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.

HHS Issues Final Rule on PPACA's Indvidual Mandate

From Bloomberg Healthcare Blog


By Sara Hansard

People who can not afford to buy health insurance, or those who are ineligible for Medicaid based on a state's decision not to expand its program under the health care reform law, will not be fined for not having coverage under a final rule issued June 26 by the Department of Health and Human Services.


The HHS final rule on exemptions from the "shared responsibility" payments required by the Affordable Care Act was issued at the same time the Internal Revenue Service issued two related notices on transition relief from the fines and on eligibility for premium tax credit subsidies to help make coverage affordable.
Among the exemptions from the fine outlined in the HHS final rule (CMS-9958-F) is a provision excusing people if coverage offered by their employer does not meet the law's requirement for minimum value. The final rule also requires self-funded student health plans and state high-risk pools to qualify for minimum essential coverage for plan years beginning after 2014.
In 2012 the Congressional Budget Office (CBO) estimated that nearly 6 million people will have to pay about $7 billion in tax penalties under ACA because they lack health insurance in 2016. HHS cited the CBO report as well, saying that less than 2 percent of Americans are expected to owe the payments.

To view the entire final rule click here

Final Rules on Preventative Services Issueed

The Department of Labor's Employee Benefits Security Administration updated the Affordable Care Act information on its website with the following:

• Final rules regarding the Coverage of Certain Preventive Services, available at www.dol.gov/ebsa/pdf/coveragepreventiveservicesfinalrule.pdf


• HHS news release, available at http://www.hhs.gov/news/press/2013pres/06/20130628a.html

• HHS Fact Sheet: Affordable Care Act Rules on Expanding Access to Preventive Services for Women, available at http://www.hhs.gov/healthcare/facts/factsheets/2011/08/womensprevention08012011a.html

• HHS Fact Sheet: Women's Preventive Services Coverage and Non-Profit Religious Organizations, available at http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/womens-preven-02012013.html 

• Certification Form for Eligible Organizations: available at www.dol.gov/ebsa/preventiveserviceseligibleorganizationcertificationform.doc and www.dol.gov/ebsa/pdf/preventiveserviceseligibleorganizationcertificationform.pdf 

• Updated Guidance on the Temporary Enforcement Safe Harbor, issued June 28, 2013, available at http://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/preventive-services-guidance-6-28-2013.pdf

Guidance on the notice to employees of coverage

The Department of Labor's Employee Benefits Security Administration updated its Affordable Care Act web page with the following information on the notice to employees of coverage options:


• Technical Release 2013-02 - Guidance on the notice to employees of coverage options under FLSA §18B and updated model election notice under COBRA, available at http://www.dol.gov/ebsa/newsroom/tr13-02.html 

• Model notice for employers who offer a health plan to some or all employees, available at http://www.dol.gov/ebsa/pdf/FLSAwithplans.pdf

• Model notice for employers who do not offer a health plan, available at http://www.dol.gov/ebsa/pdf/FLSAwithoutplans.pdf

• COBRA model election notice, available at http://www.dol.gov/ebsa/modelelectionnotice.doc

• COBRA model election notice redline version (to show May 2013 changes), available at http://www.dol.gov/ebsa/modelelectionnoticeredline.doc

IRS Affordability Proposal Excludes Wellness Discount

On May 1st, the IRS released proposed guidance on calculating the affordability of coverage for purposes of PPACA that excludes most wellness discounts from the calculation. The exception is a wellness program that provides a discounted premium for non-tobacco users or for participation in a tobacco cessation program.

To view an article from business insurance below on the proposed guidance click here.

This guidance has been greatly anticipated and most in the industry were surprised that incentives for all types of non-tobacco wellness programs are excluded from this proposed guidance.  There does appear to be a 1-year transitional safe-harbor in the proposed guidance for employers who already had a wellness incentive in place for plan years beginning before January 1, 2015. The below excerpt is copied directly from the Federal Register.

Solely for purposes of applying section 4980H and solely for plan years of an


employer’s group health plan beginning before January 1, 2015, with respect to an

employee described in the next sentence, an employer will not be subject to an

assessable payment under section 4980H(b) with respect to an employee who received

a premium tax credit because the offer of coverage was not affordable or did not satisfy

MV, if the offer of coverage to the employee under the employer’s group health plan

would have been affordable or would have satisfied MV based on the total required

employee premium and cost-sharing for that group health plan that would have applied

to the employee if the employee satisfied the requirements of any wellness program

described in the next sentence, including a wellness program with requirements

unrelated to tobacco use. The rule in the preceding sentence applies only (1) to the

extent of the reward as of [INSERT DATE of PUBLICATION OF THIS DOCUMENT IN

THE FEDERAL REGISTER], expressed as either a dollar amount or a fraction of the

total required employee contribution to the premium (or the employee cost-sharing, as

applicable), (2) under the terms of a wellness program as in effect on [INSERT DATE of

PUBLICATION OF THIS DOCUMENT IN THE FEDERAL REGISTER], and (3) with

respect to an employee who is in a category of employees eligible under the terms of

the wellness program as in effect on [INSERT DATE of PUBLICATION OF THIS

DOCUMENT IN THE FEDERAL REGISTER] (regardless of whether the employee was

hired before or after that date). Any required employee contribution to premium

determined based upon assumed satisfaction of the requirements of a wellness

program available under this transition relief may be applied to the use of an

affordability safe harbor provided in the proposed regulations under section 4980H.

To see the actual guidance via the Federal Register please click here.