Healthcare Reform Update - July 20, 2016

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When Should Employers Appeal a Marketplace Section 1411 Certification?

As a part of the Marketplace premium tax credit validation process, the Marketplaces are sending a letter (known as a Section 1411 Certification) to employers that have one or more of their employees receiving a premium tax credit to purchase health insurance through the Marketplace. This is significant, because if a large employer has a full-time employee who has purchased health insurance from a Marketplace, then the employer may be subject to penalties under the Employer Shared Responsibility Mandate. However, in order to receive a premium tax credit to purchase Marketplace coverage, an employee must have either attested that he or she was not enrolled in employer-sponsored health coverage, or that the employer-sponsored health coverage (if any was offered) was either not affordable or did not provide minimum value. If the employer offered the employee health coverage that was both affordable and provided minimum value, then the employer would not be subject to penalties.
If an employer receives a Section 1411 Certification from a Marketplace, the employer is given an opportunity to appeal. While the IRS will be the entity that will ultimately assess any penalties against employers that failed to comply with the Employer Shared Responsibility Mandate, prudent employers should not ignore the Marketplace notices.

Final ADA and GINA Wellness Rules Not Perfectly Aligned with HIPAA/PPACA Rules

In May, the Equal Employment Opportunity Commission (“EEOC”) published two sets of final rules addressing employer-sponsored wellness programs – one under the Americans with Disabilities Act (“ADA”) and one under the Genetic Information Nondiscrimination Act (“GINA”). The rules generally provide guidance on the extent to which employers can offer incentives to employees for participation in a wellness program. Although the final rules do not fall under the guise of “healthcare reform,” they do overlap, however, with wellness rules established by the Health Insurance Portability and Accountability Act (“HIPAA”) and the Patient Protection and Affordable Care Act (“PPACA”). This article will discuss the provisions of the two major sets of rules which are not in alignment.

Proposed Regulations Provide Additional Guidance and Clarifications on Expatriate Health Plans

On June 10, the Departments of Health and Human Services, Labor, and Treasury (the “Departments”) published proposed regulations regarding expatriate health plans, issuers of such coverage, and qualified expatriates. Specifically, the proposed regulations provide guidance on the Expatriate Health Coverage Clarification Act (“EHCCA”) (signed into law in December 2014), which generally exempted expatriate health plans, issuers of such coverage, and qualified expatriates from many of the market reforms enacted by the Patient Protection and Affordable Care Act (“PPACA”). The guidance provided addresses the applicability of PPACA’s fees, as well as, various definitions under the EHCCA. Additionally, the proposed regulations addressed other issues, such as excepted benefits, lifetime and annual limits, travel insurance, and short-term, limited duration insurance. This article focuses on the guidance pertaining to expatriate health plans, the other issues are discussed in another article in this edition of Healthcare Reform Update.

IRS Issues Proposed Rules Clarifying the Impact of Opt-out Payments on Affordability

In December 2015, the Internal Revenue Service (“IRS”) issued Notice 2015-87 which contained a series of FAQs covering a broad array of topics, including the impact on the affordability of employer-sponsored coverage when the employer offers its employees an opt-out bonus (FAQ #9). Affordability of employer-sponsored coverage is significant, because an employer that offers minimum essential coverage providing minimum value may still be subject to a penalty pursuant to the Employer Shared Responsibility Mandate if that coverage is deemed “unaffordable.” On July 8, 2016, the IRS released proposed regulations implementing some of the rules previously announced in IRS Notice 2015-87. The proposed regulations provide additional clarification on the impact of opt-out payments on affordability.

Departments Release Guidance on Excepted Benefits, Lifetime and Annual Limits, and Short-Term, Limited Duration Insurance
On June 10, governmental departments proposed regulations regarding excepted benefits, lifetime and annual limits, travel insurance, and short-term, limited duration insurance.
Newly Proposed Premium Tax Credit Rules Largely Provide Clarifications
On July 6th, the IRS issued a notice of proposed rulemaking relating to premium tax credits. In particular, the proposed regulations provide clarification and technical amendments to existing premium tax credit regulations, such as, eligibility for the premium tax credit, the type of coverage that satisfies the requirement to offer coverage, and determining whether coverage is affordable. The proposed regulations will become effective for plan years beginning on or after January 1, 2017. Although not directly related to employers, this guidance is important for employers to understand because employees eligible to obtain a premium tax credit and do so, potentially expose applicable large employers to penalties under the Employer Mandate.
COBRA Election Notices and Marketplace Options
Governmental departments issued a PPACA implementation FAQ on June 21 confirming that employers sponsoring group health plans may include additional information about Marketplace coverage in their COBRA election notices.
Automatic Re-enrollment for Qualified Health Plans No Longer Available in the Marketplace
In late June, CMS released a set of FAQs with guidance on automatic re-enrollment in a Marketplace where an enrollee’s original qualified health plan (“QHP”) is no longer available. Some plans offered in the current year may not be offered in the next year or some issuers have ceased offering a specific product type. Individuals enrolled in one of these QHPs were generally not re-enrolled automatically in comparable coverage under another QHP. These new FAQs provide guidance on how automatic re-enrollments will be handled for 2017 and future years.
Questions and Answers for Employers
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