4 ways the ACA individual mandate repeal can impact reporting and plan design requirements in the long-term
The 2017 Tax Cut and Jobs Act’s repeal of the Affordable Care Act’s individual mandate penalty, effective in 2019, has garnered widespread concern regarding its impact on the future of employer-provided health coverage.
An obvious ripple effect is the continued viability of the employer shared responsibility mandate and the role that might play in employers’ decisions to offer health plans to employees, as well as management of rising costs if young and healthy individuals do not purchase health insurance in the marketplace or even enroll in a plan via an employer’s offer of coverage.
Employers and their advisers should evaluate now how its repeal may have long-term impact on benefit programs and any communications regarding them.
1) ACA information reporting. Employers must continue to meet ACA information reporting requirements, as this has not yet changed. Under IRS Notice 2018-06, a 30-day extension to the deadline for applicable large employers to distribute the 2017 ACA information reporting forms (Forms 1095-B and Forms 1095-C) to employees and covered individuals was provided, with the new due date March 2, 2018. The due dates for filings with the IRS remain unchanged (fewer than 250 returns may file on paper by Feb. 28, 2018/ 250 or more returns must file electronically through the IRS's AIR system by April 2, 2018). Employers must monitor developments that may repeal or modify these reporting rules.
2) Consider auditing past reporting. The IRS has advised that it plans to start issuing Letter 226J informing ALEs of their potential liability for an employer shared responsibility payment for the 2015 calendar year (i.e., if it determines that, for at least one month in the year, one or more of the ALE’s full-time employees was enrolled in a qualified health plan for which a premium tax credit was allowed (and the ALE did not qualify for a safe harbor or other relief). If an ALE receives a Letter 226J from the IRS, the employer will have only 30 days from the date of the letter to dispute liability for a penalty payment under the IRS procedures. Risk for potential penalties still looms and should be addressed.
3) Viability of the marketplace. Many predict that repeal of the individual mandate will result in only unhealthy individuals seeking insurance, leading to higher premiums and ultimate collapse of the marketplace. Employers must monitor impact to its own program costs which are predicted to rise, re-evaluate COBRA coordination issues as communicated in Marketplace notices, and any impact to opt-out programs.
4) Overall health plan design. Undoubtedly, more change is coming. Employers will need to continually monitor and adhere to compliance requirements and evaluate cost-effective program changes that can be made in compliance with law.
Keep in mind that an important backdrop to these developments includes the rise of independent workers and the changing workforce. The TCJA provides further tax incentives for independent worker models.
Recent guidance for association health plans provides an additional path for independent workers to organize and obtain desired health insurance. Further, rise in automation and artificial intelligence in the workplace will change workplace demographics.
Employers and their advisers must strategically assess the pieces of this puzzle to determine costs associated with all of these changes and the types of benefits it will need to offer (and perhaps pay for without employee contribution) to attract and retain talent in the new economy.
Capezza will expand on these issues at EBA’s Workplace Benefits Renaissance, Tuesday, Feb. 27.