In This Issue
Draft Forms and Instructions for Employer ACA Reporting
IRS Increases ACA's Affordability Percentages
EEO-1 Filing Deadline
Cost-Sharing Limits for Medical Plans
First Class Mail May Be Insufficient for FMLA Notices
IRS Issues Draft Forms and Instructions for Employer ACA Reporting
In July, the Internal Revenue Service published draft forms that "large" employers will be required to file to show that their health coverage complies with the Affordable Care Act (ACA) shared responsibility mandate. Businesses with 100 or more full-time equivalent employees must begin complying with the ACA coverage requirements in 2015, and will have two years to phase in the requirement that they cover 95 percent of their workers. Those with 50 to 99 full-time equivalent employees will have until 2016 to begin complying. On August 28, the IRS re-released the draft forms that will be used by employers to report compliance with the ACA beginning in 2015, along with draft instructions for forms 1094-C and 1095-C. The IRS also released draft instructions for forms 1094-B and 1095-B, designed to verify compliance with the individual coverage mandate. Forms 1094-C and 1095-C will be used by employers with 50 or more full-time employees or full-time equivalents to determine whether they are liable for penalties under the employer shared responsibility requirements of the ACA. These forms will also be used to determine whether employees have received an affordable and adequate offer of coverage, thus making them ineligible for premium tax credits. Employers are required to provide each full-time employee with a form 1095-C and to file each of these and a transmittal form 1095-B with the IRS.
IRS Increases ACA's Affordability Percentages for 2015
On July 24, 2014, the IRS released Revenue Procedure 2014-37 which, among other things, addresses the indexing of the Affordable Care Act's (ACA) affordability percentages for 2015 under the employer "shared responsibility" coverage mandate. In general, for plan years beginning in 2015, a large employer's health coverage will be considered affordable under the rules if the employee's required contribution to the plan does not exceed 9.56 percent of the employee's household income for the year, up from 9.5 percent. Because an employer generally will not know an employee's household income, the IRS has created three safe harbors employers may use to determine affordability based on information that is available to them.
EEO-1 Filing Deadline is September 30
For covered employers, the Employer Information Report EEO-1 must be filed with the U.S. Equal Employment Opportunity Commission's EEO-1 Joint Reporting Committee and certified by September 30, 2014. The preferred method for completing the EEO-1 report is the web-based online filing system. Data is transferred over the Internet using encryption. Online filing requires organizations to log into their database with a Login ID and Password, contained in the annual Notification Letter. All organizations that filed the EEO-1 report for the 2013 reporting period should have received their 2014 EEO-1 notification letter by mail by July 31. Returning filers should be aware that for security reasons, passwords have been reset since the 2013 filing period. The notification letter contains the new password.
Reminder: Cost-Sharing Limits for Medical Plans to Change in 2015
Effective for plan years beginning on or after January 1, 2014, non-grandfathered health plans became subject to limits on cost-sharing for essential health benefits (EHB). As enacted, the Affordable Care Act (ACA) included an overall annual out-of-pocket maximum for all health plans and an annual deductible limit for small insured health plans. On April 1, 2014, the ACA's annual small plan deductible limit was repealed.
The out-of-pocket maximum, however, continues to apply to all non-grandfathered group health plans, both self- insured and insured. Effective for plan years beginning on or after January 1, 2015, a health plan's out-of-pocket maximum for EHB may not exceed $6,600 for self-only (individual) coverage and $13,200 for family coverage. Special transition relief for the out-of-pocket maximum was provided for plans that use more than one service provider to administer benefits. This transition relief only applies for the first plan year beginning on or after January 1, 2014. It does not apply for plan years beginning on or after January 1, 2015.
For 2015 plan years, health plans with more than one service provider may allocate the out-of-pocket maximum across multiple categories of benefits as long as the combined amount does not exceed the annual out-of-pocket maximum limit for the year. For example, a health plan's individual coverage may have an out-of-pocket maximum of $5,500 for medical coverage and $1,100 for prescription drug coverage, for a combined out-of-pocket maximum of $6,600.
Appeals Court Rules First Class Mail May Be Insufficient for FMLA Notices
The U.S. Court of Appeals for the Third Circuit, which includes Pennsylvania, has ruled that an employer may not rely on "the Mailbox Rule" to prove it provided an employee with notice of their rights under the Family and Medical Leave Act (FMLA). In Lupyan v. Corinthian Colleges Inc., the appeals court reversed an order granting summary judgment to Corinthian Colleges on an employee's FMLA interference claim because she denied ever receiving the FMLA notice in the mail.
Under the mailbox rule, if a letter "properly directed is proved to have been either put into the post-office or delivered to the postman, it is presumed . . . that it reached its destination at the regular time, and was received by the person to whom it was addressed." The FMLA requires employers to provide both general notices of employees' rights under the FMLA and employee-specific notices of rights and obligations when an employee takes FMLA leave. The ruling could require employers prove that they provided the required FMLA notice of rights to every employee by a traceable means rather than first-class mail.
In Lupyan, the employee requested a personal leave of absence and was instructed to check the FMLA box on her leave request form. She was mailed a letter the same day advising her that her leave was designated as FMLA leave and explaining her rights under the FMLA. The employee denied receiving the letter and was not permitted to return to work following the expiration of the leave due to the employer's contention that it could not accommodate her restrictions. The employee sued, claiming the employer's failure to give her notice interfered with her FMLA rights.
The Third Circuit determined that "the Mailbox Rule" was insufficient to overcome the employee's assertion that she never received the employer's letter. The district court's granting of summary judgment was vacated and the case was remanded to the district court for proceedings consistent with the Circuit Court's ruling. The ruling could have a significant impact on how employers communicate with employees in the future regarding their FMLA rights.
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