This open enrollment season may prove to be the most challenging in years, thanks primarily to two converging forces: the Affordable Care Act (ACA) health care reform law and the fact that employees barely understand their health benefits anyway.
The postponement of the employer play-or-pay provisions until 2015 muddies the waters even more. But all other ACA provisions kick in with the 2014 plan year, including guaranteed availability of coverage, coverage for essential health benefits and a repeal of all pre-existing condition exclusion periods.
You can burnish your reputation in the company by having answers to employees’ questions.
What are employees’ options if the group plan doesn’t offer dependent coverage?
Again, thanks to the IRS’ postponement, you may keep all the same coverage options for the 2014 plan year, including not offering dependent coverage. Hitch: The individual play-or-pay provisions haven’t been postponed. So employees must secure affordable coverage for their dependents or make an individual responsibility payment with their 2014 tax returns.
Employees who have self-only group coverage can ditch their group coverage and attempt to get subsidized coverage for their dependents through an exchange, but not for themselves, since employees who have access to affordable group coverage that offers minimum value aren’t eligible for premium tax credits.
Is it better to stick with group coverage or sign up for coverage through an exchange?
This is a critical question for part-time employees who participate in your group plan. They may, in fact, do better by buying individual policies through an exchange, especially if they qualify for an advance premium tax credit. But it’s not up to you to do the math for them.
Complicating matters is the fact that the first exchange open enrollment period is six months long, not the usual three months, which gives employees more time to shop and compare. Direct employees to the IRS’ website for a new set of FAQs on the premium tax credit so they can explore their options.
Won’t the IRS have access to employees’ health information if they get insurance through the exchange?
No. Exchanges determine whether applicants qualify for advance premium tax credits, and the IRS is allowed to disclose tax return information to the exchanges for that purpose. This data will be sent over a secured, encrypted channel and won’t be stored on a government server.
The IRS also calculates the amount of advance tax credits. Since advance credits must be reconciled on taxpayers’ 1040s, exchanges will provide information on the cost of coverage and the amount of advance credits taxpayers received to the IRS.
Is there anything employees can do to avoid an individual shared responsibility payment?
If your health plan doesn’t run on a calendar year—and many don’t—the IRS is providing transition relief from the individual responsibility payment for employees who didn’t sign up for coverage for the 2013-2014 plan year. Under Notice 2013-42 (IRB 2013-29), employees are off the hook for the payment for all the months in 2014, which are included in the 2013 plan year, until the 2014 plan year begins.
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