EUCLID MANAGERS ® has served the independent agent since 1976, offering a portfolio of group health, professional liability, individual life, health, disability, annuity and long-term care products.
We proudly represent many fine carriers including
Group Products:
UnitedHealthcare of Illinois
Delta Dental of Illinois
MetLife
Concierge Services:
LifeLock
HealthiestYou
Individual Products:
American General Life Companies
Assurity Life Insurance Company
Delta Dental of Illinois
Fidelity Life
Genworth Financial Insurance Co.
John Hancock Life
Legal & General
(Banner and William Penn)
Lincoln National Life
MetLife
NGL
Principal Financial
Protective Life
Prudential Financial
Transamerica
UnitedHealthOne
VOYA
Contact Information
234 Spring Lake Drive
Itasca, Illinois 60143
Phone: (630) 238-1900
Outside Chicagoland:
(800) 345-7868
Fax: (630) 773-8790 www.euclidmanagers.com
The Affordable Care Act has been the law of the land for five (5) years.
Broker training for the third annual exchange open enrollment is under way.
Despite these milestones, the law – and the rules – continue to evolve and change.
This issue of Reflections discusses two (2) recent developments regarding compliance with the ACA.
continued on page 2
Just as I think the changes in guidance or other changes to the ACA are gone, we get another notice or change in the law.
Brokers have to go back to their clients and advise them how the latest changes impact their coverage, compliance and costs. The bright side is that employers need their brokers – and see their value – more than they ever have.
Euclid Managers is proud to support your efforts through great products, knowledgeable Marketing Reps and staff.
Sincerely yours,
Karen Knippen, RHU, REBC, CLTC
Senior Vice President
E UCLID M ANAGERS
® has been serving the independent agent since 1976 with a portfolio of group health, professional liability and individual life and health, annuity and long-term care products. We proudly represent UnitedHealthcare,
Delta Dental of Illinois, MetLife and Humana Individual. We encourage your feedback and suggestions. Please call your E UCLID M ANAGERS
® Marketing Representative or Marcy Graefen at (630) 238-2915 for more information. Outside
Chicagoland, call (800) 345-7868. Website: www.euclidmanagers.com

Employers should have already assessed whether they meet the requirements to be an “applicable large employer” (ALE) which determines whether an employer is subject to the Employer Shared
Responsibility (ESR) requirements.
To review, the
IRS guidance on determining ALE status is:
• an employer must have employed during the previous calendar year at least 50 full-time employees or a combination of full-time and part-time employees that equals at least 50
• the IRS example -- an employer that employs 40 full-time employees (that is, employees employed
30 or more hours per week on average) and 20 employees employed 15 hours per week on average has the equivalent of 50 full-time employees, and would be an applicable large employer
• Employers average their number of employees across the months in the year to see whether they will be an applicable large employer for the next year. This averaging can take account of fluctuations that many employers may experience in their work force across the year.
This is a simplified description of the counting requirements as they were prior to the recent enactment into law of HR 3236: The Surface
Transportation and Veterans Health Care Choice
Improvement Act of 2015.
This Act was signed into law on July 31, 2015.
This law redefines the employees who are taken into account – or counted – when an employer is determining ALE status. The law provides that an employer does not have to count an individual as an employee for a month if the individual has medical coverage under TRICARE or a health care program under chapter 17 or 18 of the United States Code as it relates to veterans.
Guidance that further defines exactly which programs meet these requirements will be necessary to utilize this exception.
Of critical importance is that the effective date of this change applies to months beginning after
December 31, 2013!
Employers that have exceeded the 50 full-time employee equivalent and, thereby determined to be an
ALE, should take the following steps:
• Survey employees to determine whether they were covered under TRICARE or veterans’ health coverage at any time since January 1, 2014
• If the number of employees may impact ALE status, consult with an attorney to determine whether the programs under which the employees were covered qualify for this special counting exception.
This new provision only affects the counting of employees to determine ALE status. It does not exempt these employees from the other Employer Shared
Responsibility requirements regarding coverage.
The IRS released a second round of Cadillac Tax questions and issues in Notice 2015-52. As with the first notice on this subject, 2015-16, there are more questions than answers.
The notice addresses the following:
• Persons liable for the tax
• Employer aggregation
• Cost of applicable coverage
• Age and gender adjustments to the tax threshold
• Notice and payment of the tax.
-2- Reflections

The question of the persons liable for the tax is more difficult for some types of coverage than others. The law requires that “the coverage provider is liable for any applicable excise tax.”
If coverage is provided by an insurer, it is clear that the coverage provider is the health insurance plan.
Things are murkier with respect to a health savings account (HSA) or self-insured plan.
In such cases, the IRS is considering who administers the plan for day-to-day functions or, alternatively, the person that has the ultimate authority or responsibility for plan decisions.
The excise tax also relies on the treatment of entities that are part of a controlled group as a single employer.
The IRS asks in the notice for the challenges that controlled group status will have on assessment of the tax.
The IRS notes that they “anticipate that the taxable period will be the calendar year.” But, the law allows different taxable periods based on employer size. For example, experience rated plans may pose a problem for a calendar year taxable period since the actual cost of coverage may not be known until the experience rating period has elapsed.
The notice recognizes that an entity that passes through the excise tax may inflate the cost of the tax. The notice advises that:
“The excise tax is not deductible, the coverage provider will experience an increase in taxable income (that is not offset by a deduction) by reason of receipt of the excise tax reimbursement.
As a result, it is anticipated that the amount the coverage provider passes through to the employer may include not only the excise tax reimbursement, but also an amount to account for the additional income tax the coverage provider will incur (the income tax reimbursement).
In short, employers may face a true tax rate of as much as 60% or more as a result of the pass through.
IRS is asking for guidance on whether it is feasible to separately bill for tax reimbursements which could allow for the amounts to be excluded from income.
Some employers had identified an issue regarding contributions to account based plans such as HSAs,
HRAs, and FSAs. The concern is that some employers make contributions in a lump sum, rather than spacing them out over the course of the year. If these contributions had to be realized in the month they are made, the likelihood that an employer would hit the tax in that month would increase dramatically.
The notice suggests that Treasury and the IRS will consider allocating these contributions on a pro-rata basis throughout the plan year.
One of the more complex sections of the notice considers how to adjust the dollar limit for age and gender in the employer group.
When an employer exceeds the tax threshold, the question that arises is how does the employer notify each coverage provider about the tax owed and also notify the IRS?
The notice contemplates use of Form
720, the form that employers now use to pay the
ACA’s PRORI fees.
This section of the notice reveals just how complicated an adjustment will be to determine and implement.
Comments on this notice are due no later than
October 1, 2015.
Reflections -3-

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