Aug. 24, 2016

Legislative Update: Employer Shared Responsibility Federal Regulatory Updates

Recently, the following regulatory updates were released by the U.S. Department of Health and Human Services (HHS), Department of Labor (DOL) and the U.S. Treasury.

Employer Notices
The Affordable Care Act (ACA) generally requires Marketplaces to notify employers if any of their employees has enrolled in a Marketplace plan, and is eligible for advance premium tax credits or cost-sharing reductions. These events may trigger employer penalties under ACA's employer shared responsibility provisions (also known as "pay or play" rules).

The HHS recently released a sample employer notice and employer appeal request form, which employers may use to appeal the Marketplace's determination.

It is important to note that while employers appeal directly to the Marketplace, the Internal Revenue Service (IRS) makes the final decision as to whether an employer must pay any applicable employer shared responsibility payment. 

COBRA Model Election Notices
The HHS, DOL and the U.S. Treasury jointly published a new FAQ regarding the ACA and DOL’s COBRA model election notice. The FAQ provides additional guidance on the information other coverage options a group health plan administrator may include in this notice.

As background, under the COBRA continuation coverage provisions, a group health plan must provide qualified beneficiaries with a COBRA election notice that describes their rights to COBRA continuation coverage and how to make a COBRA coverage election. 

Previously in 2013, the DOL had published guidance to revise its model COBRA notice to include information about other coverage options available in the Marketplaces, including the Marketplace website and phone number. In response, Blue Cross and Blue Shield of Texas (BCBSTX) updated our standard COBRA notice to include this information.

In the recent guidance, the federal agencies note that some qualified beneficiaries may be eligible for financial assistance (such as premium tax credits or cost-sharing reductions). The qualified beneficiaries may want to consider coverage alternatives available through the Marketplaces and compare them to COBRA continuation coverage. This updated guidance also:

BCBSTX is not required to take any action as a result of this updated guidance.

ERISA Penalties
On July 1, 2016, the DOL issued an interim final rule (IFR) that substantially increases the civil penalty amounts for various violations of the Employee Retirement Income Security Act of 1974 (ERISA). The IFR is effective Aug. 1, 2016, and the increased civil penalty amounts apply to penalties assessed after that date even if the associated violations occurred prior to Aug. 1, 2016. Some penalties have significantly increased, such as the daily penalty for Form 5500 failures, which has increased from a maximum of $1,100 to $2,063.

BCBSTX is not required to take any immediate action as a result of the IFR.

This communication is intended for informational purposes only. It is not intended to provide, does not constitute, and cannot be relied upon as legal, tax or compliance advice. The information contained in this communication is subject to change based on future regulation and guidance.