President Trump’s Executive Order: The Impact to Employers and Employees

As stated in the prior blog posting, the Executive Order serves as a policy statement and the applicable agencies are not likely to take immediate action on this directive. However, once the Department heads for Health and Human Services, the Treasury, and Labor are confirmed and in place, we may see guidance as to how they intend to enforce (or not enforce) certain provisions of the Affordable Care Act (ACA).

So, What Should Employers Do?

For now, employers should continue to follow the requirements of the ACA until (and unless) further guidance from the applicable administrative agency is issued. Listed below are some of the ACA items still required by applicable employers as of January 2017:

  • Employers with 50 or more full-time equivalent: Continue to prepare and provide 2016 Forms 1094-C and 1095-C. For 2016, the Form 1095-C is due to ACA full-time employees, and for self-insured plans all covered individuals, by March 2, 2017.  form 1094-C and all forms 1095-C are due to the IRS by March 31, 2017 (unless filing paper, then the forms are due to the IRS by February 28, 2017).
  • Employers with 50 or more full-time equivalent: Prepare for the enforcement of the employer mandate penalties, if applicable.
  • Employers with 250 or more W-2 in the prior year, are required to report the value of health insurance coverage on the Form W-2 (box 12, code DD).
  • Continue to comply with the following mandates as to group health plans:
    • No lifetime or annual dollar limits on Essential Health Benefits
    • Cover children to age 26
    • No retroactive cancellation of health plan coverage, except due to fraud or intentional misrepresentation of material fact
    • No pre-existing condition exclusion clauses
    • No waiting periods in excess of 90 days
  • If applicable, comply with additional mandates for non-grandfathered plans.
  • Employers must continue to provide ACA-related notices, including but not limited to Summary of Benefits and Coverage (SBC), Notice of Coverage Options, etc.
  • For those employers who offer a health flexible spending account (FSA), the maximum employee contributions for 2017 cannot exceed $2,600.  In addition, over-the-counter drugs are excluded, unless prescribed by a physician.

What is the Impact to Employees?

Individuals should still continue to act as though the individual mandate will be enforced (have minimum essential coverage, qualify or an exemption, or pay a penalty). For the immediate future, it appears subsidies remain available to assist certain low and middle income individuals to purchase coverage in the Marketplace, if coverage is not available elsewhere (e.g., employer-sponsored, Medicare, or Medicaid).

There is a significant question as to whether the Trump administration will continue to enforce the individual mandate. It is a crucial component of the ACA in that it operates to keep the risk pool large enough to reduce adverse selection. However, by not enforcing the coverage requirement, it could lead to an exodus of healthy individuals from Covered California and creating an unstable risk pool.

There is also question around the continued availability of subsidies during this transition period. As of right now, they remain available. However, this will be an area to be closely monitored as the leadership at HHS takes shape.

We will continue to monitor and report developments. If you have any questions, please contact MNJ Insurance Solutions at (714) 716-4303.

This content is provided for informational purposes only. While we have attempted to provide current, accurate and clearly expressed information, this information is provided “as is” and MNJ Insurance Solutions makes no representations or warranties regarding its accuracy and completeness. The information provided should not be construed as legal or tax advice or as a recommendation of any kind. External users should seek professional advice form their own attorneys and tax and benefit plan advisers with respect to their individual circumstances and needs.

President Trump Signed Executive Order Addressing the ACA

Many of our clients and prospects have been asking the same question…”Now that President Trump is in office, what is going to happen with the ACA? When do you foresee changes?  What is going to happen to Covered California?”  These are all valid questions and concerns.  We are going to stay informed of any changes […]

Understanding the Small Business Health Care Tax Credit for 2016

We receive many calls from clients and prospects regarding the Small Business Health Care Tax Credit, so we thought we would provide a brief summary for 2016.  The Small Business Health Care Tax Credit is designed to encourage small businesses and small tax-exempt employers to offer health insurance coverage to their employees.

 

In general, an employer may be eligible for the credit for tax year 2016 if the employer:

• Had fewer than 25 full-time equivalent employees;
• Paid an average wage of less than $52,000 a year;
• Paid at least half of employee health insurance premiums; and
• Paid premiums on behalf of employees enrolled in a qualified health plan offered through the Small Business Health Options Plan (SHOP).

 

Employers seeking to claim the credit should know the following key facts:

• The maximum credit is 50% of premiums paid for small business employers, and 35% of premiums paid for small tax-exempt employers.  Eligible credit is on a sliding scale, depending on number of employees and average salaries.
• Small employers may claim the credit for no more than two consecutive taxable years, beginning in tax year 2014 and beyond.
• Small employers must be enrolled with SHOP/Covered California for the tax credit. If the employer is offering medical through other carriers, they may be eligible for business expense write off, and not the tax credit.
• Eligible small employers (other than those that are tax-exempt) may claim the credit on their annual income tax returns, with an attached Form 8941Credit for Small Employer Health Insurance Premiums, showing the calculation of the credit.

 

If you would like to further discuss the Small Business Health Care Tax Credit and how it may affect your company, please contact MNJ Insurance Solutions at (714) 716-4303.

 

This content is provided for informational purposes only.  While we have attempted to provide current, accurate and clearly expressed information, this information is provided “as is” and MNJ Insurance Solutions makes no representations or warranties regarding its accuracy  and completeness.  The information provided should not be construed as legal or tax advice or as a recommendation of any kind.  External users should seek professional advice form their own attorneys and tax and benefit plan advisers with respect to their individual circumstances and needs.

2017 Key Dates for Open Enrollment: Individual/Family Medical Plans

2017 IFP open enrollment

 

Did you know that in 2017 the Open Enrollment period is November 1, 2016 through January 31, 2017?  Did you know that if you do not have qualified medical coverage, meeting the minimum essential benefits, that you may face a penalty for not having health insurance coverage, according to the ACA?  (Note: there are a few exemptions for this rule.)

It is important to understand the key dates for Open Enrollment for Individual and Family coverage, both on and off the exchange.

If you are enrolling for individual/family medical coverage between November 1, 2016 and through December 15, 2016, coverage will begin as of January 1, 2017.  If you are enrolling for individual/family medical coverage on December 15, 2016 through January 15, 2017, coverage will begin as of February 1, 2017.  Finally, if you are enrolling for health coverage on January 16, 2017 through January 31, 2017, coverage will begin as of March 1, 2017.

Outside of Open Enrollment, individuals can enroll in the individual/family health coverage only if you qualify for a Special Enrollment Period (SEP).  Some examples may include, but are not limited to the following:  loss of group coverage, divorce and therefore, losing medical coverage through spouse’s employer plan, or employer terminates their group plan and therefore, no longer offers coverage.  It is also important to enroll within a certain period of time of the qualifying event.

If you have any questions, or would like to explore Individual/Family Health Insurance plans, please do not hesitate to contact Julie Mangrello-Jennings at (714) 716-4303.

IRS Issued Notice 2016-4: Extending the Due Dates for Forms 1094-C and 1095-C for 2015

1094-c and 1095-c

Great news for Applicable Large Employers (ALE) and self-insuring employers, who are required to report under Section 6055 and 6056 of the Internal Revenue Code.  Per the IRS Notice 2016-4, they extended the deadlines for the 2015 Affordable Care Act (ACA) information requirements to complete the 2015 Forms 1094-C and 1095-C.  Coverage providers also have additional time to file and distribute the B series forms for 2015 Calendar Year only.

Under the ACA, Applicable Large Employers must file the 2015 Forms 1094-C and 1095-C with the IRS, and furnish copies of the 1095-Cs to full-time employees (and to covered part-time employees, if the employer’s plan is self-funded).  There are no exceptions to the filing requirement.  Many ALEs have found compliance with this mandate challenging, therefore, we welcome the extension from the IRS to allow employers a couple more months to prepare.

Extensions:

  • Form Distribution to Individuals (Forms 1095-B and 1095-C):
    • Extended from February 1, 2016 to March 31, 0216.
  • IRS Form Filing (1094-B, 1095-B, 1094-C, and 1095-C):
    • Extended from February 29, 2015 to May 31, 0216 (paper filing)
    • Extended from March 31, 2016 to June 30, 2016 (electronic filing)

IMPORTANT NOTE: The extensions for the ACA information reporting requirements apply for calendar year 2015 only and have no effect of the requirements for other years or on the effective dates or application of the ACA “Pay or Play” provisions.  Applicable Large Employers or other coverage providers that do not comply with these extended due dates will be subject to penalties.

 

2015 Required Forms:

Form 1094-B

Form 1095-B

Form 1094-C

Form 1095-C

2015 Form Instructions:

1094-B Instructions

1095-B Instructions

1094-C Instructions

1095-C Instructions

General Penalty:

HR 1295

Questions?

6055 IRS Q&A

6056 IRS Q&A

1094-C & 1095-C FAQs

 

If you would like to further discuss the ACA Employer Reporting Requirements, penalties, and how it affects your company, please contact MNJ Insurance Solutions at (714) 716-4303.

 

This content is provided for informational purposes only.  While we have attempted to provide current, accurate and clearly expressed information, this information is provided “as is” and MNJ Insurance Solutions makes no representations or warranties regarding its accuracy  and completeness.  The information provided should not be construed as legal or tax advice or as a recommendation of any kind.  External users should seek professional advice form their own attorneys and tax and benefit plan advisers with respect to their individual circumstances and needs.

Pay or Play? Reasons Why “Pay” is NOT the Easy Answer

pay or play pic2

 

“Pay or Play” Employer Mandate and Penalties (brief summary)

Under the “Shared Responsibility of the Affordable Care Act (“ACA”), beginning January 1, 2015 employers with 100 or more full-time equivalent (“FTE”) working 30 hours or more per week (including the hours of the part-time workers added together to equal full-time equivalent workers) will be required to offer “affordable” health insurance coverage and must meet the minimum value, or they will face a penalty. Beginning January 1, 2016, employers with 50 or more FTE will be required to offer “affordable” health insurance coverage meeting the minimum value to their eligible employees, or they will be required to pay the penalty.

Large employers who do not offer coverage to their FTEs face a penalty of $2,000 time the total number of full-time employees, less the applicable exempt employees specified by law.

In addition, large employers who offer coverage to their full-time employees, but do not make the lowest cost plan “affordable” for the employee only premium or does not provide minimum value will face a penalty of $3,000 times the number of full-time employees receiving tax credits for exchange coverage (not to exceed $2,000 times the total number of full-time employees).  This is merely a brief summary of some of the employer’s penalties under the Shared Responsibility provision of the Affordable Care Act, and does not include all penalties and provisions.

 

Some Considerations for Employers

Some employers, who currently offer benefits, have considered eliminating the health care coverage altogether and instead paying the penalty on their full-time employees.  However, there are many reasons an employer should carefully consider all of their options before eliminating their group health care coverage.

Listed below are a few highlights for employers to consider in their final decision-making process.  If an employer should eliminate health care, the following would apply:

  1. Lost tax advantages for the Employer and Employee, as employee’s portion of the premiums will no longer be deducted through payroll with pre-taxed dollars with a Section 125 Premium Only Plan.
  2. Employer will pay the penalty for not offering coverage and the penalty is non-deductible, whereas employer-paid premiums are tax deductible as a business expense.
  3. Penalties will increase in subsequent years.
  4. Employer will still have the annual reporting requirements under Section 6056, regardless if they offer coverage or not.  There are additional penalties for non-compliance with the reporting requirements.
  5. Employer may face recruitment and retention challenges if they opt not to offer coverage.
  6. Other financial implications for Employers (i.e. how it may affect their Workers’ Compensation, payroll taxes, corporate bottom line, etc.).
  7. Individuals will have to purchase insurance on their own with AFTER tax dollars, or face an individual tax penalty.
  8. In most cases, employer group plans have a different and more comprehensive list of participating providers, than that of Individual plans.
  9. In most cases, employer group health plans provide a more comprehensive list of covered prescriptions.

 

As you can see, there are many things an employer needs to consider while evaluating the “Pay or Play” Employer Mandate.  The above-list are some considerations and not limited to such.

If you would like to further discuss the “Pay or Play” employer mandate, penalties, and how it affects your company, please contact MNJ Insurance Solutions at (714) 716-4303.

 

This content is provided for informational purposes only.  While we have attempted to provide current, accurate and clearly expressed information, this information is provided “as is” and MNJ Insurance Solutions makes no representations or warranties regarding its accuracy  and completeness.  The information provided should not be construed as legal or tax advice or as a recommendation of any kind.  External users should seek professional advice form their own attorneys and tax and benefit plan advisers with respect to their individual circumstances and needs.

The PACE Act and What it Means to California Employers: October 2015

President Obama has signed into law the Protecting Affordable Coverage for Employees (PACE) Act.  On September 28, 2015, the House of Representatives passed H.R. 1624 through voice vote and on October 1, the Senate passed the legislation through unanimous consent.

 

How Will PACE Act Affect the Affordable Care Act (ACA)?

Small group is currently defined as employers with 2-50 employees.  As of January 1, 2016 under the ACA, the definition of small group was set to expand 1-100 employees.  The PACE Act repeals the mandated small group expansion and it gives the individual states the flexibility to determine the small group market definition, rather than being forced to the national standard.

Several states, including California, have already enacted legislation that expands the small group market definition to 100 employees.  However, for those states that have not taken any action to date regarding the definition of small group, we are awaiting confirmation form the departments of insurance and legislators as to whether the states will accept the new federal standards or if they will take action of their own to expand the small group market definition of up to 100.

 

How Does PACE Affects the California Employer?

Unless further guidance is issued by California, we are moving forward with the small group expansion for employers with 1-100 employees with new business or renewals beginning January 1, 2016.  For employers who have 51-100 employees, there will be significant changes in their benefits, rating, and administrative process.  The most significant changes will be as follows:

  •  Rates in small group are age-banded, whereas large group premium rates are composite rates.  In age-banded rates, older employees pay a higher premium than younger employees.
  • ACA rates in small group are “member-level” rating (also known as “community rating”), whereas large group premium rates have a family rate for the plan, regardless of number of dependents.  With member-level rating in small group, larger families will pay a significantly higher premium as they are individual rated (some limits apply).
  • Small group plans are required to cover the 10 Essential Health Benefits, including pediatric dental and vision.
  • Small group plans are required to meet specified actuarial values +/- 2 percent (60%, 70%, 80%, or 90%, also referred to as the metal tiers), whereas large group plans can provide any actuarial value as long as they meet the minimum value of 60% requirement.

 

Action Items for Employers with 51-100 Employees:

  • Evaluate your plan  options in 2015.
  • Consider an Early Renewal option.
  • Market alternative carriers for 11/1 or 12/1/15 effective dates or extended renewal periods.
  • Compare current composite rates to age-banded, member-level rates in 2015 to see how the new rating will impact your company.
  • If you are an employer with 50 or more full-time equivalent and do not currently have coverage, evaluate your plan with a 2015 effective date versus age-banded rates in small group.

 

Please contact MNJ Insurance Solutions at (714) 716-4303 for more information.

 

This content is provided for informational purposes only.  While we have attempted to provide current, accurate and clearly expressed information, this information is provided “as is” and MNJ Insurance Solutions makes no representations or warranties regarding its accuracy  and completeness.  The information provided should not be construed as legal or tax advice or as a recommendation of any kind.  External users should seek professional advice form their own attorneys and tax and benefit plan advisers with respect to their individual circumstances and needs.

Reporting Requirements for Applicable Large Employers: Section 6055 and 6056

Screen-Shot-2015-03-05-at-1_43_12-PM

The Affordable Care Act added Section 6055 and 6056 which requires Applicable Large Employers (ALEs) to file returns with the IRS and provide statements to their full-time employees regarding the health insurance coverage offered by the employer.  For calendar year 2015, ALE must file the Section 6055 and 6056 returns on or before February 29 (March 31, if filed electronically) of 2016A statement to all full-time employees must be furnished by January 31 of each year following the calendar year.

  •  Section 6055 requires health insurers, certain employers, and others that provide Minimum Essential Coverage to individuals must report to the IRS information about the type and period of coverage, and must furnish the information in statements to covered individuals.
  • Section 6056 requires employers with 50+ FTE to report to the IRS information about the health coverage, if any, they offered to FT employees. Section 6056 also requires employers to furnish related statements to employees.

 

Who is an Applicable Large Employer?

  • An employer with 50 or more full-time equivalent (FTE) employees on average of business days during the preceding calendar year.

–Full-time employees: Employees working 30 or more hours per week.

–Part-time employees FTE calculation: Add all the hours worked per month by PT employees, but not more than 120 hours per employee, and divide by 120.

  • NOTE: Aggregation (control group) rules apply
  • NOTE: Reporting obligations are the responsibility of each ALE group, and you must disclose if you are part of a control group and identify the other group/members.

 

Penalties for non-compliance:

  • $100 for failure with IRS ($1.5M maximum)
  • $100 for failure to provide statement to employees ($1.5M maximum)
  • Example: Employer fails to report a FT employee and does not provide a statement to the employee: $200 penalty.
  • Penalty relief is available for 2015 if an employer can show good faith efforts to comply

 

These reporting requirements can be overwhelming for many employers.  We have solutions and resources for these services that we can provide you, as your Trusted Advisor and Broker of Record.  Please contact MNJ Insurance Solutions for more information at (714) 716-4303.

 

Other Resources:

Questions and Answers on Information Reporting by Health Coverage Providers (Section 6055) – IRS website

Questions and Answers on Reporting of Offers of Health Insurance Coverage by Employers (Section 6056) – IRS website

 

This content is provided for informational purposes only.  While we have attempted to provide current, accurate and clearly expressed information, this information is provided “as is” and MNJ Insurance Solutions makes no representations or warranties regarding its accuracy  and completeness.  The information provided should not be construed as legal or tax advice or as a recommendation of any kind.  External users should seek professional advice form their own attorneys and tax and benefit plan advisers with respect to their individual circumstances and needs.

What is “Affordable” Coverage under Health Care Reform?

Under the Patient Protection and Affordable Care Act, the employer-provided coverage must be “Affordable,” so that Applicable Large Employers avoid penalties under the “Pay or Play” rules. Affordability will be determined by whether the coverage offered costs an employer more than 9.5% of their annual household income.  Since there is no practical way for an […]

Draft Instructions and REVISED Draft 2015 Forms for IRS Reporting Requirements: August 7, 2015

On August 7, 2015, the Internal Revenue Service (IRS) released draft instructions and revised draft 1095-B and 1095-C forms to be used for Affordable Care Act (ACA) Minimum Essential Coverage (MEC) and Large Employer reporting in 2016. The IRS has posted the 2015 draft instructions and forms at IRS.gov/draftforms as information only, and will post final versions at a later date.

The revised 2015 draft forms are generally unchanged from the versions released on June 19, 2015. However, the IRS made several changes to the 2014 final instructions, including:

  • “B” form instructions for applicable large employers – The draft instructions for forms 1094-B and 1095-B now allow applicable large employers (ALEs) the option to use the “B” forms to report coverage of individuals who are not considered full-time employees for any month during the calendar year.
  • “C” form instructions for applicable large employers – The draft instructions for forms 1094-C and 1095-C require that ALEs continue to report all employees enrolled in self-insured coverage on the “C” forms – as part of MEC reporting.
  • 30-day extension for IRS filing – An automatic extension is granted if Form 8809 is submitted to the IRS on or before the filing due date.
  • 30-day extension for providing forms to individuals – An extension may be granted by submitting a letter to the IRS on or before the due date for providing forms to individuals.
  • Details on how to file corrected forms – The draft instructions include details on filing corrected paper returns. Information on electronic filing corrections can be found on IRS Publication 5125.
  • Hand delivery – Both sets of reporting may be hand delivered to individuals.
  • Reporting supplemental coverage – The definition of a “plan sponsor” has been clarified for the purpose of reporting supplemental coverage by the same reporting entity as the health plan sponsor.
  • Reporting coverage offered under multiemployer plans – Simplified reporting now available for reporting offers of coverage for employers with multiemployer arrangements that qualify for relief.
  • Reporting on COBRA participants – Clarifications on how to report COBRA participants.

For more information on the final rules on this IRS information reporting, please read  Reporting Requirements Fact Sheet.

Draft Instructions and Forms:

Instructions for Forms 1094-C and 1095-C

Form 1094-C – Transmittal/“cover sheet” for Large Employer and self-insured MEC reporting (applicable large employers)

Form 1095-C – Report to individuals and the IRS information on coverage offered and self-insured MEC (applicable large employers)

Instructions for Forms 1094-B and 1095-B

Form 1094-B – Transmittal/“cover sheet” for MEC reporting (insurance carriers and self-insured small group employers)

Form 1095-B – Report to individuals and the IRS information on MEC (insurance carriers and self-insured small group employers)

 

We will keep you informed when instructions and revised or final forms are made available.

 

This content is provided for informational purposes only.  While we have attempted to provide current, accurate and clearly expressed information, this information is provided “as is” and MNJ Insurance Solutions makes no representations or warranties regarding its accuracy  and completeness.  The information provided should not be construed as legal or tax advice or as a recommendation of any kind.  External users should seek professional advice form their own attorneys and tax and benefit plan advisers with respect to their individual circumstances and needs.