Proposed change to transitional reinsurance fee collection

In proposed regulations issues this week by HHS they are proposing a change to how the $63 transitional reinsurance fee will be collected from employers. We have copied the section from the regs below.  This changes slightly how employers have been planning to pay this fee.  Basically, instead of the full $63 being due at the end of 2014 or in very early 2015 employers will only pay $52.50 at that time, then the extra $10.50 would not be due until fourth quarter 2014.  Also note that the proposed fee for 2015 is $44.

This could impact how some employers budget for this fee, especially the larger ones.  See the below excerpt for details and please not that these are only proposed regulations. However we would be surprised if this section changed before going final.

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We recognize that the reinsurance collections provided for in the Affordable Care Act –
$12 billion for 2014, $8 billion for 2015, and $5 billion for 2016 – will result in substantial upfront
payments from contributing entities for the reinsurance program. Therefore, we are
proposing to modify our collection schedule for the program, so that we would collect the
reinsurance contribution amounts for reinsurance payments and for administrative expenses
earlier in the calendar year following the applicable benefit year, approximately in accordance
with the schedule currently described in §153.405(c), but collect the reinsurance contribution
amounts for payments to the U.S. Treasury in the last quarter of the calendar year following the
applicable benefit year. Therefore, we propose to modify §153.405(c) so that a contributing
entity would make reinsurance contributions in two installments to HHS – one at the beginning
of the calendar year following the applicable benefit year, and one at the end. As noted in the
second final Program Integrity Rule, the proposed policy is designed to alleviate the upfront
burden of the reinsurance contribution, allowing contributing entities additional time to make the
payment. We note that the proposed change in the collection schedule would not affect the
amount of funds collected for reinsurance payments. Additionally, the amounts allocated to
reinsurance payments and administrative expenses are needed to operate the reinsurance
program, while the amounts allocated for payments to the U.S. Treasury are not needed for the
operation of the transitional reinsurance program. Therefore, collecting the amounts allocated to
payments to the U.S. Treasury later in the calendar year following the applicable benefit year
will not affect the reinsurance program, and will alleviate a contributing entity’s upfront financial
burden.

Under this proposal, the first of the two installments each year would include the

reinsurance contribution amounts allocated to reinsurance payments and administrative expenses.
We propose in §153.405(c)(1) that following submission of the annual enrollment count, HHS
would notify a contributing entity of the reinsurance contribution amount allocated to
reinsurance payments and administrative expenses to be paid for the applicable benefit year. If
the enrollment count is timely submitted, HHS intends to notify the contributing entity by
December of benefit year 2014, 2015, or 2016, as applicable. We note that, due to our desire to
align the notification of reinsurance contributions due with our monthly payment and collections
cycle, this schedule differs slightly from the schedule currently set forth in §153.405(c)(3), which
provides for notification by the later of 30 days of the submission of the annual enrollment count
or by December 15. We propose in §153.405(c)(3) that the contributing entity remit this amount
within 30 days after the date of the first notification.

The second installment would cover the portion of the reinsurance contribution amount

allocated to the payments for the U.S. Treasury to be paid for a benefit year. We propose in
§153.405(c)(2), that in the fourth quarter of the calendar year following the applicable benefit
year, HHS would notify the contributing entity of the portion of the reinsurance contribution
amount allocated for payments to the U.S. Treasury for the applicable benefit year. Again, under
proposed §153.405(c)(3), a contributing entity would remit this amount within 30 days after the
date of this second notification. We note that the contributing entity would be required to submit
an annual enrollment count only once for each benefit year under §153.405(b).
 
For example, for the 2014 benefit year, of the $63.00 annual per capita contribution rate,
$52.50 would be allocated towards reinsurance payments and administrative expenses, and
$10.50 towards payments to the U.S. Treasury. Thus, we contemplate that if a contributing
entity submits its enrollment count for the 2014 benefit year in a timely manner (by November
15, 2014), a reinsurance contribution payment of $52.50 per covered life would be invoiced in
December 2014, and payable in January, 2015. Another reinsurance contribution payment of
$10.50 per covered life would be invoiced in the fourth quarter of 2015, and payable late in the
fourth quarter of 2015.

We propose that for the 2015 benefit year, the proposed $44 annual per capita

contribution rate be allocated $33 towards reinsurance payments and administrative expenses,
and $11 towards payments to the U.S. Treasury. These amounts would similarly be payable in
January 2016 and late in the fourth quarter of 2016, respectively.

 

Map Showing State Decisions on Administration’s Policy on Coverage Extensions

To see the full intereactive map click here:

Thoughtful Take on the Future of PPACA - Megan McArdle from Bloomberg

Please click here to access the full article...

IRS eases FSA use-it-or-lose-it rule

By Allison Bell
via LifeHealthpro

The Internal Revenue Service (IRS) has decided to let holders of health flexible spending arrangements (FSA) roll over up to $500 in account balance from one year to the next without worrying about the infamous "use-it-or-lose-it" rule."

Officials at the IRS, an arm of the U.S. Treasury Department, have discussed the change in IRS Notice 2013-71, and they also talk in the notice about how they will make the change available to workers at employers with non-calendar plan years.

FSAs give workers a vehicle for setting aside cash to pay for health care expenses without paying income taxes on the cash.

The IRS tried to discourage high-income workers from using FSAs as investment accounts by requiring them to forfeit any unused cash at the end of the plan year. The employers got to keep any cash forfeited.

In 2005, the IRS tried to ease the burden the rule caused by creating a grace period. The grace period rule gave FSA holders the ability to avoid losing FSA cash by using the cash up to two months and 15 days after the end of the plan year.

In 2010, the drafters of the Patient Protection and Affordable Care Act (PPACA) tried to generate revenue to cover part of the cost of PPACA by capping the deductibility of FSA contributions at $2,500 per year.

IRS officials noted in 2012, in Notice 2012-40, that because PPACA capped tax deductible contributions at $2,500 per year, the FSA could no longer be much of a tax shelter for the wealthy.
When officials asked for comments on changing the use-it-or-lose-it rule in that notice, commenters said a change could simplify health FSA administration, and make FSA programs more attractive to low-income and moderate-income workers, who "are more reluctant than others to participate because of aversion to even modest forfeitures of their salary reduction contributions," officials said.
IRS officials said they believe a $500 rollover cap is appropriate because most FSA forfeitures are for less than $500.

An employer cannot offer a FSA carryover provision and an FSA grace period at the same time.
To adopt the change, an employer must add a carryover provision to the FSA plan document and eliminate any grace period provision, officials said.

White House says Healthcare.gov will be fixed by end of November

(Reuters) — The website for Americans to buy insurance under President Barack Obama's health care law should be working smoothly for most users by the end of November, a White House official assigned to fix Healthcare.gov said Friday.

Jeffrey Zients told reporters in a conference call that Quality Software Services Inc., or QSSI, will serve as a general contractor to oversee the repairs.

The administration has not had a technology company overseeing the entire project. Instead, the government decided early on that the Centers for Medicare and Medicaid Services, part of the U.S. Department of Health and Human Services, would serve as the system integrator.

The company, a unit of health insurer UnitedHealth Group Inc., already has a technology contract related to the website and testified on Thursday to a congressional panel about problems with the system.

QSSI produced the federal data hub and a software tool for creating online consumer accounts, which was at the center of early logjam problems.

Online insurance exchanges were launched on Oct. 1 under the 2010 Patient Protection and Affordable Care Act, often called "Obamacare," to offer health insurance plans to millions of uninsured Americans. But many Americans have experienced error messages and long waits in trying to sign on to Healthcare.gov, which has become a political embarrassment for President Obama.

"By the end of November, the vast majority of consumers will be able to successfully and smoothly enroll through Healthcare.gov," Mr. Zients said.

'A lot of problems'

Mr. Zients said he had brought in technology experts to establish the problems with the website and to prioritize the repairs. Based on that assessment, he described Healthcare.gov as being "fixable."
"It will take a lot of work and there are a lot of problems that will need to be addressed, but the bottom line is that it is fixable," he said.

He said experts had identified "dozens of items" to be fixed in terms of both performance and functionality, and said a problem related to communications with insurers was on the top of the list. He did not provide further details about the nature of the glitches.

Earlier this week, the government told insurers in a meeting that it was working to fix data transmission problems with applications and also with the technology that can allow insurers to directly enroll consumers in exchange plans.

The government expects about 7 million people to enroll for individual insurance in 2014, many of whom are expected to receive government subsidies. Consumers must enroll by mid-December to have insurance on Jan. 1 and by the end of March 2014 if they want to avoid paying the penalty laid out in the Affordable Care Act.

About 90% of people who try to create accounts are able to do so, but the ability to complete an application has been "volatile," Mr. Zients said. The government said that about 700,000 Obamacare applications had been filled out across the country but has not provided enrollment figures.

The federal government is running the website for 36 states while 14 other states have built their own exchanges to sell insurance policies under Obamacare. Some state sites have also had technology issues.

Republican lawmakers, long opposed to Obamacare, have pounced on the rocky rollout to launch multiple investigations into the administration's missteps and the role of contractors.
Some Democrats have also criticized the administration and called for extending the open-enrollment period beyond the existing March 31 deadline.

Two committees in the Republican-controlled House of Representatives will hold hearings next week, one with Health and Human Services Secretary Kathleen Sebelius and another with Marilyn Tavenner, administrator of the Centers for Medicare and Medicaid Services.

The White House said last week that President Obama still has "full confidence" in Ms. Sebelius, whose department is responsible for implementing the law.

Suit challenging premium subsidies for federal health exchanges can proceed

From: Business Insurance

A lawsuit challenging the heart of the health care reform law — the extension of federal premium subsidies to millions of lower-income uninsured U.S. residents to purchase coverage in a public insurance exchange — can go forward, a federal judge in Washington has ruled.

The suit, filed by four individuals, contends that the Internal Revenue Service overstepped its authority in its 2012 rule saying that the subsidies are available through state and federal insurance exchanges.The plaintiffs argue that that under the Patient Protection and Affordable Care Act, premium subsidies are limited to states that have set up insurance exchanges, and not the 34 states where the Department of Health and Human Services established exchanges after the states declined to do so.In rejecting the Justice Department's bid to dismiss the suit, Judge Paul Friedman of the U.S. District Court of the District Columbia said Tuesday that case will be considered on an expedited basis. But he rejected the plaintiffs' bid for a preliminary injunction to block the rules while the suit is considered.In August, a federal judge in Oklahoma allowed a somewhat similar suit, which was filed by Attorney General Gov. Scott Pruitt, to proceed.

Ramifications
The ramifications of the litigation are huge. If premium subsidies are limited to coverage provided only through state insurance exchanges, millions of uninsured U.S. residents living in states, such as Ohio, Pennsylvania and Texas, that declined to set up exchanges would lack access to the subsidies and likely would remain uninsured. That would defeat the central purpose of the health care reform law, which is to significantly reduce the approximately 48 million individuals who lack health insurance.A ruling against the government also could have significant implications for employers. That is because health care reform law penalties against employers that do not offer coverage or do not offer affordable coverage apply only if an employee eligible for a premium subsidy uses it to buy coverage through a public exchange.But if the courts should rule that the subsidy is available only in state-established exchanges, employers would not face the penalties if their employees live in states that have declined to set up exchanges.Under the law, employers with at least 50 full-time employees are liable for a $2,000 per full-time employee penalty starting in 2015 if they do not offer coverage. If employee premiums for individual coverage exceed 9.5% of wages, the employer would be liable for a $3,000 penalty for that employee.

To access the full article click here

PPACA largely untouched in accord to end government shutdown

From Business Insurance

A bipartisan agreement to fully reopen the federal government and raise the government’s borrowing authority that was reached Wednesday by Democratic and Republican leaders in the U.S. Senate includes no major changes to the nation’s health care reform law.

The sole provision in the agreement that relates to the Patient Protection and Affordable Care Act would expand income verification of lower-income uninsured individuals before they could obtain federal premium subsidies to buy coverage in public health insurance exchanges.

Earlier, lawmakers floated a proposal that would have delayed an ACA provision — now set to go into effect next year — that initially imposes a $63 fee per plan participant on self-funded employers and other plan sponsors. The proposal, which would have delayed the fee until 2015, is not part of the accord.

The $25 billion to be generated by the Transitional Reinsurance Program fee over a three-year period is to be used by the federal government to partially reimburse commercial insurers that cover individuals with high health care costs.

Another proposal that was floated but not adopted would have delayed or repealed a new tax on medical devices.

The agreement could be voted on by the House and Senate as soon as Wednesday evening.

To get the full story click here

Healthcare Marketplace Applications Available

On September 26, the Department of Health and Human Services (HHS) released the final applications that individuals will use to apply for coverage on the new Health Insurance Marketplace/Exchange beginning October 1. The applications are posted on the Centers for Medicare and Medicaid Services (CMS) website.

These applications will be used in all states with federally facilitated or state partnership Marketplaces. The applications for state-run Marketplaces may differ. The applications will be used both to apply for coverage and to determine whether an individual or family is eligible for a subsidy.

There are three different applications and instructions for each:

·         Individual Short Form – For single adults with no dependents who are not eligible for employer health coverage and who want to determine if they are eligible for subsidies.

·         Standard Form – For anyone who is eligible for employer health coverage and wants to determine if they are eligible for subsidies.

·         Individual Without Financial Assistance – Form that can be used by anyone who does not want to provide employment and income information to determine if they are eligible for subsidies.

Beginning October 1, the forms can be completed online through www.healthcare.gov, or paper forms can be submitted by mail.

What Employers Need to Know

The Standard application includes a section where individuals who are eligible for employer-sponsored health coverage will need to provide information about that coverage.

·         If the employer sent the Marketplace Notice – including the optional page 3 – to all employees as required by October 1, individuals will have all the information they need to complete that part of the application.

·         If the employer did not send the Marketplace Notice or did not include page 3 of the notice, the individual will not have all the information needed to complete the application.

Page 2 of the Marketplace Notice includes basic information about which employees and dependents are eligible for coverage. The optional page 3 indicates whether the individual receiving the notice is eligible for coverage that meets the minimum value standard, the cost of employee-only coverage and what changes the employer is planning to make for the next plan year.

The Standard application includes a section called the Employer Coverage Tool, which individuals are instructed to take to their employer to get the required information about their employer coverage. The Employer Coverage Tool includes the same information as the Marketplace Notice. All information in the Marketplace Notice and the Employer Coverage Tool is numbered in the same way to make it easier for individuals to transfer the information to the application.

The Application Process

All consumers will be directed to www.healthcare.gov to get information about Marketplace coverage. They will have the opportunity to answer a few questions about their age, the state where they live and whether they currently have coverage. If they live in a state that has a state-run Marketplace, they will be directed to their state Marketplace for more information.

Individuals will complete an application to determine if they are eligible for a subsidy and to review coverage details and premiums for the plans for which they are eligible. They must enroll by December 15 for coverage to be effective on January 1, 2014. The enrollment period will continue through March 31, 2014.

Marketplace Application Checklist

According to a checklist published on www.healthcare.gov, individuals will need the following information to complete the application:

·         Social Security Numbers or document numbers for legal immigrants.

·         Employer and income information for every member of the household who needs coverage – for example, pay stubs or W-2 forms.

·         Policy numbers for any current health insurance plans covering members of the household.

·         Information about every job-based plan someone in the household is eligible for, even if they are not enrolled in the plan.

Links to the Applications

Use these links to review the applications:

Individual Short Form

Individual Short Form Instructions

Standard Form

Standard Form Instructions

Individual without Financial Assistance

Individual without Financial Assistance Instructions

Online enrollment for health exchanges delayed for small businesses

Reuters

 

Sep. 26, 2013 at 12:58 PM ET

The Obama administration will delay online Obamacare enrollment for small businesses in federally operated healthcare exchanges until Nov. 1, one month later than planned, an administration official said on Thursday.

The official, who spoke on the condition of anonymity, said small businesses that want to purchase healthcare coverage for their employers would still be able to enroll beginning Oct. 1 through paper applications, in-person meetings or over the phone to a federal call center.

The official gave no reason for the delay.

Officials at the U.S. Department of Health and Human Services, which is spearheading implementation of President Barack Obama's healthcare law, were not immediately available for comment.

Word of the delay in so-called SHOP exchange online enrollment comes five days before online healthcare marketplaces for individuals and small businesses are scheduled to begin signing up uninsured people for coverage on Oct. 1. Coverage is scheduled to begin on Jan. 1.

This is also the latest in a series of delays at the federal and state level and could raise new questions about how well the marketplaces will operate in the initial weeks and months.

Copyright 2013 Thomson Reuters.

HHS: Significant choice and lower than expected premiums available in the new Health Insurance Marketplace

To view today's press release from the Department of Health and Human Services please click below:

http://www.hhs.gov/news/press/2013pres/09/20130925a.html

Agencies Release Guidance on HRAs, Health FSAs and Cafeteria Plans

On Sept. 13, 2013, the Internal Revenue Service (IRS) and the Department of Labor (DOL) issued technical guidance on how certain market reforms under the Affordable Care Act (ACA) apply to health reimbursement arrangements (HRAs), health flexible spending accounts (FSAs) and other similar arrangements.

This guidance is contained in IRS Notice 2013-54 and DOL Technical Release 2013-03. The Department of Health and Human Services (HHS) is also issuing guidance to show that it agrees with the IRS’ and DOL’s interpretation.

The guidance applies for plan years beginning on or after Jan. 1, 2014, but can be applied for all prior periods.

Annual Limits and Preventive Care

The ACA requires non-grandfathered group health plans to cover certain preventive care services without imposing any cost sharing. For plan years beginning on or after Jan. 1, 2014, the ACA prohibits group health plans from placing annual dollar limits on the coverage of essential health benefits.

Prior guidance provided that an HRA integrated with other group health coverage is not required to satisfy the annual limit restrictions if the other coverage alone satisfies the ACA’s annual limit restrictions. The latest guidance includes the following points:

·      An HRA will comply with the preventive care services requirements if the group health plan with which the HRA is integrated complies with the preventive care services requirements.

·      A group health plan, including an HRA, used to purchase coverage on the individual market cannot be integrated with that individual market coverage for purposes of the ACA’s annual dollar limitation or preventive care services requirements. For example, a group health plan, such as an employer payment plan, that reimburses employees for an employee’s substantiated individual insurance policy premiums will fail to satisfy the market reforms for group health plans because the plan:

o     Imposes an annual limit up to the cost of the individual market coverage purchased through the arrangement;  and

o     Cannot be integrated with any individual health insurance policy purchased under the arrangement.

·      Only health FSAs that are offered through a Code Section 125 plan (or cafeteria plan) are exempt from the ACA’s annual limit prohibition. The DOL intends to amend its annual limit regulations to clarify this exemption, applicable Sept. 13, 2013. (Note that these health FSAs must comply with the annual $2,500 limit on health FSA salary reduction contributions.)

·      Health FSAs that do not qualify as excepted benefits will fail to meet the ACA’s preventive care services requirements because they are not integrated with group health plans.

·      Unused amounts that were credited to an HRA while the HRA was integrated with other group health coverage may be used to reimburse medical expenses after an employee ceases to be covered by the other group health coverage without causing the HRA to fail to comply with the ACA’s requirements on annual limits and preventive care.

·      In general, an integrated HRA violates the ACA’s annual limit prohibition if the group health coverage does not cover a category of essential health benefits and the HRA is available to cover that category of benefits and limits the coverage to the HRA’s maximum benefit. However, if the group health coverage provides minimum value, there is no violation.

HRAs—Two Integration Methods

The IRS’ and DOL’s guidance includes two ways for an HRA to be considered integrated with a group health plan for purposes of the annual dollar prohibition and the preventive care services requirements. Under either method, the HRA and the other group coverage are not required to have the same plan sponsor or the same plan document, or to file a single Form 5500 (if applicable).

Under both methods, an employee must be permitted to permanently opt out of and waive future reimbursements from the HRA at least annually. This opt-out feature is required because the HRA’s benefits generally will constitute minimum essential coverage and would disqualify an individual from claiming the ACA’s premium tax subsidy.

Employee Assistance Programs (EAPs)

Benefits under an EAP are considered to be excepted benefits that are not subject to the ACA’s market reforms, but only if the program does not provide significant benefits in the nature of medical care or treatment.

Premium Tax Subsidy

For purposes of the premium tax subsidy, the affordability and minimum value requirements do not apply if an employee enrolls in any employer-sponsored minimum essential coverage, including coverage provided through a cafeteria plan, an employer payment plan, a health FSA or an HRA, but only if the coverage does not consist solely of excepted benefits. If an employee enrolls in any employer-sponsored minimum essential coverage, he or she is ineligible for the ACA’s premium tax subsidy.

An HRA that has fewer than two participants who are current employees on the first day of the play year (for example, a retiree-only HRA) is also considered minimum essential coverage. As a result, a retiree covered by a stand-alone HRA for any month will not be eligible for a premium tax subsidy for that month.

Cafeteria Plans

Beginning in 2014, individual coverage through an Exchange cannot be reimbursed or paid for under a cafeteria plan. For cafeteria plans that as of Sept. 13, 2013 operate on a plan year other than a calendar year, this restriction will not apply before the first plan year that begins after Dec. 31, 2013. However, individuals may not claim a premium tax subsidy for any month in which they are covered by an individual plan purchased through an Exchange as a benefit under a cafeteria plan.

No Fine for Failure to Issue Notice of Coverage Options per DOL

From the DOL Website:

Q: Can an employer be fined for failing to provide employees with notice about the Affordable Care Act's new Health Insurance Marketplace?

A: No. If your company is covered by the Fair Labor Standards Act, it should provide a written notice to its employees about the Health Insurance Marketplace by October 1, 2013, but there is no fine or penalty under the law for failing to provide the notice.
The notice should inform employees:

• About the Health Insurance Marketplace;
• That, depending on their income and what coverage may be offered by the employer, they may be able to get lower cost private insurance in the Marketplace; and
• That if they buy insurance through the Marketplace, they may lose the employer contribution (if any) to their health benefits

The U.S. Department of Labor has two model notices to help employers comply. There is one model for employers who do not offer a health plan and another model for employers who offer a health plan or some or all employees:

• Model Notice for employers who offer a health plan to some or all employees
• Model Notice for employers who do not offer a health plan

The model notices are also available in Spanish and MS Word format at http://www.dol.gov/ebsa/healthreform/.
Employers may use one of these models, as applicable, or a modified version. More compliance assistance information is available in a Technical Release issued by the US Department of Labor.

IRS Struggling to Combine Reporting Requirements

Source: Lifehealthpro.com

The Internal Revenue Service is still trying to figure out how to combine two new Patient Protection and Affordable Care Act (PPACA) information reporting programs.

One of the new programs, described in Section 6056 of the Internal Revenue Code, requires a health coverage issuer to tell the IRS and consumers whether it is providing "minimum essential coverage."
The other, described in IRC Section 6056, requires a large employer to tell the IRS whether it is meeting the PPACA "shared responsibility" requirements -- the employer mandate requirements -- by offering full-time workers affordable coverage with a minimum value. An employer that violates the mandate rules could have to pay a penalty of $2,000 per affected worker.

The IRS will publish the PPACA Section 6055 MEC reporting requirement and PPACA Section 6056 shared responsibility reporting requirement draft regulations in the Federal Register Monday.
Comments will be due 60 days after the publication date.

The IRS asked for comments on the IRC Section 6055 and IRC Section 6056 reporting programs in April 2012.

Many commenters asked the IRS to combine the reporting programs.
Combining the programs will be complicated, because the programs apply to different types of entities and will generate different types of information, IRS officials said in the preamble to the Section 6056 reporting program draft.

The Section 6055 MEC requirements apply to the coverage issuers, such as insurers, and those issuers have to report the Section 6055 information only for people who actually have coverage, officials say. The individuals will use the MEC information to qualify for subsidies and see if they owe individual mandate penalties.

The Section 6056 shared responsibility reporting requirements apply to large employers, and those employers must report on the coverage they have offered workers, whether or not the workers have agreed to take the coverage, officials said.

In some cases, the IRS may let large employers use information reported on Form W-2 and information reported to meet the Section 6055 MEC reporting requirements to meet the Section 6056 shared responsibility requirements, officials said.

The IRS is considering letting employers meet the Section 6056 shared responsibility reporting requirements by using a code on the W-2.

Also in the draft, officials:

• Declined to let employers with fiscal years other than the ordinary calendar year to base Section 6055 or Section 6056 reporting on the fiscal year. Consumers need the coverage information early in the calendar year, officials said.
• Declined to create a "safe harbor" from penalties for coverage issuers or employers that violate reporting rules because other parties cause problems. Another provision already offers issuers and employers relief for any errors that are corrected in a timely manner, officials said.
• Said that the insurer that insures a group health plan, not the group plan sponsor, is responsible for meeting the Section 6055 MEC reporting requirements for the group plan members.

Comments on the draft regulations will be due 60 days after the official Federal Register publication date

Proposed Rules Would Ease Employers Health Plan Reporting Burden

Business Insurance

Newly proposed Internal Revenue Service and Treasury Department health care reform regulations would ease the amount of employee plan coverage information employers would have to report to federal regulators.

Under the proposed rules, released Thursday, employers would not be required to report cost information related to family coverage.In addition, employers would have to report how much of the premium employees will have to pay for single coverage only.Limiting that reporting requirement to single coverage is appropriate, the IRS and the Treasury Department said because a health care reform law affordability test applies only to single coverage — not family coverage.Under that test, if the premium paid by employees for single coverage exceeds 9.5% of household income, the employee is eligible for a federal premium subsidy to purchase coverage in a public insurance exchange. If the employee uses the subsidy, the employer may be liable for a $3,000 penalty. No penalty is assessed regardless of how much the employer charges for family coverage, making the need to collect such information unnecessary, regulators said.“Because only the lowest-cost option of self-only coverage offered under any of the enrollment categories for which the employee is eligible is relevant to the determination of whether coverage is affordable — and thus to the administration of the premium tax credit and employer shared responsibility provisions — that is the only cost information proposed to be requested,” according to the proposed regulation, which is scheduled to be published in the Sept. 9 Federal Register.

While regulators have reduced the amount of information to be reported, “it is only limited relief. There still will be a massive amount of work to meet the reporting requirements,” said Rich Stover, a principal with Buck Consultants L.L.C. in Secaucus, N.J.The proposed rules, though, could pose problems in other areas. For example, employers would be required to report tax identification numbers of employees’ dependents.Employers do not always have such information for every dependent, said Amy Bergner, managing director of human resources in Washington for PricewaterhouseCoopers L.L.P.

For the original article click here

DOL Issues FAQ Part XVI

Set out below are additional Frequently Asked Questions (FAQs) regarding implementation of various provisions of the Affordable Care Act. These FAQs have been prepared jointly by the Departments of Labor, Health and Human Services (HHS), and the Treasury (collectively, the Departments). Like previously issued FAQs (available at http://www.dol.gov/ebsa/healthreform/ and http://www.cms.gov/cciio/resources/fact-sheets-and-faqs/index.html), these FAQs answer questions from stakeholders to help people understand the new law and benefit from it, as intended.

Notice of Coverage Options Available Through the Exchanges

Section 18B of the Fair Labor Standards Act (FLSA), as added by section 1512 of the Affordable Care Act, generally provides that, in accordance with regulations promulgated by the Secretary of Labor, employers must provide each employee notice of coverage options available through a Health Insurance Marketplace (also referred to as an Exchange). On May 8, 2013, the Department of Labor issued Technical Release 2013-02 provided temporary guidance on FLSA section 18B, as well as model notices.⁽¹⁾

Q1: Is it permissible for another entity (such as an issuer, multiemployer plan, or third-party administrator) to send the Notice of Coverage Options on behalf of an employer to satisfy the employer's obligations under FLSA section 18B?

Yes, an employer will have satisfied its obligation to provide the notice with respect to an individual if another party provides a timely and complete notice. The Department of Labor notes that, as explained in Technical Release 2013-02, FLSA section 18B requires employers to provide notice to all employees, regardless of whether an employee is enrolled in, or eligible for, coverage under a group health plan. Accordingly, an employer is not relieved of its statutory obligation to provide notice under FLSA section 18B if another entity sends the notice to only participants enrolled in the plan, if some employees are not enrolled in the plan. When providing notices on behalf of employers, multiemployer plans, issuers, and third party administrators should take proper steps to ensure that a notice is provided to all employees regardless of plan enrollment, or communicate clearly to employers that the plan, issuer, or third party administrator will provide notice only to a subset of employees (e.g., employees enrolled in the plan) and advise of the residual obligations of employers with respect to other employees (e.g., employees who are not enrolled in the plan).

90-day Waiting Period Limitation

PHS Act section 2708 provides that a group health plan or health insurance issuer offering group health insurance coverage shall not apply any waiting period that exceeds 90 days. Section 2704(b)(4) of the PHS Act, section 701(b)(4) of ERISA, and section 9801(b)(4) of the Code define a waiting period to be the period that must pass with respect to the individual before the individual is eligible to be covered for benefits under the terms of the plan.
On February 9, 2012, the Departments issued guidance outlining various approaches under consideration with respect to PHS Act section 2708 and solicited comments. After reviewing those comments, the Departments provided temporary guidance on August 31, 2012, to remain in effect at least through the end of 2014, regarding the 90-day waiting period limitation. This guidance also solicited comments. After consideration of all of the comments received in response to the February 2012 and August 2012 guidance, the Departments published proposed regulations on March 21, 2013.
The proposed regulations generally provide that a group health plan or health insurance issuer offering group health insurance coverage may not impose a waiting period that exceeds 90 days. The proposed rules also provide that a waiting period is the period that must pass before coverage for an employee or dependent who is otherwise eligible to enroll under the terms of the plan can become effective. For this purpose, being otherwise eligible to enroll in a plan generally means having met the plan's substantive eligibility conditions (such as being in an eligible job classification or achieving job-related licensure requirements specified in the plan's terms). However, eligibility conditions based solely on the lapse of time are permissible for no more than 90 days. Other conditions for eligibility under a plan are generally permissible unless the condition is designed to avoid compliance with the 90-day waiting period limitation. The proposed regulations provide several illustrations of how to apply this rule.⁽²⁾
The preamble to the proposed regulations stated that, in the Departments' view, the proposed rules were consistent with, and no more restrictive on employers than, the August 2012 guidance.⁽³⁾ Therefore, the Departments stated they will consider compliance with the proposed rules as compliance with PHS Act section 2708 at least through 2014.⁽⁴⁾

Q2: Will the Departments be issuing final regulations under PHS Act section 2708 that give plans and issuers sufficient time to comply with the waiting period limitation?

Yes. As stated in the proposed rules, plans and issuers can rely on guidance provided in the March 2013 proposed rules at least through 2014. To the extent final regulations are more restrictive on plans or issuers than the proposed regulations, they will not be effective prior to January 1, 2015 and the Departments expect they will give plans and issuers sufficient time to comply.⁽⁵⁾
Under the proposed rules, to the extent plans and issuers impose substantive eligibility requirements not based solely on the lapse of time, these eligibility provisions are permitted if they are not designed to avoid compliance with the 90-day waiting period limitation. Therefore, for example, if a multiemployer plan operating pursuant to an arms-length collective bargaining agreement has an eligibility provision that allows employees to become eligible for coverage by working hours of covered employment across multiple contributing employers (which often aggregates hours by calendar quarter and then permits coverage to extend for the next full calendar quarter, regardless of whether an employee has terminated employment), the Departments would consider that provision designed to accommodate a unique operating structure, (and, therefore, not designed to avoid compliance with the 90-day waiting period limitation).

Footnotes

1. See Technical Release 2013-02, model notice for employers who offer a health plan to some or all employees, and model notice for employers who do not offer a health plan, available at http://www.dol.gov/ebsa/healthreform/.
2. See paragraph (c)(3)(i) and (ii) of the proposed regulations, addressing the application of plan provisions requiring certain hours-of-service per period to variable hour employees and cumulative service requirements.
3. 78 FR 17317, March 21, 2013.
4. Id.
5. 78 FR 71313, 17317 (March 21, 2013).

HHS Delays Final Agreement With Insurers Over Federal Health Exchanges

(Reuters) — The Obama administration has delayed a step crucial to the launch of the new health care law, the signing of final agreements with insurance plans to be sold on federal health insurance exchanges starting Oct. 1.

The U.S. Department of Health and Human Services notified insurance companies on Tuesday that it would not sign final agreements with the plans between Sept. 5 and 9, as originally anticipated, but would wait until mid-September instead, according to insurance industry sources.
Nevertheless, Joanne Peters, a spokeswoman for HHS, said the department remains "on track to open" the marketplaces on time on Oct. 1.

The reason for the holdup was unclear. Sources attributed it to technology problems involving the display of insurance products within the federal information technology system.
Ms. Peters said only that the government was responding to "feedback" from the companies, "providing additional flexibility and time to handle technical requests."

Coming at a time when state and federal officials are still working to overcome challenges to the information technology systems necessary to make the exchanges work, some experts say that even a small delay could jeopardize the start of the six-month open enrollment period.
U.S. officials have said repeatedly that the marketplaces, which are the centerpiece of President Barack Obama's signature health care reform law, would begin on time.

But the Oct. 1 deadline has already begun to falter at the state level, with Oregon announcing plans to scale back the launch of its own marketplace and California saying it would consider a similar move.

Tuesday's notification by the Centers for Medicare and Medicaid Services, the HHS agency spearheading marketplace development, affects insurance plans that would be sold in federal exchanges that the administration is setting up in 34 of the 50 U.S. states. The remaining 16 states, including Oregon and California, are setting up their own marketplaces.

"It makes me wonder if open enrollment can start on Oct. 1," said a former administration official who worked to implement President Obama's health care reform.
"But having everything ready on Oct. 1 is not a critical issue. What matters to people is Jan. 1, which is when the coverage is supposed to start. If that were delayed, it would be a substantive setback."
Obama's Patient Protection and Affordable Care Act is expected to extend federally subsidized health coverage to an estimated 7 million uninsured Americans in 2014 through the marketplaces.
But insurance plans must be qualified to meet specific standards if they are to be sold on the exchanges. And each insurer must sign a contract with the federal government.

The new timetable for qualified plan agreements is the latest in a series of delays for Obamacare.
The most significant came in early July when the White House and the Treasury Department announced a one-year delay in a major Obamacare provision that would have required employers with at least 50 full-time workers to provide health insurance or pay a penalty beginning in 2014.
Legal and political opposition from Republicans and their conservative allies have already fragmented Obamacare's original vision.
 

Only about half the states have opted to expand Medicaid program for the poor to uninsured families living below the poverty level, and Republicans in Congress have denied nearly $1 billion in new implementation funding this year alone.

The Government Accountability Office cautioned in June that the law known as Obamacare could miss the Oct. 1 enrollment deadline because of missed deadlines and delays in several areas including the certification of health plans for sale on the exchanges.

Another U.S. watchdog, the HHS Office of the Inspector General, warned earlier this month that the government was months behind testing data security for the federal data hub that represents the information technology backbone of the new marketplaces.

The state of Oregon has already scaled back the Oct. 1 debut of its own health care exchange by preventing state residents from signing up for coverage on their own until mid-October. California said last week that it, too, would consider a soft launch of its exchange if tests show it is not ready to accommodate wide public access.

Oklahoma lawsuit challenging IRS health care rule can proceed

From Business Insurance

A suit filed by Oklahoma’s attorney general challenging an Internal Revenue Service rule that imposes a hefty fine on employers that don’t offer health insurance coverage and whose employees use federal premium subsidies to buy coverage through any public insurance exchange can proceed, a federal judge ruled Monday.

Last year, Oklahoma Attorney General Scott Pruitt asked a federal court to overturn the IRS rule, contending that the Patient Protection and Affordable Care Act authorizes premium subsidies only in states that have established exchanges.So far, 16 states and the District of Columbia have established exchanges. In the remaining states, the exchanges will be run by either the federal government alone or in partnership with the state.In his suit, Attorney General Pruitt said the IRS rule would result in employers facing penalties under circumstances for which the health care reform law has not provided. Under the IRS rules, if an employer does not offer coverage to at least 95% of its full-time employees and just one employee uses a federal premium subsidy to buy coverage in an exchange — state or federal — the employer is liable for a $2,000 penalty for each full-time employee, minus the first 30 employees. That penalty takes effect in 2015.In his ruling, Judge Ronald White of the U.S. District Court for the Eastern District Court of Oklahoma said Oklahoma, as an employer, rather than as a state government, has the right to challenge the employer mandate.“The court finds that the plaintiff has made sufficient allegations demonstrating standing to challenge the IRS rule in its own capacity as an employer,” he ruled.Oklahoma rejected setting up an exchange.“We’re optimistic the court will recognize what states have known for months — that the IRS disregarded the law by making the large employer mandate effective in Oklahoma or in any of the 33 other states without a state health care exchange,” Mr. Pruitt said in a statement.

To view the original article click here

Administration relaxes health law income, insurance status rule for exchanges and Marketplace Administrator Responds to "Myths"

Regulations released on July 5th, by the department of Health and Human Services include details that seem to relax the verification requirements for income and insurance status for the 16 states and the District of Columbia who will be rolling out their own exchanges for 2014. You can read details about this release in this 7/8/13 article from Business Insurance.

However in a blog post on 7/9/13 the  Exchange/Marketplace Administrator, Marilyn Tavenner attempts to clarify what she deems "myths" about the delay and the relaxed verification requirements.  Click on the link for the full post. We have included the myth/fact section she posted below:

MYTH: There will be a delay in opening the Marketplace.

FACT: We are on track to open the Marketplace on October 1, when individuals, families, and small businesses will be able to shop for quality, affordable health insurance options.


MYTH: The Marketplace won’t check income information submitted by individuals.

FACT: No matter which type of Marketplace is operating in a state, the Marketplace will always check the income information submitted by individuals against electronic income data sources such as tax filings, Social Security data, and current wage information. In most circumstances, we will request additional documentation from all affected individuals, such as when an individual does not have a tax return on file and attests to an income significantly below current wage data.
We will request additional documentation from a random sampling of individuals only in the specific circumstance when:

• Current income information is not available;
• There is a significant discrepancy between the income reported on an available tax return and the income provided by the individual; and
• The individual cannot provide an acceptable explanation for this discrepancy.

MYTH: There are no safeguards against people fraudulently qualifying for tax credits to assist with insurance premiums.

FACT: There are safeguards to ensure that individuals do not fraudulently access premium tax credits. Individuals seeking to purchase insurance in the Marketplace must attest, under penalty of perjury, that they are not filing false information. In addition to the existing penalties for perjury, the health care law applies penalties when an individual provides false or fraudulent information.
Moreover, the IRS will reconcile advance payments of the premium tax credit when consumers file their annual tax returns at the end of the year, and it will recoup overpayments and provide refunds when they occur. These safeguards all apply no matter which type of Marketplace is operating in a state.


MYTH: There is a delay in verifying offers of employer-based coverage.

FACT: For over a year, we have been clear on how we will approach verifications related to employer-based coverage. Starting as far back as April 2012, we have communicated on at least three occasions – including a white paper, the proposed rule and the final rule – our approach to conduct random samples to verify offers of employer-based coverage. The final rule only differs from the approach in the bulletin and proposed rule in that State-based Marketplaces can decide whether and how to conduct such verifications in the first year of operations.
The Federally-facilitated Marketplace will perform sample-based reviews as planned, which will provide sufficiently representative data to enable HHS to evaluate the verification process and propose changes for subsequent years if necessary.


MYTH: Electronic notices will not be required until 2015, including notices of the level of premium tax credit, for example, an applicant is eligible to receive.

FACT: There is no such delay in any Marketplace. We have offered state Medicaid and CHIP agencies flexibility in implementing electronic notices as they upgrade their eligibility and enrollment systems, but this will not affect the availability of electronic notices issued by the Marketplace.

IRS Issues Guidance on Delay on Employer Mandate

To access the document in full click here, below are salient excerpts:

This notice provides transition relief for 2014 from:

 

(1) the information reporting requirements applicable to insurers, self-insuring employers, and certain other providers of minimum essential coverage under § 6055 of the Internal Revenue Code (Code) (§ 6055 Information Reporting),

 

(2) the information reporting requirements applicable to applicable large employers under § 6056 (§ 6056 Information Reporting), and

 

(3) the employer shared responsibility provisions under § 4980H (Employer Shared Responsibility Provisions).

 

This transition relief will provide additional time for input from employers and other reporting entities in an effort to simplify information reporting consistent with effective implementation of the law.

 

This transition relief also is intended to provide employers, insurers, and other providers of minimum essential coverage time to adapt their health coverage and reporting systems. Both the information reporting and the Employer Shared Responsibility Provisions will be fully effective for 2015. In preparation for that, once the information reporting rules have been issued, employers and other reporting entities are encouraged to voluntarily comply with the information reporting provisions for 2014. This transition relief through 2014 for the information reporting and Employer Shared Responsibility Provisions has no effect on the effective date or application of other Affordable Care Act provisions.

 

 

TRANSITION RELIEF Q&A

Q-1.

 

When will the rules be published regarding § 6055 Information Reporting and § 6056 Information Reporting? How will these provisions apply for 2014?

A-1.

 

The Affordable Care Act requires information reporting under § 6055 by insurers, self-insuring employers, government agencies, and certain other parties that provide health coverage and requires information reporting under § 6056 by applicable large employers with respect to the health coverage offered to their full-time employees. Proposed rules for the information reporting provisions are expected to be published this summer. The proposed rules will reflect the fact that transition relief will be provided for information reporting under §§ 6055 and 6056 for 2014. This transition relief will provide additional time for dialogue with stakeholders in an effort to simplify the reporting requirements consistent with effective implementation of the law. It will also provide employers, insurers, and other reporting entities additional time to develop their systems for assembling and reporting the needed data. Employers, insurers, and other reporting entities are encouraged to voluntarily comply with these information reporting provisions for 2014 (once the information reporting rules have been issued) in preparation for the full application of the provisions for 2015. However, information reporting under §§ 6055 and 6056 will be optional for 2014; accordingly, no penalties will be applied for failure to comply with these information reporting provisions for 2014.

Q-2.

 

What does the 2014 transition relief for § 6056 Information Reporting mean for application of the Employer Shared Responsibility Provisions for 2014?

A-2.

 

Under the Employer Shared Responsibility Provisions, an applicable large employer generally must offer affordable, minimum value health coverage to its full-time employees or a shared responsibility payment may apply if one or more of its full-time employees receive a premium tax credit under § 36B. The § 6056 Information Reporting is integral to the administration of the Employer Shared Responsibility Provisions. In particular, because an employer typically will not know whether a full-time employee received a premium tax credit, the employer will not have all of the

information needed to determine whether it owes a payment under § 4980H. Accordingly, the employer is not required to calculate a payment with respect to § 4980H or file returns submitting such a payment. Instead, after receiving the information returns filed by applicable large employers under § 6056 and the information about employees claiming the premium tax credit for any given calendar year, the Internal Revenue Service (IRS) will determine whether any of the employer’s full-time employees received the premium tax credit and, if so, whether an assessable payment under § 4980H may be due. If the IRS concludes that an employer may owe such an assessable payment, it will contact the employer, and the employer will have an opportunity to respond to the information the IRS provides before a payment is assessed.

For this reason, the transition relief from § 6056 Information Reporting for 2014 is expected to make it impractical to determine which employers owe shared responsibility payments for 2014 under the Employer Shared Responsibility Provisions. Accordingly, no employer shared responsibility payments will be assessed for 2014. However, in preparation for the application of the Employer Shared Responsibility Provisions beginning in 2015, employers and other affected entities are encouraged to voluntarily comply for 2014 with the information reporting provisions (once the information reporting rules have been issued) and to maintain or expand health coverage in 2014. Real-world testing of reporting systems and plan designs through voluntary compliance for 2014 will contribute to a smoother transition to full implementation for 2015.

Q-3.

Does this affect employees’ access to the premium tax credit?

A-3.

No. Individuals will continue to be eligible for the premium tax credit by enrolling in a qualified health plan through the Affordable Insurance Exchanges (also called Health Insurance Marketplaces) if their household income is within a specified range and they are not eligible for other minimum essential coverage, including an eligible employer-sponsored plan that is affordable and provides minimum value.

Q-4.

 

What does this mean for other provisions in the Affordable Care Act?

A-4

This transition relief through 2014 for § 6055 Information Reporting, § 6056 Information Reporting, and the Employer Shared Responsibility Provisions has no effect on the effective date or application of other Affordable Care Act provisions, such as the premium tax credit under § 36B and the individual shared responsibility provisions under § 5000A.

Employer Mandate Delayed Until 2015

The Obama Administration has postponed the Affordable Care Act (ACA) employer mandate penalties for one year, until 2015. The Department of the Treasury announced the delay on July 2, 2013, along with a similar delay for information reporting by employers, health insurance issuers and self-funded plan sponsors.

The delay does not affect any other provision of the ACA, including individuals’ access to premium tax credits for coverage through an Exchange. The Treasury plans to issue more formal information about the delay within a week.

One-Year Implementation Delay

The employer mandate provisions of the ACA are also known as the employer shared responsibility or pay or play rules. These rules impose penalties on large employers that do not offer affordable, minimum value coverage to their full-time employees and dependents. They were set to take effect on Jan. 1, 2014.

According to the Treasury, the delay of the employer mandate was required because of issues related to the reporting requirement. With the reporting rules delayed, it would be nearly impossible to determine which employers owed penalties under the shared responsibility provisions. Therefore, these payments will not apply for 2014.

The now-delayed reporting requirements are found in Internal Revenue Code sections 6055 and 6056. These rules apply to insurers, self-insuring employers and other parties that provide health coverage, along with certain employers with respect to health coverage offered to their full-time employees. The Administration’s decision is based on concerns voiced by businesses about the complexity of the requirements and the need for more time to implement them effectively.

Effects of the Delay

The additional year will give employers time to understand the employer mandate rules, to make decisions about providing health coverage and to adapt their reporting systems, without worrying about potentially significant penalties. It is unclear how the new deadline will impact guidance that has already been issued, such as the transition relief for non-calendar year plans and the optional safe harbor for determining full-time status.

Future Guidance

The administration plans to use the additional implementation time to consider ways to simplify the new reporting requirements consistent with ACA. The Treasury also plans to discuss the rules with stakeholders, including employers that currently provide health coverage to employees, and then publish proposed rules implementing these provisions later this summer. It is the Treasury’s intention to minimize the reporting requirements.

The pay or play regulations issued earlier this year left many unanswered questions for employers. The IRS had highlighted several areas where it would be issuing more guidance. Presumably, the additional time will give the IRS and Treasury the opportunity to provide more comprehensive guidance on implementing these requirements.

Scott Benefit Services will continue to monitor developments and will keep you informed of the latest updates.