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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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The House last week passed legislation (HR 30) that would relax the ACA’s employer play-or-pay rules by requiring that employers provide health insurance to employees who work 40 or more hours per week, up from the current standard of 30 hours, or face potential IRS assessments. The measure was approved by a vote of 252-172, with 12 Democrats crossing party lines.

 

A similar bipartisan Senate bill (S 30) is expected to be the subject of a committee hearing and a vote by the chamber within weeks. The legislation is strongly backed by a wide array of business groups and health plans. However, with a big projected revenue cost from the Congressional Budget Office and a veto threat from the president, the measure’s fate is uncertain as supporters try to muster the 60 votes necessary to overcome a Senate filibuster. For the 40-hour standard to become law over a presidential veto, the legislation would need to pass each chamber by a  two-thirds majority. 

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A group of employers urged White House officials at a recent meeting to alter HHS's proposed insurance nondiscrimination rules under ACA Section 1557 as it undergoes final review. Section 1557 prohibits age, race, sex, disability, and national origin discrimination in any health program or activity that receives federal financial assistance. However, the proposed rules suggest that all operations -- not just ones receiving federal funds -- of any covered organization must comply with these nondiscrimination standards. This could subject some employer health plans and their third-party administrators to the rules.

 

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The current employee tax exclusion for employer-provided health benefits came under scrutiny by lawmakers at an April 14 hearing held by the House Ways and Means Committee. Hearing witnesses included experts who argued that capping the employee income tax exclusion and providing universal tax credits would help to raise workforce wages, among other advantages. But a third witness warned that capping or ending the tax exclusion would undermine employer-sponsored coverage by removing a key incentive for employers to offer health plans, and break up employer risk pools that now include participation by younger, healthier workers.

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IRS has posted final 2015 forms and instructions for the Affordable Care Act's employer shared-responsibility (ESR) and minimum essential coverage (MEC) reporting. Employers, insurers, and others will use these forms to issue individual statements to employees and others with health coverage and file related IRS reports. Large employers will also use these forms to report employees' full-time status and plan eligibility. The first mandatory statements and reports on 2015 coverage are due in early 2016.

 

A new Senate bill (S 2045) would repeal the Affordable Care Act's 40% excise tax on high-cost plans, set to take effect in 2018. Introduced by Sens. Dean Heller, R-NV, and Martin Heinrich, D-NM, the bill comes as support grows for similar legislation in the House, where a majority of members are now cosponsoring one of two separate repeal measures (HR 2050 and HR 879).

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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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With the ACA's 40% excise tax on high-cost employer-sponsored health coverage slated to take effect in 2018, IRS last week asked for a second round of comments on how to implement the tax. Notice 2015-52 supplements February’s Notice 2015-16 and seeks input on new issues including identification of which entities may be liable for the tax, employer aggregation, age- and gender-based increases to the dollar limit, allocation of the tax among applicable taxpayers, and payment. IRS also wants feedback on cost of coverage issues not covered in the earlier notice. Comments are due October 1.  

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Final rules released last week on the mandate for nongrandfathered health plans to cover preventive services without cost sharing largely consolidate and clarify existing guidance. For closely held for-profit entities with religious objections to covering all or certain contraceptive services, the regulations give new details on how to obtain the same accommodation available to nonprofit religious organizations and their affiliates. The regulations will apply for plan years starting on or after 60 days from the date of publication in the Federal Register (Jan. 1, 2016, for calendar-year plans).

 

President Obama has officially nominated Andrew Slavitt to become CMS Administrator. Slavitt has been serving as Acting Administrator since Marilyn Tavenner stepped down earlier this year. He previously was an executive with Optum, a division of United Health, and was involved in ACA implementation in that capacity. Slavitt needs Senate confirmation and will face tough questioning from Republicans who want to grill the administration over the ACA in addition to drilling down on Medicare and Medicaid issues.

 

This week in Congress, the Medicare prescription drug program will be the focus of a House hearing, while the Senate Finance Committee examines the security of the federal insurance exchange website.

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A new law could subject employers to increased penalties for failures (whether failing to furnish or file or providing incorrect or incomplete information) relating to ACA employer shared-responsibility and minimum essential coverage (MEC) reports first due to individuals and IRS in 2016 for the 2015 calendar year.

 

The Trade Preferences Extension Act of 2015, enacted June 29, increases the penalties for failures to file correct information returns and individual statements, including ACA Forms 1094 and 1095 as well as W-2 and W-3 reporting. The new penalties are potentially steep: $250 for each return that’s inaccurate or not filed (capped at $3 million), plus another $250 for each individual statement that’s missing or incorrect (also capped at $3 million). Uncapped penalties of $500 per return or statement can apply in cases of intentional disregard.

 

However, IRS can waive penalties for reasonable cause and reduce penalties if failures and errors are corrected within certain time frames. Further, IRS said in the preamble to the ESR and MEC reporting regulations that it won’t impose penalties in 2016 for incomplete or incorrect 2015 reports, as long as the employer has made a good-faith effort to comply with the ACA reporting requirements. This relief generally won’t apply to an employer that fails to furnish individual statements or file information returns on time.

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As expected, late last week the Obama administration asked the D.C. Court of Appeals to convene a fuller panel of its judges to reconsider that court’s recent Halbig decision; a three-judge panel of that court ruled in July that ACA unambiguously authorizes IRS subsidies only for people with health coverage obtained on state health insurance exchanges, not federal exchanges. Also late last week, losing parties in the Fourth Circuit King lawsuit, addressing the same question and published the same day as Halbig but reaching the opposite conclusion, asked the US Supreme Court to hear the dispute quickly, saying a ruling by the high court would end the uncertainty about the subsidy matter. Similar cases on the public health insurance exchange subsides are pending in Oklahoma and Indiana. Subsidies are still available on federal exchanges, and likely will continue to be until the litigation is resolved.

 

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The IRS last week issued drafts of the Affordable Care Act (ACA) forms required for employer shared-responsibility (ESR) and minimum essential coverage (MEC) reporting. It's expected that issuers of health insurance and certain employers will use Form 1094-B and Form 1095-B for MEC reporting, while large employers will use Form 1095-C and Form 1094-C for ESR reporting and, in some cases, MEC reporting. The IRS also has posted a draft of Form 8941 for claiming the small employer tax credit for offering health insurance through a SHOP exchange. Draft instructions for the forms are not available yet.

 

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Closely held, for-profit corporations whose owners have religious objections to certain forms of birth control do not have to comply with Health and Human Services regulations that all FDA-approved contraceptive methods are preventive services that must be covered by nongrandfathered plans, the US Supreme Court has ruled in Burwell v. Hobby Lobby Stores Inc. (June 30, 2014). The majority cautions its ruling is limited to the facts before it, and doesn’t validate religious objections to other ACA mandates, such as coverage of vaccines, or apply to all public corporations. With respect to contraceptive services, the decision finds that other means — such as expanding the current accommodation granted nonprofit religious organizations — could achieve the mandate’s goal without curtailing religious liberty.

 

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