Author Archives | Dawn Kramer

About Dawn Kramer

Dawn is an attorney and Certified Employee Benefit Specialist (CEBS) in J.W. Terrill’s Consulting Services department. She advises clients on legal and regulatory issues affecting their employee benefit plans.

Automatic Enrollment Given a Boost

February 5, 2019

0 Comments

U.S. Department of Labor (DOL) Issues Letter Indicating ERISA Preemption Applies to State Payroll Withholding Laws

On December 4, 2018, the DOL issued a letter in response to an inquiry from the American Council of Life Insurers (ACLI) about the interaction of ERISA and state wage withholding laws that require an affirmative written election before payroll deductions may be taken as contributions toward coverage in an employer-sponsored benefit plan.

ACLI’s inquiry related to employer-provided disability coverage, but the DOL responded more broadly and indicated that ERISA preempts (overrides) such a state law. This generally means that, unless an employee has waived coverage, an employer with an ERISA-covered benefit plan may automatically enroll employees in coverage and deduct the required contributions from employee paychecks. This letter does not actually represent a change in the DOL’s position or introduce any new guidance, but it is a welcome clarification that allows employers flexibility to increase group plan participation, spreading risk, and expanding protection for their workers.

ERISA Preemption Primer

Basically, the legal doctrine of ERISA preemption provides that a benefit plan subject to ERISA may generally ignore any conflicting state law that may relate to the benefit plan with certain limited exceptions. The most significant exception allows states to regulate insurance within their borders, and state laws regulating insurance are “saved” from ERISA preemption. This is why state insurance mandates apply to fully-insured ERISA plans while self-insured ERISA plans may choose to ignore them.

In support of its position for the preemption of state wage withholding laws in connection with enrollment in an ERISA plan, the DOL cited various court cases and previous Advisory Opinions addressing circumstances in which state laws have been found to relate to an ERISA benefit plan. To the extent an applicable state law is interpreted to regulate or limit an employer’s ability to enroll employees or to make plan-related payroll deductions, it is the DOL’s position that such state law will be preempted and will not apply to the employer’s ERISA plan.

Note: The DOL’s letter did not address any of the exceptions to ERISA preemption such as the exception saving state insurance laws. As a result, the letter shouldn’t be viewed as sanctioning other actions an employer might want to take with respect to a fully-insured benefit plan.

Notes and Practical Issues

If an employer wants to implement an automatic enrollment policy, there are a few additional considerations that should be taken into account. For example, ERISA imposes certain fiduciary obligations on an employer in its role as plan administrator. Among other things, this requires comprehensive communications pieces about any plan terms and conditions as well as a clear explanation of the employee’s right to decline coverage and the exact procedures and timeframes for doing so.

We realize that the inquiry dealt specifically with disability coverage and that many employers provide ancillary coverage such as basic life, AD&D, and disability at no cost to employees. It’s also worth noting that disability was a tricky example to use, as many self-insured short term disability programs may not actually be eligible for ERISA preemption.1 The DOL letter did not address whether the required contributions for benefits subject to automatic enrollment could be taken pre-tax or post-tax, which is really an IRS matter, but either should be permissible.2 This contribution approach should be included in the communication material described earlier.

The DOL’s response does support the use of an automatic enrollment approach with respect to medical/Rx coverage, although an employer may not wish to do so for various reasons including the higher required employee contributions for these benefits compared to ancillary coverage like life and disability coverage. Also, the Affordable Care Act’s employer shared responsibility requirement can be met merely by offering coverage without regard to whether an employee actually enrolls.  In any event, the employee must be given the opportunity to waive coverage.


1 Many employer-provided self-insured short term disability programs will fall within ERISA’s payroll practice exception, and ERISA’s preemption rules will not apply to them.
2 An employer may prefer disability contributions to be taken post-tax so that the disability benefits will be tax free when paid to participants.

Continue reading...

Required Poster Update – Missouri Unemployment Insurance

April 24, 2018

0 Comments

The Missouri Division of Employment Security has recently released an updated Notice to Workers Concerning Unemployment Benefits poster.

The updated poster clarifies when and how eligible employees can apply for unemployment insurance benefits. The posting also discusses proper worker classification, and explains what workers should do if they think they may be misclassified. .

This poster is required to be posted in a location that is visible to all workers. If workers do not have access to the poster, they should be notified that they are covered by unemployment insurance.

Additional mandatory employment posters required by the State of Missouri as well as the Federal Government can be found on the Missouri Department of Labor and Industrial Relations’ website.

We urge clients to contact ThinkHR with any questions on state unemployment requirements as well as any other day-to-day HR questions.  Clients can also sign up to receive “ThinkHR Crunch,” a monthly newsletter for state and federal employment law alerts.  If you need assistance getting registered with ThinkHR, please notify your J.W. Terrill account representative and we will be happy to help!

Continue reading...

PCORI Fees Due By July 31, 2017

June 6, 2017

0 Comments

As a reminder, the annual fee for the Patient Centered Outcomes Research Institute (PCORI) is due no later than July 31, 2017.  Self-funded medical plan sponsors are responsible for reporting and paying the using the Quarterly Federal Excise Tax Return from the IRS (Form 720, Part II line 133 (c) or (d) for the applicable plan year).  Detailed instructions on completion of Form 720 are available here.  (Fees for fully insured plans will be paid by the insurance carrier.)

In addition to major medical plans, HRAs and FSAs that do not qualify as excepted benefits are also subject to the fee. An HRA/FSA integrated with other medical coverage may only be treated as a single plan if both have the same plan year and plan sponsor.  An insured major medical plan and self-funded HRA (e.g., deductible reimbursement plan) would be considered separate plans, which would each be responsible for payment of the fee.  No payment will be due for the following types of plans:

  • Stand-alone dental and vision coverage
  • Life insurance
  • Disability and accident insurance
  • Health FSAs with only employee contributions (or employer contributions up to $500 annually)
  • Health savings accounts (HSAs)
  • Hospital indemnity or specified illness coverage
  • Employee assistance and wellness programs that do not provide significant medical care or treatment
  • Stop-loss coverage

The amount of the fee changes annually and is tied to plan year. For this year, the fee will be $2.17 per covered life for plan years beginning February 1-October 1 and $2.26 for November, December and January 1 plan years.  That fee amount should be multiplied by the average number of individuals covered under the Plan during the applicable plan year (e.g., employee/spouse coverage would be considered 2 covered lives), although HRA/FSA plans can assume one covered life for each enrolled employee (or subscriber).  Retirees and COBRA participants should also be included in the covered lives calculation.

The average number of covered lives on which the fee is based may be determined using one of the following methods:

  • Actual count method–enrollment numbers on each day of the plan year are totaled and divided by total number of days in that plan year;
  • Snapshot method—Enrollment counts are taken from one consistent date each quarter (within 3 days) and divided by the number of dates on which a count was made;
  • Snapshot factor method—Participant counts are taken from one consistent date each quarter (within 3 days) and separated into 2 categories–self-only coverage and other than single-only coverage. The number of participants with other than single-only coverage is multiplied by 2.35 and then that product is added to number of participants with single-only coverage. That total is then divided by the number of dates on which a count was made; or
  • Form 5500 method (for plans that have actually filed the Form 5500 by July 31, 2017)—sum of reported participants covered at beginning and end of plan year; or if plan has self-only coverage, that sum divided by 2.Any erroneous payments should be reported using Form 720-X. The IRS has stated that plan sponsors may not reduce the amount reported and paid based on an overpayment from a prior year.
  • Plan sponsors must choose one method to use for each entire plan year, however they are permitted to change methods from year to year.
Continue reading...

Employee Benefit Plan Notices

April 19, 2017

0 Comments

Employee benefit plans are required to distribute many different notices, at different times, to various recipients. Those notices are required by various laws. We have previously written about the notices required by the Affordable Care Act (ACA), but there is another layer of notices required by the Employee Retirement Income Security Act (ERISA). ERISA applies to most private-sector employee benefit plans and imposes a number of obligations on plan sponsors, including a litany of required notices to plan participants. Below is a list of ERISA notices plan sponsors should distribute when appropriate.

  • Summary Plan Description (SPD)*—summary of the plan’s benefits, exclusions and other material provisions as well as identification and contact information for the plan administrator. An SPD should be written so that the average plan participant can understand the information. Plan participants should receive a copy of the SPD within 90 days of plan eligibility (or 120 days from the date the plan becomes subject to ERISA). Updates must be furnished every 5 years if the plan has been amended (otherwise every 10 years). Most certificates provided by the carriers for fully insured plans do not satisfy all of the SPD content requirements, so many employers choose to use a “wrap” document to ensure compliance.
  • Summary of Material Modifications (SMM)*—description of material changes to the plan or SPD-required information. Distribution of an updated SPD will satisfy this requirement. SMMs are due no later than 210 days after the end of plan year in which the change is adopted (unless the change is considered a material reduction—see below).
    • Summary of Material Reduction in Covered Services or Benefits should be provided within 60 days of adoption of change. Qualifying changes include: the elimination or reduction of benefits payable under the plan, an increase in cost-sharing (deductibles, co-insurance, co-payments, etc.), a change in a provider network service area or the imposition of new conditions on receipt of benefits (such as additional preauthorization requirements).
  • Summary Annual Report[1]—narrative summary of Form 5500 should be provided to plan participants within 9 months after the end of the plan year or 2 months after the end of the Form 5500’s extended filing deadline.
  • Plan documents—include the latest updated SPD, latest Form 5500*, trust agreement, and other instruments under which the plan is established or operated. Must be provided to participants upon written request and copies must be available for examination.
  • Notice of Benefit Determination (Explanation of Benefits)—information regarding benefit claim determinations. Requirements vary depending on the type of plan and type of claim involved. Adverse benefit determination notices must include a copy of the plan’s appeals rights and procedures.
  • COBRA Notices—additional information and model notices are available from the DOL.
    • Initial COBRA Notice (General COBRA Notice)—notice of rights to continue group health coverage upon termination due to a qualifying event. Notice should generally be provided to covered employees and covered spouses within 90 days of the date coverage commences. Model Notice
    • COBRA Election Notice—notice to individuals who have experienced a qualifying event and are eligible to continue coverage. (Recent updates to the DOL’s model notice include information about other coverage options, such as the healthcare.gov Marketplace.) Notice must be provided within 44 days after the qualifying event if the employer and plan administrator are the same. Model Notice
    • Notice of Unavailability of COBRA—notice should be provided within 14 days if an individual notifies the plan administrator of a qualifying event, but that individual is not eligible for COBRA continuation coverage.
    • Notice of Insufficient COBRA Premium payment—notice to qualified beneficiary if payment received is less than full amount due prior to cancelling coverage for non-payment.
    • Notice of Early Termination of COBRA—qualified beneficiary must be notified if COBRA continuation coverage ends prior to end of the maximum period (e.g., for non-payment of premiums).
  • Medical Child Support Order Notice (MCSO)—notice of plan’s receipt and qualification determination of a medical child support order should be provided to participants, child(ren) named in the order and any representatives.
  • Notice of Special Enrollment Rights—description of right to special enrollment in the plan upon the occurrence of certain events (loss of other coverage, marriage, birth/adoption of a child). Should be provided to employees before they are offered enrollment in the health plan. Model notice
  • Employer CHIPRA Notice—notice to employees of possible state-provided premium assistance programs. Please note that this notice is required to be issued by employer rather than health plans. Model notice
  • Wellness Program Disclosure—informs participants of availability of reasonable alternative standard for plans conditioning rewards (including premium differentials) on the satisfaction of a health contingent standard. Model language
    • For plan years beginning on or after January 1, 2017, the EEOC also requires a separate notice for participants in an employer wellness program that collects medical information. Sample Notice.
  • Newborns and Mothers Health Protection Act—statement describing requirements relating to the length of hospital stays in connection with childbirth. Notice should be included in SPD. Model language
  • Women’s Health and Cancer Rights Act Notice—describes mandated coverage for mastectomy-related reconstructive surgery and treatment of complications. Notice should be provided upon enrollment in the plan and annually thereafter.  Model enrollment and annual notices
  • HIPAA Privacy
    • Notice of Privacy Practices—description of plan’s uses and disclosures of patient’s protected health information, as well as participant rights with respect to that information. Notice should be provided at enrollment or upon request and at least every 3 years, the plan must notify individuals that the Notice of Privacy Practices is available and how individuals can obtain a copy. Model Notices
    • Breach Notification—following a discovery of a breach, a covered entity is required to notify each individual whose unsecured protected health information (PHI) has been accessed, acquired, used, or disclosed as a result of such breach. Notice must also be provided to HHS and, if the breach involves more than 500 residents of any one state or jurisdiction, the media.
  • Medicare Part D Creditable Coverage Disclosures—entities providing prescription drug coverage must notify Medicare Part D eligible individuals whether the plan’s coverage is “creditable” (actuarial value of coverage equals or exceeds the actuarial value of standard prescription drug coverage). Must be provided annually prior to October 15th or when coverage changes. Plans can determine the status of their prescription drug coverage (creditable or non-creditable) by contacting their carrier or TPA. Model Notice for Plans with Creditable Coverage; Model Notice for Plans with Non-Creditable Coverage
    • Employers are also required to report to CMS, disclosing the creditable coverage status of offered plan options within 60 days after the end of each plan year or when changes are made.   Disclosure to CMS Form  
  • Michelle’s Law Enrollment Notice—description of continuation of coverage rules for students on medical leave of absence. Although Michelle’s Law is still in force, its applicability has been limited by the ACA. Currently it only applies to plans conditioning eligibility on full-time student status for individuals age 26 and over.

[1]Note that some notice requirements are specific to ERISA, while others are contained or duplicated under other federal laws and may apply to non-ERISA plans. Please contact your Consultant for additional information on compliance for plans that are not subject to ERISA. Namely, plans maintained by governmental entities and churches.

 

Continue reading...

Employee Benefit Plan Notices

April 3, 2017

0 Comments

At times it feels like the Affordable Care Act (ACA) has monopolized our time and energy when it comes to employee benefits compliance. However, it is important to remember that although ERISA and other federal benefits statutes were amended by the ACA, they also contain several other independent obligations. So while we all hold our breath waiting to see which (if any) of the ACA’s provisions will survive President Trump’s inaugural executive order, it’s a good time to revisit the ongoing notice requirements for group health plans:

ACA Notice Requirements (still in place as of 4/1/2017)

  • Summary of Benefits and Coverage (SBC)—summary of plan benefits to be included in the plan’s open enrollment materials using a template provided by federal agencies. Note that a new template will be used for plan years beginning on or after 4/1/2017. Any mid-year modifications to the information contained in the SBC should be provided no later than 60 days prior to the change’s effective date.
  • Form 1095-C—applicable large employers need to provide full-time employees with a Form 1095-C documenting offers of group health coverage for the 2016 calendar year. Forms are due to employees no later than March 2, 2017. Copies of Forms 1095-C must also be submitted to the IRS by February 28, 2017 (if filing paper copies) or March 31, 2017 for electronic submissions.
  • Form 1095-B—form provided to all individuals enrolled in coverage. Insurance carriers will provide for fully insured plans, but small employers with self-insured plans will need to issue Form 1095-B to each enrolled employee (or other responsible individual).
  • Grandfathered Notice (if applicable)—any plan retaining grandfather status must include a disclosure with any communications describing plan benefits. Model Notice
  • Patient Protection Notice-Choice of Provider (if applicable)—non-grandfathered plans that require designation of primary care physician, must notify participants of the right to choose a network provider that may include a pediatrician or OB/Gyn.
  • Notice of Rescission (if applicable)—notice must be issued prior to any retroactive termination of coverage due to fraud or intentional misrepresentation by a participant.

With the constantly changing regulatory environment, compliance for employer-sponsored health plans is more important than ever. Please contact your account representation or compliance@jwterrill.com if you need assistance.

Continue reading...

EEOC Publishes Sample Notice for Employer Wellness Programs

June 20, 2016

0 Comments

If you’ve been following the wellness program rules that the Equal Employment Opportunity Commission (EEOC) issued last month, you have probably been eagerly awaiting the release of the promised sample language to help employers comply with the notice required by those rules. If so, your wait is over, as a copy of the notice is now available on the EEOC’s website.  The EEOC has also issued a list of questions and answers related to the sample notice.  If you need a refresher on the details on the details of those rules, please see our Article “EEOC Issues Final Wellness Program Rules.”

In order to comply with the Americans with Disabilities Act (ADA), the EEOC requires employers with wellness programs that collect health information (such as through biometric screening or health risk assessments) to provide a notice to employees specifying what information is being collected under the program, how it will be used, who will have access to it and the measures that will be taken to ensure confidentiality. The notice requirement will go into effect as of the plan year beginning on or after January 1, 2017.  Although there is no specific timing mandated for providing the notice to employees, it must be distributed prior to the collection of any health information and must give employees enough time to decide whether or not to participate in the wellness program.

Use of the sample notice is not required by employers, but when properly modified, that sample will satisfy the notice requirement for ADA, Genetic Information Nondiscrimination Act (GINA) and Health Insurance Portability Act (HIPAA) compliance.  Although this sample language is designed to give employers a good start on fulfilling the notice requirements, it should not be used as is.  There are several areas [noted in brackets] that will need to be customized with the specific details of each employer’s plan.  Employers choosing not to use the sample language will want to make sure their own notice addresses “what information will be collected, how it will be used, who will receive it, and how it will be kept confidential” in language that employees can understand.

Continue reading...

6055 and 6056 Reporting Due Dates Extended

December 28, 2015

0 Comments

With the deadline for furnishing Forms 1095-B and 1095-C to individuals rapidly approaching, the IRS issued a surprise this afternoon (Notice 2016-4). The IRS notice officially extends the due dates for filing the 2015 forms and for providing those forms to the required individuals.

Applicable large employers and health insurance issuers now have nearly two additional months to issue Forms 1095-B and 1095-C to individuals. Those forms must now be distributed by March 31, 2016 (rather than the original due date of February 1).  The deadline for filing the forms with the IRS (1094-B, 1094-C, 1095-B and 1095-C) has been extended three months. If filing by mail, the new deadline is May 31, 2016. If filing electronically, the new deadline is June 30, 2016.

2015 Report

Original Deadline

Extended Deadline  

Forms Sent to Individuals

  • 1095-B
  • 1095-C

2/1/2016

3/31/2016

Forms Filed with IRS

  • 1094-B and 1095-B
  • 1094-C and 1095-C

2/29/2016 – Paper

3/31/2016 – Electronic

5/31/2016 – Paper

6/30/2016 – Electronic

Please note that this delay is specific to forms relating to the 2015 calendar year that will be filed in early 2016 (and presumably the previous deadlines will go back into effect in 2017). Employers who fail to meet the extended deadlines may still be subject to penalties, although the IRS stated that penalties for late returns may be abated for reasonable cause such as difficulties beyond the entity’s control in gathering and transmitting required data.  As a reminder, the penalty for failing to submit a required return is $250 for each return.

The original deadline for furnishing Form 1095-B and Form 1095-C coincided with the deadline for furnishing the Form W-2 to employees and was intended to aid taxpayers in filing their federal tax returns. The IRS has acknowledged that this extension could cause problems for some individuals who will not have received their forms prior to submitting their tax returns, but that such individuals may rely on other information received from coverage providers and will not need to file an amended return upon receipt of the Form 1095-B or Form 1095-C or any corrections.

Continue reading...

MLR Rebate Allocation

September 1, 2015

0 Comments

As part of the Affordable Care Act, insurance companies are required to spend a certain percentage of premiums received for medical services and the improvement of health care quality. If insurance companies’ aggregate spending does not reach the required Medical Loss Ratio (MLR), which is 80% in the small/individual market and 85% for large groups, the insurer must provide the excess back to policyholders in the form of a rebate.

Although each individual subscriber will receive a notice about the potential receipt of a rebate, any rebates that are issued will be paid to the “policyholder,” which will generally be the employer. The policyholder will then be responsible for allocating rebate amounts. Of course since the allocation of the rebates is regulated by the government, the process can get complicated rather quickly.

REFUND ALLOCATION
Assuming the policyholder is the employer (and not the “plan” or a trust), the allocation of the rebate amount should be based on the percentage of premiums paid the employer and employees respectively. For example, if the employer pays 60% of the premiums and employees pay 40%, a rebate amount of $20,000 would be divided with $12,000 going to the employer and $8,000 due to employees. The employer has several options for distributing the employee portion of the rebate, such as a cash refund to current plan participants or crediting the rebate toward premiums due the following year. HHS has clarified that rebates will go to current enrollees at the time the rebate is issued, even though MLR calculation is based on data from the prior policy year.

TAX CONSEQUENCES
The tax consequences of the rebates will depend on how premiums are paid. Assuming premiums are paid on a pre-tax basis under a cafeteria plan and the rebate amount is used to reduce future premiums due, the rebate would be taxable to that employee since the salary reduction would also be reduced. For example, an employee’s monthly portion of the premiums is $100 per month, which is deducted from his gross income. If that receives a premium credit in the amount of $5 per month, his salary reduction would only be $95 giving him an extra $5 in taxable income.

FAQs
To view frequently asked questions and responses from the IRS please refer here.

Continue reading...

PCORI Fees Due By July 31, 2015

June 23, 2015

0 Comments

Established by the Affordable Care Act to be used as funding for the Patient Centered Outcomes Research Institute (PCORI), the seven-year fee is intended to be used to evaluate the clinical effectiveness of different treatment options and is sometimes called the Comparative Effectiveness Research Fee.

The fee applies to both fully insured and self-funded group health plans, regardless of grandfathered status.  There is no exemption for plans maintained by government, not-for-profit or church employers.

In addition to major medical plans, HRAs and FSAs that do not qualify as excepted benefits are also subject to the fee.  An HRA/FSA integrated with other medical coverage may only be treated as a single plan if both have the same plan year and plan sponsor.  An insured major medical plan and self-funded HRA (e.g., deductible reimbursement plan) would be considered separate plans, which would each be responsible for payment of the fee.  No payment will be due for the following types of plans:

  • Stand-alone dental and vision coverage
  • Life insurance
  • Disability and accident insurance
  • Health FSAs with only employee contributions (or employer contributions up to $500 annually)
  • Health savings accounts (HSAs)
  • Hospital indemnity or specified illness coverage
  • Employee assistance and wellness programs that do not provide significant medical care or treatment
  • Stop-loss coverage

Insurance companies are responsible for payment of the fee for insured plans. The plan sponsor (generally the employer) is responsible for payment of the fee for a self-funded plan, including a self-funded HRA or deductible reimbursement plan offered in connection with an insured medical plan.  Those plan sponsors should report and pay the fee using the Quarterly Federal Excise Tax Return from the IRS (Form 720, Part II).  Detailed instructions on completion of Form 720 are available here.

The amount of the fee changes annually and is tied to plan year.  For this year, the fee will be $2 per covered life for plan years beginning February 1-October 1 and $2.08 for November, December and January 1 plan years.  That fee amount should be multiplied by the average number of individuals covered under the Plan during the applicable plan year (e.g., employee/spouse coverage would be considered 2 covered lives), although HRA/FSA plans can assume one covered life for each enrolled employee (or subscriber).  Retirees and COBRA participants should also be included in the covered lives calculation.

The average number of covered lives on which the fee is based may be determined using one of the following methods:

  • Actual count method–enrollment numbers on each day of the plan year are totaled and divided by total number of days in that plan year;
  • Snapshot method—Enrollment counts are taken from one consistent date each quarter (within 3 days) and divided by the number of dates on which a count was made; or
  • Form 5500 method (for plans that have actually filed the Form 5500 by July 31, 2015)—sum of reported participants covered at beginning and end of plan year; or if plan has self-only coverage, that sum divided by 2.Any erroneous payments should be reported using Form 720-X. The IRS has stated that plan sponsors may not reduce the amount reported and paid based on an overpayment from a prior year.
  • Plan sponsors must choose one method to use for each entire plan year, however they are permitted to change methods from year to year.
Continue reading...

Anthem Cyber Attack Update – Employer Response to Anthem Breach

February 16, 2015

0 Comments

As Anthem continues its investigation into the cyber-attack on its systems, many employers are wondering how they and their employees are affected and what steps they should take to protect themselves.

Although Anthem has not yet determined the extent of the breach and which individual’s information has been compromised, it has disclosed that all lines of  business were impacted including Anthem Blue Cross and Blue Shield plans in Missouri as well as the HealthLink network. In addition, Blue Cross/Blue Shield members in other states may have been affected since information is shared amongst BCBS affiliates using its national network.

Anthem has indicated that personal information including current and past members going back to 2004 may have been accessed during the incident. This information includes: names, birthdays, addresses, employment information, member ID numbers, and Social Security numbers. No credit card, banking or other client payment information was believed  to have been involved.

Even though as of this time it is not believed that medical claims information was involved, HIPAA’s Privacy and Security rules protect any individually identifiable health information associated with a health plan.

Anthem will be providing all required regulatory and member notices as a result of the breach. This includes its own obligations for fully insured clients as well as the responsibilities of self-funded plan sponsors using ASO services or one of the affected networks. HIPAA regulations do permit these obligations  to be contractually delegated to business associates, so notices issued by Anthem will not need to be duplicated by the employer.

In any event, employers will still want to take steps to ensure that employees are protected as much as possible.  Although Anthem will be sending notifications to affected individuals (within the next two weeks), employers may wish to be proactive in communicating information about the incident to employees and encouraging them to contact Anthem with specific questions and concerns as well as taking advantage of two years of credit monitoring and identity theft protection services being offered by Anthem for all current and past members who have been enrolled since 2004.  Employees should also be warned against potential scams being conducted by telephone asking for personal information or email with outside links.

Anthem has established a dedicated website (www.AnthemFacts.com) and toll-free telephone number (1.877.263.7995) for questions regarding the incident and the status of Anthem’s response. Anthem will also be holding a town hall meeting webinar to address specific employer concerns:

Click here to register for the Employer Town Hall Meeting

Date:     Tuesday, February 17, 2015

Times:   3:30 pm to 5:00 pm Eastern Time 2:30 pm to 4:00 pm Central Time 1:30 pm to 3:00 pm Mountain Time 12:30pm to 2:00 pm Pacific Time

 

Continue reading...

Certification for Individual Shared Responsibility Mandate

January 28, 2015

0 Comments

With the beginning of the tax filing season, many employers have been getting inquiries from employees whose tax preparers are asking for proof of minimum essential coverage for purposes of the individual mandate requirement in filing their 2014 tax returns.

This is one of those ripples in the pond that was caused by delaying the employer portion of the shared responsibility mandate (and its reporting requirements) until 2015, but leaving the individual mandate with its original 2014 effective date.  As a result employers and insurers are not required to provide anything to covered individuals until 2016 (reporting is voluntary in 2015, but the forms are still yet to be finalized by the IRS).

Individuals are required to certify that they were enrolled in minimum essential coverage (basically any employer-sponsored medical coverage will qualify) during the 2014 calendar year to avoid a penalty when filing their taxes this year.  According to the IRS and healthcare.gov, individuals enrolled in an employer-sponsored plan just need to check a box on their federal return (line 61 on Form 1040).  This will not be an issue for those employees who are doing their own taxes, however some tax preparers are claiming that proof of coverage is required (presumably as indemnification in case of a discovered misrepresentation upon audit).

This can leave certain employees in a bind with tax preparers asking for documentation of coverage that neither employers nor insurers will be providing.  In this case, although there is no legal obligation to do, employers may wish to assist those employees by creating a simple form letter stating that an employee (and dependents, if applicable) had coverage with the group plan, specifying dates of coverage or at least indicating if coverage was in effect during the entire 2014 calendar year, indicating the applicable medical carrier and group policy number.

Any individuals claiming a tax credit for coverage obtained through a state/federal exchange (healthcare.gov) will receive a Form 1095-A directly from the exchange detailing coverage for enrolled individuals, monthly premiums and advance tax credit payments received.  No information is required from employers for individuals claiming a tax credit on their 2014 taxes.

If you need more information or have more specific questions, please contact a member of your account team or our consulting services department.

Continue reading...

Affordable Care Act’s Impact on Individual Tax Returns

January 9, 2015

0 Comments

While many employers are scrambling to comply with the requirements of the Affordable Care Act’s (ACA) employer mandate that goes into effect beginning in 2015, individuals are dealing with the implications of the other half of the ACA’s “shared responsibility” provision—the individual mandate. The IRS and HHS have both recently issued materials and plan to offer additional tools to help educate individuals about how the ACA will affect tax returns in upcoming filing season (for the 2014 tax year).

Although employers will want to be careful not to give tax advice, it is often helpful to have the answers to basic employee questions and to be able to easily locate resources for employees who need more in-depth information.

Fortunately for many taxpayers, the ACA’s changes won’t have much of an impact on tax filing this year. Individuals who had health coverage through an employer-sponsored group plan, Medicare, Medicaid or an individual policy purchased outside of the Marketplace will simply check a box on their federal returns and will not need to fill out any additional tax forms.

Individuals who purchased Marketplace coverage will receive a form (1095-A) that will be used to claim premium tax credits or reconcile returns with any advance credit (subsidy) payments previously received. A taxpayer who received advance credit payments, but is ineligible for those credits based on the information reported on his 2014 return, will need to increase his tax liability by the amount of the advance credit payments he had erroneously received.

The plans described above (including employer-sponsored coverage) qualify as minimum essential coverage and participants will satisfy the individuals shared responsibility requirement. Taxpayers who did not maintain minimum essential coverage during 2014 and do not qualify for an exemption will be subject to payment of a fee, which will be the greater of:

  • 1% of household income above the taxpayer’s return filing threshold, or
  • $95 per adult and $47.50 per child (up to a maximum of $285).

Employers should recommend that employees consult with their tax preparers and/or legal counsel for guidance appropriate to their individual situations.

Additional Resources:

IRS Publication 5187—“Health Care Law: What’s New for Individuals & Families”

Healthcare.gov—“How health coverage affects your 2014 federal income tax return”

Individual Shared Responsibility Provision-Exemptions

Continue reading...