Information Regarding the Affordable Care Act
For Employers Participating in HealthChoice
As of November 2014
EGID provides the following information for those employers who participate in HealthChoice and have questions related to how health reform under the Affordable Care Act (ACA) impacts the plan and participants. Employer circumstances vary, and for specific issues an employer should seek the advice of legal counsel.
Guidance continues to be issued by federal agencies on various aspects of ACA. This notice will be updated periodically as further information becomes available.
Reporting Requirements for Employers and Insurers
Under the Affordable Care Act (ACA), certain insurance information has to be communicated to employees and to the IRS.
Reporting is optional for calendar year 2014 (reported in 2015); however, it is required for calendar year 2015 (reported in 2016).
Employers and insurers have separate required reporting responsibilities as outlined below:
- Under Internal Revenue Code (IRC) Section 6056, certain employers are required to submit reports on forms 1094-C and 1095-C. Details about who must file Section 6056 reports and when they must be filed can be found by following the link provided under item number 4 below.
- Under IRC Section 6055, insurers must submit reports on forms 1094-B and 1095-B. Under the Oklahoma Employees Group Insurance Program, the insurers are HealthChoice, GlobalHealth and CommunityCare. The 1095-B forms must be issued to covered members by Jan. 31, 2016, and to the IRS electronically no later than March 31, 2016.
Draft instructions for reporting were issued by the IRS on Aug. 28, 2014. These instructions left several questions unanswered, and the IRS has not yet released Publication 5165, “Affordable Care Act Information Returns (AIR) Guide for Software Developers and Transmitters.” Existing online guidance includes draft forms, draft form instructions, Frequently Asked Questions (FAQs), and final regulations.
For employer reporting requirements, guidance currently includes:
- IRS Draft Instructions: http://www.irs.gov/pub/irs-dft/i109495c--dft.pdf
- IRS Draft Form 1094-C: http://www.irs.gov/pub/irs-dft/f1094c--dft.pdf
- IRS Draft Form 1095-C: http://www.irs.gov/pub/irs-dft/f1095c--dft.pdf
- IRS FAQs: http://www.irs.gov/uac/Questions-and-Answers-on-Reporting-of-Offers-of-Health-Insurance-Coverage-by-Employers-Section-6056
- IRS Regulations (final): https://www.federalregister.gov/articles/2014/03/10/2014-05050/information-reporting-by-applicable-large-employers-on-health-insurance-coverage-offered-under
Employers should pay particular attention to this guidance in order to meet their responsibilities.
The following information is the equivalent guidance for filings that must be done by insurers:
- IRS Draft Instructions: http://www.irs.gov/pub/irs-dft/i109495b--dft.pdf
- IRS Draft Form 1094-B: http://www.irs.gov/pub/irs-dft/f1094b--dft.pdf
- IRS Draft Form 1095-B: http://www.irs.gov/pub/irs-dft/f1095b--dft.pdf
- IRS FAQs: http://www.irs.gov/uac/Questions-and-Answers-on-Information-Reporting-by-Health-Coverage-Providers-Section-6055
- IRS Regulations (final): https://www.federalregister.gov/articles/2014/03/10/2014-05051/information-reporting-of-minimum-essential-coverage
Please be aware that some draft documents have been updated multiple times since their original appearance. It is necessary to periodically revisit the sites until such time as the forms and instructions are issued in final form.
Based on existing guidance, HealthChoice intends to fulfill required responsibilities as outlined below. Keep in mind, the following information should be regarded as preliminary and subject to change based on future IRS clarifications, instructions and regulations.
- As the plans offered to employers are fully insured coverage and not self-insured coverage under the reporting guidance, the health insurance carriers are responsible for reporting under Section 6055 (refer to the link in item 9 on page 1, FAQ 5). This means HealthChoice or the HMOs are responsible for the preparation and mailing of 1094-Bs/1095-Bs as appropriate to the IRS and to individuals insured under this program (refer to the link in item 9 on page 1, FAQ 21). Failure by the insurers to provide this information may lead to penalties against the insurer in future years (refer to the link under item 9 on page 1, FAQ 29). This does NOT relieve employers of the responsibility to produce required reporting under Section 6056 using forms 1094-C and 1095-C. Employers remain responsible for this reporting and for any penalties for failure to perform such reporting (refer to the link under item 4 on page 1, FAQ 3).
- HealthChoice does not intend to issue 1095-Bs for calendar year 2014. HealthChoice intends to issue 1095-Bs in January 2016 for individuals covered by HealthChoice during calendar year 2015.
- As HealthChoice and the HMOs will issue 1094-B/1095-B reports for insured individuals, employers in the program will not need to report dependent information on 1095-C forms (see the Federal Register, March 10, 2014, pp. 13236-7). Therefore, the Employees Group Insurance Division (EGID) does not anticipate the need to provide detailed dependent information back to employers in order for employers to complete 1095-C reporting.
- EGID will not enter into written agreements with education and local government employers to perform any reporting requirements other than 1094-B/1095-B reports.
The above items A, B, C and D represent EGID’s current intent for handling required reporting under 6055/6056, based on existing guidance and circumstances. Please note that EGID does not offer legal or tax advice to employers. Each employer should consult with its own lawyers and consultants on its specific issues.
Questions regarding the above process should be submitted in writing to your Group Management Specialist.
Transitional Reinsurance Fee
HealthChoice is responsible for reporting and paying the Transitional Reinsurance Fee for all persons covered by HealthChoice.
The “Individual Mandate” takes effect in 2014 and requires U.S. citizens to have minimum essential coverage through a private market, employer, or government plan. However, there are numerous exemptions from this requirement. Information on exemptions and penalties is found at: https://www.healthcare.gov/exemptions/
Dependent Eligibility to Age 26
ACA provides that for plan years beginning after September 23, 2010, dependents who are sons, daughters, stepchildren, adopted children and foster children can be covered to age 26, regardless of marital status, employment, student status, residency or financial dependency upon the plan member. Effective January 1, 2011, HealthChoice offered coverage to these dependents as described above. Members may cover other unmarried children up to age 26, if the child lives with the employee in a parent-child relationship and the employee is primarily responsible for the child’s support.
W-2 Reporting of Employer-Provided Health Benefits
The value of employer-provided health benefits must be reported on employees’ W-2s. The W-2 reporting is for informational purposes only so that employees understand the value of the health care benefits provided.
Information from the IRS regarding the reporting requirement may be found at:
Section 125 Plans
ACA made changes to the flexible spending account rules. Employers should contact their Section 125 plan administrators for details on these changes.
Beginning October 1, 2013 and thereafter, employers must provide a written notice to each employee and every new employee that describes the new Marketplace (formerly known as Health Insurance Exchanges). A “Frequently Asked Question” available on the Department of Labor’s website at http://www.dol.gov/ebsa/faqs/faq-noticeofcoverageoptions.html providers links to both a technical bulletin (No. 2013-02) and to a model notice for employers who offer a health plan. The technical bulletin provides more detailed instructions on the timing of the required notices and the method of delivery.
“Pay or Play”
Provisions of the Affordable Care Act include what is known as either the “employer mandate provision” or “pay or play”. Beginning in 2014, employers with an average of 50 employees or more during the preceding calendar were to offer minimum essential coverage to full-time employees, or face fines. However, two separate delays to this timeline have been announced by the government. As of March 2014, the “pay or play” provisions are not to take effect until 2015. Employers with 50 to 99 employees who satisfy certain requirements will not be required to comply until 2016. The rules regarding this process are complex and are influenced by several factors, including the types of employee contracts involved, hours worked, etc. Employers should work with their legal counsel to be sure that they understand the requirements and how they apply to each employer’s specific circumstances. The final regulations issued on February 12, 2014 are available on the Federal Register website at: http://www.gpo.gov/fdsys/pkg/FR-2014-02-12/pdf/2014-03082.pdf.
Automatic Enrollment by Large Employers
ACA provides that employers with more than 200 employees and a health benefit plan must automatically enroll all current employees and new employees into the plan. Automatic enrollees must be allowed an opportunity to opt out of the plan. The Department of Labor (which has responsibility for creating the regulations governing this change) has concluded that its automatic enrollment guidance will not be ready to take effect by 2014. It remains the Department of Labor’s view that, until final regulations under Fair Labor Standards Act (FLSA) section 18A are issued and become applicable, employers are not required to comply with the ACA required enrollment. However, employers may be subject to other existing laws or guidelines which require 100% enrollment.
In plan years beginning on or after January 1, 2014, a group health plan or group health insurance issuer shall not apply any waiting period that exceeds 90 days. A waiting period is defined to be the period that must pass with respect to the individual before the individual is eligible to be covered for benefits under the terms of the plan. HealthChoice’s waiting period is significantly less than that time period; however, employers will need to be sure that they are not imposing any additional waiting periods that exceed the 90 day limit.
Beginning in 2016, employers must submit information to the Secretary of the US DHHS about health insurance plans and employee enrollment, including certifications regarding full time employees being offered health care coverage, the length of the waiting period, premiums charged and the employer share of cost. Reports in 2016 will be for coverage provided in 2015. Under IRS Notice 2013-45, employers were encouraged to voluntarily comply with the reporting requirements for 2014, but compliance for 2014 was optional and no penalties would apply for that year. Final regulations on reporting were published in the Federal Register on March 10, 2014 and may be found at https://www.federalregister.gov/.
Grandfather Status: HealthChoice maintained “grandfather status” (GFS) during 2011, but as of January 1, 2012, is no longer a GFS plan.
Early Retiree Reinsurance Program (ERRP): HealthChoice was certified for participation in the Early Retiree Reinsurance Program (ERRP). ERRP was a program established under the Affordable Care Act whereby the Federal government reimburses a plan sponsor of an employment-based health plan for some of the costs of health care benefits paid on behalf of, or by, early retirees and certain family members of early retirees participating in the employment-based plan. CMS announced that due to the depletion of the program funding, they would no longer accept applications for program funds after May 5, 2011. HealthChoice used reimbursements it received from this program to reduce or offset future increases in plan participants’ premiums. Under federal guidelines, all ERRP funds must be used by December 31, 2014. Plans receiving money from the ERRP are required to send notices to plan participants regarding the receipt and use of these reimbursements. The full notice may be found here.