Benefits Compliance Update for October 2017
Posted on October 2nd, 2017
Last week’s health care news from Washington was not shocking. In my view, the surprise was not that Congress failed in its effort to take a last swing at the ACA before the September 30 deadline for budget reconciliation. The surprise was that they stepped back to the plate for a final at-bat after the embarrassing failure at the end of summer term. Regardless of the process, timing, or source of blame, the end result is what we have known since July: Congress has not repealed, replaced, repaired or modified the ACA. Now and going forward, the ACA remains the law of the land.
Is this a bad result for the American people, employers, and the health insurance industry? We all have an opinion. As we assess the significance of this development, I have to agree with Rand Paul’s frank assessment that the recent proposed bills – most recently the Graham-Cassidy bill – did not constitute true repeal. At best, these were modest attempts at repair and modification. The people of our country, and this industry, deserve better.
Congress has quickly turned its attention to tax reform, and an outline of a major tax overhaul has already been revealed. While it is theoretically possible for a new tax law to address certain elements of the ACA, that appears unlikely now. Congress will likely move on from the ACA and seek a victory in the tax area to shift the focus from what has been a dramatic and potentially harmful political defeat.
First Base: What is next for ACA?
The ACA remains in full force and effect for the foreseeable future. Even though Republicans are saying the right things – notably that health care remains on the table for future action – it is improbable that Congress will have the appetite to address the ACA during an election year in 2018. This term of Congress ends in January 2019, and the ACA is likely to survive until at least that point. If Republicans lose a majority in either house of Congress, that would extend the life of the law by at least two more years. If not repealed, the ACA will reach the decade mark in early 2020, and one has to think that odds are strong that it survives until then or beyond.
The message for employers remains the same: continue to comply with the provisions of the ACA, including the employer mandate and annual IRS reporting. Some form of relief may come down the road, but there is no opportunity to reduce compliance efforts.
Second Base: Will the federal agencies enforce the law?
Simply put, yes. The IRS has issued four separate information letters in recent months affirming that the employer mandate, individual mandate, and related provisions remain in force. The IRS is not relaxing its efforts to enforce the employer mandate or reporting provisions, and employers subject to these rules should continue to comply.
As specific examples, the IRS is in the process of distributing letters and questionnaires to large employers that did not file IRS Forms 1094-C and 1095-C for either 2015 or 2016. Most recently, the IRS has issued letters to employers that did submit forms but may have submitted them incorrectly. These documents (Letters 1865C) may be received by your clients, and some have even been sent in error. If you have a client that receives such a form, feel free to let me know and I’ll try to assist you with it. [A sample letter is available upon request.]
The IRS reporting requirements remain in place, and 2017 filings will be due beginning January 31, 2018. As a refresher, Applicable Large Employers must provide a Form 1095-C by 1/31 to all individuals that were full-time employees during 2017. Then, employers will file a Form 1094-C with the IRS by 4/2/18, including copies of all employee 1095-C statements. Small employers are exempt from the reporting unless they sponsor(ed) a self-funded or level-funded plan during 2017.
The Health Insurance Marketplace open enrollment period begins November 1 (and runs through December 15). All federal subsidies and tax credits remain in place. While there is some question as to the future of the cost-sharing reductions, which are currently subject of a federal lawsuit as well as threat of defunding by the President, HHS and CMS are continuing to administer the Marketplace programs in accordance with the law.
Third Base: What else do we need to know for open enrollment season?
The good news is that there are no new requirements for employers for the end of 2017 or for 2018. The Health Insurers Tax (“HIT”) returns for 2018, which will have a measurable impact on premiums for fully insured plans. Most analysts attribute 3% of premium to HIT, although amounts will vary among carriers based on their prior year’s net premium. HIT does not apply to self-funded plans, including partially self-funded plans such as the level-funded model.
In terms of compliance tips for open enrollment, here is a blog post that I recently published on topic. I expounded on these topics as part of the August 29 webinar for The Cason Group, a recording of which is available here.
A full list of 2018 IRS maximums and limits is available here. The two items of relevance that have not yet been announced are Health FSA max for plans beginning 1/1/18, which I expect to be $2,650, and also the 2018 annual limits for the new QSEHRA for small employers.
Home Plate: What are ways that your team can elevate compliance for your clients in 2018?
As the smoke clears from the ACA debate in Washington, many advisors will be tempted to coast after open enrollment and reduce attention and efforts on compliance. This dynamic creates yet another opportunity for your team to distinguish itself as a compliance-focused agency. Here are several tips on how to do so:
- Help clients protect themselves for tax purposes by confirming (a) an updated, compliant Section 125 plan in place for pre-tax premiums & (b) compliance with IRS tax rules for all benefits elections;
- Help clients protect themselves by ensuring full COBRA compliance for all applicable benefits – an area of exposure for many employers;
- Educate your clients on HIPAA, so that they will proactively hear from you any potential trouble spots similar to COBRA and 125 above;
- Host a compliance workshop or webinar for your groups soon (such as a big picture ACA & compliance update) & ongoing (such as practical training topics like the above items); and
- Provide routine compliance updates by email, blog, social media, or other formats – contact us regarding options for content assistance.
Let our team know if we can assist you with strategy on the above options or others. We have a number of employer tools, and we will be sharing more information soon about existing and new options for 2018.
Best wishes for a successful enrollment season.
By Jason M. Cogdill, Attorney at Law, The Cason Group Compliance Partner