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CIBC of Illinois, Inc. Merges With Strategic Employee Benefit Services of Champaign

CIBC of Illinois, Inc. Merges With Strategic Employee Benefit Services of Champaign



Kankakee, IL– (February 9, 2015)- William Johnson, Chairman and CEO of CIBC of Illinois, Inc. is pleased to announce the successful merger of CIBC of Illinois and Strategic Employee Benefit Services of Champaign (SEBS). The new organization will operate as CIBC of Illinois, Inc. and include offices in both Kankakee and Champaign.

“This is an extremely exciting development for both of our organizations,” said Johnson. “The expertise that CIBC possesses in the ever-changing world of employee benefits and group health insurance is exactly what businesses are demanding, and the SEBS connection to the Central and Southern Illinois markets is a great opportunity for us to deliver these solutions on a consistent basis. The synergies we gain via this new powerhouse organization will position CIBC as an industry-leader in both size and capabilities that we deliver to businesses.”

As a result of the merger, former SEBS Benefit Consultant Tony Johnston was named as President and Chief Operating Officer for both the Kankakee and Champaign offices, and Erin Beck remains as Chief Financial Officer for CIBC.

“This is a great opportunity for the SEBS team to further commit to the exciting business opportunity of employee benefits, “said Tony Johnston. “Our extensive client base will now have access to the cutting edge benefits knowledge, wellness resources, technology, and regulatory compliance that is requisite in the healthcare reform era.”

About CIBC of Illinois, Inc.

CIBC is a leader in the development and implementation of innovative employee benefits plans. Headquartered an hour south of Chicago in Kankakee and with a branch office in Champaign, CIBC serves private sector clients, non-profit organizations, governmental bodies and agencies and Taft-Hartley health and welfare funds across the Midwest. Over the past two decades, they have creatively addressed the employee benefits needs of hundreds of organizations — some with as few as two employees and others with as many as 25,000 employees around the globe.


High Deductible Plan Options: Bringing Consumerism and Cost-Savings to tthe Marketplace

CIBC of Illinois specializes in Group Benefit plans, and in order to best serve our clients, we also employ consultants that specialize in individual and family health insurance plans. In both of these areas, we continually get asked about high deductible plans because, in most cases, there is a significant cost advantage found in these types of plans. Hopefully this article will provide some basic information, and as always, please contact us for a detailed analysis.

Moving From a Standard Plan to an HDHP

There is no such thing as a one-size-fits-all health plan. Everyone has different health insurance needs depending on their health care requirements along with those of their dependents. While some prefer standard deductible health insurance (often called a PPO health insurance plan), people are increasingly switching to a High Deductible Health Plan (HDHP) with a Health Savings Account (HSA) as a better way to maximize their health care dollars.

Standard Plans vs. HDHPs

Standard plans and HDHPs are set up much in the same way. Under both plans, the member pays a premium for coverage. Both must cover preventive services free of charge. If a member receives nonpreventive medical care, he or she pays a deductible—a specified amount of money that the insured must pay before an insurance company will pay a claim. The chief difference between the plans is that under an HDHP, premium payments are considerably lower and the deductible is considerably higher.

The minimum deductibles for HDHPs are established by the IRS. For 2015, the minimum deductible is $1,300 for individuals and $2,600 for families. Comparatively, standard plans come with a deductible that is generally quite a bit lower.

The cost of the higher premiums for HDHP plans is offset by two factors. First, as previously mentioned, the premium price for an HDHP is much lower than standard plans. This means that members who use little or no medical care during the year can save hundreds of dollars that would otherwise go to unnecessary health coverage, while still remaining compliant with the individual mandate provision of the Affordable Care Act (ACA).

While some people prefer standard deductible health insurance, people are increasingly switching to an HDHP with an HSA as a better way to maximize their health care dollars.

The second major factor setting HDHPs apart from standard plans is the addition of an HSA.

Health Savings Accounts

HSAs are one of several types of tax-advantaged health accounts, and are exclusively available to people enrolled in an HSA-compliant HDHP.

With an HSA, the account holder or his or her employer (usually both) make contributions into a savings account. No taxes are deducted from money placed into the account, as the HSA contribution is withdrawn from a paycheck before taxes are assessed. While in the savings account, the money can earn interest. The employee is free to spend that money on qualified medical expenses.

The total amount that can be placed in an HSA per year is capped by the IRS. For 2015, the maximum contribution limit is $3,350 for individuals and $6,650 for families, though account holders over 55 years old may contribute an extra $1,000 to those totals.

These limits are significantly higher than other types of tax-advantaged health accounts, and unlike the other options, HSAs have additional unique features that allow you to save more money and keep it over a longer period of time. Whereas funds in health Flexible Spending Accounts (FSAs) and Health Reimbursements Arrangements (HRAs) come with an expiration date or a maximum carry-over dollar amount, HSAs allow you to build your balance as high as you wish in perpetuity. Except for the cap on total contributions per year, there are no limits on how much money can be in your account and how long it remains open.

Additionally, HSAs are individually owned accounts, meaning employees take the account—including any employer contributions—with them if they leave their employer.

Using Health Care with an HDHP

Because of the high deductibles associated with HDHPs, having an HDHP means you need to become a smart health care shopper.

The most important thing to keep in mind is that some types of health care products and services cost much more than similar items, and the more expensive option may not be necessary for the treatment you require.

Additionally, like most other health plans, HDHPs cover preventive services at no cost. Preventive care is defined as medical checkups and tests, immunizations and counseling services used to prevent chronic illnesses from occurring. Preventive care not only keeps you healthy, but it can also monitor and even reduce the risk of developing future, costly health problems.

Most types of specific preventive services are listed here. While it can sometimes be difficult to determine if a specific medical service qualifies as preventive, you can call your health plan to learn if a service is considered preventive before receiving it.

Other medial savings strategies people with HDHPs should consider are:

  • Using a generic in place of a name brand prescription can result in significant savings. While there is not a generic version for every type of drug, the only difference between a branded drug and a generic counterpart is the name; they both have the same active ingredients. If you need medication, find out what class of drugs your prescription is classified under. If you receive a name brand prescription from a doctor, ask if a generic is available.
  • Emergency Room vs. Urgent Care.Like prescriptions, there is a sizable cost adjustment between emergency rooms and urgent care. It is very expensive for hospitals to support all of the equipment and staff that an emergency room requires, so visits to the emergency room generally cost much more than those to a doctor’s office or an urgent care center. If you develop a problem that needs to be treated quickly, but it is not life threatening or risking disability, go to an urgent care clinic.
  • Qualified Medical Expenses. Use your HSA to pay for qualified medical expenses without paying taxes. Qualified medical expenses include the costs of diagnosis, cure, mitigation, treatment or prevention of disease, and the costs for treatments affecting any part or function of the body. These expenses include payments for medical services rendered by physicians, surgeons, dentists and other medical practitioners. They also include the costs of equipment, supplies and diagnostic devices needed for these purposes. Like preventive care, there can sometimes be uncertainty surrounding what is an allowable qualified medical expense. Specific qualified medical expenses are approved by the IRS, and a list of them can be found here.

HDHPs and HSAs are not the ideal health coverage plan for everyone. However, for many people, HDHPs are a great way to avoid paying for superfluous coverage and HSAs are an excellent vehicle for stockpiling tax-free money to use on future health care needs.

Understanding Voluntary Benefits

Understanding Voluntary Benefits

Benefits Buzz: Employee Benefits Newsletter for August/Septmber 2014

Benefits Buzz September 2014

HR Update: Illinois Implements “Ban the Box” Law

The Job Opportunities for Qualified Applicants Act (Act), also known as “ban the box,” places restrictions on when employers may make pre-employment inquiries into an applicant’s criminal background or history. The law goes into effect on Jan. 1, 2015 and will impact Illinois employers’ hiring practices.

Covered employers

The Act applies to private employers that have 15 or more employees in the current or preceding calendar year, as well as employment agencies. Public employers are excluded from the Act.


Under the Act, a covered employer or employment agency may not inquire about, consider or require disclosure of an applicant’s criminal record or history until after the applicant has been determined qualified for the position and the employer or agency has notified the applicant that he or she has been selected for an interview. In the case of a position for which an employer does not conduct interviews, inquiries into an applicant’s criminal background or history cannot occur until after a conditional offer of employment has been extended to the applicant.

Although the Act places restrictions on pre-employment inquires, employers may notify applicants in writing of specific offenses that will disqualify them from employment due to a federal or state law, or due to the employer’s policy. Additionally, the Act itself does not prohibit employers from denying applicants who have been convicted of certain offenses from a position as long as the process for inquiring about those convictions has been followed.

Exempted Positions

The requirements of the Act do not apply to certain exempted positions. Specifically, it does not apply to positions where:

  • Employers are required to exclude applicants with certain criminal convictions from employment due to a federal or state law;
  • The position requires a standard fidelity bond or an equivalent bond, and an applicant’s conviction of one or more specified offenses would disqualify the applicant from obtaining the bond; or
  • The position requires licensing under the Emergency Medical Services System Act.


The Illinois Department of Labor (IDOL) is responsible for investigating alleged violations of the Act. If the IDOL finds that a violation has occurred, it may impose penalties ranging from a written warning for a first violation up to $1,500 fines for repeated violations or failure to remedy a previous violation.

Compliance Steps for Employers

Employers should thoroughly review their employment applications and policies to ensure that they are in compliance with the Act and other state and federal laws regarding handling arrest records and convictions.

IRS Increases ACA Affordability Percentage: What Employers Need to Know

Starting in 2015, the Affordable Care Act (ACA) requires applicable large employers to offer affordable, minimum value health coverage to their full-time employees (and dependents) or pay a penalty. The employer penalty rules are also known as the employer mandate or the “pay or play” rules.

Also, effective for 2014, affordability of health coverage is used to determine whether an individual is:

  • Eligible for a premium tax credit for a health plan purchased through an Exchange; and
  • Exempt from the penalty for not having minimum essential coverage.

On July 24, 2014, the IRS released Revenue Procedure 2014-37 to index the ACA’s affordability percentages for 2015.

For plan years beginning in 2015, an applicable large employer’s health coverage will be considered affordable under the pay or play rules if the employee’s required contribution to the plan does not exceed 9.56 percent of the employee’s household income for the year.

Applicable large employers can use one of the IRS’ affordability safe harbors to determine whether their health plans will satisfy the 9.56 percent requirement for 2015 plan years, if requirements for the applicable safe harbor are met.

This adjusted affordability percentage will also be used to determine whether an individual is eligible for a premium tax credit for 2015. Individuals who are eligible for employer-sponsored coverage that is affordable and provides minimum value are not eligible for a premium tax credit.

Also, Revenue Procedure 2014-37 adjusts the affordability percentage for the exemption from the individual mandate for individuals who lack access to affordable minimum essential coverage. For plan years beginning in 2015, coverage is unaffordable for purposes of the individual mandate if it exceeds 8.05 percent of household income.


The pay or play rules apply only to applicable large employers. An “applicable large employer” is an employer with, on average, at least 50 full-time employees (including full-time equivalents) during the preceding calendar year.

Many applicable large employers will be subject to the pay or play rules starting in 2015. However, applicable large employers with fewer than 100 full-time employees may qualify for an additional year, until 2016, to comply with the employer mandate.

Affordability Determination

The affordability of health coverage is a key point in determining whether an applicable large employer will be subject to a penalty.

For 2014, the ACA provides that an employer’s health coverage is considered affordable if the employee’s required contribution to the plan does not exceed 9.5 percent of the employee’s household income for the taxable year. The ACA provides that, for plan years beginning after 2014, the IRS must adjust the affordability percentage to reflect the excess of the rate of premium growth over the rate of income growth for the preceding calendar year.

As noted above, the IRS has adjusted the affordability percentage for plan years beginning in 2015 to 9.56 percent. This adjusted affordability percentage will also be used to determine whether an individual is eligible for a premium tax credit for 2015.

The affordability test applies only to the portion of the annual premiums for self-only coverage and does not include any additional cost for family coverage. Also, if an employer offers multiple health coverage options, the affordability test applies to the lowest-cost option that also satisfies the minimum value requirement.

Affordability Safe Harbors

Because an employer generally will not know an employee’s household income, the IRS created three affordability safe harbors that employers may use to determine affordability based on information that is available to them.

The affordability safe harbors are all optional. An employer may choose to use one or more of the affordability safe harbors for all its employees or for any reasonable category of employees, provided it does so on a uniform and consistent basis for all employees in a category.

The affordability safe harbors are:

  • The Form W-2 safe harbor (affordability determined based on Form W-2 wages from that employer)
  • The rate of pay safe harbor (affordability determined based on an employee’s rate of pay)
  • The federal poverty line (FPL) safe harbor (affordability determined based on FPL for a single individual)


Beginning in 2014, the ACA requires most individuals to obtain acceptable health insurance coverage for themselves and their family members or pay a penalty. This rule is often referred to as the “individual mandate.” Individuals may be eligible for an exemption from the penalty in certain circumstances.

Under the ACA, individuals who lack access to affordable minimum essential coverage are exempt from the individual mandate. For purposes of this exemption, coverage is affordable for an employee if the required contribution for the lowest-cost, self-only coverage does not exceed 8 percent of household income. For family members, coverage is affordable if the required contribution for the lowest-cost family coverage does not exceed 8 percent of household income. This percentage is to be adjusted annually after 2014.

For plan years beginning in 2015, Revenue Procedure 2014-37 increases this percentage from 8 percent to 8.05 percent.

As always, contact your CIBC Consultant for help with this, or any other part of Group Benefits Management and The Affordable Care Act. We provide Solutions…that Work!

Supreme Court Rejects Contraceptive Mandate: A Legislative Update From CIBC of Illinois

On June 30, 2014, the U.S. Supreme Court issued its ruling in two related cases challenging the Affordable Care Act’s (ACA) contraceptive coverage mandate. In these cases, three closely held for-profit corporations—Hobby Lobby Stores, Mardel and Conestoga Wood Specialties—argued that they should not be required to comply with the contraceptive mandate because covering certain types of contraceptives under their health plans violates their sincere religious beliefs.

In these cases, the Supreme Court was asked to decide whether a for-profit business organized as a corporation has the right to “exercise” religious beliefs under the Religious Freedom Restoration Act (RFRA) and, if so, to what extent is it protected from government interference.

In a 5:4 ruling, the Supreme Court held that: The RFRA applies to the closely held corporations; and The contraceptive mandate violates the RFRA because there are less restrictive ways for the federal government to ensure that all women have cost-free access to FDA-approved contraceptives.

ACA’s Required Contraceptive Coverage The ACA requires non-grandfathered health plans to comply with certain preventive care guidelines for women, effective for plan years beginning on or after Aug. 1, 2012. These guidelines, which were issued by the Department of Health and Human Services (HHS), require non-grandfathered health plans to cover women’s preventive health services, including contraceptive methods, without charging a copayment, a deductible or coinsurance. Under the guidelines, plans must cover all FDA-approved contraceptive methods, sterilization procedures and patient education and counseling for all women with reproductive capacity.

The owners of Hobby Lobby Stores, Mardel and Conestoga Wood Specialties objected to providing health coverage for four types of contraceptives that are inconsistent with their sincere Christian religious beliefs that life begins at conception.

Excise Tax Under the ACA, employers with group health plans that violate the contraceptive mandate may be subject to an excise tax of $100 per individual per day of noncompliance.

Special Rules for Churches and Nonprofit Employers Group health plans sponsored by churches, other houses of worship and their affiliated organizations are exempt from the requirement to cover contraceptive services. HHS also provided a temporary safe harbor allowing nonprofit employers that do not provide contraceptive coverage to their employees because of religious beliefs to delay covering contraceptive services until the first plan year beginning on or after Jan. 1, 2014. This extension covers church-affiliated organizations that do not qualify for the exemption for churches, such as schools, hospitals, charities and universities.

For plan years beginning on or after Jan. 1, 2014, HHS created an accommodations approach for eligible nonprofit religious organizations that oppose providing coverage for some or all of the required contraceptive services based on religious objections. Under the accommodations, eligible organizations do not have to contract, arrange, pay or refer for any contraceptive coverage to which they object on religious grounds. However, separate payments for contraceptive services are provided to female employees by an independent third party, such as an insurance company or third-party administrator (TPA), directly and free of charge.

For-profit employers that object to providing contraceptive coverage on religious grounds are not eligible for the exemption, the delayed effective date or the accommodations approach that apply to churches and nonprofit religious organizations.

Companies Involved in the Cases Conestoga Wood Specialties is a closely held corporation owned and operated by the Hahn family, devout members of the Mennonite Church. The Hahns believe that they are required to run their woodworking business in accordance with their Christian religious beliefs. This is reflected in their corporate vision and mission statements. Thus, the Hahns have excluded from the group health insurance plan they offer to their employees certain contraceptive methods that they believe to terminate the life of an embryo. Hobby Lobby Stores and Mardel are two closely held corporations owned and operated by the Green family, devout members of the Christian faith. Each member of the Green family has signed a pledge to run the businesses in accordance with the family’s religious beliefs and to use the family assets to support Christian ministries. In accordance with those commitments, Hobby Lobby and Mardel stores close on Sundays, even though the Greens calculate that they lose millions in sales annually by doing so. Like the Hahns, the Greens believe that life begins at conception, and object to providing coverage for certain contraceptive methods that they consider to terminate the life of an embryo.

Supreme Court Ruling The RFRA prohibits the federal government from substantially burdening a person’s exercise of religion, even if the burden comes from a rule of general applicability. If the federal government substantially burdens a person’s exercise of religion, the RFRA entitles the person to an exemption from the rule, unless the government can show that the rule furthers a compelling governmental interest and is the least restrictive means of furthering that interest.

In its ruling, the Supreme Court noted that the RFRA provides very broad protection for religious liberty. According to the Court, the RFRA protects individuals who wish to run their businesses as for-profit corporations in a manner that is consistent with their religious beliefs. Thus, the Court held that the closely-held for-profit corporations involved in these cases have the right to exercise their religious beliefs under the RFRA.

In addition, the Court ruled that HHS’ contraceptive coverage guidelines substantially burden the companies’ exercise of religion. According to the Court, the companies’ owners have a sincere religious belief that life begins at conception. Thus, they object on religious grounds to providing health insurance that covers methods of birth control that may result in the destruction of an embryo. By requiring the owners to arrange for this coverage, HHS’ guidelines force them to engage in conduct that seriously violates their religious beliefs. In addition, if the owners and their companies do not comply with the mandate, heavy excise taxes will apply.

Although the Court assumed that the contraceptive mandate serves a compelling government interest, it ruled that the mandate is not the least restrictive means of serving that interest. According to the Court, there are other ways Congress or HHS could equally ensure that women have access to contraceptives on a cost-free basis. For example, the federal government could assume the cost of providing contraceptive coverage to women who are unable to obtain coverage due to their employers’ religious objections. Also, the Court noted that HHS could extend the accommodations approach that applies to nonprofit religious organizations to for-profit corporations with religious objections.

Impact of Ruling on Contraceptive Coverage Mandate The Supreme Court’s ruling creates a narrow exception to the ACA’s contraceptive mandate for closely held businesses that object to providing coverage for certain types of contraceptives based on their sincere religious beliefs. For all other for-profit employers, the contraceptive coverage mandate will continue to apply. HHS will likely issue guidance in the future to address how the Court’s ruling should be implemented.

In addition, the Court cautioned that its decision only applies to the ACA’s contraceptive mandate. Other insurance coverage requirements, such as immunizations, may be supported by different interests (for example, the need to combat the spread of infectious diseases) and may involve different arguments about the least restrictive means of providing them.

The Court also warned that its decision does not provide a shield for employers that try to cloak illegal discrimination (for example, discrimination in hiring on the basis of race) as a religious practice to escape legal sanction. According to the Court, the federal government has a compelling interest in providing an equal opportunity to participate in the workforce without regard to race, and prohibitions on racial discrimination are precisely tailored to achieve that critical goal.

More Information

For more information, contact CIBC and one of our licensed consultants will provide a complete assessment of this, and any other employee benefits-related issue.


Special Exchange Enrollment Periods Announced by HHS

Under the Affordable Care Act (ACA), individuals may only enroll in health insurance through an Exchange during a permitted enrollment period (such as an open enrollment or a special enrollment period). The initial open enrollment period for Exchange coverage ended on March 31, 2014. The open enrollment period for 2015 will begin on Nov. 15, 2014, and extend through Feb. 15, 2015.

On May 2, 2014, the Department of Health and Human Services (HHS) issued a Bulletin providing special enrollment periods (SEPs) in the federally-facilitated Exchange (FFE) for the following individuals:

  • Individuals who are enrolled in (or eligible for) COBRA coverage;
  • Individuals whose individual market plans renew outside of the Exchange’s open enrollment period; and
  • AmeriCorps/VISTA/National Civilian Community Corps (NCCC) members.

If certain conditions are met, the SEPs allow these individuals to enroll in qualified health plans (QHPs) outside of an open enrollment period. HHS encourages state-based Exchanges (SBEs) to adopt similar special enrollment periods for these individuals.

In addition, the Bulletin provides a hardship exemption from the individual mandate’s penalties for all months prior to the effective date of coverage for all individuals who obtained minimum essential coverage (MEC) effective on or before May 1, 2014, even for individuals who purchased coverage outside of the Exchange. This exemption is available for eligible consumers in FFE and SBE states.

Overview of Special Enrollment Periods

Individuals may be allowed an SEP in an Exchange following certain triggering events, such as marriage or birth of a child. SEPs permit individuals to enroll in QHPs outside of open enrollment. In addition, an SEP will be provided in cases where a consumer faces exceptional circumstances, as determined by HHS, that occur on or around plan selection deadlines.

The effective date of any coverage elected during an SEP follows rules similar to those applicable during open enrollment. This means that coverage would generally be effective as of the first day of the month for elections made by the 15th of the preceding month, and on the first day of the second following month for elections made between the 16th and the last day of a given month. However, special rules apply when birth, adoption or placement of a child is the special enrollment triggering event. In general, SEPs triggered by exceptional circumstances will have prospective coverage effective dates.

SEP for COBRA Enrollees

COBRA gives group health plan participants and beneficiaries the right to choose to continue their group health plan benefits for limited periods of time under certain circumstances, such as voluntary or involuntary job loss, reduction in the hours worked, transition between jobs, death, divorce and other life events.

Individuals qualify for SEPs when they are initially eligible for COBRA due to a loss of other MEC and when their COBRA coverage is exhausted. In addition, COBRA enrollees may choose QHPs in the Exchange during an open enrollment period and if they are determined eligible for any other SEPs outside of the open enrollment period.

HHS recognizes that, due to insufficient information, persons eligible for COBRA and COBRA enrollees may not have understood that they can only enroll in Exchange coverage during the open enrollment period and SEPs described above. Thus, the Bulletin provides an additional SEP based on exceptional circumstances so that persons eligible for COBRA and COBRA enrollees may enroll in coverage through the FFE. These individuals will have through July 1, 2014, to select QHPs in the FFE.

Eligible individuals should contact the Exchange call center (1-800-318-2596) to activate the SEP. They should inform the call center that they are calling about their COBRA benefits and the Exchange. Once determined eligible for the SEP, consumers can then view all plans available to them and continue the enrollment process over the phone or online through creating an account on or signing in to their existing accounts.

SEP for Individual Market Renewals Outside of Open Enrollment

Health insurance issuers in the individual market must provide a limited open enrollment period beginning 30 calendar days prior to the date the policy year ends in 2014. Based on this timeline, consumers may have reasonably expected to have an option not to renew non-calendar year individual market policies and to receive an SEP in the FFE outside of the open enrollment period. Thus, the Bulletin provides an SEP consistent with the limited open enrollment period for individual market plans.

Under this SEP, individual market consumers will be able to report to the FFE that they will not renew their plan up to 60 days before the renewal date, and can get coverage in the FFE effective the first of the month following the renewal date. Consumers will also have 60 days from the renewal date to select QHPs in the FFE. If a QHP is selected after the renewal date, coverage will be prospective based on the date of plan selection. These individuals should indicate “loss of other coverage” on their Exchange application, if they would like to apply for and enroll in a QHP offered by the Exchange, if otherwise eligible.

SEP for AmeriCorps/VISTA/NCCC Members

The Bulletin establishes an SEP in the FFE for individuals who are:

  • Beginning service in the AmeriCorps State and National, VISTA or NCCC programs; or
  • Concluding their service in the AmeriCorps State and National, VISTA or NCCC programs and are losing access to short-term limited duration coverage or self-funded coverage through these programs. (These types of coverage are not MEC.)

AmeriCorps State and National, VISTA and NCCC members have 60 days from their triggering event (that is, either the date they begin service or the date they lose access to short-term limited duration coverage or self-funded coverage) to select QHPs through the FFE. Coverage will be prospective based on the date of plan selection.

In addition, the Bulletin provides a hardship exemption from the individual mandate for AmeriCorps State and National, VISTA or NCCC members who have short-term limited duration coverage or self-funded coverage under these programs. The exemption is available to consumers in states with an FFE or SBE. Consumers will need to request the hardship exemption using the hardship exemption form, which is available at (Individuals in Connecticut must contact Access Health CT to apply for this exemption.)

Hardship Exemption for Coverage Effective On or Before May 1, 2014

In prior guidance, HHS provided hardship exemptions from the individual mandate for months in 2014 prior to the effective date of coverage for:

  • Individuals who enrolled in QHPs prior to the close of the initial open enrollment period on March 31, 2014; and
  • Individuals who received an SEP for being “in line” by March 31, 2014, and selected new coverage in the FFE.

Some consumers may not have realized that the hardship exemption relief was limited solely to individuals who purchased QHPs through the Exchanges. According to HHS, individuals who obtained other forms of MEC, effective as of May 1, 2014, outside of the Exchange (including group or individual plans) are, to a large extent, similarly situated to those who purchased QHPs with a May 1, 2014 effective date. Thus, the Bulletin provides a comparable hardship exemption for all months prior to the effective date of coverage for individuals who obtained MEC effective on or before May 1, 2014, outside of the Exchange. This exemption is available to consumers in states with an FFE or SBE. Individuals are not required to submit an exemption application to the Exchange.

More Information

Please contact CIBC of Illinois, Inc. for more information on Exchange enrollment periods.

Affordable Anxiety and Controlled Groups: You Can Run, but You Can’t Hide

Part 3: Affiliated Service Groups

By William Johnson- President and CEO

CIBC of Illinois, Inc.

In the previous two parts of the Controlled Group series we looked at a few different types of groups that the IRS deems Controlled Groups, or groups where two or more employers must be grouped together and treated as a single employer for certain purposes. Today, we will look at the final types of controlled groups, Affiliated Service Groups.

What is an Affiliated Service Group?

Affiliated Service Group rules are directed at professionals (for example, doctors, attorney and accountants) and other service organizations that that use separate service companies or management companies.

An Affiliated Service Group is a group of two or more organizations that have a service relationship and sometimes an ownership relationship. These relationships include; A-Organization groups, which consist of a First Service Organization (FSO) and at least one A-Organization, B-Organization groups, which consist of an FSO and at least one B-Organization, and Management groups.

An organization is defined as a sole proprietorship, partnership, corporation or any other type of entity regardless of its ownership format. Let’s look at the different types of organizations and their classification criterion.

Service Organization

An organization engaged in any one or more of the following fields is considered a service organization: accounting; actuarial science; insurance; architecture; health; law; performing arts; consulting; and engineering.

A professional services corporation is a corporation organized to provide professional services and has a least one shareholder who is licensed to perform the services for which the corporation is organized.

A-Organization Groups

An A-Organization group consists of an FSO and at least one A-Organization. A service organization is an A-Organization if it is a partner or shareholder in the FSO, and itt consistently performs services for the FSO or is regularly associated with the FSO in performing services for third parties. The working relationship test involves reviewing the facts and circumstances of each relationship.

Example – Blue Partnership is a law partnership. Yella Corporation is a partner in the law firm. Blue provides paralegal and administrative services for the attorneys in the law firm.


Yella is an A-Organization because is it a partner in the FSO and it is regularly associated with the law firm in performing services for third parties. Thus, Blue Partnership and Yella Corporation are an affiliated service group. 

B-Organization Groups

Another classification is a B-Organization. An organization qualifies as a B-Organization if a significant part of business is the performance of services for the FSO, for one or more A-Organizations or for both, the services are historically performed by employees in the service field of the FSO or the A-Organizations, and those who are highly compensated employees of the FSO or the A-Organizations that in total hold 10 percent or more of the interests in the organization.

It is very important to note that a B-Organization does not need to be a service organization.

A facts and circumstances analysis applies when determining whether providing services constitutes a substantial portion of the business of an organization. There are two tests that are used to verify the facts and circumstances. These are a service receipts safe harbor test and a total receipts threshold test.

Example – Green Partnership is an accounting firm with 13 partners that are deemed highly compensated employees under IRS Code 414(q). Each partner owns 1 percent of the stock of Stella Blue Corporation. Stella Blue provides services to Green of a type historically performed by employees in the accounting field. A significant portion of Stella Blue’s business consists of providing services to ABC.


Green is an FSO. Stella Blue is a B-Organization because a significant portion of its business involves performing services for the accounting firm of a type historically performed by employees in the accounting field. Also, more than 10 percent of the interests in Green are held by highly compensated employees of the FSO. Thus, Green Partnership and Stella Blue Corporation are an affiliated service group. 

Remember, the aggregation rules of Code section 318 apply. An individual is considered to own stock owned by his spouse, children, grandchildren and parents. Also, Code section 318 contains attribution rules for business relationships.

Management Groups

The final type of Affiliated Service group we will examine is the management-type affiliated service group. They exist if an organization performs management functions, and the management organization’s principal business is performing management functions on a regular and continuing basis for a recipient organization.

It is crucial to note that there does not need to be any common ownership between the management organization and the organization for which it provides services.

A recipient organization is an organization for which management services are performed, any organizations aggregated under the controlled group or affiliated service group rules,andrelated organizations (described under IRS Code section 144(a)(3)).

There are tests that can be used to determine a management organization’s principal business on a regular and continuing basis: tax-year rolling percentage test; percentage of gross receipts test; and facts and circumstances test.

Example: Sam and Dave Corporations are part of a controlled group. Shoe Corporation performs management functions for Sam Corporation on a consistent basis, and this is Shoe Corporation’s principal business. Sam and Dave Corporations are treated as the service recipient. In this scenario, Sam, Dave and Shoe Corporations are an affiliated service group.

We hope this series has helped spur some thought on how the ACA (via the IRS) will assess your business and the compliance issues associated with how it is set up. We are not lawyers, and we always recommend consulting legal professionals for specific answers to your situation. We do know that these laws are having a great impact on how people are, and will be structuring their organizations going forward.

This article is intended for informational purposes only and should not be construed as legal advice. Please consult with a legal professional for legal opinions.

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