Blog Post

Benefit Buzz - March 2024

Zywave, Inc • Mar 11, 2024

Benefit tips brought to you by MFC Benefits, LLC

Learn more about IRS releasing ACA Pay-or-Play Penalties and the DOL updates Model Employer CHIP Notice.

IRS RELEASES ACA PAY-OR-PLAY PENALTIES FOR 2025

The IRS recently released updated penalty amounts for 2025 related to the employer shared responsibility (pay-or-play) rules under the Affordable Care Act (ACA). For calendar year 2025, the adjusted $2,000 penalty amount is $2,900, and the adjusted $3,000 penalty amount is $4,350. This is a decrease from the penalty amounts for the 2024 calendar year, which are $2,970 and $4,460, respectively.

Under the pay-or-play rules, an applicable large employer (ALE) is only liable for a penalty if at least one full-time employee receives a subsidy for Exchange coverage. Employees who are offered affordable, minimum-value (MV) coverage are generally not eligible for these Exchange subsidies.

Depending on the circumstances, one of two penalties may apply under the pay-or-play rules: the Section 4980H(a) penalty or the Section 4980H(b) penalty.

Under Section 4980H(a), an ALE will be subject to a penalty if it does not offer coverage to "substantially all" (generally, at least 95%) of its full-time employees and any one of its full-time employees receives a subsidy toward their Exchange plan. This monthly penalty is equal to the ALE's number of full-time employees (minus 30) multiplied by 1/12 of $2,000 (as adjusted) for any applicable month. For 2025, the adjusted penalty amount is $2,900.

Under Section 4980H(b), ALEs that offer coverage to substantially all full-time employees but whose coverage is unaffordable or does not provide minimum value may still be subject to a penalty. The monthly penalty assessed on an ALE for each full-time employee who receives a subsidy is 1/12 of $3,000 (as adjusted) for any applicable month. For 2025, the adjusted penalty amount is $4,350. However, the total penalty for an ALE is limited to the 4980H(a) penalty amount.

DOL UPDATES MODEL EMPLOYER CHIP NOTICE

The U.S. Department of Labor (DOL) has released a new model Employer CHIP Notice with information current as of Jan. 31, 2024.

As a reminder, the Children’s Health Insurance Program Reauthorization Act of 2009 (CHIPRA) imposes an annual notice requirement on employers that maintain group health plans in states that provide premium assistance subsidies under a Medicaid plan or a Children’s Health Insurance Plan (CHIP).

An employer is subject to this annual notice requirement if its group health plan covers participants who reside in a state that provides a premium assistance subsidy, regardless of the employer’s location.

The DOL’s model notice, which employers may use for this disclosure, is updated periodically to reflect changes in the states that offer premium assistance subsidies. The DOL’s model Employer CHIP Notice includes information current as of Jan. 31, 2024.

Employers could also choose to prepare their own notices or modify the model notice. Employers should be sure to include at least the minimum relevant state contact information for any employee residing in a state with premium assistance.

Provided to you by MFC Benefits, LLC

© 2024 Zywave, Inc. All rights reserved

Download the PDF copy here.

< Older Post Newer Post >

Mail

Benefit Buzz - May 2024

By MFC Benefits, LLC • 15 May, 2024

Learn more about the Prescription Drug Report due date and the Court Ruling on Free Preventive Care. PRESCRIPTION DRUG REPORT IS DUE BY JUNE 1, 2024 Group health plans must annually submit detailed information on prescription drug and health care spending to the federal government. This reporting is referred to as the "prescription drug data collection," or the "RxDC report." The next RxDC report is due by Saturday, June 1, 2024, covering data for 2023. Employers should confirm they are taking steps to comply with this reporting deadline, such as providing information to third-party vendors on a timely basis. The RxDC report is comprised of several files, including those that require specific plan-level information, such as plan year beginning and end dates and enrollment and premium data. It also includes files that require detailed information about medical and pharmacy benefits. RxDC reports must be submitted through an online portal maintained by the Centers for Medicare and Medicaid Services (CMS). CMS'RxDC website includes updated reporting instructions and other reporting resources. Employers commonly use third parties, such as issuers, third-party administrators (TPAs) and pharmacy benefit managers (PBMs), to submit RxDC reports on behalf of their health plans. Employers using third parties to submit RxDC reports must ensure that this reporting responsibility is reflected in a written agreement with the third party. Employers may work with multiple third parties to complete the RxDC report for their health plans. For example, a self-insured employer may use both its TPA and PBM to submit different portions of the RxDC report. A health plan's submission is considered complete if CMS receives all required files, regardless of who submits them. COURT RULING EXPECTED SOON ON FREE PREVENTIVE CARE The 5th U.S. Circuit Court of Appeals is expected to issue a decision within the next few months regarding the constitutionality of the Affordable Care Act's (ACA) preventive care mandate. The ACA requires non-grandfathered health plans and health insurance issuers to cover a set of recommended preventive services without imposing cost-sharing requirements, such as deductibles. In March 2023, the U.S. District Court for the Northern District of Texas struck down a key component of the ACA's preventive care mandate. More specifically, the court ruled that the preventive care coverage requirements based on an A or B rating y the U.S. Preventive Services Task Force on or after March 23, 2010, violate the U.S. Constitution. The Biden administration appealed the District Court's decision to the 5th Circuit. A ruling by the 5th Circuit is expected soon, likely followed by an appeal to the U.S. Supreme Court. It is uncertain whether the 5th Circuit will reverse or uphold the District Court's ruling. However, for now, non-grandfathered health plans and issuers must continue to cover, without cost sharing, the full range of preventive car services required by the ACA. If the 5th Circuit rules that a key component of the ACA's preventive care mandate is unconstitutional, employers will want to consult with their issuers or TPAs to assess the impact on their health coverage. Provided to you by MFC Benefits, LLC © 2024 Zywave, Inc. All rights reserved Download the PDF copy here. Link: http://chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://content.zywave.com/file/b6f7a224-b3a3-4409-a8f2-953f0994d66a/Benefits%20Buzz%20Newsletter%20January%202024.docx Link: http://chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://content.zywave.com/file/b6f7a224-b3a3-4409-a8f2-953f0994d66a/Benefits%20Buzz%20Newsletter%20January%202024.docx