Applicable Large Employers (ALE) should not overlook the Affordable Care Act's (ACA's) annual inflation-adjusted shift in cost-sharing limits for group health plan coverage, as they could face steep penalties for failing to provide affordable coverage under the ACA's shared-responsibility provisions.
On May 21, the IRS announced in Revenue Procedure 2018-34 the 2019 shared-responsibility affordability percentage. Based on the ACA's affordability standard as adjusted for inflation, health coverage will satisfy the requirement to be affordable if the lowest-cost self-only coverage option available to employees does not exceed 9.86 percent of an employee's household income, up from 9.56 percent in 2018.
For 2019 calendar-year plans using the federal poverty level (FPL) safe harbor to determine affordability, an employee's premium payment can't exceed $99.75 per month, up from $96.08 per month in 2018.
An Annual Adjustment
The affordability standard is the highest percentage of household income an employee can be required to pay for monthly plan premiums, based on the least-expensive employer-sponsored plan offered that meets the ACA's minimum essential coverage requirements.
Employers should consider the affordability standard in developing their 2019 health care plan cost-sharing strategies, since pricing at least one plan option below the threshold will avoid triggering employer-shared responsibility penalties under Section 4980H(b), which the ACA added to the tax code, said Ryan Moulder, a Los Angeles-based partner at Health Care Attorneys PC and general counsel at Accord Systems LLC, an ACA compliance software firm.
"An employer is in control as to whether the plan it is offering meets the affordability threshold," Moulder explained. "The significant increase [for 2019] compared to 2018 provides an employer that is toeing the line of the affordability threshold an opportunity to increase the price of its health insurance while continuing to provide affordable coverage."
Excerpt from SHRM article dated May 30, 2018 by Stephen Miller, CEBS
Wednesday, May 30, 2018
Tuesday, May 22, 2018
What to do if the IRS sends an ACA non-compliance notice in error
The Internal Revenue Service is beginning to send out Employer Shared Responsibility Payment notices to employers that it believes failed to comply with the ACA coverage requirements in 2015 calendar year.
Some employers receiving these notices actually complied with the ACA requirements in 2015, but the IRS received inaccurate or incomplete information and has thus incorrectly identified these employers as failing to satisfy the ACA coverage requirements.
If an employer receives an ESRP notice, the employer must dispute the IRS penalty within 30 days of the date of the notice.
We have seen employers receiving very large fines for periods in which they actually complied with the ACA coverage requirements. Accordingly, all employers that were subject to the ACA coverage requirements in 2015 should review their 2015 ACA filings (on Form 1094-C) to determine who at the company will receive the ESRP notice from the IRS; and make sure the contact address is correct. For reference, see Part 1; Lines 1 thru 8 of Form 1094-C).
If any of the contact information on the Form 1094-C is inaccurate or if the contact person is no longer employed by the company, the employer should consider updating its contact information with the IRS.
Bret Busacker
Busacker is a partner at Holland & Hart LLP.
Some employers receiving these notices actually complied with the ACA requirements in 2015, but the IRS received inaccurate or incomplete information and has thus incorrectly identified these employers as failing to satisfy the ACA coverage requirements.
If an employer receives an ESRP notice, the employer must dispute the IRS penalty within 30 days of the date of the notice.
We have seen employers receiving very large fines for periods in which they actually complied with the ACA coverage requirements. Accordingly, all employers that were subject to the ACA coverage requirements in 2015 should review their 2015 ACA filings (on Form 1094-C) to determine who at the company will receive the ESRP notice from the IRS; and make sure the contact address is correct. For reference, see Part 1; Lines 1 thru 8 of Form 1094-C).
If any of the contact information on the Form 1094-C is inaccurate or if the contact person is no longer employed by the company, the employer should consider updating its contact information with the IRS.
Bret Busacker
Busacker is a partner at Holland & Hart LLP.
Wednesday, May 16, 2018
HSA Contribution Limits Stay at $6900 After All
The IRS on April 26 announced relief for taxpayers with family coverage under a high-deductible health plan (HDHP) and who contribute to a health savings account (HSA).
For 2018, taxpayers with family coverage under an HDHP may treat $6,900 as the maximum deductible HSA contribution, up from $6,750 in 2017. The relief follows a confusing series of IRS actions:
- In May 2017, the IRS announced in Revenue Procedure 2017-37 that the 2018 family-coverage contribution limit for HSAs would be $6,900.
- In March 2018, the IRS announced in Internal Revenue Bulletin No. 2018–10 that a change in the inflation-adjustment calculations for 2018, under the Tax Cuts and Jobs Act, lowered the maximum deductible HSA contribution for taxpayers with family coverage through an HDHP by $50, to $6,850.
- Now, in Revenue Procedure 2018-27, the IRS has granted relief for affected taxpayers by allowing the originally announced $6,900 family-coverage HSA contribution cap to remain in effect for 2018. The IRS cited “numerous unanticipated administrative and financial burdens” in response to the $50 reduction.
For 2018, the HSA contribution limit for account holders with self-only coverage through an HDHP will be $3,450, as announced in May 2017 and not adjusted since.
-From SHRM Article Dated 4-27-18 by Stephen Miller
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