By Zach Pace
Commentary: As you’ve no doubt noticed, the federal government made sweeping legislative and regulatory changes to the Affordable Care Act during the fourth quarter of 2015. During the last two weeks of December, I felt like I was drinking from a six-inch fire hose. How about you?
For 2016 planning purposes, I began making a list of the key items that have been repealed or delayed and those that we should continue to keep a keen eye on. With this list now complete, I thought I’d share.
1. Free-choice vouchers. Remember those? They were repealed back in 2011.
2. Form 1099 reporting. Remember how much added administrative work this provision would have created?
3. The $2,000-deductible ceiling. This provision coupled with Repealed Provision No. 5 (below) was scheduled to create a perfect storm this year for employers with 51 to 100 employees.
4. The automatic enrollment mandate. Reportedly, our elected representatives pressed for this provision’s repeal not because of its administrative infeasibility but because of the projected loss in tax revenue from increased salary reductions via Section 125 plans. Seriously.
5. The mandatory expansion of small group to 100 employees. I wish I had a quarter from everyone that joked, “Hey, Zack – they named an ACA after you!” How thrilling.
1. ACA nondiscrimination requirements. While these TBD rules were delayed indefinitely some time ago, some insiders expect finalization relatively soon. Sections 125 and 105(h) nondiscrimination rules remain alive and well.
2. The Cadillac tax. This excise tax is delayed until 2020. Per industry insiders, it seems awfully likely that this tax will be repealed before then. We’ll see. For those employers that began a multiple-year incremental mitigation strategy (aka glide path), they’ll need to decide if that strategy ought to be put in moth balls for a couple of years. Keep in mind that many employers can likely keep this excise tax at bay until 2022 by simply ending the flexible spending account, making health savings account contributions post-tax and eliminating their richest medical plan. 2022 is six years from now. Who knows where we’ll be by then. When it comes to increased taxation on employer- sponsored health plans, the more immediate concern, apparently, is that Section 125 becomes a bargaining chip during the budget negotiations next year between Congress and the new administration.
Lingering provisions of keen importance
1. Annually determining large-employer status. To determine status for 2016, ask your accountant to run Treasury’s formula to determine how many full-time employees plus full-time equivalents your firm averaged in the previous calendar year. Employers with 50 or more are generally subject to shared responsibility. Employers in most states with 51 or more are generally not subject to the fair health insurance premium rules (only fully insured plans are subject to these latter rules). Can anyone explain to me why they didn’t simply select 50 or 51 for both definitions?
2. Employer shared responsibility. Didn’t we make this topic a little more complicated than it needed to be? It turns out that it’s relatively easy to eliminate this penalty risk by offering to all employees that work 30 hours or more a week a low-cost plan (relatively speaking) that meets minimum value and that has an employee contribution rate for single coverage that meets the federal poverty-level safe harbor (i.e., less than around $93 per month). We can offer this “ACA easy button” plan, continue offering the normative health plans employees prefer and call it a day. Of course, for those employers with seasonal and/or variable-hour employees, tracking complications remain.
3. Eliminating opt-out credits. Under pending regulations, employers that offer cash to those employees that waive the health plan will find it harder to satisfy the affordability requirements of employer shared responsibility. See No. 5 in the below further reading list for more detail.
4. ACA reporting. Also known as Form 1095-C/1094-C reporting. The topic du jour.
5. The market reform rules. For example: elimination of pre-existing condition limitations, age 26 expansion, out-of-pocket limit ceiling, 100% coverage for preventive services (grandfathered plans are exempt from these latter three). If your health plan is fully insured, the insurer should have made these changes. If your plan is self-funded, the TPA should have. Either way, double-check.
6. Ensuring that administrative practices adopted are congruent with policies, handbooks, plan documents, summary plan descriptions, insurance contracts and Section 125 plans. Our health-plan documents, and not the ACA, continue to govern the eligibility terms of our health plans. If you’ve made ACA-related changes, now’s a great time to double-check that your documents reflect those changes.
Are there additional items on your 2016 list that you’d care to share? Please let us know via the below comment section or via Twitter: @zpace_benefits. Happy New Year, everyone.
Zack Pace is a senior vice president, benefits consulting at CBIZ, Inc. He can be reached at ZPace@cbiz.com. Follow him on Twitter at @zpace_benefitsand LinkedIn. His past EBN essays are available here.