Category: Healthcare Reform

This is a reminder to prepare for the 2016 Reporting Requirements, if you have not already done so.

Those affected are Applicable Large Employers (ALE’s).  ALE’s include those that are self-insured or have over 50 full time employees (including full time equivalent employees).  Commonly owned company’s count toward the ALE calculation.

Prepare for Compliance With Information Reporting Requirements

Information reporting is used to determine compliance with the ACA individual responsibility and “pay or play” provisions. While the information reporting requirements are first effective for coverage offered (or not offered) in 2015, the initial deadlines for reporting entities are in 2016.

  • Determine if you are a reporting entity (and what type) to understand applicable reporting requirements:
    • “Section 6055” Reporting Entities. Self-insuring employers that provide minimum essential health coverage are required to report information on this coverage to the IRS and to covered individuals under section 6055 of the Internal Revenue Code.
    • “Section 6056” Reporting Entities. Employers with 50 or more full-time employees (including FTEs) are required to report information to the IRS and to their employees about their compliance with “pay or play” under Internal Revenue Code section 6056-even those that qualified for 2015 transition relief from the “pay or play” provisions.
  • Begin compiling the required information for section 6055 reporting and/or the required information for section 6056 reporting.
  • Review the IRS Forms and Instructions to prepare for compliance:
  • Determine whether to hire a third party to fulfill reporting responsibilities (reporting entities will still be liable for the failure to report information and furnish employee statements).
  • For section 6056 reporting entities, determine whether you will use the general method of reporting or the simplified alternative method to satisfy the reporting requirements.
  • If the reporting entity plans to furnish employee statements electronically in 2016, ensure that affirmative consent is obtained from employees prior to furnishing (section 6056 reporting entities must also ensure that certain notice, hardware, and software requirements are met).
  • Remember to comply with the information reporting deadlines for calendar year 2015.

Section 6055 Deadlines:

  • First information returns must be filed no later than February 29, 2016 (or March 31, 2016, if filed electronically).
  • First employee statements must be furnished on or before January 31, 2016.

Section 6056 Deadlines:

  • First information returns must be filed no later than February 29, 2016 (or March 31, 2016, if filed electronically).
  • First employee statements must be furnished on or before January 31, 2016.

Seasonal and Temporary Workers (Variable hour employees) 

Since I love to keep things simple, the following is the short version of a complex answer.

How does an Employer determine which variable hour employees are considered full time working an average of 30 hours per week and therefore eligible for medical insurance?

  • Employees are considered “variable” employee’s if it is unclear whether the employee is expected to work an average of 30 hours per week for the measurement period (as discussed below).

 

  • In 2015: Employers with 100+ FTE (full time equivalent) employees will be required to provide up to 70% of their full time employees with affordable health care coverage that meets minimum requirements, or pay a penalty.

How do you know who qualifies?  I’m glad you asked.  This is the fun part:

You may use the “Safe Harbor” method:  This is guidance that discusses a voluntary “safe harbor” method for determining whether these employees should be classified as full or part time and when health insurance coverage for those deemed full time must begin to avoid the penalty.

  • Variable and seasonal workers start out in an initial “measurement period” during which the hours they actually work are recorded (Standard measurement periods range from 3-12 months; employer’s choice).

 

  • Then there is an “administrative period” where the employer determines if the employee worked full or part time during the “measurement period” and enrolls the employee into the health plan if he or she is deemed eligible.

 

  • Finally, there is the “stability period” during which the employee is considered and treated as full time or part time, as determined during the “measurement period”, even if their hours worked during the “stability period” change. The stability period is at least 6 months long however, no shorter than the measurement period which can be up to 12 months.

 

Hours during the “stability period” are averaged into the next measurement period which means the variable employee must re-qualify as full time based on the prior year’s hours worked.

We too hope for simpler regulations but for now, this is ours to keep.

 

Healthcare Reform Basics in a Nutshell

The Affordable Care Act (ACA) commonly known as “Health Reform” or “Obamacare” was passed in 2010.  This law was aimed at making health care available to all Americans and its implementation continues today and will so for years going forward.

Everyone, with few exceptions, is required to have insurance or otherwise pay a penalty.  The coverage has been expanded to include benefits like preventive care at a $0 copay and coverage for pre-existing conditions, even if you did not have a major medical policy in place previously.

  • Larger companies (50+ employees) usually offer health insurance to their employees. Historically, an Employer contributes a portion of the premium.  This is currently the easiest way for an Employee to enroll into a medical insurance plan and often times their best option.  Now under ACA’s rules, if the Employer does not offer insurance OR does not offer a plan meeting minimum essential benefits and actuarial values and/or does not make the plan affordable, there are penalties that apply.  Employers with 50 or more eligible employees (a portion of the part time employees count toward this number), are subject to the ACA penalty’s however, to help the smaller Employer prepare for the new laws, the penalty is delayed until 2016 therefore, in 2015, the penalty is waived for those Employers who have 50-99 employees.
  • Smaller companies (fewer than 50 employees) usually elect to provide health insurance to their employees as well and may sometimes contribute toward the employee’s premium. Under ACA, the small group employer is now eligible to offer group insurance through the SHOP (Marketplace/Exchange).  Since these groups have less than 50 FT and FTE employees, they are not charged a penalty for not offering medical insurance to their employees.
  • Individual Mandate – Penalties apply to any individual person who does not enroll into a major medical plan. They may enroll through an Employer, with the insurance carrier direct, or in the Marketplace where they may qualify for a subsidy if they meet the income guidelines.

The Health Insurance Marketplace is a new way for people to shop for medical insurance.  All plans have standards that are set and approved by the government.  The marketplaces are set up and run either by the federal government, the state, or by both.  “SHOP” is set up for groups and the “Individual Marketplace” is set up for individuals who are not insured through an Employer.

Taxes and Penalties paid by larger companies help offset the costs of the ACA.  Companies like drug manufacturers also pay fees and taxes to help offset new ACA costs.

There are a few new expanded benefits that most plans are required to have like: 1) the new hire waiting period cannot exceed 90 days, 2) dependent children may remain on their parent’s plan until the age of 26, 3) you cannot be denied coverage due to a pre-existing condition, 4) there are no annual or lifetime limits on essential health benefits, and 5) most plans now have an annual out of pocket limit.  Therefore, once you meet this limit, ALL remaining benefit expenses are paid in full for the remainder of the year.

These are just the very basics.  There are countless additional details that vary depending on each individual situation and therefore you should seek advice from your benefits advisor.  Maybe we can help!