The Affordable Care Act (ACA)

Transcription

1 The Affordable Care Act (ACA) How Will The ACA Impact Your Organization in 2016? Ralph Sepe, Partner, Health & Benefits Jill Bergman, CEBS VP Compliance, Health & Benefits November 2015

2 Today s Agenda The New ACA Reporting Requirements Answering important questions Cadillac Tax What the IRS has said so far Political Landscape What may lie ahead Our Crystal Ball What we see for 2016

3 The New ACA Information Reporting Requirements

4 ACA Reporting Requirements: Employer Challenges Understanding the rules Mandates & complicated/detailed reporting instructions Identifying common-law employer & employees Multiemployer plans, PEOs/staffing agencies, government contractors Properly classifying ACA full-time employees Assessing data elements/source In-house vs. third-party solution Payroll, HRIS, independent firms Complex set-up and BEWARE cut-off dates to contract for ACA services Controlled group issues Identify all member companies Cost & time commitment

5 Why Is Reporting Necessary? COVERAGE PROVIDER Minimum Essential Coverage (MEC); files months in calendar year with IRS and Group health plan issues Multiemployer plan individual Marketplace plan statements Retiree medical plan Government plans Medicare, Medicaid, CHIP 2015 Penalty $325/adult; $162.50/child ($975/family); 2.0% family income Amount in excess of filing threshold Penalty not greater than national average Bronze premium coverage in Exchange Certain exemptions may apply

6 Why Is Reporting Necessary? Applicable Large Employers (ALEs) Offer MEC to 70%* FT EEs (& dependents to age 26) NO: (a) penalty $2K x (FT employees 80*) One FT employee w/marketplace subsidy YES: (b) penalty Minimum value/affordable? 60% plan costs 9.5% wages or FPL/single premium NO: $3K x FT employees w/marketplace subsidy ALE MEMBER COMPANY files with IRS and issues individual statements *Transition factors for 2015; 70% increases to 95% in 2016; 80 decreases to 30 in 2016

7 Who (Which Employers) Must Report EMPLOYER MANDATE REPORTING Large Employers 100+ FTEs Mid-Size Employers FTEs; transition relief 2016 Small Employers < 50 FTEs Controlled group INDIVIDUAL MANDATE REPORTING All Employers Self-funded MEC plans } Applicable Large Employer (ALEs) 50+ FTEs across a controlled group of companies in prior calendar year (ALE Members)

8 What ALEs Report? Form 1094-C Cover Letter to IRS Authoritative transmittal ALE Member Company Form 1095-C, Parts I & II Statement to every full-time EE & IRS Form 1095-C, Part III Self-funded employers Monthly MEC ALL covered family members Other covered individuals Three SSN attempts *Many third-party vendors using look-back method to determine ACA FT status

9 How Many Statements Could One Person Receive? Marketplace coverage 1095-A Assumes same Insured group health plan type of coverage 1095-B: carrier all year 1095-C: ALE member company Multiple 1095-B forms Employer changes insurance carrier during calendar year Self-funded group health plan 1095-C: ALE member company 1095-B or 1095-C: for individual never a FT employee during the year Multiemployer plan 1095-B: fund(self-funded) or carrier (insured) 1095-C: ALE member company

10 Reporting Deadlines January 31, 2016 (Form 1095) February 29, 2016 (Forms 1094/1095) March 31, 2016 (Forms 1094/1095) Every full-time employee Covered individuals (self-funded) Paper filers Electronic filers 250+ Forms 1095

11 A Word About Electronic Filing: AIR SYSTEM Responsible official Software developers Register with e-services Third-party filers Electronically file Application for TCC (Transmitter Control Code) Businesses who submit Personal information own forms electronically Indicate transmission method A2A System Enroller: creates xml friendly message: machine-to-machine transmission AFA for ACA Internet Transmitter: web interface After receipt of TCC Successful communication test submission in XML format Use approved software IRS Publications 5164 & 5165 for all UGLY details

12 How To Deliver Statements? Mail In-person Electronic Affirmative consent

13 Good News For day extensions File w/ IRS (automatic) Form 8809 IRS due date (February 29 or March 31) Hardship: additional 30 days Issue individual statements Letter to IRS Postmarked by January 31, 2016 Reason for the delay Grant up to 30 days Electronic filing waiver File w/ IRS Form 8508 At least 45 days before due (February 15, 2016)

14 Good News For 2015 Employer makes contributions In accordance with CBA; or Participation agreement On behalf of an employee Multiemployer plan coverage Minimum value Affordable Dependents to 26 Simplified employer mandate Form 1095-C reporting Multiemployer plan: individual mandate information Form 1095-B

15 Noncompliance Penalties Fail to timely file/issue correct/required data To IRS & EE $250 per return not greater than $3,000,000 $50 up to $500K for corrections w/in 30 days ACA 1st year penalty relief Good faith effort No relief Incorrect or incomplete information Failing to timely file or issue statements Expect some confusion OK maybe a lot!

16 Reporting: Employer Action Steps Identify if employer has reporting obligations Review employee data accuracy Create & review specifications from third-party vendors Contribute to a multiemployer plan Is coverage MV/affordable; cover dependents to age 26 Report MEC for all individuals in self-funded plan sponsors Monitor/consider filing extensions/waivers If independently filing electronically FILE A WAIVER; or Create on-line profiles, applications, purchase acceptable software, run IRS tests, etc. Educate employees about forms they will receive Don t ignore or discard!(1095-a, 1095-B, 1095-C)

17 Cadillac Tax

18 Cadillac Tax % excise tax Excess value (excess benefit) of aggregate cost of healthcare benefits (applicable coverage) Made available and excluded from income Monthly excess benefit for each employee enrolled in coverage Annual dollar limit $10,200 (single) $27,500 (other) Multiemployer plans $27,500

19 Cadillac Tax 2018: Threshold Adjustments Inflation from 2010 to 2018 > 55% BCBS federal employee health benefits plan Standard option Demographic factors & certain jobs Age/gender High risk & retiree $12,850 (self-only) $30,950 (other) CPI after 2018 < medical trend More plans get caught and run over More damage

20 Applicable Coverage Group health plans Included FSAs Employee salary reduction elections and employer flex credits HSAs Employer contributions and employee payroll deductions HRAs Multiemployer plans Retiree plans Specified disease plans, critical illness, hospital & other fixed indemnity plans When premium excludable (pre-tax) from gross income Excluded Limited scope dental & vision Disability insurance Accident insurance Supplemental employee assistance plans Long-term care insurance Workers compensation Excepted benefits Paid with after-tax dollars

21 Health Coverage Provider Pays the Tax! Insurance Carrier Insured group health plan Employer Health Savings Account (HSA) The person that administers the plan benefits (1) Day-today functions, or (2) Ultimate responsibility

22 More Thoughts from the IRS Employers Determine Applicable Coverage Calculate excess benefit for calendar year Allocate total excess benefit Each coverage provider Notify IRS and each coverage provider Excess benefit and tax amount Tax paid by each coverage provider

23 More Thoughts from the IRS Coverage providers pass tax back to employer Employer reimbursement of Cadillac Tax Taxable Income to coverage provider Coverage provider Gross-up reimbursement Employers TAXED ON THE TAX Pay MORE THAN 40% of the excess benefit

24 Cadillac Tax Action Items Analysis Current plan designs Develop strategy Wait and hope for repeal or 2018 to make changes Gradually introduce cost-shifting/plan design High deductible health plans Narrow networks Private exchanges Eliminate or scale-back some/all plans (penalty) After-tax contributions Monitor progress

25 Political Landscape and What May Lie Ahead

26 Political Landscape ACA continues to be a polarizing law 2016 election More challenges and lawsuits Cadillac Tax Bi-partisan support for repeal Includes key leadership Economists strongly believe the tax must remain CBO: $87 billion over the next decade, Recently reduced projected revenue to $69 billion Find another ACA funding source

27 ACA Lawsuits Supreme Court reviewing contraceptive mandate Appeals from seven religious nonprofits Administration argues accommodation doesn t violate religious rights Three states suing in federal court: TX, KS, LA Health insurance tax on covered health insurance providers is unconstitutional coercion Includes state Medicaid and CHIP programs Federal government Threatens to cut off Medicaid/CHIP funding to states refusing to pay fee Failed to provide states clear notice on the conditions of accepting federal funding, A state official must clearly understand the strings attached to federal funds ACA is completely silent as to whether States must pay the Health Insurance Providers Fee to the federal government through their Medicaid and CHIP managed care organizations or risk loss of their federal Medicaid and CHIP funds for managed care

28 ACA By the Numbers The Cooperative Program 12 of 23 (52%) of ACA co-ops have failed/more failures likely AZ, CO, IA, KY, LA, MI, NE, NV, NY, OR, SC, TN $1.1 billion in federal startup loans Likely never to be fully repaid Insurers & consumers on the hook for unpaid claims 550,000 plan members Find new coverage for 2016 HHS Inspector General reported (July 2015) 21 of 23 operating co-ops faced staggering losses, some greater than the loans that were expected to last 15 years Congress is probing failed co-op program

29 ACA By the Numbers The Marketplaces Year Three Less than $100 per month Average premium with tax credits for 80% of returning consumers 7.5% overall average rate increase Benchmark plan for all 37 states using HealthCare.gov in 2015 More than 67% of counties will have three or more issuers participating in the Marketplace Estimating 10 million enrollees HHS Analysis for states using healthcare.gov; October 2015

30 ACA By the Numbers 2014 Risk Programs Assist insurers to create a stable, competitive and fair market for health insurance 3-Year Reinsurance Program Paying Insurers $7.9 Billion for 2014 Help stabilize premiums/spreads large claims costs across all coverage providers Insurers being paid for 100% of filed claims/better than expected experience Permanent Risk Adjustment Program $4.6 Billion Transferred Among Insurers Reduce the incentive for insurance companies to seek only to insure healthy individuals 3- Year Risk Corridors Program Paying Insurers $362 Million for 2014 Provides insurers with protection against claims uncertainty for first three years of Marketplace Insurers w/ premiums > claims (in excess of threshold) pay into the program: $362 Million Insurers w/ premiums < claims receive payments for shortfall: $2.87 Billion requested Insurers will be paid approximately 12.6% of their risk corridors payment requests We won t know total loss or gain for the full three years of the program until the fall of 2017 In the event of a shortfall for the 2016 program year, HHS will explore other sources of funding for risk corridors payments, subject to the availability of appropriations. This includes working with Congress on the necessary funding for outstanding risk corridors payments. CMS: Three Rs: An Overview, October 2015

31 A Look Ahead In 2016 PACE ACT: Repeals mandatory expansion of small group market in 2016 to 100 employees States have discretion to define as 50 or 100 NY: WILL expand to 100 employees Community rates Less plan design flexibility NJ and CT: stay at 50 Employer size based on ACA ALE rules Auto-enrollment repealed 200+ employees

32 A Look Ahead In 2016 Healthcare costs will continue to increase Healthcare trends More high deductible health plans and cost shifting to individuals Spouses, contributions, plan design Value-based plan designs Narrower networks How to control Rx/specialty costs Wellness PEOs as a solution Industry consolidation More administrative burdens/costs More rules and regulations Technology

33 STILL SEEKING INSIGHT? Ralph Sepe Partner, Health & Benefits Jill Bergman, CEBS VP Compliance, Health & Benefits