HEC welcomed Terri O'Connell with Goodsill Anderson Quin & Stifel to its 2015 Health Care Briefing on November 19.  Ms. O'Connell's talk, "How to Avoid Penalties from ACA's Reporting Requirements and the Cadillac Tax," reviewed some foundational principles of the Affordable Care Act ("ACA") and provided insight into ACA's reporting requirements for individuals and employers under IRS Forms 1094B and 1095B, and Forms 1094C and 1095C.  For example, it is important for employers to remember that the definition of "employee" differs for ALE status determination and who is offered coverage from an ALE.

 

Ms. O'Connell also provided a few tips on ACA reporting requirements, noting that the determination of full-time employees for reporting purposes is not the same as counting full-time employees for ALE status.  For purposes of reporting, employers must determine employees who work 30+ hours/week in a month.  This can be done through tracking employee hours on a monthly basis or using a look-back period.  Ms. O'Connell noted that most Hawaii employers seem to be using the monthly method rather than look-back method, probably because it is simpler to use and Hawaii employers are more familiar with this kind of approach due to Prepaid Health compliance requirements.

 

In covering "Cadillac tax" issues, Ms. O'Connell explained that the Cadillac tax is an excise take that will apply to the monthly value of employer-sponsored health coverage that exceeds an applicable dollar limit.  Any monthly value amount that exceeds the applicable dollar limit will be subject to a 40% excise tax beginning after December 31, 2017.  While insurers are responsible for paying this tax, the cost will pass on to employers through premium increases.   For this reason, Ms. O'Connell recommended that employers consider reviewing how their plans are "packaged.  If any dental or vision insurance offering is packaged separate from the medical plan, the costs of these amounts may not be included for purposes of the determining whether the plan premium exceeds the applicable dollar limit thereby triggering the Cadillac tax.