With the Affordable Care Act's Employer Mandate (Pay-or-Play penalties) now officially in effect, employers with 50 or more full-time or full-time-equivalent employees should have already made all significant changes to their benefit programs necessary to ensure that they offer "minimum essential" and "affordable" coverage to their full-time employees to avoid penalties in 2015. However, there are several ongoing ACA issues that the Akerman Employee Benefits group is continuing to monitor of which all employers should be aware.

Supreme Court Preparing to Hear Case Regarding Premium Subsidies

Last November, the Supreme Court of the United States agreed to hear the case King v. Burwell which addresses whether the IRS may continue to extend premium tax credit subsidies to coverage purchased through health insurance exchanges established by the federal government under the ACA. The plaintiffs assert that the government should follow a literal reading of the ACA, which permits premium tax credits only for coverage purchased through an exchange "established by [a] State." Therefore, the plaintiffs argue that the IRS is in violation of the ACA by its decision to also extend subsidies to coverage purchased through exchanges established by the federal government.

At this time, only 14 states have established an exchange. It is important to note that the Pay-or-Play penalties are triggered only if a full-time employee receives a premium tax credit subsidy to purchase coverage though a health exchange. If the IRS is prohibited from providing subsidies to coverage purchased through exchanges established by the federal government, this could effectively eliminate the Play-or-Pay penalties for employers in two-thirds of the states, Florida included.

Oral arguments are scheduled to be heard in King v. Burwell on March 4, 2015, and a decision is expected to be issued by the end of June.

IRS Releases Final Forms and Instructions for Employer ACA Reporting

To assist the IRS in enforcing compliance with the ACA, employers will soon be faced with a new reporting and disclosure requirement. This reporting requirement is designed to allow the IRS to enforce the Employer Mandate, enforce the Individual Mandate, and confirm eligibility for premium tax credit subsidies for coverage purchased through an exchange. Employers will be happy to know that reporting in 2015 for coverage provided during 2014 is voluntary, and employers will not be required to begin reporting until 2016 for coverage provided during 2015. The first mandatory filing deadline is February 29, 2016, or March 31, 2016, if filed electronically.

On February 9, 2015, the IRS released the final four forms and instructions that make up the new reporting requirement. The final version maintains the four different forms first released as drafts in 2014 with only minor changes. Although the released forms are the 2014 versions (for employers that choose to voluntarily report in 2015), the 2015 forms are likely to be very similar, if not identical. The specific forms and sections that an employer will need to complete will depend largely on whether the employer offers coverage that is fully insured or self-insured, and whether the employer employs 50 or more full-time or full-time-equivalent employees.

While employers have some time until the first reporting deadline, given the complex nature of the forms and the extensive data required to complete them, employers should begin familiarizing themselves with the forms and instructions well in advance of the 2016 filing deadlines. Specifically, if they have not done so already, employers should begin to develop and implement procedures for determining and documenting each employee’s full-time or part-time status by month, and collecting health coverage and health plan enrollment by month.

New Requirements for Summaries of Benefits and Coverage ("SBC")

At the end of 2014, the Departments of Health and Human Services, Labor, and Treasury (the "Departments") issued new SBC proposed regulations. These proposed regulations modify the existing SBC template and related glossary of medical and insurance terms with the objective of making the documents shorter and easier to understand. The proposed regulations also codify some of the interim guidance that has been released in the past three years, including rules governing the electronic delivery of SBCs.

The updated SBC has been reduced from four double-sided pages to two and a half pages, and now includes clearer descriptions of ACA concepts such as whether the plan provides minimum essential coverage and minimum value. Under the new proposed regulations, employers and insurance carriers will be required to use the new SBC for the next open enrollment period that begins on or after September 1, 2015.

Employers Should Consider Implementing Policies and Procedures for Addressing Exchange Subsidy Notices

The ACA requires state and federal exchanges to send notices to employers identifying employees who have purchased coverage through an exchange and qualified for a premium tax credit subsidy. These initial subsidy notices do not constitute an assessment of a Pay-or-Play penalty and will be provided to all employers, regardless of whether such employer employs 50 or more full-time or full-time-equivalent employees.

Employers will find that the subsidy notices provide the employer with the right to appeal the determination that an employee is eligible for a premium tax credit subsidy. If the Employer disagrees with this determination (i.e. if the employee declined the employer's minimum essential coverage that is affordable and provides minimum value), the employer is invited to, but is not required to, file an appeal. Filing an appeal will be especially beneficial for employers subject to the Pay-or-Play penalties, as it can help protect the employer from having to appeal the determination after a penalty tax has already been assessed.

Currently, subsidy notices will be sent to employers at the addresses provided by employees during the Exchange application process. The Departments recognize that employees may provide incorrect contact information and are currently working on a solution to streamline that process.

Employers May Need to Revise Special Enrollment Verification Procedures as HIPAA Certificates of Creditable Coverage Are No Longer Required

Due to the fact that the ACA prohibits all pre-existing condition exclusions, as of December 31, 2014, health plans are no longer required to provide a HIPAA certificate of creditable coverage upon the loss of coverage. Prior to the pre-existing condition exclusion, the purpose of the certificate of creditable coverage was to prove that an individual had maintained creditable coverage and, therefore, could not be subject to any coverage restrictions due to pre-existing conditions.

In the past, many employers relied on the certificates of creditable coverage as a means for confirming loss of coverage for an individual seeking a special enrollment right mid-year. Although it appears that some insurance carriers will continue to provide the certificates upon request, employers should consider amending their policies to accept additional forms of proof of loss of coverage from mid-year enrollees.

Employers Should Anticipate Increased Employee Tax Questions Due to IRS Staffing Limitations

As a result of IRS budget cuts and an 8% staff reduction, a report issued by the IRS' National Taxpayer Advocate Service on January 9, 2015 indicates that the agency will be able to handle less than half of taxpayer phone calls in 2015. Therefore, employees with questions about how to correctly report their health insurance coverage to the IRS to avoid a tax penalty under the individual mandate may redirect those questions to employers.

Employers may direct employees who need information about reporting their health coverage to the IRS publications "Health Care Law: What's New for Individuals & Families", and "Questions and Answers on the Individual Shared Responsibility Provision", which may be helpful.