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  • BC Network
    Tuesday, August 8, 2017

    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 telemedicine practitioners seeking to prescribe controlled substances.  For example, the Florida Board of Medicine replaced its ban on any prescription of controlled substances using telemedicine with a new rule that allows telemedicine practitioners to issue prescriptions except in the case of controlled substances for the treatment of psychiatric disorders.  Delaware, Indiana, Michigan, Ohio and West Virginia have also expanded the circumstances under which telemedicine practitioners can prescribe controlled substances.

    For more information on the Texas legislation, read this overview from Bryan Cave’s healthcare attorneys.

    Expanded State Licensing of Practitioners

    State licensing laws generally preclude or restrict a provider licensed in one state from delivering medical services to individuals in another state.  Consequently, an out-of-state physician (absent certain exceptions) must obtain a full and unrestricted license to practice medicine on patients in a particular state.  In an effort to facilitate license portability and the practice of interstate telemedicine, the Federation of State Medical Boards developed an Interstate Medical Licensure Compact.  So far, 25 states participate in the Compact or have taken action to become Compact states.  Under the Compact, licensed physicians can qualify to practice medicine across state lines within the Compact if they meet the agreed upon eligibility requirements.

    Employer Compliance Considerations

    These and other actions by states to facilitate the growth of telemedicine may encourage more employers to jump on the telemedicine bandwagon.  However, employers should be aware that as with any group health plan, the provision of a telemedicine program to employees can raise a number of compliance issues under the Affordable Care Act (ACA), Health Insurance Portability and Accountability Act (HIPAA), Employee Retirement Income Security Act (ERISA) and the Consolidated Omnibus Budget Reconciliation Act (COBRA) as well as disqualify individuals participating in a high deductible health from making or receiving contributions to their health savings account.

    Friday, July 28, 2017

    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 directly to that exact term in healthcare.gov’s uniform glossary. If you don’t provide SBCs electronically, you will still need to reference the uniform glossary’s web address (https://www.healthcare.gov/sbc-glossary/) at the top of the SBC.
    2. Tips for Comparison on Form: When comparing your SBC to the template, here are some quick things to check:
    • Is the SBC no more than four doubled-sided pages;
    • Are all defined terms underlined; and
    • Are no rows or columns deleted?
    1. How to Compare for Substance: The Department of Labor has provided an instruction guide which includes detailed language and guidance for situations which may not be standard: https://www.dol.gov/sites/default/files/ebsa/laws-and-regulations/laws/affordable-care-act/for-employers-and-advisers/sbc-instructions-for-completing-the-individual-health-insurance-coverage-final.pdf. You should verify that the detailed SBC language requirements are satisfied (both what to say and what not to say).

    Our final word of advice: find time to review your SBCs now before your alphabet soup starts to boil (or call your friendly outside counsel for help)!

    Friday, May 5, 2017

    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 in HSA Penalty (No change). 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 (No change). AHCA repeals the $2,500 (as adjusted) limit on health FSA contributions starting in 2018.
    • Medicare Part D Subsidy Expenses Would Be Deductible Again (No change). The ACA still allowed Medicare Part D subsidies to be excluded from a company’s income, but denied the deduction, for tax purposes, for any expenses that were subsidized.  This reinstates the prior law that allowed a “double tax benefit” of both the exclusion of the subsidy from income and the deduction for the costs funded by the subsidy starting in 2018.
    • A New COBRA Subsidy (No change). The AHCA does away with ACA’s income-based subsidies in favor of age-based subsidies from $2,000 to $4,000 per individual per year (with a max of $14,000 for a family) with a phaseout for incomes over $75,000 per year ($150,000 for married filing jointly). However, unlike the ACA subsidies (which could only be used for individual market insurance), the new subsidies would also be available for unsubsidized COBRA coverage.   This would not kick in until 2020.  The subsidies are adjusted based on the CPI+1, which means they are probably unlikely to keep pace with medical inflation.  Additionally, any excess subsidy (which seems unlikely) would be put into an HSA for the individual’s benefit.
    • Trading in The Cadillac Tax for a Newer Model Year (No change). Hearing the outcry of employers who did not want their health benefits taxed, the bill instead kicks the Cadillac Tax down the road. Instead of applying in 2020, it now applies in 2025.  There is no adjustment to the thresholds in this bill, so it will still pick up coverage that is not all that “Cadillac” (despite its name). Despite being highly unpopular, the Cadillac Tax has basically survived.
    • HSA Enhancements (1 change). The HSA contribution limits would be increased effective in 2018 so that they are the same as the out of pocket maximums that apply to HSAs (currently $6,550 for self-only coverage and $13,100 for family coverage). Additionally, expenses incurred up to 60 days before the account is established could be reimbursed from the account.  This version of the bill would also allow both spouses to make HSA catch-up contributions to the same HSA.
    • Continuous Coverage Requirement (Minor Changes). In lieu of the individual mandate, the law would require individuals to maintain continuous coverage (with no more than a 63-day break in the twelve months prior to enrollment). If they did not, then insurance companies could assess a 30% enrollment surcharge above their regular premium through the end of the year in which they enroll.  This is designed to encourage individuals to stay in the insurance market.  Employers will recognize the 63-day break rule from the old HIPAA creditable coverage rules.  This is basically the same concept, only applied across both employer plans and the individual market (the HIPAA rules did not apply to the individual market).  And unlike the HIPAA rules, the penalty here is a 30% premium increase, whereas under the HIPAA rules, pre-existing conditions could be excluded for a period of time if the individual did not maintain creditable coverage.  For employers, this will probably mean a return to having to issue creditable coverage certificates.
    • No More Small Business Health Care Tax Credit. This would be eliminated starting in 2020. The tax credit was limited to ACA SHOP coverage and could only be claimed for two consecutive years.
    • Elimination of Additional Medicare Tax. The ACA added an additional 0.9% tax on wages above certain thresholds ostensibly to fund Medicare (although, given the way Congress budgets, it could theoretically have been used for anything). AHCA takes this tax away beginning in 2018.
    • Not so Essential Health Benefits. The AHCA allows states to seek a waiver of the current essential health benefits requirement to establish their own set of essential health benefits. For small group plans, this would mean a change in what they have to cover, if the state in which the insurance is issued obtains a waiver.  For large group plans and particularly self-insured plans, it is unclear what impact this will have.  While those plans are not required to cover essential health benefits, they cannot impose annual or lifetime limits on those benefits.  As a practical matter, most plans simply don’t have these limits on nearly all benefits to avoid confusing participants and complicating administration.  However, if a state obtains a waiver, its list of EHBs may be so small that some employers could consider changing their plan designs.

    The AHCA would make many other changes that are beyond the scope of this post, but these are the ones that are most likely to impact on employers or their plans.  Notably, the employer reporting requirement is not removed by this bill, so that will continue to be a compliance obligation.

    The open question is whether this bill will make it through the Senate.  It passed the House 217-213, which was one more than the bare minimum needed to achieve a majority (with certain House seats currently empty).   In the Senate, the margin is even thinner with Republicans holding a 51-49 majority and Vice President Pence holding a tie-breaking vote in the event of a 50-50 split.  Some key Republican Senators are also reportedly saying they will start with a clean slate, which means more negotiation and potential for talks within the Senate or in conference between the Senate and the House to stall.  At the present time, no Democratic support is expected in the Senate.

    Regardless, if and until this bill becomes law, we repeat, yet again, our earlier admonition: continue keeping up with your compliance obligations – and keep your eye on twitter.

    Thursday, April 20, 2017

    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 are generally not preempted because they regulate insurance, which is an exception from ERISA preemption.  The upshot of this is that a state generally cannot force a stop-loss policy with a low attachment point to act like a regular medical policy, but a state could prevent the sale of that stop-loss policy.

    It appears that the Self-Insurance Protection Act, in its current form, merely gives an additional argument that stop-loss policies cannot be treated like major medical insurance, no matter how low the attachment point is.  This is like the proverbial “belt and suspenders” since treating stop-loss like major medical insurance has been found to be preempted in some cases.  The only additional protection is that the federal government would also be prevented from regulating stop-loss like regular health insurance.  However, in its current form, the act does not prevent states from requiring stop loss policies to have a minimum attachment point.

    In other words, this Act, if it becomes law, would not dramatically change the landscape for stop-loss policies. For most employers considering self-insurance, the key factor from a stop-loss perspective remains understanding what kinds of stop-loss policies your state will allow.

    Tuesday, March 7, 2017

    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 to be excluded from a company’s income, but denied the deduction, for tax purposes, for any expenses that were subsidized.  This reinstates the prior law that allowed a “double tax benefit” of both the exclusion of the subsidy from income and the deduction for the costs funded by the subsidy starting in 2018.
    • A New COBRA Subsidy. The AHCA does away with ACA’s income-based subsidies in favor of age-based subsidies from $2,000 to $4,000 per individual (with a max of $14,000 for a family) with a phaseout for incomes over $75,000 per year ($150,000 for married filing jointly). However, unlike the ACA subsidies (which could only be used for individual market insurance), the new subsidies would also be available for unsubsidized COBRA coverage.   This would not kick in until 2020.  The subsidies are adjusted based on the CPI+1, which means they are probably unlikely to keep pace with medical inflation.  Additionally, any excess subsidy (which seems unlikely) would be put into an HSA for the individual’s benefit.
    • Trading in The Cadillac Tax for a Newer Model Year. Hearing the outcry of employers who did not want their health benefits taxed, the bill instead kicks the Cadillac Tax down the road. Instead of applying in 2020, it now applies in 2025.  There is no adjustment to the thresholds in this bill, so it will still pick up coverage that is not all that “Cadillac” (despite its name). Despite being highly unpopular, the Cadillac Tax has basically survived.
    • HSA Enhancements. The HSA contribution limits would be increased effective in 2018 so that they are the same as the out of pocket maximums that apply to HSAs (currently $6,550 for self-only coverage and $13,100 for family coverage). Additionally, expenses incurred up to 60 days before the account is established could be reimbursed from the account.
    • Continuous Coverage Requirement. In lieu of the individual mandate, the law would require individuals to maintain continuous coverage (with no more than a 63-day break). If they did not, then insurance companies could assess a 30% enrollment surcharge above their regular premium for twelve months.  This is designed to encourage individuals to stay in the insurance market, even if they don’t need coverage.  Employers will recognize the 63-day break rule from the old HIPAA creditable coverage rules.  This is basically the same concept, only applied across both employer plans and the individual market (the HIPAA rules did not apply to the individual market).  And unlike the HIPAA rules, the penalty here is a 30% premium increase, whereas under the HIPAA rules, pre-existing conditions could be excluded for a period of time if the individual did not maintain creditable coverage.  For employers, this probably mostly would mean a return to having to issue creditable coverage certificates.

    The proposed AHCA makes many other changes that are beyond the scope of this post, but these are the ones that are most likely to have an impact on employer plans.  Of course, at this point, this is just proposed legislation and there’s no telling how much (if any) of this will survive the legislative process.   At least now, however, some legislators have something specific with which to work (and others have something specific to criticize).

    Friday, January 27, 2017

    PenaltyLast week, the Department of Labor (DOL) released adjusted penalty amounts which are effective for penalties assessed on or after January 13, 2017, whose associated violations occurred after November 2, 2015.  You might remember that these penalties were just adjusted effective August 1, 2016 (also for violations which occurred after November 2, 2015); however, the DOL is required by law to release adjusted penalties every year by January 15th, so you shouldn’t be surprised to see these amounts rise again next year.

    All of the adjusted penalties are published in the Federal Register, but we’ve listed a few of the updated penalty amounts under the Employee Retirement Income Security Act of 1974 (ERISA) for you below:

    General Penalties

    • For a failure to file a 5500, the penalty will be $2,097 per day (up from $2,063).
    • If you don’t provide documents and information requested by the DOL, the penalty will be $149 per day (up from $147), up to a maximum penalty of $1,496 per request (up from $1,472).
    • A failure to provide reports to certain former participants or failure to maintain records to determine their benefits remained stable at $28 per employee.

    Pension and Retirement

    • A failure to provide a blackout notice will be subject to a $133 per day per participant penalty (up from $131).
    • A failure to provide participants a notice of benefit restrictions under an underfunded pension plan under 436 of the tax code will cost $1,659 per day (up from $1,632).
      • Failure of fiduciary to make a properly restricted distribution from a defined benefit plan will be $16,169 per distribution (up from $15,909).
    • A failure of a multiemployer plan to provide plan documents and other information or to provide an estimate of withdrawal liability will be $1,659 per day (up from $1,632).
    • A failure to provide notice of an automatic contribution arrangement required under Section 514(e)(3) of ERISA will also be $1,659 per day per participant (also up from $1,632).

    Health and Welfare

    • For a multiple employer welfare arrangement’s failure to file a M-1, the penalty will be $1,527 per day (up from $1,502).
    • Employers who fail to give employees their required CHIP notices will be subject to a $112 per day per employee penalty (up from $110).
    • Failing to give State Medicaid & CHIP agencies information on an employee’s health coverage will also cost $112 per day per participant/beneficiary (again, up from $110).
    • Health plan violations of the Genetic Information Nondiscrimination Act will also go up to $112 per day per participant/beneficiary from $110. Additionally, the following minimums and maximums for GINA violations also go up:
      • minimum penalty for de minimis failures not corrected prior to receiving a notice from DOL: $2,790 (formerly $2,745)
      • minimum penalty for GINA failures that are not de minimis and are not corrected prior to receiving a notice from the DOL: $16,742 (up from $16,473)
      • cap on unintentional GINA failures: $558,078 (up from $549,095)
    • Failure to provide the Affordable Care Act’s Summary of Benefits and Coverage is now $1,105 per failure (up from $1,087).

    The penalty amounts listed above are generally maximums, but there is no guarantee the DOL will negotiate reduced penalties.  If you’re already wavering on some of your new year’s resolutions, we recommend you stick with making sure your plans remain compliant!

    Monday, January 23, 2017

    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 to expect that the less popular aspects of the law will be the initial targets of future guidance.

    What does this mean for employers faced with compliance obligations and potentially onerous noncompliance penalties?  It’s too early to tell for certain and definitely too early to abandon compliance obligations.  The secretaries of the three agencies have not been confirmed yet, and in fact, the Labor Secretary-designate Puzder is not scheduled to have his first confirmation hearing until February 2.  The best course is still the one we advised in an earlier post:  continue your compliance obligations – and keep your eye on twitter.

    Friday, January 13, 2017

    It has been an eventful 10 days in the courts and in Congress for halting impending regulations and setting the stage to roll-back new rules implemented by the Obama Administration. Employers can expect a repeal of recently passed regulations is on the horizon in the area of benefits regulation.

    ACA — 1557 Regulations: Discrimination Based on Gender Identity or Pregnancy Termination

    A nationwide injunction prohibiting the Department of Health and Human Services (HHS) from enforcing nondiscrimination rules promulgated under ACA section 1557 as they relate to discrimination on the basis of gender identity or termination of pregnancy was imposed by a federal judge on December 31, 2016. (Franciscan Alliance, Inc. v. Burwell, N.D. Tex., No. 16-cv-108, 12/31/16)  The plaintiffs argued that section 1557 regulations forced health care professionals and religious-based facilities to provide gender transition services against their medical judgment and religious beliefs.

    Regulations under 1557 have been challenged in a number of suits across the country, the most recent being a case filed by a collection of Catholic organizations in North Dakota. (Catholic Benefits Ass’n v. Burwell, D.N.D., No. 3:16-cv-432, filed 12/28/2016) Plaintiffs are arguing that the rules improperly require religious health-care organizations and benefits providers to provide services and insurance coverage relating to certain procedures that are in violation of their religious beliefs.

    Since the passage of these regulations, employer-sponsors of health plans have been scrambling to determine if the rules require that they cover gender reassignment, among other things. Generally speaking, most employer-sponsored health plans are not “covered entities” under Section 1557 because they do not receive direct subsidies from HHS.

    The remaining antidiscrimination provisions of the 1557 regulations which prohibit discrimination on the basis of disability, race, color, age, national origin, or sex other than gender identity, were generally effective January 1, 2017.

    The DOL Fiduciary Rule: Proposed 2-Year Delay for Effective Date (H. R. 355)

    A bill was introduced by Rep. Joe Wilson (R-S.C.) on 1/6/2017 proposing a 2-year delay in the effective date of the DOL Fiduciary Rule.   The Fiduciary Rule is scheduled to take effect April 10, 2017, with full compliance required by January 1, 2018.

    Republicans have repeatedly challenged the DOL Fiduciary Rule, but presumably stand a better chance of success under President-elect Donald Trump.

    Businessman Builds a TowerEn Bloc Reconsideration of Agency Regulations by Congress – Retroactive Consideration

    Bills have been introduced in both the Senate (S.34) and the House (H.R 21) that would empower Congress to make a wholesale repeal at once of multiple regulations that were passed by the Obama Administration in the last half of 2016. The House passed the Midnight Rules Relief Act (H. R. 21) on 1/4/17, one day after it was introduced.   The Senate bill was introduced 1/5/2017.

    The measures amend the Congressional Review Act (“CRA”) to allow Congress to repeal multiple rules and regulations in one joint resolution. The CRA currently requires that regulations be considered individually.

    Regulations promulgated in the last half of 2016 by the Department of Labor and the Department of Health and Human Services as well as other agencies could come under review under these bills.

    New Requirements of the Process of Agency Adoption of Regulations

    Two bills have been introduced in the House to add substantial Congressional review of regulations promulgated by governmental agencies, such as the National Labor Relations Board, The Equal Employment Opportunity Commission, and the Department of Labor. The “Executive in Need of Scrutiny Act” (H. R. 26) and the “Regulatory Accountability Act of 2017” (H.R. 5) substantially limit agencies by requiring multiple additional steps in the rulemaking process.

    The “Executive in Need of Scrutiny Act” (H. R. 26) requires Congress to act before any major rules take effect. Under the bill, an agency promulgating rules would have to publish certain information in the Federal Register and include in its report to Congress and to the Government Accountability Offices 1) a classification of the rule as major or non-major, and 2) a copy of the cost-benefit analysis of the rule that includes an analysis of any jobs added or lost.  The bill includes standards for determining if a rule is major or non-major and sets forth the congressional approval procedure for major rules and the congressional disapproval procedure for non-major rules.

    The “Regulatory Accountability Act of 2017” (H.R. 5) likewise imposes a number of steps on the formulation of new regulations and guidance documents, clarifies the nature of judicial review of agency interpretations, and requires a rigorous analysis of potential impacts of proposed rules on small entities.

    Wednesday, December 28, 2016

    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 must be covered, without cost-sharing, for plan years beginning on or after December 20, 2017.  For calendar year plans, that’s the plan year starting January 1, 2018.  Until those guidelines become applicable, non-grandfathered plans are required to continue providing coverage without cost-sharing consistent with the previous HRSA guidelines and the PHS Act.

    which-healthcare-planQualified Small Employer Health Reimbursement Arrangements. Since 2013, the DOL, IRS and HHS published guidance (here, here and here) addressing the application of the ACA to HRAs. This guidance explained that HRAs and similar arrangements that are used to pay or reimburse for the cost of individual market policies will fail to comply with the ACA because the arrangements, by definition, reimburse or pay medical expenses only up to a specified dollar amount each year and would not meet other ACA requirements.  Prior to this guidance, smaller employers would sometimes reimburse employees for individual policies instead of obtaining their own group policy.   This guidance made such a practice impermissible and could subject employers to penalty taxes of $100 per day per individual for violations.

    To address concerns raised by application of the ACA reforms to certain arrangements of small employers, the 21st Century Cures Act created a new type of tax-preferred arrangement, the “qualified small employer health reimbursement arrangement” (QSEHRA) to reimburse for medical expenses, including coverage on the individual market.  This special arrangement is effective for plan years beginning after December 31, 2016.  For calendar plan years, this means the QSEHRA exclusion is effective January 1, 2017.  For plan years beginning on or prior to December 31, 2016, the relief under Notice 2015-17 applies (which we discussed in a previous post).

    To be a QSEHRA under the Cures Act, the arrangement generally must:

    • Be funded entirely by an eligible employer (generally, an employer that had fewer than 50 full-time equivalent employees in the prior year and does not offer a group health plan to any of its employees);
    • Provide for payment to, or reimbursement of, an eligible employee for expenses for medical care as defined in Code section 213(d);
    • Not reimburse more than $4,950 ($10,000 for families) of eligible expenses for any year; and
    • Be provided on the same terms to all eligible employees of the employer.

    While a QSEHRA is not a group health plan for ACA or COB RA purposes, the 21st Century Cares Act does not really address how (or whether) other ERISA rules apply to QSEHRAs. Additional guidance in these areas would be helpful.

    Monday, November 21, 2016

    ACAOn Friday, IRS and the Department of Treasury issued Notice 2016-70 granting an automatic 30-day extension for furnishing 2016 Forms 1095-B, Health Coverage, and 1095-C, Employer-Provided Health Insurance Offer and Coverage, to individuals for employers and other providers of minimum essential coverage (MEC).  These forms must now be provided to individuals by March 2, 2017 rather than January 31, 2017.  Coverage providers can seek an additional hardship extension by filing a Form 8809.  Notice 2016-70 provides that individual taxpayers do not need to wait to receive the Forms 1095-B and 1095-C before filing their tax-returns.

    The due date for 2016 ACA filings (Forms 1094-B, 1094-C, 1095-B, 1095-B) with the IRS remains February 28, 2017 (or March 31 if filed electronically).   Employers and other coverage providers can request an automatic 30-day extension for filing these forms with the IRS by submitting a Form 8809 before February 28, 2017.  Notice 2016-70 advises that employers and other coverage providers that do not meet the relevant due dates should still furnish and file the forms, even if late, as the Service will take such action into consideration when determining whether to abate penalties for reasonable cause.

    Regarding penalties, Notice 2016-70 extends the good faith standard for providing correct and complete forms that applied to 2015 filings.    The penalty for failure to file a correct informational return with the IRS is $260 for each return for which the failure occurs, with the total penalty for a calendar year not to exceed $3,193,000.  The same level of penalty applies for failure to provide an accurate payee statement.  The good-faith relief applies to missing and inaccurate taxpayer identification numbers and dates of birth, as well as other information required on the return or statement and not to failure to timely furnish or file a statement or return.

    When evaluating good faith, the Service will take into account whether an employer or other coverage provider made reasonable efforts to prepare for reporting, such as gathering and transmitting the necessary data to an agent to prepare the data for submission to the Service.  In addition, the Service will take into account the extent to which an employer or other coverage provider is taking steps to ensure it will be able to comply with reporting requirements for 2017.  No penalty relief is provided in the case of reporting entities that do not make a good-faith effort to provide correct and accurate returns and statements or that fail to file an informational return or furnish a statement by the due dates.

    Treasury and the Service do not anticipate extending this relief with respect to due-dates or good-faith compliance for future years.