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Information Regarding the Affordable Care Act For Employers Participating in HealthChoice As of February 2016

The Employees Group Insurance Department (EGID) provides the following information for those employers who participate in HealthChoice and have questions related to how health reform under the Affordable Care Act (ACA) impacts the plan and participants. Employer circumstances vary, and for specific issues, an employer should seek the advice of its own legal counsel.

Guidance continues to be issued by federal agencies on various aspects of ACA. This notice will be updated periodically as further information becomes available.

Reporting Requirements for Employers and Insurers

Under ACA, certain insurance information has to be communicated to employees and to the IRS.

Reporting was optional for calendar year 2014 (reported in 2015); however, it is required for calendar year 2015 (reported in 2016).

Employers and insurers have separate required reporting responsibilities as outlined below:

  • Under Internal Revenue Code (IRC) Section 6056, certain employers are required to submit reports on forms 1094-C and 1095-C.

  • Under IRC Section 6055, insurers must submit reports on forms 1094-B and 1095-B. In 2015, the insurers participating through EGID are HealthChoice, GlobalHealth and CommunityCare. The health insurance carriers will issue 1095-B forms to covered members.

  • Originally, 1095-B forms were to be issued to covered members by Jan. 31, 2016.  However, on Dec. 28, 2015, the IRS issued Notice 2016-4 which delayed the due date for 1095-Bs to March 31, 2016. HealthChoice will be issuing the forms during February.  

  • It is not necessary to submit the 1095-B form to file your taxes. There are questions on the tax form asking if you had health insurance coverage each month in 2015.  You can answer based on your own knowledge or based upon deductions from your payroll checks.

  • If you had health insurance through more than one employer or a different insurance plan during 2015, you may receive more than one 1095-B.

  • When you receive your 1095-B, you should keep it with your other 2015 tax information in the future event that you need to prove you had health insurance in 2015.

For employer reporting requirements for 2015, employers should review the IRS “2015 Instructions for Forms 1094-C and 1095-C” available at https://www.irs.gov/pub/irs-prior/i109495c--2015.pdf. This both covers the filing requirements and points to additional sources of information on the subject.

Similar guidance for insurers is found at https://www.irs.gov/pub/irs-prior/i109495b--2015.pdf.

As the plans offered to employers through EGID are fully insured plans and not self-insured plans under the reporting guidance, the health insurance carriers are responsible for reporting under Section 6055. This means HealthChoice and the HMOs are responsible for the preparation and mailing of 1094-Bs/1095-Bs, as appropriate, to the IRS and to individuals insured through EGID. Failure by the insurers to provide this information may lead to penalties against the insurer in future years. This does NOT relieve employers of the responsibility to produce required reporting under Section 6056 using forms 1094-C and 1095-C. Employers remain responsible for this reporting and for any penalties for failure to perform such reporting.

As HealthChoice and the HMOs will issue 1094-B/1095-B reports for insured individuals, employers participating through EGID will not need to report dependent information on 1095-C forms under Part III (refer to the Federal Register, March 10, 2014, pp. 13236-7). Therefore, EGID does not anticipate the need to provide detailed dependent information back to employers in order for employers to complete 1095-C reporting. Although participating employers will not be required to report dependents’ Social Security numbers on their 1095 reports, employers should assist EGID in obtaining the Social Security numbers of all new dependents who enroll in coverage. Failure to have this data may result in federal penalties to the individual and to EGID.

Please note that EGID does not offer legal or tax advice to employers. Each employer should consult with its own lawyers and consultants on its specific issues.

Questions regarding the above process should be submitted in writing to your group management specialist.

Transitional Reinsurance Fee

HealthChoice and the participating HMOs are each responsible for reporting and paying the Transitional Reinsurance Fee for all persons covered by their respective plans.

Individual Mandate

The “Individual Mandate” took effect in January 2014 and requires U.S. citizens to have minimum essential coverage through a private market, employer or government plan. However, there are numerous exemptions from this requirement. Information on exemptions and penalties is found at https://www.healthcare.gov/exemptions/.

Dependent Eligibility to Age 26

ACA provides that for plan years beginning after Sept. 23, 2010, dependents who are sons, daughters, stepchildren, adopted children and foster children can be covered to age 26, regardless of marital status, employment, student status, residency or financial dependency upon the plan member. Effective Jan. 1, 2011, HealthChoice offered coverage to these dependents as described above. Members may cover other unmarried children up to age 26, if the child lives with the employee in a parent-child relationship and the employee is primarily responsible for the child’s support.

W-2 Reporting of Employer-Provided Health Benefits

The value of employer-provided health benefits must be reported on employees’ W-2s. The W-2 reporting is for informational purposes only so that employees understand the value of the health care benefits provided.

Information from the IRS regarding the reporting requirement may be found at https://www.irs.gov/affordable-care-act/form-w-2-reporting-of-employer-sponsored-health-coverage.

Section 125 Plans

ACA made changes to the flexible spending account rules. Employers should contact their Section 125 plan administrators for details on these changes.

Marketplace Notices

Beginning Oct. 1, 2013, and thereafter, employers must provide a written notice to each employee and every new employee that describes the new Marketplace (formerly known as Health Insurance Exchanges). A “Frequently Asked Questions” available on the Department of Labor’s website at https://www.dol.gov/agencies/ebsa/about-ebsa/our-activities/resource-center/faqs provides links to both a technical bulletin (No. 2013-02) and a model notice for employers who offer a health plan. The technical bulletin provides more detailed instructions on the timing of the required notices and the method of delivery.

“Pay or Play”

Provisions of ACA include what is known as either the “employer mandate provision”, the “employer shared responsibility provisions”, or “pay or play”.  As stated by the IRS, “for 2015 and after, employers employing at least a certain number of employees (generally 50 full-time employees or a combination of full-time and part-time employees that is equivalent to 50 full-time employees) will be subject to the employer shared responsibility provisions. This means that these employers must offer affordable health coverage that meets certain minimum standards to their employees and their dependents or potentially face fines for failure to do so. The rules regarding this process are complex and are influenced by several factors, including the types of employee contracts involved, hours worked, etc. Employers should work with their legal counsel to be sure that they understand the requirements and how they apply to each employer’s specific circumstances. The final regulations issued on Feb. 12, 2014, are available on the Federal Register website at http://www.gpo.gov/fdsys/pkg/FR-2014-02-12/pdf/2014-03082.pdf. Also consult the IRS “Questions and Answers” available at https://www.irs.gov/Affordable-Care-Act/Employers/Questions-and-Answers-on-Employer-Shared-Responsibility-Provisions-Under-the-Affordable-Care-Act.

Automatic Enrollment by Large Employers

ACA originally provided that employers with more than 200 employees and a health benefit plan must automatically enroll all current employees and new employees into the plan. This requirement under Section 1511 of ACA was repealed by the Bipartisan Budget Act of 2015, signed into law on Nov. 2, 2015.

Waiting Periods

In plan years beginning on or after Jan. 1, 2014, a group health plan or group health insurance issuer shall not apply any waiting period that exceeds 90 days. A waiting period is defined to be the period that must pass with respect to the individual before the individual is eligible to be covered for benefits under the terms of the plan. HealthChoice’s waiting period is significantly less than that time period; however, employers will need to be sure they are not imposing any additional waiting periods that exceed the 90-day limit.

Older Topics:

Grandfather Status:  HealthChoice maintained “grandfather status” (GFS) during 2011, but as of Jan. 1, 2012, is no longer a GFS plan.

Early Retiree Reinsurance Program (ERRP):  HealthChoice was certified for participation in the Early Retiree Reinsurance Program (ERRP). ERRP was a program established under ACA whereby the federal government reimbursed a plan sponsor of an employment-based health plan for some of the costs of health care benefits paid on behalf of, or by, early retirees and certain family members of early retirees participating in the employment-based plan. The Centers for Medicare & Medicaid Services announced that due to the depletion of the program funding, they would no longer accept applications for program funds after May 5, 2011. HealthChoice used reimbursements it received from this program to reduce or offset future increases in plan participants’ premiums. Under federal guidelines, all ERRP funds must have been used by Dec. 31, 2014. Plans that received money from ERRP were required to send notices to plan participants regarding the receipt and use of these reimbursements. The full notice may be found here.