Given the fact that, despite Republican efforts in Congress, the ACA has not been repealed or replaced, it appears that the ACA will be with us for some time yet. Following is a listing of ACA developments and deadlines that you may wish to keep in mind for 2017:
Information Reporting Requirements
Section 6055 Reporting Entities (Self-insured employers, regardless of size, that provide minimum essential health coverage) were required to file forms 1094-B and 1095-B with the IRS no later than February 28, 2017 (or March 31, 2017, if filed electronically). Individual statements were due to be provided by March 2, 2017.
Section 6066 Reporting Entities (Employers with 50 or more full-time (including full-time equivalent (or FTE)) employees were required to file forms 1094-C and 1095-C with the IRS no later than February 28, 2017 (or March 31, 2017, if filed electronically), with individual statements due to be provided by March 2, 2017.
NOTE: Penalties for failure to file or for filing late may be avoided if the employer can show good faith efforts to comply with reporting requirements. The President’s January 20, 2017 Executive Order concerning the administration of the ACA may make it easier to show good faith efforts.
Health flexible spending accounts may be offered through cafeteria plans by employers who make group health plan coverage available to employees. For tax year 2017, employee salary reduction contributions to flexible spending accounts (FSA’s) are limited to $2,600. For 2017, employers may offer a carryover of $500 of unused FSA benefits for use in the 2018 plan year; however, if a carryover is allowed, a grace period in the plan year for use of plan benefits will not be allowed. Employers thus must choose either a carryover or grace period, but not both.
Health Reimbursement Arrangements (HRA’s)
For the most part, HRA’s must be fully integrated with group health plan coverage in order to satisfy legal requirements. This requirement does not apply to retiree-only HRA’s. In addition, beginning in 2017, eligible small employers (generally those with less than 50 FTE employees) who do not offer group health plans may qualify to offer “qualified small employer HRA’s” to reimburse employees for qualified medical expenses, including individual insurance premiums.
Summary of Benefits and Coverage (SBC)
A new version of the SBC, including glossary and related benefits, is required for use on or after April 1, 2017. For those health plans that have an annual open enrollment period, the new SBC is required for use as of the first day of the open enrollment period that begins on or after April 1, 2017; for those health plans that do not have an open enrollment period, the new SBC is required for use as of the first day of the first plan year beginning on or after April 1, 2017.
Penalties under 4980H(a) (failure to provide minimum essential coverage) are increased to $2,260 per full-time employee and the 4980H(b) penalties (failure to provide affordable coverage) are increased to $3,390 per employee.
Employer Aggregation Rules
A small employer that does not employee 50 or more FTE employees nonetheless may be subject to the reporting requirements and employer shared-responsibility requirements if it is part of a larger grouping under Section 414 of the Internal Revenue Code. For example, if a small corporate subsidiary is aggregated with its parent corporation for ACA purposes, the aggregate entity is known as an “applicable large employer group” and each component part is known as an “applicable large employer member” (“ALE member”). Similar relationships among entities may exist in the public sector, as in the case of a stand-alone library the personnel and health insurance functions for which are handled by a municipality that is an applicable large employer. But since rules have not been published to determine the applicability of Section 414 to public sector entities, each public sector employer is entitled to make a good faith determination as to whether it is an ALE member.
In 2013, the Department of Health & Human Services (HHS) announced that, if permitted by applicable State authorities, certain coverages that otherwise would be cancelled because of non-compliance with ACA requirements, could be continued into 2015. In 2014, HHS extended the transitional policy for two more years in the individual and small group markets. In 2016, the policy was extended for an additional year for policy years beginning on or before October 1, 2017. Finally, on February 23, 2017, HHS announced an additional extension for policy years beginning on or before October 1, 2018 but not extending beyond December 31, 2018. States will be allowed to extend the transitional policy for shorter periods but cannot extend it beyond the dates set by HHS. Also, the States are given the authority to tailor the markets affected by the transitional policy.
Section 1332 of the ACA became effective January 1, 2017, allowing the States to apply for State Innovation Waivers to pursue health care plan regulation that is different from but not in conflict with the basic requirements of the ACA.
Maximum Out-of-Pocket Limits
Maximum out-of-pocket limits for non-grandfathered plans are increased for 2017 to $7,150 for individual coverage and $14,300 for family coverage.
Health Insurer Tax
This tax on health insurance companies, amounting to approximately 2.3% of premium cost, is suspended for 2017.
Employers that sponsor certain self-insured plans are required to pay fees to fund the Patient-Centered Outcomes Research Institute (PCORI). Employers required to pay PCORI fees must file IRS Form 720 annually and then pay the required fees no later than July 31 of the year following the last day of the plan year to which the fees apply.
These fees, charged to health plans in an effort to stabilize premiums in the marketplace, will end in 2017, although they will be required to be paid in 2017 for the 2016 plan year by employers that have self-insured plans providing major medical coverage. Employers that do not use a third-party administrator to perform claims processing, claims adjudication, and enrollment functions generally are not required to pay these fees, however.
Medicare Part D “doughnut-hole”
The Medicare Part D “doughnut-hole” coverage gap, whereby those covered by Medicare Part D are required to pay the full cost of prescription drugs while still paying premiums, will continue to shrink in 2017. While in the doughnut hole, individuals covered by a Part D plan will receive a 49% discount on generic drugs and a 60% discount on brand-name drugs.