21st Century Cures Act Becomes Law!

On Tuesday, December 13th, 2016, the President signed into law the - "21st Century Cures Act" - which includes a provision that will be very good news to many stakeholders, in particular, employers that have fewer than 50 full time/full-time equivalent employees.  Now law, the Act addresses a variety of issues including expanded treatment for mental health; resources to fight the so called "opioid epidemic"; hastening the time required for FDA approval of new drugs/devices; and additional funding to accelerate cancer research. Over $6 billion has been earmarked to fund the ambitious law, which received bi-partisan support in both the House and Senate.



Back in 2002, the IRS created Health Reimbursement Arrangements (HRA's), essentially building off a more popular and widely utilized tax preferred instrument known as a flexible spending account or FSA.  HRAs offer plan participants flexibility that FSAs did not, most notably the ability to carry over unused dollar allocations to subsequent benefit years.  The "21st Century Cures Act" has once again performed an "Adam and Eve like" creation by building off the HRA to create a new tax preferred spending arrangement called a Qualified Small Employer Health Reimbursement Arrangement, or QSE HRA.  Here's how the QSE HRA works, and more importantly, who is eligible to implement/offer the new tax preferred spending arrangement.

WHO CAN OFFER

1. Employers that do not meet the Affordable Care Act's (ACA) definition of an "applicable large employer", generally under 50 full-time and full-time equivalent employees (FTEs). (Note: employers who averaged less than 50 FTE's in 2016 or the entire prior calendar year would meet this test); and
2. Eligible employers that do not currently offer group health insurance coverage to their employees.  Employers that offer coverage to a certain class or segment of their employed population would not meet this test, unless they terminated all inforce group health plans.

IMPORTANT: Employers seeking to implement a QSE HRA must provide written notice of availability to eligible employees 90 days prior to the beginning of the year the QSE HRA is offered. Employers are allowed transition relief of this requirement if notice is provided within 90 days of the Act's effective date.

WHAT CAN BE REIMBURSED

QSE HRAs are established to reimburse eligible employees' medical expenses including:

1. Premiums for individual health insurance coverage.
2. Premiums for Medicare supplement or Medigap insurance
3. Expenses heretofore allowed to be reimbursed under FSAs and Health Savings Accounts (HSAs), listed in IRS code section 213(d). Examples include health insurance plan related copays, deductibles, and coinsurance, and expenses related to services such as acupuncture, chiropractic care, dentures, corrective vision, etc.
4. The maximum allowable QSE HRA amounts, which must be 100% employer funded, are $4,960 for individual only coverage; and $10,000 for individual plus dependent(s) coverage. Amounts can be prorated by employers based on employee hire dates.  Presumably the amounts would increase from year to year, similar to the increases announced by the IRS for annual HSA contribution limits.

COMPLIANCE/IMPLEMENTATION

There are a variety of compliance related considerations employers need to be aware of and address upon plan implementation, including:

• Development of a plan document which outlines the parameters of the QSE HRA plan (Note: HRAs and QSE HRAs are ERISA governed plans, and must follow the same rules as a health insurance plan.)
• Development/distribution of a summary plan description (SPD)
• Distribution of the required "90 day" notice
• Determining affordability relative to the ACA's individual mandate
• Reporting QSE HRA amounts on employees' form W-2
• Completion/Submission of the ACA's 1095-B data to plan participants and the IRS, along with transmission of 1094-B data to the IRS.

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IRS Announces Delay to ACA Form Filing Deadline

Last Friday (11/18/2016) the IRS announced extended deadlines for the delivery of forms 1095-B & C to INDIVIDUALS.  IRS forms 1095-B and 1095-C must now be provided to affected individuals no later than March 2, 2017 (originally 1/31/2017).

Please note this extension does NOT apply to the deadlines for filing forms 1095-C, along with 1094-C, 1094-B, and 1095-B with the IRS.  The deadline to file these forms with the IRS remains February 28, 2017 (or March 31, 2017 if filing electronically).

Also of importance in the IRS release was the extension of transition relief with respect to penalties “if good faith efforts are made to comply with information reporting requirements”.

As a reminder, employers with fewer than 50 employees (full and part-time) are not required to file any of the above referenced forms, if their plan is fully insured.

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Medicare Part D Notices

Each year, Medicare Part D requires group health plan sponsors to disclose to individuals who are eligible for Medicare Part D AND to the Centers for Medicare and Medicaid Services (CMS) whether their health plan’s prescription drug coverage is creditable. Plan sponsors must provide the annual disclosure notice to Medicare-eligible individuals before Oct. 15, 2016—the start date of the annual enrollment period for Medicare Part D. 

Employers should confirm whether their health plans’ prescription drug coverage is creditable or non-creditable and prepare to send their Medicare Part D disclosure notices by Oct. 14, 2016. CMS also requires notices to be provided to "Medicare eligible plan participants" at other times during the year, such as:

• Prior to an affected individual's initial enrollment period for Part D
• Prior to the effective date of coverage for any Medicare-eligible individual who joins the plan
• Whenever prescription drug coverage ends or changes, which results in a change in the status of the coverage
• Upon an affected individual's request

Model notices (in English and Spanish), and additional guidance on this compliance matter can be found at https://www.cms.gov/Medicare/Prescription-Drug-Coverage/CreditableCoverage/Model-Notice-Letters.html

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ACA 2016 Compliance Update

By one count (source: The Galen Institute); there have been seventy (70) significant changes, delays, modifications, and partial repeals of the Affordable Care Act (ACA)/Obamacare to date.  (For those keeping score at home, 43 have come from the White House; 24 from Congress; and 3 from the Supreme Court.) The challenges for stakeholders lie not only in developing sound, effective compliance strategies, but in keeping up with the various “fits and starts” of the law.  In addition, various penalties, fees, taxes, limits, and safe harbors are indexed for inflation, and thus, subject to change on an annual basis.  Listed below are some of the more relevant and timely announcements which impact ACA compliance in 2016 and beyond:

Click - https://smstevensandassociates.com/ResourceLibrary/tabid/192/Default.aspx to access the full post.

Short Term/Temporary Health Ins.- Buyer Beware!

Short Term Major Medical (STMM) coverage, sometimes referred to as Temporary Major Medical, can be an ideal solution to a specific, health insurance related challenge.  However, changes brought upon by the Affordable Care Act (ACA) have significantly altered the rules, restrictions, and considerations relative to the purchase and reliance upon STMM coverage.  Here is an analysis of STMM in the interest of arming interested buyers with the information they need to make an informed decision…

STMM coverage has historically, and to a large extent still is, an ideal health insurance solution for the following situations:

1. In between jobs (an excellent alternative to COBRA)
2. College graduates
3. College students no longer eligible for parents’ coverage
4. A bridge to Medicare eligibility
5. Proof of health insurance when needed

And because STMM is both temporary (usually from 1 to 12 month durations, limited to 6 months in some states), and in most cases, subject to some level of underwriting, the premiums tend to be significantly lower than permanent/renewable health insurance.  However, like a consumer product purchase, the buyer needs to understand precisely what they are buying, and be aware of both the OPEN and SPECIAL enrollment periods that now define when an individual can purchase permanent/renewable individual coverage.

The Affordable Care Act (ACA) has profoundly altered the health insurance marketplace, in a myriad of ways.  Here are the most important considerations relative to the ACA and STMM coverage:

• STMM does not meet the ACA's "minimum essential coverage" criteria, thus individuals covered by STMM are subject to the ACA’s  individual mandate penalties (for 2016 and 2017, the greater of $695 or 2.5% of income);
• A loss (or expiration) of STMM coverage does NOT allow for a special enrollment opportunity. So a loss/expiration of STMM coverage midyear would NOT result in the right to enroll in permanent/renewable coverage within 60 days of loss of STMM coverage.  An affected individual would have to wait until the 2017 open enrollment period to get permanent/renewable individual coverage, incur a life changing event (e.g., marriage, birth, adoption), or become eligible for employer based coverage.
• Because STMM coverage is not affected by most of the ACA’s rules/restrictions, it does not have to:
• include coverage for the 10 essential health benefits
• offer unlimited coverage without a lifetime benefit maximum limit
• utilize community rating
• cover preexisting conditions
• issue coverage on a guarantee issue basis 

Much like you wouldn’t hire an accountant to do plumbing work, or purchase a blender to open a can of soup, know when and if STMM coverage is the right fit for your health insurance needs!

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