In May, the Department of Health and Human services (HHS) published a final rule implementing a nondiscrimination provision to the Affordable Care Act. The provision is called Section 1557 and follows in the vein of nondiscriminatory provisions of other acts, such as Title VI of the Civil Rights Act of 1964, Title IX of the Education Amendments of 1972, and so forth. Section 1557 prohibits discrimination on the basis of race, color, national origin, age, sex, or disability in certain healthcare plans or activities. Discrimination is seen as denying, cancelling, limiting, or refusing health coverage to any of these protected groups.

While this provision does build on other federal acts, Section 1557 is unique. Here are some important elements of the provision that you need to know:

1. Transgender people are protected under the provision. Section 1557 is the first civil rights law to prohibit discrimination on the basis of sex for healthcare programs. Although this provision has been enforced since 2010, this final rule provides clarification on who is covered within that discrimination category and in what context. This means that transgender people under a covered plan cannot be denied sex-related healthcare no matter the gender they choose to identify with. For example, a medically necessary pelvic exam cannot be denied because the patient was born male.
2. Services relating to transitioning genders will now be covered. Employers and insurances can no longer exclude care related to transitioning. This means that employers cannot impose a higher cost-sharing premium to those undergoing treatment that may have been previously denied. Transition-related services, which include treatment for gender dysphoria, are not limited to surgical treatments and may include, but are not limited to, services such as hormone therapy and psychotherapy, which may occur over the lifetime of the individual.
3. But services can still be denied. Employers and insurance companies are not obligated to approve every request for coverage if it is not medically necessary or if there is a nonsurgical route. However, you will be expected to provide an objective reason for denial.
4. The section statute applies to most health programs and activities. Section 1557 applies to any entity that receives federal financial assistance. This includes the Medicare Part D program, health insurance marketplaces, and all plans offered by issuers that participate in those marketplaces. Covered entities may include hospitals, health clinics, health insurance issuers, state Medicaid agencies, community health centers, physicians’ practices, and home healthcare agencies.
5. Even health and wellness programs are subject to the rule. If you receive any funding or tax incentives from the federal government to provide healthcare to your employees, any program or activity your company administers is subject to the rule. Wellness programs or weight loss activities that discriminate against the groups mentioned in the rule are breaking federal law.
6. There are no exceptions for religious employers. No matter your company’s religious affiliation, if you are a covered entity, you are not exempt from the rule. This means that anyone who seeks gender transitional care cannot be denied coverage. However, this does not cancel out any previous rules meant to protect religious groups, such as the Religious Freedom Restoration Act.
7. You should start revising your health plans now. This rule comes into effect on January 1, 2017. This means that if your benefit plans or health plans include exclusions or coverage limitations related to sex, gender dysphoria, or sexual orientation, your plans will be out of compliance to federal law. Even if your particular benefit designs don’t fall under the Department of Health and Human Services’ jurisdiction, you are still subject to Title VII and the Americans with Disabilities Act.

While many employers will not be subject to Section 1557, the new provision sets a precedent for how the federal law expects healthcare to be administered. It will also impact how companies design their benefits packages in order to stay in compliance. Employer sponsors of self-insured plans should consult with their TPA to determine if the TPA is a covered entity and whether any plan design changes are recommended.

If your company employs more than 50 people, you may be inundated with marketplace subsidy orders. The U.S .Department of Health and Human Services (HHS) mailed out several hundred thousand of them toward the end of June. (Companies residing in states where the state manages ACA marketplaces may have already received a similar notice in 2015 from their state.) HR professionals want to know, in short order, what they are and what to do with them.

These notices let your organization know that one or more of your employees qualifies for insurance subsidies. This occurs if the individual has indicated that he or she worked for your company and either wasn’t offered healthcare coverage, was offered coverage that wasn’t affordable, or was in a waiting period and unable to enroll in healthcare coverage. The notices themselves offer employers a chance to appeal the subsidy so they won’t be penalized come tax time.

Here is what you need to know about these notices:

1. If a penalty is likely. While receiving a notice does not immediately indicate that your company will be penalized with hefty tax fees, it does mean that penalties are likely if the information reported is correct. The government will want to be compensated for any subsidy it provides. Therefore, if your employees are working full-time and still qualify for a subsidy, you will be charged a portion of that subsidy.
2. Which employees qualify for subsidies. Employees that qualify for subsidies usually fall into one of four categories:
   • Workers who did not receive an offer for health insurance from their employer
   • Workers who find their employer’s healthcare options to be unaffordable
   • Any worker whose work healthcare options don’t provide adequate coverage (or minimum value)
   • New employees in a waiting period and so unable to enroll
3. When to appeal. The notices are also part of the verification process for applicants trying to receive subsidy. As mentioned above, if the information is accurate and the employee qualifies, you will be fined. However, there are often times when the information is not accurate: For example, if the worker is covered under a qualifying health plan that is proven to be affordable or if the employee is now working part-time. If your company does not employ more than 50 full-time employees, you are not free of potential penalties. Allowing an employee to receive a subsidy will have harsher ramifications.
4. When not to appeal. You do not need to respond to notices for part-time employees (unless the notice inaccurately identifies them as full-time employees), employees who were terminated while in a waiting period for coverage, or notices naming spouses or family members as the recipients of subsidy. Again, employees who have not offered affordable coverage to full-time employees will not have a basis to appeal.
5. How to appeal. All notices are sent via regular mail. Once you receive the notice in the mail, you have 90 days to respond if you wish to appeal. In order to appeal, you will need:
   • Your original subsidy award notice that was mailed to you.
   • A completed Employer Appeal Request Form. If your company resides in a state that runs its own marketplace, you may recognize this form, because more than half use it.
   • Copies of documentation proving you have offered coverage that is both affordable and adequate. Or, documentation proving the employee is not eligible—for example, pay statements proving an employee is part-time.

These documents can be mailed or faxed back to the HHS. Once they are received, a decision will be made in writing. The employer will have the opportunity to file a second appeal in some special cases. After the second appeal, the decision will be final for both the employer and your company. The entire process, including the second appeal process, can take nearly a year.

How to manage. Depending on how large your company is, the intake of these notices can become overwhelming. Be proactive by establishing and communicating processes that can streamline the processes. For example, if your company has satellite locations, you may want to come up with a protocol to handle notices that are sent there. Designating a person to process this paperwork is also an effective way to streamline the process of appealing and record-keeping. Be sure that the person you designate is not in charge of also disciplining employees.

Again, receiving a notice does not mean your company will be fined. This is merely the vetting process for the applicant. If the information is accurate, the IRS will determine if you get fined at a later date. Your job is to report any errors you find and to ensure the information gets sent as soon as possible. By being aware of your role, you will be able to effectively prevent waste and streamline the process.

Tax season has come and gone, and summer is when businesses start getting lax about their recordkeeping. Doing so, however, can cause a lot of headaches later on in the year. On the other hand, strong recordkeeping makes tax time go faster and helps you keep track of your company’s performance. Here are some great tips to keep you organized:

Recordkeeping Tip #1: Don’t throw away employment tax records.

According to the IRS, you should keep employment tax records for at least 4 years from the date you filed or the date the tax becomes due, whichever is first. But if you receive income from various sources or have a unique situation, you might want to save them for at least 6 years. The IRS has the right to audit someone for up to 6 years if they suspect he or she has reported less than 25% of his or her income.

According to the IRS and other tax experts, these are the documents you should keep:

• Your employer identification number (EIN).
• Amounts and dates of all wage, annuity, and pension payments.
• Amounts of tips reported.
• The fair market value of in-kind wages paid.
• Records of fringe benefits provided, including substantiation.
• Records of allocated tips.
• Dates of amounts of tax deposits made.
• Copies of employees’ and recipients’ income tax withholding allowance certificates.
• Periods for which employees and recipients were paid while absent due to sickness or injury and the amount of weekly rate of payments you or third-party payers made to them.
• Dates of employment.
• Any employee copies of W-2s that were returned to you as undeliverable.
• Names, addresses, and Social Security numbers of employees and recipients.

If an employee quits or is terminated, you should save these documents as if he or she still worked for your company.

Recordkeeping Tip #2: Keep supporting documents, too.

The items listed below are documents that can help you support tax documents, prepare financial statements, and keep track of your performance. You will want to organize them by type and year so they are easy to retrieve.

• Gross receipts—income you receive from your business without deductions.
• Purchases—receipts that show the amount paid and the cost of any business purchase.
• Invoices—documents that track a business expense. Examples of these can be utility statements, phone bills, or rental agreements.

Recordkeeping Tip #3: Get in touch with your state.

Some states may require records in addition to those needed for federal tax purposes. You should get in touch with your state to see if that is the case. For example, you may need to keep records of payments for state unemployment insurance or spend on employee training.

Recordkeeping Tip #4: Ditch the docs when you’re done.

Once the required retention time frames have been met, set a schedule to destroy any paper documents and create a “destruction log.” This ensures that no confidential employee information is inadvertently released.

Always be in the habit of maintaining good records. They can help you keep your business working as efficiently as a small business can run. By keeping a paper trail, you can ensure that you are prepared, should an audit occur.

The latest update to the benefit and payment parameters for the Affordable Care Act (ACA) has been published and contains very important information relevant to employer and group health plans.

Every year, the Department of  Health and Human Services (HHS) releases a notice for the following year’s parameters. Although most of the information pertains to the marketplace, where individuals can choose and purchase insurance, a great deal specifically pertains to businesses.

Here are a few of those changes below:

1. 1. Annual limits for cost sharing. Starting January 1st, 2017, the annual out of pocket limits will be $7,500 for individual and $14,300 for family. These figures will be higher than 2016 limits which are $6,850 for an individual plan and $13,700 respectively. They apply to in-network essential health benefits offered under non-grandfathered health plans (plans purchased before March 23, 2010 which are exempt from many ACA changes). This means that an individual or family cannot pay more than the set limits on deductibles, coinsurance and copayments, or other in-network costs. Premiums, out of network costs, and non-essential health insurance do not apply, however, are not considered cost sharing.
   2. New Businesses. A newly registered business will be considered large or small, for the purposes of providing quality health insurance, based on the number of employees it is expected to hire within the current calendar year. Normally, a business is determined to be a large or small employer by how many full time employees a company employs the previous calendar year. A large employer is a business which employs more than 51 full time employees. An applicable large employer (ALE) must offer minimum essential coverage or face IRS penalties. The coverage must be affordable (as determined by the government) and provide minimum value (when a plan pays 60% of allowed benefits expected to be incurred under the plan). This amendment that applies solely to ALEs is called the shared responsibility provision, but many call it the employer mandate or pay or play provision. ALEs are also expected to report offers for minimum essential coverage to its employees. This is called the employer information reporting provision. However, if a new business is not expected to hire over 50 full time employees within the current calendar year, these provisions will not apply.
   3. Marketplace notification to employers. Beginning on January 1st, the marketplace will notify an employer when an employee applies for subsidized coverage and qualifies. Because ALEs may face penalties when an employee qualifies for coverage subsidy, this system will help companies work more efficiently with the IRS in correcting any possible reporting errors that may result in improper coverage subsidy.

• Group Health Plans. Under the new rule, health insurance rates for a small group plan will be determined by the location where most employees reside. Previously, they were determined by the address a business was registered at. However, rates might differ significantly between the two locations if they are different. Therefore, rates will now be determined by where a small business primarily operates. Also, if rates become too high, they will be subject to review by the HHS. Rate increases will be considered too high if they exceed the ‘unreasonableness’ threshold, currently at 10%.

1. Changes to the Small business health options (Shop) exchange. Beginning in 2017, the Shop Exchange will allow small businesses to offer plans at all metal levels from one insurer. This ‘vertical choice’ option means that employers can choose bronze, silver and gold plans from the same insurer. States had the choice of opting out of this option before March 16. 2016.

Keeping up with these annual revisions are very important. By staying updated, your company will avoid costly penalties and unnecessary complications with the government.

What to do prior to an EBSA audit

If your company has received a letter requesting an audit by the Employee Benefits Security Administration, do not fear. There are simple steps that will assist in resolving any issues, and Sonus Benefits is here to help.

• Send documentation and proof of coverage to the Department of Labor when it is requested.
• Contact the EBSA investigator to obtain more information.
• Find out the scope of the audit.
• Talk with your legal counsel.
• Appoint an on-site representative of the company.

On-site investigation

The investigator will interview individuals in the company to confirm their coverage and request copies of all documentation. Depending on the outcome, the investigator may then make recommendations to increase compliance. Negotiations may be needed until settlement is reached.

Best practices to prepare

• Have copies of all documents ready and up-to-date.
• Be courteous to the investigator at all times.
• Prepare any people who might be interviewed.
• Ensure that all members of your legal and management teams communicate.
• Contact all service providers to ensure they will assist in making any necessary changes.
• Obtain information about the investigation as quickly as possible.

How Sonus can help

Sonus Benefits provides the tools needed to ensure that when an audit notification is received, all bases are covered. Our compliance team stays current with all legislative changes to properly assist companies in their reporting and planning of benefits. If you receive an audit notification, rapid communication with your Sonus account representative is crucial.

Working closely with your company, Sonus puts together a custom package for all of your coverage needs — present and future. If an audit were to take place, our expert team would be there every step of the way. Our priority is keeping up with changing demand and benefit expectations to consistently provide your company with exactly what you need, when you need it.

Sonus has trusted experts, approachable representatives, and answers to any questions about evolving benefits requirements. Whether it is the Affordable Care Act, retirement plans or disability coverage, our team will create and implement a company-wide strategy to protect against compliance issues.

As our client, you are the top priority when we build your custom package. Sonus Benefits’ custom plans include web resources, medical, vision and dental coverage, flexible spending accounts, life insurance options, and many other services that will boost the incentives you offer as well as ensure you have the correct minimum coverage in place. With Sonus on your side, your company can focus on growth and leave the benefits to the experts.