McConnell Pulls Plug on Latest ACA Repeal/Replacment Effort

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McConnell Pulls Plug on Latest ACA Repeal/Replacement Effort

Employee Benefits

September 27, 2017

 

Tuesday afternoon Senate Majority Leader Mitch McConnell announced that they would not vote on Graham-Cassidy, effectively ending the GOP’s hopes of repealing and replacing the Affordable Care Act (ACA) this year. Graham-Cassidy, which was thought to be a non-starter just a couple of months ago, picked up significant steam in the last few weeks as GOP lawmakers faced the reality of their time to repeal and replace the ACA running out. Time was short because the Senate Parliamentarian ruled that the current push to repeal and replace with a simple majority (a process called budget reconciliation) had to end with the current fiscal year on September 30. With this short window of time, Graham and Cassidy pushed hard to get their bill to the floor for a vote and GOP leadership worked with the Congressional Budget Office (CBO) to fast-track a score on the bill (a requirement under budget reconciliation).  

Even with the compressed time frame and energy behind the push, similar to the last attempt in July, the GOP simply couldn’t get it over the hump. This time they were unable to even bring the bill to the floor for a vote. The three Senators that effectively killed this bill were Rand Paul, Susan Collins and John McCain, who put the final nail in the coffin of the previous repeal and replacement attempt in July. All three had different grievances with the bill:  Paul felt that it retained too many taxes and regulations of the ACA, McCain simply wanted the process to look more like “regular order” and Collins has never been comfortable with the various cuts in any of the GOP repeal and replacement attempts.

While the GOP attempt to repeal and replace the ACA seems dead for now, there is already talk of reviving the attempts in the not too distant future. This could be done by providing reconciliation instructions in either the 2018 or 2019 budget resolutions for health care (along with tax reform at some point) that would unlock the budget reconciliation option and the simple majority requirement again. Senators Lindsay Graham and Ron Johnson, who sit on the tax committee, have both already stated that if they were not able to pass a repeal/replace bill before the deadline of September 30, they will not vote for a budget unless it includes reconciliation instructions for healthcare reform and tax reform

We will continue to keep our ear to the ground and keep you posted on all things healthcare reform in the coming months.

Senate Releases Draft Health Care Bill

On Thursday the Senate released a "Discussion Draft" of the Better Care Reconciliation Act (BCRA).  To view the draft you can click here.  At this point the bill is still open for amendments and awaiting a CBO score at the beginning of next week. This means that what is in the existing draft bill will most likely change prior to what is expected to be a vote before the Senate leaves for the July 4th recess next week.

As currently written there are many similarities with the AHCA which was passed last month by the House, but there are some differences as well. (To see our review of the house bill you can click here).

The major differences from the AHCA in this draft bill are:

-No version of an individual mandate (the AHCA would allow insurers to apply a 30% surcharge to premium if an insured had a certain gap in coverage). 

-The pull back of funding for Medicaid expansion is drawn out a little longer, but it appears that the long term funding for Medicaid will be lower than the AHCA proposed.

-The tax credits would be different, capping out at 350% of the poverty level and being tied to a 58% actuarial value plan (the ACA credits were tied to a 70% plan and the AHCA were only age based).  The BCRA does seem to correct the coverage glitch for non-Medicaid expansion states that will allow those at the low end of the poverty level not currently eligible for either Medicaid or a subsidy in the exchange to receive some assistance.

As with the AHCA there are really no adverse impacts to employer-sponsored plans.  The employer mandate would go away which would remove the requirements to offer coverage to all employees averaging more than 30 hours a week. There are enhancements to HSAs which would be favorable to those employers who offer HDHP plans and their employees are eligible for HSAs.  The ACA premium subsidies would stay in place in 2018 and 2019 so many of the existing reporting requirements would most likely stay in place, at least in some capacity.  Moving forward subsidies would continue to be contingent on not having an offer of employer sponsored coverage, so some reporting requirements will most likely remain long term.

Once the bill is finalized and we are confident about the content we will provide some additional updates in the form of blog posts and a webinar.  Stay tuned.

Speaker Ryan Pulls the ACHA Off the Floor Prior to a Vote - The ACA Remains "Law of the Land for the Foreseeable Future"

Around 3:30pm on Friday the House Speaker Paul Ryan came to the conclusion that the GOP didn’t have the votes in the House of Representatives to pass the American Health Care Act and pulled it off the floor prior to a vote.    

This followed a very tumultuous three weeks for the legislation. This included multiple amendments, a CBO score that showed 24 million more people would be uninsured under the law  and what was perceived as rushed committee mark-up meetings and votes to keep the legislation moving forward.

In a prepared statement late Friday, Speaker Ryan acknowledged that the ACA is the “law of the land for the foreseeable future”.  Different lawmakers have different opinions as to how quickly they will pick back up with the effort to repeal and replace the ACA, but most think it will not be an immediate priority. 

President Trump, in press availability shortly after the bill was pulled was asked what’s next on his agenda. He stated “We'll probably be going right now for tax reform, which we could have done earlier, …So now we're going to go for tax reform, which I've always liked.”

That certainly seems to indicate that at least in the short term the ACA will continue to remain in place.  This means employers need to refocus their attention on the ACA and the various requirements that many thought might be going away under the AHCA.

Here are a few things to keep in mind as we move forward with the ACA as the law of the land:

•       Medical Device Excise Tax comes back in 2018

•       Health Insurer Tax comes back in 2018

•       PCORI fees continue through 2019

•       Cadillac Tax set to go into effect in 2020

•       All existing reporting requirements stand

•       All existing notice requirements stand

•       Must continue to offer coverage to those averaging more than 30-hours per week or face penalty

•       Nondiscrimination for fully insured plans TBD

•       Auto-enrollment provision was repealed

 

Stay tuned as Scott Benefit Services will continue to keep you posted with any changes and updates going on in the world of healthcare reform.   

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.

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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 insuranceSection 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.

 Subtitle:  
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 FundSection 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.

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.

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:

 

 

THE WHITE HOUSE

Office of the Press Secretary

For Immediate Release January 20, 2017

Read More

EXECUTIVE ORDER

- - - - - - -

MINIMIZING THE ECONOMIC BURDEN OF THE PATIENT PROTECTION AND AFFORDABLE CARE ACT PENDING REPEAL

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

2

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.

DONALD J. TRUMP

THE WHITE HOUSE,

January 20, 2017.

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.

 

 

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.

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.

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.  

 

http://thehill.com/policy/healthcare/264980-house-passes-obamacare-repeal-sending-measure-to-obamas-desk 

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.

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.

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.

 

Final 2015 forms for 6055 & 6056 reporting

The IRS has issued final 2015 forms for 1094-B, 1095-B, 1094-C and 1095-C for the 6055 & 6056 reporting due in the first quarter of 2016.

Form 1094-B,Transmittal of Health Coverage Information Return:   http://www.irs.gov/pub/irs-pdf/f1094b.pdf

 

Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Return: http://www.irs.gov/pub/irs-pdf/f1094c.pdf

 

Form 1095-B, Health Coverage: http://www.irs.gov/pub/irs-pdf/f1095b.pdf

 

Form 1095-C, Employer Provided Health Insurance Offer and Coverage:

  http://www.irs.gov/pub/irs-pdf/f1095c.pdf 

Supreme Court Verdict: Subsidies Through Federal Exchanges Will Stand

On Thursday morning the Supreme Court ruled in a 6-3 decision that subsidies provided to individuals through a Federal exchange would stand. This is a win for the Obama administration who felt that the case never should have made it to this point. Earlier this month after the G7 Summit in Krun, Germany the President stated the following:

"And so this should be an easy case. Frankly, it probably shouldn’t even have been taken up. And since we’re going to get a ruling pretty quick, I think it’s important for us to go ahead and assume that the Supreme Court is going to do what most legal scholars who’ve looked at this would expect them to do."

This morning the president got his wish, with only the most conservative members of the court  - Justices Scalia, Thomas and Alito - dissenting from the majority ruling.  Chief Justice Roberts penned the majority opinion which can be accessed by clicking here.

In the opinion the Chief Justice acknowledges that the wording is ambiguous, however states:

"the statutory scheme compels us to reject petitioners' interpretation because it would destabilize the individual insurance market in any state with a federal exchange, and likely create the very 'death spirals' that Congress designed the act to avoid,"

In his dissenting opinion Justice Scalia made his position quite clear:

"Under all the usual rules of interpretation... the government should lose this case," Scalia writes. "But normal rules of interpretation seem always to yield to the overriding principle of the present court: The Affordable Care Act must be saved."

So now, after the years of drama and waiting there will be no change to the structure and administration of the ACA subsidies.  This is good news to the nearly 6.4 million Americans that are currently receiving subsidies in the 34 exchanges being administered by the Federal government. The Kaiser Family Foundation estimates that there were $1,737,476,989  of monthly subsidy dollars at risk.

From an employer perspective it will continue to be business as usual. PCORI fees and Transitional Reinsurance fees will be due later this year and the new reporting requirements under sections 6055 & 6056 of the law have companies scrambling to find a solution to comply in the first quarter of 2016.

With the ruling now in the rear view mirror, the republican congress will likely now attempt to challenge specific aspects of the law, such as the medical device excise tax, 30-hour threshold for full-time employees and the Cadillac tax to name a few.

Greg Stancil is the Director of Healthcare Reform for Scott Insurance

IRS releases draft of 2015 forms for 6055-6056 reporting

Fortunately for employers and vendors who have already started gathering data for the 2015 reporting there are very few changes to the forms.

The main forms that will be utilized by employers are the 1094-C and 1095-C forms. The 1094-C is unchanged and the 1095-C just has one additional voluntary field.  

A link to the forms is provided below:

Form 1094-B,Transmittal of Health Coverage Information Return:  http://www.irs.gov/pub/irs-dft/f1094b--dft.pdf 

Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Return: http://www.irs.gov/pub/irs-dft/f1094c--dft.pdf

Form 1095-A, Health Insurance Marketplace Statement: http://www.irs.gov/pub/irs-dft/f1095a--dft.pdf

Form 1095-B, Health Coverage: http://www.irs.gov/pub/irs-dft/f1095b--dft.pdf

 Form 1095-C, Employer Provided Health Insurance Offer and Coverage:

 http://www.irs.gov/pub/irs-dft/f1095c--dft.pdf  

FAQ on Reporting Requirements

Yesterday the IRS released an FAQ on the reporting requirements under sections 6055 & 6056.  Click here to read the FAQ.

Click here to view the webinar we conducted earlier in the year on the reporting requirements.

King v/s Burwell Update

Update from Greg Stancil, Director of PPACA Compliance:

The oral arguments in the Supreme Court were held this morning. As I previously stated, the two swing votes should be with Justice Kennedy and Chief Justice Roberts.

Based on my review of coverage of the hearings the Chief Justice played his cards fairly close to the vest and didn’t seem to indicate which way he was leaning. He only asked a few questions.

Justice Kennedy asked questions of both sides and made the statement that:

limiting access to the tax credits to 16 states  — to states with PPACA exchanges established by the states, rather than the U.S. Department of Health and Human Services (HHS)  — would create a “serious constitutional problem.”

I’m not sure that necessarily shows which way he will vote, however Wall Street’s reaction seemed to indicate that they felt like the hearing went well for the administration,  as hospital stocks rose more than any other stocks on the S&P as of 12:00pm today.  A ruling against the administration in King v/s Burwell was is in Wall Street’s opinion a big threat to hospital stocks. So in reading the tea leaves (or the ticker) it seems they feel like the administration fared well.

The court is expected to rule in June.

Initial "Cadillac Tax" Guidance Released

The Internal Revenue Service released initial guidance on the Affordable Care Act's "Cadillac Tax" which is set to take effect in 2018.  The IRS says that  Notice 2015-16 (http://www.irs.gov/pub/irs-drop/n-15-16.pdf) is intended to “initiate and inform the process of developing regulatory guidance” and addresses several aspects of the Cadillac tax relating to: (1) the definition of applicable coverage; (2) the determination of the cost of applicable coverage; and (3) the application of the annual statutory dollar limit to the cost of applicable coverage.   

 

The IRS anticipates issuing another notice, before the publication of proposed regulations, describing potential approaches to a number of issues not addressed in Notice 2015-16, including procedural issues relating to the calculation and assessment of the excise tax.