PPACA. ERISA. HIPAA. COBRA. EEOC. FLSA. FMLA. It’s a complex alphabet soup of agencies and laws that employers have to deal with today to offer health care benefits to their employees. What do they all have in common? Compliance requirements. And the Department of Labor (DOL) and the IRS have beefed up their enforcement activities in recent years.
Health subsidies within the state and federal exchanges are the latest target in the compliance crosshairs.
Under the Affordable Care Act (ACA), the government is required to conduct audits of Marketplace coverage to make sure only people who are eligible are receiving a subsidized plan, and the Centers for Medicare & Medicaid Services (CMS) launched an Employer Initiatives Program this spring to help in that auditing process, including:
- Phone calls from HHS consultants to ask employers about the health coverage they’re offering. The Centers for Medicare & Medicaid Services (CMS) are asking some employers to participate in a request for information. Through the end of June 2016, a CMS contractor may contact you by phone to ask about (a) the employee cost for self-only coverage on the least expensive minimum value plan you offered for the 2016 plan year, and (b) your employees’ eligibility for employer-sponsored coverage. If you’re asked to provide information about the coverage you offer, you only need to provide information about the least expensive minimum value plan you offered for 2016. And participation is completely voluntary; if you get the call, you’re under no obligation to answer the consultant’s questions.
- Mailed notification of any employee who applied for financial assistance. If one of your employees opts out of the health coverage you offer and turns to the federal marketplace instead, it could mean the coverage you’re offering doesn’t meet ACA requirements. If the federal marketplace determines that you aren’t offering minimum essential coverage and minimum value at a price your employees can afford, you can appeal. But the IRS has the final say about your liability and shared responsibility payment.
No tax returns, no subsidies.
The Department of Health & Human Services also announced a new provision for 2017 that affects the advance premium tax credits (APTCs) and cost-sharing subsidies that most ACA exchange enrollees receive. Going forward, anyone who doesn’t file tax returns will no longer receive health insurance subsidies. People who don’t have a tax return on file and who don’t return to the marketplace to update their application will be denied coverage for January 1, 2017. Even if an employee was automatically enrolled in 2015 and 2016, if there is no tax return information for 2014 or 2015 and they don’t update their information for 2017 by December 15 (the last day to take action for January 1, 2017, coverage), APTCs and cost-sharing reductions will be discontinued.
For employers, compliance issues are a growing headache. The costs for noncompliance are growing too, including expensive penalties, DOL enforcement actions and even lawsuits. The DOL estimates that three out of four health insurance plans they audit have an ERISA violation, and about 70 percent of the audits with violation result in fines for the employer.
Your best protection? A plan and a partner.
Make sure you establish written procedures for your plan administration, document everything, conduct regular internal audits and get all required notices sent out in a timely manner. Review your Summary of Benefits and Coverage Sheet to make sure the coverage you’re offering your employees meets ACA standards. And with the constantly evolving complexities of the law and the increasing costs of noncompliance, don’t try to go it alone.
Contact the health care compliance experts at Higginbotham Insurance to learn more about staying compliant and protecting your business from ACA subsidy audits.