House Votes to Repeal the Cadillac Tax

On July 17, 2019, the U.S. House of Representatives voted across bipartisan lines to repeal the ACA’s Cadillac Tax. The final vote in the House was 419-6 in favor of repeal. The tax was designed as a penalty tax on high-value health coverage, to convince health plan sponsors to reduce benefits and keep costs down by discouraging overly generous plans. However, both employers and union groups opposed the tax.
 
This repeal is good news for plan sponsors but the measure still has to pass the Senate. One of the challenges to Senate passage is that the tax was originally included to help finance the ACA. Repealing the tax without replacing it with some other revenue source arguably leaves a sizable hole in the federal budget. It is estimated by the Congressional Budget Office that repealing the tax will cost the government approximately $196.9 billion over 10 years. 
 
The Cadillac Tax, originally slated to go into effect in 2018, has been delayed by Congress repeatedly. After several delays, the 40% excise tax on the cost of health coverage that exceeds predetermined threshold amounts goes into effect in 2022. Currently, those thresholds, which will be updated prior to 2022, are $10,200 for individual coverage and $27,500 for family coverage.
 
Diversified Group will keep you up to date on any additional action on this topic.
why-diversified-group

IRS Penalties Are Being Issued

capitalThe Internal Revenue Service is finally issuing penalty letters to employers who failed to provide health coverage in compliance with the employer shared responsibility provisions of the ACA for the 2015 tax year. Some letters may describe a no coverage excise tax while others may assess an excise tax for failure to provide “adequate or affordable” coverage. The notices are catching many employers off guard because issuance of these letters was delayed several times.

Those who receive a letter describing the specific violation could be liable for penalties ranging from $2,080 to $3,480 per affected employee, depending on the violation and the plan year involved. Regulatory experts recommend that employers refer to the data submitted on forms 1094-C and 1095-C and respond to the IRS on time, even if they don’t believe the tax is owed.

why-diversified-group

What’s Hot and What’s Not

self-fundingThe new year is a good time to look at the benefits larger companies are using to attract and retain good people. According to their 2017 Employee Benefits report, the Society for Human Resource Management tells us that HSAs, wholesale generic drug programs for injectable drugs, standing desks and genetic testing for chronic diseases are becoming popular. The report shows that 55% of businesses allow those with high deductible health plans to put part of their pay into an HSA tax free. This is up from 42% just a few years ago. 36% of employers now also contribute to workers’ HSAs. The percentage of employers covering genetic testing rose from 12% to 18% in just one year.

“Not so much” would describe dwindling interest in medical FSAs, long-term care insurance, mental health coverage and use of personal or life coaching. In other trends, daily casual dress has become the norm at 44% of surveyed companies and nearly 60% of companies now allow telecommuting.

why-diversified-group

IRS Loosening Enforcement of ObamaCare Mandate

The article below is from The Hill, written by Peter Sullivan

irs

Source: © Greg Nash

The IRS says it will not reject tax forms from people who fail to answer whether they had health insurance, a sign of loosening up on enforcement of ObamaCare’s individual mandate.

Tax forms ask people whether they had health coverage in the previous year to determine whether they need to pay a financial penalty under ObamaCare’s mandate to have coverage.

The IRS cited Trump’s executive order calling on agencies to ease up on ObamaCare regulations.

“The recent executive order directed federal agencies to exercise authority and discretion available to them to reduce potential burden,” the IRS said in a statement to Reason.

“Consistent with that, the IRS has decided to make changes that would continue to allow electronic and paper returns to be accepted for processing in instances where a taxpayer doesn’t indicate their coverage status.”

It is unclear how much of an effect the decision will have. The mandate remains the law, and people are still supposed to pay a penalty for lacking coverage.

Insurers are worried that the Trump administration could ease up on the mandate or create more exemptions to it. The mandate helps bring in healthy enrollees to balance out the sick ones and prevent premiums from spiking.

self-funding-video

How New York’s canceling health coverage for 130,000 workers

Article written by Michael W. Ferguson, as seen in the New York Post

New York’s state legislators are thinking small — literally.

The state’s definition of “small business” expanded Jan. 1, thanks to legislation passed in 2013. Many firms that thought of themselves as medium-size are now legally considered “small.” One consequence: They’re barred from choosing self-insurance — a form of health coverage that allows employers to pay their employees’ medical bills directly.

State legislators must restore this vital health care option for these newly small businesses. If they don’t, firms may have to slash their benefits — or stop offering them altogether.

Firms that offer conventional health insurance pay monthly premiums to insurers to cover medical claims for their employees. Companies that self-insure, by contrast, pay the doctor when an employee goes in for a check-up or an operation.

That can save businesses big money. By one estimate, companies can cut their health care costs by up to 25 percent by self-insuring.

Self-insurance also enables employers to provide higher-quality care. Because they’re not bound to the generic health care options provided by insurers, they can customize coverage for their employees’ unique needs.

Continue reading