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Mercer

The IRS recently released draft instructions for 2015 employer shared-responsibility (ESR) forms. These instructions provide several, mostly helpful, clarifications for completing the individual statements and IRS transmittal (due in early 2016), including a relaxed standard for use of the “98% offer” method and some relief for employers with reporting duties for multiemployer plan populations. Draft 2015 instructions were also released for the form which insurers and certain others will use to report on enrollees’ minimum essential coverage (MEC).

 

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As employers are in the throes of open enrollment, the IRS issued guidance on requirements for minimum value plans. This guidance comes after a reported "glitch" in the HHS minimum value calculator that made it possible for a plan to obtain a minimum value of 60% while excluding coverage for hospital inpatient services. This most recent guidance states that plans that don't include coverage for hospital inpatient services or physician services (or both) won't qualify as minimum value coverage in 2015. Due to the late notice, employers with plans that were able to comply due to the glitch and are in a binding contract will be allowed for the 2015 plan year. The good news is that employees who qualify for subsidized coverage and want to sign up for more comprehensive coverage in the public exchange will be allowed to do so and their employer will not be penalized. So, a win on both accounts. Employers are required to communicate to employees on this issue if such a plan has been offered. Expect vendors with these products to respond accordingly with enhanced plan designs for 2016.  

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With the open enrollment season for January 2015 plan year upon us, or frightfully close, there is a lot of speculation about what really qualifies as a “minimum value” plan. Reports that HHS may update the minimum value calculator to correct a “glitch” have some employers reviewing their compliance strategy.

 

Employers have been getting ready for the ACA employer shared responsibility (ESR) requirements for several years now. The ESR requirements were originally scheduled to go into effect in 2014, but in 2013 regulators delayed implementation until 2015. Mercer survey data suggests that in 2014, most employers were already in compliance with two of the primary provisions — offering a plan that met the minimum value (MV) requirements and had affordable contributions.

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The Washington Post ran an article over the weekend that is getting a lot of attention. The article suggests that there is a “glitch” in the calculator developed by HHS, because it allows a plan that excludes coverage for hospitalization to meet the 60% minimum plan value requirement. Is that a glitch that will be corrected, or did the government intend to allow a loophole in the calculator used by self-insured plan sponsors to determine if a plan meets the 60% plan value requirement? Let’s explore this issue from two employer angles — the “a” requirement and the “b” requirement. Under the Shared Responsibility provision, employers must do two things to avoid assessments.

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When the proposed ACA 90-day waiting period regulations were issued, employers were frustrated by the fact that the common design of “first of the month following 90 days” was not permissible. Apparently, their cries were heard, as more recent regulations provide some flexibility for employers.

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For a while, it seemed that the “mini-med plan” — a fairly common offering by employers with low-wage and part-time populations (such as retail and hospitality businesses) — would be a casualty of the ACA, since the law prohibits the annual dollar limits that were a key feature of these low-cost plans. But other features of the ACA — the employer and individual “shared responsibility” mandates — may be encouraging employers to consider offering a sort of cousin to the mini-med, the so-called “skinny plan.”

 

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There have been a few articles and blog posts discussing the formula used to calculate affordability (and affordability safe harbors) under the Shared Responsibility provisions. HHS recently published regulations that apply a COLA adjustment to the current 9.5% threshold used for determining whether coverage is affordable from the individual’s perspective to qualify for a subsidy. The percentage will be 9.56% for 2015. However, this adjustment doesn't carry through to the employer affordability safe harbors — so the safe harbor options would still be 9.5% of FPL, W-2 wages, or rate of pay. It’s possible that the IRS will issue future guidance to align the safe harbors with the individuals’ threshold. We’ll have to wait and see — again.

 

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