Employers And Plan Sponsors Prepare For ACA’s 2014 Changes

On Jan. 1, 2014, employers and plan sponsors will experience many significant changes because of the Patient Protection and Affordable Care Act (ACA), according to speakers at the annual employee benefits conference of The Groom Law Group, Chartered, Washington, D.C. The Internal Revenue Service and the U.S. Departments of Health and Human Services (HHS) and Labor (DOL) have released thousands of pages of rules and regulations under the ACA, many of which will come fully into force in 2014 and beyond.

2014 fees and reporting. “Many ACA changes are right around the corner,” said Christine L. Keller, principal at The Groom Law Group. Although the Obama administration delayed the employer shared responsibility reporting requirements for an additional year (to 2015), the individual shared responsibility requirements are effective Jan. 1, 2014. Individuals who are not exempt must carry minimum essential coverage or make a shared responsibility payment (also known as a penalty). The penalty for 2014 is 1 percent of household income minus tax filing threshold or, if higher, a flat dollar amount, Keller noted.

Along with delaying the employer mandate, the administration also delayed Code Sec. 6056 and Code Sec. 6056 reporting for employers and insurers. Forms will be due to the IRS and individuals in 2016, rather than in 2015, Keller explained. The IRS has issued proposed rules with the expectation that final rules will be released before 2014.

The ACA’s transitional reinsurance fee, will be due in January 2015, Keller said. For 2014, the transitional reinsurance fee is scheduled to be $63 per covered life. The fee has been in the news recently as some lawmakers in Congress wanted to suspend it for one to two years as part of a budget/debt ceiling agreement.

Public and private exchanges. On October 1, health insurance exchanges (also called marketplaces) launched in all 50 states and the District of Columbia. The majority of states have marketplaces being operated by the federal government.

Private exchanges were not created by the ACA but developed as a market response to the ACA and public exchanges, explained Tamara S. Killion, principal at The Groom Law Group. A private exchange can be a single/multiple issuer or insured/self-funded. “Private exchanges can offer employees the ability to buy up or buy down coverage,” Killion said.

One key difference between marketplaces and private exchanges is the availability of tax credits to help offset the individual’s cost of coverage, Killion said. Only individuals enrolled in marketplaces may qualify for the Code Sec. 36B premium assistance tax credit.

Reforms. The ACA has instituted many insurance reforms, said Jon W. Breyfogle, principal at The Groom Law Group. The IRS, HHS and DOL have issued significant amounts of guidance but many questions remain to be answered. The HHS has confirmed its historic “look through” treatment of associations. Additional guidance is likely for short term limited duration plans. These plans, which generally must be less than 12 months in duration, are exempt from market reforms.

DOL investigations. In fiscal year 2012, DOL closed 3,566 ERISA cases, 72 percent of which included a monetary recovery, reported Jennifer Eller, principal at The Groom Law Group. “DOL almost certainly looks at plan expenses when they do an investigation,” Eller noted. “They are always interested in the extent to which the plan sponsor has been reimbursed by the plan.” Eller added that almost all DOL investigations were suspended during the federal government shutdown.

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