The Fact of the Month
Here’s something to talk about when you are discussing plan design options with your clients.
The Affordable Care Act may have lowered the number of uninsured Americans. Still, the number of people in this country who have private health insurance coverage and are considered underinsured is rising. According to research from the Commonwealth Foundation, in 2018, 45% of Americans with private health coverage (including employer-sponsored coverage) qualified as underinsured. This number is way up from 16% in 2005. People are underinsured if:
– Their deductible is 5 percent or more of their household income; or
– Their annual out-of-pocket costs (excluding premiums) exceed 10 percent of income; or
– If their household income is under 200 percent of the federal poverty level, and their annual out-of-pocket costs (excluding premiums) exceed 5 percent of income.
For reference, 45% of the U.S. population in 2018 was roughly 147 million people. That’s equal to all of the people who live in our seven most populous states—California, Texas, New York, Florida, Illinois, Pennsylvania, and Ohio. It’s also equal to all of the people who live in the 40 least populous states! Source: https://www.commonwealthfund.org/publications/issue-briefs/2019/feb/health-insurance-coverage-eight-years-after-aca
The Big Three
Each month GPAHU identifies three top public policy or legal developments that could impact our members and their clients. Here are this month’s big three!
Pennsylvania State Exchange Board Is Considering Producer Commission Schedules and Other Issues
The board of directors of the new Pennsylvania state-based health insurance exchange is considering how they should require health insurers to handle the schedule of commissions for products that will be sold on the exchange next year. The proposal they are considering would require insurers to submit producer commission payment schedules for QHPs, and QDPs offered through the exchange to the Exchange Authority at least 45 days in advance of the start of the Open Enrollment Period. If there are any mid-year changes, they would have to give at least 30 days advance notice for transparency and informational purposes. Other issues before the board include the dates for next year’s open enrollment season and how market competition in the silver plan category of benefit would impact the value of premium tax credits.
Finally, the staff of the state exchange just announced they are initiating an Outreach & Education Workgroup. Brokers and other stakeholders are welcome to participate. The group will initially meet for monthly, one-hour web-based conference calls, and the current plan is to begin the series early in April. If you are interested in participating, send an email to Chachi Angelo, the Exchange’s Marketing Communications Manager at email@example.com.
Supreme Court Will Consider Individual Mandate Challenge Next Year
The Supreme Court of the United States recently announced that next year, they will consider whether or not the Affordable Care Act’s (ACA) individual mandate to maintain health insurance coverage is still constitutional now that the penalty for noncompliance is $0. Both parties in the case of Texas v. United States asked the Supreme Court to review issues in the case right away, rather than waiting for the case to work its way through the federal appeals court system again. The Court agreed to consolidate the two petitions and will hear one hour of oral arguments in the case when their 2020-2021 term starts next October. The arguments must focus on three key questions:
- If the plaintiffs in the case have legal standing to challenge the ACA.
- If the individual mandate is constitutional now that the associated tax penalty is $0.
- If the mandate is unconstitutional, should the whole law be invalidated too? Or, can the mandate and possibly other portions of the law be separated from the rest of the ACA?
While oral arguments in the case could happen before the presidential election, it usually takes about three months for the justices to rule after the arguments conclude. Often, in high profile cases, they wait even longer, releasing decisions near the end of their term in June. So, the waiting game on the status of the ACA will continue, in all likelihood, until some point in 2021.
IRS Announces That Employer Mandate Penalty Liability Never Expires!
The Internal Revenue Service (IRS) added another fun wrinkle to the employer reporting season when it recently announced that there is no statute of penalty limitations for employer mandate penalties. Typically, there is a three-year statute of limitations on federal tax penalties. However, that protection only applies if an employer must make and report tax penalty liability on a tax return. Since the ACA’s employer shared responsibility penalties aren’t reported on a tax return and are only triggered if an eligible employee obtains a premium tax credit through a health insurance exchange, the IRS concluded that they could levy these penalties at any time. Employers argued that the health coverage information they give annually to the IRS via Forms 1094-C and 1095-C should be enough to trigger the three-year penalty window, but unfortunately, the IRS disagreed.
GPAHU members should use this information to alert applicable large employer clients that their penalty liability has no time limit, so they should maintain records accordingly. Also, brokers and employers should keep in mind that this expanded penalty liability timeframe only applies to the employer-shared responsibility provisions codified under IRC 4980H. The IRS’s announcement does not cover the annual obligation that large employers and self-funded plans have to file Forms 1094-C and 1095-C, or any of the related penalties for failing to file, late filing, or filing errors.
Check This Out!
If you want to expand your health policy knowledge beyond this newsletter, here is a resource to check out!
If you like to listen to podcasts, check out The ShiftShapers Podcast. Hosted by former NAHU National President, David Saltzman, it is a weekly interview show with people dedicated to shaping and transforming the benefits industry.