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Compliance Recap - October 2017

October was a busy month in the employee benefits world. President Trump announced a new Acting Secretary for the U.S. Department of Health and Human Services (HHS). Eric Hargan fills the position vacated by Tom Price, who resigned in late September 2017.

The Internal Revenue Service (IRS) issued the instructions for Forms 1094/1095 for the 2017 tax year, announced PCORI fees for 2017-18, and announced cost-of-living adjustments for 2018. President Trump issued an Executive Order on healthcare and announced an end to the Patient Protection and Affordable Care Act's cost sharing reductions.

The IRS, Employee Benefits Security Administration (EBSA), and Centers for Medicare and Medicaid Services (CMS) issued two interim final rules to allow a greater number of employers to opt out of providing contraception to employees at no cost through their employer-sponsored health plan.

The U.S. Department of Labor (DOL) issued a proposed rule to delay a disability claims procedure regulation's applicability date. The IRS provided additional guidance on leave-based donation programs' tax treatment and released an information letter on COBRA and Medicare. HHS released its proposed rule on benefits and payment parameters for 2019. The U.S. Department of the Treasury (Treasury) issued its Priority Guidance Plan for projects it intends to complete during the first half of 2018.

UBA Updates

UBA released seven new advisors in October:

UBA updated existing guidance:

IRS Issues 2017 Instructions for Forms 1094/1095

The IRS issued the instructions for Forms 1094-C and 1095-C for the 2017 tax year. Applicable large employers use Forms 1094-C and 1095-C to report information related to their employer shared responsibility provisions under the Patient Protection and Affordable Care Act (ACA).

Read more about the instructions and forms.

IRS Announces PCORI Fee for 2017-18

The IRS announced the Patient-Centered Outcomes Research Institute (PCORI) fee for 2017-18. The fee is $1.00 per covered life in the first year the fee is in effect. The fee is $2.00 per covered life in the second year. In the third through seventh years, the fee is $2.00, adjusted for medical inflation, per covered life.

For plan years that end on or after October 1, 2016, and before October 1, 2017, the indexed fee is $2.26. For plan years that end on or after October 1, 2017, and before October 1, 2018, the indexed fee is $2.39.

Read more about the PCORI fee.

IRS Announces Cost-of-Living Adjustments for 2018

The IRS released Revenue Procedures 2017-58 and Notice 2017-64 to announce cost-of-living adjustments for 2018. For example, the dollar limit on voluntary employee salary reductions for contributions to health flexible spending accounts (FSAs) is $2,650, for taxable years beginning with 2018.

Download the chart of 2018 annual benefit plan amounts.

Executive Order on Healthcare

On October 12, 2017, the White House released the Executive Order "Promoting Healthcare Choice and Competition Across the United States," signed by President Trump, that directs various federal agencies to explore options relating to association health plans, short-term, limited-duration insurance, and health reimbursement arrangements in the next 60-120 days.

Employers should not make any changes to their group health plans based on the Executive Order until regulations are issued.

Read more about the Executive Order.

President Trump Ends ACA Cost Sharing Reductions

President Trump announced that the ACA's cost sharing reductions for low income Americans would be stopped. The Department of Health and Human Services (HHS) confirmed that the payments would stop immediately.

Because the cost sharing reductions are different than the advance premium tax credit, this payment termination will not have a direct impact on employers at this time. However, employers with fully insured health plans might see group health plan rate increases in the future as insurance companies work to make up for revenue loss.

Read more about the payment termination.

Agencies Roll Back Contraceptive Mandate

The Internal Revenue Service, Employee Benefits Security Administration, and Centers for Medicare and Medicaid Services issued two interim final rules that were effective on October 6, 2017. These rules will allow a greater number of employers to opt out of providing contraception to employees at no cost through their employer-sponsored health plan.

The expanded exemption encompasses all non-governmental plan sponsors that object based on sincerely held religious beliefs, and higher education institutions' student health plan arrangements. The exemption also now encompasses employers who object to providing contraception coverage based on sincerely held moral objections and higher education institutions' student health plan arrangements. Further, if an insurance company has sincere religious beliefs or moral objections, it would be exempt from having to sell coverage that provides contraception. The exemptions apply to both non-profit and for-profit entities.

Read more about the contraceptive mandate rollback.

DOL Proposes Delay to Final Disability Claims Procedures Regulations' Applicability Date

The DOL issued a proposed rule to delay the applicability date of its final rule that amends the claims procedure requirements applicable to ERISA-covered employee benefit plans that provide disability benefits. The DOL's Fact Sheetcontains a summary of the final rule's requirements.

The DOL is delaying the applicability date from January 1, 2018, to April 1, 2018, to consider whether to rescind, modify, or retain the regulations and to give the public an additional opportunity to submit comments and data concerning the final rule's potential impact.

IRS Provides Additional Guidance on Leave-Based Donation Programs' Tax Treatment

Last month, the IRS provided guidance for employers who adopt leave-based donation programs to provide charitable relief for victims of Hurricane and Tropical Storm Irma. This month, the IRS issued Notice 2017-62 which extends the guidance to employers' programs adopted for the relief of victims of Hurricane and Tropical Storm Maria.

These leave-based donation programs allow employees to forgo vacation, sick, or personal leave in exchange for cash payments that the employer will make to charitable organizations described under Internal Revenue Code Section 170(c).

The employer's cash payments will not constitute gross income or wages of the employees if paid before January 1, 2019, to the Section 170(c) charitable organizations for the relief of victims of Hurricane or Tropical Storm Maria. Employers do not need to include these payments in Box 1, 3, or 5 of an employee's Form W-2.

IRS Releases Information Letter on COBRA and Medicare

The IRS released Information Letter 2017-0022 that explains that a covered employee's spouse can receive COBRA continuation coverage for up to 36 months if the employee became entitled to Medicare benefits before employment termination. In this case, the spouse's maximum COBRA continuation period ends the later of: 36 months after the employee's Medicare entitlement, or 18 months (or 29 months if there is a disability extension) after the employment termination.

CMS Releases 2019 Benefits Payment and Parameters Proposed Rule

The Centers for Medicare & Medicaid Services (CMS) released a proposed ruleand fact sheet for the 2019 Benefit Payment and Parameters. The proposed rule is intended to increase individual market flexibility, improve program integrity, and reduce regulatory burdens associated with the Patient Protection and Affordable Care Act (ACA) in many ways, including updates and annual provisions to:

  • Essential health benefits
  • Small Business Health Options Program (SHOP)
  • Special enrollment periods (SEPs)
  • Exemptions
  • Termination effective dates
  • Medical loss ratio (MLR)

CMS usually finalizes the Benefit Payment and Parameters rule in the first quarter of the year following the proposed rule's release. November 27, 2017, is the due date for public comments on the proposed rule.

Almost all the topics addressed in the proposed rule would affect the individual market and the Exchanges, particularly the Small Business Health Options Program (SHOP) Exchanges.

Of interest to small group health plans, CMS proposes to change how states will select essential health benefits benchmark plans. If CMS keeps this change in its final rule, then it will affect non-grandfathered small group health plans for benefit years 2019 and beyond.

Read more about the proposed rule.

Treasury Issues its Priority Guidance Plan

The Treasury issued its 2017-2018 Priority Guidance Plan that lists projects that it intends to complete by June 30, 2018, including:

  • Guidance on issues related to the employer shared responsibility provisions
  • Regulations regarding the excise tax on high cost employer-provided coverage ("Cadillac tax")
  • Guidance on Qualified Small Employer Health Reimbursement Arrangements (QSE HRAs)

Question of the Month

Q: Although the transitional reinsurance fee (TRF) expired, why might an employer have one TRF remittance due in November?

A: The TRF premium stabilization program was in place from 2014 to 2016. Calendar year 2016 was the last year for which the TRF was required. HHS offered employers with self-insured plans with an option to pay the TRF in one or two payments. If an employer chose to pay in two installments for the 2016 benefit year, then the employer's first payment was due by January 17, 2017, and its second payment is due by November 15, 2017.


HRL - Employers - Happy

Critical compliance changes for next year: An open enrollment checklist

Keeping up-to-date with health care is one of our top priorities. From HR Morning, here is a comprehensive list of everything you need to know so far going into 2018.


As HR pros immerse themselves in negotiating plan changes for this year’s open enrollment, it’s critical to keep these new 2018 regulation changes front and center.

To help, here’s a checklist of changes you’ll need to be aware of when making plan-design moves:

1. Mental Health Parity reg changes enforced

Beginning January 1, 2018, plans that require “fail first” or “step therapy” could violate the Parity Act’s “non-quantitative treatment limitation” (NQTL) rules. Under the NQTL rules, plans can’t be more restrictive for mental health/substance abuse benefits than they are for medical/surgical ones.

Here’s an example of a fail-first strategy: Requiring mental health or addiction patients to try an intensive outpatient program before admission to an inpatient treatment if the same restriction doesn’t apply to medical/surgical benefits.

2. New Summary of Benefits and Coverage (SBC) template

Under the ACA, plans were required to start using the new SBC template on or after April 1, 2017.

For calendar year plans, that means this is the first enrollment with the new template, which includes new coverage examples and updates about cost-sharing. You can find more details on and instructions for the new form here: bit.ly/temp544

3. Women’s preventive care

The Women’s Preventive Services Guidelines were updated for 2018 calendar plans to include a number of items that must be covered without any cost-sharing. The list includes breast cancer screenings for average-risk women, screenings for cervical cancer, diabetes mellitus and more.

 

See the original article here.

Source:

Bilski J. (17 October 2017). "Critical compliance changes for next year: An open enrollment checklist" [Web blog post]. Retrieved from address http://www.hrmorning.com/critical-compliance-changes-for-next-year-an-open-enrollment-checklist/


Compliance Recap September 2017

Download the full Compliance Recap here.

September was a quiet month in the employee benefits world.

The Internal Revenue Service (IRS) issued final Forms 1094/1095, special per diem rates for 2017-18, and
guidance on the tax treatment of leave-based donation programs. The Centers for Medicare and Medicaid
Services (CMS) announced a Medicare special enrollment period for individuals impacted by recent
hurricanes. A U.S. District Court remanded a payment rate rule to the IRS, the Department of Health and
Human Services (HHS), and the Department of Labor (DOL) for further explanation of their rule.

UBA Updates

UBA released one new advisor in September: IRS Releases Draft Forms and Instructions for
2017 ACA Reporting.

IRS Issues Forms 1094/1095
The IRS issued Forms 1094-B, 1095-B, 1094-C, and 1095-C for the 2017 tax year. Coverage providers
use Forms 1094-B and 1095-B to report health plan enrollment. Applicable large employers use Forms
1094-C and 1095-C to report information related to their employer shared responsibility provisions under
the ACA.

IRS Issues 2017-18 Special Per Diem Rates
The IRS issued Notice 2017-54 to provide special per diem rates for taxpayers to use in substantiating
the amount of ordinary and necessary business expenses incurred while traveling away from home on or
after October 1, 2017.

IRS Provides Guidance on Tax Treatment of Leave-Based Donation Programs
Some employers adopted or will adopt leave-based donation programs to provide charitable relief for
victims of Hurricane and Tropical Storm Irma. These leave-based donation programs allow employees to
forgo vacation, sick, or personal leave in exchange for cash payments that the employer will make to
charitable organizations described under Internal Revenue Code Section 170(c).

The IRS’ Notice 2017-52 states that the employer’s cash payments will not constitute gross income or
wages of the employees if paid before January 1, 2019, to the Section 170(c) charitable organizations for
the relief of victims of Hurricane or Tropical Storm Irma. Employers do not need to include these
payments in Box 1, 3, or 5 of an employee’s Form W-2.

CMS Announces Special Enrollment Period for Hurricane Victims

CMS established a Medicare special enrollment period for individuals affected by Hurricanes Harvey, Irma,
and Maria. The special enrollment period will allow individuals to enroll, dis-enroll, or switch Medicare health
or prescription drug plans from the start of the incident period through the end of 2017.

Court Remands Regulations to HHS, DOL, and IRS

The United States District Court for the District of Columbia held that the Departments of Health and
Human Services, Labor, and the Treasury (the Departments) acted arbitrarily and capriciously by failing to
seriously respond to comments and proposed alternatives as part of the notice and comment process for
the Departments’ rule on how much plans are required to pay out-of-network physicians for emergency
health care services.

Under the Patient Protection and Affordable Care Act (ACA), group health plans cannot impose a higher
copayment or coinsurance rates for participants who receive emergency medical treatment from an out-of-network
provider.

Pursuant to that ACA provision, the Departments issued an interim final rule to establish that “a plan or
issuer satisfies the copayment and coinsurance limitations in the statute if it provides benefits for out-of-network
emergency services in an amount equal to the greatest of three possible amounts—

(1) The amount negotiated with in-network providers for the emergency service furnished;
(2) The amount for the emergency service calculated using the same method the plan generally uses
to determine payments for out-of-network services (such as the usual, customary, and
reasonable charges) but substituting the in-network cost-sharing provisions for the out-of-network
cost-sharing provisions; or
(3) The amount that would be paid under Medicare for the emergency service.”

Despite extensive public comment, the Departments issued the final rule without substantive revision. A
college of emergency physicians was dissatisfied with the Departments’ response to public comments
and filed suit against the Departments.

Although the court determined that the Departments failed to seriously respond to public comments, the
court declined to vacate the rule. The court remanded the case to the Departments for further explanation
of their rule.

Question of the Month

Q. How does the new child age rating structure affect employers in the small group market who are in
states that adopt the new age band?

A. The new child age rating bands will likely result in an increase in 2018 premiums.

As background, in December 2016, the Department of Health and Human Services (HHS) issued a final
rule that creates multiple child age bands rather than a single age band for individuals age 0 through 20,
for plan or policy years beginning on or after January 1, 2018.

Per HHS, establishing single-year age bands starting at age 15 will result in small annual increases in
premiums attributable to age for children age 15 to 20, which will help mitigate large premium increases
attributable to age due to the transition from child to adult age rating at age 21.

States are not required to adopt these new age rating bands. However, for employers in states that adopt
these new age rating bands, employers will see an increase in 2018 premiums at renewal if they have
employees or dependents who fall within the 14-20 age range.

Download the full Compliance Recap here.