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HIPAA Continues to Apply During Coronavirus Pandemic

As the Coronavirus Disease 2019 (COVID-19) pandemic grows, employers and others may be wondering how the public health emergency created by the outbreak affects information protected under the Health Insurance Portability and Accountability Act of 1996 (HIPAA).

The short answer: All HIPAA protections continue to apply. Accordingly, employer-sponsored health plans, which are “covered entities” subject to HIPAA, must continue to adhere to HIPAA’s privacy and security rules and may not use or disclosure protected health information (PHI) in a manner not already provided for under HIPAA in the absence of an applicable exception issued by the U.S. Department of Health and Human Services. As a reminder, PHI that an employee obtains when carrying out an administrative function for the plan generally cannot be shared with the employer.  For example, if in the process of performing auditing activities for the employer-sponsored health plan, an employee learns that the plan has provided coverage for the COVID-19 treatment for an employee’s child, that information is PHI and the employee is prohibited from sharing that information with the employer.

The U.S. Department of Health and Human Services Office for Civil Rights recently issued a Bulletin to remind covered entities of their continuing compliance requirements and the circumstances under which PHI may be disclosed without an individual’s authorization, including:

  • Treatment, when necessary to treat the patient or a different patient by one or more health care providers.
  • Public health activities, including disclosure to a public health authority such as the

IRS Relief for HDHPs Covering COVID-19 Testing and Treatment Costs

Yesterday, the Internal Revenue Service (IRS) issued Notice 2020-15 announcing that a high deductible health plan’s payment of COVID-19 (coronavirus) testing and treatment prior to satisfaction of the plan’s minimum deductible will not affect its status as a high deductible health plan.

Pursuant to Section 223(c)(2) of the Internal Revenue Code, high deductible health plans generally must require covered individuals to satisfy minimum deductibles before the plan can pay for any medical care services and items (subject to certain limited exceptions such as preventive care) in order for the covered individuals to remain “eligible individuals” for health savings account (HSA) purposes.   Under the relief provided in Notice 2020-15, this minimum deductible requirement will not apply to:

  • Medical care services and items related to testing for and treatment of COVID-19. These services and items may, therefore, be provided without a deductible or with a deductible that is less than the otherwise applicable minimum deductible.  For 2020, the minimum deductibles are $1,400 for self-only coverage and $2,800 for family coverage.
  • Any COVID-19 vaccine developed in the coming months. The IRS included a reminder that vaccines will continue to be treated as preventive care to which the minimum deductible requirement does not apply.

This is welcome news for employers sponsoring high deductible health plans who have been exploring ways in which to help alleviate the financial obstacles that may prevent employees from getting tested or seeking treatment for COVID-19 as well as for individuals with fully-insured

J, K, L, M and N: What’s In a Letter?

Over the last few months, the Internal Revenue Service (IRS) has been replying to responses to their Letter 226-J, which notifies employers of a proposed Employer Shared Responsibility Payment (ESRP). The IRS has recently updated its website to include additional information on its Letter 227 series. The various letters either close the ESRP case or provide the employer with next steps.

If you responded to a Letter 226-J, the reply from the IRS will come in the form of one of the following four 227 letters:

  • Letter 227-J. If you submitted a completed Form 14764, ESRP Response agreeing to the ESRP amount proposed in your Letter 226-J, the IRS will acknowledge its receipt using Letter 227-J and provide instructions for making the ESRP. If full payment is not received within 10 days, the IRS will issue a Notice and Demand for the outstanding balance.
  • Letter 227-K. You want this letter. Letter 227-K acknowledges acceptance of the information you provided disputing the proposed ESRP amount and renders a determination that no ESRP is due. The case is closed and no further action is required.
  • Letter 227-L. The IRS acknowledges receipt of your response to Letter 226-J and notifies you of the revised ESRP amount using Letter 227-L. An updated ESRP Summary Table and Form 14765 (PTC Listing) will be included. If you agree with the revised ESRP amount, you must submit a completed Form 14764, ESRP Response with the required payment. If you disagree with the revised ESRP

IRS Reduces 2018 Annual HSA Contribution Limit for Family Coverage

March 6, 2018

Categories

In May 2017, the IRS issued Rev. Proc. 2017-37 announcing the inflation-adjusted health savings account contribution limits for 2018 as $3,450 for self-only coverage and $6,900 for family coverage.   However, this week the IRS issued Rev. Proc. 2018-18, which supersedes Rev. Proc. 2017-37 and reflects a decrease in the 2018 annual contribution limit for family coverage to $6,850.  Employers that provide a high deductible health plan option to their employees with a health savings account feature should ensure that their communications and systems are updated accordingly.

 

Play Time is Over: IRS Reveals Process for Assessing ACA Penalties

The Affordable Care Act (ACA) introduced a “pay or play” scheme, effective January 1, 2015, in which Applicable Large Employers (ALEs) must offer affordable qualifying healthcare to their full-time employees (and their dependent children) or pay a penalty. Despite President Trump’s first Executive Order (discussed here) directing a rollback of the Affordable Care Act (ACA) and instructing the Secretary of Health and Human Services to minimize the “unwarranted economic and regulatory burden of the act,” the Internal Revenue Service (IRS) quietly updated its Questions and Answers on Employer Shared Responsibility Provisions Under the ACA to include the first official guidance detailing the process for enforcement of the penalty. Notably, this update coincided with an IRS announcement that penalties for the 2015 calendar year will be assessed late this year.

The ALE penalty process starts with Letter 226J, which the IRS will send to ALEs it believes owe a penalty based on information reported on Forms 1095-C and 1094-C. The letter will explain the penalty calculations and describe steps to follow depending on whether the ALE agrees or disagrees with the proposed penalty amount.

If you receive Letter 226J and disagree with the proposed penalty, you may:

  • Complete, sign and date Form 14764 ESRP Response (to be included with Letter 226J);
  • Include a statement explaining the basis for your disagreement

Code Section 409A…Here Today but Possibly Gone Tomorrow and Other Proposed Changes in the Tax Cuts and Jobs Act

Last week the House unveiled its tax overhaul plan, the Tax Cuts and Jobs Act (“Act”).  The Act’s proposals related to employee benefits and compensation are as follows:

Nonqualified Deferred Compensation

Perhaps one of the most talked about aspects of the Act (at least among benefits practitioners) is the demise of Code section 409A and the creation of its replacement, Code section 409B.

Under the proposed Code section 409B regime, nonqualified deferred compensation would be defined broadly to include any compensation that could be paid later than the March 15 following the taxable year in which the compensation is no longer subject to a substantial risk of forfeiture, but with specific carve-outs for qualified retirement plans and bona fide vacation, leave, disability, or death benefit plans.  Stock options, stock appreciation rights, restricted stock units, and other phantom equity are included expressly in the definition of nonqualified deferred compensation.

All nonqualified deferred compensation earned for services performed after 2017 would become taxable once the substantial risk of forfeiture no longer exists, even if payment of the compensation occurs in a later tax year.  As a result:

  • Stock options and stock appreciation rights would become includible in income in the year in which the award vests, without regard to whether they have been exercised.
  • An employee’s deferral of any salary under a nonqualified deferred compensation arrangement until separation from service or otherwise would result in the inclusion of such amount in the employee’s income in the year earned.
  • All salary

Telemedicine – An Expanding Landscape

According to one recent survey, telemedicine services (i.e., remote delivery of healthcare services using telecommunications technology) among large employers (500 or more employees) grew from 18% in 2014 to 59% in 2016.  Common selling points touted by telemedicine vendors include reduced health care costs and employee convenience.  However, state licensure laws imposing restrictions on telemedicine practitioners can often limit the value (or even availability) of telemedicine services to employees.

But that seems to be changing.

Texas Law Change

This summer Texas passed legislation (SB 1107) prohibiting regulatory agencies with authority over a health professional from adopting rules pertaining to telemedicine that would impose a higher standard of care than the in-person standard of care.  With the enactment of SB1107, the Texas Medical Board must revise portions of its existing telemedicine regulations, which had largely been viewed as some of the most restrictive in the country.  Key revisions proposed by the Board at its July meeting included the elimination of the following requirements:

  • Patient must be physically in the presence of an agent of the treating telemedicine practitioner
  • Physical examination of the patient by the telemedicine practitioner in a traditional office setting within the past twelve months
  • Interaction between the patient and telemedicine practitioner must be via live video feed

However, it appears that the Board will continue its prohibition against the use of telemedicine for prescribing controlled substances for the treatment of chronic pain.

Prescribing Controlled Substances

Meanwhile other states have relaxed their rules relating to

Button up Your Business Associates Agreements or Pay the Price

480652321Last month, the Office of Civil Rights (OCR) of the U.S. Department of Health and Human Services (HHS) announced a resolution agreement with the Center for Children’s Digestive Health (CCDH) which included a $31,000 penalty.

This isn’t the first time a covered entity has paid a “resolution amount” to settle potential violations under the Health Insurance Portability and Accountability Act of 1996 (HIPAA) Privacy and Security Rules with respect to a business associate agreement (or lack thereof).

  • March 2016: North Memorial Health Care of Minnesota  paid $1.55 million to settle charges that it failed to enter into a business associate agreement with a major contractor performing certain payment and health care operations activities on its behalf and to complete a risk analysis.
  • April 2016: Raleigh Orthopaedic Clinic, P.A. of North Carolina  agreed to pay $750,000 to settle charges that it potentially violated the HIPAA Privacy Rule by handing over the protected health information of approximately 17,300 patients without first executing a business associate agreement.
  • September 2016: Care New England Health System entered into a settlement relating to the failure to timely amend an existing business associate agreement for the HIPAA Omnibus Final Rule and paid $400,000.

However, unlike the other settlements in which the covered entity had reported a breach, OCR was not investigating a breach involving the CCDH’s protected health information.   It appears that the compliance

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

ISS Updates Proxy Voting Guidelines for 2017

ISS Updates Proxy Voting Guidelines for 2017

December 9, 2016

Authored by: Serena Yee and Denise Erwin

vote-do-not-useLast month, Institutional Shareholder Services (ISS) published updates to its proxy voting guidelines effective for meetings on or after February 1, 2017.  Key compensation-related changes include the following:

Non-Employee Director Compensation Programs

In the case of management proposals seeking shareholder ratification of non-employee director compensation, ISS will review such proposals on a case-by-case basis utilizing the following factors:

  • Amount of director compensation relative to similar companies
  • Existence of problematic pay practices relating to director compensation
  • Director stock ownership guidelines and holding requirements
  • Vesting schedules for equity awards
  • Mix of cash and equity-based compensation
  • Meaningful limits on director compensation
  • Availability of retirement benefits or perquisites
  • Quality of director compensation disclosure

To the extent the equity plan under which non-employee director grants are awarded is on the ballot, ISS will consider whether it warrants support.  When a plan is determined to be relatively costly, ISS vote recommendations will be case-by-case, looking holistically at all of the factors, rather than requiring that all enumerated factors meet certain minimum criteria.

Equity Plan Scorecard

Proposals to approve or amend stock option plans, restricted stock plans and omnibus stock incentive plans for employees and/or employees and directors are evaluated using an equity plan scorecard (EPSC) approach.  For 2017, ISS has made the following changes to the EPSC:

  • Addition of New Dividends Payment Factor. Full points will be earned only if the equity plan explicitly prohibits, with
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