As many will attest, 2014 has already provided ample opportunity for keeping up with the ACA. With the inaugural healthcare exchange enrollment period drawing to its close on March 31, announcements from federal agencies over the last several weeks continued to give us more to think about. In addition to the release of the final regulations for the Employer Shared Responsibility provisions, (see our most recent blog), we have yet more clarifications and changes to share with you.
FINAL INFORMATION REPORTING REGULATIONS
On March 5 the IRS and Treasury Department jointly released the "significantly streamlined" final regulations for implementation of the information reporting requirements that apply to insurers and certain employers. Beginning in 2015, employers who are subject to the Employer Shared Responsibility provisions of the ACA will need to track certain items so that they may report on them to the IRS and employees in early 2016. These reports are meant to support the enforcement of the "pay-or-play" employer provisions and administration of premium tax credits for individuals covered by the exchange.
Who Reports What To Whom
- Section 6055 Reporting - Insurers and sponsors of self-insured plans (regardless of size) who provide minimum essential coverage need to provide basic plan details, as well as the identity of who was covered under the plan during each month, to the IRS and those covered individuals.
- Section 6056 Reporting - Employers who are subject to the Employer Shared Responsibility requirements will provide basic plan information, the number of full time employees and for each of those, information about the coverage offered (if any) per month, including the lowest cost for employee-only coverage. This statement will also be provided to both the IRS and each employee listed on the report. Employers eligible for Section 4980 transition relief in 2015, (those between 50-99 full time employees), will use the Section 6056 report to indicate their eligibility for such relief.
Reporting for Sections 6055 and 6056 will be combined under one form so that employers having to report under both sections will only need to complete one document. The timing of reporting is similar to that of W-2 forms - employees must receive their statement no later than January 31 and the IRS filing must be received by February 28 or March 31 for electronic filers. (Note that the first two dates fall on a Sunday in 2016, so the deadlines have been shifted to February 1 and March 1, respectively.)
Simplified Reporting Option
There will be a simpler reporting option for affected employers who can certify that they provide a "qualifying offer" of affordable, minimum value coverage to one or more of their full time employees and the employee's family including spouse
(Note that an employer claiming 2015 transition relief as they move to add dependent coverage to their plans for 2016 will be unable to use these simplified reporting methods.)
The reporting form (1095-C) is under development at the IRS, to be released for comment "in the near future". Its release should help provide a clearer picture of the work and data that will be involved. In the meantime, the Treasury Department has created a fact sheet on the final reporting regulations which is available at their website.
- For employees receiving such a qualified offer for all 12 months, employers will only need to provide identifying data for each employee and the fact that they received a qualifying offer for the entire year.
- For employees receiving a qualified offer for less than 12 months, employers will use a certain indicator code for each month that a qualifying offer was made.
- As part of the phase-in approach for 2015, there will be a further streamlined reporting method if an employer can certify that they have made the qualifying offer to at least 95% of their full time employees and their families.
- Finally, if an employer can certify that they provide affordable, minimum value coverage to at least 98% of the employees covered by the report, they will have the option of avoiding the necessity of indicating which employees are full time and may instead indicate which employees may be full time.
Health and Human Services (HHS) followed up on March 6 with its own ACA-related announcements, including:
- The second annual Open Enrollment period for the healthcare exchange will be held from November 14, 2014 to February 15, 2015 for coverage as early as January 1, 2015. This open enrollment period is 30 days longer than originally scheduled.
- The maximum out-of-pocket limits for 2015 non-grandfathered plans will be $6,600 for individuals and $13,200 for families. For small group plans, these amounts include maximum deductibles of $2,050 for individuals and $4,100 for families.
- States that are currently participating in the federal exchange system but want to move to a state-run exchange for the next enrollment period will have until June 15 to have their plan approved or conditionally approved by HHS.
- The attachment point for the three-year Transitional Reinsurance program, (meant to stabilize premiums in the marketplace as enrollments increase), has been lowered from $60,000 per person to $45,000 per person for 2014 and will increase to $70,000 in 2015.
- Confirmation that the Reinsurance Fee, which pays for the above-mentioned program, will be $44 per covered life in 2015 and that the 2014 fee of $63 per covered life will be collectible in two payments during 2015 instead of one. The Reinsurance Fee is paid by health insurance issuers, including most self-insured employer plans.
Those interested in further reading on the latest HHS announcements will find an HHS fact sheet
on the CMS website.
FURTHER EXTENSION FOR "PRE-ACA" PLAN EXCEPTIONS
Finally, in follow-up to a similar announcement in November of last year, an additional two year extension through 2016 will be allowed for individual and small group policies that were in place before the ACA went into affect and do not meet its requirements. The extensions are only available if state insurance regulators agree to allow for the extension in their state and of course, if insurers continue to offer the plan. The state of California already opted last year not to take up HHS on their original offer of an extension, so this announcement has a negligible effect on California policyholders.
With the publication of the final regulations for Information Reporting and Employer Shared Responsibility, employers will ideally have a better idea of where their organization stands and what they will need to do over the next couple of years to stay in compliance with the ACA. Needless to say, this no doubt remains an adjustment period for everyone - employers, insurers and individuals - to the new landscape of health insurance legislation, so we will continue bringing you related developments to keep you informed.