The next step for your health plan is open enrollment, where individuals will be able to accept or decline coverage in the plan. Open enrollment periods typically last from 15-30 days. Insurance companies and other plan providers typically mail the “pre-fulfillment” information about the plans to employers. The employers are then tasked with distributing the material to employees. Typically for an upcharge, employers can request that the provider send the materials directly to employees. During open enrollment, your Human Resources division should be prepared for a number of questions from eligible participants (and even ineligible employees) concerning the benefits offerings and other issues.
Employees may also have questions concerning the public exchange in their geographic area. Even though you may offer a compliant plan that prevents individual subsidies from public exchanges, some employees may still wish to apply for coverage.
Public exchanges are typically not popular options without subsidies. However, subsidies trigger employer penalties, leading many employers to design fully PPACA-compliant solutions. The problem of tax penalties is unfortunately not prevented by merely complying with the law. If an individual is mistakenly or illegitimately awarded a subsidy by a public exchange, the employer may still face penalties if corrective action is not taken.
How could a subsidy be incorrectly awarded? Consider that the granting of a subsidy by a public exchange occurs by application of the individual without input from any other source. If an individual mistakenly or maliciously fails to report that their employer offers them minimum value and affordability in a plan with at least minimum essential coverage, the employee may receive a subsidy without deserving one. Considering the incentive some employees may have to obtain such subsidies, as well as the economic incentive for navigators (exchange plan salespersons) to enroll individuals in public exchanges, illegitimate subsidies will inevitably be granted.
When a subsidy is granted, correctly or not, a notice will be prepared for the employer, alerting them to the subsidy. This notice serves to present the employer with a few important pieces of information:
- A subsidy has been granted, and unless overturned, the employer will face a tax penalty.
- The employer has an opportunity to appeal the grant.
- Adverse employment actions taken by the employer against the employee as a result of the subsidy grant will be actionable under the Fair Labor Standards Act. The bar for lawsuits is very low under FLSA. Caution is encouraged with respect to employee “whistleblowers” protected under this statute.
If an employer has a compliant plan with minimum value and affordability but receives a notice of subsidy grant to an employee eligible for that plan, the employer should immediately appeal the grant. The appeals process will be chaotic and frenetic, based on the likely mistaken granting of a high volume of illegitimate subsidies. Furthermore, if the appeal is not filed prior to the actual grant of subsidies for a given month of coverage, penalties for those months will likely be impossible to recover. Best practices mandate a rapid filing of appeal with the exchange granting the subsidy.
The appeals process will involve an examination, similar to an IRS audit, of the plan’s qualifications as providing minimum essential coverage, minimum value, and affordability. Employers should have on hand the Plan Document, a Summary Plan Description, any insurance or provider contracts associated with the plan, a Summary of Benefits and Coverage, and any other document presented to an eligible employee concerning the plan. Failure to supply some of these documents could result in a rejected appeal, or even worse, other excise penalties for failure to uphold other federal statutes. This process can be fraught with danger and deadlines. Consultation with a third party or legal counsel is strongly encouraged.
The best means of avoiding appeals is prevention. Prevention entails employee education on their benefits options and how to responsibly apply for exchange subsidies. The more proactive the employer, especially through alternative media such as videos or specific health plan meetings, the more informed the employees will be. More informed employees may better understand exchange applications, employer offerings, and how the two interact. Furthermore, informed employees may be less susceptible to look elsewhere for PPACA information, including looking to sources which are less scrupulous. You would rather educate your employees than a plaintiff’s attorney, for instance.
Once open enrollment for both the public exchange and your plan have ceased, you can breathe easier. Aside from open enrollment, most health plans bar mid-year enrollment with the exception of major life changes (marriage, divorce, birth).
Aside from specific plans, what changes in PPACA are on the horizon? This question can be difficult to answer, as regulations, especially the more impactful variety, have often come quickly and with little warning. However, certain areas are likely to see change in the coming years.
First, fully-insured discrimination regulations are probable. The IRS has issued a notice to expect regulation on this matter, and though the date of arrival is in question, the arrival is less so. These rules will dramatically affect and may eliminate “management carve-out” fully-insured plans for management, executive, and corporate level employees as opposed to others.
Second, the employer mandates may be further delayed or eliminated altogether. Though the probability of another delay lessens each day as 2015 nears, the possibility remains ever present in the mind of many employers. Another delay would not have regulatory legs to stand on, as no real reason remains for putting off the employer mandates. However, given the political climate and an election year, anything is possible. Once the mandates become active in 2015, any further delays are highly unlikely, though a repeal of the mandates could be possible. Some PPACA solutions offer a termination provision in case of repeal of the employer mandates. These clauses should be highly sought for alternative PPACA plans, such as MEC plans.
Third, the “Cadillac” tax on higher value health plans is expected to be enforced beginning in 2020. However, predicting anything related to PPACA 3 or more many years in advance is guesswork at best.
Fourth, reporting requirements began in 2015 for all applicable large employers. Reporting can occur on one of a number of forms, 1094-A, B, or C and 1095-A, B, or C. LBMC has been proactive in breaking these forms down to assist employers in their timely and accurate filing in 2016 and beyond. Employers are encouraged to contact LBMC to discuss these obligations further and how LBMC can help.
Finally, a number of smaller areas may see change in the coming months and years. Everything from excepted benefit regulations (plans not subject to PPACA), exchange subsidy grants and appeals processes (and legal precedent from the inevitable lawsuits), closing of unintended loopholes such as the recently popular “narrow MV” plans, and a study of self-insured plans nationwide will lead to an ever-changing and ever-challenging landscape.
As always, educated employers will better react and save more money compared to those without accurate knowledge. Stay involved in PPACA developments, and keep an eye on the Tennessee Healthcare Reform site, where we will continue to provide updates and information on PPACA’s present and future. Though always a challenge, PPACA can be met in a manner that reduces the impact on your business and your employees. LBMC will be with you all along the way to help you find solutions, deal with unexpected problems, and maintain efficiency.
LBMC can help you navigate through the extensive ACA requirements, determine any penalty exposure, and develop strategies to eliminate or reduce future penalty exposure.
External PPACA Resources: