The Internal Revenue Service has for some time made available a comprehensive set of Questions & Answers covering the Affordable Care Act’s (ACA) employer shared responsibility rules. (These are the rules that are codified in Section 4980H of the Internal Revenue Code, the compliance with which is reported on IRS Forms 1094-C and 1095-C, etc.) Entitled, “Questions and Answers on Employer Shared Responsibility Provisions Under the Affordable Care Act,” this web-based resource provided generally useful information about how the rules worked. Until recently, however, the IRS’ Questions and Answers merely said that the IRS “expects to publish guidance of general applicability describing the employer shared responsibility payment procedures in the Internal Revenue Bulletin before sending any letters to ALEs [Applicable Large Employers] regarding the 2015 calendar year” (Q&A 57). On November 2, that changed. This post explains what happened, and what it means for employers.
The stunning failure of the U.S. House of Representatives to pass the American Health Care Act (AHCA) (which we previously reported on here) has political and policy implications that we cannot forecast. Nor is it clear to us whether or when the Trump administration and Congress will make another effort to repeal and replace, or whether Republicans will seek Democratic support in an effort to “repair,” the Affordable Care Act (ACA). And we are similarly unable to predict whether and to what extent the AHCA’s provisions can be achieved through executive rulemaking or policy guidance. The purpose of this post is not to assess why the AHCA failed, or to speculate on the outcome of any future legislative efforts to repeal and replace the ACA, but rather to offer some thoughts about how the AHCA’s failure will impact employers in the near term. As our title suggests, the news may not be all that bad.
In Q&A format, recently issued Notice 2015-87 addresses a number of pressing issues that have arisen under the Affordable Care Act (ACA), including that law’s employer shared responsibility rules, information reporting requirements, and insurance market reforms, among others. Q&A 15 of the notice addresses, and proposes changes in, the rules governing breaks-in-service involving staffing firms that place contract and temporary workers with educational organizations. This post explains the proposed changes and examines their impact on staffing firms that provide employees to educational organizations.
This post concludes our half-year series of posts focusing on the Affordable Care Act’s reporting requirements. These requirements are challenging in the extreme. Carriers and employers, and their vendors, service providers and strategic partners, have scrambled up a steep learning curve. And in a few short months—a few more than originally anticipated as a result of Notice 2016-4, which was covered in last week’s post —compliance will begin in earnest. This post offers some predictions about how we expect compliance to unfold.
It took a while, but most employers and their advisors have finally gotten the hang of the Affordable Care Act’s employer shared responsibility rules. That is, they understand generally that:
- “Applicable Large Employer Members” (i.e., each separate legal entity within a controlled group that collectively comprises an Applicable Large Employer) must make an offer of “minimum essential coverage” to substantially all of their full-time employees or face the prospect of a potentially very big penalty;
- If coverage is offered, but it is unaffordable or fails to provide minimum value, then the employer faces the prospect of a potentially (hopefully, maybe) not very big penalty; and
- If coverage is offered that is both affordable and provides minimum value, then the employer has no penalty exposure, but this approach might be costly.
When it comes to telling the government about compliance, however, not everyone has gotten the proverbial “hang-of-it,” and many questions remain (at least enough to fill this blog from week-to-week). Most too have heard that the IRS has announced that it will be applying a “good faith” standard. While they get that this is a “good thing,” many are not sure why, exactly. (Trust me, it’s a good thing.) And there are of course a cohort of presumably small but indeterminate size employers that remain unaware of the rules or simply assume that their consultant or payroll service has it covered.
The lingering reporting-related questions appear to cluster around full-time employee determinations, offers of coverage, and eligibility, participation and coverage. This post examines issues relating to coverage, both under the rules governing the reporting of minimum essential coverage and under the employer shared responsibility rules, with a particular emphasis on “MEC plans.”
The Affordable Care Act’s (ACA) employer shared responsibility rules provide applicable large employers (i.e., those with 50 or more full-time and full-time equivalent employees on business days during the preceding calendar year) with a choice: make an offer of group health plan coverage to substantially all of the employer’s full-time employees or pay a non-deductible excise tax if at least one full-time employee qualifies for a premium tax credit from a public insurance exchange or marketplace. (The particulars of the tax are explained in a set of Questions and Answers issued by the Internal Revenue Service.) Because the amount of the tax for failing to offer any coverage is substantial, most employers view the employer shared responsibility rules as imposing a mandate rather than offering a meaningful choice. Consequently, what constitutes an offer of coverage, and how the offer is reported, is of interest to employers.
Under a common strategy for controlling group health care plan costs, employers sometimes adopt arrangements under which an employee is offered cash as an incentive to waive coverage. These arrangements are colloquially referred to as “opt-out plans” or “opt-out arrangements.” Amounts offered under opt-out arrangements—we will call them “opt-out credits”—are in some instances paid as unrestricted, taxable cash. Other opt-out arrangements might impose a requirement that, to qualify for the opt-out credit, the employee must have other group health plan coverage. And still others might offer only a choice between group health plan participation and an opt-out credit that consists of a contribution to the employee’s health flexible spending account. This post examines how opt-out credits affect an applicable large employer’s determination of affordability for purposes of complying with the Affordable Care Act’s (ACA) employer shared responsibility rules, and it explains how opt-out credits are reported. Continue Reading The Affordable Care Act’s Reporting Requirements for Carriers and Employers (Part 6 of 24): Reporting Group Health Plan Opt-Out Arrangements under Code § 6055
In our prior installments, we determined that students who work at least 30 hours per week for their educational institutions are “full time” employees of those institutions under the Affordable care Act’s employer shared responsibility mandate. As such, employers who are “applicable large employers” must make an offer of health care coverage to these students, or risk paying a penalty. We also determined that student health insurance coverage cannot be used to satisfy the employer mandate.
But what if students work in positions where hours are not easily captured? In this installment, we will analyze one such example: the position of dormitory resident assistant.
In Part 2 of this miniseries, we discussed whether a student health insurance plan may be used to help an educational institution avoid penalties under t the Affordable Care Act’s “employer shared responsibility” mandate with respect to individuals who are both students and full-time employees of the institution. Conclusion: it cannot. Nevertheless, certain educational institutions must offer student health insurance, and wish to provide subsidies to certain students (such as graduate students) to help defray the costs of the coverage. Are such subsidies allowed?
In the previous installment of this series, we addressed whether student employees may be excluded from an employer’s offer of coverage. We concluded that a blanket exclusion of this nature could put an employer at risk for ACA penalties. Our second issue addresses student health insurance coverage required by state law.