New PPACA Information
The Internal Revenue Service (IRS) and the Department of Labor (DOL) issued a notice that clarifies that standalone health reimbursement arrangements (HRAs) generally will not be permitted after the 2013 plan year. HRAs that are integrated with group health plans will still be allowed.
The IRS issued proposed regulations on the reporting that will be needed to allow the government to determine who owes an individual mandate or an employer-shared responsibility penalty. Reporting will begin in early 2016, based on coverage during 2015.
It appears that separate reports will be needed for the individual and employer obligations. Insurers will be responsible for reporting on the individuals they cover (even though the coverage is provided through an employer) for purposes of the individual mandate. Plan sponsors will report this information for self-funded plans. Large employers, whether their plan is fully insured or self-funded, will be responsible for the reporting needed with respect to the employer-shared responsibility (“play or pay”) penalty.
The health marketplaces (also known as the exchanges) began open enrollment on Oct. 1. Open enrollment for 2014 will run through March 31, 2014. Coverage will begin on Jan. 1, 2014 if the person enrolls by mid-December 2013 and as of the first of the following month if the person enrolls after that date (with cut-off dates to allow processing time). Premium tax credits (also known as subsidies) are only available through the public exchanges.
The press is now reporting that the federal government will be making a few changes in how marketplace enrollment synchronizes with the individual mandate, so that a person can enroll in marketplace coverage as late as March 31, 2014 without having to pay penalties for the first part of 2014. We will provide additional details as they become available.
New Information Outside of PPACA
The DOL announced that for purposes of employee benefit plans it will join the IRS in recognizing a same-sex marriage if it was legal where performed, even if the couple is now living in a state that does not recognize same-sex marriages. The IRS provided a process for employers and employees to follow to recover FICA taxes paid on an after-tax basis.
Frequently Asked Questions
Q1: When must a plan meet the new eligibility waiting period requirements? A1: Plans may not impose a waiting period longer than 90 days as of the start of the 2014 plan year. So, a plan with a June 1 plan year does not need to meet the waiting period requirement until June 1.
Q2: How will the new waiting period requirement work? A2: The waiting period limit is fully effective as of the start of the 2014 plan year. This means that starting on that date an employee may not be required to wait more than 90 days from his eligibility date to enroll, even if he was hired under the old plan terms.
Example: Acme has a calendar year plan, so it must meet the 90 day waiting period limit as of Jan. 1, 2014. Acme currently has a 6 month waiting period. Sam was hired on Sept. 15, 2013. Sam must be offered coverage as of Jan. 1, 2014 (rather than 6 months after Sam’s start date) since Sam will have completed 90 days of service as of Jan. 1.