Beginning in 2016, group health plans and large employers will be required to file annual health coverage information returns under Internal Revenue Code Sections 6055 and 6056, which were added by the Affordable Care Act (ACA). Although all filers are encouraged to file information returns electronically, those who file 250 or more information returns are required to file electronically through the Affordable Care Act (ACA) Information Returns (AIR) system. To assist in developing software for use with the AIR system, the Internal Revenue Service (IRS) released Draft Publication 5165. This guide has information regarding the communication procedures, transmission formats and other rules for the following annual information returns filed electronically:

• Form 1094-B, Transmittal of Health Coverage Information Returns
• Form 1095-B, Health Coverage
• Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns
• Form 1095-C, Employer-Provided Health Insurance Offer and Coverage

The IRS will publish a final Publication 5165 at a later date.

The Departments of Labor (DOL), Health and Human Services (HHS) and the Treasury released FAQ XXV addressing the compliance of wellness programs with the Affordable Care Act.

Highlights of FAQ XXV:

• Compliance with the wellness program regulations under ACA does not determine compliance with other laws nor does it determine the tax treatment of rewards provided by the wellness program.
• A wellness program will comply with the requirement to be “reasonably designed” if it:
  has a reasonable chance of improving the health of, or preventing disease in, participating individuals;
  • is not overly burdensome;
  • is not a subterfuge for discrimination based on a health factor;
  • is not highly suspect in the method chosen to promote health or prevent disease; and
  • provides a reasonable alternative standard to qualify for the reward for anyone who does not meet the initial standard that is related to a health factor.

The Departments of Labor (DOL), Health and Human Services (HHS) and the Treasury released FAQ Part XXII addressing the compliance of premium reimbursement arrangements with the Affordable Care Act. Sponsors of health reimbursement arrangements (HRAs), health flexible spending arrangements (health FSAs) or other arrangements that reimburse health premiums should confirm that reimbursements are not being made for individual coverage premiums.

Specifically, the guidance provided in this set of three questions states that:

• Employers cannot offer employees cash to reimburse the purchase of an individual policy.
• Employers cannot offer employees at risk of high claims a choice between the group health plan or cash to obtain individual insurance.
• Employers cannot cancel group policies, setup a Code section 105 reimbursement plan using brokers to help employees select individual policies and allow employees to access premium tax credits.

Final rules were released by the Departments of Labor (DOL), Health and Human Services (HHS) and the Treasury addressing limited scope vision and dental benefits and employee assistance programs (EAPs) as excepted benefits. These regulations should be reviewed so that plans may make any necessary changes effective for plan years beginning on or after January 1, 2015.

Background

Excepted benefits are generally excluded from the Affordable Care Act’s (ACA’s) requirements. There are four categories of excepted benefits:

1. Benefits that are generally not health coverage (workers compensation, accidental death and dismemberment)
2. Limited excepted benefits (some limited scope* vision or dental benefits, long-term care, home health care, health FSAs)
3. Non-coordinated excepted benefits (coverage for a specific disease or illness, hospital indemnity insurance)
4. Supplemental excepted benefits (Medicare Supplement plans)

*Limited scope means that benefits are limited to treatment of the eye (vision) or mouth (dental).

In December 2013, proposed rules were issued regarding excepted benefits. The rules proposed changes in the requirements affecting limited scope vision and dental coverage and recognition of both employee assistance programs and coverage that wraps around individual coverage as new forms of limited excepted benefits. The final rule is silent on wraparound coverage and makes minor modifications to the other proposals. Additional guidance on wraparound coverage is expected in the future.

Vision and Dental Benefits

The final rules clarify that limited scope vision and dental benefits are excepted benefits if they (1) are offered under a separate policy or insurance contract or (2) are not considered to be an integral part of the group health plan. These benefits are not an integral part of the group health plan if either (1) participants may decline coverage or (2) claims for the benefits are administered under a separate contract. The regulations eliminate the requirement that an additional premium be charged in order to qualify as an excepted benefit.

Employee Assistance Programs (EAPs)

The final rule also allows employee assistance programs to be recognized as excepted benefits if they:

• Do not provide significant medical care benefits.
• Do not coordinate their benefits with group health plan benefits.
• Do not require employee premiums or contributions for participation.
• Do not impose cost-sharing requirements.

Next Steps

These regulations apply to group health plans and group health insurance issuers for plan years beginning on or after January 1, 2015. Plans should review the regulations and determine that benefits have been designed and are being administered appropriately to meet the definition of excepted benefits. If these requirements are not met, plans may face additional compliance under HIPAA, Mental Health Parity and the ACA as well as potential penalties for noncompliance.

The Internal Revenue Service (IRS) published Revenue Procedure 2014-30 outlining the annual health savings account (HSA) contribution limitation, the minimum deductible for a high-deductible health plan (HDHP) and the maximum out-of-pocket expense limits for an HDHP in 2015. For calendar year 2015, the annual contribution limitation to an HSA is $3,350 for self-only coverage and $6,650 for family coverage. The minimum deductible under an HDHP is $1,300 for self-only coverage or $2,600 for family coverage. The maximum out-of-pocket expense limit is $6,450 for self-only coverage or $12,900 for family coverage.

The Centers for Medicare & Medicaid Services (CMS) published final regulations on March 12, 2014 to establish the Basic Health Program (BHP) under the Affordable Care Act.  These regulations include eligibility and enrollment requirements for standard health plan coverage offered through the BHP, minimum benefits covered by such plans and federal funding available to states participating in the BHP.  These regulations are effective on January 1, 2015.  CMS also published a final methodology to determine the federal payments states may receive should they elect to participate in the BHP in 2015.

The U.S. Department of Labor (DOL), Treasury and Health and Human Services (HHS) jointly released final and proposed regulations on February 24, 2014 to implement the 90 day waiting period limit provision of the Affordable Care Act.

The final regulations state that a group health plan or group insurance issuer cannot impose a waiting period of more than 90 days from the date an individual becomes eligible for coverage.  Eligibility requirements which are based on number of hours worked are generally permitted as long as the maximum number of hours required is no more than 1200 hours in a 12 month period.

Enrollment may also be based on meeting other eligibility conditions such as being in an eligible job classification, attaining job-related licenses or completing an orientation period.  The departments issued a proposed rule limiting the maximum length of an orientation period to one month.

The final regulations are effective April 25, 2014.  The regulations apply to group health plans and group health insurance issuers for plan years beginning on or after January 1, 2015.  For plan years that begin prior to that date, plans must comply with either the proposed rule or the final rule.