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Mercer

Last night’s vote was about change, but what will Donald Trump’s presidency mean for healthcare benefits?  The ACA will almost certainly change, although it is unclear if we will see full repeal or a major overhaul.  With that said, Republicans won’t want to risk the backlash of kicking 25 million constituents off their plans. The task at hand is to “fix” the parts of the ACA that are ineffective.  At this point, here’s what we think we know:

 

  • The popular features of the ACA will likely remain, such as expanded eligibility for dependent children to age 26; the ban on pre-existing condition limits; and the closed gap in Medicare prescription coverage
  • Repeal of the excise tax could become a reality -- but would a cap on the employee tax exclusion take its place?
  • We’ll see a laser focus on how to create new, competitive markets for individuals who don’t get coverage through their employer or public programs, with Trump favoring individual tax preferences
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The good news is that employer ACA reporting was delayed for 2014. The bad news is that your employees may be prompted for the new Form 1095 when they file their taxes for 2014. The Form 1040 will prompt filers to indicate whether they had health care coverage in 2014. While a recent press release from the Departments of Treasury and HHS states that, for many with employer-sponsored health insurance, indicating coverage status will be as easy as "checking the box,"  what makes it more complicated is the taxpayer documentation required in order to "check the box" and/or have on file in the event of an audit later.

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Everyone is shifting into planning mode this month, thinking about open enrollment for 2016 benefits. Whether you are making major benefit plan changes, going out to bid for services, or keeping things status quo, here’s what you need to keep in mind relative to the ACA.

 

Reporting requirements. If you have not yet established processes for ACA reporting for 2015, you are not alone. Many employers are just now focusing on the requirements and looking for resources to support compliance. There are many third-party options available to help if your payroll or HRIS teams don't have the bandwidth. But it’s best to get started now.

 

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The ACA reporting deadlines for minimum essential coverage and employer shared responsibility occur in the first quarter of 2016. Individual statements (Form 1095-Cs) have a Monday, February 1, 2016, deadline and the IRS electronic transmittal due date (Form 1094-C) is Thursday, March 31, 2016.

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While it’s far from clear where the incoming administration and Congress will land on the “replace” part of “repeal and replace” with regard to the Affordable Care Act, they are signaling interest in promoting the use of health savings accounts by expanding eligibility and allowing funds to be used for more purposes. High-deductible HSA-eligible plans already feature in many employer health benefit programs. In 2016, 21% of all covered employees were enrolled in an HSA-eligible plan. Enrollment has been rising over the past decade as employers -- especially large employers (500+ employees) -- have added HSA-eligible plan choices to their health programs. The threat of the excise tax was a big motivator for employers to move employees into lower-cost plans; while the excise tax may go by the wayside, there is now discussion of capping the individual tax exclusion for employer-provided health coverage, which could still drive cost pressure on employer-sponsored health plans.

 

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Time flies. We can finally see the light at the end of the tunnel for ACA compliance. But the last ACA requirement poses the biggest challenges for most employers, and that’s (drum roll) the excise tax slated to go into effect in 2018. Since today is the deadline for the second round of comment letters to the IRS, we thought it would be timely to kick off a series of posts on this important topic. What will follow over the coming days are pieces written by Mercer colleagues with a broad range of expertise, focusing on tax-avoidance strategies and how the excise tax may affect other HR and business objectives.

 

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Plans that implement reference-based pricing (RBP) set a maximum amount payable for specific procedures. Higher-than-normal cost sharing applies for providers charging above reference price. Employers using or considering RBP need to stay on top of ACA rules and guidelines to avoid potential compliance problems:

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This week, all eyes are on the presidential hopefuls as the primary election season kicks into high gear. With health care on the docket as one of the key domestic policy issues of this election, it’s important for voters to know where each candidate stands, relative to the ACA and Medicare.

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Mercer met with Congressional staff on June 11 to provide input on developing legislation that would modify the ACA’s 40% excise tax on high-cost plans. Mercer recently submitted comments to the IRS on how to implement the tax starting in 2018, but more fundamental reform can only be achieved through enactment of new legislation.

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Federal guidance issued in May addresses the interaction of COBRA with the ACA. The Department of Labor (DOL) has updated its model COBRA general and election notices for employers to use; Spanish versions of the notices also are available. Accompanying DOL proposed regulations and interagency “frequently asked questions” guidance explain that public exchanges may offer better coverage options than COBRA in some situations, and to optimize their decisions individuals need to understand the somewhat complex interaction of COBRA and exchange enrollment, including eligibility for exchange subsidies. Final rules published May 27 by the Department of Health and Human Services further clarify some of these issues.

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Traditionally, employers have not thought of opt-out credits as increasing the cost of employee coverage. But in a recent HIPAA FAQ unrelated to affordability, regulators said that cash payments — or opt-outs — offered only to employees likely to generate high claims costs violate HIPAA’s prohibition against discrimination on the basis of health status.

 

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While the recent IRS request for comment on implementing the 2018 excise tax on high-cost coverage gave us insight into what the IRS is thinking, it isn’t the formal guidance that we desperately need. This makes it tough on employers heading to the bargaining table this year. A recent article in The Wall Street Journal highlights the challenges facing the big three automakers as they prepare to negotiate this summer with the UAW, which historically has been very protective of its members’ health benefits. In other words, benefits are rich and costs are high. The law imposes a 40% excise tax on the annual cost of health plan premiums above $10,200 for individual coverage and $27,500 for family coverage. While it’s not clear whether UAW workers are enrolled in plans with costs that currently exceed the threshold, the employers and the UAW are concerned that, if costs continue to rise at their current rate, by 2018 the plans could face significant penalties. If they do, who pays?

 

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