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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President Signs Important ACA Modification Bill!

Yesterday (October 7, 2015) the President signed the Protecting Affordable Coverage for Employees, or PACE Act, giving states the flexibility to define "small employer group", for purposes of the Affordable Care Act (ACA).  The PACE Act also redefines the definition of small employer to 1 - 50 employees.  This is an extremely important tweak to the ACA, especially for employer groups that employ between 50 - 100 full and part-time employees.  Had the PACE Act not been signed into law, the ACA was set to change the definition of small employer group from the current, 1 - 50 employees, to 1 - 100 employees, as affected plans renewed on and after January 1, 2016.  

For more information on the impact of this law, click - https://smstevensandassociates.com/ResourceLibrary/tabid/192/Default.aspx

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Long Term Care's Silver Tsunami

Recently I read an article in a trade publication that addressed the so called "silver tsunami", related to long term care.  While the word "tsunami" certainly got my attention, some of the statistics mentioned in the piece had me downright concerned. As an employee benefits consultant/broker, health insurance is almost always at the top of the list in terms of importance and cost, followed by dental, life insurance, disability income, vision, and tax preferred spending accounts (e.g., health savings accounts, flexible spending accounts, health reimbursement arrangements).  However, with 10,000 Americans turning 65, each and every day, and the propensity to need some form of assisted care in the future as we age, LONG TERM CARE INSURANCE (LTCI) deserves a "seat at the table".  Here are some important considerations relative to long term care, which includes facility care at various levels, and potentially care received in the comfort of one's own home...

Based on insurance company – Northwestern Mutual Life Insurance Company’s 2014 Long Term Care Study:

• Currently 1 in 3 Americans provides or is expected to provide care for a loved one.
• The largest share of caregivers is in their peak earning years of age (45-64).
• 47% of working caregivers reduce or deplete personal savings to cover expenses related to care giving.
• 80% of primary and 50% of secondary caregivers reduced retirement plan contributions to cover long term care related expenses.
• 75% of Americans agree that as people live longer, the need for long term care is greater.
• By the year 2020, it is estimated that 25% of the workforce will be 55 years of age or older.

And finally…

• Someone turning 65 years of age today has a nearly 70% chance of needing some form of long term care services/support in their remaining lifetime.

There are a number of quality insurance companies offering long term care insurance protection in the form of both individual and group policies. And, there are a several factors to take into consideration when evaluating long term care insurance.  Some of these factors include:

1. The maximum benefit period (usually expressed in a number of years, or in some cases, for life).
2. The per day or per month benefit amount.
3. The total amount of benefits available or the lifetime maximum benefit (generally determined by multiplying the per day benefit amount (no. 2.above) by 365, then multiplying this figure by the number of years associated with the maximum benefit period (no. 1. above).
4. The length of time before benefits are payable (referred to as the benefit waiting period).
5. Whether or not the policy provides coverage for care provided in and out of a nursing home, assisted living facility, and/or the person’s home.
6. Whether or not the policy only provides benefits for licensed care givers.  Some policies provide benefits to care givers that are not necessarily licensed providers, but rather, friends, neighbors, and relatives.
7. Inflation protection.
8. Partial or full return of premium in the event benefits are never triggered.
9. Whether or not the policy can continue with limited benefits if the policy owner decides to stop paying premiums (generally referred to as a non-forfeiture option).
10. Whether the policy pays benefits based on an expense incurred, indemnity, or disability model.
11. Whether the policy is considered qualified or non-qualified.  (Note: in order to be eligible for tax deductability of premiums, the policy must be qualified.).

And unlike other forms of insurance that have clearly defined benefit “triggers” (e.g., death, accident, fire, theft), LTCI benefits are usually triggered by a physician’s certification of either or both of the following:

1. Inability to perform a specific number of “activities of daily living”, or ADL’s, which may include bathing, continence, dressing, eating, toileting, and transferring; or
2. Cognitive impairment (e.g., dementia, Alzheimer’s disease).

Finally, the federal government encourages the purchase of LTCI by allowing tax deductability of a portion, and in certain instances, all of the premiums paid for coverage.  For example, in 2015, an individual between the ages of 60 - 70 can deduct up to $3,800 if such premiums and other allowable medical expenses exceed 10% of adjusted gross income (AGI).  Tax deductability of LTCI premiums paid for group/employer provided coverage depend on the structure of the organization (i.e., partnership, S corporation, C corporation).  And, like many other insurance benefits provided by employers, LTCI benefits received are tax free to covered employees and dependents!

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2016 Health Savings Account (HSA) Guidelines

Earlier this summer (2016) the IRS released its annual guidance affecting Health Savings Accounts (HSA), and associated qualified high deductible health plans (QHDHP).  Interestingly, for the first time since rules were relaxed to allow contribution amounts to be higher than a percentage of the deductible (remember those days?), the IRS chose to keep the maximum HSA contribution limit for individual coverage static; but increased the HSA family coverage limit.  Despite keeping the maximum allowable HSA contribution amount unchanged for those having individual only coverage, the IRS did, however, increase the maximum out of pocket limit associated with the required/accompanying QHDHP for individuals (in addition to families).
Here's an overview of the changes affecting both HSAs and QHDHP's, starting in 2016...

Health Savings Account (HSA) contribution limits:

• Individual Coverage: $3,350 (no change from 2015)
• Family Coverage: $6,750 (an increase of $100 from 2015)
• As a reminder, so called family coverage is defined as an individual plus one or more dependents.

Qualified High Deductible Health Plan (QHDHP) out of pocket limits:

• Individual Coverage*
• Deductible must be at least $1,300 and no greater than $2,600 annually.
• Out of Pocket limit (deductible plus additional requirements such as post deductible copays and coinsurance) may not exceed $6,550 annually (which is a $100 increase from 2015).
• Family Coverage
• Deductible must be at least $2,600 annually
• Out of Pocket limit (deductible plus additional requirements such as post deductible copays and coinsurance) may not exceed $13,100 annually (which is a $200 increase from 2015).

* IMPORTANT: Recent guidance issued by the trilogy of ACA compliance and enforcement -Departments of Labor/Treasury/Health & Human Services – affects QHDHPs (both inforce and newly established) starting in 2016.  The guidance indicates that the annually published ACA out of pocket maximums affect so called “aggregate” or "non-embedded" family deductibles that are part of many QHDHP’s.  (Note: QHDHP’s that utilize embedded family deductibles and grandfathered plans would not be impacted by the change.)  

This means that QHDHPs having a non-embedded or aggregate deductible for family coverage will be required to limit the deductible exposure facing any one family member to the ACA individual maximum out of pocket limit for 2016, which is $6,850.

For more information on this guidance and the impact on affected plans, go to -https://www.smstevensandassociates.com/ResourceLibrary/tabid/192/Default.aspx

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