New ACA Developments May Affect Employers

Despite numerous attempts to repeal the Affordable Care Act (ACA), the law is still alive and kicking as we begin 2018. This means employers need to stay the course and continue to make sure they are in compliance with any of the law’s provisions affecting them.

On that note, there have been recent developments involving the ACA that may impact employers. Here are some of the key recent developments related to the health care law.

1 . Tax Reform

On December 22, 2017, President Trump signed sweeping tax legislation into law that, among other things, repeals the ACA’s individual mandate requirement. The ACA individual mandate imposes a tax penalty (also known as an individual shared responsibility payment) on individuals who do not obtain minimum essential healthcare coverage for any month, unless an exemption applies.

Under the tax reform legislation, effective January 1, 2019, the tax is repealed by reducing the individual responsibility payment to zero for individuals who do not purchase health insurance that qualifies as minimum essential coverage. At this point, it is unclear what effect this might have on other aspects of the ACA, but it’s important for employers to understand that there is NO CHANGE to the employer mandate. That provision is completely unaffected by the tax legislation and the repeal of the individual mandate.

2.  IRS Employer Mandate Letters

Not only is there no change to the ACA’s employer mandate, but the IRS announced at the end of 2017 that it will be sending IRS Letter 226J tax penalty notices to propose and assess employer shared responsibility payments.

As a quick refresher, the ACA does not require an employer to offer health coverage under the employer mandate, but applicable large employers (those with at least 50 full-time employees, including full-time equivalent employees) are subject to the employer shared responsibility provisions. This means these applicable large employers may owe a shared responsibility penalty if at least one full-time employee receives a premium tax credit or cost-sharing assistance to purchase individual coverage through the marketplace and the employer didn’t offer health coverage:

  • At all; or
  • That is considered good enough under the ACA.

The IRS said it will be issuing tax penalty notices informing applicable large employers of their liability for the 2015 calendar year. Whether an employer receives a Letter 226J will be based on information reported to the IRS on Forms 1094-C and 1095-C and information the IRS has about any employees that received a premium tax credit. An employer that receives a Letter 226J from the IRS generally will have 30 days from the date of the letter to respond, and the specific due date will be listed on the letter.

3. ACA Reporting Extension

The ACA created two annual information reporting requirements under the Internal Revenue Code (IRC) for certain employers:

  1. IRC Section 6055 requires annual information reporting by health insurance issuers, self-insuring employers, government agencies and other providers of health coverage.
  2. IRC Section 6056 requires annual information reporting by applicable large employers relating to the health insurance that that the employer offers (or does not offer) to its full-time employees.

Both sections require employers to report information to the IRS and furnish written statements to employees or covered individuals detailing the health coverage offered to them.

In late December 2017, the IRS announced that it was extending the 2018 due date for entities to provide the required individual statements to employees by 30 days. Thus, employers now have until March 2, 2018, to provide Forms 1095-B or 1095-C to individuals. (The original deadline was January 31.)

Since the extension is automatic, employers don’t have to do anything to take advantage of the extra time. However, it is important for employers to remember that there was no extension of due dates for filing the 2017 information returns with the IRS. These returns are still due to the IRS on February 28 for paper filers and April 2 for electronic files.

4. Contraceptive Coverage and the Courts

The courts are also getting into the ACA action as well, with two federal courts recently blocking President Trump’s roll back of contraceptive coverage under the law.

The ACA requires many group health plans to provide coverage for certain preventive care services with no cost sharing, including contraception and contraceptive counseling. Under the Obama administration, group health plans of certain religious employers were exempted from the requirement to cover contraceptive services, and certain religious nonprofits could opt out of providing contraceptive coverage directly by sending a form to the plan’s health insurer or third-party administrator.

In October 2017, the Trump administration released two interim final rules that attempted to make it easier for certain employers that cite moral or religious objections to contraception to refuse to provide coverage for some birth control methods. With the two federal court rulings, the Obama-era ACA contraceptive coverage rules remain in place for now.

5. Small Business Health Plans

Finally, to ring in the New Year, on January 4, the U.S. Department of Labor (DOL) announced a Notice of Proposed Rulemaking to expand access to health care through Small Business Health Plans (or Association Health Plans). According to the DOL’s announcement, the proposed rule would allow small employers “to join together as a single group to purchase insurance in the large group market.”

Will the next year provide more of the status quo or are changes on the horizon? XpertHR will continue to track all of the breaking news surrounding the ACA and its impact on employers.

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