President Trump Orders Pull-Back on ACA

ACA changesBy Brad Roehrenbeck, General Counsel & VP, Legal Services, Compliance

As widely reported over the weekend, within a few hours of his swearing in, President Donald Trump signed his first Executive Order, calling on federal agencies to take immediate steps to curtail aspects of the Affordable Care Act and signaling the new administration’s plans to repeal and replace the Act altogether.

What does the Order say?

The Order itself has little if any tangible impact on the law. The Order states the administration’s official policy of pursuing a complete repeal and replacement of the ACA. It directs the heads of all federal agencies to take steps within their authority to remove or minimize any provision of the ACA that carries fiscal or regulatory burden. As the primary agencies charged with implementing the ACA, that action will likely come from the Department of Health and Human Services, the Department of Labor, and the IRS. The order also directs these agencies to afford greater flexibility to the States in areas impacted by the law. Finally, the order directs federal agencies to take steps to encourage and enable an interstate market for health coverage.

What does the Order mean for employers?

For now, the Order has no real impact on employers, except to signal that federal agencies will be acting quickly to relax various components of the ACA that impact employers, group health plans, and their members. The Senate has yet to confirm those President Trump has nominated to lead the agencies affected by the Order. Once those agency heads are confirmed, we expect to see regulations issued as prescribed by the Order and will be watching closely. Of course, both the Trump administration and members of both houses are said to be working on legislation to repeal and/or replace the ACA. Both the House and the Senate have laid the groundwork for streamlined procedures for repeal of the Act. They face more of an uphill battle to pass legislation to replace the ACA, as a 60-vote majority will be required in the Senate to pass replacement legislation. We will provide updates as details of those efforts become public. Until such legislation passes or further regulations are released, employers should bear in mind that the ACA remains in full force and effect.MedCost

DOL Increases Employee Benefit Plan Penalties

By Michael Berwanger, JD, Director, Quality Management & Compliance

employee benefit plansOn June 30, the Department of Labor (DOL) announced two interim final rules that increase civil penalties for various violations as required by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015.

The Act requires agencies to: 1) adjust the level of civil monetary penalties with an initial “catch-up” adjustment; and (2) make subsequent annual adjustments for inflation. According to the DOL, future adjustments will be made by January 15 of each year, starting in 2017. Here are some highlights of the changes:

*Form 5500The maximum penalty for failing to file Form 5500, which must be filed by most Employment Retirement Income Security Act (ERISA) plans, will increase from $1,100 to $2,063 per day that the Form 5500 is late.

*Group Health Plans. The maximum penalty for failing to provide the summary of benefits and coverage (SBC) required under health care reform will increase from $1,000 to $1,087 per failure. Violations of the Genetic Information Nondiscrimination Act (GINA), such as establishing eligibility rules based on genetic information or requesting genetic information for underwriting purposes, may result in penalties of $110 per participant per day, up from $100. Maximum penalties relating to disclosures regarding the availability of Medicaid or Children’s Health Insurance Plan assistance, including failure to disclose to a state, on request, relevant information about the employer’s plan, will also increase from $100 to $110 per day.

*401(k) Plans. For plans with automatic contribution arrangements, penalties for failure to provide the employee benefit plansrequired ERISA § 514(e) preemption notice to participants will increase from $1,000 to $1,632 per day. Penalties for failing to provide blackout notices (required in advance of certain periods during which participants may not change their investments or take loans or distributions) or notices of diversification rights will increase from $100 to $131 per day. And the maximum penalty for failure to comply with the ERISA § 209(b) recordkeeping and reporting requirements will increase from $11 to $28 per employee.

*Multiple Employer Welfare Arrangements (MEWAs)Penalties for failure to meet applicable filing requirements, which include annual Form M-1 filings and filings upon origination, will increase from $1,100 to $1,502 per day.

Other penalties increased by the regulations include those for failure to provide certain information requested by the DOL, failures not corrected within specified time periods, and defined benefit plan compliance failures. The increases apply to penalties assessed after August 1, 2016, with respect to violations occurring after November 2, 2015.

employee benefit plansPenalty assessments made before August 1, 2016, (including those relating to violations after November 2, 2015) and assessments at any time relating to violations on or before November 2, 2015, will reflect the lower pre-adjustment amounts.

You can read the DOL FAQ here and see a full listing of new penalty amounts here.

 

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Health Premiums Growing Faster than Income

Single Employee Insurance Up 48% from 2005-2014

It’s no surprise to employers that health premiums continue to take a bigger spending bite every year. Single employee premiums jumped 48% from 2005 to 2014, reported the Congressional Budget Office (CBO) in February 2016.[i] Estimates at 5% annual growth mean that the cost of insuring employees will outpace average income per capita by two percentage points per year.

health expenses, healthcare costs, employer premiums

Source: CBO with data from 2015 Employer Health Benefits Survey (Kaiser Family Foundation) & Agency for Healthcare Research & Quality

The CBO projects average premiums for employer-based coverage at $10,000 for individuals and about $24,500 for family coverage in 2025—an almost 60% increase from 2016.

Costs for government subsidized health insurance will top $600 billion this year. And most Americans who receive subsidies are working full-time. The Affordable Care Act (ACA) will account for $110 billion in subsidies.

Looming over employers is the Cadillac tax on more expensive health care insurance. Currently the 40% tax is set to take effect in 2020 (see “Cadillac Tax Revisions” blog), but ACA requirements are impacting employer planning for health benefits.

Since an average 62% of American employees still get their health coverage at work, tracking health care spending remains a major concern for businesses.[i]health premiums, healthcare costs, employer health expenses

As health care laws continue to change, employers must work closely with consultants and benefits administrators who have expert knowledge to get the best performance from every health care dollar.

[i] “Update from 2015 Employer Health Benefits Survey,” Kaiser Family Foundation, February 5, 2016, http://kff.org/private-insurance/issue-brief/a-comparison-of-the-availability-and-cost-of-coverage-for-workers-in-small-firms-and-large-firms-update-from-the-2015-employer-health-benefits-survey/ (accessed April 28, 2016)

[i] “Private Health Insurance Premiums and Federal Policy,” Congressional Budget Office, February 11, 2016, https://www.cbo.gov/publication/51130 (accessed April 4, 2016).

 

Largest US Health Insurer To Exit Most ACA Exchanges in 2017

ACA, health insurance, health exchangesUnitedHealthcare will operate only in a “handful” of health insurance exchanges in 2017, down from 34 states this year, company officials said Tuesday.

The company did not provide the anticipated details in its first-quarter earnings announcement released Tuesday morning or in a subsequent teleconference with securities analysts. But a spokesman confirmed Nevada and Virginia would be among the states where it will retain a presence. In the past week, UnitedHealthcare said it would leave Georgia, Michigan, and Arkansas.

(Galewitz, Kaiser Health News, April 19, 2016)
Kaiser Health News

2017 Presidential Budget Proposes Cadillac Tax Revisions

Cadillac Tax

The President’s 2017 federal budget proposal released February 9 includes a second round of revisions to the unpopular “Cadillac” tax on expensive private health insurance. The $4.1 trillion spending plan would raise the tax threshold to the level of the Affordable Care Act’s gold premium, where any state’s individual health insurance marketplace exceeds the Cadillac tax threshold.

The President approved a two-year delay on the 40% tax when he signed the 2016 spending bill on December 18. The tax is currently set to take effect in 2020; and is projected to raise $87 billion a year for ACA expenses.

Business groups and labor unions continue to call for the tax’s total repeal. The 2017 fiscal plan is expected to face stiff partisan opposition in Congress.

 

House Vote Fails to Override Presidential Veto

ACA Repeal is Unsuccessful

Capitol with flag. shutterstock_216021430 WEBAs promised, the US House of Representatives held a vote yesterday, attempting to override President Obama’s veto on a bill which would have repealed the Affordable Care Act. The 241-186 vote in the House was a largely symbolic vote that was not expected to reach the two-thirds majority needed to override the veto.

The Associated Press reported that House Speaker Paul Ryan is planning a Republican proposal this year to replace the health care reform law passed six years ago.

IRS Extends Due Dates for New 2015 Reporting

Tax form & glassesOn Dec. 28, the IRS extended the due dates for new health care information reporting forms in 2016. Insurers, self-insuring employers, other coverage providers, and applicable large employers now have additional time to provide health coverage information for 2015 to individual taxpayers and the IRS. Providers and certain employers must now furnish individuals with either Form 1095-B or 1095-C by March 31, 2016. The due dates for issuers filing these forms and the associated Form 1094 with the IRS are May 31, 2016, for paper filers and June 30, 2016, for electronic filers.

Individual taxpayers will generally not be affected by this extension and should file their tax returns as they normally would. However, due to these extensions, some individual taxpayers may not receive a Form 1095-B or Form 1095-C by the time they are ready to file their 2015 tax return. While the information on these forms may assist in preparing a return, they are not required. Like last year, taxpayers can prepare and file their returns using other information about their health insurance. Individuals do not have to wait for their Form 1095-B or 1095-C in order to file.

These extensions apply automatically to all health coverage information return issuers and are longer than the 30-day extensions that would otherwise be obtained by submitting Form 8809, Application for Extension of Time To File Information Returns. Therefore, the IRS will not process any previously requested extensions of these deadlines for 2016. The longer automatic extensions do not require a formal request using Form 8809 or other documentation. The IRS does not anticipate additional extensions.

The IRS has not extended the due dates for Health Insurance Marketplaces to issue Form 1095-A. Individuals who enrolled for coverage through the Marketplace should receive Form 1095-A by February 1, 2016, and should wait to file their returns until they receive their Form 1095-A.

 For more information: https://www.irs.gov/Affordable-Care-Act/IRS-Extends-Due-Dates-for-New-2015-Information-Reporting-Requirements

Supreme Court Refuses to Hear ACA Challenge

TGovernment buildinghe US Supreme Court has rejected the most recent challenge to the Affordable Care Act. Modern Healthcare reported that the Court refused to hear a case alleging that the ACA law should have originated in the House instead of the Senate. To date, lower courts have uniformly rejected the challenge. The Court’s refusal to take up the challenge leaves those decisions intact, likely putting the issue to rest.

The case is Sissel v.Department of Health and Human Services, 15-543.

Congress Sends Health Care Repeal to the President

Government buildingThe U. S. House of Representatives voted yesterday 240 to 181 to repeal the Affordable Care Act, sending the bill to President Obama. The bill, which passed the Senate 52 to 47 last month, faces a certain veto from the president (The Washington Post).