Affordable Care Act Review

Affordable Care Act Review

Stand Alone, Fixed-Indemnity Plans Are Back, Maybe

Posted in Affordable Care Act, Coverage Mandates, Exchanges, Insurers and Brokers, Taxes

In Central United Life Ins. Co. v. Burwell, D.C. Cir. No. 15-5310 (July 1, 2016), a D.C. Circuit panel affirmed, 3-0, a trial court injunction barring enforcement of the 2014 HHS regulation permitting individual fixed-indemnity policies to be sold only as supplements to ACA minimum essential coverage. You’ve heard this theme before. The Public Health Service Act, 42 U.S.C. §§  300-21(c)(2), 300gg-63(b), 300gg-91(c)(3), defines “excepted benefits” as policies offered separately from and not coordinated with health plans. When passing the ACA, Congress adopted and piggy-backed on those PHS Act provisions. Many consumers decided to buy fixed indemnity plans in lieu of ACA Marketplace plans, despite the ACA individual mandate penalties for not buying minimum essential coverage. Displeased, HHS issued a regulation “to amend the criteria for fixed indemnity insurance to be treated as an excepted benefit,” outlawing such plans unless sold as a supplement minimum essential coverage. See 79 Fed. Reg. 30240, 30253 (May 27, 2014). But only Congress may amend a statute, the Court held, and Congress did nothing of the sort in the ACA. Rather, the ACA reaffirmed the existing definition of “excepted benefits” and how that definition applied to individuals’ purchase of fixed indemnity plans.

As of this writing, HHS has not requested rehearing and has not filed an appeal notice. We expect the government to take a mulligan, asking the full D.C. Circuit to over-rule the panel opinion. We think that likely because 4-4 Supreme Court opinions are treated as affirming the decision appealed. While we wait, we’ll be interested to see whether and how quickly insurers resume marketing fixed indemnity plans to individuals as alternatives to ACA minimum essential coverage.


ACA Retaliation: Let Us Tell You A Little Story about A Man Named Jed

Posted in Affordable Care Act, Employee Leasing, Government Employers, Independent Contractors, Private Employers

Jed, employed by Drysdale LLC, a janitorial contractor, recently began working nights at the Commerce Bank, supervised by the Bank’s Chief of Security.  Jed’s family had health insurance until his wife lost her job early this year.  Drysdale didn’t offer insurance, so Jed bought a policy through  With the federal subsidy, his premium is less than $50 monthly.

About six weeks ago, Drysdale got a Marketplace notice of the subsidy granted to Jed.  After consulting its lawyer, Drysdale amended its standard contract to negate any indemnity obligation to customers for ACA taxes and penalties imposed on the customer with respect to Drysdale employees.  The Bank noticed the change and inquired.  Drysdale explained, using Jed’s example, that the Bank could have ACA obligations to Jed independent of Drysdale’s obligations to Jed.

On July 5, the Bank asked for a replacement after Jed was found asleep in a computer closet.  Drysdale removed Jed from the Bank and has not reassigned him.

Today, Drysdale and the Bank received OSHA notices that Jed (represented by a labor union) had charged them with retaliation in violation of FLSA § 218c, which reads, in relevant part:

218c. Protections for employees

(a) Prohibition

No employer shall discharge or in any manner discriminate against any employee with respect to his or her compensation, terms, conditions, or other privileges of employment because the employee (or an individual acting at the request of the employee) has—

(1) received a credit under section 36B of title 26 or a subsidy under section 18071 of title 42;


(b) Complaint procedure

(1) In general

An employee who believes that he or she has been discharged or otherwise discriminated against by any employer in violation of this section may seek relief in accordance with the procedures, notifications, burdens of proof, remedies, and statutes of limitation set forth in section 2087(b) of title 15.

(Emphasis ours.)  When Jed applied for his subsidy, he was given three notices of this retaliation protection.  Much to the employers’ surprise, they have only a few weeks to prove that Jed would have suffered the same fate even if they had been ignorant of his subsidy.  But Jed says that he and the Security Chief had a deal: If Jed finished his work an hour early, he could nap before leaving for his day job.  And OSHA’s rules say that Jed’s proof “burden may be satisfied, for example, if the complaint shows that the adverse action took place shortly after the protected activity, giving rise to the inference that it was a contributing factor in the adverse action.” 29 CFR § 1984(e)(3).  Very probably, OSHA will issue a preliminary order reinstating Jed who, by the way, is now a union organizer.  A damages trial will follow some months later.

Why is this the Bank’s problem?  Because DOL enforces this law, and DOL’s “employee” definition is even broader than the definition used by the IRS.  You may “employ,” for this purpose, a worker whom the IRS would recognize as an independent contractor.  Jed’s supervision by the Bank’s Chief of Security goes a long way toward proving that the Bank was Jed’s joint employer.

Why is this Drysdale’s problem?  Because it opened the Marketplace subsidy notice envelope.  As we explained in several prior articles, there are ways to appeal subsidy errors without acquiring notice of the identities of subsidy recipients who might be among your employees.  If you have not established those procedures yet, now would be a very good time to do so.


DOL Adjusts Civil Monetary Penalties Upward

Posted in Affordable Care Act

On June 30, the Department of Labor (“DOL”) published an interim final rule to adjust the civil monetary penalties on employer-sponsored plans.  The DOL published the interim final rule in accordance with the Federal Civil Monetary Penalties Inflation Adjustment Improvements Act of 2015, which amended the Inflation Adjustment Act.  While the interim final rule adjusts many penalties (see the full list here), we are listing only those that have an affect on health plans.  They are as follows:

ERISA Penalty Statute Description of ERISA Violations Subject to Penalty Current Penalty Amount New Penalty Amount
ERISA § 502(c)(2) – Failure or refusal to file annual report (Form 5500) required by ERISA § 104; and

– Failure of a multiemployer plan to certify endangered or critical status under ERISA § 305(b)(3)(C) treated as failure to file annual reports.

Up to $1,100 per day Up to $2,063 per day
ERISA § 502(c)(5) Failure of a multiple employer welfare arrangement to file report required by regulations issued under ERISA § 101(g). Up to $1,100 per day Up to $1,502 per day
ERISA § 502(c)(9)(A) Failure by an employer to inform employees of CHIP coverage opportunities under ERISA § 701(f)(3)(B)(i)(I) – each employee a separate violation. Up to $100 per day Up to $110 per day
ERISA § 502(c)(9)(B) Failure by a plan administrator to timely provide to any State the information required to be disclosed under ERISA § 701(f)(3)(B)(ii), regarding coverage coordination—each participant/beneficiary a separate violation. Up to $100 per day Up to $110 per day
ERISA § 502(c)(10)(B)(i) Failure by any plan sponsor of a group health plan, or any health insurance issuer offering health insurance coverage in connection with the plan, to meet the requirements of ERISA §§ 702(a)(1)(F), (b)(3), (c) or (d); or § 701; or § 702(b)(1) with respect to genetic information. $100 per day during non-compliance period $110 per day during non-compliance period
ERISA § 502(c)(10)(C)(i) Minimum penalty for de minimis failures to meet genetic information requirements not corrected prior to notice from Secretary of Labor. $2,500 minimum $2,745 minimum
ERISA § 502(c)(10)(C)(ii) Minimum penalty for failures to meet genetic information requirements which are not corrected prior to notice from Secretary of Labor and are not de minimis. $15,000 minimum $16,473 minimum
ERISA § 502(c)(10)(D)(iii)(II) Cap on unintentional failures to meet genetic information requirements. $500,000 maximum $549,095 maximum
ERISA § 715 Failure to provide Summary of Benefits Coverage under Public Health Services Act section 2715(f), as incorporated into ERISA § 715 and 29 CFR 2590.715-2715(e) Up to $1,000 per failure Up to $1,087 per failure

In addition, the DOL issued a fact sheet and an FAQ further explaining the adjustments.  While these changes increase the penalties on a wide variety of violations, it is worth noting that the maximum penalty is not always imposed for a violation.

Beginning in 2017, future adjustments may be made annually and will have to be made by January 15 of such year.

It’s Marketplace Appeal Season!

Posted in Affordable Care Act, Government Employers, Private Employers, Taxes

All of us of a certain age remember the Bugs Bunny cartoon in which Bugs and Daffy confused dimwit Elmer Fudd as to the current hunting season – i.e., wabbit (Bugs) or duck (Daffy) – ending with the proclamation of baseball season. Play ball!  Whatever other season you think it may be now, know this: it’s also Marketplace Appeal Season.

The online employer appeal function of still isn’t operational, so Marketplace subsidy certification notices are being mailed to employers from this address:  Health Insurance Marketplace, Department of Health and Human Services, 465 Industrial Boulevard, London, KY 40750-0001.  We saw our first notice last week; it was dated June 21, 2016.  With identities redacted, here is the text.

Dear Benefits Manager:

The person listed below submitted an application for health coverage through the Health Insurance Marketplace in [redacted] and indicated that he or she is an employee of [redacted] at the address shown above.

This person reported that he or she:

  • didn’t have an offer of health care coverage from [redacted];
  • did have an offer of health care coverage, but it wasn’t affordable or didn’t provide minimum value; or
  • was in a waiting period and unable to enroll in health care coverage.

The employee has been determined eligible for advance payments of the premium tax credit (APTC) or cost-sharing reductions (CSRs) for at least one month during 2016 to help pay for Marketplace coverage and has enrolled in coverage through the Marketplace.

Employee Name


Last 4 digits of Social Security Number (if available)

Marketplace Application ID





Why am I getting this notice?

This notice Informs you that your employee was found eligible for APTC or CSRs and that, if various conditions are met, you may have to pay an employer shared responsibility payment to the Internal Revenue Service (IRS) in the future. It also notifies you of your opportunity to appeal this eligibility determination.

Certain employers (those with at least 50 full-time employees or full-time equivalent employees, called applicable large employers) might have to pay an employer shared responsibility payment for any month that at least one full-time employee enrolled in Marketplace coverage and receives APTC or CSRs.

Important: This is only a notification that [redacted] may have to pay an employer shared responsibility payment. Only the IRS, not the Marketplace, can determine whether this employer will owe an employer shared responsibility payment.

What can I do next?

To learn more, you can visit or contact the IRS at 800-829-4933 Monday- Friday, 7 a.m. – 7 p.m. your local time (Alaska & Hawaii follow Pacific Time).

You may file an appeal to the Marketplace if you believe there’s been a mistake regarding the employee’s eligibility for APTC or CSRs. If you believe your employee was incorrectly determined eligible for APTC or CSRs because you offered the employee affordable, minimum value health coverage, filing an appeal could help reduce the employee’s potential tax liability. Filing an appeal could also eliminate reports from the Marketplace to the IRS that your employee received APTC or CSRs following an appeal decision in your favor. However, filing an appeal won’t necessarily affect whether you have to pay an employer shared responsibility payment to the IRS, because the IRS will determine independently whether you have to pay.

If you appeal, the Marketplace will consider evidence provided by both you and your employee to determine if the employee is eligible for APTC or CSRs.

Remember, it’s a violation of the Fair Labor Standards Act to discriminate against any employee because he or she received APTC or CSRs.

What are my appeal rights?

You have 90 days from the date of this notice to request an appeal from the Marketplace. For more information about the employer appeal process and to download the employer appeal request form, visit and mail the completed form to:

Health Insurance Marketplace

465 Industrial Blvd.

London, KY 40750-0061

You may also fax the form through this secure fax line: 1-877-369-0129.

You must include a copy of this notice with your appeal request.

When you navigate to that URL, you’ll find a four-part Form that looks like this.




It’s worth stressing again: If you open these envelopes and see the employee names, you will expose your organization to claims from those employees that their subsidy certifications motivated your subsequent, adverse employment actions against them.  You’ll bear a heavy, expensive burden to disprove such claims.  Better to outsource your appeals under a written agreement that deprives you of knowledge of the names appearing in such notices.  If you have not done that yet, consider doing it soon, because . . . it’s Marketplace Appeal Season.  Play ball!

EEOC Sample Notice for Employer-Sponsored Wellness Programs

Posted in Affordable Care Act, Government Employers, Private Employers

You know the drill.  A manufacturer advertises a new drug, warning, of course, that some users may suffer serious side effects.  A year or two later, lawyers counter-advertise for new clients with those conditions who took the drug.  There follows, in some cases, a campaign to remove the “bad drug” from the market.  On June 21, 2016, the EEOC published a Sample Notice, to be given by employer-sponsored wellness programs.  Some parts of it remind the reader of a lawyer’s TV ad – “Have you been injured by a bad wellness program?  You may have a right to compensation.”  Here’s the full text.


[Name of wellness program] is a voluntary wellness program available to all employees. The program is administered according to federal rules permitting employer-sponsored wellness programs that seek to improve employee health or prevent disease, including the Americans with Disabilities Act of 1990, the Genetic Information Nondiscrimination Act of 2008, and the Health Insurance Portability and Accountability Act, as applicable, among others. If you choose to participate in the wellness program you will be asked to complete a voluntary health risk assessment or “HRA” that asks a series of questions about your health-related activities and behaviors and whether you have or had certain medical conditions (e.g., cancer, diabetes, or heart disease). You will also be asked to complete a biometric screening, which will include a blood test for [be specific about the conditions for which blood will be tested.] You are not required to complete the HRA or to participate in the blood test or other medical examinations.

However, employees who choose to participate in the wellness program will receive an incentive of [indicate the incentive] for [specify criteria]. Although you are not required to complete the HRA or participate in the biometric screening, only employees who do so will receive [the incentive].

Additional incentives of up to [indicate the additional incentives] may be available for employees who participate in certain health-related activities [specify activities, if any] or achieve certain health outcomes [specify particular health outcomes to be achieved, if any]. If you are unable to participate in any of the health-related activities or achieve any of the health outcomes required to earn an incentive, you may be entitled to a reasonable accommodation or an alternative standard. You may request a reasonable accommodation or an alternative standard by contacting [name] at [contact information].

The information from your HRA and the results from your biometric screening will be used to provide you with information to help you understand your current health and potential risks, and may also be used to offer you services through the wellness program, such as [indicate services that may be offered]. You also are encouraged to share your results or concerns with your own doctor.

Protections from Disclosure of Medical Information

We are required by law to maintain the privacy and security of your personally identifiable health information. Although the wellness program and [name of employer] may use aggregate information it collects to design a program based on identified health risks in the workplace, [name of wellness program] will never disclose any of your personal information either publicly or to the employer, except as necessary to respond to a request from you for a reasonable accommodation needed to participate in the wellness program, or as expressly permitted by law. Medical information that personally identifies you that is provided in connection with the wellness program will not be provided to your supervisors or managers and may never be used to make decisions regarding your employment.

Your health information will not be sold, exchanged, transferred, or otherwise disclosed except to the extent permitted by law to carry out specific activities related to the wellness program, and you will not be asked or required to waive the confidentiality of your health information as a condition of participating in the wellness program or receiving an incentive. Anyone who receives your information for purposes of providing you services as part of the wellness program will abide by the same confidentiality requirements. The only individual(s) who will receive your personally identifiable health information is (are) [indicate who will receive information such as “a registered nurse,” “a doctor,” or “a health coach”] in order to provide you with services under the wellness program.

In addition, all medical information obtained through the wellness program will be maintained separate from your personnel records, information stored electronically will be encrypted, and no information you provide as part of the wellness program will be used in making any employment decision. [Specify any other or additional confidentiality protections if applicable.] Appropriate precautions will be taken to avoid any data breach, and in the event a data breach occurs involving information you provide in connection with the wellness program, we will notify you immediately.

You may not be discriminated against in employment because of the medical information you provide as part of participating in the wellness program, nor may you be subjected to retaliation if you choose not to participate.

If you have questions or concerns regarding this notice, or about protections against discrimination and retaliation, please contact [insert name of appropriate contact] at [contact information].

This or a similar notice is required by ADA and GINA rules that the EEOC published on May 17, 2016.  Along with the Sample Notice, EEOC released this Q&A guidance.

  1. If wellness program participants already get a notice under the Health Insurance Portability and Accountability Act (HIPAA), do they need to get a separate ADA notice?

Employers that already provide a notice that informs employees what information will be collected, who will receive it, how it will be used, and how it will be kept confidential, may not have to provide a separate notice under the ADA. However, if an existing notice does not provide all of this information, or if it is not easily understood by employees, then employers must provide a separate ADA notice that sets forth this information in a manner that is reasonably likely to be understood by employees.

  1. Who must provide the notice?

An employer may have its wellness program provider give the notice, but the employer is still responsible for ensuring that employees receive it.

  1. Does the notice have to include the exact words in the EEOC sample notice?

No. As long as the notice tells employees, in language they can understand, what information will be collected, how it will be used, who will receive it, and how it will be kept confidential, the notice is sufficient. Employers do not have to use the precise wording in the EEOC sample notice. The EEOC notice is written in a way that enables employers to tailor their notices to the specific features of their wellness programs.

  1. When should employees get the notice?

The requirement to provide the notice takes effect as of the first day of the plan year that begins on or after January 1, 2017 for the health plan an employer uses to calculate any incentives it offers as part of the wellness program. For more information about which plan to use in calculating wellness program incentives, refer to EEOC’s questions and answers on the ADA rule and the Genetic Information Nondiscrimination Act (GINA) rule. Once the notice requirement becomes effective, the EEOC’s rule does not require that employees get the notice at a particular time (e.g., within 10 days prior to collecting health information). But they must receive it before providing any health information, and with enough time to decide whether to participate in the program. Waiting until after an employee has completed an HRA or medical examination to provide the notice is illegal.

  1. Is an employee’s signed authorization required?

No. The ADA rule only requires a notice, not signed authorization, though other laws, like HIPAA, may require authorization. Title II of the Genetic Information Nondiscrimination Act (GINA) requires prior, written, knowing, and voluntary authorization when a wellness program collects genetic information, including family medical history. (See Q&A 7 below.)

  1. In what format should the notice be provided?

The notice can be given in any format that will be effective in reaching employees being offered an opportunity to participate in the wellness program. For example, it may be provided in hard copy or as part of an email sent to all employees with a subject line that clearly identifies what information is being communicated (e.g., “Notice Concerning Employee Wellness Program”). Avoid providing the notice along with a lot of information unrelated to the wellness program as this may cause employees to ignore or misunderstand the contents of the notice. If an employee files a charge with EEOC and claims that he or she was unaware of a particular medical examination conducted as part of a wellness program, EEOC will examine the contents of the notice and all of the surrounding circumstances to determine whether the employee understood what information was being collected, how it was being used, who would receive it, and how it would be kept confidential.

Employees with disabilities may need to have the notice made available in an alternative format. For example, if you distribute the notice in hard copy, you may need to provide a large print version to employees with vision impairments, or may have to read the notice to a blind employee or an employee with a learning disability. A deaf employee may want a sign language interpreter to communicate information in the notice, whether the notice is in hard copy or available electronically. Notices distributed electronically should be formatted so that employees who use screen reading programs can read them.

  1. What notice must employers provide for spouses participating in an employer’s wellness program?

As was the case prior to the issuance of the rules in 2016, GINA requires that an employer that offers health or genetic services and requests current or past health status information of an employee’s spouse obtain prior, knowing, written, and voluntary authorization from the spouse before the spouse completes a health risk assessment. Like the ADA notice, the GINA authorization has to be written so that it is reasonably likely to be understood by the person providing the information. It also has to describe the genetic information being obtained, how it will be used, and any restrictions on its disclosure.

While problematic, the Sample Notice and the guidance fairly portray the published rules.  For employers trying hard to do the right thing, the government seems to have no end of right things for you to do.

2015 ACA Information Reporting: Parts Sold Separately, Some Assembly Required

Posted in Affordable Care Act, Government Employers, Private Employers

Ten days before the deadline for electronic filing of 2015 Forms 1094-C and 1095-C, many employers are discovering that they contracted for less than all the needed services. Here’s what we’re seeing all too commonly.

Some vendors offered turnkey packages. They promised, in writing, to host or to manage your data, to use it to generate your Forms, to deliver timely Forms 1095-C to the 2015 employee recipients, and to upload the Forms to the IRS timely. Some even committed to make and upload required corrections. Typically, these vendors sold those comprehensive services as part of a broader deal to administer your payroll and/or your benefit plans. They committed to do lots of expensive development and preparation – e.g., acquiring an AIR system Transmitter Control Code (“TCC’), months in advance of knowing exactly what their associated costs and delivery schedules would be. Their prices typically reflected that risk. Those prices sent many employers in search of less costly options.

That spurred the market for software that enables employers to generate their own XML Forms. Some vendors bundled that software with a commitment to deliver the employer-generated Forms to employees and to upload the Forms to the AIR system.  Some allowed customers to buy only the software license. Some vendors offered only the software license.

As the 2016 delivery and filing deadlines approached, employer options narrowed. Some vendors offering comprehensive services cut off sales months in advance of those deadlines, to assure the delivery of quality services in the first year of operation. In short, the less you bought, the later you could buy it. But too many employers waited too late and could buy only a software license. Those employers were able to generate and deliver 2015 Forms 1095-C to their 2015 full-time employees, avoiding the $250-per-Form fine for that failure, but there’s a separate $250-per-Form fine for failing to file timely with the AIR system. If the ALE Member has 250 or more 2015 Forms 1095-C to file, paper filing is not an option, and electronic filing requires an IRS-issued TCC. Getting the TCC requires application to the IRS and IRS approval based on passing a series of data and system integrity tests. Do you know what a “SOAP Envelope” is? If not, and maybe even if you do, you probably need a Plan B. There is no “EASY” button.

If this is your situation, you need to make a last minute AIR system transmitter deal with a reputable vendor, or you need to budget for the penalties. As noted in a prior article, you can mitigate your penalty exposure by filing correctly, though late. If you don’t file at all, you’ll be exposed to the full penalty of $250 per Form 1095-C.

As of June 20, 2016, there are still a few AIR system Transmitters who will accept a few more 2015 upload-only customers. While you’re at it, ask if they will upload the required corrections for the quoted price. You’re likely to need to make loads of corrections.

House v. Burwell: Insurer Cost-Sharing Subsidies Unauthorized

Posted in Affordable Care Act, Exchanges, Insurers and Brokers

A U.S. District Judge has ruled that HHS unlawfully has spent billions of dollars to reimburse insurers for cost-sharing reductions granted to individuals who bought health insurance through an ACA Exchange such as U.S. House of Representatives v. Burwell, D.D.C. No. 1:14-cv-01967 (May 12, 2016). The Court stayed its ruling pending review by the D.C. Court of Appeals.

As usual, the winning argument was simple – i.e., ACA § 1401 makes a permanent appropriation for premium subsidies but § 1402 cost-sharing subsidies are left to the annual appropriations process, and Congress has appropriated nothing. The government rehashed its King v. Burwell ambiguity arguments, but with far more difficulty. Among other things, the Administration previously had conceded that cost-sharing subsidies depend on annual Congressional appropriations.

If this decision stands, it’s very bad news for insurers participating in the ACA Exchanges, even if, as the Court suggested, they may be able to sue, under the Tucker Act, 28 U.S.C. § 1491(a)(1), to recover the promised payments from the government. The opinion does not address whether the subsidies already paid are subject to HHS claw-back.

But if this decision stands, and if Congress does not appropriate the missing funds, then may be doomed. Premium increases sufficient to overcome lost cost-sharing subsidies might accelerate an insurance death spiral that some believe already has begun.

In prior years, the forthcoming D.C. Court of Appeals decision would have been seen as a rest stop on the road to ultimate Supreme Court resolution. But with SCOTUS now split 4-4 on so many contentious issues, the D.C. Circuit may have the final word, perhaps late this year.


CMS’ New Initiative Intended to Transform Primary Health Care

Posted in Uncategorized

CMS’ efforts to improve the delivery of primary health care moved into new territory this week when the agency announced a new five-year delivery model, Comprehensive Primary Care Plus (CPC+), which CMS’ chief medical officer described as “the future of health care.” CMC+ will launch in January 2017, and evolves from the Comprehensive Primary Care initiative that CMS began in 2013. The announcement of CMS+ comes on the heels of CMS’ March 2016 announcement that it met, ahead of schedule, its goal of tying 30% of Medicare payments to quality-and-value-based alternative payment models by 2016. CMS’ new goal is to make 50% of Medicare payments via alternative payment models by 2018.

CPC+ is CMS’ largest ever such model, and is expected to be implemented in up to 20 regions accommodating 20,000 physicians and clinicians and the 25 million people they serve. Under CMC+, Medicare will partner with commercial insurance plans and state Medicaid agencies to support delivery of advanced primary care by primary care practices (PCP).

PCPs participating in CPC+ will proceed along one of two tracks. Track 1 PCPs must help patients with serious or chronic diseases meet their health goals, give patients 24-hour access to care and health information, deliver preventive care, involve patients and their families in patient care, and work with other health care partners to deliver coordinated health care. Track 2 PCPs must, in addition to these services, provide patients who have complex medical and behavioral health needs with more comprehensive services, which may include systemic assessment of their psychosocial needs and an inventory of resources and supports to meet these needs.

Track 1 PCPs will receive a monthly care management fee in addition to fee-of-service payments under the Medicaid Physician Fee Schedule. Track 2 participants will receive an on-average higher monthly care management fee and a hybrid of reduced Medicaid fee-for-service payments and up-front comprehensive primary care payments. The hybrid payments are intended to give providers freedom to find ways to deliver health care outside of traditional person-to-person encounters.
CMS is soliciting payer proposals to partner with Medicare in CPC+ through June 1, 2016, after which it will identify regions in which PCP+ will be implemented. The geographic reach of selected providers will be a factor in determining the choice of the CPC+ regions. From July 15 to September 1, 2016, CMS will publish the CPC+ regions and solicit applications from practices in these regions. Practices will apply directly for the preferred track, however applicants for the more remunerative Track 2 must include in their application a letter of support from their Health IT vendor that discusses the vendor’s commitment to support the PCP with advanced Health IT capabilities.

[Sources: CMS launches largest-ever multi-payer initiative to improve primary care in America; Comprehensive Primary Care Plus; and Health Care Payment Learning and Action Network, all from]

So I Made This Little 1095-C Mistake. Big Deal?

Posted in Affordable Care Act, Government Employers, Insurers and Brokers, Private Employers

The 2015 Instructions for Forms 1094-C and 1095-C tell Applicable Large Employers how to furnish and file corrections to incorrectly filed Forms 1095-C. They don’t answer these two questions that arise between the March 31, 2016 deadline for furnishing Forms 1095-C to full-time employees and the May 31 paper filing deadline or the June 30 e-filing deadline.

  • What if I realize after March 31 that I miss-classified someone as a 2015 part-time employee or contractor?
  • What if I properly classified a 2015 full-time employee but gave her a Form 1095-C with incorrect codes on Line 14 or Line 16?

Are you assessable for the $250 penalty provided by 26 U.S.C. § 6722 even if you fix the problem before you file? And how do you fix the problem? Let’s begin with that Code section.

Section 6722 imposes that penalty for failing to furnish the Form 1095-C by March 31 or for including “incorrect information” on a timely Form 1095-C, with these exceptions.

  • The penalty is $50 if either mistake is corrected within 30 days of the March 31 deadline, and $100 if corrected by August 1, 2016.
  • If Form 1095-C was furnished timely but with good faith data mistakes, and if those mistakes are corrected by August 1, then the penalty for the first 10 corrected Forms is waived.

Even these penalties may be waived, as the IRS has said repeatedly in FAQ guidance, such as here:

[Q3] […] Accordingly, the IRS will not impose penalties under sections 6721 and 6722 on ALE members that can show that they have made good faith efforts to comply with the information reporting requirements.

[Q32] Does Notice 2016-04 affect the rules of sections 6721(b) and 6722(b) concerning the reduction of penalty amounts for issuers that make corrections by August 1? Yes. Because the deadlines under sections 6055 and 6056 for furnishing ACA statements to individuals and filing ACA information returns with IRS have been extended as described above in Q&A #18, the August 1, 2016 deadlines for reduction in penalty amounts to correct the failures described in sections 6721(a)(2) and 6722(a)(2) also are extended. For statements furnished to individuals under sections 6055 and 6056, any failures that reporting entities correct by April 30 and October 1, 2016, respectively, will be subject to reduced penalties. For returns filed on paper with the IRS under sections 6055 and 6056, any failures that reporting entities correct by June 30 or November 1, 2016, respectively, will be subject to reduced penalties. For returns filed electronically with the IRS under sections 6055 and 6056, any failures that reporting entities correct by July 30 or November 1, 2016, respectively, will be subject to reduced penalties. These extended dates have no effect on the penalty relief described in Q&A #3, above, for incomplete or incorrect returns filed or statements furnished to employees in 2016 for coverage offered in calendar year 2015.

If you tried hard but goofed a little, and fixed it, the IRS seems to be in an understanding mood, this first reporting year. Beware, however: because the regulations (26 CFR § 301.6722(b)(2)(i)) say that a dollar amount error is “never inconsequential,” Line 15 errors may not receive as much sympathy as Line 14 and Line 16 errors.

So now, how about “how”? Where is the guidance? There’s not much. Piecing together what we can read on related topics, we suppose that the IRS expects the ALE to furnish the correction as it furnished (or should have furnished) the original. But what if the original e-notice to the employee bounced back? Our guess is that the IRS would want you to furnish the correction by mail or in person, unless the employee has provided a new, valid e-mail address.

We are aware of no requirement that the employer explain separately what error was made, why it was made, or how it has been corrected. Furnishing the corrected Form seems sufficient.

We would like to see current, directly applicable IRS guidance on this, because the question is being frequently asked.