Health Insurance Plan Changes under Trump Administration

TrumpOn April 13, 2017, the federal Department of Health and Human Services (HHS) issued final regulations designed to help stabilize the individual and small-group health insurance markets. The new rules generally do not impact large-group plans. The rules also do not impact self-funded plans (whether large group or small group), grandfathered plans or insurance not subject to the Affordable Care Act (ACA) requirements, such as supplemental health benefits (including hospital indemnity and other fixed indemnity coverage and coverage for a specified disease or illness) or other excepted benefit coverage (such as dental, vision, accident or disability benefits). This article provides a high-level summary of key provisions in the final market stabilization rule. Shortened 2018 Open Enrollment Period in the Individual Market Under the final regulation, the 2018 open enrollment period for the individual market both on and off Exchanges will start on Nov. 1, 2017, and run through Dec. 15, 2017. This conforms the open enrollment period for 2018 to the open enrollment period for 2019 and later years. Before this change, the 2018 open enrollment period would have been longer (starting Nov. 1, 2017, and running through Jan. 31, 2018). This longer period had been provided on a transition basis leading up to the shorter period that would apply in 2019 and later years. In making the change, HHS determined that there has been enough experience with Exchange coverage so that a longer open enrollment period was not needed. HHS was also concerned that the longer open enrollment period inappropriately encouraged some people to wait until they are sick to sign up for insurance coverage. Adjustment of Metal Tiers to Provide More Consumer Choice in the Individual and Small Group Market Non-grandfathered individual and fully insured small-group market plans are subject to actuarial value (AV) requirements that are represented by metal tiers. The AV is an estimate of the expected payments by the plan for essential health benefits. There are four metal tiers: » Bronze (60 percent actuarial value) » Silver (70 percent actuarial value) » Gold (80 percent actuarial value) » Platinum (90 percent actuarial value) The First New Health Care Regulations in the Trump Administration: Final “Market Stabilization” Rules By: Carolyn Smith and John Hickman, Alston & Bird LLP Aflac Federal Relations 2 Alston & Bird LLP Prior rules had allowed plans some variation from the precise AV percentages, while still meeting the metal tier requirements. The new final regulations allow greater variation, thus allowing insurers greater flexibility to adjust benefits and provide consumers with additional options and potentially lower premiums. Under the final rule, starting with the 2018 benefit year, plans will be considered to meet the metal tier requirements if the plan’s AV is no more than 2 percentage points above and no more than 4 percentage points below the specified AV level. For example, a plan with an AV between 66 percent and 72 percent would qualify as a silver plan and a plan with an AV between 56 percent and 62 percent would qualify as a bronze plan. A special rule allows additional variation for certain bronze plans. If a bronze plan is either an HAS compatible high-deductible health plan (HDHP) or covers and pays for at least one major service other than preventive services before the deductible is met, then a variation of 5 percentage points above the AV and 4 percentage points below is permitted. For example, an HSA-compatible HDHP can have an AV of between 56 percent and 65 percent and still be considered a bronze plan. This provides greater flexibility for insurers that offer HDHPs. Allowing Insurers Greater Flexibility to Recoup Past-Due Premiums in the Individual and Large- and Small-Group Markets The final rule allows insurers to collect past-due premiums from individuals for the prior 12 months before re-enrolling the individual for the next year, if permitted under state law and consistent with applicable nondiscrimination rules. This rule is designed to encourage individuals to maintain continuous coverage throughout the year. Although the rule applies in the group market as well as the individual market, an insurer cannot refuse to effectuate an individual’s coverage for a year due to the employer’s failure to pay past-due premiums. Changes Relating to Special Enrollment Periods for Exchanges Special enrollment periods allow individuals who experience certain events, such as loss of employment-based health coverage, marriage or birth of a child, to enroll in or change coverage outside of the open enrollment period. The final rule includes a number of provisions regarding special enrollment periods, including additional verification requirements for special enrollments through the Exchanges and limiting the ability of Exchange enrollees to change metal tier levels during a special enrollment period. These changes are intended to help avoid fraudulent claims of eligibility for special enrollment periods by individuals who have waited until they are sick to enroll in insurance coverage.

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Compliance Update – 02-09-2017

Compliance Update – 02/09/2017

Informative Q&As for Forms 1095-B and 1095-C

Recently released IRS Q&As regarding employer filing requirements under section 6055 and 6056 of the Affordable Care Act (ACA), commonly known as 1094 and 1095 filings, provide additional information on codes to be used for COBRA participants and Health Reimbursement Arrangements (HRAs) sponsored by an Applicable Large Employer (ALE).

Recap of ACA Filing Requirements
For an outline of filing requirements, please see our Compliance Alert Update to the Affordable Care Act Reporting Requirements and Affordable Care Act Reporting Requirements.

Questions and Answers
Due to the breadth and complexity of each Q&A, we will reference the Q&A number, the question, and a brief explanation of the answer. However, for a full description, please reference the entire Q&A on the IRS website.

Q&A 17. How should an ALE report enrollment information for self-insured health plan coverage provided to an individual who was not an employee on any day of the calendar year, such as a non-employee COBRA beneficiary?

By entering 1G, “Offer of coverage for at least one month of the calendar year to an employee who was not a full-time employee for any month of the calendar year…”

Q&A 22. How should an ALE complete Part II of Form 1095-C for a full-time employee who terminates employment during a calendar year and receives an offer of COBRA continuation coverage?

This COBRA scenario is not reported as an offer of coverage in Part II of Form 1095-C. If the former employee was a full-time employee for one or more months of the year before terminating employment, the ALE should use code 1H on line 14 for any month for which the employee was not offered COBRA continuation coverage. For those same months enter 2A on line 16.

Q&A 23. How should an ALE complete Part II of Form 1095-C for an active employee who receives an offer of COBRA continuation coverage due to a reduction in hours?

The employer should report the offer of COBRA continuation as an offer of coverage in Part II of Form 1095-C.

Q&A 24. How should an employer that sponsors a self-insured health plan report coverage of spouses and dependents of employees who separately elect to receive COBRA continuation coverage?

In some circumstances an employer may choose to report coverage of each non-employee spouse and dependent who separately elects COBRA continuation coverage on a Form 1095-B or on 1095-C.

Q&A 26. Should an ALE report coverage under a Health Reimbursement Arrangement (HRA) for an individual who is enrolled in both the HRA and the employer’s other self-insured major medical group health plan?

If an individual is covered by two or more plans that are minimum essential coverage and provided by the same reporting entity, reporting is required for only one of them for that month.

Q&A 27. Should an ALE report coverage under an HRA for an individual who is eligible for the HRA because the individual is enrolled in the employer’s group health plan?

An ALE would be required to report HRA coverage for an employee who is enrolled in the HRA but not enrolled in another group health plan of the employer.

The Questions and Answers about Information Reporting by Employer on Form 1094-C and Form 1095-C is very informative and extensive. It not only covers questions on COBRA coverage and HRA participants, but includes “Basics of Employer Reporting” and “Reporting Offers of Coverage and other Enrollment information.”

 

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Property & Casualty Benefits

AllState has a special program that allows sole proprietors to pick up special coverages such as accident and disability if you carry one of the P & C lines such as auto or homeowners or business insurance. Aflac requires 3 employees to carry the account and this makes some valuable coverage available to sole proprietors

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ACA for Applicable Large Employers

The new ACA Information Center for Applicable Large Employers page on IRS.gov features information and resources for employers of all sizes on how the health care law may affect them if they fit the definition of an applicable large employer.

The page includes such sections as trends and resources for ALEs; how to determine if you are an ALE; and outreach materials including FAQs and links to forms, among other materials.

In 2016, ALEs must file an annual information return and provide a statement to each full-time employee reporting whether the company offered health insurance, and if so, what insurance it offered.

See also: “IRS allows employers to ‘test run’ ACA reporting

Companies that will file 250 or more information returns for 2015 must e-file the returns through the ACA Information Reports system. Draft Publication 5165, “Guide for Electronically Filing Affordable Care Act Information Returns,” contains information on the communication procedures, transmission formats, business rules and validation procedures for returns that companies must transmit in 2016.

Although most employers will not be affected, companies should determine if they are an ALE, which comprises an average of at least 50 full-time employees (including full-time equivalents) during 2014. A company with fewer than 50 full-time employees may be an ALE if it shares a common ownership with other employers.

For More Information CONTACT US

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“Mini-COBRA” Laws in D.C., Maryland, and Virginia

mini-cobra-laws

Length of Continuation Coverage provided by D.C., Maryland, and Virginia “Mini-COBRA” Laws

 
Almost everyone has heard of COBRA: the Consolidated Omnibus Budget Reconciliation Act of 1985. COBRA generally requires that group health plans sponsored by employers with 20 or more employees offer employees and their families the opportunity for a temporary extension of health coverage (“continuation coverage”) in certain circumstances where coverage under the plan would otherwise end. These circumstances include both voluntary and involuntary separation from employment, as well as death, divorce, etc. Continuation coverage under the federal COBRA generally lasts for 18 months – but may last for up to 29 or 36 months in certain limited circumstances.
Less well known are the state “mini-COBRA” laws that apply to employers with fewer than 20 employees.
 
D.C., Maryland, and Virginia all have mini-COBRA laws that apply to employers with fewer than 20 employees.
 
The D.C. mini-COBRA law provides for 3 months of continuation coverage, except in the case of terminations for gross misconduct. The employer is required to provide notice to the employee within 15 days after the date that coverage would otherwise terminate. The employee is responsible for electing coverage and paying the premium within 45 days after the date that coverage would otherwise terminate. D.C. Code § 32-732.
 
The Maryland mini-COBRA law provides for 18 months of continuation coverage, except in the case of terminations for cause. The employer is required provide an election form within 14 days of request by an employee. The employee is responsible for electing coverage and paying the premium within 45 days after the date that coverage would otherwise terminate. Md. Code, Ins. Art. § 15-409.
 
The Virginia mini-COBRA law provides for 12 months of continuation coverage, except in the case of terminations for cause. The employer is required provide an election form within 14 days after the date that coverage would otherwise terminate. The employee is responsible for electing coverage and paying the premium within 31 days receiving the notice – but in no event beyond the 60 day period following the date that coverage would otherwise terminate. Va. Code § 38.2-3541.

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Changes to Small Business Health Care Tax Credit

Intro

Small Businesses may find themselves in the unenviable position of wanting to make health insurance available to employees but not being able to afford the required 50% contribution levels. Before you run away in terror, please remember that there are tax credits available to help alleviate the burden. Firstly, the employer and the employee will experience reductions in cost by way of pre-taxing the health insurance premiums. Additionally, the Government has extended tax credits to Small Business owners of up to 50% of the employer contribution. Also, the employer contribution can be pegged to the lowest cost option available further reducing exposure.
Please read the article below for more information and contact me here to pursue options.

IRS Health Care Tax Tip 2015-13, February 26, 2015

Small employers should be aware of changes to the small business health care tax credit, a provision in the Affordable Care Act that gives a tax credit to eligible small employers who provide health care to their employees.

Beginning in 2014, there are changes to the tax credit that may affect your small business or tax-exempt organization:

  • Credit percentage increased from 35 percent to 50 percent of employer-paid premiums; for tax-exempt employers, the percentage increased from 25 percent to 35 percent.
  • Small employers may claim the credit for only two consecutive taxable years beginning in tax year 2014 and beyond.
  • For 2014, the credit is phased out beginning when average wages equal $25,400 and is fully phased out when average wages exceed $50,800. The average wage phase out is adjusted annually for inflation.
  • Generally, small employers are required to purchase a Qualified Health Plan from a Small Business Health Options Program Marketplace to be eligible to claim the credit.  Transition relief from this requirement is available to certain small employers.

Small employers may still be eligible to claim the tax credit for tax years prior to 2014.   Employers who were eligible to claim this credit for prior years – but did not do so – may consider if they are still eligible to amend prior year returns in order to claim the credit.*

The following information will assist you in completing Form 8941, Credit for Small employer Health Insurance Premiums.

  • SHOP QHP documentation or letter of eligibility from SHOP, unless transition relief applies
  • Numbers of full-time and part-time employees and numbers of hours worked
  • Average annual wages for employees
  • Employer premiums paid per employee, if applicable
  • Relevant K-1s and other pass-through credit information
  • Cost of coverage for each employee
  • Payroll tax liability – for tax-exempt organizations only
  • Pass-through credit info – for K-1s of other small employers

For more information about the Affordable Care Act and filing your 2014 income tax return, visit IRS.gov/aca.

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Supreme Court upholds Affordable Care Act

The Supreme Court ruled on an important issue affecting health insurance in the U.S. The decision upholds the Affordable Care Act and affirms an eligible individual’s ability to obtain subsidized health insurance through a federal exchange. Employers 50+ must continue comply with the requirement to provide minimum essential health coverage to their employees or face the potential of thousands of dollars in penalties. Individuals must move forward with the purchase of health care coverage whether it is subsidized or not. Penalties for not doing so continue to rise. Contact me for information on how to avoid these penalties, provide affordable coverage and comply with legal obligations.
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Vision Correction Savings and Insurance Benefits

With 8 in 10 adults needing some type of vision correction, employees are much more likely to go for an annual vision exam than to schedule an annual physical with their primary care physician. Over the years, study after study has shown numerous diseases can be detected through an eye exam. For example, a VSP study of 120,000 of its members found that, over a four-year period, eye doctors were the first to detect signs of diabetes 34% of the time. For hypertension it was 39%, and for cholesterol it was 62% of the time, according to Dan Schauer, SVP and general manager at VSP Vision Care. Group coverage for vision plans are not only extremely cost-effective but they can big bonuses in terms of improving health. This is one easy way to help employees to become healthier and reduce health insurance needs.
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CADILLAC TAX IS COMING IN 2018!

Starting in 2018, employers will have to pay a 40% tax on the cost of health plan coverage exceeding $10,200 for self-only coverage and exceeding $27,500 for other-than-self-only coverage (e.g., “employee plus one” or “family” coverage). If an employer is self-insured, they are responsible for the payment; if they’re fully insured, the carrier is responsible, but this will surely impact the rates the employer pays. The tax cannot be written off corporate taxes, so it’ll sting twice.The tax is based upon the cost of the insurance an employer offers, not on the quality of the benefits offered. Unfortunately, there are a lot of firms paying Cadillac prices without having Cadillac plans; they’re overpaying. In most of these cases, the employer’s underlying base rates and a relatively high number of claims have caused their rates to jump through the years. Meanwhile, we all know that insurance prices have been steadily increasing for decades. Medical inflation and bad claims experience compounds over time to create a difficult scenario, and it’s a scenario that could cost you an extra 40% — depending on the size of your workforce — and could very quickly turn into millions of dollars you owe the government.

There are two things employers need to do:
1. Take a closer look at the health benefits you offer and the overall cost of your medical program to determine whether you’re over the threshold.
2. If you are, that means you need to take steps to reduce your exposure by reducing utilization and claims expenses.

Employers have a heavy incentive to avoid the tax. One way to do that is to reduce the coverage you offer your employees, often by raising deductibles. However, just because you raise deductibles doesn’t mean you reduce utilization or claims expense. The smart approach for employers is to keep employees as healthy as possible, and thereby reduce episodic care.

The other option is to manage your claims better to lower your expense by decreasing utilization and managing claims better, i.e., helping your employees to become healthier so that they ultimately don’t use their insurance as often. This is not a change that can occur overnight; you can’t issue a memo ordering your employees to be healthier. What employers have to do — starting now — is to think strategically about how best to make employees healthier.

In either of these scenarios, supplemental benefits can play a big role in assisting employees to cover the high deductibles by paying cash to the policyholder. These benefits not only help employees in paying medical bills but can also create a more positive atmosphere when introducing high deductible plans.
For more information on how to create plan designs that lower your monthly premiums and provide tax breaks for your company and the employees with supplemental benefits, please contact me at gogg.ins@verizon.net

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Tax Q&As for On-Exchange Members

If you enrolled for health coverage in 2014 through Federal Exchanges, this is helpful information.
Please refer to the attached questions and answers that will help you assist you clients as they prepare to submit their 2014 taxes.

Tax Q&As for On-Exchange Members

Includes: Exchange members, both in state and federal exchanges

Q1:  I’ve heard that my health coverage may impact my taxes. Is that true?

 A1:  Yes, your 2014 health coverage affects your income taxes in two ways.

1)  Federal tax law requires everyone either to have had health care coverage, or to have received an exemption from this requirement in 2014. If you/and or your dependents did not have an exemption and did not have qualifying health coverage in 2014, then you may owe a penalty—called a shared responsibility payment—with your tax return.

For more information about qualifying for an exemption from health coverage, contact your marketplace or visit https://www.healthcare.gov/fees-exemptions/exemptions-from-the-fee/.

2)  If you received federal financial assistance in 2014, you will need to report the amount you received on your federal taxes.

a) If the amount of assistance was less than the premium tax credit that you qualified or, then you should receive a credit.

b) If the amount of assistance you received was more than the premium tax credit that you qualified for, then you may need to pay some or all of the advance payment of the premium tax credit back.

c) You may have to complete one or two new tax forms.

For more information on how health coverage may impact taxes, contact your marketplace, or visit https://www.healthcare.gov/taxes/ or http://www.irs.gov/ACA.

Region URL General Information Phone Numbers
DC dchealthlink.com 1-855-532-5465 and TTY 711-1-532-5465
Maryland marylandhealthconnection.gov 1-855-642-8572 and TTY 1-855-642-8573
Virginia healthcare.gov 1-800-318-2596 and TTY 1-855-889-4325

You will use the information on the 1095-A statement to complete Form 8962, Premium Tax Credit (PTC). You should file Form 8962 with your 1040 tax return if you want to claim the premium tax credit or if you received advance payments (APTC) made to your health plan.

For more information on the 1095-A statement, contact your marketplace, or visit https://www.healthcare.gov/taxes/ or http://www.irs.gov/ACA.

For more information on Form 8962 and Form 1040, visit http://www.irs.gov/ACA. You can also find copies of Form 8962 and Form 1040 on http://www.irs.gov/ACA.

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