New Final Regulations to Impact Employer-Sponsored Health Benefit Plans

New Final Regulations to Impact Employer-Sponsored Health Benefit Plans

In the last few weeks, the Obama Administration issued a flurry of new final regulations, FAQs, and other guidance that will impact employer-sponsored health plans.  Since all of these requirements and guidance will be both finalized and effective before January 20 (even the ones that will impact the 2018 plan year), they cannot be simply set aside by the Trump administration. Adjustments may be made, but the traditional and relatively slow federal regulatory process must be used to make any changes, meaning that the 2017 plan year requirements will likely be unaffected.

The new rules and guidance comprise almost 1000 pages of information and span many documents.  To make things simple for you, Kistler Tiffany Benefits has identified the most relevant points for our clients and broken them down by how quickly the new information will impact your plan.

 2016-2017 Employer Reporting Information

The Internal Revenue Service (IRS) has updated three sections of its Affordable Care Act Frequently Asked Questions website to help employers and plan sponsors prepare for 2016 reporting that must occur in early 2017.  The pages that were updated include: (1) Employer Shared Responsibility Provisions; (2) Reporting Of Offers of Health Coverage by Employers; and (3) Information Reporting by Employers on Form 1094-C and Form 1095-C.   These FAQs are a great first place to look if you have a tricky reporting question, as they are direct source material from the IRS and they are filled with detailed reporting scenario examples and explanations about how to use different reporting codes, safe harbors, transition relief mechanisms and more.

 2017 Plan Year Requirements

A final rule on premium tax credits was released by the Department of Treasury and contains the announcement that the IRS has decided not to finalize new proposed rules about how an employer would have to factor in the cost of unconditioned opt-out payments into their coverage affordability calculation.  However, that doesn’t mean that previous guidance about how unconditioned opt-out payments must be handled doesn’t still stand.  The final rule explicitly states that employers should use Notice 2015-87 and the proposed rule to guide their actions.  The previously issued guidance contains some exemptions, including opt-out payments covered by collective bargaining agreements finalized before December 15, 2015.  Kistler Tiffany Benefits has prepared some detailed information for you about the applicability of these opt-out rules.

New updated guidelines from the Human Resources Services Administration details all of the women’s preventive health services all non-grandfathered health plans must cover without cost-sharing, including all FDA-approved forms of contraception.  The guidelines also list screenings for breast and cervical cancer, preventive care visits, and counseling for sexually transmitted infections as services that must be subject to first-dollar coverage.

The Occupational Safety and Health Administration published a new final regulation clarifying the obligations employers have to keep accurate records of each recordable injury and illness and providing employers with guidance about how to document and maintain these records.  Employers need to be in compliance with this rule by January 18, 2017, but according to the Obama Administration, this final regulation simply states more clearly employers’ obligations.  “This rule simply returns us to the standard practice of the last 40 years,” said Assistant Secretary of Labor for Occupational Safety and Health Dr. David Michaels.  “It is important to keep in mind that accurate records are not just paperwork; they have a valuable and potentially life-saving purpose.”

 2018 Plan Year Requirements

The maximum out-of-pocket cost sharing limits for the 2018 plan year for all plans will be $7,350 for individual coverage and $14,700 for anything other than individual coverage.  The annual limit on cost sharing for standalone dental plans will be $350 for one child or $700 for two or more children.

In 2018, if an individual wants to seek an individual mandate exemption because their required contribution to employer-sponsored coverage is too expensive, the cost of coverage to the employee must be greater than 8.05% of household income.  This percentage is a different threshold than what employers must use to calculate if the coverage they offer is “affordable” in order to avoid employer mandate penalty liability.  The IRS will release the 2018 employer coverage affordability threshold at a later date, but for 2017 coverage that will be reported on in 2018, that employer affordability percentage is 9.69%.

For plans that are subject to the law’s small group modified community rating and age rating requirements, the current age rating requirements for children will be modified for plan years beginning on or after January 1, 2018 to begin increasing the rates for children 14 and up as they transition into adulthood.  Currently children ages 0-20 fall into a single age band, so the rates for all of these children on a group plan are consistent.  However, under the new rules, the current age rate factor will remain the same for children ages 0-13, then increase for children starting at age fourteen, with a slight difference year by year through age 20. This means under current law, for small group plans in years 2018 on forward, the overall rate for each family in the group with children on the plan will vary each year based on the age of their children.