Affordable Care Act Mandate Enforcement Continues

From ChamberChoice

Under the Affordable Care Act (ACA) taxpayers are required to maintain what is considered “minimum essential coverage” (MEC) health care for themselves, their spouses and dependents, as applicable. Failure to maintain MEC during any month in the year (with limited exceptions) exposes a taxpayer to a “shared responsibility” penalty. Because the tax penalty has the effect of requiring individuals to have health coverage, this aspect of the ACA is commonly referred to as the “individual mandate.”

Additionally, the ACA requires that an Applicable Large Employer (ALE) offer its full-time employees and dependents minimum essential coverage. That coverage must also provide minimum value and be affordable for the full-time employee. If the employer does not meet this responsibility, and a full-time employee receives subsidized coverage from the Marketplace, then the employer may be assessed a penalty. The amount of the penalty will depend on whether the offer of MEC was met (it must be offered to 95 percent of full-time employees and dependents), and whether the coverage offered was affordable minimum value. This penalty is referred to as the “employer mandate.”

The Internal Revenue Service is the agency that is responsible for the enforcement of both mandates.

Individual Mandate

For individuals who were covered with minimum essential coverage in 2015, coverage providers began providing individuals with a Form 1095-B or 1095-C in 2016. This information was also provided to the IRS as assistance with the administration and enforcement of the individual mandate. These forms are required to be provided every year in January as long as the ACA is in effect.

Taxpayers use the information from a Form 1095-B or 1095-C to indicate on their 1040 tax filing whether they and everyone on their returns had health coverage, were exempt from the health coverage requirement, or are making a penalty payment. In response to President Trump’s executive order telling agencies to exercise authority and discretion to reduce potential burdens under the ACA, the IRS accepted 2017 tax returns, regardless of whether the health coverage information was or was not provided. Thus, the tax filing process may have been delayed, but it was not rejected.

In mid-October, the IRS stated that for the 2018 tax filings, electronic taxpayer returns that do not indicate meeting the ACA health coverage requirements or are not paying the penalty will be rejected. If a taxpayer files a paper return, the IRS provides it could suspend processing of the return and delay any taxpayer refund if the filing omits information addressing the individual shared responsibility.

Employer Mandate
As to the employer mandate, the IRS has confirmed that employers are still subject to the mandate and compliance is expected. There are indications that the IRS will begin mandate enforcement and will begin issuing penalty notices. Take note, “indications” does not mean a confirmed statement from either the IRS or
the Administration.

As a reminder, an ALE’s ACA reporting obligation requires that it must provide its full-time employees a Form 1095-C by Jan. 31 of every year. The employer then files a Form 1094-C with the IRS attaching copies of the 1095-C distributed to employees.

In 2016, the IRS sent letters notifying employers that they may be noncompliant with their ACA reporting obligations. This communication gave employers the opportunity to either file their ACA returns late, or provide further information to the IRS. However, receipt of a letter, or actually not receiving a letter, was not a determination that the employer would, or would not be penalized.

The IRS’ guidance on the collection of information under the individual and employer mandates is a reminder that the Affordable Care Act is still a viable law and requires compliance. The ultimate enforcement
of the ACA mandate provisions by the agency remains to be seen and probably relies on further Administration guidance. In the meantime, employers should continue their ACA compliance strategy in order to avoid possible penalties. If that strategy consisted of not complying with the mandate, then a possible strategy review may need to be considered.

Businesses & Individuals Encouraged to Explore Health Insurance Options During Open Enrollment

Panelists at the recent community health insurance forum included (L-R); Craig Pritts, ChamberChoice; Craig Shively, Geisinger Health Plan; Sandy Darlington, Columbia Montour Area Agency on Aging; and Mark Middlebrook, PA Health Access Network.

As evaluating and selecting health insurance in today’s ever-changing environment is confusing, resources exist to help individuals and businesses choose the best option. At a recent community forum co-sponsored by the Chamber, panelists advised people on the marketplace to reevaluate their coverage. This year’s timeline for making changes is considerably shorter than in previous years, as open enrollment ends Dec. 15.

Recent changes to the Affordable Care Act are significantly impacting health insurance marketplace rates, particularly with silver-level plans, according to the panelists. In some cases, gold-level plans with better benefits can be competitive with silver plans. Group plans have also seen smaller annual increases, compelling small business owners to revisit the overall affordability of having an employer-sponsored plan.

The forum, held Nov. 15 at The Greenly Center, was co-sponsored by the United Way of Columbia and Montour County. Panelists included representatives of Geisinger Health Plan, the Columbia Montour Area Agency on Aging, the PA Health Access Network, and ChamberChoice, the Chamber’s member benefits program. The PA Health Access Network offers the services of free navigators to help individuals register and enroll with the marketplace. ChamberChoice agents can also help individuals select plans and work with members to set up group plans for employers, including health savings accounts and flexible spending accounts. Certified counselors at the Agency on Aging can work with anyone of any age who is eligible for Medicare. Geisinger Health Plan has local representatives to help individuals and businesses understand their options on and off the marketplace.

State Legislation Aims to Reduce Opioid Abuse

Recently, President Trump declared the opioid epidemic a national public health emergency, which is touching all socioeconomic classes. From a legislative perspective, one strategy for addressing the crisis would be to implement a prescription drug formulary in Pennsylvania’s workers’ compensations system, which would streamline medication prescriptions to help patients avoid the overuse that can result in addiction. In doing so, it is also expected to lower rising costs within the workers’ compensation system – as has been proven in other states like Ohio, where the number of opioid prescriptions dropped by 38 percent and the number of opioid-dependent WC patients was reduced by half just three years after their formulary was adopted.

Over 70 chambers from across Pennsylvania, including the Columbia Montour Chamber, are supporting House Bill 18 and Senate Bill 936, which would create a drug formulary. A letter was sent to members of the General Assembly in mid-November. S.B. 936 recently cleared the Senate with bipartisan support and the House is expected to consider the legislation in the few session days remaining this year.

Organizations and individuals are also encouraged to contact their state representative and urge them to support S.B. 936. Tell them that drug formularies are common across other state workers’ compensation systems, private healthcare and public programs like Medicare and the Children’s Health Insurance Program; and have been shown to help address overuse of and addition to prescription drugs among injured workers in the states that adopt these policies.

Federal Tax Reform Bill Approved by U.S. House

From PA Chamber of Business & Industry

Last week, the U.S. House voted mostly along party lines – 227 to 205 – in favor of the “Tax Cuts & Jobs Act” – H.R. 1 – which aims to make significant updates to the Federal Tax Code for the first time in more than 30 years. Every member of Pennsylvania’s GOP Congressional delegation voted in the affirmative on the legislation. The U.S. Chamber is leading the charge in urging Congressional passage of federal tax reforms that would simplify the current, burdensome Tax Code; lower federal tax rates to improve the nation’s ability to compete; allow for the expense of capital investments to help free up a company’s cash flow and move to a territorial tax system, among other changes. All told, H.R. 1 would cut taxes by more than $1.4 trillion over the next decade.

The PA Chamber has joined the U.S. Chamber and more than 100 chambers of commerce nationwide in sending letters to Congress, calling on them to pass the legislation because it would improve America’s competitive edge, help to grow the domestic economy and improve our global standing.

Following the House’s action on H.R. 1, the PA Chamber issued a press release calling on both chambers to act quickly and get a federal tax reform package to President Trump’s desk by the end of the year. Two letters recently sent to Washington, D.C. also communicate the PA Chamber’s support for tax reforms – first, to the state’s congressional delegation urging support for a Main Street lending initiative that will help small business growth; and second, to the Commonwealth’s U.S. Sens. Toomey and Casey urging them to support the Tax Cuts & Jobs Act. The U.S. Senate Finance Committee (on which both Toomey and Casey serve) advanced its own version of a tax reform plan late last week, which could be taken up by the full Senate after the Thanksgiving holiday. Toomey voted ‘yes’ on the Senate bill, while Casey voted in the negative.

“The U.S. House and Senate’s approval of their respective tax bills are critical steps toward the ultimate goal of reforming our federal tax structure,” PA Chamber President Gene Barr stated. “The PA Chamber looks forward to working with our elected officials as the bills move through the legislative process and work begins on a final compromise.”

The Columbia Montour Chamber has not yet taken a position on the House’s tax bill. 

PCORI Fees in Health Insurance Plans to be Increased in 2018

From ChamberChoice

PCORI fees, which are used to fund research on patient-centered outcomes, apply to plan and policy years ending before Oct. 1, 2019. The function gives the fee its name, the Comparative Effectiveness Research Fee (sometimes referred to as “CER fees” or “PCORI assessment”). Insurers pay this fee for a fully-insured plan with the cost being built into the premium. Self-insured plan sponsors are responsible for the payment and filing of the fee.

The amount of the fee is adjusted each year for inflation. On Oct. 6, 2017, the Internal Revenue Service issued IRS Notice 2017-61 providing that the PCORI fee will increase by 13 cents.

Fees and Form
The fee is based on the average covered lives for the applicable 12-month policy or plan year. As a reminder, if an employer’s ERISA plan year is different than their policy year, then the ERISA plan year is used for calculating the fee. CER/PCORI fees are due by July 31, 2018 for 2017 calendar plan years and for plan years ending on or after Oct. 1, 2016 and before September 30, 2017.

• For 2017 calendar plan years, employers must pay a $2.39 per average covered life fee by July 31, 2017.

• For plans ending on or after October 1, 2016 and before Sept. 30, 2017, employers must pay a $2.26 per covered life fee by July 31, 2018.

Plan fees must be paid via IRS Form 720 Quarterly Federal Excise Tax Return annually, a plan sponsor will report and pay the fee on the second quarter Form 720.

Counting Lives
There is a special rule for the PCORI fee when coverage is provided under multiple self-insured health plans:

• Generally, separate fees apply for lives covered by each specified health insurance policy or applicable self-insured health plan.

• However, two or more applicable self-insured health plans may be combined and treated as a single applicable self-insured health plan for purposes of calculating the PCORI fee but only if the plans have:
       o The same plan sponsor; and
       o The same plan year.

For example, if amounts in an HRA may be used to pay deductibles and copays under a fully insured health policy, the HRA (an applicable self-insured health plan) and the policy would be subject to separate PCORI fees.

However, an HRA that may be used to pay deductibles and copays under an applicable self-insured health plan is not subject to a separate fee (and the fee will apply only to the applicable self-insured health plan) if both the HRA and the applicable self-insured health plan have the same plan sponsor and the same plan year.

The PCORI fee is not payable until July 31 of next year. However, as employers budget for the new year, the 13 cents per average covered life increase recently published by the IRS needs to be taken into consideration. JRG will publish a reminder of the fee and additional information as the July 31, 2018 due date nears.