IRS Issues Publications on Electronic Filing of Health Care Coverage Information Returns

The Patient Protection and Affordable Care Act (PPACA) implemented information reporting requirements for employers. Known as information returns, the employer supplied information allows the government to ascertain whether the employer is meeting their requirements under the PPACA. The type of information submitted pertains to the type of employer health-coverage offered, specific employee coverage, and other various requirements under the act.

In order to facilitate the information returns, the Internal Revenue Service (IRS) allows these filings to be submitted electronically. Known as the “AIR” system, the IRS issued publications to guide employers wishing to submit the PPACA information returns electronically. In order to submit the information returns, the employer must first create an account at least 28 days prior to submitting information. For some employers, such as those with over 250 of one type of information return, the returns must be submitted via the AIR system.

The AIR filings are subject to very specific instructions and requirements. To retrieve these publications, please visit the following website.

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CMS Proposes New Exceptions to the Stark Law

The Centers for Medicare and Medicaid Services (“CMS”) has proposed revisions to the regulations governing enforcement of the physician self-referral law, commonly known as the Stark Law.   The changes are part of a 282-page proposed rulemaking that establishes the 2016 Medicare Physician Fee Schedule.  According to CMS, the proposed changes to the Stark regulations are intended to accommodate delivery and payment system reform, to reduce regulatory burdens, and to facilitate compliance.  Many aspects of the proposal appear to be in response to physician self-disclosures of highly technical violations that have been submitted under the Medicare self-referral disclosure protocol (“SRDP”) adopted as part of the Patient Protection and Affordable Care, also known as Obamacare.

The Stark law  generally prohibits a physician from making referrals for certain designated health services (“DHS”) that are payable by Medicare to an entity with which he or she (or an immediate family member) has a financial relationship (ownership or compensation), unless an exception applies.  Among other things, the proposal would add two new exceptions, primarily targeted at rural and underserved areas.  As with all things Stark-related, the proposed exceptions are highly technical.

The first new exception to Stark would permit a hospital, federal qualified health center, or rural health center to subsidize a physician’s payment of a nonphysician practitioner’s salary.  The proposed exception would apply only where the nonphysician practitioner is a bona fide employee of the physician or the physician’s practice and the purpose of the employment is to provide primary care services to the physician’s patients.  To qualify under this exception, a non-physician practitioner would have to be a physician assistant, nurse practitioner, clinical nurse specialist, or certified nurse midwife.  The subsidy would also be subject to a financial cap and two year time limitation.

The second new exception would expressly permit “timeshare arrangements,” and is intended to benefit communities where there is a need for certain specialty services but that need is not great enough to support a full-time physician specialist.   Under timeshare arrangements, a hospital or local physician practice may ask a specialist from a neighboring community to provide the services in space owned by the hospital or practice on a limited or as-needed basis. In such circumstances, the visiting physician may not have exclusive use of the premises and there may not be a one-year arrangement as required by the current exception for leased office space.

The proposed timeshare exception would provide relief from Stark where the visiting physician is a temporary licensee of the space rather than a lessor.  However, the proposed exception includes numerous technical requirements, including limitations on certain types of equipment that may be used in connection with the license.  In addition, the proposed exception would not protect a license of office space that is primarily used to furnish DHS to patients.

The proposed rule impacting the Stark Law can be found at the following link:

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IRS Issues Notice Regarding PPACA Excise Tax

Part of the Patient Protection and Affordable Care Act (“PPACA”) efforts to reduce healthcare costs include an excise tax on health insurers that provide benefits to employees above a threshold limit. This tax is designed to discourage insurance programs that allow employees to receive unusually generous benefits under the insurance plan, which is believed to encourage heavy usage of healthcare. By reducing the overall usage, it will decrease costs. Moreover, it is expected that this tax will help fund the PPACA and off-set the cost of healthcare for those who are not enrolled in a qualified welfare plan. The 40% excise tax is set to take effect in 2018 for the cost of an applicable coverage plan that is above the threshold limit.

In preparing for the implementation of the excise tax, the Internal Revenue Service (“IRS”) has issued Notice 2015-16. This notice serves to clarify “the definition of applicable coverage,” “the determination of the cost of applicable coverage,” and “the application of the annual statutory dollar limit to the cost of applicable coverage.” The notice also seeks input on these issues.

This notice is only the start of implementing the new excise tax and the IRS anticipates issuing further notices. Eventually, the IRS intends to propose regulations and will invite further comments. For details regarding Notice 2015-16, the notice may found at the following link: .

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SHOP Exchanges To Be Delayed

In addition to the “glitches” that users are experiencing with the new healthcare Exchanges, the government has experienced issues in rolling out SHOP. SHOP is an exchange that is targeted at small employers. Employers who use SHOP may be eligible for a variety of tax benefits for providing insurance to their employees. Like the individual Exchanges, SHOP was supposed to have been rolled out on October 1st. However, due to technical issues, SHOP will be unavailable until November.

 Although online enrollment is unavailable, small employers can still use SHOP for some features. SHOP currently allows users to view plans and prices that are available in their areas. Employers can also currently apply by mailing in a paper application. Although employers cannot enroll online yet, now is an ideal time to review the options provided by SHOP and to determine if your business is eligible for tax benefits.

© 2013 Parsonage Vandenack Williams LLC

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Employer Deadline for Notification of Health Care Exchanges Approaching

As a reminder, the Patient Protection and Affordable Care Act (commonly referred to as “Obamacare”) requires most employers to provide each of their employees a written “Exchange Notice” on or before October 1, 2013. The purpose of the Exchange Notice is to inform employees of the existence of government-run health exchanges, also known as the “Health Insurance Marketplace”, where health insurance can be obtained.

The notification requirement applies to most employers that have $500,000 or more in annual revenue. If the requirement applies to your company, the Exchange Notice must be provided to all employees regardless of plan-enrollment status or eligibility and regardless of whether the employee is part-time or full-time status. In addition, the Exchange Notice must be provided to all new employees hired after October 1, 2013.

The Department of Labor has issued model notices for use by employers. One notice is provided for use by employers that offer a health plan to some or all employees, and a second notice is available for employers that do not offer a health plan.

The notice for employers that offer a health plan is available at:

The notice for employers that do not offer a health plan is available at:

We also recommend that you include a cover letter explaining why the notice is being provided. A cover letter is not required, but it may reduce the number of employees who contact you to inquire about the purpose of the Exchange Notice.

The Exchange Notice can be distributed electronically, by first class mail or by hand delivery, although it is recommended that you obtain a signed receipt or other confirmation from the employee for any hand delivered Exchange Notices.

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New IRS Guidance Clarifies Tax Treatment of HSAs

Health savings accounts (HSAs) are a useful tool for employees and employers because of their tax-favored status. The IRS has recently clarified that certain Affordable Care Act rules will not affect the tax treatment of HSAs.

An HSA must be paired with a high-deductible health plan (HDHP) to receive tax-favored treatment. The Affordable Care Act requires health plans to provide certain preventive services with no deductible or cost-sharing. There was some concern that this rule would result in loss of HDHP status with the effect of HSAs losing tax favorable treatment. The IRS, however, has indicated that HDHPs will not lose their status as HDHPs solely because they offer the preventive services required by the Affordable Care Act. Thus, HSAs will still be a strong, tax-favored tool for dealing with medical expenses.

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IRS Releases Update on Partial ACA Postponement

The start date for employer reporting requirements under the ACA has now been pushed back to 2015. In response, the IRS has stated that it will release proposed rules for these requirements later this summer. As a result, employers will have additional time to prepare for the new law. They also will not be penalized for failing to comply with ACA reporting requirements for 2014.

The IRS notice also provides a clue as to how it may handle penalties under the ACA. Starting in 2015, certain employers must offer affordable coverage to their full-time employees. If they do not, and any of their full-time employees receive a premium tax credit, they may have to pay a penalty. But, employers will generally not know whether their employees received a premium tax credit. Thus, the IRS has indicated that it may inform employers if their full-time employees received a premium tax credit. If this is the case, employers may not have to determine if their employees have received premium tax credits.

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