Tag Archives: Health Care Reform

Questions to Ask If You’re Considering a HealthCare Sharing Ministry

March 9, 2017


With the Affordable Care Act (ACA) driving premiums on individual health plans out of reach for many families, we’re getting more inquiries on HealthCare Sharing Ministries. These are programs administered by religious affiliated organizations in which members agree to share healthcare costs, much like the mutual aid societies of earlier generations.  The growing interest in “med share” programs comes from that fact that monthly contributions are often significantly lower than premiums for health insurance.  And, members in some med share programs are exempt from ACA tax penalties levied by the IRS on the uninsured.

Because these plans aren’t insurance products, we won’t offer an opinion here on their merits. But as professional risk managers, we do want to offer some questions to ask when considering enrolling in one of these programs.  Specifically:

  1. Who’s in charge? What organization is offering this med share program? Does the website for the sponsoring organization list the names of the executive leadership and board members, provide bios outlining their qualifications, and give telephone, email and physical contact information?
  2. What happens to my money? Does the sponsoring organization publish professionally audited annual financials? When reviewing insurers, we always check to make certain a carrier has reserves that are sufficient to pay large claims.  How does the med share plan you’re considering prepare for catastrophic exposures?
  3. How are my medical bills paid? Med share programs do not guarantee payment to providers. Your shared monthly contribution is held in escrow and paid out to providers following a set of payment rules created and administered by the organization.  Are these rules and timelines for paying providers clearly defined and provided to potential members in writing?  Does the organization provide a consumer bill of rights, and a transparent process for resolving disputes?
  4. What does my doctor think about this program? Your providers may have never heard of a med share program. Will they refuse to provide services?  Do they consider a med share member uninsured and bill full retail cost for services?
  5. Do I have a “Plan B”? Keep in mind that an employer group health plan may prohibit you from enrolling outside of the annual open enrollment period. Similar gatekeeper enrollment rules hold true for ACA-compliant individual health plans, as well.  Leaving a med share plan once you’ve joined may pose a unique set of challenges.

Human nature has shown us that when we don’t know what to ask, we end up relying on the one question which we know has a clear answer; how much does it cost? We hope that the questions in this blog post will help to start a conversation that leads to a clear understanding of what you’re buying, and perhaps put the cost question at the back end of the discussion where it belongs.

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Narrow Health Plan Networks

January 24, 2017


A cost containment strategy for health plans making resurgence in recent years has been offering narrow provider networks which limit the doctors or hospitals accessible under the in-network benefits of the plan. Services obtained from doctors or hospitals outside of this limited network are considered to be out-of-network and subject to higher deductibles and co-insurance (with the exception of emergency services which must be covered the same as in-network).

The drivers behind offering narrows networks is the lower costs realized by excluding higher cost providers.  Savings amounts vary but are estimated to be in the range of 5 to 20%.  Narrow networks have been around for a number of years (most recently seen in the 1990’s) but have again become more commonplace today due to the escalating cost of healthcare.

The use of narrow networks is very prevalent in the plans offered through the State Exchanges under the Affordable Care Act.   Modern Healthcare reports that about 70% of plans offered through State Exchanges in 2014 included limited networks with premiums that were up to 17% less expensive that more inclusive broad networks.

Narrow networks have also been used in Accountable Care Organizations (ACOS).  ACO   providers receive financial rewards by offering care that meets certain quality and cost-saving targets. The smaller size of the network in an ACO arrangement makes it easier to manage a patient’s care. Narrow networks are also being included today in the group health plans offered by large employers.

One of the biggest challenges is assuring the health care consumer is fully aware of the limited nature of the in-network coverage offered by their choice of a narrow network plan.  The narrow network can be an excellent fit for a fully engaged educated consumer who has selected this particular plan with the objective of saving on health insurance costs while maintaining quality care.  Conversely, it can be a nightmare for an ill-informed consumer who can potentially incur significant expenses at much lower out-of-network reimbursement levels.

The Kaiser Family Foundation conducted a poll in February 2014 which found 51% of survey respondents would rather have a plan that costs more but allowed them to see a broader array of doctors and hospitals.  While 37% would rather have a plan that was less expensive with a more limited range of health care providers.  The survey also found that individuals who are either responsible for purchasing their own coverage or uninsured were more likely to select a less expensive narrow network health plan over a more costly broad network by a margin of 54% to 35%.

In summary, the acceptance of narrow network plans continues to be mixed.  These limited networks offer the opportunity for savings to insurers, employers and health plan members but also come with additional complexity for less savvy consumers of health care.

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2017 ACA Rates: Key Drivers
- A look at three major factors influencing individual exchange rates in 2017, as reported by the American Academy of Actuaries

December 6, 2016


Earlier this year, insurance companies filed premium rates for the fourth time under ACA guidelines.  We’ll take a look into three of the main driving factors influencing individual marketplace rates in 2017.


Medical trend is expected to increase slightly compared to recent years.  The largest contributing factor is a continued increase in available specialty drugs (see our article on high dollar specialty meds here).

Relative to historic medical trend levels, however, the current trend is comparatively low.  Counteracting forces include an increased focus on cost-effective and preventative care.

A number of significant brand name drugs are coming off patent, such as Crestor earlier this year.  In the coming years, this may also help alleviate some of the trend increase attributed to specialty drugs.


The Transitional Reinsurance Program was introduced along with the ACA to help insurers cover the cost of high claims incurred from a large population of previously uninsured, high-risk individuals.  The fund was set up to cover a portion of claims for the first three years – most heavily weighted to 2014, when the biggest hit was expected to incur, then less in 2015 and 2016.

After 2016, claims were expected to have stabilized.  Beginning in 2017, the program will have concluded and no funds will be offered.

Claims have not stabilized as expected and the decrease of program funds in both 2015 and 2016 were linked to higher premiums.  Likewise, the conclusion of the program in 2017 is expected to equate to a 4-7% increase in claim costs to insurers.


Positively, insurers will have had more solid information on the overall risk pool (population of insured) when setting rates for 2017 thanks to data released by CMS.  This is the first year since inception solid population data has been available.  Unfortunately, this may have a negative impact on rates as the Academy of Actuaries explains that “some insurers may have set premiums low relative to the market-wide risk profile.”

Rates will also reflect the insurers’ expectations for enrollment in 2017, as higher participation rates bring lower expected costs and vice versa.  If an insurer overestimated enrollment for 2016, their 2017 costs may need to be increased to account for the participation discrepancy.

The Kaiser Family Foundation estimates 46% of potential enrollees did so in 2016.  During this uncertain time, the White House has increased outreach to young Americans in an attempt to stabilize claims with a greater population of healthy participants.  This is crucial, especially with Aetna, United Healthcare and Humana having all withdrawn from the majority of marketplaces recently, citing hundreds of millions in losses.

Despite the GOP’s promise to repeal Obamacare, these factors will continue to influence our health marketplace.  Changes in legislation may certainly impact how these factors interact, but they are not going anywhere anytime soon.

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IRS Extends Deadline for Providing 1095 Forms
- Employers now have until March 2, 2017

November 18, 2016


The IRS issued notice 2016-70 today, giving employers additional leeway to complete their 1094/1095 filing obligations.

The notice does two things. First, it extends the deadline to furnish the 1095 form to employees to March 2, 2017. The prior deadline was January 31, 2017. The IRS did not extend the deadline for filing the 1094 and 1095 forms. Employers filing by mail will still need to do so by February 28, 2017. Employers filing electronically (employers filing 250+ forms are required to do so) must file by  March 31, 2017.

Second, it extends the “good faith transition relief” for another year. In 2015, the IRS announced it would not penalize employers for incorrect or incomplete forms if they could show they made good-faith efforts to comply with the reporting requirements. No relief was available to employers who did not timely file the forms. IRS notice 2016-70 extends that good faith relief to the 2016 reporting requirement. The IRS also noted that the relief applied to “missing and inaccurate taxpayer identification numbers and dates of birth.”

The IRS announcement is welcome news to many employers still struggling to interpret and apply the IRS instructions to their reporting obligation.

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IRS Releases 2016 Forms 1094-C and 1095-C

October 4, 2016


The IRS released the final versions of the 2016 Forms 1094/1095-C on Monday October 3, 2016. Like last year, Applicable Large Employers (ALEs) and self-funded employers with a reporting obligation must complete the appropriate Forms. Fully-insured large employers will complete Parts I and II of Form 1095-C. Self-funded large employers will complete Parts I, II and III of Form 1095-C.

The IRS made several changes intended to ease the reporting process and update the 1095-C indicator codes. The changes are outlined in the instructions for Forms 1094-C and 1095-C.

Most notably unlike last year, the IRS will not accept “good faith efforts” and will require accurate reporting. Individuals must receive their Form 1095-C by January 31, 2017. Employers must file Forms 1094-C and 1095-C to the IRS by February 28, 2017 if filing by mail (or March 31, 2017 if filing electronically). Although the IRS extended the filing deadlines last year, prudent employers shouldn’t count on any extensions this year.

Self-funded small employers will follow the instructions for Forms 1094-B and 1095-B.

J.W.Terrill employee benefit clients can access ThinkHR for more Form 1094/1095 educational resources.

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Health Insurance Tax Moratorium
- For 2017 Only

September 28, 2016


Last December, Congress passed a spending bill. That particular spending bill garnered attention nationally because of several provisions it included; most notably, a two year moratorium of the so-called Cadillac tax.

But another provision in that spending bill will result in more immediate consequences for consumers: a one year suspension of the Health Insurance Providers Fee, also referred to as the Health Insurance Tax (HIT). The HIT was implemented as part of the Affordable Care Act (ACA). It requires providers of insurance to pay a fee based on their share of the health insurance market premium. Insurance companies, HMOs, Medicare Advantage providers and self-funded MEWAs are all required to report to the IRS the “net premiums written for health insurance of United States health risks.” Self-funded employers are not required to report. The IRS then aggregates that information and assigns each insurer’s fee based on their share of the total premium reported in the market. The total HIT target is set each year and the IRS works backward to calculate each entity’s share of the total fee. The HIT for 2017 was estimated at $13.9 billion.

Since HIT is suspended for 2017, premiums on insured plans should be reduced. Insurers estimated that HIT increased annual premiums an average of $170 for individuals and $530 for families. While that amount will be noticeable, it probably won’t be enough to induce employers to move from a self-funded plan to a fully-insured one. It is a factor that all employers should consider, however; particularly groups that are considering moving away from a fully-insured plan in 2017. As renewal season for January 1 plan years is now upon us, employers should factor this bit of good news into their decision-making process.

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TRF Deadlines Coming Soon

September 28, 2016


The Transitional Reinsurance Fee (TRF) is a three year ACA program designed to ease the shock of rising premium costs due to the influx of individuals enrolling in medical coverage for the first time. By design, the TRF declined each year, from $63 in 2013 to $27 in 2016. The good news is that 2016 is the last year the TRF is in effect.

Who Must Pay the Fee?

The TRF is really only a concern for self-funded medical plans. Insurance carriers calculate and pay the TRF on behalf of fully-insured groups. Self-funded groups are responsible for calculating and paying the TRF to the Centers for Medicare & Medicaid Services (CMS) themselves.

Here is a Step-by-Step guide to paying the TRF.


November 15, 2016: This date is important for two reasons. First, if the employer chose to pay last year’s TRF in two installments, their second payment for the 2015 TRF is due on this date. November 15 is also when 2016’s TRF count is due to CMS. Self-funded groups will use the “2016 ACA Transitional Reinsurance Program Annual Enrollment and Contributions Submission Form” to submit their employee count. The form will be posted on pay.gov.

January 15, 2017: This is the date the first installment for 2016 plan year is due. Self-funded groups can also elect to pay the entire fee in one lump sum on this date. Again, the fee for 2016 is $27 per covered life. If the group chooses pay in two installments, the IRS has proposed split payments of $21.60 in January and $5.40 (per covered life) in November. The IRS has not yet finalized the split payment amounts.

November 15, 2017: If the group chose to pay in two installments, the second payment for the 2016 plan year is due on this date.

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Healthcare Reform Webinar
-September 9, 2016

September 11, 2016


If you weren’t able to attend our most recent Healthcare Reform Webinar, you can access a recording of the webinar here. The slides are available here.

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Summary of Benefits and Coverage
- Final April 2016

September 9, 2016


The final SBC is the product of over a year long process of revising the original SBC issued in 2012. On April 6, 2016 the Department of Labor issued the final regulations of the new Summary of Benefits and Coverage (SBC) intended for use as of January 1, 2017.

The Summary of Benefits and Coverage is a standardized document required by the ACA that provides individuals with standard insurance information.  All insurance plans and group health plans are required to produce a SBC based on a uniform template to reflect the plans terms. This document will help one better understand the coverage they have.

The changes on the new SBC include:

  • Removed the Q&A about coverage examples which reduced the template to 5 pages
  • An additional cost example for a foot fracture treated in an ER
  • Updated claims/pricing data for the coverage example calculator
  • New minimum essential coverage and minimum value language.  New appeals/grievance rights language
  • Revised language for some sections of the template
  • Updated Uniform Glossary

Now that the changes are listed let’s review some of the basics to make sure they are clear.

If you don’t have at least minimum essential coverage you will pay a penalty when federal income tax return is filed. Minimum essential coverage must be kept throughout the year or a fee will be charged each month you don’t have it. You are allowed less than 3 consecutive months in a row per year without coverage without paying the penalty. Insurance plans must meet minimum essential coverage requirements. It is probably easier to list the types of insurance that are not considered minimum essential coverage:

  • Short Term Health plans
  • Fixed Benefit Health plans
  • Supplemental Medicare like Part D or Medigap
  • Some Medicaid covering only certain benefits
  • Vision only, Dental only and limited benefit plan

According to the ACA, insurance plans must meet one of the four levels of coverage based on actuarial value; bronze, silver, gold and platinum.  A plan must at least meet 60% actuarial value which would be the bronze level. Meeting 60% means a plan to pay at least 60% of the total cost of medical services.

The updated section on the SBC for enhanced language for grievances and appeals has much more information explaining each term and how to submit to your plan. A grievance is a compliant to the health insurer. An appeal is when a benefit has been denied and a request to review that claim is submitted.

Final documents are available on the DOL website here.

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Electronic Medical Records in 2016 – A Success Story

August 19, 2016


It’s been three years since we posted “Update 2013-Electronic Medical Records-What’s next?”. Back in 2013, Electronic Medical Records (EMRs) were a relatively new technology most health care providers were working to adjust to.  Since then a great deal of progress has been made in getting doctors and hospital to adopt this new system of recording the health information of their patients.

As mentioned in our previous article, the Federal government began investing over $31 billion in 2011 in the form of incentives payments to physicians and hospital to spur the move toward using Electronic Medical Records. Today almost every hospital and about 75% of physicians have implemented EMRs.  And although the use of EMR systems has become prevalent, physicians still continue to complain about having to use them.

Earlier this year at the Healthcare Information and Management Systems Society Convention, Dr. Karen DeSalvo, National Coordinator for the Health Information Technology at the Department of Health and Human Services, announced more work is now needed to reform our health care delivery system so that we can begin to reap the most value from that investment.

Three year goals were established in January 2015 in the form of a draft interoperability roadmap, Connecting Health and Care for the Nation. Progress has been made in connecting networks in both private enterprise solutions and public health exchanges.

Dr. DeSalvo mentioned two mobile apps are still needed. One will be used by consumers while the second will be for clinicians.  These apps will enhance interoperability of EMR systems at a cost of $175,000 each.  Development of “an open resource” website is also needed which will make it easier for developers to publish apps.

These initiatives are reflective of the need for EMR systems to make the lives of health care providers simpler instead of more complex. And to give patients improved access to their medical information and a better way to communicate with their doctors.

Key trends continuing in 2016 according to an article published in Healthcare IT News include the following:

  • Cloud-based EMR services which will reduce the costs of implementation and updating of EMR systems.
  • Improved patient portals with additional features allowing a heightened level of access and patient recording of health information.
  • Growth of telehealth estimated to hit over $30 billion by the end of the decade. The expansion of this service is expected to mesh well with the growing senior population.
  • Mobile friendly EMR systems that allowing providers to untether from a computer screen.

Opening the avenues of access to health information also increases the risk of a data breach. The hacking of personal medical information holds great potential in the quest by the unscrupulous for identify theft and other cybercrimes.  Data security is of utmost importance especially when accessing through mobile devices or other cloud based services.  It is vital for systems to maintain the utmost level of cybersecurity during implementation and as updates are made for additional features.

In summary, a great deal of progress has been achieved in EMRs in the past several years. Enhancements and improvements being implemented today and in the near future will further solidify this technology into our health care delivery system. The ultimate payoff will be improved patient care and reduced cost of health care.

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Alternative to Affordable Care Act Unveiled – Part 2

August 15, 2016


The House GOP, led by Speaker Paul Ryan released their alternative to the Affordable Care Act (ACA) on June 22. Similar to the original starting point of the ACA, the GOP’s plan read more like a mission statement than a roadmap to change. Ryan emphasized that the plan they released was simply a starting point for reform and a continuation of earlier proposals by party members. Based on previous statements and suggestions it’s possible to infer what means the House GOPs will suggest to implement their plan.

The two main changes the House GOP suggests are the repeal of both the Individual and Employer Mandate. But it would also reform many other aspects of healthcare and the insurance industry.Health Care Reform

Employer Coverage

Arguably one of the biggest changes in this plan, House GOP’s would repeal the Employer Mandate. While designed to increase employer-sponsored healthcare many employers complained it only increased their headaches with its numerous rules and requirements. The GOP plan would remove the obligation to provide coverage to full-time employees. Proponents of the change have argued that employers will continue to offer health coverage for other reasons, including attracting new employees and retaining current employees.


House Republicans follow their theme of less federal oversight by suggesting the elimination of the Independent Payment Advisory Board (IPAB) and the Center for Medicare and Medicaid Innovation (CMMI). The age of Medicare eligibility would be eventually altered to come into alignment with the Social Security retirement age so both programs run harmoniously. A few other tweaks are planned, such as combining Medicare Part A (which covers hospital services) and Part B (which covers outpatient services), creating a single deductible for all services and capping out-of-pocket expenses paid by beneficiaries.

The plan would phase out the federal matching rates for Medicaid and replace it with per-person allotments to states. States would be provided with an allotment for each of the four eligibility groups (elderly, disabled, children and able-bodied adults) based on historical spending costs in each group. The states would be responsible for the excess amount if a group costs more than what the federal government provides. However, states who don’t want to deal with the per capital payment system may choose to receive a full block grant instead. These states would receive an adjusted fixed payment based on what the state spent in a reference year. Additionally, at least $25 billion in federal funding would be available to assist states in reforming their Medicaid programs. In the application states must be able to convey their target goals for improvement and how their reforms would decrease the number of uninsured. Bonuses are available for states that achieve or surpass their goals.

Industry Reforms

The House GOP also intends to give consumers and states more control in decision making. The plan would keep pre-existing condition protection and prevent premium and coverage adjustments but only for individuals who stay continuously insured. If an individual have a lapse in coverage, they would lose this protection.

Young adults would still be allowed to be on their parents’ plan up to age 26. Additionally, the current age rating ratio of 3:1 for older to younger enrollees would be relaxed. Under the proposed plan, the ratio between premiums charged to the oldest consumers to the youngest would be 5:1 and states may adjust the default limitation.

Marketplace Reforms

Despite proposing the repeal of the individual mandate, the House GOP’s plan makes no mention of getting rid of the Marketplaces. Instead, various reforms would be implemented to account for the new healthcare system. This includes replacing the current income-based subsidies with an age-based system. Younger consumers would be able to pay less for health insurance while the older would be required to pay more. If the customer has an excess credit after purchasing a plan on the Marketplace, they would be allowed to deposit the remaining amount into a Health Savings Account (HSA) for future use.

However, those consumers with higher claims would find themselves in a high-risk pool to keep the premiums down for everyone else in the Marketplace. Premiums are partly determined by the amount of claims a group incurs. The higher the amount of claims the higher the premiums raise to keep pace with the increasing costs. The theory is that the market is gathering risk (and the associated higher cost) into one pool to insulate consumers with lower to normal claims. The plan suggests $25 billion in federal funding to establish these pools but does not explain the method for choosing consumers to participate.

For those who wish to go to the Marketplaces for coverage, consumers would also be able to purchase plans licensed and provided in other states. Theoretically, interstate sales would increase market competitiveness and cause lower premiums. Others argue that this is very difficult, if not impossible, to implement. Varying state regulations, provider participation and the costs associated with setting up an interstate system are all barriers to success. Some even fear issuers will simply move to the states with the easiest regulations to make their work easier.

Various Taxes and Rules

Many politicians have spoken out about the “Cadillac” tax on high cost health coverage. The Cadillac tax is a 40% excise tax on high-premium plans designed to rein in overly generous health plans and help finance the ACA. Before it was delayed until 2020, the Kaiser Family Foundation estimated 26% of employers would be hit with Cadillac tax for at least one of their plans. The GOP’s plan would curb overly generous health plans by replacing the Cadillac tax with an upper limit on federal tax preference for employer-paid premiums. The federal tax system currently has no limit on preferential treatment to health insurance purchased through employers. Employers’ payments for health insurance are also exempt from income and payroll taxes which further encourages spending. Under the GOP’s plan, employer-paid premiums exceeding the local threshold (taking into account the high cost of healthcare in certain areas) would be taxable income to the employee. Because the threshold is not yet set, it’s unclear how this would affect collective bargaining groups which often have very rich plans.

The House GOP plan wants to promote the use of HSAs. Republicans recommend setting the annual maximum contribution to an HSA at the same level as the underlying deductible, allow excess subsidy amounts to be contributed to the HSA, and changing the distribution rules to allow for greater spending freedom. The plan would allow people to use HSA funds to purchase direct primary care arrangements and direct-practice medicine and allow spouses to make catch-up contributions to the same HSA account.

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Health Insurance Marketplace Notices
-Don't ignore, but don't overreact

July 1, 2016


Employers who sponsor medical plans should be on the lookout for notices from “Health Insurance Marketplace.” The Marketplace, which is part of the Department of Health and Human Services (HHS), has begun notifying employers when an employee has enrolled in Marketplace coverage and been found eligible for a subsidy. Naturally, many employers are concerned about these Marketplace notices and how they could impact their liability for a shared responsibility payment (also known as an employer mandate penalty). However, understanding how the Marketplace notices are created and how the employer mandate penalties are triggered can help alleviate those concerns.

Individuals who enroll in the Marketplace are asked to provide information to determine eligibility for subsidies. If the individual is found to be eligible for either the premium tax credit or the cost-sharing subsidy, and if the individual provides the “complete employer address,” the Marketplace will send the employer a notice. Those two exchange subsidies are what ultimately trigger employer mandate penalties. However, the Marketplace does not assess those penalties; only the IRS does. “The IRS will independently determine any liability for the employer shared responsibility payment without regard to whether the Marketplace issued a notice or the employer engaged in any appeals process.”[1] The Marketplace’s concern is confirming the individual’s eligibility for the subsidies. If the individual had access to affordable, minimum value employer coverage (but failed to disclose that during enrollment) he or she is ineligible and must repay any subsidy received.

The Marketplace notice will list the employee’s name, date of birth and last 4 digits of their Social Security Number. It also advises the employer that the employee reported that he or she:

  1. Did not receive an offer of health care coverage from the employer;
  2. Was offered unaffordable coverage or coverage that did not provide minimum value; or
  3. Was not able to enroll in coverage due to a waiting period.

If the employer disagrees with any of those three statements, the employer should appeal. Ideally, the employer would be able to submit open enrollment documentation to support their position (such as an employee waiver, or information about the plan and employer contribution). Employers have 90 days from the date of the notice to file an appeal. The Marketplace has posted information about the appeal process on its website, and employers can utilize the Marketplace appeal form. The appeal should focus on whether the employee received an offer of affordable, minimum value coverage. Other issues, such as the employer’s size or the applicability of the employer mandate, should be reserved for the IRS in the event that the IRS assesses an employer mandate penalty. The last deadline for employers to report compliance with the employer mandate on forms 1094 and 1095 was June 30. Presumably, the IRS will not issue employer mandate penalties until it can process and review those returns.

[1] Centers for Medicare & Medicaid Services, “Frequently Asked Questions Regarding the Federally-Facilitated Marketplace’s (FFM) 2016 Employer Notice Program.” Available online at: https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/Downloads/Employer-Notice-FAQ-9-18-15.pdf


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