Monday, December 22, 2014

PPACA Checklist

As 2014 comes to an end and 2015 begins the “play or pay” period begins for employers.  Here is a brief checklist of what you need to get started.  Of course, the complexity of the PPACA is astonishing and the list provided should only be used to gather documents before consulting with Ratliff Law Firm.  First, the employer needs to make a list of employees and their status.  Employers must remember that under the PPACA full-time is considered thirty (30) hours per week and not the traditional forty (40) hours per week.  The second step the employer should take is determining the IRS penalty if the employees are not offered coverage.  Third, in most situations, the required reporting of data is not due until 2016.  With that said, employers need to make sure they are capable of providing such information to the IRS in 2016.  Employers would not introduce a product, skillset, etc., without prior preparation so why would they report to the IRS without proper legal planning?  Fourth, employers must distribute 1512 Notices to all employees.  The 1512 Notice allows employees to know whether or not they will be receiving coverage from their employer.  Last, a combination of the other steps will adequately prepare employers for a potential IRS assessment.  This is not intended to be legal advice and does not form an attorney-client relationship with any reader.

Friday, December 19, 2014

Will or Trust…The (Past) Million Dollar Question

Several decades ago only the rich and powerful used trusts to help with tax liability.  While this is still done today, trusts are a great tool for everyone not matter how large or small their estate.  A Last Will and Testament does not directly allow for the passing of items such as retirement accounts (IRA, 401K, etc.) and life insurance policies; those items pass outside of probate.  However, with a Revocable Living Trust you can direct that your retirement accounts, life insurance policies, and any other item you legally own pass into your trust.  Other advantages include but are not limited to: privacy of your estate, cost efficiency for your family, and the likely avoidance of probate court.  A trust document does not become public record upon your death, but a Last Will and Testament does once it is filed with the Clerk and Master.  Don’t leave your family wasting time and money in Probate Court.  Trust us today.  This is not intended to be legal advice and does not form an attorney-client relationship with any reader. 

Tuesday, December 16, 2014

Haslam announces Insure Tennessee Plan

Governor Haslam announced yesterday his Insure Tennessee plan, a two year pilot program to provide health care coverage to Tennesseans who currently do not have access to health insurance or have limited options. This plan will need to be approved by the state legislature under HB937, with a special session expected as soon as January 2015. Insure Tennessee would offer two main options of coverage for individuals below 138 percent of poverty ($16,100 for an individual and $27,300 for a family of three). Tennesseans 21 to 64 years old will be offered a choice of the Health Incentives Plan or the Volunteer Plan.

The Volunteer Plan provides a health insurance voucher to participants that would be used to participate in their employer’s health insurance plan, valued at slightly less than the average TennCare per-enrollee cost. The administration expects half of the newly eligible would qualify as it is estimated that half of this population is employed but simply cannot afford the employer’s group plan.

Participants in the Healthy Incentives Plan may choose to receive coverage through a redesigned component of the TennCare program, which would introduce Health Incentives for Tennesseans (HIT) accounts, modeled after Health Reimbursement Accounts (HRAs), which can be used to pay for a portion of required member cost-sharing. The thinking here is that having participants contribute towards their health care costs through premiums and co-pays will encourage more efficient use of the coverage. HIT accounts attempt to strike a balance between off-setting costs for hospitals associated with indigent care by expanding coverage, on the one hand, and curbing spending on the participant side through cost-sharing measure (premiums and co-pays) on the other. Additionally, the HIT counts will build value in correlation with preventive services received. While the details remain unclear, essentially a participant would increase the value of her HIT for every preventive service, such as a screening, thus off-setting cost to that participant.

The Haslam administration has received approval from HHS for this program. It would be the first of its kind among the states. The unique combination of cost-sharing and incentives for preventive care is certainly a creative solution to a difficult problem. It will be exciting to watch the legislature debate this unique plan in 2015. 

Monday, December 15, 2014

PPACA for 2014 and what to expect for 2015

It is a busy time indeed for health insurance professionals and employee benefits attorneys!  I bring to you the following as a summary regarding PPACA for 2014 and what to expect for 2015.  I believe the article linked below is good in its entirety, however, I wanted to bring the following especially to your attention.

First, consider the following by Jessica Waltman, senior vice president of government affairs at the National Association of Health Underwriters in Washington, D.C.:

“…You have some employers who are compliant and other employers working on becoming compliant. They have to document. It's not just ‘I don't have to do it this year’; it's ‘I have to fill out and document it.’ A lot of employers were already offering coverage, but the new systems in place are a compliance burden that may be as much work as offering coverage in the first place.” [Emphasis Added]

The “documentation” Ms. Waltman speaks about is one of best practices rather than, for example, a single IRS form.  I compare the documentation to a level above what you would retain for your income tax records (after all, this is a tax, yet on the other hand it is also administered by several other bureaucracies, including the Department of Labor).  Therefore, the chance for an audit is at least two-fold.  Please keep in mind too that one should not put their broker in the position of attorney, and vice-versa.  That is, certain of the documentation must be prepared by an attorney, and certain provided by the broker.  I say this to protect the broker from giving you legal and tax advice, because their Errors and Omissions insurance normally won’t cover that, you won’t have compliant documents, and both parties lose.  Finally, I have reviewed several different software programs to track ACA requirements, where chain of custody is of utmost importance, therefore if you are interested in learning about this please contact us.  We can make a recommendation.

Second, the following is also instructive:

“What's happening is PPACA is just loaded with fear-inducing issues. So employers are freaking out,” Davis says. “Plus the law has changed 30–40 times so far, so everyone is asking if they’re in compliance. In health care, we call it the worry well. It creates stress, so brokers use that and deluge people with information. Within 24 hours of a change, we get the information. We keep up on it, but clients continue to freak out because they’re scared of missing something. The IRS went out and hired a bunch of new auditors last year and started auditing health plans. And those penalties can be huge. People are going to continue to peddle fear and offer hope,” Aaron Davis, president of Next Logical Benefit Strategies in Westminster, Maryland.

I was speaking to a well-regarded ERISA litigator friend the other day, and we both agreed that health and welfare plans in the past were never audited.  As a matter of fact, the only plan of that type he had ever seen audited was a Section 125 plan and that was because he felt the government was being “aggressive.”  Now, however, we both agreed the government will begin auditing healthcare plans the same as pension plans, which is a very active area of litigation.  Remember, if you offer any healthcare plan, you must have the documentation discussed above available to employees on a timely basis.  That is, if you have a group of 10 employees, the documentation requirements are substantially similar to if you have 1000 employees. 

Click HERE to see the entire article.”

Wednesday, December 10, 2014

The Supreme Court will hear King v. Burwell

The Supreme Court will hear King v. Burwell. At stake in this case is whether federally facilitated exchanges can grant subsidies to help individuals afford premiums. If the Supreme Court denies the federal exchanges the ability to grant subsidies, it would be a major blow to the PPACA, effectively eliminating certain penalties under the employment mandate. The decision is expected to come down summer of 2015. While this is a potentially significant case, employers should continue compliance efforts in the meantime as penalties become effective January 1, 2015. For more information visit:

Friday, December 5, 2014

Obama’s “pay or play” mandate

While the Affordable Care Act (aka Obamacare) approval has reached an all-time low it is important to realize that, for now, it is the law of the land.  While individuals do not face an extreme IRS penalty in 2014 the same cannot be said for 2015.  Individual penalties for 2015 are the higher of the following: (1) two-percent of your household income or (2) $325 per person ($162.50 per child under 18).  In comparison, the individual penalties for 2014 are the higher of: (1) one-percent of your household income or (2) $95 per person ($47.50 per child under 18). 

Obama’s “pay or play” mandate begins in January 2015 for applicable large employers.  An applicable large employer is defined as fifty (50) or more full-time employees or fifty (50) or more full-time employees when including full-time equivalents.  Penalties from the IRS against employers are severe in 2015.  If employers do not have proper procedures in place the penalties can be crippling.  When it comes to something as complex as the Affordable Care Act you cannot afford the risk of extreme IRS penalties.  Seeking legal advice for the Affordable Care Act should be on your “must do” list before 2014 comes to a close.  This is not intended to be legal advice and does not form an attorney-client relationship with any reader.