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Stay updated on the latest healthcare reform and compliance updates at the FPHRA Conference in July 2016. Presented by Kelly M. Davis, AIP Benefits Client Advocate.
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FPHRA ConferenceHealth Care Reform and Compliance Updates July 2016 Presented by: Kelly M. Davis, AIP Benefits Client Advocate
July Updates EMPLOYER MANDATE Employer Shared Responsibility Counting to 50 “Medium Size” Employers KNOW YOUR EMPLOYEES Yes, No…Maybe? Measurement Provisions Flow Charts Sample Measurement Calendar EMPLOYER PENALTIES Pay or Play Recap Affordability
July Updates cont… REPORTING OF COVERAGE • Code section 6056 & Code section 6055 RECENT REGULATORY AND LEGAL ACTIVITY • Federal Court will hear new ACA case • Important Numbers for 2016 & 2017 • PCORI Fees Due July 31st • Employer Appeals of Exchange Subsidy Notices • Medicare Secondary Payer: IRS-SSA-CMS Data Match • EEOC Finalizes Wellness Rules
“Employer Shared Responsibility” The ACA sections that contain the employer penalty requirements are also known as the “employer shared responsibility” provisions or “pay or play” rules. To qualify as an ALE, an employer must employ, on average, at least 50 full-time employees, including full-time equivalent employees (FTEs), on business days during the preceding calendar year. All employers that employ at least 50 full-time employees, including FTEs, are subject to the ACA’s pay or play rules, including for-profit, nonprofit and government employers. • In general, the employer penalty rules apply to: • ALEs with 100 or more full-time employees (including FTEs) started in 2015; and • ALEs with 50 to 99 full-time employees (including FTEs) started in 2016.
Counting to 50 In 2016 the Affordable Care Act’s Employer Mandate will apply to employers with 50 or more full-time employees + equivalents. Always be mindful of the 414 common ownership rules when counting to 50. How to count to 50: • Applicable large employer status is determined for each calendar year using employee information from the prior calendar year. • For 2016 employers need to use all 12 months of 2015 to determine status. • Full-time employees working 130 hours per month count as 1 Full-time. Part-time employees working under 130 hours per month must be converted to full-time equivalents. To convert to a full-time equivalent all part-time employee hours are added together and then divided by 120 • Example: employer has 40 full-time employees working 130 hours in a month and 25 part-time employees working less than 130 hours. Those 25 part-time employees worked a total of 1,625 hours in the month. • Full-time count = 40 • Part-time count = 1,625 / 120 = 13.54 • Full-time employee equivalents = 40+13.54 = 53.54 FTE’s
Know Your Employees When you hire an employee are they full-time or not? YES…..NO…Maybe? When you hire a variable hour employee who is reasonably expected to work full-time (30 hours per week or 130 hours per month) treat them like any other full-time employee and make sure to offer them benefits within the 90 day waiting period limit. When you hire a variable hour employee and do not reasonably expect them to work full-time and you choose not to offer them benefits by the 90 day waiting period limit, you may wish to consider the measurement / look back period methods of determining eligibility in order to help demonstrate ACA compliance.
Look-back Measurement Method • May be used for new variable hour and seasonal employees IF used for ongoing employees • Generally may not use the look-back measurement method for variable hour/seasonal employees and use monthly measurement method for employees with predictable schedules • Measurement & Administrative period together should not be more than 13 months
“Pay or Play 2016” Have at least 50 FT + Es? NO No penalty applies! YES “Sledge hammer” $2,160 penalty per FT (minus first 30) if at least one FT receives the tax credit NO Offer Coverage? YES NO Plan provides minimum required value? • Lesser of: • “Tack hammer” $3,240 per FT receiving tax credit • “Sledge hammer” $2,160 per FT (minus first 30) YES NO Is coverage affordable? YES No penalty applies!
Health Plan Affordability An employer’s health coverage was considered affordable in 2015 if the employee’s required contribution to the plan does not exceed 9.56 percent of the employee’s household income for the taxable year. For 2016 an employer’s coverage will be affordable based on 9.66 percent. Because an employer generally will not know an employee’s household income, the IRS provides three affordability safe harbors that employers may use to determine affordability based on information that is available to them. These safe harbors allow an employer to measure affordability based on: • the employee’s W-2 wages; • the employee’s rate-of-pay income; • or the federal poverty level for a single individual. For 2016, the mainland single FPL is $11,880. https://aspe.hhs.gov/poverty-guidelines
Reporting of Coverage Self-funded plan sponsors that are ALEs must report under both sections, but will use a combined reporting method
Reporting of Coverage Penalties will not be imposed on reporting entities that can show good faith efforts to comply
Recent Regulatory and Legal Activity • Federal Courts Will Hear 2 New ACA Cases • Marin v. Dave & Buster’s • Important Numbers for 2016 & 2017 • PCORI Fees Due July 31st • Employer Appeals of Exchange Subsidy Notices • Medicare Secondary Payer: IRS-SSA-CMS Data Match
Marin v. Dave & Buster’s Marin v. Dave & Buster’sis a class action lawsuit alleging that the restaurant chain reduced their employees’ work hours in order to avoid providing health benefits, as required under the ACA. According to the group of about 10,000 employees who filed suit, beginning in June 2013, Dave & Buster’s implemented “a nationwide effort to ‘right size’ the number of full-time and part-time employees[…]so as to avoid the costs associated with providing insurance that complied with the requirements of the ACA.” As a result, a large number of Dave & Buster’s employees saw their hours significantly reduced, seemingly for the purpose of keeping them below the ACA’s “full-time employee” threshold. Dave & Busters moved to have the case dismissed, arguing that their specific intention was only to avoid anticipated future costs, not to interfere with their employee’s health benefits. However, the federal District Court disagreed, allowing the case to continue to trial. According to the court, the group of employees presented enough evidence to make a claim that Dave & Buster’s “intentionally interfered with [the employees’] right to health-care coverage, motivated by [their] concern about future costs that would become associated with the plan's health-care coverage.” Impact on Employers This case is the first of its kind, and will set a precedent for other employers who are considering or have implemented similar strategies for their employees’ work hours as a result of the ACA. While some workforce changes may not pose legal issues, employers should carefully consider any overt employment actions they may wish to take as a direct result of the ACA and its health coverage requirements.
Important Numbers for 2016 & 2017 Annual Limitations on Cost-sharing – Maximum Out of Pockets: • Effective for plan years beginning on or after Jan. 1, 2014, the ACA requires non-grandfathered plans to comply with an overall annual limit—or an out-of-pocket maximum—on essential health benefits (EHB). • The ACA requires the out-of-pocket maximum to be updated annually based on the percent increase in average premiums per person for health insurance coverage. • For 2016, the out-of-pocket maximum is $6,850 for self-only coverage and $13,700 for family coverage. • Under the final rule, the out-of-pocket maximum increases for 2017 to $7,150 for self-only coverage and $14,300 for family coverage.
Important Numbers for 2016 & 2017 HSA Rules:
Important Numbers for 2016 & 2017 Employer shared responsibility penalty amounts For 2015, the adjusted penalty amounts are $2,080and $3,120 For 2016, the adjusted penalty amounts are $2,160and $3,240 The IRS anticipates that adjustments for future years will be posted on the IRS.gov website. ACA’s Affordability Contribution Percentage Increased for 2016 and 2017 For plan years beginning in 2016, employer-sponsored coverage will be considered affordable if the employee’s required contribution for self-only coverage does not exceed: 9.66 percentof the employee’s household income for the year, for purposes of both the pay or play rules and premium tax credit eligibility; and For plan years beginning in 2017, employer-sponsored coverage will be considered affordable if the employee’s required contribution for self-only coverage does not exceed: 9.69 percentof the employee’s household income for the year, for purposes of both the pay or play rules and premium tax credit eligibility; and
PCORI Fees Due July 31st The Affordable Care Act (ACA) requires health insurance issuers and sponsors of self-insured health plans to pay Patient-Centered Outcomes Research Institute fees (PCORI fees). The fees are reported and paid annually using IRS Form 720 (Quarterly Federal Excise Tax Return). https://www.irs.gov/pub/irs-pdf/f720.pdf PCORI fees will be due by July 31, 2016, for plan years ending in 2015. IRS instructions for filing form 720, which were revised in January 2015, include information on reporting and paying the PCORI fees. https://www.irs.gov/pub/irs-pdf/i720.pdf
Employer Appeals of Exchange Subsidy Notices Highlights: • Beginning in spring 2016 exchanges will begin notifying employers that they may be liable for ACA penalties when their employees receive health insurance subsidies. • Employers have 90 daysto appeal Exchange subsidy eligibility determinations. • The requirement for Exchanges to accept online appeals has been delayed until 2017. ACTION STEPS Employers—especially applicable large employers (ALEs)—should prepare to appeal any incorrect Exchange subsidy eligibility determinations. To prepare, employers should: • Become familiar with the appeals process; and • Maintain complete and accurate records regarding the health insurance coverage they offered to employees. IMPORTANT DATES • December 31, 2016 - Exchanges may require paper appeals through Dec. 31, 2016. • January 1, 2017 - Exchanges will be required to accept appeals online, by phone, by mail and in person beginning Jan. 1, 2017.
Medicare Secondary Payer: IRS-SSA-CMS Data Match OVERVIEW • The Data Match program requires that employers share certain information regarding health plan coverage with CMS. • The information is used to determine whether Medicare or an employer-sponsored group health plan should have primary payer status. REPORTING REQUIREMENTS • Employers must complete a questionnaire, providing health coverage information about their Medicare-eligible employees and their spouses. • Employers have 30 days to complete the questionnaire (unless an extension applies). • Failure to complete the questionnaire may result in penalties. IMPORTANT LINKS • CMS’ web page on the Data Match program - https://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/EmployerServices/IRS-SSA-CMS-Data-Match.html • Data Match Instructions to help employers complete the group health plan questionnaire - • https://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/EmployerServices/Downloads/Instructions-for-completing-the-Group-Health-Plan-Report-for-the-IRS-SSA-CMS-Data-Match.pdf
EEOC Finalizes Wellness Rules Under ADA and GINA On May 16, 2016, the Equal Employment Opportunity Commission (EEOC) issued final rules that describe how the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA) apply to employer-sponsored wellness programs. • The final ADA rule provides guidance on the extent to which employers may offer incentives to employees to participate in wellness programs that ask them to answer disability-related questions or to undergo medical examinations. • The final GINA rule clarifies that an employer may offer a limited incentive to an employee whose spouse provides information about his or her current or past health status as part of the employer’s wellness program.
EEOC Finalizes Wellness Rules Under ADA and GINA Legal Concerns Employee wellness programs must be carefully designed to comply with the ADA, GINA and other federal laws that prohibit discrimination based on race, color, sex (including pregnancy), national origin, religion, compensation or age. Additionally, wellness programs that are part of group health plans must be designed to comply with HIPAA’s nondiscrimination requirements, as amended by the Affordable Care Act (ACA). Under HIPAA, health-contingent wellness programs are required to follow certain standards related to nondiscrimination, including a standard that limits the amount of incentives that can be offered. The maximum reward under HIPAA for health-contingent wellness programs is 30 percent of the cost of health coverage (or 50 percent for programs designed to prevent or reduce tobacco use).
