By one count (source: The Galen Institute); there have been seventy (70) significant changes, delays, modifications, and partial repeals of the Affordable Care Act (ACA)/Obamacare to date. (For those keeping score at home, 43 have come from the White House; 24 from Congress; and 3 from the Supreme Court.) The challenges for stakeholders lie not only in developing sound, effective compliance strategies, but in keeping up with the various “fits and starts” of the law. In addition, various penalties, fees, taxes, limits, and safe harbors are indexed for inflation, and thus, subject to change on an annual basis. Listed below are some of the more relevant and timely announcements which impact ACA compliance in 2016 and beyond:
· Cadillac Tax Delay – There are a number of taxes created by the ACA, some of which directly impact and apply to health insurance coverage. These include the Comparative Effectiveness Research Fee ($2.17 per covered member, payable in 2016 based on 2015 counts); Transitional Reinsurance Fee ($27 per covered member payable in 2016); the health insurance industry fee/tax (3% – 4% of premium); and lastly the Cadillac tax, originally set to take effect in 2018, but now delayed until 2020. (Note: see separate post addressing how the Cadillac tax works.)
· Employer/Insurer Reporting (IRS Sec. 6055/6066) Deadline Extension – To assist the government in the enforcement of both the ACA’s employer and individual mandates, insurers and employers (generally those with 50 or more part/full-time employees) are required to gather/capture specific data and report to both the IRS, and employees/individuals as follows:
– Forms 1095–B and 1095-C must be provided to affected individuals/employees by March 31, 2016; and
– Forms 1094-B, 1094-C, and duplicate copies of the aforementioned 1095’s must be filed with the IRS by May 31, 2016 (if filing the paper forms); or June 30, 2016 (if filing electronically).
· Employer Mandate/Shared Responsibility penalties indexed – The two (2) employer shared responsibility or “pay or play” penalties were originally set to be $2,000 (i.e., the “pay” penalty, assessed upon affected employers opting not to provide health insurance at all); and $3,000 (i.e., the “play” penalty assessed to employers based on offers of coverage that fail either or both of the i. affordability; or ii. minimum value tests) respectively. For 2016, these penalties have been indexed for inflation:
o Pay penalty – 2016: $2,160 (assessed monthly in the amount of $180/month); 2017: $2,260 (estimated).
o Play penalty – 2016: $3,240 (assessed on a per affected employee basis at $270/mo); 2017: $3,390 (estimated).
· Employer Mandate/Shared Responsibility – affordability W-2 safe harbor indexed – one of the available safe harbor tests of an employer’s health insurance offering is based on employees’ cost of the lowest cost plan option, relative to their previous year’s W-2. Originally, if an employee’s cost of such coverage exceeded 9.5% of their previous year’s W-2, an employer would have employer mandate penalty exposure. For 2015, health insurance cost exceeding 9.56% of an employee’s W-2 income triggered penalty exposure; and now in 2016 the trigger is 9.66% of W-2 income.
· Health insurance industry fee/tax (HIT) moratorium for 2016/2017 – The health insurance industry fee/tax (HIT) is a tax on fully insured health insurance plans, and is assessed as a percentage of premiums payable for such coverage. (Note: self insured benefit plans do not pay this tax.) Currently, affected fully insured plans are assessed between 3% – 4% of annual premium to collect this tax. The Centers for Medicare and Medicaid Services (CMS) recently announced a moratorium on the HIT tax originally due in 2017 based on 2016 data, and calculated the anticipated amount of this revenue at $13.9 billion. The absence of this tax should theoretically lower the cost of fully insured health insurance coverage in 2017.
· 2016/2017 health insurance out of pocket limits – the ACA places caps, or limits, on health insurance out of pocket maximums (i.e., the total of a plans in-network/PPO: copays, deductibles, and coinsurance.) The limits for 2016 and 2017 are.
o Single Coverage – $6,850 (2016); $7,150 (2017)
o Single + dependent(s) Coverage – $13,700 (2016); $14,300 (2017)