This checklist is designed to help companies review the key reporting and notice requirements that may apply to their employer-sponsored group health plans under ERISA (the Employee Retirement Income Security Act). Please note that this list is for general reference purposes only and is not all-inclusive.
On December 14th, the U.S. District Court for the Fifth Circuit in Texas ruled the Affordable Care Act (ACA) unconstitutional in light of the Tax Cuts and Jobs Act of 2017 which eliminated the tax penalty under the individual mandate. The district court sided with 20 Republican state attorneys general that argued since the individual mandate was eliminated, the entire law was invalidated. The ruling went further and also ruled that all of the consumer protections under the ACA were tied to the individual mandate and they were also unconstitutional. These include the prohibition against insurers charging patients more for pre-existing conditions, allowing children to stay on their parent’s plans until age 26, and removal of caps on coverage.
The judge in the case did not rule the law has to be enjoined immediately, however, it is unclear when the ruling would take effect. Sixteen Democratic state attorneys general and the District of Columbia filed a motion asking the court to clarify the impact of the ruling and confirm that the ACA “is still the law of the land.” Additionally, a series of appeals will most likely keep the ruling from being enacted anytime in the near future… thus:
- People can still enroll in ACA health plans in states with extended deadlines (without an extension, exchange enrollment ended on December 14th.);
- There is no impact on 2019 plans that people may have recently enrolled in. Immediately following the ruling, Seema Verma, Administrator of the Centers for Medicare & Medicaid Services, stated the ruling “has no impact on current coverage or coverage in a 2019 plan;”
- Employers still face IRS deadlines to file forms 1095-B and 1095-C. (1095-B and 1095-C forms must be delivered to individuals by March 4, 2019. The 1094 and 1095 B & C forms must be filed with the IRS by February 28th if filing paper and April 1st if filing electronically);
- The Employer Mandate is still in force, penalties have been and will continue to be assessed for failure to file these returns;
- With the Employer Mandate still in force, Applicable Large Employers (ALEs) should continue to follow the Employer Shared Responsibility Rules (ESR) to avoid a penalty. This means offering a plan that meets minimum value and affordability to at least 95% of your full time employees (defined as those working at least 30 or more hours per week).
The case will most likely make its way to the U.S. Fifth Circuit Court of Appeals and then to the U.S. Supreme Court before any definitive action can be considered.
The Patient-Centered Outcomes Research Trust Fund fee is a fee on issuers of health insurance policies and plan sponsors of self-insured health plans that helps to fund the Patient-Centered Outcomes Research Institute (PCORI), which was established by the Affordable Care Act (ACA). The institute assists, through research, patients, clinicians, purchasers and policy-makers, in making health decisions by advancing the quality of evidence-based medicine. The institute compiles and distributes comparative clinical effectiveness research findings. Under the ACA, all medical plans are responsible for paying the Patient-Centered Outcomes Research fee to the IRS, based on the number of plan participants. If the plan is fully-insured, the insurance carrier pays the fee on behalf of the policyholder. If the plan is self-insured, the employer/plan sponsor must file the Form 720 for the second quarter and pay the fee to the IRS directly.
The IRS recently published its PCOR fee for policy and plan years ending: January through September 2018 the applicable dollar amount is $2.39, which is multiplied by the number of covered lives determined for the appropriate period. For policy and plan years ending October through December 2018, the applicable dollar amount is $2.45.
All self-insured medical plans, including health FSAs and HRAs must pay the fee unless they are considered an excepted-benefit:
- A health FSA is an excepted-benefit as long as the employer does not contribute more than $500/year to the accounts and offers another medical plan with non-excepted benefits.
- An HRA is an excepted-benefit if it only reimburses for excepted-benefits (e.g., limited-scope dental and vision expenses or long-term care coverage) and is not integrated with the group medical plan.
The PCORI fee is calculated off the average number of lives covered during the policy year. That means that all parties enrolled will have to be accounted for such as dependents, spouses, retirees, and COBRA beneficiaries. For HRA and health FSA plans, just count each participating employee as a covered life.
Payment of the PCOR fee for the calendar 2018 plan year — the last year the fee applies — will be due by July 31, 2019 (payments may extend into 2020 for non-calendar-year plans).
Clients who have elected to have Diversified Group assist with the PCOR fee calculation can expect an email in June 2019, which will include a copy of the completed Form 720 and a PCOR calculation worksheet with supporting documentation. Clients will need to file the Form 720 by July 31, 2019.
The Health Insurance Responsibility Disclosure (HIRD) form is a new state reporting requirement in Massachusetts beginning in 2018. This form differs from the original HIRD form that was passed into law in 2006 and repealed in 2014. The 2018 form is administered by MassHealth and the Department of Revenue (DOR) through the MassTaxConnect (MTC) web portal. The HIRD form is intended to assist MassHealth in identifying its members with access to employer sponsored health insurance who may be eligible for the MassHealth Premium Assistance Program. The HIRD form is required annually beginning in 2018. The reporting period opens on November 1 and must be completed by November 30 of the filing year.
Any employers with six or more employees in Massachusetts in any month during the past 12 months preceding the due date of the form (November 30th of the reporting year) are required to annually submit a HIRD form. An individual is considered to be an employee if they were included on the employer’s quarterly wage report to the Department of Unemployment Assistance (DUA) during the past 12 months. This includes all employment categories, full-time and part-time.
The HIRD form is reported through MassTaxConnect (MTC) web portal (https://mtc.dor.state.ma.us/mtc/_/#1). The MTC is where employer-taxpayers register to file returns, forms and make tax payments. To file your HIRD form, login to your MTC withholding account and select the “file health insurance responsibility disclosure” hyperlink. If you do not have a MTC account or you forgot your password or username, follow the prompts on the site or call the DOR at 614-466-3940.
INFORMATION REQUIRED FOR HIRD REPORTING
The HIRD Form will collect information about the employer’s insurance offerings, including:
- Plan Information – plan year, renewal date.
- Summary of benefits for all available health plans – information regarding in and out of network deductibles and out-of-pocket maximums can be found on the plan’s summary of benefits and coverage.
- Eligibility criteria for insurance offerings – minimum probationary periods and hours worked per week to be eligible for coverage. Employment based categories, such as full-time, part-time, hourly, salaried.
- Total monthly premiums of all available health plans
- Employer and employee shares of monthly premiums – information on employer and employee monthly contributions toward the cost of medical. Employer cost of coverage is your COBRA rate less 2% and less the employee contribution.
Due to the nature of the filing online, employers with employees in Massachusetts will need to complete this reporting themselves. However, Diversified Group may be able to assist you in the gathering of the required information. Please contact us by November 15th if you need assistance with accumulating data.
Section 1332 of the Affordable Care Act (ACA) permits a state to apply for a State Innovation Waiver to pursue innovative strategies for providing their residents with access to high quality, affordable health insurance while retaining the basic protections of the ACA. Recently several states have applied for waivers and have been approved. Among these is the State of Maine, which sought to reestablish the Maine Guaranteed Access Reinsurance Association – MGARA (originally established in 2012 but later suspended in light of the ACA’s transitional reinsurance program which expired in 2016). Maine’s Section 1332 waiver to reestablish MGARA was approved by the Department of Health and Human Services earlier this year. MGARA is a state instituted reinsurance program that automatically cedes high-risk enrollees with one of eight conditions (including various types of cancer, congestive heart failure, HIV and rheumatoid arthritis) and voluntary cedes other high-risk enrollees to the pool in an attempt to help stabilize individual medical premiums by about 9 percent each year beginning in 2019. The program is slated to initially run from January, 2019 through December, 2023. The Governor’s Office pushed to get the program up and running by January, 2019 in an attempt to substantially lower premiums in the individual market.
One of the funding sources supporting MGARA’s operations is a quarterly assessment due from each insured and self-insured plan that writes or otherwise provides medical insurance in Maine (other than federal or state government plans) beginning in 2019 at $4.00 per month for each covered person enrolled under each such policy or plan. Only federal and state employees are exempt from the assessment. The 2019 Quarterly Assessment will apply to policies and plans initiated or renewed on or after January 1, 2019, with the first assessment due on May 15, 2019, and 45 days from the end of each calendar quarter thereafter. Self-funded plans using a Third Party Administrator (TPA) will be assessed and reported through their TPA similar to other state assessments.
Diversified Group will collect and report the MGARA on behalf of our self-insured clients who have members residing in Maine.
In March, due to the new inflation-adjustment calculations required under the Tax Cuts and Jobs Bill Act, the IRS announced in revenue ruling 2018-27 that the previously released (in May 2017) $6,900 family contribution limit would be reduced to $6,850. Since excess contributions are subject to a 6% excise tax, many employers and individuals who front-loaded their HSA contributions in January were now looking at a penalty for overfunding their HSA for 2018, as well as income tax due on the excess. The IRS received enough complaints from stakeholders asserting that implementing the $50 reduction to the limitation would impose numerous unanticipated administrative and financial burdens that they have actually reversed their decision and will go back to the $6,900 family contribution limit for 2018. The revised inflation-adjustment calculation established under the Tax bill has been put on hold until 2019.
All the talk about repeal and replace seems to have lulled many plan sponsors into a false sense of security, thinking that ACA regulations weren’t going to be enforced. Unfortunately, the IRS is preparing to begin penalizing non-compliant plans, which is why we continue to encourage our clients to keep their eye on the ball even though it is easier to follow the media frenzy coming from Capitol Hill.