All posts tagged ACA

What the Latest Version of the AHCA Would Mean for Employers

Magazine with article about Repeal Healthcare with magnifying glass. Concept. +all text written by photographer and is copyright free+

The American Health Care Act that was passed by the House of Representatives by a small margin would repeal the employer mandate and the reporting requirements that the Affordable Care Act ushered in.

While Senate Republicans are likely to start from scratch and hammer out their own ACA replacement, for now, the only legislation in play is the controversial AHCA.

So, what’s in it for employers?

 

Eliminates the employer mandate – The ACA mandate requires that employers with 50 or more full-time or full-time-equivalent workers provide health insurance for their staff. The AHCA eliminates this requirement. This will likely not have a significant impact on a large number of organizations since they offer benefits to better compete for talent.

 

Delays the “Cadillac tax” again – Congress has already voted once to delay the implementation of an annual 40% excise tax on plans with annual premiums exceeding $10,800 for individuals or $29,500 for a family. The tax is slated to take effect in 2020, but the AHCA delays that to 2026. While the tax is supposed to be paid by insurers, it’s anticipated that they would pass it on to employers.

 

Changes tack on essential benefits – The ACA also requires that all health plans provide 10 essential benefits, including doctors’ services, inpatient and outpatient hospital care, and prescription drug coverage. The AHCA would allow states to have the final say in what health insurance plans should include.

That said, the bill would seem to allow national employers to opt out of essential benefits and offer stripped down plans that would likely be less expensive for employers and their covered workers, but also offer fewer benefits.

 

Expands health savings accounts

The measure would also greatly increase the amount of cash an individual can set aside pre-tax into their HSA. The current maximum an individual can put into an HSA is $3,400, but under the AHCA that would be increased to $6,550. For families, the HSA maximum would jump to $13,100 from the current $6,550.

The AHCA removes the cap on flexible savings accounts as well, which was set at $2,600 under the ACA.

These two changes would benefit employees who take advantage of these health care savings vehicles.

 

The takeaway
The AHCA does much more than the above, but most of the rest of the legislation is really geared toward the individual market and also tries to deal with the issue of pre-existing conditions.

The AHCA would also:

  • Eliminate the tax penalty for individuals who fail to secure coverage.
  • End funding for Medicaid expansion.
  • Replace the ACA’s cost-sharing subsidies, which are based mostly on consumers’ incomes and premium costs, with tax credits that increase for older individuals.
  • Repeal taxes on the wealthy, insurers, and drug and medical device makers.

 

To be clear, this legislation is not the end game. House Republicans were able to pass the legislation by a razor-thin margin after much wrangling, a feat that will be difficult to repeat in the Senate.

Also, it seems likely that Senate Republicans will start from scratch with their own legislation and that the AHCA may never see the light of day in the Senate.

Political stakes are also higher for senators and the GOP holds a slight 52-48 majority in the upper house. It would only take a few defectors to sink any attempt at repealing the ACA.

 

Companies Struggle with Benefits Compliance

More and more employers are being overwhelmed by all of the compliance requirements associated with managing employee benefits.

The Guardian Life Insurance Company of America’s “Benefits Balancing Act” study found that 60% of employers are feeling overwhelmed with the increased complexity of managing their benefits programs. One of the main reasons for the additional burden is the Affordable Care Act, with its myriad of compliance and reporting requirements.

The employer mandate and the documentation and new filing requirements with the IRS are high on the list of compliance issues, as are evolving Family Medical Leave Act (FMLA) and ERISA requirements.

Interestingly, larger firms with 100 or more employees are having the hardest time, with 70% saying they are especially challenged by installing new coverages, changing carriers and employee communications and enrollment.

The shackles of compliance are so great that it’s the number one benefits-related concern for nearly 30 % of employers, the study found. In fact, 70% said that their firms are not equipped to keep up with the steady changes in federal and state laws governing employee benefits.

The top areas of compliance concern are:

  • The ACA excise tax (“Cadillac tax”)
  • Changes to paid parental leave laws
  • ACA employer mandate
  • ERISA requirements
  • State and local FMLA requirements

 

In terms of administration the top concerns are:

  • Employee communications and education
  • Adding new benefits or changing plans and insurers
  • Establishing electronic data interchanges
  • Account management and service delivery
  • Claims and employee customer service
  • Enrolling employees

 

What companies are doing

As the regulatory landscape has shifted so dramatically over the last seven years, many employers have opted for outsourcing their benefits compliance.

This may be an especially smart move for smaller employers, which often do not have in-house benefits administration resources.

 

Among employers outsourcing at least some benefits activities, the study found that:

  • 50% use the services of a broker
  • 25% use an insurance company
  • 25% use a third-party vendor (enrollment firm, HR services firm or a private exchange)

ACA Repeal Plan Is Dead; So What Should You Do?

A blank tombstone against a sky with fluffy clouds..

Now that the American Health Care Act has suffered a defeat in Congress and President Trump has said he’ll move on to other matters, the Affordable Care Act will stand as the law of the land.

The big question hanging over the law, however, is the executive order that Trump signed shortly after taking office in January. While that order did not abolish the legislation, it set the stage for agencies to act immediately on regulations that are deemed overly burdensome.

However, the administration has not indicated what it will do now that the AHCA has ground to a halt.

While the executive order still stands, it’s now abundantly clear that the ACA will not be repealed this year, but what’s not certain is how the agencies will enforce the law’s regulations.

They can choose, for example, not to enforce the penalties for applicable large employers who do not provide acceptable health insurance for their employees, or to enforce the penalties for individuals that do not secure health insurance if none is offered by their employer.

There are two main agencies that have enabling regulations in place for the ACA: the

Department of Treasury and the Department of Health and Human Services (HHS). There has been no indication or announcement from these agencies that they will or will not enforce the regulations currently in place or whether they are in the process of starting to write new ones.

Regardless, whatever they chose to do, rule-making takes time… often years. In fact, the regulations that enabled the ACA took four years to unfold as the agencies were busy writing them and putting them out for public comment.

And any rules would still have to be changed within the confines of the ACA, and it’s unclear how much leeway the agencies have in deviating from that law.

The executive order reads:

“…it is imperative for the executive branch to ensure that the law is being efficiently implemented, take all actions consistent with law to minimize the unwarranted economic and regulatory burdens of the Act, and prepare to afford the States more flexibility and control to create a more free and open healthcare market.”

It also said that the HHS secretary and other agency heads “shall exercise all authority and discretion available to them to waive, defer, grant exemptions from, or delay the implementation of any provision… that would impose a fiscal burden on any State or a cost, fee, tax, penalty, or regulatory burden on individuals, families, healthcare providers, health insurers, patients, recipients of healthcare services, purchasers of health insurance, or makers of medical devices, products, or medications.”

Meanwhile, Trump has expressed willingness to work with the Democrats to get a new law pushed through, but the chances of that are slim if he insists on repealing the ACA. They are more likely to be open to changes to address some of the problems with the law, particularly the lack of participation by private insurers in health exchanges in some parts of the country.

 

The takeaway
So what does this mean for you, an employer? It means you should continue providing insurance for your employees if you are an applicable large employer, and continue submitting the required forms to the IRS.

For now, do what you’ve been doing.

 

What Does President Trump’s Executive Order on ACA Mean?

Worker repairing  an engine rotor winding of copper wire.

Donald Trump’s first act after assuming the presidency was to sign an executive order that authorizes federal agencies to scale back as many parts of the Affordable Care Act as possible within the confines of the law.

The executive order does not abolish the landmark legislation, but sets the stage for agencies to act immediately on regulations that are deemed overly burdensome. The agencies, particularly the Department of Treasury and the Department of Health and Human Services (HHS), will have wide latitude in making regulatory changes thanks to the broad scope of the order.

But don’t expect immediate changes in the law. Regulations cannot be rewritten, amended or replaced without going through the rule-making process, which includes notice and comment periods. That can take months, or sometimes years.

Another reason you should not expect immediate change is that the order specifically states that agencies can act only “to the maximum extent permitted by law.”

The order came on the heels of the House of Representatives approving a budget blueprint that will allow Republicans to repeal major provisions of the ACA without the threat of a Democratic filibuster in the Senate. But that action can only undo parts of the law that have an effect on the federal budget and they would need some cooperation from Democrats to repeal other parts and forge a replacement.

That means that most of the laws and regulations governing employer plans will likely stay in place for the moment, although it’s unclear for how long.

Trump has been on record saying that the repeal of the law should not take place until a replacement plan is also in place, in order to avoid creating disruptions in the market. He also said that everyone in the United States would be covered.

Here are some of the more relevant passages of the executive order:

“…it is imperative for the executive branch to ensure that the law is being efficiently implemented, take all actions consistent with law to minimize the unwarranted economic and regulatory burdens of the Act, and prepare to afford the States more flexibility and control to create a more free and open healthcare market.”

It also said the HHS secretary and other agency heads “shall exercise all authority and discretion available to them to waive, defer, grant exemptions from, or delay the implementation of any provision… that would impose a fiscal burden on any State or a cost, fee, tax, penalty, or regulatory burden on individuals, families, healthcare providers, health insurers, patients, recipients of healthcare services, purchasers of health insurance, or makers of medical devices, products, or medications.”

As mentioned, the process for making regulations takes time. Proposed regulations have to be drawn up and they have to go out for public comment, including holding hearings so that all sides can argue for or against the changes or recommend adding more changes.

Adding more confusion and concern, Trump senior adviser Kellyanne Conway said that the president may stop enforcing the law’s tax penalty against people who don’t buy insurance. But that move alone could snowball into an ugly scenario where more healthy individuals bale out of their insurance policies, which in turn would likely lead to insurers abandoning the public insurance exchanges.

She said that he would consider repealing the employer mandate quickly, as well. But that may be not be legal as the individual and employer mandates are explicit provisions of the law passed by Congress, and they cannot be overridden by the executive branch.

Republicans Unveil Two Proposals to Replace/Augment the ACA

Government Shutdown with magnifying glass. ++All text written by photographer. Image in page was taken by photographer ++

Republicans in June introduced two sweeping proposals for replacing or augmenting the Affordable Care Act, as they seek to blaze a trail they say will be better for both employers and individual Americans.

Rep. Pete Sessions, (R-Texas) and Sen. Bill Cassidy, (R-Louisiana), introduced H.R. 5284, which they call an “alternative” health care bill which will not repeal the ACA, but work alongside it and modify various parts of the system.

The so-called “Health Empowerment Liberty Plan” (HELP) includes conditions for helping Americans purchase health insurance, but also keeps in place ACA provisions that bar health insurers from discriminating against people with pre-existing medical conditions.

And later in June, a Republican task force convened by House Speaker Paul Ryan introduced a proposal that was not in bill form that would completely eliminate the ACA.

 

HELP!

Here are the major provisions of the proposed HELP Act:

Individual mandate out – It would eliminate the individual mandate to be covered for insurance either through your job or by purchasing a health plan through a public insurance exchange.

Employer mandate out – It would eliminate the employer mandate, which is the requirement that employers with 50 or more full-time workers purchase affordable coverage for them.

Exchanges still okay – The bill would also allow states to decide if they want to opt in or out of the Affordable Care Act. States that elect to remain part of the ACA would be able to keep their marketplace exchanges and Medicaid expansion programs in place.

For states that decide to opt out, U.S. citizens, including Medicaid beneficiaries, would be eligible for a $2,500 per individual, $1,500 per child tax credit, to be used towards the cost of employer-sponsored health insurance, invested in a Roth Health Savings Account or received as an annual payment.

New tax – The HELP Act would limit the tax exclusion for employer health plans to $2,500 per employee, exposing companies and workers to taxes for insurance benefits above that threshold.

Oddly, Republicans have heavily criticized the ACA’s “Cadillac tax,” which seeks to tax at 40% the portion of any employer-provided health plan that costs more than $10,200 a year.

Small employer purchasing power – The measure would also allow small employers to band together to purchase health insurance. Small employers should be able to “offer health care coverage at lower prices through improved bargaining power at the negotiating table with insurers just as corporations and labor unions do,” according to the proposal.

Minimum essential benefits out – The bill would abolish federal minimum essential benefits – a hallmark of the ACA – though it would allow states to regulate coverage.

People could buy cheaper limited-benefit plans with an annual cap on benefits. Those who buy such plans would receive asset and wage protection if their medical bills exceeded certain thresholds.

Competition and transparency – It would also limit how much insurers could charge for out-of-network services, require providers and plans to disclose prices, and deregulate physician-owned facilities, freestanding surgery centers, and retail clinics.

 

The task force proposal

The health care reform proposal released by the House Republican task force convened by Speaker Ryan would entail a full repeal of the ACA.

The proposal, which is broad in scope and short on specifics, would include a transition period out of the ACA and into a new plan. It would eliminate the individual and employer mandate and instead encourage people to have insurance coverage with the help of refundable tax credits that would be adjusted for the recipient’s age.

It would encourage small group health plans and provide $25 billion in incentives to states to set up high-risk insurance pools.

In place of the ACA’s individual mandate, the plan would prohibit insurance companies from denying patients coverage or charging them more because of pre-existing conditions – but only if they keep continuous insurance coverage, although they could switch plans or carriers.

It would also allow young adults to stay on their parents’ health plans until age 26, which is one of the most popular pieces of the ACA.

Under the proposal, insurers would be allowed to sell across state lines and medical liability laws would be reformed.

 

Government Shutdown with magnifying glass. ++All text written by photographer. Image in page was taken by photographer ++

Government Shutdown with magnifying glass. ++All text written by photographer. Image in page was taken by photographer ++

Staffing Agency and Temp Workers and Your ACA Obligations

Medical questions

If you use a staffing agency or temp workers, there is an added complexity to how you calculate your employees for the sake of the Affordable Care Act “pay or play” rules.

As you know, if you have 50 or more full-time or full-time equivalent employees, you are required to secure health insurance for your employees or face penalties of about $2,000 a head. As the Internal Revenue Service will be scrutinizing employers in this regard, you need to know the rules of the road if you are using staffing companies for your workforce.
The IRS has indicated that it intends to use a fact-based “common law” definition of employee to determine who is a full-time employer under the ACA.

When an employer uses a staffing agency to supply workers, making the determination as to who is a common law employee becomes more complex. However, the final rules allow for some relief for an employer who might otherwise incur the pay-or-play penalties with respect to workers hired through staffing agencies that are reclassified by the IRS as common law employees of the client employer.

Generally, a worker providing services to an employer is a common law employee if the employer has the authority to direct and control the manner in which services will be performed.

The IRS sets out three main categories of facts that it will consider to determine whether a person is a common law employee or an independent contractor:

  • Behavioral control;
  • Financial control; and
  • Facts about the relationship.

 

Staffing agency conundrum

But the line blurs when contracting with a staffing agency. In many of these contracts, the workers are often characterized as employees of the staffing agency or jointly employed by the staffing agency and the company client.

The IRS has stated in a Q&A section on its website that the terms used by the parties to such a contract are only one of many facts that will be examined to determine who is the common law employer for ACA purposes.

Because employers do not offer health coverage to workers supplied by staffing agencies, if the IRS decides to classify them as common law employees it could trigger liability ACA penalties.

For example, an employer who offers coverage to 96 out of 100 full-time employees would not owe a penalty under the 95% rule. But if just five additional workers provided by a staffing agency are later determined to actually be common law employees of the employer, the employer could owe a penalty of $150,000 ($2,000 multiplied by 75, which is the number of full-time employees, less 30).

 

What you should do
One bit of good news is that final ACA regulations allow employers to take credit for an offer of coverage made by a staffing agency only if the firm pays the staffing agency more for a worker who accepts the offer of coverage than the employer would pay if the worker did not accept the offer.

If you have not done so, make sure that your staffing agency contract explicitly addresses this issue in a line item.

The typical staffing agency contract prior to the ACA did not include provisions for distinguishing offers of coverage.

You will want to consider how many staffing agency workers typically are part of your workforce to determine whether ACA penalties may be triggered.

Finally, you should review and, if necessary, amend your agreements with staffing agencies to take advantage of the protection offered by the ACA regulations.

2016 ACA Compliance Checklist

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This is the year that the rubber really hits the road for employers with 50 or more full-time workers.

The Affordable Care Act employer mandate for organizations with 50 to 99 employees takes effect this year, meaning that if you haven’t been offering your staff coverage before, you are now required to do so. There are also new reporting requirements for employers both in terms of submitting documents to the Internal Revenue Service as well as to your employees.

As the New Year gets underway, read this refresher so you don’t miss a beat and expose your business to penalties.

Check your grandfathered status

Review your plan’s grandfathered status:

  • If you have a grandfathered plan, determine whether it will maintain its grandfathered status for the 2016 plan year. Grandfathered plans are exempt from some of the ACA’s mandates. A grandfathered plan’s status will affect its compliance obligations from year to year.
  • If your plan will lose its grandfathered status for 2016, confirm that it has all of the additional patient rights and benefits required by the ACA for non-grandfathered plans. This includes, for example, coverage of preventive care without cost-sharing requirements.
  • If your plan will keep grandfathered status, continue to provide the Notice of Grandfathered Status in any plan materials provided to participants and beneficiaries that describe the benefits provided under the plan (such as the plan’s summary plan description and open enrollment materials).

 

Cost-sharing limits

The ACA’s overall out-of-pocket limit applies for all non-grandfathered group health plans, including self-insured health plans and insured plans.

Under the ACA, a health plan’s out-of-pocket maximum for essential health benefits may not exceed $6,850 for self-only coverage and $13,700 for family coverage, effective for plan years beginning on or after Jan. 1.

 

Employer mandate

Under the ACA’s employer mandate, organizations with between 50 and 99 full-time employees must start offering health coverage to eligible workers starting this year. Implementation for employers with 100 or more full-time workers took effect in 2015.

 

To determine if you are an ‘applicable large employer’ (ALE) under the ACA, you need to:

  • Calculate the number of full-time employees for all 12 months of 2015. A full-time employee is one who works at least 30 hours a week.
  • Calculate full-time equivalent employees (FTEs). Take the aggregate number of hours worked (but not more than 120 hours of service for any employee) for all employees who were not full time for that month, and divide the total hours of service by 120. This will give you the number of FTEs you have.
  • Add the number of full-time employees and FTEs (including fractions) calculated above for all 12 months of 2015.
  • Add up the monthly numbers from the preceding step and divide the sum by 12. Disregard fractions.

 

If your result is 50 or more, you are likely an ALE for 2016.

 

Reporting requirements

Starting in 2016, employers with 50 or more full-time or full-time equivalent employees are required to make additional filings with the IRS, as well as supply their staff with forms.

ALEs (with 50 or more full-time and full-time equivalent employees in the preceding calendar year) will use Form 1094-C and Form 1095-C to satisfy reporting requirements.

If filed on paper, these forms must be put in the mail no later than Feb. 28. If filing is done electronically, the due date is March 31.

You must also provide 1095-C to your employees before the end of January, along with their W-2 forms.

Covered California Struggles to Grow, Keep Policyholders

The Golden State’s public health insurance exchange, Covered California, is struggling to keep up its enrollment as only 66% of the individuals who enrolled for 2014, re-enrolled for this year.

And overall enrollment for the 2015 policy year nudged up just 1% for Covered California, ranking the state in the bottom five on overall growth during open enrollment this year, according to an analysis by Avalere Health.

California’s re-enrollment and overall policy growth compares poorly with the rest of the country. State exchanges run by the federal government re-enrolled 78% of their policyholders, while also growing their enrollment by an average of 65%.

One problem that Covered California also faced in 2014 was that it lost many of the people who had signed up at the start of the year. By December, enrollment had fallen 10% from the beginning of the year to 1.1 million individuals.

Covered California has said that it lost more enrollees than expected to non-payment of monthly premiums.

Meanwhile, Covered California had projected enrollment of 1.7 million for the 2015 policy year. But, by the cut-off date for enrollment, Feb. 15, it had 1.4 million individuals enrolled.

California’s enrollment ranks poorly with state exchanges run by the federal government via its HealthCare.govwebsite.

Overall, enrollment on the federal exchange jumped 61% in 2015 to 8.8 million. The state-run exchanges, cumulatively, increased enrollment by 12% to 2.8 million.

The bottom five states in terms of overall growth this year are:

  • Vermont, -17%.
  • Washington, -2%.
  • California +1%.
  • Rhode Island and New York, tied at +10%.

 

To boost its numbers, Covered California launched a special enrollment period that ended on April 30. Through April 22, it had added an additional 22,000 people, still putting it far below its target.

To make matters worse, the poor showing may not bode well for Covered California in light of the nearly $80 million budget deficit it faces for its 2015-16 fiscal year.

Although the exchange is setting aside $200 million to cover its near-term deficit, Covered California executive director Peter Lee said in December that there are questions about the “long-term sustainability of the organization.”

healthcare shopping

Exchanges Send Employers Coverage Notification Letters

By now you should be aware of the various penalties that can be levied against employers for not providing health insurance to their full-time employees once the employer mandate takes full effect.

But are you aware of another liability contained in the Affordable Care Act – the whistleblower complaint?

The ACA prohibits an employer from discharging or in any manner discriminating or taking retaliatory action against any employee because the employee or an individual acting at the request of the employee has:

  1. Received a credit or a subsidy for purchasing health insurance coverage on a public exchange;
  2. Provided, caused to be provided, or is about to provide or cause to be provided to the employer, the federal government or the state attorney general, information regarding a violation of Title I of the ACA;
  3. Testified or is about to testify in a proceeding concerning an ACA violation. Or if they assisted or participated, or are about to assist or participate, in such a proceeding.
  4. Objected to, or refused to participate in, any activity, policy, practice or assigned task that the employee reasonably believes was in violation of any provision of the ACA.

The task of investigating whistleblower complaints is the responsibility of the federal Occupational Safety and Health Administration. Employees that feel they’ve been wronged in terms of the ACA have 180 days to file an administrative complaint with the OSHA Whistleblower Directorate.

So far there have been no Department of Labor (DOL) administrative tribunals for an ACA whistleblower complaint. That’s not surprising since the employer mandate has partly taken effect only this year for employers with 100 or more full-time or full-time equivalent employees.

While there have been no tribunals, the OSHA has received one complaint that was thrown out. Nonetheless, the complaint could be a reflection of what a complaint might look like in the future, after the employer mandate is fully implemented.

 

The case:

A woman employed as a “durational employee” by the Housing Authority of Columbus, Georgia, filed an ACA whistleblower complaint in August 2014.

She alleged that she was terminated in January 2014 – four months after she’d refused to sign and acknowledge that she understood “and agreed” with the terms of the company’s policy on health coverage for employees.

Those were laid out in a letter she’d received in September 2013, which stated that durational employees were ineligible for participation in the employer’s group health insurance plan and that only regular, full-time employees were eligible.

She said that after she had refused to sign, she received her first unsatisfactory performance evaluation and a significantly lower annual bonus based on the unsatisfactory review.

She alleged that adverse employment actions were the result of her refusal to accept the terms.

OSHA dismissed the complaint, on the grounds that it was filed to late – more than 180 days following the date of termination.

The woman appealed the decision to the DOL Office of Administrative Law, claiming that her complaint was timely because she had attempted, unsuccessfully, to file timely complaints within the 180-day limitations with other federal agencies, as well as with the White House.

But the administrative law judge threw out the complaint, saying the employer could not be held liable for retaliation prior to the effective date of the employer mandate.

 

The takeaway:

The case illustrates the most likely scenario under which an employee may gain ACA whistleblower protection after this year.

Other whistleblower complaints likely to surface in 2016 would concern complaints of adverse employment actions taken after an employer receives notice that one or more of its employees qualified for a tax credit or a subsidy for purchasing health benefits through a public exchange.

However, all complaints must be filed within 180 days of an adverse employment action.

whistleblowers