Safety Focused Newsletter - June 2019

Emergency Preparedness During National Safety Month

It’s always important to take a proactive approach to safety in the workplace, but sometimes an emergency can arise at a moment’s notice. Taking some time to plan before an incident takes place can help you take action quickly and ensure the safety of yourself and your co-workers. And, because the National Safety Council organizes National Safety Month every June, it’s a great time to review emergency preparedness in various workplace settings.

Here are some strategies to help ensure you’re ready to respond to an emergency in the workplace:

  • Check workplace policies—There may already be plans in place for how to respond to an emergency, but they’ll only be effective if you and your co-workers follow them. These plans may also include evacuation routes or strategies to help contain a hazard.
  • Stay focused and calm—You may not have time to react to an emergency, so you should always be ready to get to safety at any time. Try to keep essentials on hand so can take them with you, as you should never go back to a dangerous area to gather your belongings.
  • Have a communication plan—After you’re in a safe area, you should have a plan to communicate with your manager, co-workers or emergency responders. Try to meet in a designated location that’s established by a workplace policy and give an update on your status as soon as possible.
  • Help others when possible—Make your own safety a priority during an emergency, but offer any help you can if there aren’t any hazards present. It may be a good idea to check the locations of first-aid kits in your workplace if you need to treat an injury.

According to the Centers for Disease Control and Prevention, there are about 330 heat-related fatalities every year.

5 Tips for Outdoor Heat Safety

The hot summer months can cause body temperatures to rise to unsafe levels, especially when combined with strenuous work. Outdoor workers are also be vulnerable to heat-related illnesses since they spend long periods in direct sunlight.

There are many types of heat illnesses, such as heat stroke, heat exhaustion, dehydration and heat cramps. Each of these conditions have various symptoms, but they commonly cause dizziness, weakness, nausea, blurred vision, confusion or loss of consciousness.

Here are some tips for staying safe in the heat while working outdoors:

  1. Wear loose, light-colored clothing so your skin gets air exposure.
  2. Shield your head and face from direct sunlight by wearing a hat and sunglasses.
  3. Take regular breaks to rest in a shaded area. If you’re wearing heavy protective gear, consider removing it to help cool off even more.
  4. Ease into your work and gradually build up to more strenuous activity as the day progresses. You should also avoid overexerting yourself during the hottest hours of the day.
  5. Drink water frequently, even if you aren’t thirsty. Experts recommend drinking at least eight ounces every 20 to 30 minutes to stay hydrated. Stick to water, fruit juice and sport drinks and avoid caffeinated beverages, as they can dehydrate you.

Employees should take care to monitor themselves and their co-workers on hot days. If you notice any signs of heat illness, notify your on-duty supervisor immediately.

Heat illnesses can usually be treated by being moved to a cooler area and drinking cool liquids. In extreme cases when heat illnesses cause unconsciousness, health care professionals should be alerted immediately.

Taking some time to plan before an incident takes place can help you take action quickly and ensure the safety of yourself and your co-workers.

Download the Newsletter

A monthly safety newsletter from


Construction Risk Advisor - June 2019

Trenching and Excavating Safety

Excavations are any man-made cuts, cavities, trenches or depressions formed by earth removal. Of these, trenches—narrow excavations made below the surface of the ground—create the most significant workplace hazards, particularly as they relate to:

  • Cave-ins
  • Hazardous atmospheres (e.g., carbon monoxide, noxious gas, vapors or a lack of oxygen)
  • Falls (e.g., a worker accidently falls into a trench and injures themselves)
  • Floods or water accumulation
  • Mobile equipment (e.g., equipment operated or stored too close to the excavation site falls into the trench)

Above all, cave-ins present the greatest risk in trenching and are more likely to result in worker fatalities than any other excavation-related accidents. In fact, one cubic yard of soil can weigh as much as a car, leading to serious injuries or even death in the event of a trench collapse. In order to keep workers safe, employers must consider one or more of the following protective systems:

  • Shoring involves installing aluminum hydraulic or other types of supports to prevent soil movement and cave-ins. Shoring systems typically consist of posts, wales, struts and sheeting.
  • Benching/sloping is a method of protecting workers from cave-ins by excavating the sides of an excavation to form one or a series of horizontal levels or steps, usually with vertical or near vertical surfaces between levels. Sloping, if done correctly, removes the risk of cave-ins by sloping the soil of the trench back from the trench bottom.
  • Shielding protects workers by using trench boxes or other types of supports to prevent soil cave-ins.

For more information on construction safety, contact Hierl Insurance Inc. today.

Newsletter Provided by: Hierl's Property & Casualty Experts

Download the Newsletter

Trucking Risk Advisor - June 2019

New Resources for the CDL Drug and Alcohol Clearinghouse Available

Recently, the U.S. Department of Transportation’s Federal Motor Carrier Safety Administration (FMCSA) released resources regarding the implementation of its Commercial Driver’s License (CDL) Drug and Alcohol Clearinghouse. The Clearinghouse is a secure online database that gives employers, the FMCSA, state driver licensing agencies and law enforcement personnel real-time access to important information about CDL driver drug and alcohol program violations. In addition, the Clearinghouse will:

  • Centralize testing processing for CDL holders who operate commercial motor vehicles (CMVs).
  • Help employers and other parties identify ineligible drivers by allowing stakeholders to see if CDL drivers of interest have violated federal drug and alcohol testing program requirements.
  • Ensure that drivers who commit drug and alcohol program violations complete the necessary steps before getting back on the road or performing any other safety-sensitive function.

As of Jan. 6, 2020, motor carriers will be required to use the Clearinghouse to check on a current employee’s status at least once per year. To learn more, click here.

Newsletter Provided by: Hierl's Property & Casualty Experts

Download the Newsletter

The Indirect Costs of Accidents

Successful motor carriers have always made safety a priority, both to safeguard their employees and lower the costs associated with accidents. But, with the number of drivers on U.S. roadways increasing, there’s also a rising number of accidents and collisions. In fact, the National Highway Traffic Safety Administration found that fatalities from large truck crashes have reached their highest level in 29 years.

Accidents can lead to a number of direct costs for fleets, from medical bills, property damage and vehicle repairs. However, as the demand for increased freight capacity continues to increase, employers that sacrifice safety for increased capacity may not consider these indirect costs:

  • Loss of revenue—Most vehicles involved in an accident need to stay idle for a significant amount of time, leading to lower efficiency or even the complete loss of a delivery order.
  • Fines and penalties—Trucks that cause an accident may face significant traffic violations and FMCSA penalties. Plus, significant FMCSA violations can add to compliance requirements and take some of your attention off of your regular operations.
  • Legal fees—Accidents can lead to significant legal fees from lost freight and third-party claims. Long legal proceedings can be a drain on your finances, regardless of whether you win or lose a claim.
  • Insurance premiums—Insurance carriers continue to raise commercial vehicle policy rates as the number of accidents increases. Even small incidents can lead to significant insurance rate increases as insurers try to recover funds lost from claims.

The best way to make safety a priority during any commercial driving operation is to establish a comprehensive safety program. This should start with a collaborative effort between managers, fleet supervisors, drivers, mechanics and other stakeholders in order to identify safety risks across all aspects of your organization, and develop effective and proactive solutions.


Bringing Design Thinking to HR

Design thinking has continued to rise in popularity across many industries. Continue reading this blog post from UBA for things to keep in mind when implementing design thinking processes.


Across industries, design thinking has continued its rise in popularity. At its core, design thinking is about centering people in the creation of products. Whatever you’re designing, whether a process or a tool, connecting your work to the people who will use it makes a better solution.

As HR Executive points out, design is more than logos and graphics. It’s the plan for anything produced, including the policies, tools, and systems of an HR Department. Ensuring those are designed with intention for today’s busy workforce means a better chance of them being successful. While HR in the past has been all about adoption, today’s departments have to think toward more than just first use to continued use. This means not just understanding, but connecting with, the people who will be using the tools, following the policies, and using the systems. The sheer number of workplace components HR manages, from compensation to workforce experience to productivity also means HR creates an immense amount of data. When that data is rooted in design thinking approaches, it becomes more valuable to the company as a whole.

If you’re already convinced of the value of design thinking, the Harvard Business Review has a few things to keep in mind to help ensure implementing design thinking processes goes smoothly.

  1. Encourage your team to think differently. Not just differently, but divergently. Outlier ideas, big reaches, and unexpected notions are more than useful, they’re essential.
  1. Empower your team to fail, more than once. Iteration and testing are parts of the design process and lead to improvements that don’t come from running with a safer idea.
  1. Embrace it yourself. For HR teams used to having clear directions and focusing on efficiency, these are new experiences so it’s up to managers to lead the way.

Read more:

The Right Way to Lead Design Thinking

How to Incorporate Design Thinking into HR Processes

SOURCE: Olson, B. (9 May 2019) "Bringing Design Thinking to HR" (Web Blog Post). Retrieved from http://blog.ubabenefits.com/bringing-design-thinking-to-hr


Compliance Recap - April 2019

Compliance Recap

April 2019

April was a busy month in the employee benefits world.

The Centers for Medicare & Medicare Services (CMS) issued its parameters for the defined standard Medicare Part D prescription drug benefit for 2020. In the court case challenging the Patient Protection and Affordable Care Act’s constitutionality, the court will hear oral arguments during the week of
July 8, 2019.

CMS released its 2020 Benefit Payment and Parameters final rule and fact sheet. The Department of Labor (DOL) started its appeal of the court case that invalidated portions of the DOL’s association health plans final rule. The DOL also released a statement regarding its enforcement of the final rule.

The Department of Health and Human Services (HHS) issued a notice that all Health Insurance Portability and Accountability Act of 1996 (HIPAA) enforcement actions will be governed by lower interim civil monetary penalty amounts as a matter of HHS’ enforcement discretion, pending rulemaking to change the current civil monetary penalty limits.

The Internal Revenue Service (IRS) released a memorandum regarding S corporation 2-percent shareholders’ deduction of group health plan coverage premiums paid or reimbursed by an S corporation.

UBA Updates

UBA released one new Advisor: Final 2020 Benefit Payment and Parameters Rule

UBA also updated existing guidance: Updates on DOL’s Association Health Plans Final Rule

 

 

CMS Releases 2020 Parameters for Medicare Part D Prescription Drug Benefit

The Centers for Medicare and Medicaid Services (CMS) released the following parameters for the defined standard Medicare Part D prescription drug benefit for 2020:

Deductible

$ 435

Initial coverage limit

$ 4,020

Out-of-pocket threshold

$ 6,350

Total covered Part D spending at the out-of-pocket threshold (for beneficiaries who are ineligible for the coverage gap discount program)

$ 9,719.38

Minimum cost-sharing in catastrophic coverage portion of the benefit

$ 3.60 for generic/preferred multi-source drugs

$ 8.95 for all other drugs

 

Generally, group health plan sponsors must disclose to Part D eligibility individuals whether the prescription drug coverage offered by the employer is creditable. Coverage is creditable if it, on average, pays out at least as much as coverage available through the defined standard Medicare Part D prescription drug plan.

Status of Court Case Challenging ACA Constitutionality

As background, in February 2018, twenty states filed a lawsuit asking the U.S. District Court for the Northern District of Texas (Court) to strike down the Patient Protection and Affordable Care Act (ACA) entirely. The lawsuit came after the U.S. Congress passed the Tax Cuts and Jobs Act in December 2017 that reduced the individual mandate penalty to $0, starting in 2019.

On December 14, 2018, the Court issued a declaratory order that the individual mandate is unconstitutional and that the rest of the ACA is unconstitutional. The Court granted a stay of its December 2018 order, which prohibits the order from taking effect while it is being appealed in the Fifth Circuit Court of Appeals (appeals court).

The appeals court will hear oral arguments during the week of July 8, 2019.

CMS Publishes 2020 Benefit Payment and Parameters Final Rule

The Centers for Medicare and Medicaid Services (CMS) published its final rule and fact sheet for benefit payment and parameters for 2020. Although the final rule primarily affects the individual market and the Exchanges, the final rule addresses the following topics that may impact employer-sponsored group health plans:

  • The 2020 maximum annual limitation on cost sharing is $8,150 for self-only coverage and $16,300 for other-than-self-only coverage.
  • For fully-insured plans, any indication of a reduction in the generosity of a benefit for individuals that is not based on clinically indicated, reasonable medical management practices is potentially discriminatory.
  • Amounts paid toward cost sharing using direct support by drug manufacturers (for example, coupons) to insured patients to reduce or eliminate immediate out-of-pocket costs for specific prescription brand drugs that have a generic equivalent are not required to be counted toward the annual limitation on cost sharing.
  • Federally Facilitated Small Business Health Options Programs (FF-SHOPs) may operate a toll-free hotline rather than a more robust call center.

The final rule is effective on June 24, 2019. The final rule generally applies to plan years beginning on or after January 1, 2020.

Read more about the final rule.

DOL Appeals Association Health Plan Court Case

On March 28, 2019, the U.S. District Court for the District of Columbia (Court) found that the DOL’s association health plans final rule exceeded the statutory authority delegated by Congress under the Employee Retirement Income Security Act (ERISA) and that the final rule unlawfully expands ERISA’s scope. In particular, the Court found the final rule’s provisions – defining “employer” to include associations of disparate employers and expanding membership in these associations to include working owners without employees – were unlawful and must be set aside.

On April 26, 2019, the Department of Justice (DOJ) filed a notice of appeal. On April 29, 2019, the DOL issued a statement regarding its enforcement policy regarding the final rule. In light of the court’s decision, the DOL will not take enforcement action against:

  • employers and associations for potential violations stemming from actions taken before the court’s decision:
  • if the employer or association relied in good faith on the AHP final rule’s validity and
  • as long as the employers (and association) meet their responsibilities to association members and their participants and beneficiaries to pay health benefit claims as promised.
  • existing AHPs for continuing to provide benefits – to members who enrolled in good faith reliance on the AHP rule’s validity before the court’s order – through the remainder of the plan year or contract term that was in force at the time of the court’s decision.

This means that the DOL will not enforce potential violations that may have occurred before March 28, 2019. However, the DOL will enforce violations that occur on or after March 28, 2019. Because the DOL has not asked for a stay of the court order, associations cannot form self-funded AHPs under the final rule and existing AHPs must not market to new enrollees or sole proprietors.

Employers and their employees who are currently participating in an insured AHP under the final rule can generally maintain their coverage through the later of the end of the plan year or contract term. However, at the end of the plan year, the issuer will only be able to renew coverage for an employer if the coverage complies with the relevant market requirements for that employer’s size, rather than the association’s size.

For example, if a small employer and a sole proprietor joined an insured AHP under the final rule, then at renewal, an insurer can only sell coverage that complies with the small group market rules to the small employer and that complies with the individual market rules to the sole proprietor.

In the upcoming months, the U.S. Court of Appeals for the District of Columbia Circuit will consider the legal arguments in this case. Employers in AHPs should keep apprised of future developments in this case.

Read more about DOL’s enforcement of the final rule.

HHS Issues Notification Regarding the HIPAA Civil Monetary Penalty Tiers

On April 30, 2019, the Department of Health and Human Services (HHS) issued a notice that all Health Insurance Portability and Accountability Act of 1996 (HIPAA) enforcement actions will be governed by the following interim penalty tiers as a matter of HHS’ enforcement discretion:

Culpability

Penalty per violation

Annual limit

No knowledge

$100 – $50,000

$25,000

Reasonable cause

$1,000 – $50,000

$100,000

Willful neglect – corrected

$10,000 – $50,000

$250,000

Willful neglect – not corrected

$50,000

$1,500,000

 

The notice doesn’t legally bind HHS and doesn’t create legal rights for covered entities such as employers’ group health plans.

Practically speaking, the penalty amounts have not changed. The civil monetary penalties under HIPAA, as amended by the Health Information Technology for Economic and Clinical Health (HITECH) Act, continue to be:

Culpability

Penalty per violation

Annual limit

No knowledge

$114 – $57,051

$1,711,533

Reasonable cause

$1,141 – $57,051

$1,711,533

Willful neglect – corrected

$11,410 – $57,051

$1,711,533

Willful neglect – not corrected

$57,051

$1,711,533

 

However, HHS may exercise discretion to impose a lower penalty amount if a covered entity, such as a health plan, is facing enforcement for violating HIPAA or HITECH.

HHS plans to engage in rulemaking to revise the penalty amounts. If and when final regulations are issued, then the revised penalty amounts will become law.

IRS Releases Memo on 2-percent Shareholders’ Health Coverage Deductions

The Internal Revenue Service (IRS) released a memorandum to confirm that a person who is a 2-percent shareholder (through Internal Revenue Code §318’s attribution rules) in an S corporation is entitled to a deduction for the amounts paid by the S corporation under a group health plan.

For the 2-percent shareholder to deduct the health insurance premium amounts, the S corporation must report the health insurance premiums paid or reimbursed as wages on the 2-percent shareholder’s Form W-2 in that same year. Also, the shareholder must report the premium payments or reimbursements from the S corporation as gross income on the Form 1040, U.S. Individual Tax Return.

Question of the Month

  1. What are the penalties for failing to comply with Section 125 requirements, such as failing to follow a cafeteria plan document’s terms?
  2. An operational failure occurs when a plan fails to follow its cafeteria plan document’s terms. There are several potential penalties for operational failures, including:
  • Cafeteria plan disqualification
  • Requiring the cafeteria plan to comply with Section 125 and its regulations, including reversing transactions that caused noncompliance
  • Imposing employment tax withholding liability and penalties on the employer regarding pre-tax salary reductions and elective employer contributions
  • Imposing employment and income tax liability and penalties on employees regarding pre-tax salary reductions and elective employer contributions

 

5/1/2019


OSHA Penalty Schedule

HIGHLIGHTS

OSHA CITATIONS

  • Citations must describe the particular nature of the violation.
  • OSHA will provide a reasonable time to correct the problem.
  • Citations must be posted at or near the location where the violation occurred and must remain on display until the violation is corrected.

2019 PENALTIES

  • $13,260 per serious, other-than-serious and posting violation
  • $13,260 per day for failure to abate a violation
  • $132,598 per willful or repeated violation

OSHA Penalty Schedule

An employer receives a written citation when it violates OSHA standards or regulations. The citation will describe the particular nature of the violation and will include a reference to the provision of the chapter, standard, rule, regulation or order the employer violated.

In addition, the citation will provide a reasonable amount of time for the employer to correct the problem. When the violation does not pose a direct or immediate threat to safety or health (de minimis violation), OSHA may issue a notice or warning instead of a citation.

An employer that receives a citation must post a copy of it at or near the place where the violation occurred. The notice must remain on display for three days or until the violation is corrected, whichever is longer. Penalties may be adjusted depending on the gravity of the violation and the employer’s size, history of previous violations and ability to show a good faith effort to comply with OSHA requirements.

LINKS AND RESOURCES

CURRENT PENALTIES

Below is a list of potential citations employers may receive and a range of corresponding penalties for these citations.

Violation

Current Penalty

De minimis violation Warning
Other-than-serious violation Up to $13,260 per violation
Serious violation 

A violation where there is a substantial probability that death or serious physical harm could result from an employer’s practice, method, operation or process. An employer is excused if it could not reasonably know of the presence of the violation.

Up to $13,260 per violation
Willful or repeated violation 

A violation is willful when committed intentionally and knowingly. The employer must be aware that a hazardous condition exists, know that the condition violates an OSHA standard or other obligation, and make no reasonable effort to eliminate it.

Between $9,472 and $132,598 per violation
Repeated violation

A violation is repeated when it is substantially similar to a violation that was already present in a previous citation.

Up to $132,598 per violation
Willful violation resulting in death of employee Up to $10,000 and/or imprisonment for up to six months.

Penalties may double for a second or higher conviction.

Uncorrected violation Up to $13,260 per day until the violation is corrected
Making false statements, representations or certifications Up to $10,000 and/or imprisonment for up to six months
Violation of posting requirements Up to $13,260 per violation
Providing unauthorized advance notice of inspection Up to $1,000, imprisonment for up to six months or both

Current laws allow OSHA to adjust the maximum penalty amounts every year to account for the cost of inflation, as shown by the consumer price index (CPI). If OSHA plans to adjust penalty amounts, it must signal its intention by Jan. 15 of each year.

For more information regarding OSHA regulations, standard or penalties, contact us today.

Download the Newsletter

Provided by Hierl Insurance Inc.


District Court Vacates Portions of the Association Health Plans Final Rule

Recently, the U.S. District Court for the District of Columbia ruled that the Department of Labor's final ruling on the definition of "employer" exceeded the statutory authority delegated by Congress under ERISA. Read this blog post from UBA for more on this compliance update.


As background, on June 19, 2018, the U.S. Department of Labor (DOL) issued a Final Rule that broadened the definition of “employer” and the provisions under which an employer group or association may be treated as an “employer” sponsor of a single multiple-employer employee welfare benefit plan and group health plan under Title I of the Employee Retirement Income Security Act (ERISA).

On March 28, 2019, the U.S. District Court for the District of Columbia (Court) found that the DOL’s final rule exceeded the statutory authority delegated by Congress under ERISA and that the final rule unlawfully expands ERISA’s scope. In particular, the Court found the final rule’s provisions – defining “employer” to include associations of disparate employers and expanding membership in these associations to include working owners without employees – are unlawful and must be set aside.

The Court’s order vacates the specific provisions of the DOL’s final rule regarding “bona fide group or association of employers,” “commonality of interest,” and “dual treatment of working owners as employers and employees.” The Court order sends the final rule back to the DOL to consider how the final rule’s severability provision affects the final rule’s remaining portions.

Although the DOL issued Questions and Answers after the Court’s decision, the DOL has not indicated how it will proceed. The DOL could revise its final rule or could appeal the decision and request that the Court stay its decision pending the appeal. Employers in association health plans should keep apprised of future developments in this case.

SOURCE: Hsu, K. (2 May 2019) "District Court Vacates Portions of the Association Health Plans Final Rule" (Web Blog Post). Retrieved from http://blog.ubabenefits.com/district-court-vacates-portions-of-the-association-health-plans-final-rule


HHS Releases Bulletin that Extends Grandmothered Plans Through 2020

Recently, the Department of Health and Human Services (HHS) re-extended its transitional relief policy to permit renewals with a termination date no later than December 31, 2020. Read this blog post from UBA to learn more.


As background, 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.

Since 2013, HHS has re-extended transitional relief each year. Most recently, on March 25, 2019, HHS released a Bulletin in which it re-extended its transitional relief policy to permit renewals with a termination date no later than December 31, 2020, provided that all such coverage comes into compliance with the specified requirements by January 1, 2021.

SOURCE: Hsu, K. (25 April 2019) "HHS Releases Bulletin that Extends Grandmothered Plans Through 2020" (Web Blog Post). Retrieved from http://blog.ubabenefits.com/hhs-releases-bulletin-that-extends-grandmothered-plans-through-2020


Compliance Recap - March 2019

Compliance Recap - March 2019

March was a busy month in the employee benefits world.

The Department of Justice (DOJ) announced that it will not defend the Patient Protection and Affordable Care Act (ACA) in the court case challenging the ACA’s constitutionality. The Internal Revenue Service (IRS) updated two Q&As regarding ACA reporting for 2018.

The Department of Health and Human Services (HHS) published its 2020 Actuarial Value Methodology and 2020 AV Calculator. HHS also released a bulletin that allows grandmothered plans to be extended through 2020. A U.S. District Court vacated the bona fide associations and working owner provisions contained in the Department of Labor’s association health plans final rule.

The Department of Labor (DOL) released two information letters. One information letter clarifies when an authorized representative may receive claim-related notices on behalf of an ERISA plan participant. The other information letter addresses whether employees may delay taking FMLA leave and whether the statutory 12-week period may be extended.

The IRS updated its Publication 969 for taxpayers to use in preparing 2018 returns. The IRS also announced tax relief for individuals and businesses affected by recent storms in Alabama, Nebraska, and Iowa.

UBA Updates

UBA released one new advisor: 2019 Compliance Calendar

UBA updated or revised existing guidance:

 

Status of Court Case Challenging ACA Constitutionality

As background, in February 2018, twenty states filed a lawsuit asking the U.S. District Court for the Northern District of Texas (Court) to strike down the Patient Protection and Affordable Care Act (ACA) entirely. The lawsuit came after the U.S. Congress passed the Tax Cuts and Jobs Act in December 2017 that reduced the individual mandate penalty to $0, starting in 2019.

On December 14, 2018, the Court issued a declaratory order that the individual mandate is unconstitutional and that the rest of the ACA is unconstitutional. The Court granted a stay of its December 2018 order, which prohibits the order from taking effect while it is being appealed in the Fifth Circuit Court of Appeals (appeals court).

On March 25, 2019, the DOJ submitted a letter to the appeals court clerk stating the Court’s ruling should be affirmed and that the entire ACA should be struck down as unconstitutional. The DOJ intends to file an appellate brief to defend the Court’s ruling.

IRS Updates Q&As on ACA Reporting

On March 26, 2019, the Internal Revenue Service (IRS) updated the Extended Due Dates and Transitional Relief section of the Questions and Answers on Information Reporting by Health Coverage Providers (Section 6055) to include two additional Q&As at Q29 and Q30. Q29 addresses the extended 2019 due date, provided under IRS Notice 2018-94, for furnishing Forms 1095-B to individuals. Q30 states that Notice 2018-94 did not affect the penalty amounts for failing to furnish and file Forms 1094 and 1095.

The IRS updated the Extended Due Dates and Transition Relief for 2015 and 2016 Reporting section of the Questions and Answers on Reporting of Offers of Health Coverage by Employers (Section 6056) to include an additional Q&A at Q35. Q35 addresses the extended 2019 due date provided under IRS Notice 2018-94 for furnishing Forms 1095-C to individuals.

HHS Publishes Final 2020 Actuarial Value Calculator and Methodology

On March 19, 2019, The Department of Health and Human Services (HHS) published the Final 2020 Actuarial Value (AV) Calculator Methodology. The Final 2020 AV Calculator Methodology also contains the 2020 AV Calculator. HHS issues this guidance annually to help issuers of non-grandfathered health insurance plans, offered in the individual and small group markets, to determine the levels of coverage of their plans (for example, AV of 60 percent for bronze level, AV of 70 percent for silver level, AV of 80 percent for gold level, and AV of 90 percent for platinum level).

A few changes were made to the 2020 AV Calculator compared to the 2019 AV Calculator. For the 2020 AV Calculator, HHS added a one-year projection factor of 6.1 percent for medical costs and 9.8 percent for drugs costs to the calculator claims data. Also, the AV Calculator estimate for the annual limit on cost-sharing has been increased to $8,250 for 2020. Finally, HHS removed the column labeled “Number of Enrollees” in its AV Calculator to limit user confusion.

HHS Releases Bulletin that Extends Grandmothered Plans Through 2020

As background, 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.

Since 2013, HHS has re-extended transitional relief each year. Most recently, on March 25, 2019, HHS released a Bulletin in which it re-extended its transitional relief policy to permit renewals with a termination date no later than December 31, 2020, provided that all such coverage comes into compliance with the specified requirements by January 1, 2021.

Read more about the transitional relief.

District Court Vacates Portions of the Association Health Plans Final Rule

As background, on June 19, 2018, the U.S. Department of Labor (DOL) issued a Final Rule that broadened the definition of “employer” and the provisions under which an employer group or association may be treated as an “employer” sponsor of a single multiple-employer employee welfare benefit plan and group health plan under Title I of the Employee Retirement Income Security Act (ERISA).

On March 28, 2019, the U.S. District Court for the District of Columbia (Court) found that the DOL’s final rule exceeded the statutory authority delegated by Congress under ERISA and that the final rule unlawfully expands ERISA’s scope. In particular, the Court found the final rule’s provisions – defining “employer” to include associations of disparate employers and expanding membership in these associations to include working owners without employees – are unlawful and must be set aside.

The Court’s order vacates the specific provisions of the DOL’s final rule regarding “bona fide group or association of employers,” “commonality of interest,” and “dual treatment of working owners as employers and employees.” The Court order sends the final rule back to the DOL to consider how the final rule’s severability provision affects the final rule’s remaining portions.

Although the DOL issued Questions and Answers after the Court’s decision, the DOL has not indicated how it will proceed. The DOL could revise its final rule or could appeal the decision and request that the Court stay its decision pending the appeal. Employers in association health plans should keep apprised of future developments in this case.

Read more about the court decision.

DOL Releases Information Letter on ERISA Claim-Related Notices to Representatives

The Department of Labor (DOL) recently released an information letter (Letter) that clarifies an authorized representative’s ability to receive notices regarding claims under ERISA. The Letter notes that a plan may communicate with both the individual and the individual’s authorized representative. However, for purposes of the claims procedures rules, when a person clearly designates an authorized representative to act and receive notices on the person’s behalf with respect to a claim, the plan should direct all information and notifications to the authorized representative, unless the person indicates otherwise.

DOL Releases Opinion Letter on When an Employee Must Take FMLA Leave

On March 14, 2019, the Department of Labor (DOL) released Opinion Letter FMLA2019-1-A (Letter) to address whether an employer may delay designating paid leave as Family and Medical Leave Act (FMLA) leave or permit employees to extend FMLA leave beyond the 12-week period (26 weeks for military or caregiver leave) provided under the FMLA.

The Letter states that once an eligible employee communicates a need to take leave for an FMLA-qualifying reason, neither the employee nor the employer may delay designating the FMLA-qualifying leave as FMLA leave. The employer may not delay designating leave as FMLA-qualifying leave even if the employee would prefer that the employer delay the designation. Further, an employer may not designate more than 12 weeks of leave as FMLA leave. If an employee substitutes paid leave for unpaid FMLA, the paid leave counts toward the 12-week FMLA period and does not extend such period.

IRS Releases Publication 969 Health Savings Accounts and Other Tax-Favored Health Plans

The Internal Revenue Service (IRS) updated its Publication 969 for taxpayers to use in preparing 2018 returns. The publication explains Health Savings Accounts (HSAs), Medical Savings Accounts (Archer MSAs and Medicare Advantage MSAs), Health Flexible Spending Arrangements (FSAs), and Health Reimbursement Arrangements (HRAs).

Tax Relief for Victims of Storms in Alabama, Nebraska, and Iowa

The Internal Revenue Service (IRS) recently announced that individuals who reside or have businesses in certain counties of Alabama, Nebraska, and Iowa may qualify for tax relief, including postponed deadlines, because of the President’s declaration that a major disaster occurred in these states due to severe storms. The IRS automatically identifies taxpayers located in the covered disaster area and applies automatic filing and payment relief. But affected taxpayers who reside or have a business located outside the covered disaster area must call the IRS disaster hotline at 866-562-5227 to request this tax relief.

The Department of Labor (DOL) released a Fact Sheet that recognizes that the recent natural disasters may impede efforts to comply with ERISA for the next few months. The Fact Sheet provides guidance on relief that is available for certain ERISA requirements for employee benefit plans. The DOL also released an FAQ directed toward participants and beneficiaries of employee benefit plans that have been impacted by the recent natural disasters. The FAQ addresses health benefit questions and retirement benefit questions.

Question of the Month

  1. How does a person who is 65 years old or older maintain HSA eligibility and continue working? Also, when the person plans to retire, what should the person do about HSA contributions to avoid IRS penalties?
  2. To maintain health savings account (HSA) eligibility, an individual who is working and age 65 or older must:
  • Not apply for or waive Medicare Part A, and
  • Not apply for Medicare Part B, and
  • Waive or delay Social Security benefits.

For example, if a person delays Social Security benefits and delays Medicare Part A and B, retires at the end of April at an age over 65, and applies for Social Security benefits and Medicare on May 1, 2019, then the general rule is that the person’s Social Security entitlement and Medicare Part A coverage will be retroactive for six months, but no earlier than the person’s first month of eligibility. In this example, if the person retired and applied for Medicare at age 67, then Medicare benefits would be retroactively effective as of November 2018.

IRS regulations state that a person can’t contribute to an HSA when the person has Medicare, so a person would need to stop contributing six months in advance of applying for Social Security benefits and Medicare. If a person contributes to an HSA after Medicare coverage begins, then the person may be subject to IRS penalties.

4/10/2019


Compliance Recap - February 2019

February was a quiet month in the employee benefits world.

The Internal Revenue Service (IRS) released an information letter addressing when an employer may seek recoupment of contributions made to an employee’s HSA.

A U.S. District Court held that the State of Maryland could not ask for a declaration that the Patient Protection and Affordable Care Act (ACA) is constitutional and enforceable. Four states and the U.S. House of Representatives joined the appeal of the court case that held the ACA to be unconstitutional.

The Department of the Treasury, Department of Labor (DOL), and the Department of Health and Human Services (HHS) issued a request for information regarding grandfathered group health plans.

UBA Updates

UBA released one new advisor: Compliance Recap – 2018 Year in Review

UBA updated or revised existing guidance: State Guide to COBRA Supplemental Requirements

IRS Releases Information Letter on Returning HSA Contributions to an Employer

Generally, a person’s interest in a health savings account (HSA) is nonforfeitable. However, in the past, the Internal Revenue Service’s Notice 2008-59 described limited circumstances under which an employer may recoup contributions made to an employee’s HSA.

The Internal Revenue Service (IRS) recently released Information Letter 2019-0033 (Letter), clarifying that IRS Notice 2008-59 was not intended to provide an exclusive set of circumstances in which an employer can recoup contributions made to an HSA. If there is clear evidence of an administrative or process error, an employer may request that the contributions it made to an employee’s HSA be returned. This correction should put the employer and employee in the same position that they would have been in if the error had not occurred.

The Letter lists the following examples of when an employer may recoup HSA contributions:

  • An amount withheld and deposited in an employee’s HSA for a pay period is greater than the amount shown on the employee’s HSA salary reduction election.
  • An employee receives an employer contribution that the employer did not intend to contribute but the amount was transmitted because an incorrect spreadsheet is accessed or because employees with similar names are confused with each other.
  • An employee receives an incorrect HSA contribution because it is incorrectly entered by a payroll administrator (whether in-house or third-party) causing the incorrect amount to be withheld and contributed.
  • An employee receives a second HSA contribution because duplicate payroll files are transmitted.
  • An employee receives as an incorrect HSA contribution because a change in employee payroll elections is not processed timely so that amounts withheld and contributed are greater than (or less than) the employee elected.
  • An employee receives an incorrect HSA contribution because an HSA contribution amount is calculated incorrectly, such as a case in which an employee elects a total amount for the year that is allocated by the system over an incorrect number of pay periods.
  • An employee receives an incorrect HSA contribution because the decimal position is set incorrectly resulting in a contribution greater than intended.

Status of Court Case Challenging ACA Constitutionality

There is recent activity in the court case regarding the Patient Protection and Affordable Care Act’s constitutionality.

As background, in February 2018, twenty states filed a lawsuit asking the U.S. District Court for the Northern District of Texas (Court) to strike down the Patient Protection and Affordable Care Act (ACA) entirely. The lawsuit came after the U.S. Congress passed the Tax Cuts and Jobs Act in December 2017 that reduced the individual mandate penalty to $0, starting in 2019.

On December 14, 2018, the Court issued a declaratory order that the individual mandate is unconstitutional and that the rest of the ACA is unconstitutional. The Court granted a stay of its December 2018 order, which prohibits the order from taking effect while it is being appealed in the Fifth Circuit Court of Appeals (appeals court).

On February 1, 2019, the U.S. District Court for the District of Maryland held that the State of Maryland could not ask for a declaration that the ACA is constitutional and enforceable because the federal government will continue to enforce the ACA while the appeal proceeds.

On February 14, 2019, the appeals court granted the U.S. House of Representatives’ request to intervene as a party to the lawsuit to defend the ACA. Also, on February 14, the appeals court granted the request of the states of Colorado, Iowa, Michigan, and Nevada to intervene as parties to the lawsuit to defend the ACA. The appeals court denied these intervenor states’ request for expedited briefing. The federal government’s brief is due on March 25, the twenty states’ brief is due on April 24, and reply briefs are due on May 15.

Agencies Issue Request for Information on Grandfathered Health Plans

On February 25, 2019, the Department of the Treasury, Department of Labor (DOL), and Department of Health and Human Services (HHS) (collectively, the Departments) issued a request for information (RFI) regarding grandfathered group health plans. The RFI contains two sets of questions concerning: (1) maintaining (or relinquishing) grandfathered status and (2) general information about grandfathered group health plans and group health insurance coverage.

As background, under the ACA, group health plans that were in existence on March 23, 2010, are excused from some of the ACA’s requirements. Under the Departments’ prior guidance, certain changes can cause a plan to lose its grandfathered status.

The RFI is intended to help the Departments understand issues related to grandfathered health plans and to estimate the impact of any potential changes to the rules governing group health plans’ retention of grandfathered status. The RFI also seeks to determine whether there are opportunities for the Departments to assist group health plans with maintaining grandfathered status.

Question of the Month

Q: When must IRS reporting Forms 1094-C, 1095-C, 1094-B, and 1095-B be electronically filed for the 2018 calendar year?

A: If filing electronically, Forms 1094-C, 1095-C, 1094-B, and 1095-B must be filed by April 1, 2019. Employers may file Form 8809 to receive an automatic 30-day extension of this due date for forms due to the IRS. Form 8809 must be filed by April 1, 2019 for employers that are filing electronically.

3/1/2019