Compliance Recap July 2017

July was a relatively quiet month in the employee benefits world, despite the U.S. Senate's release of two bills in its attempt to repeal the Patient Protection and Affordable Care Act (ACA).

First, the U.S. Senate revised its Better Care Reconciliation Act and declined to vote on its revision. Then the U.S. Senate released its Health Care Freedom Act and voted on it. The Health Care Freedom Act failed to pass the U.S. Senate.

The Occupational Health and Safety Administration (OSHA) launched an electronic form 300A that employers use to report work-related injuries and accidents. Two courts issued decisions regarding ACA accommodation and website accessibility. The U.S. Citizenship and Immigration Services (USCIS) released a revised version of Form I-9, Employment Eligibility Verification, opened the H-2B Temporary Nonagricultural Worker program to an additional 15,000 workers for 2017, and began issuing redesigned Green Cards and EADs as part of the Next Generation Secure Identification Document Project.

The U.S. District Court, which issued a nationwide preliminary injunction against the U.S. Department of Health and Human Services (HHS) to prohibit HHS from enforcing portions of the ACA's Section 1557, remanded the case in part to HHS for reconsideration of the regulation.

UBA Updates

UBA released three new advisors in July:

·         COBRA Notices

·         Determining COBRA Premiums for Fully Insured and Self-Funded Health Plans

·         ERISA's "Church Plan" Exception

UBA updated existing guidance:

·         OSHA's Final Rule on Electronic Tracking of Workplace Injuries and Illnesses

U.S. Senate Releases Revision of Better Care Reconciliation Act

On July 13, 2017, the U.S. Senate released a revised draft of its Better Care Reconciliation Act (BCRA) bill. The U.S. Senate released the original draft of the BCRA on June 22, 2017, which would substitute the House's House Resolution 1628, a reconciliation bill aimed at "repealing and replacing" the Patient Protection and Affordable Care Act (ACA). The House bill was titled the "American Health Care Act of 2017" (AHCA).

The revised draft BCRA proposes to affect employer-sponsored plans in a few ways:

·         Allow health savings account (HSA) funds to be used to pay for the medical expenses of children under age 27 and to pay for high-deductible health plans' (HDHPs) premiums that are not otherwise covered by tax credits, deductibles, or exclusions.

·         Make HDHPs ineligible for HSAs if the HDHPs cover abortions except where necessary to save the mother's life or in cases of rape or incest.

·         Allow professional employer organizations to sponsor association plans.

On July 18, 2017, the U.S. Senate declined to vote on the revised BCRA after it determined that it didn't have enough votes to pass the bill.

On July 28, 2017, the U.S. Senate voted on the Health Care Freedom Act to repeal the ACA's individual and employer mandates and temporarily repeal the medical device tax. The bill failed to pass.

Employers with group health plans should continue to monitor progress in Washington, D.C., and should not stop adhering to any provisions of the ACA in the interim, or begin planning to comply with provisions in either the AHCA or revised BCRA.

OSHA Launches Electronic Form 300A

In 2016, the Occupational Safety and Health Administration (OSHA) published a rule entitled "Tracking of Workplace Injuries and Illnesses" which issued sweeping changes to the way certain employers were required to report work-related injuries and accidents. Employers with at least 10 employees at a single site have always been required to maintain and annually post a Form 300A log. Among the changes were that "high risk" employers with at least 20 employees (see the complete list atwww.osha.gov/recordkeeping/NAICScodesforelectronicsubmission.pdf) and all employers with 250 or more employees in a single physical location were required to file their report electronically. The original due date for filing 2016 data was July 1, 2017.

On June 28, 2017, OSHA proposed delaying the compliance date until December 1, 2017, "to provide the new administration an opportunity to review the new electronic reporting requirements prior to their implementation and allow affected entities sufficient time to familiarize themselves with the electronic reporting system, which will not be available until August 1."

OSHA will release the electronic Injury Tracking Application (ITA). Three options have been made available for submission:

1.     Users may manually enter data into a web form.

2.     Users may upload a CSV file to process single or multiple establishments at the same time.

3.     Users of automated recordkeeping systems will have the ability to transmit data electronically via an API (application programming interface).

OSHA estimates that it will take employers 10 minutes to create an account. Establishments may no longer submit paper reports. Future plans include an interface for entering data from a mobile device.

Technology is the New Frontier with ADA Accommodation

Website accessibility has become a hot topic in the world of ADA accommodation. Recently, a Florida federal judge handed down a trial verdict finding that grocery chain Winn-Dixie had violated Title III of the Americans with Disabilities Act (ADA) by having a website that was inaccessible to a blind plaintiff. Shortly thereafter, a federal judge in the Central District of California allowed another blind plaintiff to continue a case against Hobby Lobby for failing to "provide full and equal enjoyment of goods and services offered by its physical stores by not maintaining a fully accessible website."

Title III relates to public accommodation (private and non-profit business) and could impact any business offering goods and services through a website, which, in this era of e-commerce is far-reaching. Further, Title I of the ADA relates to employment, so would impact online application processes and career web pages.

In the Winn-Dixie case, the court recognized Web Content Accessibility Guidelines (WCAG) 2.0 as the website standard. WCAG are guidelines developed by a private group of accessibility experts that have been used to support accommodation initiatives. Until this case, WCAG had not been referenced by the court as the de facto legal standard.

Regarding Title I employment accommodation, the U.S. Department of Labor recently identified the Partnership on Employment & Accessible Technology (PEAT) as the source for employers who want to ensure that their workplace technology is accessible to all employees and job applicants. In particular, the "Accessible Technology Action Steps: A Guide for Employers" was recommended as a resource.

Definitive guidelines have traditionally been elusive in the amorphous arena of public accommodations within the requirements of the ADA. Businesses would be well advised to review their accessibility through these validated resources.

Immigration Updates: I-9, H-2B Visas, Green Cards

I-9 Updates

U.S. Citizenship and Immigration Services (USCIS) released a revised version of Form I-9, Employment Eligibility Verification, on July 17, 2017. Employers can use this revised version or continue using Form I-9 with a revision date of 11/14/16 through September 17, 2017. On September 18, 2017, employers must use the revised form with a revision date of 07/17/17. Revisions include changes to the instructions and revisions to the List of Acceptable Documents, including:

·         All the certifications of report of birth issued by the Department of State (Form FS-545, Form DS-1350, and Form FS-240) were combined into List C, number 2.

·         All List C documents were renumbered, except the Social Security card. For example, the employment authorization document issued by the Department of Homeland Security on List C changed from number 8 to number 7.

·         Consular Report of Birth Abroad (Form FS-240) was added to List C. Employers completing Form I-9 on a computer will be able to select Form FS-240 from the drop-down menus available in List C of Sections 2 and 3. E-Verify users will also be able to select Form FS-240 when creating a case for an employee who has presented this document for Form I-9.

Increase in H-2B Visas

USCIS has opened the H-2B Temporary Nonagricultural Worker program to anadditional 15,000 workers for 2017. The H-2B Temporary Nonagricultural Worker program was designed to serve U.S. businesses unable to find a sufficient number of qualified U.S. workers to perform nonagricultural work of a temporary nature. To qualify for the additional visas, petitioners must attest, under penalty of perjury, that their business is likely to suffer irreparable harm if it cannot employ H-2B nonimmigrant workers during fiscal year (FY) 2017.

New Green Cards Issued

USCIS has begun issuing redesigned Green Cards and Employment Authorization Documents (EADs) as part of the Next Generation Secure Identification Document Project. The new cards feature enhanced graphics and fraud-resistant features. Enhancements include:

·         The card holder's photo on both sides of the card

·         Unique graphic images and color palette

·         Holographic images

Cards will no longer display the individual's signature, nor will they have an optical stripe on the back.

Court Remands ACA Section 1557 Case to HHS

ACA Section 1557 provides that individuals shall not be excluded from participation, denied the benefits of, or be subjected to discrimination under any health program or activity which receives federal financial assistance from the U.S. Department of Health and Human Services (HHS), on the basis of race, color, national origin, sex, age, or disability.

In May 2016, HHS issued a final rule implementing Section 1557, which took effect on July 18, 2016.

Eight states and three faith-based private health care providers filed a lawsuit to challenge HHS' authority under the ACA to issue regulations that interpret sex discrimination as forbidding discrimination based on gender identity and termination of pregnancy. The lawsuit also asserted that the regulations violate the Religious Freedom Restoration Act as applied to them.

On December 31, 2016, the U.S. District Court for the Northern District of Texas issued a nationwide preliminary injunction prohibiting enforcement of the rule as it prohibits discrimination on the basis of gender identity or pregnancy termination.

On July 10, 2017, the District Court stayed the case and remanded it in part to HHS for reconsideration of the rule. The injunction remains in place.

Question of the Month

Q. Who must be counted under Form 5500's 100-participant rule?

A. Generally, small unfunded, insured, and combination unfunded/insured welfare plans are exempt from the Form 5500 filing requirement. To qualify for the exemption, a plan must cover "fewer than 100 participants at the beginning of the plan year."

Employees who are covered participants are counted. All former employees who are COBRA qualified beneficiaries are counted. Non-employees (covered spouses and dependent children) are not counted.

Only covered participants are counted. To determine when a participant is covered, the plan sponsor would look to the earlier of:

·         The date that the plan document states that participation begins.

·         The date when the individual becomes eligible to receive a benefit.

·         The date when the individual makes a voluntary or mandatory plan contribution.

To download the full recap click here.


BREAKING: Health Care Bill Moves to Debate on Senate Floor with 51-50 vote

In case you haven't heard, the motion to debate a version of the Health Care Bill after multiple renditions that has been dragging it's way through congress and stalled in the Senate has just been successfully passed with a narrow vote of 51-50 in favor with Vice President Pence casting the tie-breaking vote . The bill has a long road ahead and likely a vast number of revisions.

You can keep an eye on relevant news from our Navigator page right here on our own website.  We know it is overwhelming to try to keep up with all of the news from all of the disparate sources. Our Navigator resource simply works to curate content from a variety of trusted, non-partisan sites across the internet and bring them to a central location to provide you a trusted place to stay-up-to-date on Health Care news at a glance.

 


Source: Wall Street Journal, Daniel Nasaw,Michelle Hackman

Access Live Updates on the Motion Here: http://www.wsj.com/livecoverage/senate-obamacare-repeal-and-replace-vote

Moments ago:

Vice President Mike Pence just broke the 50-50 tie. The motion to proceed passes and the Senate will now begin debate on a bill to repeal and replace the Affordable Care Act.

With the motion passed, Senators will now proceed to 20 hours of debate on several proposals repealing parts of the 2010 Affordable Care Act, including their replacement package and a separate bill repealing the law with a two-year delay.

They are expected to debate numerous amendments – not counted toward the 20 hours – including proposals put forward by Democrats....


 

 

 


Compliance Recap May 2017

Make sure to stay up-to-date with the most recent rules and regulations from May regarding healthcare legislation thanks to our partners at United Benefit Advisors (UBA).

May was an active month in the employee benefits world. On May 4, 2017, the U.S. House of Representatives passed a bill titled the “American Health Care Act of 2017” (AHCA) to repeal and replace the Patient Protection and Affordable Care Act (ACA).

The Internal Revenue Service (IRS) released its Employer Shared Responsibility affordability percentage indexed for 2018. The U.S. Citizenship and Immigration Services (USCIS) issued redesigned permanent resident cards and employment authorization documents. The USCIS also issued a warning about phone scams targeting immigrants. The Occupational Safety and Health Administration (OSHA) announced that it will delay electronic submission of injury and illness records.

The IRS released dollar limits for health savings accounts (HSAs) and high-deductible health plans (HDHPs) for 2018. The IRS released guidance confirming that health flexible spending arrangements (health FSAs) cannot reimburse Medicare premiums. The IRS also released a memo regarding tax treatment of benefits paid under an arrangement that combines a self-funded fixed indemnity heath plan and wellness program.

The Centers for Medicare & Medicaid Services (CMS) announced that it will end the Federally Facilitated SHOP Exchange (FF-SHOP) at the end of 2017. The U.S. Department of Labor (DOL) issued an advisory opinion on an employee welfare benefit plan maintained by an association of employers. The U.S. Supreme Court declined to take an opt-out arrangement case, leaving intact a lower court’s decision that opt-out payments must be included in overtime calculations under the Fair Labor Standards Act (FLSA).

UBA Updates

UBA released three new advisors in May: • House Passes AHCA Bill in

  • House Passes AHCA Bill in First Step to Repeal and Replace the ACA
  • Frequently Asked Questions About Employees’ Reduction in Hours
  • What Qualifying Events Trigger COBRA?

The House Passes AHCA Bill in First Step to Repeal and Replace the ACA

On May 4, 2017, the U.S. House of Representatives passed House Resolution 1628, a reconciliation bill aimed at "repealing and replacing" the ACA. The AHCA will now be sent to the Senate for debate, where amendments can be made, prior to the Senate voting on the bill.

It is widely anticipated that in its current state the AHCA is unlikely to pass the Senate. Employers should continue to monitor the text of the bill and should refrain from implementing any changes to group health plans in response to the current version of the AHCA.

IRS Releases Employer Shared Responsibility Affordability Percentage Indexed for 2018

The Internal Revenue Service (IRS) released its Revenue Procedure 2017-36 that sets the required contribution percentage to determine whether employer-sponsored health coverage is affordable at 9.56 percent for calendar year 2018.

USCIS Issues Redesigned Green Cards and Employment Authorization Documents

The U.S. Citizenship and Immigration Services (USCIS) began issuing the new Permanent Resident Cards (also known as Green Cards) on May 1, 2017. The new cards incorporate enhanced graphics and fraud-resistant security features. These new cards are also part of an ongoing effort between USCIS, U.S. Customs and Border Protection, and U.S. Immigration and Customs Enforcement to enhance document security and deter counterfeiting and fraud.

The new Green Cards and Employment Authorization Documents (EADs):

  • Display the individual’s photos on both sides • Show a unique graphic image and color palette:
    • Green Cards will have an image of the Statue of Liberty and a predominately green palette
    • EAD cards will have an image of a bald eagle and a predominately red palette
  • Have embedded holographic images
  • No longer display the individual’s signature

Also, Green Cards will no longer have an optical stripe on the back.

Some Green Cards and EADs issued after May 1, 2017, may still display the existing design format as USCIS will continue using existing card stock until current supplies are depleted. For more information about the Green Card application process, please visit USCIS.gov/greencard.

USCIS Issues a Warning on Phone Scam Targeting U.S. Immigrants

U.S. immigrants have been targeted by a phone scam that appears as if it is from the Canadian government’s Immigration, Refugees, and Citizenship Canada (IRCC) call center (1-888-242-2100). Recipients of these calls are advised to hang up immediately and check their status by:

  • Making an InfoPass appointment at http://infopass.uscis.gov, or
  • Using myUSCIS to find up-to-date information about their application, or
  • Calling the USCIS National Customer Service Center at 1-800-375-5283.

Scam email or phone calls should be reported to the Federal Trade Commission at http://1.usa.gov/1suOHSS. Suspicious emails may be forwarded to the USCIS webmaster at uscis.webmaster@uscis.dhs.gov. The USCIS will review the emails received and share them with law enforcement agencies as appropriate. Visit the Avoid Scams Initiative at www.uscis.gov/avoid-scams for more information on common scams and other important tips.

OSHA Proposes to Delay Electronic Submission of Injury and Illness Records

In 2016, the Occupational Safety and Health Administration (OSHA) announced that certain high-risk employers of 20 or more employees and employers with 250 or more employees must electronically file Form 300A for workplace illnesses and injuries that occurred in calendar year 2016.

OSHA recently posted a notice on its website stating that “OSHA is not accepting electronic submission of injury and illness logs at this time and intends to propose extending the July 1, 2017 date by which certain employers are required to submit the information from their completed 2016 form 300A electronically.” It should be noted that the requirement to keep records has not changed; only the method in which they are submitted is under scrutiny.

IRS Releases 2018 Amounts for HSAs 

The IRS released Revenue Procedure 2017-37 that sets the dollar limits for health savings accounts (HSAs) and high-deductible health plans (HDHPs) for 2018. For

For calendar year 2018, the annual contribution limit for an individual with self-only coverage under an HDHP is $3,450, and the annual contribution limit for an individual with family coverage under an HDHP is $6,900. For

For calendar year 2018, a “high deductible health plan” is defined as a health plan with an annual deductible that is not less than $1,350 for self-only coverage or $2,700 for family coverage, and the annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) do not exceed $6,650 for self-only coverage or $13,300 for family coverage.

IRS Releases Information Letter to Confirm that FSAs Cannot Reimburse Medicare Premiums

The IRS released its Information Letter Number 2017-0004 to confirmed that a health flexible spending arrangement (health FSAs) cannot reimburse Medicare premium expenses. The IRS cited its Publication 969 which states that an FSA cannot reimburse health insurance premium payments. Because Medicare premiums are premiums for other health coverage, Medicare premiums are not FSA-reimbursable expenses.

IRS Releases Memo Regarding Tax Treatment of Benefits Paid by Self-Funded Health Plans

On May 12, 2017, the IRS released a Memorandum to address the taxability of benefits paid under an arrangement that combines a self-funded fixed indemnity heath plan and wellness program. The IRS specifically refutes the claim that these arrangements provide nontaxable cash payments to employees and employment tax savings for the employer and employees.

The IRS concluded that benefits paid under a such an employer-provided self-funded health plan should be included in an employee’s income and wages if the average amounts received by the employee for participating in a health-related activity predictably exceed the employee’s after-tax contributions.

CMS Plans to End SHOP Exchange

On May 15, 2017, the Centers for Medicare & Medicaid Services (CMS) announced that it will issue rules to essentially end the Federally Facilitated SHOP Exchange (FF-SHOP) at the end of 2017.

Under the rules that CMS intends to propose, HealthCare.gov will continue to make FF-SHOP participation eligibility decisions for small employers regarding the Small Business Health Care Tax Credit, but the FF-SHOP will stop handling SHOP functions, such as processing premium payments or handling employer or employee enrollment, for SHOP plans taking effect on or after on January 1, 2018. CMS intends to allow employers to directly enroll with insurers offering SHOP plans or through FF-SHOPregistered brokers or agents.

DOL Issues Advisory Opinion on Employee Welfare Benefit Plan Sponsored by a Group of Employers

On May 16, 2017, the Department of Labor (DOL) issued its Advisory Opinion to address whether a membership-based organization could fall within ERISA’s definition of “group or association of employers” who sponsor an ERISA employee welfare benefit plan.

Based on the facts presented to the DOL, the DOL concluded that the organization’s membership is comprised of employers engaged in the same industry and that the employers have a genuine organizational relationship unrelated to the health plan through their membership in the organization. The DOL determined, based on the proposed arrangement’s facts, that the participating member employers would be a bona fide group or association of employers under ERISA and that the health plan would be an ERISA employee welfare benefit plan.

U.S. Supreme Court Declines to Take Opt-Out Arrangement FLSA Case

Last year in court case Flores v. City of San Gabriel, the 9th Circuit Court of Appeals (which covers several western states including Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, and Washington) determined that when an employer pays cash to an employee for opting out of its health plan, the payment must be considered part of the employee’s “regular rate of pay” under the Fair Labor Standards Act (FLSA). This means that the adjusted rate of pay must be used in calculating compensation for overtime hours.

The City of San Gabriel appealed the 9th Circuit’s decision to the U.S. Supreme Court. On May 15, 2017, the Supreme Court declined to take the case, essentially leaving the decision intact.

Practically speaking, if an employer is in one of the states covered by the 9th Circuit and if the employer calculates compensation for overtime hours, then it should consider this additional FLSA aspect to offering cash in lieu of benefits.

To download the full compliance alert click Here.


Compliance Recap April 2017

Make sure to stay up-to-date with the most recent rules and regulations from April regarding healthcare legislation thanks to our partners at United Benefit Advisors (UBA).

In April, government agencies ramped up their activities by issuing a final rule, updating guidance, and announcing increased Health Insurance Portability and Accountability Act of 1996 (HIPAA) enforcement.

The Internal Revenue Service (IRS) updated its webpage that summarizes employer shared responsibilities payments and their calculation. The Department of Health and Human Services (HHS) Centers for Medicare & Medicaid Services (CMS) released its ACA Market Stabilization Final Rule and its 2018 Medicare Part D Benefit Parameters. The Treasury Inspector General released its report on the IRS' processing of Forms 1094-C and 1095-C.

The IRS released an information letter on HSA ineligibility due to Medicare entitlement. HHS' Office of Civil Rights (OCR) released guidance on electronic protected health information (ePHI) attacks. The Department of Labor (DOL) released its annual report on self-insured group health plans. The Congressional Research Services updated its Patient Protection and Affordable Care Act (ACA) Resources for FAQs.

UBA Updates

UBA released two new advisors in April:

·         ACA Market Stabilization Final Rule

·         Section 105(h) Nondiscrimination Testing

IRS Updates Its Webpage on Employer Payments and Calculations

On April 6, 2017, the IRS updated its webpage on Types of Employer Payments and How They are Calculated. It provides a summary of the employer shared responsibility provisions, the penalties amounts adjusted for calendar year 2017, examples of employer liability, and description of the IRS' process for assessing and collecting the employer shared responsibility payment.

CMS Releases Its ACA Market Stabilization Final Rule

On April 18, 2017, CMS issued its final rule regarding ACA market stabilization. The regulations are effective on June 17, 2017.

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 changes primarily affect the individual market. However, to the extent that employers have fully-insured plans, some of the changes will affect those employers' plans because the changes affect standards that apply to issuers.

Read more about the final rule.

CMS Releases Its 2018 Medicare Part D Benefit Parameters

On April 3, 2017, the Centers for Medicare & Medicaid Services (CMS) released its Announcement of Calendar Year (CY) 2018 Medicare Advantage Capitation Rates and Medicare Advantage and Part D Payment Policies and Final Call Letter and Request for Information.

Most group health plan sponsors offering prescription drug coverage to Part D eligible individuals must disclose whether the plan is creditable or non-creditable. For coverage to be creditable, the coverage's actuarial value must equal or exceed the actuarial value of the standard Medicare prescription drug coverage. Practically speaking, coverage is creditable if it's at least as good as standard Medicare prescription drug coverage.

Group health plan sponsors will use the parameters below to determine whether their plans' prescription drug coverage is creditable for 2018:

Part D Benefit Parameters -- Standard Benefit 2017 2018
Deductible $400.00 $405.00
Initial Coverage Limit $3,700.00 $3,750.00
Out-of-Pocket Threshold $4,950.00 $5,000.00
Total Covered Part D Spending at Out-of-Pocket Threshold for Non-Applicable Beneficiaries $7,425.00 $7,508.75
Estimated Total Covered Part D Spending for Applicable Beneficiaries $8,071.16 $8,417.60
Minimum Cost-Sharing in Catastrophic Coverage Portion of the Benefit    
    Generic $3.30 $3.35
    Other $8.25 $8.35

Treasury Inspector General Releases Report on IRS' Processing of Forms 1094-C and 1095-C

On April 7, 2017, the U.S. Department of the Treasury Inspector General released its Affordable Care Act: Efforts to Implement the Employer Shared Responsibility Provision that describes the results of its audit of the IRS' preparations for ensuring compliance with the Employer Shared Responsibility Provisions and its related information reporting requirements.

The Inspector General determined that some of the IRS' processes and procedures do not function as intended. As a result, the IRS has been unable to accurately and completely identify noncompliant employers who are potentially subject to the employer shared responsibility payment, unable to process paper information returns timely and accurately, and unable to identify validation errors correctly. Further, the IRS' implementation of a post-filing compliance validation system is being delayed until May 2017.

IRS Releases Information Letter on HSA Ineligibility Due to Medicare Entitlement

The IRS issued Letter 2017-0003 that explains the consequences of health savings account (HSA) ineligibility due to Medicare entitlement. Under the facts, an employee retired and enrolled in Medicare Parts A and B. Later, the employee resumed working and enrolled in the employer's health plan and was provided with an HSA.

The IRS determined that the employee never had a valid HSA because the employee's Medicare enrollment disqualified him from establishing an HSA. Per the IRS, the employee must withdraw the funds from his account and include them in his income; the withdrawal is not subject to a fine.

HHS OCR Releases Guidance About Man-in-the-Middle Attacks on ePHI

The U.S. Department of Health and Human Services Office for Civil Rights (OCR) issued its Man-in-the Middle Attacks and "HTTPS Inspection Products"guidance. The OCR warns organizations that have implemented end-to-end connection security on their internet connections using Secure Hypertext Transport Protocol (HTTPS) about using HTTPS interception products to detect malware over an HTTPS connection because the HTTPS interception products may leave the organization vulnerable to man-in-the-middle (MITM) attacks. In an MITM attack, a third party intercepts internet communications between two parties; in some instances, the third party may modify the information or alter the communication by injecting malicious code.

OCR provides a partial list of products that may be affected. Also, OCR provides a method that organizations can use to determine if their HTTPS interception product properly validates certificates and prevents connections to sites using weak cryptography.

OCR emphasized that covered entities and business associates must consider the risks presented to the electronic protected health information (ePHI) transmitted over HTTPS. Further, OCR encouraged covered entities and business associates to review OCR's recommendations for valid encryption processes to ensure that ePHI is not unsecured and the U.S. Computer Emergency Readiness Team's recommendations on protecting internet communications and preventing MITM attacks.

DOL Releases Its Annual Report to Congress on Self-Insured Group Health Plans

The Department of Labor (DOL) released its Report to Congress - Annual Report on Self-Insured Group Health Plans. The report provides statistics on self-insured employee health benefit plans and financial status of employers that sponsor such plans. The report uses data from the Form 5500 that many self-insured health plans are required to file annually with the DOL.

Congressional Research Services Updates Its ACA Resources for FAQs

On April 3, 2017, the Congressional Research Service updated its Patient Protection and Affordable Care Act (ACA): Resources for Frequently Asked Questions. The report lists contacts for questions about employer-based coverage and sources on taxes, congressional efforts to repeal or amend the ACA, ACA agency audits and investigations, insurance coverage statistics, and legal issues.

Question of the Month

Q. Under what circumstances do HIPAA's breach notification requirements not apply when a breach of protected health information (PHI) occurs?

A. Generally, breach notification must be provided when a breach of unsecuredPHI is discovered. HHS provides only two methods of creating "secured PHI" that would not be subject to the notification requirements if there is a breach:

·         Encryption

·         Destruction

This means that if PHI/ePHI is encrypted or destroyed and a breach occurs, HIPAA's notification requirements are not triggered.

To download the full compliance recap click Here.


ACA Market Stabilization Final Rule

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:

  • Consumers who enrolled with an advance premium tax credit (APTC) that is too large because of a redundant or duplicate policy
  • Consumers who were affected by a temporary error in the treatment of Social Security Income for tax dependents
  • Lawfully present non-citizens that were affected by a temporary error in the determination of their APTC eligibility
  • Lawfully present non-citizens with incomes below 100 percent of federal poverty level (FPL) who experienced certain processing delays
  • Consumers who were eligible for or enrolled in COBRA and were not sufficiently informed about their coverage options

Continuous Coverage

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.

Network Adequacy

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.

Conclusion

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.


Option for Some to Renew Policies That Do Not Fully Meet ACA Standards

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:

  • Any changes in the options that are available to them
  • Which of the market reforms would not be included in the renewed policy
  • The person’s potential right to enroll in a qualified health plan offered through a health insurance Marketplace and possibly qualify for financial assistance
  • How to access coverage through a Marketplace
  • The person’s right to enroll in health insurance coverage outside of a Marketplace that complies with the market reforms

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.

3/10/17

Download the full UBA ACA Advisor here.


Health Savings Accounts: What You Need to Know

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.

Eligibility

To be an eligible individual and qualify for an HSA, you must meet the following requirements:

  • You must be covered under a high deductible health plan (HDHP) on the first day of the month.
  • You have no other disqualifying health coverage except what is permitted.
  • You are not enrolled in Medicare.
  • You cannot be claimed as a dependent on someone else’s tax return for the year.

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

See full download for corresponding data.

Disqualifying coverage problems can be difficult for employees to understand, and care should be taken to educate them on what disqualifying coverage is.

  • Example: Adam and Susan are married; Adam is a full-time employee at The Auto Dealer and enrolls in its HDHP. Susan is a full-time employee at The Dry Cleaner and enrolls in its HMO plan with an FSA. Both Adam and Susan enroll in single-only coverage. Because Susan now has an FSA, which the IRS allows her to spend on Adam even if she has single-only coverage, Adam is no longer HSA eligible because he is now covered by disqualifying coverage (even if Susan does not spend any of the FSA on Adam’s qualifying expenses). If Susan chose to enroll in The Dry Cleaner’s limited purpose FSA instead of the general purpose FSA, Adam could maintain his HSA eligibility.

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

See full download for corresponding data.

Health FSA with Carryovers

See full download for corresponding data.

Medicare

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:

  • Not apply for or waive Medicare Part A, and
  • Not apply for Medicare Part B, and
  • Waive or delay Social Security benefits.

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.

Dependent Status

Individuals who can be claimed as a dependent on someone else’s tax return are not HSA eligible.

  • Example: Anna is 15 years old and is claimed as a dependent on her parent’s taxes. Her mom, Caroline, has enrolled in family HDHP coverage through her employer and has established an HSA to which she can contribute up to the full family amount. Anna does not have any other disqualifying coverage, but she cannot establish an HSA because she is claimed as a dependent on her parent’s taxes.

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.

  • Example: Samuel is 24 years old and is not claimed as a dependent on his parent’s taxes. His mom, Caroline, has enrolled in family HDHP coverage through her employer (which covers Samuel) and has established an HSA into which she can contribute up to the full family amount. Samuel does not have any other disqualifying coverage, and he can establish his own HSA (although his employer is unlikely to allow him to put pre-tax dollars into it). Caroline cannot spend her HSA dollars on Samuel’s medical expenses, despite the fact that he is covered under the family HDHP. That is because Samuel is not a tax dependent of his parent.

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.

Contribution

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:

  • For 2015, Mr. Auburn and his wife are both eligible individuals. They each have family coverage under separate HDHPs. Mr. Auburn is 58 years old and Mrs. Auburn is 53. Mr. and Mrs. Auburn can split the family contribution limit ($6,650) equally or they can agree on a different division. If they split it equally, Mr. Auburn can contribute $4,325 to an HSA (one-half the maximum contribution for family coverage ($3,325) + $1,000 additional contribution) and Mrs. Auburn can contribute $3,325 to an HSA.

Beginning the first month an individual is enrolled in Medicare (or entitled to Medicare) the contribution limit is zero.

  • Example: Marie turned age 65 in July 2016 and enrolled in Medicare. She had an HDHP with selfonly coverage and is eligible for an additional contribution of $1,000. Her contribution limit is $2,175 ($4,350 × 6 ÷ 12).

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.

Employer Contributions

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:

  • The same amount, or
  • The same percentage of the annual deductible limit under the HDHP covering the employees.

This rule prohibits employers from implementing HSA “matching” programs, or using HSA contributions as a wellness incentive.

Comparable participating employees:

  • Are covered by their HDHP and are eligible to establish an HSA,
  • Have the same category of coverage (either self-only or family coverage), and
  • Have the same category of employment (part-time, full-time, or former employees).

Distributions

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.

  1. You and your spouse
  2. All dependents you claim on your tax return
  3. Any person you could have claimed as a dependent on your return except if:
    • The person filed a joint return,
    • The person had gross income of $4,000 or more, or
    • You, or your spouse if filing jointly, could be claimed as a dependent on someone else's return.

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.

3/10/17

See full download for corresponding data.


Important News Regarding the Employer-Tax Exclusion for Health Insurance

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.

3/10/17

Download the UBA Notification here.


Compliance Recap February 2017

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 Updates

UBA released three new advisors in February:

  •  CMS’ Proposed Rule on ACA Market Stabilization
  • Medicare Part D: Creditable Coverage Disclosures
  • Health Insurance Marketplace Notice and OMB Expiration Date

UBA updated existing guidance:

  •  Qualified Small Employer Health Reimbursement Arrangements FAQ

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:

  • Section 2701 – relating to fair health insurance premiums
  • Section 2702 – relating to guaranteed availability of coverage
  • Section 2703 – relating to guaranteed renewability of coverage
  • Section 2704 – relating to the prohibition of pre-existing condition exclusions or other discrimination based on health status, with respect to adults, except with respect to group coverage
  • Section 2705 – relating to the prohibition of discrimination against individual participants and beneficiaries based on health status, except with respect to group coverage
  • Section 2706 – relating to non-discrimination in health care
  • Section 2707 – relating to comprehensive health insurance coverage
  • Section 2709 – relating to coverage for individuals participating in approved clinical trials

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.

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.

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:

  • Medical Loss Ratio report and rebating: The maximum penalty increases to $111 per day, per individual affected by the violation.
  • Summary of Benefits and Coverage: For failure to provide, the maximum penalty increases to $1,105 per failure.
  • HIPAA: The penalty range increases to a minimum penalty of $112 up to a maximum of $55,910 per violation, and the maximum penalty for all violations of an identical requirement in a calendar year increases to $1,677,299.

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.

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.

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.

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Medicare Part D: Creditable Coverage Disclosures

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:

  • Provide annual written notice to all Medicare eligible individuals (employees, spouses, dependents, retirees, COBRA participants, etc.) who are covered under the prescription drug plan.
  • Disclose to the Centers for Medicare and Medicaid Services (CMS) whether the coverage is “creditable prescription drug coverage.”

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:

  • Group health plans under ERISA, including health reimbursement arrangements (HRAs), dental and vision plans, certain cancer policies, and employee assistance plans (EAPs) if they provide medical care
  • Group health plans sponsored for employees or retirees by a multiple employer welfare arrangement (MEWA)
  • Qualified prescription drug plans

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:

  1. Provides coverage for brand and generic prescriptions;
  2. Provides reasonable access to retail providers;
  3. Is designed to pay on average at least 60 percent of participants’ prescription drug expenses; and
  4. Satisfies at least one of the following:
    1. The prescription drug coverage has no annual benefit maximum benefit or a maximum annual benefit payable by the plan of at least $25,000.
    2. The prescription drug coverage has an actuarial expectation that the amount payable by the plan will be at least $2,000 annually per Medicare eligible individual.
    3. For entities that have integrated health coverage, the integrated health plan has no more than a $250 deductible per year, has no annual benefit maximum or a maximum annual benefit payable by the plan of at least $25,000, and has no less than a $1 million lifetime combined benefit maximum.

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:

  • A combined plan year deductible for all benefits under the plan
  • A combined annual benefit maximum for all benefits under the plan
  • A combined lifetime benefit maximum for all benefits under the plan

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:

  1. Prior to the Medicare Part D Annual Coordinated Election Period (ACEP) which runs from October 15 through December 7 of each year;
  2. Prior to an individual’s Initial Enrollment Period (IEP) for Medicare Part D;
  3. Prior to the effective date of coverage for any Medicare eligible individual that joins the plan;
  4. Whenever the entity no longer offers prescription drug coverage or changes the coverage offered so that it is no longer creditable or becomes creditable; and
  5. Upon request by the individual.

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:

  • The employee is able to access documents that are sent in electronic format at any location where the employee performs his or her job duties, and
  • The employee is expected to access the employer’s electronic information system as part of his or her key job duties

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 types of documents to which the consent will apply
  • That the consent can be withdrawn at any time without charge
  • The procedures for withdrawing consent and for updating the address used for receipt of electronically furnished documents
  • The right to request and obtain a paper version of an electronically distributed document, and whether the paper version will be provided at no charge
  • The hardware or software needed to access and retain the documents delivered electronically

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:

  1. For plan years that ended in 2006, no later than March 31, 2006
  2. For plan years that end in 2007 and beyond, within 60 days after the beginning date of the plan year for which the entity is providing the form
  3. Within 30 days after the termination of the prescription drug plan
  4. Within 30 days after any change in the creditable coverage status of the prescription drug plan

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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