In our Q1 Insurance Brief we discuss the following topics:

  • Employer Reporting Filing Extension

  • ACA Court Ruling

  • PCORI Fee Update

  • Anthem Blue Cross & Sutter Health

Employer Reporting Filing Extension

On November 29, 2018 the IRS issued Notice 2018-94 which extends by 30 days the due date for providing forms 1095-B or 1095-C forms to employees.  The new deadline is March 4, 2019.   This extension is automatic so employers and providers do not have to request it.

The deadline for submitting the 1094-B and 1094-C forms to the IRS has not changed.   Paper filers must submit by February 28, 2019, and electronic filers must submit by April 1, 2019.  Electronical filing is mandatory for entities filing 250 or more 1095s.

The Notice also extends the good-faith transition relief to 2018 information reporting.   This relief applies to incorrect and incomplete information reported on Form 1095-B or 1095-C, but not to a failure to provide or file the form by the deadline.    Evidence of good faith efforts would include gathering all the data needed and providing it to a third party to prepare the reports.


ACA Court Ruling

On Friday December 14, U.S. District Judge Reed O'Connor released his ruling on the first of five counts in Texas v. United States. The case challenged the constitutionality of the Affordable Care Act's (ACA) individual mandate in light of the Tax Cuts and Jobs Act of 2017, which zeroed out the individual mandate penalty. Judge O'Connor's ruling was that the individual mandate, with no accompanying tax penalty, is unconstitutional. The decision also determined that the individual mandate is such an essential part of the ACA that the ACA cannot function without the individual mandate in place. As a result, his ruling finds the entire ACA invalid.   This ruling is not final until all five counts have been addressed. 

On December 30th Judge O’Connor issued a stay of his opinion.    This means that the law will remain in effect as the appeals process moves along.  The most important thing that employers should know is that the ACA continues to be the law of the land and compliance with the ACA is still being enforced.

What’s Next:   Eighteen states joined together in filing a motion on December 18th in the U.S. District Court for the Northern District of Texas.  The motion is being led by California Attorney General Xavier Becerra.  The filing challenges the ruling asking the court to clarify the impact of the ruling and confirm that the ACA is still the law of the land.

It is expected the ruling will be engaged in appeals for the next several months.   An appeal would go to the Fifth Circuit Court of Appeals.   If the 5th Circuit ruling disagrees with O’Connor then it is likely it will move to the U.S.  Supreme Court.  If the 5th Circuit agrees it is a little less likely to go to the Supreme Court.   But due to the magnitude of what could happen if the ruling were enforced the Supreme Court would likely feel it had to take it up.   We would not expect to see in on the Supreme Court’s calendar until 2020.

PCORI Fee Update

On November 5, the IRS announced in Notice 2018-85 that the adjusted applicable amount for the Patient-Centered Outcomes Research Institute (PCORI) fee for policy or plan years ending on or after October 1, 2018, and before October 1, 2019, will be $2.45. This has increased from $2.39 for plan years that end on or after October 1, 2017, and before October 1, 2018. The PCORI fee is calculated based on the average number of lives covered under the policy or plan. This fee is filed and paid each July with a Form 720, Quarterly Federal Excise Tax Return.

Anthem Blue Cross & Sutter Health Contract

Here is the latest on contract negotiations as reported on Anthem’s news page.    This applies to both California large group and small group clients.

“Anthem Blue Cross (Anthem) continues to be actively engaged in negotiations with Sutter Health (Sutter). Although the termination date for the Sutter and Anthem agreement for commercial business was December 31, 2018, the agreement allows Sutter providers to remain available to members while negotiations continue past this date.

You may have heard from Sutter that Anthem is sending letters on January 1, 2019, to HMO members with Sutter doctors to notify them that they will be reassigned if an agreement is not reached. Anthem is not issuing letters on January 1, 2019, to HMO members.

Our top priority during these negotiations continues to be protecting consumers’ access to affordable health care. Any increases in costs are often paid for by our consumers, and public and private employers, the majority of which are self-insured and pay for their employees’ medical care directly.

We will continue to keep you updated of developments in the negotiation.“