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.

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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


Status of Court Case Challenging ACA Constitutionality

Twenty states filed a lawsuit back in February of last year that asked the U.S. District Court for the Northern District of Texas to strike down the Patient Protection and Affordable Care Act. Continue reading this blog post for an update on the status of this court case.


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.

SOURCE: Olson, B. (16 April 2019) "Status of Court Case Challenging ACA Constitutionality" (Web Blog Post). Retrieved from http://blog.ubabenefits.com/status-of-court-case-challenging-aca-constitutionality


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


OSHA Cornerstones - Second Quarter 2019

OSHA Signals Updates to Powered Industrial Truck Standards as It Requests Information From Employers

OSHA recently requested information on powered industrial trucks in the workplace, a sign that the agency will likely update its standards on these vehicles. Although the American National Standards Institute and the National Fire Protection Association updated their own standards last year, OSHA’s regulations have only been changed once since they were adopted in 1971.

Powered industrial trucks are one of the most frequently cited OSHA standards, with 2,294 violations in 2018. The agency’s current regulations don’t include language on common risk exposures, such as carbon monoxide buildup from engines, noise hazards and stopping distances on descending grades. And, although updates may require employers to implement new safety procedures, OSHA stated that a major goal is to remove regulatory burden while improving safety.

As a part of the request for information, OSHA specified that it wants data on these specific topics:

  • The types, age and usage of powered industrial trucks
  • Maintenance and retrofitting procedures for each type of powered industrial truck
  • Suggestions for regulating older vehicle models
  • The types of accidents and injuries associated with the use of these vehicles
  • The advantages and drawbacks of retrofitting machines with new safety features
  • Any relevant components of powered industrial truck safety programs

OSHA will accept public comments on powered industrial trucks until June 10. For more information, see the full notice on the Federal Register’s website.

Increased OSHA Penalties for 2019

Federal law requires OSHA to increase its maximum penalties every year to account for inflation. Here’s a list of the maximum penalties for 2019:

  • Other-than-serious violation: $13,260 per violation
  • Serious violation: $13,260 per violation
  • Failure to comply with posting requirements: $13,260 per violation
  • Failure to correct a violation: $13,260 per day until corrected
  • Repeated violation: $132,598 per violation
  • Willful violation: $132,598 per violation, and a minimum penalty of $9,472 per violation

OSHA Issues Final Rule to Roll Back Electronic Reporting Requirements After Concerns About Employee Privacy

Earlier this year, OSHA updated its electronic reporting rule after concerns that reports on workplace injuries and illnesses contain employees’ personal information. The agency also explained that under the original rule, it was possible for this information to be disclosed publicly through a Freedom of Information Act request or OSHA’s Injury Tracking Application.

The new final rule only requires certain establishments to submit data from OSHA Form 300A, and became effective on Feb. 25. Previously, establishments with 250 or more employees were also required to submit forms 300 and 301. While this requirement was removed before the March 2 deadline to submit data, OSHA stated that it’s likely that many employers automatically submitted data from all three forms, and using software to remove personal details won’t be 100 percent effective.

Some organizations believe the final rule will negatively affect workplace safety, and six states filed a lawsuit against OSHA in an attempt to reinstate the original electronic reporting requirements. However, others believe that the final rule still allows the agency to collect a summary of workplace injuries and illnesses without revealing potentially harmful personal information.

New and Updated OSHA Resources to Help Prevent Falls

Falls are one of the most common and dangerous injuries in the workplace, and OSHA recently released a number of resources to help employers stay aware of common fall hazards and train their workforces.

Here’s a summary of the new and updated resources:

For more resources on preventing falls at your organization, call 920-921-5921 today or visit www.hierl.com.

According to the National Employment Law Project, the Trump administration's focus on deregulation has caused OSHA enforcement activity to fall and fatality investigations to rise.

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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


DOL’s Annually Adjusted Federal Penalties

Recently, the DOL issued their Federal Civil Penalties Inflation Adjustment Act Annual Adjustments for 2019. These annual adjustments of federal civil monetary penalties are effective for penalties assessed after January 23, 2019, for violations occurring after November 2, 2015. Read this blog post from UBA to learn more.


On January 23, 2019, the Department of Labor (DOL) issued its Federal Civil Penalties Inflation Adjustment Act Annual Adjustments for 2019 which is the DOL's annual adjustment of federal civil monetary penalties.

Here are some of the adjustments:

  • Form 5500: For failure to file, the maximum penalty increases from $2,140 to $2,194 daily for every day that the Form 5500 is late.
  • Summary of Benefits and Coverage: For failure to provide, the maximum penalty increases from $1,128 to $1,156 per failure.
  • Medicaid/CHIP notice: For failure to provide, the maximum penalty increases from $114 to $117 per day per employee.
  • For failure to provide documents to the DOL upon its request, the maximum penalty increases to $156 per day, not to exceed $1,566 per request.

The adjustments are effective for penalties assessed after January 23, 2019, for violations occurring after November 2, 2015.

SOURCE: Hsu, K. (28 February 2019) "DOL's Annually Adjusted Federal Penalties" (Web Blog Post). Retrieved from http://blog.ubabenefits.com/dols-annually-adjusted-federal-penalties


Employee wellness programs and compliance: What to know right now

Do you know whether your wellness plan is “purely participatory” or “health-contingent?” Under the Health Insurance Portability & Accountability Act (HIPAA) current guidance, employers need to assess whether the plan is “purely participatory” or “health-contingent.” Read on for more.


Defining “wellness” for any one person is no simple task, and neither is deciphering a given wellness program’s compliance under the law.

In 2016, when the Equal Employment Opportunity Commission (EEOC) released its final regulations defining a “voluntary” program under the Americans with Disabilities Act (ADA), the entire landscape — at least what can be seen on a hazy day — appeared defined. But thanks to AARP’s successful challenge to these regulations and the EEOC’s recent acknowledgment of the demise of its incentive limitations, employers find themselves back in the “Wild West” of sorts for wellness compliance.

That being said, the uncertainty is not new for employers with wellness programs, and there is now more guidance than before, so let’s take a moment to take in the current view.

The current guidance under the Health Insurance Portability & Accountability Act (HIPAA) remains unchanged, so any wellness program integrated with a health plan or otherwise constituting a health plan itself, employers need to assess whether the plan is “purely participatory” or “health-contingent.” The health-contingent plans (which condition the award of incentives on accomplishing a health goal) will require additional compliance considerations, including—but not limited to—incentive limitations, reasonable alternative standards (RAS), and notice requirements.

The RAS should be of particular importance because they can be missed most out of the compliance parameters. Often there is an “accidental” program such as a tobacco surcharge, and the employer does not even realize the wellness rules are implicated, or the employer’s RAS is another health-contingent parameter that actually necessitates another RAS.

The Department of Labor is actively enforcing compliance in this area, so employers will want to take care.

Additionally, the EEOC’s ADA (and Genetic Information Nondiscrimination Act) regulations are still largely in force. This seems to be a common misconception—ranging from a celebration of no rules to a lament for the end of incentivized wellness programs that include disability-related questionnaires (like an average health risk assessment) or medical examinations (including biometric screenings).

The truth is somewhere in the middle.

The ADA’s own RAS and notice concepts still apply, along with confidentiality requirements. All that has changed is that the EEOC has declined (again) to tell us at what point an incentive turns a program compulsory. So employers sponsoring wellness programs subject to the ADA have three choices, based on risk tolerance (In truth, there are four options, but charging above the ADA’s previous incentive limitations would be excessively risky):

  • Run incentives for ADA plans up to the 30 percent cap that existed before. This is the riskiest approach. To take this route, an employer must rely upon HIPAA’s similar (though not exactly the same) incentive limitations as indicative of non-compulsory levels. The fact that Judge Bates did not accept this argument in the AARP case advises against this approach, but this case does not have global application. If this path is chosen, it will be imperative to document analysis as to why this incentive preserves voluntariness for your participants.
  • Keep the incentives below the previous 30 percent cap but incentivize the program. This approach does have risk because no one knows at what point an incentive takes choice away from participants. However, the incentive is a useful tool to motivate and reward health-conscientious behavior. The wellness incentive limitations stood at 20 percent under the HIPAA regulations for quite some time without much concern, so this could be a relatively safe target. But the most important thing is to carefully assess the overall structure of the program(s) offered, consider the culture and demographics of the employees who may participate, and balance the desire to motivate against the particular tensions of the program to decide on a reasonable incentive. Make sure to document this analysis and reconsider it every time a program changes.
  • Not incentivize the program at all. This is the most conservative approach from a compliance perspective but ultimately not required. Before the EEOC’s 2016 regulations, employers were incentivizing programs subject to the ADA, and nothing about the AARP case or the EEOC’s response to it prohibits incentives.

There’s no doubt the wellness compliance landscape has changed a little over this last year, but this is also just the tip of the iceberg. With enforcement heating up, it is imperative for employers to carefully consider compliance, document the reasonableness of incentive choices and lean on trusted counsel when necessary to avoid potentially costly and time-consuming issues.

SOURCE: Davenport, B. (13 February 2019) "Employee wellness programs and compliance: What to know right now" (Web Blog Post). Retrieved from https://www.benefitspro.com/2019/02/13/employee-wellness-programs-and-compliance-what-to-know-right-now/


Hospital pricing transparency: More information, more confusion?

A new ruling on hospital pricing transparency now requires that hospitals provide a list of their prices for all of the services and medications they provide. Continue reading this blog post to learn more about this ruling.


As of the first of this year, a new rule is in effect that requires hospitals to list the price for all the services they provide and medications they prescribe for patients while they’re in the hospital. In theory, this should give patients more information that can help them decide where it makes the most economic sense to receive hospital care. In actuality, while there’s a wealth of new data available, it can be difficult to find — and nearly impossible for people outside the healthcare industry to understand.

The document that aggregates the price information is called a chargemaster, and it can contain tens of thousands of entries. The new rule doesn’t require that the information be written in plain language, only that it be machine readable, so much of the data reads like it’s in a yet-to-be-discovered language. For example, if you download Memorial Sloan Kettering’s chargemaster, you’ll find an Excel spreadsheet that contains 13,088 entries such as “CAP MALE/FEMALE RAIL, $765” and “BX SUBCUT SKIN/INC, $1,771.” Even if a patient puzzles out the meaning of these abbreviations, the prices listed are different from the lower fees that insurers negotiate, so estimating how much you would pay for care is complicated at best and impossible at worst.

The goal of the hospital pricing transparency rule is to help patients understand the cost of their care and choose more wisely when deciding where to receive that care. Unfortunately, the information that is now available adds to the confusion and doesn’t help patients make one-to-one price comparisons when choosing where to receive care. In addition, the rule only covers care delivered by a hospital, so patients don’t have the information they need to make price comparisons for services performed in doctor’s offices, urgent care facilities, diagnostic test sites and outpatient surgical centers.

Though the new rule generally doesn’t help employees, employers can.

Even if price transparency doesn’t help workers better understand the cost of care and choose where to receive that care, there are strategies and resources that employers can provide to help their employees make more informed decisions about healthcare. Here are some of them.

Second opinions. Wrong diagnoses, inappropriate treatments (treatments that don’t meet the evidenced-based standard of care) and medical errors all drive up healthcare costs for both employers and employees and can lead to poorer health outcomes. One strategy to lower the risk of these types of problems is providing employees with streamlined access to second opinions from experienced physicians.

A second opinion can confirm or change an employee’s diagnosis, suggest other treatment options and pinpoint misdiagnoses, especially in the case of serious and complex conditions like cancer, autoimmune disease and back and joint problems. In fact, a Mayo Clinic study found that 88% of people who sought a second opinion from the hospital’s physicians for a complex medical condition received a new or refined diagnosis. Employers can make second opinions available to employees through several channels, including a health insurance plan or as a standalone benefit.

Care coordination. Duplicate testing and medical care is another source of wasted healthcare dollars. When communication between healthcare providers is inconsistent or medical records aren’t updated and shared among all treating physicians, employees may undergo repeat testing — for example, when a primary care physician and a cardiologist both order a cardiac stress test for a patient with shortness of breath. Employers can offer care coordination through a case manager for employees who are living with multiple health conditions.

This support can lower the risk of duplicative testing as well as duplicate prescriptions or medications that can result in interactions, which can put an employee’s health needlessly at risk. Another piece of this equation is the review and coordination of medical records, which is especially important when employees see multiple physicians. A medical records management service should include a review of the employee’s records by an RN or physician, consolidation of a comprehensive medical record, and the creation of a secure electronic medical record that can be shared with the employee’s permission with all treating physicians.

Guidance on where to receive care. While you can undergo a colonoscopy, medication infusion or a range of common surgical procedures at a hospital, that may not always be the most appropriate or cost-effective place to receive care. By offering employees the ability to talk with a care manager or adviser about the procedure they need and the options for where they can receive that care (a hospital, outpatient surgery center or doctor’s office), employers can help them receive the care they need and lower both claims costs and employee out-of-pocket costs.

Medical bill review. Another resource employers can offer to make sure healthcare costs are carefully managed is a medical bill review. Experts estimate that between 30% and 80% of medical bills contain errors that increase costs. There are many different causes of these errors, including the use of the incorrect billing codes and use of out-of-network healthcare providers. In addition to offering employees the services of a medical billing review and negotiation firm, they can provide education that lets employees know what types of errors are commonly made and how to spot them on their own bills.

SOURCE: Varn, M. (13 February 2019) "Hospital pricing transparency: More information, more confusion?" (Web Blog Post). Retrieved from https://www.benefitnews.com/opinion/hospital-pricing-transparency-more-information-more-confusion?brief=00000152-14a5-d1cc-a5fa-7cff48fe0001