Saturday, March 7, 2015

Compliance & Reform Updates: SCOTUS Hears Federal Subsidies Case; Cadillac Tax Comments Sought; Penalties for No Coverage & ADA Violated at End of FMLA Leave

Healthcare Reform
IRS Invites Comments on Cadillac Tax Implementation for 2018
March 4, 2015-BB&T Insurance Services
Excerpt: “For taxable years beginning in 2018, the Affordable Care Act (ACA) imposes a 40 percent excise tax on high-cost group health coverage. This tax, also known as the “Cadillac tax,” is intended to encourage companies to choose lower-cost health plans for their employees… The Cadillac tax is on the "excess benefit," which is the amount that the cost of coverage exceeds certain statutory dollar limitations. There are separate statutory limitations for self-only coverage and other-than-self-only coverage. The Notice contains a discussion of how the statutory limit might be determined where an employee has self-only coverage for some benefits and other than self-only coverage for other benefits.”

The Cadillac Tax: How a 40% Tax Really Could Mean a 60% Tax
March-Employee Benefit News
Excerpt: "The Cadillac tax is a nondeductible excise tax, which increases the cost impact on for-profit employers. And depending upon who the “coverage provider” is that pays the tax, employers may be paying out closer to 60% to cover the excise tax, say Laderman and Stover. For insured plans, insurers likely will build the excise tax into the premium rates they charge employers. Because the premium amount is taxed for the insurer as income, they’ll likely build in 60% to ensure the 40% is covered after taxes. The tax treatment could also prove costly for non-profits and governments. How the tax treatment will play out remains to be seen."

Mid-argument updates: King v. Burwell (Latest update: 11:06)
March 4, 2015-SCOTUS
Excerpt: “In the midst of a discussion of context and the consequences of petitioners’ reading, Justice Kennedy raised a question that will surely receive a lot of scrutiny in the coming discussion of the case. He pointed out that, under petitioners’ reading, the federal government would be all but forcing states to create their own exchanges. That’s true not just for the headline reason covered by this case – that their citizens would be denied benefits – but for a very perceptive reason that Justice Kennedy added: namely, state insurance systems will fail if the subsidy/mandate system created by the statute does not operate in that particular state.”

FAQ: What Are The Penalties For Not Getting Insurance?
March 3, 2015-Kaiser Health News
Excerpt: “The $95 penalty has gotten a lot of press, but many people will be paying substantially more than that. A single person earning more than $19,650 would not qualify for the $95 penalty ($19,650 – $10,150 = $9,500 x 1percent = $95). So the 1 percent penalty is the standard that will apply in most cases, say experts. For example, for a single person whose modified adjusted gross income is $35,000, the penalty would be $249 ($35,000 – $10,150 = $24,850 x 1percent = $249).”

King v. Burwell: What to Expect From the Supreme Court Argument
March 2, 2015-Olgetree Deakins
Excerpt: “…the Supreme Court is not expected to issue a decision in King until close to the last day of the current term. The Supreme Court’s order disposing of the case—referred to as its “mandate”—is not issued until at least 25 days after the decision is announced, and the Court has discretion to withhold its mandate beyond that minimum period. In practice, this means that an adverse outcome for the government may have a somewhat delayed impact. However, rather than attempting to anticipate the substance of the Court’s decision, employers should continue their ongoing ACA compliance efforts and await further official guidance before suspending or modifying those efforts in reliance on King.”

March 6, 2015-Alston Bird Employee Benefits and Executive Compensation Advisory
  • "Mere pay increase that is not restricted is OK. If an employer increases compensation to assist employees with payments for individual market coverage, the arrangement is not an employer payment plan as long as the increased compensation is not conditioned on the employee’s purchase of individual market coverage.
  • Including premium reimbursements (conditioned on purchase of coverage) in income still results in an [impermissible] employer payment plan. If an employer pays an individual market premium directly or reimburses an employee upon proof of premium payment, the arrangement would be an employer payment plan subject to Notice 2013-54 even if the employer includes the amount in taxable income." This arrangement will run afoul of new Reform laws for groups over 50 employees. 

In Other News
EEOC Charges Employer Violated ADA By Terminating Employment At FMLA Leave End
March 2015-Solutions Law Press
Excerpt: “Employers considering terminating the employment of employees not ready to resume their usual duties when their eligibility for medical leave ends under the Family & Medical Leave Act (FMLA) or other leave policies should first consider whether the employee qualifies for accommodation under the Americans With Disabilities Act. That’s the message transmitted by a new Employment Opportunity Commission (EEOC) Americans With Disabilities Act (ADA) lawsuit against ValleyLife of Phoenix, Arizona.”

March 6, 2015-Mish's Global Economic Trend Analysis
  • Civilian Non-institutional Population: +176,000
  • Civilian Labor Force: -178,000
  • Not in Labor Force: +354,000
  • Participation Rate: -0.1% to 62.8%