ACA Updates from Scirocco Group

Delayed Reporting for 2015 Information Under IRC 6055 and 6056

IRS Notice 2016-4 extends due dates for both furnishing to individuals and filing with the IRS for insurers, employers, and other providers of Minimum Essential Coverage (MEC) and information reporting by Applicable Large Employers (ALEs).

– There is an automatic extension for furnishing Forms 1095-B and 1095-C to individuals from February 1, 2016 to March 31, 2016.
– If not filing electronically, there is an automatic delay for Forms 1094-B, 1095-B, 1094-C, and 1095-C from February 29, 2016 toMay 31, 2016.
– There is an automatic extension to file electronically for Forms 1094-B, 1095-B, 1094-C, and 1095-C with the IRS from March 31, 2016 toJune 30, 2016.

The notice also provides guidance to individuals who might not receive Forms B or C by the time they file their 2015 tax returns.

REMINDER: Employers who have 50 or more full-time employees including equivalents are considered ALEs. All ALEs are subject to Employer Reporting of 2015 information even if they qualified for Transitional Relief of the Employer Shared Responsibility / Play or Pay for 2015.

Self-insured employers that are not ALEs are subject to Form B reporting.

For further details regarding reporting, see our contact a Scirocco Group representative.

ACA Guidance: Two-Year Delay of the Cadillac Tax

President Obama signed federal legislation on December 18, 2015, which delays the Cadillac tax for two years.

In addition to delaying the Cadillac tax, the legislation provides the following:

– a two-year delay of the excise tax (aka the Cadillac tax) on high-cost plans (therefore, this will not be applicable in 2018 and 2019)
– a one year delay of the Health Insurance Tax (HIT will be applicable on 2017 premium)
– a suspension of the medical devices tax until December 31, 2017

For more details on federal health care reform, including information on taxes and provisions, visit www.sciroccogroup.com.

If you have any questions, contact your Scirocco Account Executive.

ACA Contraceptive Coverage Accommodations for Religious Organizations

Final Rule Issued on ACA Contraceptive Coverage Exemptions

Churches and other houses of worship are exempt from the ACA’s requirement to cover contraceptives. Other church-affiliated institutions that object to providing contraceptive coverage on religious grounds, such as schools, charities, hospitals and universities, can be eligible for an accommodations approach.

Under these accommodations, eligible organizations are not directly involved with providing any contraceptive coverage to which they object on religious grounds. Payments for these contraceptive services will be provided by an independent third party, such as an insurance company or third-party administrator (TPA), directly and free of charge.

To be eligible for the accommodation, an organization or employer must meet specific requirements and was required to self-certify that it met the criteria (HHS has provided a self-certification form for this purpose).

A number of organizations challenged the self-certification requirement, arguing that it infringes on religious liberty because it makes the nonprofit organization complicit in the provision of birth control.

In response to these challenges, the Departments previously provided an alternative way for an eligible organization to provide notification of its objection to covering contraceptives: by notifying HHS in writing of its religious objection to providing contraceptive coverage instead of providing the self-certification to the plan’s issuer or TPA. This option has been confirmed in the final regulations.

Under the Affordable Care Act (ACA), non-grandfathered health plans must cover certain preventive health services for women, including contraceptives, without imposing cost-sharing requirements for the services.

On July 10, 2015, the Departments of Labor (DOL), Health and Human Services (HHS) and the Treasury (Departments) released final regulations on the ACA’s women’s preventive care coverage requirement.

These regulations:

     • Finalize an accommodation for eligible nonprofit organizations and for-
     profit businesses with religious objections to providing contraceptive coverage,
     including related documentation standards.

     • Clarify general rules on the coverage of preventive services generally.

The regulations are applicable on the first day of the first plan or policy year beginning on or after Sept. 12, 2015.

ACA Contraceptive Coverage Accommodation for Closely Held For-profit Businesses

Final Rule Issued on ACA Contraceptive Coverage Exemptions

On June 30, 2014, in Burwell v. Hobby Lobby Stores, Inc. et al., the U.S. Supreme Court created a narrow exception to the contraceptive mandate for closely held for-profit businesses that object to providing coverage for certain types of contraceptives based on their sincerely held religious beliefs.

In light of the Supreme Court’s decision in the Hobby Lobby case, the final regulations amend the definition of an “eligible organization” for purposes of the accommodations approach described above to include a closely held for-profit entity that has a religious objection to providing coverage for some or all of the contraceptive services otherwise required to be covered.

Under the final regulations, a qualifying closely held for-profit entity will not be required to contract, arrange, pay or refer for contraceptive coverage. Instead, payments for contraceptive services provided to participants and beneficiaries in the eligible organization’s plan would be provided or arranged separately by an issuer or a TPA.

The final rules define a qualifying closely held for-profit entity based on an existing definition in the Internal Revenue Code. For this purpose, a “closely held for-profit entity” is an entity that:

     • Is not a nonprofit entity

     • Has no publicly traded ownership interests

     • Has more than 50 percent of the value of its ownership interest owned
     directly or indirectly by five or fewer individuals

For purposes of this definition, all of the ownership interests held by members of a family are treated as being owned by a single individual. In addition, the rule provides that entities whose ownership structure is substantially similar to this definition can also qualify for the accommodation. An organization that is unsure about whether its ownership structure qualifies as “substantially similar” can seek guidance from HHS.

To be eligible for the accommodation, the for-profit entity’s highest governing body (such as its board of directors, board of trustees or owners, if managed directly by its owners) must adopt a resolution or similar action, under the organization’s applicable rules of governance and consistent with applicable state law, establishing that it objects to covering some or all of the contraceptive services on account of the owners’ sincerely held religious beliefs.

A qualifying closely held for-profit entity seeking the accommodation may use either of the two notification options available to qualifying nonprofit entities that seek the accommodation.

Disclosure of the Decision to Assert a Religious Objection to Contraceptive Services

Final Rule Issued on ACA Contraceptive Coverage Exemptions

A for-profit entity taking advantage of the accommodation must make its self-certification or notice of objection available for examination upon request by the first day of the plan year to which the accommodation applies. The self-certification or notice of objection must be maintained consistent with ERISA’s record retention requirements.

The final regulations do not establish any additional requirements to disclose the decision. The Departments believe that the current notice and disclosure standards for health plans provide individuals with an adequate opportunity to know that the employer has elected the accommodation for its group health plan and that they are entitled to separate payment for contraceptive services from another source without cost sharing.

The current standards require that, for each plan year to which the accommodation applies, a TPA that is required to provide or arrange payments for contraceptive services and a health insurance issuer required to provide payment for these services, provide to plan participants and beneficiaries written notice of the availability of separate payments for these services contemporaneous with (to the extent possible), but separate from, any application materials distributed in connection with enrollment or re-enrollment in health coverage.

ACA Contraceptive Coverage Exemptions Additional Clarifications on Coverage of Recommended Preventive Services

Final Rule Issued on ACA Contraceptive Coverage Exemptions

The final regulations include the following clarifications related to the women’s preventive care coverage requirement:

     • Scope of recommended preventive services: The regulations finalize
     the requirement to provide coverage without cost sharing with respect to the
     following three categories of recommendations and guidelines (in addition to those
     provided for in the Health Resources and Services Administration (HRSA)
     guidelines for women):

        ◦ Evidence-based items or services that have in effect a rating of “A” or “B”
        in the current recommendations of the U.S. Preventive Services Task Force

        ◦ Immunizations for routine use that have in effect a recommendation from
        the CDC’s Advisory Committee on Immunization Practices

        ◦ Evidence-informed preventive care and screenings for infants, children
        and adolescents, provided for in guidelines supported by HRSA

     • Office visits: The final regulations clarify that, when a recommended preventive
     service is not billed separately (or is not tracked as individual encounter data
     separately) from an office visit, plans and issuers must look to the primary purpose
     of the office visit when determining whether they may impose cost sharing with
     respect to the office visit. The Departments anticipate that the determination of the
     primary purpose of the visit will be resolved through normal billing and coding
     activities, as they are for other services.

     • Out-of-network providers: The final regulations do not require plans or issuers
     to provide coverage for recommended preventive services delivered by an out-of-
     network provider. However, the regulations clarify that a plan or issuer that does
     not have a provider in its network who can provide a particular recommended
     preventive service is required to cover the preventive service when performed by
     an out-of-network provider, and the plan or issuer may not impose cost sharing
     with respect to the preventive service.

     • Reasonable medical management: Plans and issuers may use reasonable
     medical management techniques to determine the frequency, method, treatment or
     setting for required preventive coverage items or services to the extent they are not
     specified in the relevant recommendation or guideline. A plan or issuer may rely on
     the relevant clinical evidence base and established reasonable medical
     management techniques to determine the frequency, method, treatment or
     setting for coverage of a recommended preventive health service.

     • Services not described: The final regulations clarify that a plan or issuer may
     cover preventive services in addition to those required to be covered under
     the ACA. For these additional preventive services, a plan or issuer may impose
     cost sharing at its discretion, consistent with applicable law. A plan or issuer
     may also impose cost sharing for a treatment that is not a recommended
     preventive service, even if the treatment results from a recommended
     preventive service.

     • Timing: The preventive coverage requirement took effect for plan years beginning
     on or after Sept. 23, 2010. Coverage pursuant to recommendations or guidelines
     issued after that date must be provided for plan years beginning one year after the
     date the recommendation or guideline is issued.

Also, required coverage must be provided through the end of the plan year, even if the recommendation or guideline changes during the plan year. This rule does not apply if a recommendation or guideline is downgraded to a “D” rating or if any related item or service is subject to a safety recall or is otherwise determined to pose a significant safety concern by an authorized federal agency.

SBC Effective Date

Final Rule Updates SBC Requirement

The final regulations generally apply to coverage that begins on or after Sept. 1, 2015. However, for disclosures to individuals and dependents in the individual market, the requirements apply to coverage that begins on or after Jan. 1, 2016.

Until these final regulations become applicable, plans and issuers must continue to comply with the 2012 final regulations, as applicable.

On June 16, 2015, the Departments of Labor (DOL), Health and Human Services (HHS) and the Treasury (Departments) published final regulations on the summary of benefits and coverage (SBC) and uniform glossary requirement under the Affordable Care Act (ACA).

These regulations finalize provisions in proposed regulations that were published on Dec. 30, 2014, in order to amend prior final regulations from Feb. 14, 2012. According to the Departments, the changes made by these final regulations are designed to improve consumers’ access to important health plan information and to provide clarification that will make it easier for group health plans and health insurance issuers to comply with the SBC requirement.

New SBC Template

Final Rule Updates SBC Requirement

In conjunction with the December 2014 proposed regulations, the Departments issued a draft-updated template, instructions and supplementary materials. The Departments previously issued an FAQ on March 31, 2015, announcing that the finalized template, instructions and uniform glossary are not expected to be finalized until January 2016. The final rule reiterates this expected timeline.

These new documents will apply for plan years beginning on or after Jan. 1, 2017 (including open enrollment periods in fall of 2016 for coverage beginning on or after Jan. 1, 2017).

SBC and Uniform Glossary Requirements

Final Rule Updates SBC Requirement

The ACA expanded ERISA’s disclosure requirements by requiring group health plans and issuers to provide an SBC to applicants and enrollees at certain times, such as before enrollment and re-enrollment. The SBC requirement became effective for plan coverage that began on or after Sept. 23, 2012.

In addition, plans and issuers must make a uniform glossary of health coverage-related terms and medical terms available to participants. Plans and issuers must provide the uniform glossary upon request, in either paper or electronic form, within seven business days after receipt of the request.

The 2012 regulations require plans and issuers to provide the SBC and uniform glossary in a standardized format. In conjunction with the 2012 regulations, the Departments provided a template for the SBC and related materials, including a uniform glossary, for plans and issuers to use (available on the DOL website).

After the 2012 regulations were issued, the Departments released a series of FAQs on the SBC requirement. FAQs Parts VII, VIII, IX, X, XIV and XIX addressed questions related to compliance with the 2012 regulations, implemented additional safe harbors and released updated SBC materials.

On Dec. 30, 2014, the Departments issued additional proposed regulations, as well as a new proposed SBC template, instructions, an updated uniform glossary and other materials. The draft-updated template, instructions and supplementary materials are available on the DOL website under the heading “Templates, Instructions, and Related Materials—Proposed (SBCs On or After 9/15/15).”

The ACA establishes a penalty of up to $1,000 for each willful failure to provide the SBC. Failing to provide the SBC may also trigger an excise tax of $100 per individual for each day of noncompliance. However, the Departments have stated that their approach to implementation emphasizes assisting (rather than imposing penalties on) plans, issuers and others that are working diligently and in good faith to understand and come into compliance with the SBC requirement.

Overview of the SBC Final Regulations

Final Rule Updates SBC Requirement

The 2015 regulations generally finalize the December 2014 proposed regulations without significant changes, which implement certain changes to the SBC requirement. Overall, the modifications in the final regulations:

     • Clarify when and how a plan or issuer must provide an SBC

     • Streamline the SBC template

     • Add certain elements to the SBC template that the Departments
     believe will be useful to consumers

In addition, the final regulations make some of the SBC enforcement safe harbors and transitions permanent, with several modifications.

Providing the SBC

Final Rule Updates SBC Requirement

The final regulations provide additional guidance on when a plan or issuer must provide the SBC to participants and beneficiaries. For example, the final regulations clarify how to satisfy the requirement to provide an SBC in the following situations:

     • The issuer provides the SBC upon request before application for coverage—
     If the issuer provides the SBC upon request before application for coverage, the
     requirement to provide an SBC upon application is deemed satisfied, and
     the issuer is not required to automatically provide another SBC upon application
     to the same entity or individual (provided there is no change to the information
     required to be in the SBC). However, if there has been a change in the
     information required to be included in the SBC, a new SBC that includes the
     changed information must be provided upon application (that is, as soon as
     practicable following receipt of the application, but in no event later than
     seven business days following receipt of the application).

     • The terms of coverage are not finalized—If the plan sponsor is negotiating
     coverage terms after an application has been filed and the information
     required to be in the SBC changes, an updated SBC is not required to be provided
     to the plan or its sponsor (unless an updated SBC is requested) until the first day of
     coverage. The updated SBC is required to reflect the final coverage terms under
     the policy, certificate, or contract of insurance that was purchased.

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All posts in Health Care Reform

ACA Updates from Scirocco Group

Delayed Reporting for 2015 Information Under IRC 6055 and 6056

ACA Guidance: Two-Year Delay of the Cadillac Tax

ACA Contraceptive Coverage Accommodations for Religious Organizations

ACA Contraceptive Coverage Accommodation for Closely Held For-profit Businesses

Disclosure of the Decision to Assert a Religious Objection to Contraceptive Services

ACA Contraceptive Coverage Exemptions Additional Clarifications on Coverage of Recommended Preventive Services

SBC Effective Date

New SBC Template

SBC and Uniform Glossary Requirements

Overview of the SBC Final Regulations

Providing the SBC

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