The ACA: What’s been repealed, delayed or retained

 By Zack Pace
January 20, 2016

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Commentary: As you’ve no doubt noticed, the federal government made sweeping legislative and regulatory changes to the Affordable Care Act during the fourth quarter of 2015. During the last two weeks of December, I felt like I was drinking from a six-inch fire hose. How about you?
For 2016 planning purposes, I began making a list of the key items that have been repealed or delayed and those that we should continue to keep a keen eye on. With this list now complete, I thought I’d share.
Repealed provisions
1. Free-choice vouchers. Remember those? They were repealed back in 2011.
2. Form 1099 reporting. Remember how much added administrative work this provision would have created?
3. The $2,000-deductible ceiling. This provision coupled with Repealed Provision No. 5 (below) was scheduled to create a perfect storm this year for employers with 51 to 100 employees.
4. The automatic enrollment mandate. Reportedly, our elected representatives pressed for this provision’s repeal not because of its administrative infeasibility but because of the projected loss in tax revenue from increased salary reductions via Section 125 plans. Seriously.
5. The mandatory expansion of small group to 100 employees. I wish I had a quarter from everyone that joked, “Hey, Zack – they named an ACA after you!” How thrilling.
Delayed provisions
1. ACA nondiscrimination requirements. While these TBD rules were delayed indefinitely some time ago, some insiders expect finalization relatively soon. Sections 125 and 105(h) nondiscrimination rules remain alive and well.
2. The Cadillac tax. This excise tax is delayed until 2020. Per industry insiders, it seems awfully likely that this tax will be repealed before then. We’ll see. For those employers that began a multiple-year incremental mitigation strategy (aka glide path), they’ll need to decide if that strategy ought to be put in moth balls for a couple of years. Keep in mind that many employers can likely keep this excise tax at bay until 2022 by simply ending the flexible spending account, making health savings account contributions post-tax and eliminating their richest medical plan. 2022 is six years from now. Who knows where we’ll be by then. When it comes to increased taxation on employer- sponsored health plans, the more immediate concern, apparently, is that Section 125 becomes a bargaining chip during the budget negotiations next year between Congress and the new administration.
Lingering provisions of keen importance
1. Annually determining large-employer status. To determine status for 2016, ask your accountant to run Treasury’s formula to determine how many full-time employees plus full-time equivalents your firm averaged in the previous calendar year. Employers with 50 or more are generally subject to shared responsibility. Employers in most states with 51 or more are generally not subject to the fair health insurance premium rules (only fully insured plans are subject to these latter rules). Can anyone explain to me why they didn’t simply select 50 or 51 for both definitions?
2. Employer shared responsibility. Didn’t we make this topic a little more complicated than it needed to be? It turns out that it’s relatively easy to eliminate this penalty risk by offering to all employees that work 30 hours or more a week a low-cost plan (relatively speaking) that meets minimum value and that has an employee contribution rate for single coverage that meets the federal poverty-level safe harbor (i.e., less than around $93 per month). We can offer this “ACA easy button” plan, continue offering the normative health plans employees prefer and call it a day. Of course, for those employers with seasonal and/or variable-hour employees, tracking complications remain.
3. Eliminating opt-out credits. Under pending regulations, employers that offer cash to those employees that waive the health plan will find it harder to satisfy the affordability requirements of employer shared responsibility. See No. 5 in the below further reading list for more detail.
4. ACA reporting. Also known as Form 1095-C/1094-C reporting. The topic du jour.
5. The market reform rules. For example: elimination of pre-existing condition limitations, age 26 expansion, out-of-pocket limit ceiling, 100% coverage for preventive services (grandfathered plans are exempt from these latter three). If your health plan is fully insured, the insurer should have made these changes. If your plan is self-funded, the TPA should have. Either way, double-check.

Employers advised to prepare for questions on ACA reporting form

 

By Andrea Davis
January 21, 2016

 

As employers prepare to distribute Forms 1095 to employees by the newly extended IRS deadline of March 31, they should brace for increased questions from employees about the new forms.
In Notice 2016-4, issued by the IRS on Dec. 28, the agency extended the deadlines for both providing individuals with the reporting forms required as part of the Affordable Care Act and for filing them with the IRS, although it also said “employers and other coverage providers are encouraged to furnish statements and file the information returns as soon as they are ready.”
In the year-end notice, “the IRS indicated to employers that there’s going to be no more extensions,” says Laura Kerekes, chief knowledge officer with ThinkHR Corporation. “This is already more generous than what the initial filing extension was. The feeling is that you better get these done and into the government.”
The IRS notice also provides guidance to those who might not receive a 1095-C by the time they file their 2015 tax returns, saying people can rely on information they’ve already received from their employer outlining whether they’re enrolled in employer-sponsored coverage or not.
“That’s pretty important for employers to just make note of and maybe get ahead of with communication to their employees to say the filing deadlines have been extended so the company will not have your 1095-C done,” says Kerekes, adding employers can let employees know “this is the information we've already provided you, you can rely on it when you're working on your taxes and filing by your April 15 deadline.”
And while employers with more than 50 full-time employees need to compile data for the new forms to demonstrate employee healthcare coverage offerings under the ACA, two-in-five employers say they are unfamiliar with these forms altogether, finds a recent study from ADP.
“The good news is that 60% were highly or very familiar with the 1094-C and were working on it,” says Vic Saliterman, senior vice president and general manager of ADP’s healthcare reform business. “The fact that, given the nature of the way the law is written and the penalty, 40% were not familiar [with the forms] was certainly concerning.”
More than half (52%) of midsized businesses and 45% of large employers are unsure if they’re at risk of violating ACA compliance requirements this year and nearly one-in-five employers think they are at risk of not complying with Form 1095-C requirements, according to the ADP report.

Understanding the retiree benefit of HSAs

In this age of high-deductible healthcare plans, industry experts say employers and employees should increasingly consider the benefits of health savings accounts as a retiree benefit. HSAs, they say, offer cost-shifting benefits for employers and employees that advisers should be educating clients about.“Retiree benefits are going through a dramatic change,” says Seth Ravine, chief revenue officer of the Tampa, Fla.-based Acclaris. “Employers are looking for ways to cut costs, and retirees are feeling the brunt of that.”

According to Mercer’s latest data from the Inside Employees' Minds Survey, there is a growing concern about healthcare expenses in retirement. The survey also found most employees between the ages of 35 and 64 place a high value on an employer’s retirement benefits and low healthcare costs, ranking them as the second and third most valued elements of the employment deal, behind base pay.
A high-deductible healthcare plan coupled with an HSA is a way for employers to cut healthcare costs for the company, yet still satisfy employee retirement and healthcare needs, experts say.
Also see: “7 things employers and employees don’t know about HSAs.”
“The individual or employee is going to have to take on more control and financial burden than any other previous generation,” Ravine says.
“A high-deductible healthcare plan has short term and long-term gains,” he says, adding that advisers should work with employers to understand the short term and long-term goals.
“Most employers will see the short-term drops of healthcare costs immediately, but you haven’t actually changed the trend of your healthcare liability,” he says. “What HSAs can do long term is, if employees start them early, invest in them early, and learn how to utilize them — including when to draw from HSAs and when it is best to pay out of pocket — now you’re giving real dollars to individuals. At the same time you’re giving yourself as the employer the ability to push more costs onto employees.”
Education
Educating employees about what an HSA is and how it can be used as a tool for meeting healthcare costs in retirement is key, experts say.
“Most Americans are unprepared for healthcare costs in retirement, and an HSA is the best way to save for that,” said Eric Roberts, a consultant at Nyhart Actuary & Employee Benefits, during a recent webcast hosted by the Healthcare Trends Institute.
“If you have already made it into the retiree population and haven’t had the ability to open an HSA, you’re in a tight spot,” says Ravine. “Once you’re on Medicare, you can’t contribute to an HSA anymore, but the next generations have a real chance to utilize HSAs in their retirement.”
Still, employers and employees hold several misconceptions about how an HSA works, indicating a need for adviser help to understand them, including how an HSA differs from an FSA and an HRA.
Employees have a lack of awareness surrounding several HSA features and benefits, says HSA custodian company HealthEquity. For example, for some employees and employers the fact that HSA funds roll over and are not “use it or lose it,” is not common knowledge, the company says.
Many consumers also don’t know that after age 65, you can withdraw money from an HSA for any type of purchase (not just medical expenses) without penalty.
If used for other expenses, the amount withdrawn will be taxable as income but will not be subject to any other penalties. Individuals under age 65 who use their accounts for non-medical expenses must pay income tax and a 20% penalty on the non-qualified withdrawal.

By Melissa A. Winn
      
 

Could state waivers undo the ACA's employer mandate?

The ACA allows states, beginning in January 2017, to ask the federal government to waive almost every major coverage requirement of the health care reform law, including the employer mandate. Employers and other benefit industry stakeholders hoping to be relieved from ACA requirements may consider state waivers the elixir they’ve been waiting for, but are they? READ MORE »