ACA Affordability and Offer of Coverage Penalties Update

The IRS recently updated one of their Q&As to outline their upcoming issuing of ACA penalty demand letters.

According to question 55 of the Q&A, employers will receive Letter 226J if the IRS determines at least one full-time employee received a premium tax credit to enroll on a health plan through the exchange. Letter 226J will contain the name and contact information of a specific IRS employee that the ALE should contact if the ALE has questions about the letter.

The letter will include:

  • A summary table itemizing each month an employer may be liable for a payment
  • A response form, Form 14764, “ESRP Response”
  • Form 14765 which will list by month an ALE’s assessable full-time employees
  • A description of actions the ALE employer should take to dispute the letter’s findings.

The Letter 226J will include a due date for the employer’s response, which will generally be 30 days from the date of the letter. If an employer doesn’t respond or doesn’t respond timely, the IRS will issue a notice and demand for payment, Notice CP 220J.

Samples of the letters and forms are not yet available for review. However, the IRS states that the Letter 226J for calendar year 2015 will be issued in “late 2017.”

See below to review the updated Q&As and contact your NEEBCO representative with questions.

IRS ACA Q&A

IRS Issues Pay or Play Guidance

IRS Announces Employee Benefit Plan Limits for 2018

Many employee benefits are subject to annual dollar limits that are periodically increased for inflation. The Internal Revenue Service (IRS) recently announced cost-of-living adjustments to the annual dollar limits for various welfare and retirement plan limits for 2018. Although some of the limits will remain the same, many of the limits will increase for 2018.

Refer to the attached compliance bulletin for additional information and contact your NEEBCo representative with any questions you may have.

IRS Announces Benefit Plan Limits for 2018

2018 Individual Health Insurance Increases

The New Hampshire Insurance Department cautions those with individual coverage that some will experience steep rate increases for 2018.

“… the 24,000 residents who don’t qualify for a federal subsidy or who buy a plan outside HealthCare.gov will see an average increase of 52 percent… Rates in 2018 saw such a dramatic increase because of rising medical and pharmaceutical costs, instability in Washington, and the federal government’s decision to eliminate key funding to insurance companies,” said Commissioner Sevigny.

People who currently have a policy will receive a renewal letter from their insurance company. To find a more accurate estimate of what they will pay in monthly premium, consumers should use the plan preview tool on HealthCare.gov. Residents can enter basic information about their household, and the tool will provide premium estimates and 2018 plan information. Consumers will need to return to the website during the open enrollment period to enroll in a plan.

Individuals may contact NEEBCo for assistance in navigating their options for the upcoming individual open enrollment. Refer to the below for the full press release.

NHID Individual Open Enrollment Release

2018 FSA Limit Increase

On Oct. 19, 2017, the Internal Revenue Service (IRS) released Revenue Procedure 2017-58 which increased the FSA dollar limit on employee salary reduction contributions to $2,650 for taxable years beginning in 2018. It also includes annual inflation numbers for 2018 for a number of other tax provisions.

The health FSA limit applies on an employee-by-employee basis. Each employee may only elect up to $2,650 in salary reductions in 2018. However, each family member who is eligible to participate in his or her own health FSA will have a separate limit. For example, a husband and wife who have their own health FSAs can both make salary reductions of up to $2,650 per year, subject to any lower employer limits. In addition, if an individual has health FSAs through two or more unrelated employers, he or she can make salary reductions of up to $2,650 under each employer’s health FSA.

An employer may continue to impose its own dollar limit on employees’ salary reduction contributions to health FSAs, as long as the employer’s limit does not exceed the ACA’s maximum limit in effect for the plan year.

Contact your NEEBCo representative with questions.

Health FSA Limit Will Increase for 2018

ACA Cost-Sharing Subsidies to End

The ACA created two federal health insurance subsidies – premium tax credits and cost-sharing reductions – to help eligible individuals and families purchase health insurance through an Exchange. The premium tax credit assists eligible individuals with the cost of the health insurance plan, and the cost-sharing reductions assist eligible individuals with lower out-of-pocket costs (for example, lower deductibles and copays).

The ACA requires insurers that offer Exchange health plans to reduce cost sharing for eligible individuals, and requires the federal government to reimburse insurers for the cost of that reduction on a monthly basis.

On Oct. 12, 2017, the White House announced that it will no longer reimburse insurers for cost-sharing reductions made available to low-income individuals through the Exchanges under the Affordable Care Act (ACA), effective immediately. Because Congress did not pass an appropriation for this expense, the Trump administration has taken the position that it cannot lawfully make the cost-sharing reduction payments.

While the immediate impact of this announcement is unclear, it could have a significant impact on individuals who enroll through the Exchange during the upcoming open enrollment period, which begins on Nov. 1. Insurers that offer plans through the Exchange likely will not have enough time to make significant changes before open enrollment begins. This may cause a lot of confusion and uncertainty in the Exchanges, both for insurers and for consumers enrolling in Exchange coverage for 2018.

Contact your NEEBCo representative with any questions you may have.

White House Announces ACA Subsidies Will End

Healthcare Executive Order

On Oct. 12, 2017, President Donald Trump signed an executive order intended to change certain rules under the Affordable Care Act (ACA). The order does not make any changes to existing regulations.

The order would relax regulations on association health plans, and also directs the Departments of Labor, Health and Human Services, and the Treasury (Departments) to consider expanding the availability of low-cost short-term, limited-duration insurance and health reimbursement arrangements (HRAs).

An executive order is a broad policy directive that directs federal agencies to consider new regulations or guidance to implement the order’s policies. As a result, the executive order’s specific impact will remain largely unclear until agencies can issue further guidance.

The intention of the executive order is to reform the U.S. health care system by expanding choices and increasing competition to bring down costs for consumers. There are three major areas referenced:

Association health plans – An existing alternative option to traditional group health insurance, where several businesses pool funds together as a way to pay for benefits or buy group health insurance for their employees. Association health plans have been subject to state insurance laws for many years. The Obama administration tightened regulation of these plans by subjecting them to additional ACA requirements, such as coverage of essential health benefits and premium rating restrictions. The order directs the Departments to draft regulations expanding access to association health plans, potentially allowing employers to form groups across state lines and avoid certain ACA insurance requirements.

Short-Term Health Insurance – The executive order also directs the Departments to consider expanding coverage through low-cost short-term, limited-duration insurance, which is not subject to the ACA’s market reform requirements.

Health Reimbursement Arrangements – The executive order directs the Departments to expand employers’ ability to offer HRAs to their employees, and to allow HRAs to be used in conjunction with individual health insurance coverage.

Refer to the attached bulletin for more detail and contact your NEEBCo representative with any questions you may have.

President Signs Executive Order Designed to Change ACA Rules

ADA May Not Require Extended Leave

The U.S. Court of Appeals for the 7th Circuit has ruled that the Americans with Disabilities Act (ADA) does not require employers to provide long-term leave as a “reasonable accommodation” for individuals with disabilities.

The decision in Severson v. Heartland Woodcraft is consistent with the court’s prior ruling on a similar issue, but conflicts with rulings by other federal courts and the Equal Employment Opportunity Commission’s (EEOC) position. The EEOC is the federal agency responsible for enforcing the ADA. All employers subject to the ADA should be aware that the 7th Circuit’s decision conflicts with how the EEOC may enforce the ADA under its regulations and guidance.

Whether an employer may deny an employee’s request for leave as a reasonable accommodation under the ADA will depend on the specific circumstances of the situation. The 7th Circuit’s decision only affects employers in Wisconsin, Indiana and Illinois. Employers subject to the ADA in other states should be aware that other federal court decisions may apply to them.

For example, the U.S. Courts of Appeals for 1st and 9th Circuits have issued decisions holding that multi-month leave periods were reasonable accommodation under the ADA. Those decisions affect employers in Maine, New Hampshire, Massachusetts, Rhode Island and Connecticut (1st Circuit), and employers in California, Oregon, Washington, Nevada, Montana, Idaho and Arizona (9th Circuit).

Reference the attached Compliance Bulletin for details.

ADA does not Require Extended Leave

Contraceptive Mandate Changes

On Oct. 6, 2017, the Departments of Labor (DOL), Health and Human Services (HHS) and the Treasury (Departments) issued two interim final rules expanding certain exemptions from the Affordable Care Act’s (ACA) contraceptive coverage mandate.

The first interim final rule expands the availability of the exemption for employers that object to providing contraceptive coverage based on their religious beliefs. This exemption may apply to all types of nongovernmental employers, including:

  • Churches, integrated church auxiliaries, conventions or associations of churches, or religious orders;
  • Nonprofit organizations;
  • For-profit entities, regardless of whether they are closely held;
  • Institutions of higher education; and
  • Any other nongovernmental employers.

This exemption also applies to health insurance issuers offering group or individual insurance coverage that have sincerely-held religious or moral beliefs objecting to contraceptive or sterilization coverage.

The second interim final rule provides an additional exemption for certain employers that object to providing contraceptive coverage based on their moral convictions (but not religious beliefs). This exemption is narrower in scope than the exemption based on religious objections. It may only apply to the following types of nongovernmental employers:

  • Nonprofit organizations;
  • Privately held for-profit entities; and
  • Institutions of higher education.

Health insurance issuers offering group or individual insurance coverage that have sincerely-held moral objections to providing contraceptive or sterilization coverage may also qualify for this exemption. The Departments are requesting comment on whether this moral objection exemption should also be extended to all for-profit entities (regardless of whether they are closely held or publicly traded) and nonfederal governmental employers, such as local government hospitals.

This guidance, which is effective immediately, significantly expands the number of employers that are eligible for an exemption from the contraceptive coverage mandate.

Contact your NEEBCo representative with questions.

New Regulations Expand Exemptions from the Contraceptive Mandate

2017 Final ACA Reporting Forms Released

On Sept. 28, 2017, the Internal Revenue Service (IRS) released final 2017 forms for reporting under Internal Revenue Code (Code) Sections 6055 and 6056. The 2017 forms are substantially similar to the 2016 versions, except that sections related to expired Section 4980H Transition Relief were removed.

Final instructions for 2017 have also been released.

Individual statements for 2017 must be furnished by Jan. 31, 2018. IRS returns for 2017 must be filed by Feb. 28, 2018 (April 2, 2018, if filed electronically, since March 31, 2018, is a Sunday). While the IRS extended the due date for furnishing last year’s individual statements to the end of March, the IRS does not anticipate extending the filing or furnishing deadlines for 2017 reporting.

Contact your NEEBCo representative with any questions you have.

Final Forms for 2017 ACA Reporting Released

2017 1094-C Form

2017 1095-C Form

2017 1094C and 1095-C instructions