EMPLOYER SHARED RESPONSIBILITY

Transcription

1 July 2014

2 EMPLOYER SHARED RESPONSIBILITY The Employer Shared Responsibility sometimes referred to as the employer mandate starts in 2015, and we can help you understand how it will affect your business. On February 10, 2014, the Internal Revenue Service (IRS) and U.S. Department of the Treasury issued the final regulations, which we ve summarized below: Who: All fully insured and self-funded employers. In general, to be subject to the Employer Shared Responsibility provisions for a calendar year, an employer must have employed during the previous calendar year at least 50 full-time or full-time equivalent employees. What: Under the Employer Shared Responsibility provisions, if employers do not offer affordable health coverage that provides a minimum level of coverage to their full-time employees (and dependents), the employer may be subject to an Employer Shared Responsibility payment if a full-time employee receives a premium tax credit for purchasing individual coverage on one of the new Affordable Insurance Exchanges. When: 2015: 100 or more full-time or full-time equivalent employees 2016: 50 or more full-time or full-time equivalent employees How much: $2,000/employee if the employer doesn t offer affordable coverage to all employees (with some exclusions) $3,000/employee if the employer doesn t offer affordable coverage (penalty is for each full-time employees who gets a subsidy) Dependent on employee getting tax credit on the exchange 50 to 100 Full-Time Employees Tax penalties are delayed until 2016, but there are requirements and limitations. This transitional relief applies to all of 2015 and the portion of 2016 that falls before the plan year anniversary You cannot move your start date in order to delay 2016 implementation You cannot reduce staff in order to get below 100 employees intentionally to avoid the penalties If you don t currently offer coverage you are not required to start until 2016 If you do currently offer coverage, there are limits to reducing contribution levels: Dollar amount can t go down more than 95 percent of what you currently offer or Can t reduce percent of costs contributed Benefits can be reduced but must be greater than 60 percent minimum value Can t alter classes of employees to reduce employees eligible for coverage You must certify on a prescribe form (not yet issued) that you meet the above requirements All Large Employers While not pertinent to employers with 50 to 100 full-time employees. The following transition relief opportunities may still be available to employers with 50 to 100 employees (if needed). Just as employers with 50 to 100 employees, this transitional relief applies to all of 2015 and the portion of 2016 that falls before the plan year anniversary You cannot move your start date to delay 2016 implementation Previously, employers were required to offer to 95 percent of employees, for 2015 only (and the portion of 2016 before your plan year anniversary) this is lowered to 70 percent Previously, if the employer did not offer minimum essential coverage then they were subject to a $2,000 penalty on all employees, except for the first 30. This exception of 30 has been changed so the penalty does not apply to the first 80, effectively reducing the penalty $100,000

3 The final regulations also provide transition relief for employers with a significant percentage of employees eligible for or covered under a non-calendar year plan as of December 27, 2012, if the employer: Had at least a quarter of its employees covered under those non-calendar year plans as of any date in the 12 months ending on February 9, 2014; or, Offered coverage under those plans to one third or more of its employees during the open enrollment period that ended most recently before February 9, The final regulations also extend this transition relief to employers that have a significant percentage of full-time employees eligible for or covered under a non-calendar year plan as of December 27, 2012, if the employer: Had at least one third of its full-time employees covered under those non-calendar year plans as of any date in the 12 months ending on February 9, 2014; or, Offered coverage under those plans to half or more of its full-time employees during the open enrollment period that ended most recently before February 9, If either of these transition policies apply, the employer will not be liable for a penalty for months in 2015 before the 2015 plan year begins with respect to employees who are offered affordable, minimum value coverage no later than the first day of the 2015 plan year and who would not have been eligible for coverage under any calendar year group health plan maintained by the employer as of February 9, IRS REPORTING REQUIREMENTS Beginning in 2016 (for information on 2015), insurers and self-funded plans will be required to report information about health coverage provided during the prior year to all enrollees, as required by Code section 6055 and Each group will be subject to reporting requirements about the health coverage they offered employees and dependents the year before. This information will be reported on new IRS forms which have not been made available. IRS reporting will be voluntary for 2014 and mandatory for However, there are two areas of transition relief beginning in 2015: Good Faith Standard (2015 Penalty Relief): There are no reporting penalties for optional 2014 reporting, and a good faith effort standard for imposing 2015 reporting penalties for incorrect or incomplete filings. Simplified Reporting (2015): There is a simplified reporting method in 2015 for employers with 50 or more full-time equivalent employees. If the employer made a qualifying offer to at least 95 percent of full-time employees, spouses and dependents in 2015, they are allowed to report a simplified section 6056 form with respect to those employees. Eligible employers will be permitted to report without identifying or specifying the number of full-time employees. When are the new IRS forms due? The time line is similar to Form W-2 rules, which means the form is generally filed with the IRS by February 28 (March 31 for electronic filing), and given to full-time employees or responsible individuals by January 31. The form will be filled out in regards to the prior calendar year and the first forms are due in Arkansas Blue Cross will keep you updated as more information becomes available. TRANSITIONAL REINSURANCE FEES Employers, or plan sponsors, with self-funded group health plans, are required to make contributions to the transitional reinsurance program. First reporting is due to U.S. Department of Health and Human Services (HHS) by November 15, ARKANSAS BLUE CROSS ACTUARIAL CONSULTING The new health care law is complicated. We have a team of professional actuaries ready to help you. Services offered include: Day-to-day analysis Strategic decisions specific to ACA Assurance of your compliance with ACA Transitional reinsurance fee calculations Talk to your Arkansas Blue Cross representative to learn more about our actuarial consulting services and fees.

4 The HHS determines the transitional reinsurance fee for a benefit year (defined as a calendar year). HHS has estimated the per capita fee as $5.25 per month, or $63 per year, for 2014 and it decreases the subsequent two years. The fee applies to all reinsurance contribution enrollees including all covered employees, spouses and dependents. By November 15 of each benefit year (2014, 2015 and 2016) the plan sponsor submits to HHS an enrollment count of the average number of covered lives subject to the reinsurance fee. Typically, employers have the most accurate information when determining the number of lives covered under their health plans. As a third-party administrator (TPA), BlueAdvantage can crunch the numbers to determine the number of covered lives within your group. On or around November 1 of each calendar year, BlueAdvantage will provide plan sponsors with the average number of covered lives for those employers who may wish to use either of these counts. We ll use the Snapshot and Snapshot Factor methods. This does not mean, however, that you are required to pay reinsurance fees based on any counts we provide to you. As a plan sponsor, you decide the method used for reinsurance fee calculations. Many employers may choose the Form 5500 Method since this data is routinely reported by self-funded groups and the method of calculation is relatively easy to follow. A note to employers utilizing multiple TPAs to administer group health plans: BlueAdvantage will provide an average count of covered lives for the plans we administer. If other employee group health plan populations are administered by additional TPAs, then the employer will need to determine the best method for obtaining that information. NOTICE OF COVERAGE OPTIONS AVAILABLE ON THE MARKETPLACE Employers are required to provide a notice to their employees: About the existence of the Health Insurance Marketplace and how it works Whether their plan meets minimum value That by purchasing on the Marketplace, they waive their right to any employer premium contribution Template language for this employee notice is available on the Arkansas Blue Cross website in the employer section. Please be advised that employers are required to provide this notice to all new employees within two weeks of hiring. GRANDFATHERED VS. NON-GRANDFATHERED The big question facing employers is do we like the health plan we have (with the required changes) enough to keep it, or should we give up our grandfathered status and establish a new health plan compliant with all the changes required for non-grandfathered plans? GRANDFATHERED STATUS: The following are examples of changes to your health plan that would result in the loss of grandfathered status: 1. Eliminating or substantially reducing benefits for any types of conditions 2. Increasing a member s coinsurance percentage by any amount 3. Increasing a plan s annual deductible by more than medical inflation plus 15 percent, in total, from March 23, 2010, forward 4. Increasing copayments to physicians and pharmacies by more than the greater of $5 or medical inflation plus 15 percent from March 23, 2010, forward 5. Decreasing your employer contribution by more than 5 percent of the premium from March 23, 2010, forward In addition, employers must maintain records showing what their health plan benefits were as of March 23, 2010, and beyond, so they are available for review in case there is a question. Employers also must include a statement that their health plan is grandfathered in any benefit plan communications to employees. The Department of Labor has published model language to use for that communication. There are some additional items that will trigger the loss of grandfathered status: Adding an annual limit Decreasing the dollar value of an annual limit Purchasing a plan that existed before March 23, 2010, with the same carrier, and merging plans for the purpose of reducing benefits There are potential cost implications for staying

5 grandfathered, both short term and long term. Employers have less ability to control costs by traditional approaches, such as increasing deductibles, raising copayments or adjusting their contribution amounts. However, it is important to consider the benefits of retaining grandfathered status as well. Grandfathered status does not expire. Only by doing one of the preceding actions will a group lose grandfathered status. Requirements for new plans that do not apply to grandfathered plans: Mandated preventive care without cost sharing Nondiscrimination rules for insured groups Quality of care/provider reimbursement structure reporting Appeals and external review process Choice of providers/emergency services (already in place) Modified community rating and bands (small group only) Nondiscrimination related to providers Requirement to cover essential benefits Annual out-of-pocket coinsurance maximum Clinical trials coverage AUTO-ENROLLMENT (STILL DELAYED) The portion of the new law that requires employers with more than 200 employees automatically enroll new hires on any employer-sponsored health coverage is beginning January 1, However, the Department of Labor has indicated that the requirement cannot be implemented until rule making is complete. W-2 REPORTING The law required that all employers include the value of their health insurance plan (both employer and employee contributions) on the employee s W-2 beginning January 1, 2013, for 2012 wages. However, transitional relief was provided so that the provision only applies to employers that issue 250 or more W-2 forms annually. This will be the requirement until further guidance is provided. SMALL GROUP TRANSITION RELIEF In February, the federal government released final regulations on the employer shared responsibility requirements commonly called the employer mandate, under the ACA. Part of these regulations addressed transition relief for 2015 for small employers to avoid penalties and address many of the open issues in the proposed regulations. That brought about some opportunities for small employers, whether they are grandfathered or non-grandfathered. Some changes will result in a loss of grandfathered status, but could result in significant savings for groups for more than two years since they will not be mandated to pay ACA member level rates until October As a reminder, these changes can only be made at renewal. FUTURE TOPICS Arkansas Blue Cross will provide more information on other important health care changes in the future. Talk to your Arkansas Blue Cross representative to find out more about changes, or to learn more about our actuarial consulting services and fees. The enclosed information is an Arkansas Blue Cross interpretation of the new health insurance laws based on interim final regulations released by the U.S. Department of Health and Human Services as of the date printed on the communication s front cover. Other changes could be forthcoming as federal entities determine how these laws will be implemented. Please consult your attorney or tax advisor.

6 arkansasbluecross.com WE RE HERE TO HELP Little Rock ArkansasBlue Shackleford Crossings 2612 S. Shackleford Rd., Ste J Phone: Pine Bluff ArkansasBlue 509 Mallard Loop Dr. Phone: Texarkana 1710 Arkansas Blvd. Phone: Fayetteville 516 E. Millsap Rd., Ste 103 Phone: Fort Smith 3501 Old Greenwood Rd., Ste 5 Phone: Hot Springs ArkansasBlue 1635 Higdon Ferry Rd., Ste J Phone: MPI /14 Jonesboro 707 E. Matthews Ave. Phone: