Looking Ahead: Potential Changes in Compliance for 2017

In a changing political climate, it’s difficult to predict how changes to legislation will effect businesses. Benefits Pro recently released a list of 6 different compliance issues to watch for in 2017.

  1. Changes to the Affordable Care Act — though they won’t happen overnight. Though the repeal and replacement of the law is unlikely to occur at this moment, it is important to be familiar with any changes with the law’s compliance, financial, and strategic standards.
  2. Revising or withdrawing changes to the EEO-1 form, a form that is required of every business to report to the U.S. Equal Employment Opportunity Commission. According to Benefits Pro, revisions to the report will require that companies include information regarding wages and hours, as well as longstanding reporting of workforce characteristics such as gender, race/ethnicity, and job category.
  3. Predictable tax reform from the new presidential administration. The article notes that there are three elements of tax reform that could effect employer-sponsored benefits: proposed caps on the tax preference for employer health benefits, limits on the tax preference for retirement plan savings and employer contributions, and expanded HSAs.
  4. Employer-sponsored retirement plans may be affected by automatic-enrollment retirement plans. Large business are instructed to prepare to comply with state and local automatic-enrollment retirement plan mandates.
  5. Employers should become familiar with the proposed FLSA changes for overtime rules and comprehensively communicate those changes with employees.
  6. Business leaders should become aware of proposed paid sick leave and family leave laws at the state and local levels.

For more information, click here.

UPDATE: President Obama Signs Cures Act into Law

In an earlier update, Cornerstone provided an overview of select portions of the anticipated 21st Century Cures Act. The president has since signed the Act into law with many provisions set to go into effect January 1, 2017.

Background

Due to previous guidance from the Department of Labor (DOL) and IRS, employers have been effectively prohibited from providing employees with funds to purchase individual health insurance policies (see IRS Notice 2013-54 and DOL Technical Release 2013-03).

However, the Cures Act will enable small employers with fewer than 50 full-time employees to fund qualified stand-alone HRAs. Employees may use the HRA to pay for qualified out-of-pocket medical expenses, including individual polices purchased through the public exchanges. The Cures Act creates an exemption from ACA group health plan requirements for qualified small employer health reimbursement arrangements (QSEHRA).

What are the general criteria for a QSEHRA?

  • Must be small employer (fewer than 50 full-time employees or equivalents)
  • Employer cannot also sponsor a group health plan
  • QSEHRAs must be offered to all full-time employees
    • Except: 90-day waiting period, individuals under 25, individuals covered under collective bargaining agreement for health benefits, along with part-time and seasonal workers.
  • Must be provided on the same terms to all eligible employees
    • Except: The Cures Act allows benefits to vary based on age and family-size market variations in the price of an insurance policy.
  • Payments and reimbursements must be funded solely by the employer and cannot exceed $4,950 for an individual or $10,000 for family
  • Notice – Employer must provide each eligible employee a written notice at least 90 days before the beginning of the year or when an employee becomes eligible including:
    • The amount of the permitted benefit under the Qualified HRA for the year;
    • A statement that if the employee is applying for advance payment of the premium tax credit for health insurance on the Marketplace, the employee must inform the Marketplace of the amount of the permitted benefit under the Qualified HRA;
    • A statement that if the employee is not covered under minimum essential coverage for any month, the employee may be subject to a tax under Code Section 5000A and reimbursements under the Qualified HRA may be taxable income.

Another important consideration for employers is that the employers’ contributions, while not taxable income to the employee, must be reported on the employee’s W-2.

Employees may not be eligible for health insurance subsidies for plans purchased through the exchange during the months they are covered under an employer’s QSEHRA. Coordination of QSEHRA benefits and a premium tax credit requires analysis of whether the coverage provided by the QSEHRA is “affordable coverage.”

Affordability is determined separately for each employee.  A QSEHRA is considered to provide affordable coverage for a month if, for a particular employee:

  • that employee’s premium for self-only coverage under the second  lowest cost silver plan offered in the relevant exchange, minus
  • 1/12th of that employee’s permitted benefit for the year,
  • is not more than 1/12th of 9.5% (indexed) of the employee’s household income for the year

While employers should alert employees of the potential impact, it appears the above calculation will remain the employees’ responsibility. In addition to creating an exemption for these arrangements going forward, the Cures Act also extends prior transition relief through detailed in IRS Notice 2015-17 through the end of 2016.

On December 20, 2016, the DOL addressed the impact of the Cures Act in ACA Implementation FAQs Part XXXV. The DOL acknowledges, “Because a QSEHRA is statutorily excluded from the definition of a group health plan, the group market reform requirements do not apply to a QSEHRA.”

FAQ Q.3 goes on to explain that, “Pursuant to the extension provided under the Cures Act, for plan years beginning on or before December 31, 2016, the excise tax under Code section 4980D will not be asserted for any failure to satisfy the market reforms by EPPs that pay, or reimburse employees for, individual health policy premiums or Medicare Part B or Part D premiums, with respect to employers otherwise eligible for the relief under Q&A 1 of Notice 2015-17. Such employers are also not required to file IRS Form 8928 solely as a result of having such an arrangement for the plan years beginning on or before December 31, 2016.” In other words, a small employer that has been reimbursing individual health insurance premiums or other medical costs from a standalone HRA before January 1, 2017 will not be subject to the $100 per day penalty under Code Section 4980D.

The previous agency guidance referenced above would still prohibit these arrangements for larger employers. Accordingly, an employer that is considered an applicable large employer as defined in Code section 4980H(c)(2) is not permitted to offer a QSEHRA.

The full text of the bill can be accessed here.

Cornerstone will continue to provide updates as provisions of this Act are implemented.


For more information, contact your Cornerstone representative.

GOP Must Take a Few Steps Before Repealing Obamacare

Politico reports that, in order for the GOP to repeal Obamacare, they must take the necessary steps to stabilize premiums and fleeing insurers before agreeing on a replacement plan.

“It’s not going to be politically possible to throw 20 million people out on the street without health insurance,” said right-leaning health care policy analyst John Goodman.

To read the full story, click here.

Cures Act Sent to President Obama to Provide HRA Relief for Small Businesses

The 21st Century Cures Act is headed to President Obama’s desk and is expected to be signed into law effective January 1, 2017.

While the Act addresses a number of items, of particular significance to brokers is a provision that removes qualified small employer (fewer than 50 full-time employees) health reimbursement arrangements (HRAs) from the definition of a “group health plan.” Following IRS guidance in 2014 and 2015, brokers had been limited in their ability to assist employers who wished to reimburse employees for the purchase of individual health insurance.

Under the Act, qualified HRAs may be used to assist employees in purchasing coverage on the individual market. However, arrangements must meet a number of criteria to be considered a qualified reimbursement arrangement.

For example, annual benefits under qualified HRAs cannot exceed an indexed maximum of $4,950 per year ($10,000 if family members are covered), must be employer-funded, and can only be used for qualified medical expenses. Also, the HRA benefits must also be offered on the same terms to all “eligible employees.”

Employees covered under a qualified HRA will be ineligible for subsidies for policies purchased through the health insurance exchanges.

The Act also contains significant changes for Medicare Open Enrollment beginning in 2019. The Act provides that Medicare-eligible individuals may make a one-time change during the first three months of any year to another Medicare Advantage plan, elect original Medicare fee-for-service program, or to elect coverage under Part D.

The full text of the bill can be accessed here.

Cornerstone will continue to provide updates as provisions of this Act are implemented.


For more information, contact your Cornerstone representative.

 

UPDATE:

Repeal of the ACA May Not Benefit Employer-Sponsored Health Plans

Benefits Pro reported that employer-sponsored health plans may not benefit from the repeal of the ACA. A Bloomberg report by Greta E. Cowart notes that employers may have to return money received from retiree reinsurance program and other government-sponsored initiatives, and that many of the mandates on what should be included in these plans that weren’t exempted nor grandfathered will be difficult to take out of the plans.

 

For more information, click here.

Obamacare May Be Repealed Before Replacement is Arranged

According to the Associated Press, Congress may vote to repeal Obamacare before arranging  replacement legislation. GOP representatives expect that repealing the health care law without a replacement would encourage representatives from both parties to cooperate in quickly finding a replacement policy that benefits all.

 

Click here for the full story.

President-Elect Trump Nominates Price for HHS Chief

According to Benefits Pro, President-elect Donald Trump has decided to nominate U.S. Representative Tom Price as the secretary of the Department of Health and Human Services. Price has been a key figure in the attempt to pass legislation repealing and replacing Obamacare.

“There is much work to be done to ensure we have a healthcare system that works for patients, families, and doctors; that leads the world in the cure and prevention of illness; and that is based on sensible rules to protect the well-being of the country while embracing its innovation spirit,” Price said in a statement.

The President-elect also announced his nomination of Seema Verma as the administrator for the Centers for Medicare and Medicaid Services.

Read the full story here.

New Jersey Residents May Lose Coverage if Trump Cuts Medicaid

 

To read the full article, click here.

Confusion Among Buyers with Medicare Advantage Plans and Networks

The Wall Street Journal reports that there may be some confusion with Medicare Advantage plans among buyers, especially in determining which hospitals are included in the plans’ networks. A report from the Henry J. Kaiser Family Foundation finds that incorrect and confusing information in plan directories is leading to difficulty in navigating the plans.

For more information, click here.

Repealing Obamacare May Be More Complex Than Expected

Politico reports that President-elect Donald Trump and the GOP’s promise to repeal Obamacare without a replacement program underway may cause health insurers to prematurely bolt from the individual market and increase premiums.

 

Read the full article here.