IRS to Begin Enforcing 4980H Penalties on Large Employers Before End of 2017

On November 2, 2017, the IRS issued guidance regarding the enforcement of Employer Shared Responsibility payments, otherwise known as the Section 4980H penalty. Questions 55-58 of the IRS Questions and Answers on Employer Shared Responsibility Provisions Under the Affordable Care Act indicate that the IRS is moving forward with assessing penalties on Applicable Large Employers (“ALEs”) who failed to offer appropriate health care coverage under Section 4980H for the 2015 calendar year.

An ALE is generally an employer who employs at least 50 full-time employees during the calendar year. An ALE will be assessed a penalty for the 2015 year if any full-time employee received a premium tax credit or cost-sharing reduction and either: (a) the employer failed to provide minimum essential health coverage to 95% of its full-time employees; or (b) the employer offered minimum essential health coverage to 95% of its full-time employees, but the coverage was not affordable or did not provide minimum value. Read More ›

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Open Enrollment Looms and ACA Changes are Uncertain – What are Employers to Do?

On the morning of July 28, 2017, another effort to repeal or replace the Affordable Care Act (“ACA”) failed in a 49-51 Senate vote when three Republican senators voted against the bill. Attempts to pass even a trimmed down “skinny” version of the bill were unsuccessful.  Following this dramatic vote, the path forward for health care reform is as uncertain as ever.

With fall open enrollment fast approaching, employers may be wondering what actions to take with respect to their health plans. Given the uncertainty of whether changes will be made to the ACA before open enrollment, employers may wish to proceed as though the ACA will remain in effect for 2018. Read More ›

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Transitioning to Coverage: Three Things to Know About the New Transgender Healthcare Regulations

On May 18, 2016, the Department of Health and Human Services (“HHS”) issued final regulations implementing the nondiscrimination provisions of the Affordable Care Act. As we discussed in our March 30, 2016 blog, the rule prohibits discrimination on the basis of sex and gender identity in the provision of health programs.  In application, the final regulations prohibit the categorical refusal of coverage to transgender participants and require that individuals be treated consistent with their self-selected gender identity.

  1. When are the final regulations effective?

The final rule generally is effective July 18, 2016. However, group health plans and health insurance need not be modified to comply with the new nondiscrimination rules until the first day of the first plan year (in the individual market, policy year) beginning on or after January 1, 2017. Read More ›

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When Anything Less than 95% is a Failing Grade: An Update on the Employer Shared Responsibility Penalties

As a reminder, effective January 1, 2016, employers must offer minimum essential coverage to 95% or more (up from 70% or more for 2015) of their full-time employees and their dependents each month or pay a very steep penalty.  Missing the mark even slightly, for example coming in at 94%, will require the employer to pay a $2,000 annual penalty for each full-time employee (minus the first 30 full-time employees).

The rules are explained in more detail in our Health Care Reform’s Employer Shared Responsibility Penalties: A Checklist for Employers, which I have updated to reflect certain recent guidance.  Most importantly the revised Checklist:

  •  now reflects how the penalties are adjusted each year (see footnote 7 of the Checklist for more information);
    • the $2,000 subsection (a) penalty is $2,080 for 2015 and $2,160 for 2016.
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“A Trap for the Unwary” – Does Your Self-Funded Health Plan Provide Transgender Benefits? It Might Need to Soon.

Assistant Secretary of Labor Phyllis Borzi recently offered informal guidance on the broad scope of nondiscrimination regulations proposed under Section 1557 of the Affordable Care Act. During her remarks at the ABA Labor Section Employee Benefits Committee Meeting in February, Ms. Borzi indicated that the proposed regulations would apply to any health plan that receives federal funds, including a self-funded plan that uses a third party administrator that receives federal funds.  Ms. Borzi characterized the proposed regulations as a “trap for the unwary,” noting that many self-funded plans assume that the nondiscrimination rules will not apply to them.  In light of Ms. Read More ›

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King v. Burwell – Supreme Court Confirms Tax Subsidies are Available in All States

In an earlier blog post this year, I discussed the King v. Burwell case and the possible ramifications if the United States Supreme Court did not uphold the Internal Revenue Service position that residents in states with either a state or federal Health Care Exchange are entitled to receive subsidies from the federal government to help pay for Health Care Exchange coverage.  On June 25, 2015, in a 6-3 decision, the Supreme Court ruled that the federal subsidies are available in states with federal Health Care Exchanges as well as states with state Health Care Exchanges.

The Court did not rubberstamp the IRS’ position, but rather found that it was “the Court’s task to determine the correct reading of” the statute.  Read More ›

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May Companies Reduce Employee Hours to Avoid ACA Requirements?

The Affordable Care Act (the “ACA”) generally requires that large employers offer health coverage that meets certain requirements to their full-time employees (i.e., employees working 30 hours or more per week) and their children to avoid paying potential tax penalties.  Some employers have decided to reduce certain employees’ hours to less than 30 hours per week, rendering these employees ineligible for health coverage under the terms of an applicable group health plan while insulating the employer from any ACA tax liability with respect to these employees.

A class action suit filed in May against Dave & Buster’s Inc. (“D&B”) contends that this conduct violates ERISA Section 510 and requires D&B to reinstate coverage for those employees who were reduced to part-time status.  Read More ›

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IRS Issues More Guidance On Employers That Pay For Individual Health Insurance Policies for Employees – Gives Limited Relief to Small Employers

I have blogged more on the topic of how the Health Care Reform Act applies to employers that reimburse employers for individual health insurance policies than any other topic in the last year.  At one point in time, as indicated in my post of June 11, 2014, The IRS Meant What It Said in Notice 2013-54 – Employers Who Pay For Individual Health Insurance Policies for Employees On a Pre-Tax Basis Face Massive Penalties, it looked like such arrangements might be permissible if done on an after-tax basis.  However, as noted in my post of November 13, 2014, Agencies Come Down Hard on Various Employer Health Plans and Arrangements, the IRS clarified that was not the case in a series of FAQs it issued that same month. Read More ›

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IRS Forms and Instructions Finalized for Reporting Health Coverage

On February 8, 2015, the IRS released final forms and instructions for reporting health coverage pursuant to Code Sections 6055 and 6056, which were added by the Health Care Reform Act.  Please see our SW Benefits Update, “Final IRS Forms and Instructions for Reporting Health Coverage Clarify Large Employer Requirements for 2015 and Beyond” for more information on this reporting and the noteworthy revisions to the instructions.  The forms and instructions can be found here, and in the SW Benefits Update. Read More ›

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Proposed Regulations for Summary of Benefits and Coverage Seek to Simplify Compliance

As part of Health Care Reform, employers and insurers are required to provide group health plan participants with a Summary of Benefits and Coverage (“SBC”) describing the important features of the group health plan option(s) offered by the employer/insurer.  The SBC is also intended to provide participants a way to easily compare different group health plan options.  The current rules for complying with the SBC requirement were viewed by some as not being “user-friendly.”  On December 22, 2014, the DOL, HHS and Treasury released proposed guidance that is designed “to improve consumer access to important plan information so that [the consumers] can make more informed choices.”

The proposed regulations suggest the following changes/additions:

•  A new coverage example regarding a foot fracture and emergency room visit would be added to the existing coverage examples of “having a baby” and “managing type 2 diabetes.”  These coverage examples have been shown to be helpful in a participant’s understanding of how their coverage works. Read More ›

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