health insurance

What are consequences to employer for not establishing health insurance plan?

Employer Health Care Arrangements

Q1.  What are the consequences to the employer if the employer does not establish a health insurance plan for its own employees, but reimburses those employees for premiums they pay for health insurance (either through a qualified health plan in the Marketplace or outside the Marketplace)?

Under IRS Notice 2013-54, such arrangements are described as employer payment plans. An employer payment plan, as the term is used in this notice, generally does not include an arrangement under which an employee may have an after-tax amount applied toward health coverage or take that amount in cash compensation. As explained in Notice 2013-54, these employer payment plans are considered to be group health plans subject to the market reforms, including the prohibition on annual limits for essential health benefits and the requirement to provide certain preventive care without cost sharing.  Notice 2013-54 clarifies that such arrangements cannot be integrated with individual policies to satisfy the market reforms.  Consequently, such an arrangement fails to satisfy the market reforms and may be subject to a $100/day excise tax per applicable employee (which is $36,500 per year, per employee) under section 4980D of the Internal Revenue Code.

Q2. Where can I get more information?

On Sept. 13, 2013, the IRS issued Notice 2013-54, which explains how the Affordable Care Act’s market reforms apply to certain types of group health plans, including health reimbursement arrangements (HRAs), health flexible spending arrangements (health FSAs) and certain other employer healthcare arrangements, including arrangements under which an employer reimburses an employee for some or all of the premium expenses incurred for an individual health insurance policy.

DOL has issued a notice in substantially identical form to Notice 2013-54, DOL Technical Release 2013-03, and HHS will shortly issue guidance to reflect that it concurs with Notice 2013-54. On Jan. 24, 2013, DOL and HHS issued FAQs that addressed the application of the Affordable Care Act to HRAs.
Source: IRS, http://www.irs.gov/uac/Newsroom/Employer-Health-Care-Arrangements

in employee / Employer / health insurance  by probityadmin 0 comments

What constitutes Special Enrollment?

*Special Enrollment*

Now that open enrollment has ended, you can enroll in a Covered California health insurance plan only if you experience a qualifying life event.

The next open enrollment period will be in the fall of 2014. Remember, you can enroll in Medi-Cal at any time.

Common types of qualifying life events for special enrollment:

*You get married or enter into a domestic partnership.
*You have or adopt a child, receive a child into foster care, or you place a child in adoption or in a foster home.
*You change where you permanently live, and you gain access to new Covered California health insurance plans. This includes moving to California from another state. This also applies to individuals who are released from jail or prison.
*You lose your health coverage. For example, you are no longer eligible for Medi-Cal, or you lose health coverage through your job.
*Your income changes so much that you become newly eligible or ineligible for help paying for your insurance. For example, if you are already getting help paying for your insurance premium, and your income goes down, you may be able to get extra help.
*You become a citizen, national or lawfully present individual. This event applies only to people who were not previously citizens, nationals or lawfully present.
*Your enrollment was wrong, due to the misconduct or misrepresentation of your health insurance company, Covered California or a non-Covered California entity (such as a Certified Enrollment Counselor).
*You applied for health coverage before March 31 and got a denial for Medi-Cal after March 31. If you were incorrectly denied Covered California or Medi-Cal coverage, you can also file an appeal.
*If you are a member of a federally recognized American Indian or Alaska Native tribe, you may enroll in health insurance or change your health insurance plan once a month even if the open enrollment period is over.
*Covered California can also determine, on a case-by-case basis, that you experienced an exceptional circumstance, which could allow for a special enrollment period.

After my qualifying life event, how long do I have to sign up for health insurance or change my health insurance plan in Covered California?

You have 60 days from the date on which the qualifying life event happens to enroll in a Covered California health insurance plan or change your existing Covered California plan. For example, if you have a child on June 1, you have until July 31 to notify Covered California, complete an application for your new child, choose a health plan and pay for it. If you do not get health coverage for your child, you may have to pay a tax penalty.
If 60 days pass and you do not sign up for health coverage, you will have to wait until the next open enrollment period, which will be in the fall of 2014.

Keep in mind that you can enroll in Medi-Cal at any time. You do not need a special enrollment period to enroll in Medi-Cal. To see if you or someone in your family is eligible for Medi-Cal, complete the online application at www.CoveredCA.com.

Can coverage start right away?

For most qualifying life events, the start date for coverage depends on the date you enroll, as discussed in the question above. If you enroll by the 15th day of the month, your coverage will start on the first day of the next month. If you enroll after the 15th day of the month, you coverage will start on the first day of the second month.

But there are a few exceptions to the start date rule:
•    If you lose your Medi-Cal coverage, job-based coverage or other coverage, and you use a special enrollment period, your coverage would start on the first day of the next month following your plan selection, regardless of when during the month you make your plan selection.
•    If you get married and use a special enrollment period, your coverage will start on the first day of the next month following your plan selection, regardless of when during the month you make your plan selection.
•    If you have or adopt a child or place a child in adoption or foster care, and you use a special enrollment period, your coverage starts on the date of the birth, the adoption or the placement for adoption or foster care.
•    On a case-by-case basis, Covered California may start your coverage earlier.

http://www.coveredca.com/coverage-basics/special-enrollment/

in employee / health insurance / individual mandate  by probityadmin 0 comments

IRS Highlights Stiff Penalty for Reimbursing Individual Premiums

Since the IRS and Treasury published Notice 2013-54 in September 2013, pre-tax employer reimbursement of an employee’s individual health insurance premiums has been a hot topic of conversation.  Historically, many employers have provided this type of benefit in lieu of offering a group health plan – a strategy that now needs to be reevaluated as a result of regulations implementing the Patient Protection and Affordable Care Act (PPACA).

The IRS has affirmed its stance on these types of arrangements (called “employer payment plans”) in a short two question FAQ published on May 19, 2014.  Question 1 reads as follows:

Q1.  What are the consequences to the employer if the employer does not establish a health insurance plan for its own employees, but reimburses those employees for premiums they pay for health insurance (either through a qualified health plan in the Marketplace or outside the Marketplace)?

Referencing Notice 2013-54, the IRS emphasizes that these employer payment plans are considered group health plans under PPACA. As group health plans, these arrangements are subject to the market reforms, including the prohibition on annual limits and the requirement to cover preventive care without cost-sharing.  These arrangements cannot be integrated with individual health insurance plans in order to satisfy the market reform requirements.

Unlike Notice 2013-54, this recent FAQ shines a spotlight on the consequences for employers operating employer payment plans to reimburse employees for the cost of individual health insurance policies.  The potential penalty? Up to $100 per day per applicable employee, under Code 4980D.  The IRS also points out that the penalty could total $36,500 per year per employee.  This figure does not include potential liability as a result of additional DOL enforcement of compliance with the market reforms, incorporated into ERISA by the Public Health Service Act (PHSA).

The Department of Labor also issued Technical Release 2013-03, which is substantially similar to Notice 2013-54.  The IRS notes in the FAQ that HHS is expected to issue guidance in the near future concurring with Notice 2013-54 and Technical Release 2013-03.  Employers currently utilizing this strategy or who are considering the implementation of such an employer payment plan should consult with counsel on the impact of Notice 2013-54, Technical Release 2013-03 and this FAQ to consider the risks and find an alternative benefits strategy if necessary.  See http://www.irs.gov/uac/Newsroom/Employer-Health-Care-Arrangements

Source LISI, http://blog.lisibroker.com/irs-highlights-stiff-penalty-for-reimbursing-individual-premiums/

in Employer / health insurance / Premiums  by probityadmin 0 comments

How do employers and insurers report under the ACA?

FACT SHEET: Final Regulations Implementing Information Reporting for Employers and Insurers under the Affordable Care Act (ACA)

3/5/2014

WASHINGTON – Today, the U.S. Department of the Treasury and the Internal Revenue Service (IRS) released final rules to implement the information reporting provisions for insurers and certain employers under the ACA that take effect in 2015.

“Today’s announcement is part of the Administration’s effort to provide certainty and early guidance about major health policies so employers, small business owners and other individuals can plan for 2015,” said Assistant Secretary for Tax Policy Mark J. Mazur.  “Treasury’s final rules significantly streamline and simplify information reporting while making it easier for employers and insurers of all sizes to provide the quality, affordable health coverage that every American deserves.”

While 96 percent of employers are not subject to ACA reporting requirements or the employer responsibility provision because they have fewer than 50 employees, in 2015 requirements begin to phase-in for the remaining four percent of employers that are required to offer quality, affordable coverage to employees or make a payment.  The final regulations released today on information reporting by those employers will substantially streamline reporting requirements for employers, particularly those that offer highly affordable coverage to full-time employees.  Final rules were also released today to provide guidance for reporting by insurers and other parties that provide health coverage under the ACA.  Together, these rules respond to feedback from stakeholders and will help employers and insurers effectively comply with their responsibilities.

Today’s final rules include the following key provisions:

Single, Combined Form for Information Reporting

  • Employers that “self-insure” will have a streamlined way to report under both the employer and insurer reporting provisions.  Responding to widespread requests, the final rules provide for a single, consolidated form that employers will use to report to the IRS and employees under both sections 6055 and 6056, thereby simplifying the process and avoiding duplicative reporting.  The combined form will have two sections: the top half includes the information needed for section 6056 reporting, while the bottom half includes the information needed for section 6055.
    • Employers that have fewer than 50 full-time employees are exempt from the ACA employer shared responsibility provisions and therefore from the employer reporting requirements.
    • Employers that are large enough to be subject to the employer responsibility provisions and that “self-insure” will complete both parts of the combined form for information reporting.
    • Employers that are subject to employer responsibility but do not “self-insure” will complete only the top section of the combined form (reporting for section 6056). Insurers and other providers of health coverage will report only under section 6055, using a separate form for that purpose.  Insurers do not have to report on enrollees in the Health Insurance Marketplace, since the Marketplace will already be providing information on individuals’ coverage there.

Simplified Option for Employer Reporting

  • For employers that provide a “qualifying offer” to any of their full time employees, the final rules provide a simplified alternative to reporting monthly, employee-specific information on those employees.
    • A qualifying offer is an offer of minimum value coverage that provides employee-only coverage at a cost to the employee of no more than about $1,100 in 2015 (9.5 percent of the Federal Poverty Level), combined with an offer of coverage for the employee’s family.
    • For employees who receive qualifying offers for all 12 months of the year, employers will need to report only the names, addresses, and taxpayer identification numbers (TINs) of those employees and the fact that they received a full-year qualifying offer.  Employers will also give the employees a copy of that simplified report or a standard statement indicating that the employee received a full-year qualifying offer.
    • For employees who receive a qualifying offer for fewer than all 12 months of the year, employers will be able to simplify reporting to the IRS and to employees for each of those months by simply entering a code indicating that the qualifying offer was made.
    • To provide for a phase-in of the simplified option, employers certifying that they have made a qualifying offer to at least 95% of their full-time employees (plus an offer to their families) will be able to use an even simpler alternative reporting method for 2015.  Those employers will be able to use the simplified, streamlined reporting method for their entire workforce, including for any employees who do not receive a qualifying offer for the full year.  Those employers will provide employees with standard statements relating to their possible eligibility for premium tax credits.
  • The final regulations also give employers the option to avoid identifying in the report which of its employees are full-time, and instead to just include in the report those employees who may be full-time.  To take advantage of this option, the employer must certify that it offered affordable, minimum value coverage to at least 98 percent of the employees on whom it is reporting.

What Information Is Reported

The statute calls for employers, insurers, and other reporting entities to report information including:

  • For section 6055
    • Information about the entity providing coverage, including contact information.
    • Which individuals are enrolled in coverage, with identifying information and the months for which they were covered.
  • For section 6056
    • Information about the employer offering coverage (including contact information and the number of full-time employees).
    • For each full-time employee, information about the coverage (if any) offered to the employee, by month, including the lowest employee cost of self-only coverage offered.
  • Streamlined information:  The final rules omit data elements in the statute that are not necessary to understanding coverage offered and provided, in the interest of streamlining.  These include (but are not limited to):
    • The length of any waiting period;
    • Employer’s share of the total allowed costs of benefits provided under the plan;
    • The amount of advance payments of the premium tax credit and cost-sharing reductions.

For more information, see sections 6055 and 6056 final regulations here.

###​

Source:  US Dept of the Treasury, http://www.treasury.gov/press-center/press-releases/Pages/jl2310.aspx

in Employer / health insurance / Insurers  by probityadmin 0 comments

Is premium assistance for spouse and child coverage available?

Q: I have health insurance through my employer, but coverage for my spouse and child are too expensive. Would I be eligible for premium assistance for a plan for my child?

A: Whether you or your family are eligible for premium assistance depends on whether you  have an offer of coverage that includes your spouse and dependents and (1) is affordable and (2) meets the standard for minimum coverage. The affordability of  employer-provided coverage is evaluated on these two criteria:

1. The total annual premium you pay for self-only coverage is 9.5 percent or less of your annual household income.

2. Your employer-provided plan covers at least 60 percent of health care costs for an average population. Your employer or your health insurance plan should notify you as to how much the plan covers.

If those two criteria are met, your employer’s plan is considered “affordable” under the law, and your family members would not qualify for premium assistance through Covered California.

If your employer-provided coverage does not include dependent coverage, or if your employer does not offer dependent coverage, your spouse and child may qualify for subsidies through Covered California since they would not be offered coverage. In that case, their eligibility would be based on the family’s income.

https://www.blueshieldca.com/bsca/documents/about-blue-shield/health-reform/COVEREDCA_FAQs_092413.pdf

in child / coverage / health insurance  by probityadmin 0 comments

Premium assistance for a child’s plan.

I have health insurance through my employer, but coverage for my spouse and child are too expensive. Would I be eligible for premium assistance for a plan for my child?

Whether you or your family are eligible for premium assistance depends on whether you have an offer of coverage that includes your spouse and dependents and (1) is affordable and (2) meets the standard for minimum coverage. The affordability of employer-provided coverage is evaluated on these two criteria:

1. The total annual premium you pay for self-only coverage is 9.5 percent or less of your annual household income.

2. Your employer-provided plan covers at least 60 percent of health care costs for an average population. Your employer or your health insurance plan should notify you as to how much the plan covers.

If those two criteria are met, your employer’s plan is considered “affordable” under the law, and your family members would not qualify for premium assistance through Covered California.

If your employer-provided coverage does not include dependent coverage, or if your employer does not offer dependent coverage, your spouse and child may qualify for subsidies through Covered California since they would not be offered coverage. In that case, their eligibility would be based on the family’s income.

Source https://www.blueshieldca.com/bsca/documents/about-blue-shield/health-reform/COVEREDCA_FAQs_092413.pdf

in child / health insurance  by probityadmin 0 comments

Do I have to buy health insurance? What are the penalties?

Do I have to buy health insurance? What are the penalties for not having health coverage?

There will be penalties for individuals who choose not to get affordable insurance. These penalties are part of the federal law and will be collected by the Internal Revenue Service as part of individual tax filing for 2014. There are no penalties for small employers (fewer than 50 full-time-equivalent employees), but starting in 2015 large employers may be subject to a penalty if they do not offer affordable coverage to their
employees.

In 2014, an individual who does not maintain minimum health coverage will face a penalty of $95 or 1 percent of income, whichever is greater. In 2014, a family will be charged a penalty of $95 per uncovered adult and $47.50 per uncovered child (up to $285 for a family) or 1 percent of the family’s income, whichever is greater. For 2015, the penalty increases to $325 per adult and $162.50 per child (up to $975 for a family) or 2 percent of family income, whichever is greater. For 2016, the penalty is $695 per adult and $374.50 per child (up to $2,085 for a family) or 2.5 percent of family income, whichever is greater.

However, some individuals may be exempt from paying a penalty, including:

* people who would have to pay more than 8 percent of their income for health insurance
* people with incomes below the threshold required for filing taxes (in 2013, $9,750 for a single person and $27,100 for a married couple with two children)
* people who qualify for religious exemptions
* undocumented immigrants
* incarcerated individuals
* members of federally recognized American Indian tribes and Alaska Native

Source: https://www.blueshieldca.com/bsca/documents/about-blue-shield/health-reform/COVEREDCA_FAQs_092413.pdf

in health insurance / individual mandate  by probityadmin 0 comments

What You Need to Know about the Small Business Health Care Tax Credit

How will the credit make a difference for you?

For tax years 2010 through 2013, the maximum credit is 35 percent of premiums paid for small business employers and 25 percent of premiums paid for small tax-exempt employers such as charities.

 

For tax years beginning in 2014 or later, there will be changes to the credit:

•The maximum credit will increase to 50 percent of premiums paid for small business employers and 35 percent of premiums paid for small tax-exempt employers.

•To be eligible for the credit, a small employer must pay premiums on behalf of employees enrolled in a qualified health plan offered through a Small Business Health Options Program (SHOP) Marketplace.

•The credit will be available to eligible employers for two consecutive taxable years.

 

Here’s what this means for you. If you pay $50,000 a year toward workers’ health care premiums — and if you qualify for a 15 percent credit, you save… $7,500. If you save $7,500 a year from tax year 2010 through 2013, that’s total savings of $30,000. If, in 2014, you qualify for a slightly larger credit, say 20 percent, your savings go from $7,500 a year to $10,000 a year.

Even if you are a small business employer who did not owe tax during the year, you can carry the credit back or forward to other tax years. Also, since the amount of the health insurance premium payments is more than the total credit, eligible small businesses can still claim a business expense deduction for the premiums in excess of the credit. That’s both a credit and a deduction for employee premium payments.

There is good news for small tax-exempt employers too. The credit is refundable, so even if you have no taxable income, you may be eligible to receive the credit as a refund so long as it does not exceed your income tax withholding and Medicare tax liability.

And finally, if you can benefit from the credit this year but forgot to claim it on your tax return, there’s still time to file an amended return.

 

Can you claim the credit?

Now that you know how the credit can make a difference for your business, let’s determine if you can claim it.

To be eligible, you must cover at least 50 percent of the cost of single (not family) health care coverage for each of your employees. You must also have fewer than 25 full-time equivalent employees (FTEs). Those employees must have average wages of less than $50,000 (as adjusted for inflation beginning in 2014) per year. Remember, you will have to purchase insurance through the SHOP Marketplace to be eligible for the credit for tax years 2014 and beyond.

 

Let us break it down for you even more.

You are probably wondering: what IS an FTE. Basically, two half-time workers count as one FTE. That means 20 half-time employees are equivalent to 10 FTEs, which makes the number of FTEs 10, not 20.

Now let’s talk about average annual wages. Say you pay total wages of $200,000 and have 10 FTEs. To figure average annual wages you divide $200,000 by 10 — the number of FTEs — and the result is your average annual wage. The average annual wage would be $20,000.

Also, the amount of the credit you receive works on a sliding scale. The smaller the business or charity, the bigger the credit. So if you have more than 10 FTEs or if the average wage is more than $25,000 (as adjusted for inflation beginning in 2014), the amount of the credit you receive will be less.

 

How do you claim the credit?

You must use Form 8941, Credit for Small Employer Health Insurance Premiums, to calculate the credit. For detailed information on filling out this form, see the Instructions for Form 8941.

If you are a small business, include the amount as part of the general business credit on your income tax return.

If you are a tax-exempt organization, include the amount on line 44f of the Form 990-T, Exempt Organization Business Income Tax Return. You must file the Form 990-T in order to claim the credit, even if you don’t ordinarily do so.

 

Don’t forget… if you are a small business employer, you may be able to carry the credit back or forward. And if you are a tax-exempt employer, you may be eligible for a refundable credit.

 

http://www.irs.gov/uac/Small-Business-Health-Care-Tax-Credit-for-Small-Employers

in health insurance / tax  by probityadmin 0 comments

How do exchanges simplify things for an employer?

Many employers are just exhausted from changing health plans every time there is another rate increase – someone always gets upset by the change and what started out as an employee benefit ends up being a challenge. Rates have escalated way too much in the past decade, some employees are reluctant to change providers and the administrative/regulatory hassles are overbearing on many employers, especially small ones. An exchange does two things to make the employer’s life simpler: First, they provide a broad choice of plans and carriers – allowing employees to choose the plan that is best for them as opposed to the traditional “one shoe fits all” approach that employers have traditionally taken when selecting a plan; Second, all of this is done on a single administrative platform that consolidates the administrative functions into a single arrangement that the employer (or the broker) can handle.

 

Source Blue Shield of California

https://www.blueshieldca.com/employer/administrator-resources/reference/tax-resources.sp

03/20/14

in employee / health insurance  by probityadmin 0 comments

We have several employees who waive our group health plan coverage. Will waivers be permitted under the new law?

Yes. However, employers with more than 200 employees with health plans must auto-enroll new full-time employees. Adequate notice must be provided to allow these employees time to opt out. The Department of Labor has indicated that guidance on this will not be ready until after 2014.
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in coverage / health insurance  by probityadmin 0 comments