Affordable Care Act Update: Final Regulations for 90-Day Waiting Period Released

February 21, 2014 at 11:19 am | Posted in Affordable Care Act, Compliance, Creditable Coverage, Department of Labor, Employment Law, Federal Taxes, Health and Human Services, Health Care, PPACA, Regulations | Leave a comment
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On February 20th, The U.S. Departments of Labor, Treasury, and Health and Human Services published final regulations (85 pages) implementing a 90-day limit on waiting periods for health coverage. The final regulations require that no group health plan or group health insurance issuer impose a waiting period that exceeds 90 days after an employee is otherwise eligible for coverage. The rules do not require coverage be offered to any particular individual or class of individuals.

To ensure that eligibility conditions based solely on the passage of time are not used to evade the waiting period limit, the rules state that such conditions cannot exceed 90 days. Other conditions for eligibility are generally permissible, such as meeting certain sales goals, earning a certain level of commission, or successfully completing an orientation period.

Additionally, requiring employees to complete a certain number of hours before becoming eligible for coverage is generally allowed as long as the requirement is capped at 1,200 hours. The rules also address situations in which it cannot be determined that a new employee will be working full-time.

The departments are issuing a companion proposed rule that would limit the maximum duration of an otherwise permissible orientation period to one month. This proposal will be open for public comment.

A link to the final rule is here:

Unofficial: IRS Will Pursue Employers for Shared Responsibility Payments Starting in 2015

March 18, 2013 at 11:04 am | Posted in Affordable Care Act, Employment Law, Federal Laws, Federal Taxes, Health Care, IRS, Medical, PPACA, Regulations | Leave a comment
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From the Bloomberg News Service

Employers who may have a shared responsibility payment under tax code Section 4980H for not offering health care to full-time employees under the Affordable Care Act can expect to hear from the Internal Revenue Service about payments due beginning in 2015, but only if IRS has strong evidence to support its assessment, an IRS official said March 12.

Employers will be able to dispute or explain why the shared responsibility payment assessment may be incorrect, similar to standard IRS notice and demand procedures for assessable payments, Frederick Schindler, director of implementation oversight at the IRS Affordable Care Act Office, told members of the payroll industry at the American Payroll Association 2013 Capital Summit in Washington, D.C.

However, the IRS will make its assessment based on a variety of information provided by employers’ insurers, from the Department of Health and Human Services, and other third-party reporting to which IRS will have access, Schindler said.

“All of that information will be utilized before we go to the employer,” Schindler added.

Beginning Jan. 1, 2014, the shared responsibility payment for large employers, generally those with 50 full-time or full-time equivalent employees, is triggered if at least one employee receives a premium tax credit to help them pay for health coverage, if an employer does not provide a plan that meets minimum coverage requirements. Employees will use the tax credit to help purchase individual coverage on an affordable insurance exchange.

Protector Group Note: The statement of Mr. Schindler constitutes “informal” IRS guidance and should not be construed as a basis for an employer to assure full compliance with Section 4980H in 2014.

New Tax Imposed on Health Insurers (the Self Insured are Spared…), Could Impact Future Premium Increases

March 5, 2013 at 11:17 am | Posted in Affordable Care Act, Federal Laws, Federal Taxes, Health Care, IRS, Medical, Regulations | Leave a comment
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Last Friday, the IRS announced new regulations regarding a new health care tax, authorized under the Affordable Care Act. The tax is tied to health insurance premiums earned by the health insurance industry. A good summary of the new regulations was captured in the March 4th edition of BenefitsPro and is reprinted below:


The Internal Revenue Service on Friday unveiled its proposal to raise billions of dollars through annual fees on health insurers, a “$100 billion health insurance tax rule” that the industry says will significantly drive up costs for consumers. The rule as part of the Patient Protection and Affordable Care Act imposes annual fees on health insurers that start at $8 billion in 2014, increases to $14.3 billion in 2018, and will increase every year after that. The Joint Committee on Taxation estimates the tax will exceed $100 billion over the next ten years.

The proposed rule will be published Monday for public consideration in the Federal Register. The IRS will accept comments for 90 days, beginning Monday.

Not paying on time will result in a $10,000 penalty for insurers, plus $1,000 for every day they miss deadline.

America’s Health Insurance Plans blasted the rule as a tax that will financially drown both employers and consumers. They warn that the costs will have to be passed along to consumers in the form of higher premiums, a claim that the Congressional Budget Office has also verified in its analysis.

“Imposing a new sales tax on health insurance will add a financial burden on families and employers at a time when they can least afford it,” AHIP President and CEO Karen Ignagni said Friday. “This tax alone will mean that next year an individual purchasing coverage on his or her own will pay $110 in higher premiums, small businesses will pay an additional $360 for each family they cover, seniors enrolled in Medicare Advantage will face $220 in reduced benefits and higher out-of-pocket costs, and state Medicaid managed care plans will incur an additional $80 in costs for each person enrolled.”

There is currently legislation to repeal the fees, recently introduced by Reps. Charles Boustany, R-La., and Jim Matheson, D-Utah, which AHIP strongly supports.

A 2011 report by Oliver Wyman found that nationally the health insurance tax alone “will increase premiums in the insured market on average by 1.9 percent to 2.3 percent in 2014,” and by 2023 “will increase premiums 2.8 percent to 3.7 percent.”

Recent Fiscal Cliff Tax Deal Ends PPACA’s Federal Voluntary Long-Term Care Program

January 7, 2013 at 10:22 am | Posted in Affordable Care Act, Federal Taxes, Health and Human Services, PPACA | Leave a comment
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The much ballyhooed “fiscal cliff” tax deal signed by President Obama last week contained a section that repealed the federally sponsored voluntary long-term care program contained in the Patient Protection Affordable Care Act (PPACA).  Under the Community Living Assistance Services and Supports (“CLASS”) program, participants would have paid a monthly premium for five years, after which they would have become eligible for a cash benefit of at least $50 a day that could be used to offset the cost of long-term care services.

The law directed the U.S. Department of Health and Human Services secretary to establish automatic enrollment procedures that employers could have used, forcing employees to opt out if they didn’t want to participate.

Approximately one year ago, HHS Secretary Kathleen Sebelius said the administration would not implement “CLASS” since there was no protection against adverse selection. Secretary Sebelius opined: “This could have led to a vicious cycle where premiums would have to be set higher and higher to cover the likely costs of the benefits, leading fewer and fewer healthier people to sign up for the program,” she said.

IRS Issues FAQ Guidance Concerning Same-Sex Couples Taxpayer Obligations and Allowances

October 30, 2012 at 11:50 am | Posted in Federal Taxes, IRS | Leave a comment
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Last week, the Internal Revenue Service (IRS) issued guidance concerning a variety of frequently asked income tax and deductions questions that they have addressed concerning same-sex couples.

 A copy of the guidance can be found here:

IRS Deputy Commissioner to Congress: IRS Agents Won’t Audit Individuals about Compliance with Individual Mandate

September 19, 2012 at 9:31 am | Posted in Federal Taxes, IRS, Regulations, Uncategorized | Leave a comment
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IRS Deputy Commissioner Steven Miller told a congressional subcommittee on Tuesday, September 11, 2012 that IRS agents would not be used to enforce the individual mandate; there would be no audits. Miller testified that “In most cases, taxpayers will file returns reporting their health insurance coverage, and-or making payment, and there will be no need for further interactions with the IRS.”

Starting in 2014, individuals who are not exempt from the individual mandate will have to pay the IRS a flat $95 penalty, which the United States Supreme Court recently identified as a “tax.” The individual mandate tax will increase to $325 in 2015, $695 in 2016, and a cost of living adjustment will be added to the tax in 2017. The tax is only 50% of the stated amount for uninsured individuals under age 18. There are also family caps on the aggregate tax that range 1% to 2.5 % of a family’s income from 2014 through 2017.

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