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What a Difference an “H” Makes…Again

Health Care ReformAfter weeks of “will they or won’t they” that rivals some of the great TV sitcom near romances for suspense (even though it was considerably shorter), House Republicans passed the American Health Care Act (“AHCA”) just before going on recess (more information on the bill here and here).   As with the version that was released in early March, this is designed to meet the Republicans’ promise to “repeal and replace” the ACA.  As before, in many respects, the AHCA is less “repeal and replace” and more “retool and repurpose,” but there are some significant changes that could affect employers, if this bill becomes law as-is.

Below is a brief summary of the most important points (many of which may look familiar from our prior post on the original iteration of the AHCA . Where we did not make any substantive changes from our prior post, we have indicated those with the words “No change”):

  • Employer Mandate, We Hardly Knew You (No change). The ACA employer play or pay mandate is repealed retroactive to January 1, 2016, so if you didn’t offer coverage to your full-time employees, then this is the equivalent of the Monopoly “Get out of Jail Free” card.
  • OTC Reimbursements Allowed from HSAs and FSAs, Without a Prescription (No change). This goes back to the old rules that allowed these reimbursements. This would begin in 2018.
  • Reduction

Stop-Loss Policies, How Low Can You Go?

Stop-LossOn April 5, the “Self-Insurance Protection Act” passed the House and moved to the Senate.  This bill, if enacted, would amend ERISA, the Public Health Service Act and the Internal Revenue Code (the “Big 3” statutes containing ACA rules) to exclude from the definition of “health insurance coverage” any stop-loss policies obtained by self-insured health plans or a sponsor of a self-insured health plan.  No additional guidance is given regarding what would constitute a “stop-loss policy” under the proposed definition.  According to this fact sheet from one Congressional committee, the law appears to address concerns that HHS might one day decide to try and regulate stop-loss insurance.  In our opinion, that seems unlikely under the current administration, but it could be a regulatory priority in future administrations.

But what does the Self-Insurance Protection Act mean for state regulation of stop-loss insurance?

As the Department of Labor noted in a prior technical release (and as we have written about previously), states have been attempting to regulate stop-loss insurance and have previously sought to include stop-loss insurance in the definition of “health insurance coverage” under certain circumstances (i.e., policies with attachment points below specified amounts).  However, such laws have been found to be preempted by ERISA.  In comparison, and as the DOL notes, state laws prohibiting insurers from issuing stop-loss policies with attachment points below specified thresholds

What a Difference an “H” Makes

Health Care ReformLate on Monday, House Republicans revealed, in two parts (here and here, with summaries here and here) the American Health Care Act (“AHCA”) that is designed to meet the Republicans’ promise to “repeal and replace” the ACA.  In many respects, the AHCA is less “repeal and replace” and more “retool and repurpose,” but there are some significant changes that could affect employers, if this bill becomes law as-is.  Below is a brief summary of the most important points:

  • Employer Mandate, We Hardly Knew You. The ACA employer play or pay mandate is repealed retroactive to January 1, 2016, so if you didn’t offer coverage to your full-time employees, then this is the equivalent of the Monopoly “Get out of Jail Free” card.
  • OTC Reimbursements Allowed from HSAs and FSAs, Without a Prescription. This goes back to the old rules that allowed these reimbursements. This would begin in 2018.
  • Reduction in HSA Penalty. One of the pay-fors for the ACA was an increase in the penalty for non-health expense distributions from HSAs from 10% to 20%. The AHCA takes it back to 10% starting in 2018.
  • Unlimited FSAs Are (or Would Be) Here Again. AHCA repeals the $2,500 (as adjusted) limit on health FSA contributions starting in 2018.
  • Medicare Part D Subsidy Expenses Would Be Deductible Again. The ACA still allowed Medicare Part D subsidies

Fiduciary Rule Under Review – Delayed Applicability Date

In a prior post, we covered President Trump’s order directing the Department of Labor to review the new regulation and, as it deems appropriate, to take steps to revise or rescind it.  The Employee Benefits Security Administration (“EBSA”) has taken the first step in response to that order by proposing a 60 day delay in the applicability date. The final rule had an applicability date of April 10, 2017.  Likewise, the prohibited transaction exemptions (“PTEs”) included in the final rule, such as the Best Interest Contract Exemption, had an applicability date of April 10, 2017.

In light of the President’s prior order, EBSA has released the text of a proposed rule, to be published on March 2, 2017, delaying the applicability date of the final rule and the PTEs by 60 days.  EBSA noted that there were only 45 days until the rule and the PTEs became effective and said that it felt it needed more time to perform the analysis required by the President’s order.

EBSA is inviting comments on the proposal to extend the applicability date of the final rule and PTEs.  Comments must be submitted quickly; the comment period will end 15 days after publication.

DOL Gives a Peek at Non-quantitative Treatment Limitations

Mental Health ScrabbleWhile on this day, most people focus on the heart, we’re going to spend a little time focusing on the head.  Under the Mental Health Parity and Addiction Equity Act (MHPAEA), health plans generally cannot impose more stringent “non-quantitative” treatment limitations on mental health and substance abuse benefits (we will use “mental health” for short) than they impose on medical/surgical benefits.  The point of the rule is to prevent plans from imposing standards (pre-approval/precertification or medical necessity, as two examples) that make it harder for participants to get coverage for mental health benefits than medical/surgical benefits. “Non-quantitative” has been synonymous with “undeterminable” and “unmeasurable”,  so to say that this is a “fuzzy” standard is an understatement.

However, we are not without some hints as to the Labor Department’s views on how this standard should be applied.  Most recently, the DOL released a fact sheet detailing some of its MHPAEA enforcement actions over its last fiscal year.  In addition to offering insight on the DOL’s enforcement methods, it also provides some examples of violations of the rule:

  • A categorical exclusion for “chronic” behavior disorders (a condition lasting more than six months) when there was no similar exclusion for medical/surgical “chronic” conditions.
  • No coverage resulting from failure to obtain prior authorization for mental health benefits (for medical/surgical benefits, a penalty was applied, but coverage was not denied).
  • A categorical exclusion for

The First ACA Shoe Drops

The First ACA Shoe Drops

January 23, 2017

Authored by: Lisa Van Fleet and Chris Rylands

ACA Blue HighlightOnly hours into the new administration, steps were taken to eliminate, or at the very least minimize the impact of, the Patient Protections and Affordable Care Act (“ACA”).  In his first Executive Order, President Trump affirmed his intent to repeal the ACA and further sought to minimize the economic burden of the ACA.  The order instructs the Secretary of Health and Human Services and the heads of all other executive departments and agencies to,  “take all actions consistent with the law to minimize the unwarranted economic and regulatory burden of the act, and prepare to afford the states more flexibility and control to create a more free and open healthcare market.”

This is not a repeal of the ACA (the President cannot unilaterally do that).  However, what it means is that the agencies responsible for overseeing ACA implementation  (HHS, Treasury, and Labor) are tasked with finding ways to lessen the law’s impact.  That can only be done through future rule making and other guidance.  While we do not have a crystal ball, we expect to see several more sets of FAQs that will mitigate the impact of the law and potentially a suspension of the enforcement of such items as the employer play or pay mandate and the individual mandate.  Whether any of that comes to fruition remains to be seen, but it seems reasonable

Now You Can Be Up to Your QNEC in Forfeitures

Money in basket. Isolated over whiteOn January 18, 2017, the IRS issued proposed regulations allowing amounts held as forfeitures in a 401(k) plan to be used to fund qualified nonelective contributions (QNECs) and qualified matching contributions (QMACs). This sounds really technical (and it is), but it’s also really helpful.  Some plan sponsors of 401(k) plans use additional contributions QNECs and/or QMACs to satisfy nondiscrimination testing.  Before these proposed rules, they could not use forfeitures to fund these contributions because the rules required that QNECs and QMACs be nonforfeitable when made (and also subject to the same distribution restrictions as 401(k) contributions).  If you have money sitting in a forfeiture account, then by definition it was forfeitable when made, so that money couldn’t possibly have been used to fund a QNEC or QMAC.

The proposed regulations provide that amounts used to make these contributions must satisfy the vesting requirements and distribution requirements applicable to 401(k) contributions when they are allocated to participants’ accounts rather than when they are contributed to the plan.  The regulations are only proposed, but the IRS has said taxpayers may rely on them.  If the final regulations turn out to be more restrictive, then those restrictions will only apply after the regulations are finalized.

Going forward, plan sponsors wishing to apply amounts held in forfeiture accounts to fund QNECs and QMACs under the 401(k) plan should

Top 10 Employee Benefits New Year’s Resolutions for 2017

new-years-resolutionsIf statistics are any guide, by now a significant number of you have already broken your New Year’s resolutions.  However, there’s still plenty of time to make new ones that you can break, er, keep.  If you sponsor or work with an employee benefit plan (and odds are, if you’re reading this, that you do), then here are some ideas to keep in mind in the upcoming year:

    1. Fiduciary, Know Thyself. It important to know your fiduciaries (or know if you are one). Reviewing plan documents, charters, and delegations, among other possible documents, are key to determining who is an ERISA fiduciary. You should make sure that any individuals who have been designated are still willing and able to serve and, if not, they should be removed. While not as much of an issue for plan sponsors, advisors should also closely review the DOL’s conflict of interest/fiduciary rule to determine if it applies to them.
    2. Look Over Your Service Providers’ Shoulders. Even if you think you have outsourced one or more of your plan responsibilities, you’re still required, under ERISA, to monitor those providers to make sure they are doing their jobs properly. Additionally, if you have not done an RFP in a while for a particular service provider, it may be time to do one.
    3. Resolve to Improve Your Plan Governance. As we have detailed previously, the specter

New ACA FAQs – Special Enrollment, Women’s Preventive Care and a Cure for the HRA that Ails You (If You’re Small Enough)

In the latest round of FAQs on ACA implementation (now up to 35 if you’re keeping track), the DOL, HHS and Treasury Department addressed questions regarding HIPAA special enrollment rights, ACA coverage for preventive services, and HRA-like arrangements under the 21st Century Cures Act.

Special Enrollment for Group Health Plans. Under HIPAA, group health plans generally must allow current employees and dependents to enroll in the group health plan if the employee or dependents lose eligibility for coverage in which they were previously enrolled.  This FAQ clarifies that an individual is entitled to a special enrollment period if they lose individual market coverage.  This could happen, for example, if an insurer covering the employee or dependent stops offering that individual market coverage.  However, a loss of coverage due to a failure to timely pay premiums or for cause will not give the employee or dependent in a special enrollment right.

Women’s Care: Coverage for Preventive Services. The Public Health Service Act (PHS Act) requires non-grandfathered plans to provide recommended preventive services without imposing any cost-sharing.  Recommended preventive services that must be covered include the women’s preventive services provided for in Health Resources and Services Administration’s (HRSA) guidelines.

HRSA updated its guidelines on December 20, 2016. The updated guidelines build on many of the existing preventive care for women and include screening for breast cancer, cervical cancer, gestational diabetes, HIV, and domestic violence, among other items.  The services identified in the updated guidelines

ACA Facelift to Disability Claims Process Could Affect All Plans

claimIt might be tempting to conclude that the recent Department of Labor regulations on disability claims procedures is limited to disability plans.  However, as those familiar with the claims procedures know, it applies to all plans that provide benefits based on a disability determination, which can include vesting or payment under pension, 401(k), and other retirement plans as well. Beyond that, however, the DOL also went a little beyond a discussion of just disability-related claims.

The New Rules

The new rules are effective for claims submitted on or after January 1, 2018. Under the new rules, the disability claims process will look a lot like the group health plan claims process.  In short:

  • Disability claims procedures must be designed to ensure independence and impartiality of reviewers.
  • Claim denials for disability benefits have to include additional information, including a discussion of any disagreements with the views of medical and vocational experts and well as additional internal information relied upon in denying the claim. In particular, the DOL made it clear in the preamble that a plan cannot decline to provide internal rules, guidelines, protocols, etc. by claiming they are proprietary.
  • Notices have to be provided in a “culturally and linguistically appropriate manner.” The upshot of this is that, if the claimant lives in a county where the U.S. Census Bureau
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