Employers and other health plan sponsors may be focused on preparing for the commencement of the employer mandate under the Affordable Care Act on January 1, 2015, but a number of other deadlines and developments are emerging this autumn for plan sponsors to consider.
Health Plan IDs. As we reported earlier, many health plans are required to apply for and obtain a health plan ID by November 5, 2014. Despite calls for a delay in the deadline, recent guidance from the Centers for Medicare and Medicaid Services (CMS) continues to hold to this date for health plans with more than $5 million in receipts. That guidance does address certain issues that have concerned health plan sponsors. For example, the FAQs clarify that:
- Employer-sponsored health plans that are fully insured may obtain a health plan ID, but are not required to do so. The insurer must obtain the ID.
- Health flexible spending arrangements and health savings accounts do not need to obtain an ID.
- Certain health reimbursement accounts (HRAs) are also exempt from this requirement.
With the deadline less than a month away, plan sponsors should be preparing to apply for health plan IDs. The process is not at all streamlined, and plan sponsors should allow several weeks to account for difficulties and delays.
Reporting Requirements. The IRS has issued certain new forms for reporting on compliance with individual and employer (form 1095-C and 1094-C) mandates. These forms have been modified very modestly from prior drafts.
Regarding the reporting requirements that relate to the individual mandate, employers will be asked to provide Social Security numbers (called the Taxpayer Identification Number or TIN) not only for employees, but also for their dependents. Employees are sometimes reluctant to provide employers with a dependent’s TIN. In those cases, employers will be allowed to provide the dependent’s birth date instead, but only if they have made reasonable efforts to obtain the TIN.
In explaining this requirement, the IRS has stated that an employer will be deemed to have made a reasonable effort if it solicits the employee for the information at least three times (in 2014, 2015, and 2016). Employers may consider using annual enrollment or other convenient occasions to request this information.
Patient Centered Outcomes Research Institute (PCORI) Fees. The IRS has announced that the PCORI fee for plan and policy years beginning on or after October 1, 2014, and ending before October 1, 2015, has been increased from $2.00 to $2.08.
Mid-year Cafeteria Plan Changes Expanded. An IRS Notice expands the list of events that allow employees to make mid-year changes in health coverage. Employees may now terminate health coverage offered under a cafeteria plan after the year has begun in certain circumstances where:
- The employee’s hours are reduced from above 30 hours per week to below 30 hours per week, if the employee intends to enroll promptly for minimum essential coverage elsewhere; or
- The employee becomes eligible for coverage under a Health Insurance Exchange (often referred to as a Marketplace) during an annual or special enrollment period for the Marketplace, if the employee intends to enroll for such coverage immediately after the employer-sponsored coverage terminates.
An employer that wishes to introduce these mid-year changes before the end of 2014 must amend its cafeteria plan document to include them before the end of 2015.
Changing the Look-Back Measurement Period. One recent development affecting the employer mandate will be of interest to employers using the look-back method of determining whether employees work full-time. The IRS has announced how to address situations where an employer changes the duration or start date of a measurement period or where an employee subject to one measurement period transfers to a new position that subjects him or her to a different measurement period. In general, the status of an employee who has entered a stability period will not be changed until that period expires.
As the federal health care reform effort gained steam, Ballard Spahr attorneys established the Health Care Reform Initiative to monitor and analyze legislative developments. With federal health care reform now a reality, our attorneys are assisting health care entities and employers in understanding the relevant changes and planning for the future. They also have launched the Health Care Reform Dashboard, an online resource center for news and analysis on developments under the Affordable Care Act.
If you have questions about health plan ID requirements or other end-of-year health plan considerations, please contact Brian M. Pinheiro at 215.864.8511 or firstname.lastname@example.org, Jean C. Hemphill at 215.864.8539 or email@example.com, Diane A. Thompson at 424.204.4334 or firstname.lastname@example.org, Edward I. Leeds at 215.864.8419 or email@example.com, or any other member of the Employee Benefits and Executive Compensation Group with whom you work.