Ahhh, the ever-exciting world of the Affordable Care Act *insert sarcasm*.
By now, you’re continuing to collect and track the data necessary to complete the 1094C/1095C (if you’re self-insured, it’s the "B" versions) forms and submit them to the IRS early next year. Here’s a handy-handy resource from the IRS - ACA Information Center for Applicable Large Employers (ALEs) – and yes, it really is handy!
If you haven’t been doing this yet, I really wouldn’t want to be anywhere near you over the next two months. If you don’t file? The penalty is $250 per statement. If the employer fails to file/issue both an information return to the IRS and a statement to each employee, the penalty is doubled to $500 per statement (with a cap of $6 million). There is still a one year "transition rule" which provides that penalties will not be assessed for the first year of reporting if the employer or insurer can establish that it made a good faith effort to comply, but only if incorrect or incomplete information was furnished. Therefore, it seems that an employer who does not file or issue at all could not establish a good faith effort. Doing the math, if you’re a 300 employee company, you could be fined up to $150,000. Ouch.
A bit of good news is that the auto-enrollment provision of the ACA (which had not been implemented) has now been repealed.
Congress, with cooperation from the White House, during the recent budget deal, repealed the ACA's auto-enrollment requirement for large employers, a provision which mandated that employers with more than 200 employees automatically enroll new and currently employed full-time employees in health insurance. This would have been a major administrative burden – in terms of both effort and cost – had it been retained and implemented.
The ‘Cadillac tax’
Due to begin January 1, 2018. Employer sponsored health plans — whether self-insured or not — will be subject to a 40% excise tax on the "value" (this means the premium) of any healthcare coverage that exceeds $10,200 for single coverage or $27,000 for family coverage. Those figures will be adjusted for inflation. But as you might know, the speed at which healthcare costs are increasing in this country far exceeds the rate of inflation. As a result, it’s expected to only be a few short years before even average healthcare plans are slapped with this so-called "Cadillac tax".
The Senate is scheduled to take up a reconciliation bill passed by the House which would repeal this tax, the employer mandate, and the medical device tax. However, the President is expected to veto the bill. Repealing the Cadillac tax would most likely have a much greater chance of happening if it was presented by itself. President Obama is not going to entertain anything along the lines of repealing a major provision of the law like the employer mandate. What will happen if a Republican wins the White House is a discussion for another day.
This is another provision of the law that has not been implemented or rules even written. It was intended to prohibit offering generous healthcare coverage to either current or former executives of companies that isn’t also offered to the bulk of a company’s employees (under the same terms/costs). Again, as with the auto-enrollment provision, DOL never wrote implementation rules. Federal agencies have informally suggested these nondiscrimination rules aren’t really a top priority, so they still haven’t given any clues as to when the rules may be issued. Therefore, it appears they’re not imminent.
On a completely different subject……
The Department of Labor has been really quiet about what’s happening with the proposed changes to the Fair Labor Standards Act (FLSA). But, last week, at the American Bar Association’s Labor and Employment Law conference in Philadelphia, the Solicitor of Labor M. Patricia Smith offered some info according to a report by The Wall Street Journal.
During a panel discussion, Smith said that the finalized changes to the FLSA’s overtime eligibility rules likely won’t be issued until late 2016. Most likely, this will mean they probably won’t take effect until sometime in 2017.
So, while we might have more time to prepare for the changes, we still don’t know exactly what those changes will finally be.
The public comment period for the proposed changes garnered about 270,000 comments! Smith cited the amount of comments it received and the complexity of the law as the two main reasons the agency is looking at a later date for releasing the final rules.
In addition to raising the minimum salary threshold from $23,600 to possibly $50,440, the DOL is looking at making changes to the duties test. While it hasn’t suggested any changes, it did specifically ask for comments on whether the tests should be changed, and what those changes should be. (If they’re asking, you can bet it’s coming at some point.) You can see the current criteria here.
Initially the DOL had set a tentative deadline of November 2014 for issuing the proposed rules. Those proposed rules didn’t come out until more than six months after that deadline had passed. It was then expected that the finalized rules would be issued sometime in early 2016. Now, that’s not going to happen. These delays will take the rulemaking process right up to the presidential election. The question now being asked is would the Obama administration issue a highly controversial set of finalized rules just before the election? Business groups, employers and even a former DOL administrator (who oversaw the last rule changes) have openly opposed the proposed changes. I think it’s a gamble either way. If issued before the election, it may give the GOP more ammunition to use in their campaigns. On the other hand, if viewed favorably by the voting public, issuing them before the election could bolster the Democrat’s election efforts. Either way, if a Republican wins the White House, there’s a good chance the rules would be repealed.
And you thought HR was easy……