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ACA Loopholes Closing by a ‘Skinny’ Margin

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Employers already are well aware that the health care landscape is changing – and changing drastically. But now employers who thought they were complying with the Affordable Care Act (ACA) are being told otherwise, as the Obama administration works to close loopholes – and fast.

Two major loopholes exist that employers must account for now.

  1. Plans that pass the minimum-value test – but do not offer hospital coverage – no longer will be accepted after 2015.
  2. So-called “skinny plans” were determined to meet the minimum-essential coverage rules of the IRS, but those offering them could still face penalties.

Hospital Coverage Now a Must
According to the U.S. Department of the Treasury, employers offering medical plans that lack hospital coverage and/or physician services will not qualify as meeting the ACA’s minimum-value threshold. This is reflected in IRS Notice 2014-69.

This represents a blow to a large number of employers who were preparing to offer similar plans for 2015 – the first year they will be held to the ACA’s employer mandate, lest face costly penalties.

Despite this news, the administration will allow employers one year to find an alternative, provided they had committed – in writing and before Nov. 4 – to offer one of these plans to their employees. These employers have been granted limited grandfather protection, but will have to add coverage for inpatient services in order to qualify for minimum-value status for the preceding calendar year. Additionally, this protection applies only for those plan years beginning on or before March 1, 2015.

The Treasury also noted that individuals offered these plans still will be able to qualify for subsidies, despite the employer-offered insurance meeting the minimum-value coverage mark under the grandfathered protection.

Employers offering grandfathered plans either must revise their summary of benefits and coverage, or send another form of notice to employees that they still will qualify for subsidies through a health-insurance exchange because of the plan’s limitations.

Large employers failing to offer minimum-value coverage next year could be fined upward of $3,000 per worker in 2015. These penalties will be assessed when employees qualify for subsides through exchanges based on their income.

‘Skinny Plans’
“Skinny plans” are employer-sponsored benefits that offer little more than preventive care. These plans were adopted by employers because they pass the ACA requirement of providing minimum-essential coverage, which is not to be confused with “minimum-value.” These plans are not designed to meet the minimum-value requirement of 60 percent, but allow employers to bypass the first tier of fines under the ACA’s pay-or-play penalty assessment ($2,000 multiplied by each employee for failure to offer coverage).

For employers to be spared the affordability/minimum-value portion of the ACA penalties, they also must offer a comprehensive health plan to all employees and prove that an affordable offer was made to each one. Those choosing the lower-cost alternative (Skinny plans) then would not qualify for subsidies because they were offered a plan that met the ACA’s minimum-value standard.

Penalties for employers offering solely “skinny plans” would be assessed only for employees who opted for the exchange and qualified for subsidies.

As an employer, it is important that you know all of the facts when deciding which plan to choose for your employees … and note that sometimes, being “skinny” isn’t all it’s cracked up to be.

The content of this blog is intended to keep interested parties informed of legal and industry developments for educational purposes only.  It is not intended as legal opinion or tax advice and should not be regarded as a substitute for legal or tax advice.



Author Bio: Jason Bodin has been the communications pulse for a number of organizations, including Paycom, where he serves as director of public relations and corporate communications. He helped launch Paycom’s blog, webinar platform and social media channels. He aided in the development of Paycom’s tool to assist organizations in complying with the Affordable Care Act, one of the largest changes in health care the country has seen. A graduate of the University of Oklahoma, Bodin previously worked for ESPN and FoxSports. In his free time, he enjoys adventuring with his family, reading and strengthen his business acumen.

ACA ‘Cadillac Tax’ Delayed to 2022

ACA ‘Cadillac Tax’ Delayed to 2022

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The short-term spending bill that ended the government shutdown on Jan. 22 included a small provision that again delayed the Affordable Care Act’s (ACA) “Cadillac tax,” now to 2022.

So nicknamed because it targets employer-sponsored health plans with the most generous level of benefits, the Cadillac tax originally was to take effect in 2018. In 2015, the effective date was pushed to 2020, and now the new bill pushes the effective date two additional years into the future.

When – or if – the Cadillac tax goes into effect, it will impose a 40% excise on the cost of employer-sponsored health coverage exceeding a certain dollar value per employee. The dollar value would have been $10,200 for individual coverage and $27,500 for family coverage in 2018, had the tax not been delayed. The law calls for the amount to be adjusted annually with growth in the consumer price index.

How does this affect Employers?

Employers do not have to contend with the tax for an additional two years. The IRS has not yet issued regulations addressing implementation; with this additional delay, the agency likely will not do so in the near future.

Disclaimer: This blog includes general information about legal issues and developments in the law. Such materials are for informational purposes only and may not reflect the most current legal developments. These informational materials are not intended, and must not be taken, as legal advice on any particular set of facts or circumstances. You need to contact a lawyer licensed in your jurisdiction for advice on specific legal problems.

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Posted in ACA, Blog, Compliance, Featured

Erin Maxwell

by Erin Maxwell


Author Bio: As a compliance attorney for Paycom, Erin Maxwell monitors legal and regulatory changes at the state and federal level, focusing on health and employee benefits laws, to ensure the Paycom system is updated accordingly. She previously served as assistant general counsel at Asset Servicing Group in Oklahoma City. She holds a bachelor’s degree from the University of Central Oklahoma and a J.D. from the University of Oklahoma. Outside of work, Maxwell enjoys politics, historical mysteries and spending time with her family.

Deadline Extended

Employer Deadline Extended for Furnishing 2017 ACA Forms

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Distribution of 2017 Affordable Care Act (ACA) Forms 1095-B or -C to your employees has been extended.

As issued in Notice 2018-06, the IRS has extended the deadline from Jan. 31 to March 2. (However, the deadline to provide Forms W-2 and 1099 to employees and contract workers remains as Jan. 31.)

Filing deadlines unchanged

While the deadline to furnish forms was extended, the filing deadlines remain the same: Feb. 28 for paper forms, and April 2 for electronic forms.

IRS Notice 2018-06 emphasizes that employers who do not comply with the due dates for furnishing or filing are subject to penalties under sections 6722 or 6721.

Good-faith transition relief extended

The IRS also announced the extension of good-faith transition relief. This may allow an employer to avoid some penalties if it can show that it made good-faith efforts to comply with the information reporting requirements for 2017.

This relief applies only to incorrect and incomplete information reported on the ACA forms, and not to a failure to file or furnish the forms in a timely manner. Additionally, the IRS stated it does not anticipate extending either the good-faith transition relief or the furnishing deadline in future years.

Contact a trusted tax professional if you have questions on how this may affect your business specifically.

Click here to read more about how the ACA is affect by the new Tax Cuts and Jobs Act.

Disclaimer: This blog includes general information about legal issues and developments in the law. Such materials are for informational purposes only and may not reflect the most current legal developments. These informational materials are not intended, and must not be taken, as legal advice on any particular set of facts or circumstances. You need to contact a lawyer licensed in your jurisdiction for advice on specific legal problems.

Tags: , , , ,
Posted in ACA, Blog, Compliance, Featured

Erin Maxwell

by Erin Maxwell


Author Bio: As a compliance attorney for Paycom, Erin Maxwell monitors legal and regulatory changes at the state and federal level, focusing on health and employee benefits laws, to ensure the Paycom system is updated accordingly. She previously served as assistant general counsel at Asset Servicing Group in Oklahoma City. She holds a bachelor’s degree from the University of Central Oklahoma and a J.D. from the University of Oklahoma. Outside of work, Maxwell enjoys politics, historical mysteries and spending time with her family.

Employers Unaffected by ACA Changes in New Tax Law

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On December 22, President Trump signed the Tax Cuts and Jobs Act. The bill includes a provision that reduces the penalty for not complying with the Affordable Care Act’s (ACA) individual mandate to $0, effectively removing the penalty for individuals who do not have health insurance coverage after the effective date of Jan. 1, 2019.

However, this update will not impact employers, since the law does not remove the employer mandate (the requirement that large employers offer health insurance coverage to their full-time employees or pay a penalty) or the associated employer reporting requirements. Large employers subject to the mandate still face penalties if they fail to comply with either, and the IRS has begun sending out notices with preliminary assessments of the employer shared responsibility penalty for tax year 2015.

Employers subject to the employer mandate should continue to comply and be prepared to file Forms 1094 and 1095 with the IRS in accordance with the normal deadlines.

For the 2017 tax year, the deadlines to provide Forms 1095-C to employees is Jan. 31, 2018.  The deadline to file Forms 1094-C and 1095-C with the IRS is Feb. 28, 2018 if filing paper forms, and April 2, 2018, if filing electronically.

Disclaimer: This blog includes general information about legal issues and developments in the law. Such materials are for informational purposes only and may not reflect the most current legal developments. These informational materials are not intended, and must not be taken, as legal advice on any particular set of facts or circumstances. You need to contact a lawyer licensed in your jurisdiction for advice on specific legal problems.

Posted in ACA, Blog, Compliance, Featured

Erin Maxwell

by Erin Maxwell


Author Bio: As a compliance attorney for Paycom, Erin Maxwell monitors legal and regulatory changes at the state and federal level, focusing on health and employee benefits laws, to ensure the Paycom system is updated accordingly. She previously served as assistant general counsel at Asset Servicing Group in Oklahoma City. She holds a bachelor’s degree from the University of Central Oklahoma and a J.D. from the University of Oklahoma. Outside of work, Maxwell enjoys politics, historical mysteries and spending time with her family.

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