Employer reporting requirements and information on Forms 1095 and 1094

On July 30, the Department of the Treasury and the Internal Revenue Service (IRS) issued a second notice regarding the 40% Excise Tax a.k.a. the Cadillac Tax. The notice provides information on possible approaches that are being considered for administering the Cadillac Tax and continues the process of gathering input that will be used to develop regulations.

This is a follow-up to the notice issued on February 23, 2015, and comments may be submitted until October 1, 2015.

The notice addresses several issues, including:

• Who pays the tax
• How the tax will be determined
• How the tax will be paid

Who Pays the Tax

Each “coverage provider” must pay the tax on its share of the excess benefit. A coverage provider is:

• The health insurer for insured coverage.
• The employer for accounts such as Health Savings Accounts (HSAs) to which the employer contributes.
• The plan benefits administrator – the agencies are seeking comments on whether this should be the third-party administrator or the entity that has ultimate responsibility for plan administration, typically the employer.

How the Tax will be Determined

The notice seeks comments on how to calculate and administer the tax. The following are some of the proposed approaches:

The Supreme Court released their ruling on King v. Burwell today. The vote was 6-3 in favor of upholding health premium subsidies in all States, including States that have a Health Plan Exchange run by the Federal Government.

Now that the decision is made, we will most likely see action in Congress to clean up parts of the Affordable Care Act.

Here is a link to the Supreme Court’s Opinion: http://www.supremecourt.gov/opinions/14pdf/14-114_qol1.pdf

The proposed rules on use of financial incentives within workplace wellness programs were published by the Equal Employment Opportunity Commission (EEOC) on April 16, 2015.   These rules align the wellness provisions of the Affordable Care Act (ACA) and the Health Insurance Portability and Accountability Act (HIPAA) with the nondiscrimination rules in the Americans with Disabilities Act (ADA).

As employer groups with 51-100 employees renew or purchase health insurance coverage in 2016, they must abide by the rules and regulations governing the small group market, including those related to benefit coverage and essential health benefits; actuarial value, and premium rating restrictions, such as adjusted community rating and no medical underwriting.

The small group rules apply to fully insured plans, including those purchased in the Small Business Health Options Program (SHOP) marketplace.

In some markets, the state and insurance carriers may give employers the option to keep their plan for a while longer by:

• Changing their plan year to maximize the time the employer can keep their plan in 2016.
• Taking advantage of transitional relief, which allows employers in some states to keep their current plans through Sept. 30, 2017.

Employers that self-insure (self-funded) are not subject to these requirements.

Options and requirements vary by state, issuer and segment. For more information, please contact us for a consultation at 832-482-2494 or via email through the “contact us” page on our website.