Author Archives | Christopher Johnson

About Christopher Johnson

Christopher manages the consulting services department of J.W.Terrill providing regulatory, analytical, technical and wellness support to clients.

IRS Releases 2017 Standard Mileage Rates

January 2, 2017

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The Internal Revenue Service (IRS) released IR-2016-169 on December 13th providing the 2017 optional standard mileage rates. Beginning on January 1, 2017 the standard rates for the use of a car (also vans, pickups or panel trucks) will be:

  • 53.5 cents per mile for business miles drive;
  • 17 cents per mile for medical or moving purposes;
  • 14 cents per mile in service of charitable organizations.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

Per http://www.irs.gov these and other requirements are described in Rev. Proc. 2010-51. Notice 2016-79, posted today on IRS.gov, contains the standard mileage rates, the amount a taxpayer must use in calculating reductions to basis for depreciation taken under the business standard mileage rate, and the maximum standard automobile cost that a taxpayer may use in computing the allowance under a fixed and variable rate plan.

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2017 HSA Contribution Limits

June 17, 2016

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The IRS has issued inflation-adjusted Health Savings Account figures for 2017. Revenue procedure 2016-28 provides as follows:

Annual contribution limitation for 2017

For calendar year 2017, the limit on deductions, for an individual with self-only coverage under a high deductible health plan, is $3,400. For calendar year 2017, the limitation on deductions, for an individual with family coverage under a high deductible health plan, is $6,750.

High deductible health plan for 2017

For calendar year 2017, a HSA qualified high deductible health plan (HDHP) is defined, as a health plan with an annual deductible that is not less than $1,300 for self-only coverage, or $2,600 for family coverage, and the annual out-of-pocket (deductibles, co-payments, and other amounts, but not premiums) do not exceed $6,550 for self-only coverage, or $13,100 for family coverage.

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Reporting Deadline Approaching

September 21, 2015

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The Centers for Medicare and Medicaid Services (CMS) requires you to notify Medicare Part D Eligible members if the drug coverage offered by the employer is Creditable or Non Creditable by no later than October 15th of every year and annually notify CMS, online within 60 days after the first day of the plan year of the coverage status.

REQUIREMENTS 

Provide notice to Medicare eligible individuals whether the plans prescription drug coverage is creditable or not creditable. Most insurance carriers or Pharmacy Benefit Managers (PBM’s) are providing notices to employers as to whether the coverage is Creditable or Non Creditable. If you did not receive a notice from the carrier you can call and ask them. Although you are only required to provide this notice to Medicare eligible participants we recommend you provide this notice to all employees in the event an employee has a spouse or dependent who is Medicare eligible that you may not be aware of. CMS provides detailed guidance and model notices on their website.

Provide notice to Centers for Medicare and Medicaid Services (CMS) of employer program status. The online disclosure form can be found on the CMS website .

DISCLOSURE OPTIONS

When providing notices to Medicare eligible individuals a number of options are allowed as follows:

  1. Provide the model notice “As Is” subject to completion of certain blanks.
  2. Prepare a customized notice – an employer with or without creditable coverage can provide a customized creditable coverage notice, provided that it meets CMS’s content standards, summarized below.

If coverage is creditable, customized disclosure notices must address the following items:

  • that the employer has determined that the prescription drug coverage is creditable ;
  • the meaning of creditable coverage , as defined by the guidance; and
  • Why creditable coverage is important and that the individual could be subject to payment of higher Part D premiums if he or she subsequently has a break in creditable coverage of 63 days or longer before enrolling in a Part D plan.

If the coverage is non-creditable, customized disclosure notices to Part D eligible individuals must address the following items:

  • that the employer has determined that the prescription drug coverage is not creditable ;
  • the meaning of creditable coverage , as defined by the guidance;
  • that an individual generally may only enroll in a Part D plan from October 15 through December 7 of each year, starting with the 2012 plan year; and
  • an explanation of why creditable coverage is important and that the individual may be subject to payment of higher Part D premiums if he or she fails to enroll in a Part D plan when first eligible.
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Anthem plans acquisition of CIGNA

July 25, 2015

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On Friday, July 24th Anthem, Inc definitively said it would buy Cigna Corp for about $54.2 billion, creating the largest U.S. health insurer by membership.

The deal has raised a number of concerns with lawmakers and physician groups raising fears of market exploitation and corporate policies that are contrary to patient interests.

According to Anthems press release:

  • Combination will create the premier health services company with critical diversification to lead the transformation of health care for consumers by enhancing health care access, quality and affordability.
  • Cigna shareholders receiving consideration of $103.40 per share in cash and 0.5152 shares of Anthem stock in exchange for each Cigna share, reflecting a value of $188.00 based on Anthem’s unaffected share price as of May 28, 2015.
  • Combination expected to drive adjusted earnings per share accretion approaching 10% in year one, with accretion more than doubling in year two.
  • The combined company will cover approximately 53 million medical members with well positioned commercial, government, consumer, specialty businesses along with a market-leading international franchise.

As anticipated the proposed merger between Anthem and Cigna is drawing heavy scrutiny from federal agencies. Furthermore regulators are anticipated to review both the Anthem Cigna deal at the same time as a review of a potential Aetna Humana deal.

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UnitedHealth Group to Buy PBM Catamaran

April 1, 2015

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OptumRx, UnitedHealth Groups free standing pharmacy benefits manager and Catamaran announced on March 30th that they have agreed to merge. The deal has UnitedHealth Group acquiring Catamaran for around $12.8 billion in cash.

Catamaran is the fourth largest pharmacy benefit manager (PBM) in the U.S. by volume of prescriptions and OptumRx is the country’s third largest PBM.

According to UnitedHealth Groups website the merger:

“…will create significant value for their combined customer base beyond the scale and enhanced service resulting from integration of their businesses. This combination is expected to create a dynamic competitor in the PBM market by combining the strengths of Catamaran’s industry-leading technology platform with the data and analytics capabilities of Optum. The combined company is expected to deliver an innovative and compelling consumer and payer services offering that will link demographic, lab, pharmaceutical, behavioral and medical treatment data to engage individuals to make better decisions as they seek the best, most effective care and improve compliance with pharmaceutical use and care protocols.”

For the immediate future its business as usual for both organizations. The deal will still need to clear regulatory hurdles but based on information provided by the two organizations it is anticipated to finalize in the fourth quarter of 2015.

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DOL Clarifies Compliance of Premium Reimbursement Arrangements

November 7, 2014

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During September DOL and Treasury published guidance on the application of the market reforms and other provisions of the Affordable Care Act to health reimbursement arrangements (HRAs). The prior guidance explained that employer health care arrangements (HRA’s, employer payment plans, etc) are group health plans and as such subject to the group market reform provisions of the ACA. Regulators further clarified that such arrangements will not violate reform provisions if the plans were integrated with a group health plan that is in compliance.

In the same release regulators clarified that, an employer health care arrangement cannot be integrated with individual market policies to satisfy the market reforms. Consequently, such an arrangement may be subject to penalties, including excise taxes under section 4980D of the Internal Revenue Code (Code).

To further clarify the previously released guidance the DOL has issues a new set of FAQ’s a summary of that guidance can be found below:

Q1: My employer offers employees cash to reimburse the purchase of an individual market policy. Does this arrangement comply with the market reforms?

No. If the employer uses an arrangement that provides cash reimbursement for the purchase of an individual market policy, the employer’s payment arrangement is part of a plan, fund, or other arrangement established or maintained for the purpose of providing medical care to employees, without regard to whether the employer treats the money as pre-tax or post-tax to the employee.

Q2: My employer offers employees with high claims risk a choice between enrollment in its standard group health plan or cash. Does this comply with the market reforms?

No. PHS Act section 2705,which was incorporated by reference into ERISA section 715 and Code section 9815, as well as the nondiscrimination provisions of ERISA section 702 and Code section 9802 originally added by the Health Insurance Portability and Accountability Act (HIPAA), prohibit discrimination based on one or more health factors. Offering, only to employees with a high claims risk, a choice between enrollment in the standard group health plan or cash, constitutes such discrimination.

Q3: A vendor markets a product to employers claiming that employers can cancel their group policies, set up a Code section 105 reimbursement plan that works with health insurance brokers or agents to help employees select individual insurance policies, and allow eligible employees to access the premium tax credits for Marketplace coverage. Is this permissible?

No. The Departments have been informed that some vendors are marketing such products. However, these arrangements are problematic for several reasons. First, the arrangements described in this Q3 are themselves group health plans and, therefore, employees participating in such arrangements are ineligible for premium tax credits (or cost-sharing reductions) for Marketplace coverage. The mere fact that the employer does not get involved with an employee’s individual selection or purchase of an individual health insurance policy does not prevent the arrangement from being a group health plan. DOL guidance indicates that the existence of a group health plan is based on many facts and circumstances, including the employer’s involvement in the overall scheme and the absence of an unfettered right by the employee to receive the employer contributions in cash.

Second, as explained in DOL Technical Release 2013-03, IRS Notice 2013-54, and the two IRS FAQs addressing employer health care arrangements referenced earlier, such arrangements are subject to the market reform provisions of the Affordable Care Act, including the PHS Act section 2711 prohibition on annual limits and the PHS Act 2713 requirement to provide certain preventive services without cost sharing. Such employer health care arrangements cannot be integrated with individual market policies to satisfy the market reforms and, therefore, will violate PHS Act sections 2711 and 2713, among other provisions, which can trigger penalties such as excise taxes under section 4980D of the Code.

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Regulators Require Hospitalization Coverage

November 4, 2014

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The Department of Health and Human Services (HHS) and the Internal Revenue Service (IRS) issued a Notice this morning requiring all employer-sponsored health plans to cover in-patient hospitalization services and physician services in order to be considered providing “minimum value” (MV) under the Affordable Care Act (ACA). Large employers that do not offer MV plans that are affordable to their full-time employees may be subject to a penalty under the ACA.

The Notice says this requirement will not apply to employers that have entered into agreements or have begun enrolling employees in, plans that do not provide hospitalization and/or physician services prior to Nov. 4, 2014. Such employers do have an obligation to inform employees enrolled in such plans that they may be eligible for a premium tax credit, however, if the employer did not also offer employees affordable MV plans that cover hospitalization and physician services.

Notice 2014-69 is an announcement that regulators plan on proposing regulations requiring plans to cover hospitalization and physician services in order to provide MV. Employers will not be penalized for not complying with these new requirements for any months prior to those regulations being finalized. In other words, employers have a window of time now where plans that were considered MV prior to today’s developments can be amended to cover hospitalization/physician services beginning no later than the date on which the regulations become final without incurring any ACA penalties.

Todays announcement has been anticipated for some time. The direct impact will be felt by employers considering inclusion of “skinny plans” or “MEC” plans to their benefit offerings.

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CMS Delays HPID Deadline

November 3, 2014

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The Centers for Medicare & Medicaid Services (CMS) issued a delay, until further notice, in enforcement of regulations pertaining to health plan enumeration and use of the Health Plan Identifier (HPID).

The HPID is a standard, unique health plan identifier required by HIPAA. Deadlines for plan compliance are as follows:

  • Controlling Health plans (except small health plans) are required to obtain HPIDs by November 5, 2014
  • Small controlling health plans, not to be confused with sub-health plans (SHPs), are required to obtain HPIDs by November 5, 2015

This enforcement delay applies to all HIPAA covered entities, including healthcare providers, health plans, and healthcare clearinghouses.

On September 23, 2014, the National Committee on Vital and Health Statistics (NCVHS), an advisory body to HHS, recommended that HHS rectify in rule making that all covered entities (health plans, healthcare providers and clearinghouses, and their business associates) not use the HPID in the HIPAA transactions. This enforcement discretion will allow HHS to review the NCVHS’s recommendation and consider any appropriate next steps.

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Federal Judge Rules Subsidies Unlawful

October 1, 2014

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A federal judge in Oklahoma found Tuesday that the Internal Revenue Service rule that the administration issued to set up tax-credit subsidies was “an invalid implementation” of the law based on his interpretation of it.

A U.S. Justice Department spokesman said the administration will appeal the decision.

The issue of whether the subsidies are legal is being fought in many courts across the country and could end up before the U.S. Supreme Court. The outcome of the challenges will determine whether subsidies will be available in all 50 states or only in some.

The stakes are high for the administration. If subsidies are no longer available to two-thirds of the states, coverage may become unaffordable to many, making the law considerably less attractive.

This issue has already advanced beyond the federal district courts. Earlier this summer a pair of federal appellate courts, the U.S. Court of Appeals for the District of Columbia Circuit and the Fourth Circuit in Richmond, came down on either side of the issue.

Impacts of Case

There is no immediate impact of this ruling; however, contingent on the outcomes of future appeals and court cases the future of subsidies in many states (including Missouri) could be in question. Employers should not take any action before a final decision has been decided by a higher court and new guidance has been given.

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Medicare Notice Deadline Approaching

September 12, 2014

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Its that time of year where as an employer offering prescription drug coverage to Medicare Part D Eligible employees, the Centers for Medicare and Medicaid Services (CMS) requires you to notify these members if the drug coverage is Creditable or Non Creditable by no later than October 15th of every year and annually notify CMS, online within 60 days after the first day of the plan year of the coverage status.

REQUIREMENTS

Provide notice to Medicare eligible individuals whether the plans prescription drug coverage is creditable or not creditable. Most insurance carriers or Pharmacy Benefit Managers (PBM’s) are providing notices to employers as to whether the coverage is Creditable or Non Creditable. If you did not receive a notice from the carrier you can call and ask them.Although you are only required to provide this notice to Medicare eligible participants we recommend you provide this notice to all employees in the event an employee has a spouse or dependent who is Medicare eligible that you may not be aware of. CMS  provides detailed guidance and model notices on their website.

Provide notice to Centers for Medicare and Medicaid Services (CMS) of employer program status. The online disclosure form can be found on the CMS website .

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New Rules on Religious Exemptions from Contraceptive Mandate

September 4, 2014

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Health and Human Services (HHS) issued an interim finale rule for religious non-profits on a process for notification of  objection(s) to providing said coverage. HHS also issued a proposed rule, seeking comments on extending similar provisions to closely held for-profit organizations.

Closely held for profit organizations

In responses to the U.S. Supreme Court’s decision, in Burwell v. Hobby Lobby, HHS has issued proposed rules expanding the availability of the accommodation to include closely held for-profit entities that have religious objections to providing coverage for some or all contraceptive services.

HHS is currently seeking comments on how to define a closely held for-profit company and other steps. The current two approaches for defining a closely held for-profit company are:

  1. Privately held organization with limited number of owners; or
  2. Privately held organization with ownership being concentrated amongst minimum percentage.

Religious non-profits

The Center for Consumer Information & Insurance Oversight issued the following comments on their website in regards to the topic:

“…in light of the Supreme Court’s recent interim order in a case involving Wheaton College, interim final regulations were published to establish another option for an eligible organization to avail itself of the accommodation.

Under the interim final regulations, an eligible organization may notify the Department of Health and Human Services (HHS) in writing of its religious objection to contraception coverage. HHS will then notify the insurer for an insured health plan, or the Department of Labor will notify the TPA for a self-insured plan, that the organization objects to providing contraception coverage and that the insurer or TPA is responsible for providing enrollees in the health plan separate no-cost payments for contraceptive services for as long as they remain enrolled in the health plan.

Regardless of whether the eligible organization self-certifies in accordance with the July 2013 final rules, or provides notice to HHS in accordance with the August 2014 IFR, the obligations of insurers and/or TPAs regarding providing or arranging separate payments for contraceptive services are the same, as discussed in this Fact Sheet. “

The newly proposed rules have already been met with reservation from religious non-profits as the act of opting out in effect provides authority to the government to require another party to provide the mandated coverage. There is speculation that the new rules may violate affected organizations rights under the Religious Freedom Restoration Act (RFRA).

For both closely held organizations and religious non-profits we would anticipate continued potential legal action and rules development.

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“Individual Mandate” Requirements & Exemptions

September 2, 2014

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Under the Affordable Care Act individuals are required to have “minimum essential coverage” for each month starting January 2014 going forward. Failure to have the required coverage results in a fee known as the “individual share responsibility payment.”

What is the penalty?

For 2014 this fee is 1% of your yearly income or $95 per person for the year, whichever is greater. The fee increases annually. In 2016 it will be 2.5% of income or $695 per person.

Who must have coverage?

All citizens living in the United States are subject to the requirement as are all permanent residents and all foreign nationals who are in the United States long enough during a calendar year to qualify as resident aliens for tax purposes.

The provision applies to individuals of all ages, including children. The adult or married couple who can claim a child or another individual as a dependent for federal income tax purposes is responsible for making the payment if the dependent does not have coverage or an exemption.

What counts as “minimum essential coverage?”

  • Employer-sponsored coverage, COBRA coverage and retiree coverage
  • Coverage purchased in the individual market
  • Medicare Part A coverage and Medicare Advantage plans and most Medicaid coverage
  • Children’s Health Insurance Program (CHIP) coverage
  • Veterans health coverage administered by the Veterans Administration
  • TRICARE coverage
  • Peace Corps volunteers coverage
  • Coverage under the Non-appropriated Fund Health Benefit Program
  • Refugee Medical Assistance supported by the Administration for Children and Families
  • Self-funded health coverage offered to students by universities for plan or policy years that begin on or before Dec. 31, 2014
  • State high risk pools for plan or policy years that begin on or before Dec. 31, 2014
  • Other coverage recognized by the Secretary of HHS as minimum essential coverage

Additional information on qualified coverage’s can be found at the IRS Q&A site here.

EXEMPTIONS

  • Individuals who are uninsured 3 months or less;
  • If available coverage would cost more than 8% of household income;
  • Individuals that do not have to file a tax return because income is too low;
  • Members of recognized tribe or eligible for services through an Indian Health Services provider;
  • Member of a recognized health care sharing ministry;
  • Member recognized religious sects with objections to insurance;
  • Incarcerated individual (either detained or jailed);
  • Individuals unlawfully present in the U.S.
  • Hardship exemptions as defined by HHS here.

How to apply for an exemption

Individuals can apply for exemption based on affordability, membership in a health care sharing ministry, membership in a federally recognized tribe or as a result of incarceration by:

  1. Claiming exemption when filing their 2014 federal tax return; or
  2. Using one of the five forms below (see instructions):

Additional information on exemptions and the shared responsibility act (individual mandate) can be located at either the IRS Q&A site or HealthCare.gov site.

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