September 15, 2015
- HHS Confirms Maximum Out-of-Pocket Limits for Essential Health Benefits Under ACA
- New IRS Guidance Allows Plans to Waive Electronic Filing of Form 8955-SSA, Form 5500-EZ
HHS Confirms Maximum Out-of-Pocket Limits for Essential Health Benefits Under ACA
In a September 16 letter to members of the National Coalition on Benefits (NCB), of which the Council is a member, the U.S. Department of Health and Human Services (HHS) Centers for Medicare and Medicaid Services (CMS) reaffirmed a controversial policy stance with regard to embedded maximum out-of-pocket (MOOP) limits under the Affordable Care Act (ACA).
As set forth in the 2016 Notice of Benefit and Payment Parameters, finalized on February 27, the 2016 annual limitation on cost sharing under the ACA for self-only coverage is $6,850. For non-self-only coverage, the MOOP limit will be $13,700. The preamble to the 2016 notice stated that “the annual limitation on cost sharing for self-only coverage applies to all individuals regardless of whether the individual is covered by a self-only plan or is covered by a plan that is other than self-only.” The departments of Labor, Treasury and Health and Human Services subsequently issued question-and-answer guidance and Frequently Asked Questions (FAQs) about Affordable Care Act Implementation (Part XXVII), indicating that the new MOOP rule applies to all non-grandfathered plans for plan or policy years in or after 2016.
In June 17 written comments to the U.S. Departments of Labor, Treasury and Health and Human Services, the Council expressed serious concerns about this approach, arguing that the departments’ interpretation of MOOP limits is inconsistent with the plain language of the statute and congressional intent, and that the process used to impose the new requirement lacked prior and clear notice of the departments’ intent to apply this MOOP interpretation to large group insured and self-funded plans.
The new HHS letter, addressed to the NCB on September 15, appears to reaffirm the agency’s approach, “[w]e believe that applying the individual $6,850 maximum annual limitation on cost sharing to individuals covered by a plan that is other than self-only helps remedy the difficulty a consumer could face in paying up to $13,700 out-of-pocket for certain covered medical care under the plan because he or she purchased family coverage instead of self-only coverage.” The letter also states “this clarification applies to all non-grandfathered small group and large health group plans, including self-insured plans, for plan or policy years beginning on or after January 1, 2016.”
HHS’ position continues to be troubling, particularly since most large plan sponsors have already finalized their 2016 plan designs. Additionally, as noted in the Council’s written comments to the three agencies, applying the embedded MOOP to large group insured and self-funded plans is especially problematic given the looming threat of the 40 percent tax on health benefits, which is effective in 2018. Employers are currently making changes to their plans to avoid triggering the 40 percent tax. The embedded MOOP interpretation will make avoiding the tax even more difficult for large group and self-funded plans.
New IRS Guidance Allows Plans to Waive Electronic Filing of Form 8955-SSA, Form 5500-EZ
For plan sponsors who cannot file forms 8955-SSA or Form 5500-EZ electronically because it would create an economic hardship, the new Internal Revenue Service (IRS) Revenue Procedure 2015-47 establishes a process for obtaining a waiver from electronic filing.
Form 5500 is required to be filed under both ERISA and the Internal Revenue Code, while form 8955-SSA (identifying separated participants with deferred vested benefits) is required just by the Code.
Pursuant to final IRS regulations issued in September 2014, employee retirement plan administrators are required to submit Form 5500 Series annual reports and other plan-related documents using electronic filing methods or other specified magnetic media. The final regulations apply only to plan administrators required to file at least 250 information returns during the calendar year ending with or within the plan year (including information returns like Form W-2 and Form 1099), meaning most large employers are covered by the rule.
Revenue procedure 2015-47, which spells out the procedures for obtaining a waiver, becomes effective September 28, 2015. Because the U.S. Department of Labor already requires electronic filing of Form 5500 and Form 5500-SF under separate regulations, the waiver procedures apply only to Form 8955-SSA and Form 5500-EZ filings.
For more information, contact Jan Jacobson, senior counsel, retirement policy, at (202) 289-6700.