Employee Benefit Consultants, Risk Managers and Administrators
November 2017 Newsletter
Transitional Reinsurance Fee Payment Deadline is Today - November 15
The purpose of the Transitional Reinsurance Fee (TRF) is to stabilize premiums in the individual market inside and outside of the Marketplace (Exchanges). The Affordable Care Act (ACA) mandated that health insurance issuers and self-funded group health plans fund this Transitional Reinsurance program. The ACA is expected to collect $12 billion in 2014, $8 billion in 2015 and $5 billion in 2016, totaling $25 billion. The law began in 2014 and expired at the end of 2016. The payments in 2017 are for the tax year 2016.
The fee for 2016 is $27.00 per covered member per year. If two payments were elected, the first installment is based on $21.60 per covered member per year and the second installment based on $5.40 per covered member per year, for a total of $27.00 per covered member per year.
The federal deadline for the second (and last) installment is November 15. Tucker Administrators clients that have a second payment have already been notified that their payment was scheduled November 8 as the debit date for Pay.gov to allow for any contingencies, as late penalties can apply if payment is not made by November 15.
IRS Sends Clear Signal About Employer Shared Responsibility
In spite of the Trump administration’s efforts to repeal the ACA, there does not seem to be any changes to the Employer Shared Responsibility part of the ACA for Applicable Large Employers (ALE) on the horizon. An ALE is an employer with 50 or more Full-Time Equivalents in the previous year. Further, the IRS has indicated that it intends to start sending letters advising of penalties - for tax years beginning 2015 and beyond. The letter, IRS Form 226J ,to employers will contain information on penalties assessed (if any), and how to pay and appeal them. The IRS had indicated informally that for the 2014 year, they would accept a 1095Cs, with errors, without assessing penalties long as the employer made a good faith effort.
The IRS will obtain information on ESR compliance through the employer reporting of 1094C and 1095C and information on any full-time employee receiving a tax credit for The Marketplace.
Here is a refresher:
The Employer Shared Responsibility requires ALEs to offer health coverage:
• to at least 95% of benefit-eligible employees
• that meets affordability to the employee requirements
• that meets minimum value requirements
or pay a penalty if at least one full-time employee receives a premium tax credit to purchase coverage through The Marketplace.
There are two kinds of penalties for noncompliance:
Penalty 4980H(a) commonly known as the “sledgehammer” penalty, is based on the ALE that fails to offer group health plan coverage to at least 95% of its fulltime employees. The penalty originally was $2,000* per full-time employee minus 30 if at least one employee applies for and receives a premium tax credit for The Marketplace.
Penalty 4980H(b), or the “tackhammer” penalty is based on an affordability test and whether a minimum benefit value is maintained, and if a full-time employee applies and is approved for a premium tax credit. The penalty originally $3,000* per employee that receives a premium tax credit for Marketplace coverage.
*The penalties above have since been indexed for inflation each year since 2014.
In order to determine if an employee is full-time and benefit-eligible, the IRS has devised two measurement methods:
The monthly measurement method, which is just like it sounds. The employer tracks hours worked each month, and eligibility for health coverage is based on each month. The lookback measurement method involves 3 measurement periods, some of which may span several months, to determine full-time status: a look back period, an administrative period, and a stability period.
Eligibility, elections, and affordability status for health coverage is then submitted to the IRS on Form 1095C.
While Congress continues to consider repeal and replace strategies, the law is still in effect, and the IRS has sent clear signals that they intend to enforce it by starting with the 2015 tax year.
If you have any questions, please call us at 704-525-9666.
Real world situation reveals the complexity of navigating laws when an employee is injured
Real world situations in the benefits industry often do not fit the textbook examples. This article that appeared in the November 2, 2017 Employee Benefits Adviser* is a great example of the number and scope of regulations to consider in benefits administration.
An employee has a physically demanding job on the factory floor, hut they have been out on leave for an injury that they contend is work-related. However, your worker’s compensation insurance carrier has recently denied them coverage. Additionally, the employee also has used Family Medical Leave Act (FMLA) intermittently to care for the serious health condition of their spouse before going out on their current leave. The employee would like to return to work but their medical condition prevents them from regularly lifting more than 20 lbs., an essential function of the position. In the meantime, the supervisor is complaining and wants an employee who can do the job right now. What are your next steps?
This complicated scenario implicates at least three laws: the Americans with Disabilities Act (ADA), the Family Medical Leave Act, and worker’s compensation (WC). The above scenario requires you to successfully navigate any decision regarding this employee through all three laws. An employer who fails to consider all three could face costly litigation.
Here are things employers and their advisers need to consider:
Analyze and evaluate the employee’s circumstances under each law separately. In order to do so successfully, you need to understand the purpose and the applicability of each law.
The ADA is designed to make the workplace more accessible and prohibits discrimination against a qualified individual with a disability who, with or without reasonable accommodation, can perform the essential functions of the job. The ADA applies to an employer with at least 15 employees.
The FMLA is designed to help employees balance their work and family responsibilities by offering unpaid leave and applies to an employer with at least 50 employees working within 75 miles of the employee’s worksite. The employee must have worked for the employer for at least 12 months and 1,250 hours to be FMLA-eligible.
WC is designed to provide reimbursement for medical care and lost wages to employees who sustain work-related injuries or illnesses. WC applies to essentially every employee and is typically a state-administered program.
Employers must also be aware of other state laws or their own company policies, which may offer more protections and/or greater benefits to eligible employees. Consider leave rights, reinstatement rights, medical documentation, fitness to return to work certification, and benefits while on leave under each law.
The ADA does not require employers to provide a specific amount of leave. However, it does require that employers make “reasonable accommodations” for employees with disabilities unless doing so would create an undue hardship on the company.
The FMLA provides an employee with up to 12 weeks of unpaid leave for an employee’s own or a family member’s serious health condition, for the birth or adoption of a child, and for military exigencies. The law also provides for 26 weeks for military caregiver leave. WC laws typically do not provide a specific limit for leave.
Under the ADA, the employee should be reinstated to his or her previous job unless doing so would create an undue hardship on the company. Under the FMLA, the employee is required to be reinstated to the same or an equivalent job.
Article by Hogan, Caroline"Views Juggling ADA, FMLA and worker’s compensation regulations",Employee Benefit Adviser, November 02 2017
What is Reference Based Reimbursement?
Rising prices in health care has created alternatives to the traditional PPO, network-based discount strategies. Reference Based Reimbursement (RBR) has emerged as one of those alternatives-a payment model that determines a fixed, maximum amount to pay healthcare providers for specific services and supplies. It is not a network discount payment system. Rather, it is a payment system designed to provide a reasonable reimbursement and profit margin for quality services/supplies, expressed as a rate that is derived from data sources such as Medicare, Ingenix, FairHealth and others, or a blend of more than one.
Reference Based Reimbursement (RBR) has emerged as an alternative to traditional PPOs-a payment model that determines a maximum amount to pay healthcare providers for specific services and supplies, expressed as a rate that is derived from data sources such as Medicare, Ingenix, FairHealth and others, or a blend of more than one.
RBR provides cost transparency because the reimbursement rate is based on defendable statistical data from a third party mentioned in the last paragraph, as opposed to network discounts that are generally considered trade secrets. Employers contract with “safe harbor” providers that have agreed not to balance bill the member in exchange for accepting the plan’s maximum reimbursement amount.
RBR programs are not without challenges. One, while most providers accept the reimbursement rate or a negotiated payment that would still be below the traditional payment model, there is a small percentage that will seek payment by balance billing the member. However, vendors that specialize in RBR plans have advocacy programs that provide legal defense against providers who balance bill the patient. Two, a high level of education is needed for the employer, employees and provider community in order for RBR to be used properly. Three, the plan document must contain specific language to properly administer an RBR plan.
For an RBR program to be successful, the employer hires an RBR specialty vendor and TPA with expertise necessary to set and defend reimbursement rates, provide employer/employee education and advocacy. Call us today to learn more at 704-525-9666.
Anne Parker Retires from Tucker Administrators
Anne Parker, Senior Vice President of Administration is retiring after 30 years of service at Tucker Administrators. Anne started in 1987 as a consultant for cafeteria plans, and rapidly progressed to become an proven expert in Section 125/ERISA plan administration and regulatory compliance. To broaden her skills as a consultant, Anne earned the Certified Employee Benefit Specialist (CEBS) designation in 1996. She was active in the Carolinas chapter of the International Society for Certified Employee Benefit Specialists by serving on the board of directors for six years and was the 2004 chapter president.
Anne's keen mind for federal regulations and the ability to solve problems made her popular with clients, knowing that an issue would be handled in an efficient and professional manner. Besides her competence and skill, she has been a friend to all with her thoughtfulness, sparkling wit, and quiet encouragement.
May good luck and happiness follow you to the next chapter of your life, Anne!