Friday, February 27, 2015

Compliance & Reform Updates | Employee Counting Clarification; Cadillac Tax Guidance; IRS Safe Harbors; New Anthem News; FMLA Now Covers Same Sex Partners & More

This has been an incredibly busy two-week period in benefit news.  Here are some stories that you will want to review -

Anthem Update:

Notice Obligations in Connection with Recently Announced Cyber Attack
February 26, 2015-Anthem
Excerpt: “Certain federal and state laws, as well as contracts between you and Anthem, require that you be notified about the Incident, and may also require you, after receiving notice from Anthem, to make additional notices to regulators and individuals. To assist you in fulfilling these obligations, promote a consistent message to potentially impacted individuals, and in furtherance of our legal obligations, Anthem will have the notices it provides to regulators and individuals cover identified notice obligations you may also have to those regulators and individuals, including notice obligations under the breach notification regulations issued under the Health Insurance Portability and Accountability Act of 1996 and the Health Information Technology for Economic and Clinical Health Act (collectively, "HIPAA").”

Health Care Reform News:

More than half of ACA subsidy recipients must repay some portion
February 24, 2015-Bloomberg
Excerpt: “Fifty-two percent of the clients seen by H&R Block Inc. who received subsidies through the Affordable Care Act in 2014 underestimated their income and must repay a portion of the subsidies, with the average repayment $530, according to a Feb. 24 release from the Kansas City, Mo.-based company.”

IRS Issues Preliminary Guidance on Cadillac Tax
February 24, 2015-Ballard Spahr LLP
Excerpt: “Although the new notice does not provide guidance that employers may rely on, employers may draw upon it to understand the issues and general direction that the IRS is contemplating. For employers who wish to submit formal comments to the guidance, the deadline is May 15, 2015.”

Excise Tax on High Cost Employer-Sponsored Health Coverage
February 23, 2015-Internal Revenue Service
Excerpt: “This notice is intended to initiate and inform the process of developing regulatory guidance regarding the excise tax on high cost employer-sponsored health coverage under § 4980I of the Internal Revenue Code (Code). Section 4980I, which was added to the Code by the Affordable Care Act,1 applies to taxable years beginning after December 31, 2017. Under this provision, if the aggregate cost of “applicable employer-sponsored coverage” (referred to in this notice as applicable coverage) provided to an employee exceeds a statutory dollar limit, which is revised annually, the excess is subject to a 40% excise tax.”

IRS Offers Temporary Safe Harbor for Some Premium Reimbursement Arrangements
February 19, 2015-Thompson Information Services
Excerpt: “Small employers and certain other plan sponsors can continue to reimburse individual premiums until July 1, without the threat of extreme penalties for offering coverage that does not comply with Affordable Care Act insurance mandates, under new guidance from the Internal Revenue Service.”

“Pay-or-Play” & Contingent Workers: Final Regulations Provide Clarity But Not Complete Relief
February 17, 2015-Proskauer's ERISA Practice Center Blog
Excerpt: "Short-Term Employees. The final regulations confirm the IRS’s position that short-term employees (other than seasonal employees) who are reasonably expected to work full-time (30 hours or more per week) at date of hire must generally be offered coverage within 90 days. There is no blanket exemption for short-term employees—if employment extends beyond the end of the third full calendar month of employment, the employer must offer coverage regardless of the projected termination date (the offer of coverage will generally be within 90 days from date of hire due to the ACA’s waiting period rules).
Employees of Temporary Staffing Firms. There are special rules for determining whether a variable hour employee is a full-time employee. Variable hour employees are employees with no set schedule or seasonal employees (generally those working 6 months or less on a seasonal basis). Under these rules, the employer (staffing company) can use a determination period of from 3 to 6 to 12 months to determine an individual’s full-time status for a following so-called “stability period” of 6 or 12 months."

Summary Chart of Disallowed Pay or Play Tactics
December 1, 2014-E is For ERISA
Excerpt: "With the January 1, 2015 employer shared responsibility deadline fast approaching, the three government agencies charged with ACA compliance (IRS, DOL and HHS) have provided recent guidance on several strategies or tactics that have been marketed to applicable large employers as legitimate ways to reduce their coverage costs and exposure to shared responsibility penalty taxes (assessable payments). Employer reimbursement of individual health insurance premiums is a common but not universal feature of these arrangements. The Internal Revenue Service ruled out pre-tax reimbursement of individual health premiums in Notice 2013-54, but more recent guidance in ACA FAQ XXII and in IRS Notice 2014-69 expands the prohibition to include after-tax individual premium reimbursements, as well as other shared responsibility cost reduction strategies."

Excerpt of Chart:

In Other News:

Beware of Brokers Offering to Cut Commissions or Work for a Fee Under Health Reform - You Will End Up Paying Twice
February 24, 2015-LifeHealthPro, by Craig Gottwals
Excerpt: "As the health and welfare brokerage industry gets squeezed by the mandates of the Patient Protection and Affordable Care Act (PPACA), I have seen more agencies resort to desperate pleas for new business by offering to "save" a client money by taking a commission cut or a flat-fee arrangement in lieu of commission on fully insured medical policies. While this direct approach undoubtedly sounds alluring to business owners and chief financial officers, it belies a fundamental misunderstanding of the new PPACA underwriting rules. With the PPACA rules on mandatory minimum medical loss ratios (MLR) rules now in place, brokers should not be saddling clients with “fee” arrangements or underfunded commission agreements on medical policies."

DOL and HHS Enforcement Activities Targeting Health Plans
January 30, 2015-Bloomberg BNA
Excerpt: "[T]he ACA and MHPAEA's (Mental Health Parity Act) enforcement scheme splits regulatory authority between state governments and the federal government -- and even federal enforcement is split among three different agencies, depending on the type of health plan at issue. This tangled enforcement scheme runs the risk of overlapping enforcement actions that could impose significant and unnecessary compliance costs on plan sponsors and insurers. This article provides a high-level overview of how ACA and MHPAEA enforcement authority is allocated between the states and the federal government, and how (and when) three federal agencies -- [HHS, DOL and IRS] -- may enforce the ACA and MHPAEA. [The article also discusses] current enforcement activities by HHS and DOL against insurers and plan sponsors ... [and] offers suggestions on how insurers and plan sponsors can best prepare for ACA and MHPAEA audits."

FMLA Modified to Protect Same-Sex Spouses Regardless of State of Residence
February 25, 2015-McGuire Woods
Excerpt: “By final rule published on Feb. 25, 2015 and effective March 27, 2015, the U.S. Department of Labor (DOL) is modifying the definition of “spouse” to include legally recognized same-sex marriages and “common law” marriages regardless of where the worker lives, provided the marriage was legal in the state in which it was originally celebrated. This shift from a “state of residence” rule to a “place of celebration” rule will allow legally married couples to enjoy consistent federal family leave rights even if the state in which they currently reside does not recognize same-sex marriages.”

Planning for the Year Ahead in Benefits
February 20, 2015-Winstead
Excerpt: “The final instructions clarify that if an employer wants to use either of these reporting methods it must satisfy the requirements to use such method for all months in the calendar year. For the 98% Offer method which avoids counting the number of full-time employees and reporting this number each month, the employer must have offered affordable coverage providing minimum value to at least 98% of its full-time employees for whom it is filing a Form 1095-C and that if offered minimum essential coverage to the employees’ dependents in each month in the calendar year. The employer is not required to identify which of the employees receiving the Form 1095-C is a full-time employee, but it must provide a Form 1095-C to every one of its full-time employees.”

The Pay Period Leap Year Redux: Don't Leap If It Isn't Your Year!
February 13, 2015-Wage and Hour Insights 
Excerpt: “If your first weekly paychecks will issue on Thursday, January 1, 2015, you will have a fifty-third pay period on December 31, 2015. If your first bi-weekly paychecks will issue on Thursday, January 1, 2015, you will have a twenty-seventh pay period on December 31, 2015, depending on payday holiday processing rules. This means that for employers who pay employees weekly or bi-weekly, 2015 could be a Pay Period Leap Year, but it doesn’t mean that all of your employees will have one.”