The (ACA) Year in Review

IRS Codes for Dummies

If you understood the post from yesterday congratulations! You are officially certified now as OCD - Obamacare Compliance Designation. If not, never fear, your favorite bloggers are here. For those with a more visual approach be sure to check out the bottom.

For individuals who purchase insurance through the Marketplaces you might use/receive the following regulations and forms:

Regulation 5000A - The rule that everyone must have minimum essential health care coverage. This also provides a listing of types of coverage that qualify under the ACA.

Section 1401 (which creates Section 36B of the Internal Revenue Code) - This authorizes tax credits for the purchase of qualifying health insurance in an exchange “established by the State under Section 1311″ of the Act. It was a vital part of the King vs. Burwell case. In final regulations under Code 36B, the Treasury Department and the IRS read the rules broadly, such that subsidized coverage are available irrespective of whether an exchange is state-based or Federally-facilitated.

1095-A - This is called the Marketplace Statement. It is provided by the Marketplace to confirm an individual has insurance that meets minimum coverage and allows that person to receive a premium tax credit. It shows what the 2nd lowest cost Silver Plan is for the state the person resides in along with the amount an individual received in advanced premium tax credits.

Form 8962 - The new tax form you complete that will provide a way to figure your tax credit and then reconciles with your advanced premium tax credit. You must submit this form to the IRS with your taxes if you qualify and receive a subsidy through the purchase of individual insurance through a marketplace.

Form 8965 - You must complete this form if you are claiming an exemption to the individual mandate. Important to note, you must have received an exemption from the Marketplace beforehand. You will provide the exemption certificate number you received on this tax form.

For insurers, Applicable Large Employers, and individuals who receive insurance through their employer you will use the following regulations and forms:

IRS Code 6055 - Provides that every fully insured and self funded plan must offer minimum essential coverage and will report this information by filing a return to the IRS and also by furnishing a statement to individuals who are offered insurance under the plan. The IRS uses this to show compliance with the individual mandate (5000A). In fully insured cases insurers are the ones providing documentation to the IRS and individuals who are covered under a group plan.

IRS Code 6056 - Only applies to Applicable Large Employers (50 or more FTE's). This section requires the employers to complete tax filing documents to the IRS and all of their employees. The IRS uses these tax forms to determine if an employer meets the Employer Mandate requirements and also determine if an employee is eligible for a premium tax credit or not.

IRS Form 1094-C - This form is generated by ALE's under IRS Code 6056 to show a summary of information for the employer who sponsors a health insurance plan. It covers eligibility methods, monthly enrollments, and minimum coverage requirements. It also asks for the total number of 1095-C forms the plan sponsor has sent.

IRS Form 1095-C - This form is given to all full-time employees and also provided to the IRS by all ALE's who offer fully insured and self funded plans. What sections to complete depend on whether an employer offers a fully insured or self funded plan. Regardless this is the most cumbersome portion of the reporting requirements for an employer. This data is used by the IRS to determine if an employer owes a penalty or if an employee is eligible for a tax credit. It also is used by the IRS to determine if someone is responsible for the individual mandate tax for not having insurance.

IRS Form 1094-B - This form is only required if an employer meets the following two requirements: 1. they offer minimum essential coverage and 2. the plan they offer is self-funded. If you don't meet these requirements then you will not have to deal with this form.

IRS Form 1095-B - This form is sent by insurers to all members who are covered under a fully insured medical plan. This includes: individual off exchange, small and large group fully insureds. Small group self funded accounts are also responsible for sending these to employees.

Oy Canada! (Part 2,739)

Two years ago, we noted that "Canada's Supreme Court has ruled that under the "law of the land" in Ontario, a government board, not the family or doctors, has the ultimate power to pull the plug on a patient."

On the one hand, this is pretty scary; after all, it's what will happen under the IPAB. On the other, at least one knows the score, and can (try to) plan accordingly.

On the gripping hand:

"Canadian Medical Association considering allowing doctors to LIE about patients death to cover up euthanasia."

Wait, what?!

Oh, it gets worse:

The Quebec Medical College is already doing this:

"The physician must write as the immediate cause of death the disease or morbid condition which justified [the medical aid in dying] and caused the death. It is not a question of the manner of death (cardiac arrest), but of the disease, accident or complication that led to the death."

So if one has cancer, or some other fatal disease, and one is euthanized (perhaps under government orders) the cause of death won't be listed as the lethal injection, but the cancer itself.

"The deceased died of a sudden and severe influx of electrons."

Sure, go with that.

[Hat Tip: The Political Hat]

Understanding Another Obamacare Extension

Employers and insurers have been gearing up for a crazy month of January where they must comply with new IRS reporting requirements. Confusion and time constraints will make this month a nightmare for human resource and accounting departments.

But never fear, the IRS is here!


In guidance released yesterday the IRS is providing an extension to these reporting requirements. The reporting requirements pertain to sections 6055 and 6056 and directly impact the time allowed to submit forms 1095-B, 1095-C, 1094-B, and 1094-C. They also give more time to employers so that they won't be subject to fines under codes 6722 and 6721 for failing to file these forms in a timely fashion.

These forms are then used by the IRS to help individuals who have new requirements under section 36B and 5000A. Don't mistake these above mentioned forms with form 1095-A which could also include form 8962 or 8965.

All of these forms are necessary in finalizing your 1040 or 1040EZ except for this year where it might not be possible that you have received your 1095-B or 1095-C in time for tax filing. There is no need to worry as the IRS has indicated that they will not require anyone to file an amended return should they not have their form 1095-B or 1095-C submitted with their 1040 or 1040EZ.

(COMING SOON! UNDERSTANDING THE POST ABOVE)

Suspend. Delay. Postpone. Repeat

The cost of Obamacare just got bigger and since history is a strong indicator we should be prepared for huge deficits to cut into the President's signature disaster. The vote by Congress to pass the annual spending bill contained three items of interest tied to the revenues that were supposed to be coming in to pay for a large part of the Not So Affordable Care Act.

By postponing the Cadillac Tax from 2018 to 2020, pausing the Medical Device Tax for 2017 and 2018, and also pausing the Health Insurance Tax for 2017 the federal government is reducing revenues to fund Obamacare by $32.1 Billion. Some are saying so what, in government world that's pennies. This is correct in the short term, but given the track record of Congress pushing things off, the long term of not letting these expire or removing them altogether will be financially irresponsible.

How financially irresponsible? In reviewing the 10 year Obamacare costs based on the December 2nd release from the Office of Management and Budget regarding H.R. 3762 and the CBO's Budget and Economic outlook for 2015 we found a significant potential for lost revenue based on these three taxes being eliminated.

The smallest of the three is the Medical Devices Tax. The two year pause that has already passed will cost $4.1 billion. Should Congress repeal this tax - which has bipartisan support - would reduce revenues by $23.9 billion over ten years.

The Cadillac Tax is the one receiving the most attention. This tax will hit more employers over time and the primary revenue generator is new tax dollars on employee compensation. The CBO can only score on the garbage in, garbage out rules. Because Congress is full of garbage, they assumed that as the tax kicked in employers would reduce benefits and therefore lower premiums. In turn they assumed that employers would replace this lower premium with a dollar for dollar match in compensation. The end result is higher income tax revenue on taxpayers. The cost of delaying this for two years is $13 billion. Many in Congress want this tax fully repealed. Doing so would reduce Obamacare revenues by $149 billion over ten years.

The sneaky one is the Health Insurance Tax - or as we refer to it - The HIT. This tax bill is sent to health insurers based on their market share. It has flown under the radar because it was sold as a tax on insurance companies. Nobody likes insurance companies so taxing them would seem to be a good thing. But if you look at your insurance bill you will see that this tax is built in to your premium. This tax being paused for a year will lower revenues by an additional $13 billion. Continuing the delay for ten years will cost $159 billion - even more than the Cadillac Tax.

The total cost over ten years of eliminating these three taxes will decrease Obamacare revenues by $331,900,000,000. This makes up more than half of the revenues Obamacare is supposed to generate over that same time period.

We already knew that Obamacare was financially unsustainable. Adding these reductions in revenue to the fold will accelerate it's death. And that might be a good thing.

Merry Christmas

For some unexplained reason it seems to be insensitive to wish others a Merry Christmas.

Forget the fact that many who celebrate Christmas do so in a decidedly secular manner. Today's commentary will diverge from the traditional Christmas post and will not explore the "true meaning" of Christmas.

And no, we are not yielding to outside pressure, political or otherwise. Those of us who make InsureBlog possible can perhaps make our voices heard above the din and say Merry Christmas without reprisal.

Nearly all U.S. Christians (96%) say they celebrate Christmas. No big surprise there. But a new Pew Research Center survey also finds that 81% of non-Christians in the United States celebrate Christmas, testifying to the holiday’s wide acceptance - Pew Research

This to me is a fairly powerful statement.

If a nation that includes Christians, Jews, Buddhists, Muslims, etc. plus a minority of non-believers in any religious deity can openly declare en masse that they acknowledge Christmas, then why should we be self conscious about wishing someone a Merry Christmas?

Why must the the overwhelming majority of us be relegated to the back seat and forced to substitute Merry Christmas with Happy Holidays?

My co-blogger, Henry Stern, is a devout, practicing Jew. I, on the other hand, am a Christian. We acknowledge and worship the same God but we do so in different ways.

I don't understand many of his customs and he probably doesn't understand some of mine. After all these years I still don't know which Jewish holidays allow you to feast with abandon while others require fasting.

But in the big scheme of things, does it really matter?

If you, as a reader of InsureBlog, find yourself offended by Merry Christmas do not expect an apology. It isn't forthcoming.

It's not that I do not care about your feelings. Rather it is because I refuse to be pressured into hiding my light under a basket just to keep from offending someone who has a different belief from my own.

So if the words Merry Christmas offend you, get over yourself.

Here is comes one last time. Merry Christmas to all and may you be truly blessed during this holy time of year.

#MerryChristmas

How sick is this?

This strikes me as perverse:

"In theory, if the system works, it could make insuring a patient with diabetes more attractive than insuring a similar patient without diabetes. Covering a patient who has diabetes and has had terrible medical care may look even better, because an insurer could collect extra risk adjustment cash for that patient while using good care management to reduce the patient's medical bills."

As FoIB Allison Bell notes, an immediate problem is that the implied mechanism here looks like the health care version of a credit score, and "[c]onsumers may not be thrilled to learn that insurers are assigning them risk scores."

I'd agree, if they ever even learned of its existence. But this has been kept so well under the radar that I doubt whether many non-industry folks know about it (heck, I wonder how many industry folks know!).

It actually gets worse, though:

"CMS recently began offering health insurers HHS-RADV training. The agency wants insurers to send it HHS-RADV data reports by April 30, 2016."

That's the agency's Risk Adjustment Data Validation program, which seeks to collect health care usage data from carriers. And how is this data then used? Well, carriers have an incentive to make their own insureds look as sick as possible in order to hold onto (or get more of) that sweet, sweet risk corridor cash (and BTW, rotsa ruck with that).

On the gripping hand, it's hard to feel much sympathy for carriers (thanks, AHIP!).