Government Oversight on Health Plans
Red Alert: This is a long one – and important!
One of my long-stated positions on employer health plan compliance is that the ACA represents a major shift in government oversight of health plans. This may seem like an obvious statement – with the employer mandate and its associated reporting, the government already is getting more information about employee health plans than ever before. Or so it seems – but when you really dive into the information recorded on the 1095-C forms, you see it only describes, in broad terms, whether an employee was eligible, and whether the coverage offered to the employee met a certain standard. Sure, lots of info there, but it only paints a partial picture of what’s going on with the plan. That begs the question: what else could the government ask for?
That question was largely answered on July 12. The Department of Labor published over 700 pages of new regulations essentially revamping the entire Form 5500 reporting system. If you sponsor a 401(k) or other retirement program, you probably file 5500s for those each year, but most employers have typically enjoyed an exemption from having to file 5500s for their health plans. Starting in 2019, that will come to an end.
Currently, group health plans with fewer than 100 participants at the beginning of the plan year don’t file a Form 5500, but the new Form 5500 Schedule J will have to be filed by almost all groups (there are a very few minor exceptions not likely to apply to anyone in this audience). If you’re a small group – less than 100 FTEs – and fully-insured, then your Schedule J reporting will be minimized. For groups with 100 or more FTEs (or smaller but self-funded) here are some of the items you’ll be reporting:
- Benefits and plan design characteristics
- What types of plans were offered
- Who were they offered to
- How were they offered
- How much did employees pay for them
- Plan funding details
- Stop loss information
- Whether the plans were grandfathered under the ACA
- Whether the employer received any rebates, such as MLR rebates and what was done with that money
- Service provider information
- Claims processing and payment details
- Number of claims filed, paid, appealed and denied in the year
- Dollar amounts, in addition to the actual counts, also likely to be reported
- Wellness plan design information
- "Other compliance information”
- Not yet defined
So what does this all mean? Quite simply, the government is admitting they can’t enforce the current rules and regulations without significantly more detail on how employer plans really operate. The fix is to get the information (not reduce the number of regulations, sadly…). This information will have to be reported on plan years beginning on or after 1/1/19, and will require employers to pay close attention to all aspects of their plan. That annual FTE calculation you thought was only relevant for 2015? Now it’s an annual task that will define your 5500 reporting requirements. Use that MLR money for a pizza party because it was easier than rebating current participants? Might want to look into that practice going forward.
Obviously, a myriad of details will need to be worked out before this goes live, so stay alert for future updates as more information becomes available.
Lastly, the question now is: What’s left? We’re still waiting for the fully-insured non-discrimination regulations. From what we’ve heard, most employers will be able to comply with these relatively easily via a safe harbor, but we haven’t seen anything substantial on these rules yet. They could come at any time, especially now that the Form 5500 reporting mechanism will make the test results more verifiable. We will, of course, alert all Assurance clients when they’re published, but in the meantime, now is the time to make sure your plan documentation and operations are up to date, and to identify any gaps that may exist. As always, we’re available to help!
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