Compliance Newsletter

April 2017 Edition

The Patient Protection and Affordable Care Act (PPACA) was signed into law on March 23, 2010, bringing many changes for employers and health plans. The law continues to evolve as regulations are released. This monthly alert brings you information on the major provisions and regulations coming from Washington, connects you to valuable tools in understanding and complying with the law, and keeps you informed of Michigan legislation enacted in response to PPACA.

On Friday, January 20, 2017, President Trump signed his first Executive Order, titled "Minimizing the Economic Burden of the Patient Protection and Affordable Care Act Pending Repeal."

The Executive Order instructs the Secretary of the Department of Health and Human Services (HHS) and the heads of all other executive departments and agencies with authority, or responsibility, under the Patient Protection and Affordable Care Act (ACA) to exercise all authority and discretion to waive, defer, grant exemptions from, or delay the implementation of any provision or requirement of the ACA that would impose a fiscal burden on any state, or cost a fee, tax, penalty, or regulatory burden on individuals, families, health care providers, health insurers, patients, recipients of health care services, purchasers of health insurance, or makers of medical devices, products, or medications.

44North recommends that employers wait for confirmation from various federal agencies that regulations they are in the process of complying with (notably, ACA-related reporting) are on hold for the time being. We are, unfortunately, in a "wait and see" period.

MARKET STABILIZATION

HHS Publishes Final Rule

On April 18, 2017, the Department of Health and Human Services' (HHS) Centers for Medicare & Medicaid Services (CMS) published its final rule regarding Patient Protection and Affordable Care Act (ACA) market stabilization.

The rule amends standards relating to special enrollment periods, guaranteed availability, and the timing of the annual open enrollment period in the individual market for the 2018 plan year, standards related to network adequacy and essential community providers for qualified health plans, and the rules around actuarial value requirements.

The proposed changes primarily affect the individual market. However, to the extent that employers have fully-insured plans, some of the proposed changes will affect those employers' plans because the changes affect standards that apply to issuers.

The regulations are effective on June 17, 2017.

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PREMIUM TAX CREDIT

IRS Guidance on Tax Credit Eligibility When Employer Sponsored Plan is Offered to Employee's Spouse and Children

The IRS updated its Questions and Answers on the Premium Tax Credit. Specifically, Q&A 15 addresses a situation in which an employer offers minimum value, affordable coverage to an employee, the employee's spouse, and the employee's children. The plan only allows the spouse and dependent to enroll if the employee enrolls. The employee declines to enroll.

The IRS determined that all three family members are not eligible for a premium tax credit for Marketplace coverage because they could have enrolled in the employer-sponsored coverage through the employee's coverage and the coverage would have been minimum value and affordable.

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PAY OR PLAY PENALTIES

IRS Updates Employer Payments and How They Are Calculated

The IRS has updated its webpage with a fact sheet containing information about the employer shared responsibility provisions of the Patient Protection and Affordable Care Act (PPACA). An applicable large employer (ALE) may be subject to an employer shared responsibility payment if it fails to offer minimum essential coverage or if it fails to offer affordable minimum essential coverage that provides minimum value. However, an ALE may be subject to only one, not both, of the two potential employer shared responsibility payments depending on its decisions about offering minimum essential coverage to its fulltime employees (and their dependents).

The fact sheet describes which payment applies when employers fail to offer minimum essential coverage and how the payment is calculated. In addition, the fact sheet also describes the second type of payment, which applies when an employer fails to offer affordable minimum essential coverage that provides minimum value. Finally, the fact sheet defines the meaning of the term "offer of coverage" and describes how the assessment and collection of the employer shared responsibility payment will be handled by the IRS.

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COMPLIANCE RECAP

March 2017

In March, the employee benefits world watched as the House Speaker unveiled a proposal to replace parts of the Patient Protection and Affordable Care Act (ACA) with the American Health Care Act (AHCA). The AHCA bill was withdrawn from consideration by the full House on March 24 because it appeared that there would not be enough votes to pass the AHCA.

On March 13, 2017, the U.S. Senate approved Seema Verma as the new administrator of the Centers for Medicare & Medicaid Services (CMS), which spends more than a $1 trillion annually on health care programs.

IRS Updates Publication 969

The Internal Revenue Service (IRS) updated its Publication 969 Health Savings Accounts and Other Tax-Favored Health Plans for use in preparing 2016 tax returns. The publication describes HSAs, MSAs, FSAs, and HRAs, including eligibility requirements, contribution limits, and distribution information.

IRS Releases Information Letter

IRS released Information Letter Number 2016-0077, in which it explains how an employer may dispose of a flexible benefit plan's unused funds when an employer ceases business operations and terminates a plan and when a participant forfeits funds to an ongoing plan.

The plan documents will determine how an employer may dispose of unused funds when a cafeteria plan terminates. Unused funds will not revert to the U.S. Treasury.

The IRS explained that the Internal Revenue Code (IRC) Section 125 rules apply to funds forfeited by a participant in an ongoing plan. Per IRC Section 125, the participants' forfeited funds may be:

Retained by the employer maintaining the plan,
Used to defray plan expenses, or
Returned to current participants and allocated on a reasonable and uniform basis (but not based on claims experience).

Finally, the IRS explained that when an employee terminates employment, IRC Section 125 prohibits the plan from reimbursing health care expenses incurred after the employee terminates employment and no longer participates in the plan .

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HR CORNER

Updated Michigan Minimum Wage Poster Effective 1/1/17

The Michigan Department of Civil Rights has updated a poster that Michigan employers must post at their work sites. The poster-Michigan Law Prohibits Discrimination-is a required posting under the Michigan Elliott Larsen Civil Rights Act and the Michigan Persons with Disabilities Civil Rights Act (MPWDA). The new poster was recently revised to reinsert language addressing accommodation under the MPWDA that had been eliminated in 2011. The revised poster now states that "Persons with disabilities needing accommodation for employment must notify their employers in writing within 182 days."

The revised poster can be found on the Michigan Department of Civil Rights website. A business is not required to include information about this accommodations-related time limit as part of the anti-discrimination posting. Therefore, a business may choose to continuing using the previous version of the poster at its own discretion.

However, be aware that MCL 37.1210(19) does require that a business inform employees about the accommodations time limit. Whether the notice is included in this poster or not, a business that fails to provide adequate notice to its employees may waive the ability to use the time limit as a defense.

Employers should display the new poster in a conspicuous place along with your other required employment postings. In addition, any employee handbook or similar communication provided to employees should contain language notifying employees of their need to inform their employer about a need for accommodation in writing within 182 days of when the employee knew or reasonably should have known that an accommodation is needed.

44North has developed a chart summarizes the various workplace related posters and contains links to the actual poster for printing.

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Office Closure

All 44North offices will be closed on Monday, May 29th, in recognition of Memorial Day. For emergency assistance, please call 855-306-1099 and a service representative will be happy to assist.

The information in this newsletter is based on 44North's review of the national healthcare reform legislation and is not intended to impart legal advice. Interpretations of the reform legislation vary, and efforts will be made to present and update accurate information. This overview is intended as an educational tool only and does not replace a more rigorous review of the law's applicability to individual circumstances and attendant legal counsel and should not be relied upon as legal or compliance advice. Analysis is ongoing and additional guidance is also anticipated from the Department of Health and Human Services.

Questions or comments? Please email us at [email protected] .