Administrative Obligations Workshop. February 5, 2015

Transcription

1 Virginia ASBO Administrative Obligations Workshop February 5, 2015 This is only a brief summary that reflects our current understanding of select provisions of the law, often in the absence of regulations. All of the interpretations contained herein are subject to change as the appropriate agencies publish additional guidance. Agenda ACA introduction Notice and Disclosure Requirements Reporting Requirements Other Tasks 1

2 ACA Introduction State Exchanges Individual mandate Federal premium tax credit to purchase Exchange coverage Employer mandate 2

3 Employer Mandate Penalty Penalty may apply if: No coverage offered to full time employees and dependents Coverage is unaffordable or inadequate Employee enrolls in Exchange coverage and qualifies for a federal premium tax credit Tracking Hours Full time is 30+ hours/week or 130+ hours/month Counting hours Work and non work time for which pay is due Service records or use of equivalency Include common law employees Volunteer hours 3

4 Measurement Period Approach 90 Days Year 1: Measurement Period Admin Period Stability Period 3 12 Months 6 12 Months* Year 2: Measurement Period Admin Period Stability Period * Must be at least as long as Measurement Period Special rules for educational institutions Apply if 4+ week break in service Two methods for determining full time employees Use measurement period excluding break Treat employee as credited with hours for the employment break Includes anti abuse rule 4

5 Final notes on counting hours worked Changes in employment Breaks in service 13 weeks (26 weeks for Educational Institutions) Rule of parity Special unpaid leave Workshop Goals for the Workshop Feel free to ask questions as we go Disclaimers Breaks and Restrooms 5

6 Notice and Disclosure Requirements Notice of Grandfathering Use questionnaire to confirm continued eligibility for grandfathering Grandfathered plans must include notice of grandfathered status in all benefit summaries Model language available Effective for plan years on/after March 23,

7 Documentation of Grandfathering Grandfathered plans must maintain records documenting the terms of coverage in effect on March 23, 2010 and all terms since then Must be available to agencies and participants upon request Must be sent to any new insurance carrier Documentation of Grandfathering Examples of documentation: Plan documents, including amendments Health insurance policies Certificates or contracts of insurance Summary plan descriptions Documentation of plan design Documentation of premium rates and contributions 7

8 Patient Protection Notices 1 st plan year on/after September 23, 2010: Lifetime limits Adult child eligibility Non-grandfathered plans, for all plan years on/after September 23, 2010 (incorporate into plan summaries): Right to select PCP Direct access to OB/GYN Model language available Summary of Benefits & Coverage Plan sponsor must provide a Summary of Benefits and Coverage (SBC) Effective for annual enrollments/plan years beginning on or after September 23, 2012 Distribute with annual enrollment materials, following special enrollment events, and upon request 8

9 Summary of Benefits & Coverage Government issued template/instructions Fully insured get SBC from insurer Self-funded employer fills in template In either case, the employer is responsible for distribution (may delegate) Template was updated for 2014 May need to provide in multiple languages Check county-by-county data on DOL website Summary of Benefits & Coverage Deadline: With any written enrollment materials, or not later than the first day of enrollment If reenrollment is automatic, 30 days prior to the first day of the plan year To special enrollees, within 90 days of enrollment Upon request, ASAP but not more than 7 days 9

10 Summary of Benefits & Coverage SBC may be provided in paper or, if certain requirements are satisfied, electronically If already covered by the plan, use DOL safe harbor If eligible but not enrolled, electronic format must be readily accessible, paper available; if post online, must send or paper notice Safe Harbor for Electronic Distribution If using a computer is an integral part of the employee s job, may distribute electronically (e.g., via ) Posting online is not distribution May post and send a postcard or with the link 10

11 Safe Harbor for Electronic Distribution For participants who do not have workrelated computer access, must obtain prior consent Informed consent must include: Right to request a paper copy Type of documents that will be sent electronically Hardware/software requirements to access Right to withdraw consent at any time Safe Harbor for Electronic Distribution Informed consent (cont d) In all cases, paper copy must be available upon request and without a fee Consent may be electronic or paper, but must demonstrate ability to access information electronically Utilize features such as return-receipt and undeliverable mail options, confirm receipt ESB XXX

12 Advance Notice of Benefit Changes Applies if the plan sponsor makes certain mid-year modifications to health plan coverage not reflected in distributed SBC Only applies for mid-year changes Must send notice of mid-year changes 60 days in advance of effective date May simply distribute updated SBC Effective September 23, 2012 Uniform Glossary Federal agencies have published a uniform glossary to help explain key concepts from SBC May also be distributed in paper or electronic form, but distribution is required only upon request Glossary is not a template: no information needs to be added ESB XXX

13 Employee Exchange Notice Employers subject to FLSA must provide information about the state Exchanges One or more employees Generally firms with $500,000+ annual business Plus hospitals, schools, and government agencies Internet compliance tool is available to determine applicability Employee Exchange Notice Required distribution: To all current employees as of October 1, 2013 To all subsequent new hires within 14 days of start date beginning January 1, 2014 May be paper or electronic (if satisfy DOL safe harbor rules) Two model notices were provided 13

14 Employee Exchange Notice Model COBRA notice was also revised Effective date: October 1, 2013 Model if employer offers coverage: First two pages are mandatory Third page is optional helps employees apply for tax premium tax credit for public exchange coverage Reporting Requirements 14

15 W 2 Reporting First effective for the 2012 tax year Employers that filed fewer than 250 W-2 Forms the previous year are not required to report at this time Must report health care costs, including: Employer and employee contributions Pre-tax and after-tax contributions in most cases W 2 Reporting Coverage subject to W-2 reporting Employer- sponsored group health coverage Employer contributions to Health FSA Gap Coverage Hospital Indemnity Coverage if pre-tax Fixed Indemnity Coverage if pre-tax Specified Disease Coverage (e.g., cancer, critical illness) if pre-tax On-site clinic Employer-sponsored wellness Coverage exempt from W-2 reporting HRA Allocations Employee contributions to a Health FSA* Health Savings Account contributions Archer MSA contributions Stand Alone Dental Coverage Stand Alone Vision Coverage Long Term Care Coverage Disability Coverage Accident, including AD&D * Requires an additional calculation 15

16 W 2 Reporting Four methods to determine cost: Premium charged method COBRA applicable premium method Modified COBRA premium method Composite rate Report total in Box 12 using code DD ESB XXX 0713 PCORI Fee Plan sponsors and insurers must pay a fee to help fund comparative effectiveness research Covered plans Fee must be paid by July 31 st of the year following the end of the plan year: File tax form 720 First forms were due July 31,

17 PCORI Fee Amount of the fee is based on the average number of covered lives $1 per individual for 1 st plan year ending after Sept. 30, 2012 $2 per individual for the October 1, 2013 Sept. 30, 2014 year $2.08 per individual for the Oct. 1, 2014 and before Sept. 30, 2015 PCORI Fee Four methodologies to determine the average number of covered lives: Actual count method Snapshot factor method Snapshot count method Form 5500 method ESB XXX

18 Exchange Reinsurance Fee Insurers and plan sponsors of group health plans must pay fee to HHS Purpose: stabilize premiums in individual public exchange Applies for 3 years beginning 2014 HHS estimates for 2014: $63/covered life Estimates for 2015: $44/covered life Estimate for 2016: $27/covered life Exchange Reinsurance Fee Process: Must report covered life information to HHS by December 5, 2014 HHS will send invoices by later of 30days after submission of covered life information or December 15, 2014 for $52.50/covered life Payment is due within 30 days of receipt Payment for remaining $10.50 will be invoiced and is payable in the fourth quarter

19 6055 and 6056 Reporting Two components: Section 6055: Minimum Essential Coverage Reporting Section 6056: Large Employer Reporting Employers subject to both can combine the reporting Employers with 250+ returns must file electronically ESB XXX and 6056 Reporting First reporting will be for calendar year 2015 Regardless of plan year Due to covered individuals by January 31, 2016 (in conjunction with W-2 Forms) Due to the IRS by February 28, 2016, or March 31 if filed electronically (Form1095) Form and instructions available in draft ESB XXX

20 6055 Reporting Used to facilitate compliance and administration of the individual mandate and premium tax credits for public exchange coverage Who has to file Insurers of insured health plans Plan sponsors of self-funded plans (regardless of size) ESB XXX Reporting Include all individuals covered by the plan Information to include Employers may not currently have all of this information Must make at least two attempts to collect Social Security number (or date of birth) for all employees and covered dependents (spouse and children) ESB XXX

21 6056 Reporting Used to enforced the employer mandate and determine eligibility for premium tax credits to purchase public exchange coverage Large employers must file Employed an average of 50+ full-time equivalent employees on business days of the previous calendar year Employer mandate delay for employers with employees does not delay reporting ESB XXX Reporting Employers that qualify for delay in the employer mandate must provide certification of eligibility in 6056 reporting Administrator of multiemployer plan may complete reports but employer is responsible for filing/distributing Information to report ESB XXX

22 6056 Reporting Simplified reporting available: Simple reporting to IRS for employees and dependent children offered adequate and affordable minimum essential coverage For 2015, simple reporting to employees if the employer offered coverage to 95% of full-time employees, spouses, and children Do not have to determine full-time status if offered coverage to 98% of employees and dependents ESB XXX 0713 Calculating Minimum Value Required for 6056 reporting (and employer mandate) Options for calculating minimum value: Minimum value calculator Safe harbor plan designs Actuarial certification Plans offered in the small group market that meet the requirements of public exchange coverage are all adequate 22

23 Transparency Disclosures Plan sponsors of non-grandfathered plans must make disclosures to HHS and public E.g., claims payment policies, enrollment data, financial disclosures, cost-sharing Future regulations are expected to clarify required content and effective date Quality of Care Reporting Plan sponsors of non-grandfathered plans must report on certain quality-related programs Must be issued annually to HHS and to employees during open enrollment Future regulations are expected to clarify required content and effective date 23

24 Cadillac Tax Reporting Effective 2018: 40% non-deductible excise tax Imposed on aggregate value of health coverage that exceeds threshold amounts Any employee covered under specified employer-sponsored health coverage could trigger the tax Cadillac Tax Reporting Following entities pay the tax: Insured plans insurance company Self-funded plans plan administrator HSA-employer Employers must: Calculate value of coverage on a per employee/ per month basis Notify entity required to pay and IRS 24

25 Cadillac Tax Reporting Coverage subject to the tax General thresholds applicable in 2018: Individual coverage: $10,200 Family coverage: $27,500 Family limit applies to everyone a multiemployer plan (e.g., Taft-Hartley plan) Distinction from multiple employer plan Cadillac Tax Reporting 25

26 Cadillac Tax Reporting Cadillac Tax Reporting Cost of coverage to be determined under rules that apply for COBRA coverage If the coverage has the same cost for individual and family (e.g., health FSAs), employer must develop rates for both Cost of coverage for pre- and post-65 retirees may be combined at employer s option Future guidance is expected to clarify the requirements 26

27 Other Tasks Medicare Tax Two components took effect January 1, 2013 Additional 0.9% Medicare tax on wages New 3.8% Medicare contribution tax on unearned income Generally applies to income over $200,000 for individuals, $250,000 for couples 27

28 Medicare Tax Employers must withhold 0.9% tax once employee s wages exceed $200,000 No obligation to notify employees or to withhold 3.8% tax Employer Mandate (Free Rider Penalty) Administrative Tasks Determine large employer status: 50+ full time equivalent employees Employers with full-time equivalent employees not subject to employer mandate until 2016 plan year Members of a controlled group treated as single entity to determine large employer status 28

29 Employer Mandate Full-time employees 30+ hours/week or 130+ hours/calendar month Counting total hours Add all hours (hours worked and non-work time for which pay is due) Hourly employees: count actual hours Employer Mandate Tracking hours of service for non-hourly employees Count actual hours of service Days-worked equivalency Weeks-worked equivalency Develop reasonable plan for employees paid a stipend Determine if individuals qualify as bona fide volunteers ESB XXX

30 Employer Mandate Methods to measure to determine full-time status: Monthly measurement period method Look back measurement period method May use different methods only for specified categories of employees Special rules for leaves of absence, educational breaks, and breaks in service Employer Mandate Recap of administrative tasks: Develop and implement strategy Amend medical and Section 125 plans if necessary to reflect changes in eligibility Calculate large employer status Adopt processes to consolidate all hours worked Consider adopting mechanism to track hours worked ESB XXX

31 Employer Mandate Recap of administrative tasks (cont d) Consider implementing software to help manage employer mandate generally Make a reasonable plan for crediting hours worked for employees paid a stipend Determine qualification as bona fide volunteers Adopt processes to measure full-time status (probably need to be monthly) ESB XXX 0713 Employer Mandate Due date: generally January 1, 2015 Non-calendar year plans in existence on December 27, 2012 may qualify for a delay until the beginning of their 2015 plan year ESB XXX

32 Tax Credit Eligibility Determinations Subsidies are available to help individuals pay for public exchange coverage Individuals who are eligible for adequate and affordable employer coverage are ineligible Employer verification by the exchange 2014: just employee attestation 2015: random verifications, possible employer form or national database Nondiscrimination Testing Fully-insured non-grandfathered plans may not discriminate in favor of highly compensated individuals Primarily just major medical coverage Self-funded plans are currently subject to similar rules, regardless of grandfathered status 32

33 Nondiscrimination Testing IRS has delayed enforcement pending publication of regulations Future regulations are expected to clarify requirements and effective date Nondiscrimination testing may be required Automatic Enrollment Plan sponsors with 200+ full-time employees must automatically enroll newly eligible full-time employees Must provide notice Employees may opt out Future regulations are expected to clarify required content and effective date 33

34 Plan Design & Document Updates Plan documents may need to be updated to comply with plan design mandates Primarily just major medical coverage Plans that only cover retirees are exempt Two rounds of plan design mandates take effect for plan years beginning on/after: September 23, 2010 January 1, 2014 Plan Design & Document Updates Ongoing obligation: incorporate updates to covered preventive care services Plans must comply for plan years beginning on/after one year after the new recommendation is published 34

35 Plan Design & Document Updates Section 125, FSA, HRA plan amendments Health FSA/HRA reimbursement for OTC drugs and medicines only with Rx Health FSA contributions limited to $2,500 Eliminate direct payments or reimbursement of premiums for individual health insurance May not offer stand-alone HRAs General rule: amend prospectively Final Thoughts Ensure process includes a plan for monitoring developments in the law Rules and/or forms have yet to be issued for several administrative requirements Existing rules could be revised Sign up for complimentary VIP updates at HCReducation.com ESB XXX

36 Questions? Learn more at: HCReducation.com AmericanFidelityConsulting.com This is only a brief summary that reflects our current understanding of select provisions of the law, often in the absence of regulations. All of the interpretations contained herein are subject to change as the appropriate agencies publish additional guidance. Copyright 2012 American Fidelity Assurance Company 36