The latest Health Reform Bulletin provides employers with a “to do” list of compliance items for 2014 and a reminder of the ever-changing Shared Responsibility obligations which go into effect in 2015.

1. CBIZ Health Reform Bulletin
Subject: Year-end Wrap Up
Date:
December 2, 2013
As 2013 draws to a close, the “to-do” list for compliance with the Affordable Care Act (ACA)
remains long. The law has, and continues to, evolve.
EMPLOYER SHARED RESPONSIBILITY REQUIREMENT
The employer shared responsibility component of the law, which requires employers employing
50 or more full-time plus full-time equivalent employees to either offer adequate health
coverage at an affordable rate to those employees working 30 or more hours per week or risk a
penalty, has, in effect, been delayed until 2015. This enforcement delay is due, in large part, to
the delay of the reporting requirement that would have been used to manage the shared
responsibility requirement (see CBIZ Health Reform Bulletins, Information Reporting by
Employers on Health Coverage and Reporting of Minimum Essential Coverage (9/18/13) and
IRS Guidance on Delay of Employer Shared Responsibility Reporting Requirements (7/10/13)).
At this point in time, it is prudent to assume that the employer shared responsibility requirement
will take effect January 1, 2015.
This delay notwithstanding, an employer who will or may become subject to the employer
shared responsibility requirement will want to assess its workforce with particular attention to
variable hour employees. A variable employee is one for whom it cannot be reasonably
determined at the time of hiring whether the individual will be regularly scheduled to work at
least 30 hours per week. Examples of individuals who would likely fall into the variable
employee category include, among others, substitute teachers and construction workers.
Generally, an individual’s status as a full-time employee, i.e., working 30 or more hours per
week, is determined on a month-by-month basis. This creates much complexity for employers
as it relates to variable hour employees. The regulations would allow an employer to use a
look-back period, known as a measurement period, to determine an individual’s hours worked,
based on this determination; at which point, the individual would be deemed full-time for a
subsequent period, known as the stability period. For more details about these rules, see the
CBIZ Health Reform Bulletin, A Primer on ACA’s Variable Employee Rules (11/5/12). It is
important to remember that this safe harbor is only available for variable hour employees,
including seasonal employees. This methodology cannot be used for individuals who are
clearly full-time. We anticipate getting further guidance on these matters in the relatively near
future. In the meantime, it is prudent to begin gathering data if it is anticipated that this type of
safe harbor will be used.
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2. CBIZ Health Reform Bulletin
2014 MARKET REFORMS
Notwithstanding the employer-shared responsibility requirement delay, certain ACA market
reforms take effect on plan anniversaries on or after January 1, 2014.
All group health plans, including grandfathered and non-grandfathered health plans, are
subject to the following provisions:
• Ban on preexisting condition exclusions imposed on anyone;
• Full implementation of ban on annual limits on the dollar value of essential health
benefits (EHB) (the prohibition of lifetime limits on EHBs has been in effect for several
years);
• Extension of dependent coverage until age 26;
• Increased limit in outcome-based incentives/disincentives permitted in wellness
programs from 20 to 30%; or, up to 50% for tobacco-free programs; and
• Ban on waiting periods exceeding 90 days.
In addition to the list of ACA provisions above, non-grandfathered health plans are subject to
these ACA provisions in 2014:
• Fair health insurance premiums;
• Guaranteed availability of coverage;
• Guaranteed renewability of coverage;
• Ban on discrimination against health care providers (“any willing provider” type laws);
• Coverage for individuals participating in approved clinical trials;
• Inclusion of essential benefit coverage by insurers in the small group and individual
markets; and
• Cost-sharing limitations. Following are the deductible and out-of-pocket limits that can
be imposed by plans:
 Deductible (only applicable to small insured plans offered in/outside
Marketplace)
 $2,000 for single coverage
 $4,000 for coverage for more than one
 Out-of-pocket (applicable to insured plans offered via the Marketplace, and
insured and self-funded plans offered outside Marketplace)
 $6,350 for single coverage
 $12,700 for coverage for more than one
FIRST DOLLAR COVERAGE FOR PREVENTIVE HEALTH SERVICES: CONTRACEPTIVE COVERAGE
MANDATE
ACA requires first dollar coverage for certain preventive health services in plans, such as
screenings, preliminary testing and counseling. These services were expanded to include
women’s health preventive services including all FDA-approved contraceptive services
beginning August 1, 2012. Church plans, defined as plans sponsored by a religious employer,
are fully exempt from the mandate to cover contraceptive and related services.
Final regulations issued in June, 2013 provide for an accommodation for non-exempt, nonprofit religious organizations that object to including contraceptive coverage on religious
grounds (see CBIZ Health Reform Bulletin, Women’s Health Services Mandate Final
Regulations – Exemption for Religious Employers and Non-Profit Religious Organizations,
7/5/13).
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3. CBIZ Health Reform Bulletin
Under this accommodation, a plan sponsored by an eligible organization is not required to
arrange or pay for the objectionable benefit as long as it meets certain criteria. However, its
insurer or third party administrator will have to include contraceptive coverage in the plan
beginning January 1, 2014. Several lawsuits initiated by religious organizations objecting to
inclusion of this coverage continue to wind their way through the courts. It is likely that these
challenges will reach the Supreme Court.
With regard to for-profit entities objecting to the contraceptive coverage mandate, the Supreme
Court has agreed to address the Freedom of Religion issue as it relates to the ACA’s
contraceptive coverage mandate. Specifically, the Supreme Court will review the issue of
whether a corporation should be treated like an individual with regard to the First Amendment
rights to Freedom of Religion, and the rights under the Religious Freedom Restoration Act
(RFRA). The Supreme Court is expected to hear the case in March of 2014, with its decision
expected in June 2014.
ONLINE SHOP ENROLLMENT DELAYED
The ACA provides small employers, currently those with fewer than 50 employees, the
opportunity to purchase coverage through the Small Business Health Options Program
(SHOP). On November 27, 2013, the HHS issued guidance and FAQs stating that employers
wishing to purchase coverage through the SHOP should do so through a qualified agent or
broker rather than through the on-line portal for this first year of compliance. The primary
reason for purchasing coverage through the SHOP in 2014 is that it is the only way to obtain
the small business tax credit, available only to employers employing 25 or fewer employees
and who meet other criteria. The guidance also provides that for coverage to be effective by
January 1, 2014, the coverage is to be bound by December 15, 2013 (or, December 23, 2014
for federal exchanges).
INDIVIDUAL SHARED RESPONSIBILITY REQUIREMENT
The individual shared responsibility requirement mandates that beginning January 1, 2014,
virtually all individuals residing in the U.S. must maintain a minimum level of coverage, or risk a
shared responsibility payment (see CBIZ HRBs, Guidance and Updates (9/11/13) and
Individual Minimum Essential Coverage, 2/6/13)).
Individuals seeking health coverage can enroll through the HealthCare.gov website. For
coverage to be effective on January 1, 2014, individuals must enroll by December 23, 2013.
There will be no risk of penalty if individuals enroll through the Marketplace by March 31, 2014.
If the individual is eligible for an employer plan for which the anniversary is different from the
calendar year, the individual will not be subject to individual shared responsibility requirement
until the plan anniversary occurring on or after January 1, 2014 (see Transition Relief in the
CBIZ HRB, Guidance and Updates (9/11/13).
PROPOSED BENEFIT AND PAYMENT PARAMETERS IN 2015
On December 2, 2013, the Department of Health and Human Services published proposed
benefit and payment regulations addressing several issues applicable to the 2015 benefit year.
Following are some of the proposals contained in the regulations:
•
Transitional Reinsurance Fee. The goal of a transitional reinsurance program is to
stabilize premiums in the individual market due to anticipated immediate enrollment of
higher risk individuals. The reinsurance money would be used to offset the expenses of
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4. CBIZ Health Reform Bulletin
the newly eligible individuals. For 2014, the contribution rate is $5.25 per covered life
per month, or approximately $63, annually. The proposed annual reinsurance
contribution rate to be collected in 2015 is $44 per enrollee.
In addition, HHS proposes to divide the payment of fees into two installments beginning
in 2015: one in January and one in December.
Virtually, all-sized health plans, whether insured or self-funded are subject to the fees.
However, according to the proposed regulations, a self-funded, self-administered plan
where no third party administrator or other third party is used to administer the plan
could be exempt from the fees in the 2015 and 2016 benefit years.
•
2015 Open Enrollment Period. For benefit years beginning on January 1, 2015, the
annual open enrollment period would begin November 15, 2014 and extend through
January 15, 2015.
•
Proposed 2015 Cost Sharing and Deductible Limits. In 2015, the maximum annual
limitation on cost sharing would be $6,750 for self-only coverage and $13,500 for other
than self-only coverage. In the small group market, for calendar year 2015, the
maximum annual limitation on deductibles would be $2,150 for self-only coverage and
$4,300 for other than self-only coverage.
HEALTH INSURANCE PROVIDER FEES
Beginning January 1, 2014, the ACA imposes an annual fee upon “covered entities” such as
insurers who engage in providing health insurance for U. S. health risks. The assessed fees
are apportioned amongst all applicable covered entities (insurers) based on a ratio of net
premiums for insuring U. S. risks during the preceding calendar year as compared to the
aggregate net premiums for that same year. The fee is assessed when net premiums covering
US risks exceed $25 million for the previous year.
A few weeks ago, the IRS issued guidance addressing these fees and related reporting
requirements in the form of final regulations, IRS Notice 2013-76 and IRS Revenue Ruling
2013-27.
For purposes of the fees, covered entities include:
• State-licensed health insurance companies;
• Federal or state-licensed HMOs;
• Entities providing health insurance under Medicare Advantage, Medicare Part D, or
Medicaid; and
• Self-funded multiple employer welfare arrangements (MEWA).
Plans not subject to these fees include those sponsored by non-profit entities, such as VEBAs.
Although employers who sponsor self-funded plans are exempt from these fees, there may be
potential impact on stop-loss coverage by affected insurers.
The types of affected insurance coverage provided by covered entities not only include health
insurance, but also on limited-scope dental and vision insurance, as well as, retiree-only
insurance. Employee assistance programs and wellness programs are not considered health
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5. CBIZ Health Reform Bulletin
insurance for purposes of this fee unless they provide significant benefits in the nature of
medical care or treatment.
Although employers are not subject to these fees, the covered entity/insurer may pass along
some of these costs to employer/policyholders. In this event, the IRS considers the fee to be
part of the insurer’s cost of doing business; and does not permit any exemption or exclusion
from gross income it pays to offset the fees.
Covered entities are required to report their net premiums written during the prior year by filing
the Form 8963 with the IRS by April 15th of the year in which the fee is due (by May 1st for the
initial 2014 filing report).
YEAR-END REMINDERS
FORM W-2 REMINDER - AGGREGATE COST OF HEALTH COVERAGE
The Form W-2 must include the aggregate cost of health coverage. For details about this
mandatory reporting, see these CBIZ Health Reform Bulletins, Reminder: Fast Approaching
Form W-2 Reporting Requirement
and Additional IRS Guidance on W-2 Reporting
Requirement. The aggregate cost information is to be reported in Box 12, using Code DD.
SUMMARY OF BENEFITS AND COVERAGE
Under ACA, all group health plans, including grandfathered plans, whether insured or selffunded, are required to provide a Summary of Benefits and Coverage (SBC) to plan
participants within certain timeframes:
1. Upon application;
2. By the first day of coverage;
3. Within 90 days of enrollment be special enrollees;
4. Upon contract renewal; and
5. Upon request.
For coverage beginning January 1, 2014 and before January 1, 2015, an SBC must include a
statement about whether the plan does or does not meet minimum essential coverage
standards and minimum value standard.
MARKETPLACE NOTICE OBLIGATION
All employers subject to Fair Labor Standards Act were to provide the initial notice of
marketplace options to all employees by October 1, 2013. In addition, there is an on-going
obligation to provide the Notice to all new hires within 14 days of hire. The purpose of the
Notice is to explain important information about the pros and cons of buying coverage through
the marketplace. The DOL provides model notices that can be used by employers who offer
health coverage to some or all employees, and for those who do not offer coverage.
PATIENT-CENTERED OUTCOMES RESEARCH INSTITUTE FEE
One of the ACA fees imposed on both insured and self-funded health plans is the Patient
Centered Outcome Research (PCOR) fee. The purpose of this fee is to fund a PatientCentered Outcome Research Trust Fund. This Trust Fund, in turn, supports a Patient-Centered
Outcomes Research Institute to assist patients, clinicians, purchasers, and policymakers in
making informed health decisions by advancing comparative clinical effectiveness research.
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6. CBIZ Health Reform Bulletin
This fee and types of plans subject to the fee are more fully described in the CBIZ Health
Reform Bulletins, Reporting and Paying PCOR Fees – Revised Form 720 Issued (6/4/13) and
Final Regulations Issued: Patient-Centered Outcomes Research Fees (12/11/12).
The fee, required to be reported annually to the IRS on the second quarter Form 720 and paid
by its due date, July 31, is based on the average number of lives covered under the policy or
plan. For policy and plan years ending after Sept. 30, 2012, and before Oct. 1, 2013, the
applicable dollar amount is $1. For policy and plan years ending after Sept. 30, 2013, and
before Oct.1, 2014, the applicable dollar amount is $2. For additional information about the
PCOR fee, see IRS webpage, questions and answers and chart of plans subject to the fees.
About the Author: Karen R. McLeese is Vice President of Employee Benefit Regulatory Affairs for CBIZ
Benefits & Insurance Services, Inc., a division of CBIZ, Inc. She serves as in-house counsel, with
particular emphasis on monitoring and interpreting state and federal employee benefits law. Ms. McLeese
is based in the CBIZ Leawood, Kansas office.
The information contained herein is not intended to be legal, accounting, or other professional advice, nor are these
comments directed to specific situations. The information contained herein is provided as general guidance and may
be affected by changes in law or regulation. The information contained herein is not intended to replace or substitute
for accounting or other professional advice. Attorneys or tax advisors must be consulted for assistance in specific
situations. This information is provided as-is, with no warranties of any kind. CBIZ shall not be liable for any damages
whatsoever in connection with its use and assumes no obligation to inform the reader of any changes in laws or other
factors that could affect the information contained herein. As required by U.S. Treasury rules, we inform you that,
unless expressly stated otherwise, any U.S. federal tax advice contained herein is not intended or written to be used,
and cannot be used, by any person for the purpose of avoiding any penalties that may be imposed by the Internal
Revenue Service.
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