Summer 2014 Updates

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Draft Instructions for IRS Reporting on Employer Mandates

On 8/28/2014, the IRS released draft instructions for the reporting forms on employer mandates for large employers.

You can find these forms at IRS Draft Forms. These forms are for informational purposes only and the IRS will post final versions on a later date.

The IRS will also be hosting a webinar on September 9th at 2:00. This will show large employers how to report on minimal essential coverage. If you are interested in this webinar, please click this link: IRS Seminar Link

Updated COBRA Notice

May 2, 2014: The Employee Benefits Service Administration (EBSA), which is part of the Department of Labor, proposed revisions to the notices employers are required to send to their employees under the Consolidated Omnibus Reconciliation Act (COBRA) 1985.

They also released two model notices for employers to provide COBRA notices both when coverage is obtained and when employment is ceased. These new notices now inform former employees that they are eligible to purchase health insurance through the Health Insurance Marketplace as part of the COBRA requirements.

COBRA allows individuals with employer sponsored health plans to continue coverage for a period of time after coverage is lost due to loss of job, reduction in hours, death of employed spouse or parent. This coverage is available by paying the premiums to the (former) employer plus an administrative fee.

Under the Affordable Care Act (ACA), there is an open enrollment period for those plans. However, with a life event, such as job loss, you can sign up after that open enrollment period.

New Coverage Sample Notice: Model General Notice

Model Election Notice: Model Election Notice

Pay or Play Rules: Dependent Coverage

May 13, 2014: The IRS updated its Q & A on the Employer Shared Responsibility Provisions that gives further clarification and answers for employers. In particular, it addresses when a large employer (50+) offers coverage to full time employees, but not to dependents.

Overall, a large employer will potentially be responsible for a penalty if:

They do not offer medical coverage to full-time employees or their dependents
One of the full-time employees gets a subsidy to purchase individual coverage through the Marketplace.
(If a dependent enrolls and gets a subsidy through the Marketplace, it does not affect the employer’s liability)

Employer Shared Responsibility for Employers with 50-99 Full-time Equivalent Employees

Most employers with 50-99 Full-time Equivalent Employees (FTE) are not subject to Employer Shared Responsibility until 1/1/2016.

This will not apply to most employers unless specific criteria are met. To be exempt from this, there is a process that the employer will need to go through to show that they did not do certain things between 2/9/2014 & 12/31/2015. The employer must not have:

Reduced their workforce size or the hours worked so they could satisfy workforce size condition.
Must not have changed Renewal Date
Eliminate coverage being offered to a particular class.
Reduce employer contribution for more than 5% for employee only for cover in place from 2/9/2014 through 12/31/2015 for calendar year plans and 2/9/2014 through the renewal date in 2015 for non-calendar plans.
Reduce coverage being offered since 2/9/2014 that makes if be less than minimum value coverage being offered.

Individual Insurance Policy Premiums Reimbursements

The IRS has released FAQs regarding employers who do not set up a health insurance plan for their employees, but choose instead to reimburse their employees on a pre-tax basis for their individual health insurance premiums. This is sometimes called Employer Payment Plans. This arrangement does not comply with the ACA reforms according to the FAQs. Therefore, they may be subject to an excise tax of $100 per day for each employee affected. (That’s $36,500 per year for each employee!). It does; however, seem that premium reimbursement arrangements made on an after-tax basis will be allowed.

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