This advisory summarizes recent developments that affect the Affordable Care Act (“ACA”) requirements for employers, as well as other recent changes that affect employer-sponsored health plans.
ACA Information Reporting Deadlines extended
The Internal Revenue Service (“IRS”) has extended the due dates for submitting ACA information returns for 2020 on Forms 1095-B and 1095-C from January 31, 2021 to March 2, 2021. However, the IRS has not extended this deadline for filing ACA information at the IRS, which remains March 1, 2021 if not filed electronically and March 31, 2021 if filed electronically.
The IRS has extended the good faith transition facilities from ACA reporting penalties for employers who can demonstrate they made good faith efforts to meet the 2020 information reporting requirements . However, this relief only applies to the transmission or submission of incorrect or incomplete information and is not available if a declaration or return is not submitted or submitted in a timely manner. In the latter case, penalties can be imposed if there is no reasonable reason for the filing to fail.
The IRS has also issued new Forms 1094/1095 and related instructions that include reporting information for Individual Health Insurance Agreements (“HRAs”). As explained in our August 2019 Opinion, the Department of Labor (“DOL”), Health and Social Services (“HHS”) and the IRS have jointly issued final regulations effective January 1, 2020 that will enable employers to use HRAs to offer individual coverage.
ACA government-mandated information reporting
As summarized in our February 2020 opinion, several jurisdictions have adopted their own versions of the ACA’s individual mandate and information reporting requirements. Employers who are subject to government information reporting requirements should review local information reporting compliance guidelines issued by local competent authorities. In general, however, state mandatory reporting can be met using the same forms filed with the IRS for reporting ACA mandatory information.
Adjustment of ACA affordability limits
For the purposes of the ACA’s employer mandate, employer-sponsored health insurance must meet affordability requirements. In particular, an employee’s share of the coverage costs must not exceed a certain percentage of the household income. For the year 2021 this percentage has been increased from 9.78% to 9.83%.
Adjustment of the ACA cost participation limits
The ACA requires that the cost sharing for essential health services as part of a group health plan (e.g. emergency services) is subject to an overall annual limit. The cost sharing includes items such as deductibles, co-insurance and co-payments. For 2021, the annual cost sharing limit is $ 8,550 for auto insurance and $ 17,100 for family insurance.
PCORI fees extended to 2029
Under the ACA, health insurers and sponsors of self-insured health insurance plans had to pay annual fees to the Patient-Centered Outcomes Research Institute (PCORI). PCORI fees must be filed with the IRS using Form 720 and are due by July 31 of the calendar year following the plan year for which the fee applies. Originally, PCORI fees should only be due for plan years ending before October 1, 2019. However, by the end of 2019, Congress extended the PCORI fee requirement to plan years ending before October 1, 2029.
Abolition of the Cadillac tax
When the ACA was originally enacted, it included an excise tax on high-cost, employer-sponsored health insurance plans (i.e. the Cadillac tax). The Cadillac tax was originally scheduled to come into effect in 2018. However, the Cadillac tax implementation date was later postponed to 2022, and in late 2019, Congress lifted the Cadillac tax altogether.
New COBRA notes for DOL models
As summarized in our June 2020 opinion, DOL has published revised COBRA notices that provide additional information on the availability of non-COBRA coverage options. In order to comply with COBRA notification requirements, employers should update their COBRA notices to reflect the changes made to DOL’s COBRA model notifications.