Healthcare Reform FAQ

Transcription

1 Healthcare Reform FAQ Frequently Asked Questions (FAQs) regarding implementation of various provisions of the Affordable Care Act (ACA) (Revised April 7, 2015) California s Valued Trust is not engaged in the practice of law and this document, which may include commenting on legal issues or regulations, does not constitute and is not a substitute for legal advice. Accordingly, CVT recommends that school districts secure the advice of competent legal counsel with respect to any legal matters related to this report or otherwise. The information contained in this document and in any attachments is not intended by CVT to be used, and it cannot be used, for the purpose of avoiding penalties under the Internal Revenue Code or imposed by any legislative body on the taxpayer or plan sponsor.

2 Multiemployer Plan Is CVT a multiemployer plan? Yes, CVT is a Multiemployer plan. A governmental multiemployer plan is an employee benefit plan maintained under one or more collective bargaining agreements between one or more employee organizations and more than one employer and to which more than one employer contributes. Excise Tax What is the excise tax? As it stands currently, the excise tax is a 40% non-deductible excise tax on the benefits in excess of the annual threshold and will be assessed beginning in Employees include former employees and surviving spouses. Tax is on the excess benefit (the amount over the below dollar caps.) What plans are at risk for the excise tax? The tax is imposed on the amount that exceeds the annual threshold. Effective January 1, 2018 the threshold is $10,200 for self-only coverage and $27,500 for coverage other than self-only. Multiemployer plans tax liability is subject to the higher threshold of $27,500 for self-only coverage. CVT, as a multiemployer plan, falls under the higher threshold of tax being imposed after $27,500 both for self-only and family coverage. Are Kaiser Permanente and other HMO plans at risk for the excise tax? Yes, fully insured coverage is at risk for the excise tax. Who is responsible for paying the excise tax? CVT is responsible to pay any applicable tax for our self-insured PPO plans. For fully insured plans the tax will be paid by the insurer (Kaiser Permanente, Blue Shield of California or Anthem Blue Cross). Reporting Requirements Why is the reporting required? The required forms will assist the IRS in determining if requirements of the individual mandate (forms 1094-B and 1095-B) and Employer Shared Responsibility (forms 1094-C and 1095-C) requirements have been met. Who receives the reporting? The IRS and individuals will receive information. 2 This is for informational purposes only - not intended to be used as legal advice

3 When is the reporting due? Reporting is for calendar year 2015; reports sent to individuals are due by the end of January 2016 and the reports sent to the IRS are due the end of February/March 2016, depending on the method used for filing. What information is needed? Basic coverage information, name, address, TIN, months enrolled in coverage; employer forms will also include the monthly employee cost for the lowest plan offered. Who completes the forms? The 1094-C and 1095-C forms are the responsibility of districts.. The IRS 1094-C is an employer transmittal form. The IRS 1095-C sets out the required information and the instructions state: An employer that offers health coverage through an employer-sponsored self-insured health plan must complete Form 1095-C, Parts I, II and III, for any employee who enrolls in the health coverage, whether or not the employee is a full-time employee for any month of the calendar year. But CVT districts will not be required to complete part III of the 1095-C form for employees with CVT benefits. The IRS 1095-C instructions show why this is so: If an employer is offering health coverage to employees in another manner, such as through an insured health plan or a multiemployer health plan, the issuer of the insurance or the sponsor of the plan providing the coverage is required to furnish the information about their health coverage to any enrolled employees, and the employer should not complete Form 1095-C, Part III, for those employees. IRS forms summary Districts will complete the entire 1094-C form and parts I and II, of the 1095-C form for employees with CVT benefits, but not part III. Both the 1094-B and 1095-B forms will be completed through CVT for all employees covered by CVT. I was told that I need to include a 1095-A form with my taxes. Do I get that information from CVT? The 1095-A form will be sent this year but only to members enrolled in Covered California coverage. Everyone will need to answer a yes or no question asking if they have appropriate health coverage beginning with the 2014 tax year, but only people enrolled in Covered California will be provided evidence they enrolled in coverage. Beginning with the 2015 tax year CVT and employers will be responsible for providing coverage information to subscribers, but there is no requirement to provide coverage information for the 2014 tax year. 3 This is for informational purposes only - not intended to be used as legal advice

4 Affordability Requirement The Marketplace Exchanges / Shared Responsibility Requirement When does the Employer Mandate begin for school districts participating in CVT? For most districts the Employer Mandate is effective the first day of the CVT plan year beginning on October 1, This applies to district employees which participate in a CVT plan; and if the plan year for those employees was not modified to begin at a later date after December 27, As it pertains to the ACA Employer Mandate, which requires large employers to provide health coverage to all full-time employees, where full-time is defined as all employees who work at least 30 hours per week for more than 120 days per year, what are the options available for covering substitute employees? Substitute teachers that elect CVT coverage will choose from the same plan options and rate structure that the unit/group has bargained. CVT offers each unit/group within the district the option to bargain a 3-Tiered or 4-Tiered minimum value Bronze plan to assist the district in meeting the requirement to offer an affordable option that satisfies the minimum value requirement. Our district is billed on a composite rate. How do I calculate if our plans are affordable? The composite rate should be treated as the self-only rate and used for the 9.5% affordability calculation. CVT offers a calculator to help evaluate the affordability requirement. The calculator can be found at Will healthcare reform and its Shared Responsibility requirement bring about the end of the composite rate structure? CVT will continue to offer current rate structure options. The rate structure a unit has bargained does impact the affordability requirement under the Affordable Care Act and therefore needs to be taken into consideration when making the Shared Responsibility calculations. Our bargaining unit only offers PPO plan 1 and 2 and I am a single individual. Do I have affordable coverage? Affordability is based on the employee's wage compared to how much out-of-pocket cost the employee contributes using the lowest cost plan option. For example, if the bargaining unit offers plans 1 and 2 as their only options, then the affordability calculation will be based on the contributions for plan 2, the lowest-cost plan, regardless of which plan the employee elects. How do I determine if the plans our district offers are affordable? If the employee is contributing less than 9.5% of wages shown on the W-2 towards the contribution for medical benefits, based on the lowest cost plan offered by the district, then the district is providing an affordable plan. Is the affordability of 9.5% based on individual or family income? Adjusted gross? Or gross income? The affordability criteria are based on modified, adjusted, gross household income. The IRS has released guidelines, though, that state there are three safe harbors for calculating the affordability requirements; among which is the employee's W-2 wages, since knowledge of the household income is not available to an employer. For more information please refer to 4 This is for informational purposes only - not intended to be used as legal advice

5 Will CVT offer assistance in making sure our school district s plans meet the requirements to avoid Affordable Care Act penalties? Yes, all of CVT s medical plans currently meet minimum essential/minimum value requirements. A new benefit option (CVT PPO Bronze Plan) modeled after the Covered California Bronze Plan was included in all district/unit benefit offerings, effective October 1, 2013, to assist districts and members in meeting the Shared Responsibility requirement. If a district meets the Shared Responsibility requirements, will an employee still be allowed to receive subsidized coverage through the Exchange? No, the Exchange should not replace an Employer Sponsored Plan if the employer has met the Shared Responsibility requirements and the employee would not be eligible for subsidized coverage through the Exchange. Participation Requirement / Full-Time Employee Can our school district s full-time employees opt out of CVT coverage and take an Exchange plan? Even full-time employees that are able to purchase coverage through the Exchange and qualify for subsidized coverage will have to have contributions made on their behalf due to CVT s 100% participation policy. What if a full-time employee has coverage through a spouse? Regardless of spousal coverage status, full-time employees are covered by CVT benefits. Is obtaining coverage through the Exchange a qualifying event? Yes, acquiring/losing coverage is a qualifying event, regardless of who the coverage is through. Qualifying events allow an employee to make plan selection changes, add/remove dependents and part-time employees can add/terminate a line of coverage. If an employee works 30 hours a week, which by the Affordable Care Act s definition is a full-time employee, does that mean that the district must comply with the 100% participation rule with regard to that employee? CVT defers to collective bargaining agreements to define a full-time employee. All full-time employees, as defined by the collective bargaining agreement, are required to participate in a CVT plan. Our school district s collective bargaining agreements state benefits are only offered to employees who work 35+ hours. How does this affect those employees who work 32 hours per week? The Shared Responsibility requirement pertains to any employee who works more than 30 hours per week or 130 hours on average in a month. This regulation must be used when determining if the employer has met coverage requirements for its employees. Where does my school district find information about how to calculate its full-time employees? Proposed guidelines can be found at 5 This is for informational purposes only - not intended to be used as legal advice

6 Federal Subsidies How does my school district know if an employee is eligible for a subsidy through the Marketplace Exchange? The eligibility for a federal subsidy is determined by federal poverty guidelines. The federal poverty guidelines can be found at Will an employee be allowed to purchase coverage on the Marketplace Exchange just for his/her dependents if the employer provides an affordable, adequate plan, (according to Box 1 of the employee s W2) but the family qualifies for a tax credit based on gross family income? If an employee is offered an affordable, adequate plan through their employer (and the family is eligible to also enroll) then the family dependents of that employee would not be eligible for a federal subsidy. For additional information on the ruling please visit The dependents would be allowed to purchase Marketplace Exchange coverage without the federal subsidy. According to Affordable Care Act guidelines, are employers required to offer medical benefits to dependents? Employers are required to offer medical benefits to child dependents up to age 26, not spouses. 6 This is for informational purposes only - not intended to be used as legal advice