American Benefits Council
Benefits Byte


June 12, 2015

The Benefits Byte is the American Benefits Council’s regular e-mail and online newsletter for members only, providing timely reports on legislative, regulatory and judicial developments, along with updates on the Council’s activities in support of employer-sponsored benefit plans.

The Benefits Byte is published by the American Benefits Council, based on staff reports and edited by Jason Hammersla, Council director of communications. Contact information for Council staff related to specific topics can be found at the end of each story.

Click here to read past issues on the Benefits Byte Archive page.

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House Committee Announces Hearing on Fiduciary Rule

The U.S. House of Representatives Education and the Workforce Committee will discuss the recent fiduciary rule re-proposal in a June 17 hearing, the committee recently announced. U.S. Secretary of Labor Thomas Perez is expected to testify before the panel.

As we have previously reported, the DOL’s Employee Benefits Security Administration (EBSA) issued proposed regulations on April 14 that broadly update the definition of “investment advice” by extending fiduciary status to a wider array of advice relationships than the existing rules do. (See the April 14 Benefits Byte for a brief summary of the proposal.) This regulatory project is a continuation of a similar effort from 2010 that was ultimately withdrawn in response to scrutiny from outside groups, including the Council, as well as members of Congress.

Comments are due on the proposal on July 20. The Council is already undertaking a thorough review of the proposal itself, as well as the prohibited transaction exemptions and the economic analysis being used to support the issuance of new rules, and we welcome your input. We held a Benefits Briefing webinar to discuss the proposal on June 11; click here to request a recording.

EBSA also announced that a public hearing will be held the week of August 10, after which the comment period will be reopened for approximately 30 to 45 days.

For more information on DOL’s fiduciary definition project, or to provide input for the Council’s comment letter, contact Lynn Dudley, senior vice president, global retirement and compensation policy, or Jan Jacobson, senior counsel, retirement policy, at (202) 289-6700.

Legislation Introduced to Ease Employers’ PPACA Reporting Obligations

Lawmakers in the U.S. House of Representatives have introduced the bipartisan Commonsense Reporting and Verification Act (H.R. 2712), a measure to give employers more flexibility with respect to their reporting obligations under the Patient Protection and Affordable Care Act (PPACA).

The measure is sponsored by representatives Diane Black (R-TN) and Mike Thompson (D-CA) – both members of the House Ways and Means Committee – and is the latest in a growing number of bipartisan measures designed to make PPACA more workable for employers. The Council strongly supports efforts to reduce the reporting burden on employers under the health care law.

The bill specifically addresses Internal Revenue Code sections 6055 and 6056, as added by PPACA. As we have previously reported, Section 6056 requires every applicable large employer (generally, an employer that employed on average at least 50 full-time employees or equivalents) to file a return with the IRS that reports the terms and conditions of the health care coverage provided to the employer's full-time employees during the year. Employers that provide self-insured coverage are also subject to the reporting requirements of Section 6055, which requires every health insurance issuer, sponsor of a self-insured health plan, government agency that administers government-sponsored health insurance programs and other entities that provide minimum essential coverage to file annual returns reporting certain information for each individual for whom minimum essential coverage (MEC) is provided and to provide a copy of the return to the individual. (The Internal Revenue Service (IRS) recently revised its Questions and Answers on Reporting under Section 6056 to accompany its Questions and Answers on Reporting under Section 6055.)

Specifically, H.R. 2712 would:

  • Create a prospective reporting system under Code Section 6056: Under prospective reporting, an employer could certify whether it was offering MEC to its full-time and part-time employees, as well as its employees’ dependents and spouses. The employer would also certify whether the coverage was minimum value and met one of the affordability safe harbors relevant to Code Section 4980H. Finally, the certification would indicate the months that the coverage was available (during the year) and any waiting periods that apply. An employer that took advantage of prospective reporting would not have to do any additional reporting to the IRS under Code Section 6056, unless the employer was notified by an Exchange that the employee (or the spouse or dependent of the employee) had been deemed eligible for an advance premium tax credit or cost sharing subsidy.
  • Eliminate the requirement to collect dependent SSNs: H.R. 2712 provides that if the MEC provider did not collect or maintain information on the taxpayer identification numbers (TINs) of dependents of the primary insured/ employee prior to January 1, 2014, the issuer or employer could use the dependent’s name and date of birth instead of the name and TIN. This rule would be effective for any returns due more than 60 days after the date of enactment of H.R. 2712.
  • Expand employers’ ability to use electronic statements: H.R. 2712 provides that an in individual shall be deemed to have consented to receive a Section 6056 statement in electronic form if such individual has consented at any prior time to receive such statement in electronic form. It also provides that statements under Code Section 6055 may be provided electronically if the individual has previously consented to receive any private health information in electronic format.
  • Require the Comptroller General to perform two studies: One study would be performed on the effectiveness of the process for Marketplaces to notify employers that one of their full-time employees has been deemed eligible for an advance premium tax credit or cost-sharing subsidy (and for employers to appeal that determination), and another on the prospective reporting system created by H.R. 2712.
  • Creates eligibility process for subsidies: The bill would provide that a Marketplace can automatically reenroll an individual into a qualified health plan so long as the Marketplace re-determines the eligibility of the individual for an advanced premium tax credit or cost-sharing reduction.

Bipartisan Members of the Senate Finance Committee are working on a companion that is expected to be introduced before Congress’ Independence Day recess.

For more information on this legislation or PPACA reporting issues generally, contact Katy Spangler, senior vice president, health policy, or Kathryn Wilber, senior counsel, health policy, at (202) 289-6700.

House Committee Discusses Changes to PPACA, Health Care System

The U.S. House of Representatives Committee on Ways and Means discussed possible outcomes of the U.S. Supreme Court’s King v. Burwell decision and areas of the Patient Protection and Affordable Care Act (PPACA) that need changes in a June 10 hearing on PPACA’s implementation and the U.S. Department of Health and Human Services (HHS) Fiscal Year 2016 budget request.

The Supreme Court is soon expected to render its decision in King v. Burwell, the controversial case that challenges the legality of federal subsidies for individuals obtaining health coverage in federally facilitated insurance exchanges. A ruling for King to strike the legality of the subsidies would likely create pressure on the Obama Administration, Congress and states to address the decision in the form of regulatory or legislative “fixes,” particularly for individuals who rely on subsidies to purchase health coverage. The Council believes regardless of the outcome of the decision, an opportunity exists for a re-examination of PPACA.

In convening the hearing, committee Chairman Paul Ryan (R-WI) raised many of the issues often cited by opponents to PPACA, including increasing health insurance premiums and the issues some individuals faced when filing their taxes if they received a subsidy. Ryan also stated that the law could not be “fixed” with minor changes and tweaks but that the “answer is to repeal and replace this law with real, patient-centered reforms.”

HHS Secretary Sylvia Burwell testified before the committee. In her testimony, Burwell stated that the budget “makes critical investments in health care, science, innovation and human services.”

Committee members raised a number of concerns and areas of PPACA that need amending during the question-and-answer session.

Ryan asked Burwell whether President Obama would work with Congress on a solution to ensure the affordability of health insurance for Americans or whether he would “dictate” a solution if the Supreme Court strikes down the subsidies. Burwell stated that “if the court makes that decision [strikes the subsidies], we’re going to do everything we can, and we’re working to make sure we are ready to communicate, to work with states and do everything we can,” but noted that the “critical decisions” in that situation will reside with Congress, the states and their governors to determine if the subsidies are available.

Rep. Kevin Brady (R-TX) asked Burwell if the president would sign legislation other than just extending the federal subsidies to states operating under federal exchanges. Burwell responded that the administration has always been open to legislation that expands access, affordability and quality. Brady specifically mentioned the measure recently introduced by Senator Ron Johnson (R-WI), the Preserving Freedom and Choice in Health Care Act (S. 1016), which would allow for individuals who receive subsidies through the federal exchange to keep their subsidies through August 2017 and also repeal both the individual and employer mandates. Burwell answered that they consider that measure a repeal of PPACA and that President Obama has indicated that he will not sign repeal.

Rep. Charles Boustany (R-LA) expressed concern that employees cannot use funds from a stand-alone Health Reimbursement Account (HRA) to purchase individual health insurance on a tax-favored basis. Boustany also raised this issue in a February 3 hearing to U.S. Treasury Secretary Jacob Lew (see the February 6 Benefits Byte). Burwell agreed that the administration should do more to allow flexibility for small employers providing assistance to their employees and also noted that they would like to expand the tax credit for small businesses who provide health insurance to their employees from businesses with fewer than 25 full-time employees to businesses with fewer than 50 full-time employees.

In 2014, Boustany introduced the Small Business Healthcare Relief Act, which would prevent small businesses from being penalized for providing monetary assistance to their employees to purchase insurance on the individual market on a pre-tax basis (such as in an HRA). The Council shares Boustany’s concern and believes that the Obama Administration’s position is also problematic for large employers. The Council included a recommendation in our A 2020 Vision public policy strategic plan to permit employers to establish stand-alone HRAs, or similar accounts, that can be used to purchase individual coverage. 

Rep. Bill Pascrell asked how PPACA has impacted employer-sponsored health insurance take-up rates. Burwell noted that studies have shown very slight, “basically the same” rates and added that there has not been a significant decrease.

Rep. Jim Renacci (R-OH) noted that fixes to PPACA are needed in defining seasonal employees as well as with implementation issues with the Hospital Readmission Reduction program. Other issues raised by committee members include: implementation dates of provisions of the recent “doc fix” legislation, opioid addiction, electronic health records (EHRs) and allowing flexibility for physicians and end-of-life care.

For more information, contact Katy Spangler, senior vice president, health policy, or Diann Howland, vice president, legislative affairs, at (202) 289-6700.

Final Regulations on PPACA Summary of Benefits and Coverage Issued

On June 12, the U.S. departments of Treasury, Labor and Health and Human Services issued final regulations on the summary of benefits and coverage (SBC) and the uniform glossary for group health plans and health insurance coverage in the group and individual markets under the Patient Protection and Affordable Care Act (PPACA). A fact sheet is available as well.

The SBC is intended to provide consumers with consistent and comparable information regarding health plan benefits and coverage. The proposed regulations were issued in December 2014 and amended the final regulations released in February 2012 (see the February 9, 2012, Benefits Byte) that implement the disclosure requirements under section 2715 of the Public Health Service Act to help individuals better understand their health coverage (see the December 23, 2014, Benefits Byte). The Council submitted written comments on the proposed regulations on March 2 (see the March 4 Benefits Byte).

The Council is reviewing the final rule and will issue more information shortly. For more information, contact Kathryn Wilber, senior counsel, health policy, at (202) 289-6700.

The American Benefits Council is the national trade association for companies concerned about federal legislation and regulations affecting all aspects of the employee benefits system. The Council's members represent the entire spectrum of the private employee benefits community and either sponsor directly or administer retirement and health plans covering more than 100 million Americans.

Notice: the information contained herein is general in nature. It is not, and should not be construed as, accounting, consulting, legal or tax advice or opinion provided by the American Benefits Council or any of its employees. As required by the IRS, we inform you that any information contained herein was not intended or written to be used or referred to, and cannot be used or referred to (i) for the purpose of avoiding penalties under the Internal Revenue Code, or (ii) in promoting, marketing or recommending to another party any transaction or matter addressed herein (and any attachment).