All posts tagged health care reform

Significant Shift in Immigration Policy

Trump has been vocal about his stance on immigration in regard to deportation and illegal immigration. He also seeks to strengthen U.S. jobs, wages, and security through the nationwide use of E-Verify. Trump plans to work with Congress to strengthen and expand the use of E-Verify as currently less than half the states require employers to use E-Verify; however, more than 16.4 million cases were run through E-Verify in fiscal year 2016 by employers in every industry, state, and U.S. territory. E-Verify ensures a legal workforce, protects jobs for authorized workers, deters document and identity fraud, and works seamlessly with Form I-9. Employers may also look to the changes in the Form I-9 effective January 21, 2017 designed to make the form more user-friendly and alleviate mistakes, although this was established prior to Trump’s presidency.

Paid Leave for New Mothers

Although the specifics are unclear right now, Trump has proposed six weeks of paid maternity leave to new mothers. These payments would come from recapturing fraud and improper payments in the U.S. unemployment insurance system. Trump has also discussed allowing parents to enroll in tax-free dependent care savings accounts for their children (read in-depth analysis of paid family leave from our own in-house expert Laura Kerekes). According to the National Partnership for Women and Families, employers can expect paid leave to improve worker retention, reduce turnover costs with increased worker productivity, and increase employee loyalty.

Tax Reform

Trump has advocated for significant tax cuts “across the board” by increasing the standard deduction to $30,000 for joint filers (from $12,600), and simplifying the tax code. Trump plans to collapse the seven tax brackets to three with low-income Americans at an income tax rate of 0 percent. Trump’s tax plan also seeks to lower the business tax rate from 35 percent to 15 percent, and eliminate the corporate alternative minimum tax. Proponents of lowering business taxes assert that it creates jobs in the United States rather than overseas, encourages investment in our infrastructure, and because the United States has the highest corporate income tax rates, businesses are at a significant disadvantage. Trump intends to apply this lower rate to all business, both small and large. Additionally, according to Trump’s tax plan, businesses that pay a portion of an employee’s childcare expenses would be permitted to exclude those contributions from income. Employees who are recipients of direct employer subsidies would not be able to exclude those costs from the individual income tax and the costs of direct subsidies to employees could not be used as a cost eligible for the credit.

Repeal of the Affordable Care Act

The Affordable Care Act will be challenged under Trump’s administration. Trump seeks to remove healthcare exchanges and replace them with tax-free health savings accounts for people with high-deductible insurance plans. Trump has also advocated state-based high-risk pools for people with medical conditions that make it hard to get coverage on their own. He also seeks to allow companies to sell insurance across state lines to boost competition and drive down prices.

What’s Next for Employers

Interestingly, the largest impact of a Trump presidency may not be from his stance on these issues but may be seen when it comes time to naming the next U.S. Supreme Court Justices as he will likely appoint four justices during his term in office. Experts predict four because the average age of retirement for a Supreme Court justice has been approximately 78.7 years old, and currently three of the eight justices range in age from 78 – 83. The fourth open seat remains unoccupied since Justice Antonin Scalia’s death in February.

Understandably, there are opposing views to these presented issues, and neither candidate provided many details about how their plans for these issues would be financed or implemented. ThinkHR will follow the changes in labor and employment laws and will provide information and tools to help employers make sense of the changes that impact American businesses.

Originally published by www.thinkhr.com

Following the November 2016 election, Donald Trump (R) will be sworn in as the next President of the United States on January 20, 2017. The Republicans will also have the majority in the Senate (51 Republican, 47 Democrat) and in the House of Representatives (238 Republicans, 191 Democrat). As a result, the political atmosphere is favorable for the Trump Administration to begin implementing its healthcare policy objectives. Representative Paul Ryan (R-Wis.) will likely remain the Speaker of the House. Known as an individual who is experienced in policy, it is expected that the Republican House will work to pass legislation that follows the health care policies in Speaker Ryan’s “A Better Way” proposals. The success of any of these proposals remains to be seen.

Employers should be aware of the main tenets of President-elect Trump’s proposals, as well as the policies outlined in Speaker Ryan’s white paper. These proposals are likely to have an impact on employer sponsored health and welfare benefits. Repeal of the Patient Protection and Affordable Care Act (ACA) and capping the employer-sponsored insurance (ESI) exclusion for individuals would have a significant effect on employer sponsored group health plans.

Trump Policy Proposals

President-elect Trump’s policy initiatives have seven main components:

  • Repeal the ACA. President-elect Trump has vowed to completely repeal the ACA as his first order of Presidential business.
  • Allow health insurance to be purchased across state lines.
  • Allow individuals to fully deduct health insurance premium payments from their tax returns.
  • Allow individuals to use health savings accounts (HSAs) in a more robust way than regulation currently allows. President-elect Trump’s proposal specifically mentions allowing HSAs to be part of an individual’s estate and allowing HSA funds to be spent by any member of the account owner’s family.
  • Require price transparency from all healthcare providers.
  • Block-grant Medicaid to the states. This would remove federal provisions on how Medicaid dollars can and should be spent by the states.
  • Remove barriers to entry into the free market for the pharmaceutical industry. This includes allowing American consumers access to imported drugs.

President-elect Trump’s proposal also notes that his immigration reform proposals would assist in lowering healthcare costs, due to the current amount of spending on healthcare for illegal immigrants. His proposal also states that the mental health programs and institutions in the United States are in need of reform, and that by providing more jobs to Americans we will reduce the reliance of Medicaid and the Children’s Health Insurance Program (CHIP).

Speaker Ryan’s “A Better Way” Proposal

In June 2016, Speaker Ryan released a series of white papers on national issues under the banner “A Better Way.” With Republican control of the House and Senate, it would be plausible that elected officials will begin working to implement some, if not all, of the ideas proposed. The core tenants of Speaker Ryan’s proposal are:

  • Repeal the ACA in full.
  • Expand consumer choice through consumer-directed health care. Speaker Ryan’s proposal includes specific means for this expansion, namely by allowing spouses to make catch-up contributions to HSA accounts, allow qualified medical expenses incurred up to 60 days prior to the HSA-qualified coverage began to be reimbursed, set the maximum contribution of HSA accounts at the maximum combined and allowed annual high deductible health plan (HDHP) deductible and out-of-pocket expenses limits, and expand HSA access for groups such as those with TRICARE coverage. The proposal also recommends allowing individuals to use employer provided health reimbursement account (HRA) funds to purchase individual coverage.
  • Support portable coverage. Speaker Ryan supports access to financial support for an insurance plan chosen by an individual through an advanceable, refundable tax credit for individuals and families, available at the beginning of every month and adjusted for age. The credit would be available to those without job-based coverage, Medicare, or Medicaid. It would be large enough to purchase a pre-ACA insurance policy. If the individual selected a plan that cost less than the financial support, the difference would be deposited into an “HSA-like” account and used toward other health care expenses.
  • Cap the employer-sponsored insurance (ESI) exclusion for individuals. Speaker Ryan’s proposal argues that the ESI exclusion raises premiums for employer-based coverage by 10 to 15 percent and holds down wages as workers substitute tax-free benefits for taxable income. Employee contributions to HSAs would not count toward the cost of coverage on the ESI cap.
  • Allow health insurance to be purchased across state lines.
  • Allow small businesses to band together an offer “association health plans” or AHPs. This would allow alumni organizations, trade associations, and other groups to pool together and improve bargaining power.
  • Preserve employer wellness programs. Speaker Ryan’s proposal would limit the Equal Employment Opportunity Commission (EEOC) oversight over wellness programs by finding that voluntary wellness programs do not violate the Americans with Disabilities Act of 1990 (ADA) and the collection of information would not violate the Genetic Information Nondiscrimination Act of 2008 (GINA).
  • Ensure self-insured employer sponsored group health coverage has robust access to stop-loss coverage by ensuring stop-loss coverage is not classified as group health insurance. This provision would also remove the ACA’s Cadillac tax.
  • Enact medical liability reform by implementing caps on non-economic damages in medical malpractice lawsuits and limiting contingency fees charged by plaintiff’s attorneys.
  • Address competition in insurance markets by charging the Government Accountability Office (GAO) to study the advantages and disadvantages of removing the limited McCarran-Ferguson antitrust exemption for health insurance carriers to increase competition and lower prices. The exemption allows insurers to pool historic loss information so they can project future losses and jointly develop policy.
  • Provide for patient protections by continuing pre-existing condition protections, allow dependents to stay on their parents’ plans until age 26, continue the prohibitions on rescissions of coverage, allow cost limitations on older Americans’ plans to be based on a five to one ratio (currently the ratio is three to one under the ACA), provide for state innovation grants, and dedicate funding to high risk pools.

Speaker Ryan’s white paper also addresses more robust protection of life by enforcing the Hyde Amendment (which prohibits federal taxpayer dollars from being used to pay for abortion or abortion coverage) and improved conscience protections for health care providers by enacting and expanding the Weldon Amendment.

Speaker Ryan also proposes other initiatives including robust Medicaid reforms, strengthening Medicare Advantage, repealing the Independent Payment Advisory Board (IPAB) that was once referred to as “death panels,” combine Medicare Part A and Part B, repealing the ban on physician-owned hospitals, and repealing the “Bay State Boondoggle.”

Process of Repeal

Generally speaking, the process of repealing a law is the same as creating a law. A repeal can be a simple repeal, or legislators can try to pass legislation to repeal and replace. Bills can begin in the House of Representatives, and if passed by the House, they are referred to the Senate. If it passes the Senate, it is sent to the President for signature or veto. Bills that begin in the Senate and pass the Senate are sent to the House of Representatives, which can pass (and if they wish, amend) the bill. If the Senate agrees with the bill as it is received from the House, or after conference with the House regarding amendments, they enroll the bill and it is sent to the White House for signature or veto.

Although Republicans hold the majority in the Senate, they do not have enough party votes to allow them to overcome a potential filibuster. A filibuster is when debate over a proposed piece of legislation is extended, allowing a delay or completely preventing the legislation from coming to a vote. Filibusters can continue until “three-fifths of the Senators duly chosen and sworn” close the debate by invoking cloture, or a parliamentary procedure that brings a debate to an end. Three-fifths of the Senate is 60 votes.

There is potential to dismantle the ACA by using a budget tool known as reconciliation, which cannot be filibustered. If Congress can draft a reconciliation bill that meets the complex requirements of our budget rules, it would only need a simple majority of the Senate (51 votes) to pass.

Neither President-elect Trump nor Speaker Ryan has given any indication as to whether a full repeal, or a repeal and replace, would be their preferred method of action.

The viability of any of these initiatives remains to be seen, but with a Republican President and a Republican-controlled House and Senate, if lawmakers are able to reach agreeable terms across the executive and legislative branches, some level of change is to be expected.

One thing rings true when it comes to the Affordable Care Act (ACA): “expect the unexpected.” I know this sounds cliché, but it was my best attempt to describe the experience HR professionals encounter as they attempt to comply with this somewhat murky piece of legislation. Last year on December 28, we were alerted a month from the approaching deadline that the forms and filing requirements had moved two and three months out to address challenges. This was a fairly drastic move within a month of a significant compliance deadline.

As a leading provider of ACA solutions to hundreds of employers, we are finding this concern about uncertainty spills into the 2016 tax season. To provide some useful guidance, I thought it would be helpful to share with you a roll-up of common questions and key issues we are receiving from our clients over the past several months:

  1. Will the ACA be delayed again in 2016? We do not see the filing requirements delayed again in 2016. The delay for 2015 was a one-time delay, and the IRS has signaled this to be the case on their conference calls.
  2. What changes do we need to be concerned with in the 1094-C and 1095-C forms? Overall, the changes to these forms are minor in 2016. The 2015 Qualifying Offer, a form of transition relief, was eliminated from the 1094 form. The biggest changes are with two contingent offer of coverage codes 1J and 1K. The idea behind these new offer codes is that employer coverage is contingent upon not having coverage available elsewhere. If this better describes how you offer coverage, you may want to consider selecting these codes over the traditional 1A or 1E.
  3. Will it be easier to work with name/TIN mismatches flagged through the corrections process? In the first year it was difficult to work with IRS requested corrections because you often could not identify which covered individual generated the error (we didn’t know if it was the employee, a dependent, or both). Several IRS conference calls have signaled they will be providing more detail on the corrections this year. If your ACA solution communicates with the IRS Affordable Care Act Information Returns (AIR) system, you will likely be able to display the detail of this error message and act on it. A side-note: remaining corrections from 2015 do not have a specific due date, but should be addressed as soon as possible.
  4. Why do we still have transition relief in 2016? The expectations for many is that transition relief was simply a 2015 phenomenon. While non-calendar year and 2015 Qualifying Offer Transition Relief have been eliminated, 4980H Transition Relief has remained into 2016 for “non-calendar” plans that meet certain criteria. This means that employers who might be facing shared responsibility penalties in 2016 can still take advantage of one of the two types of relief: 1) if you average 50 to 99 FTEs you are shielded for the 2015 non-calendar year plan for the months that spill into 2016 (e.g., a July 1 plan will be shielded for the first six months of 2016), or 2) the same applies for 100+ clients in terms of being able to leverage the 70 percent offer requirement.
  5. Will it be easier this year? This is a general question that depends on the solution you use. Overall, we believe the answer is a resounding “YES!” With our solution, a large number of clients are able to take advantage of an automated renewal process that transitions setup from 2015 and trends existing employees from December 31, 2015, into 2016. Vendors have learned how to make this process easier for their customers after all the pain they experienced in 2015. Everything from data collection, filing and corrections process should be more automated this year.

Originally published by www.ubabenefits.com

 

Minimum essential coverage (MEC) is the type of coverage that an individual must have under the Patient Protection and Affordable Care Act (ACA). Employers that are subject to the ACA’s shared responsibility provisions (often called “play or pay”) must offer MEC coverage that is affordable and provides minimum value.

In the fall of 2015 the IRS issued Notice 2015-68 stating it was planning to propose regulations on reporting MEC that would, among other things, require health insurance issuers to report coverage in catastrophic health insurance plans, as described in section 1302(e) of the ACA, provided through an Affordable Insurance Exchange (an Exchange, also known as a Health Insurance Marketplace). The notice also covered reporting of “supplemental coverage” such as a health reimbursement arrangement (HRA) in addition to a group health plan.

Recently, the IRS released the anticipated proposed regulations, incorporating the guidance given in Notice 2015-68. These regulations are generally proposed to apply for taxable years ending after December 31, 2015, and may be relied on for calendar years ending after December 31, 2013.

The proposed regulations provide that:

  1. Reporting is required for only one MEC plan or program if an individual is covered by multiple plans or programs provided by the same provider.
  2. Reporting generally is not required for an individual’s eligible MEC only if the individual is covered by other MEC for which section 6055 reporting is required.

These rules would apply month by month and individual by individual. Once finalized, the regulations would adopt the same information provided in the final instructions for reporting under sections 6055 and 6056 of the ACA.

For examples under the first rule and more detail on the second rule, as well as how to avoid penalties, view UBA’s ACA Advisor, “Reporting Minimum Essential Coverage”.

Originally published by www.ubabenefits.com

The Affordable Care Act (ACA) has brought about many changes to the health insurance industry. As we are now in the sixth year of implementation of the Act, we are seeing more changes coming just around the corner.

Generally speaking, most health plans can be classified into two categories: HMO and PPO. With an HMO plan, you choose your physician group where you will seek services, and you choose a primary care physician that you will see for all of your needs, who will refer you to a specialist or other service facility, if needed. The HMO model is designed to be as cost-effective as possible, only providing services when the physician deems it necessary, or solely for the benefit of the patient.

Due to the ACA, with an HMO plan, a woman is no longer required to get a referral from her primary care physician to an OB-GYN, and a parent is not required to get a referral to a pediatrician for his or her children even though neither are classified as primary care physicians.

In contrast, a PPO plan has more flexibility for the patient. With a PPO plan you are encouraged to see physicians and providers that are participating in your plan’s network, but are not required to do so. You can, in fact, see any doctor or provider that you wish, when you wish to see them, and without a referral from your primary care physician.

However, times they are a-changin’. Beginning January 1, 2017, Covered California, California’s state insurance exchange, will require both HMO and PPO enrollees to specify their primary care physician during the enrollment process. If one is not selected, the plan will select one for the plan participant. A plan participant is allowed to change their primary care physician at any time. Right now, this is only being implemented for individual plan subscribers.

It is expected that this change will be implemented for group PPO plan subscribers in 2018.

Beginning in 2012, the ACA implemented the Patient-Centered Outcomes Research Institute (PCORI) fee. This is a charge of $1 to $2 per enrollee, per year in a plan. If the plan is fully insured, the fee is paid to the government directly by the insurance carrier. If the plan is self-funded it is paid by the plan sponsor using IRS Form 720 and is due by July 31 for the previous plan year.

The purpose of the PCORI is to help analyze the overall costs of health care and identify trends to find ways to best reduce the overall cost of health care.

HMOs like Kaiser Permanente have fully integrated information systems that allow them to track each patient electronically so that they can see everything about the patient in one place. By tracking each patient, notes from the nurses and physicians, treatments, and medications, they can track costs and trends easily by mining the data from the system.

Most PPO plans do not track this data, in part because patients in the past have not had to choose a primary care physician or provider group. When they can see whomever they choose, it makes tracking of this data very difficult across multiple providers. In addition, participants in a small group, fully-insured plan are pooled with other small groups where claim data is not shared with the plan sponsor, and there is no need to track it closely as the information at the patient level is not relevant to the actuaries that calculate plan costs and premiums.

However, that is going to change. In order to study the overall cost of medical care, identify trends, and discover ways to curb inflating costs, data is needed, and selecting a primary care physician for plan participants is the first step.

Cigna, which provides both HMO and PPO plans, has implemented a Collaborative Care Program with more than 120 physician groups in 29 states, including provider group Palo Alto Medical Foundation (PAMF) in the San Francisco Bay area. By tracking client claims data and patient outreach programs to help patients to remember to take their medications as prescribed and continue with follow up treatments, PAMF has been able to reduce its inflation trend by 5 percent compared to other providers in the San Francisco Bay Area. The goal is to duplicate and build on the success that Cigna has already shown through its program and control and reduce the cost of health care.

So when you or your employees are applying for health insurance, make sure that primary care physician information is handy, because it is going to be needed.

Originally published by www.ubabenefits.com

On June 8, 2016, Ohio Governor John Kasich signed legislation (H.B. 523) making Ohio the 25th state to adopt a workable medical marijuana law. The legislation will allow seriously ill patients to use and purchase medical cannabis that will be cultivated and processed in-state.

With regards to employment, the bill does not:

  • Require an employer to permit or accommodate an employee’s use, possession, or distribution of medical marijuana.
  • Prohibit an employer from taking any adverse employment action an employer may take under current law because of a person’s use, possession, or distribution of medical marijuana.
  • Permit a person to sue an employer for taking an adverse employment action related to medical marijuana.
  • Prohibit an employer from establishing and enforcing a drug-testing policy, drug-free workplace policy, or zero-tolerance drug policy or interfere with federal restrictions on employment, including U.S. Department of Transportation regulations.

In addition, a person who is discharged from employment because of the person’s medical marijuana use will be found to have been discharged for just cause under the Unemployment Compensation Law if the use violated an employer’s drug-free workplace policy, zero-tolerance policy, or other formal program or policy regulating medical marijuana use and will be thus ineligible for unemployment benefits.

The bill also maintains the rebuttable presumption that an employee is ineligible for workers’ compensation if the employee was under the influence of marijuana and being under the influence of marijuana was the proximate cause of the injury, regardless of whether the marijuana use is recommended by a physician.

The law goes into effect September 8, 2016.

Originally published by www.thinkhr.com

0826The Health Insurance Portability and Accountability Act (HIPAA) established national standards to secure and protect the privacy of health information. The Health Information Technology for Economic and Clinical Health Act (HITECH) requires the Department of Health and Human Services’ (HHS) Office for Civil Rights (OCR) to conduct audits of covered entities and business associates in order to ensure compliance with the HIPAA Privacy, Security, and Breach Notification Rules.

OCR initiated a pilot program in 2012 to assess the processes implemented by 115 covered entities to comply with HIPAA’s requirements. The pilot program was a three-step process: (1) initial protocol development, (2) test of these protocols by conducting 20 audits, and (3) full audit execution using revised protocol materials, which were completed by the end of December 2012.

OCR selected a pool of covered entities for audits that broadly represented a wide range of healthcare providers, health plans, and healthcare clearinghouses. Criteria to select entities to be audited included whether the entity was public or private, size of the entity, affiliation with other healthcare organizations, the type of entity and relationship to patient care, past and present interaction with OCR concerning HIPAA enforcement and breach notification, as well as geographic factors.

A wide range of covered entities were audited in Phase 1. The audit process began when selected entities received a notification letter from OCR notifying them of their selection and asking them to provide documentation of their privacy and security compliance efforts. Every audit included a site visit during which auditors interviewed key personnel and observed processes to determine compliance. Following the site visit, auditors developed a draft audit report which described how the audit was conducted, what the findings were, and what actions the covered entity took in response to those findings. The covered entity had the opportunity to remedy any compliance issues. The final report included the steps the entity took to resolve any compliance issues identified by the audit and it also described best practices.

OCR used the final audit to understand HIPAA compliance efforts and to determine the types of technical assistance that should be developed and the types of corrective action that are most effective. The technical assistance and best practices that OCR generated assisted covered entities and business associates in improving their efforts to keep health records safe and secure.

Originally published by United Benefit Advisors – Read More

The Latest UBA Survey data shows employers are flocking to two strategies to control rising prescription drug costs: moving to blended copay/coinsurance models vs. copay only, and adding tiers to the prescription drug plans. Almost half (48.9%) of prescription drug plans utilize three tiers (generic, formulary brand, and non-formulary brand), 4.3% retain a two-tier plan, and 44.1% offer four tiers or more. The number of employers offering drug plans with four tiers or more increased 34% from 2014 to 2015. The fourth tier (and additional tiers) pays for biotech drugs, which are the most expensive. By segmenting these drugs into another category with significantly higher copays, employers are able to pass along a little more of the cost of these drugs to employees. Over the last two years, the number of plans with four or more tiers grew 58.1%, making this a rapidly growing strategy to control costs.

Employers with 1 to 99 employees have been driving the trend to adopt prescription drug plans with four or more tiers. In three years, plans with four or more tiers increased approximately 60% among these groups, making this the top cost-containment strategy for small employers, who make up the backbone of America.

Even the largest employers (1,000+ employees), 81% of which historically have offered plans with two or three tiers, have seen a 12.9% decrease in these plans as they, too, migrate to plans with four or more tiers (albeit more slowly).

The construction, mining and retail industries have also been steadily leading the migration to plans with four or more tiers over the last three years, and in the latest UBA survey, 47.5%, 53.2% and 46.3% of their respective plans fall in this category. But this year, the utilities industry has made a more sudden switch, with 58.3% of those plans now consisting of four or more tiers, leapfrogging its perennial tier-climbing peers. This is a significant jump, considering nearly 20% of plans in the utilities industry were still two-tier plans just three years ago—far more two-tier plans than any other industry group at that time. However, this wasn’t a total surprise since, in the 2014 survey year, the industry had an above-average amount of three-tier plans (65.9% vs. an average of 57.1%).

The education and manufacturing industries are more reluctant to shift to plans with four or more tiers. Over the last three years those industries have maintained the highest amounts of three-tier plans, and in the latest survey, 52.8% of their plans remain at three tiers.

Two-tier plans are becoming nearly as rare as single-tier plans, shrinking 45% to 4.3% of all prescription plans in three years. Agriculture has the most holdouts, with 14.8% of plans still comprised of one or two tiers.

Regionally, the East Central U.S. has been leading the migration to plans with four or more tiers for the last three years, followed by North Central and Southeast employers. In the 2015 survey year, Southeast employers eclipsed East Central employers with 60.7% of their plans with four or more tiers.

Strangely enough, East Central and Southeast employers have the lowest percentage of three-tier plans (34.3% and 34.1%, respectively) but the highest percentage of single-tier plans (4.7% and 4.2%, respectively). Other Western employers (excluding California) also have below-average three-tier plans (40.6%), above-average four-tier plans (49.1%) and above-average (10.2%) one- to two-tier plans.

Groups increasing tiers most aggressively for cost savings

California employers have the most two-tier plans (22.9% vs. the average of 4.3%) which, although still off the charts, represents a 20% decline from the previous survey year.

Mid-Atlantic and New England employers have had the most three-tier plans for the last three years, making them the top resisters of plans with four or more tiers over time.

Groups resisting 4+ tier plans

For more information on prescription drug trends, including the companies making an early leap to five-tier plans, download UBA’s free (no form!) publication: Special Report: Trends in Prescription Drug Benefits.

Originally published by UBABenefits.com

 

0624UBAApplicable large employers and self-funded employers of all sizes have now completed the first round of required IRS reporting under the Patient Protection and Affordable Care Act (ACA). The ACA requires individuals to have health insurance, while applicable large employers (ALEs) are required to offer health benefits to their full-time employees. In order for the IRS to verify that (1) individuals have the required minimum essential coverage, (2) individuals who request premium tax credits are entitled to them, and (3) ALEs are meeting their shared responsibility (play or pay) obligations, employers with 50 or more full-time or full-time equivalent employees and insurers were required to report on the health coverage they offered. Similarly, insurers and employers with less than 50 full time employees but that have a self- funded plan also have reporting obligations. All of this reporting is done on IRS Forms 1094-B, 1095-B, 1094-C and 1095-C.

Now that the first set of forms has been completed, many employers are wondering what the next steps are. Employers that did not fulfill all of their obligations under the employer shared responsibility provision (play or pay) might owe a penalty to the IRS. A penalty will be owed in regard to the 2015 plan year if:

  • The employer does not offer health coverage or offers coverage to fewer than 70 percent of its full-time employees and the dependents of those employees, and at least one of the full-time employees receives a premium tax credit to help pay for coverage on a Marketplace; or
  • The employer offers health coverage to all or at least 70 percent of its full-time employees, but at least one full-time employee receives a premium tax credit to help pay for coverage on a Marketplace, which may occur because the employer did not offer coverage to that employee or because the coverage the employer offered that employee was either unaffordable to the employee or did not provide minimum value.

As of March 2016, the only information from the IRS on the payment of these penalties is as follows:

The IRS will adopt procedures that ensure employers receive certification that one or more employees have received a premium tax credit. The IRS will contact employers to inform them of their potential liability and provide them an opportunity to respond before any liability is assessed or notice and demand for payment is made. The contact for a given calendar year will not occur until after the due date for employees to file individual tax returns for that year claiming premium tax credits and after the due date for applicable large employers to file the information returns identifying their full-time employees and describing the coverage that was offered (if any).

If it is determined that an employer is liable for an Employer Shared Responsibility payment after the employer has responded to the initial IRS contact, the IRS will send a notice and demand for payment. That notice will instruct the employer on how to make the payment. Employers will not be required to include the Employer Shared Responsibility payment on any tax return that they file.

 Employers will be notified if an employee who either was not offered coverage, or who was not offered affordable, minimum value, or minimum essential coverage, goes to the Exchange and gets a subsidy or “advance premium tax credit.” To understand this “Employer Notice Program” the appeals process, and how affordability must be documented, request UBA’s newest ACA Advisor, “IRS reporting Now What?”

Originally published by United Benefit Advisors – Read More

0608blogWith the passage of the Affordable Care Act (ACA), the federal government became much more involved in what had always been a heavily regulated, but predominately private industry. What many people have forgotten is that the ACA was not the first legislation to be passed that involved private and employer-sponsored health and welfare plans.

The Employee Retirement Income Security Act (ERISA) is not just about retirement plans. For example, it requires health and welfare plans to generate and retain certain documents related to the plan, such as the Summary Plan Description (SPD), and requires the plan sponsor to distribute certain notices to plan participants and beneficiaries. (For more in formation about how ERISA may impact you, request UBA’s publication, “Reporting and Plan Documents under ERISA and Cafeteria Plan Rules.”)

The Health Information Technology for Economic and Clinical Health (HITECH) Act has affected the way private health information is handled when it is stored on or transmitted via an electronic device. The Health Insurance Portability and Accountability Act (HIPAA) of 1996 has also had a strong impact on health and welfare plans but, like ERISA, it has not always been heavily regulated.

The passage of the ACA has shined a light on many other prior pieces of legislation. With both the Employee Benefits Security Administration (EBSA) and the IRS having enforcement rights over the ACA, and everyone looking for revenue, the searchlight is starting to shine brighter, and the beam is becoming wider.

What does this mean for sponsors of health and welfare plans? Basically, it means that regulations that were previously considered to be guidelines now need to be taken more seriously, and where there are gaps, plan sponsors need to be sure to take the time to address them before an audit by the EBSA or Office of Civil Rights (OCR) results in fines. While the OCR has always conducted health plan audits for HIPAA compliance, the agency is really going to be stepping up enforcement in 2017, and is compiling a list of potential plans to audit before the end of 2016.

One of the requirements of HIPAA is that the covered entity must safeguard the Protected Health Information (PHI) of plan participants. HIPAA defines a covered entity as a health care provider or health plan, which includes insurance carriers, government programs, and welfare benefit plans. However, many plans require other entities to have access to that same information in order to fulfill the benefit obligations of the plan to the plan participants. For example, the plan has to transmit participant data or enrollment forms to the insurance broker or carrier so the participant can begin receiving benefits of the plan, such as going to see a doctor.

In order for the covered entity to be sure that the PHI of the plan participant is kept safe under the HIPAA requirements, it can enter into a Business Associate Agreement (BAA) with the other party so that they can exchange PHI information for business purposes. A business associate could be an insurance broker, COBRA vendor, HR or benefits database vendor, IT vendors, or offsite shredding vendor. A BAA outlines the responsibilities for each party, helps to protect the other party in case of a security breach, and defines how the PHI that is exchanged can be used.

A covered entity should also outline policies and procedures that identify the employees who need access to PHI and limit access to those employees, in addition to limiting the amount and type of information disclosed.

Originally published by United Benefit Advisors – Read More