CMS Posts New FF-SHOP FAQs on REGTAP

Posted by admin on July 23, 2014  |   No Comments »

On July 3, 2014, CMS posted five new frequently asked questions (FAQs) to REGTAP related to the federally facilitated SHOP (FF‑SHOP).

  • FAQ #2565 describes the payment process for 2015. Insurers will not handle billing or payments in the FF‑SHOP. Premiums will be paid through the SHOP and not directly to the insurers.
    FAQ #2565
  • FAQ #2598 states that premium rate calculations and tobacco surcharges are determined only once per year. An employee attesting midyear that he/she has completed a tobacco cessation program would not receive non-tobacco user rates until the group’s annual renewal.
    FAQ #2598
  • FAQ #2606 clarifies that it is not an employer’s responsibility to offer a tobacco cessation program to employees. Final regulations require that an insurer offer such a program if the insurer is imposing a tobacco surcharge. The surcharge would be removed if the individual agrees to participate in the program. Of course, a small employer is always welcome to implement a wellness program on its own, but it is not required to do so.
    FAQ #2606
  • FAQ #2594 explains that the FF‑SHOP will not support a fixed-dollar contribution design for small employers. Employers may contribute a fixed percentage amount toward employee and dependent medical and dental coverage.
    FAQ #2594
  • FAQ #2597 provides an overview of the employee choice model, which will be available in some states beginning in 2015. Employers in states with employee choice may choose to offer employees either 1) all medical plans across a single metal level and all dental plans across a single coverage level, or 2) a single medical plan and a single dental plan. Employers without employee choice in 2015 may offer employees only a single medical plan and a single dental plan.
    FAQ #2597

Reminder: Form 5500 Filing Deadline for Calendar-year Plans Is July 31

Posted by admin on July 22, 2014  |   No Comments »

Plan sponsors are required to file Form 5500-series returns on the last day of the seventh month following the end of their plan years. For calendar-year plans, sponsors must file by July 31, 2014 (reporting on the 2013 plan year). Plans may request a 2.5‑month extension to file by submitting Form 5558, Application for Extension of Time to File Certain Employee Plan Returns, by that plan’s original due date. Ask your advisor if you need assistance with filings.

DOL Form 5500 Website
Form 5558, Extension of Time

PCOR Fee Payable by July 31; Revised Form 720 Now Available

Posted by admin on July 21, 2014  |   No Comments »

The deadline to pay the PCOR fee is July 31, 2014. The fee is generally due by July 31 of the calendar year following the year in which the plan year ends. In other words, for plan years ending in 2013, the PCOR fee is due July 31, 2014. The fee is payable annually through 2019.

Importantly, the IRS released a revised version of Form 720 (which is the form used to report and pay the fee) as well as the related Form 720 Instructions (further describing the PCOR counting methods and amounts due). For plans paying the PCOR fee for the first time, the fee is $1 per covered life; for plans paying the PCOR fee for the second time (those with plan years ending Oct. 1 – Dec. 31), the fee is $2 per covered life. Previous versions of Form 720 did not include the option to pay the increased $2 fee for plans paying the PCOR fee for the second time. Plan sponsors should ensure they are using the most current version of this form.

For insured plans, the carrier is responsible for paying the PCOR fee. However, for self‑insured plans, including HRAs, the plan sponsor (generally, the employer) is responsible for such payment. Employers should be aware of whether any plans they sponsor, including major medical plans, prescription drug plans and HRAs, are considered self-insured and subject to the PCOR fee. For most types of plans, the fee is payable for each covered life (i.e., employees and dependents), and there are three methods that may be used to determine the number of covered lives in calculating the fee amount.

More Information on PCOR Fee
Form 720
Form 720 Instructions
IRS Information on PCOR Fee

August Training Opportunities, Register Now

Posted by admin on July 18, 2014  |   No Comments »

NFP Benefits Compliance is hosting a series of webinars in August. Training dates are Aug. 6, 13 and 20, 2014, at 3 p.m. ET. Topics are “The Well‑designed Wellness Program,” “COBRA Compliance” and “Legislative Update.” NFP Benefits Compliance reserves the right to change training topics in the event of significant legislative, judicial or regulatory developments.

There is required registration information. Participants must enter their name and the name of their NFP office or Benefits Partners firm into the “Broker Name” and “Broker’s Firm Name” fields.

See Content and Register

“PPACA Fee Overview: What Employers Need to Know About PCOR and Reinsurance Fees” Webcast Now Available

Posted by admin on July 17, 2014  |   No Comments »

A 30 minute recorded webcast is available that answers commonly asked questions regarding the PCOR and reinsurance fees. The webcast is presented by Jill Brooking, vice president, NFP Benefits Compliance. Our webcast covers common questions about the PCOR fee, which is due July 31, and provides an overview of the reinsurance fee, which requires contributing entities, including insurers, self‑insured employers and third-party administrators (TPAs), to submit the enrollment count of the average number of covered lives in a plan by Nov. 15, 2014.

It also explains:

  • Methods for calculating the average number of covered lives
  • The amount of the fees
  • When payment is due

View the Webcast

IRS Clarifies Treatment of Midyear Post-Windsor Amendments for Safe Harbor 401(k) Plans

Posted by admin on June 6, 2014  |   No Comments »

On May 15, 2014, the IRS issued Notice 2014-37, which provides additional clarifications for retirement plan sponsors of safe harbor 401(k) plans. The notice builds on the previously issued Notice 2014-19, which was released on April 4, 2014.

As background, retirement plans must recognize same-sex marriages for purposes of issuing survivor benefits, obtaining spousal consent, eligibility for joint and survivor annuities and other administrative functions. These steps are required as a result of last summer’s U.S. Supreme Court decision in U.S. v. Windsor. The IRS previously clarified that the deadline to incorporate the post-Windsor required plan amendment recognizing same-sex marriages under the terms of the plan would be the later of the plan’s remedial amendment period or Dec. 31, 2014.

However, this deadline raised issues for sponsors of safe harbor 401(k) plans, which are required to adopt any amendments before the beginning of the plan year unless a specific exception to the rule applies. As such, Notice 2014-37 clarifies that safe harbor 401(k) plans can adopt a midyear plan amendment in order to comply with theWindsor decision without risking the plan’s status as a safe harbor plan.

IRS Notice 2014-37

IRS Announces Late Filer Penalty Relief

Posted by admin on June 4, 2014  |   No Comments »

On May 9, 2014, the IRS released Notice 2014-35 and Revenue Procedure 2014-32, which provide relief from IRS penalties to certain group plans that are delinquent in filing their annual reporting. As background, certain group health and retirement plans are required to timely file Form 5500 on an annual basis. A plan administrator that is delinquent in filing may be subject to penalties imposed by the DOL and IRS. If the plan voluntarily complies through the DOL’s Delinquent Filer Voluntary Compliance (DFVC) Program, the DOL penalties are reduced and there is relief from the IRS penalties.

Certain retirement plans are required to file Form 8955-SSA to report information about vested benefits payable to separated plan participants. Prior to this announcement, relief was not available under the DFVC Program for plans that were delinquent in such filing. IRS Notice 2014-35 now provides for the DFVC Program to be available for such failures. To take advantage of the program, plans must file the delinquent Form 8955-SSA in paper format with the IRS by Dec. 1, 2014.

Form 5500-EZ must be filed by retirement plans with one participant and by foreign plans. The program is subject only to the IRC’s Form 5500 filing requirement. Thus, the DFVC Program and DOL penalties would not apply. In Revenue Procedure 2014-32, the IRS announced a one-year late-filer program for Form 5500-EZ filers. No penalty would be due if an eligible plan completed and submitted delinquent forms and any applicable schedules starting June 2, 2014, and ending June 2, 2015.

IRS Notice 2014-35
Revenue Procedure 2014-32

IRS Issues Regulations on Tax Treatment of Qualified Retirement Plan Payment of Accident or Health Insurance Premiums

Posted by admin on June 2, 2014  |   No Comments »

On May 12, 2014, the IRS published final regulations on the tax treatment of payments from qualified retirement plans (including 401(k) plans) for health, accident or long-term care premiums. The final regulations track previous IRS guidance – including a 2003 IRS revenue ruling and 2007 proposed regulations – and do not allow participants to pay for health, accident or long-term care premiums on a pretax basis from their qualified retirement plan accounts. Specifically, under the proposed regulations, such premium payments were considered taxable distributions under IRC 402(a) (although there are a few exceptions for retiree health benefits).

The final regulations add an exception that allows disability insurance premiums to be paid from a qualified plan without resulting in a taxable distribution. To meet that exception, though, in the event of a disability, the disability insurance contract proceeds must be paid to the qualified plan trust on a participant’s behalf. The regulations further expound on the conditions that must be met for that exception. Employers that want to rely on the exception should engage outside counsel to assist.

The final regulations also make conforming amendments to IRC Section 106, which governs the income exclusion for employer-provided health coverage. Specifically, Section 106 has been amended to reflect the definition of “dependent” made by the Working Families Tax Relief Act of 2014 and the availability of the exclusion for children under age 27 under PPACA. The final regulations are effective for taxable years beginning on or after Jan. 1, 2015 (although taxpayers may rely on them in earlier taxable years).

Final Regulations
IRS Web Page

IRS Releases Final Regulations on Marketplace Reporting Requirements

Posted by admin on May 30, 2014  |   No Comments »

On May 7, 2014, the IRS issued final regulations relating to state health insurance exchange reporting requirements to the IRS. As background, PPACA requires exchanges (marketplaces) to report certain information to the IRS and to some individuals. The marketplace reporting is meant to assist the IRS in administering the premium tax credit and cost-sharing subsidies available to individuals who purchase health insurance through the marketplace, including IRS reconciliation of advance credit payments. The final regulations mostly track proposed regulations issued last year.

The final regulations state that marketplaces must report to the IRS on a monthly and annual basis, and must provide annual summary reports to applicable individuals (those who have purchased coverage through the marketplace and qualify for a premium tax credit or cost-sharing subsidy). The first monthly reports are due sometime after June 15, 2014 (actual date to be determined by the IRS), and will include cumulative information for previous months in 2014, and the first annual reports are due by Jan. 31, 2015.

The reports will contain detailed information on the individuals enrolled in marketplace coverage, including the identity and contact information of each individual’s employer, whether that employer offered affordable minimum value coverage, and the amount of the employee’s required contribution for self-only coverage. Importantly, the final regulations require reporting only on coverage obtained through the marketplace by an individual (for single or family coverage and not SHOP coverage). The IRS will further describe SHOP marketplace reporting details in future regulations.

The marketplace reports will be sent directly to the IRS, and so employers will not furnish or receive them. The marketplace will contact employers directly, however, if the marketplace determines that one of the employer’s employees qualifies for a premium tax credit. The employer would then have an opportunity to appeal that determination. Regardless, employers should be aware that the marketplace reports may contain information relating to the employer’s plan (e.g., minimum value and affordability determinations).

Final Regulations

Final Exchange Rule Released

Posted by admin on May 28, 2014  |   No Comments »

On May 16, 2014, HHS issued the final rule on exchange and insurance market standards, effective for 2015 and beyond. The rule will be published in the Federal Register on May 27, 2014. The final rule addresses a wide number of provisions, including: the discontinuation of certain products, clarifications on the SHOP exchanges, guidance for both navigator and non-navigator assistance personnel, quality reporting, nondiscrimination standards (for health care providers), minimum certification standards and responsibilities of issuers and premium stabilization and enforcement remedies, among other provisions.

The rule also provides for a modification of the reinsurance contributions if the actual contributions do not meet projections, allows for certain changes to the risk corridors calculation and modifications for the way that the annual limit on cost sharing is calculated, provides for clarifications on indexing the contributions used to determine eligibility from the individual mandate, updates standards for consumer assistance programs and standards related to the opt-out provisions for self-funded, non-federal governmental plans under HIPAA, and provides for certain changes with respect to exchange appeal standards and coverage enrollment/termination standards. Finally, time-limited adjustments to standards related to the MLR program are included.

While nearly all of these provisions do not directly affect employers sponsoring group health plans, some of these provisions have an indirect effect. For example, the rule requires that individual fixed indemnity insurance products can only be sold going forward to individuals who have other health coverage that is minimum essential coverage in order for such products to continue to be considered an excepted benefit. Essentially, an individual purchasing a fixed indemnity policy must perform a one-time attestation upon issuance of the first policy issued on or after Jan. 1, 2015, that the individual has minimum essential coverage, and those policies may only pay a fixed-dollar amount per period of hospitalization or illness and/or per service (consistent with the group market rule on hospital and fixed indemnity policies). Employers who currently facilitate the purchase of an individual fixed indemnity product to employees should be aware of the changes affecting these plans and contact your insurance advisor for assistance.

In another significant change, state exchanges were previously planning to rely upon the federal HHS to conduct verifications of enrollment in eligible employer-sponsored plans for purposes of eligibility for employees who sought an advance premium tax credit for determinations made on or after Jan. 1, 2015. However, HHS has determined that state exchanges will have to perform their own separate verifications of enrollment in employer-sponsored plans instead of relying on HHS to act as a comprehensive national resource to perform the advance premium tax credit determinations. States administering their own exchanges will be able to implement sample-based reviews to determine eligibility for premium tax credits beginning Jan. 1, 2016. This change will not affect eligibility determinations made in states being run by the federally facilitated exchange.

The rule also finalizes rules for self-funded, non-federal governmental plans to opt out of certain provisions under HIPAA that have previously been in effect, including benefits for newborns and mothers, parity in mental health and substance use disorder benefits, required coverage for reconstructive surgery following mastectomies, and coverage of dependent students on a medically necessary leave of absence. However, the rule finalizes the amendments with one clarification: that in the case of a plan sponsor submitting opt-out elections for more than one collectively bargained health plan, each plan must be separately listed in the opt-out election, or in the case of group health plans not subject to a collective bargaining agreement, the sponsor must submit separate election documents for each plan.

A new notice requirement will apply for insurers who are discontinuing policies in the individual and small group markets. These discontinuation notices will be provided to all enrollees under the plan or coverage at least 90 days prior to the discontinuation. Thus, small employers who took advantage of an early renewal strategy and continue to sponsor a PPACA non-compliant plan should be aware that enrollees in the plan will begin to receive such discontinuation notices, even if the employer intends to transition the coverage to a PPACA-compliant plan for the 2014 – 2015 plan year.

There were additional clarifications with respect to the special enrollment periods available for individuals to enroll on exchange coverage midyear. You may recall that employers are required to comply with midyear qualifying events as governed by Section 125 for pretax elections, as well as HIPAA special enrollment rights, but are not responsible for advising employees on what special enrollment periods are available through the exchanges. However, some employers may find it beneficial to be familiar with such requirements as explained in this final rule in the event an employee requests to move off of the employer-sponsored plan and enroll in exchange coverage.

Finally, with respect to SHOP exchanges, there was an additional one-year delay to implement the employee-choice provision in SHOP coverage in cases where an insurance commissioner in a state submits evidence that delaying employee choice will be in the best interest of small employers if implementing employee choice would cause issuers to price their products and plans higher than they would otherwise price them. State insurance commissioners whose states are participating in the federally facilitated SHOP (FF-SHOP) must submit their recommendations as to whether employee choice will be implemented on or before June 2, 2014. Also with respect to SHOP exchanges, the final rule clarified that the open enrollment period in FF-SHOPs will occur between Nov. 15 and Dec. 15 each year, and group coverage purchased during this time frame is not subject to employer contribution or group participation rules. Minimum participation requirements will be enforced upon initial enrollment and at renewal outside of this window. State-based SHOPs may begin the 2015 employer and employee election periods prior to Nov. 15, 2014, in a manner that works with their small group markets.

Final Exchange Rule