In the years since the 2010 enactment of the Affordable Care Act (“ACA”), the agencies charged with enforcing the ACA have worried that certain responses to the law’s requirements could negatively affect the overall health insurance system. For instance, because the ACA requires insurers to issue individual health insurance coverage without regard to health status, sponsors of self-funded employer plans may be tempted to shift their high-risk employees into the individual market. But by leaving only healthier employees in the self-funded plans, this approach could result in “adverse selection” – leading to an erosion of the individual insurance market.
The United States Supreme Court’s decision on October 6, 2014, to deny review of various appellate court rulings (including the Tenth Circuit, the federal appeals court covering Colorado), which had struck down bans on same-sex marriage as unconstitutional, effectively legalized same-sex marriage in the state of Colorado.
Following recent announcements by both the IRS and the Social Security Administration, we now know most of the dollar amounts that employers will need to administer their benefit plans for 2015.
On January 25 2013, the Department of Health and Human Services (HHS) issued its final Omnibus Rule, mandating, among other things, that covered entities update their Business Associate Agreements (“BAAs”) with service providers who maintain, utilize, or come into contact with protected health information (“PHI”). Group health plans are considered covered entities and the Omnibus Rule’s expansion of the definition Business Associate meant that several plans entered into BAAs with a variety of service providers by or before last September.
Although 9.5% has been a key threshold in determining the “affordability” of employer health coverage, the IRS has just announced (in Revenue Procedure 2014-37) that this threshold will be adjusted to 9.56% for 2015. This adjustment reflects the fact that health insurance premiums have risen more rapidly than incomes. Similar adjustments have also been announced for related percentage thresholds.
The HIPAA Electronic Transactions and Code Sets rule requires most group health plans to obtain new health plan identifier numbers (HPIDs) by November 5, 2014. While insurers will likely obtain the HPID on behalf of fully insured plans, the task of obtaining the HPID for a self-funded plan will fall upon the plan sponsor. While the process is relatively simple, plan sponsors should begin identifying which group health plan arrangements are subject to the HPID requirement and communicating with plan vendors regarding the requirements.
Plan administrators who fail to timely file Form 5500 annual reports for their retirement plans may be subject to penalties under both ERISA and the Tax Code. Under previous guidance from the IRS, correcting such a late filing under the Department of Labor’s Delinquent Filer Voluntary Compliance (“DFVC”) Program could relieve the filer from penalties assessed by both the Department of Labor (“DOL”) and the Internal Revenue Service (“IRS”). However, under new guidance from the IRS, relief from its penalties now depends on a separate filing. Moreover, this new IRS requirement will apply retroactively to DFVC Program filings made since 2009.
The federal agencies charged with administering the Affordable Care Act (“ACA”) have issued revised versions of the model COBRA and CHIPRA notices. Moreover, current COBRA beneficiaries have been given a special one-time window in which to enroll in Marketplace coverage.
In Revenue Procedure 2014-30, the IRS has announced the 2015 inflation-adjusted amounts for health savings accounts (“HSAs”) and qualifying high deductible health plans (“HDHPs”), all as determined under Section 223 of the Internal Revenue Code. The maximum annual out-of-pocket expense amounts for all “essential health benefits” under non-grandfathered health insurance plans and policies will also increase for the 2015 plan and policy years. Unfortunately, there will now be a “disconnect” between the maximum HDHP out-of-pocket amount and the maximum amount allowed under other non-grandfathered plans.
The IRS has issued additional guidance regarding how the Supreme Court’s 2013 decision in Windsor v. United States (regarding same-sex marriage) applies to qualified plans and Section 403(b) arrangements. Notice 2014-19 provides that plans must operationally comply with the Windsor decision as of June 26, 2013, although certain same-sex marriages are not required to be recognized until September 16, 2013. Plans with language that is inconsistent with the Windsor decision must generally be amended by December 31, 2014 (although certain plans may have additional time to amend). The related FAQs provide that Section 403(b) plans are also subject to the same operational effective dates, but are not required to be amended at this time. Plan sponsors should consult with counsel to determine whether their qualified plans must be amended to comply with Windsor and to discuss correction of any operational failures that may have occurred since June 26, 2013.