Affordable Care Act

Employers Must File ACA Returns Electronically by April 1, 2024

The Affordable Care Act (ACA) created reporting requirements under Internal Revenue Code (Code) Sections 6055 and 6056. Under these rules, certain employers must provide information to the IRS about the health plan coverage they offer (or do not offer) to their employees.

Under the original rules, any reporting entity that was required to file at least 250 individual statements under Sections 6055 or 6056 had to file electronically. However, on Feb. 23, 2023, the IRS released a final rule implementing a law change by the Taxpayer First Act of 2019, which lowers the 250-return threshold for mandatory electronic reporting to 10 returns. This means most reporting entities will be required to complete their ACA reporting electronically starting in 2024.

This ACA Compliance Bulletin describes the process for reporting electronically under Sections 6055 and 6056.

Action Steps

Employers that have not requested an extension or an electronic filing waiver, and that are subject to the ACA reporting rules should be exploring options for filing ACA reporting returns electronically to ensure filing is completed by the April 1, 2024, deadline. For example, they may be able to work with a third-party vendor to complete the electronic filing.

Reporting entities that may be in a position to perform their own electronic reporting can review the IRS’ ACA Information Returns (AIR) Program main page for more information on the reporting standards for composing and successfully transmitting compliant submissions to the IRS.

The IRS has designated the AIR Help Desk as the first point of contact for electronic filing issues (1-866-937-4130).

Electronic Reporting Requirement

In prior years, any reporting entity that was required to file at least 250 individual statements under Sections 6055 or 6056 had to file electronically, and this requirement applied separately to each …

By |March 5th, 2024|Affordable Care Act, Compliance, Health Care Reform, IRS|Comments Off on Employers Must File ACA Returns Electronically by April 1, 2024

Legal Alert-PCORI Fee Amount Adjusted for 2023

The Internal Revenue Service (IRS) has issued Notice 2022-59 to increase the Patient-Centered Outcomes Research Institute (PCORI) fee amount for plan years ending on or after Oct. 1, 2022, and before Oct. 1, 2023. The updated PCORI fee amount is $3.00 multiplied by the average number of lives covered under the plan.

Applicability of PCORI Fee

The PCORI fee was created by the Affordable Care Act (ACA) and first applied for plan or policy years ending after Sept. 30, 2012. The fee is imposed on health insurance issuers and self-insured plan sponsors to fund comparative effectiveness research. The PCORI fee was originally scheduled to expire in 2019. However, a federal spending bill extended the PCORI fee for an additional 10 years. As a result, the PCORI fee will apply through the plan or policy year ending before Oct. 1, 2029.

Payment Deadline

PCORI fees are reported and paid annually on IRS Form 720 (Quarterly Federal Excise Tax Return). These fees are due each year by July 31 of the year following the last day of the plan year. For plan years ending in 2022, the PCORI fee is due by July 31, 2023. Employers with self-insured health plans should have reported and paid PCORI fees for 2021 by Aug. 1, 2022 (since July 31, 2022, was a Sunday).

Calculating the PCORI Fee

The PCORI fees are calculated based on the average number of covered lives under the plan or policy. This generally includes employees and their enrolled spouses and dependents, unless the plan is an HRA or FSA. Final rules outline a number of alternatives for issuers and plan sponsors to determine the average number of covered lives.

By |November 15th, 2022|Affordable Care Act, Compliance, Employee Benefits, Human Resources, IRS, Legislation|Comments Off on Legal Alert-PCORI Fee Amount Adjusted for 2023

REMINDER: PCORI Fees Due By July 31, 2022

Employers that sponsor self-insured group health plans, including health reimbursement arrangements (HRAs) should keep in mind the upcoming July 31, 2022 deadline for paying fees that fund the Patient-Centered Outcomes Research Institute (PCORI) via Form 720, which was recently updated and released by the IRS.  As background, the PCORI was established as part of the Affordable Care Act (ACA) to conduct research to evaluate the effectiveness of medical treatments, procedures and strategies that treat, manage, diagnose or prevent illness or injury.  Under the ACA, most employer sponsors and insurers are required to pay PCORI fees until 2029, as it only applies to plan years ending on or before September 30, 2029 (unless extended).

The amount of PCORI fees due by employer sponsors and insurers is based upon the number of covered lives under each “applicable self-insured health plan” and “specified health insurance policy” (as defined by regulations) and the plan or policy year end date.  This year, employers will pay the fee for plan years ending in 2021.

The fee is due by July 31, 2022 and varies based on the applicable plan year as follows:

  • For plan years that ended between January 1, 2021 and September 30, 2021, the fee is $2.66 per covered life.
  • For plan years that ended between October 1, 2021 and December 31, 2021, the fee is $2.79 per covered life.

For example, for a plan year that ran from July 1, 2020 through June 30, 2021 the fee is $2.66 per covered life. The fee for calendar year 2021 plans is $2.79 per covered life. The insurance carrier is responsible for paying the PCORI fee on behalf of a fully insured plan.  The employer is responsible for paying the fee on …

Legal Alert- IRS Releases 2023 HSA Contribution Limits and HDHP Deductible and Out-of-Pocket Limits

In Rev. Proc. 2022-24, the IRS released the inflation adjusted amounts for 2023 relevant to Health Savings Accounts (HSAs) and high deductible health plans (HDHPs). The table below summarizes those adjustments and other applicable limits.

  2023 2022 Change
Annual HSA Contribution Limit

(employer and employee)

Self-only: $3,850 Family: $7,750 Self-only: $3,650 Family: $7,300 Self-only: +$200 Family: +$450
HSA catch-up contributions

(age 55 or older)

$1,000 $1,000 No change
Minimum Annual HDHP Deductible Self-only: $1,500 Family: $3,000 Self-only: $1,400 Family: $2,800 Self-only: +$100

Family: $200

Maximum Out-of-Pocket for HDHP

(deductibles, co-payment & other amounts except premiums)

Self-only: $7,500 Family: $15,000 Self-only: $7,050 Family: $14,100 Self-only: +$450 Family: +$900

 

Out-of-Pocket Limits Applicable to Non-Grandfathered Plans

The ACA’s out-of-pocket limits for in-network essential health benefits have also been announced and have increased for 2023.

  2023 2022 Change
ACA Maximum Out-of-Pocket Self-only: $9,100

Family: $18,200

Self-only: $8,700

Family: $17,400

Self-only: +$400

Family: +$800

 

Note that all non-grandfathered group health plans must contain an embedded individual out-of-pocket limit within family coverage if the family out-of-pocket limit is above $9,100 (2023 plan years) or $8,700 (2022 plan years). Exceptions to the ACA’s out-of-pocket limit rule are available for certain small group plans eligible for transition relief (referred to as “Grandmothered” plans). While historically CMS has renewed the transition relief for Grandmothered plans each year, it announced in March that the transition relief will remain in effect until it announces that all such coverage must come into compliance with the specified requirements.

Next Steps for Employers

As employers prepare for the 2023 plan year, they should keep in mind the following rules and ensure that any plan materials and participant communications reflect the new limits:

  • HSA-qualified family HDHPs cannot have an embedded individual deductible that is …
By |May 3rd, 2022|Affordable Care Act, Compliance, Employee Benefits, Employee Communications, Health Care Reform, IRS, Legislation, Medical, Voluntary Benefits|Comments Off on Legal Alert- IRS Releases 2023 HSA Contribution Limits and HDHP Deductible and Out-of-Pocket Limits

Agencies Issue FAQs Regarding Coverage of Over the Counter COVID-19 Diagnostic Tests

On December 2, 2021, President Biden announced that federal agencies would soon issue guidance regarding the availability of coverage/reimbursement from group health plans and health insurance carriers for individuals who purchase over the counter, at-home COVID-19 diagnostic tests (“OTC COVID-19 tests”).  Accordingly, on January 10, 2022, the agencies released “FAQs About Affordable Care Act Implementation Part 51, Families First Coronavirus Response Act (FFCRA) and Coronavirus Aid, Relief, and Economic Security Act (CARES Act) Implementation” which, among other things, requires group health plans and health insurance carriers to reimburse participants, beneficiaries, or enrollees (“Individuals”) for no less than eight (8) OTC COVID-19 tests per calendar month beginning on January 15, 2022 (i.e., for tests purchased on or after January 15, 2022).

Background

During the COVID-19 public health emergency, the FFCRA requires group health plans (self-funded, fully-insured, grandfathered, and non-grandfathered plans, but not excepted benefits such as dental or vision) and health insurance issuers (“Plans and Carriers”) to cover testing or certain other items or services intended to diagnose COVID-19 without cost sharing (deductibles, copays, or coinsurance), prior authorization, or other medical management requirements.  It also permits the agencies to implement the FFCRA through sub-regulatory guidance, program instruction, or otherwise.  The CARES Act expanded the FFCRA to, among other things, include a broader range of reimbursable COVID-19 diagnostic items and services that must be covered without cost-sharing, prior authorization, or medical management during the public health emergency.

In 2020, the agencies implemented several FAQs intended to serve as statements of policy to implement the above-referenced requirements under the FFCRA and CARES Act.  Since that time, the FDA has authorized at-home OTC COVID-19 diagnostic tests that individuals can self-administer and self-read to diagnose COVID-19.  Accordingly, per the agencies, the FAQs …

By |January 13th, 2022|Affordable Care Act, Compliance, Employee Benefits, Employee Communications, Health Care Reform, Legislation, Medical, Wellness|Comments Off on Agencies Issue FAQs Regarding Coverage of Over the Counter COVID-19 Diagnostic Tests

Legal Alert- IRS Issues Affordability Percentage Adjustment for 2022

The Internal Revenue Service (IRS) has released Rev. Proc. 2021-36, which contains the inflation adjusted amounts for 2022 used to determine whether employer-sponsored coverage is “affordable” for purposes of the Affordable Care Act’s (ACA) employer shared responsibility provisions and premium tax credit program. As shown in the table below, for plan years beginning in 2022, the affordability percentage for employer mandate purposes is indexed to 9.61%.  Employer shared responsibility payments are also indexed.

Code Section 4980H(a) 4980H(b) 36B(b)(3)(A)(i)
Description Coverage not offered to 95% (or all but 5) of full-time employees. Coverage offered, but unaffordable or is not minimum value. Premium credits and affordability safe harbors.
2022* $2,750 $4,120 9.61%
2021 $2,700 $4,060 9.83%
2020 $2,570 $3,860 9.78%
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%

*Section 4980H(a) and (b) penalties 2022 are projected.

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

Under the ACA, applicable large employers (ALEs) must offer affordable health insurance coverage to full-time employees. If the ALE does not offer affordable coverage, it may be subject to an employer shared responsibility payment. An ALE is an employer that employed 50 or more full-time equivalent employees on average in the prior calendar year. Coverage is considered affordable if the employee’s required contribution for self-only coverage on the employer’s lowest-cost, minimum value plan does not exceed 9.61% of the employee’s household income in 2022 (prior years shown above). An ALE may rely on one or more safe harbors in determining if coverage is affordable: W-2, Rate of Pay, and Federal Poverty Level.

If the employer’s coverage is not affordable under one of the safe harbors and a full-time …

President Orders OSHA To Develop Mandatory Vaccine Requirement for Large Employers

President Biden announced that he ordered OSHA to develop emergency temporary standards (ETSs) that would require employers with 100 or more employees to mandate that employees either receive one of the three available COVID-19 vaccines or submit to at least weekly COVID-19 testing.  Employers who do not comply with these requirements could be fined approximately $13,650 per employee.  The President also announced the OSHA ETSs will require employers to offer paid time off to employees to receive the vaccine, as well as any time necessary to recover from a reaction to the vaccine.

The President also issued executive orders requiring federal executive branch employees to be fully vaccinated (i.e., no weekly testing option) and federal contractor employees under new or newly extended/newly optioned contracts to comply with vaccine safety protocols.  He also announced (1) health care workers at certain facilities that receive Medicaid or Medicare funding must be fully vaccinated, (2) that the Department of Transportation will double its fines for individuals who refuse to wear masks on public transportation, and (3) increased testing availability for individuals either at home (through certain, chosen retailers who will sell the kits at cost) [1] and at pharmacies.

The pending OSHA ETSs, and approaches large employers (i.e., 100 or more employees) and small employer (i.e., fewer than 100 employees) can take to incentivize vaccines are the focus of this alert.

Background

On August 23, 2021, the U.S. Food and Drug Administration (FDA) approved the Pfizer-BioNTech COVID-19 vaccine, one of the three COVID-19 vaccines approved for emergency use in the United States.  Due to this approval and the rampant spread of the COVID-19 Delta variant, employers recently began implementing different approaches to encourage individuals to receive the COVID-19 vaccine.  Some implemented …

By |September 16th, 2021|Affordable Care Act, Compliance, Employee Benefits, Employee Benefits Adviser, Employee Communications, Health Care Reform, Human Resources, Legislation, Medical, U.S. Department of Labor, Wellness|Comments Off on President Orders OSHA To Develop Mandatory Vaccine Requirement for Large Employers

Summary of Mental Health Parity and Transparency Provisions Under the Consolidated Appropriations Act, 2021

The Consolidated Appropriations Act, 2021 (the “CAA”), which was signed into law on December 27, 2020, included several provisions impacting group health plans and health insurance issuers.  Below is a summary of the provisions focused on mental health parity and health plan transparency (specifically, broker/consultant commissions and pharmacy benefits and drug costs).

Mental Health Parity

The Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA), prohibits a group health plan from applying financial requirements (e.g., deductibles, co-payments, coinsurance, and out-of-pocket maximums), quantitative treatment limitations (e.g., number of treatments, visits, or days of coverage), or non-quantitative treatment limitations (such as restrictions based on facility type) to its mental health and substance use disorder benefits that are more restrictive than those applied to the plan’s medical and surgical benefits.

MHPAEA compliance has been a focus in DOL audits in recent years.  As part of the action plan for enhanced enforcement in 2018, the DOL, HHS and IRS released a self-compliance tool plans and issuers can use to evaluate their plan.  However, Section 203 of the CAA took this a step further, requiring more active engagement by group health plans.

Beginning on February 10, 2021, group health plans were required to perform and document comparative analyses of the design and application of non-quantitative treatment limitations (NQTLs).  Specifically, the NQTL analyses must include certain information specified in the CAA, such as, among other things, specific plan terms or other relevant terms regarding NQTLs and the specific substance abuse, mental health, medical and surgical benefits to which they apply, and the factors used to determine that NQTLs will apply to mental health or substance use disorder benefits and medical or surgical benefits.

Per the CAA, the DOL, IRS (Treasury) and HHS are required …

By |August 23rd, 2021|Affordable Care Act, Compliance, Employee Benefits, Employee Communications, Health Care Reform, Human Resources, IRS, Legislation, Medical, U.S. Department of Labor, Voluntary Benefits, Wellness|Comments Off on Summary of Mental Health Parity and Transparency Provisions Under the Consolidated Appropriations Act, 2021

Legal Alert: COVID-19 Plan Design

As the United States continues to battle the COVID-19 pandemic, vaccinations of Americans age 12 and older is underway with approximately half of the eligible population vaccinated against the virus. In the United States, there are currently three vaccines — one from Moderna, one from Pfizer and one from Johnson & Johnson—that are available, with distribution being handled at the state and local level.

To help combat the pandemic, many employers are implementing some level of a vaccine mandate at work, with some employers requiring all employees who return to the office to be vaccinated (e.g., Google, Facebook), requiring all new hires to show proof of vaccination (Delta Airlines) or merely requiring all their U.S.-based employee population to be vaccinated by a certain date (United Airlines). Members of the United States military will also be required to be vaccinated as a matter of national security to maintain military readiness.

As businesses are eager to return to the office and bring customers back on-site as applicable, many employers are wondering if they can modify their group health plan design to provide richer benefits for employees who are vaccinated.

Specifically, employers are wondering if:

  • They can limit eligibility for their group health plan to only employees who have received the vaccine (or who have a medical or religious waiver);
  • They can charge vaccinated employees lower premiums, co-pays, or deductible limits (or, conversely, charge non-vaccinated employees higher premiums, co-pays or deductibles);
  • Exclude all COVID-19 treatment from group health plan coverage for employees who are not vaccinated (example: the plan would deny all claims for out-patient, in-patient or prescription drug treatment of COVID-19 for individuals who are not vaccinated;
  • Provide larger HSA, HRA, or FSA contributions to individuals who are vaccinated.

At the most basic …

Agencies Release First Rule on the No Surprises Act

On July 13, 2021, the DOL, HHS, and IRS released a joint Interim Final Rule implementing specified provisions of the No Surprises Act, a new law included within the Consolidated Appropriations Act, 2021.  The No Surprises Act addresses, among other things, a prohibition on surprise billing, which impacts emergency room parity rules previously implemented under the Affordable Care Act (“ACA”) and ACA provisions related to provider choice.

The Interim Final Rules will be finalized on September 13, 2021 and apply for plan years beginning on or after January 1, 2022.

Background 

ACA Provider Choice and Emergency Services Requirements

Under §2719A of the ACA, most group health plans that require designation of a participating primary care provider must permit the participant or beneficiary to designate an available, participating primary care provider of their choice, and must inform participants of their ability to make a designation or, if they don’t, a primary care provider will be designated for them. A participant can designate a pediatric primary care provider for children, and the notice must inform participants and beneficiaries that they do not need prior authorization from the plan to access participating Ob-Gyn providers, though prior authorization may be required for certain services and providers may have to comply with any referral processes.  The ACA did not extend these requirements to “excepted benefits” such as stand-alone dental or vision plans, and grandfathered health plans were exempt from complying.

Additionally, §2719A of the PHSA requires emergency services to be provided:

  • Without prior authorization (whether they are provided by an in-network or out-of-network provider);
  • Without regard to whether the health care provider furnishing the emergency services is a participating network provider with respect to the services; and
  • Without imposing administrative requirements or limitations on …