Individual Marketplace Open Enrollment Begins Nov. 1, SHOP Enrollment With No Minimum Participation Rate Begins Nov. 15

Individuals and eligible small employers should be aware of two important enrollment dates for the federal Individual Health Insurance Marketplace and Small Business Health Options Program (SHOP) Marketplace. Next month, individuals will begin open enrollment for 2018, and small businesses will be given a chance to enroll in SHOP coverage without meeting certain requirements.

Individual Marketplace Open Enrollment Period
The 2018 open enrollment period to obtain coverage in the Individual Marketplace runs from November 1, 2017 through December 15, 2017, with coverage starting January 1, 2018. After this period, individuals can enroll or change plans only if they qualify for a special enrollment period.

SHOP Marketplace Enrollment
While eligible small employers do not have to wait for an open enrollment period and can start offering SHOP coverage to their employees at any time of the year, from November 15 through December 15 these employers will not have to meet their state's Minimum Participation Rate (MPR) in order to be eligible to purchase coverage. In general, employers can use the SHOP Marketplace to purchase coverage if they:

• Have 50 or fewer full-time equivalent employees (although some states may make the SHOP Marketplace available to businesses with up to 100 employees);
• Have an office or employee work site within the state whose SHOP Marketplace the employer wishes to use;
• Offer coverage to all of their full-time employees (generally those working an average of 30 hours or more per week); and
• Meet the applicable MPR requirement (in most states, at least 70% of full-time employees must enroll to satisfy this requirement).

Click here to view SHOP Marketplace tools, fact sheets, how-to guides, and other resources for employers.

Cuts to Take Effect Immediately

The Trump administration announced yesterday that it will no longer make cost-sharing reduction (CSR) payments to insurance companies under the Affordable Care Act (ACA). According to a statement issued by the U.S. Department of Health and Human Services (HHS), the agency's decision to discontinue these payments immediately follows a legal review by HHS, the Department of Treasury, the Office of Management and Budget, and an opinion from the U.S. Attorney General. 

Background
The ACA requires insurers to offer plans with reduced deductibles, copayments, and other means of cost sharing to eligible individuals who purchase plans through the Health Insurance Marketplace. In turn, insurers receive CSR payments arranged by the Secretary of HHS to cover the costs they incur because of this requirement. Whether CSR payments were properly appropriated by Congress has been the subject of litigation since 2014.

To read the HHS statement, click here. 

ACA Requirements Remain In Effect Pending Further Guidance or Legislation

President Trump has signed an executive order calling upon federal agencies to consider expanding health care options in 3 major areas to potentially increase competition and lower costs. Until further guidance is issued or legislation is signed, however, all current ACA requirements remain in effect, including penalties for noncompliance.

The following are key highlights of the order:

• Association Health Plans (AHPs): The executive order directs the U.S. Department of Labor to consider expanding access to AHPs, which could potentially allow employers to form groups across state lines.
• Short-Term, Limited Duration Insurance (STLDI): The executive order directs federal agencies to consider ways of expanding coverage through low-cost STLDI, which is not subject to certain ACA rules.
• Health Reimbursement Arrangements (HRAs): HRAs are tax-advantaged, employer-established arrangements that allow eligible employees to be reimbursed for qualified medical expenses. The executive order directs federal agencies to consider changes to the rules regulating HRAs to increase their usability, expand employers' ability to offer them to employees, and allow them to be used in conjunction with nongroup coverage.

For more information on this executive order, click here.

Note: In general, executive orders must be implemented in a manner consistent with applicable law, including the Administrative Procedure Act, which requires extended review of and public comment on any federal rules which may be proposed as a result of an executive order. Going forward, we will promptly report changes made to any ACA requirements.

New Rules Expand Exemptions Based on Religious and Moral Objections

Effective as of October 6, 2017, two companion interim final rules issued by the U.S. Departments of Health and Human Services, Treasury, and Labor expand exemptions related to the Affordable Care Act requirement that non-grandfathered group health plans provide coverage without cost-sharing for contraceptive services (referred to as the "contraceptive mandate"). Previously, the contraceptive mandate was subject to exemptions for religious employers and accommodations for certain other non-profit religious organizations and closely held for-profit entities with sincerely held religious beliefs against certain contraceptives. 

Expanded Exemptions
The new rules exempt entities that object to establishing, maintaining, providing, offering, or arranging (as applicable) coverage, payments, or a plan that provides coverage or payments for some or all contraceptive services based on their sincerely held religious beliefs or moral convictions. For this purpose, the term "contraceptive services" includes contraceptive or sterilization items, procedures, or services, or related patient education or counseling.

• Religious Exemption. This exemption applies to non-governmental plan sponsors—including non-profit organizations and for-profit entities (whether or not they are closely held or publicly traded)—that object based on sincerely held religious beliefs.
• Moral Exemption. This exemption includes the plans of plan sponsors that are non-profit entities, as well as for-profit entities that have no publicly traded ownership interests (as defined under the law).

Disclosure Requirements
Exempt entities will not be required to comply with a self-certification process. However, where an exemption applies and all or a subset of contraceptive services are omitted from a plan's coverage, otherwise applicable ERISA disclosures must reflect the omission of coverage in ERISA plans.

For more information on the interim final rules, please click here.

Fee Applies to Certain Self-Insured Plans

The Internal Revenue Service (IRS) recently announced an increase in the applicable dollar amount used to determine the Patient-Centered Outcomes Research Institute (PCORI) fee for plan years that end on or after October 1, 2017 and before October 1, 2018. As a reminder, employers sponsoring certain self-insured plans are responsible for the PCORI fee.

Fee Increase
For plan years ending on or after October 1, 2017 and before October 1, 2018, the fee for an employer sponsoring an applicable self-insured plan is $2.39 multiplied by the average number of lives covered under the plan. PCORI fees for plan years that end between October 1, 2017 and December 31, 2017 will be due to the IRS in July 2018. 

Click here to read the IRS notice announcing the increase. Details on how to determine the average number of lives covered under a plan are included in these regulations.

Used for Reporting in Early 2018

The IRS has released the final 2017 Instructions for Forms 1094-B, 1095-B, 1094-C, and 1095-C to help employers prepare for calendar year 2017 Affordable Care Act (ACA) information reporting. Employers will use the final versions of the forms and instructions in early 2018 to report on health coverage offered (or not offered) in the 2017 calendar year.

Key Changes for 2017 Reporting
The 2017 instructions differ from the 2016 instructions as follows:

• Instructions to Forms 1094-C and 1095-C: The final instructions have been revised to remove discussion of section 4980H transition relief, as none is available for 2017.
• Instructions to Forms 1094-B and 1095-B: While no significant form revisions are listed in the instructions, the "Additional Information" section refers reporting entities to regulations relating to the requirement to solicit the taxpayer identification number (TIN) of each covered individual (including available penalty relief for failure to report a TIN if certain regulatory requirements are satisfied).

2017 Forms
The following forms are now available for calendar year 2017 reporting:

• Form 1094-B (transmittal)
• Form 1095-B 
• Form 1094-C (transmittal)
• Form 1095-C  

Information Reporting Deadlines
The upcoming deadlines for submitting Forms 1094 and 1095 are as follows:

• Applicable large employers (ALEs)—generally those with 50 or more full-time employees, including full-time equivalents—must file Forms 1094-C and 1095-C with the IRS no later than February 28, 2018 (or April 2, 2018, if filing electronically). ALEs must also furnish a Form 1095-C to all full-time employees by January 31, 2018.
• Self-insuring employers that are not considered ALEs, and other parties that provide minimum essential coverage, must file Forms 1094-B and 1095-B with the IRS no later than February 28, 2018 (or April 2, 2018, if filing electronically). A Form 1095-B must also be furnished to "responsible individuals" (may be the primary insured, employee, former employee, or other related person named on the application) by January 31, 2018.

Special Enrollment Periods Available for 2017 Marketplace Coverage

As a result of Hurricanes Harvey, Irma, and Maria, the Centers for Medicare & Medicaid Services (CMS) will make available special enrollment periods for certain individuals seeking health plans offered through the Federal Health Insurance Marketplace (Exchange). In general, these special enrollment periods are available to residents of Florida, Georgia, Louisiana, South Carolina, and Texas.

Special Enrollment Period Details
The special enrollment periods created by CMS will allow individuals impacted by the storms to select a new 2017 Marketplace plan or make changes to their existing 2017 plan at any time through December 31, 2017. Specifically, there will be special enrollment periods for individuals who:

• Experienced a special enrollment period qualifying event between 60 days prior to the start date of the incident designated by the Federal Emergency Management Agency (FEMA) and December 31, 2017, but were unable to complete the application, plan selection, and enrollment process due to a hurricane-related weather event in 2017; or
• Reside in or move from areas affected by a hurricane in 2017.

These special enrollment opportunities are in addition to the annual open enrollment period this fall and any other enrollment period for which the individual may be eligible.

Additional details on these special enrollment periods can be found here.

Payment Due November 15 for Contributing Entities Opting for Two-Part Contribution

The second transitional reinsurance contribution payment for the 2016 benefit year is due by November 15, 2017, for issuers and certain self-insured group health plans (referred to as "contributing entities") that did not previously pay the entire 2016 benefit year contribution in one payment. The contributions are part of the three-year Transitional Reinsurance Program established by the Affordable Care Act.

Reinsurance Contribution Process

The Transitional Reinsurance Program began in 2014 and continued through 2016, and required contributing entities to make contributions to support payments to individual market issuers that cover high-cost individuals. For the 2016 benefit year, contributing entities were given the option to either: 

1. Pay the entire 2016 benefit year contribution in one payment (no later than January 17, 2017 reflecting $27.00 per covered life); or
2. Make two separate payments, with the first remittance due by January 17, 2017 reflecting $21.60 per covered life, and the second remittance due by November 15, 2017 reflecting $5.40 per covered life.

Click here for more on the Transitional Reinsurance Program.

Certain Notices Must Be Distributed Around Open Enrollment

A company's open enrollment period can be a hectic time for management, HR, and employees alike. However, during the enrollment process, employers should remember their disclosure obligations. Below are five key notices that must be distributed to employees around the open enrollment period:

1. Summary Plan Description (SPD): An SPD must generally be distributed to group health plan participants within 90 days after the employee becomes a plan participant. Click here for more on the SPD requirement.
2. Summary of Benefits and Coverage (SBC): An SBC must generally be provided to group health plan participants and beneficiaries prior to initial enrollment in, or upon renewal of, plan coverage. Click here to access an SBC template.
3. Employer CHIP Notice: The Employer CHIP Notice must be provided to all employees that reside in states with group health plan premium assistance, annually before the start of each plan year. Click here to download a model Employer CHIP Notice.
4. Notice of Special Enrollment Rights: This notice must be provided to all employees eligible to enroll in the employer's group health plan, at or before the time the employee is initially offered the opportunity to enroll. Click here to access a model Notice of Special Enrollment Rights (see page 3, also marked as page 138).
5. Medicare Part D Creditable or Non-Creditable Coverage Notice: This notice must generally be distributed before October 15 to all Medicare-eligible individuals who are offered prescription drug coverage under the employer's group health plan. Click here to access model versions of the creditable and non-creditable coverage notices.

Note: Additional notice requirements may apply depending on the particular features of the group health plan.

Noncompliance Penalties as High as $3,390 Per Full-Time Employee    

Despite recent attempts in Congress to "repeal and replace" the Affordable Care Act (ACA) and President Trump's executive order calling for executive agencies to minimize the ACA's regulatory burden, penalties for failing to comply with the ACA's employer shared responsibility ("pay or play") provisions remain in effect.

In general, an applicable large employer (ALE)—generally one with at least 50 full-time employees, including full-time equivalent employees (FTEs)—will owe a "pay or play" coverage penalty for calendar year 2017 under either of these scenarios:

• ALE does not offer coverage to at least 95% of its full-time employees (and their dependents), and at least one full-time employee receives a premium tax credit to purchase individual coverage through the Health Insurance Marketplace. Under this scenario, an ALE will generally owe a penalty of $2,260 per full-time employee.
• ALE offers coverage to at least 95% of its full-time employees (and their dependents), but at least one full-time employee receives a premium tax credit to purchase individual coverage through the Health Insurance Marketplace because he or she was not offered coverage that was affordable or provided minimum value, as defined by federal regulations. Under this scenario, an ALE will generally owe a penalty of $3,390 for each full-time employee that received a premium tax credit.

Employers seeking more information on "pay or play" compliance should read the Internal Revenue Service's recently updated Q&As. 

Final Forms 1094 and 1095 Not Yet Available

Employers subject to the Affordable Care Act's (ACA) information reporting requirements are reminded that the 2018 deadlines for reporting coverage provided in calendar year 2017 are currently as follows:

• Applicable large employers (ALEs)—generally those with 50 or more full-time employees, including full-time equivalents—must file Forms 1094-C and 1095-C with the IRS no later than February 28, 2018 (or April 2, 2018 if filing electronically). ALEs must also furnish a Form 1095-C to all full-time employees by January 31, 2018.
• Self-insuring employers that are not considered ALEs, and other parties that provide minimum essential coverage, must file Forms 1094-B and 1095-B with the IRS no later than February 28, 2018 (or April 2, 2018, if filing electronically). These entities are also required to furnish a Form 1095-B to "responsible individuals" (may be the primary insured, employee, former employee, or other related person named on the application) by January 31, 2018.

Note: The final Forms 1094 & 1095 for calendar year 2017 reporting are not yet available from the IRS.

Final Instructions to be Released Later

The IRS has released the 2017 Draft Instructions for Forms 1094-B, 1095-B, 1094-C, and 1095-C to help employers and insurers prepare for calendar year 2017 Affordable Care Act (ACA) information reporting. Employers and insurers will use the final versions of the forms and instructions in early 2018 to report on health coverage offered (or not offered) in the 2017 calendar year.

Key Proposed Changes for 2017 Reporting
The 2017 draft instructions differ from the 2016 instructions as follows:

• Draft Instructions to Forms 1094-C and 1095-C: The draft instructions have been revised to remove discussion of section 4980H transition relief, as none is available for 2017.
• Draft Instructions to Forms 1094-B and 1095-B: While no significant form revisions are listed in the draft instructions, the "additional information" section refers reporting entities to regulations relating to the requirement to solicit the TIN of each covered individual (including available penalty relief for failure to report a TIN if certain regulatory requirements are satisfied).

Who is Required to Report?
The ACA requires insurers, self-insuring employers, and other parties that provide minimum essential health coverage to annually report information on this coverage to the IRS and to covered individuals using Forms 1094-B and 1095-B.

Applicable large employers (generally those with 50 or more full-time employees, including full-time equivalents) are also required to report information to the IRS and to their employees about their compliance with the ACA's employer shared responsibility ("pay or play") provisions and the health care coverage they have offered (or have not offered) using Forms 1094-C and 1095-C.  

Note: Self-insured employers that are applicable large employers must combine reporting under both information reporting provisions by filing a single information return, Form 1095-C, and transmittal, Form 1094-C.

Designation Determined by Hours Worked, Not Employer Classification

As a reminder, the employer shared responsibility provisions of the Affordable Care Act (also known as "pay or play") require applicable large employers ("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. But who are "full-time employees" under pay or play?

Determining 'Full-Time Employees'
For purposes of pay or play, an employee is a full-time employee for a calendar month if he or she averages at least 30 hours of service per week. In addition, 130 hours of service in a calendar month is treated as the monthly equivalent of at least 30 hours of service per week.

Generally, an hour of service means:

• Each hour for which an employee is paid, or entitled to payment, for the performance of duties for the employer; and
• Each hour for which an employee is paid, or entitled to payment, for a period of time during which no duties are performed due to vacation, holiday, illness, incapacity (including disability), layoff, jury duty, military duty, or leave of absence.

Employer Classification of 'Full-Time Employee' Not Determinative
Last summer, the IRS addressed a question from an employee whose employer developed a policy restricting part-time or seasonal employees from working more than 29 hours of service in any week. In its response, the IRS affirmed prior guidance and advised that, assuming the employer is subject to pay or play, an employee in either employer-based classification who works an average of 30 or more hours of service per week during any given month could potentially trigger (or increase the amount of) the employer's liability for an assessable payment under pay or play for that month.

Guidance Provides 2017 Monthly National Average Premium for Bronze Plans

The IRS has released the 2017 monthly national average premium for a bronze level health plan offered through the Health Insurance Marketplace, which is used to determine the maximum individual mandate penalty.

New Guidance
According to the new IRS guidance, the monthly national average premium for qualified health plans that have a bronze level of coverage and are offered through the Health Insurance Marketplace in 2017 is:

• $272 per individual (up from $223); and
• $1,360 for a family with five or more members (up from $1,115).

The guidance is effective for taxable years ending after December 31, 2016.

Calculating the Payment
The Affordable Care Act's "individual mandate" provision requires every individual to have minimum essential health coverage for each month, qualify for an exemption, or make a penalty payment when filing his or her federal income tax return.

The annual penalty amount is either a percentage of an individual's household income in excess of the return filing threshold or a flat dollar amount, whichever is greater. The maximum penalty is capped at the cost of the national average premium for a bronze level health plan available through the Marketplace. At this time, the 2017 inflation adjustment for the flat dollar amount penalty has not been announced.

Law Requires Certain Employers to Offer Dependent Coverage Until Age 26

Under the Affordable Care Act, when a plan covers dependents, it must continue to make the coverage available until a child reaches the age of 26, even if the young adult has been offered coverage through his or her own employer, is married, no longer lives with his or her parents, is not a dependent on a parent's tax return, or is no longer a student. 

There is no federal requirement compelling a plan or issuer to offer dependent coverage. However, applicable large employers may be liable for a "pay or play" penalty if they do not offer coverage to the dependents of their full-time employees through the entire calendar month during which the dependent attains age 26.

Note: Individual states may have dependent coverage requirements that are more favorable to employees. Employers and plan administrators should consult with their state insurance department to determine if additional requirements apply to their plans.

Final 2017 Versions to be Released Later

The IRS has released draft versions of the Forms 1094-B, 1095-B, 1094-C, and 1095-C that employers and insurers will use in early 2018 to report on health coverage offered in the 2017 calendar year.

2017 Draft Forms
The following draft forms are now available for 2017:

• Draft Form 1094-B (transmittal)
• Draft Form 1095-B
• Draft Form 1094-C (transmittal)
• Draft Form 1095-C

If finalized, the most significant change to the 2017 forms would be the removal of the "Section 4980H Transition Relief" box from line 22 of Form 1094-C. This transition relief is no longer available to employers.

Background
The Affordable Care Act (ACA) requires insurers, self-insuring employers, and other parties that provide minimum essential health coverage to report information on this coverage to the IRS and to covered individuals using Forms 1094-B and 1095-B. Applicable large employers (generally those with 50 or more full-time employees, including full-time equivalents) are also required to report information to the IRS and to their employees about their compliance with the employer shared responsibility provisions ("pay or play") and the health care coverage they have offered using Forms 1094-C and 1095-C.

Marketplace Special Enrollment Period Rules Also Modified

The 2018 open enrollment period to obtain coverage in the individual Health Insurance Marketplace runs from November 1, 2017 through December 15, 2017, with coverage starting January 1, 2018. After this period, individuals can enroll or change plans only if they qualify for a special enrollment period.

Special Enrollment Period Rules
Federal agencies previously announced modifications to the Marketplace special enrollment period rules, as follows:

• Pre-enrollment verification of eligibility will generally be conducted for all categories of special enrollment periods;
• The ability of existing Marketplace enrollees to change plan metal levels during the coverage year will be limited;
• Issuers will be permitted to deny Marketplace special enrollment due to loss of minimum essential coverage where the issuer has a record of termination due to non-payment of premiums by the individual, unless obligations for premiums due for previous coverage are fulfilled.

Click here for additional information regarding special enrollment periods. For more on applicable dates and deadlines, click here.

Overview of Employer Responsibilities for Handling Rebates

The Medical Loss Ratio (MLR) rules under Health Care Reform require an issuer to provide rebates if its medical loss ratio (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 provided by issuers to policyholders (typically the employer that sponsors the plan) by September 30 of the following year.

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 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. Note that 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). For additional details, click here.

Waiver Allows Implementation of Alaska Reinsurance Program for 2018 and Future Years

The U.S. Departments of Health and Human Services and Treasury have approved the State of Alaska's application for a waiver from the Affordable Care Act requirement that it consider all enrollees in the individual market to be part of a single risk pool. The waiver allows Alaska to implement the Alaska Reinsurance Program (ARP) for the next five plan years, from January 1, 2018 through December 31, 2022.

ARP Implementation
ARP is a state-operated reinsurance program which covers claims in the individual market for individuals with one or more of 33 identified high-cost conditions to help stabilize premiums. As a result of the waiver approval and implementation of the ARP for 2018 and future years, state and federal agencies anticipate that more consumers in Alaska will have coverage and will see lower premiums (which are projected to be 20% lower in 2018 than they would be without the waiver).

State Innovation Waivers
Section 1332 of the ACA permits a state to apply for a "State Innovation Waiver" to pursue innovative strategies for providing its residents with access to quality health care, as long as the waiver request meets certain requirements to retain the basic protections of the ACA. The waivers are approved for five-year periods and can be renewed.