Happy New Year! It’s that time when we all vow to better ourselves in the months ahead. Resolutions abound, and they need not be limited to individual self-improvement. Employers too have many opportunities for betterment in the New Year. In the area of employee benefits, we offer these four goals for 2018.
Health and welfare have been around for a long time, and they are ubiquitous. Employees have come to expect medical, dental, life, and other insurance as part of their benefits packages. Employers offer coverage in order to reward employees, attract the best talent, and now, under the Affordable Care Act, avoid penalties. Historically, these plans posed few regulatory concerns for employers, despite that the applicable laws and regulations have become increasingly complicated with each passing decade. With the enactment of the Affordable Care Act, however, the applicable legal and regulatory concerns have reached a tipping point. The burdens of compliance and the penalties for non-compliance are now more ominous than ever. This post examines the compliance environment of health and welfare plans generally and group health plans in particular.
When it comes to telling their employees about certain benefits, many employers have for decades (since 1974 to be exact) flouted a particular provision of the law with impunity. The law to which we refer is the Employee Retirement Income Security Act (ERISA), and the provision relates to the requirement that the employer tell employees about the salient plan terms by providing them with a Summary Plan Description or “SPD.” The Affordable Care Act alters the regulatory landscape on this score. And while the ACA did not change the requirements that apply to SPDs, it radically changes the surrounding compliance environment. Complying with the SPD requirements all of a sudden looks not only like a good idea, but it also rises—dare we say—to a best or at least highly recommended practice.
In response to this changing environment, we recommend using a “wrap document,” which as we explain below, allows employers to satisfy the ERISA SPD and other disclosure requirements.
The final regulations under Code § 4980H establish two—and only two—methods for determining an employee’s status as full-time: the monthly measurement method and the look-back measurement method. Under the former (as the name suggests) an employee’s status as full-time is determined month-by-month. An employee who works on average at least 30 hours per week, or 130 hours per month, is full-time. (An employer may alternatively use 120 hours per month in months with 4 weeks and 150 hours per month in months with 5 weeks.) The monthly measurement method is particularly well-suited to employers and industries with stable workforces and low turnover. In most instances, the reporting burdens for these employers will be relatively manageable. But even in this environment, employees will from time-to-time terminate, change status, or incur service breaks.
This post explores the reporting challenges associated with employee terminations, changes in status, and breaks in service under the monthly measurement method. Next week’s post will do the same for the look-back measurement method.
The IRS recently issued final instructions for Forms 1094-B and 1095-B and Forms 1094-C and 1095-C . The 2015 Instructions for Forms 1094-B and 1095-B implement a suggestion we made in a previous post relating to the reporting of Health Reimbursement Arrangements (HRAs) that are integrated with other group health plan coverage. The 2015 Instructions for Forms 1094-C and 1095-C make a substantive change in the manner in which offers of COBRA coverage are reported and clarify the reporting of multiemployer plan coverage. The Treasury Department and IRS also issued Notice 2015-68 , which announces their intent to propose regulations to reflect recent changes in the law (e.g., the Expatriate Health Coverage Clarification Act of 2014) and to clarify existing regulations (e.g., the reporting of coverage under integrated HRAs, as discussed below.
Continue Reading The Affordable Care Act’s Reporting Requirements for Carriers and Employers (Part 10 of 24): IRS Issues Final Form 2015 Instructions for Forms 1094-B and 1095-B, 1094-C and 1095-C—Good News for HRAs, Changes to COBRA Reporting, Clarifications for Multiemployer Plans, and More
Written by Alden J. Bianchi
Regulations implementing the Affordable Care Act’s (ACA) employer shared responsibility rules including the substantive “pay-or-play” rules and the accompanying reporting rules were adopted in February. Regulations implementing the reporting rules in newly added Internal Revenue Code Sections 6055 and 6056 came along in March. And draft reporting forms (IRS Forms 1094-B, 1094-C, 1095-B and 1095-C) and accompanying instructions followed in August.
With these regulations and forms, and a handful of other, related guidance items (e.g., a final rule governing waiting periods), the government has assembled a basic—but by no means complete—compliance infrastructure for employer shared responsibility. But challenges nevertheless remain. Set out below is a partial list of items that are unresolved, would benefit from additional guidance, or simply invite trouble.
Continue Reading The Affordable Care Act—Countdown to Compliance for Employers, Week 1: Going Live with the Affordable Care Act’s Employer Shared Responsibility Rules on January 1, 2015 . . . What Can Possibly Go Wrong?
Written by Alden J. Bianchi
Recent developments under the Affordable Care Act and COBRA, and existing rules governing mid-year election changes under cafeteria plans, have combined to make it challenging for certain terminating employees and those employees who experience a reduction in hours to continue health care coverage seamlessly. These developments include newly-issued COBRA notices, rules governing an individual’s ability to enroll in qualified health plans through a public exchange or Health Insurance Marketplace (Marketplace) other than during an open enrollment period, and rules relating to offers of coverage by applicable large employers under rules governing stability periods. The challenge relates to the transition from employer-sponsored group health plan coverage into Marketplace coverage.
Written by Alden J. Bianchi
Particularly with the issuance of final regulations under the Affordable Care Act’s employer shared responsibility rules, employers have been concerned—justifiably—with the pay-or-play penalties. Human resource, finance, even senior management personnel of affected employers (i.e., generally, those employers who employed an average of at least 50 full-time employees on business days during the preceding calendar year) want to know, what’s this going to cost me, and what does it mean for the maintenance and operation of our group health plans?