There are a number of health and welfare plan action items to address as 2016 closes and 2017 begins. The election results have created uncertainty in the minds of many regarding whether certain legal obligations will remain in effect (or be enforced). Employers should assume Affordable Care Act (ACA) and other existing obligations will continue unless and until repealed or otherwise affected by subsequent guidance. It is not clear how soon change may occur after the inauguration on January 20, 2017. Based on the promises by both President-Elect Trump and the Republican Party to repeal and/or replace the ACA, we expect that revenue related ACA requirements, such as the employer shared responsibility provisions, are more likely to be affected during 2017 than other ACA requirements like the preventive services mandates that merely impact plan design.
Other changes, such as those suggested by the President-Elect in his healthcare position statement or by the Republican Party in its A Better Way policy paper, if enacted, will likely include some provisions that take effect quickly while others are delayed (e.g. beginning “on or after”). For example, increases to HSA annual contribution limits may occur quickly while the GOP’s proposed limitation on the unlimited exclusion for employer-provided health coverage would likely occur at some point in the future.
Below is a list of action items that should be addressed by health and welfare plans as 2016 comes to a close and 2017 begins. Please note that for non-calendar year plans, the specific timing requirements described below may vary.
Employer shared responsibility provisions under the ACA:
- Determine applicable large employer/applicable large employer member status for 2017.
- Determine whether any changes will be made to the measurement process for 2017 such as a change in method (e.g. monthly versus look-back), changes to period duration if the look-back measurement method is used, or other variations among permissible employee categories under the employer shared responsibility provisions. Update employer measurement policy as needed.
- Ensure minimum essential coverage will be offered to at least 95% of ACA full-time employees for each month during 2017 to avoid potential Internal Revenue Code (IRC) Section 4980H(a) penalty (projected to be $2,260 per ACA full-time employee less the first thirty in 2017).
- Complete Forms 1095-C and distribute to applicable employees by March 2, 2017 (the IRS has already extended the original January 31, 2017 due date). Provide Form 1095-C to other individuals if Form 1095-C is used in lieu of available alternative Form 1095-B (e.g. self-insured coverage provided to ex-spouse who was never employee). The automatic and for cause extensions are not available for forms distributed to individuals.
- Forms Series 1094/1095 must be filed with the IRS by March 31, 2017 (February 28, 2017 if filed by paper). The automatic and for cause extensions are available for the IRS filings.
Issues [potentially] affecting plan design and/or written plan materials:
- Reflect any changes in eligibility as a result of compliance with the ACA’s employer shared responsibility provisions and employee measurement.
- Under the ACA, large group insured and self-insured plans that have annual or lifetime dollar limits on benefits must define essential health benefits in a manner consistent with one of the three largest Federal Employees Health Benefit Program options or a State benchmark plan. For all practical purposes, this is a benchmark plan selection requirement and employers may want to review the 2017 State benchmark plans to determine their best option(s).
- Non-grandfathered group health plans must incorporate additional preventive services related to tobacco use counseling and interventions and screenings for high blood pressure and diabetes (if they have not already done so) as well as additional preparatory services related to colonoscopies and the use of aspirin to help prevent cardiovascular diseases and colorectal cancer. Additional Preventive Services Recommendations will apply to non-calendar year plans during 2017, as recommendations are generally effective for plan years beginning one year after the month the recommendation is issued.
- Plan administrators should review their wellness programs and revise as necessary to comply with the Americans with Disability Act and Genetic Information Nondiscrimination Act final regulations impacting wellness design and incentives beginning with the 2017 plan year.
- The U.S. Dept. of Labor’s is increasing its focus on parity issues related to non-quantitative treatment limitations under the Mental Health Parity and Addiction Equity Act (MHPAEA). Plan administrators should continue to review whether the group health plan’s administrative procedures for receiving mental health/substance abuse benefits and services comply with the MHPAEA.
- Covered Entities, as defined under the ACA Section 1557 , and federal contractors must remove complete exclusions on transgendered services in their group health plans and determine what coverage will be available beginning with the 2017 plan year.
- Covered Entities also need to meet ACA Section 1557’s notice requirements.
- An employer that is not a Covered Entity under ACA Section 1557 or a federal contractor may still consider plan design changes in light of recent Equal Employment Opportunity Commission opinions viewing transgendered coverage exclusions as a form of sex discrimination under the Civil Rights Act.
- Plan administrators must determine whether to amend the employee health care FSA contribution limit to $2,600. The annual HSA contribution limit for self-only coverage also increased to $3,400. The family contribution limit and catch-up contribution limits for HSAs remain unchanged at $6,750 and $1,000, respectively.
- Plan administrators must ensure non-grandfathered medical plan coverage satisfies the ACA’s out-of-pocket maximum limit requirements for 2017 ($7,150 self-only/$14,300 family).
- Plan administrators must ensure high deductible health plan coverage satisfies the out-of-pocket maximum limit requirements for 2017 ($6,550 self-only/$13,100 family).
Complete and distribute Forms W-2 by January 31, 2017:
- Ensure Forms W-2 correctly reflect appropriate cost of group health coverage for ACA purposes in Box 12 using Code DD.
- Ensure Forms W-2 correctly reflect HSA contributions in Box 12 using Code W, if any.
Distribute Summary Annual Report(s) (assumes Form 5500 extension filed).
Pay 2016 Transitional Reinsurance Fee:
- The latest date for a scheduled first installment payment or payment of the total fee is January 17, 2017.
A revised Summary of Benefits and Coverage applies beginning with the first open enrollment period beginning on or after April 1, 2017.
In addition to the items listed above, you should be aware that additional changes to your health and welfare plans may be necessary as a result of ongoing changes to applicable law.
[FN1]For purposes of this requirement, Covered Entities generally include:
- any health program or activity if any part received funding from the U.S. Dept. of Health and Human Services (HHS),
- any health program or activity that HHS itself administers, and
- the public health Insurance marketplace and all plans offered by issuers that participate in the public health Insurance marketplace