2017 has been a very interesting year in regards to politics and economics. Early in the year, Donald Trump was sworn in as the 45th president of the United States. That in and of itself has provided enough material to keep the pundits well stocked for their various TV and radio broadcasts.
Front and center is the Affordable Care Act. President Trump promised to repeal and replace the legislation that was passed in 2009/2010 on a strictly partisan basis. The Senate bill sailed through the House with no conference committee, no technical amendments and has resulted in many lawsuits by individuals, businesses, states, and Congress.
The idea was to provide access to affordable care to those traditionally unserved. However, access has been uneven across the states with many carriers scaling back or exiting entirely from the individual market in many states. There are currently fewer carriers in the majority of states than were in place when Obamacare was rolled out. Aetna announced it was pulling out entirely from 11 states.
Many markets are finding that the individual plans offered are anything but affordable. Premiums for 2017-2018 in the individual market increased by 239% in Seattle, 71% in Los Angeles and 70% in Boise, Idaho. These premium increases are just not sustainable and going forward the outlook is uncertain. On top of that, Cost-Reduction Payments (CSRs) that are designed as payments to carriers for providing low-cost health care and to subsidize Congressional coverage were stopped by the administration. This may very well lead to even less access and higher cost.
There have been many attempts this year to repeal, adjust and/or amend the ACA. None have been successful. The tax reform legislation that is moving through Congress may include a repeal of the individual mandate as required by the ACA. If this is eventually approved and signed into law it would further complicate and threaten the stability of the ACA and the individual marketplace. How this would potentially impact employers remains to be seen.
So, what should we expect for 2018?
The IRS has stated that it will no longer accept “silent” tax returns, those that do not indicate whether the taxpayer had coverage, had an exemption or will make a shared responsibility payment. Last year, returns were accepted and processed even when the taxpayer was silent on coverage. Taxpayers will need to check the box on line 61 of Form 1040 indicating whether they were enrolled in health insurance for the year or attach an exemption form, or make a shared responsibility payment if they were not.
The IRS has also said that in 2018 it will be providing additional guidance on the following:
- Guidance on certain transactions involving welfare benefit funds
- Guidance on Employer Shared Responsibility (sec 4980H)
- Guidance on the Cadillac Tax (sec 4980I)
- Guidance on qualified small employer health reimbursement arrangements (QSEHRAs) (sec 9831(d))
Applicable Large Employers (ALEs) may in 2018 charge up to 9.56% of household income or one of the “safe harbor” provisions for employee-only coverage to be considered affordable. This is slightly lower than the 9.69% threshold applied for 2017.
The annual limits for Health Savings Accounts contributions, minimum annual deductible and the Maximum Out-of-Pocket amount will be adjusted in 2018:
- Annual HSA Contribution Limit (single/family) – increases to $3,450/$6,900
- Minimum Annual HDHP Deductible (single/family) – increases to $1,350/$2,700
- Maximum Out-of-Pocket for SDSP (single/family) – increases to $6,650/$13,300
The Maximum Out-of-Pocket under the ACA increases to $7,350/$14,700. This applies to all in-network Essential Health Benefits (EHBs).
I wrote an article a few weeks ago regarding the penalty letters (Letter 226J) that were being sent to employers indicating a proposed penalty due to a full-time employee receiving a subsidy through federal or state Marketplace. The letter will contain a list of FT employees who received subsidize coverage, instructions to take if the ALE disagrees and a description of the actions the IRS will take if the ALE does not respond.
There will be new claims procedures for Disability claims filed on or after 1/1/2018 (effective date was delayed until 4/1/2018). These are procedural protections that were added by the ACA. The new measures are aimed at ensuring independence and impartiality of the decision maker.
The EEOC will be issuing proposed rules on Wellness Incentives for 2018. Currently, an employer may set a 30% incentive on the total cost of self-only coverage. A federal court in DC questioned whether the 30% limit would ensure the program remained “voluntary”. The current rules will remain in place until the EEOC determines how to proceed. The proposed rules will be introduced by August 2018 and a final rule is expected by October 2019.
Stacy Barrow is an expert on ERISA law and recently held a webinar (2017 End of Year Update) for Benefit Advisors Network. If you are interested in viewing this informative webinar and receiving a copy of the presentation, please contact Dan Bilek at CPI-HR, by clicking here.