The ACA: What's new?
The ACA: What's new?
The Affordable Care Act ("ACA") and its implementing regulations have created an ever-evolving, shifting, expanding piece of legislation that is nearly impossible for employers, and their lawyers, to keep up with. This article is meant to serve as your cliffs notes guide to what the Departments of Labor, Treasury and Health and Human Services (the "Departments") were up to in 2015.
Repeal of Automatic Enrollment
In late October 2015, the powers that be agreed to repeal a provision of the ACA that would have required employers with 200 or more full-time employees to automatically enroll new full-time employees in their health plans.
As background: applicable large employers may be subject to an Employer Mandate penalty if they do not offer health coverage to at least 95% of all full-time employees (the “a” penalty) or if they do offer coverage but it is not affordable or does not provide minimum value to at least one full-time employee (the “b” penalty). Penalties do not apply unless at least one full-time employee receives a premium credit through the Exchange.
The original penalty amounts were $2,000 per full-time employee under the "a" penalty and $3,000 per full-time employee actually receiving a premium credit under the "b" penalty. These amounts are indexed annually.
In mid-December 2015, the IRS issued Notice 2015-87, clarifying that the 2015 adjusted penalty amounts are $2,080 and $3,120, respectfully, and announcing that the 2016 adjusted penalty amounts are $2,160 and $3,240.
The "Cadillac Tax"
In late December 2015, President Obama signed a comprehensive spending package that included a two-year delay of the "Cadillac Tax," giving employers a little more time to consider their options. The tax was originally set to take effect January 1, 2018.
In late December 2015, the IRS issued Notice 2016-4, which extended the due dates for the 2015 information reporting (the most recent and sharpest thorn in the side of large employers). Employers now have until March 31, 2016, to provide required employee statements and until May 31, 2016 (June 30, 2016, if filing electronically), to file the applicable IRS Forms, generally Forms 1094-C and 1095-C, with the IRS.
If that news wasn’t good enough, the IRS also announced that employers showing a good faith effort to comply with the ACA's reporting requirements will not be assessed any penalties for submitting incomplete or incorrect returns relating to offers of coverage during 2015. This means that employers pulling their hair out trying to figure out the dreaded "indicator codes" of Form 1095-C can breathe a sigh of relief. For this year only, if you try, you can't fail.
Nondiscrimination for Fully Insured Plans
Self-insured health plans are prohibited from discriminating in favor of highly compensated individuals. The ACA extended that prohibition to fully-insured plans, effective upon the issuance of IRS regulations.
To date, no such regulations have been issued. Fully-insured plans are still legally permitted, but not encouraged, to be discriminatory.
This article was first published in the Spring 2016 Consigliere by the Knoxville Bar Association. ©2016 Kennerly, Montgomery & Finley, P.C. This publication is intended for general information purposes only and does not constitute legal advice or a legal opinion and is not an adequate substitute for the advice of legal counsel. Please consult with a Kennerly Montgomery attorney to determine how laws, suggestions, and illustrations apply to specific situations.