Health Care Reform Updates & Human Resource News Alerts

Health Care Reform News

HR360::Health Care Reform
  • IRS 'Pay or Play' Letters for 2015 Penalties Expected to Be Issued in 2017

    Posted on April 28, 2017
    Print

    Penalty Letters Separate & Distinct From Marketplace Notices

    The Internal Revenue Service (IRS) has announced that it expects the letters informing applicable large employers (ALEs) that filed Forms 1094-C and 1095-C of their potential liability for a "pay or play" payment for the 2015 calendar year (with reporting in 2016) to be issued in 2017. Going forward, the agency intends to issue letters informing ALEs that filed Forms 1094-C and 1095-C of their potential liability, if any, in the latter part of each calendar year in which reporting was due (for example, in late 2018 for reporting in 2018 for coverage in 2017).

    While the Health Insurance Marketplaces have begun 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, these letters do not indicate whether an employer is required to make a pay or pay payment, as only the IRS can make such determinations.

    For the latest guidance on pay or play payments, please see IRS Q&As #55-58.

    © 2012 - 2013 HR 360, Inc.
  • IRS Updates 2017 'Pay or Play' Penalty and Affordability Amounts

    Posted on April 27, 2017
    Print

    Q&As Also Address Offers of Coverage Under 'Pay or Play'

    The IRS has updated its existing Q&As on the Affordable Care Act's employer shared responsibility ("pay or play") requirements to reflect adjustments to the pay or play penalty and affordability amounts. Those adjustments are as follows:

    • For calendar year 2017, the applicable per-employee dollar penalties of $2,000 and $3,000 are adjusted to $2,260 and $3,390, respectively.
    • For plan years beginning in 2017, the affordability threshold for purposes of both the pay or play affordability safe harbors and the premium tax credit provisions is 9.69%.

    The Q&As also address what counts as an "offer of coverage" for purposes of pay or play compliance. Click here to view the Q&As in their entirety.

    © 2012 - 2013 HR 360, Inc.
  • How to Appeal a Marketplace Notice

    Posted on April 19, 2017
    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 penalties under the Affordable Care Act's "pay or play" provisions for applicable large employers (generally those with 50 or more full-time employees, including full-time equivalents), such employers may seek to appeal an employee's eligibility determination.

    Employer Appeals Process
    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.

    This appeal can generally be filed two ways, either by:

    1. Filling out the Employer Appeal Request Form; or
    2. Submitting a letter with the following information:
      • Business name
      • Employer ID Number (EIN)
      • Employer's primary contact name, phone number, and address
      • The reason for the appeal
      • Information from the Marketplace notice received, including date and employee information

    Employers should mail or fax the appeal request form or letter—with a copy of the Marketplace notice—to the address or fax number provided by Healthcare.gov. After the appeal is filed, the employer will get a letter saying the appeal was received; the letter will provide a description of the appeals process and instructions for submitting additional materials if needed.

    Note: 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.
  • New Individual Marketplace Open Enrollment Period Dates Announced

    Posted on April 18, 2017
    Print

    Marketplace Special Enrollment Period Rules Also Modified

    The U.S. Department of Health and Human Services (HHS) has issued a final rule which, among other things, amends the timing of the annual Health Insurance Marketplace ("Marketplace") open enrollment period for the 2018 plan year and modifies the rules for Marketplace special enrollment periods. 

    New Individual Marketplace Open Enrollment Period
    The final rule changes the dates for open enrollment in the individual Marketplace for the 2018 plan year to November 1, 2017 through December 15, 2017 (consistent with the open enrollment period dates previously established for plan years starting in 2019 and beyond). The previously established open enrollment period for the 2018 plan year was scheduled to run from November 1, 2017 through January 31, 2018. Accordingly, this change will require individuals to enroll in coverage prior to the beginning of the year, unless they are eligible for a special enrollment period

    Modifications to Individual Marketplace Special Enrollment Periods
    The final rule also makes the following modifications to Marketplace special enrollment period rules:

    • Starting in June 2017, HHS will conduct pre-enrollment verification of eligibility for Marketplace coverage for all categories of special enrollment periods for all new consumers in all states served by the Healthcare.gov platform.
    • 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 to read the final rule in its entirety.

    © 2012 - 2013 HR 360, Inc.
  • Reminder: Certain Small Employer HRAs Now Exempt From ACA's Market Reforms

    Posted on April 14, 2017
    Print

    QSEHRAs Must Satisfy Certain Requirements

    As a reminder, a recent law allows certain small employers to offer new "qualified small employer health reimbursement arrangements" (QSEHRAs) to reimburse employees for qualified medical expenses, including individual health insurance premiums.

    Background
    Under prior agency guidance, stand-alone HRAs (except for retiree-only HRAs and HRAs consisting solely of excepted benefits) and HRAs used to purchase coverage on the individual market were considered group health plans that did not comply with certain market reforms of the Affordable Care Act (ACA). As a result, these HRAs were subject to a $100 per day excise tax per applicable employee under the federal tax code.

    The 21st Century Cures Act, which was signed into law in December 2016, exempts so-called QSEHRAs from the ACA's market reforms.  

    QSEHRA Requirements
    To qualify as a QSEHRA, an arrangement generally must:

    • Be funded solely by an eligible employer without salary reduction contributions;
    • Provide, after an eligible employee provides proof of coverage, payment or reimbursement of qualified medical expenses (which generally includes individual health insurance premiums) incurred by the employee or his or her family members;
    • Limit annual payments and reimbursements to $4,950 per employee or $10,000 per family (which are prorated where coverage is less than the entire year); and
    • Be provided on the same terms to all eligible employees.

    Under the law, the term 'eligible employer' means an employer that has fewer than 50 full-time equivalent employees and does not offer a group health plan to any of its employees. Therefore, large employers and employers who offer a group health plan must still comply with the prior agency guidance.

    The law defines an 'eligible employee' as any employee of an eligible employer. Employers may, however, exclude employees from QSEHRA eligibility who:

    • Have not completed 90 days of service;
    • Have not attained age 25;
    • Are part-time or seasonal;
    • Are covered by certain collective bargaining agreements; or
    • Are nonresident aliens that receive no earned income from sources within the U.S. 

    Employer Notice & Reporting Requirements
    While the 21st Century Cures Act requires an employer funding a QSEHRA for any year to provide an initial written notice to each eligible employee that includes certain information about the QSEHRA, the IRS recently announced its intention to issue additional guidance concerning the contents of the notice. Until the issuance of such guidance, employers that provide QSEHRAs for years beginning in 2017 are not required to furnish an initial written notice to eligible employees, and no penalties will be imposed for failure to provide the notice.

    Note that the law also requires an employee's total permitted benefit for the year to be reported on his or her Form W-2.

    Click here for more information on QSEHRAs from the U.S. Department of Labor.

    © 2012 - 2013 HR 360, Inc.
  • Determining 'Full-Time Employees' Under 'Pay or Play'

    Posted on April 11, 2017
    Print

    Designation Determined by Hours Worked, Not Employer Classification

    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. The Internal Revenue Service (IRS) recently addressed a question regarding how an employer's classification of employees as part-time or seasonal impacts full-time employee calculations under the pay or play provisions.

    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, or has 130 hours of service in a calendar month (130 hours of service in a 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
    According to the IRS, if an employer develops a policy restricting part-time or seasonal employees from working more than 29 hours of service in any week, and an employee in either employer-based classification  actually works an average of 30 or more hours of service per week during any given month, this could potentially trigger (or increase the amount of) the employer's liability for an assessable payment under pay or play for that month.

    © 2012 - 2013 HR 360, Inc.

    HR News and Alerts

    HR360::Health Care Reform
    • IRS 'Pay or Play' Letters for 2015 Penalties Expected to Be Issued in 2017

      Posted on April 28, 2017
      Print

      Penalty Letters Separate & Distinct From Marketplace Notices

      The Internal Revenue Service (IRS) has announced that it expects the letters informing applicable large employers (ALEs) that filed Forms 1094-C and 1095-C of their potential liability for a "pay or play" payment for the 2015 calendar year (with reporting in 2016) to be issued in 2017. Going forward, the agency intends to issue letters informing ALEs that filed Forms 1094-C and 1095-C of their potential liability, if any, in the latter part of each calendar year in which reporting was due (for example, in late 2018 for reporting in 2018 for coverage in 2017).

      While the Health Insurance Marketplaces have begun 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, these letters do not indicate whether an employer is required to make a pay or pay payment, as only the IRS can make such determinations.

      For the latest guidance on pay or play payments, please see IRS Q&As #55-58.

      © 2012 - 2013 HR 360, Inc.
    • IRS Updates 2017 'Pay or Play' Penalty and Affordability Amounts

      Posted on April 27, 2017
      Print

      Q&As Also Address Offers of Coverage Under 'Pay or Play'

      The IRS has updated its existing Q&As on the Affordable Care Act's employer shared responsibility ("pay or play") requirements to reflect adjustments to the pay or play penalty and affordability amounts. Those adjustments are as follows:

      • For calendar year 2017, the applicable per-employee dollar penalties of $2,000 and $3,000 are adjusted to $2,260 and $3,390, respectively.
      • For plan years beginning in 2017, the affordability threshold for purposes of both the pay or play affordability safe harbors and the premium tax credit provisions is 9.69%.

      The Q&As also address what counts as an "offer of coverage" for purposes of pay or play compliance. Click here to view the Q&As in their entirety.

      © 2012 - 2013 HR 360, Inc.
    • How to Appeal a Marketplace Notice

      Posted on April 19, 2017
      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 penalties under the Affordable Care Act's "pay or play" provisions for applicable large employers (generally those with 50 or more full-time employees, including full-time equivalents), such employers may seek to appeal an employee's eligibility determination.

      Employer Appeals Process
      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.

      This appeal can generally be filed two ways, either by:

      1. Filling out the Employer Appeal Request Form; or
      2. Submitting a letter with the following information:
        • Business name
        • Employer ID Number (EIN)
        • Employer's primary contact name, phone number, and address
        • The reason for the appeal
        • Information from the Marketplace notice received, including date and employee information

      Employers should mail or fax the appeal request form or letter—with a copy of the Marketplace notice—to the address or fax number provided by Healthcare.gov. After the appeal is filed, the employer will get a letter saying the appeal was received; the letter will provide a description of the appeals process and instructions for submitting additional materials if needed.

      Note: 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.
    • New Individual Marketplace Open Enrollment Period Dates Announced

      Posted on April 18, 2017
      Print

      Marketplace Special Enrollment Period Rules Also Modified

      The U.S. Department of Health and Human Services (HHS) has issued a final rule which, among other things, amends the timing of the annual Health Insurance Marketplace ("Marketplace") open enrollment period for the 2018 plan year and modifies the rules for Marketplace special enrollment periods. 

      New Individual Marketplace Open Enrollment Period
      The final rule changes the dates for open enrollment in the individual Marketplace for the 2018 plan year to November 1, 2017 through December 15, 2017 (consistent with the open enrollment period dates previously established for plan years starting in 2019 and beyond). The previously established open enrollment period for the 2018 plan year was scheduled to run from November 1, 2017 through January 31, 2018. Accordingly, this change will require individuals to enroll in coverage prior to the beginning of the year, unless they are eligible for a special enrollment period

      Modifications to Individual Marketplace Special Enrollment Periods
      The final rule also makes the following modifications to Marketplace special enrollment period rules:

      • Starting in June 2017, HHS will conduct pre-enrollment verification of eligibility for Marketplace coverage for all categories of special enrollment periods for all new consumers in all states served by the Healthcare.gov platform.
      • 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 to read the final rule in its entirety.

      © 2012 - 2013 HR 360, Inc.
    • Reminder: Certain Small Employer HRAs Now Exempt From ACA's Market Reforms

      Posted on April 14, 2017
      Print

      QSEHRAs Must Satisfy Certain Requirements

      As a reminder, a recent law allows certain small employers to offer new "qualified small employer health reimbursement arrangements" (QSEHRAs) to reimburse employees for qualified medical expenses, including individual health insurance premiums.

      Background
      Under prior agency guidance, stand-alone HRAs (except for retiree-only HRAs and HRAs consisting solely of excepted benefits) and HRAs used to purchase coverage on the individual market were considered group health plans that did not comply with certain market reforms of the Affordable Care Act (ACA). As a result, these HRAs were subject to a $100 per day excise tax per applicable employee under the federal tax code.

      The 21st Century Cures Act, which was signed into law in December 2016, exempts so-called QSEHRAs from the ACA's market reforms.  

      QSEHRA Requirements
      To qualify as a QSEHRA, an arrangement generally must:

      • Be funded solely by an eligible employer without salary reduction contributions;
      • Provide, after an eligible employee provides proof of coverage, payment or reimbursement of qualified medical expenses (which generally includes individual health insurance premiums) incurred by the employee or his or her family members;
      • Limit annual payments and reimbursements to $4,950 per employee or $10,000 per family (which are prorated where coverage is less than the entire year); and
      • Be provided on the same terms to all eligible employees.

      Under the law, the term 'eligible employer' means an employer that has fewer than 50 full-time equivalent employees and does not offer a group health plan to any of its employees. Therefore, large employers and employers who offer a group health plan must still comply with the prior agency guidance.

      The law defines an 'eligible employee' as any employee of an eligible employer. Employers may, however, exclude employees from QSEHRA eligibility who:

      • Have not completed 90 days of service;
      • Have not attained age 25;
      • Are part-time or seasonal;
      • Are covered by certain collective bargaining agreements; or
      • Are nonresident aliens that receive no earned income from sources within the U.S. 

      Employer Notice & Reporting Requirements
      While the 21st Century Cures Act requires an employer funding a QSEHRA for any year to provide an initial written notice to each eligible employee that includes certain information about the QSEHRA, the IRS recently announced its intention to issue additional guidance concerning the contents of the notice. Until the issuance of such guidance, employers that provide QSEHRAs for years beginning in 2017 are not required to furnish an initial written notice to eligible employees, and no penalties will be imposed for failure to provide the notice.

      Note that the law also requires an employee's total permitted benefit for the year to be reported on his or her Form W-2.

      Click here for more information on QSEHRAs from the U.S. Department of Labor.

      © 2012 - 2013 HR 360, Inc.
    • Determining 'Full-Time Employees' Under 'Pay or Play'

      Posted on April 11, 2017
      Print

      Designation Determined by Hours Worked, Not Employer Classification

      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. The Internal Revenue Service (IRS) recently addressed a question regarding how an employer's classification of employees as part-time or seasonal impacts full-time employee calculations under the pay or play provisions.

      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, or has 130 hours of service in a calendar month (130 hours of service in a 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
      According to the IRS, if an employer develops a policy restricting part-time or seasonal employees from working more than 29 hours of service in any week, and an employee in either employer-based classification  actually works an average of 30 or more hours of service per week during any given month, this could potentially trigger (or increase the amount of) the employer's liability for an assessable payment under pay or play for that month.

      © 2012 - 2013 HR 360, Inc.