A C A U p d a t e Including How to Avoid Receiving an IRS Penalty Notice
J E N N I F E R R E E D Benefits Compliance/ACA Reporting Considered one of the foremost experts on the Affordable Care Act and the complexities of ACA Reporting. Prior to joining GUS BATES Jennifer contracted with multiple Broker Partners, HR Consultants, and HR Technology Consultants in all regions of the US. HR Technology Consulting Experience consulting with employers ranging in size from 20-16,000+ Employees in the key areas of HRIS, Integrated HRIS & payroll, Time & Attendance, Benefits Enrollment, and ACA. 2
Why ACA Still is Here Stay…for a while… ACA was originally estimated in 2010 by Obama to cost $940 billion (FY 2010- FY 2019), CBO updated their estimate in March 2012 that it would likely cost closer to $2 trillion over 11 years… The Original estimate came from five cost areas: • Expanding Medicaid and CHIP - $434 billion. (2012 Update - $931 billion) • Tax credits to small businesses who provide insurance - $40 billion. (2012 Update- $23 billion) • Setting up the health insurance exchanges - $358 billion. • Tax credits for those who can't afford insurance - $106 billion. (2012 - $808 billion for setting up exchanges and tax credits) Source: https://www.thebalance.com/cost-of-obamacare-3306050 and https://www.forbes.com/sites/theapothecary/2016/09/18/obamacare- 3 medicaid-expansion-a-lot-of-spending-of-little-value/#2b3d839c7a32
Current Status of State Medicaid Expansion Source: https://kaiserfamilyfoundation.files.wordpress.com/2018/05/current-status-of-the-medicaid-expansion-decisions- 4 healthreform.png
Medicaid Expansion? Yes (In November, 2017 but it was No when she voted) Yes Yes Yes No Yes Yes No Yes No No, but a ballot on Medicare expansion will appear on November 2018 ballot No Yes 5 Source: https://www.nytimes.com/interactive/2017/07/25/us/politics/senate-votes-repeal-obamacare.html
Remember the $106 billion budgeted for Tax Credits? (FY 2010-2019) • In a Letter to Congress, IRS Commissioner said $29.2 Billion in tax credits were paid out in 2014 and 2015. 2016 Cost for tax credits was $32.8 Billion . • $4.6 billion Individual penalties were owed for 2014/15; however, 77% reported being owed a net refund which leaves roughly $1.01 Billion coming in from Individual Mandate. • Washington Times reported that the IRS overpaid “Nearly $3.5 billion in 2017 that it cannot recoup because of constraints…” 6
December 22, 2017 – H.R. 1, Tax Reform Legislation Eliminated the ACA individual mandate beginning in 2019 Did not Affect the Employer mandate or ACA reporting Did not affect the Employer Exclusion. Extended the “Good Faith Effort” for 2017 Extended the due date for distribution of the 2017 1095- C’s (and B’s) to the individuals from January 31 st to March 2 nd . 7
President Trump State of Union Address – January 30, 2018 Setting the Stage…. Highlighted Tax Reform Provisions that “We Repealed the Core of Disastrous Obama care – the individual mandate is now gone.“ “One of my greatest priorities is to reduce the price of prescription Drugs.” Opioid crisis 8
Continuing Resolution (CR) Delays ACA Taxes – January 22, 2018 9
Health Insurance Tax (HIT) What is HIT Anyway? Do I have to write a check like PCORI? • HIT is a fixed-dollar amount distributed across health insurance providers, so no, you do not “directly” write a check. • Self-Insured Employers are exempt • These fees are “passed through” to the fully insured market and adds more than $500 annually in cost to a typical family policy • 2018 - These fees are in effect. • 2019 - Suspended (moratorium). • H.R. 246 (Gov Track 9% Chance) Reps Kristi Noem (R-SD) and Kyrsten Sinema (D-AZ) proposed in January 2017 eliminating the HIT 10
Budget Reconciliation Process • Republican’s have the majority; but need a minimum of 9 Democratic votes on nearly all votes. • Budget Reconciliation process is the exception – Just need a simple majority. • Only 1 Reconciliation “Vehicle” is permitted per fiscal year. • 2017 - Expired in failure on September 30 th 2017 • 2018 - Used for Tax Reform 11
CMS Final Rule – April 9, 2018 Final Rule allows states to define Essential Health Benefits in 2020 Option 1) States can chose from 50 EHB plans used by other states Option 2) Insurers can replace one or more EHB categories used In other states 2017 health plan. Option 3) State may build their own EHB benchmark plan subject to certain scope of benefits requirements. The goal is to give insurers more flexibility in designing plans to provide lower cost options. 12
CMS Final Rule – April 9, 2018 CMS Expanded Hardship Exemptions • People Living in counties with one or no exchange will be exempt from paying the ACA penalty for not having coverage in 2018. • Hardship obtaining coverage, because all affordable plans offered cover abortion, and it is contrary to one’s beliefs. • When specialty care is needed by an individual, but the affordable plans offered do not provide access to such specialty care 13
States Considering Individual Mandates 2 of the 9 States with Individual Mandate Proposals signed state individual mandate into law 1. California 2. Connecticut 3. Hawaii 4. Maryland 5. Minnesota 6. New Jersey - Signed into law in May 2018, Effective 2019 7. Rhode Island 8. Vermont - Signed into law in May 2018, Effective 2020 9. Washington 10. District of Columbia Massachusetts was the first state which was signed into law in 2006. 14 ** All states above also chose to Expand Medicaid.
Employer Reporting Establish a new voluntary reporting system that reduces administrative burden on the employer. • H.R. 3919 (Per Gov Track 11% Chance) • Reps Diane Black (R-TN) and Mike Thompson (D-CA) introduced on 10/3/2017 as the “Commonsense Reporting Act of 2017” • S. 1908 (Per Gov Track only 2% Chance) • Sens Mark Warner (D-VA) and Rob Portman (R-OH) – Identical to H.R. 3919 Bills would simplify the information that would need to be reported and eliminate the requirement to collect dependent social security numbers. 15
Full Time Definition ACA FT Definition: Employee that works 30 hours a week or 130 hours a month (or Average during Measurement Period) • H.R. 3798 (Per Gov Track only 4% Chance) • Reps Jackie Walorski (R-IN) and Dan Lipinski (D-IL) reintroduced "Save American Workers Act” in September 2017. • S. 1782 (Per Gov Track only 2% Chance) • Sens Susan Collins (R-ME) and Joe Donnelly (D-IN) reintroduced a similar bill named ““Forty Hours Is Full Time Act of 2017” Both Bills (if passed) would change the definition to 40 hours/week (174/month). 16
May 2017 – Executive Order Contraceptive Mandate President Donald Trump signed an executive order directing federal agencies to look into exempting religious employers from the Affordable Care Act’s contraceptive mandate. • Under ACA Regulations, Birth Control is covered under preventative care at 100%. Trump’s proposed rule would allow employers to opt out of covering birth control for religious and moral reasons. • In December 2017, Federal judges in California and Pennsylvania temporarily blocked the rules. Opposers include Planned Parenthood and groups of medical associations. • According to Law360 the EBSA hopes to have a ruling on this in July 2018. 17
October 2017 – Executive Order Association Health Plans (AHPs) President Trump signed executive order directing federal agencies to reinterpret ERISA to expand the availability of association health plans (AHPs). • Modified the definition of an Employer to include Employer Associations. • Self-Employed or sole proprietors are permitted to take part or even form an association. • The association can be created solely for the purpose of Insurance purposes (Final reg. modified this to say the AHP must have a “substantial business purpose”) • Final Rules released by the DOL on Tuesday June 19, 2018 18
May 31, 2018 – IRS Released Proposed Electronic Filing Mandate IRS released proposed regulations to expand electronic filing requirement. • Employers today are required to file electronically if they file over 250 “information returns” or pay a penalty per return of $260 • Each type of return is currently counted separately meaning if an employer files 200 Form W- 2’s and 200 1095 - C’s they would not be required to file electronically. • Proposed Regulations would aggregate most forms to reach this threshold including Forms 1095-C (and B), Forms 1099, Forms 1099-R, and Forms W-2 • Would become effective for any returns filed in 2019 19
June 7, 2018 – “Trump Admin Backs GOP Anti - ACA Suit” Background - a 20-State coalition filed suit in Texas Federal court in Feb, 2018 against the federal government stating that the individual mandate is now unconstitutional with the individual mandate being eliminated in December 2017. • On June 7 th - Trump administration said that it “agreed that the mandate is no longer constitutional.” • Guaranteed Issue (meaning the preexisting conditions requirement) and Community Rating (uniform pricing) “have to be scrapped” • Texas et al. v. United States of America et al., case number 4:18-cv- 00167 20
How to Avoid Receiving an IRS Penalty Notice
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