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What a Difference an “H” Makes

March 13, 2017

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Late on Monday, House Republicans revealed, in two parts (here and here, with summaries here and here) the American Health Care Act (“AHCA”) that is designed to meet the Republicans’ promise to “repeal and replace” the ACA.  In many respects, the AHCA is less “repeal and replace” and more “retool and repurpose,” but there are some significant changes that could affect employers, if this bill becomes law as-is.  Below is a brief summary of the most important points:

  • Employer Mandate, We Hardly Knew You. The ACA employer play or pay mandate is repealed retroactive to January 1, 2016, so if you didn’t offer coverage to your full-time employees, then this is the equivalent of the Monopoly “Get out of Jail Free” card.
  • OTC Reimbursements Allowed from HSAs and FSAs, Without a Prescription. This goes back to the old rules that allowed these reimbursements.

New IRS Memo Confirms Tax Treatment of Wellness Programs & Incentives

June 14, 2016

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In a recently released IRS Chief Counsel Memo, the IRS confirmed that wellness incentives are generally taxable. The memo also, indirectly, confirmed the tax treatment of wellness programs more generally.

As to the incentives, the IRS held that a cash payment to employees for participating in a wellness program is taxable to the employees. The memo did not deal with incentives paid to dependents, but we presume those would be taxable to the applicable employee as well.  The IRS did say that certain in-kind fringe benefits (like a tee shirt) might be so de minimis as to be exempt as fringe benefits.  Confirming the IRS’s long-standing position, however, cash does not qualify for this exception and is taxable.

This tax treatment also applies to premium reimbursements if the premiums were paid for on a pre-tax basis through a cafeteria plan. Therefore, if employees who participate in a wellness program

New ACA, et. al. FAQs Cover Items From “Top” to “Bottom”

April 26, 2016

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On April 20, the “Big Three” agencies (DOL, Treasury/IRS, and HHS) released another set of FAQs (the 31st, for those of you counting at home). Consistent with earlier FAQs, the new FAQs cover a broad range of items under the Affordable Care Act, Mental Health Parity and Addiction Equity Act, and Women’s Health Cancer Rights Act. The authors are admittedly curious about how “Frequently” some of these questions are really asked, but we will deal with all of them in brief form below.

1. Bowel Preparation Medication – For those getting a colonoscopy, there is good news. (No, you still have to go.) But the ACA FAQs now say that medications prescribed by your doctor to get you ready for the procedure should be covered by your plan without cost sharing. Plans that were not already covering these at the first dollar will need to start.

2. Contraceptives – As a reminder, plans are

Don’t Be Confused – 9.56% may still just be 9.5% for you

February 13, 2015

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In prior posts, we have described how coverage has to be “affordable” to avoid the ACA play or pay penalty. We’ve usually used the shorthand that the premium must be no more than 9.5% of an employee’s household income. However, that 9.5% is subject to periodic adjustments designed to approximate the difference between the growth in insurance premium costs and income. For 2015, that percentage has been adjusted to 9.56%.

However, there’s a catch here: the percentage applies to actual household income, which is something an employer is very unlikely to know. Recognizing this, the IRS has provided some safe harbors based on information more readily available to an employer. Those are the W-2, rate of pay, and Federal Poverty Line safe harbors.   Without describing all the details, the general rule is that if the premium for an employer’s coverage is less than 9.5% of the employee’s

Anthem Data Breach Implications for Employers

February 5, 2015

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As has now been widely reported, Anthem, Inc. was the unfortunate target of a cyber-attack potentially impacting 80 million current and former customers. Some reports have indicated that the HIPAA breach notification rules will not apply to this breach. However, the information stolen appears to include individually identifiable information, potentially including health plan enrollment information. Enrollment information, in the hands of a health plan, is protected health information (PHI), so it is possible that the HIPAA data breach notification rules are applicable. As such, both insured and self-funded customers utilizing Anthem as their TPA should review information concerning the Anthem breach carefully before concluding that the HIPAA breach notification rules do not apply.

Additionally, given that claims for other Blue Cross Blue Shield customers may have been submitted through Anthem for employees and dependents in an Anthem service area, it is possible that Anthem has information on individuals

Breaking – Treasury Official Announces Anticipated Delay in Employer Mandate, Reporting Requirements

July 8, 2013

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From BenefitsBryanCave.com

See the details in this article here.

A link to the Treasury’s website with the release here.  Update 7/3: A White House blog post on this topic is also available.

Update: We’re still digesting this news, but here’s a summary of the Treasury blog post:

  • It will be an additional year before employer and insurer reporting under Code Sections 6055 and 6056 is effective (so the first reports will be due in 2015 rather than in 2014)
  • Proposed regulations on these reporting requirements are expected this summer
  • The IRS encourages voluntary reporting in 2014
  • Since enforcement of Employer Shared Responsibility mandate hinges upon these reports, excise taxes under the mandate will not apply in 2014
  • Formal guidance on the transition period for this delayed enforcement is expected within a week
  • It is not clear whether an employer is required to make efforts toward implementation or do anything

Renew Early? Pay Later?

May 30, 2013

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Renew Early? Pay Later?

May 30, 2013

Authored by: Chris Rylands

From BenefitsBryanCave.com

While we have not heard it first-hand, we have heard through the grapevine that some insurance carriers are out there offering to their clients the ability to “renew early.”  Part of the strategy is, apparently, to delay the application of health care reform provisions.  The following discussion addresses some risks associated with reliance on such a strategy as a means of complying with the employer mandate and the insurance mandates.

EMPLOYER MANDATE:  At the outset, let’s be clear about one fact: this does not get an employer out of play or pay.  The employer mandate rules specifically say that a plan year can only be changed for a valid business purpose and that, in this case, avoiding the shared responsibility tax is not a valid business purpose.  Renewing early is (assuming other legal niceties are satisfied) a change in plan year.  Without a business purpose,

It’s About Time to Start Counting Up the Hours

From BenefitsBryanCave.com

Unless you’ve been under a proverbial (or actual) rock for the last several months, you are probably aware that the health reform law has a really big tax that could hit employers for not offering (or not offering good enough) health coverage to their full-time employees and dependents, referred to as play or pay (or “shared responsibility”) rules. We’ve discussed the proposed regulations previously here. But starting with this post, we are going to cover these rules in digestible portions. This will help you see some of the finer points of the rules, without having to swallow the entire regulations in a single sitting. In this first post, we’ll cover how you determine full-time employees (so you know who has to be offered coverage effective January 1, 2014)in a Q&A format. It’s worth noting the rules discussed here technically apply to all ongoing employees

IRS Audit Trends & Issues for Benefit Plans

February 26, 2013

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From BenefitsBryanCave.com

Continuing our series of posts reporting on the recent TE/GE meetings, today we focus on the audit trends and issues that the IRS officials in attendance identified.  In addition to providing insight on the IRS’s focus, the list serves as a good compliance checklist for plan sponsors.  Are you making these errors?  If so, you can (and should) fix them now before the IRS comes knocking.

Areas of Focus. At the outset, it’s helpful to know where the IRS is looking for trouble, so you can have some idea where agents are coming from when you get the dreaded audit letter.  The officials at TE/GE gave these insights:

  • Most audits are focused on 3 or 4 particular issues depending on the market segment (i.e., the business of the employer) and the size of the plan (generally less than 100 participants is a

Proposed Contraceptive Compromise Rule Released

February 5, 2013

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From BenefitsBryanCave.com

Continuing what has become a habit of Friday afternoon rule issuances, the Departments of the Treasury, Labor, and Health and Human Services issued a proposed rule last Friday to attempt to accommodate the objections of religious employers to the contraceptive mandate.  The rule makes a few accommodations to the prior guidance.

  • § First, the definition of “religious employer” (i.e., an employer entirely exempt from the mandate) has been expanded by eliminating the 3 prior requirements, which resulted in widespread objections:  that the organization (1)  have as its purpose the inculcation of religious values, (2) primarily employ persons who share its religious beliefs, and (3) primarily serve persons who share its religious beliefs.  Under the new proposal, a “religious employer” must be described in Code section 6033(a)(3)(A) (i) and (iii), which refer to churches, their integrated auxiliaries, conventions and associations of
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