Affordable Care Act Archives - Page 11 of 23

Modification of “Use It or Lose It” Rule for Health Flexible Spending Arrangements

by McDermott Will & Emery | Nov 12, 2013 | Health and Welfare Plans

The Internal Revenue Service recently issued new guidance modifying the “use it or lose it” rule applicable to health flexible spending arrangements (FSAs) to allow carryover of certain unused health FSA amounts into the next plan year.

On October 31, 2013, the Internal Revenue Service (IRS) issued Notice 2013-71, which modifies the existing requirement that unused amounts in a health flexible spending arrangement (FSA) at the end of a plan year (or applicable grace period) must be forfeited. This new guidance permits an employer to amend its cafeteria plan, effective as early as the 2013 plan year, to allow up to $500 of unused amounts as of the end of the plan year to be carried forward for use in the following plan year. The tradeoff is that a health FSA cannot have both a grace period and a carryover feature; it is one or the other.

Carryover of Certain Unused Amounts Permitted

The “use it or lose it” rule applicable to health FSAs requires unused amounts remaining in a health FSA at the end of a plan year (or applicable grace period) to be forfeited. The new guidance now permits an employer to amend its plan to allow for up to $500 of unused amounts remaining in a health FSA at the end of a plan year to be carried forward to reimburse eligible expenses incurred in the next following plan year. While the employer can elect to allow less than $500 to be carried over into the next following plan year, the same carryover limit must apply to all plan participants. This $500 permitted carryover feature does not affect the $2,500 annual health FSA limit imposed by the Affordable Care Act. Thus, a participant with $500 remaining unused in his or her health FSA at the end of a plan year may be permitted to carryover the $500 into the next plan year, in addition to a maximum contribution of $2,500, for a potential total of $3,000 available reimbursement that next following plan year.

Under prior IRS guidance, health FSAs are permitted to include a two-month and 15-day grace period after the end of the plan year, during which a health FSA participant can incur eligible expenses and use the amounts contributed for the previous year to pay those expenses. The new guidance specifies that a plan that is amended to provide for the carryover of unused health FSA amounts into the following plan year cannot also have a grace period in place for that following plan year. Thus, an employer amending its plan to allow for carryover of unused health FSA amounts may also need to amend the plan to remove any existing grace period feature.

Deadline for Plan Amendments Allowing Carryover

Under the new guidance, an employer electing to allow for carryover of unused health FSA amounts must amend its plan to permit the carryover. This amendment must be adopted on or before the last day of the plan year from which amounts can be carried [...]

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New Guidance Clarifies Health Reimbursement Arrangements Under ACA

by McDermott Will & Emery | Oct 31, 2013 | Health and Welfare Plans

Recently issued guidance clarifies the application of certain provisions under the Affordable Care Act (ACA) to health reimbursement arrangements, employer payment plans, health flexible spending arrangements and employee assistance programs.

To read the full article, click here.

IRS Issues Proposed Regulations on Information Reporting under the Affordable Care Act

by McDermott Will & Emery | Sep 17, 2013 | Health and Welfare Plans

by Amy M. Gordon, Susan M. Nash and Jacob Mattinson

Recently issued guidance clarifies annual information reporting requirements for insurers and employers under the Affordable Care Act (ACA). The required reporting enables the Internal Revenue Service to determine compliance with the employer and individual mandates and individual eligibility for premium tax credits under the ACA.

To read the full article please click here.

FAQ on Notice of Coverage Options for ACA’s New Health Insurance Marketplace

by McDermott Will & Emery | Sep 12, 2013 | Health and Welfare Plans

In a brief Frequently Asked Question (FAQ) document quietly issued yesterday, the U.S. Department of Labor formally clarified there is no penalty associated with provision of the Exchange Notice. The guidance states that employers “should provide a written notice to its employees about the Health Insurance Marketplace by October 1, 2013, but there is no fine or penalty under the law for failing to provide the notice.” Therefore, employers should send out the Exchange Notice, but there would be no penalty if someone is missed. (This FAQ does not state or imply that employers no longer have to send out the notice.)

A link to the FAQ can be found here.

Final Affordable Care Act Regulations on the Exemption of Contraceptives Coverage by Religious Employers and Student Health Insurance

by McDermott Will & Emery | Jul 23, 2013 | Health and Welfare Plans

by Amy M. Gordon and Jamie A. Weyeneth

The final regulations retain the definition of a religious employer, modify the accommodations provided for eligible organizations that object to contraception coverage on religious grounds, and describe how contraceptives will be provided and paid for under both a fully insured and a self-insured group health plan.

To read the full article, click here.

Transition Relief on Certain Information Reporting and Employer Shared Responsibility Provisions

by McDermott Will & Emery | Jul 17, 2013 | Health and Welfare Plans

by Amy M. Gordon, Joanna C. Kerpen, Megan Mardy and Jamie A. Weyeneth

The Internal Revenue Service has provided transition relief for 2014 from the information reporting requirements under Internal Revenue Code Sections 6055 and 6056, and from the employer pay-or-play penalties under Code Section 4980H.

To read the full article, click here.

Final ACA Wellness Rules Issued

by McDermott Will & Emery | Jun 6, 2013 | Health and Welfare Plans

by Amy Gordon and Jamie Weyeneth

On May 29, the U.S. Departments of the Treasury, Labor (DOL) and Health and Human Services issued final regulations amending the 2006 HIPAA nondiscrimination wellness regulations to implement the employer wellness program provisions of the Affordable Care Act. In their article “Final ACA Wellness Rules Issued,” published by Employee Benefits Advisor, Amy Gordon and Jamie Weyeneth discuss the updated and expanded requirements for health-contingent wellness programs.

To read the full article, click here.

ACA Guidance on 90-Day Waiting Periods and Certificates of Creditable Coverage

by McDermott Will & Emery | Apr 16, 2013 | Health and Welfare Plans

by Amy M. Gordon, Jamie A. Weyeneth and Megan Mardy

Recently issued Affordable Care Act guidance clarifies the prohibition on waiting periods in excess of 90 days and eliminates the requirement to issue HIPAA group health plan certificates of creditable coverage after December 31, 2014.

To read the full article, click here.

New ACA Regulations Address Minimum Essential Coverage and Exemptions

by McDermott Will & Emery | Jan 31, 2013 | Health and Welfare Plans

by Anne W. Hance and Amy M. Gordon

The U.S. Department of Health and Human Services (HHS) and the Internal Revenue Service (IRS) released on January 30, 2013, two proposed rules and a final rule relating to the Affordable Care Act’s (ACA) requirement that individuals maintain “minimum essential coverage” (MEC) or be subject to a “shared responsibility” payment.

IRS Final Rule: The IRS issued final regulations in May 2012 addressing eligibility for the health insurance premium tax credit, which is available to certain low-income individuals purchasing a qualified health plan on a health insurance exchange. The January 30, 2013 final rule supplements these regulations by finalizing the requirement that “affordability” of coverage available for the employee under an employer-sponsored group health plan is determined based on self-only coverage (and not family coverage).
IRS Proposed Rule: The proposed rule addresses (1) the obligation each taxpayer has to make a “shared responsibility payment” for himself, herself and any dependents who, for a calendar month, do not have MEC, and (2) exemptions to this payment obligation. The limited exceptions for this payment obligation include individuals who lack access to affordable MEC. The proposed rule addresses the difference in determining affordable MEC for an employee eligible for coverage under a group health plan (as described above) versus affordability for a “related individual.” A “related individual” is one for whom an Internal Revenue Code Section 151 deduction can be claimed.
HHS Proposed Rule: The HHS proposed rule sets forth standards and processes by which a health insurance exchange will make eligibility determinations and grant exemptions from the shared responsibility payment. This proposed rule also (1) identifies certain types of coverage deemed to be MEC , and (2) sets forth standards by which HHS may designate certain health benefits coverage as MEC.For example, self-funded student health insurance coverage and Medicare Advantage Plans are proposed to be designated as MEC. Additionally, sponsors of other types of coverage that meet designated criteria, such as providing consumer protections required by the Affordable Care Act, may apply to HHS for recognition as MEC.

Next Steps

Health insurance issuers will want to consider whether the various products they offer or administer will meet the MEC requirements set forth in HHS’s proposed rule, in order to respond to inquiries from customers, to meet notice requirements (including inserting model statements into existing plan documents, as applicable), and potentially to respond to exchanges making eligibility determinations. If a product does not constitute MEC, issuers may want to consider whether to continue to offer the product in its current form or revise the coverage to meet the MEC requirements.

Sponsors of group health plans will need to consider the separate affordability standards for employees and for related individuals and the implications for group health plan participants, and either modify coverage to meet the MEC standards, or consider the consequences of the shared responsibility payment.

Proposed ACA Regulations on Transitional Reinsurance Program Premiums and Potential Effects for Employer-Sponsored Group Health Plans

by Jackie Sinn | Dec 31, 2012 | Health and Welfare Plans

by Amy M. Gordon, Jacob Mattinson and Susan M. Nash

As part of the Patient Protection and Affordable Care Act (ACA), the U.S. Department of Health and Human Services (HHS) recently released proposed regulations regarding the estimated amount of annual contributions that are required to be paid to HHS from employer-sponsored group health plans to finance state transitional reinsurance programs. The reinsurance programs are intended to help stabilize premiums for coverage in the individual market during the first three years the state health insurance exchanges are operational (2014 through 2016). HHS is estimating the annual contribution rate for 2014 will be $63 per covered life (employees and their dependents). This will undoubtedly impact the overall cost of providing coverage under an employer-sponsored group health plan and should be taken into account by employers for purposes of estimating cost trends.

Read the full article here.

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