· Transition Relief Announced for Certain Affordable Care Act Provisions Employer Shared Responsibility Payments and Reporting Requirements Delayed until 2015 Transition Relief Announced for Certain Affordable Care Act Provisions Employer Shared Responsibility Payments and Reporting Requirements Delayed until 2015 On July 9, 2013, the Internal Revenue Service (IRS) issued Notice 2013-45 announcing transition relief for the following Patient Protection and Affordable Care Act (Affordable Care Act) requirements: · Employer shared responsibility provisions (§ 4980H of the Internal Revenue Code (Code), commonly referred to as the play or pay provision) · Reporting of health insurance coverage related to the individual mandate § 6055 · Reporting by applicable large employers related to employer shared responsibility requirements § 6056 Implementation of these requirements was originally targeted for 2014. The transition relief provides a one year delay, now targeting implementation for these provisions in 2015. Additional, general information about the provisions receiving a delay is below. The transition relief is intended to give affected entities more time to comply with these provisions, which will most likely require changes to health coverage and reporting systems. While a proposed rule was issued in January 2013 for the employer shared responsibility provision, rules have not yet been issued regarding either of the reporting requirements. The notice indicates that proposed rules for the reporting requirements are expected to be issued sometime this summer. The notice encourages employers and other affected entities to voluntarily comply with the requirements during 2014 in preparation for mandatory compliance in 2015. From the notice: “…in preparation for the application of the Employer Shared Responsibility Provisions beginning in 2015, employers and other affected entities are encouraged to voluntarily comply for 2014 with the information reporting provisions (once the … rules have been issued) and to maintain or expand health coverage in 2014. Real-world testing of reporting systems and plan designs through voluntary compliance for 2014 will contribute to a smoother transition to full implementation for 2015.” The transition relief does not delay the compliance dates for any other Affordable Care Act provisions. Based on currently available information, the following continue to have implementation dates for later this year or in 2014[1]: · Employer requirement to notify employees of the Marketplace[2] · Individual and SHOP Marketplace (Exchange) enrollment · Subsidies for those who are eligible and enroll on the individual Marketplace · Eligibility waiting periods can be no longer than 90 days · Summary of Benefits and Coverage (SBC) changes · Essential health benefit (EHB) provisions, including new requirements for out-of-pocket maximums and aggregation of member cost-sharing to satisfy out-of-pocket limits[3] · Modified community rating for small group market · Elimination of pre-existing condition waiting periods · Employer-sponsored wellness program rule changes · Individual shared responsibility payments (a.k.a. the Individual Mandate) Employer Shared Responsibility Provisions § 4980H[4] In January 2013, the IRS issued a proposed rule and Q&A regarding employer shared responsibilities that are part of the Affordable Care Act. The Q&A page is still available, but indicates that new questions and answers will be available soon. Due to the complex nature of the rule – particularly with regard to determining full-time employees – employers are urged to read the proposed rule and Q&A to understand their responsibilities that will be effective in 2015. As with all proposed rules, requirements may change when the rule is finalized. BlueCross is unable to provide guidance or advice regarding compliance with the employer shared responsibility provision, the determination of applicable large employer status, or whether employees are considered full-time under this rule. We are not in a position to understand a specific group’s employment practices or corporate structure. Employers are urged to direct specific questions to their legal counsel or tax professional. The following information is provided for general use. The proposed rule outlines two different ways an employer may be penalized: Employer does not offer coverage to most full-time employees. If an applicable large employer does not offer minimum essential coverage to at least 95 percent of its full-time employees, and at least one full-time employee enrolls in the Exchange and receives a premium tax credit or cost-sharing reduction (a subsidy)[5], certain penalties may be assessed on the employer. If an employer has no employees who enroll in the Exchange and receive a subsidy, no penalty will be assessed. The monthly assessment (penalty) is 1/12 of $2,000 multiplied by the total number of full-time employees reduced by 30. 2. Employer offers coverage to most full-time employees, but an employee enrolls in exchange and receives a subsidy. There is also a tax assessed on applicable large employers who offer coverage to at least 95 percent of employees, but have one or more full-time employees enroll through the Exchange and receive a premium tax credit or cost-sharing reduction. This monthly assessment is 1/12 of $3,000 per employee who enrolls in the Exchange and receives a subsidy, not to exceed the penalty amount that would apply if the employer had not offered coverage. If an employer offers coverage that is considered affordable, minimum essential coverage with minimum value, an employee will not be eligible for a subsidy through the Exchange. The proposed rule includes transition relief that exempts applicable large employers who qualify from some or all penalties until their plan year renewal during 2014. It’s not clear based on the transition relief announced in Notice 2013-45 if similar transition relief will be available in 2015, or if all applicable large employers will face penalties on Jan. 1, 2015 regardless of their plan year timing. As mentioned above, the notice encourages employers to voluntarily comply during 2014. Information Reporting Two types of information reporting have been delayed under the Notice 2013-45 transition relief: 1. Reporting of health insurance coverage related to the individual mandate § 6055 2. Reporting by applicable large employers related to employer shared responsibility requirements § 6056 Reporting under § 6055 will be undertaken by health insurance issuers, government agencies, employers that sponsor self-insured plans and other entities that provide minimum essential coverage. Reporting under § 6056 will be the responsibility of applicable large employers, but the IRS is looking for ways to coordinate and minimize any duplication between the data reported under § 6055 and § 6056 Types of information to be reported may include the name, address, and taxpayer identification number of the primary insured and every other individual covered under the policy or plan; the dates each individual was covered under minimum essential coverage during the calendar year; in the case of health insurance coverage, whether the coverage is a qualified health plan (QHP) offered through an Exchange; if the coverage is a QHP offered through an Exchange, the amount, if any, of any advance payment of the premium tax credit or of any cost-sharing reduction for each covered individual; the name, address, and employer identification number of the employer maintaining the plan; the portion of the premium to be paid by the employer; and any other information that the IRS requires. Entities reporting information will also be required to send a notice to each individual for whom information was reported, identifying the information reported to the IRS for that individual. As noted above, proposed rules for these reporting requirements are expected to be issued this summer. In April 2012, the IRS issued two Notices that provided preliminary outlines of required information and requested comments on the reporting requirements[6]. [1] This is not an exhaustive list. For additional information, please refer to the Oct. 15, 2012 and May 13, 2013 Health Care Reform Update available on BlueAccess. 2 For additional information about this notice requirement, please refer to the June 10, 2013 Health Care Reform Update available on BlueAccess. 3 For additional information essential health benefit requirements, please refer to the Mar. 18, 2013 Health Care Reform Update available on BlueAccess. 4 For additional information about the employer shared responsibility proposed rule, please refer to the Jan. 14, 2013 Health Care Reform Update available on BlueAccess. 5 Eligibility for the premium tax credit and/or cost-sharing reduction is based on factors such as the percentage of poverty level in which the employee falls (generally less than 400%) and the employee’s premium cost as a percentage of total household income, if he or she were to purchase coverage through the Exchange. 6 For additional information about the IRS requests for comments relating to information reporting, please refer to the May 21, 2012 Health Care Reform Update available on BlueAccess. BlueCross BlueShield of Tennessee, Inc., an Independent Licensee of the BlueCross BlueShield Association. [1] This is not an exhaustive list. For additional information, please refer to the Oct. 15, 2012 and May 13, 2013 Health Care Reform Update available on BlueAccess. [2] For additional information about this notice requirement, please refer to the June 10, 2013 Health Care Reform Update available on BlueAccess. [3] For additional information essential health benefit requirements, please refer to the Mar. 18, 2013 Health Care Reform Update available on BlueAccess. [4] For additional information about the employer shared responsibility proposed rule, please refer to the Jan. 14, 2013 Health Care Reform Update available on BlueAccess. [5] Eligibility for the premium tax credit and/or cost-sharing reduction is based on factors such as the percentage of poverty level in which the employee falls (generally less than 400%) and the employee’s premium cost as a percentage of total household income, if he or she were to purchase coverage through the Exchange. [6] For additional information about the IRS requests for comments relating to information reporting, please refer to the May 21, 2012 Health Care Reform Update
Posted on: Wed, 17 Jul 2013 11:01:23 +0000
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