The latest information on changes to benefit legislations and services.

2019 Limits For High Deductible Health Plans (HDHP) And Health Savings Accounts (HSA)

The IRS released the 2019 Health Savings Account (HSA) contribution limits, the minimum required HDHP deductibles, and the out-of-pocket maximums.  Each year, the IRS reviews these figures based on a cost-of-living adjustment.

 

The figures below pertain to HSAs and HSA-qualified High Deductible Health Plans.

 

2019 Annual HSA Contribution Limits

Single:  $3,500 ($50 increase from 2018)

Family:  $7,000 ($100 increase from 2018)

 

2019 Annual Minimum HDHP Required Deductibles

Single:  $1,350 (same as 2018)

Family:  $2,700 (same as 2018)

 

2019 HDHP Out-of-Pocket Maximums

Single:  $6,750 ($100 increase from 2018)

Family:  $13,500 ($200 increase from 2018)

 

More information can be found at:

https://www.irs.gov/pub/irs-drop/rp-18-30.pdf

2018 HSA Limits – Reverted Back

2018 Limits For High Deductible Health Plans (HDHP) And Health Savings Accounts (HSA)

 

In May 2017, the IRS originally released the 2018 Health Savings Account (HSA) contribution limits, the minimum required HDHP deductibles, and the out-of-pocket maximums (https://www.irs.gov/pub/irs-drop/rp-17-37.pdf).  However, the December 2017 passing of the Tax Reform Bill led to a review of the limits.  Each year, the IRS reviews these figures based on a cost-of-living adjustment.  The only change from the initial release was that the family HSA maximum contribution was adjusted downward to $6,850, compared to the previously announced limit of $6,900.

 

On April 26, 2018, the IRS announced through the Revenue Procedure 2018-27 that the $6,900 family HSA maximum contribution will remain in effect for 2018, hence undoing the change of lowering this to $6,850.

 

The figures below pertain to HSA and HSA-qualified High Deductible Health Plans.

 

2018 Annual HSA Contribution Limits

Single:  $3,450 ($50 increase from 2017)

Family:  $6,900 ($150 increase from 2017)

 

2018 Annual Minimum HDHP Required Deductibles

Single:  $1,350 ($50 increase from 2017)

Family:  $2,700 ($100 increase from 2017)

 

2018 HDHP Out-of-Pocket Maximums

Single:  $6,650 ($100 increase from 2017)

Family:  $13,300 ($200 increase from 2017)

 

More information can be found at:

https://www.irs.gov/pub/irs-drop/rp-18-27.pdf

https://www.irs.gov/newsroom/irs-grants-relief-for-taxpayers-affected-by-reduction-of-maximum-deductible-health-savings-account-contributions

2018 HSA Limits – Updated

In May 2017, the IRS originally released the 2018 Health Savings Account (HSA) contribution limits, the minimum required HDHP deductibles, and the out-of-pocket maximums (https://www.irs.gov/pub/irs-drop/rp-17-37.pdf). However, the December 2017 passing of the Tax Reform Bill led to a review of the limits. Each year, the IRS reviews these figures based on a cost-of-living adjustment.

 

The only change from the initial release is that the family HSA maximum contribution is being adjusted downward to $6,850, compared to the previously announced limit of $6,900. This change may affect current and future contributions to HSAs. If an HSA participant has already contributed more than the family HSA maximum contribution of $6,850 for 2018, contact your HSA financial institution to initiate an excess contribution removal of the overage.

 

The figures below pertain to HSA and HSA-qualified High Deductible Health Plans.

 

2018 Annual HSA Contribution Limits

Single: $3,450 ($50 increase from 2017)

Family: $6,850 ($100 increase from 2017, and originally announced as $6,900)

 

2018 Annual Minimum HDHP Required Deductibles

Single: $1,350 ($50 increase from 2017)

Family: $2,700 ($100 increase from 2017)

 

2018 HDHP Out-of-Pocket Maximums

Single: $6,650 ($100 increase from 2017)

Family: $13,300 ($200 increase from 2017)

 

More information can be found at:

https://www.irs.gov/pub/irs-irbs/irb18-10.pdf

Suspension of Obamacare Taxes, Including the Cadillac Tax

On January 23, 2018, Congress passed, and President Trump signed into law, a stopgap spending deal that ended the shutdown of the federal government.

Included in this deal are the suspensions of three taxes:

  1. The Cadillac Tax was delayed for two additional years, from 2020 until 2022. This tax would have imposed a 40% surcharge on employer sponsored health plans with premiums of more than $10,200 per year for individuals and $27,500 per year for families (these premium levels are estimates). The Cadillac Tax was previously delayed from 2018 to 2020.
  2. The Health Insurer Tax (HIT), which was included in all fully insured health insurance premiums, is projected to collect more than $14 billion in revenue in 2018. It is suspended in 2019. It will continue in 2018, and again in 2020.
  3. The 2.3% Medical Device Tax which imposed an excise tax on the sale of certain medical devices was delayed for two years, and will now begin in January 2020. The Congressional Budget Office estimated that $3.27 billion would have collected from device makers in 2018 and in 2019 if the tax were in effect.

The Congressional Joint Committee on Taxation projected that suspension of these three taxes will add $31.25 billion to the federal budget deficit over the next several years.In addition to suspending these three Obamacare taxes as part of its deal to end the shutdown, Congress authorized funding of the Children’s Health Insurance Program (CHIP), which provides health coverage to about 9 million children, for six more years.

More information can be found at:

https://www.irs.gov/businesses/corporations/health-insurance-provider-fee-2017-moratorium-questions-and-answers

https://www.irs.gov/businesses/corporations/affordable-care-act-provision-9010

https://www.jct.gov/publications.html?func=startdown&id=5058

New Medicare Health Insurance Cards For Those Over Age 65 and Medicare Eligible

In an effort to prevent fraud, fight identity theft, and keep taxpayer dollars safe, Centers for Medicare & Medicaid Services (CMS) is removing Social Security Numbers (SSN) from Medicare cards in a year-long phased approach, beginning April 2018.

The Medicare Access and CHIP Reauthorization Act (MACRA) of 2015 requires the removal of Social Security Numbers (SSN) from all Medicare cards by April 2019. A new Medicare Beneficiary Identifier (MBI) will replace the SSN-based Health Insurance Claim Number (HICN) on the new Medicare cards for Medicare transactions like billing, eligibility status, and claim status.

Between April 2018 and April 2019, CMS will mail the new Medicare cards to all people with Medicare in phases by geographic location. People with Medicare will receive a new Medicare card in the mail, and will be instructed to safely and securely destroy their current Medicare card and keep their new Medicare number confidential. Issuance of the new number will not change benefits that people with Medicare receive.

Medicare members will receive their new card automatically in the mail to their address on file with CMS. Addresses can be updated by Medicare members contacting Social Security at ssa.gov/myaccount or 1-800-772-1213.

Please see the attachment for information from CMS about how the new Medicare cards will look, and what details will be included in the mailing to Medicare members.

Note that Medicare will never call asking for personal information. Beware of anyone who contacts a Medicare member asking about personal information, or about their new Medicare card.

More information can be found at:

www.cms.gov/newcard

https://www.cms.gov/Newsroom/MediaReleaseDatabase/Press-releases/2017-Press-releases-items/2017-09-14.html

https://www.cms.gov/Medicare/New-Medicare-Card/index.html

https://www.congress.gov/bill/114th-congress/house-bill/2/text

2018 Contribution Limit For Flexible Spending Accounts (FSA)

The IRS has announced that the maximum FSA contribution limit for 2018 will increase by $50 – from $2,600 to $2,650.

The FSA limit increase is effective for FSA plan years beginning on or after January 1, 2018.

The limit is based on the employee and not the household. If an employee and spouse both have access to their own FSA through their own respective employers, they are each eligible to contribute up to the $2,650 maximum into their respective FSA.

More information can be found at:

https://www.irs.gov/pub/irs-drop/rp-17-58.pdf

NYS Department of Taxation and Finance Notice on New York Paid Family Leave (PFL)

This is a follow-up from the Smola Consulting Benefits Bulletin posted on 7/21/2017 regarding New York Paid Family Leave (PFL) benefits starting January 1, 2018 for new parents, family members caring for sick relatives, and employees with family members deployed abroad on active military duty.

The New York State Department of Taxation and Finance just released Notice N-17-12, offering more guidance on New York Paid Family Leave. Important takeaways from the Notice are:

  1. Benefits paid to employees will be taxable non-wage income that must be included in federal gross income
  2. Taxes will not automatically be withheld from benefits; employees can request voluntary tax withholding
  3. Premiums will be deducted from employees’ after-tax wages
  4. Employers should report employee contributions on Form W-2 using Box 14 – State disability insurance taxes withheld
  5. Benefits should be reported by the State Insurance Fund on Form 1099-G and by all other payers on Form 1099-MISC

Notice N-17-12 can be found here:

As referenced in the Notice, it is the responsibility of each employee and employer to consult with a tax advisor.

https://www.tax.ny.gov/pdf/notices/n17_12.pdf

More information can be found at:

https://www.tax.ny.gov/pdf/notices/n17_12.pdf

https://www.ny.gov/sites/ny.gov/files/atoms/files/PaidFamilyLeave_BusinessOwnerFactSheet.pdf

https://www.ny.gov/programs/new-york-state-paid-family-leave

Final Regulations Released on New York Paid Family Leave (PFL)

On Wednesday July 19, 2017, the New York State Workers Compensation Board posted Final Regulations regarding New York Paid Family Leave (PFL), which takes effect on January 1, 2018.

Final regulations can be found here:

http://www.wcb.ny.gov/PFL/pfl-regs.jsp

Governor Andrew Cuomo announced that the state has adopted regulations implementing New York’s Paid Family Leave program. These regulations outline the responsibilities of employers and insurance carriers in implementing the most comprehensive paid family leave program in the nation.

New parents, family members caring for sick relatives, and employees with family members deployed abroad on active military duty, are eligible for Paid Family Leave benefits starting January 1, 2018.

More information can be found at:

http://www.governor.ny.gov/news/governor-cuomo-announces-regulations-implementing-new-yorks-nation-leading-paid-family-leave

https://www.ny.gov/sites/ny.gov/files/atoms/files/PaidFamilyLeave_BusinessOwnerFactSheet.pdf

https://www.ny.gov/programs/new-york-state-paid-family-leave

2018 Limits For High Deductible Health Plans (HDHP) And Health Savings Accounts (HSA)

The IRS released the 2018 Health Savings Account (HSA) contribution limits, the minimum required HDHP deductibles, and the out-of-pocket maximums. Each year, the IRS reviews these figures based on a cost-of-living adjustment.

The figures below pertain to HSA’s and HSA-qualified High Deductible Health Plans.

2018 Annual HSA Contribution Limits

Single: $3,450 ($50 increase from 2017)

Family: $6,900 ($150 increase from 2017)

2018 Annual Minimum HDHP Required Deductibles

Single: $1,350 ($50 increase from 2017)

Family: $2,700 ($100 increase from 2017)

2018 HDHP Out-of-Pocket Maximums

Single: $6,650 ($100 increase from 2017)

Family: $13,300 ($200 increase from 2017)

All High Deductible Health Plans that have a $1,300 / $2,600 deductible for 2017 must increase that deductible to at least $1,350 / $2,700 upon their renewal for 2018.

More information can be found at:

https://www.irs.gov/pub/irs-drop/rp-17-37.pdf

2017 Contribution Limit For Flexible Spending Accounts (FSA)

The IRS has announced that the maximum FSA contribution limit for 2017 will increase by $50 – from $2,550 to $2,600. This is the first increase to the limit in two years, and only the second increase since the limit was originally set at $2,500.

The FSA limit increase is effective for FSA plan years beginning on or after January 1, 2017.

The limit is based on the employee and not the household. If an employee and spouse both have access to their own FSA through their own respective employers, they are each eligible to contribute up to the $2,600 maximum into their respective FSA.

More information can be found at:

https://www.irs.gov/pub/irs-drop/rp-16-55.pdf

Affordable Care Act Penalty Updates

The annual baseline budget projections by the Congressional Budget Office and Joint Committee on Taxation (CBO), is projecting employer responsibility penalties to total $228 billion by the end of 2020.  The individual mandate penalty will yield a projected $28 billion. The high-premium employer plan’s Cadillac Tax is expected to yield $18 billion.

These penalty estimates have tripled over the last year.

Employers should know that The Department of Labor is expecting to audit every employer with over 50 employees by the end of 2018.

Employers can expect IRS penalty notification and collections to increase after the election.

More information can be found at:

http://acahelp.com/

https://www.jct.gov/

Penalty Increases for Benefit-Related Violations

Recently, The Department of Labor published an interim final rule to adjust for inflation within the civil monetary penalties enforced by the Department of Labor. This Benefits Bulletin describes some of the adjustments made to the benefit-related civil monetary penalties enforced by the Employee Benefits Security Administration (EBSA) under the Employee Retirement Income Security Act of 1974 (ERISA). As penalties have not kept up with the rate of inflation, Congress enacted legislation requiring an initial “catch-up” adjustment to specified penalties, followed by annual adjustments.

The rule’s catch-up adjustments apply to penalties assessed after August 1, 2016, whose associated violations occurred after November 2, 2015. Beginning in 2017, the Department of Labor will adjust the new ERISA Title I penalty amounts annually for inflation by January 15. For example, by January 15, 2017, the Department will adjust annual penalty amounts to reflect any increase in inflation from October 2015.

A full list of penalty changes can be found on the links shown at the bottom of this Bulletin, but some examples include:

Form 5500: The maximum penalty for failing to file Form 5500 (due the last day of the seventh month after the plan year ends) will increase from $1,100 to $2,063 per day that the Form 5500 is late.

Group Health Plans: Failure to provide the Summary of Benefits and Coverage (SBC) will increase from $1,000 to $1,087 per failure. Maximum penalties relating to disclosures regarding the availability of Medicaid or CHIP assistance, including failure to disclose to a state, on request, and relevant information about the employer’s plan, will increase from $100 to $110 per day.

401(k) Plans: For plans with automatic contribution arrangements, penalties for failure to provide the required ERISA pre-emption notice to participants will increase from $1,000 to $1,632 per day. Failure to furnish reports, such as pension benefits statements to certain former participants and beneficiaries or failure to maintain records, will increase from $11 to $28 per employee.

On a related note, The Department of Labor released a proposal to improve and modernize Form 5500, where revisions, if approved, will begin with the Plan Year 2019 that will be filed in 2020 (https://www.dol.gov/newsroom/releases/ebsa/ebsa20160711).

More information can be found at:

https://www.dol.gov/ebsa/pdf/fs-interim-final-rule-adjusting-erisa-civil-monetary-penalties-for-inflation.pdf

https://www.dol.gov/sites/default/files/2016-inflation-penalty-chart.pdf

https://www.gpo.gov/fdsys/pkg/FR-2016-07-01/pdf/2016-15378.pdf

2017 Limits For High Deductible Health Plans (HDHP) And Health Savings Accounts (HSA)

The IRS released the 2017 Health Savings Account contribution limits, the minimum required HDHP deductibles, and the out-of-pocket maximums. Each year, the IRS reviews these figures based on a cost-of-living adjustment.

The figures below pertain to HSA’s and HSA-qualified High Deductible Health Plans.

2017 Annual HSA Contribution Limits

Single: $3,400 ($50 increase from 2016)

Family: $6,750 (unchanged from 2016)

2017 Annual Minimum HDHP Required Deductibles

Single: $1,300 (unchanged from 2016)

Family: $2,600 (unchanged from 2016)

2017 HDHP Out-of-Pocket Maximums

Single: $6,550 (unchanged from 2016)

Family: $13,100 (unchanged from 2016)

All High Deductible Health Plans and Health Savings Accounts with Smola Consulting Clients will be compliant with these 2017 IRS updates.

More information can be found at:

https://www.irs.gov/pub/irs-drop/rp-16-28.pdf

Cadillac Tax Delayed

On December 15, 2015, Congress approved a two-year delay of the Cadillac Tax. The “tax extender” package and provision was signed by the President, making it official. The Cadillac Tax effective date will move from 2018 to 2020. The delay was included in a year-end tax and spending package that also makes the Cadillac Tax tax-deductible for employers who pay it.

The Cadillac Tax is a 40% excise tax originally scheduled to take effect in 2018 to reduce health care usage and costs by encouraging employers to offer plans that are cost-effective, and engage employees in sharing in the cost of care. It is a 40% tax on employers that provide high-cost health benefits to their employees.

The 40% tax is on the cost that exceeds a threshold of the total premiums paid by both employers and employees, plus:

  1. Employer and employee contributions to Health Care FSA, HRA and HSA
  2. The cost of Employee Assistance Plans with counselling benefits, onsite medical clinics and wellness programs
  3. Retiree coverage
  4. Hospital indemnity or other fixed indemnity insurance
  5. Federal / State / Local government-sponsored plans for its employees
  6. Coverage for a specified disease or illness
  7. Multi-employer plans

These thresholds (originally set for $10,200 for single coverage and $27,500 for family coverage in 2018) will be updated for 2020 when final regulations are issued, and then indexed for inflation in future years.

For insured plans, the employer calculates the tax and the insurers pay. For self-funded plans, the employer calculates and pays the tax. As noted above, another change is that the Cadillac Tax will now be tax-deductible.

Coverages exempt from the Cadillac Tax include insured or self-funded stand-alone dental plans, insured or self-funded stand-alone vision plans, accident only coverage, disability benefits, worker’s compensation, liability insurance, and long-term care insurance benefits.

More information can be found at:

IRS Reporting Requirements – Final Forms and Instructions

On 9/17/2015, the IRS issued final forms and instructions for employer reporting relating to insured health plan coverage. The forms will be used to enforce Affordable Care Act employer penalties and individual mandate and tax credit eligibility rules with mandatory reporting starting in 2016 for the tax year 2015. Large employers with 50 or more full-time employees (including full-time equivalents) are required to complete these forms.

Form 1094-C is the Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns. This form is used to report aggregate employer level data on each employee. Form 1094-C is used to provide summary information for each employer, and each employer will submit this form to the IRS.

Form 1095-C is the Employer-Provided Health Insurance Offer and Coverage. Form 1095-C will be submitted to the IRS and will be provided to each employee as it includes information about the health insurance offered to them.   This form must be filed for everyone who was a full-time employee of the employer for any month of the calendar year.

These final versions include:

  • Forms 1094-C and 1095-C (for Applicable Large Employer reporting and self-insured large group Minimum Essential Coverage reporting)
  • Forms 1094-B and 1095-B (for insurance carrier and small employer Minimum Essential Coverage reporting)
  • The corresponding instructions

These reports are due in January 2016 for coverage offered in calendar year 2015.

There is no change to Form 1094-C (http://www.irs.gov/form1094c).

Form 1095-C (http://www.irs.gov/form1095c) has three changes to the instructions, all on page 2:

  1. Line 10. The telephone number to call with questions can also be used to report information errors on the form and ask that they be corrected.
  2. Line 14. Explanation that coverage reported does not include coverage offered through a multiemployer plan due to membership in a union.
  3. Line 14. Code 1A removed the dollar value to report coverage providing minimum value of self-only coverage, employee contributions equal to or less than 9.5% of the 48 contiguous states single federal poverty line versus equal or less than $1,108.65.

The instructions for Forms 1094-C (http://www.irs.gov/form1094c) and 1095-C (http://www.irs.gov/form1095c) include new information about these topics:

  • The Qualifying Offer Method and transitional relief for 2015
  • Multiemployer arrangements
  • Reporting COBRA coverage
  • Reporting coverage for individuals who have both medical coverage and a Health Reimbursement Arrangement (HRA)
  • Employees who have TRICARE or Veterans coverage
  • Counting the total number of employees per month on the 12th day of the month (as well as other days previously announced)

 

Form 1094-B (http://www.irs.gov/form1094b) has no changes.Form 1095-B (http://www.irs.gov/form1095b) now allows insurers to include only the last four digits of their Employer Identification Number (EIN).Changes to the Instructions for Forms 1094-B (http://www.irs.gov/form1094b) and 1095-B (http://www.irs.gov/form1095b) include:

  • Copies of Form 1095-B provided to individuals may include only the last four digits of Social Security Numbers (SSNs) or EINs. Forms filed with the IRS must include the complete numbers.
  • SSNs may be left blank if the individual does not have a SSN.
  • The instructions provide information about what to report for an individual who has more than one type of Minimum Essential Coverage.
  • Beginning in 2017 (for 2016 coverage), insurers must report catastrophic health plan coverage sold through the Marketplace. Reporting this coverage is optional but encouraged in 2016.
  • Clarification that insurers must identify employers that sponsor coverage through an association or MEWA but not multiemployer plan.

More information can be found at:

HSA Contribution Extended to Veterans

Effective 1/1/2016, the ability to make Health Savings Account (HSA) contributions will be extended to veterans, provided both of these criteria are met:

  1. Care is received through a Veteran’s Administration (VA) program
  2. Care is specifically for a service-connected disability

If the VA hospital care or medical services are specifically affiliated to a service-connected disability, veterans are eligible to contribute to an HSA on a pre-tax basis.

This new legalisation was amended on 7/31/2015 as part of the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015.

Prior to 2016, individuals were not eligible to make HSA contributions for any month that they receive VA medical benefits at any time during the previous three months.

The legislation does not reference if anyone else beyond the eligible veteran (such as an employer) can contribute to that veteran’s HSA.

Note that this excludes TRICARE, which is administered by the Department of Defense and not through the VA.

More information can be found on page 24 (Section 4007) of the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015:

https://www.congress.gov/114/bills/hr3236/BILLS-114hr3236enr.pdf

Supreme Court Upholds ACA Federal Subsidies

Below is an article released today from Washington (Associated Press), detailing the Supreme Court’s ruling to uphold the Affordable Care Act’s federal subsidies. The ruling holds that the Affordable Care Act authorized federal tax credits for eligible Americans living not only in states with their own exchanges, but also in the 34 states with federal marketplaces.

WASHINGTON (AP) – The Supreme Court on Thursday upheld the nationwide tax subsidies under President Barack Obama’s health care overhaul, in a ruling that preserves health insurance for millions of Americans.

The justices said in a 6-3 ruling that the subsidies that 8.7 million people currently receive to make insurance affordable do not depend on where they live, under the 2010 health care law.

The outcome is the second major victory for Obama in politically charged Supreme Court tests of his most significant domestic achievement. It came the same day the court gave the administration an unexpected victory by preserving a key tool the administration uses to fight housing bias.

Chief Justice John Roberts again voted with his liberal colleagues in support of the law. Roberts also was the key vote to uphold the law in 2012. Justice Anthony Kennedy, a dissenter in 2012, was part of the majority on Thursday. “Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them,” Roberts wrote in the majority opinion.

In a dissent he summarized from the bench, Justice Antonin Scalia said, “We should start calling this law SCOTUScare.” Using the acronym for the Supreme Court, Scalia said his colleagues have twice stepped in to save the law from what Scalia considered worthy challenges.

Justices Samuel Alito and Clarence Thomas joined the dissent, as they did in 2012.

Nationally, 10.2 million people have signed up for health insurance under the Obama health overhaul. That includes the 8.7 million people who are receiving an average subsidy of $272 a month to help pay their insurance premiums.

Of those receiving subsidies, 6.4 million people were at risk of losing that aid because they live in states that did not set up their own health insurance exchanges. The challenge devised by die-hard opponents of the law, often derided by critics as “Obamacare,” relied on four words – established by the state – in the more than 900-page law.

The law’s opponents argued that the vast majority of people who now get help paying for their insurance premiums are ineligible for their federal tax credits. That is because roughly three dozen states opted against creating their own health insurance marketplaces, or exchanges, and instead rely on the federal healthcare.gov to help people find coverage if they don’t get insurance through their jobs or the government.

In the challengers’ view, the phrase “established by the state” demonstrated that subsidies were to be available only to people in states that set up their own exchanges. Those words cannot refer to exchanges established by the Health and Human Services Department, which oversees healthcare.gov, the opponents argued.

The administration, congressional Democrats and 22 states responded that it would make no sense to construct the law the way its opponents suggested. The idea behind the law’s structure was to decrease the number of uninsured. The law prevents insurers from denying coverage because of “pre-existing” health conditions. It requires almost everyone to be insured and provides financial help to consumers who otherwise would spend too much of their paycheck on their premiums.

The point of the last piece, the subsidies, is to keep enough people in the pool of insured to avoid triggering a so-called death spiral of declining enrollment, a growing proportion of less healthy people and premium increases by insurers.

Several portions of the law indicate that consumers can claim tax credits no matter where they live. No member of Congress said that subsidies would be limited, and several states said in a separate brief to the court that they had no inkling they had to set up their own exchange for their residents to get tax credits.

The 2012 case took place in the midst of Obama’s re-election campaign, when he touted the largest expansion of the social safety net since the advent of Medicare nearly a half-century earlier. But at the time, the benefits of the Affordable Care Act were mostly in the future. Many of its provisions had yet to take effect.

In 2015, the landscape has changed, although the partisan and ideological divisions remain for a law that passed Congress in 2010 with no Republican votes.

The case is King v. Burwell, 14-114.

For More Information

http://nypost.com/2015/06/25/supreme-court-hands-obama-major-win-on-health-care/

2016 Limits For High Deductible Health Plans (HDHP) And Health Savings Accounts (HSA)

The IRS released the 2016 Health Savings Account contribution limits, the minimum required HDHP deductibles, and the out-of-pocket maximums. Each year, the IRS reviews these figures based on a cost-of-living adjustment.

The figures below pertain to HSA’s and HSA-qualified High Deductible Health Plans.

2016 Annual HSA Contribution Limits

Single: $3,350 (unchanged from 2015)

Family: $6,750 ($100 increase from 2015)

2016 Annual Minimum HDHP Required Deductibles

Single: $1,300 (unchanged from 2015)

Family: $2,600 (unchanged from 2015)

2016 HDHP Out-of-Pocket Maximums

Single: $6,550 ($100 increase from 2015)

Family: $13,100 ($200 increase from 2015)

All High Deductible Health Plans and Health Savings Accounts with Smola Consulting Clients will be compliant with these 2016 IRS updates.

More information can be found at:

http://www.irs.gov/pub/irs-drop/rp-15-30.pdf

Employer Reporting – Final Forms Available

The IRS has issued final forms and instructions for employer reporting and notices relating to insured health plan coverage. The final versions are largely unchanged from the prior draft versions. The forms will be used to enforce Affordable Care Act employer penalties and individual mandate and tax credit eligibility rules with mandatory reporting starting in 2016 for the tax year 2015. Large employers with 50 or more full-time employees (including full-time equivalents) are required to complete these forms.

Form 1094-C is the Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns. This form is used to report aggregate employer level data on each employee. Form 1094-C is providing summary information for each employer, and each employer will submit this form to the IRS.

Form 1095-C is the Employer-Provided Health Insurance Offer and Coverage. Form 1095-C will be submitted to the IRS AND will be provided to each employee as it includes information about the health insurance offered to them. This form must be filed for everyone who was a full-time employee of the employer for any month of the calendar year.

Attached are the final version of Forms 1094-C and 1095-C.

Both Finance Manager (FM) and WinCap are aware the IRS has provided final forms. Tim Keller at Genesee Valley/Wayne-Finger Lakes Educational Technology Service has let Smola Consulting know neither organization has released the modules that will support the completion of these forms. He is expecting them soon.

Per the IRS Final Instructions (http://www.irs.gov/pub/irs-pdf/i109495c.pdf):

  • You must file Forms 1094-C and 1095-C by February 28 if filing on paper or March 31 if filing electronically of the year following the calendar year to which the return relates.
  • For calendar year 2015, Forms 1094-C and 1095-C are required to be filed by February 29, 2016, or March 31, 2016, if filing electronically.

More information can be found at:

http://www.irs.gov/pub/irs-pdf/f1094c.pdf

http://www.irs.gov/pub/irs-pdf/f1095c.pdf

http://www.irs.gov/pub/irs-pdf/i109495c.pdf

This information does not constitute legal advice.  Employers should consult their own legal counsel with respect to compliance with these laws.

Annual Compliance Notice Summary

As the realm of compliance and regulations continues to get more complex each year, Smola Consulting is featuring this Benefits Bulletin that summarizes the annual employee compliance notice requirements, and the acceptable distribution method of employee notification.

The table below summarizes the five notices that must be made available to employees.

Annual Notice Frequency Distribution Method
Children’s Health Insurance Program Reauthorization Act (CHIPRA) Annual Paper or electronic
Medicare Creditable Coverage Annual (by 10/15 of each year) Paper or electronic
HIPAA Notice of Privacy Practices Upon enrollment and annually thereafter Paper or electronic
COBRA 1) New Employee Notification

2) COBRA “Participant” Notifications
1) Paper or electronic

2) Paper or electronic
(paper preferred)

Women’s Health and Cancer Rights (WHCRA) Upon enrollment and annually thereafter 1st notice – Paper or electronic
2nd notice – Must be paper

Specific requirements exist for providing notices through electronic communications. Compliance with these requirements is critical.

Conditions set forth below and in the Regulations for electronic disclosures must be satisfied. The individual who is the recipient of an electronic notice retains the right to obtain a paper copy of the notice from an employer upon request. Employers should always state on the electronic transmission that these documents are available in paper / written format, and can be requested through Human Resources. Individual employees covered by the plan who does not have access to employer intranet or e-mail must be provided the notice in paper format.

Additional information on electronic notices can be found through the Department of Labor at:
Regulation 29 CFR 2520.104b-l(c) & 2520.104b-l(c)(l)(iii)
Regulation 42 CFR 423.56(c)
Regulation 45 CFR 164.520(c)(3)

Model notices for CHIPRA, Medicare Creditable Coverage, HIPAA, COBRA and WHCRA can be found at:

Children’s Health Insurance Program Reauthorization Act (CHIPRA)
www.dol.gov/ebsa/chipmodelnotice.doc

Medicare Creditable Coverage
www.cms.gov

HIPAA Notice of Privacy Practices
http://www.hhs.gov/ocr/privacy/hipaa/modelnotices.html
http://www.hhs.gov/ocr/privacy/hipaa/understanding/coveredentities/notice.html
http://www.hhs.gov/ocr/privacy/hipaa/understanding/summary/privacysummary.pdf

COBRA
www.dol.gov/ebsa/modelelectionnotice.doc

Women’s Health and Cancer Rights (WHCRA)
www.dol.gov/ebsa/pdf/CAGAppC.pdf (pages 141-142)

This information does not constitute legal advice. Employers should consult their own legal counsel with respect to compliance with these laws.

HHS Proposes 3rd Year Fee of $27 for ACA Transitional Reinsurance Program

On 11/21/2014, federal regulators proposed that insured and self-funded employers would have to pay $27 for each health plan enrollee in the third and final year of the Transitional Reinsurance Program, authorized by the Patient Protection and Affordable Care Act (PPACA). Self-funded employers pay this fee separately, where insured employers have this fee built into their rate.

The $27 fee, to be paid in 2017, has been proposed and is not final. It comes on top of an earlier disclosed $63-per-health-care-plan-participant fee that is to be paid next year, and a $44-per-participant fee that is to be paid in 2016.

The fees, whose amounts were set by the U.S. Department of Health and Human Services, are intended to generate $25 billion in revenues over a three-year period as set by the Patient Protection and Affordable Care Act, including $12 billion in the first year, $8 billion in the second year, and $5 billion in the third year.

The revenue generated by the program is to be used by the government to partially reimburse commercial insurers covering individuals with high health care costs.

Earlier, regulators said the 2014 fee could be paid in full with one $63-per-participant payment made by 1/15/2015. Alternatively, rather than pay the full $63 by 1/15/2015, employers could make a payment of $52.50 per participant by that date, with an additional $10.50-per-participant payment due 11/15/ 2015. Employers and health care plan sponsors also can choose between paying the 2015 and 2016 fees with one payment or with two payments.

The 2015 fee could be paid in full with one $44-per-participant payment made by 1/15/2016, or with a $33 payment made by that date, and an $11 payment made by 11/15/2016.

Similarly, the $27-per-participant fee for 2016 could be paid in full by 1/15/2017, or with a $21.60 payment made by that date, and a $5.40 payment made by 11/15/2017.

More information can be found at:
http://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs/The-Transitional-Reinsurance-Program/Reinsurance-Contributions.html
http://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs/The-Transitional-Reinsurance-Program/Downloads/Reinsurance-Contributions_Pay-gov-Form-Go-Live_10_17_14.pdf

Affordable Care Act Employer Mandate Delayed – Redefined

Employers with 50-99 Full-Time Workers – Delayed Coverage Offering Until 2016

Employers with 100 or More Full-Time Workers – Mandate Changes From Offering Coverage to 95% of Employees to 70%

On February 10, 2014, the IRS and Treasury Department issued final regulations that impact enforcement of the Employer Mandate. Two changes were announced – one impacting employers with 50-99 employees, and the other with greater than 100 employees.

Employers with 50-99 full-time workers workers will be given until 2016 to offer health insurance coverage to employees before they risk a federal penalty for not complying.

Employers with 100 or more full-time employees will be subject to the mandate starting in 2015, although coverage to eligible full-time employees is reduced from 95% to 70% in 2015 to avoid the Type A penalty. Employers will need to offer coverage to at least 95% of eligible employees in 2016 to avoid the Type A penalty.

Clarification was provided for employers with a plan year which doesn’t start on January 1. The mandate was previously unclear when the penalty would apply – on January 1, 2015 or on the first day of the plan year (if not January 1). For employers with 100 or more full-time employees, the mandate will apply on the first day of their plan year in 2015 (meaning employers with non-calendar year plans will not have to provide coverage to full-time employees on January 1, 2015; coverage must be provided as of the first day of the plan year starting in 2015).

One additional clarification was provided regarding the length of the measurement period. In 2014, a shortened transition measurement period of six months is permitted.

The full-time employee definition remains at 30 hours or more per week. The definition of dependent has been revised to exclude stepchildren and foster children, and continues to exclude spouses.

More information can be found at:
http://www.treasury.gov/press-center/press-releases/Pages/jl2290.aspx/
http://www.treasury.gov/press-center/press-releases/Documents/Fact%20Sheet%20021014.pdf
http://www.ofr.gov/OFRUpload/OFRData/2014-03082_PI.pdf

FSA Plans – “Use It or Lose It” Provision Amended

The IRS issued Notice 2013-71 on October 31, 2013, which now allows up to $500 of unused funds in Flexible Spending Accounts to be carried over to the next plan year. This change can be effective to plan years beginning in 2013 and after, as long as you amend your plan document accordingly.

On December 31st of this year, “use it or lose it” will only apply to dollars $501 and above. The rollover can be $500, or any lesser amount. Employers can set a lower rollover amount, but it must make that same rollover limit available to all eligible plan participants.

This change is at the employer’s discretion. The FSA medical limits remain the same at $2,500. However, up to $3,000 may be available in the following plan year if the participant were to rollover the full $500 the prior year.

An employer can only implement this new rollover option if the plan does not include a grace period. If a grace period currently exists, it must be removed before the new rollover option is implemented.

This new amendment will require a plan document amendment. Amendments to remove the grace period, if applicable, and to adopt the rollover provision, must be adopted on or before the last day of the plan year from which amounts may be rolled over.

More information can be found here.

Employment Based Wellness Programs Final PPACA Regulations

The Department of Health and Human Services (HHS) issued final Patient Protection and Affordable Care Act (PPACA) Health Care Reform rules on May 29th, 2013 regarding employment based wellness programs.  The final regulations increase the maximum permissible reward under a health-contingent wellness program offered in connection with a group health plan from 20% to 30% of the cost of coverage, and to 50% when the wellness program is designed to prevent or reduce tobacco usage.  The final rules will be effective for plan years beginning on or after January 1, 2014.

The final rules support workplace health promotion and prevention without regard to an employee’s current health status.  These Health Care Reform rules expand non-discrimination protections for employer-sponsored wellness programs.  The final rules also provide more clearly defined guidelines to design and implement workplace wellness programs than were in HHS’s initial proposal.

The final rules include standards for both participatory wellness programs (those available without regard to an individual’s health status such as rewards to employees for taking a health risk assessment, or participating in a biometric screening, etc), and wellness programs that have “health contingent wellness programs” (those which reward individuals for meeting a specific health standard such as no tobacco usage, having a specified cholesterol level, etc).

References in the final regulations include rewards such as:

  • Discount or rebate of a premium or contribution;
  • Waiver of all or part of a cost-sharing mechanism (such as a deductible, copayment, or coinsurance);
  • Additional benefit, or any financial or other incentive;
  • Avoiding a penalty, such as the absence of a surcharge or other financial or nonfinancial.

The final rules state:

  • Individuals eligible for the program must be given an opportunity to qualify for the reward at least once per year;
  • The size of the award reward offered to an individual under all health-contingent wellness programs with respect to a plan cannot exceed the applicable percentage of employee-only coverage under the plan, taking into account both employer and employee contributions towards the cost of coverage for the benefit package under which the employee is receiving coverage.  If, in addition to employees, any class of dependents (such as spouses or dependent children) participate in the health-contingent wellness program, the reward cannot exceed the applicable percentage of the total cost of the coverage in which the employee and any dependents are enrolled or employee-plus-one coverage;
  • The reward for a health-contingent wellness program, together with the reward for other health-contingent wellness programs with respect to the plan, must not exceed 30% of the total cost of employee-only coverage under the plan, or 50% to the extent the program is designed to prevent or reduce tobacco use;
  • Consumers are protected with the following provisions:
    • Wellness programs must be reasonably designed to promote health or prevent disease;
    • The full reward under a health-contingent wellness program must be available to all similarly situated individuals;
    • Recommendations be accommodated which are made at any time by an individual’s physician based on medical appropriateness.

To read the final rules in their entirety, please visithttp://www.ofr.gov/OFRUpload/OFRData/2013-12916_PI.pdf

Employer Penalties Delayed

On July 2, 2013, the Treasury Department announced a one year delay in the employer mandate which penalizes employers with more than 50 employees for not providing a minimum level of affordable health insurance. Originally the penalty was to be effective starting in 2014. However, these penalties have officially been delayed until 2015.

According to the Treasury Department’s announcement (http://www.treasury.gov/ connect/blog/Pages/Continuing-to-Implement-the-ACA-in-a-Careful-Thoughtful-Manner-.aspx):
This is designed to meet two goals. First, it will allow us to consider ways to simplify the new reporting requirements consistent with the law. Second, it will provide time to adapt health coverage and reporting systems while employers are moving toward making health coverage affordable and accessible for their employees.

The individual mandate is unaffected by the rule change, requiring most Americans to purchase insurance or pay a penalty, with tax credits provided to those who can’t afford coverage. Also unaffected is the establishment of exchanges in states for low-income Americans to obtain health insurance.

More information can be found at:
http://www.treasury.gov/connect/blog/Pages/Continuing-to-Implement-the-ACA-in-a-Careful-Thoughtful-Manner-.aspx

We will continue to keep you informed as more information becomes available.

Employer Notice of Coverage Options

As a requirement of the Patient Protection and Affordable Care Act (PPACA), all employers with over $500,000 in annual revenue are required to notify all employees about their healthcare options available through the Health Insurance Exchanges. This Benefits Bulletin addresses the temporary guidance of this notification that was issued on May 8, 2013.

Employers are not yet required to provide notices under this temporary guidance, and can wait until formal guidance is provided later this year.

This notification is called the Employer Notice of Coverage Options, and a template is located at http://www.dol.gov/ebsa/pdf/FLSAwithplans.pdf. Originally scheduled for March 1, 2013, this notice deadline has been delayed until October 1, 2013 to coincide with the beginning of the Health Insurance Marketplace (Exchange) open enrollment period.