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HR360::Health Care Reform
  • IRS Reminder: Conduct a Mid-Year ACA 'Checkup'

    Posted on July 21, 2016
    Print

    Workforce Size Impacts 'Pay or Play' and Information Reporting Requirements

    The IRS is reminding employers to conduct a mid-year examination of how many full-time and full-time equivalent employees (FTEs) they have in the current calendar year in order to determine whether they must comply with the employer shared responsibility provisions ("pay or play") and corresponding information reporting requirements of the Affordable Care Act (ACA) in the next calendar year.

    Employers With Fewer Than 50 Employees
    Employers with fewer than 50 full-time employees, including FTEs, in the preceding calendar year are generally not subject to pay or play for the current calendar year. Other provisions of the ACA, however, may still be applicable to these employers, including:

    • Information Reporting: Small self-insured employers must file Forms 1094-B and 1095-B with the IRS about individuals they cover and furnish a Form 1095-B to employees enrolled or responsible for those enrolled in the plan about the coverage provided. If the small employer's health coverage is provided through an insurance policy, the issuer will file and furnish these forms.
    • SHOP Eligibility: Employers with 50 or fewer full-time employees, including FTEs, can purchase insurance through the Small Business Health Options Program (SHOP) Marketplace.
    • Small Business Health Care Tax Credit: Employers may be eligible for the small business health care tax credit if they do all of the following:
      • Cover at least 50% of full-time employees’ premium costs;
      • Have fewer than 25 FTEs with average annual wages of less than $51,800 in tax year 2016 ($51,600 in tax year 2015); and
      • Generally purchase coverage through the SHOP Marketplace.

    Employers With 50 or More Employees
    In general, employers with at least 50 full-time employees (including FTEs) in the preceding calendar year are applicable large employers (ALEs) for the current calendar year. ALEs are generally required to comply with pay or play. Other ACA provisions which may be applicable to ALEs include:

    • Information Reporting: ALEs must file Forms 1094-C and 1095-C with the IRS and furnish a Form 1095-C to full-time employees about the health coverage they offered. If the ALE provides self-insured coverage, the employer must also include information about covered individuals on all applicable Forms 1095-C.
    • Pay or Play Transition Relief: While ALEs are generally subject to pay or play, transition relief is available for certain employers for 2015 and 2016. 
    • SHOP Eligibility: Starting in 2016, some states may make the SHOP Marketplace available to businesses with up to 100 employees.
    © 2012 - 2013 HR 360, Inc.
  • IRS Releases Draft 2016 Forms 1094 and 1095 for Employers to Report Health Coverage and ACA Compliance

    Posted on July 19, 2016
    Print

    Final 2016 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 2017 to report on health coverage offered in the 2016 calendar year.

    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.

    2016 Draft Forms
    The following draft forms are now available for 2016:
    Key Changes For 2016
    Notable changes from the 2015 forms include:
    • The "Qualifying Offer Method Transition Relief" box is no longer on line 22 of Form 1094-C, as that transition relief was only available to employers with calendar year plans for 2015 reporting.
    • Two new line 14 codes (codes 1J and 1K) will be available on Form 1095-C to reflect conditional offers of coverage to an employee's spouse.
    • The "Instructions for Recipient" section of Form 1095-B now says that if the recipient or a member of his or her family received employer-sponsored coverage, that coverage may be reported on a Form 1095-C rather than a Form 1095-B. These instructions also tell recipients that certain lines may be left blank even if the recipient received employer-sponsored coverage. 
    © 2012 - 2013 HR 360, Inc.
  • IRS Issues Proposed Rules Related to Premium Tax Credit Eligibility

    Posted on July 13, 2016
    Print

    Premium Tax Credit Eligibility Impacts Employer 'Pay or Play' Liability

    The IRS has released proposed rules clarifying certain issues regarding the premium tax credit (PTC) for individuals who are offered employer-sponsored health coverage consisting solely of excepted benefits, who are not offered an annual opportunity to enroll in employer-sponsored coverage, or who provide inaccurate information to a Health Insurance Marketplace in order to become eligible for a PTC.
     
    How PTCs Impact Employers
    For 2016, applicable large employers (ALEs)—generally those with at least 50 full-time employees, including full-time equivalent employees (FTEs), in the preceding calendar year—will be liable for a "pay or play" penalty only if:

    • The ALE does not offer minimum essential coverage to at least 95% of its full-time employees (70% for the 2015 plan year) and their dependents, and at least one full-time employee receives a PTC; or
    • The ALE offers minimum essential coverage to at least 95% of its full-time employees (70% for the 2015 plan year) and their dependents, but at least one full-time employee receives a PTC (either because the employer did not offer coverage to that employee or because the coverage the employer offered to that employee was unaffordable to the employee or did not provide minimum value).

    New Proposed PTC Rules
    Key highlights of the proposed rules include:

    • Clarification that individuals enrolled in or offered an employer-sponsored plan consisting solely of excepted benefits (such as limited scope dental or vision benefits) will not be denied eligibility for a PTC by virtue of that offer or coverage, as health coverage that consists solely of excepted benefits does not constitute minimum essential coverage;
    • Clarification that individuals who decline to enroll in affordable, minimum value employer-sponsored coverage for a plan year (and thus are ineligible for a PTC that year), but are not provided the opportunity to enroll in that coverage for any succeeding plan year, will not be denied eligibility for a PTC for the succeeding plan year(s) for which there is no enrollment opportunity; and
    • Clarifications regarding PTC eligibility and repayments of advance credit payments for individuals who, intentionally or with reckless disregard for the facts, provide inaccurate information to the Marketplace.

    The rules are generally proposed to apply for taxable years beginning after December 31, 2016 (taxpayers may rely on the rule regarding excepted benefits for all taxable years beginning after December 31, 2013). Click here to read the proposed rules in their entirety.

    © 2012 - 2013 HR 360, Inc.
  • New Proposed Rule on Opt-Out Arrangements and Affordability of Employer-Sponsored Coverage

    Posted on July 11, 2016
    Print

    Proposals May Impact Employer Liability Under 'Pay or Play'

    The IRS has released a proposed rule addressing how opt-out arrangements are taken into account for purposes of determining whether an employer-sponsored group health plan offers affordable coverage. An opt-out arrangement is an arrangement whereby an employer offers its employees a cash payment in exchange for declining coverage under the employer-sponsored plan.

    Affordability of Employer Sponsored Coverage
    As a reminder, applicable large employers (ALEs) may be subject to a "pay or play" penalty if any of the employer's full-time employees receives a premium tax credit to purchase coverage through a Health Insurance Marketplace because the employer-sponsored coverage is either unaffordable to the employee or does not provide minimum value.

    For plan years beginning in 2016, an employer-sponsored plan is considered "affordable" if the portion of the annual premium an employee must pay for self-only coverage (the "required contribution") does not exceed 9.66% of his or her household income. (For plan years beginning in 2015, the threshold is 9.56%.)

    Treatment of Opt-Out Arrangements  
    Under the proposed rule, the amount of any cash payment made available to an employee under an opt-out arrangement increases the employee's required contribution for purposes of determining the affordability of the eligible employer-sponsored plan to which the opt-out arrangement relates (regardless of whether the employee enrolls in the plan or declines to enroll and receives the opt-out payment), unless the arrangement constitutes an "eligible opt-out arrangement." An eligible opt-out arrangement is an arrangement under which the employee's right to receive an opt-out payment is conditioned on:

    1. The employee declining to enroll in employer-sponsored coverage; and
    2. The employee providing reasonable evidence that he or she (and all other individuals for whom the employee reasonably expects to claim a personal exemption deduction for the taxable year or years that begin or end in or with the employer's plan year to which the opt-out arrangement applies) have or will have minimum essential coverage (other than coverage in the individual market, whether or not obtained through the Marketplace) during the period of coverage to which the opt-out arrangement applies.

    Until a final rule is issued and becomes applicable, except for opt-out arrangements adopted after December 16, 2015, employers are not required to increase the amount of an employee's required contribution by amounts made available under an opt-out arrangement for purposes of any potential "pay or play" consequences.

    © 2012 - 2013 HR 360, Inc.
  • New SBC Template Generally Expected to Apply to Plan Years Beginning On or After April 1, 2017

    Posted on July 08, 2016
    Print

    Q&As Address Implementation Date of New SBC Template

    The Centers for Medicare & Medicaid Services (CMS) have released new Q&As regarding the applicable date for using the new Summary of Benefits and Coverage (SBC) template and associated documents.

    Background
    Under the Affordable Care Act (ACA), group health plans and health insurance issuers are generally required to provide a written SBC to plan participants and beneficiaries at specified times during the enrollment process and upon request. On April 6, 2016, federal agencies finalized new versions of the SBC template, instructions, uniform glossary, and related documents.

    Applicability Dates for New SBC Template
    According to the Q&As, the applicable dates for using the new SBC template and associated documents will be as follows:

    • Health plans and issuers that maintain an annual open enrollment period will be required to use the new editions beginning on the first day of any open enrollment period that begins on or after April 1, 2017.
    • Health plans and issuers that do not use an annual open enrollment period will be required to use the new editions beginning on the first day of the first plan year that begins on or after April 1, 2017.

    Additional information is available in the text of the Q&As. Visit the U.S. Department of Labor's webpage on the SBC and Uniform Glossary for news updates and access to templates and related documents.

    © 2012 - 2013 HR 360, Inc.
  • Reminder: Certain Employers May Receive Marketplace Notices

    Posted on July 07, 2016
    Print

    Appeals Due Within 90 Days

    Health Insurance Marketplaces are now sending letters to notify certain employers that one or more of their employees has been determined eligible for advance premium tax credits and cost-sharing reductions and has enrolled in a Marketplace plan. Because these events may trigger employer penalties under the Affordable Care Act's "pay or play" provisions, employers may seek to appeal an employee's eligibility determination.

    Employer Appeals Process
    Marketplaces must notify employers within a reasonable timeframe following any month of the employee's eligibility determination and enrollment. Employers have 90 days from the date stated on the Marketplace notice to file an appeal. In the appeal, the employer may assert that it provides its employee access to affordable, minimum value employer-sponsored coverage or that its employee is enrolled in employer coverage, and therefore that the employee is ineligible for advance payments of the premium tax credit or cost-sharing reductions.

    An appeal will not determine if the employer is subject to a "pay or play" penalty, as only the IRS, not the Marketplace or the Marketplace Appeals Center, can make such determinations.

    © 2012 - 2013 HR 360, Inc.

    HR News and Alerts

    HR360::Health Care Reform
    • IRS Reminder: Conduct a Mid-Year ACA 'Checkup'

      Posted on July 21, 2016
      Print

      Workforce Size Impacts 'Pay or Play' and Information Reporting Requirements

      The IRS is reminding employers to conduct a mid-year examination of how many full-time and full-time equivalent employees (FTEs) they have in the current calendar year in order to determine whether they must comply with the employer shared responsibility provisions ("pay or play") and corresponding information reporting requirements of the Affordable Care Act (ACA) in the next calendar year.

      Employers With Fewer Than 50 Employees
      Employers with fewer than 50 full-time employees, including FTEs, in the preceding calendar year are generally not subject to pay or play for the current calendar year. Other provisions of the ACA, however, may still be applicable to these employers, including:

      • Information Reporting: Small self-insured employers must file Forms 1094-B and 1095-B with the IRS about individuals they cover and furnish a Form 1095-B to employees enrolled or responsible for those enrolled in the plan about the coverage provided. If the small employer's health coverage is provided through an insurance policy, the issuer will file and furnish these forms.
      • SHOP Eligibility: Employers with 50 or fewer full-time employees, including FTEs, can purchase insurance through the Small Business Health Options Program (SHOP) Marketplace.
      • Small Business Health Care Tax Credit: Employers may be eligible for the small business health care tax credit if they do all of the following:
        • Cover at least 50% of full-time employees’ premium costs;
        • Have fewer than 25 FTEs with average annual wages of less than $51,800 in tax year 2016 ($51,600 in tax year 2015); and
        • Generally purchase coverage through the SHOP Marketplace.

      Employers With 50 or More Employees
      In general, employers with at least 50 full-time employees (including FTEs) in the preceding calendar year are applicable large employers (ALEs) for the current calendar year. ALEs are generally required to comply with pay or play. Other ACA provisions which may be applicable to ALEs include:

      • Information Reporting: ALEs must file Forms 1094-C and 1095-C with the IRS and furnish a Form 1095-C to full-time employees about the health coverage they offered. If the ALE provides self-insured coverage, the employer must also include information about covered individuals on all applicable Forms 1095-C.
      • Pay or Play Transition Relief: While ALEs are generally subject to pay or play, transition relief is available for certain employers for 2015 and 2016. 
      • SHOP Eligibility: Starting in 2016, some states may make the SHOP Marketplace available to businesses with up to 100 employees.
      © 2012 - 2013 HR 360, Inc.
    • IRS Releases Draft 2016 Forms 1094 and 1095 for Employers to Report Health Coverage and ACA Compliance

      Posted on July 19, 2016
      Print

      Final 2016 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 2017 to report on health coverage offered in the 2016 calendar year.

      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.

      2016 Draft Forms
      The following draft forms are now available for 2016:
      Key Changes For 2016
      Notable changes from the 2015 forms include:
      • The "Qualifying Offer Method Transition Relief" box is no longer on line 22 of Form 1094-C, as that transition relief was only available to employers with calendar year plans for 2015 reporting.
      • Two new line 14 codes (codes 1J and 1K) will be available on Form 1095-C to reflect conditional offers of coverage to an employee's spouse.
      • The "Instructions for Recipient" section of Form 1095-B now says that if the recipient or a member of his or her family received employer-sponsored coverage, that coverage may be reported on a Form 1095-C rather than a Form 1095-B. These instructions also tell recipients that certain lines may be left blank even if the recipient received employer-sponsored coverage. 
      © 2012 - 2013 HR 360, Inc.
    • IRS Issues Proposed Rules Related to Premium Tax Credit Eligibility

      Posted on July 13, 2016
      Print

      Premium Tax Credit Eligibility Impacts Employer 'Pay or Play' Liability

      The IRS has released proposed rules clarifying certain issues regarding the premium tax credit (PTC) for individuals who are offered employer-sponsored health coverage consisting solely of excepted benefits, who are not offered an annual opportunity to enroll in employer-sponsored coverage, or who provide inaccurate information to a Health Insurance Marketplace in order to become eligible for a PTC.
       
      How PTCs Impact Employers
      For 2016, applicable large employers (ALEs)—generally those with at least 50 full-time employees, including full-time equivalent employees (FTEs), in the preceding calendar year—will be liable for a "pay or play" penalty only if:

      • The ALE does not offer minimum essential coverage to at least 95% of its full-time employees (70% for the 2015 plan year) and their dependents, and at least one full-time employee receives a PTC; or
      • The ALE offers minimum essential coverage to at least 95% of its full-time employees (70% for the 2015 plan year) and their dependents, but at least one full-time employee receives a PTC (either because the employer did not offer coverage to that employee or because the coverage the employer offered to that employee was unaffordable to the employee or did not provide minimum value).

      New Proposed PTC Rules
      Key highlights of the proposed rules include:

      • Clarification that individuals enrolled in or offered an employer-sponsored plan consisting solely of excepted benefits (such as limited scope dental or vision benefits) will not be denied eligibility for a PTC by virtue of that offer or coverage, as health coverage that consists solely of excepted benefits does not constitute minimum essential coverage;
      • Clarification that individuals who decline to enroll in affordable, minimum value employer-sponsored coverage for a plan year (and thus are ineligible for a PTC that year), but are not provided the opportunity to enroll in that coverage for any succeeding plan year, will not be denied eligibility for a PTC for the succeeding plan year(s) for which there is no enrollment opportunity; and
      • Clarifications regarding PTC eligibility and repayments of advance credit payments for individuals who, intentionally or with reckless disregard for the facts, provide inaccurate information to the Marketplace.

      The rules are generally proposed to apply for taxable years beginning after December 31, 2016 (taxpayers may rely on the rule regarding excepted benefits for all taxable years beginning after December 31, 2013). Click here to read the proposed rules in their entirety.

      © 2012 - 2013 HR 360, Inc.
    • New Proposed Rule on Opt-Out Arrangements and Affordability of Employer-Sponsored Coverage

      Posted on July 11, 2016
      Print

      Proposals May Impact Employer Liability Under 'Pay or Play'

      The IRS has released a proposed rule addressing how opt-out arrangements are taken into account for purposes of determining whether an employer-sponsored group health plan offers affordable coverage. An opt-out arrangement is an arrangement whereby an employer offers its employees a cash payment in exchange for declining coverage under the employer-sponsored plan.

      Affordability of Employer Sponsored Coverage
      As a reminder, applicable large employers (ALEs) may be subject to a "pay or play" penalty if any of the employer's full-time employees receives a premium tax credit to purchase coverage through a Health Insurance Marketplace because the employer-sponsored coverage is either unaffordable to the employee or does not provide minimum value.

      For plan years beginning in 2016, an employer-sponsored plan is considered "affordable" if the portion of the annual premium an employee must pay for self-only coverage (the "required contribution") does not exceed 9.66% of his or her household income. (For plan years beginning in 2015, the threshold is 9.56%.)

      Treatment of Opt-Out Arrangements  
      Under the proposed rule, the amount of any cash payment made available to an employee under an opt-out arrangement increases the employee's required contribution for purposes of determining the affordability of the eligible employer-sponsored plan to which the opt-out arrangement relates (regardless of whether the employee enrolls in the plan or declines to enroll and receives the opt-out payment), unless the arrangement constitutes an "eligible opt-out arrangement." An eligible opt-out arrangement is an arrangement under which the employee's right to receive an opt-out payment is conditioned on:

      1. The employee declining to enroll in employer-sponsored coverage; and
      2. The employee providing reasonable evidence that he or she (and all other individuals for whom the employee reasonably expects to claim a personal exemption deduction for the taxable year or years that begin or end in or with the employer's plan year to which the opt-out arrangement applies) have or will have minimum essential coverage (other than coverage in the individual market, whether or not obtained through the Marketplace) during the period of coverage to which the opt-out arrangement applies.

      Until a final rule is issued and becomes applicable, except for opt-out arrangements adopted after December 16, 2015, employers are not required to increase the amount of an employee's required contribution by amounts made available under an opt-out arrangement for purposes of any potential "pay or play" consequences.

      © 2012 - 2013 HR 360, Inc.
    • New SBC Template Generally Expected to Apply to Plan Years Beginning On or After April 1, 2017

      Posted on July 08, 2016
      Print

      Q&As Address Implementation Date of New SBC Template

      The Centers for Medicare & Medicaid Services (CMS) have released new Q&As regarding the applicable date for using the new Summary of Benefits and Coverage (SBC) template and associated documents.

      Background
      Under the Affordable Care Act (ACA), group health plans and health insurance issuers are generally required to provide a written SBC to plan participants and beneficiaries at specified times during the enrollment process and upon request. On April 6, 2016, federal agencies finalized new versions of the SBC template, instructions, uniform glossary, and related documents.

      Applicability Dates for New SBC Template
      According to the Q&As, the applicable dates for using the new SBC template and associated documents will be as follows:

      • Health plans and issuers that maintain an annual open enrollment period will be required to use the new editions beginning on the first day of any open enrollment period that begins on or after April 1, 2017.
      • Health plans and issuers that do not use an annual open enrollment period will be required to use the new editions beginning on the first day of the first plan year that begins on or after April 1, 2017.

      Additional information is available in the text of the Q&As. Visit the U.S. Department of Labor's webpage on the SBC and Uniform Glossary for news updates and access to templates and related documents.

      © 2012 - 2013 HR 360, Inc.
    • Reminder: Certain Employers May Receive Marketplace Notices

      Posted on July 07, 2016
      Print

      Appeals Due Within 90 Days

      Health Insurance Marketplaces are now sending letters to notify certain employers that one or more of their employees has been determined eligible for advance premium tax credits and cost-sharing reductions and has enrolled in a Marketplace plan. Because these events may trigger employer penalties under the Affordable Care Act's "pay or play" provisions, employers may seek to appeal an employee's eligibility determination.

      Employer Appeals Process
      Marketplaces must notify employers within a reasonable timeframe following any month of the employee's eligibility determination and enrollment. Employers have 90 days from the date stated on the Marketplace notice to file an appeal. In the appeal, the employer may assert that it provides its employee access to affordable, minimum value employer-sponsored coverage or that its employee is enrolled in employer coverage, and therefore that the employee is ineligible for advance payments of the premium tax credit or cost-sharing reductions.

      An appeal will not determine if the employer is subject to a "pay or play" penalty, as only the IRS, not the Marketplace or the Marketplace Appeals Center, can make such determinations.

      © 2012 - 2013 HR 360, Inc.