Elimination of the ACA Individual Mandate Effective 2019

One of the significant updates for the Affordable Care Act, is the elimination of the Affordable Care Act’s individual mandate, effective 2019.

Under the current ACA regulations, the individual mandate requires most Americans to purchase a minimum level of health coverage. Those who fail to do so are liable for a penalty of $695 for an adult or 2.5 percent of household income, whichever is greater. The new Act accomplished the elimination of the individual mandate by reducing the penalty amounts to $0 and zero percent, respectively.

Employer Mandate and Other ACA Features Still in Place

The Act leaves many aspects of the ACA intact, including the individual marketplace, premium subsidies for those earning between 100% and 400% of the federal poverty rate, the ban on insurers charging more or denying coverage based on health factors, and Medicaid expansion.

Most significantly for employers, however, is the employer mandate and reporting requirements, which remain in force. Accordingly, applicable large employers will need to plan around the Code section 4980H(a) (“A”) penalty — which can apply if an employer does not offer minimum essential coverage to at least 95% of its full-time employees and at least one full-time employee buys subsidized marketplace coverage — and the Code section 4980H(b) (“B”) penalty — which can apply if an employer offers full-time employees coverage that is not affordable or does not meet minimum value requirements.

In 2018, A penalty is $2,320 (or $193.33 per month) multiplied by the total number of full-time employees (minus 30). The B penalty is $3,480 (or $290 per month) for each full-time employee who buys subsidized marketplace coverage (capped by the amount of the A penalty).


Important Deadlines and Penalties for Employers

Distribution of Form 1095C to Employees

  • 1095C Form must be provided to employees no later than January 31st, 2018
  • Forms can either be provided to the employee directly or mailed. Forms being mailed must be postmarked by January 31st. Employers must obtain affirmative consent to furnish a statement electronically.
  • Penalty: Failure to provide employees with a timely and accurate 1095c can result in penalties of up to $260.00 per form.

Filing of Forms 1094c and 1095c with the IRS

  • The IRS established two separate deadlines for the 1094C and 1095C Forms to be filed.
  • Returns filed on paper must be postmarked by February 28th, 2018. Only companies filing fewer than 250 forms are eligible to file the returns on paper.
  • Penalty: Companies filing more than 250 forms can be penalized up to $260.00 for each additional paper form.
  • Returns that are filed electronically must be e-filed by April 2nd, 2018.

Important Forms and Instructions on Reporting for 2017

The Affordable Care Act reporting requires employers with 50 or more Full Time Equivalent Employees to report on the offer of health coverage to full-time employees and their family member, as well as when the offer was made. Additional reporting such as if the coverage offered was affordable and whether the employees enrolled in the offered health care coverage.

Small employers with fewer than 50 full-time employees are exempt from some, but not all of the ACA’s reporting requirements. For example, self-insured small employers must complete and file Forms 1095B and 1094B with the IRS, as well as provide full-time employees with a copy of Form 1095-B.

Below are the links to the final forms and instructions on the IRS website:

Congress Reaches Tentative Deal on ACA Cost-Sharing Reduction Payments

President Donald Trump announced via executive order on Oct. 12 that he was ending payments to insurers for subsidizing low-income market participants, saying the payments are illegal because Congress hasn’t appropriated the money. These so-called cost-sharing reduction (CSR) payments, which subsidized health plans purchased on the ACA’s Marketplace exchanges, are sometimes called “extra savings” and are distinct from the premium tax credits that also subsidize policies purchased through an exchange.

Trump’s executive order does not affect the penalties that large employers are subject to when a full-time employee is not offered ACA-compliant coverage and receives a premium tax credit for a policy purchased through a Marketplace exchange.

Shortly after the executive order was issued, a bipartisan agreement was brokered on the Senate Health, Education, Labor and Pensions Committee by Sens. Lamar Alexander, R-Tenn., and Patty Murray, D-Wash. The agreement, if passed by Congress in new legislation, would restore CSR payments to insurance companies for two years and would give states more flexibility from ACA regulations.

Trump and some GOP congress members have indicated that they want any legislative fix to allow for a wider range of plans to be made available under the ACA, among other changes that might sink the deal if Democrats remain opposed.

ACA Penalty Updates

Under the ACA, a large employer must offer “affordable” medical coverage to at least 95%of its full-time employees and their dependent children, age 26 or younger or face stiff penalties.

  • A penalty of $2,260 per full-time employee (minus the first 30) if the employer fails to offer minimum essential coverage to 95 percent of its full-time employees and their dependents and any full-time employee obtains coverage on the exchange.
  • A penalty of $3,390 per full-time employee (minus the first 30) if a full-time employee receives a premium tax credit because the employer offered coverage that was unaffordable or did not provide minimum value.

These penalties, which took effect Jan. 1, 2016, go up in 2018 to $2,320 for the first penalty and $3,480 for the second. An employer may be subject to one of these penalties, not both. Employers that previously defined a full-time employee based on 40 hours of service have had to adjust their definition of full-time to 30 hours to comply with the employer mandate.

Executive Order re: Health Care Plan Options

On October 12th 2017, President Donald Trump signed an Executive Order which directed federal agencies to review regulations surrounding three health care plan options:

  • Association plans
  • Short-term limited-duration insurance (short term health plans)
  • Health reimbursement arrangements (HRA).

This Order does not create any new regulations.  It does not include any specific directive on any of these health options.  It simply instructs federal agencies to review existing regulations and to consider proposing new regulations and guidance.

In particular, the Order requests the agencies to focus on the following:

  • Expanding rules that pertain to association plans so more employers are eligible to participate;
  • Lengthening the period of coverage for short-term health plans and allowing for their renewal; and
  • Offering additional flexibility in how Health Reimbursement Arrangement (HRA) funds can be used, including with non-group coverage.

There is existing law addressing these subjects.  When developing new regulations or guidance, agencies are bound by current law. Given the potential conflict between federal and state law, there is also the possibility of legal challenges arising.  Therefore, developing new regulations surrounding these topics will not be immediate and can take up to a year or longer. Nothing in current law has changed.  The Order merely asks agencies to review existing regulations and develop proposals within the confines of the law.

The executive orders does not make any changes to the employer mandate or the ACA reporting obligations. Employers with 50 or more full-time equivalent employees should continue preparations for 2017 ACA annual reporting.

Congress to Repeal the “Cadillac Tax”

President Donald Trump announced that he will not continue federal subsidies, known as cost-sharing reduction (CSR) payments, to insurance companies that reduce health care costs for low-income enrollees. Senators Lamar Alexander (R-TN) and Patty Murray (D-WA) announced that they have reached a bipartisan agreement to stabilize the Affordable Care Act (ACA) markets.

The bill, known as the Bipartisan Health Care Stabilization Act, would provide CSR payments for two years and would allow states to obtain Section 1332 waivers through a streamlined approval process. These waivers would not exempt states from:

  • covering the minimum ACA requirements
  • guaranteed renewability of coverage
  • elimination of pre-existing condition restrictions
  • coverage of dependent children to age 26
  • the prohibition on annual and lifetime limits

The Bipartisan Health Care Stabilization Act appears to have the necessary 60 votes in the Senate for passage, but it is unclear whether it will be considered by the full Senate absent support from Trump.

As Congress continues negotiations on the CSR payments, this week the U.S. District Court for the Northern District of California heard arguments for a temporary restraining order that would have forced the Trump administration to keep making the payments while a lawsuit works its way through the courts. On October 25, the court ruled against the emergency order, denying the motion for an injunction. To date, more than 10 million Americans are enrolled in the ACA exchanges, and nearly 6 million people receive the CSR subsidies.

Lastly, Speaker Paul Ryan (R-WI) announced earlier this week that House efforts to repeal and replace the ACA are over for the year.

The ACA continues to be in effect

On Tuesday, September 26, 2017, the Senate acknowledged that the attempt to reform the Affordable Care Act did not have the votes necessary to pass the Senate. This most recent bill was the last attempt, backed by Senate Republican leadership, to pass a partisan measure to partially repeal and replace the Affordable Care Act. Under budget reconciliation, the bill could have passed the Senate with a simple majority vote, which was not the case.

Now that the clock has officially run out for the fiscal year 2017 budget, ACA repeal and replace efforts do not appear to have a path forward in the near future. Republican leadership have indicated that they will move on to other priorities at this time, particularly tax reform. There is still recognition that there is work to be done on the ACA. How they proceed remains up in the air at this time.

The ACA and all its provisions still continue to be the law of the land. This is inclusive of Employer Shared Responsibility provisions.

Compliance will continue to monitor for any developments in Congress.

ACA Update

On June 22, 2017, a draft was released by the Senate Republicans to repeal and replace the Affordable Care Act. The Senate is drafting a new health care bill called the Better Care Reconciliation Act that substitutes the House bill, but still contains similar regulations. The Senate’s bill will have to face another vote before it lands on President Trump’s desk.

The Better Care Reconciliation Act includes changes to Medicaid, subsidy amounts, waiver process for states and the individual mandate. Until the bill is passed, all reporting requirements are still in effect. Employers should still continue to offer minimal essential coverage to their full-time employees who are working on an average of 30 hours per week.

ACA Updates

  • On May 4th, 2017 the House of Representatives approved the bill to repeal and replace major parts of the Affordable Care Act. The bill still needs to be approved by the Senate, which would need to happen through the budget reconciliation process. It is not certain yet whether the Senate would be permitted to pass the American Health Care Act (AHCA) in its current form.
  • Several key provisions were added to or modified such as Pre-existing Conditions, Health Status Underwriting, Essential Health Benefit Requirement for Insured Plans and Age Weighted Underwriting. Employers should become familiar with the AHCA provisions that most directly impact group health plans.
  • Currently, the ACA’s employer information reporting requirements are still in effect until further notice.



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