New Year Will Bring Clarity, Challenges for ACA

A new year means new regulations under the Affordable Care Act. Attorney and health care thought leader Dan Kuperstein shared this great list of six things he expects in 2016 related to the ACA and employers with Employee Benefit News.

1. Look for answers to questions related to the so-called Cadillac tax, and expect a big impact on health and wellness at larger corporations. We’ll likely gain a better understanding of who is responsible for paying the tax. The ACA says now that “employers,” “coverage providers,” and “person[s] that administer the benefits,” are liable for paying the tax, but the “person that administers the benefits” is never defined. The IRS is expected to clarify this.

2. We are entering the year that many employers will begin to pull back on generous health plans in preparation for 2018. Recent studies show that nearly 50% of large employers (200 or more workers) will have at least one plan impacted in 2018 by the Cadillac tax, which taxes the cost of employer-sponsored coverage that exceeds caps of $10,200 for individuals and $27,500 for family coverage. If a premium exceeds either amount, the employer will face a 40% non-deductible excise tax on that excess amount. No employer wants to pay that stiff of a penalty, but they also don’t want to pull the rug out from employees who may be accustomed to a high level of benefits. To prevent shock in 2018, employers should begin scaling back plans in 2016.

3. The EEOC likely will finalize wellness rules under the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA). While wellness programs have gained in popularity, they also have drawn litigation (and confusion) about how employers can design these programs in a nondiscriminatory way. In 2015, the EEOC released proposed rules. Final rules developed in 2016 should clarify remaining questions.

4. New rules under the ACA outlining nondiscrimination testing requirements for fully insured health plans are expected to be released in 2016. Employers with fully insured plans may need to move quickly to develop new eligibility rules or reduce benefits if their existing plans favor highly compensated management or executives by offering benefits or plans not available to all qualified employees. This requirement was originally scheduled to take effect in 2010 but was delayed indefinitely until the IRS issued regulations or guidance on how to comply. The wait is likely nearing an end as U.S. Treasury officials have informally commented that guidance will be released before the end of 2016.

5. More employers will be forced to pay or play. Additional rules regarding pay or play go into effect on January 1, as employers with 50 or more full-time employees, including full-time equivalents, become subject to the rules. Last year, employers with between 50-99 full-time employees and equivalents were not required to comply with pay or play, assuming they satisfied certain transition rules. And, the pay or play rules will get harder in 2016. Employers must offer minimum essential coverage to at least 95% of their full-time employees and their dependents to avoid the ACA’s large penalty. Next year is also the first year the IRS will penalize employers for not complying. Specifically, the IRS will begin assessing employers with penalties in 2016 for noncompliance in the 2015 calendar year. For some employers, this means hundreds of thousands of dollars.

6. Employers will scramble to meet reporting requirements. The new year is the first year employers will have to meet the ACA’s reporting requirements. IRS deadlines are February 29 and March 31; if filing electronically, forms are due to employees by February 1. Failing to comply with the reporting requirements could result in penalties of up to $3 million. S