The Affordable Care Act continues to change and evolve, and HR professionals need to continuously update their knowledge of the ACA for employee benefits management. Here are three of the latest ACA developments that HR departments must understand:
Penalties for Moving Sickest Workers to Exchanges
Many employers have chosen to ask their heaviest healthcare coverage users to go on the health insurance exchanges next year to find coverage. According to Kaiser Health News, employers have been asking benefits consulting firms about this strategy for some time, as it can mean lower healthcare costs for employers and can often benefit the workers who purchase their own plans through the marketplace. Many employers have even looked into health savings accounts (HSA) or health reimbursement arrangements (HRAs) to help workers purchase plans and pay their premiums.
This was a gray issue for some time, and the Internal Revenue Service has ruled that this strategy is not in compliance with the ACA's mandates. According to the IRS, employers can't dump workers on the exchanges and then provide them with tax-free cash to fund their healthcare coverage because these employer payment plans are considered group health plans, which need to comply with healthcare reforms. In short, the funds need to be taxable. Employers that don't comply with this ruling could receive a $100 a day penalty for each employee. Companies that still want to ask workers to go on the exchanges can instead up employees' pay, which is taxable, according to The New York Times.
Developments in Reporting Requirements
There are also updates on the reporting requirements for employers. The IRS and the U.S. Treasury Department issued two reporting documents in particular that provide employers guidelines on the minimum essential healthcare coverage that need to be reported. The Information Reporting of Minimum Essential Coverage rule offers information on this for those companies covered under section 6055 of the Internal Revenue Code. The second rule, Information Reporting by Applicable Large Employers on Health Insurance Coverage Offered Under Employer-Sponsored Plans, is for those covered under section 6056 and 4980H of the same code.
New COBRA Notification Requirements
The Consolidated Omnibus Budget Reconciliation Act (COBRA) remains in effect, and employers need to comply with both COBRA and the ACA. Employers need to provide workers who lose their health coverage through the company with new COBRA general and election notices so they know they have the ability to go on the marketplace to receive health coverage, according to an article in Lexology.