On July 2, through a Treasury Department blog, the federal government announced that the employer reporting—and thus, the associated fines under the Health Care Reform law—will be delayed a year until January 2015. The Treasury followed up the next week with an official announcement.
What Did Not Change for Individuals
The premium tax credit (for those who qualify, who purchase insurance through a state exchange) and the individual shared responsibility (including fines). The fines start at one percent of income (or $95 per adult, whichever is higher) in 2014, two percent or $325 in 2015, and 2.5 percent or $695 in 2016. The fee is paid on the 2014 federal income tax form, which is completed in 2015.
Individuals who enroll in a qualified health plan (QHP) through a state exchange (aka: Marketplace) will continue to be eligible for the premium tax credit if their household income is within a specified range and they are not eligible for other minimum essential coverage, including an eligible employer-sponsored plan that is affordable and provides minimum value (such as employer coverage).
Currently, there is no explanation of how the Marketplaces will monitor whether an individual has affordable employer-sponsored coverage available that provides minimum value. Thus, individuals who actually do have coverage available through employment could instead buy coverage in a Marketplace and qualify for a subsidy if employers do not voluntarily report this information or include it on pages two and three of the Exchange Notice that employers must give to all employees by October 1, 2013. Despite the Employer Shared Responsibility Provisions being delayed until 2015, employers are encouraged by the government to voluntarily comply with the information reporting provisions for 2014 (once the information reporting rules have been issued) and to maintain or expand health coverage in 2014. Employers should actually consider this reporting to help avoid any inappropriate premium tax credits being applied to employees.
What Did Not Change for Employers
Exchange Notices: Applies to all employers, even those with fewer than 50 employees. The Exchange Notices need to be sent to employees by October 1, 2013, and thereafter to new employees upon hire (within 14 calendar days of the start date). There are two versions:
1. For those firms that do not offer insurance, see www.dol.gov/ebsa/pdf/FLSAwithoutplans.pdf.
2. For those firms that offer insurance to some or all employees, see www.dol.gov/ebsa/pdf/FLSAwithplans.pdf.
The notice may be provided by first class mail or electronically if the requirements of the Department of Labor’s electronic disclosure safe harbor at 29 CFR 2520.104b-1(c) are met. There is no requirement to obtain an employee’s signature if mailed; however, an employer may want to track delivery and receipt of the notice. Potential fine: None specified, but an employee may seek damages and legal fees under ERISA.
Summary of Benefits and Coverage (SBC): Applies to all employers, even those with fewer than 50 employees. Technically, this requirement applies to all group health plans except federal governmental plans and retiree-only plans, standalone dental and vision coverage, most health FSAs, and certain HRAs. Provided by your carrier, the SBC is a standardized eight-page document that outlines major benefits, costs, and limitations of the health plan. It also includes information on consumer rights, appeals and grievances, and coverage examples for some typical costs under the plan. The rule went into effect for plan years starting on or after September 23, 2012, so this is old news for most employers. Potential fine: $1,000 for each notice failure, typically against plan administrator if not produced, but may be against the employer if it does not disseminate.