Wednesday, 30 July 2014
Virtus featured in NBJ- I Just Received a Check From My Health Insurance Company. Now What?
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I Just Received a Check From My Health Insurance Company. Now What?

VIRTUS

David Johnson

VIRTUSOver recent days, many employers across the state of Tennessee are receiving checks from their health insurance company in compliance with the ACA's Medical Loss Ratio Rule. Good news!

Simply stated, the rule requires health insurance companies to provide an annual rebate to the policyholder (employer) of an ERISA plan if the insurer's medical loss ratio falls below a minimum level. The level is 85 percent for companies with more than 100 employees and 80 percent for smaller groups or individuals. Eleanor Kennedy's recent NBJ article from July 24 speaks more specifically to the amounts and carriers involved.

However, you might be thinking as an employer, what am I to do with this money? Yes, you do have special fiduciary obligations.

  1. If the employer paid 100 percent of the premium, the rebate is the employer's.
  2. If there were fixed amounts paid by the employer and employees, the rebate should be shared proportionately.
  3. Former employees are entitled to a share of the rebate unless the cost of distributing the funds is comparable to the entitled amount. If so, 100 percent of the rebate may be allocated to current employees.
  4. Possibly the most common method, the employer uses the rebate to fund future employee premiums, enrich benefits, or any other permissible purpose. The decision you make must be exercised within three months of receiving the rebate.

In conclusion, two things are important:

Consult with your benefits advisor on guidance as to what would be the most effective path to take and how to take it.

Finally, whichever option you land on, be sure to document it for audit purposes as justification of your action will be reviewed.

Happy spending…

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Posted on 07/30/2014 3:59 PM by David Johnson
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Tuesday, 29 July 2014
Virtus Legal eBlast - IRS Releases Draft ACA Reporting Forms for Employers and Health Insurance Issuers
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On Thursday, July 24, 2014, the Internal Revenue Service (IRS) released draft forms that applicable large employers and health insurance issuers will use to report information regarding health coverage, as required under the Affordable Care Act (ACA) starting in 2015. (The first reporting will be due in the first quarter of 2016, reflecting the 2015 calendar year.)

At this time, draft instructions relating to the forms are not available; however, the IRS anticipates that draft instructions will be available in August. Both the forms and the instructions will be finalized later this year. The forms may be found by following these links:

  • Form 1094-B: Transmittal of Health Coverage Information Returns

http://www.irs.gov/pub/irs-dft/f1094b--dft.pdf

  • Form 1095-B: Health Coverage

http://www.irs.gov/pub/irs-dft/f1095b--dft.pdf

  • Form 1094-C: Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Return

http://www.irs.gov/pub/irs-dft/f1094c--dft.pdf

  • Form 1095-C: Employer Provided Health Insurance Offer and Coverage

http://www.irs.gov/pub/irs-dft/f1095c--dft.pdf

Applicable large employers (generally those with 50 or more full-time equivalent employees on average during the prior calendar year) will satisfy their reporting requirements by filing Form 1094-C (a transmittal to the IRS) and Form 1095-C (a statement to employees).   Applicable large employers that sponsor self-insured plans will complete both sections of Form 1095-C to satisfy their obligation, whereas an employer sponsor of a fully insured plan will complete only the top half of Form 1095-C.

The IRS will use Form 1095-C to assess an employer's compliance with the pay-or-play mandate as well as whether an employee is eligible for premium tax credits to purchase coverage through the Health Insurance Marketplace. Employers must file Form 1094-C with the IRS by February 28 following the reporting year (March 31 if filing electronically) and must provide Form 1095-C to full-time employees by January 31 following the reporting year.

Health insurance issuers, including self-insured employer-sponsored plans, will satisfy their reporting obligations by filing Form 1094-B with the IRS and by providing Form 1095-B to covered employees, who will use the information to report compliance with the individual mandate on their federal income tax return. The IRS will use Form 1095-B to verify whether individuals have the minimum essential coverage necessary to comply with the ACA's individual mandate.

 

Peter Marathas, Esq.

Compliance Director

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Posted on 07/29/2014 8:47 AM by David Johnson
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Thursday, 24 July 2014
Virtus Legal eBlast - Win Some/Lose Some: High Stakes Decisions On The Affordable Care Act Come Out For and Against the Administration
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July 22, 2014 marked a day when two different federal courts came out on opposite sides of the same question. In the morning, the U.S. Court of Appeals for the DC Circuit dealt a serious blow to the Obama Administration with a decision that called into question the structural integrity of the "pay-or-play" mandates under the Affordable Care Act ("ACA"). Later in the day, the U.S. Court of Appeals for the Fourth Circuit, sitting down the road in Richmond, came out on the other side of the question.

In Halbig v. Burwell, the Appeals Court for the District of Columbia Circuit, sitting in Washington, DC, sided with the plaintiffs and against the Obama Administration today when it held that the ACA, by its terms, does not allow for subsidies for individual coverage in exchanges established by the federal government. Today, a majority of the states-more than 30-have federally-run exchanges. This means that, at least according to this court, individuals purchasing insurance coverage on the federally-run exchanges will not be eligible for federal subsidies when they purchase insurance.

Not so fast, said the Fourth Circuit Court of Appeals later in the day. In King v. Burwell, the court addressed the same issue addressed in Halbig and reached the exact opposite conclusion. In King, four other judges found that Congress intended to make subsidies widely available. While the plain language of the ACA does not say it, the Fourth Circuit, found that the contextual meaning of the ACA dictated a different result.

At issue in Halbig and King is the statutory construction of the subsidy provisions. The plain language of the ACA provides that individuals purchasing coverage from a state exchange are eligible for the federal subsidy. The ACA, on its face, does not provide for a subsidy on the federal exchanges. The Internal Revenue Service (IRS) addressed this in May 2012 through a regulation, providing that an individual could obtain a subsidy if he or she "is enrolled in one or more qualified health plans through an Exchange."   In the same regulation, the IRS defined an exchange to include both state and federal exchanges.   In other words, the IRS sought, by regulation rather than by amending the law, to clarify that the ACA provides the subsidy on both state and federal exchanges.

Plaintiffs in both cases challenged the IRS's ability as a regulator to, in the plaintiffs' perspective, rewrite the statute. The Fourth Circuit court agreed with the Obama Administration, finding that the context of the ACA supported the IRS's clarification. The D.C. Circuit disagreed, however, and found that there was no basis for the IRS to effectively rewrite the statute.

If the Halbig decision is ultimately upheld, it will be important to employers because one of the triggers for assessment of a penalty against an employer under the ACA is that a full-time employee has obtained subsidized coverage on an exchange. If individuals in the federal exchange states are not eligible for subsidies on the exchanges in those states, employers in those states cannot be assessed a penalty. If the King decision is upheld, it will mean that both federal and state exchanges are treated the same with respect to subsidies and with respect to the play or pay penalties. 

 

Peter Marathas, Esq.

Compliance Director

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Posted on 07/24/2014 11:51 AM by David Johnson
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Thursday, 24 July 2014
Virtus featured in NBJ - HR Technology: It Isn't Like Your College Stereo Anymore
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Nashville BizBlog

HR Technology: It Isn't Like Your College Stereo Anymore

 

David Johnson

Remember what your stereo looked like from way back when? You had a Pioneer receiver, JVC cassette deck, Onkyo DVD player and Jenson speakers or some variety thereof all sitting on shag carpet, some construct of 2 by 12s or milk cartons.

Now fast forward and look at the HR technology you have in place today. Does it look similar? This technology for that, that technology for this or just a lot of fragmented pieces serving various roles. Like our old stereos, there was a time when unbundling technology was okay. However, today is not that time. On the off-chance that you do not have HR technology, you definitely need to keep reading. Let's be honest anyway. Don't you wish you had that whiz-bang SaaS based HR system that is fully integrated, seamless, easy-to-use, solves your child's Calculus problems and paints houses on the weekends to pay for itself? Well you can at least some of it.

The Bad News

HR today is facing new compliance requirements brought on by Obamacare. They are real, and all indications are that they are here to stay at least until we figure them out and then they will change again. If you do not have a system that will support the requirements, the penalties are daunting. The average ERISA fine is $1,000 per day per offense. Compliance offenses that apply to employee reporting under Obamacare are even more egregious. They can be up to $1,000 per day per person. Some of these requirements include:

Dependent coverage to age 26;

IRS 6055 & 6056 reporting;

Employee acknowledgment of SBCs;

Employee acknowledgement of Notice of Exchange;

Wellness incentives; and, everyone's favorite

Full-time/part-time status, measuring stability, and look-back periods.

This is not the entire list. In short, what you don't know that auditors do know can result in you stroking a sizeable check to your government with no-thank-you card in return.

The Good News

VIRTUSAn integrated system that efficiently executes on payroll, time and attendance, and Human Resource Information System will get you where you need to be in the simplest manner.ADP, one of the world's largest providers of human capital management solutions, embraces this position and vision and validates this point with a 2013 independent study by Cedar Creststone. It states, "Organizations with an integrated Human Resource Management System (HRMS) and talent management solution show 33 percent higher revenue per employee and 95 percent higher net income per employee than those with alternative approaches."

However, cited as the No. one reason survey respondents are moving to a new SaaS HRMS is to improve the user experience across the organization. So, at a minimum, you have to look to your adviser to at least guide you through a needs-analysis on this front. If so, what you don't know will now be known, your money will stay with your company and your senior HR person will send you a thank-you card along with your favorite bottle.

David Johnson is the founder and senior partner of Virtus Benefits, a Nashville-based, full-service employee benefits firm.

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Posted on 07/24/2014 11:59 AM by David Johnson
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Tuesday, 22 July 2014
Virtus Legal eBlast - DC Appeals Court Holds that Premium Subsidies are Not Available to Enrollees in Federal Exchanges
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No Pay-or-Play Penalty in States with a Federal Exchange?  DC Appeals Court Holds that Premium Subsidies are Not Available to Enrollees in Federal Exchanges

 

The U.S. Court of Appeals for the DC Circuit has dealt a serious blow to the Obama Administration today with a decision that calls into question the structural integrity of the "pay-or-play" mandates under the Affordable Care Act ("ACA").

In Halbig v. Burwell, the Appeals Court for the District of Columbia Circuit, sitting in Washington, DC, sided with the plaintiffs and against the Obama Administration today when it held that the ACA, by its terms, does not allow for subsidies for individual coverage in exchanges established by the federal government.  Today, a majority of the states-34-have federally-run exchanges.  This means that, at least according to this court, individuals purchasing insurance coverage on the federally-run exchanges will not be eligible for federal subsidies when they purchase insurance.  This is significant to employers because one of the triggers for assessment of a penalty against an employer under the ACA is that a full-time employee has obtained subsidized coverage on an exchange.  If individuals in 34 states are not eligible for subsidies on the exchanges in those states, employers in those states cannot be assessed a penalty.

At issue in Halbig is the statutory construction of the subsidy provisions.  The plain language of the ACA provides that individuals purchasing coverage from a state exchange are eligible for the federal subsidy.  The ACA, on its face, does not provide for a subsidy on the federal exchanges.  The Internal Revenue Service (IRS) addressed this in May 2012 through a regulation, providing that an individual could obtain a subsidy if he or she "is enrolled in one or more qualified health plans through an Exchange."   In the same regulation, the IRS defined an exchange to include both state and federal exchanges.   In other words, the IRS sought, by regulation rather than by amending the law, to clarify that the ACA provides the subsidy on both state and federal exchanges.

In Halbig, the plaintiffs challenged the IRS's ability as a regulator to, in the plaintiffs' perspective, rewrite the statute.  The district court agreed with the Obama Administration, finding that the context of the ACA supported the IRS's clarification.  The appellate court disagreed, however.  In a 2-1 decision, the appeals court found that there was no basis to support the contextual reading and effectively found that the IRS had exceeded its regulatory authority.

As noted, this is far from the final word on this issue.  The decision could be reviewed by the full DC Circuit Appellate Court, which has a majority (seven) of its active judges appointed by Democratic presidents and four appointed by Republicans.  It may eventually be decided by the US Supreme Court, but that may be a long way off.  There is also a chance that this could result in overdue bi-partisan discussions in Congress to address this and other ACA issues.  At this point, however, it is clear that at least one high-level federal court has suggested that the entire pay or-play approach may be in jeopardy in a majority of states.  Stay tuned.

Peter Marathas, Esq.

Compliance Director

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Posted on 07/22/2014 2:37 PM by David Johnson
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