2016 ACA NEWS: WHAT YOU NEED TO KNOW (& DO)

Transcription

1 2016 ACA NEWS: WHAT YOU NEED TO KNOW (& DO) Jessica Straub Licensed Attorney SET SEG Legal Liaison Heather Menzies Licensed Health Insurance Counselor SET SEG Account Executive DISCLAIMER The content in this presentation is based on proposed and final IRS regulations. Information related to health care reform is rapidly changing. Participants should consult with their legal counsel or benefits professional regarding situations specific to their organization. 1

2 OVERVIEW ACA recap and update Focus on 95 percent requirement Strategies regarding 95 percent OFFERING TO 95 PERCENT? Not Okay Okay 2

3 ACA RECAP Measuring full time employees Determining affordability IRS form filing deadline extension Cadillac Tax delay Small group expansion reversal 2016 presidential election ACA UPDATE IRS NOTICE Dec. 16, 2015, the IRS published Indicates certain Section 125 employer contributions and cash in lieu/opt out payments should be considered employee contributions for affordability calculations Clarifies 2016 affordability threshold of 9.66% Updates 4980H(a) and (b) assessment amounts Clarifies handling of disability payments with hours measurement Applies 26 week rule to third party educational staffing firms No effect for 2015 reporting Additional proposed regulations are expected 3

4 BF1 95 PERCENT REQUIREMENT Two types of employer assessments, both may only be imposed if at least one employee seeks and receives a Marketplace subsidy. For 2016: H(a): $2,160 per full time employee if employer does not offer coverage to 95% of full time employees H(b): $3,240 per employee who is not offered affordable, minimum value coverage AND receives a Marketplace subsidy This basic summary excludes important details that should be considered in practice. BF1 WHEN DOES 95 PERCENT REQUIREMENT APPLY? 95 percent coverage offer requirement began Jan. 1, 2016 unless non calendar Plan Year transition relief applies. Plan Year (defined by 45 CFR ) specified in: Health and Welfare Plan Document, or Summary Plan Description, or Considered to be deductible or limit year used under the plan, or The calendar year This basic summary excludes important details that should be considered in practice. 4

5 Slide 7 BF1 Brian Flowerday, 1/8/2016 Slide 8 BF1 Brian Flowerday, 1/8/2016

6 HIGHLIGHTS OF 95 PERCENT REQUIREMENT Employer must offer Does not need to contribute to cost Does not need employees to enroll Employer must offer minimum essential coverage Does not need to be affordable Does not need to be minimum value Employer will be liable if at least one full time employee receives the premium tax credit for purchasing coverage through the Marketplace. HIGHLIGHTS OF 95 PERCENT REQUIREMENT What is Minimum Essential Coverage? 26 U.S. Code Section 5000A(f)(1)(B) lists Coverage under an eligible employer sponsored plan as meeting the minimum essential coverage requirement 26 U.S. Code Section 5000A(f)(2)(B) defines an eligible employersponsored plan as any plan offered in the small or large group market within a state. 29 CFR requires that a group health plan must provide coverage for all of the following items and services, and may not impose any cost sharing requirements (such as a copayment, coinsurance, or deductible) with respect to those items or services. 5

7 STRATEGIES TO ATTAIN 95 PERCENT Five options to address newly eligibles 1. Do nothing take the risk 2. Add them to existing plan offerings 3. Offer them minimum value, affordable coverage 4. Offer them minimum value, unaffordable coverage 5. Offer them minimum essential coverage OPTION 1 DO NOTHING Pros Cons Low immediate cost No new plans created Exposure to $2,160/every employee penalty if one employee receives Marketplace subsidy Potential political implications 6

8 OPTION 2 ADD TO EXISTING PLAN OFFERINGS Pros Eliminates potential $2,160/every employee assessment Eliminates potential $3,240/individual assessment (if affordable) Good for employees (collective bargaining chip?) No new plans created Cons Raises district spending on medical insurance Could impact plan utilization and rates Carrier must allow OPTION 3 OFFER AFFORDABLE, MINIMUM VALUE COVERAGE Pros Eliminates potential $2,160/every employee assessment Eliminates potential $3,240/individual assessment Cons Is it too expensive for the employee? Makes employee ineligible for federal Marketplace subsidy Carriers may require minimum participation levels Additional cost to district 7

9 OPTION 4 OFFER MINIMUM VALUE, UNAFFORDABLE COVERAGE Pros Eliminates potential $2,160/every employee assessment Employees remain eligible for Marketplace subsidies Cons Potential $3,240/individual assessment remains Carriers may require minimum district cost sharing and employee enrollment levels Potential Section 125 Plan nondiscrimination implications OPTION 5 OFFER MINIMUM ESSENTIAL COVERAGE Pros Eliminates potential $2,160/every employee assessment Employees remain eligible for Marketplace subsidies Transition relief insulation Cons Loophole solution political implications? Potential $3,240/ individual assessment remains New plan administrative work Potential Section 125 Plan nondiscrimination implications 8

10 ACTION ITEMS Review 2015 ACA/IRS reporting results Model vulnerability to 2016 assessments Evaluate impact of IRS Notice on affordability Determine which option works best to achieve 95 percent Partner with a consultant or agent Prepare for annual ACA strategy review Jessica Straub, Esq. Legal Liaison jstraub@setseg.org Heather Menzies Account Executive hmenzies@setseg.org 9