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Compliance Recap - January 2018

January was a busy month in the employee benefits world. On January 24, 2018, the U.S. Senate confirmed Alex Azar as the new Secretary of the U.S. Department of Health and Human Services (HHS).

The U.S. Department of Labor (DOL) proposed regulations regarding association health plans. HHS released the 2018 federal poverty guidelines. The DOL issued updated civil monetary penalties for 2018 and announced the applicability date for final regulations regarding disability claims procedures. A U.S. District Court modified its order regarding the Equal Employment Opportunity Commission's wellness regulations.

Congress and the President delayed the Cadillac tax's effective date, delayed the health insurance tax (HIT), and reauthorized the Children's Health Insurance Program. The Internal Revenue Service (IRS) released its Employer's Tax Guide. HHS issued a proposed rule to protect conscience rights in health care and created a new Conscience and Religious Freedom Division within HHS' Office of Civil Rights.

UBA Updates

UBA released seven new advisors in January:

UBA updated existing guidance: 2018 Annual Benefit Plan Amounts

DOL Issues Proposed Regulations Regarding Association Health Plans

The U.S. Department of Labor's (DOL) Employee Benefits Security Administration (EBSA) issued a proposed rule which would broaden the definition of "employer" and the provisions under which an employer group or association may be treated as an "employer" sponsor of a single multiple-employer employee welfare benefit plan and group health plan under Title I of the Employee Retirement Income Security Act of 1974 (ERISA).

The DOL posted 79 letters that were submitted as public comments as of January 31, 2018. The deadline for submitting public comments is March 6, 2018.

Read more about the proposed rule.

HHS Releases 2018 Federal Poverty Guidelines

The U.S. Department of Health and Human Services (HHS) released the 2018federal poverty guidelines (FPL). For a family / household of one in the contiguous United States, the FPL is $12,140. In Alaska the FPL is $15,180, and in Hawaii the FPL is $13,960.

For 2018, applicable large employers that wish to use the FPL affordability safe harbor under the employer shared responsibility / play-or-pay rules should ensure that their lowest employee-only premium is equal to or less than $96.72 a month, which is 9.56% of the 2018 FPL.

Civil Monetary Penalties Inflation Adjustment for 2018

The U.S. Department of Labor (DOL) published its civil monetary penalties for 2018. Under federal law, the DOL is required to annually adjust its regulations' civil monetary penalties for inflation no later than January 15 of each year. The adjusted penalty amounts are effective for violations occurring after November 2, 2015, that have penalties assessed after January 2, 2018.

Below are some examples of the increases.

Description 2017 Penalty Amount 2018 Penalty Amount
Failure to file Form 5500 $2,097 per day $2,140 per day
Failure to provide the Summary of Benefits and Coverage (SBC) $1,105 $1,128
Failure to provide documents requested by the DOL $149 per day, not to exceed $1,496 per request $152 per day, not to exceed $1,527 per request
Failure to inform employees of children's health insurance program (CHIP) coverage opportunities; each employee is a separate violation $112 per day $114 per day

 

DOL Issues Final Disability Claims Procedures Regulations' Applicability Date

The U.S. Department of Labor (DOL) announced that April 1, 2018, will be the applicability date for its rule that amends the claims procedure requirements of ERISA-covered employee benefit plans that provide disability benefits. The DOL'sFact Sheet contains a summary of the regulation's requirements.

U.S. District Court Modifies Order Regarding EEOC Wellness Rules

In August 2017, the United States District Court for the District of Columbia heldthat the U.S. Equal Employment Opportunity Commission (EEOC) failed to provide a reasoned explanation for its decision to adopt 30 percent incentive levels for employer-sponsored wellness programs under both the Americans with Disabilities Act (ADA) rules and Genetic Information Nondiscrimination Act (GINA) rules.

In December 2017, the court vacated the EEOC rules under the ADA and GINA effective January 1, 2019, and ordered the EEOC to promulgate any new proposed rules by August 31, 2018.

In January 2018, the EEOC asked the court to reconsider the portion of the court's order that required the EEOC to promulgate new proposed rules by August 31, 2018. The court vacated that portion of its order. The court's order to vacate the portions of the EEOC's wellness rules under the ADA and GINA as of January 1, 2019, remains.

Read more about the court's order.

Congress Delays Cadillac Tax Effective Date, Delays HIT Tax, and Reauthorizes CHIP

Congress and the President passed H.R. 195, a short-term spending bill. The bill delays the effective date of the excise tax on high cost employer-sponsored health coverage ("Cadillac tax") to 2022. The bill delays the health insurance tax (HIT) that applies to insurers. The HIT was in effect in 2014, 2015, and 2016, and will be in effect for 2018. Now the HIT will be delayed from 2019 to 2020; essentially, the bill implemented a one-year moratorium for the HIT for 2019. The bill also reauthorizes the Children's Health Insurance Program (CHIP) for six years.

IRS Issues 2018 Employer's Tax Guide

The Internal Revenue Service (IRS) issued its Publication 15 (Circular E) Employer's Tax Guide that discusses employers' tax responsibilities. The guide generally discusses health insurance plans, health savings accounts, and medical care reimbursement.

HHS Issues Proposed Rule to Protect Conscience Rights in Health Care

The U.S. Department of Health and Human Services (HHS) published a proposed rule titled "Protecting Statutory Conscience Rights in Health Care; Delegations of Authority."

HHS proposes this rule pursuant to President Trump's May 4, 2017, Executive Order 13798 "Promoting Free Speech and Religious Liberty" and the U.S. Attorney General's October 6, 2017, "Federal Law Protections for Religious Liberty"memorandum.

HHS proposes this rule to enhance awareness and enforcement of federal health care conscience laws and associated anti-discrimination laws, to further conscience and religious freedom, and to protect the right to abstain from certain activities related to health care services without discrimination or retaliation.

The rule cites several federal health care conscience laws and the activities that they protect, including:

·    The Church Amendments: conscience protections related to abortion and sterilization

·    The Coats-Snowe Amendment: conscience protections related to abortion, training, and accreditation

·    The Weldon Amendment: protections against discrimination for health care entities and individuals who do not further abortion or other services

·    HHS' 2011 final rule that enforces the Church, Coats-Snowe, and Weldon Amendments

·    The Consolidated Appropriations Act of 2017: protections from discrimination for health care entities and individuals who object to furthering or participating in abortion under programs funded by HHS' annual appropriations

·    The Patient Protection and Affordable Care Act: conscience protections related to assisted suicide, abortion, and the individual mandate to maintain minimum essential coverage

·    The Assisted Suicide Funding Restriction Act of 1997: protections for Medicare or Medicaid program providers and their employees from informing individuals about a right or service related to assisted suicide and from applying any advance directive term related to assisted suicide

·    Medicare and Medicaid: protection from being compelled to provide, reimburse for, or cover any counseling or referral service over a moral or religious objection

·    Global health program conscience and anti-discrimination protections

·    Exemptions from compulsory health care or services generally and under specific programs for hearing screening, occupational illness testing, suicide assessment or treatment services, vaccination, and mental health treatment

·    Conscience clauses related to religious nonmedical health care in Medicare, Medicaid, and the Children's Health Insurance Program (CHIP).

The proposed rule aims to revise the current regulatory framework of federal health care conscience protection statutes to a more robust regulatory framework similar to those that implement and enforce other civil rights laws.

To do so, the proposed rule would require written assurances and certifications of compliance with federal health care conscience and associated anti-discrimination laws as part of accepting federal financial assistance from HHS. The proposed rule would also require HHS and certain recipients to post a notice to the public, patients, and employees of their protections under the federal health care conscience and associated anti-discrimination statutes, including how to file a complaint with HHS' Office of Civil Rights (OCR). The proposed rule's Appendix A provides the notice's text. Further, the proposed rule would require recipients to report information about OCR investigation notices and compliance review letters to their applicable HHS funding source and to disclose complaints filed with OCR when applying for new or renewed federal financial assistance from HHS.

The proposed rule details OCR's authority to conduct outreach, provide technical assistance, initiate compliance reviews, receive and process complaints, and conduct investigations. The proposed rule grants OCR discretion to choose its means of enforcement, which will range from informal resolution to funding termination. The OCR may also refer cases to the U.S. Department of Justice for enforcement.

Public comments are due by March 27, 2018.

HHS Creates New Conscience and Religious Freedom Division

The U.S. Department of Health and Human Services (HHS) announced the new Conscience and Religious Freedom Division (CRFD) within HHS's Office of Civil Rights (OCR). According to HHS' press release, the CRFD will restore federal enforcement of laws that protect the rights of conscience and religious freedom. CFRD's website includes instructions on how to file a conscience or religious freedom complaint with OCR.

Question of the Month

Q. Can an employer exclude children from coverage based on a child's access to other coverage, employment status, or marital status?

A. No, if a group health plan provides dependent coverage, then the plan must generally make coverage available for children until age 26. These group health plans must not define dependent, for purposes of dependent coverage, in terms other than the relationship between the child and the plan participant.

This means that a plan cannot use items such as a child's access to other coverage, employment status, marital status, tax dependent status, residency, or student status to define dependent.

Also, if the employer is an applicable large employer, then it must offer coverage to its full-time employees' dependent children to avoid penalties under the employer shared responsibility provisions.


IRS Issues New Tables for 2018 Tax Withholding

Starting Feb. 15, 2018, employers must use new tables to determine how much income tax to withhold from their employees’ paychecks. The Internal Revenue Service (IRS) issued the required new tables, in Notice 1036, on Jan. 9, 2018. The notice contains early release copies of the “Percentage Method Tables for Income Tax Withholding” that will appear in IRS Publication 15 (Employer’s Tax Guide).

According to the IRS, Notice 1036 is the first in a series of steps that the agency will take to help employers improve the accuracy of their tax withholdings under changes made by a new tax reform law, the Tax Cuts and Jobs Act, enacted on Dec. 22, 2017.

New Tables Work with Existing Forms W-4 for 2018

The new tables in Notice 1036 are designed to work with the Forms W-4 that employees have already filed with their employers to claim withholding allowances for 2018. Thus, employers do not need to obtain updated Forms W-4 from their employees to start using the new tables.

For 2019, however, the IRS is revising Form W-4 to more fully reflect the new law and to help individuals determine whether to adjust their withholding. Once released, the revised Form W-4 can be used in 2018 by employees starting a new job and by existing employees who wish to update their withholding in response to the new law or changes in their personal circumstances. Until the revised Form W-4 is released, employees and employers should continue to use the 2017 Form W-4.

Read the Full PDF


DOL Announces New Standard for Unpaid Interns

On Jan. 5, 2018, the U.S. Department of Labor (DOL) announced that it would adopt a new standard for determining whether interns and students are “employees” who must be paid under the Fair Labor Standards Act (FLSA).

The DOL clarified that, going forward, it would abandon its six-part test and instead adopt the “primary beneficiary” test used by federal courts.

The six-part test provides that an intern at a for-profit company is an employee unless all six factors of the test are met. The primary beneficiary test has a more flexible approach, focusing on whether the intern or the business benefits more from the relationship.

The Old Six-part Test

The six-part benefit test is very specific and allows for interns to be unpaid only if all of the following factors are met:

  1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training that would be given in an educational environment;
  2. The internship experience is for the benefit of the intern;
  3. The intern does not displace regular employees, but works under close supervision of existing staff;
  4. The employer that provides the training derives no immediate advantage from the activities of the intern; and, on occasion, its operations may actually be impeded;
  5. The intern is not necessarily entitled to a job at the conclusion of the internship; and
  6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

The Primary Beneficiary Test

The primary beneficiary test looks at the “economic reality” nature of the employment relationship and includes seven factors to consider. However, unlike the six-part test, these factors provide only a reference frame to determine who is benefiting more from the intern-employer relationship.

The seven factors are:

  1. The extent to which the intern and the employer clearly understand that there is no expectation of compensation. Any promise of compensation, express or implied, suggests that the intern is an employee—and vice versa.
  2. The extent to which the internship provides training that would be similar to that which would be given in an educational environment, including the clinical and other hands-on training provided by educational institutions.
  3. The extent to which the internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit.
  4. The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar.
  5. The extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning.
  6. The extent to which the intern’s work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern.
  7. The extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship.

Not every factor must be met, and not all factors must be given the same weight during the analysis. Instead, the courts will consider these seven factors and evaluate whether, in the totality of the circumstances, the employer is benefiting more from the relationship than the intern is. When an employer is the primary beneficiary of the relationship, the intern is an employee for purposes of the FLSA. When the intern is the primary beneficiary, he or she is not considered an employee under the FLSA.

More Information

Please contact Hierl Insurance Inc. for more information about compliance with FLSA issues.

Download the PDF


DOL Reintroduces 17 Opinion Letters

On Jan. 5, 2018, the U.S. Department of Labor (DOL) reintroduced 17 opinion letters. The letters were introduced by the Wage and Hour Division during the George W. Bush administration in response to specific employer compliance questions, such as whether “on-call” hours for ambulance personnel are considered as compensable time under the Fair Labor Standards Act (FLSA). The letters were withdrawn in 2009, shortly after their introduction.

Addressing compliance questions through opinion letters is a more relaxed approach than the administrative interpretations issued by the Obama administration.

Opinion Letters

Opinion letters provide the DOL’s official opinion on how labor and employment laws apply in specific situations.

The DOL issues opinion letters after receiving an employer’s request for clarification on how the law should be interpreted in specific scenarios. For example, multiple opinion letters present the DOL’s opinion on whether FLSA exemptions apply to specific employment positions.

As a result, opinion letters are fact-specific and employers can rely on them for guidance to the extent that the facts in their circumstances align with the scenarios described in the letter.

Publishing opinion letters is a labor-intensive process and employers that request one may need to wait several months to receive a response from the DOL. In addition, while the DOL reviews all opinion letter requests, it has traditionally only answered a few, at its discretion. The DOL has published instructions on how to request opinion letters on its website.

Impact on Employers

Opinion letters can be extremely helpful for employers that are trying to understand their legal responsibilities, particularly in areas where the law seems to be outdated or where compliance with one legal obligation interferes with compliance with another.

Indeed, employers that receive an answer to their request can rely on the answer they receive in their efforts to comply with their legal obligations. Employers are also encouraged to review past opinion letters and other DOL guidance to obtain a clearer understanding of their obligations.

However, an employer that seeks the DOL’s opinion regarding a specific situation should understand the risk that the DOL may not agree with its practices, so employers should consider this alternative carefully.

In addition, while employers can rely on an opinion letter, employers should also remember that opinion letters are merely guidance—they are not the law, and they are not binding. This means that DOL inspectors, auditors and judges may disagree with opinion letters and find noncompliance even when the employer is following the advice given by an opinion letter.

Good Faith Defense

However, employers that rely on opinion letters may be able to establish a good faith defense under the law. The good faith defense principle allows noncompliant employers to minimize the risk of penalties if they can prove they were making an honest effort to comply with the law.

Download the PDF


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HHS Nominee Vows To Tackle High Drug Costs, Despite His Ties To Industry

What is President Trump’s solution for fighting high drug prices? From Kaiser Health News, check out this article on the new Department of Health and Human Services (HHS) nominee.


Senate Democrats on Tuesday pressed President Donald Trump’s nominee for the top health post to explain how he would fight skyrocketing drug prices — demanding to know why they should trust him to lower costs since he did not do so while running a major pharmaceutical company.

Alex M. Azar II, the former president of the U.S. division of Eli Lilly and Trump’s pick to run the Department of Health and Human Services, presented himself as a “problem solver” eager to fix a poorly structured health care system during his confirmation hearing before the Senate Finance Committee. Azar said addressing drug costs would be among his top priorities.

But armed with charts showing how some of Eli Lilly’s drug prices had doubled on Azar’s watch, Democrats argued Azar was part of the problem. Sen. Ron Wyden of Oregon, the committee’s top Democrat, said Azar had never authorized a decrease in a drug price as a pharmaceutical executive.

“The system is broken,” Wyden said. “Mr. Azar was a part of that system.”

Azar countered that the nation’s pharmaceutical drug system is structured to encourage companies to raise prices, a problem he said he would work to fix as head of HHS.

“I don’t know that there is any drug price of a brand-new product that has ever gone down from any company on any drug in the United States, because every incentive in this system is towards higher prices, and that is where we can do things together, working as the government to get at this,” he said. “No one company is going to fix that system.”

Azar’s confirmation hearing Tuesday was his second appearance before senators as the nominee to lead HHS. In November, he faced similar questions from the Senate Health, Education, Labor and Pensions Committee during a courtesy hearing.

If confirmed, Azar would succeed Tom Price, Trump’s first health secretary, who resigned in September amid criticism over his frequent use of taxpayer-paid charter flights. A former Republican congressman who was a dedicated opponent of President Barack Obama’s signature health care law, Price had a frosty relationship with Democrats in Congress as he worked with Republicans to try to undo the law.

Price and the Trump administration often turned to regulations and executive orders to undermine the Affordable Care Act, since Republicans in Congress repeatedly failed to enact a repeal. “Repeal and replace” has been the president’s mantra.

But at the hearing, Azar was circumspect about his approach, noting that his job would be to work under existing law. “The Affordable Care Act is there,” he said, adding that it would fall to him to make it work “as best as it possibly can.”

Senate Republicans touted Azar’s nearly six years working for the department under President George W. Bush, including two years as a deputy secretary. Committee Chairman Orrin Hatch (R-Utah) praised Azar’s “extraordinary résumé,” adding that, among HHS nominees, he was “probably the most qualified I’ve seen in my whole term in the United States Senate.” Hatch, who is the longest-serving Republican senator in history, has been a senator for more than 40 years.

In addition to drug costs, Azar vowed to focus on the nation’s growing opioid crisis, calling for “aggressive prevention, education, regulatory and enforcement efforts to stop overprescribing and overuse,” as well as “compassionate treatment” for those suffering from addiction.

Pressed about Republican plans to cut entitlement spending to compensate for budget shortfalls, Azar said he was “not aware” of support within the Trump administration for such cuts.

“The president has stated his opposition to cuts to Medicaid, Medicare or Social Security,” Azar said. “He said that in the campaign, and I believe he has remained steadfast in his views on that.”

But Democrats pushed back, pointing out that Trump had proposed Medicaid cuts in his budget request last year. Sen. Sherrod Brown (D-Ohio) said such cuts would hurt those receiving treatment for opioid addiction.

“What happens to these people?” he said.

Despite such Democratic criticism, Azar is likely to be confirmed when the full Senate votes on his nomination. An HHS spokesman Tuesday pointed reporters to an editorial in STAT supporting Azar, written by former Senate majority leaders Bill Frist and Tom Daschle — a Republican and a Democrat. “We need a person of integrity and competence at the helm of the Department of Health and Human Services,” they wrote. “The good news is that President Trump has nominated just such a person, Alex Azar.”

Read further.

Source:

IRS Reporting Tip 2: 2017 Plan Year Form 1094-C, Line 22

Just in: From UBA Benefits, get the IRS Reporting Tips for Form 1094-C, Line 22.


Under the Patient Protection and Affordable Care Act (ACA), individuals are required to have health insurance while applicable large employers (ALEs) are required to offer health benefits to their full-time employees.

In order for the Internal Revenue Service (IRS) to verify that (1) individuals have the required minimum essential coverage, (2) individuals who request premium tax credits are entitled to them, and (3) ALEs are meeting their shared responsibility (play or pay) obligations, employers with 50 or more full-time or full-time equivalent employees and insurers are required to report on the health coverage they offer. Similarly, insurers and employers with less than 50 full time employees but that have a self-funded plan also have reporting obligations. All of this reporting is done on IRS Forms 1094-B, 1095-B, 1094-C and 1095-C.

Form 1094-C

Form 1094-C is used in combination with Form 1095-C to determine employer shared responsibility penalties. It is often referred to as the "transmittal form" or "cover sheet." IRS Form 1095-C will primarily be used to meet the Section 6056 reporting requirement, which relates to the employer shared responsibility/play or pay requirement. Information from Form 1095-C will also be used in determining whether an individual is eligible for a premium tax credit.

Form 1094-C contains information about the ALE, and is how an employer identifies as being part of a controlled group. It also has a section labeled "Certifications of Eligibility" and instructs employers to "select all that apply" with four boxes that can be checked. The section is often referred to as the "Line 22" question or boxes. Many employers find this section confusing and are unsure what, if any, boxes they should select. The boxes are labeled:

A. Qualifying Offer Method
B. Reserved
C. Reserved
D. 98% Offer Method

Qualifying Offer Method

The instructions provide the following definition to explain the qualifying offer method.

Check this box if the ALE Member is eligible to use and is using the Qualifying Offer Method to report the information on Form 1095-C for one or more full-time employees. Under the Qualifying Offer Method there is an alternative method of completing Form 1095-C and an alternative method for furnishing Form 1095-C to certain employees. If the ALE Member is using either of these alternative rules, check this box. To be eligible to use the Qualifying Offer Method, the ALE Member must certify that it made a Qualifying Offer to one or more of its full-time employees for all months during the year in which the employee was a full-time employee for whom an employer shared responsibility payment could apply. Additional requirements described below must be met to be eligible to use the alternative method for furnishing Form 1095-C to employees under the Qualifying Offer Method.

This means that, if an employer used code 1A for any employee on Line 14 of its 1095-C form, the employer should check Box A. Code 1A is only used by employers who offered minimum value, minimum essential coverage to a full-time employee, and the coverage meets the federal poverty level safe harbor.

It cannot be used for minimum value, minimum essential coverage that meets either the W-2 or rate of pay safe harbor.

98% Offer Method

An employer meets the requirements of the 98% Offer Method if it offers affordable, minimum value coverage to at least 98 percent of its total employees for whom it is filing a Form 1095-C (regardless of whether they are full-time or part-time). This means that the employer does not need to report whether an employee is full time and it does not need to provide a count of its full-time employees. If the employer meets the requirements of the 98% Offer Method, it should check Box D.

However, the employer will still need to provide Form 1095-C to each of its employees, which includes all of the other information required, and if an employee requests a premium tax credit, it will need to respond to an IRS inquiry about the employee's work and coverage status. Employers that anticipate difficulties reporting full-time employees (excluding those in waiting periods) may find this option helpful.

If an employer selects Box D, it does not need to complete Part III Column (b) of the 1094-C.

The IRS provides the following example for the 98% offer method:

Employer has 325 employees. Of those 325 employees, Employer identifies 25 employees as not possibly being full-time employees because they are scheduled to work 10 hours per week and are not eligible for additional hours. Of the remaining 300 employees, 295 are offered affordable minimum value coverage for all periods during which they are employed other than any applicable waiting period (which qualifies as a Limited Non-Assessment Period). Employer files a Form 1095-C for each of the 300 employees (excluding the 25 employees that it identified as not possibly being full-time employees). Employer may use the 98% Offer Method because it makes an affordable offer of coverage that provides minimum value to at least 98% of the employees for whom Employer files a Form 1095-C. Using this method, Employer does not identify whether each of the 300 employees is a full-time employee. However, Employer must still file a Form 1095-C for all of its full-time employees. Employer chooses to file a Form 1095-C on behalf of all 300 employees, including the five employees to whom it did not offer coverage, because if one or more of those employees was, in fact, a full-time employee for one or more months of the calendar year, Employer would be required to have filed a Form 1095-C on behalf of those employees.

Reserved Code B (formerly, Qualifying Offer Method Transition Relief)

This box is not applicable in 2017. In 2015, the instructions provided the following definition to explain the qualifying offer method transition relief.

Check this box if the employer is eligible for and is using the Qualifying Offer Method Transition Relief for the 2015 calendar year to report information on Form 1095-C for one or more full-time employees. To be eligible to use the Qualifying Offer Method Transition Relief, the employer must certify that it made a Qualifying Offer for one or more months of calendar year 2015 to at least 95% of its full-time employees. For this purpose, an employee in a Limited Non-Assessment Period is not included in the 95% calculation.

This transition relief has expired, and is no longer available to employers regardless of size or their plan years. No employer should select Box B, which is now reserved for future use.

Reserved Code C (formerly Section 4980H Transition Relief)

This box is not applicable in 2017. In 2015 and 2016, Box C was used to inform the government that an employer is entitled to one of two forms of transition relieffor its 2015 plan year:

1.     Midsize Employer Transition Relief (only available to employers with 50 to 99 employees who meet the maintenance requirements of transition relief)

2.     Relief when Calculating Assessable Penalties (only available to employers with 100 or more employees)

Conclusion

Different real-world situations will lead an employer to select any combination of boxes on Line 22, including leaving all four boxes blank. Practically speaking, only employers who met the requirements of using code 1A on Form 1095-C or who offered coverage to virtually all employees will check any of the boxes on Line 22. Notably, employers who do not use the federal poverty level safe harbor for affordability will never select Box A, and corresponding with that, will never use codes 1A or 1I on Line 14 of a Form 1095-C.


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Compliance Recap - December 2017

December was a relatively busy month in the employee benefits world.

The Internal Revenue Service (IRS) delayed the reporting deadlines in 2018 for the 1095-B and 1095-C forms to individuals. President Trump signed the Tax Cuts and Jobs Act. The Centers for Medicare and Medicaid Services (CMS) released guidance on accommodation revocation notices.

A U.S. District Court vacated U.S. Equal Employment Opportunity Commission (EEOC) wellness rules effective January 1, 2019. The U.S Department of Health and Human Services’ Office of Child Support Enforcement (OCSE) issued Frequently Asked Questions to address employers’ duties regarding medical support notices.

The IRS released Form 8941 instructions regarding credit for small employer health insurance premiums and Form W-2 reporting guidance for Qualified Small Employer Health Reimbursement Arrangements (QSEHRAs).

UBA Updates

UBA updated existing guidance: Contraception Mandate Rolled Back for Employers

IRS Extends 2018 Deadlines for 1095-B and 1095-C Forms to Individuals

On December 22, 2017, the Internal Revenue Service (IRS) issued Notice 2018-06, delaying the reporting deadlines in 2018 for the 1095-B and 1095-C forms to individuals. The 1095-B form is now due to the individual identified as the “responsible individual” on the form by March 2, 2018. The 1095-C form is now due to employees by March 2, 2018.

There is no delay for the 1094-C and 1094-B forms, or for forms due to the IRS.

Read more about the IRS Notice.

President Trump Signs Tax Bill

On December 22, 2017, President Trump signed the Tax Cuts and Jobs Act (Act) that, among other items, eliminates the individual mandate penalty under the Patient Protection and Affordable Care Act (ACA). The Act reduces the penalty associated with the individual shared responsibility provision to zero, effective in 2019.

Per the Congressional Research Service’s summary, the bill amends the Internal Revenue Code to reduce tax rates and modify policies, credits, and deductions for individuals and businesses.

For businesses, the bill:

  • Reduces the corporate tax rate from a maximum of 35 percent to a flat 20 percent rate (25 percent for personal services corporations).
  • Allows increased expensing of the costs of certain property.
  • Limits the deductibility of net interest expenses to 30 percent of the business's adjusted taxable income.
  • Repeals the work opportunity tax credit.
  • Terminates the exclusion for interest on private activity bonds.
  • Modifies or repeals various energy-related deductions and credits.
  • Modifies the taxation of foreign income.
  • Imposes an excise tax on certain payments from domestic corporations to related foreign corporations.

The bill also repeals or modifies several additional credits and deductions for individuals and businesses.

In particular, the Act eliminates the business deduction for qualified mass transit and parking benefits starting in 2018, and eliminates the exclusion for bicycle commuting expenses for tax years 2018 through 2025. These benefits (except for bicycle commuting) will continue to be tax-exempt to employees. For 2018, employees can contribute up to a maximum of $260 per month for both qualified mass transit and parking expenses through an employer-sponsored qualified transportation plan under Section 132(f).

The Act’s elimination of the business deduction for qualified mass transit and parking benefits means that employers will be taxed on the value of providing qualified transportation fringe benefits.

CMS Releases Guidance on Accommodation Revocation Notices

The Patient Protection and Affordable Care Act (ACA) requires that non-grandfathered group health plans and health insurance issuers offering non-grandfathered group or individual health insurance coverage provide coverage of certain specified preventive services without cost sharing. Under the ACA and interim final regulations, objecting entities could use an accommodation process as part of the exemption from the ACA’s requirement to provide contraceptive coverage.

If an entity wants to revoke the accommodation, then the regulations require that written notification be given to participants and beneficiaries. The Centers for Medicare and Medicaid Services (CMS) released guidance on the two methods that can be used to provide accommodation revocation notices.

Read more about CMS’ guidance.

U.S. District Court Vacates EEOC Wellness Rules Effective January 1, 2019

On August 22, 2017, the United States District Court for the District of Columbia held that the U.S. Equal Employment Opportunity Commission (EEOC) failed to provide a reasoned explanation for its decision to adopt 30 percent incentive levels for employer-sponsored wellness programs under both the Americans with Disabilities Act (ADA) rules and Genetic Information Nondiscrimination Act (GINA) rules.

At that time, the court declined to vacate the EEOC’s rules because of the significant disruptive effect it would have. However, the court remanded the rules to the EEOC for reconsideration.

In September 2017, the EEOC filed a status report indicating its schedule to comply with the court order, including issuing a proposed rule by August 2018 and a final rule by October 2019. It stated that it did not expect to require employers to comply with a new rule before 2021.

The court found the EEOC’s process of not generating applicable rules until 2021 to be unacceptable. Instead, the court determined that one year was ample time for employers to adjust to new EEOC rules. The court vacated the EEOC rule effective January 1, 2019, and ordered the EEOC to promulgate any new proposed rules by August 31, 2018.

OCSE Issues FAQs Regarding Employers’ Duties Regarding Medical Support Notices

The U.S Department of Health and Human Services’ Office of Child Support Enforcement (OCSE) issued its “Medical Support – Answers to Employers’ Questions” FAQs, which instruct employers and plan administrators how to complete Parts A and B of the National Medical Support Notice (NMSN). The FAQs also provide, among other items, the following guidance:

  • When a plan receives a request for information by a child support agency that issued an NMSN, the plan administrator is permitted to disclose protected health information in response to the NMSN under the Health Insurance Portability and Accountability Act of 1996 (HIPAA).
  • Even if a recently terminated employee has elected self-only COBRA continuation coverage, a plan should enforce the NMSN to cover the child of that former employee. If the plan is subject to COBRA and if the child loses coverage due to a qualifying event, then the child is a qualified beneficiary with the right to elect COBRA continuation coverage.
  • A plan administrator may take all necessary steps to enroll the child named in the NMSN if coverage is available and the premiums can be deducted with the limits of the Consumer Credit Protection Act (CCPA). Such steps may include changing an employee’s coverage to a different option, even if it affects the employee’s premiums.

IRS Releases Form 8941 Instructions: Credit for Small Employer Health Insurance Premiums

The Internal Revenue Service (IRS) released its instructions for Form 8941 which eligible small employers use to figure the credit for health insurance premiums for tax years beginning after 2009. For tax years beginning after 2013, the credit is only available for period of two consecutive tax years. Generally, the maximum credit is a percentage of premiums that the employer has paid during the tax year for health insurance coverage that the employer provided to certain employees enrolled in a qualified health plan offered through the Small Business Health Options Program (SHOP) Marketplace.

IRS Releases Form W-2 Reporting Guidance for QSEHRAs

The IRS released its Form 8962 with instructions. Form 8962 is used by individual taxpayers to calculate and report a premium tax credit. The instructions provide a reminder to employers who provided a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) to their eligible employees. For each employee covered under its QSEHRA, the employer should report the annual permitted benefit by indicating Code FF in Box 12 of the employee’s Form W-2.

Question of the Month

What code should an employer use for Form 1095-C Line 14 if:

  • the employer offers minimum essential coverage (MEC) providing minimum value (MV) to a full-time employee that is affordable (using the Federal Poverty Level safe harbor for affordability) and
  • the employer offers at least MEC to the employee’s spouse and dependents?

Does the code change if the employee declines coverage because the employee is covered by the spouse’s group health plan?

The employer should use Code 1A in Line 14. The code doesn’t change if the employee waives coverage.

 

Download the PDF

 


Compliance Bulletin: 2018 Minimum Wage Rates

The current federal minimum wage rate is $7.25 per hour. However, many states have adopted minimum wage rates higher than the federal rate. When the state rate and the federal rate are different, employers must pay their employees the higher rate.

Affected employers should review their employees’ pay rates and update their minimum wage poster notices as necessary to ensure compliance with local wage and hour regulations.

Download the following PDF for helpful charts and tables with wage rate information by state.

 


With Below Average Cost, Increasing Enrollment, CDHPs Have Big Impact

According to the UBA Health Plan Survey, enrollment in CDHPs continues to grow in most regions. Receive information like this but customized to your business by taking our Benchmark Survey.


When most experts think of group healthcare plans, Preferred Provider Organization (PPO) plans largely come to mind—though higher cost, they dominate the market in terms of plan distribution and employee enrollment. But Consumer-Directed Health Plans (CDHPs) have made surprising gains. Despite slight cost increases, CDHP costs are still below average and prevalence and enrollment in these plans continues to grow in most regions—a main reason why it was one of the top 7 survey trends recently announced.

In 2017, 28.6% of all plans are CDHPs. Regionally, CDHPs account for the following percentage of plans offered:

Prevalence of CDHP Plans

CDHPs have increased in prevalence in all regions except the West. The North Central U.S. saw the greatest increase (13.2%) in the number of CDHPs offered. Looking at size and industry variables, several groups are flocking to CDHPs:

Regional offering of CDHPs

When it comes to enrollment, 31.5% of employees enroll in CDHP plans overall, an increase of 19.3% from 2016, after last year’s stunning increase of 21.7% from 2015. CDHPs see the most enrollment in the North Central U.S. at 46.3%, an increase of 40.7% over 2016. For yet another year in the Northeast, CDHP prevalence and enrollment are nearly equal; CDHP prevalence doesn’t always directly correlate to the number of employees who choose to enroll in them. Though the West held steady in the number of CDHPs offered, there was a 2.6% decrease in the number of employees enrolled. The 12.6% increase in CDHP prevalence in the North Central U.S. garnered a large 40.7% increase in enrollment. CDHP interest among employers isn’t surprising given these plans are less costly than the average plan. But like all cost benchmarks, plan design plays a major part in understanding value. The UBA survey finds the average CDHP benefits are as follows:

CDHP benefits

 

Read the original article.

Source:
Olson B. (7 December 2017). "With Below Average Cost, Increasing Enrollment, CDHPs Have Big Impact" [Web blog post]. Retrieved from address http://blog.ubabenefits.com/with-below-average-cost-increasing-enrollment-cdhps-have-big-impact

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UBA Survey: Weary Families Get a Break While Singles See Out-of-Pocket Cost Increases

Below, our partner, UBA Benefits, has provided some insight from their 2017 Health Plan Survey. If you are an employer seeking customized results from the survey, we can help you. Please visit our survey page here.


While the rate impact of the regulatory environment plays out, one thing is clear from the 2017 UBA Health Plan Survey: employers continue to shift a greater share of expenses to employees through out-of-pocket cost increases. While this is just one of 7 mega trends uncovered in the survey, it is particularly interesting this year because singles were hit more heavily than families as compared to years past.

While average annual total costs per employee increased from $9,727 to $9,934, employees’ share of total costs rose 5%, from $3,378 to $3,550, while employers’ share rose less than 1%, from $6,350 to $6,401. The good news for employees is that, for a second year in a row, median in-network deductibles for singles and families held steady at $2,000 and $4,000, respectively. Similarly, some out-of-network deductibles remained unchanged, with families’ median out-of-network deductible remaining at $8,000 in 2017. Conversely, singles, who had been holding steady in 2014 and 2015 at a $3,000 median out-of-network deductible, saw a 13.3% increase to $3,400 in 2016, and another jump in 2017 to $4,000. Since deductible increases help employers avoid premium increases, we will likely see this trend continue, especially as insurance carriers are required to meet the ACA metal levels.

Both singles and families also are seeing continued increases in median in-network out-of-pocket maximums, up to $5,000 and $10,000, respectively. Families bore the brunt of the increase in median out-of-network out-of-pocket maximums between 2014 and 2016, going from $16,000 in 2014 to $18,000 in 2015, to $20,000 in 2016, but then holding steady at $20,000 in 2017. The maximum for singles, which had remained steady at $9,000 in 2015 and 2016, increased in 2017 to $10,000.

Interestingly, out-of-network expenses are not subject to ACA limitations, so it was theorized that they’d likely continue to skyrocket with more plans eliminating out-of-pocket maximums for non-network services. Perhaps to offset that, more employers adopted plans with no deductible for out-of-network services, while employees saw a massive decrease in the number of employers offering no deductible for in-network services. Looking at deductibles and out-of-pocket costs just among the ever-dominant PPO plans, in-network and out-of-network deductibles for families and singles are generally below average. However, the median in-network single deductible for PPO plans has held steady at $1,500 in 2016 and 2017, along with the family deductible at $3,000. The increases were seen in the out-of-pocket maximums, which rose in 2017 to $4,500 for single (up from $4,000 in 2016), and to $10,000 for family coverage (up $1,000 from $9,000 in 2016).

Read the original article here.

Source:
Olson B. (21 November 2017). "UBA Survey: Weary Families Get a Break While Singles See Out-of-Pocket Cost Increases" [Web blog post]. Retrieved from address http://blog.ubabenefits.com/uba-survey-weary-families-get-a-break-while-singles-see-out-of-pocket-cost-increases