There used to be a brief three month respite between October 15, the final due date for extended Form 5500s, and the following January 1, when the annual administrative cycle began again.
Not any more. The Affordable Care Act (“ACA”) provides another set of compliance deadlines starting on November 15, 2014. The new deadlines involve:
- Open Enrollment
- Health Plan Identifiers (“HPID”)
- Reporting Requirements for Self-Funded Group Health Arrangements
- Document Updates
- 2015 and beyond
Following is a brief explanation of each:
1. Open Enrollment
A three month open enrollment period begins on November 15, 2014. This is the first ACA renewal period and the first time all the related tax requirements will be in place. This presents a significant administrative challenge. Many employers also face their own November compliance deadline. Here’s what’s just around the corner:
2. Health Plan Identifier (“HPID”)
Both self-funded and insured, with annual “receipts” in excess of $5 million must obtain a ten-digit Health Plan Identifier (“HPID”) by November 5, 2014 (smaller plans have until November 5, 2015). In accordance with an official description, the sign up process requires users
to go through the CMS Enterprise Portal, access the Health Insurance Oversight System (HIOS), and apply for an HPID from the Health Plans and Other Entity Systems (“HPOES”).
For insured plans, it is likely the insurer will apply for your plan’s HPID, but check to be sure. Self-funded plan sponsors may have to go it alone. The CMS has posted step-by-step instructions and an explanatory video. Allow some time because there are reported delays in the online registration system and there could be a rush of applications as the deadline approaches.
2. Reporting Requirements for Self-Funded Group Health Arrangements
Self-funded plans are also required to report their average number of enrolled employees, spouses and dependents for the period from January 1, 2014 through September 30, 2014. The report is required by November 15, 2014 and is made by setting up an account at “Pay.gov” and then accessing the “ACA Transactional Reinsurance Program, Annual Enrollment and Contributions Submission Form.”
This will allow such plans to compute their transitional reinsurance fee, which is $63.00 per covered life payable during 2015 in installments ($52.50 per covered life on January 15, 2015 and $10.50 per covered life on November 15, 2015). Yes, this is another ACA fee and is not to be confused with the Patient-Centered Outcome Research Institute (“PCORI”) fee. For insured plans, the transitional reinsurance fee will be paid by the group health carrier.
3. Document Updates
In addition to the new filings, plan documents must be updated.
COBRA Election Notice
A model COBRA election notice with a beefed up description of “Marketplace” (ACA) coverage is available on the Department of Labor website along with a revised Children’s Health Insurance Program Reauthorization Act (CHIPRA) notice that mentions the Marketplace coverage option. Use of the model notices, with appropriate adaptation for specific plans, is optional but recommended because it assures compliance with the applicable disclosure requirements.
Cafeteria plan rules have been modified by the IRS in Notice 2014-55 to allow additional ACA-related mid-year election changes. Under current rules, a cafeteria plan cannot provide participants an option to revoke their group health elections solely to enroll in ACA coverage. Under the IRS notice, cafeteria plans can allow plan participants to revoke their cafeteria plan elections if they incur a reduction in service below a 30 hours per week average but are still eligible for employer-provided coverage OR the employee wants to purchase ACA coverage but can’t do so without incurring a gap in coverage or a period of duplicate coverage (this happens when the employer-provided plan is not a calendar year plan because ACA coverage is based on the calendar year).
The changes are effective September 18, 2014 but do not apply to cafeteria plan flexible spending arrangements (FSAs). Cafeteria plan documents will have to be modified to permit these mid-year election changes.
5. 2015 And Beyond
ACA “large employers” (those with at least 50 “full-time equivalent” employees including tax-exempt and government employers) must file annual returns with the IRS and provide coverage statements to their full-time (30 hour per week) employees. The IRS reporting is made on Form 1094-C (this contains the employer’s certification of all calendar months that it has offered minimum essential coverage to full-time employees and their dependents) and Form 1095-C (each full-time employee is to be issued a copy of this form to report the employee’s portion of the least costly monthly premium for employee-only coverage that satisfies the ACA minimum value requirements as well as the calendar months when such coverage was available to the employee).
The Form 1095-C for each covered employee is also filed with the IRS along with Form 1094-C much like Form W-2 and Form 1098, the W-2 transmittal form. The Form 1095-C must be issued to employees by January 31 of the following calendar year with the first deadline falling on February 1, 2016 (January 31, 2016 is a Sunday) with respect to 2015 data. The IRS filing is due by February 28 of the following year (March 31 if filed electronically) with the first filing deadline also falling on February 1, 2016. The IRS has published FAQs and draft instructions for completing the required forms that provide additional details.
Sponsors of self-funded health plans (not insured plans), regardless of size, must file an annual information return on Form 1095-B (“large employers” will use Form 1095-C mentioned above) and provide a statement to each covered employee to report the months during which the employee was enrolled in the plan. The purpose of this reporting is to police the individual mandate that requires individuals to maintain minimum essential coverage or pay a penalty (or is it a tax?). The deadlines track the rules above for Forms 1095-C and 1094-C with the first disclosure and filing due February 1, 2016 (the filing, if made electronically, can be made as late as March 31).
Annual returns due in 2016 sound like they are a long way off. However, employers, HR staff, insurers and third party administrators for self-funded plans need complete 2015 data in order to be in a position to provide individual information to each participant during the January, 2016 reporting window. For many employers, it will make sense to establish internal protocols to capture the required participant data as early in 2015 as possible. If that data is not readily available by early January, 2016, it could prove very difficult to distribute individual statements to all employees by the end of that month.