Make sure you are staying up-to-date with the most recent rulings and changes regarding healthcare thanks to our partner United Benefit Advisors (UBA).
On April 18, 2017, the Department of Health and Human Services’ (HHS) Centers for Medicare & Medicaid Services (CMS) published its final rule regarding Patient Protection and Affordable Care Act (ACA) market stabilization.
The rule amends standards relating to special enrollment periods, guaranteed availability, and the timing of the annual open enrollment period in the individual market for the 2018 plan year, standards related to network adequacy and essential community providers for qualified health plans, and the rules around actuarial value requirements.
The proposed changes primarily affect the individual market. However, to the extent that employers have fully-insured plans, some of the proposed changes will affect those employers’ plans because the changes affect standards that apply to issuers.
The regulations are effective on June 17, 2017.
Guaranteed Availability of Coverage
The guaranteed availability provisions require health insurance issuers offering non-grandfathered coverage in the individual or group market to offer coverage to and accept every individual and employer that applies for such coverage unless an exception applies. Individuals and employers must usually pay the first month’s premium to activate coverage.
CMS previously interpreted the guaranteed availability provisions so that a consumer would be allowed to purchase coverage under a different product without having to pay past due premiums. Further, if an individual tried to renew coverage in the same product with the same issuer, then the issuer could apply the enrollee’s upcoming premium payments to prior non-payments.
Under the final rule and as permitted by state law, an issuer may apply the initial premium payment to any past-due premium amounts owed to that issuer. If the issuer is part of a controlled group, the issuer may apply the initial premium payment to any past-due premium amounts owed to any other issuer that is a member of that controlled group, for coverage in the 12-month period preceding the effective date of the new coverage.
Practically speaking, when an individual or employer makes payment in the amount required to trigger coverage and the issuer lawfully credits all or part of that amount to past-due premiums, the issuer will determine that the consumer made insufficient initial payment for new coverage.
This policy applies both inside and outside of the Exchanges in the individual, small group, and large group markets, and during applicable open enrollment or special enrollment periods.
This policy does not permit a different issuer (other than one in the same controlled group as the issuer to which past-due premiums are owed) to condition new coverage on payment of past-due premiums or permit any issuer to condition new coverage on payment of past-due premiums by any individual other than the person contractually responsible for the payment of premiums.
Issuers adopting this premium payment policy, as well as any issuers that do not adopt the policy but are within an adopting issuer’s controlled group, must clearly describe the consequences of non-payment on future enrollment in all paper and electronic forms of their enrollment application materials and any notice that is provided regarding premium non-payment.
Annual Open Enrollment Periods
Currently, annual Exchange open enrollment for plan year 2018 begins on November 1, 2017, and ends on January 31, 2018. Under the final rule, the open enrollment period will shorten; it will begin on November 1, 2017, and end on December 15, 2017. This open enrollment period will be consistent with the month-and-a-half open enrollment period beginning with and after the open enrollment for the 2019 benefit year.
Special Enrollment Periods
Starting in June 2017, all new consumers who seek to enroll in Exchange coverage through applicable special enrollment periods will be subject to pre-enrollment eligibility verification. This will include all states served by HealthCare.gov. This pre-enrollment verification will apply to the individual market only, not to special enrollment periods under the Small Business Health Options Program (SHOP).
New dependents can enroll in a new qualified health plan (QHP) at any metal level if they enroll in a separate QHP from other existing enrollees; however, if the new dependent is enrolling in the same QHP as those who are already QHP enrollees, then the dependent and existing QHP enrollees are restricted from changing plans or metal levels. This does not apply to the small group market or SHOP.
Consumers who were terminated from coverage due to premium nonpayment will not be allowed to enroll in coverage mid-year through a special enrollment period due to loss of minimum essential coverage.
For consumers who are newly enrolling in QHP coverage through the Exchange through the special enrollment period for marriage, at least one spouse must have had minimum essential coverage for one or more days during the 60 days preceding the marriage date, or must have lived in a foreign country or a U.S. territory for one or more days during the 60 days preceding the marriage date. This applies to the individual market only. This does not apply to the small group market or SHOP.
For consumers who are newly enrolling in QHP coverage through the Exchange through the special enrollment period for a permanent move, the consumer will need to provide documentation of the move and evidence of prior coverage for one or more days in the 60 days preceding the move, unless the consumer is moving to the U.S. from a foreign country or a U.S. territory. This applies to the individual market. The requirement to show prior coverage for the permanent move special enrollment period is applicable to the SHOP. Further, CMS intends to release guidance on documentation that will be acceptable for this special enrollment period.
For the remainder of 2017 and for future plan years, CMS will significantly limit the use of the exceptional circumstances special enrollment period by using a more rigorous test that will require consumers to provide supporting documentation. CMS intends to provide guidance on situations that will meet the more rigorous test and on documentation that consumers will be required to provide. This applies to the individual market only.
A consumer may request and the Exchange must provide for a coverage effective date that is no more than one month later than the consumer’s effective date would ordinarily have been, if the special enrollment period verification process delays the enrollment so that the consumer would be required to pay two or more months of retroactive premium to effectuate coverage or avoid cancellation. This applies to the individual market and SHOP.
The final rule indicates that the following special enrollment periods are no longer available:
CMS solicited and received comments on policies that would promote continuous coverage; however, CMS did not take any action in this final rule regarding such policies.
Health Insurance Issuer Standards under the ACA, Including Standards Related to Exchanges
Under the ACA, issuers of non-grandfathered individual and small group health insurance plans, including QHPs, must ensure that the plans adhere to certain levels of coverage.
A plan’s coverage level, or actuarial value (AV), is determined based on its coverage of the essential health benefits (EHBs) for a standard population. The ACA requires a bronze plan to have an AV of 60 percent, a silver plan to have an AV of 70 percent, a gold plan to have an AV of 80 percent, and a platinum plan to have an AV of 90 percent. The HHS Secretary issues regulations on the calculation of AV and its application to coverage levels; the ACA authorizes the Secretary to develop guidelines to provide for de minimis variation in the actuarial valuations used in determining the level of coverage of a plan to account for differences in actuarial estimates.
The final rule amends the definition of de minimis to a variation of -4/+2 percentage points, rather than +/-2 percentage points for all non-grandfathered individual and small group market plans (other than bronze plans meeting certain conditions) that are required to comply with AV. For example, a silver plan could have an AV between 66 and 72 percent. For bronze plans that either cover and pay for at least one major service, other than preventive services, before the deductible or meet the requirements to be a high deductible health plan, the allowable variation in AV will be -4/+5 percentage points. This applies to plans beginning on or after January 1, 2018. CMS’ revised 2018 AV Calculator (scroll to Plan Management, Guidance) reflects the amended AV de minimis range.
CMS will rely on state reviews for network adequacy in states where a federally facilitated exchange (FFE) is operating as long as the state has a sufficient network adequacy review process. In states that do not have the authority and means to conduct sufficient network adequacy reviews, CMS will rely on an issuer’s accreditation (commercial, Medicaid, or Exchange) from an HHS-recognized accrediting entity. CMS will use the following three accrediting entities for 2018 plan year network adequacy reviews: the National Committee for Quality Assurance, URAC, and the Accreditation Association for Ambulatory Health (these accrediting entities were previously recognized by HHS for QHP accreditation).
Unaccredited issuers are required to submit an access plan as part of the QHP application; the access plan must demonstrate that an issuer has standards and procedures in place to maintain an adequate network consistent with the National Association of Insurance Commissioners’ (NAIC’s) Health Benefit Plan Network Access and Adequacy Model Act.
Essential Community Providers
Essential community providers (ECPs) include providers that serve predominantly low-income and medically underserved individuals; issuers must meet requirements for ECPs’ inclusion in QHP provider networks.
CMS will lower the minimum percentage of network participating practitioners; an issuer will satisfy the regulatory standard if the issuer contracts with at least 20 percent of available ECPs in each plan’s service area to participate in the plan’s provider network. Also, CMS will continue to allow an issuer’s ECP write-ins to count toward the satisfaction of the ECP standard, if the written-in provider has submitted an ECP petition to HHS no later than the issuer submission deadline for QHP application changes.
The final rule adopts almost all the proposed rule’s provisions. The primary changes from the proposed rule to the final rule are: clarifications to the scope of the guaranteed availability policy regarding unpaid premiums, changes to special enrollment period provisions, updates to the definitions and general standards for eligibility determinations, and clarification regarding states’ roles.
CMS acknowledges that these provisions’ net effect on enrollment, premiums and total premium tax credit payments is uncertain. However, CMS determined that these regulations are urgently needed to stabilize markets, incentivize issuers to enter or remain in the market, and ensure premium stability and consumer choice.
To download the full compliance alert click Here.
Updated March 2017 by our partners at United Benefits Advisors.
In the fall of 2013, the Department of Health and Human Services (HHS) announced a transitional relief program that allowed state insurance departments to permit early renewal at the end of 2013 of individual and small group policies that do not meet the “market reform” requirements of the Patient Protection and Affordable Care Act (ACA) and for the policies to remain in force until their new renewal date in late 2014.
On March 5, 2014, HHS released a Bulletin that extended transitional relief to permit renewals as late as October 1, 2016, allowing plans to remain in force until as late as September 30, 2017. On February 29, 2016, HHS released another Bulletin to permit renewals until October 1, 2017, with a termination date no later than December 31, 2017. On February 23, 2017, HHS released its Insurance Standards Bulletin Series, in which it re-extended its transitional policy. States may permit issuers that have renewed policies under the transitional policy continually since 2014 to renew such coverage for a policy year starting on or before October 1, 2018; however, any policies renewed under this transitional policy must not extend past December 31, 2018.
The primary market reforms are the requirements that policies include the 10 essential health benefits, be valued at the “metal levels” (platinum 90%, gold 80%, silver 70%, or bronze 60%), and be community rated (which means that rates may only be based on age with a 3:1 limit, smoking status with a 1.5:1 limit, rating area and whether dependents are covered). Under the ACA, all non-grandfathered group health plans must ensure that annual out-of-pocket cost sharing (for example, deductibles, coinsurance and copayments) for in-network essential health benefits does not exceed certain limits; in February 2015, HHS clarified that the out-of-pocket limits apply to each individual, even those enrolled in family coverage
Not all existing policies automatically may or will be renewed. In addition to permission from the federal government, both the state insurance department and the insurance company must agree to renew these non-compliant policies. A list of state decisions as of March 2016 is available at healthinsurance.org.
States and insurers have the option to include some of the market reform requirements that the federal government says may be disregarded. States had the option to allow renewals of individual policies only, small group policies only, or both types of policies, and to allow this for 2015 only or for both 2015 and 2016. In 2016, these market reforms apply to mid-size employers (those with 50 to 100 employees) and states may extend the option to renew existing policies to those employers as well.
Requirements that Apply to Plans Renewed Under This Exception
See full download for corresponding data.
All newly-issued policies must meet all of the ACA requirements.
Insurers that choose to renew existing policies must send a notice to all individuals and small businesses each year that explains:
Renewed policies will satisfy the individual’s requirement to have “minimum essential” coverage. It appears that each renewed policy will need to be evaluated to determine whether it meets minimum value (60%). Access to affordable, minimum value coverage through an employer will make the individual ineligible for a premium tax credit/subsidy. Rate increases will need to be reported, and in some cases reviewed.
Download the full UBA ACA Advisor here.
Updated March 2017 by our partners at United Benefits Advisors: Stay in the know of how Health Savings Accounts (HSAs) work and how you can use them properly.
A health savings account (HSA) is a tax-exempt trust or custodial account set up with a qualified HSA trustee (such as a bank or insurance company) that is used to pay or reimburse certain medical expenses.
HSAs were first available as of January 1, 2004, and have grown greatly in popularity. An eligible individual (with or without employer involvement) can establish an HSA. Eligible participating individuals can make contributions, up to statutory limits, and get a tax deduction. Investment earnings on HSA accounts are tax free, and HSA funds used to pay qualified medical expenses are completely tax free. Employers contributing to their eligible employees’ HSAs, or that offer HSAs through a cafeteria plan also receive federal tax deductions for the contributions.
As a result of these benefits, HSAs are highly regulated; by Internal Revenue Code Section 223, as well as numerous IRS notices and guidance documents. IRS Publication 969 provides a basic overview of HSA regulations for employers and employees.
To be an eligible individual and qualify for an HSA, you must meet the following requirements:
High Deductible Health Plan
In order to participate in an HSA, an individual must be covered under an HDHP on the first day of the month. In 2016, that means the individual must have an annual deductible of at least $1,300 for self-only coverage, and the deductible and out-of-pocket expense cannot exceed $6,550. These dollar figures change annually. For an individual enrolled in family coverage (or, other than self-only), the deductible must be at least $2,600 in 2016, and the deductible and out-of-pocket expenses cannot exceed $13,100. 2 ©2017 United Benefit Advisors, LLC. All rights reserved. The HDHP must provide “significant benefits;” for example it could not exclude in-patient care or hospitalizations, be a fixed indemnity benefit, or only cover certain specified diseases such as cancer.
Other Disqualifying Coverage
Disqualifying coverage problems can be difficult for employees to understand, and care should be taken to educate them on what disqualifying coverage is.
Interplay Between Health FSAs and HSAs
Special issues can arise when an employer offers multiple benefit plans, including a traditional health plan with an FSA account, and an HDHP with an HSA account. These same issues arise when an employer looks to change the benefit plan it offers from a traditional plan with an FSA and an HDHP with an HSA.
When an individual has an FSA, they have coverage that disqualifies them from being HSA eligible. The question becomes, when are they considered to have “dropped” the FSA in order to gain HSA eligibility? The answer is different depending on the FSA’s plan design and whether the individual has a remaining balance at the end of the plan year.
Health FSA with a Grace Period
Health FSA with Carryovers
Being entitled to Medicare makes an individual ineligible for an HSA, even if the individual is enrolled in a qualifying HDHP.
Internal Revenue Code (IRC) Section 223 reads: “Medicare eligible individuals. The [contribution limit] under this subsection for any month with respect to an individual shall be zero for the first month such individual is entitled to benefits under title XVIII of the Social Security Act and for each month thereafter.”
Being eligible for and being entitled to Medicare are not the same. Individuals become entitled to Medicare through their age, through disability, or due to end stage renal disease (ESRD).
Individuals are entitled to Medicare once they are 65 years old and they either have applied for and are receiving benefits from the Social Security or Railroad Retirement Board, or, are eligible for monthly retirement benefits from Social Security or the Railroad Retirement Board (but have not applied for them) but have filed an application for Medicare Part A.
For an individual who is working and aged 65 or over to maintain HSA eligibility he or she must:
When employment-related coverage ends, the individual has eight months to enroll in Medicare Part A, which, once effective, will be effective for six months retroactively, but no earlier than the first day of eligibility.
Retroactive Medicare Coverage
Medicare Part A coverage begins the month an individual turns age 65, provided the individual files an application for Medicare Part A (or for Social Security or Railroad Retirement Board benefits) within six months of the month in which the individual turns age 65. If the individual files an application more than six months after turning age 65, Medicare Part A coverage will be retroactive for six months.
Individuals who delayed applying for Medicare and were later covered by Medicare retroactively to the month they turned 65 (or six months, if later) cannot make contributions to the HSA for the period of retroactive coverage. There are no exceptions to this rule.
However, if they contributed to an HSA during the months that were retroactively covered by Medicare and, as a result, had contributions in excess of the annual limitation, they may withdraw the excess contributions (and any net income attributable to the excess contribution) from the HSA.
They can make the withdrawal without penalty if they do so by the due date for the return (with extensions). Further, an individual generally may withdraw amounts from an HSA after reaching Medicare eligibility age without penalty. (However, the individual must include both types of withdrawals in income for federal tax purposes to the extent the amounts were previously excluded from taxable income.)
If an excess contribution is not withdrawn by the due date of the federal tax return for the taxable year, it is subject to an excise tax under the Internal Revenue Code. This tax is intended to recapture the benefits of any tax-free earning on the excess contribution.
Individuals who can be claimed as a dependent on someone else’s tax return are not HSA eligible.
Another complicated wrinkle in dependent status and HSAs involves whose expenses can be reimbursed from the HSA. HSAs can only reimburse the expenses of the employee, spouse, and tax dependents as defined by IRS Code Section 223(d)(2)(A) (even if the person is not eligible to set up his or her own HSA) if the expense was incurred after the HSA is established.
Determining Eligibility; Changes in Eligibility
An individual’s eligibility is determined on a monthly basis, on the first day of the month.
If an individual is enrolled in single HDHP coverage on the first day of September (and has no disqualifying coverage), the individual is eligible to contribute up to the full single contribution limit for the month (1/12 of the annual limit) of September, as well as October, November, and December. If an individual enrolls on the 15th of September in single HDHP coverage (and has no disqualifying coverage), the individual can begin contributing up to the full single contribution limit for the months of October, November, and December, but not the month of September. That is because the individual was not HSA eligible on the first day of September. If an individual changes from family to single coverage, or vice versa, the limit for that month is based on the individual’s coverage as of the first day of the month.
The amount you or any other person can contribute to your HSA depends on the type of HDHP coverage you have, your age, the date you become an eligible individual, and the date you cease to be an eligible individual. For 2016, if you have self-only HDHP coverage, you can contribute up to $3,350. If you have family HDHP coverage, you can contribute up to $6,750.
The “last-month” rule also provides that individuals who are eligible for an HSA on December 1 (the last month of the year), are considered eligible for the entire year. The individual is considered to have the HDHP coverage on December 1 for the entire year.
If an individual changes from family to single coverage during the year, the individual’s maximum contribution amount is calculated as (X/12 x $6,750) + (Y/12 x $3,350) = $____. The dollar figures used in the formula will change annually based on the IRS contribution limits.
X represents the number of months the individual was eligible under family coverage; Y represents the months the individual was eligible for single coverage.
Individuals who reach age 55 by the end of the taxable year have their contribution limit increased by $1,000, regardless of the tier of coverage they are enrolled in. This is called a “catch-up” contribution. A married couple, both age 55 or older, can make two catch-up contributions, but there must be a separate HSA for each spouse. Because HSAs are individual trusts, spouses cannot have a joint HSA (but each spouse can spend his or her individual HSA dollars on the spouse’s medical expenses).
The IRS has a “special rule” for married individuals that allows a couple to divide the maximum HSA contribution between spouses so long as one of them has family HDHP coverage, and neither has disqualifying coverage. The IRS provides the following example:
Beginning the first month an individual is enrolled in Medicare (or entitled to Medicare) the contribution limit is zero.
If an individual makes contributions in excess of the IRS annual limits, he or she must pay a 6 percent excise tax on the excess contributions, and the excise tax will apply to each year the excess contribution remains in the individual’s account. The excise tax is paid with IRS Form 5329.
Employers may contribute to an employee’s HSA, but their contributions count toward the individual’s total contribution limit for the year.
One of two sets of nondiscrimination rules applies to HSA contributions from employers. If the employer makes contributions through a Section 125/cafeteria plan, the contributions are included in the plan’s cafeteria plan nondiscrimination testing. These rules generally prohibit employers from favoring highly compensated or key employees.
Comparable contributions. If the employer does not include the HSA in its Section 125/cafeteria plan, it is subject to the comparable contributions rule.
In this case, if an employer makes contributions, it must make comparable contributions to all comparable participating employees’ HSAs. Contributions are comparable if they are either:
This rule prohibits employers from implementing HSA “matching” programs, or using HSA contributions as a wellness incentive.
Comparable participating employees:
Individuals may receive tax-free distributions from their HSA to pay or be reimbursed for qualified medical expenses incurred after the establishment of the HSA. If an individual loses HSA eligibility at any point, he or she can continue to spend remaining HSA dollars on qualified medical expenses.
HSA-qualified expenses are all medical expenses allowed by IRC Section 213, except insurance premiums (unless for COBRA, long-term care insurance or Medicare supplemental, which may be reimbursed). If you use HSA funds to pay premiums for COBRA, long-term care insurance, or Medicare supplement coverage, you cannot claim the health coverage tax credit for those premiums.
Qualified medical expense incurred overseas may be paid with an HSA. Care should be taken to ensure the expense is documented and meets the requirements under IRC Section 213.
Non-prescription or over-the-counter (OTC) medications other than insulin are not considered a qualified medical expense, unless you have a prescription for it. For example, if your physician wrote you a prescription for aspirin or pre-natal vitamins, you could purchase them over-the-counter with your HSA funds.
Qualified medical expenses are those incurred by the following persons.
A child of parents who are divorced (or separated, or living apart for the last six months of a calendar year) are treated as the dependents of both parents, regardless of whether the custodial parent releases the claim to the child’s exemption.
HSAs also have prohibited transactions, including the lending of money between the individual and the HSA. This means that, if an individual overdraws the HSA account (which is considered lending money), the individual loses HSA eligibility for the entire year, and will be subjected to an additional 20 percent excise tax. Federal law will require the bank operating the HSA to close it, and the individual cannot reopen the account at that bank, or any other bank, for the entire year.
HSA holders are obligated to keep sufficient records to show that any distributions from their HSA were used exclusively to pay or reimburse qualified medical expenses, that the expense was not paid previously or from another source, and that the individual did not take the expense as an itemized deduction in any year.
Thanks to our partners at United Benefits Advisors, an important opportunity has been brought to our attention that could be crucial for your business.
The U.S. Congress is currently considering health care reform proposals that would eliminate or place a cap on the employer-tax exclusion for health insurance. Eliminating the exclusion would eliminate most of the advantages of employer-sponsored insurance, while capping it would degrade the benefit and serve as a tax increase for middle-class Americans.
As an employer, you would be most directly affected by the elimination or cap of the employer tax exclusion. Did you know that more than 175 million Americans, including those covered by unions, currently receive their coverage through this system, largely due to the tax-exclusion where employers provide contributions for an employee’s health insurance which are excluded from that employee’s compensation for income and payroll tax purposes?
How Can I Learn More About This Issue?
The National Association of Health Underwriters (NAHU) has created easy-to-understand infographics about the employer-tax exclusion and the insurance risk pool that can help. You can also read details about the employer-tax exclusion.
What Can You Do?
You can take action today by sharing with your senators and representatives why the exclusion must be preserved in any health care reform legislative proposals. NAHU provides an online form so you don’t have to track down how to reach your state’s legislators.
If You Don’t Want to Send an Email
You can also reach your legislators by phone. The U.S. Capitol Switchboard can be reached at 202-224- 3121. You are welcome to use the prepared text as talking points when calling your legislators, or to expand on the prepared message to share your personal story on how this issue will impact you.
Download the UBA Notification here.
Stay up-to-date with the most recent ACA regulations thanks to our partners at United Benefits Advisor (UBA)
February had relatively little activity in the employee benefits world because a new Secretary of the Department of Health and Humans (HHS) was recently confirmed and HHS started its rulemaking under the new administration.
On February 10, 2017, the U.S. Senate confirmed Rep. Tom Price as the new Secretary of HHS, who has a budget of more than $1 trillion, the largest budget of any Cabinet secretary. HHS administers the Patient Protection and Affordable Care Act (ACA), Medicare, and Medicaid, and oversees other programs and agencies.
The Centers for Medicare & Medicaid Services (CMS) extended its transitional policy for nongrandfathered coverage in the small group and individual health insurance markets. The Internal Revenue Service (IRS) delayed the deadline for small employers to provide its initial written notices to employees regarding Qualified Small Employer Health Reimbursement Arrangements (QSE HRAs). CMS proposed a rule on ACA market stabilization.
HHS issued its Annual Civil Monetary Penalties Inflation Adjustment to reflect required inflation-related increases to the civil monetary penalties in its regulations. The IRS released a letter that discusses retroactive Medicare coverage’s effect on HSA contributions. Also, the IRS announced that it will not automatically reject individual tax returns when the taxpayer failed to indicate continuous coverage, failed to claim an exemption from the individual mandate, or failed to pay the penalty.
UBA released three new advisors in February:
UBA updated existing guidance:
CMS Allows States to Extend Life of “Grandmothered” or Transitional Health Insurance Policies
On February 23, 2017, the Department of Health and Human Services’ Centers for Medicare & Medicaid Services (CMS) released its Insurance Standards Bulletin Series, in which it re-extended its transitional policy for non-grandfathered coverage in the small group and individual health insurance markets.
States may permit issuers that have renewed policies under the transitional policy continually since 2014 to renew such coverage for a policy year starting on or before October 1, 2018; however, any policies renewed under this transitional policy must not extend past December 31, 2018.
If permitted by applicable state authorities, health insurance issuers may choose to continue certain coverage that would otherwise be cancelled, and affected individuals and small businesses may choose to re-enroll in such coverage.
As background, CMS’ transitional policy was first announced in November 14, 2013; CMS had most recently extended the transitional policy on February 29, 2016, for an additional year for policy years beginning on or before October 1, 2017, provided that all policies end by December 31, 2017.
Policies subject to the transitional relief are not considered to be out of compliance with the ACA’s single risk pool requirement or the following Public Health Service Act (PHS Act) provisions:
However, issuers can choose to adopt some of or all these provisions in their renewed policies.
IRS Delays Initial Notice Requirements for QSE HRAs
Under the 21st Century Cures Act, small employers that want to reimburse individual health coverage premiums through HRAs called “Qualified Small Employer Health Reimbursement Arrangements” (QSE HRAs) must provide annual written notice to all eligible employees no later than 90 days before the beginning of the benefit year.
On February 27, 2017, the Internal Revenue Service (IRS) issued Notice 2017-20 that delays the initial written notice deadline. The Department of the Treasury and the IRS intend to issue guidance to provide employers with additional time to furnish the initial notice to employees; the extended deadline will be no earlier than 90 days following the issuance of future guidance. Further, no penalties will be imposed for failure to provide the initial notice before the extended deadline.
CMS’ Proposed Rule on ACA Market Stabilization
On February 17, 2017, the Department of Health and Human Services’ Centers for Medicare & Medicaid Services (CMS) issued a proposed rule to stabilize the health insurance market and address risks to the individual and small group markets. CMS proposes changes to guaranteed availability of coverage, network adequacy, essential community providers, open enrollment periods, special enrollment periods, continuous coverage, and standards for the Exchanges.
Public comments are due by March 7, 2017.
HHS Civil Monetary Penalties Increase
On February 3, 2017, the Department of Health and Human Services (HHS) issued its Annual Civil Monetary Penalties Inflation Adjustment to reflect required inflation-related increases to the civil monetary penalties in its regulations. Here are some of the adjustments:
Most adjustments are effective for penalties assessed after February 3, 2017, for violations occurring after November 2, 2015. The HIPAA penalty adjustments are effective for penalties assessed after February 3, 2017, for violations occurring on or after February 18, 2009.
IRS Letter Regarding the Retroactive Medicare Coverage Effect on HSA Contributions
The Internal Revenue Service (IRS) recently released a letter regarding retroactive Medicare coverage and health savings account (HSA) contributions.
As background, Medicare Part A coverage begins the month an individual turns age 65, provided the individual files an application for Medicare Part A (or for Social Security or Railroad Retirement Board benefits) within six months of the month in which the individual turns age 65. If the individual files an application more than six months after turning age 65, Medicare Part A coverage will be retroactive for six months.
Individual Mandate – IRS Will Not Reject Silent Returns
For 2016 returns, the Internal Revenue Service (IRS) intended to reject electronically filed “silent returns,” when the taxpayer failed to indicate continuous coverage on Line 61, failed to file a Form 8965 to claim an exemption from the individual mandate, or failed to pay the penalty.
On February 15, 2017, the IRS issued a statement that it would change course and process silent returns. This means that returns without a completed Line 61 will not be systemically rejected by the IRS at the time of filing. The IRS determined that allowing returns to be accepted for processing – when a taxpayer doesn’t indicate health insurance coverage status – is consistent with the January 20, 2017, Executive Order directing federal agencies to exercise authority and discretion to reduce potential burden under the ACA.
Per the IRS, the ACA’s provisions are still in force until changed by Congress; further, taxpayers remain required to follow the law and pay what they may owe. The IRS indicates that if it has questions about a return, it will follow up with correspondence and questions to taxpayers at a future date, after the filing process is complete.
Please be aware that this change in IRS policy for individual filers does not affect employer reporting.
To download the full compliance click Here.
Information courtesy of our partner, United Benefits Advisors.
Entities such as employers with group health plans that provide prescription drug coverage to individuals that are eligible for Medicare Part D have two major disclosure requirements that they must meet at least annually:
Because there is often ambiguity regarding who in a covered population is Medicare eligible, it is best practice for employers to provide the notice to all plan participants.
CMS provides guidance for disclosure of creditable coverage for both individuals and employers.
Who Must Disclose?
These disclosure requirements apply regardless of whether the plan is large or small, is self-funded or fully insured, or whether the group health plan pays primary or secondary to Medicare. Entities that provide prescription drug coverage through a group health plan must provide the disclosures. Group health plans include:
Health flexible spending accounts (FSAs), Archer medical savings accounts, and health savings accounts (HSAs) do not have disclosure requirements. In contrast, the high deductible health plan (HDHP) offered in conjunction with the HSA would have disclosure requirements.
There are no exceptions for church plans or government plans.
Determining if Coverage is Creditable
The Medicare Modernization Act (MMA) provides that coverage is creditable if it provides prescription drug “coverage of the cost of the prescription drugs the actuarial value of which . . . to the individual equals or exceeds the actuarial value of standard prescription drug coverage.”
Plans can determine if they are creditable or not by meeting the plan design safe harbor or by actuarial determination. Practically speaking, many carriers for fully insured plans provide employers with creditable coverage information; however, employers are still responsible for the applicable disclosures to participants and CMS.
CMS guidance offers a design-based safe harbor for determining creditable coverage status. Specifically, a plan is deemed to be creditable if it:
An integrated plan is any plan of benefits that is offered to a Medicare eligible individual where the prescription drug benefit is combined with other coverage offered by the entity (for example, medical, dental, vision, etc.) and the plan has all of the following plan provisions:
If a plan does not meet the safe harbor based on its design, it will need to obtain an actuarial determination. Only plans that are seeking the retiree drug subsidy must provide CMS with the actual attestation documents from the actuary; however, employers should consider retaining the documents as best practice.
Disclosures to Plan Participants
The MMA penalizes individuals for late enrollment in Medicare Part D if they do not maintain “creditable coverage” for a period of 63 days or longer following their initial enrollment period for drug benefits. Therefore, individuals must be informed if the employer-provided coverage is, in fact, creditable. CMS provides model notices for creditable coverage and non-creditable coverage disclosures in both English and Spanish.
Disclosures to individuals must be made:
If the creditable coverage disclosure notice is provided to all plan participants annually, prior to October 15 of each year, CMS will consider items 1 and 2 above to be met.
Method of Delivery
Employers can provide participants with separate notices, or, under certain conditions, can provide the notice with enrollment materials or summary plan descriptions (SPDs).
If the disclosure is provided with other information (such as in the SPD), it must be “prominent and conspicuous,” which means it must be in “at least 14 point font, in a separate box, bolded, or offset on the first page” of the other information provided.
Tip: An SPD is the document provided to participants to explain their rights and obligations under the plan. It is intended to provide a summary of the plan’s terms and should be written in a way the average participant can understand it. However, it has become increasingly common for plans to use a combination plan document/SPD and most Department of Labor (DOL) offices permit this. The group insurance policy or certificate is not an SPD.
Employers may provide the notice by mail, or electronically if electronic distribution method requirements are met. Disclosures should not be handed out in person.
Recipients of electronic disclosures are divided into two groups – those with work-related computer usage, and those who do not use computers as part of their jobs. An employee is considered to have work-related computer usage if:
An employee who uses a computer as part of his or her job does not need to consent to receive disclosures electronically.
Individuals who do not access a computer as part of their work for the employer must specifically consent to receive disclosures electronically. This would include retirees, as well as active employees in many types of jobs. The written consent requirements are fairly complicated. Prior to providing consent, an individual must be given a clear statement that explains:
The individual must provide an email address for delivery of the documents. The individual must provide consent in a manner that demonstrates his or her ability to access the information in the electronic format that will be used, so many employers require that the consent be provided electronically. An employer may not simply provide a kiosk for employees who do not use computers as part of their jobs. Likewise, it may not provide thumb drives of documents to employees who do not use computers as part of their jobs unless it obtains the employee’s consent.
Delivery to Spouses and Dependents
If an employee and an employee’s spouse or dependents are covered under the same plan, a single notice is sufficient for the eligible individual and the individual’s family. However, if an employer knows that a spouse or dependent is Part D eligible and has a different address, the employer is obligated to send a separate notice to the spouse or dependent.
Disclosures to CMS
Employers must provide CMS with a “Disclosure to CMS Form” that is completed and sent electronically through the CMS website. The form must be provided annually and:
CMS provides an instruction guide with screen shots for completing the form online. Employers should gather the information necessary to complete the form prior to beginning to complete the form, as some of the questions may require preparation on the part of the employer. For example, employers must estimate how many Part D eligible individuals they expect to be covered as of the first day of the plan year.
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On Dec. 19, 2016, the Occupational Safety and Health Administration (OSHA) issued a final rule amending its recordkeeping regulations. The amendments were adopted to clarify that an employer’s duty to create and maintain work-related injury or illness records is an ongoing obligation. The final rule becomes effective on Jan. 18, 2017.
The clarification explains that an employer remains under an obligation to record a qualifying injury or illness throughout the fiveyear record storage period, even if the incident was not originally recorded during the first six months after its occurrence. The final rule does not create any additional or new recordkeeping obligations for employers.
OSHA requires employers to create and maintain records about workplace injuries and illnesses that meet one or more recording criteria. Specifically, employers must:
Create and update a log of work-related injuries and illnesses (OSHA 300 Form);
Create and maintain injury and illness incident reports (OSHA 301 Form); and
Create and display an annual summary of workplace incidents (OSHA 300A Form) between Feb. 1 and April 30 of each year.
Employers must keep these records for at least five years. The five-year retention period begins on Jan. 1 of the year following the year covered by the records. For example, the five-year retention period for incident reports created on Jan. 23, 2015, June 15, 2015, and Nov. 4, 2015, begins on Jan. 1, 2016.
Penalties for Noncompliance
OSHA has the authority to issue citations and assess fines against employers that violate recordkeeping laws. However, in general, the OSH Act does not allow for a citation to be issued more than six months after the occurrence of a violation.
OSHA is of the opinion that a violation exists until it is corrected. Therefore, the six-month period to issue citations and assess penalties begins on the date of the last instance of the violation. For example, if a violation that started on Feb. 1 was corrected on May 15, the six-month period would begin on May 15, and OSHA would have until Nov. 15 to issue a citation.
OSHA also asserts that uncorrected violations are considered ongoing violations, and that each day of noncompliance is subject to a separate penalty.
The Final Rule
According to OSHA, adopting the final rule and amending its recordkeeping regulations was necessary because the previous regulations did not allow OSHA to enforce an employer’s incident recording obligation as an ongoing requirement. In fact, a federal circuit court has held that the former regulations did not authorize OSHA to “cite the employer for a record-making violation more than six months after the recording failure.” The court also noted that there is a discrepancy between the OSH Act and the regulations, and that while the OSH Act allows for continuing violations of recordkeeping requirements, the specific language in the regulations does not implement this statutory authority and does not create continuing recordkeeping obligations.
The federal court interpretation of previous regulations meant that employers were no longer responsible for recording or storing workplace incidents if OSHA failed to detect and penalize employers for omitted recordable incidents within the six-month period. For this reason, OSHA issued its proposed amendments on July 29, 2015.
Impact on Employers The final rule and amended regulations do not create additional or new recordkeeping regulations, and employers will not be required to record incidents that they were not previously required to record.
This clarification simply makes it possible for OSHA to penalize employers for a recordkeeping violation within six months of the last date of noncompliance, not the first date when a violation occurs. OSHA believes that the clarification will encourage employers to comply with record-making and recordkeeping obligations even when these records are not produced within the first six months of when a recordable incident takes place. In other words, the clarification discourages employers from ignoring record-making and recordkeeping obligations solely because six months have transpired since the occurrence of a recordable incident.
This also means that OSHA now has a window of up to 66 months (five years and six months) after the occurrence of a recordable incident to enforce record-making and recordkeeping requirements.
Finally, the amended regulations emphasize an employer’s ongoing duty to create and maintain records and increasingly justify OSHA’s ability to assess penalties against a violating employer for each day of noncompliance, until the maximum penalty amount is reached or the employer corrects the violation
See the original article Here.
The Federal Motor Carrier Safety Administration (FMCSA) recently released a final rule that will create a national drug and alcohol testing clearinghouse for commercial driver license (CDL) holders who operate commercial motor vehicles (CMVs). Under the rule, drivers will be added to the clearinghouse if they test positive for drugs or refuse to perform a test required by the Department of Transportation (DOT). Then, employers will be able to review the testing history of applicants, drivers who work for more than one motor carrier and long-term employees.
Once the clearinghouse has been created, employers will be required to do the following:
* Search the clearinghouse at least once every year for current drivers.
* Review the system for any information on driver applicants.
The agency has stated that the rule will assist employers in determining whether a driver needs to begin or continue a return-to-service process before driving a CMV. And, although the final rule became effective on Jan. 4, 2017, compliance will not be required until Jan. 6, 2020.
OSHA currently requires employers to keep track of their employees’ injuries and illnesses in an “OSHA log.” However, in 2016, the agency released a final rule that will also require some employers to submit these records electronically, so they can be posted on OSHA’s website. The final rule became effective on Jan. 1, 2017.
The following are the requirements for the new rule:
* Establishments with 250 or more employees that are required to keep injury and illness records must electronically submit the following forms:
o OSHA Form 300: Log of Work-Related Injuries and Illnesses
o OSHA Form 300A: Summary of Work-Related Injuries and Illnesses
o OSHA Form 301: Injury and Illnesses Incident Report
* Establishments with 20-249 employees that work in industries with historically high rates of occupational injuries and illnesses must electronically submit information from OSHA Form 300A.
With the new rule, OSHA hopes that employers and researchers will be encouraged to find new and innovative ways to prevent injuries and illnesses at workplaces.
OSHA Publishes New Rule Regarding Slip, Trip and Fall Protection
OSHA recently published a final rule to update the standards regarding walking-working surfaces, as well as personal protective equipment (PPE) meant to protect employees from slip, trip and fall hazards. According to the agency, the final rule is meant to increase consistency between the general and construction industries’ fall protection standards, and will allow employers to choose the system that works best for their workplaces.
The final rule applies to all general industry workplaces and covers all walking-working surfaces—any horizontal or vertical surface on or through which an employee walks, works or gains access to a workplace location. The new standards for these surfaces address the following topics:
Additionally, the final rule also indicates that employers must ensure that employees have fall and falling object protection in certain areas and during certain operations or activities.
Employers will be required to train employees about the requirements of the new rule. And, while the training employers provide to their employees is not required to be site specific, it does need to address the hazards to which employees may be exposed at their workplace.
The final rule becomes effective on Jan. 17, 2017, although OSHA will allow additional time for employers to comply with some standards. For more information on the final rule, including a full compliance schedule, call us at 920-921-5921, and ask to see our compliance bulletin, “OSHA Final Rule on Slips, Trips and Fall Protection.”
Large Number of Trench Collapse Fatalities in 2016 May Shift OSHA’s Focus
Since OSHA published safety standards regarding trenching and excavation safety in 1989, fatalities involving trench collapses have fallen dramatically. However, OSHA has reported that 24 employees died as a result of trench collapses since the beginning 2016—more than double the number that occurred in 2015.
Although OSHA is aware of the alarming number of fatalities, the agency still has not determined how safety issues involving trench collapses will be addressed. However, OSHA believes that simply making its staff aware of the problem isn’t enough.
In Tennessee, an employee died after a trench collapsed—the first such incident to occur in the state in more than five years. As a result, OSHA’s state agency in Tennessee now considers excavation hazards an “imminent danger” and has pulled a state inspector off of a general scheduled inspection to investigate trench exposures. However, it’s unknown if OSHA will extend these practices into other states.
Although OSHA’s trench and excavation standards are meant to protect employees, it’s important for employers to take a proactive role by training employees on how to recognize trench hazards. Additionally, it’s likely that OSHA will focus on compliance with trench safety standards as a way to reduce the number of fatalities in 2017.
Two Major OSHA Rules to Consider in Early 2017
OSHA frequently introduces or revises safety rules to remain up to date with new technologies and workplace procedures. In early 2017, two new major rules regarding injury and illness reporting will be in effect that all employers and establishments should be aware of.
OSHA’s electronic reporting rule will require some establishments to electronically submit data from their work-related injury records to OSHA. This rule becomes effective on Jan. 1, 2017. Under the new rule, establishments with 250 or more employees must electronically submit data from their OSHA 300, 300A and 301 forms. OSHA will then remove any personally identifiable information (PII) and post the establishment-specific data on its website.
In response to the electronic reporting rule, OSHA released an anti-retaliation rule that went into effect on Dec. 1, 2016. This rule includes two major requirements for employers:
Because these two new rules may dramatically change how establishments and employees report injuries and illnesses, it’s important for employers to understand their reporting responsibilities. For more information, contact us today and ask for our two compliance bulletins, “OSHA Issues Final Rule on Electronic Reporting” and “OSHA’s Antiretaliation Rules to Take Effect Dec. 1, 2016.”