Jim Kyger, assistant vice president, human resources, Printing Industries of America.
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.
Application for Advance Premium Credits: Applies to all employers, even those with fewer than 50 employees. When 2015 employer reporting and fines kick in, firms with 50 or more employees should pay special attention to ensure they are not fined unjustly. If individuals go to an Exchange for insurance and apply for a premium tax credit, the Exchange checks various databases to verify the individual is eligible (most of these databases are not currently populated), and then will request that individuals fill out a 12-page form (“Application for Health Coverage and Help Paying Costs”) and have the employer(s) complete a section on coverage as well. On July 5, 2013 the government said in a regulation (page 585) it will select a statistically significant random sample of these cases to confirm accuracy and then go to the employer. Thus, the typical employer may not see very many of these. Potential fine: None specified, but the employer “pay or play” penalty could later kick in for firms with 50 or more employees, since an employee is receiving a premium tax credit subsidy. More guidance is expected on the topic later this year.
PCORI Fees: The Patient-Centered Outcome Research Institute (PCORI) Fees should have been paid by July 31 by your health plan (talk to your plan administrator). PCORI is a private non-profit group that funds research that will provide patients and those who care for them with the evidence-based information needed to make better informed health and healthcare decisions. The amount of the fee is $1 times the average number of individuals covered under the plan for the first year, then $2 times the average number of covered individuals thereafter. The fee is adjusted to “medical inflation” thereafter. If a health plan is insured, then the fee is paid by the insurer; if the health plan is self-funded, the plan sponsor is responsible for the fee. The fee is self-reported on IRS Excise Tax Form 720. PCORI fees paid are considered ordinary and necessary business expenses and thus deductible for plan sponsors. Applies to plans even with fewer than 50 employees. Potential fine: minimum $135.
W-2 Reporting of Aggregate Value of Health Coverage: Large employers (250+ W-2s filed) must report the cost of (tax free) health insurance coverage on 2012 W-2s (filed in January 2013). Small employers (those that filed 250 or fewer W-2s for the 2013 tax year—including under 50) have a temporary delay until further notice. Exclude amounts relating to dental, vision, FSAs, HSAs, and HRAs. Potential fine: $200 per W-2 form.
Plan Mandates Still Apply: All of the healthcare law’s plan mandates still apply, such as the maximum 90-day waiting period, elimination of pre-existing conditions, wellness incentive, coverage of dependents up to age 26, and 2013 annual limit maximum is $2 million. Note: the annual and lifetime limits are uncapped for plan years that start on or after January 1, 2014. Potential fines: $100 per day.
Counting Employees in 2014: If your firm is right around the 50 employee threshold, you should continue to keep track of full-time equivalents in 2014 to determine if you’re covered in 2015. Include full-time, part-time, temporary (not from a temp agency), and seasonal employees (if they work more than 120 days in a calendar year).
Small Business Tax Credits Still in Play: Firms with 25 or fewer employees who have an average salary of less than $50,000 (excluding owners) can qualify for a sliding scale tax credit if they offer health insurance to their employees. The credit started in 2010, and firms can still claim the credit for previous years. For 2014, firms may only claim the credit if they purchase through their state’s SHOP Exchange. The credit actually increases in 2014.
Self-Compliance Checklist: The Department of Labor has published a long, yet useful healthcare law self-audit at http://www.dol.gov/ebsa/pdf/part7-2.pdf. While this document needs to be updated as per the employer reporting/fine delay, it still is useful.
Jim Kyger is assistant vice president, human relations, Printing Industries of America. Do you have a healthcare law compliance question? Let us know: HRQuestions@printing.org. More information at MyPRINTResource.com/10013918.