Month: August 2014

In order for the IRS to verify that individuals and employers are meeting their shared responsibility obligations, and that individuals who request premium tax credits are entitled to them, employers and insurers will be required to provide reporting on the health coverage they offer. Reporting will first be due early in 2016, based on coverage in 2015.

On July 24, 2014, the IRS published drafts of several of the forms that will be used to provide the required reporting. Instructions were not released with the draft forms, so some questions remain unanswered. The IRS has said that it will issue drafts of the instructions in August and that the final forms and instructions will be available by the end of 2014.

Generally speaking, an employer will not have any reporting requirement if it has fewer than 50 full-time and full-time equivalent employees in its controlled group and it sponsors a fully insured medical plan. All other employers will have at least some reporting. This appears to include employers with 50 to 99 employees for 2015 – even though the employer-shared responsibility requirement has been delayed until 2016 for most employers in this group, reporting is still needed to help determine whether individual employees owe penalties or are eligible for premium subsidies.

Employers with 50 or more full-time or full-time equivalent employees in their controlled group – whether the coverage offered is fully insured or self-funded – will need to complete both Part I and Part II of IRS Form 1095-C. This form will be required for each employee, regardless of whether the employee is eligible for medical coverage. Part I includes basic identifying information. Part II will be used to determine whether minimum essential, minimum value and affordable coverage was offered and accepted. This data will be used to determine whether the employer owes penalties for not offering minimum essential coverage (these are sometimes referred as the “A” penalty or the $2,000 penalty) or for not offering affordable, minimum value coverage (these are sometimes referred to as the “B” penalty or the $3,000 penalty) and if the employee is eligible for premium subsidies.

The employer will use one of several codes to report whether it offered coverage to the employee, and the extent of the coverage it offered.  The employer also will report the employee’s share of the lowest cost monthly premium for self-only minimum value coverage for which the employee is eligible.

Finally, the employer will enter codes that the IRS will use when determining if a penalty is owed. Those codes address whether the employee was eligible for coverage during the month, including whether the employee was employed, classified as full-time, in a waiting period or covered. If the employee was covered during the month, the employer will report whether coverage was affordable and which affordability safe harbor was used.

In addition, employers with self-funded plans will complete Part III of Form 1095-C. Part III information will be used to determine whether the employee’s family met its requirement to have minimum essential coverage.

Information that is similar to the information provided on Part III of Form 1095-C will be provided by the insurer to the employee using IRS Form 1095-B. Form 1095-B will report whether the employee and the employee’s spouse and children had minimum essential coverage for each month. This means that an employee who works for a mid-size or large employer that provides coverage on a fully insured basis will receive two forms: Form 1095-B from the insurer and Form 1095-C from the employer.

Employers with 50 full-time and full-time equivalent employees in their controlled group also will need to file IRS Form 1094-C, with a copy of the Form 1095-C it issued to each employee. Employers that are part of a controlled or affiliated service group also must enter the name and EIN of all other employers that were part of the group during the calendar year. Each employer in a controlled or affiliated service group must file a separate report, although one member of the controlled group may complete the form on behalf of other members. In certain circumstances, government plans may report on a single form through a “designated government entity.”

The reporting will occur with the same timing and process as W-2 and W-3 reporting. Even though these forms are not final, employers may want to study them as they begin to determine whether they are currently collecting, and will be able to retrieve, the information needed to complete the forms.

For a summary of the draft IRS employer and insurer reporting forms, download UBA’s PPACA Advisor, “IRS Issues Drafts of Individual and Employer Responsibility Reporting Forms.”  

In order for the IRS to verify that individuals and employers are meeting their shared responsibility obligations, and that individuals who request premium tax credits are entitled to them, employers and insurers will be required to provide reporting o…

By Stephen Coffman, Group Practice Leader
The Guardian Life Insurance Company of America  

A more meaningful attempt to manage absences can go a long way toward helping ease the staffing and morale challenges of small and midsize businesses that often feel the impact of absences more acutely than larger firms. What’s more, in an environment where government oversight is only intensifying, effective absence management may become more challenging and burdensome for employers unless they have access to a specialist who understands the increasing and ever-changing federal, state and local Family and Medical Leave Act (FMLA) laws. The Americans with Disabilities Act (ADA) also needs to be considered.  For example, requirements have expanded in recent years to include reasonable accommodations designed to reduce employee stress, which can trigger absences and erode productivity.  

Small or midsize employers may not even be aware of all these issues and updates, nor have the staff to appropriately address them, which can leave companies vulnerable to lengthy and costly ligation. Plus, a growing “sandwich generation” combined with an aging population means the incidences and complexity of employee absences will only increase.  For this and many other reasons, outsourcing absence management or partnering with an expert makes a lot of sense.  But what should employers look for when evaluating their outsourcing options? Absence management programs that follow these five best practices, as revealed in the Guardian Absence Management Activity Index^SM and Study*, will generate better outcomes for companies:  

1. A full return-to-work program, starting with a written policy.
2. Detailed reporting for disability and FMLA usage patterns, costs and more.
3. A process that gives employees referrals to health management programs.
4. A central leave-reporting portal for Short Term Disability and Family and Medical leaves.
5. Using the same resource for Short Term Disability, Family and Medical leaves and other benefit programs.

Aside from helping to ensure compliance with FMLA, a more robust program approach to absence management can help shorten the duration and severity of absences and return employees to work sooner, thereby reducing health care costs and improving productivity.  It’s a win-win for both employers and their employees.

To learn more about absence management best practices and solutions, contact a Guardian Group Sales Representative. Exclusively for UBA Partners, join Guardian’s complimentary webinar “The Road to Better Absence Management” on Thursday, August 21, 2014, at 2:00 p.m. ET / 11:00 a.m. PT. Click here for participation details. If you’re not a UBA Partner and you are interested in the webinar, click here to locate your nearest Partner Firm.

*The Guardian Absence Management Activity Index^SM and Study, 2013

PPACA brings numerous responsibilities and options to employers. Below is a summary of the PPACA provisions that apply to group health plans and whether the provision applies to insured small group plans (50 or fewer employees) provided inside and outside the SHOP exchange.

Provisions Effective 2014 or Later

Provisions Effective 2010 – 2013

United Benefit Advisors has created reference charts that summarize the PPACA requirements applicable to employers of all types. These new resources cover more than 40 PPACA provisions such as FSA limits, W2 reporting, PCORI fees, exchange notices, eligibility waiting periods, modified community rating, deductible and out of pocket limits, wellness rules, IRS reporting, penalties, cadillac tax and more. View the right tool for you at: 

http://www.ubabenefits.com/Wisdom/ComplianceSolution/GroupHealthPlansandPPACA/tabid/351/Default.aspx

* Does not apply in whole or part to grandfathered plans; with respect to guaranteed access, open enrollment will be available both inside and outside the exchange each Nov. 15 – Dec. 15 for employers that cannot meet participation requirements for initial issue.

^# States have the option to renew policies that do not meet all of the PPACA requirements through Oct. 1, 2016.  If renewal of “non-compliant” policies is allowed, this requirement will not apply to those renewed policies.

Note: For 2014 and 2015 a group is considered “small” for the insurance market requirements of PPACA if the group has 50 or fewer employees.  Beginning in 2016, a group will be considered “small” for the insurance market requirements if the group has 100 or fewer employees. (In most states part-time employees count pro rata toward full-time equivalent employees using the same method as the employer shared responsibility/play or pay requirement.)

In contrast, for purposes of the employer shared responsibility/play or pay requirement, for 2015 an employer generally will not be considered “large” unless it has 100 or more full-time or full-time equivalent employees.  Beginning in 2016, an employer will not be considered “large” for purposes of the employer shared responsibility/play or pay requirement unless it has 50 or more full-time or full-time equivalent employees.

By Carol Taylor

A little over a month ago, the Department of Health and Human Services (HHS) released several Q&As regarding the Federally Facilitated Small Business Health Options Program (FF-SHOP). At the time, they stated the FF-SHOP would not support COBRA transactions (see blog and Q&A here).

Several more Q&As were issued recently, and while they now state that COBRA participants should be listed as an employee (see Q&As 2851, 2874 and 2883), there are still issues that employers should be aware of before rushing to enroll in the FF-SHOP. Some of these issues could result in fines or lawsuits, depending on the situation.

One major federal COBRA issue that still exists is child-only policies will not be allowed (see Q&As 2873 and 2887). Non-compliance with this portion of COBRA could result in fines of $100 per day. While child-only elections for COBRA do not occur frequently, they are a necessity, especially if the child is disabled, has a major illness, or was involved in an accident and the deductible or out of pocket maximum has been, or is close to being, met. This also affects most states, where mini-COBRA or state continuation laws have been passed.

While in some states adults will not be an issue for continuation, in others it will be. Florida, for example, requires the insurance carrier to bill the continuant directly. Non-compliance in this area could cause someone wanting to continue coverage to sue their former employer, since it breaks Florida statutes.

At least eight states allow dependents over the age of 26 to remain covered under their parent’s policies, provided that certain restrictions are met. Most of these require the over-age dependent to be a citizen of that state and to not be married; however, several other factors may also be required. A listing of these states is provided here. In the FF-SHOP, over-age dependents will be terminated off the coverage automatically as listed in Q&As 2890 and 2856. 

The over-age dependent automatic termination becomes an even larger issue in states where disabled over-age dependents are allowed to stay on their parent’s policies. This affects employers in at least 10 states. While many believe that it should not be an issue for the parents to just obtain an individual policy for those affected, there could be potentially devastating effects to families being forced off the group coverage. Many individual policies have higher deductibles and out of pocket maximums, narrow provider networks, limitation of carrier or plan choices, different prescription formularies and other items that must be expertly evaluated before switching coverage.

Another issue employers should be mindful is if their state requires no premium for the first month for newborns. The FF-SHOP will charge a pro-rated premium for all newborns. In their Q&As on this topic, they even acknowledge that they are violating state laws. The Q&As can be found at 2866 and 2880.

Although there are certainly other issues, one remaining concern in the latest round of Q&As is the pro-rate of premiums, found in Q&A 2894. This again becomes an issue for many states that do not allow any premium billing for other than a full month of coverage. It could be a major concern for employers to administer, since calculating the pro-rated amount can be a daunting task for many. If they calculate the amount incorrectly, they will need to correct payroll deduction amounts, leading to unhappy employees, if the amount was underestimated.

While states may levy fines for non-compliance, the employer should be aware that the most immediate risk is a lawsuit from the employee or former employee. They could even be filed under federal purview, such as the ADA and others. Before rushing into the FF-SHOP policies, an employer should weigh all these factors. They likely are not worth the minimal and limited small business tax credit for the apparent risks associated with breaking federal or state laws.

In the world of ever-changing rules, it is always best to seek the counsel of a seasoned insurance agent or broker.

Carol Taylor is a Employee Benefit Advisor with D&S Agency, a UBA Partner Firm.

For further information about the health care reform requirements for your business, download UBA’s complimentary guide, “PPACA Compliance and Decision Guide for Small and Large Employers” from the PPACA Resource Center at http://bit.ly/1nHbaWv.