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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

“Who” May Object to the Contraceptive Coverage Mandate, and why?

New rules issued by the Trump administration, including both interim final and temporary regulations effective October 6, 2017, significantly expand “who” may object to the Patient Protection and Affordable Coverage Act’s (PPACA) contraceptive coverage mandate and why those entities or individuals may object.

Background:

Under the PPACA, the Health Resources and Services Administration (HRSA), a division of the United States Department of Health and Human Services (HHS), has the authority to require that certain preventive care and screenings for women be covered by specific group health plans and health insurance issuers.  HRSA has used that discretion to require, among other things, contraceptive coverage.  HHS, the Department of Labor, and the Department of the Treasury, the agencies tasked with enforcing that requirement, have permitted certain health insurance issuers and group health plans with religious objections, such as non-profit organization and church plans, to receive an exemption or accommodation from this requirement.  As a result of the Hobby Lobby litigation, closely held for-profit organizations with religious objections to contraceptive coverage were added to the list of entities which could request an accommodation; however, accommodations are intended to shift the cost of providing these services and supplies to third-party administrators and health insurance issuers rather than permitting a group health plan to truly not offer the services or supplies.

The new world order:

The first interim final rule and associated temporary regulations provide that all non-governmental plan sponsors and health insurance issuers that object to contraceptive coverage based on sincerely held

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

Open Enrollment: SBC, HIPAA, GINA, WHCRA, NMHPA, CHIPRA, EOB, OOPM, HSA, HCFSA, DCFSA…

Are you gearing up for open enrollment’s alphabet soup? Anyone who works in human resources/employee benefits and has survived even one open enrollment season knows just how busy that alphabet soup will make your next few months.

Before open enrollment is in full swing and things get too crazy, you should spend some time reviewing the disclosures you will use. Even if you have a TPA who generally takes responsibility for open enrollment, the ultimate responsibility for legal compliance belongs to the plan administrator.

In particular, this year there have been some major changes to the Summary of Benefits and Coverage (“SBC”). The new SBC requirements apply to all group health plans for plan years beginning on or after April 1, 2017. You should confirm that your SBC has been updated to satisfy the new requirements. Among other changes, you’ll notice that a new introductory paragraph has been added; certain questions have been eliminated, added (e.g., are there services covered before you meet your deductible?), or rephrased; and, a third coverage example has been added. Because the changes to the SBC are quite extensive this year, we recommend that you undertake a wholesale review of your SBC.

Here are a few quick tips to help you review your SBC:

  1. Compare your SBC to the DOL’s template SBC: There’s a template available for your use at https://www.dol.gov/sites/default/files/ebsa/laws-and-regulations/laws/affordable-care-act/for-employers-and-advisers/sbc-template-final.pdf. We recommend using this template if you provide SBCs electronically because there are imbedded hyperlinks for each defined term that take participants

Work Now, Party Later: The Case for Tackling the New Disability Claims Procedures Before Year-End

Update: On November 24, 2017, the Department of Labor filed a final rule to delay the applicability date of new disability claims procedures regulation by 90 days, through April 1, 2018.

Plan sponsors are typically forced to wait for last minute guidance to satisfy year-end compliance obligations. As a result, those of us who work with these plans spend the last days of the year frantically ensuring plans are in compliance mode while friends and family ring in the new year with frivolity and festivities. While we can’t guarantee that won’t happen again this year, if it happens to you because you are evaluating the impact of the new disability claim procedures on plans, then shame on you. As discussed below, the information necessary to comply with the new rules is already available. So address these obligations now – then dig out your little-black-dress or tux, and join the year-end frivolity!

The final rule modifying the disability claims procedures, issued late last year, became effective January 18, 2017, and applies to claims for disability benefits which are filed on or after January 1, 2018.  Plan sponsors should identify their claims procedures, plan documents and SPDs that may need to be updated to reflect the new rule. To assist in that endeavor, the key changes implemented by the new rule are summarized below.

  1. New Independence and Impartiality Provisions. These new provisions are intended to reduce the possibility of unfair claims review. The change requires that “decisions regarding hiring, compensation,

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

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

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
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