It’ll come as no surprise that a top compliance issue for employer-sponsored health plans right now is ACA shared-responsibility requirements and related IRS reporting. Although the recent tax reform legislation zeroed out the individual mandate penalty beginning in 2019, the employer mandate and its assessments remain on the books. The means large employers must continue to gather data on offers of coverage and enrollment for 2018 reporting due in 2019. With respect to 2017 reporting, the IRS delayed the deadline for furnishing 2017 Forms 1095-C and 1095-B to individuals to March 2, but IRS filing deadlines are unchanged – February 28 if filing by paper or April 2 if filing electronically. An automatic 30-day extension of the IRS filing deadline is available by submitting Form 8809 before the relevant due date. The IRS has also extended the good-faith compliance standard to 2017 reporting but has said it doesn’t expect to do so for 2018 reporting due in 2019.
Employers finalizing their 2017 reporting should be aware of issues raised by the IRS in 2015 employer shared responsibility assessment letters (Letter 226J) that the agency began to send last fall. To our knowledge, these letters have so far only made assessments for failure to offer minimum essential coverage to a sufficient percentage of full-time employees (70% in 2015 but 95% in 2016 and later years) – the so-called “a” penalty. In many cases, the assessment letters have resulted from employer reporting errors on the 2015 1094-C and 1095-C forms. Some employers failed to properly report the offer of coverage to the required percentage of full-time employees on form 1094-C or to file a separate 1094-C for each member of a controlled group. These are valuable reminders for employers to reach out for expert assistance if there are uncertainties as they prepare the forms and transmittals.
All that might seem like more than enough, but there are a few other compliance issues employers will want to address this year.
- New disability rules apply in April. The final claim procedure rules for ERISA disability plans will apply to claims filed after April 1, 2018. Insurers/claims administrators will absorb the bulk of the compliance burden, but employers should identify which plans are affected by the new rules and confirm they are on track for timely compliance. Confirmation of responsibility for revising plan documents is also important.
- Wellness plan rules in flux. Keep an eye out for new developments about wellness incentives tied to completing health risk assessments or biometric screenings. A federal district court has ruled that the final EEOC rule authorizing wellness incentives for health screening incentives up to 30% of the cost of the self-only premium for the employer’s health plan becomes invalid at the end of 2018. This issue is unlikely to get resolved in time for 2019 planning, and employers with these types of incentives will want to assess plans for next year in light of this uncertainty. Some employers may stay the course, while others may consider non-financial incentives , forgoing medical examination criteria or other design changes.
- Mental health parity in crosshairs again. In 2018, the MHPAEA and state parity laws are expected to be the subject of state and federal enforcement activity. The current focus on opioid addiction may prompt more aggressive enforcement. As in past years, employers should review any coverage limits or exclusions—both quantitative and nonquantitative -- that may pose a risk, and ensure compliance with other aspects of the law. It is also wise to review coverage of medications used to treat opiate addiction for parity compliance.
- Expected guidance on HRAs. New guidance is expected this year which will propose easing restrictions on the use of Health Reimbursement Arrangements (HRAs) by employers. If this guidance can be relied on while proposed or if it becomes final, it may present opportunities to redesign health programs – including perhaps stand-alone HRAs for some active employees.