IRS Extends Deadline for Certain ACA Filings for 2019 (Including 1095-C for Employees); Trump Administration Releases Transparency in Coverage Proposed Rule
By: Dorothy M. Cociu, RHU, REBC, GBA, RPA,
President, Advanced Benefit Consulting & Insurance Services, Inc.
Printed in The County of Orange Insurance News (The COIN), January-February, 2020
IRS Extends Deadlines for Certain ACA Reporting
On December 2, 2019, the IRS issued Notice 2019-63, which provides transition relief for 2019 ACA reporting for applicable large employers.
The transitional relief provides an extension for the due date for furnishing forms under Sections 6055 and 6056 for 2019 from January 31, 2020, to March 2, 2020. It also extends good-faith transition relief from penalties related to 2019 information reporting under Sections 6055 and 6056, and provides an additional penalty relief related to furnishing 2019 forms to individuals under Section 6055.
It’s important to note that the due date for filing forms with the IRS for 2019 is unchanged; February 28, 2020 for paper forms, or March 31, 2020 if filing electronically.
Notice 2019-63 provides an additional 31 days for furnishing the 2019 (individual) Form 1095-B and Forms 1095-C, extending this deadline from January 31, 2020 to March 2, 2020. The IRS will not grant additional extensions of time up to 30 days to furnish Forms 1095-B and 1095-C because this extended deadline applies automatically to all reporting entities. As a result, the IRS will not formally respond to any requests that have already been submitted for 30-day extensions of time for statements for 2019.
Despite the extension, the IRS is encouraging employers and other coverage providers to furnish 2019 statements to individuals as soon as they are able.
Notice 2019-63 also extends transition relief from penalties for providing incorrect or incomplete information to reporting entities that can show that they have made good-faith efforts to comply with Sections 6055 and 6056 reporting requirements for 2019; this includes furnishing forms to individuals as well as filing with the IRS. Basically, the relief applies to forms that have missing or inaccurate taxpayer ID numbers and dates of birth, as well as other information required on the return or statement. No relief is provided for reporting entities that do not make a good-faith effort to comply or fail to file an information return or furnish a statement by the due dates (as extended).
In determining good faith, the IRS takes into account whether a reporting entity made reasonable efforts to prepare for reporting the required information to the IRS and furnishing information to individuals. The IRS also takes into account the extent to which the reporting entity made reasonable efforts to prepare for this reporting requirement.
As I’m sure you’re aware, the individual mandate penalty has been reduced to zero beginning 20191. Because of this, the IRS is studying whether and how Section 6055 reporting requirements will change, if at all, in future reporting years. Because there is no penalty, the individual does not need the information on the Form 1095-B for his or her individual tax return. However, reporting entities must continue to provide the Form 1095-B to
individuals.
Notice 2019-63 provides relief from the penalty for failing to furnish a statement to individuals as required under Section 6055 in certain cases for 2019. The IRS will not impose a penalty under Section 6722 against reporting entities for failing to furnish a Form 1095-B to responsible individuals in cases where two conditions are met:
- The reporting entity prominently posts a notice on its website stating that responsible individuals may receive a copy of the 2019 Form 1095-B upon request, accompanied by an email address and a physical address to which a request may be sent, as well as a telephone number that responsible individuals can use to contact the reporting entity with any questions, and
- The reporting entity furnishes a 2019 Form 1095-B to any responsible individual upon request within 30 days of the date the request is received.
Special Considerations for Self-Funded Health Plans
Self-funded employers are generally required to use Form 1095-C, Part III to meet the reporting requirements, instead of Form 1095-B. However, according to the notice, because of the combined reporting under sections 6056 and 6055 on the Form 1095-C for full-time employees of ALE members enrolled in a self-funded plan, the 2019 section 6055 furnishing relief does not extend to the requirement to furnish Forms 1095-C to full-time employees. Accordingly, per the Notice, for full-time employees enrolled in self-funded health plans, penalties will continue to be assessed consistent with prior enforcement policies for any failure by ALE members to furnish Form 1095-C, including Part III, according to the instructions. However, the 2019 section 6055 furnishing relief does extend to penalty assessments in connection with the requirement to furnish the Form 1095-C to any employee enrolled in an ALE member’s self-funded health plan who is not a full-time employee for any month in 2019.
Because these situations vary and can be complicated, we always recommend that you and/or your employer clients seek the advice of legal and/or tax professionals to see how these extensions apply to them.
Trump Administration Releases Transparency in Coverage Proposed Rule (CMS-9915-P)
On November 15, 2019, the Transparency in Coverage Proposed Rule was released by the Departments of Health & Human Services, Department of Labor, and Department of the Treasury, in response to President Trump’s executive order on Improving Price and Quality Transparency.
Two rules were issued to take steps toward price transparency. The first is the Calendar Year 2020 Outpatient Prospective Payment System (OPPS) & Ambulatory Surgical Center (ASC) Price Transparency Requirements for Hospitals to Make Standard Charges Public (final rule). The second rule is the Transparency in Coverage Proposed Rule, that requires that pricing information be made publicly available.
As Marilyn Monahan (Monahan Law Office) stated in her January-February, 2020 Legal Brief in The COIN, these rules are highly controversial and there has already been a lawsuit filed to stop the final rule.
In general, seven main cost-sharing information disclosure requirements are outlined, which must be made available to participants through and online, self-service tool.
According to HHS Secretary Alex Azar, “President Trump has promised American patients ‘A+’ healthcare transparency, but right now our system probably deserves an ‘F’ on transparency. President Trump is going to change that, with what will be revolutionary changes for our healthcare system. Today’s transparency announcement may be a more significant change to American healthcare markets than any other single thing we’ve done, by shining light on the costs of our shadowy system and finally putting the American patient in control.”
According to HHS, the Trump Administration is taking action toward making sure that insured and uninsured Americans alike have the information necessary to get an accurate estimate of cost of the healthcare services they are seeking before they receive care.
In response to the Executive Order, HHS, DOL and Department of Treasury (collectively, the Departments) are issuing a proposed rule, “Transparency in Coverage” that would require most employer-based group health plans and health insurance issuers offering group and individual coverage to disclose price and cost-sharing information to plan participants, beneficiaries, and enrollees up fron. With this information, according to HHS, patients will have accurate estimates of any out-of-pocket costs they must pay to meet their plan’s deductible, co-pay, or co-insurance requirements. This will make previously unavailable price information accessible to patients and other stakeholders in a standardized way, allowing for easy comparisons.
The seven main disclosures are:
· Estimated cost-sharing liability
· Accumulated amounts of responsibility, including deductible or OOP limits
· Negotiated rate, in dollars, for an in-network provider for a requested covered item or service
· Out-of-Network allowed amount for a requested item or service
· Itemized list of covered items and services for which cost-sharing information is disclosed
· Notice of prerequisites to coverage
· Disclosure notice including various costs, balance bills, actual charges, and cost-sharing liability
If finalized, the proposed Transparency in Coverage rule would require health plans to:
· Give consumers real-time, personalized access to cost-sharing information, including an estimate of their cost-sharing liability for all covered healthcare items and services, through an online tool that most group health plans and health insurance issuers would be required to make available to all of their members, an in paper form, at the consumer’s request. This requirement would empower consumers, according to HHS, to compare costs between specific providers before receiving care.
· Disclose on a public website their negotiated rates for in-network providers and allowed amounts paid for out-of-network providers. This is intended to promote competition in pricing, as well as assist the consumer.
The rule (being finalized) will require hospitals to provide patients with clear, accessible information about their “standard charge” for the items and services they provide, including through the use of standardized data elements, making it easier to shop and compare across hospitals, as well as mitigate surprises. The final rule will require hospitals to make their standard charges public in two ways beginning in 2021:
· Comprehensive Machine-Readable File: Hospitals will be required to make public all hospital standard charges (including the gross charges, payer-specific negotiated charges, the amount the hospital is willing to accept in cash from a patient, and the minimum and maximum negotiated charges) for all items and services on the Internet in a single data file that can be read by other computer systems. The file must include additional information such as common billing or accounting codes used by the hospital and a description of the item or service to provide common elements for consumers to compare standard charges from hospital to hospital.
· Display of Shoppable Services in a Consumer-Friendly Manner: Hospitals will be required to make public payer-specific negotiated charges, the amount the hospital is willing to accept in cash from a patient for an item or service, and the minimum and maximum negotiated charges for 300 common shoppable services in a manner than is consumer-friendly and update the information at least annually.
· In order to ensure that hospitals comply with the requirements, the final rule provides CMS with new enforcement tools including monitoring, auditing, corrective action plans, and the ability to impose civil monetary penalties of $300 per day. In response to public comments, CMS is finalizing that the effective date of the final rule will be January 1, 2021 to ensure that hospitals have the time to be compliant with these policies.
According to Kaiser Health News (Julie Appleby, November 15, 2019), this rule is controversial and likely to face court challenges. Four major hospital organizations said they would challenge it in court shortly after the rule was proposed in July.
Insurers also pushed back. “The rules the administration released…will not help consumers better understand what health services will cost them and may not advance the broader goal of lowering health costs,” said Scott Serota, president and CEO of Blue Cross Blue Shield Association, in a statement. Requiring disclosure of negotiated rates, he said, could lead to price increases “as clinicians and medical facilities could see in the negotiated payments a roadmap to bidding up prices rather than lowering rates.” The rule, he added, could confuse consumers.
The author of the KHS article states “Although consumer advocates say price information can help patients shop for lower-cost services, they also note that few consumers do, even when provided such information.
KHN states that nonetheless, HHS Secretary Alex Azar said the administration is confident. “We may face litigation, but we feel we are on sound legal footing for what we are asking. We hope hospitals respect patients’ right to know the prices of services and we’d hate to see them take a page out of Big Pharma’s playbook and oppose transparency.”
According to the Self-Insurance Institute of America (SIIA), a self-insured plan must create its own on-line tool that is made available to participants to request the cost-sharing information” that is required. This could effectively cause substantial burdens for self-funded plans and their network/RBP or TPA partners. I will be working with our attorney on this as well as our TPAs to gather more information on this as more information becomes available.
Footnotes: 1) Note that California is somewhat mirroring the federal penalty for all residents beginning 2020; that will be a state mandate, not a federal mandate.
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Disclaimer:
The information contained should not be construed as legal or tax advice. You should seek advice from your attorney or tax preparer as situations vary.
