Tuesday, March 7, 2017

American Health Care Act - Overview

Last night, Republicans in the U.S. House of Representatives released their proposed repeal and replacement bill, called the American Health Care Act.  The proposed legislation is a two-part bill, one coming from the Ways and Means Committee, and the other from the Energy and Commerce Committee.

Most notable for employers, the proposed legislation repeals the employer mandate and there will be no cap on the employer tax exclusion. (A full summary of the major impacts of the bill is included at the end of this post.)

A cap on the tax exclusion was included in a recent draft and in recent weeks we have made significant efforts on behalf of our clients for it to be removed.  We worked on a national level through our C2 Solutions partnership and lobbied in Washington, D.C. through the National Association of Health Underwriters and Council of Insurance Agents and Brokers platforms. We also worked with members of Congress representing the Scott footprint. We engaged in multiple calls with policy advisors, chiefs of staff and directly with the Representatives.  I was in the office of a member of the House leadership yesterday afternoon as the final touches were being put on the bills to be released.  At Scott, we are pleased to see these efforts bear fruit for the benefit of our clients. 

It is important to note that this bill still faces committee review before it is voted on by the House and it must also make its way through the Senate. It is very possible that the proposed legislation we see today will not be the final form.
Our team at Scott will continue to monitor the legislation through the committee markup and House vote process and then into the Senate. We plan to offer a webinar in the coming weeks to cover the details of the legislation more thoroughly. You can subscribe to receive email notifications for our webinars and seminars here.

American Health Care Act Impact Summary

Below is a summary of the major impacts of the bill, by section. Potential impacts to employer-sponsored coverage are in bold. The Ways and Means bill has much more applicability to employers than the Energy and Commerce.

Ways And Means:
Sections 01-02 – Deals with the government recapturing subsidy overpayments and allows premium tax credits to be used to purchase “catastrophic” coverage.
Section 03 – Repeals the ACA premium tax credit/subsidies beginning in 2020
Section 04 – Repeals the ACA Small Business Tax Credits
Section 05 – Repeals the Individual Mandate by reducing the penalties to $0 for all months beginning after December 31, 2015.
Section 06 – Repeals the Employer Mandate by reducing the penalties to $0 for all months beginning after December 31, 2015.
Section 07 – Delays the effective date of the Cadillac Tax until January 1, 2025
Section 08 – Allows OTC medications to be purchased through HSA, FSA, HRA and Archer MSA accounts effective in 2018.
Section 09 – Returns penalty for distribution of HSA or Archer MSA dollars for non-qualified expenses to pre-ACA levels
Section 10 – Eliminates the $2500 (it has been increased to $2600) limit on medical FSA accounts effective in 2018

Section 11 – Repeal of Medical Device Excise Tax
Section 12 – Reinstates employer deduction for offering retiree drug coverage
Section 13 – Repeals the increase threshold for medical expense deduction, returning it to 7.5%
Section 14 – Repeals the 0.9% Medicare Hospital Insurance surtax
Section 15 – Creates new refundable tax credits for individuals who don’t have access to employer or government based insurance
Section 16 – Increases the amount that can be contributed to an HSA to $6,550 for single and $13,100 for family beginning in 2018
Section 17 – Allows both spouses to make HSA catch-up contributions to HSA
Section 18 – Allows certain medical expenses incurred before the HSA was established to be reimbursed if HSA is established with 60 days of HDHP effective date.

Section 01 – Repeal of 10% tanning tax
Section 01 – Repeal of 3.8% investment tax
Section 01 – Remuneration from certain insurers allowing deduction of certain expenses paid to an officer
Section 01 – Repeal of Tax on Pharmaceutical Manufacturers
Section 02 – Repeal of Health Insurance Tax

Energy and Commerce:
Section 101 – Repeals the Prevention and Public Health Fund
Section 102 – Increases funding for the Community Health Center Fund
Section 103 – One-year freeze on Planned Parenthood funding
Sections 111 – 121 – All deal with Medicaid restructuring
Section 131 – Repeals the ACA Cost Sharing subsidy in 2020
Section 132 – Establishes the Patient and State Stability Fund
Section 133 – Establishes a continuous health insurance coverage incentive in the individual and small group market of 30% increased premium if someone has anything more than a 63-day gap in coverage beginning in 2018
Section 134 – Eliminates the “metal tier” (i.e. platinum, gold, silver, bronze) actuarial value requirements
Section 135 – Changes the age variation allowance in premium rates from 3-1 to 5-1.

Friday, January 27, 2017

Reminder: 1095-C Delivery to Employees Delayed Until 3/2/17

This post serves as a reminder to employers that the IRS extended the due date for employers to furnish 1095-C forms to their employees. The date was originally January 31, 2017 and was extended to March 2, 2017.  The due dates for the information returns to be filed to the IRS were not changed.

On November 30, 2016 the IRS released the following notice:

Certain due dates for the 2016 information reporting requirements under IRC sections 6055 and 6056 have been extended.

The due date for furnishing to individuals the 2016 Form 1095-B, Health Coverage, has changed from January 31, 2017, to March 2, 2017.

The due date for filing with the Service the 2016 Form 1094-B, Transmittal of Health Coverage Information Returns, and the 2016 Form 1095-B, Health Coverage, remains unchanged. The due date is February 28, 2017; if filing electronically, the due date is March 31, 2017.

The due date for furnishing to individuals the 2016 Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, has changed from January 31, 2017, to March 2, 2017.

The due date for filing with the Service the 2016 Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns, and the 2016 Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, remains unchanged. The due date is February 28, 2017; if filing electronically, the due date is March 31, 2017.

As a result of these extensions, individuals might not receive a Form 1095-B or Form 1095-C by the time they file their 2016 tax returns. Taxpayers do not need to wait to receive Forms 1095-B and 1095-C before filing their returns. For further guidance, please see Notice 2016-70.

Monday, January 23, 2017

Text of Trump's ACA Executive Order

 On Friday shortly after he took the oath of office President Trump signed an executive order designed to "minimize the economic burden of the Patient Protection and Affordable Care Act".

While the President works with congress to attempt to repeal and replace the ACA this executive order allows the HHS and other departments to delay implementing any part of the law that might place a "fiscal burden on any State or a cost, fee, tax, penalty, or regulatory burden on individuals, families, healthcare providers, health insurers, patients, recipients of healthcare services, purchasers of health insurance, or makers of medical devices, products, or medications."

The text of the executive order is below:
Office of the Press Secretary
    For Immediate Release January 20, 2017
    - - - - - - -
    By the authority vested in me as President by the Constitution and the laws of the United States of America, it is hereby ordered as follows:
    Section 1. It is the policy of my Administration to seek the prompt repeal of the Patient Protection and Affordable Care Act (Public Law 111-148), as amended (the "Act"). In the meantime, pending such repeal, it is imperative for the executive branch to ensure that the law is being efficiently implemented, take all actions consistent with law to minimize the unwarranted economic and regulatory burdens of the Act, and prepare to afford the States more flexibility and control to create a more free and open healthcare market.
    Sec. 2. To the maximum extent permitted by law, the Secretary of Health and Human Services (Secretary) and the heads of all other executive departments and agencies (agencies) with authorities and responsibilities under the Act shall exercise all authority and discretion available to them to waive, defer, grant exemptions from, or delay the implementation of any provision or requirement of the Act that would impose a fiscal burden on any State or a cost, fee, tax, penalty, or regulatory burden on individuals, families, healthcare providers, health insurers, patients, recipients of healthcare services, purchasers of health insurance, or makers of medical devices, products, or medications.
    Sec. 3. To the maximum extent permitted by law, the Secretary and the heads of all other executive departments and agencies with authorities and responsibilities under the Act, shall exercise all authority and discretion available to them to provide greater flexibility to States and cooperate with them in implementing healthcare programs.
    Sec. 4. To the maximum extent permitted by law, the head of each department or agency with responsibilities relating to healthcare or health insurance shall encourage the development of a free and open market in interstate commerce for the offering of healthcare services and health insurance, with the goal of achieving and preserving maximum options for patients and consumers.
    Sec. 5. To the extent that carrying out the directives in this order would require revision of regulations issued through notice-and-comment rulemaking, the heads of agencies shall comply with the Administrative Procedure Act and other
    applicable statutes in considering or promulgating such regulatory revisions.
    Sec. 6. (a) Nothing in this order shall be construed to impair or otherwise affect:
    (i) the authority granted by law to an executive department or agency, or the head thereof; or
    (ii) the functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals.
    (b) This order shall be implemented consistent with applicable law and subject to the availability of appropriations.
    (c) This order is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.
    January 20, 2017.

    Friday, December 9, 2016

    Repeal...Delay...Replace - The GOP Plan for the Future of the ACA

    It appears as though the growing consensus within the GOP leadership is that they need to insert one additional verb into their plans for dealing with the future of the ACA...Delay.

    After a meeting with Vice President-Elect Mike Pence on Tuesday it seems that the strategy of repeal through budget reconciliation in the first 100 days of President-Elect Trump's presidency is still in their plans. However the replacement isn't going to come as quickly as some had thought, and many in the GOP might have hoped for.

    There is discussion around repealing immediately but delaying the effective date of that repeal anywhere from 6 months to 3 years. 

    In an article written by Senator Mike Lee and Representative Mark Walker in National Review they state it this way:

    ...But deleting Obamacare from federal statute will be only the first step in reforming federal health-care policy. ...We have a responsibility to fix the broken government policies that have crippled our health-care system for decades. This means providing a transition, for however many years, for the market to recover and be able to serve individuals and businesses with more affordable, accessible health coverage. This means implementing the best of the many free-market repair proposals that Republicans have been developing for the past six years. People need options, not heavy-handed government mandates.

    The time period for that "transition" is still being debated.  Senate Majority Whip John Cornyn told Politico We’re talking about a three-year transition now that we actually have a president who’s likely to sign the repeal into the law. People are being, understandably cautious, to make sure nobody’s dropped through the cracks,”
    There is some resistance within the GOP to the prospect of delaying the effective date of the repeal. The House Freedom Caucus and most notably Senator John McCain have expressed opposition to any path forward that doesn't repeal and replace the law at the same time.  
    What does seem clear at this point is that some major parts of the ACA will be repealed in the next few months via the budget reconciliation process. The effective date of those delays and how they will be replaced remain to be seen.
    This leaves employers in the dark about exactly how their day to day requirements around the ACA will be impacted in 2017 and beyond. The Employer Mandate will almost certainly be part of the requirements that are repealed but a delay may mean it is business as usual for 2017 (and potentially beyond) from an administrative reporting and tracking perspective. A delay would most likely also mean all of the coverage requirements and ALE rules would stay in place.
    This is certainly something that employers will watch closely in the coming weeks and months.

    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.