minimum essential coverage Archives - EMPLOYEE BENEFITS BLOG

Affordable Care Act Compliance: IRS Releases Draft 2016 Employer Reporting Forms and Instructions

by McDermott Will & Emery | Aug 30, 2016 | Health and Welfare Plans

On August 2, the Internal Revenue Service (IRS) released revised draft Forms 1094-C and 1095-C, and draft instructions for completing these forms for the 2016 reporting year (see here). Although these are not final versions, it is important for employers to review the updates and changes from the 2015 forms and instructions as they prepare for the 2016 filings.

The Affordable Care Act (ACA) created new reporting requirements under Sections 6055 and 6056 of the Internal Revenue Code (Code). The new rules require an applicable large employer (ALE) to report, on IRS Forms 1094-C and 1095-C, information about offers of health insurance coverage to full-time employees (FTEs) and the provision of minimum essential coverage (MEC). The Form 1094-C is also referred to as the “authoritative transmittal.” For 2016, an ALE is generally an employer with 50 or more FTE equivalents. Under Code Section 6056, an ALE must annually file with the IRS a report listing the offers of coverage made to its FTEs during the reporting year. In addition, ALEs must furnish a related statement of coverage information to FTEs. Under Code Section 6055, employers (including ALEs) who provide MEC under self-insured plans must also report MEC information for each individual covered under the employer’s self-insured plan. ALE status is determined on a controlled group basis, and each member of the controlled group is an “ALE Member” with an independent responsibility to file a Form 1094-C and Form 1095-Cs. Generally, the reporting is required at the employer identification number (EIN) level.

Under Code Section 6055, employers that are not ALEs must report MEC information on Forms 1094-B and 1095-B. Although these forms were also revised recently, draft instructions for completing these forms have not yet been released.

Read the full article here for the upcoming changes in detail, when to file and next steps to plan for.

Individual Responsibility under the ACA

by McDermott Will & Emery | Aug 11, 2014 | Health and Welfare Plans

Effective 2014, if a taxpayer is not covered under minimum essential coverage for one or more months, then, unless an exemption applies, the taxpayer is liable for the individual shared responsibility payment on his return. The individual shared responsibility payment is the lesser of: (1) the sum of the monthly penalty amounts; or (2) the sum of the “monthly national average bronze plan premiums” for the “shared responsibility family.”

In recently published Revenue Procedure 2014-46, Sec. 3, the IRS provides that the monthly national average premium, for qualified health plans that have a bronze level of coverage and are offered through exchanges in 2014, is $204 per individual and $1,020 for a shared responsibility family with five or more members. For example, if the sum of the monthly penalty amount is $95 (or 1 percent of income) and the bronze level of coverage costs $204, the individual’s shared responsibility payment would be $95, unless the 1 percent is greater than $95.

IRS Provides Clarity on Whether Professional Employer Organizations Can Offer Eligible Employer-Sponsored Plans

by McDermott Will & Emery | Aug 29, 2013 | Health and Welfare Plans

The Internal Revenue Service (IRS) has released final regulations on the requirement that individuals maintain health insurance that meets the minimum essential coverage standard (the “individual mandate”). These regulations give clarity to Professional Employer Organizations (PEOs) offering group health plan coverage to employees on behalf of an employer. An individual can satisfy the minimum essential coverage requirement by maintaining coverage under an eligible employer-sponsored plan. The final regulations provide that an eligible employer-sponsored plan includes coverage offered by a PEO on behalf of an employer. Specifically, the definition of eligible employer-sponsored plan in the final regulations (Section 1.5000A-2(c)) provides that an eligible employer-sponsored plan includes, in addition to coverage offered by an employer, (i) group health insurance coverage offered on behalf of an employer to an employee and (ii) a self-insured group health plan under which coverage is offered by, or on behalf of, an employer to the employee. In addition, the preamble to the final regulations explicitly states that organizations such as PEOs can offer coverage under an eligible employer-sponsored plan on behalf of an employer, yet not be viewed as the employer by reason of offering such coverage (“commentators asked whether a plan offered to an employer’s employees by a third party, such as a professional employer organization or leasing company, is an eligible employer-sponsored plan for the employees eligible to participate in the plan. The final regulations are revised to provide that a plan offered by an employer to an employee includes a plan offered to an employee on behalf of an employer. No inference is intended from this treatment that the third party is the employer for this or any other provision of the Code or related laws.”).

The final regulations are expected to be published in the Federal Register on August 30, 2013.

Favorable Temporary ACA Exemption for Expatriate Health Plans

by McDermott Will & Emery | May 21, 2013 | Health and Welfare Plans

by Amy M. Gordon, Megan Mardy and Todd A. Solomon

Recently issued guidance addresses the unique compliance issues surrounding expatriate health plans under the Patient Protection and Affordable Care Act of 2010, as amended by the Health Care and Education Reconciliation Act of 2010 (ACA).

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.

IRS Requests Comments on Minimum Value and Reporting Requirements

by McDermott Will & Emery | May 10, 2012 | Health and Welfare Plans

by Amy M. Gordon, Susan M. Nash and Jamie A. Weyeneth.

The Internal Revenue Service recently issued requests for comments in advance of issuing proposed regulations on health care reform reporting and minimum value requirements.

To read the full article, click here.