Affordable Care Act Delays: Employer Considerations

On July 2, 2013, the U.S. Department of Treasury announced it will provide an additional year before the Affordable Care Act (ACA) mandatory employer and insurer reporting requirements begin. It is designed to meet two goals. First, it will allow the Treasury 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.

While employers are getting a one-year reprieve from the process in determining if they owe a shared responsibility payment, we await guidance from Treasury next week to determine to what extent, if any, employers will be relieved of tracking hours of variable hour employees in 2013. Will use of Measurement, Administrative, and Stability Periods also be postponed one year? Many employers have already instituted workforce changes in response to the Employer Shared Responsibility Rules, such as reducing hours of part-time employees or adjunct professors to less than 29 hours/week. Will employers stay with those changes or roll them back if Measurement Periods are not to start until 2014?

Since the Health Insurance Exchange ("Marketplace") is moving forward, it is important for employers to be prepared to respond, beginning 10/1/2013, to questions from the Marketplace (be it from HHS or the state-based exchange operator) as to:

1) Does the applicant meet the ACA full-time employee (FTE) definition?

2) If so, did the employer offer them minimum essential health coverage?

3) If so, did the plan offered meet both the Minimum Value Standard and the Affordability Test?

If the employer is not answering these questions, how does the Marketplace determine if the applicant is eligible for a federal premium subsidy? There's certainly no indication premium subsidies will be given to anyone who applies. As of today, July 3, 2013, in 88 days employers will be fielding questions from the Marketplaces, and prior to that, from their employees who will be very confused about the information they are reading and hearing about on TV and the radio relative to subsidies to enroll for health coverage through the Exchange.

The U.S. Department of Treasury release can be found here ACA Delays.

Findley Davies has prepared a list of compliance requirements which have been delayed and those which are still in effect found on page two of this bulletin.

What's Delayed Until 2015?
The Employer Shared Responsibility Requirements under IRC § 4980H

  • Applicable Large Employer (with more than 50 full-time equivalent employees) must offer minimum essential health coverage to at least 95% of its FTEs or pay an annual excise tax of $2000 x # FTEs - 1st 30 FTEs
  • Applicable Large Employer who fails to offer (i) a plan that meets a Minimum Value test (covers at least 60% of allowable charges) or (ii) affordable coverage (i.e. employee contributions for single FTE coverage > safe harbor thresholds, such as 9.5% of Individual FPL) must pay annual $3,000 excise tax on any FTE that applies for and receives a federal premium subsidy to purchase coverage through the public health insurance exchange or marketplace

The IRC § 6055 annual reporting requirement for any person providing health care coverage and the IRC § 6056 annual reporting requirements for Applicable Large Employers

  • 1st information return for HHS based on 2014 enrollment was originally due in January, 2015; this will now be based on 2015 enrollment and due in January 2016
  • 1st annual information return for employees will now be due 1/31/2016

What's Not Delayed & Still Effective 1/1/2014? (highlights only – not a comprehensive list)
The Individual Responsibility Tax—all U.S. citizens and legal residents are required to purchase minimum essential health coverage or pay a tax

  • In 2014 the tax will be the greater of $95/person or 1% of household income

Health insurance exchange or marketplace will enroll individuals and small employer groups beginning October for coverage effective 1/1/2014

  • By 10/1/2013 employers must provide a notice to all employees about the availability of a marketplace in their state
  • Premium subsidies available to people whose household income is 100%-400% FPL
  • Each state decides whether to expand Medicaid to people under age 65 with income up to 138% FPL
  • Guaranteed issue, renewability and rating rules take effect for individual and small group markets

Wellness rewards increase to 30% of the cost of coverage and up to 50% for tobacco; new rules for reasonable alternative standards take effect.

Employer-sponsored plans cannot impose annual benefit limits or preexisting condition limits on adults.

Non-grandfathered plans must cover routine costs and services in connection with clinical trials.

Health insurers will be subject to an excise tax on their net premiums written in the preceding calendar year.

Non-grandfathered plans using different providers for Medical and Rx benefits must separately limit out-of-pocket expenses to no more than the 2014 HSA maximums of $6,350/single and $12,700/family.

Transitional Reinsurance Program Fee of $63/member for 2014 will be assessed on all plans (both (i) grandfathered and non-grandfathered and (ii) insured or self-funded plans).

Summary of Benefits and Coverage (SBC) is revised (for use in Open Enrollment for 2014 coverage) to explain whether the health benefit:

  • Provides Minimum Essential Coverage, and
  • Meets the Minimum Value Standard

And don't forget: if the employer is self-funded, the PCORI fee is due by 7/31/2013 using IRS Form 720

 

Please contact Bruce Davis, Principal and Health & Group Benefits National Practice Leader, 419.3274133, This email address is being protected from spambots. You need JavaScript enabled to view it., or your Findley Davies consultant with questions and additional employer implications.