Defining The Offer
As we are approaching 2015 we are entering into a new era in employer sponsored healthcare where accountability of health coverage is the new normal. When I say accountability I mean When, Who and What. When is when you elected coverage into your health plan, and for what period of time in 2015 (e.g. January- December 2015). Who, as in who is your coverage with. What is the question of what does your coverage consist of; does it meet minimum essential coverage and is the corresponding lowest cost single plan (maybe your plan) affordable based on 9.5% of your and w2 earnings. 2015 is all about these metrics as we prepare for 2016 which will be all about the reporting, but also about accountability as well. These measurements tie back to the ultimate enforcement of The Employer Mandate and the Individual Mandate through IRS sections 6055 and 6056. Penalties associated with not complying with The Employer Mandate are of particular concern.
Recent releases of IRS transmittals forms 1094 and 1095 (B & C) provide insight into the type and frequency of data that will need to be reported in 2016. It is useful today as we plan for next year in terms of making sure this data is properly collected. Nevertheless, there is a great deal of focus and perhaps panic around the filing aspect which is 15 months away. The terms of electronic filing (clearly the most efficient way to get data to the IRS) are still being defined by the vendors (HR/payroll, Benefits Administration systems, and ACA compliance solutions) and the IRS. Both are now in the midst of figuring out how to assist or deliver in the filing for 2016. This is not where the focus should be now for employers. Instead, all of the efforts should be to ensure you are collecting the data properly in 2015.
If you have a benefits administration system that collects and maintains elections in place for 2015 you are most of the way towards meeting the requirements. This, assuming you are measuring the when, who and what described earlier. The missing pieces which can be captured in a system are the waivers and the employees that simply forgot or didn’t get around to it for some reason- the “non-elected bunch”. For waivers it is suggested that you deliver an affidavit where the employee agrees they have been extended coverage and by declining is aware of the risks of not having coverage and penalties of the individual mandate. The affidavit can also apply to dependents as well. For the non-elected employees, it’s a matter of tracking them down and making sure they ultimately complete their elections before the deadline of open enrollment or the new hire election period. All of this defines what has been referred to as “the offer” of health insurance which by 2016 will go up to 95% of all eligible employees if you are an Applicable Large Employer (ALE) (50+FTE’s).
With these additional measures in place for 2015 you will be in a good position to reach compliance and extend an offer. For my customers and their clients that are ALEs, we are in the process of making sure their benefits administration system is collecting the when, who and what information in a proper fashion. I would also consult your legal/compliance support to make sure you are delivering the correct language at time of enrollment. With all of that you can rest easy…..sort of.