ACA Year-End Announcements: New Guidance, Delays & Extensions
Significant Changes to Understand in Early 2016
PRESENTED BY
THURSDAY /// JANUARY 14 /// 2:00-2:30 P.M. EST
Andrea EsselsteinJD
Luke ClarkSenior Consultant
Group Benefits
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AGENDA
ACA Year-End Announcements
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Auto Enrollment (> 200 Employees): Repealed
Cadillac Tax: Two-Year Delay
Minimum Value: Criteria to Determine Individual Premium Tax Credits
2016 Pay or Play Penalties: Notice 2015-87
Employer Reporting Requirements Deadline Extension: Notice 2016-04
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In the News
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YEAR-END ANNOUNCEMENTS & TIMELINE
ACA UPDATES
NOVEMBER 2: Auto Enrollment Requirements (> 200 Employees) Repealed
(Bipartisan Budget Act of 2015)
DECEMBER 18: Two-Year Cadillac Tax Postponement
(Consolidated Appropriations Act of 2016)
DECEMBER 18: Minimum Value of Eligible Employer-Sponsored Plans
(Final Regulations Issued)
– Premium Tax Credit (Subsidy) Regulations
DECEMBER 28: Notice 2015-87
– 4980H Penalties
– Affordability Considerations
– Hours of Service
DECEMBER 28: Notice 2016-04
– Extension of Reporting Due Dates (IRS Code Sections 6055 & 6056)
Initial ACA
Auto Enrollment
Provisions:
Never Implemented
Auto Enrollment Requirements May
Potentially Face Legal Challenges
under HIPAA (Informed Consent)
AUTO ENROLLMENT REPEALED
Employers are STILL PERMITTED to Auto Enroll
Employees
IMPORTANT REMINDER
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INITIAL ACA PROVISION: Employers with More
than 200 Full-time Employees Must Automatically
Enroll New Full-time Employees in One of the
Employer's Health Benefit Plans
Potential Value of Auto Enrollment –
Assistance in Avoiding IRS Code 4980 Penalties
CADILLAC TAX DELAYED
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Non-Deductible, Annual 40% Excise Tax on
“High-Value” Plans
(Fully Insured & Self-funded Plans)
Tax Applies to the Plan Value in Excess of
$10,200 ($850 / month) for Single Coverage;
$27,500 ($2,292 / month) for other than Self-
Only Coverage (Family Coverage)
TAX IS TO
DISCOURAGE
“RICH” BENEFIT
PLANS WHICH,
ACCORDING TO
ADVOCATES OF
THE TAX,
CONTRIBUTE TO
OVERUSE OF
MEDICAL CARE
CADILLAC TAXOVERVIEW
CADILLAC TAX DELAYED UNTIL 2020
The Cadillac Tax is
DEDUCTIBLEFor Employers with a Marginal
Federal Income Tax Rate at the
Maximum Level of 35%, the Effective
Rate Becomes 28%
Cadillac Tax
CHANGES
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Two-Year Breathing Period
for Employers
TAX DEFERRED
NOT ELIMINATED
No Changes to the Inflation Rate
to Determine Annual
Government Thresholds:
Consumer Price Index
NOT MEDICAL TREND
Legislation Adds a Study to Analyze
AGE & GENDER
ADJUSTMENTS
Continue to Attack the Cost of Providing
Medical & RX Coverage
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DECEMBER 18, 2015
MINIMUM VALUE
ELIGIBLE EMPLOYER-SPONSORED PLANS
HEALTH INSURANCE PREMIUM TAX CREDITS
What is Minimum Value?
MINIMUM VALUE
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Criteria to Obtain Health Insurance Premium Tax
Credits (Subsidies). If > 50 Full-time Employees:
Employer-Sponsored Plans Must Pay 60% of
Covered Expenses (Cost of Benefits) to Qualify as
“Minimum Value” OR Pay Penalties
Minimum Value Changes: No Major Changes from the Interim Final Regulations
• Clarity Regarding COBRA Qualifying Events as a Result of Reduced Hours
• Coverage Considered Not Affordable if Typical COBRA Premium Charged, i.e., 102% of
the Total Monthly Premium
Plan Sponsor Next Steps: Consider Charging a COBRA Premium for
Employees Experiencing a Loss of Eligibility as a Result of a Reduction in Hours Equal to
the Same Contribution used for Active Employees
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DECEMBER 28, 2015
NOTICE 2015-874980H PENALITES, AFFORDABILTIY CONSIDERATIONS
& HOURS OF SERVICE
NOTICE 2015-87
“Pay or Play” Penalties
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Notice 2015-87
Titled: “Further Guidance on the Application of the Group Health Plan Market Reform
Provisions of the ACA to Employer-Provided Health Coverage & on Additional ACA Provisions”
INCREASED “PAY OR PLAY” PENALTIES
2015 2016
$2,000 IRC 4980H(a) “No Offer Penalty” $2,080 $2,160
$3,000 IRC 4980H(a)
“Unaffordable/Inadequate Coverage” Penalty
$3,120 $3,240
NOTICE 2015-87
Affordability Considerations
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9.5%
Affordability Safe Harbor
Currently
9.56%
Affordability Safe Harbor
Plan Years Beginning in
2015
9.66%
Affordability Safe Harbor
Plan Years Beginning in
2016
Treasury and IRS are Modifying the Regulations Pertaining to Affordability Safe
Harbors to Align the Percentages of Employees’ Wages with the Affordability
Thresholds used at the Exchanges
NO
PENALTY
NO PENALTY
No
No
No
No
Yes
Yes
Yes
Yes
Yes
Is Your Organization an Applicable LARGE Employer (ALE) under the ACA; and therefore
Subject to Employer Shared Responsibility? Does Your Organization Employ > 50 Full-Time
Equivalent Employees (2016)? FULL-TIME: Working 30 Hrs/wk; 130 Hrs/Mo on Average
Does Your Organization
Offer Qualified Coverage
to Substantially All
Full-Time Employees and
Dependents?
Common Controlled Group
Rules Apply
(Spouses are NOT
Dependents under ACA)
Does Plan Cover a Minimum Value of
at Least 60% of Covered Expenses?
Do Any Full-time Employees Pay
> 9.66% of Household Income * for the Lowest Cost
Employee-Only Coverage?Employee Subsidy Eligibility in the
Public Exchange if Household Income
< 400% of FPL AND Not Offered Qualified,
Affordable Coverage
(>9.66% HH Income & 60% of Covered Expenses)
2016 NONDEDUCTIBLE
EMPLOYER PENALTY OF
$2,160 x Total Full-Time Employees
Less 30 (80 in 2015)
($2,000 Penalty Adjusted
for Inflation in 2015 & Beyond)
2016 NONDEDUCTIBLE
EMPLOYER PENALTY OF
$3,240 x Number Full-Time Employees who
Receive a Subsidy & Purchase Coverage in
the Public Exchange
Cap = $2,080 x Total Full-Time Employees
Less 30 (Less 80 in 2015)
* Plan Affordability Safe Harbor:Employee Only W-2 Income; OR
IRS-issued Calculation for Hourly Employees; OR
Federal Poverty Level (FPL)
Qualifying Full-time Employees
May Receive a Subsidy in the
Public Exchange if Household
Income < 400% of the Federal
Poverty Level (FPL)
Has At Least One Full-Time
Employee Received a Premium Tax
Credit (Subsidy) to Purchase
Coverage in the Public Exchange? Yes
EMPLOYER COVERAGE MANDATE & PENALTY EXPOSURE: “SHARED RESPONSIBILITY”
Plan Years on or after January 1, 2015: 100 or More Full-Time Employees
Plan Years on or after January 1, 2016: 50 or More Full-Time Employees
NOTICE 2015-87
HOURS OF SERVICE
Credit Must Be Given for an
Hour of Service when an Employee is Disabled
Employee is Both
Employed AND
Receiving
Short-term or
Long-term Disability
Benefits
Except When
Employee Pays
100% of Disability
Premiums with
Post-Tax Dollars
No Credit
Given When
Employee is
Receiving
Workers’
Compensation
Benefits
CLARITY FOR
DISABLED EMPLOYEES
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DECEMBER 28, 2015
NOTICE 2016-04
EXTENSION OF REPORTING REQUIREMENT DUE
DATES (IRS SECTIONS 6055 & 6056)
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EMPLOYER REPORTING REQUIREMENTS
IRS REPORTING
REQUIRED FOR
EMPLOYERS WITH 50
OR MORE FULL-TIME
EMPLOYEES
REQUIRED TO
REPORT? IRS Section 6055: Reporting information required by
insurers and small self-funded employers as to which
individuals are ENROLLED in Minimum Essential
coverage.
IRS FORM 1095-B OR Combined Form 1095-C
IRS Section 6056: Reporting information required by
ALL large employers as to whether full-time employees
(those employed for one month or more) were
OFFERED coverage and the lowest amount an
employee may pay to receive Minimum Value
coverage.
IRS FORM 1095-C
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Examples
Form 1095-B and Form 1095-C
EMPLOYER REPORTING REQUIRMENTS
Extension of Due Dates Under §6055 and §6056
FORM ORIGINAL
DUE DATE
EXTENDED
DUE DATE
1095 (B or C ) – To Employees February 1, 2016 March 31, 2016
1094 (B or C) AND Individual Form 1095s
-- To IRS if Filing by Paper February 29, 2016 May 31, 2016
1094 (B or C) AND Individual Form 1095s
-- To IRS if Filing Electronically (Electronic
Filing Required if filing > 250 Form 1095s)
March 31, 2016 June 30, 2016
• Individuals Do NOT Need to Provide IRS with a Copy of Form 1095 when Filing
Individual Tax Returns
• Late Filing Penalty to Plan Sponsors of $250 Per Form Remains
2016 DISCUSSION
PRACTICAL STEPS
Understand, Quantify and Mitigate Your Ongoing ACA Risk Exposure through a
Demographic & Spousal / Dependent Eligibility Analysis
Invest in Employee Outreach & Supervisor Education ASAP as Plan Changes are
Anticipated.
Introduce New Initiatives during 2016 Communication Opportunities
Revise COBRA Notices Reflecting 2014 Guaranteed Issue Coverage for COBRA
Continuants & Pre-65 Retirees
Promote Preventive Care with Employees & Families
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Thank you for joining us!
Contact Information:
Luke Clark, Senior Benefits Consultant
Andrea Esselstein, J.D.