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Q2 Legislative Updates
Q3 Legislative Updates 

 

We’re here to help you stay on top of the impact of health reform. Our Legislative Updates will keep you up to date on the latest news. Here are some topics we are following.

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Many organizations continue to struggle to maintain compliance with the Affordable Care Act’s (ACA) Employer Shared Responsibility Payment requirements for many reasons – from the challenge of tracking variable hour staff to employee populations spread out among multiple commonly owned companies.

At the same time, the Internal Revenue Service (IRS) is under increasing pressure from the Treasury Inspector General for Tax Administration to assess potential ACA employer penalties by using Letter 226-J to notify employers who may have not complied with section 4980(b), the ACA employer mandate, for previous reporting years – and those fines can total in the millions of dollars for a single employer.

The good news is there are concrete steps you can take to reduce your penalty risk. Read our article authored by Kyle J. Scott, our AVP, Compliance, and published in Corporate Compliance Insights to learn about ways to reduce your risk of receiving a Letter 226-J, the IRS notification of potential assessments.

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Several employers are planning to move forward with new hybrid working models which include employees in the workplace, and others working from home. This new model may provide greater access to new talent, lower overhead costs, and more flexibility for their employees. It also means more complexities for employer's compliance and state individual mandate reporting requirements.

As companies hire employees across the nation now and in the future, they are responsible for following all the state-based individual mandates where their employees reside. 

That's why we created our Six Misconceptions Employers Have Around State-Based Reporting eBook to help employers avoid the most common misconceptions around state-based reporting requirements that could potentially put their company at risk of incurring financial penalties for noncompliance and/or violating privacy laws.

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The Honorable Ruth Bader Ginsburg, a U.S. Supreme Court Justice who has been a long-standing champion for women’s rights and the civil rights of all Americans, passed away earlier this month.

Justice Ginsburg also was a key defender of the Affordable Care Act (ACA), and her passing is creating discussion about the possibility of the Supreme Court ruling the ACA as unconstitutional. The court will be hearing the issue on November 10, 2020. We understand the uncertainty surrounding the ACA is difficult for employers, and we are here to help you understand and navigate any impact to your business.

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The IRS announced the new annually indexed percentage for affordability under the Affordable Care Act’s employer mandate provision. Per Rev. Proc. 2020-36, applicable large employers (ALEs) can charge no more than 9.83 percent of income towards their health plan premium for plan years beginning on/after January 1, 2021. This represents an increase from the 2020 percentage of 9.78 percent. Therefore, some employers may be able to slightly increase their employee contribution for single coverage and avoid potential ACA penalties. Read our article including how to apply this percentage across the three ACA affordability safe harbors.

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For the 2020 tax year, the IRS has made several updates to Form 1095-C and 1095-B to accommodate for the new Individual Coverage Health Reimbursement Arrangement (ICHRA) compliance requirements, as well as adding new offer of coverage codes. Full instructions for these forms have not yet been released.

ICHRAs allow tax-advantaged dollars to be used to subsidize employee health plan premiums for coverage that is purchased on the individual markets. Employers who choose to administer ICHRA plans will need to include additional information (such as zip codes and employee age) on their Forms 1095-C and an ICHRA coverage origin code for Forms 1095-B.

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As the core components of the employer shared responsibility provision, applicable large employers (ALEs) must offer affordable healthcare that meets minimum essential coverage (MEC) requirements to 95 percent of their full-time employees and their dependents. If you failed to meet these guidelines or you did not complete your IRS forms correctly, your company could be subject to penalties that could swell into the millions and stack up from each month and year you are out of compliance.  

Health e(fx) HR Insights calculates your risk for both Penalty A and Penalty B across your FEINs, and provides details on which employees have not been, but should be offered affordable coverage. Read our blog for more information on penalty risk and talk to your Health e(fx) Account Manager or Sales Account Executive for more information on HR Insights.

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