Healthcare insurance reform update: What should employers be concerned about now?

October 10, 2023

By Jessica Webb-Ayer, JD, Legal EditorIt’s been another busy year for healthcare insurance reform so far, and there are several things that employers need to make sure they are aware of when entering into the second half of the year.

‘Play or pay’ provision

In February, the Obama administration released more healthcare insurance reform final regulations. These regulations made further changes to the implementation of the Affordable Care Act’s (ACA) employer responsibility section (also commonly referred to as the "play or pay" provision).

Under this particular part of healthcare insurance reform, employers with 50 or more employees face penalties if they do not offer health insurance coverage or if the coverage they offer is insufficient. The play or pay provision was originally supposed to become effective January 1, 2014, but last summer the administration delayed its implementation until 2015.

Although the final regulations provided extensive guidance on many aspects of the play or pay provision, a few of the most important changes included:

More delays. Employers with 50 to 99 employees will not face any potential penalties under the provision until 2016 if they meet certain requirements and provide appropriate certification.
Relief for large employers. Larger employers with 100 or more employees will still have to contend with possible penalties under the play or pay provision in 2015, but the regulations phase in the percentage of full-time employees to which such employers need to offer coverage in order to avoid penalties (from 70 percent in 2015 to 95 percent in 2016 and beyond).
Transitional rules. The final regulations also extended to 2015 a few transitional rules that originally were to apply to 2014 in the proposed regulations.

Reporting requirements

In March, the IRS released final regulations clarifying another healthcare insurance reform component—the employer and insurer reporting requirements found in Internal Revenue Code Sections 6055 and 6056.

Section 6056 concerns information reporting by applicable large employers (generally, employers with 50 or more full-time employees, including full-time equivalent employees) on health insurance coverage offered under employer-sponsored plans, while Section 6055 concerns information reporting requirements for providers of minimum essential health coverage, including self-insured employers.

The new final Section 6056 regulations provide employers with a general reporting method (along with some alternative reporting methods). Applicable employers must report certain information to the IRS, including details about the healthcare coverage (if any) they offered to full-time employees. Such employers also must provide related statements to employees.

Entities subject to the new 6055 final regulations must file an information return and transmittal with the IRS and also furnish statements to applicable employees on forms prescribed by the IRS.

Another Supreme Court case

Finally, in another development this year, the U.S. Supreme Court is reviewing the ACA again this term, and a decision is expected before the end of June. The Court has reviewed the ACA before when it upheld the individual mandate, but this time it is looking at another one of the law’s controversial mandates—the contraceptive mandate. Under the ACA, many health insurance plans must cover certain preventive services for women without cost sharing (e.g., coinsurance, copayments, and deductibles).

The contraceptive mandate has been the subject of quite a few lawsuits across the country since the ACA became law. The Supreme Court will be reviewing two cases challenging it—Sebelius v. Hobby Lobby Stores and Conestoga Wood Specialties v. Sebelius. These cases are interesting and relevant to a larger base of employers because they both concern whether corporations may decline to provide contraceptive coverage to employees based on the religious beliefs of the owners of the corporations.