This week, the Department of Labor, Internal Revenue Service, and Pension Benefit Guaranty Corporation released new guidance on the Health and Welfare Form 5500. The proposed rule includes a proposal that all group health plans, including small insured and self-insured welfare benefit plans, would need to file the Form 5500, instead of only those with 100 or more enrollees under current regulations. Comments on the proposed rule are due by October 4 and, if approved, the new regulations would take effect for plan year 2019. The Administration is seeking these changes to provide critical data for agency oversight and collect information needed for congressionally mandated reports on group health plans. The changes correlate both with the fiduciary role changes (better reporting of fiduciary fees) and the proposed increased penalties for violators/ERISA violations released in an interim final rule last month. NAHU’s Compliance Corner recently reviewed the form in its webinar, “Understanding the Basics of Health and Welfare Form 5500,” on June 9. A recording on that webinar is available here.

Last Friday, the Centers for Medicare and Medicaid Services (CMS) released new guidance on the Summary of Benefits and Coverage (SBC) requirements. The questions and answers document clarifies that health plans with annual open enrollment periods (OEP) must use the 2017 SBC for open enrollment periods beginning on or after April 1, 2017. Qualified health plans will begin using it for the November 1, 2017, to January 31, 2018, marketplace open enrollment period. It advises that health plans without an OEP should begin using the 2017 SBC for the first year for the first plan or policy year beginning on or after April 1, 2017.

Also last Friday, the Internal Revenue Service released a proposed rule on opt-out payments, allowing them to be used to determine affordability under the ACA. Comments on the rule are due by September 6. The rule addresses the issue where some employers may offer employees who decline coverage a cash opt-out payment, which may be conditional on the employee having coverage from another source. Last year, the IRS issued a notice that opt-out payments are the economic equivalent of salary reductions for the purposes of determining health insurance affordability, and that it would treat them as such. The guidance this week formalize the IRS’s position that an unconditional offer of an opt-out payment is treated as a required employee contribution for coverage for purposes of determining the affordability of employer-sponsored coverage for advanced premium tax credit eligibility.

However, under eligible conditional opt-out arrangements, the amount offered in the salary reduction would be disregarded and not be used to determine affordability. To be considered eligible: 1) the employee must decline enrollment in employer-sponsored coverage; and 2) the employee must provide, at least annually (no earlier than the start of open enrollment), reasonable evidence (including attestation by the employee) that the employee and all other individuals for whom the employee reasonably expects to claim a personal exemption have minimum essential coverage for the taxable year other than in the individual market. The opt-out payment can continue to be excluded from consideration if the employee terminates coverage mid-year, as long as the employer does not know or have reason to know the employee has terminated coverage. Employers impacted by the employer mandate and employer reporting requirements should use the affordability test of self-only coverage (not to exceed 9.66% of annual household income for 2016 and 9.69% for 2017) in determining affordability. Individuals with eligible opt-out arrangements would not be eligible for subsidized marketplace coverage as they would already have minimum essential coverage. The proposed rule does not make permanent exceptions from its opt-out rule for collectively bargained or de minimis payments.