Employee Communications

This is the Employee Communications category of the Broad REach Benefits blog. At Broad Reach Benefits, we focus on employers that have between 30 and 500 benefit eligible employees. We’re employee benefit specialists, not a big box brokerage firm or payroll company with a sales force peddling policies.

IRS Extends Deadline for Furnishing Form 1095-C, Extends Good-Faith Transition Relief

The Internal Revenue Service (IRS) has released Notice 2019-63, which extends the deadline for furnishing 2019 Forms 1095-B and 1095-C to individuals from January 31, 2020 to March 2, 2020.  The Notice also provides penalty relief for good-faith reporting errors and suspends the requirement to issue Form 1095-B to individuals, under certain conditions.

The due date for filing the forms with the IRS was not extended and remains February 28, 2020 (March 31, 2020 if filed electronically).

The draft instructions to Forms 1094-C and 1095-C allow employers to request a 30-day extension to furnish statements to individuals by sending a letter to the IRS with certain information, including the reason for delay. However, because the Notice’s extension of time to furnish the forms is as generous as the 30-day extension contained in the instructions, the IRS will not formally respond to requests for an extension of time to furnish 2019 Forms 1095-B or 1095-C to individuals.

Employers may still obtain an automatic 30-day extension for filing with the IRS by filing Form 8809 on or before the forms’ due date. An additional 30-day extension is available under certain hardship conditions. The Notice encourages employers who cannot meet the extended due dates to furnish and file as soon as possible and advises that the IRS will take such furnishing and filing into consideration when determining whether to abate penalties for reasonable cause.

Relief from Furnishing Form 1095-B to Individuals

Due to the individual mandate penalty being reduced to zero starting in 2019, an individual does not need the information on Form 1095-B in order to complete his or her federal tax return. Therefore, the IRS is granting penalty relief for employers who fail to furnish a Form […]

By |December 4th, 2019|Employee Benefits, Employee Communications, Human Resources, Legislation|Comments Off on IRS Extends Deadline for Furnishing Form 1095-C, Extends Good-Faith Transition Relief

IRS Releases Guidance for Employers Offering Individual Coverage HRAs

On September 27, the Internal Revenue Service (IRS) released proposed regulations on the application of the Affordable Care Act’s (ACA) employer shared responsibility provisions to a new type of Health Reimbursement Arrangement (HRA) available starting in 2020.  In June 2019, the Department of Labor, the Department of Health and Human Services, and the Treasury Department (the “Departments”) released a final rule concerning HRAs that can be integrated with individual market coverage or Medicare.  This new type of HRA is referred to as an Individual Coverage HRA, or ICHRA.  The rule, based on an executive order from President Trump in 2017, is intended to increase the usability of HRAs, to expand employers’ ability to offer HRAs to their employees, and to allow HRAs to be used in conjunction with non-group coverage.

The ICHRA rule is effective for plan years beginning on or after January 1, 2020.  The IRS has also proposed regulations to guide employers in determining whether their contribution to an employee’s ICHRA results in an “affordable” offer of coverage under the ACA.  Specifically, the proposed regulations will assist employers who offer ICHRAs in determining the “required employee contribution” for purposes of line 15 of Form 1095-C.  Employers may continue to use the W-2, Rate of Pay, or Federal Poverty Level safe harbors to determine whether their entry in line 15 results in an “affordable” offer of coverage.  (See Example on page 3.)

The proposed regulations are effective for periods after December 31, 2019.  Employers may continue to rely on them during any ICHRA plan year beginning within six months from the publication of any final regulations.

 Proposed Safe Harbors

 The proposed regulations offer safe harbors for applicable large employers (ALEs), which are those who employed […]

By |October 29th, 2019|Compliance, Employee Benefits, Employee Communications, Health Care Reform, Human Resources, Legislation, Voluntary Benefits|Comments Off on IRS Releases Guidance for Employers Offering Individual Coverage HRAs

President Trump Issues Executive Order Encouraging Transparency in Pricing and Expanding Consumer-Directed Arrangements

On June 24, 2019, President Trump issued an Executive Order intending to develop price and quality transparency initiatives to ensure that healthcare patients can make well-informed decisions about their care. This is part of the consumer-driven healthcare initiative, which has been a focus of government and patient groups alike to have more transparency regarding the cost of services from hospitals and other healthcare providers, as well as expanding the ability to use certain pre-tax health spending arrangements. The goal is to help consumers to make better informed decisions regarding their healthcare. It is also intended to address so-called “surprise billing,” which can expose patients to unexpected medical bills. The Executive Order directs federal agencies to promulgate regulations and issue guidance to meet these objectives.

Transparency in Prices

The Executive Order instructs the Department of Health and Human Services (HHS) to promulgate regulations requiring hospitals to publicly post standard price information for services rendered in an easy-to-read format. The regulations should mandate the disclosure of standard charge information for services, supplies, and any other fees that apply to the hospital and its employees. HHS may also use the Executive Order to create regulations for other providers and self-funded health plans to also post standard costs for services and supplies. The objective of such disclosure is to allow patients to make more informed decisions about the cost of services and goods if the patient goes to a certain healthcare facility. If a patient understands the cost and quality of services, they could avoid unexpected costs. It could also facilitate further analysis regarding the cost differentials between facilities and providers. The standard costs posted must be regularly updated, in order to provide accurate, […]

By |July 2nd, 2019|Compliance, Employee Benefits, Employee Communications, Human Resources, Legislation, Medical|Comments Off on President Trump Issues Executive Order Encouraging Transparency in Pricing and Expanding Consumer-Directed Arrangements

District Court Judge in Texas Strikes Down the ACA – But Law Remains in Effect for Now

On Friday, December 14, a federal judge in Texas issued a partial ruling that strikes down the entire Affordable Care Act (ACA) as unconstitutional. The White House has stated that the law will remain in place, however, pending the appeal process. The case, Texas v. U.S., will be appealed to the U.S. Court of Appeals for the Fifth Circuit in New Orleans, and then likely to the U.S. Supreme Court.

The plaintiffs in Texas (a coalition of twenty states) argue that since the Tax Cuts and Jobs Act zeroed out the individual mandate penalty, it can no longer be considered a tax. Accordingly, because the U.S. Supreme Court upheld the ACA in 2012 by saying the individual mandate was a legitimate use of Congress’s taxing power, eliminating the tax penalty imposed by the mandate renders the individual mandate unconstitutional. Further, the individual mandate is not severable from the ACA in its entirety. Thus, the ACA should be found unconstitutional and struck down.

The court in Texas agreed, finding that the individual mandate can no longer be fairly read as an exercise of Congress’s Tax Power and is still impermissible under the Interstate Commerce Clause—meaning it is unconstitutional. Also, the court found the individual mandate is essential to and inseverable from the remainder of the ACA, which would include not only the patient protections (no annual limits, coverage of pre-existing conditions) but the premium tax credits, Medicaid expansion, and of course the employer mandate and ACA reporting.

Several states such as Massachusetts, New York and California have since intervened to defend the law. They argue that, if Congress wanted to repeal the law it would have done so. The Congressional record makes it clear Congress was voting only […]

By |December 18th, 2018|Compliance, Employee Communications, Health Care Reform, Legislation, Wellness|Comments Off on District Court Judge in Texas Strikes Down the ACA – But Law Remains in Effect for Now

IRS Issues Affordability Percentage Adjustment for 2019

In Rev. Proc. 2018-34, the IRS released the inflation adjusted amounts for 2019 relevant to determining whether employer-sponsored coverage is “affordable” for purposes of the Affordable Care Act’s (“ACA’s”) employer shared responsibility provisions and premium tax credit program. As shown in the table below, for plan years beginning in 2019, the affordability percentage is 9.86% of an employee’s household income or applicable safe harbor.

Code Section 4980H(a) 4980H(b) 36B(b)(3)(A)(i)
Description Potential annual penalty for failure to offer coverage to at least 95% (70% in 2015) of full-time employees (calculated per full-time employee, minus 30 (80 in 2015))[1] Potential annual penalty if coverage is offered but is not affordable or does not provide minimum value (calculated per full-time employee who receives a subsidy)[2] Premium credits and affordability safe harbors

Section 4980H penalties may be triggered by a full-time employee receiving a PTC

2019 $2,500* $3,750* 9.86%
2018 $2,320 $3,480 9.56%
2017 $2,260 $3,390 9.69%
2016 $2,160 $3,240 9.66%
2015 $2,080 $3,120 9.56%
2014** $2,000 $3,000 9.50%

* Estimated based on premium adjustment percentage in the 2019 Notice of Benefit and Payment Parameters

**No employer shared responsibility penalties were assessed for 2014.

 

Under the ACA, applicable large employers (ALEs) – generally those with 50 or more full-time equivalent employees on average in the prior calendar year – must offer affordable health insurance to full-time employees to avoid an employer shared responsibility payment. Coverage is “affordable” if the employee’s required contribution for self-only coverage under the employer’s lowest-cost minimum value plan does not exceed 9.5% (as indexed) of the employee’s household income for the year. In lieu of household income, employers may rely on one or more of the following safe harbor alternatives when […]

By |June 7th, 2018|Employee Benefits, Employee Communications, Health Care Reform|Comments Off on IRS Issues Affordability Percentage Adjustment for 2019

Agencies Issue Guidance on Mental Health Parity Issues, Signal Enhanced Enforcement

On April 23, 2018, the Departments of Labor, Treasury, and Health and Human Services released several pieces of guidance on issues arising under the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA), including 2017 enforcement actions, guidance on mental health parity implementation, and an action plan for enhanced enforcement in 2018.

The guidance includes:

  • Proposed FAQs (Part 39) regarding non-quantitative treatment limitations (e.g., non-numerical limits on benefits, such as preauthorization requirements) and plan disclosure issues;
  • An updated draft model disclosure form participants may use to request information from employer-sponsored health plans;
  • A self-compliance tool for group health plans, plan sponsors, insurance carriers, State regulators and other parties to evaluate MHPAEA compliance by a group health plan or insurance carrier; and
  • A 2018 DOL report to Congress titled Pathway to Full Parity.

Highlights of the April 2018 guidance

2017 MHPAEA Enforcement Actions

The DOL actively enforces MHPAEA during audits of employer-sponsored group health plans. These cases may stem from participant complaints where the facts suggest the problems are systemic and adversely impact other participants. Penalties for parity violations are limited to equitable relief; if violations are found by a DOL investigator, the investigator requires the plan to remove any offending plan provisions and pay any improperly denied benefits.

Each year the DOL publishes a fact sheet summarizing its enforcement activity during the prior year. Out of the 187 applicable investigations where MHPAEA applied, the DOL cited 92 violations for noncompliance with parity rules in 2017. The fact sheet provides 6 examples of MHPAEA enforcement actions and several are noteworthy because of their required corrections:

  • Restrictions on Residential Treatment Removed. Removal of impermissible annual day limit on residential treatment for substance use disorder […]
By |May 17th, 2018|Employee Benefits, Employee Communications, Human Resources, Legislation, Medical|Comments Off on Agencies Issue Guidance on Mental Health Parity Issues, Signal Enhanced Enforcement

IRS Adjusts 2018 HSA Contribution Limit – Again

The IRS has announced it is modifying the annual limitation on deductions for contributions to a health savings account (“HSA”) allowed for taxpayers with family coverage under a high deductible health plan (“HDHP”) for the 2018 calendar year. Under Rev. Proc. 2018-27, taxpayers will be allowed to treat $6,900 as the annual limitation, rather than the $6,850 limitation announced in Rev. Proc. 2018-18 earlier this year.

The HSA contribution limit for individuals with family HDHP plan coverage was originally issued as $6,900 last May in Rev. Proc. 2017-37. Earlier this year, the IRS announced a $50 reduction in the maximum deductible amount from $6,900 to $6,850 due to changes made by the Tax Cuts and Jobs Act.

Due to widespread complaints and comments from individual taxpayers, employers and other major stakeholders, the IRS has decided it is in the best interest of “sound and efficient” tax administration to allow individuals to treat the originally released $6,900 as the 2018 family limit. The IRS acknowledged that many individuals had already made the maximum HSA contribution for 2018 before the deduction limitation was lowered and many other individuals had made annual salary reduction elections for HSA contributions through employers’ cafeteria plans based on the higher limit. Additionally, the costs of modifying various systems to reflect the reduced maximum would be significantly greater than any tax benefit associated with an unreduced HSA contribution.

Alternatively, if an individual decides not to repay such a distribution it will not have to be included in gross income or subject to the additional 20% tax as long as the distribution is received by the individual’s 2018 tax return filing due date. This tax […]

By |May 1st, 2018|Employee Communications, Health Care Reform, Human Resources, Medical|Comments Off on IRS Adjusts 2018 HSA Contribution Limit – Again

EEOC’s Status Report in AARP v. EEOC Creates Uncertainty for Wellness Programs

In its March 30 status report to the U.S. District Court for the District of Columbia in American Association for Retired Persons (AARP) v. EEOC, the EEOC stated that “it does not currently have plans to issue a Notice of Proposed Rulemaking addressing incentives for participation in employee wellness programs by a particular date certain, but it also has not ruled out the possibility that it may issue such a Notice in the future.”

Employers continue to face uncertainty as to wellness program incentives subject to the ADA and GINA (i.e., those with medical exams or disability-related inquiries) as the EEOC awaits confirmation of Janet Dhillon as EEOC Chair and considers “a number of policy choices available.” In other words, the EEOC may wait until the Senate confirms outstanding nominations before re-engaging in the rulemaking process, leaving wellness programs open to challenge in 2019 by employees who feel that the incentives (or penalties) are so great that they render the program involuntary.

Background

As background, under the ADA, wellness programs that involve a disability-related inquiry or a medical examination must be “voluntary.” Similar requirements exist under GINA when there are requests for an employee’s family medical history (typically as part of a health risk assessment). For years, the EEOC had declined to provide specific guidance on the level of incentive that may be provided under the ADA, and their informal guidance suggested that any incentive could render a program “involuntary.” In 2016, after years of uncertainty on the issue, the agency released rules on wellness incentives that resemble, but do not mirror, the 30% limit established under U.S. Department of Labor (DOL) regulations applicable to health-contingent employer-sponsored wellness programs.   While the regulations appeared to be […]

By |April 17th, 2018|Employee Benefits, Employee Benefits Adviser, Employee Communications, Retired, U.S. Department of Labor|Comments Off on EEOC’s Status Report in AARP v. EEOC Creates Uncertainty for Wellness Programs

Agencies Release Proposed Regulations on Short-Term Limited Duration Insurance

On February 20, 2018, the U.S. Departments of Labor, Treasury, and Health and Human Services (Agencies) released proposed regulations that expand the availability of short-term limited duration insurance (STLDI). STLDI is offered in the individual (non-group) insurance market and is generally used by individuals such as students or individuals between jobs. Therefore, the direct impact to employers is limited; however, there is some concern that this rule may disrupt the individual and small group markets and is seen by some as a further step by the Trump administration to erode Obama-era regulations.

The rule reverses prior regulations that limited the duration of STLDI coverage to less than 3 months after the original effective date of the contract. If finalized, the rule would extend the permitted duration of STLDI to a period of less than 12 months. The rule does not require issuers to guarantee renewability of STLDI policies; however, it does not prohibit individuals from re-applying for coverage for another 364 days (which would likely be subject to medical underwriting).

The proposed regulations are in furtherance of an October 2017 Executive Order instructing the Agencies to consider ways to promote healthcare choice and competition by, among other things, expanding the availability of STLDI. The regulations are open for public comment for 60 days.

Although STLDI is sold in the individual market, it is exempt from ACA’s insurance mandates, which typically makes it more affordable than the ACA-compliant plans that are required to offer coverage in ten broad categories of essential health benefits and contain other consumer protections. STLDI, on the other hand, is not required to cover essential benefits and may contain preexisting condition exclusions and annual and lifetime limits.

There is concern that expansion of STLDI […]

By |March 6th, 2018|Disability, Employee Benefits, Employee Communications, Medical, Short Term Disability|Comments Off on Agencies Release Proposed Regulations on Short-Term Limited Duration Insurance