This Advisory provides a summary of recent developments impacting Affordable Care Act (“ACA”) requirements applicable to employers, as well as other recent changes impacting employer-sponsored health plans.
ACA Information Reporting Deadlines Extended
The Internal Revenue Service (“IRS”) has extended the due dates for furnishing individuals with 2020 ACA information returns on Forms 1095-B and 1095-C from January 31, 2021 to March 2, 2021. The IRS did not, however, extend the deadline for filing ACA information returns with IRS, which remains March 1, 2021, if not filing electronically, and March 31, 2021 if filing electronically.
The IRS has extended good-faith transition relief from ACA reporting penalties for employers that can demonstrate they have made good faith efforts to comply with the 2020 information reporting requirements. This relief, however, applies only to the furnishing or filing of incorrect or incomplete information and is not available for failures to timely furnish or file a statement or return. In the latter case, penalties may apply absent reasonable cause for the filing failure.
The IRS has also issued new Forms 1094/1095 and related instructions to include reporting of information for individual coverage health reimbursement arrangements (“HRAs”). As explained in our August 2019 Advisory
, the Department of Labor (“DOL”), Health and Human Services (“HHS”) and the IRS issued joint final regulations allowing employers to offer individual coverage HRAs, effective January 1, 2020.
State-Mandated ACA Information Reporting
As summarized in our February 2020 Advisory
, several jurisdictions have adopted their own versions of the ACA’s individual mandate and information reporting requirements. Employers subject to State- mandated information reporting requirements should review guidance issued by the applicable local governmental authorities regarding how to comply with local information reporting requirements. Generally, however, State-mandated coverage reporting may be satisfied using the same forms filed with the IRS for ACA-mandated information reporting.
Adjustment of ACA Affordability Limits
For purposes of the ACA’s employer mandate, employer-sponsored health coverage must meet affordability requirements; specifically, an employee’s share of the cost of coverage must not exceed a specified percentage of household income. For 2021, that percentage has been increased from 9.78% to 9.83%.
ACA Cost Sharing Limits Adjustment
The ACA requires that cost-sharing for essential health benefits under a group health plan (e.g., emergency services) be subject to an overall annual limit. Cost-sharing includes such items as deductibles, coinsurance and copayments. For 2021, the annual cost-sharing limit will be $8,550 for self-only coverage, and $17,100 for family coverage.
PCORI Fees Extended to 2029
Under the ACA, health insurers and self-insured health plan sponsors have been required to pay annual “Patient-Centered Outcomes Research Institute” (“PCORI”) fees. PCORI fees must be filed with the IRS, using Form 720, and are due by July 31 of the calendar year following the plan year to which the fee applies. Originally, PCORI fees were scheduled to be payable only for plan years ending before October 1, 2019. As of the end of 2019, however, Congress has extended the PCORI fee requirement through plan years ending before October 1, 2029.
Repeal of the Cadillac Tax
When the ACA was initially enacted, it included an excise tax on high-cost employer-sponsored health coverage (i.e., the Cadillac Tax); the Cadillac Tax was initially scheduled to take effect in 2018. The implementation date of the Cadillac Tax was subsequently delayed until 2022, however, and at the end of 2019, Congress repealed the Cadillac Tax altogether.
New DOL Model COBRA Notices
As summarized in our June 2020 Advisory
, the DOL has issued revised model COBRA notices containing additional information regarding the availability of non-COBRA coverage options. For purposes of complying with COBRA notice requirements, employers should update their COBRA notices to reflect the changes made to the DOL’s model COBRA notices.
COVID-19 Relief for Health and Welfare Arrangements
Please see our below advisories for more information on some of the relief measures impacting employer sponsored health and welfare arrangements that Congress and federal regulatory agencies have issued in response to the coronavirus pandemic.
- CARES Act Impact on Employee Benefits and Compensation, April 3, 2020
- HHS Issues HIPAA Enforcement Relief and Guidance, April 10, 2020
- COVID-19: DOL Issues Administrative Changes for Employee Benefit Plans, May 6, 2020
- IRS Issues Cafeteria Plan Relief, Providing Employers Significant Discretion, May 20, 2020
- Time for Employers to Update COBRA Notices, June 8, 2020
- COVID-19 Relief Triggers ERISA Participant Notice Requirements, June 18, 2020