Tag Archives: Employee Benefits

Impact of the Government Shutdown on Healthcare Reform

The U.S. Constitution requires Congress to pass a bill establishing a federal budget, often called a spending bill. For a spending bill to pass, the Senate and the House of Representatives must all agree upon the bill, which must then be approved by the President. When Congress is unable to agree upon a federal budget, or when the President vetoes it, before the budget cycle ends, a government shutdown occurs.

Due to Congress’ inability to reach an agreement on a spending bill, a government shutdown began on Oct. 1, 2013, following the end of the federal government’s fiscal year. Although the Republican-controlled House of Representatives has passed a spending bill that maintains spending levels, the bill does not provide funding to implement the Affordable Care Act (ACA). The Democratic-controlled Senate has refused to take up any bill that does not fully fund the ACA.

What happens during a government shutdown?

Similar to a lockout in the private sector, during a government shutdown, the government stops providing all “non-essential” services. This means that many government functions will stop, and many federal employees will be furloughed.

However, military personnel and essential employees will not be furloughed. In addition, other “essential” government functions and services will continue. These functions and services include:

  • Social Security, Medicare and certain types of veterans’ benefits;
  • National security, including the U.S. military and embassies;
  • Public safety, including air traffic control, emergency medical care, border patrol, federal prisons, most law enforcement, emergency and disaster assistance, overseeing the banking system, operating the power grid and guarding federal property;
  • All agencies with independent sources of funding, including the U.S. Postal Service and the Federal Reserve; and
  • Members of Congress, including essential Congressional staffers (but not those that are non-essential).

Which government agencies are affected?

Nearly all federal agencies will be affected by the government shutdown in some way. The Administration’s Office of Management and Budget has detailed contingency plans that describe each agency’s course of action.

The government estimates that roughly 800,000 federal workers will be furloughed as a result of the government shutdown.

Department of Health and Human Services

HHS said that a government shutdown could mean furloughing 40,512 workers, amounting to 52 percent of HHS employees.

However, the effect that the shutdown will have on each office will vary based on whether the service is essential. For example, those running the Suicide Prevention Lifeline would stay, but those in charge of investigating Medicare fraud would be furloughed. In addition, some parts of HHS will only be partially shut down.

Department of Labor

A majority of the DOL’s employees will be furloughed. About 13,350 employees will be furloughed, amounting to 82 percent of the DOL’s workforce.

Internal Revenue Service

Nearly 90 percent of the IRS’ workforce, or 86,200 workers, are expected to be furloughed. Although Social Security benefit payments, automated revenue collections and daily cash management for the federal government will continue, the IRS will stop performing key functions, including audits, examinations of returns, processing of paper returns and call-center operations for taxpayers with questions.

Certain essential employees, such as law enforcement, will not be furloughed, along with some positions that are paid for by funds outside of Congressional appropriations.

How does the government shutdown impact the ACA?

The government shutdown has very little, if any, impact on the health care reform law, despite efforts to defund the law. Because funding for the ACA was passed by Congress in 2010, the health insurance Exchanges still opened for enrollment on Oct. 1, 2013, and won’t be affected by the government shutdown.

Although the Exchanges are operational despite the government shutdown, technical difficulties may still occur due to a high volume of traffic. When attempting to access Exchange websites on Oct. 1, consumers experienced wait times, glitches and error messages indicating heavy Internet traffic.

IT contractors are currently working to fix the issues. However, the shutdown affects non-essential government workers, which may include some of the IT staff.

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Filling Your Employees in on Health Insurance Exchanges

Not only does the Affordable Care Act legislate for every US citizen to purchase Health Insurance of some form or another, it also obliges large and small businesses to provide their employees with Health Insurance. October 1 marks the opening of the Small Business Health Options Program (SHOP) marketplace, which will give employers with 50 or fewer full-time-equivalent employees a program through which to purchase Health Insurance coverage.02F62387

Effective of October 1, employers are required to provide a notice to employees about the exchange including whether or not they may have access to subsidies if their employer does not offer affordable health care. With the countdown to Health Care Reform now fully underway, employers need to know how to inform their employees about the exchange and how it will affect them.

Focus on the exchange.

The one thing your staff will be most interested in knowing is how they are going to be covered and what they need to do to ensure they are covered. By first explaining that the exchanges are marketplaces where individuals and small employers can buy health insurance, you can give employees a comprehensive insight into what policies are available and what government subsidies will be available to them. Once you explain the ins and outs of the health insurance exchange to your employees, you can instruct them on how you will be providing coverage and what that coverage will include.

What else should you communicate?

As the Affordable Care Act is a quite complicated piece of legislation, it is vital that you don’t over-complicate things when explaining its provisions to your staff. Communicating too much information to employees can create unnecessary confusion and should be avoided. Instead, employers should focus on the present. Refrain from focusing on the long-term and hypothetical situations, as the Affordable Care Act may be subject to reform over the next 5 years.

The most important information to communicate to your employees is the fact that the Affordable Care Act will change many rules about health insurance in 2014. As of January 1, Insurance companies must accept everyone who applies for coverage, regardless of their condition of health. In addition, the law also requires that every individual must be covered or else they will be subject to a hefty fine, come January. By outlining the timeframe of the Affordable Care Act coming into effect, you can ensure your employees are aware of deadlines and fully prepared for them.

HOW should you communicate?

By planning for a consistent communication plan, you can cover how the Health Insurance Exchanges will affect employees in the near future, while accounting for long-term developments. In communicating with employees, it’s important to use all available resources to make information as accessible as possible.

The provisions of the Affordable Care Act can be difficult to throw your head around, but it’s crucially important for employers to get up to speed with how it will affect them and their employees come October 1 and beyond. By analysing the legislation and devising a straight-forward communications strategy, you can ensure your Business is ready when the SHOP exchanges open.

Struggling to throw your head around the Affordable Care Act? By contacting us directly, you can avail of FREE expert advice on how to prepare for Health Care Reform.

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How Heathcare Reform Will Affect Workers Comp

There has been much speculation about the changing face of health care in the United States since the Affordable Care Act was passed by the Obama Administration in 2010. Divided opinions on the provisions of ‘Obamacare’ have been well-represented by the rife inconsistency across the nation with regards health care exchanges, with some states opting for state-based exchange system, while other states have opted for federal-based initiatives.doctor, clipboard, stethescope

As the October 1 deadline draws nearer, much of the attention has focused on the requirement for all US citizens to carry health insurance coverage and the bearing that will have on employers. The reformed regulations are also expected to affect workers’ compensation insurance but the extent, nature and desirability of this impact remains markedly unclear. In the meantime, here are some changes in Workers’ Compensation we are sure to see.

Fewer claims

Each year, millions of workers’ compensation claims are filed, costing employers billions. However, not all of these claims are due to work-related injuries. In some cases, employees without adequate insurance coverage would opt to use their workers’ compensation coverage to cover treatment for various conditions that may be pre-existing. Under the Affordable Care Act, a large contingent of previously uninsured workers will have the right to health insurance coverage of some form or another, thus reducing the need for workers’ compensation claims.

The increase in insured employees will also lead to a preventative approach, from both employers and the workforce, all aiming to develop a healthier workplace and lower the number of filed insurance claims. For Businesses, taking a preventative approach by introducing initiatives such as wellness programs should be regarded as something they do FOR employees and not TO them. At the end of the day, a healthier workforce means health insurance claims are less likely, while taking an interest in the well-being of the workforce can also help harness working relationships and ultimately lead to better results.

Better Care

The Affordable Care Act legislates for an increased number of insured US citizens and in light of this increase, the number of practitioners and physicians is set to also increase, particularly in rural areas. While there have been suggestions of how the actual care will be affected by a much higher proportion of patients, the long-term ideals of the ACA include increased facilities and medical professionals, which will ultimately result in better care in some areas that may have lacked facilities in the past.

The provisions of the ACA also dictate the introduction of Electronic medical records allowing Physicians to diagnose and treat workers’ compensation claims more efficiently and accurately. This emphasis on the holistic treatment of chronic care could ultimately help claimants to return to work quicker, thus benefitting Businesses. An electronic database could also help reduce the likelihood of medical errors and subsequently increase the quality and efficiency of care.

While speculation over how the ACA will affect workers’ compensation coverage continues, it is important for Businesses to understand that there will be changes. Understanding mandate deadlines and the provisions of the act itself is one thing, but understanding the actual effects of Health Care Reform is another, which will involve time, effort and commitment from employers.

If you’re looking to review your Employee Benefits program ahead of January 1, why not ask one of our experts for their advice.

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Mistakes to Avoid With Employee Wellness Programs

Workplace wellness programs are an increasingly important part of the employee benefits program, designed to encourage employees to take steps to prevent the onset of worsening health conditions and eliminate unhealthy behaviours, through nutrition seminars and physical activity. While they are often touted a costly venture for employers, such investments can pay off handsomely for employers, by improving relationships, building work ethic and of course, cutting down financial costs long term.key person insurance

Whether you are thinking about Workplace Wellness for the first time, or indeed considering a revamp of your current initiative, understanding the common mistakes and misconceptions associated with Wellness programs can help you and your employees deliver the results.

No plan at all

It may seem like a no brainer, but having no wellness program is probably the biggest mistake you should avoid making. Workplace Wellness programs are something of a fresh fad and were not always considered a requirement for Businesses. While there is not currently any legislation binding companies to promote workplace wellness, it is something that Businesses consider to be an important part of their overall benefits plan, heading into the future.

Businesses that decide against the promotion of a preventative scheme will run the risk of missing out on building relationships within the workplace by making employees feel valued. At the end of the day, wellness programs are something you implement FOR the workforce, not something you do to them. Neglecting the growing demand for wellness in the workplace can leave businesses standing still when they could just as easily be moving forward.

Insufficient budget

There is no point in ignoring the fact that a successful wellness program will cost you. In order to see results, employers must be committed to their workforce and prepared to meet the financial requirements of Wellness initiatives. If you fail to provide adequate funding, your wellness initiative will automatically be doomed to failure.

Failing to sit down and assess the budgetary requirements of introducing a workplace wellness scheme is a common mistake that companies make when first approaching a workplace initiative. It is important to understand that a wellness initiative can be a major undertaking and will require adequate funding, staffing and resources to provide meaningful results. It is important for employers to persist and provide consistent funding, if required, so that the long-term future of your employees and employee benefit costs are manageable and guaranteed.

One size fits all approach

One of the most important considerations to make when assessing the requirements of your workplace wellness initiative and deciding what it should entail, is that no two workers are the same and therefore, adopting a ‘one size fits all approach’ is something worth avoiding. Some employees may be in a different condition of health than others. Some may smoke while some may not. It is important to tailor your plan to fit each individual employee and if that involves individual profiling, BMI and fitness testing, then so be it.

Many companies that introduce general wellness plans that hold the physical condition of each and every employee in the same regard will see participation levels drop. Considering participation is key to the success of the wellness program, low participation levels mean it’s time to rethink your initiative.

Wellness programs should also account for issues such as stress management as well as emotional and mental wellness in order to fully acknowledge the diverse needs of the workforce. By understanding those needs and the obstacles to watch out for, you can introduce an effective, cost-efficient – in the long run – wellness program that can help boost morale, working relationships, reputation and ultimately, productivity.

Need advice on how your Employee Benefits Program? Ask an expert for free.

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FAQ on Exchange Notice Penalties

The Affordable Care Act (ACA) requires employers to provide all new hires and current employees with a written notice about the ACA’s health insurance exchanges (Exchanges), effective Oct. 1, 2013.

On Sept. 11, 2013, the Department of Labor (DOL) issued a frequently asked question (FAQ) on the penalties for failing to provide an Exchange Notice. In this FAQ, the DOL stated that there is no fine or penalty under the ACA for failing to provide the notice.

Exchange Notice Requirements

The ACA requires all employers that are subject to the Fair Labor Standards Act (FLSA) to provide a written notice to their new and current employees about the Exchanges.

The notice should inform employees:

  • About the Exchange;
  • That they may be able to get lower-cost private insurance in the Exchange; and
  • That they may lose the employer contribution (if any) to their health benefits if they buy insurance through the Exchange.

The DOL has issued two model notices to help employers comply. There is one model for employers that do not offer a health plan and another model for employers that offer a health plan for some or all employees:

Employers may use one of these models, as applicable, or a modified version. More compliance assistance information is available in a Technical Release issued by the DOL.

The deadline for providing the Exchange Notice is Oct. 1, 2013.

Penalties for Failing to Comply

Although employers that are subject to the FLSA should provide a written notice to their employees about the Exchange by Oct. 1, 2013, the DOL asserted in the FAQ that there is no fine or penalty under the ACA for failing to provide the notice.

This means that employers cannot be fined for failing to provide employees with notice about the ACA’s new Exchanges.

What This Means for Employers

Although this FAQ asserts that there will be no penalties for failing to provide an Exchange Notice, there are several reasons employers may still want to provide the notice.

The Exchange Notice can help employers answer employee questions about:

  • What the Exchange is;
  • Whether the employer will still provide a plan once the Exchanges are operational;
  • How Exchange plans are different from the employer’s plan; and
  • Whether the employer’s plan is intended to be affordable and provide minimum value.

If the employer’s plan is affordable and provides minimum value, employees will not be eligible for federal subsidies through the Exchange. However, most employees will have the option of waiving employer-sponsored coverage and, instead, enrolling in coverage through the Exchange.

In many cases, employer-sponsored coverage may be a better option for employees than Exchange coverage. For example, premiums for employer-sponsored coverage will often be cheaper for the employee than premiums for coverage through the Exchange. Additionally, the employee portion of the premium for employer-sponsored coverage is typically excluded from taxable income and is therefore tax-free. This is not the case in the Exchange.

More Information

Please visit the DOL website or contact us for more information on the Exchange Notice requirement.

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What Businesses Need to Know About Healthcare Reform

Over 3 years have passed since the Obama Administration signed off on the Affordable Care Act which was considered the first step in a long journey towards lowering the number of American citizens without Health Insurance. With the State and Federally-operated Health Insurance Exchanges opening on October 1, and the January 1 2014 deadline looming, it seems we are finally beginning to see the journey towards Nationwide Health Insurance Coverage take pace.health care benefits

However, a number of hiccups have slowed the implementation of the Affordable Care Act and following the recent postponement of the employer’s mandate, many US citizens and Businesses have been left to ponder the timeframe of Health Care Reform and whether or not it will take off as anticipated. In light of this confusion and uncertainty, here are a few points you need to know so that you and/or your Business can be fully prepared come January 2014.

What the Affordable Care Act means

The Affordable Care Act is a law which requires almost all American citizens to maintain a minimum level of health insurance coverage or else face a tax penalty. It also provides that large employers must offer coverage to full-time employees or else pay a penalty of up to $2,000 per employee. Smaller Business owners must also offer employees Health Insurance coverage but will be eligible for a tax credit to help cover the costs. The law also calls for Insurers to accept applicants regardless of pre-existing conditions or health issues, meaning employees and retirees no longer need an employment relationship to gain access to health coverage.

So far, 25 states have opted for federally-based exchanges while 19 have declared their preference of state-based exchanges. These exchanges will allow US citizens and Business owners to shop for Health Insurance coverage after October 1 which has been set as the opening date. Fees on employers, insurers, drug and device makers and higher earners as well as the introduction of new taxes will help fund the programme which is due to take effect on January 1, 2014.

Healthcare Trends in the US

Employer-based Health Benefits are the dominant source of Health Coverage in the US, however, this form of coverage has steadily declined since the year 2000, something that the Affordable Care Act aims to stabilise and rejuvenate. According to reports, 155.5m non-elderly US citizens with coverage in 2011 were covered by employer-based Health Insurance programmes. That figure represents a stark drop of 14.2m from 2000. The Affordable Care Act targets Employers, Big and Small, in an attempt to make Health Insurance a complete necessity for US citizens who may have opted against it in the past for financial reasons or other.

Over the past 20 years, Health Care Costs in America have increased dramatically, subsequently increasing the financial pressure on Businesses in providing Health Insurance coverage for employees. The Affordable Care Act will see the introduction of tax benefits as part of the long term objective of lowering Medicare costs.

Perhaps the most important figure of all is the 45 million US citizens who lacked Health Insurance in 2012, according to reports. This has been taken as a confirmation of the need for Health Care Reform across the country.

The role of Businesses

From discussing the provisions of the Affordable Care Act in relation to Health Care trends in America, it is clear to see that the substantiality of Health Care Reform will have much to do with the role of US Businesses, big and small. From providing Health Insurance to introducing preventative measures such as Wellness programmes, US Businesses will be at the heart of Health Care Reform.

Although the Employer’s mandate delay has caused confusion among employers, the decision is a clear indication that the implementation of the Affordable Care Act is in fact working. Businesses are still encouraged to purchase employee Health coverage after October 1, however, penalties for failing to provide Health Insurance will not take effect until 2015, giving employers more time to restructure. It has also been suggested that this delay will give the Obama Administration time to look at the law itself and make changes if necessary.

The eventuality factor remains, and employers now have more time to plan ahead and consider the long-term future of their organization. Businesses now have adequate time to conduct a reassessment of their Risk Management Strategy, consider introducing Wellness Programmes and consult their Insurer on the best possible Health Insurance policy that can be incorporated into their overall process. Although you won’t be subject to a penalty, now is the time to act ahead of the October 1 exchange window.

Health Care Reform can be quite confusing for both employers and employees. If you need to study up and see how you you’re affected by the Affordable Care Act, speak to one of our experts.

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Will Healthcare Reform Lead to Increased Patient-Centered Care?

With the Health Care Exchanges now less than two months away, we are well and truly on the verge of long-awaited Health Care Reform. Over 3 years since it was passed, the Affordable Care Act (ACA) will begin to take effect in the coming months ahead of January 2014, which will mark the beginning of the new legislation. doctor, clipboard, stethescope

Under the ACA, every US citizen will be legally obliged to purchase Health Insurance of some form or another or else face heavy fines come January. Those who were previously unable to afford Health Insurance will be entitled to a tax credit, depending on their income. Ultimately, the objective of ‘Obamacare’ is to get the ball rolling on Nationwide Health Care, available to everyone at affordable rates. However, while the ACA will see changes in Health Insurance coverage, what does it mean for the actual services available to US citizens? For many, Health Care Reform is seen as an opportunity for Patient-Centered care.

What is Patient-Centered Care?

Nationwide coverage is the aim of Health Care Reform, but there are many other provisions worth considering as you prepare yourself for the October 1 exchanges deadline, including how Health Care itself will be affected by the huge increase in patients across the country.

Many Physicians and Health Care specialists have already started to move towards a Patient-Centered Care system which is an innovative approach to the planning, delivery and evaluation of health care based on mutually beneficial relationships between providers, patients and families. Patient-Centered Care is about respect for patient’s preferences and values and providing emotional support, physical comfort and consistent care. Communication, education and coordination of care to include family involvement are all elements of a patient-focused initiative which ultimately provides an engaging and personally-tailored Health Care programme for patients.

Patient-Centered Care in the Affordable Care Act

Patient-centeredness is very much at the heart of Health Care Reform having been integrated into a number of health reform initiatives in the past. The ACA includes a number of innovative pilot programs that will evaluate the Patient-Centered Medical Home. It calls for the creation of a ‘Physician Compare’ website allowing the public to compare quality data at the physician level, such as ‘an assessment of patient experience and patient, caregiver, and family engagement.’

Shared decision-making is another attribute of the ACA, with the objective of providing an increased level of adequate information to patients. Patients will be able to make informed health decisions, along with family and caregivers, as part of a person-focused system. Preventative Care starts at an education level and the ACA places significant focus on the introduction of schemes at school-level to educate the youth about their health.

In order for a Patient-Centered system to work, an adequate measurement scheme must be in place to assess patient satisfaction and in introducing a ‘Physician Compare’ initiative along with surveys, the ACA aims for patient-focused care that can help in future decision making.

What should you do to ensure you get the best Coverage/Treatment?

If you haven’t studied up on Health Care Reform and the legislative changes that will be introduced in January 2014, then talk to your insurance agent. Make sure you know what it means for you, your family and your health insurance plan. Understanding is the first step, once you understand what these changes mean you can compare health insurance plans and physicians so that you are prepared for 2014 and beyond.

While quantity of patients is set to increase, the role of Physicians will change with a stronger focus on patient’s personal conditions and requirements. A serious and sustained effort to build a Patient-Centered health care system is starting to gain momentum with Health Care treatment tailored to your needs along with Health Insurance Plans tailored to your needs, the main objective.

If you have a question about Health Care Reform and what Insurance plan best suits you, why not ask one of our experts for free.

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Will Healthcare Reform Actually Work?

After 3 long years, the countdown to the Health Care exchanges is coming to an end. While a lot of the confusion and uncertainty brought on by the heavily-debated 2010 Affordable Care Act remains, the October 1 deadline beckons, as we approach a new age of ‘Health Care for All’ here in the US.

There is no doubt that the Affordable Care Act was seen as a huge political victory for the Obama Administration. But the question of whether or not it will prove a historic one, also lingers.  As employers and citizens seek consultation on the best possible Health Insurance plan, a number of hiccups, including the recent postponement of the employer’s mandate, not to mention the 17 states who have opted out of ‘Obamacare’, have left many US citizens wondering whether or not Health Care Reform will actually work.

What exactly are we working towards?

‘Obamacare’ legislates that all US citizens must have some form of Health Care coverage come January 2014. Those who fail to buy Health Insurance by the turn of the year will be subject to hefty fines. The scheme also calls on large employers to provide Health Care coverage to employees, provided they have over 50 working staff. Making it a legal obligation for people to have Health Insurance is seen as the most effective way to achieve nationwide coverage come 2018, and while some states have opted out of a federal health insurance exchange, they have devised their own initiatives to roll out state-wide Health Care by January 2014.

Convincing the people

Up until now, the Obama Administration’s Health Care Reform initiative has received heavy criticism from various bodies and media figures from different backgrounds. But the White House ensures, job-growth, new and improved health care facilities as well as practitioners, and increased localisation of Health Care services are at the heart of the initiative which thus far, hasn’t resulted in job losses. Convincing doubters is arguably the biggest challenge President Obama has had to face during his tenure, which ultimately will be defined by the success of Health Care Reform.

Nurturing before and after 2014

Legislation will count for very little come the end of 2014 unless the initiative is nurtured into existence, enforced and invested in. Investment from the Government is as important as investment from the people, who are the main beneficiaries of Health Care Reform. While January 2014 is seen as a new dawn, people must go out, consult their insurance brokers and find the best possible health insurance package for them and their loved ones. The future of US Health Care depends on people making that step, regardless of their current state of health or financial situation. The ‘Health Care for All’ initiative must be supported by all so it can benefit all.

The role of employers

Large employers are responsible for providing Health Care coverage for employees and in many ways, they are the backbone of the Obamacare initiative. Critics claim some employers may let go of staff to lower their books and avoid having to provide health insurance, but this puts the sustainability of the company in doubt and also puts a business in an impossible position where they can be held subject to fines and penalties. Health Care reform depends on employers, both large and small, learning about the provisions of the Affordable Care Act and working to accommodate employees in a way that both ensures their health and the long term health of the company itself.

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Health Insurance Served On A Silver Platter

January 1, 2014 marks the start of Obamacare as the U.S. will experience changes in health insurance. With the health insurance marketplaces opening all over the nation in October, 2013, now is the time to be considering what type of health insurance you will be applying for, including Medicare or Medicaid.

Medicare vs. Medicaid

Medicare and Medicaid are both government programs that help people pay for health care. Medicare is generally for the elder and disabled, while Medicaid is for people with limited income and resources. Many low-income individuals are unaware of the positive opportunities the healthcare reform will create for them.

Comprehensive Coverage

Under the health care reform, all health plans being offered on state exchange must provide comprehensive coverage, but not all plans offer the same level of coverage. For many people Medicaid will serve as a safety net for health coverage. Medicaid is a free and comprehensive health plan that is easy to apply for. In order to receive Medicaid, however, you need to be approved as eligible. You will be asked to provide your social security number as well as an income statement. So although you will not get denied health coverage under Obamacare, Medicare or Medicaid may deny you.

Coverage That Works For You

Do you want to opt for Medicaid or Medicare? A good thing about Obamacare is that it will result in free Medicare preventative services. Although without fear of denial when applying for any type of health insurance coverage, it may be worth looking into other options. When the health care exchange takes place in October make sure you weigh your options based on both coverage and cost.

Benefits of Obamacare

Besides having your pick of the litter when it comes to coverage, there are several other important benefits of Obamacare. Beginning in 2014 no one will be able to be denied health care as a result of a pre-existing condition. This is important to everyone who has conditions ranging from cancer to pregnancy. This also affects children under the age of 19 who have pre-existing conditions. There will be free preventative services to all women including breastfeeding, contraception, domestic violence, and HIV screening and counseling. Obamacare will also limit insurers’ ability to charge unreasonably high premiums for private coverage.

Have more questions? Visit our Healthcare Reform Library or contact us  for more information.

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IRS Guidance on Delay of Employer Mandate Penalties and Reporting Requirements

On July 9, 2013, the Internal Revenue Service (IRS) issued Notice 2013-45 to provide formal guidance on the delay of the Affordable Care Act (ACA) large employer “pay or play” rules and related information reporting requirements. The provisions affected by the delay are:

  • § 4980H employer shared responsibility provisions;
  • § 6055 information reporting requirements for insurers, self-insuring employers and certain other providers of minimum essential coverage; and
  • § 6056 information reporting requirements for applicable large employers.

For 2014, compliance with the information reporting rules is completely optional and the IRS will not assess penalties under the pay or play rules. Both the information reporting and the employer pay or play requirements will be fully effective for 2015.

Information Reporting Requirements

The ACA amended the Internal Revenue Code (Code) to require large employers, health insurance issuers and self-funded plan sponsors to report information about health plan coverage to the IRS so that the federal government can enforce the employer mandate.

Code § 6055 requires annual information reporting by health insurance issuers, self-insuring employers, government agencies and other providers of health coverage. Code § 6056 requires annual information reporting by applicable large employers related to the health coverage that the employer offers (or does not offer) to its full-time employees.

Employer Shared Responsibility Requirements

Under the ACA, large employers that do not offer their full-time employees (and dependents) health coverage that is affordable and provides minimum value may be subject to penalties. The ACA’s employer mandate provisions are also referred to as the employer shared responsibility or pay or play rules.

One-year Implementation Delay

The large employer pay or play rules and related reporting requirements were set to take effect in 2014. However, on July 2, 2013, the Treasury announced that these will be delayed for one year, until 2015. This means that:

  • Information reporting under §§ 6055 and 6056 will be optional for 2014 and no penalties will be applied for failure to comply with these requirements for 2014; and
  • No employer shared responsibility payments will be assessed for 2014.

However, both the information reporting and the employer pay or play requirements will be fully effective for 2015.

The IRS issued Notice 2013-45 to provide more information on the delay.

According to the IRS, the delay of the reporting requirements provides additional time for input from employers and other reporting entities in an effort to simplify these requirements, consistent with effective implementation of the ACA. This delay is also intended to provide employers, insurers and other providers of minimum essential coverage time to adapt their health coverage and reporting systems.

The delay of the employer mandate penalties was required because of issues related to the reporting requirements. Because the reporting rules were delayed, the Treasury believed it would be nearly impossible to determine which employers owed penalties under the shared responsibility provisions.

The pay or play regulations issued earlier this year left many unanswered questions for employers. The IRS highlighted several areas where it would be issuing more guidance. Presumably, the additional time will give the IRS and Treasury the opportunity to provide more comprehensive guidance on implementing these requirements.

Effect on Other ACA Provisions

The delay does not affect any other provision of the ACA, including individuals’ access to premium tax credits for coverages through an Exchange and the individual mandate.

Individuals will continue to be eligible for the premium tax credit to purchase coverage through an Exchange as long as they meet the eligibility requirements (for example, their household income is within a specified range and they are not eligible for other minimum essential coverage).

Future Guidance

Proposed rules for the information reporting provisions are expected to be published this summer. The proposed rules will reflect the fact that transition relief will be provided for the information reporting requirements.

It is still unclear how the new deadline will impact guidance that has already been issued, such as the transition relief for non-calendar year plans and the optional safe harbor for determining full-time status. Future guidance may affect these and other rules under the ACA.

What this Means for Employers

The Obama Administration’s decision to delay the employer mandate penalties and related reporting requirements will have a significant effect on many employers. See below for an overview of the ACA provisions that are affected by the delay, the provisions that are not affected by the delay and steps that employers are encouraged to take in 2014.

For 2014, the IRS is encouraging employers to voluntarily:

  • Comply with the information reporting requirements once the IRS issues information reporting rules (which are expected this summer)
  • Maintain or expand health coverage to prepare for when the employer pay or play rules become effective in 2015.

         Delayed                                                                              Not Delayed

Information Reporting Requirements

The following employers will not have to report on coverage they provide:

Pay or Play Requirements

Employers will not be required to:

 

Current Provisions

Future Provisions

Prohibition on pre-existing condition exclusions (PCEs) for children

Subsidies for low-income individuals for Exchange coverage

Large employers with at least 50 full-time employees, including full-time equivalents (FTEs) Consider whether they employ on average 50 or more full-time employees, including FTEs, on business days during the previous calendar year

Small business tax credit

Individual mandate

Appeals process and external review rules

Establishment of Exchanges

Lifetime limits prohibited

Limits on cost-sharing

Employers with self-insured health plans Count employees’ hours to determine whether they average 30 or more hours per week

Required coverage of preventive care services

New requirements for wellness programs

Patient protections

Annual limits prohibited

Offer minimum essential coverage to substantially all full-time employees and dependents

Over-the-counter drug reimbursement limits

Employee notice of Exchanges

Rescissions prohibition

Rating restrictions

Offer coverage to employees who average 30 or more hours per week

PCORI fees

Health insurance provider fee and reinsurance fee

Health FSA limits

Guaranteed issue and renewability

Offer coverage that is of minimum value

Additional Medicare tax for high-wage earners

90-day waiting period limit

Offer coverage that is affordable

Uniform summary of benefits and coverage

Comprehensive benefits coverage

W-2 reporting

Prohibition on all PCEs

Dependent coverage up to age 26

Coverage for clinical trial participants

Medical loss ratio rules

Cadillac tax

Increased tax on withdrawals from HSAs and Archer MSAs

Automatic enrollment for employers with 200+ employees and nondiscrimination rules for fully-insured plans (effective dates TBD, but not affected by this delay)

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