The Patient Protection and Affordable Care Act (PPACA), commonly referred to as Health Care Reform, was enacted in 2010 with the goal of making affordable health care available to all Americans. Both employers and individuals have certain responsibilities under PPACA.
I. Employer Responsibilities:
A. Health Plan Changes
Some of the health care benefit plan changes that the University has implemented in compliance with the PPACA are:
- Extend coverage for children to age 26 under the health, dental, drug and vision plans
- Eliminate the $2 million lifetime maximum benefit under the health plans
- Implement zero cost-sharing in-network for covered preventive and contraceptive services under the health plans and for designated preventive and contraceptive prescriptions and OTC medications/products and vaccines under the drug plan
- Adopt new internal claims and appeals procedures and an external review process for clinical claims denials under the health and prescription drug plans
- Reduce the annual maximum for Health Flex Spending Account contributions to $2500 (adjusted to $2550 effective 1/1/2015)
- Enhance coverage for clinical trials for life-threatening diseases
- Extend full-time health premiums to employees working an average of 30 hours or more per week.
- Adjust health plan out-of-pocket maximums to ensure combined prescription drug plan and health plan out-of-pocket maximums do not exceed PPACA-established maximums.
The University also has implemented the following informational requirements under PPACA:
- Provide a uniform explanation of coverage, a Summary of Benefits and Coverage (SBC), for all University health plans. The SBCs, which are updated annually, are posted on the Health Plan Comparisons page of this website.
- Report the value of health care benefits annually on employee W-2 forms
- Notify employees upon hire and annually about the Health Insurance Marketplace. The Notice is posted on the Regulatory Benefit Notices page of this website.
B. The Employer Mandate
Beginning in 2015, employers with 100 or more full-time employees may be subject to a penalty if they do not offer medical coverage:
If an employer does not offer such coverage, or the coverage is unaffordable or does not provide minimum value, full-time employees may qualify for a premium credit or subsidy for the purchase of health insurance through the Health Insurance Marketplace and the employer is subject to a penalty.
Health plan coverage offered by the University satisfies the minimum essential coverage, affordability, and minimum value requirements under the PPACA. Benefit-eligible employees who choose to purchase coverage through the Health Insurance Marketplace will not qualify for a premium credit or subsidy.
C. IRS Reporting Requirements
Starting with calendar year 2015, employers that provide minimum essential coverage during a calendar year are required to report to the IRS certain information about individuals receiving such coverage and to also provide a statement (IRS Form 1095-C) to those individuals. The IRS will use this information to validate compliance with the Employer Mandate as well as the Individual Mandate (discussed below). The University’s 1095-C forms for tax year 2015 will be issued by February 1, 2016.
The Form 1095-C must contain the name, address and Social Security Number (SSN) for each covered employee as well as the names and SSNs of all covered dependents (spouse, domestic partner, and children), and will include the months for which each individual was enrolled in coverage for at least one day. If a covered dependent does not have a SSN, the dependent’s date of birth will instead be reported on this form.
- To ensure a SSN is on file for each of your covered dependents, log into HRMS Employee Self-Service, select “Benefits” and then “Dependent/Beneficiary Data”. On the Dependent/Beneficiary Data page, view the “Dependent Personal Information” for each of your covered dependents by selecting their name. If you have previously provided SSNs for your dependent(s), only the last four digits of their SSN will be listed, and no further action is needed. If the SSN is missing, click the “edit” button at the bottom of the page, enter the SSN, and save your entry.
II. Individual Responsibilities:
A. The Individual Mandate
Under PPACA, individuals are required to either maintain health insurance coverage for themselves and their family members or pay an individual shared responsibility payment, i.e., a tax penalty, with their federal income tax return. For tax year 2015, the tax penalty that may apply to individuals who do not maintain health insurance coverage will be the greater of:
- $325 for each uninsured adult plus $162.50 for each uninsured child, up to a $975 maximum penalty per family, or
- 2% of household income over the filing threshold.
The above tax penalty amounts will increase significantly for tax year 2016 to the greater of the following:
- $695 for each uninsured adult plus $347.50 for each uninsured child, up to a $2,085 maximum penalty per family, or
- 2.5% of household income over the filing threshold.
These amounts will be increased annually by a cost of living adjustment.
B. IRS Reporting Requirements
When preparing your federal income tax return, you will be required to complete the Health Care: Individual Responsibility section, indicating whether you, your spouse and dependent children had minimum essential health coverage for the entire year. You will be required to provide proof of that qualifying coverage when filing your tax return with IRS. If you and your family members were covered by a University health plan for the entire year, you can provide the 1095-C form issued to you by the University as proof of that qualifying coverage. Please be sure to retain the Form 1095-C with your income tax records.
If you cannot indicate that you, your spouse and dependents had qualifying health coverage for the entire year and you don’t otherwise qualify for a coverage exemption, you will be required to enter the applicable individual shared responsibility payment amount that you will be subject to, per the federal income tax filing instructions.
For questions you may have about completing the Health Care Individual Responsibility section of your federal tax return, please consult your personal tax advisor or go to www.irs.gov.