As fall approaches, we can expect to hear more about how employers are adapting their health plans for 2016 open enrollments. One topic likely to garner a good deal of attention is how the Affordable Care Act’s high-cost plan tax (HCPT), sometimes called the “Cadillac plan” tax, is affecting employer decisions about their health benefits. The tax takes effect in 2018.

The potential of facing an HCPT assessment as soon as 2018 is encouraging employers to assess their current health benefits and consider cost reductions to avoid triggering the tax. Some employers announced that they made changes in 2014 in anticipation of the HCPT, and more are likely to do so as the implementation date gets closer. By making modifications now, employers can phase-in changes to avoid a bigger disruption later on. Some of the things that employers can do to reduce costs under the tax include:

(FOR THE FULL ARTICLE, CLICK HERE)

LANSING – Michigan consumers and small businesses will experience lower increases in the cost of their 2016 health insurance plan than those in many other states, according to the Michigan Department of Insurance and Financial Services (DIFS). DIFS reports that the average approved rate changes on a premium weighted basis increased by 6.5 percent for the individual market and 1 percent for the small group market.

“Many states are reporting rate increases well in excess of 10 percent which is significantly higher than the rate of health care inflation,” said DIFS Director Patrick McPharlin.   “We are pleased that Michigan consumers are seeing more modest increases.”

DIFS completed the review of health insurance rate change requests for the individual and small group markets and determined that the requested rate changes were actuarially supported. As in prior years, DIFS conducted a thorough examination of each company’s rate change request. This examination included review of public comments received throughout June 2015 following the posting of the rate change requests.   Credentialed actuaries evaluated the rates, consistent with rate review requirements, to ensure compliance with State and Federal laws.

“Ensuring rates are adequate but not excessive is critical to make sure consumers not only receive health insurance coverage at a reasonable price, but can count on the coverage they purchase,” states Director Patrick McPharlin. “Michigan has a stable and competitive health insurance market with a range of options and premiums for consumers and businesses.”

DIFS has updated its Rate Change Request Charts to include the final approved rate changes for each company. These rate changes affect about 900,000 Michiganders enrolled in individual or family policies or through their small group employer. Michigan’s premium increases are the result of a number of factors that vary by market. In the individual market, Michigan companies attributed the change to annual health care costs, the expected reduction in Federal program reinsurance recoveries, and higher than expected claim costs. In the small group market, many companies experienced better than expected results, offsetting the expected increase due to the change in annual health care costs.

Open enrollment for 2016 begins November 1, 2015 and continues through January 31, 2016. Consumers are encouraged to contact their insurance carrier, agent, or navigator regarding how these rate changes could affect their policy. There are also shopping tools, rate comparisons and resources available on the DIFS Health Insurance Consumer Assistance Program’s (HICAP) website, www.michigan.gov/hicap and the Healthcare.gov website.

For more information about DIFS or the services provided, please visit the website at www.michigan.gov/difs or follow them on Twitter.

On July 31, 2015, President Obama signed into law H.R. 3236, the “Surface Transportation and Veterans Health Care Choice Improvement Act of 2015.”

The new law includes the following tax provisions: 

• With respect to the employer mandate, veterans enrolled in a health plan under the VA or TRICARE would be exempt from being counted in the 50 full-time employee threshold.  

This change is effective as of January 1, 2014.

• Eligible veterans are not disqualified from contributing to a Health Savings Account (“HSA”), as a result of receiving medical care under the VA for a service related disability.  In the past such coverage would have made them ineligible to contribute to an HSA.

This change is effective January 2016.

• The maximum extension for the returns of employee benefit plans filing Form 5500 shall be an automatic three and one-half month period ending on November 15 for calendar year plans.  It had been an automatic two and one-half extension in the past.

This change is effective for taxable years beginning after December 31, 2015.
 
Click on the link below for a copy of the new law:

http://resources.evans-legal.com/wp-content/uploads/2015/07/00013740.pdf  

If you have any comments or questions regarding any of the above information, please do not hesitate to call me at (708) 717-9638 or e-mail me at larry@larrygrudzien.com

Thank-You, Larry Grudzien, Attorney-At-Law

By Larry Grudzien
Attorney-At-Law

August 9, 2015
 
On August 6, 2015, IRS released draft instructions for Forms 1094-C and 1095-C for 2015. The following is an overview of important provisions to consider in the completion of the forms:
 
1. Who Must File:
 
If an employer is offering health coverage to employees other than under a self-insured plan, such as through an insured health plan or a multiemployer health plan, the issuer of the insurance or the sponsor of the plan providing the coverage is required to furnish the information about their health coverage to any enrolled employees, and the employer should not complete Form 1095-C, Part III for those employees.
 
2. One Form 1095-C for Each Employee of Each Employer:
 
For each full-time employee of an employer, there must be only one Form 1095-C filed for employment with that employer. For example, if an employer separately reports for each of its two divisions, the employer must combine the offer and coverage information for any employee who worked at both divisions during the calendar year so that a single Form 1095-C is filed for the calendar year for that employee which reports information for
all twelve months of the calendar year from that employer.
 
In contrast, a full-time employee who works for more than one employer that is a member of the same Aggregated ALE Group (that is, works for two separate ALE Members) must receive a separate Form 1095-C from each employer, unless the ALE Member is not treated as the employer for any calendar month in the calendar year as described later.
 
For any calendar month in which a full-time employee works for more than one ALE Member of an Aggregated ALE Group, only one ALE Member is treated as the employer and only that ALE Member reports for that employee for that calendar month (and the other ALE Member is not required to report for that employee for that calendar month). If under these rules, an ALE member is not required to report for an employee for any month in the calendar year, the employer is not required to report for that full-time employee for that calendar year.
 
3.   Form 1094-C, Column (c) Total Employee Count for ALE member:
 
An employer must choose to use one of the following days of the month to determine the number of employees per month and must use that day for all months of the year: (1) the first day of each month; (2) the last day of each month; (3) the first day of the first payroll period that starts during each month; or (4) the last day of the first payroll period that starts during each month (provided that for each month that last day falls within the calendar month in which the payroll period starts). If the total number of employees was the same for every month of the entire calendar year, enter that number in line 23, column (c) “All 12 Months” or in the boxes for each month of the calendar year. If the number of employees for any month is zero, enter 0.

 
4.  Form 1095-C,  line 14:
 
An employer offers health coverage for a month only if it offers health coverage that would provide coverage for every day of that calendar month. Thus, if an employee terminates  coverage before the last day of the month, the employee does not actually have an offer of coverage for that month. See Line 16, code 2B later for how the employer may complete  Line 16 in the event an employee terminates coverage before the last day of the month.
 
5.   Form 1095-C, line 14:
 
For reporting offers of coverage for 2015, an employer relying on the multiemployer arrangement interim guidance should enter code 1H on line 14 for any month for which the employer enters code 2E on line 16 (indicating that the employer was required to contribute to a multiemployer plan on behalf of the employee for that month and therefore is eligible for multiemployer interim rule relief). For reporting for 2015, Code 1H may be entered without regard to whether the employee was eligible to enroll in coverage under the multiemployer plan. For 2016 and future years, reporting for offers of coverage made through a multiemployer plan may be reported in a different manner.
 
6.  Form 1095-C, Line 14:
 
An offer of COBRA continuation coverage that is made to a former employee upon termination of employment is reported as an offer of coverage using the appropriate indicator code on line 14 only if the former employee enrolls in the coverage. If the former employee does not enroll in the coverage (even if a spouse or dependent of the former employee independently enrolls in the coverage), code 1H (No offer of coverage) should be entered for any month for which the offer of COBRA continuation coverage applies.
 
An offer of COBRA continuation coverage that is made to an active employee (for instance, an offer of COBRA continuation coverage that is made due to a reduction in the employee’s  hours that resulted in the employee no longer being eligible for coverage under a plan) is reported in the same manner and using the same code as an offer of that type of coverage to any other active employee.
 
7.   Form 1095-C, Line 16:
 
If an employee is in an initial measurement period, enter code 2D (employee in a section 4980H(b) Limited Non-Assessment Period) for the month, and not code 2B (employee not a full-time employee). For an employee in a section 4980H(b) Limited Non-Assessment Period for whom the employer is also eligible for the multiemployer interim rule relief for the month code 2E, enter code 2E (multiemployer interim rule relief) and not code 2D (employee in a Limited Non Assessment period.
 
8.   Form 1095-C, Line 16:
 
 Enter code 2E for any month for which the multiemployer interim guidance applies for that employee. Under the interim guidance regarding multiemployer arrangements,  an employer is treated as offering health coverage to an employee if the employer is required by a collective bargaining agreement or related participation agreement to make contributions for that employee to a multiemployer plan that offers, to individuals who satisfy the plan’s eligibility conditions, health coverage that is affordable and provides minimum value, and that also offers health coverage to those individuals’ dependents or is eligible for the section 4980H transition relief regarding offers of coverage to dependents.
 
Codes 2F through 2H: Although employers may use the section 4980H affordability safe harbors to determine affordability for purposes of the multiemployer interim guidance, an employer eligible for the relief provided in the multiemployer interim guidance for a month for an employee should enter code 2E (multiemployer interim rule relief), and not a code for the section 4980H affordability safe harbors (codes 2F, 2G, or 2H).
 
9.   Form 1095-C, Part III:
 
If two or more employees employed by the same employer are spouses or employee and dependent, and one employee enrolled in a coverage option under the plan that also covered the other employee(s) (for example, one employee spouse enrolled in family coverage that provided coverage to the other employee spouse and their employee dependent child), the enrollment information should be reflected only on the Form 1095-C for the employee who enrolled in the coverage (but would report the other employee family members as covered individuals.
 
10.  Form 1095-C, Part III:
 
This part may be completed by an employer offering self-insured health coverage for any other individual who enrolled in the coverage under the plan for one or more calendar months of the year but was not an employee for any calendar month of the year, such as a non-employee director, a retired employee who retired in a previous year, a terminated employee receiving COBRA continuation coverage who terminated employment during a previous year, and a non-employee COBRA beneficiary (but not including an individual who obtained coverage through the employee’s enrollment, such as a spouse or dependent obtaining coverage when an employee elects COBRA continuation coverage that is family coverage). If the Form 1095-C is used with respect to an individual who was not an employee for any month of the calendar year, Part II must be completed by using Code 1G in the “All 12 Months” box or the box for each month of the calendar year
 
11.    Employee, Definition:
 
For this purpose, an employee is an individual who is an employee under the common-law standard for determining employer-employee relationships. An employee does not include a sole proprietor, a partner in a partnership, an S corporation shareholder who owns at least 2-percent of the S corporation, a leased employee within the meaning of section 414(n) of the Code, or a worker that is a qualified real estate agent or direct seller. If an employee is an employee of more than one employer of the same Aggregated ALE Group during a calendar month, the employee is treated as an employee of the employer for whom the employee has the greatest number of hours of service for that calendar month; if the employee has an equal number of hours of service for two or more employers of the same Aggregated ALE Group for the calendar month, those employers must treat one of the employers as the employer of that employee for that calendar month.
 
12.    Limited Non-Assessment Period, Definition:
 
A Limited Non-Assessment Period generally refers to a period during which an ALE Member  will not be subject to an assessable payment under section 4980H(a), and in certain cases section 4980H(b), for a full-time employee, regardless of whether that employee is offered health coverage during that period.
 
The first five periods described below are Limited Non-Assessment Periods only if the employee is offered health coverage by the first day of the first month following the end of the period, and are Limited Non-Assessment Periods for section 4980H(b) only if the health coverage that is offered at the end of the period provides minimum value.
 
First Year as ALE Period. January through March of the first calendar year in which an employer is an ALE, but only for an employee who was not offered health coverage by the employer at any point during the prior calendar year. For this purpose, 2015 is not the first year an employer is an ALE, if that employer was an ALE in 2014 (notwithstanding that transition relief provides that no employer shared responsibility payments under section 4980H will apply for 2014 for any employer).
 
Waiting Period under the Monthly Measurement Method. If an employer is using the monthly measurement method to determine whether an employee is a full-time employee, the period beginning with the first full calendar month in which the employee is first otherwise (but for completion of the waiting period) eligible for an offer of health coverage and ending no later than two full calendar months after the end of that first calendar month.
 
Waiting Period under the Look-Back Measurement Method. If an employer is using the look-back measurement method to determine whether an employee is a full-time employee and the employee is reasonably expected to be a full-time employee at his or her start date, the period beginning on the employee’s start date and ending not later than the end of the employee’s third full calendar month of employment.
 
Initial Measurement Period and Associated Administrative Period under the Look-Back Measurement Method. If an employer is using the look-back measurement method to determine whether a new employee is a full-time employee, and the employee is a variable hour employee, seasonal employee or part-time employee, the initial measurement period for that employee and the administrative period immediately following the end of that initial measurement period.
 
Period Following Change in Status that Occurs During Initial Measurement Period Under the Look-Back Measurement Method. If an employer is using the look-back measurement method to determine whether a new employee is a full-time employee, and, as of the employee’s start date, the employee is a variable hour employee, seasonal employee or part-time employee, but, during the initial measurement period, the employee has a change in employment status such that, if the employee had begun employment in the new position or status, the employee would have reasonably been expected to be a full-time employee, the period beginning on the date of the employee’s change in employment status and ending not later than the end of the third full calendar month following the change in employment status. If the employee is a full-time employee based on the initial measurement period and the associated stability period starts sooner than the end of the third full calendar month following the change in employment status, this Limited Non-Assessment Period ends on the day before the first day of that associated stability period.
 
First Calendar Month of Employment. If the employee’s first day of employment is a day other than the first day of the calendar month, then the employee’s first calendar month of employment is a Limited Non-Assessment Period.
 
13.   Offer of Health Coverage, Definition
 
An employer makes an offer of coverage to an employee if it provides the employee an effective opportunity to enroll in the health coverage (or to decline that coverage) at least once for each plan year. An employer makes an offer of health coverage to an employee for the plan year if it continues the employee’s election of coverage from a prior year but provides the employee an effective opportunity to opt out of the health coverage. If an employer provides health coverage to an employee but does not provide the employee an effective opportunity to decline the coverage, the employer is treated as having made an offer of health coverage to the employee only if that health coverage provides minimum value and does not require an employee contribution for the coverage for any calendar month of more than 9.5 percent of a monthly amount determined as the mainland federal poverty line for a single individual for the applicable calendar year, divided by 12.
 
For purposes of reporting, an offer to a spouse includes an offer to a spouse that is subject to a reasonable, objective condition, regardless of whether the spouse meets the reasonable, objective condition. For example, an offer of coverage that is available to a spouse only if the spouse certifies that the spouse does not have access to health coverage from another employer is treated as an offer of coverage to the spouse for reporting purposes. Note that this treatment is for reporting purposes only, and generally will not affect the spouse’s eligibility for the premium tax credit if the spouse did not meet the condition and therefore did not have an actual offer of coverage.
 
An employer offers health coverage for a month only if it offers health coverage that would provide coverage for every day of that calendar month. For reporting purposes, this means that an offer of coverage does not occur for a month if an employee’s employment terminates before the last day of a calendar month and the health coverage also ends before the last day of that calendar month (or for an employee who did not enroll in coverage, the coverage would have ended if the employee had enrolled in coverage).
 
An employer offers health coverage to an employee if it, or another employer in the Aggregated ALE Group, or a third party such as a multiemployer or single employer Taft-Hartley plan, a multiple employer welfare arrangement (MEWA), or, in certain cases, a staffing firm, offers health coverage on behalf of the employer.
 
For a copy of the instructions, please click on the link below:

http://www.irs.gov/pub/irs-dft/i109495c–dft.pdf   

If you have any comments or questions regarding any of the above information, please do not hesitate to call me at (708) 717-9638 or e-mail me at larry@larrygrudzien.com

Starting with the 2015 tax year, health coverage reporting will be required, and large underwritten and self-funded groups must be prepared to do this in 2016.

In a previous Blue Alert, we told you about the requirements for us to report on our underwritten group and individual (off-Marketplace) coverage information (IRS Section 6055). We also provided information about how large group employers and self-funded groups should report coverage information about their full-time employees (IRS Section 6056).

We’ve developed a one-page document that you can use when educating your groups that will help them understand the following:

   * Who is responsible for Section 6055 and Section 6056 reporting by market segment?
   * Which IRS form is used to report health plan coverage information?

Important reminder about self-funded groups
We are reminding you that self-funded groups are responsible for reporting member coverage to the IRS in 2016. These groups must remember to report tax identification numbers (most likely Social Security numbers) to the IRS on all members on a contract, including dependents.

We won’t be able to help these groups collect members’ taxpayer identification numbers (most likely Social Security numbers). We’re also unable to provide reports such as D1 reports for 6055 reporting purposes.

However, we’re working on a solution that would allow your groups to retrieve a membership file that would supply member counts. Self-funded groups could use that information to help with their reporting.

What you can do
If you are a sales representative or agent, explain the reporting requirements to your group.

For more information, refer to our frequently asked questions document.

Questions? Contact your Blues sales representative or managing agent.