2015 Employer Compliance Checklist

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1 2015 Employer Compliance Checklist Groups 100+ Many provisions of the ACA have already been implemented and others will become effective for calendar year The following checklists are to assist employers to make sure they are in compliance with the law Grandfathered Plan Status A grandfathered plan is any plan in which an individual was enrolled either directly or through any group plan on March 23, A plan loses its grandfathered status if changes are made to the plan s coverage that significantly decrease the benefits, materially increase cost sharing by participants or substantially increase the cost of coverage paid by participants. If you have a grandfathered plan, you need to determine if it will keep its grandfathered status for the 2015 plan year. Check the following: If your plan will lose its grandfathered status for 2015, confirm that the plan has all of the additional patient rights and benefits required by the ACA such as 100% coverage of preventive care without cost-sharing. If your plan will keep its grandfathered status, include a Notice of Grandfathered Status in any materials provided to participants and beneficiaries anytime plan materials are distributed, such as open enrollment, new hire or special enrollments. Cost-sharing Limits Effective for plan years beginning on or after January 1, 2014, non-grandfathered health plans are subject to limits on cost-sharing for essential health benefits (EHB). This includes both self-insured and fully insured plans. Effective for plan years beginning on or after January 1, 2015, a health plan s out-ofpocket maximum for EHB may not exceed: $6,600 for self-only coverage $13,200 for family coverage For 2015 plan years, health plans with more than one service provider may divide the out-of-pocket maximum across multiple categories of benefits, rather than reconcile claims across multiple service providers. Thus, health plans and issuers may structure a benefit design using separate out-of-pocket maximums for EHB, provided that the combined amount does not exceed the annual out-of-pocket maximum limit for that year. For example, a health plan s self-only coverage may have an out-ofpocket maximum of $5,000 for major medical coverage and $1,600 for pharmaceutical coverage for a combined out-of-pocket maximum of $6,600. 1

2 Check the following: Review your plan s out-of-pocket maximum to make sure it complies with the ACA s limits for the 2015 plan year ($6,600 for self-only and $13,200 for family coverage). If you have a health savings account (HSA)-compatible high-deductible plan (HDHP), keep in mind that your plan s out-of-pocket maximum must be lower than the ACA s limit. For 2015, the out-of-pocket maximum limit for HDHPs is $6,450 for self-only coverage and $12,900 for family coverage. If your plan uses multiple service providers to administer benefits, confirm that the plan will coordinate all claims for EHB across the plan s service providers, or will divide the out-of-pocket maximum across the categories of benefits, with a combined limit that does not exceed the maximum for FSA Contributions Effective January 1, 2015, the maximum amount an individual can contribute to an FSA is $2,550. Also, it is now possible to carry $500 of unspent funds from one year into the following year. The $2,550 limit does not apply to employer contributions to the health FSA and it does not impact contributions under other employer-sponsored coverage. For example, employee salary reduction contributions to and FSA for dependent care assistance are not affected by the limit. Check the following: Confirm that your FSA will not allow employees to make pre-tax contributions in excess of $2,550. Communicate new FSA limits to your employees during open enrollment. Employer Shared Responsibility Under the ACA s Employer Shared Responsibility rules, beginning with calendar year 2015, employers who have 50 or more Full-Time Equivalent Employees (FTEs) that do not offer health coverage to at least 70% of their full-time employees (and dependent children) that is affordable and provides minimum value will be subject to penalties if any full-time employee receives a government subsidy for health coverage through an Exchange. Transition relief is available for applicable large employers (ALEs), with FTEs and for employers with Non-Calendar year plans. 2

3 FTEs are determined by taking the number of full-time employees (those who work an average of 30 hours per week) and adding that number to the calculated number of FTEs. FTEs are calculated by adding the hours for all part-time employees for the month and dividing that number by 120. It s important to remember if you are one of multiple companies under common ownership (a Controlled Group), in calculating FTEs, all employees in all companies that are part of that Controlled Group must be counted. Check the following: To count your employees, determine whether you will use the entire 2014 calendar year or the special transition rule that allows you to use any period of at least six consecutive calendar months during Calculate the number of full-time employees for each calendar month in the counting period. A full-time employee is an employee who is employed on average for at least 30 hours of service per week. Calculate the number of FTEs for each calendar month in the counting period by calculating the aggregate number of hours of service (but not more than 120 hours of service for any employee) for all employees who were not full-time employees for that month and dividing the total hours of service by 120. Add the number of full-time employees and FTEs (including fractions) calculated above for each month in the counting period. Add up the monthly numbers from the preceding step and divide the sum by the number of months in the counting period. Disregard fractions. If your result is 50 or more, you are likely an Applicable Large Employer (ALE) for Keep in mind that there is a special exception for employers with seasonal workers. If your workforce exceeds 50 full-time employees (including FTEs) for 120 days or fewer during a calendar year, and the employees in excess of 50 who were employed during that time were seasonal workers, the employer does not qualify as an ALE. Transition Relief Dependent Coverage The transition relief for large employers for the 2015 plan year for plans under which (1) dependent coverage is not offered, (2) dependent coverage does not constitute minimum essential coverage, or (3) dependent coverage is offered for some, but not all, dependents, will not be subject to an Employer Shared Responsibility, provided that the employer takes steps during the plan year toward offering dependent coverage. 3

4 Transition Relief Employers Unsure of ALE Status Rather than being required to use the full twelve months of 2014 to measure whether it has 50 FTEs, an employer may measure during any consecutive six-month period (as chosen by the employer) during For example, an employer could use a period of at least six months through August 2014 to determine its applicable large employer status and, if it is an applicable large employer, the period from September through December 2014 to make any needed adjustments to its plan (or to establish a plan). Non-Calendar Year Plans Employers who offer non-calendar year plans are not required to comply with the mandate until the start of their plan year in 2015, rather than on January 1, 2015, provided that the plan meets the following criteria: A. The employer maintained a non-calendar year plan before December 27, 2012 B. The plan year was not modified after December 27, 2012 C. Eligibility rules were not changed after February 9, Also, the group must meet one of two coverage tests: A. Since December 27, 2012, the plan needs to have been either offering coverage to at least 33% of all employees or covering at least 25% of its entire workforce, including part-time workers. B. The group would have to demonstrate that since December 27, 2012, it has been offering coverage to at least 50% of all full-time employees or covering at least 33% of all full-time employees. CHECK the following: Establish a system for identifying full-time employees (30 hours per week or more) and aggregate hours for full-time equivalent employees. Determine ALE status for 2015, including eligibility for the one-year delay for groups. For non-calendar plan years, determine whether you qualify for the transition relief. Test plan for affordability and minimum value compliance. In order to be considered affordable, premiums must not be more than 9.5% of the employee s W-2 income OR rate of pay OR Federal Poverty Level (FPL). In order to comply with minimum value guidelines, the employersponsored plan must offer health coverage that pays at least 60% of the cost of the covered services provided under the plan. 4

5 Reporting Requirements In February 2015, the Internal Revenue Service (IRS) released the forms and instructions that employers will use to report under Sections 6055 and 6056: The final forms include: Form 1095-B: Health Coverage. To be filed with the IRS and provided to taxpayers by insurers, as well as by self-insured employers that are not subject to the employer "shared responsibility" mandate, to verify that individuals have minimum essential coverage that complies with the individual coverage requirements. Form 1095-C: Employer-Provided Health Insurance Offer and Coverage. To be filed by employers with 50 or more full-time or full-time equivalent employees to verify their compliance with the employer "shared responsibility" mandate. Form 1095-C will also be used to establish employee eligibility for premium tax credits if the employer does not offer affordable and adequate coverage. Form 1094-B: Transmittal of Health Coverage Information Returns and Form 1094-C: Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns. These are the transmittal forms that insurers and employers will use to transmit the individual 1095-Bs and 1095-Cs to the IRS. The IRS also issued instructions relating to the above forms: Text of Instructions for IRS Forms 1094-B and 1095-B. Text of Instructions for IRS Forms 1094-C and 1095-C. These forms do not have to be filed until the 2015 tax year, but the IRS is asking employers to voluntarily file for the 2014 tax year. Who does it apply to? 6055 (all employers) 6056 (only employers over 50 FTEs) Fully insured health plans Reported by insurer Reported by employer Self-insured plans and multiemployer groups Overview of Sections 6055 & 6056 Reported by employer Reported by employer The Code Sections 6055 and 6056 reporting requirements are intended to promote transparency with respect to health plan coverage and costs. They will also provide the government with information to administer other ACA mandates, such as the employer and individual mandates. The final regulations apply for calendar years beginning after Dec. 31, 2014, however, the IRS is encouraging voluntary compliance for The Section 6055 final rule requires health insurance issuers, self-insured health plan sponsors, government agencies and any other entity that provides minimum essential coverage (MEC) to report information on that coverage to the IRS and covered individuals. 5

6 Reporting Requirements Information reported must include employees and dependents covered under the health plan; their name, address, Social Security number and a list of the specific months where they were covered at least one day. The Section 6056 final rule requires applicable large employers (ALEs) subject to the play or pay rules to report to the IRS and covered individuals information on the health coverage offered to full-time employees. Reporting must include for each calendar month, the number of full-time employees, with corresponding names, addresses and Social Security numbers of each; whether the employer coverage offered provided minimum essential coverage, minimum value, met the 9.5% affordability test, was offered to full-time employees and their dependents, and the employee s share of the cost for the lowest-cost employee-only coverage offered. A lot of additional information is required, which the final regulations allow employers to report using indicator codes. Simplified Filing Options For 6056 With simplified filing an employer can report on an annual basis (rather than monthly). To qualify, the employer needs to make a qualifying offer to full-time employees for all 12 months of the year. The employee contribution for this offer cannot cost more than $1,100 for the year for employee-only coverage, and must also include an offer of coverage to the employee s spouse and dependents. An employer that certifies this qualifying offer to at least 95%of its full-time employees can take advantage of the simplified filing. Also, if the employer makes a qualified offer to at least 98% of full-time employees they qualified for even more streamlined reporting. Check the following: Develop procedures for determining and documenting each employee's full-time or part-time status by month. Develop procedures to collect information about offers of health coverage and health plan enrollment by month. Review ownership structures of related companies and engage professionals to perform a controlled/affiliated service group analysis Discuss the reporting requirements with the health plan's insurer/thirdparty administrator and the company's payroll vendor to determine responsibility for data collection and form preparation. There are a number of Notices and documents which must be distributed by the employer to employees in order to be in compliance with the ACA and ERISA. Most must be distributed to newly hired employees, at Open Enrollment, Special Enrollment, or upon request. Review the checklist on the following pages. 6

7 Employee Notices Checklist Notice or Action Item Details Applies To Provided by/ Provided to Delivered by Date (Timing) Notice of Grandfathered (GF) Status Examples of actions that will cause loss of GF status include: Any increase in employee co insurance rate, Decrease in ER contribution rate by > 5 percentage points below rate on 3/23/10. Group health plans that have been grandfathered or will lose grandfather status. Employer to all participants: The disclosure must state that the plan is grandfathered and must provide contact information for questions and complaints, OR if losing grandfathered status: Amend your plan to comply with requirements on nongrandfathered plans and comply in operation, if your plan will lose grandfathered status. Can use Model Notice issued by DOL. At Open Enrollment or new eligibility. Notice can be included in the SPD. Any required amendments should be made prior to beginning of plan year (but plan must comply even if not yet formally amended.) Notice of Coverage Options (Exchange Notice) Tells employees that Health Insurance Exchanges / Marketplaces became operative in 2014; that employees might be eligible for federal subsidies; info about employer coverage, if available. Employers: Provide Notice to all employees (full time & part time, whether eligible for coverage or not) Can use Model Notices issued by DOL. At time of hire. Can include (as a separate notice) with open enrollment materials. Also must give to non eligible employees Summary Plan Description (SPD) Tells participants what the plan provides and how it operates. It provides information on when an employee can begin to participate in the plan, how service and benefits are calculated, when benefits become vested, when and in what form benefits are paid, and how to file a claim for benefits. Employers: Provide to all plan participants automatically when becoming a participant of an ERISA covered retirement or health benefit plan or to beneficiaries receiving benefits under such a plan. SPD should be delivered to participants within 90 days after they become covered, whether they request it or not. Plan administrators of a new plan must distribute an SPD within 120 days after the plan is established. An updated SPD must be furnished to all covered participants every 5 years, and every 10 years even if the SPD has not changed. Must be delivered within 30 days if requested by participant. 7

8 Notice or Action Item Details Applies To Provided by/ Provided to Delivered by Date (Timing) Uniform Summary of Benefits & Coverage (SBC) & Glossary of Terms Summary of covered benefits, and it also provides examples of how plan will pay benefits in specific circumstances. Glossary is of common health plan terms. Plan sponsor or carrier/ Provides to all participants and eligible employees. Most carriers are preparing SBCs but requiring plan sponsors to provide them to participants. Self insured plans: TPA or employer must prepare. Can use Model Notices issued by the DOL. With Open Enrollment materials; Also at initial enrollment; Within 7 business days after requested; Within 90 days after HIPAA special enrollment; If auto re enrollment at least 30 days before 1st of Plan Year Women s Health and Cancer Rights Act Informs participants about benefits covering mastectomies and related services and how to get detailed information on available benefits. Plan Administrator (can be delegated to the carrier): Send to all plan participants. Annually & upon initial enrollment. Usually sent at Open Enrollment. HIPAA Privacy Notice (Carrier s Notice, or selfinsured Plan s Notice, or Employer s Notice for plan overall) Tells plan participants about their HIPAA Privacy rights, the plan s Privacy obligations, and the contact information for the Privacy Official if a participant wants to file a complaint Insured plan: Carrier must send to all plan participants if employer does not get Protected Health Information (PHI). Self funded plan: Employer or TPA must send to all plan participants General distribution rules: At initial enrollment; & If relevant information changes; & Upon request; & Every 3 years must notify of right to request new Notice HIPAA Notice of Special Enrollment Rights Tells all eligible employees what circumstances give rise to special mid year enrollment rights (even if they do not enroll.) Plan Administrator (Sponsor), can be delegated to Carrier: Send or give to eligible employees. Initial Eligibility and each Open Enrollment; and also must be in SPD. CHIP Notice Medicaid and Children s Health Insurance Program Informs employees about possible state financial assistance for health insurance coverage. Plan sponsor: Send to all eligible employees who reside in a state with CHIP financial assistance. Annually, before beginning of plan year. Recommend to include with Open Enrollment materials; And upon initial eligibility. Medicare Part D Creditable or Non Creditable Coverage Notice Indicates whether the plan s prescription drug coverage is creditable or noncreditable with Medicare prescription drug coverage. Plan sponsor is only required to send to all Medicareeligible participants (including COBRA participants and eligible dependents), but usually just sends to all participants. Annually, must send before October 15 (regardless of plan year) If included with Open Enrollment materials before Oct 15, need not send again until next year. 8

9 Notice or Action Item Details Applies To Provided by/ Provided to Delivered by Date (Timing) Newborns and Mothers Health Protection Act Explains federal and state hospitalization time provisions for newborns and mothers. Must be in SPD. Often sent by Plan Administrator or carrier: Send to all plan participants. Must include in SPD. May want to send annually with Open Enrollment materials. Summary Annual Report Summary of benefits under the plan and total amount paid by plan. Large plans 100+ ( that file Form 5500.) Plan administrator: Send to all plan participants. (Within 60 days after Form 5500 was filed.) Annually, within 60 days after filing of Form 5500 (or 9 months after end of Plan Year.) Wellness Program disclosures Applies only for certain types of Wellness Programs Tells eligible individuals they can satisfy an alternate standard if they are medically unable to meet Wellness Program s standard that is related to a health factor. Wellness programs with a reward or penalty that affects employee s cost for coverage under the GHP & requires achievement of performance standards. Plan administrator: Send to all plan participants. Annually, at open enrollment; and Prior to or at offering of Wellness Program. HIPAA/HITECH Breach Notice (if breach involved more than 500 individuals) Notifies affected participants and Health and Human Services (HHS) that there was a breach of Protected Health Information (PHI) during the prior 60 days. Plans that had a breach of PHI during the past 60 days. Plan sponsor: Must provide notice to Affected Plan participants (directly) and HHS (on HHS website.) Without unreasonable delay & not more than 60 days after discovery of breach. HIPAA/HITECH Breach Notice (if breach involved 500 or fewer individuals) Notifies affected participants & Health and Human Services (HHS) that there was a breach of Protected Health Information (PHI) Plans that had a breach of PHI (During the past plan year for notice to HHS; During past 60 days for notice to participants.) Plan sponsor: Must provide notice to Affected Plan participants (directly) And HHS (on HHS website). Notice to HHS: Within 60 days after end of plan year. Notice to affected participants: without unreasonable delay & not more than 60 days after discovery of breach. Self certification of Religious Organization Status Applies only to religious organizations that do not want to cover women s contraceptive services. Religious employers and religiouslyaffiliated employers Religious employer to insurers and/or TPA. Must self certify and provide copy to insurer or TPA prior to beginning of plan year. This is not an annual requirement. This document is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice. 9

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