With the second U.S. presidential debate in St. Louis now over, we should all have a better feel for the issues that will dominate the next administration. It looks to be brinksmanship and not policy changes. If only the disruptive part of U.S. politics worked as well while lawmakers were in session.
In order to enact change, momentum has to be built to bring the right people together to implement those changes.
Sunday night’s discussion of the Affordable Care Act (ACA) was just a snapshot of the candidates’ opposing beliefs. Trump said, “Repeal and Replace.” Clinton said, “Fix the ACA.” While many employers would welcome a repeal, that is not likely to happen in the time frame needed. Any attempt to fix the ACA will result in a Veteran Administration type single payer system. The ACA cannot be fixed; it was designed to fail.
Regardless of which approach eventually prevails, a freight train is rolling down the tracks and it has nothing to do with the ACA. In order to enforce compliance with the ACA, the Department of Labor and the IRS have teamed up with Health and Human Services and the Centers for Medicare and Medicaid. The joint agency goal is to coordinate a nationwide request for documents employers are required to provide under ERISA and numerous other laws.
To clarify: The laws these agencies seek to enforce have nothing to do with the ACA. It just so happens that the required notifications are critical to determining when the fines imposed by the ACA apply.
I recently interviewed a new client who was confident he was eligible to receive transitional relief for offering health coverage to his employees. As it turns out, he did not qualify because he did not have the proper documents nor did he distribute them to the employees. The client is now facing a $200,000 fine for not offering coverage. Additionally, he has to pay income taxes on $200,000 because of his corporate structure. You might think it ends there, but he also failed to file Form 8928 notifying the IRS of a failure in the group health plan. (Yes, there is a form for that!) This will generate even more penalties for the business.
Fines for non-compliance can be quite large and have never really been enforced before, so why should employers be concerned now? It is probably best to review some of the recent actions taken by the Department of Labor and the insurance companies that write health insurance policies.
In June of this year, the Department of Labor issued new rules doubling many of the fines for non-compliance. Here is a sample of some administrative changes insurance companies have made just this year:
- Premera of Washington State recently sent out a letter telling clients that three of their drug card plans were not creditable coverage for Medicare.
- United Health Care has changed their application nationally to include the following:
- Yes Subject to ERISA? (Most private sector plans are ERISA plans)
- No If No, please indicate appropriate category:
- Church (Additional information needed)
- Federal Government
- Indian Tribe – Commercial Business
- Non-Federal Government (State, Local or Tribal Gov.)
- Foreign Government/Foreign Embassy
- Non-ERISA Other
- United Health Care also sent out a form notifying every employer that making a change to the health plan effective date was not the same as changing the Plan effective date.
- Anthem reminded employers to check the drug plan themselves to determine if it is creditable for Medicare.
Clearly the insurance companies know something is coming and they want no part of lawsuits from angry employers.
It seems apparent that the industry is preparing for the compliance freight train and is safely stepping off the tracks. Shouldn’t you at least be looking up to see if you are in the way? All of the pieces are in place and the process is being automated. No government bureaucrat is going to show up at your door, they will just send you a request for documents and then a bill. A big bill!
No matter who wins the election, you can bet that many of the bureaucrats will remain in place and they will spend their time trying to survive and justify their pay or impose the full measure of the ACA for non-compliance. If you have a group plan in place, follow the insurance company’s lead and step off the tracks by making sure your plan is in compliance. The cost is tiny compared to the fines and just consider the previous years that you have not been in compliance a tax break.
The Equipment Dealers Association is providing a resource for all its members to avoid fines and get their plan into compliance. Take advantage of the discounted ERISA Edge service offered by TASC.
For more information, visit www.erisaweb.com.
Bill Hill, President of Visor, Inc.