September 13, 2018 - Health Care Reform Update

Policy Effective for Tax Year 2018

The Centers for Medicare and Medicaid Services (CMS) has announced that individuals will be able to claim hardship exemptions from the Affordable Care Act's individual mandate for tax year 2018 on their 2018 federal income tax return. Previously, individuals were only permitted to claim these exemptions on their federal income tax return if first approved by the Health Insurance Marketplace. In addition, individuals claiming a hardship exemption will no longer be required to present documentary evidence or provide a written explanation of their hardship upon claiming the exemption.

Among other things, individuals are generally eligible to claim a hardship exemption for any month before, during, or after he or she:

• Experienced a fire, flood, or other natural or human-caused disaster;
• Filed for bankruptcy; or
• Had unpaid medical expenses that resulted in substantial debt.

For more information, please read the CMS announcement.

© 2018 HR 360, Inc.

August 03, 2018 - Health Care Reform Update

New Rule Loosens Current Restrictions

Effective October 2, 2018, a new rule will allow individuals to purchase short-term, limited-duration health insurance coverage for a period of less than 12 months, and renew such coverage for up to 36 months. Under current law, the maximum coverage period for short-term, limited-duration health insurance is less than 3 months, and these policies cannot be renewed.

Notably, short-term, limited-duration health insurance is:

• Not required to comply with the Affordable Care Act's ban on pre-existing condition exclusions and lifetime and annual dollar limits.
• Not required to comply with the Affordable Care Act's essential health benefits requirement, which requires individual health insurance policies to cover, among other things, hospitalizations, emergency services, and maternity care.
• Not "minimum essential coverage," meaning that policyholders may remain liable for an individual mandate penalty for any month in 2018.

Click here to read the new rule. A fact sheet is also available.

© 2018 HR 360, Inc.

July 18, 2018 - Health Care Reform Update

Overview of Employer Responsibilities for Handling Rebates

The Affordable Care Act's medical loss ratio (MLR) rules require group health insurance issuers to provide rebates if their MLR—the amount of health insurance premiums spent on health care and activities to improve health care quality—falls short of the applicable standard during a reporting year. Each year's rebates must be issued to plan sponsors by September 30 of the following year. As a result, plan sponsors should be looking for these rebates to arrive in the coming weeks. 

Employer Distribution
The MLR rules provide that issuers must pay any rebates owed to persons covered under a group health plan to the policyholder, who is then responsible for distributing the rebate to eligible plan enrollees. In general, there are several ways rebates may be distributed by plan sponsors to plan enrollees, including:

• A rebate check in the mail;
• A lump-sum reimbursement to the same account that was used to pay the premium if it was paid by credit card or debit card; or
• A direct reduction in future premiums.

In addition to the above methods, employers may also apply the rebate in a way that benefits employees. However, decisions on how to apply or expend the plan's portion of a rebate are subject to the general standards of fiduciary conduct under the federal Employee Retirement Income Security Act (ERISA).

© 2018 HR 360, Inc.

July 06, 2018 - Health Care Reform Update

Affected Employers Must File IRS Form 720

Employers that sponsor certain self-insured health plans—including some health reimbursement arrangements (HRAs) and health flexible spending arrangements (health FSAs)—are reminded that they are responsible for Patient-Centered Outcomes Research Institute (PCORI) fees. Fees for self-insured plans with plan years that ended in 2017 are due July 31, 2018, and are required to be paid via IRS Form 720, Quarterly Federal Excise Tax Return.

Employer-sponsored self-insured plans with plan years that ended between January 1, 2017 and September 30, 2017 must pay a fee of $2.26 multiplied by the average number of lives covered under the plan. Employer-sponsored self-insured plans with plan years that ended between October 1, 2017 and December 31, 2017 must pay a fee of $2.39 multiplied by the average number of lives covered under the plan. Details on how to determine the average number of lives covered under a plan are included in these regulations.

© 2018 HR 360, Inc.

June 19, 2018 - Health Care Reform Update

Rule Permits Associations Based on Industry or Geography

The U.S. Department of Labor (DOL) has issued a new rule that allows employers to join together as a single group to offer group health insurance coverage to employees, working owners (including those without other employees), and their spouses and dependents as part of an "association health plan." The rule allows association health plans to be formed on the basis of industry or geography, such as by state, city, county, or multi-state metropolitan area.

The new rule subjects association health plans to the nondiscrimination rules currently applicable to large group coverage under the Health Insurance Portability and Accountability Act (HIPAA), as amended by the Affordable Care Act (ACA). These rules prohibit discrimination based on a health factor or within groups of similarly situated individuals, but do generally permit plans to impose different eligibility provisions and costs based on bona-fide employment-based classifications, such as full-time versus part-time status.

Click here for more information from the DOL.

For more on the nondiscrimination rules applicable to group health plans, check out our Health Insurance Nondiscrimination Rules page.

© 2018 HR 360, Inc.

June 15, 2018 - Health Care Reform Update

Tool Provides Estimates Only

The Taxpayer Advocate Service—an independent organization within the Internal Revenue Service (IRS)—has developed a Employer Shared Responsibility Provision Estimator tool to assist employers in understanding how the Affordable Care Act's employer shared responsibility ("pay or play") provisions work and how the provisions may apply to them.

Employers can use the tool to determine their:

• Number of full-time employees, including full-time equivalent employees (FTEs);
• Applicable large employer (ALE) status; and
• Estimated maximum amount of potential liability for the employer shared responsibility payment ("pay or play" penalty payment).

The tool provides estimates only. As a result, employers are advised to use it only as a guide to assist in making decisions regarding their tax situation.

© 2018 HR 360, Inc.

June 01, 2018 - Health Care Reform Update

Employers Have Opportunity to Respond Before 'Pay or Play' Penalty Assessment

The Internal Revenue Service (IRS) is currently issuing Letter 226-J to certain applicable large employers (ALE)—generally those with at least 50 full-time employees, including full-time equivalent employees, on average during the prior year—it believes owe a penalty for failing to comply with the Affordable Care Act's employer shared responsibility provisions ("pay or play" provisions). In conjunction with Letter 226-J, employers will receive Form 14764, which they can use to respond to Letter 226-J. Employers who submit Form 14764 to the IRS will generally receive one of 4 letters back:

• Letter 227-J, which acknowledges receipt of Form 14764 and the employer's agreement to pay the penalty;
• Letter 227-K, which acknowledges receipt of Form 14764 and shows that the penalty has been nullified;
• Letter 227-L, which acknowledges receipt of Form 14764 and shows that the penalty has been revised; or
• Letter 227-M, which acknowledges receipt of Form 14764 and shows that the penalty amount did not change.

For more information on IRS "pay or play" penalty letters, click here.

© 2018 HR 360, Inc.

May 21, 2018 - Health Care Reform Update

Percentage Up from 2018

Under the employer shared responsibility ("pay or play") provisions of the Affordable Care Act, applicable large employers—generally those who had 50 or more full-time employees (including full-time equivalent employees)—may be subject to a penalty if they do not offer affordable coverage that provides minimum value to their full-time employees and their dependents. For plan years beginning in 2019, the Internal Revenue Service has announced that coverage will generally be considered affordable if the employee's required contribution for the lowest cost self-only health plan offered is 9.86% or less of his or her household income for the taxable year. For plan years beginning in 2018, the applicable percentage is 9.56%.

Given that employers are unlikely to know an employee's household income, they may use a number of safe harbors to determine affordability, including reliance on Form W-2 wages.

© 2018 HR 360, Inc.

May 17, 2018 - Health Care Reform Update

Employers May Apply a Reasonable, Good Faith Interpretation of the Term 'Seasonal Worker'

Employers looking to hire seasonal workers this summer are reminded that there is an exception when measuring workforce size to determine whether they are an applicable large employer (ALE) subject to the Affordable Care Act's employer shared responsibility ("pay or play") provisions.

What Is 'Pay or Play'?
The pay or play provisions require ALEs—generally those with at least 50 full-time employees, including full-time equivalent employees (FTEs)—to offer affordable health insurance that provides a minimum level of coverage to full-time employees (and their dependents) or pay a penalty tax if any full-time employee is certified to receive a premium tax credit for purchasing individual coverage on the Health Insurance Marketplace (Exchange).

Seasonal Worker Exception
If an employer's workforce exceeds 50 full-time employees (including FTEs) for 120 days or less (or 4 calendar months) during the preceding calendar year, and the employees in excess of 50 who were employed during that period were seasonal workers, the employer is not considered an ALE for the current calendar year. A seasonal worker for this purpose is an employee who performs labor or services on a seasonal basis (e.g., retail workers employed exclusively during holiday seasons are seasonal workers).

Seasonal Worker Versus Seasonal Employee
While the terms "seasonal worker" and "seasonal employee" are both used in the pay or play provisions, only the term "seasonal worker" is relevant for determining whether an employer is considered an ALE. For this purpose, employers may apply a reasonable, good faith interpretation of the term "seasonal worker." For more information on the difference between a seasonal worker and a seasonal employee under pay or play, please refer to IRS Pay or Play Q&A #26.

© 2018 HR 360, Inc.

April 26, 2018 - Health Care Reform Update

Employers Should Correct Errors As Soon As Possible

Although the deadlines for employers to file and furnish their 2017 Forms 1094-C & 1095-C have passed, employers should confirm the accuracy of these forms and correct any errors on them soon to avoid noncompliance penalties.

To correct the paper version of the original Form 1094-C filed with the IRS, employers generally should:

• Prepare a Form 1094-C including the correct information
• Enter an "X" in the CORRECTED checkbox at the top of the form
• File the corrected Form 1094-C with the IRS

To correct the paper version of a Form 1095-C, employers generally should:

• Prepare a new Form 1095-C
• Enter an "X" in the CORRECTED checkbox at the top of the new Form 1095-C
• File the corrected Form 1095-C, along with a non-authoritative Form 1094-C (DO NOT mark the CORRECTED checkbox on the Form 1094-C), with the IRS
• Furnish the employee a copy of the corrected Form 1095-C

For more information on correcting errors, see the 2017 Instructions for Forms 1094-C and 1095-C.

© 2018 HR 360, Inc.

April 19, 2018 - Health Care Reform Update

Policies Renewed Under Extended Transitional Policy Must End by December 31, 2019

A previously extended transitional policy which allows health insurance issuers, at their option, to continue group coverage that would otherwise be terminated or cancelled has been further extended to policy years beginning on or before October 1, 2019, provided that all policies end by December 31, 2019. Health insurance issuers that renew coverage under the extended policy are required to provide standard notices to affected small businesses for each policy year.

Policies subject to the transitional relief will not be considered to be out of compliance with key Affordable Care Act provisions, including:

• The requirement to cover a core package of items and services known as essential health benefits;
• The requirement that any variations in premiums be limited with regard to a particular plan or coverage to age, tobacco use, family size, and geography;
• The requirements regarding guaranteed availability and renewability of coverage; and
• The requirements relating to coverage for individuals participating in approved clinical trials.

Click here to review the extended transitional policy.

© 2018 HR 360, Inc.

April 10, 2018 - Health Care Reform Update

HHS Issues Key Rule for 2019

A new rule from the U.S. Department of Health and Human Services (HHS) addresses, among other things, the requirement under the Affordable Care Act that non-grandfathered group health plans limit annual out-of-pocket cost-sharing for coverage of essential health benefits under the plan. Under the rule, these out-of-pocket expenses may not exceed $7,900 for self-only coverage or $15,800 for family coverage in 2019.

© 2018 HR 360, Inc.

April 10, 2018 - Health Care Reform Update

Rule Effective for Plan Year 2018

The U.S. Department of Health and Human Services (HHS) has issued a new rule that allows employers to directly enroll in SHOP (Small Business Health Options Program) coverage through a SHOP-registered agent or broker. This enrollment approach is now generally available in federally-facilitated SHOPs (FF-SHOPs), including state-based Exchanges using the federal platform for SHOP, for plan years beginning on or after January 1, 2018. State-based Exchanges operating their own SHOPs can also adopt this new approach.

For more information, please contact the SHOP that applies in your state.

© 2018 HR 360, Inc.

March 27, 2018 - Health Care Reform Update

IRS Electronic Filing Deadline is April 2

With the April 2 deadline to electronically file Forms 1094 & 1095 with the Internal Revenue Service (IRS) approaching, employers are reminded that failing to comply with these information reporting requirements may result in significant penalties. These penalties are as follows:

• Employers that fail to file correct information returns with the IRS and furnish correct payee statements are generally subject to a $260 penalty for each return for which such failure occurs, with a maximum annual penalty of over $3 million.
• Employers that file correct returns and furnish correct statements on or before 30 days after the required filing date are generally subject to a $50 penalty for each return for which such failure occurs, with a maximum annual penalty of over $500,000.
• Employers that file correct returns and furnish correct statements beyond 30 days after the required filing date but on or before August 1, 2018 are generally subject to a $100 penalty for each return for which such failure occurs, with a maximum annual penalty of over $1 million.

© 2018 HR 360, Inc.

March 16, 2018 - Health Care Reform Update

Company Size Impacts Application of "Pay or Play"

Employers are reminded that it is important to know how many full-time employees they have in order to ensure compliance with the employer shared responsibility provisions ("pay or play") of the Affordable Care Act, which apply only to applicable large employers (ALEs).

Determining ALE Status
Whether an employer is considered an ALE for a particular calendar year depends on the size of its workforce during the preceding calendar year. For example, employers will use information about the size of their workforce during 2017 to determine if their company is an ALE for 2018. Employers with an average of at least 50 full-time employees in the preceding calendar year—including full-time equivalent employees (FTEs)—are generally deemed ALEs for the current calendar year.

Identifying Full-Time Employees
In general, for purposes of pay or play: 

• A full-time employee is, for a calendar month, an employee who is employed on average at least 30 hours of service per week (130 hours of service in a calendar month is treated as the monthly equivalent of at least 30 hours of service per week).
• A full-time equivalent employee is a combination of employees, each of whom individually is not a full-time employee, but who, in combination, are equivalent to a full-time employee.

For additional rules on determining who is a full-time employee, including what counts as an hour of service, click here.

© 2018 HR 360, Inc.

March 09, 2018 - Health Care Reform Update

Changes May Impact Amount of Premium Tax Credit

Individuals with coverage through the Health Insurance Marketplace who are receiving advance payments of the premium tax credit—which are paid directly to insurance companies to lower monthly premiums—that certain changes in their income or family size may affect the credit. As a result, if circumstances have changed for such individuals, it would be prudent to perform a "mid-year checkup" via the IRS's Premium Tax Credit Change Estimator to determine if they need to adjust the premium tax credit they are currently receiving. Performing a checkup now will help individuals avoid large differences between the advance credit payments made on their behalf and the amount of the credit they are allowed when they file their tax returns next year.

Reporting Changes in Circumstances
The estimator tool does not report changes in circumstances to the Marketplace. To report changes and adjust the amount of advance payments of the credit, individuals must contact their Marketplace. Changes that should be reported to the Marketplace include:

• An increase or decrease in an individual's income;
• Marriage or divorce;
• The birth or adoption of a child;
• Starting a job that provides health insurance;
• Gaining or losing eligibility for other health care coverage; or
• Changing residences.

© 2018 HR 360, Inc.