2015 ACA Compliance and Planning

As we approach the 5th anniversary of the signing of the Affordable Care Act (ACA) into law, compliance and planning have become more important than ever.  Listed below are ACA provisions that have particular relevance this year, and deserve attention and planning…

• The Individual Mandate went into effect in 2014, with a penalty of $95 or 1% of income (the greater of the two) for non-compliance.  As citizens prepare/file their tax returns in early 2015, they will notice new questions relating to health insurance and the individual mandate. This year (2015) the fines increase to $325/2% of income; and next year (2016), the fines increase to $695/3%.  Individuals/Employees need to be made aware of this mandate, the exposure for non-compliance, and their various options to access qualifying coverage.  (Note: the Kaiser Family Foundation’s polling has found 40% of Americans are unaware the ACA is law!)

• The Employer Mandate/Shared Responsibility went into effect this year (2015) affecting employers with 100 or more full time/full time equivalent employees; and affects employers with 50 or more FT/FTE’s next year (2016).  Understanding and planning for this aspect of the ACA is absolutely critical. The penalties are significant, but can be avoided without necessarily incurring additional expenses, reducing hours or positions.  Click here for an overview of this provision – Understanding Employer Shared Responsibility.

• Employer reporting/statements – one of the more onerous, time consuming, and expensive aspects of the ACA is the associated employer reporting, which takes effect in early 2016 based on information gathered/monitored in 2015.  Data elements that have not traditionally been tracked/reported will now be required by the federal government, and individual statements to employees will also be required. See https://smstevensandassociates.com/ResourceLibrary/TabId/192/ArtMID/864/ArticleID/99/aca-employer-reporting-requirements.aspx and https://smstevensandassociates.com/ResourceLibrary/TabId/192/ArtMID/864/ArticleID/80/aca-employer-reportingcontinued.aspx for more information addressing employer reporting requirements.

• Out of pocket maximum – for 2015, a health insurance plan’s out of pocket maximum (i.e., the total of copays, deductible, and coinsurance) increased to $6,600 (individual); $13,200 (family), from $6,350/$12,700 in 2014.  These limits affect ALL health insurance plans, regardless of the size of an employer group, or how/if a plan is fully insured or self funded.

• Grandfather Status – as plans lose grandfather protection in 2015, they must begin implementing aspects of the ACA that heretofore have not been an issue.  The most significant changes relate to the ability to require copays for preventive care, and applying copays and deductibles toward the plans out of pocket maximum (see above). 
• Grandmother Status –  similar to the loss of “grandfather” status, the loss of grandmother status in 2015 (fully insured groups of 2-50 and individual policyholders) will impact benefits and premium costs.  Grandmother status was the term coined to describe plans that were able to benefit from the two separate announced delays in ACA compliance.  See https://smstevensandassociates.com/ResourceLibrary/TabId/192/ArtMID/864/ArticleID/92/understanding-the-two-separate-aca-delays.aspx for more information on ACA compliance delays. 

• • Waiting periods – for plan years beginning on or after 1/1/14, the waiting period for health insurance coverage applicable to new hires cannot exceed 90 days.  This means that any waiting period defined as “1^st of the month following 90 days (or greater)” is out of compliance. 
  • Fees/Taxes/Impact – employers, employees, and individuals (i.e., those not eligible for employer provided health insurance) need to be aware/reminded of the ACA related fees and taxes, and the direct effect on premium cost, and the impact on Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs): 

– Comparative Effectiveness Research Fee (CERF) – $2.08 per member for 2015

– Health Insurance Sector Tax – 2% – 3% of premium (n/a to partially self funded plans)

– Transitional Reinsurance Fee – $44 per member for 2015

– FSA limit on allocations for un-reimbursed medical/dental/vision expenses ($2,550 for 2015)

– HSA – penalty for non-qualified distribution was increased to 20% in 20111

– HSA/FSA – not allowed to used funds from these tax preferred accounts to pay for non-prescription, over the counter medicine, effective in 2011

• Cadillac Tax – although not effective until 2018, employers offering coverage need to start planning for its impact.  A 40% excise tax is imposed on affected employers.  See https://smstevensandassociates.com/ResourceLibrary/TabId/192/ArtMID/864/ArticleID/100/acas-cadillac-tax.aspx for more information on the ACA’s cadillac tax.

There are a number of strategies, options, and tactics to minimize, and in some
cases, avoid ACA related fines, penalties, and overall compliance.  Employers are encouraged to work with their Trusted Advisers to address the ACA’s impact on their organizations; and importantly, to engage and educate employees on what it all means to them!

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