WPELRA ACA Update. January 21, Auntone A. Kelly & Kathy Schwappach v

Transcription

1 WPELRA ACA Update January 21, 2016 Auntone A. Kelly & Kathy Schwappach v Copyright 2015 by The Segal Group, Inc. All rights reserved.

2 Agenda Recent U.S. Supreme Court Decisions Legislative Update: Excise Tax Budget Reconciliation Bill ( Restoring Americans Healthcare Freedom Reconciliation Act of 2015 ) (HR 3762) Government Funding/Tax Extenders Package Final ACA Rules Published Nov. 18, 2015 Reminder on ACA Reporting 2

3 King v. Burwell On June 25, 2015, the United States Supreme Court held in a sixthree decision that the Affordable Care Act premium assistance tax credits (also called subsidies ) that assist individuals to purchase health insurance on an Exchange, are available in all states, regardless of whether the Exchange is operated by the state or the federal government The majority opinion was written by Chief Justice Roberts, and joined by Justices Kennedy, Ginsberg, Breyer, Sotomayor and Kagan. Justice Scalia, joined by justices Thomas and Alito, published a strong dissent to the decision 3

4 Issue Are the ACA premium assistance tax credits available in States that have a Federal Exchange rather than a State Exchange? The ACA provides premium assistance tax credits for any applicable taxpayer who has enrolled in an insurance plan through an Exchange established by the State Under Section 36B of the Internal Revenue Code Treasury/Internal Revenue Service (IRS) regulations made tax credits available on both the State and Federal Exchanges 37 States use healthcare.gov (the Federal Marketplace) for 2015 enrollment 4

5 Previous Court Actions The Federal District Court upheld the IRS Rule and dismissed the lawsuit, and was affirmed by the Fourth Circuit Court of Appeals. The same day, the Court of Appeals for the District of Columbia Circuit vacated the IRS rule in a different case. Halbig v. Burwell Petitioners argued that a Federal Exchange is not an Exchange established by the State The Government responded that the phrase an Exchange established by the State should be read to include Federal Exchanges 5

6 Analysis The Court generally analyzes an agency s interpretation of a statute under a two-step framework announced in Chevron v. Natural Resources Defense Council Chevron asks: Is the statute ambiguous? If so, is the agency s interpretation reasonable? In King v Burwell, the Court decided that this is an extraordinary case where Congressional intent must be analyzed by the Court, not the agencies. 6

7 Intent of the Affordable Care Act The Affordable Care Act adopts a version of the three key reforms of State insurance markets that made the Massachusetts system successful Previous attempts at insurance reform failed when States only used one type of reform The three key reforms of the ACA are: 1. Guaranteed issue and community rating 2. Individual mandate to obtain health insurance 3. Refundable tax credits to individuals with household income between 100 percent and 400 percent of the federal poverty line All effective on the same day January 1,

8 Majority Opinion Analysis Whether the premium assistance tax credits are available on Federal Exchanges is a question of deep economic and political significance that is central to the statutory scheme. It is unlikely that Congress would have delegated this decision to an agency, least of all the IRS, which has no expertise in crafting health insurance policy of this sort. This is not a case for the IRS. Instead, it is the Supreme Court s task to determine the correct reading of Section 36B To decide the case, the Court had to read the ambiguous language in context with the entire statute 8

9 Holding The statutory scheme compels us to reject petitioners interpretation because it would destabilize the individual insurance market in any State with a Federal Exchange, and likely create the very death spirals that Congress designed the Act to avoid. 9

10 Obergefell v. Hodges On June 26, 2015, the U.S. Supreme Court announced its decision in Obergefell v. Hodges. In a 5-4 decision, the Court ruled that the U.S. Constitution requires all states to: Issue marriage licenses to same-gender couples on the same terms and conditions that apply to opposite-gender couples, and Recognize same-gender marriages entered into in other states Justice Kennedy wrote the majority opinion, in which Justices Ginsburg, Breyer, Sotomayor and Kagan Four justices (Chief Justice Roberts and Justices Scalia, Thomas and Alito) wrote dissenting opinions. 10

11 Implications for Employer-Sponsored Plans Employers will no longer need to impute income for covered samegender spouses for state income tax purposes under the laws of some states As a result of the Court s 2013 decision in United States v. Windsor, plan sponsors stopped imputing income for federal tax purposes for coverage provided to same-gender spouses Effective date of state laws may vary Plan sponsors that currently offer health coverage to oppositegender spouses but not to same-gender spouses should review that policy with legal counsel Although the Employee Retirement Income Security Act (ERISA) itself may not require that health coverage be offered to same-gender spouses, state and potentially federal anti-discrimination laws may State and local governmental entities must recognize same-gender spouses 11

12 Budget Reconciliation Activity Restoring Americans Healthcare Freedom Reconciliation Act of 2015 (HR 3762) House version (passed Oct. 23, 2015) would repeal key provisions of the Affordable Care Act, including: Employer shared responsibility penalty Individual mandate Excise tax on high-cost plans (40% tax) W-2 reporting of cost of health coverage Senate version (passed Dec. 3, 2015) would go further; it would also repeal many other provisions, including: Premium assistance tax credits Medicaid expansion Note: Senate voted to permanently repeal the 40% excise tax White House has pledged a veto 12

13 New Final ACA Rules Regulations issued in 2010 were interim final regulations They generally took effect with the plan year beginning on/after Sept. 23, 2010 Final regulations were published November 18, 2015 on the following group health plan requirements: Grandfathering Ban on preexisting condition exclusions Ban on annual and lifetime dollar limits on essential health benefits Rescission of coverage Dependent coverage to age 26 Internal claims and appeals and external review (non-grandfathered plans only) Patient protections (selection of PCP, direct access to ob-gyn services, coverage of emergency room services) (non-grandfathered plans) Final rules generally incorporate guidance already published New rules apply to plan years beginning on/after Jan. 1,

14 What s Really New in the Final Regulations Grandfathering Plans lose grandfathered status by making certain design changes (e.g., raising coinsurance for just one benefit) Reminder: Plans must continue to include notice of grandfathered status in all benefit summaries 14

15 What s Really New in the Final Regulations (continued) Ban on annual and lifetime dollar limits Applies to essential health benefits (EHB) Some plan sponsors determined that certain benefits were essential when provided in-network, but were not essential when obtained outof-network New: An essential health benefit is essential whether it is obtained in-network or out-of-network Reminder: Review any annual or lifetime dollar limits to determine where they are essential benefits, and remove any out-of-network dollar maximums on EHB by the January 1, 2017 plan year 15

16 What s Really New in the Final Regulations (continued) Ban on annual and lifetime dollar limits & HRAs Health Reimbursement Arrangements (HRAs) have to be integrated with underlying group health coverage that meets all required ACA standards (including the ban on annual and lifetime dollar limits) Plan sponsors have to offer participants the ability to permanently opt out of and waive future reimbursements from the HRA Required so that participants can qualify for a premium assistance tax credit when buying Exchange/Marketplace coverage (if otherwise eligible) Needed because having any HRA balance means the individual is enrolled in a group health plan 16

17 What s Really New in the Final Regulations (continued) Ban on annual and lifetime dollar limits & HRAs New: Participants can elect to reinstate HRA balance upon a fixed date, the participant s death, or the earlier of the two Election must be irrevocable until the reinstatement event Participants (and family members) cannot have access to the balance prior to reinstatement and, upon reinstatement, cannot submit for reimbursement any claims incurred after the forfeiture and before the reinstatement Examples: Freeze the HRA balance until participant is Medicare-eligible Freeze it for a year that the participant expects to qualify for a premium assistance tax credit Reminder: New HRA amendments will be required if the plan permits balances to be frozen 17

18 What s Really New in the Final Regulations (continued) Dependent Coverage to Age 26 Plans that cover children must extend coverage to age 26 Applies to a child as defined in IRC 152(f)(1) (natural, adopted, stepchild, eligible foster child) Terms of plan cannot vary based on the age of a child (except for child age 26 or older) However, age-related provisions that apply to all individuals (employees, spouses, children) are permissible New: Plan cannot restrict eligibility to a child who lives, works or resides in an HMO service area or other network service area even if this rule applies to employees and spouses, too Rule affects eligibility; it does not affect extent to which plan must pay for services provided outside of service area Reminder: Review eligibility rules for plans with HMO-type restrictions 18

19 What s Really New in the Final Regulations (continued) Emergency Services (Non-Grandfathered Plans Only) Plans that cover emergency care in hospital ERs must pay for outof-network emergency care by paying the greater of: Amount the plan would pay in-network providers Amount the plan would pay out-of-network providers Amount that Medicare would pay Purpose is to limit balance-billed charges New: These rules do not apply in cases where state law prohibits a patient from being required to pay balance-billed charges or where the plan is contractually responsible for such charges However, plans and insurers are required to provide patients with adequate and prominent notice of their lack of financial responsibility with respect to such charges Reminder: Review the plan s hospital ER payment rules, many of which do not clearly set forth these rules 19

20 What s Really New in the Final Regulations (continued) Internal Claims and Appeals/External Review (Non- Grandfathered Plans Only) Plan sponsors must continue to provide claimants with new or additional evidence or rationale upon which the plan sponsor may rely New: If plan sponsor gets this information late in the process, the period for providing a final determination on the claim is tolled until the claimant has reasonable time to respond to the new information New: Plan sponsors cannot charge even a nominal fee for external review Only exception is plans or insurers subject to state laws that permit a filing fee of not more than $25 (with refund or waiver in certain cases) Reminder: Claims and appeals provisions need to be updated, and plans need to contract with at least three (3) Independent Review Organizations (IRO) 20

21 What s Really New in the Final Regulations (continued) Selecting Pediatrician as PCP (Non-Grandfathered Plans Only) When plan requires selection of a Primary Care Provider (PCP), parents must be able to select a pediatrician as their child s PCP New: This includes pediatric subspecialists Reminder: Plan documents should be reviewed and amended to include pediatric subspecialists 21

22 ACA Reporting Deadlines January 31: Employee/Participant statements February 1 in 2016 because January 31, 2016 is a Sunday February 28: Deadline for filing with IRS if filing on paper February 29 in 2016 because February 28, 2016 is a Sunday March 31: Deadline for filing with IRS if filing electronically Must file electronically if filing 250 or more Forms 1095-B or Forms 1095-C First reports are due in early 2016 for the 2015 calendar year. Same reporting schedule for plans that do not operate on a calendar-year basis. 22

23 Allocation of Responsibility Employer Type Plan Type Employer Reporting Plan Reporting Large employer (including each member of a controlled group) Self-insured plan Insured group health plan Employer (Forms 1095-C and 1094-C) Employer (Forms 1095-C and 1094-C) Employer (complete Part III of the 1095-C) Health insurer (Form 1095-B and 1094-B) Small employer (not part of a controlled group) Self-insured plan Insured group health plan Not applicable Not applicable Employer (Form 1095-B and 1094-B) Health insurer (Form 1095-B and 1094-B) 23

24 Questions 24