In December 2015, many changes were made to the ACA that have an impact on when and how an employer complies with this complex and dynamic legislation.
In This Webinar We Covered:
- Status of Cadillac Tax, and Impact on Employers
- Common and dangerous fiduciary myths
- A Look Ahead at 2016 and 2017
Download Presentation from Seminar:
View Webinar Video – The Ever-Changing ACA (Affordable Care Act):
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Questions and Answers from Webinar:
Question: Small employer, about 20 EEs offers HSA with a high deductible plan. Employee responsible for first $2k of deductible, employer will reimburse next $4k of deductible when employee shows explanation of benefits for substantiation. Problems? Any reporting requirement by the small employer? 1095B/C?
Answer: We will start with the second part of your question and the most, simple part first. As a small employer with less than 50 full time equivalent employees (FTEEs), the employer would NOT be considered and Applicable Large Employer (ALE) and therefore would not be subject to the employer mandate under the ACA. As a result, there are not 1094/1095-C employer reporting requirements for this employer. Under these facts, the insurance carrier will provide 1095B statements to any covered individual in the HDHP plan to provide them proof of coverage to satisfy the individual mandate under the ACA, the employer has no reporting obligations related to the ACA. The employer does not need to separately report the HSA as a self-insured plan.
Now we will address the more complicated part of your question. There may or may not be compliance concerns with the deductible reimbursement plan that you describe above. If the employer is offering a HDHP plan to employees and pairing that with an employer funded Health Reimbursement Account (HRA), that is ok as long as participants understand that the HRA is considered non qualified health coverage and makes them ineligible to make contributions to a Health Savings Account (HSA). If however, the employer is making contributions to the employee’s HSA bank account contingent on the individual incurring deductible expenses, that would not meet the comparability testing that requires that the employer must make “comparable” contributions to employees falling within the same categories (union vs. non union, part time vs. full time). You should discuss your program with your benefits or legal advisor to determine if there are any compliance concerns with your contributions.
Question: Our plan year is July to June, would you suggest we try to change this in preparing for these changes?
Answer: There shouldn’t be any negative consequence of having a non-calendar year plan year for purposes of the application of the Cadillac tax.
Question: How does the Cadillac Tax affect persons with dual coverage?
Answer: While the rules are not final, the Cadillac tax is expected to be assessed to the insurance company or the self funded employer, not the individual. As a result, dual coverage of an individual should not have any impact on the calculation of the Cadillac tax.
Question: Will we be able to get copies of the slides from today’s presentation? (there were a few of these questions)
Answer: Yes. View the presentation by clicking here.
Question: IF the tax is going to be passed through in rates (for FF plans) how can this be tax deductible?
Answer: We are not tax advisors so this answer should not be considered tax advice or guidance. However, we will provide the answer that we understand to be true based on the information currently available. Employers will want to discuss this with their tax advisors if/when for an answer specific to their situation. Based on the December 2015 changes, Cadillac Tax payments will be deductible for federal tax purposes. If a carrier were assessed the tax for a fully insured plan, the carrier would be able to deduct the taxes for federal tax purposes and might also increase the insurance premiums charged to the plan sponsor to pass through the additional cost of the tax. The insurance premiums are deductible as a business expense to the employer.
Question: Future Topic: How to Prepare for the FLSA changes.
Answer: Thank you for that recommendation. We will consider this for a future webinar.
Question: Would EAP benefits fall within the bubble and be included for the Cadillac Tax?
Answer: At this time, that has not been determined. According to IRS Notice 2015-16, Treasury and IRS are considering whether to exercise authority to propose that EAPs that qualify as an excepted benefit would be excluded from applicable coverage for purposes of the Cadillac Tax.
Sarah Friend, Employee Benefits Consultant of The Partners Group Employee Benefits Division
Sarah has a wealth of healthcare experience after spending over 20 years working in the industry. Sarah has worked with TPG as an Employee Benefits Consultant since 2007, in which she specializes in working with large, complex employers. She also worked with one of Oregon’s leading health plans for 11 years in a variety of sales, operations and management positions. Sarah has been frequently featured in the media as an expert resource, and possesses a strong reputation for her commitment to service and a unique ability to communicate complex messages effectively to a broad audience. Sarah enjoys building long-term relationships with her clients and partnering with them to create sustainable and valued employee benefit programs, custom incentives to promote employee health and wellness, and strategies to ensure compliance in a dynamic regulatory environment. She graduated from Western Oregon University with a degree in Communications and Business. Sarah is an active board member of the Portland Rose Festival Foundation and volunteers frequently in the community. More details on Sarah.
Iris Tilley, Partner with Barran Liebman LLP
Iris Tilley is a Partner with Barran Liebman LLP, where she advises employers in all aspects of employee benefits, including the design, administration, and termination of qualified retirement plans, nonqualified deferred compensation arrangements, and health and welfare plans. She also regularly advises employers on issues related to COBRA and HIPAA. She received her undergraduate degree from the University of Portland and her J.D. and M.B.A. from Seattle University School of Law and Seattle University Albers School of Business and Economics, respectively. Iris is admitted to practice in Oregon and Washington and often speaks and writes about employee benefits topics, including health care reform.