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IRS Notice Increases Dollar Amount Basis of PCORI Fee

The IRS recently issued Notice 2018-85, which increases the dollar amount that is the basis of the fee established under the Affordable Care Act to help fund the Patient-Centered Outcomes Research Institute (“PCORI Fee”). The PCORI Fee is imposed on plan sponsors of applicable self-funded health plans and issuers of specified health insurance policies. Plan sponsors remit the PCORI Fee to the IRS annually by filing an IRS Form 720. The PCORI Fee is based on a flat dollar amount multiplied by the average number of lives covered under the plan for the applicable plan year. The dollar amount for plan and policy years that ended on or after October 1, 2017 and before October 1, 2018, is $2.39. Notice 2018-85 increases the dollar amount for plan and policy years that end on or after October 1, 2018 and before October 1, 2019, to $2.45. View Notice 2018-85.

New HRA Option for Employers in 2020 May Avoid ACA Employer Penalties

New proposed rules have been issued by the federal Departments of the Treasury, Labor, and Health and Human Services that permit employers to offer health reimbursement arrangements (“HRAs”) to employees who are enrolled in individual health insurance coverage. An employee could use such an HRA to pay the employee’s premiums for individual health insurance and other medical expenses. The same HRA must be offered to an entire “class” of employees, and a traditional group health plan could not be offered to that class. Classes of employees include full-time, part-time, seasonal, union, employees in a waiting period, employees under age 25, non-resident aliens with no U.S. income, employees in the same insurance rating area, or a combination of those classes. The HRA contribution could increase with age, reflecting the fact that health coverage for older employees is generally more expensive, and the IRS will provide an approach for varying contributions by… Continue Reading

Reminder: July 31, 2018 Deadline for Annual Reporting and Payment of PCORI Fee Under the Affordable Care Act

The deadline for plan sponsors of self-insured health plans to report and remit the Patient-Centered Outcomes Research Institute fee (“PCORI Fee”) due under the Affordable Care Act with respect to the 2017 plan year is July 31, 2018. For this purpose, a plan year that ended during the 2017 calendar year is considered a 2017 plan year. The PCORI Fee is assessed to fund the Patient-Centered Outcomes Research Institute and applies to plan years ending on or after October 1, 2012, and before October 1, 2019. Plans should report and remit the PCORI Fee via a second quarter IRS Form 720. The PCORI Fee is based on a flat dollar amount multiplied by the average number of lives covered under the plan for the applicable plan year. The covered lives fee amount for plan years that ended after December 31, 2016, but before October 1, 2017 is $2.26, and the… Continue Reading

IRS Increases ACA Employer Affordability Percentage for 2019

Generally, the Affordable Care Act (the “ACA”) requires coverage under a group health plan sponsored by an “applicable large employer” (at least 50 full-time equivalent employees) to be “affordable”, as determined under the ACA, in order to avoid certain ACA penalties. “Affordability” is based on whether the premium for employee-only coverage is less than a certain percentage of an employee’s household income or a designated safe harbor amount. The IRS has increased the affordability percentage for 2019 to 9.86 percent, up from 9.56 percent in 2018.

Deferred Effective Date of “Cadillac Tax” on High Cost Employer-Sponsored Health Coverage

In addition to maintaining the funding of the federal government through February 8, 2018, the recently enacted continuing resolution, H.R. 195, entitled the “Federal Register Printing Savings Act of 2017”, deferred by two additional years the date on which the excise tax on high cost employer-sponsored health coverage under the Affordable Care Act, the so-called “Cadillac Tax”, becomes effective. The effective date of the Cadillac Tax had previously been postponed until taxable years beginning after December 31, 2019 (see our prior blog post regarding that postponement). Under H.R. 195, the Cadillac Tax will now go into effect for taxable years beginning after December 31, 2021 (i.e., for calendar year health plans, January 1, 2022). View the text of H.R. 195.

Federal Courts Enjoin Religious and Moral Exemptions under ACA’s Contraceptive Coverage Mandate

In December 2017, two federal district courts granted nationwide preliminary injunctions from enforcement of the interim final rules providing for religious and moral exemptions from the contraceptive coverage mandate under the ACA issued in October 2017 by the U.S. Departments of Health and Human Services, Labor, and the Treasury (collectively, the “Departments”). Please see our earlier discussion of these exemptions. Both federal courts held that the Departments impermissibly bypassed the notice and comment rulemaking requirements of the Administrative Procedures Act and that the plaintiffs, consisting of six states, sufficiently demonstrated they would be harmed without an injunction. The timing of these injunctions is a cause for concern for any plan sponsors who have already acted in reliance on the interim final rules. The U.S. Department of Justice has indicated it disagrees with these rulings and may appeal. View Commonwealth of Pennsylvania v. Trump. View State of California v. Health and… Continue Reading

DOL Proposed Regulations Make Association Health Plans a More Viable Option for Some Employers

The DOL recently issued proposed regulations which broaden the criteria under ERISA for determining when a group of employers may join together as a single employer to sponsor a single group health plan under ERISA, in the form of an “association health plan” (“AHP”). Joining an AHP could be a more viable option for many small employers. Various federal and state laws affecting employer-sponsored health coverage, including the Affordable Care Act (the “ACA”), impose requirements that differ based on whether employer-sponsored health coverage is insured or self-funded and, if insured, whether it is offered in the “small group” or “large group” insurance market. The status of coverage as either small or large group coverage generally depends on how many employees the employer has and affects the employer’s compliance obligations under the ACA and other laws. Under current DOL guidance, a group of small employers that want to associate in order… Continue Reading

Extension of Due Dates for 2017 Individual Statements under Affordable Care Act Information Reporting

In Notice 2018-06, the IRS extended the due date, from January 31, 2018 to March 2, 2018, for employers (including applicable large employers), insurers, and other providers of “minimum essential coverage” in 2017 (“Reporting Entities”) to furnish statements to individuals on IRS Forms 1095-B and 1095-C, pursuant to the Affordable Care Act’s information reporting requirements (the “ACA Reporting Requirements”). The notice also extends the IRS’s transition relief from penalties that the Reporting Entities would otherwise incur for incorrect or incomplete information reported on their 2017 information statements to individuals or returns filed with the IRS. To obtain this transition relief, a Reporting Entity must show that it made a good faith effort to comply with the ACA Reporting Requirements in furnishing statements to individuals and filing its IRS returns. Notably, the notice does not extend the due date under the ACA Reporting Requirements for Reporting Entities to file their 2017… Continue Reading

IRS Releases Guidance for ACA Employer Shared Responsibility Payment Process

The IRS recently updated its Questions and Answers on Employer Shared Responsibility Provisions under the Affordable Care Act (the “FAQs”) to include a description of the employer shared responsibility payments process in the form of revised FAQs #55 – 58. FAQ #58 indicates the IRS will send assessments for the 2016 reporting year in late 2017. A brief overview of this process is described below: The IRS will send Letter 226J to the employer. This letter will include: (i) the assessment amount the IRS believes is owed by the employer for each month of the prior reporting year; (ii) a list of the full time employees resulting in the assessment (the list will include the Form 1095-C Part II indicator codes provided to the IRS, if any, by the employer); (iii) the steps the employer should take if it agrees or disagrees with the assessment; and (iv) the steps the… Continue Reading

IRS Issues Helpful Guidance Regarding Qualified Small Employer Health Reimbursement Arrangements

The IRS recently issued Notice 2017-67 (the “Notice”) containing 79 questions and answers that provide helpful guidance regarding the requirements for “qualified small employer health reimbursement arrangements” (“QSEHRAs”). As discussed in our prior blog posts (linked below), starting January 1, 2017, eligible small employers are permitted to offer employees a QSEHRA to reimburse substantiated medical care expenses, including premiums, of up to a specified maximum per year, provided that certain requirements are met. Among other items, the Notice addresses the QSEHRA requirements regarding employer and employee eligibility, the written employee notice, the substantiation of reimbursable expenses, and Form W-2 reporting of QSEHRA coverage. The Notice also discusses the impact of QSEHRA coverage on health savings account eligibility. View IRS Notice 2017-67. Our prior blog posts regarding QSEHRAs are available here: Small Employers Can Reimburse Premiums and Medical Expenses IRS Provides Transition Relief Regarding QSEHRA Notice Deadline Executive Order Directs Agencies… Continue Reading

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