Health Care Reform Update Archive || E-Newsletters || GBOPHB Website


May 2016 | Vol. I, Issue 3 | Center for Health
 

 

This periodic e-newsletter is provided to keep conference benefits officers and other United Methodist Church (UMC) employer representatives informed about the Affordable Care Act (ACA) and evolving health care landscape—and the impact on you as an employer/plan sponsor. Please share this Health Care Reform Update with church administrators and others in your annual conference or organization. Contact the General Board at healthcare_reformupdate@gbophb.org with article ideas or if you would like to share your organization‘s experience in a future issue.

Articles

REGULATORY SPOTLIGHT

Year-End Legislative Activity Impacts Church Plans

The Protecting Americans from Tax Hikes Act of 2015 (“PATH Act,” signed into law December 18, 2015) contains rules and clarifications that impact church health, welfare and retirement plans.

Health Plans—Cadillac Tax Delayed Until 2020

The PATH Act postponed the “Cadillac tax” until 2020. This 40% excise tax on high-cost employer-sponsored health plans was scheduled to begin in 2018. The Affordable Care Act (ACA) established this tax on employer-sponsored health plans that cost over $10,200 for single coverage and over $27,500 for family coverage (total cost for both employer and employee cost-shares). The legislation also makes the Cadillac tax deductible (for taxpaying employers) and establishes a study of how the tax may be adjusted to accommodate demographic differences in plan costs.

Church Plan Clarifications—Controlled Groups and Other Details

The PATH Act also addresses significant rules that impact church benefits plans beyond health plans.

  • Clarifies “controlled group” rules for determining when separate entities must be treated as a single employer;
  • Allows church retirement plans to pre-empt state withholding laws to implement automatic contribution arrangements—consistent with pre-emption protections available for ERISA plans;
  • Eases rules on participants’ benefits transfers from a church 401(a) plan or 403(b) annuity contract to another 403(b) annuity contract, and eases rules for mergers of such plans;
  • Modifies contribution and benefit limitations that apply to grandfathered 403(b) defined benefit (DB) plans; and
  • Eases rules regarding church plans investing in group trusts.

More details about the PATH Act’s impact on church plans are provided here.

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IRS SPOTLIGHT

Deadlines Approaching for IRS Reporting—May/June

Deadlines to file Section 6055 and Section 6056 forms (Forms 1094-B and 1094-C, plus attachments) with the Internal Revenue Service (IRS) are approaching quickly. Section 6055 requires providers of health coverage to report each person obtaining coverage under the policy or plan. Section 6056 verifies that applicable large employers [i.e., employers with at least 50 full-time and full-time equivalent employees (collectively “FTEEs”)] offer health insurance to eligible employees. Deadlines differ for paper filing vs. electronic filing. The participant reporting (1095-B and 1095-C) deadline was March 31, and the following months have allowed any corrections to be made before transmitting the data to the IRS. The IRS submission should match the detail from the participant forms.

  • May 31—paper forms
  • June 30—electronic forms

In February, the IRS allowed more lenient reporting deadlines during this first year of reporting requirements (2016 reporting for 2015 health coverage). Instructions on how to complete the forms are provided here: Section 6055 (1094-B) and Section 6056 (1094-C).

The Employer Shared Responsibility Toolkit can help you determine if your organization is an applicable large employer, including an Excel worksheet to calculate your organization’s total FTEES. Find these resources on the health care reform webpage.

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IRS SPOTLIGHT

Collect Data Now for Next Year’s Section 6056 Reporting

Accurate counts of full-time and full-time equivalent employees (collectively “FTEEs”) are crucial to determine whether an employer is considered an applicable large employer (ALE) under Affordable Care Act (ACA) guidelines. Applicable large employers—those with at least 50 FTEEs—are subject to Section 6056 reporting to verify their compliance with the Employer Shared Responsibility Rule (“employer mandate”) to offer affordable, minimum value health coverage for eligible employees. All applicable large employers—including those sponsoring HealthFlex1—must complete Section 6056 reporting by filing Form 1094-C and Form 1095-C. Section 6056 reporting does not apply to smaller employers.

If an employer is an ALE for a calendar year (based on its FTEE count for the preceding calendar year), it must make offers of coverage to each of its full-time employees or face potential penalties. A full-time employee is defined as one who works on average at least 30 hours per week.

Employee counts are used to populate IRS Form 1094-C and Form 1095-C. Both forms verify that 1) employer-provided health insurance was offered, and 2) (if the employer provided self-insured coverage) employees had health coverage for the defined months.

Annual conferences, local churches and other salary-paying units that establish systems for counting employees now and tracking coverage for those who are offered coverage will have an easier time completing these forms before next year’s Q1 deadlines, which are expected to be January 31 for the 1095-C and February 28 for the 1094-C.

Salary-paying units have several options for counting full-time employees who should receive offers of coverage:

  • Monthly method—Employer determines each employee’s status for a calendar month by counting individuals’ hours of service for the month. The monthly method can be helpful with clergy and other employees who generally work the same number of hours each week, but may be problematic for employees whose work schedule varies week to week.
  • Look-back method—Employer “looks back” to count each employee’s hours during one sample period (“measurement period”) and applies those counted hours to determine coverage eligibility during a subsequent period (“stability period”). The look-back method can be helpful with clergy and other employees who work variable-hour or seasonal schedules during the year.
  • Administrative period option—Employer using the look-back method may apply a period of time for calculations between the measurement period and stability period. The time for performing the calculations is called the administrative period.

These methods are explained in more detail here.

The Employer Shared Responsibility Toolkit provides more resources, including an Applicable Large Employer Worksheet (Excel calculator). Visit the health care reform webpage for helpful information.

1 For HealthFlex plan sponsors, the General Board will file the Section 6055 reporting (reports of health coverage provided by HealthFlex) for all enrolled participants, but will not provide the 6056 reporting required of applicable large employers.

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Disclaimer: This e-newsletter is provided by the General Board of Pension and Health Benefits as a general informational and educational service to its plan sponsors, the annual conferences, plan participants and friends across The United Methodist Church. It should not be construed as, and does not constitute, legal advice nor accounting, tax, or other professional advice or services on any specific matter; nor do these messages create an attorney-client relationship. Readers should consult with their counsel or other professional adviser before acting on any information contained in this newsletter. The General Board expressly disclaims all liability in respect to actions taken or not taken based on the contents of this newsletter.

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