Requirements For Small-Group and Individual Health Insurance | Mercer US

Regulators Seek Comments on Cadillac Tax

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Regulators Seek Comments on Cadillac Tax
Calendar25 February 2015

Last week brought a flurry of ACA guidance including final HHS regulations on benefit and payment parameters for 2016. The rules primarily address market requirements for small-group and individual health insurance. Some provisions, however, will affect many employers with insured large-group or self-insured plans, such as final 2016 cost-sharing limits ($6,850 for self-only coverage and $13,700 for other tiers), and the reinsurance contribution for 2016 ($27 per covered life, payable in a lump sum or two installments of $21.60 and $5.40). The guidance also modifies the minimum-value standard so that plans must not only meet the 60% quantitative test but also cover physician services and hospitalization, and defines “habilitative” services. The definition could affect how some plans cover such services, including certain treatments for autism.

In addition, the IRS has issued final forms and instructions for employer shared-responsibility, or "play-or-pay," and minimum essential coverage (MEC) reports first due to individuals and IRS in 2016 for the 2015 calendar year. The forms — labeled 2014 — are generally the same as initial drafts, and the 1094-B and 1095-B instructions have few changes. But the 1094-C and 1095-C instructions that large employers will use clarify several issues.

Finally, the IRS provided limited relief for some health reimbursement arrangements (HRAs). IRS Notice 2015-17 provides penalty relief for certain HRAs that pay for employees' individual health insurance premiums. The IRS has previously said such arrangements generally violate the ACA’s market reforms.

This week brought an IRS request for comment on implementing the rules for ACA’s excise tax on high-cost employer health plans. With the tax slated to take effect in 2018, IRS Notice 2015-16 invites input on specific issues to consider in drafting rules, including which types of employer coverage and costs to include in or exclude from calculations; what methods to use in calculating coverage costs; and how to adjust the cost limits for age, gender, and annual inflation.

Congress returns this week after a one-week recess, and Health and Human Services Secretary Sylvia Mathews Burwell will testify before key House committees. While the committee hearings are nominally being held to consider the Department’s 2016 budget request, Republicans are expected to press Burwell on how the administration may be preparing for a Supreme Court ruling that could invalidate insurance subsidies in federally-run exchanges.

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