Commentary: As we approach a new year, it’s time to gear up for another round of regulatory changes, particularly with respect to the Affordable Care Act. Here are six things likely to happen next year that will affect your health plan.
1. Regulations will bring more clarity to the Cadillac tax. The coming year likely will bring clarification to some unanswered questions regarding the so-called Cadillac tax — answers that will have a big impact on health and wellness at larger corporations. One answer we’ll likely get in the form of a proposed regulation is a better understanding of who is responsible for paying the tax. Currently, the ACA says 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 in the law or anywhere else. Fortunately, the
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2. Companies will scale back rich plans in preparation for 2018. 2016 is the year that many employers will begin pulling back on generous health plans. While some employers began doing this as early as 2014, you can expect that many more will be doing it in 2016. Recent studies show that
No employer wants to pay that stiff 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 when employers will have to lower plan benefits or face the tax, they should begin scaling back plans in 2016 to ease into the changes.
3. The EEOC Likely Will Finalize Wellness Rules under the ADA and GINA. In 2016, we’re expecting to see final regulations from the EEOC explaining how wellness plans can comply with the Americans with Disabilities Act and the Genetic Information Nondiscrimination Act. While wellness programs have become increasingly popular, there has been litigation (and just general confusion) about precisely how employers can design these programs in a nondiscriminatory way. In 2015, the EEOC released proposed rules under both the
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For example, final rules under the ADA will likely clarify how the new 30% cap on wellness incentives (imposed on wellness plans with “medical examinations” or “disability-related inquiries”) will apply to employees’ spouses and to different tiers of coverage under the associated group health plan.
4. Guidance will help employers comply with nondiscrimination rules. 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 them benefits or plans that are not available to all qualified employees. This nondiscrimination requirement was originally scheduled to take effect in 2010, but was delayed indefinitely until the IRS issued regulations or guidance on how to comply with the rules. The wait is likely nearing an end as 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, 2016, as employers with 50 or more full-time employees, including full-time equivalents, become subject to the rules. This is a much larger group of employers. Last year, employers with between 50-99 full-time employees and full-time equivalents were not required to comply with pay or play, assuming they satisfied certain transition rules. Additionally, 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. In addition, 2016 is 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 – and maybe even millions of dollars – in penalties.
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6. Employers will scramble to meet reporting requirements. You’re possibly already panicking about this, right? 2016 is the first year employers will have to meet the ACA’s reporting requirements; deadlines for filing IRS forms are February 29 and March 31, if filing electronically, and forms are due to employees by February 1. Failing to comply with the information reporting requirements could result in penalties of up to $3 million.
The dawn of a new year is, for most people, a time of new beginnings and optimism. However, for HR departments and benefits managers, the New Year promises to be filled with increasing complexity. Hopefully, you’ve been planning for the last few months, and you’ll be positioned to make 2016 a great year for you and your organization. If not, it’s time to roll up the sleeves and get to work.
Dan Kuperstein, senior vice president of compliance for Corporate Synergies, is an ERISA attorney with experience in a broad array of sophisticated employee benefits and labor and employment matters, including the Affordable Care Act, COBRA, HIPAA and GINA compliance. He is a respected thought leader on healthcare reform and has published numerous articles on the Affordable Care Act and other laws and regulations.
