6 Key Steps for Businesses to Prepare for 2016 Health Care Reform
A new year means new and continuing responsibilities under the Affordable Care Act (ACA) for employers sponsoring group health plans. I thought you may find this information useful, below you will find 6 key steps for businesses to prepare for 2016 health care refo
1. Evaluating Grandfathered Status of Group Health Plan Remember that changes to a grandfathered plan that reduce benefits or increase costs to employees may result in a loss of grandfathered status, requiring the plan to come into compliance with additional ACA requirements that previously did not apply because the plan was exempt. Grandfathered plans must provide notice to enrollees and keep appropriate records to maintain grandfathered status.
2. Reviewing Plan Documents for Required Changes to Plan Benefits Plan design and benefits offered should reflect a number of recent changes, including:
A 90-day limitation on waiting periods (reasonable and bona fide employment-based orientation periods not to exceed one month);
The elimination of employer payment plans (arrangements under which an employer reimburses an employee for some or all of the premium expenses incurred for an individual health insurance policy, or uses its funds to directly pay the premium for an individual policy), including those sponsored by small employers; and
For non-grandfathered plans, limitations on annual out-of-pocket costs for essential health benefits (unless notified otherwise by the insurance carrier).
3. Analyzing Tax-Favored Arrangements For employers that sponsor these types of arrangements, ensure that:
Health reimbursement arrangements (other than retiree-only HRAs and HRAs consisting solely of excepted benefits) are "integrated" with other group health plan coverage.
Health flexible spending arrangements (FSAs) qualify as excepted benefits, are offered through a cafeteria plan, and employee salary reduction contributions are limited to $2,550 for the year.
Cafeteria plans do not provide a qualified health plan offered through the Individual Health Insurance Marketplace as a benefit.
4. Providing Required Notices to Employees and Dependents All new employees should receive a notice about the Health Insurance Marketplace within 14 days of their start dates. Employers sponsoring group health plans also need to provide a Summary of Benefits and Coverage (SBC) to participants and beneficiaries (or contract with the carrier or third party administrator to do so) at various times during the enrollment process and upon request.
5. Complying With "Pay or Play" Responsibilities Employers that are subject to "pay or play" for 2016 (generally those with 50 or more full-time employees, including full-time equivalents, on average during 2015) should decide whether to offer group health plan coverage to full-time employees and their dependents, and determine if a penalty will apply. An employer may be liable for a penalty if it does not offer affordable health insurance that provides minimum value to its full-time employees (and their dependents), and any full-time employee receives a premium tax credit for purchasing individual coverage on the Health Insurance Marketplace.
6. Satisfying New Information Reporting Requirements (IRS Forms 1094 and 1095) The ACA requires self-insuring employers (regardless of size) and other parties that provide minimum essential health coverage to report information on this coverage to the IRS and to covered individuals. Large employers (generally those with 50 or more full-time employees) are also required to report information to the IRS and to their employees about their compliance with the "pay or play" provisions and the health care coverage they have offered. The first information returns must be filed with the IRS no later than February 29, 2016 (or March 31, 2016, if filed electronically), and the first individual/employee statements must be furnished on or before January 31, 2016. Additional items that may be of continued significance for certain employers and group health plans in 2016 include distribution of Medical Loss Ratio (MLR) rebates, withholding of Additional Medicare Tax, reporting of health coverage on Forms W-2 (for employers required to file at least 250 Forms W-2), and payment of Transitional Reinsurance Program and Patient-Centered Outcomes Research Institute (PCORI) fees.
Review our 2016 Health Care Reform Checklist for more details regarding ACA requirements for employers in the upcoming year.