Thursday, July 14, 2016

Health Insurance Marketplace Subsidy Notifications Update: CMS Suggests "Appeal everything just to be on the safe side".

We have had several clients ask us over the past few days if they should appeal every single notification that they receive from DHHS or just the ones where there truly was a mistake.  The notification states,  You may file an appeal to the Marketplace if you believe there’s been a mistake regarding the employee’s eligibility for APTC or CSRs.”  This seems to make it clear that you only need to appeal the notices where you believe the employee received a subsidy in error, for example:

·         The employee was offered benefits at Open Enrollment as a FT employee and waived coverage.
·         The employee was offered benefits based on average hours worked over either the standard measurement period of the initial measurement period and waived coverage. 

However I had a client call into the 800 number on the form and were told to “appeal everything”. I  thought this was odd so I called into the 800 number as well and had a very long talk with the folks at CMS. 

I was told that it is up to the employer but that they are suggesting to appeal everything “just to be on the safe side”. Which if I have to decode that means they are afraid that the system isn’t going to work like it should and penalties might go out in error,  so even the part-timers that technically did receive the subsidy correctly should be appealed. The problem in that case is that there really isn’t anything to appeal, because they got the subsidy legitimately. On the appeal form it states:

Use the space below to explain why this employee shouldn’t have been eligible for advance payments of the premium tax credit and cost-sharing reductions (if applicable). Use extra paper, if necessary. If you’re including documents to support your request, send us copies. Keep all original documents.

The issue is that they are in fact eligible. I explained this to the CMS rep and he agreed but just said his suggestion would be to explain the issue thoroughly in that section again “to be on the safe side”.  So at the end of the day it’s up to employers if they want to appeal, they technically shouldn’t have to appeal those non-full time employees. However, based on these recent conversations I am worried that if employers don’t appeal, something might fall through the cracks and they will wind up having to fight a penalty.  Employers very well may choose to put in the extra effort and appeal everything to ensure they wind up “on the safe side” of this issue.

Friday, July 1, 2016

Health Insurance Marketplace Subsidy Notifications

It appears as if the DHHS has recently been on a notice mailing binge.  Several of you have received a version of the notice below in the last few days.  CMS has issued a Q & A about the notices that you can access here.
Here are some summary Items to take note of:

-This is not an announcement of penalty, only a notice that  one of your employees applied for and was found eligible for a subsidy in the exchange.

-There is no action that needs to be takeen at this time as the IRS, not the HHS/Marketplace issues the penalties.

-If the system works correctly, then cross referencing this with the 1095-C reports they received should result in no further action if an appropriate offer was made and declined or if the employee is ineligible for coverage based on employment status.

-We would advise a client to appeal this particular notice is if they did actually offer the employee coverage and they still applied for the subsidy. In that case the employee should have never received the subsidy and that is something you can appeal with the HHS/Marketplace and avoid this issue going to the IRS.  There is information on how to appeal at the end of the form, the client has 90 days from reception of the notice.  There is also information regarding how to appeal in the above Q & A.

As always, please don't hesitate to reach out to your Scott Advisor with additional questions. Thanks!

ACA Information Returns May Continue To Be Filed After June 30, 2016

The IRS released the following statement yesterday regarding ACA reporting deadlines:

If you are an applicable large employer, self-insured employer, or other health coverage provider, the deadline to electronically file ACA information returns with the IRS is midnight ET on June 30, 2016.  The ACA Information Returns (AIR) system will remain up and running after the deadline.  If you are not able to submit all required ACA information returns by June 30, 2016, please complete the filing of your returns after the deadline.

It is important to note the following:

  • The AIR system will continue to accept information returns filed after June 30, 2016.  In addition, you can still complete required system testing after June 30, 2016.
  • If any of your transmissions or submissions was rejected by the AIR system, you have 60 days from the date of rejection to submit a replacement and have the rejected submission treated as timely filed.
  • If you submitted and received “Accepted with Errors” messages, you may continue to submit corrections after June 30, 2016.

The IRS is aware that some filers are still in the process of completing their 2015 tax year filings.  As is the case for other information returns, penalties may be associated with the submission of the ACA information returns for failure to timely file required returns.  As the IRS has publicly stated in various forums in recent months, filers of Forms 1094-B, 1095-B, 1094-C and 1095-C that miss the June 30, 2016, due date will not generally be assessed late filing penalties under section 6721 if the reporting entity has made legitimate efforts to register with the AIR system and to file its information returns, and it continues to make such efforts and completes the process as soon as possible.   In addition, consistent with existing information reporting rules, filers that are assessed penalties may still meet the criteria for a reasonable cause waiver from the penalties.

If you are not an electronic filer and you missed the May 31, 2016, paper filing deadline for ACA information returns, you should also complete the filing of your paper returns as soon as possible.

Monday, January 11, 2016

Why the Latest ACA Repeal Attempt Actually Means Something

On Friday, President Obama vetoed the bill that would repeal significant parts of the ACA and defund Planned Parenthood for a year. On its face this just seems like another pointless repeal attempt by the GOP, (as they have tallied over 50 attempts at this point). However, this one needs to have an asterisk beside it.

The reason this one is different is because it actually made it to President Obama's desk to get vetoed.  Why that means something is because most prognosticators believe that Republicans will keep the House and the Senate in the 2016 election so only the White House is really up for grabs.  While Republicans probably won’t have a veto-proof majority in 2017 (just like they don’t now), this proves they don’t need one to get at least a version of repeal to the president’s desk.  So if the president in 2017 is Trump, Rubio, Cruz, Bush (insert name here), then they have proven they will be able to get a bill to repeal significant portions of the law through budget reconciliation to their desk.

If you aren’t familiar with budget reconciliation or the politics of the situation the below article does a good job explaining it. In summary, it only requires majority approval in the Senate, and it allows the majority to avoid a filibuster to get it through. Interestingly enough, budget reconciliation was actually the same way the Democrats were able to get the ACA through when it was originally signed into law back in 2010.
When Paul Ryan was asked why there was no alternative to the ACA provided with this bill, his answer was "Just wait".  He now has his committee chairmen working on an alternative option.  This was just a dress rehearsal, and it was successful for the GOP. They are hoping for a final performance in early 2017 that would be a huge blow to the ACA as we know it today.  

Monday, December 28, 2015

IRS Delays 6055 & 6056 Reporting Deadlines

On Monday the IRS released notice 2016-4 announcing that it is giving employers additional time to file forms associated with sections 6055 and 6056 of the Affordable Care Act.
The deadline for employers to electronically file the forms for 2015 which provide coverage information to the IRS was extended to June 30 from March 31, while non-electronic form reporting was delayed to May 31, 2016 from Feb. 29.
In addition, the deadline for furnishing employees with 1095-C coverage forms for 2015 was extended to March 31 from Feb. 1.
The IRS said in the notice that employers needed “additional time to adapt and implement systems to gather, analyze and report this information.”
This delay will be welcomed by employers and their filing partners across the country.
To read the notice in its entirety click here.

Monday, December 21, 2015

Key ACA Delays Included in Budget Deal

On Friday the U.S. Senate passed a $1.1 trillion omnibus spending bill and a $650 million tax break package that includes three key delays/moratoriums of taxes and fees associated with the Affordable Care Act.

The most noteworthy of the delays was  two year delay of the 40% excise tax on high-cost plans, commonly known as the Cadillac Tax. The Cadillac Tax, which would be imposed on the portion of group health plan premiums that exceed $10,200 for single coverage and $27,500 for family coverage was set to go into effect in 2018.  This delay postpones the much maligned tax to 2020. The bill also made any amounts paid as a result of the tax, tax deductible.

While the delay is a win for employers, the threat of the tax still looms large and many industry experts don't expect the delay to result in a significant change of course for companies planning to make benefit design changes and tweaks to stay below the tax.

According to the bipartisan nonprofit Committee for a Responsible Federal Budget, delaying the Cadillac tax until 2020 will cost the government $16 billion.

Another welcomed piece of the tax break package was a 2 year moratorium on the medical device excise tax. This tax is a 2.3 percent excise tax that manufacturers and importers must pay on sales of certain medical devices beginning Jan. 1, 2013.  Opponents of the tax argued that it was a hindrance to innovation and research and had a particular negative impact on smaller start up companies that typically have very thin margins in early years of operation.

The delay is estimated to subtract $3.4 billion from the federal budget between 2016 and 2017.

The final delay/moratorium was on the health insurer fee.  The health insurer fee is a tax on health insurance that insurance companies pay on their fully insured blocks of business. The amount of the tax was $8 billion in 2014 and increased by 41 percent for 2015. The tax is scheduled to total more than $145 billion over the next ten years. 

It's estimated that this tax had between  a 3% and 4% impact on fully insured policies over the last two years. Insurance companies will now not have to pay this fee for 2017.

Monday, October 5, 2015

Senate Passes ACA Small Group Market Rule Repeal

On Oct. 1, 2015, the U.S. Senate passed legislation repealing the Affordable Care Act (ACA) requirement that the small group market in every state be expanded to include businesses with 51-100 employees.  
The Protecting Affordable Coverage for Employees (PACE) Act was passed by the U.S. House of Representatives earlier in the week. It has been reported that President Obama will sign the Act into law, although some sources previously indicated that he might veto it.

Small Group Market Expansion

Most states have historically defined “small employers” as those with 50 or fewer employees for purposes of defining their small group health insurance market.
Effective for 2016 plan years, the ACA expanded the definition of a “small employer” to include those that employed an average of between one and 100 employees.

The PACE Act eliminates the ACA’s new definition and gives states the option of expanding their small group markets to include businesses with up to 100 employees.
Impact on Employers

The expansion of the small group market was expected to have a significant effect on mid-size businesses. These businesses would have been required to buy coverage for employees in the small group market, which is more heavily regulated than the large group market.
This change was expected to increase premiums costs for employers and employees and reduce flexibility in plan design due to added small group market requirements.

Some states have already amended their state laws to adopt the expanded small group market definition. These states will have to take action to undo those changes.
Most states are taking already taking advantage of a transition rule provided by the Dept. of Health and Human Services (HHS). HHS has said it will not enforce small group market regulations for mid-size businesses if their policies are renewed by Oct. 1, 2016.

This means that many employers have already been able to delay moving from the large group to the small group market. The PACE Act will make this relief permanent.