Brught t yu by Crnerstne Grup 2015 Cmpliance Checklist The Affrdable Care Act (ACA) has made a number f significant changes t grup health plans since the law was enacted ver fur years ag. Many f these key refrms became effective in 2014, including health plan design changes, increased wellness prgram incentives and reinsurance fees. Additinal refrms becme effective in 2015 fr emplyers spnsring grup health plans. Fr 2015, the mst significant ACA develpment impacting emplyers is the shared respnsibility penalty fr applicable large emplyers and related reprting requirements. T prepare fr 2015, emplyers shuld review upcming requirements and develp a cmpliance strategy. This Legislative Brief prvides a health care refrm cmpliance checklist fr 2015. Please cntact Crnerstne Grup fr assistance r if yu have questins abut changes that were required in previus years. Grandfathered Plan Status PLAN DESIGN CHANGES A grandfathered plan is ne that was in existence when the ACA was enacted n March 23, 2010. If yu make certain changes t yur plan that g beynd permitted guidelines, yur plan is n lnger grandfathered. Cntact Crnerstne Grup if yu have questins abut changes yu have made, r are cnsidering making, t yur plan. Review yur plan s grandfathered status: If yu have a grandfathered plan, determine whether it will maintain its grandfathered status fr the 2015 plan year. Grandfathered plans are exempt frm sme f the ACA s mandates. A grandfathered plan s status will affect its cmpliance bligatins frm year t year. If yur plan will lse its grandfathered status fr 2015, cnfirm that the plan has all f the additinal patient rights and benefits required by the ACA fr nn-grandfathered plans. This includes, fr example, cverage f preventive care withut cst-sharing requirements. If yur plan will keep its grandfathered status, cntinue t prvide the Ntice f Grandfathered Status in any plan materials prvided t participants and beneficiaries that describe the benefits prvided under the plan (fr example, the plan s summary plan descriptin and pen enrllment materials). Mdel language is available. Cst-sharing Limits Effective fr plan years beginning n r after Jan. 1, 2014, nn-grandfathered health plans are subject t limits n cst-sharing fr essential health benefits (EHB). As enacted, the ACA included an verall annual limit (r an ut-f-pcket maximum) fr all health plans and an annual deductible limit fr small insured health plans. On April 1, 2014, the ACA s annual deductible limit was repealed. This repeal is effective as f the date that the ACA was enacted, back n March 23, 2010. 1
The ut-f-pcket maximum, hwever, cntinues t apply t all nn-grandfathered grup health plans, including selfinsured health plans and insured plans. Effective fr plan years beginning n r after Jan. 1, 2015, a health plan s ut-f-pcket maximum fr EHB may nt exceed $6,600 fr self-nly cverage; and $13,200 fr family cverage. Special transitin relief fr the ut-f-pcket maximum was prvided fr plans that use mre than ne service prvider t administer benefits. This transitin relief nly applies fr the first plan year beginning n r after Jan. 1, 2014. It des nt apply fr plan years beginning n r after Jan. 1, 2015. Fr 2015 plan years, health plans with mre than ne service prvider may divide the ut-f-pcket maximum acrss multiple categries f benefits, rather than recncile claims acrss multiple service prviders. Thus, health plans and issuers may structure a benefit design using separate ut-f-pcket maximums fr EHB, prvided that the cmbined amunt des nt exceed the annual ut-f-pcket maximum limit fr that year. Fr example, a health plan s self-nly cverage may have an ut-f-pcket maximum f $5,000 fr majr medical cverage and $1,600 fr pharmaceutical cverage, fr a cmbined ut-f-pcket maximum f $6,600. Check yur plan s cst-sharing limits: Review yur plan s ut-f-pcket maximum t make sure it cmplies with the ACA s limits fr the 2015 plan year ($6,600 fr self-nly cverage and $13,200 fr family cverage). If yu have a health savings accunt (HSA)-cmpatible high-deductible health plan (HDHP), keep in mind that yur plan s ut-f-pcket maximum must be lwer than the ACA s limit. Fr 2015, the utf-pcket maximum limit fr HDHPs is $6,450 fr self-nly cverage and $12,900 fr family cverage. If yur plan uses multiple service prviders t administer benefits, cnfirm that the plan will crdinate all claims fr EHB acrss the plan s service prviders, r will divide the ut-f-pcket maximum acrss the categries f benefits, with a cmbined limit that des nt exceed the maximum fr 2015. Be aware that the ACA s annual deductible limit n lnger applies t small insured health plans. Health FSA Cntributins Effective fr plan years beginning n r after Jan. 1, 2013, an emplyee s annual pre-tax salary reductin cntributins t a health flexible spending accunt (FSA) must be limited t $2,500. The $2,500 limit des nt apply t emplyer cntributins t the health FSA and it des nt impact cntributins under ther emplyer-prvided cverage. Fr example, emplyee salary reductin cntributins t an FSA fr dependent care assistance r adptin care assistance are nt affected by the $2,500 health FSA limit. On Oct. 31, 2013, the Internal Revenue Service (IRS) annunced that the health FSA limit remained unchanged at $2,500 fr the taxable years beginning in 2014. Hwever, the $2,500 limit is expected t be indexed fr cst-f-living adjustments fr later years. The IRS is expected t release the health FSA limit fr 2015 later this year. 2
Update yur health FSA s cntributin limit: Wrk with yur advisrs t mnitr IRS guidance n the health FSA limit fr 2015. Once the 2015 limit is annunced by the IRS, cnfirm that yur health FSA will nt allw emplyees t make pre-tax cntributins in excess f that amunt fr 2015. Als, cmmunicate the 2015 health FSA limit t emplyees as part f the pen enrllment prcess. REINSURANCE FEES Health insurance issuers and self-funded grup health plans must pay fees t a transitinal reinsurance prgram fr the first three years f the Exchanges peratin (2014-2016). The fees will be used t help stabilize premiums fr cverage in the individual market. Fully insured plan spnsrs d nt have t pay the fee directly. Certain types f cverage are excluded frm the reinsurance fees, including HRAs that are integrated with majr medical cverage, HSAs, health FSAs and cverage that cnsists slely f excepted benefits under the Health Insurance Prtability and Accuntability Act (HIPAA) (such as stand-alne visin and dental cverage). Als, fr 2015 and 2016, self-insured health plans are exempt frm the reinsurance fees if they d nt use a thirdparty administratr in cnnectin with the cre administrative functins f claims prcessing r adjudicatin (including the management f appeals) r plan enrllment. The reinsurance prgram s fees will be based n a natinal cntributin rate, which the Department f Health and Human Services (HHS) annunces annually. Fr 2015, HHS annunced a natinal cntributin rate f $44 per enrllee per year (abut $3.67 per mnth). The reinsurance fee is calculated by multiplying the number f cvered lives (emplyees and their dependents) fr all f the entity s plans and cverage that must pay cntributins by the natinal cntributin rate fr the year. Determine whether yur health plan is subject t reinsurance fees: Taking int accunt the new exceptin fr self-insured plans, r self-administered health plans, review the health cverage yu prvide t yur emplyees t determine the plan(s) subject t the reinsurance fees fr 2015. HIPAA CERTIFICATION Health plans must file a statement with HHS certifying their cmpliance with HIPAA s electrnic transactin standards and perating rules. The ACA specified an initial certificatin deadline f Dec. 31, 2013, fr the fllwing transactins: Eligibility fr a health plan; Health care claim status; and Health care electrnic funds transfers (EFT) and remittance advice. HHS extended the first certificatin deadline t Dec. 31, 2015, althugh small health plans may have additinal time t cmply. 3
Cntrlling health plans (CHPs) are respnsible fr prviding the initial HIPAA certificatin n behalf f themselves and their subhealth plans, if any. Based n HHS definitin f CHPs, an emplyer s self-insured plan will likely qualify as a CHP, even if it des nt directly cnduct HIPAA-cvered transactins. Fr emplyers with insured health plans, the health insurance issuer will likely be the CHP respnsible fr prviding the certificatin. Hwever, mre definitive guidance frm HHS n this pint wuld be helpful. Analyze yur bligatins fr the HIPAA certificatin: Cnfirm whether yur health plan is a CHP that is required t prvide the initial HIPAA certificatin. If yu have a self-insured plan, wrk with yur third-party administratr (TPA) t cmplete the certificatin by the deadline. If yu have an insured plan, cnfirm that the issuer will be prviding the HIPAA certificatin n yur plan s behalf. Wrk with yur advisrs t mnitr additinal guidance frm HHS n the HIPAA certificatin requirement. Under the ACA s emplyer penalty rules, applicable large emplyers (ALEs) that d nt ffer health cverage t their full-time emplyees (and dependent children) that is affrdable and prvides minimum value will be subject t penalties if any full-time emplyee receives a gvernment subsidy fr health cverage thrugh an Exchange. The ACA sectins that cntain the emplyer penalty requirements are knwn as the emplyer shared respnsibility prvisins r pay r play rules. The pay r play rules were set t take effect n Jan. 1, 2014. Hwever, the IRS delayed the emplyer penalty prvisins and related reprting requirements fr ne year, until Jan. 1, 2015. On Feb. 10, 2014, the IRS released final regulatins implementing the ACA s emplyer shared respnsibility rules. Amng ther prvisins, the final regulatins establish a ne-year delay fr medium-sized ALEs, include transitin relief fr nn-calendar plans and clarify the methds fr determining emplyees full-time status. This checklist will help yu evaluate yur pssible liability fr a shared respnsibility penalty fr 2015. Please keep in mind that this summary is a high-level verview f the shared respnsibility rules. It des nt prvide an in-depth analysis f hw the rules will affect yur rganizatin. Fr mre infrmatin n the emplyer penalty rules and hw they may apply t yur situatin, please cntact Crnerstne Grup. ALE Status EMPLOYER PENALTY RULES The ACA s emplyer penalty rules apply nly t ALEs. ALEs are emplyers with 50 r mre full-time emplyees (including full-time equivalent emplyees, r FTEs) n business days during the preceding calendar year. Emplyers determine each year, based n their current number f emplyees, whether they will be cnsidered an ALE fr the next year. Under a special rule t determine ALE status fr 2015, an emplyer may select a perid f at least six cnsecutive calendar mnths during the 2014 calendar year (rather than the entire 2014 calendar year) t cunt its full-time emplyees (including FTEs). 4
Determine yur ALE status fr 2015: T cunt yur emplyees, determine whether yu will use the entire 2014 calendar year r the special transitin rule that allws yu t use any perid f at least six cnsecutive calendar mnths during 2014. Calculate the number f full-time emplyees fr each calendar mnth in the cunting perid. A full-time emplyee is an emplyee wh is emplyed n average fr at least 30 hurs f service per week. Calculate the number f FTEs fr each calendar mnth in the cunting perid by calculating the aggregate number f hurs f service (but nt mre than 120 hurs f service fr any emplyee) fr all emplyees wh were nt full-time emplyees fr that mnth and dividing the ttal hurs f service by 120. Add the number f full-time emplyees and FTEs (including fractins) calculated abve fr each mnth in the cunting perid. Add up the mnthly numbers frm the preceding step and divide the sum by the number f mnths in the cunting perid. Disregard fractins. If yur result is 50 r mre, yu are likely an ALE fr 2015. Keep in mind that there is a special exceptin fr emplyers with seasnal wrkers. If yur wrkfrce exceeds 50 full-time emplyees (including FTEs) fr 120 days r fewer during a calendar year, and the emplyees in excess f 50 wh were emplyed during that time were seasnal wrkers, the emplyer des nt qualify as an ALE. One-year Delay fr Medium-sized ALEs Eligible ALEs with fewer than 100 full-time emplyees (including FTEs) have an additinal year, until 2016, t cmply with the shared respnsibility rules. This delay applies fr all calendar mnths f 2015 plus any calendar mnths f 2016 that fall within the 2015 plan year. ALEs that change their plan years after Feb. 9, 2014, t begin n a later calendar date are nt eligible fr the delay. T qualify fr this delay, an emplyer: Must emply a limited wrkfrce f at least 50 fulltime emplyees (including FTEs), but fewer than 100 full-time emplyees (including FTEs) during 2014 May nt reduce its wrkfrce size r verall hurs f service f its emplyees in rder t satisfy the limited wrkfrce size cnditin during the perid beginning n Feb. 9, 2014 and ending n Dec. 31, 2014 May nt eliminate r materially reduce the health cverage, if any, it ffered as f Feb. 9, 2014, during the cverage maintenance perid (that is, the perid ending Dec. 31, 2015, r the last day f the plan year that begins in 2015) An applicable large emplyer must certify that it meets the three eligibility cnditins t be eligible fr this transitin relief. This certificatin will be made as part f the transmittal frm (Frm 1094-C) that the ALE is required t file with the IRS under the Internal Revenue Cde (Cde) Sectin 6056 reprting requirements. Cde Sectin 6056 requires ALEs subject t the pay r play rules t reprt t the IRS certain infrmatin abut the health care cverage prvided t the emplyer s full-time emplyees fr the calendar year. ALEs eligible fr the additinal ne-year delay will still 5
reprt under Sectin 6056 fr 2015. Further infrmatin n this certificatin will be available in the instructins fr the Sectin 6056 transmittal frm. Determine whether yu qualify fr the ne-year delay fr medium-sized ALEs: Review whether yu have fewer than 100 full-time emplyees (including FTEs) fr 2014 and meet the ther requirements fr the ne-year delay. Wrk with yur advisrs t mnitr IRS infrmatin n the certificatin prcess fr medium-sized ALEs. Keep in mind that ALEs eligible fr the ne-year delay must still reprt under Sectin 6056 fr 2015. Transitin Relief fr Nn-calendar Year Plans The final regulatins include transitin relief fr nn-calendar plans that allw spnsrs f these plans t begin cmplying with the pay r play rules at the start f their 2015 plan years, rather than n Jan. 1, 2015. The transitin relief applies t emplyers that maintained nn-calendar year plans as f Dec. 27, 2012, if the plan year was nt mdified after Dec. 27, 2012, t begin at a later date. The fllwing grups f emplyees may be cvered under the transitin relief: Emplyees (whenever hired) wh wuld be eligible fr cverage effective beginning n the first day f the 2015 plan year under the eligibility terms f the plan as in effect n Feb. 9, 2014; All emplyees, if a significant percentage f the emplyer s wrkfrce was eligible fr cverage under ne r mre nn-calendar year plans; and All full-time emplyees, if a significant percentage f the emplyer s full-time emplyees were eligible fr cverage under ne r mre nn-calendar year plans. If yu have a nn-calendar year plan: Determine whether yu qualify fr the transitin relief that allws yu t delay cmplying with the pay r play rules until the start f yur 2015 plan year and cnfirm whether all full-time emplyees are cvered by the transitin relief. The fllwing checklists will help yu determine which emplyees are cvered by the transitin relief. Transitin relief is prvided fr emplyees wh wuld be eligible fr cverage as f the first day f the 2015 plan year under the plan s eligibility terms in effect n Feb. 9, 2014, if the fllwing requirements are met: Pre-2015 Eligible Emplyees The applicable large emplyer maintained a nn-calendar year plan as f Dec. 27, 2012, and the plan year was nt mdified after Dec. 27, 2012, t begin at a later calendar date; Emplyees are ffered cverage that meets the ACA s affrdability and minimum value requirements n later than the first day f the 2015 plan year; and 6
The emplyees wuld nt have been eligible fr cverage under any calendar year grup health plan maintained by the emplyer as f Feb. 9, 2014. If this relief applies, the emplyer will nt be liable fr a penalty fr these emplyees fr any perid prir t the 2015 plan year. Significant Percentage (All Emplyees) Transitin relief is prvided when emplyers have a significant percentage f their emplyees eligible fr r cvered under ne r mre nn-calendar year plans that have the same plan year as f Dec. 27, 2012. T qualify fr this relief, the fllwing requirements must be met: The emplyer maintained a nn-calendar year plan as f Dec. 27, 2012 (r tw r mre nn-calendar year plans that have the same plan year as f Dec. 27, 2012) and did nt change the plan year after Dec. 27, 2012, t begin at a later calendar date; and The emplyer must have either: Had at least ne quarter f its emplyees cvered under thse nn-calendar year plans as f any date in the 12 mnths ending n Feb. 9, 2014; OR Offered cverage under thse plans t ne-third r mre f its emplyees during the pen enrllment perid that ended mst recently befre Feb. 9, 2014. If this relief applies, the emplyer will nt be liable fr a penalty fr any perid prir t the 2015 plan year with respect t emplyees wh are ffered affrdable, minimumvalue cverage n later than the first day f the 2015 plan year and wh wuld nt have been eligible fr cverage under any calendar-year grup health plan maintained by the emplyer as f Feb. 9, 2014. Significant Percentage (Full-time Emplyees) Transitin relief is prvided when emplyers have a significant percentage f their fulltime emplyees eligible fr r cvered under ne r mre nn-calendar-year plans that have the same plan year as f Dec. 27, 2012. T qualify fr this relief, the fllwing requirements must be met: The emplyer maintained a nn-calendar-year plan as f Dec. 27, 2012 (r tw r mre nn-calendar-year plans that have the same plan year as f Dec. 27, 2012) and did nt change the plan year after Dec. 27, 2012, t begin at a later calendar date; and The emplyer must have either: Had at least ne-third f its full-time emplyees cvered under thse nn-calendar-year plans as f any date in the 12 mnths ending n Feb. 9, 2014; OR 7
Offered cverage under thse plans t ne half r mre f its full-time emplyees during the pen enrllment perid that ended mst recently befre Feb. 9, 2014. If this relief applies, the emplyer will nt be liable fr a penalty fr any perid prir t the 2015 plan year with respect t emplyees wh are ffered affrdable, minimumvalue cverage n later than the first day f the 2015 plan year and wh wuld nt have been eligible fr cverage under any calendar-year grup health plan maintained by the emplyer as f Feb. 9, 2014. Hwever, despite this transitin relief, if an applicable large emplyer member des nt ffer cverage t substantially all f its full-time emplyees (and their dependents) as f the first day f the 2015 plan year, an emplyer may be subject t a penalty fr any calendar mnth in 2015, withut regard t the transitin relief fr nncalendar-year plans. The mnthly penalty assessed fr emplyers that d nt ffer health plan cverage t substantially all full-time emplyees and their dependents is equal t the number f full-time emplyees (excluding 30 full-time emplyees) multiplied by 1/12 f $2,000. Fr 2015 (plus any calendar mnths f 2016 that fall within an emplyer s 2015 plan year), if an emplyer has 100 r mre full-time emplyees, the penalty is calculated by reducing the emplyer s number f full-time emplyees by 80 rather than 30. Health Plan Cverage An ALE is nly liable fr a penalty under the emplyer shared respnsibility rules if at least ne full-time emplyee receives a premium tax credit r cst-sharing reductin fr cverage purchased thrugh an Exchange. Emplyees wh are ffered health cverage that is affrdable and prvides minimum value are nt eligible fr these Exchange subsidies. Full-time Emplyees A full-time emplyee is an emplyee wh was emplyed n average at least 30 hurs f service per week. The final regulatins generally treat 130 hurs f service in a calendar mnth as the mnthly equivalent f 30 hurs per service per week. The IRS has prvided tw methds fr determining full-time emplyee status the mnthly measurement methd and the lk-back measurement methd. Mnthly Measurement Methd Invlves a mnth-t-mnth analysis where full-time emplyees are identified based n their hurs f service fr each mnth. This methd is nt based n averaging hurs f service ver a prir measurement methd. Mnth-t-mnth measuring may cause practical difficulties fr emplyers, particularly if there are emplyees with varying hurs r emplyment schedules, and culd result in emplyees mving in and ut f emplyer cverage n a mnthly basis. Lk-back Measurement Methd An ptinal safe harbr methd fr determining full-time status that is intended t give emplyers flexible and wrkable ptins and greater predictability fr determining full-time status. The details f the safe harbr vary based n whether the emplyees are nging r new, and whether new emplyees are expected t wrk full-time r are variable, seasnal r parttime. This methd invlves a measurement perid fr cunting hurs f service, an administrative perid that allws time fr enrllment and disenrllment, and a stability perid when cverage may need t be prvided, depending n an emplyee s average hurs f service during the measurement perid. If an emplyer meets the requirements f the safe harbr, it will nt be liable fr penalties fr emplyees wh wrk full-time during the stability perid, if they did nt wrk full-time hurs during the measurement perid. 8
Affrdability f Cverage Under the ACA, an emplyer s health cverage is cnsidered affrdable if the emplyee s required cntributin t the plan des nt exceed 9.5 percent f the emplyee s husehld incme fr the taxable year. Husehld incme means the mdified adjusted grss incme f the emplyee and any members f the emplyee s family, including a spuse and dependents. Because an emplyer generally will nt knw an emplyee s husehld incme, the IRS prvided three affrdability safe harbrs that emplyers may use t determine affrdability based n infrmatin that is available t them. The final regulatins prvide safe harbr appraches fr assessing whether an emplyer s cverage is affrdable. These safe harbrs allw an emplyer t measure affrdability based n: The emplyee s W-2 wages; The emplyee s rate f pay; r The federal pverty level fr a single individual. Minimum Value Under the ACA, a plan prvides minimum value if the plan s share f ttal allwed csts f benefits prvided under the plan is at least 60 percent f thse csts. The IRS and HHS prvided the fllwing three appraches fr determining minimum value: MV Calculatr (prvided by HHS); Design-based safe harbr checklists; and Actuarial certificatin. In additin, any plan in the small grup market that meets any f the metal levels f cverage (that is, brnze, silver, gld r platinum) prvides minimum value. Review yur health plan design: Use the mnthly measurement methd r the lk-back measurement methd t cnfirm that health plan cverage will be ffered t all full-time emplyees (and dependent children). If yu have emplyees with varying hurs, the lk-back measurement methd may be the best fit fr yu. T use the lk-back measurement methd, yu will need t select yur measurement, administrative and stability perids. Please cntact Crnerstne Grup fr mre infrmatin n the lk-back measurement methd. Review the cst f yur health plan cverage t determine whether it s affrdable fr yur emplyees by using ne r mre f the affrdability safe harbrs. Cverage is affrdable if the emplyee prtin f the premium fr the lwest-cst, self-nly cverage that prvides minimum value des nt exceed 9.5 percent f an emplyee s W-2 wages, rate-f-pay incme r the federal pverty level fr a single individual. The cst f family cverage is nt taken int accunt. Determine whether the plan prvides minimum value by using ne f the fur available methds (minimum value calculatr, safe harbr checklists, actuarial certificatin r metal level). 9
REPORTING OF COVERAGE The ACA requires ALEs t reprt infrmatin t the IRS and t emplyees regarding the emplyer-spnsred health cverage. The IRS will use the infrmatin that ALEs reprt t verify emplyer-spnsred cverage and administer the emplyer shared respnsibility prvisins. This reprting requirement is fund in Cde Sectin 6056. All ALEs with full-time emplyees, even medium-sized ALEs that qualify fr the ne-year delay frm the pay r play rules, must reprt under Sectin 6056 fr 2015. In additin, the ACA requires every health insurance issuer, spnsr f a self-insured health plan, gvernment agency that administers gvernment-spnsred health insurance prgrams and any ther entity that prvides minimum essential cverage (MEC) t file an annual return with the IRS reprting infrmatin fr each individual wh is prvided with this cverage. Related statements must als be prvided t individuals. This reprting requirement is fund in Cde Sectin 6055. Bth f these reprting requirements becme effective in 2015. The first returns will be due in 2016 fr health plan cverage prvided in 2015. The Sectin 6055 and 6056 returns must be filed with the IRS by Feb. 28 (r March 31, if filed electrnically) f the year after the calendar year t which the returns relate. Written statements must be prvided t emplyees n later than Jan. 31 f the year fllwing the calendar year in which cverage was prvided. ALEs with self-funded plans will be required t cmply with bth reprting bligatins, while ALEs with insured plans will nly need t cmply with Sectin 6056 reprting. T simplify the reprting prcess, the IRS will allw ALEs with self-insured plans t use a single cmbined frm fr reprting the infrmatin required under bth Sectin 6055 and Sectin 6056. Prepare fr Health Plan Reprting: Determine which reprting requirements apply t yu and yur health plans. Start analyzing the infrmatin yu will need fr reprting and crdinate internal and external resurces t help track the required data. 10