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Employer Health Care Reform Guide

Employer Shared Responsibility and Reporting

The Affordable Care Act defines large employers as companies that have, on average, at least 50 full-time (or full-time equivalent) employees. These employers are required to provide health coverage that is affordable and meets a minimum value or pay a tax penalty.

The provision was originally slated to take effect in 2014 and then, under transitional relief, moved to 2015. Then in February 2014, the administration announced final rules that provide additional flexibility for employers.

Play or Pay
Nicknamed the "Play or Pay Rules," this provision applies to for-profit, nonprofit and government employers, and defines a full-time employee as an employee who was employed on average at least 30 hours of service per week during the preceding calendar year. The penalty applies if the employer does not offer coverage that meets the minimum value standard and is affordable, and at least one employee gets financial help through one of their state marketplace or the federal Health Insurance Marketplace.  

Employers can use the government-developed calculator to check minimum valuable. Health Net 2014 Summary of Benefits of Coverage (SBC) states whether the plan meets minimum value.

Effective Dates
The IRS published final regulations on February 12, 2014. Under the final regulations, applicable large employers that have fewer than 100 full-time employees generally will have until 2016 to comply with the pay or play rules. Applicable large employers with 100 or more full-time employees must comply starting in 2015.

Employer Shared Responsibility Reporting Requirements (ACA Section 6056)

Applicable Large Employers (ALEs) who are subject to the employer shared responsibility provisions of the Affordable Care Act must comply with IRS reporting requirements. The IRS defines an ALE as an employer with at least 50 full-time employees or a combination of full-time and part-time employees that is equivalent to at least 50 full-time employees (for example, 100 half-time employees equals 50 full-time employees).

Beginning in 2016, ALEs must annually report the offer of health insurance coverage to employees, and send a statement about the offer of coverage to full-time employees. The IRS will use the information to determine if individuals are eligible for a Marketplace subsidy, and/or if ALE owes a shared responsibility penalty.

When to Report and Send Statements to Employees
Employer shared responsibility reporting begins in 2016, for the 2015 calendar year. Employers are required to:

Note: ALEs with self-insured plans may use Forms 1094-C and 1095-C to fulfill reporting requirements under Sections 6055 (MEC reporting) and 6056 (Employer Shared Responsibility reporting). Non-ALE groups (i.e., small business groups) with self-insured plans must also report under Section 6055, but are not required to report under Section 6056.

What to Include on the Forms
Form 1094-C

Form 1095-C

Filing Requirements At-a-Glance
In addition to the forms that health plans are required to file, the Marketplaces and certain employer groups also have form-filing requirements. The chart below outlines who sends what form.

The chart below summarizes the responsibility for entities that provides Minimum Essential Coverage and are subject to Employer Shared Responsibility.

Plan Type Minimum Essential Coverage Reporting (Section 6055) Employer Shared Responsibility Reporting (Section 6056)
Individual (Marketplace plan) Form 1095-A Sent by the Marketplace N/A
Individual (non‑Marketplace) Forms 1094-B & 1095-B Filed and sent by the Health Plan N/A
Small Group fully insured plan (SHOP and non‑Marketplace) Forms 1094-B & 1095-B Filed and sent by the Health Plan N/A
Small Group self‑insured plan (non-ALE) Forms 1094-B & 1095-B Employer's responsibility to file and send statements to employees/former employees N/A
ALE  fully insured plan Forms 1094-B & 1095-B Filed and sent by the Health Plan Forms 1094-C & 1095-C (sections I & II only) Employer's responsibility to file and send statements to employees
ALE  self-insured plan Forms 1094-C & 1095-C (all sections)
  • Employer's responsibility to file and send statements to employees
  • Self-insured large group plans meet reporting requirements of both section 6055 and 6056 by filing Forms 1094-C & 1095-C

Additional Forms and Information

More details on minimum essential coverage reporting.

This information is for general purposes only and is not legal or tax advice. For more detailed information about IRS filings, tax or legal implications, please contact your professional tax advisor or legal counselor.

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Important Notice

General Purpose
Health Net's National Medical Policies (the "Policies") are developed to assist Health Net in administering plan benefits and determining whether a particular procedure, drug, service, or supply is medically necessary. The Policies are based upon a review of the available clinical information including clinical outcome studies in the peer-reviewed published medical literature, regulatory status of the drug or device, evidence-based guidelines of governmental bodies, and evidence-based guidelines and positions of select national health professional organizations. Coverage determinations are made on a case-by-case basis and are subject to all of the terms, conditions, limitations, and exclusions of the Member's contract, including medical necessity requirements. Health Net may use the Policies to determine whether, under the facts and circumstances of a particular case, the proposed procedure, drug, service, or supply is medically necessary. The conclusion that a procedure, drug, service, or supply is medically necessary does not constitute coverage. The Member's contract defines which procedure, drug, service, or supply is covered, excluded, limited, or subject to dollar caps. The policy provides for clearly written, reasonable and current criteria that have been approved by Health Net's National Medical Advisory Council (MAC). The clinical criteria and medical policies provide guidelines for determining the medical necessity criteria for specific procedures, equipment and services. In order to be eligible, all services must be medically necessary and otherwise defined in the Member's benefits contract as described in this "Important Notice" disclaimer. In all cases, final benefit determinations are based on the applicable contract language. To the extent there are any conflicts between medical policy guidelines and applicable contract language, the contract language prevails. Medical policy is not intended to override the policy that defines the Member's benefits, nor is it intended to dictate to providers how to practice medicine.

Policy Effective Date and Defined Terms.
The date of posting is not the effective date of the Policy. The Policy is effective as of the date determined by Health Net. All policies are subject to applicable legal and regulatory mandates and requirements for prior notification. If there is a discrepancy between the policy effective date and legal mandates and regulatory requirements, the requirements of law and regulation shall govern. In some states, prior notice or posting on the website is required before a policy is deemed effective. For information regarding the effective dates of Policies, contact your provider representative. The Policies do not include definitions. All terms are defined by Health Net. For information regarding the definitions of terms used in the Policies, contact your provider representative.

Policy Amendment without Notice.
Health Net reserves the right to amend the Policies without notice to providers or Members. In some states, prior notice or website posting is required before an amendment is deemed effective.

No Medical Advice.
The Policies do not constitute medical advice. Health Net does not provide or recommend treatment to Members. Members should consult with their treating physician in connection with diagnosis and treatment decisions.

No Authorization or Guarantee of Coverage.
The Policies do not constitute authorization or guarantee of coverage of any particular procedure, drug, service, or supply. Members and providers should refer to the Member contract to determine if exclusions, limitations and dollar caps apply to a particular procedure, drug, service, or supply.

Policy Limitation: Member's Contract Controls Coverage Determinations.
Statutory Notice to Members: The materials provided to you are guidelines used by this plan to authorize, modify or deny care for persons with similar illnesses or conditions. Specific care and treatment may vary depending on individual need and the benefits covered under your contract. The determination of coverage for a particular procedure, drug, service, or supply is not based upon the Policies, but rather is subject to the facts of the individual clinical case, terms and conditions of the Member's contract, and requirements of applicable laws and regulations. The contract language contains specific terms and conditions, including pre-existing conditions, limitations, exclusions, benefit maximums, eligibility, and other relevant terms and conditions of coverage. In the event the Member's contract (also known as the benefit contract, coverage document, or evidence of coverage) conflicts with the Policies, the Member's contract shall govern. The Policies do not replace or amend the Member contract.

Policy Limitation: Legal and Regulatory Mandates and Requirements
The determinations of coverage for a particular procedure, drug, service, or supply is subject to applicable legal and regulatory mandates and requirements. If there is a discrepancy between the Policies and legal mandates and regulatory requirements, the requirements of law and regulation shall govern.

Reconstructive Surgery
California Health and Safety Code 1367.63 requires health care service plans to cover reconstructive surgery. "Reconstructive surgery" means surgery performed to correct or repair abnormal structures of the body caused by congenital defects, developmental abnormalities, trauma, infection, tumors, or disease to do either of the following:

1. To improve function; or
2. To create a normal appearance, to the extent possible.

Reconstructive surgery does not mean "cosmetic surgery," which is surgery performed to alter or reshape normal structures of the body in order to improve appearance.

Requests for reconstructive surgery may be denied, if the proposed procedure offers only a minimal improvement in the appearance of the enrollee, in accordance with the standard of care as practiced by physicians specializing in reconstructive surgery.

Reconstructive Surgery after Mastectomy
California Health and Safety Code 1367.6 requires treatment for breast cancer to cover prosthetic devices or reconstructive surgery to restore and achieve symmetry for the patient incident to a mastectomy. Coverage for prosthetic devices and reconstructive surgery shall be subject to the copayment, or deductible and coinsurance conditions, that are applicable to the mastectomy and all other terms and conditions applicable to other benefits. "Mastectomy" means the removal of all or part of the breast for medically necessary reasons, as determined by a licensed physician and surgeon.

Policy Limitations: Medicare and Medicaid
Policies specifically developed to assist Health Net in administering Medicare or Medicaid plan benefits and determining coverage for a particular procedure, drug, service, or supply for Medicare or Medicaid Members shall not be construed to apply to any other Health Net plans and Members. The Policies shall not be interpreted to limit the benefits afforded Medicare and Medicaid Members by law and regulation.


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