EEOC Releases Final Rules for Wellness Programs under ADA and GINA

May 26th, 2016 § 0 comments § permalink

On Monday, May 16, the Equal Employment Opportunity Commission (EEOC) released final regulations (Final Regulations) under Title I of the Americans with Disabilities Act (ADA) and Title II of the Genetic Information Nondiscrimination Act (GINA) governing wellness programs. The ADA rules cover an employer’s requests for health information from employees and the GINA rules cover requests for health information from family members.

The Final Regulations can be found here (ADA) and here (GINA). Additional Q&A guidance and information for small employers can be found here. The Final Regulations are effective for plan years beginning on or after January 1, 2017, and they apply to all workplace wellness programs, including those offered to employees or their family members that do not require participation in a particular health plan.

The rules clarify the EEOC’s stance on wellness programs and how to determine limits on incentives for spouses, although it is not all good news for employers. As discussed below, there continues to be significant disconnect between EEOC and U.S. Department of Labor (DOL) rules on wellness programs, most notably on the treatment of health risk assessments (HRAs) and biometric screenings when used as a gateway to eligibility.

Overview of the Final Wellness Program Regulations

The Final Regulations apply to any wellness program—both participation-based and outcome-based—that includes disability-related inquiries and/or medical examinations. In other words, if there’s no medical exam or inquiry, the program isn’t subject to the Final Regulations.

Under the ADA rules, the maximum reward (or penalty) attributable to an employee’s participation in a wellness program is 30% of the total cost of self-only coverage. Likewise, under GINA, the maximum reward (or penalty) attributable to a spouse’s participation in a wellness program is also 30% of the total cost of self-only coverage.

The Final Regulations reaffirm that the 30% limit includes financial (cash) rewards as well as in-kind incentives (e.g., time-off awards, prizes, and other items), even those of minimal value. To be clear: rewards under both participation and outcome-based wellness programs are counted toward the 30% limit, and there is no “de minimis” rule for cash or non-cash incentives.

As shown in the table below, the 30% limit applies differently depending on whether the wellness program is offered to all employees or only enrolled employees, and whether the employer also sponsors one or more group health plans.

Wellness Program Design Reward Limit
Wellness program offered only to employees enrolled in the employer’s group health plan Wellness program offered only to employees enrolled in the employer’s group health plan
Wellness program offered to all employees regardless of health plan participation; employer offers one group health plan 30% of the total cost of coverage under the benefit option offered by the employer
Wellness program offered to all employees regardless of health plan participation; employer offers multiple group health plans 30% of the total cost of coverage under the least expensive benefit option offered by the employer
Wellness program offered to all employees; employer does not offer a group health plan  30% of the cost of self-only coverage under the second lowest cost Silver Plan for a 40-year-old nonsmoker on the Exchange in the employer’s principal place of business

Treatment of Incentives for Spouses and Children

The final GINA regulations limit incentives for spouses to provide health information to a wellness program to 30% of the cost of self-only coverage under the applicable plan based on the table above. The rules also prohibit an employer from providing any incentives for an employee’s children (juvenile or adult, natural or adopted) to provide information to a wellness program. The final rule confirms that employers are prohibited from providing incentives for spouses to undergo genetic testing – only information about a spouse’s “manifestation of disease or disorder” may be obtained. For example, spouses may be induced to answer questions related to weight or blood pressure, or whether they have diabetes.

Tobacco Cessation Programs

The Final Regulations confirm that tobacco cessation programs that do not request any medical information from employees are not covered by the ADA.

For example, a wellness program that merely asks employees whether or not they use tobacco (or whether they ceased using tobacco by the end of the program) is not a wellness program that asks disability-related questions. This program would generally be covered by the 50% limit established by the DOL for outcome-based wellness programs, if connected to a group health plan. However, if the program includes a medical exam or inquiry, such as biometric screening or cotinine testing, then it will be subject to the 30% limit described in the Final Regulations. The EEOC does not consider medical exams or inquiries related to a spouse’s tobacco use to be a request for genetic information covered by GINA.

HRAs and Biometric Screening

There continues to be deep disconnect between the EEOC and DOL when it comes to HRAs and biometric screening. Under DOL rules, employers may require employees to complete an HRA and biometric screening in order to be eligible to enroll in benefits. However, the Final Regulations specifically prohibit an employer from denying access to the plan or a particular benefit option if an employee or spouse declines to participate in a wellness program that includes a medical exam or inquiry. The EEOC continues to assert this position, although two district courts that have examined the issue have come to a different conclusion, as discussed below.

EEOC’s Position on Recent Court Cases

Two district courts in Florida and Wisconsin have held that a certain provision in the ADA known as the “insurance safe harbor” applies to wellness programs in a way that allows employers to penalize employees who do not answer disability-related questions or undergo medical examinations in connection with wellness programs (e.g., employees who refuse to complete an HRA and/or biometric screening).

The EEOC believes both cases (Seff v. Broward County and EEOC v. Flambeau)were wrongly decided. The EEOC’s position is that the safe harbor is a relic that was included in the ADA to allow health plans to engage in some practices that are no longer permitted, such as charging enrollees higher rates based on increased risks associated with their medical conditions. The ADA’s safe harbor provision, the EEOC argues, was intended to protect this now unlawful practice, provided that any decision to treat people differently because of their medical conditions was based on risks and costs associated with those conditions.

The EEOC rejects the idea that the safe harbor could apply to employer wellness programs, since employers are not using information to determine whether employees with certain health conditions are insurable or to set insurance premiums. The Final Regulations contain a new provision explicitly stating that the safe harbor provision does not apply to wellness programs even if they are part of an employer’s health plan.

Reasonably Designed

The Final Regulations affirm that a wellness program must be “reasonably designed to promote health or prevent disease” in order to offer incentives.

A wellness program will not be “reasonably designed” if the employer collects health-related information without giving any feedback to the employees or spouses who provide it, or without using the information to design a program that addresses at least a subset of conditions identified. Nor will it be “reasonably designed” if it simply shifts health costs from the employer to the employee.

Employers must also provide employees with detailed information about what medical information will be obtained through the wellness program, how it will be used, who will receive it, and the restrictions on disclosure. An employer’s existing wellness program materials may suffice, although an employer may need to revise its materials if their existing communications are not detailed enough. The EEOC also intends to provide a sample notice on its website within the next 30 days that employers may use.

Lastly, an employer may only receive information collected by a wellness program in aggregate form. The format cannot be likely to disclose the identity of specific individuals except as necessary to administer a health plan.

About The Authors. This alert was prepared for Benico, Ltd. by Stacy Barrow and Mitchell Geiger. Mr. Barrow and Mr. Geiger are employee benefits attorneys with Marathas Barrow & Weatherhead LLP, a premier employee benefits, executive compensation and employment law firm.

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EEOC Releases Final Rules for Wellness Programs under ADA and GINA

May 26th, 2016 § 0 comments § permalink

On Monday, May 16, the Equal Employment Opportunity Commission (EEOC) released final regulations (Final Regulations) under Title I of the Americans with Disabilities Act (ADA) and Title II of the Genetic Information Nondiscrimination Act (GINA) governing wellness programs. The ADA rules cover an employer’s requests for health information from employees and the GINA rules cover requests for health information from family members.

The Final Regulations can be found here (ADA) and here (GINA). Additional Q&A guidance and information for small employers can be found here. The Final Regulations are effective for plan years beginning on or after January 1, 2017, and they apply to all workplace wellness programs, including those offered to employees or their family members that do not require participation in a particular health plan.

The rules clarify the EEOC’s stance on wellness programs and how to determine limits on incentives for spouses, although it is not all good news for employers. As discussed below, there continues to be significant disconnect between EEOC and U.S. Department of Labor (DOL) rules on wellness programs, most notably on the treatment of health risk assessments (HRAs) and biometric screenings when used as a gateway to eligibility.

Overview of the Final Wellness Program Regulations

The Final Regulations apply to any wellness program—both participation-based and outcome-based—that includes disability-related inquiries and/or medical examinations. In other words, if there’s no medical exam or inquiry, the program isn’t subject to the Final Regulations.

Under the ADA rules, the maximum reward (or penalty) attributable to an employee’s participation in a wellness program is 30% of the total cost of self-only coverage. Likewise, under GINA, the maximum reward (or penalty) attributable to a spouse’s participation in a wellness program is also 30% of the total cost of self-only coverage.

The Final Regulations reaffirm that the 30% limit includes financial (cash) rewards as well as in-kind incentives (e.g., time-off awards, prizes, and other items), even those of minimal value. To be clear: rewards under both participation and outcome-based wellness programs are counted toward the 30% limit, and there is no “de minimis” rule for cash or non-cash incentives.

As shown in the table below, the 30% limit applies differently depending on whether the wellness program is offered to all employees or only enrolled employees, and whether the employer also sponsors one or more group health plans.

Wellness Program Design Reward Limit
Wellness program offered only to employees enrolled in the employer’s group health plan Wellness program offered only to employees enrolled in the employer’s group health plan
Wellness program offered to all employees regardless of health plan participation; employer offers one group health plan 30% of the total cost of coverage under the benefit option offered by the employer
Wellness program offered to all employees regardless of health plan participation; employer offers multiple group health plans 30% of the total cost of coverage under the least expensive benefit option offered by the employer
Wellness program offered to all employees; employer does not offer a group health plan  30% of the cost of self-only coverage under the second lowest cost Silver Plan for a 40-year-old nonsmoker on the Exchange in the employer’s principal place of business

Treatment of Incentives for Spouses and Children

The final GINA regulations limit incentives for spouses to provide health information to a wellness program to 30% of the cost of self-only coverage under the applicable plan based on the table above. The rules also prohibit an employer from providing any incentives for an employee’s children (juvenile or adult, natural or adopted) to provide information to a wellness program. The final rule confirms that employers are prohibited from providing incentives for spouses to undergo genetic testing – only information about a spouse’s “manifestation of disease or disorder” may be obtained. For example, spouses may be induced to answer questions related to weight or blood pressure, or whether they have diabetes.

Tobacco Cessation Programs

The Final Regulations confirm that tobacco cessation programs that do not request any medical information from employees are not covered by the ADA.

For example, a wellness program that merely asks employees whether or not they use tobacco (or whether they ceased using tobacco by the end of the program) is not a wellness program that asks disability-related questions. This program would generally be covered by the 50% limit established by the DOL for outcome-based wellness programs, if connected to a group health plan. However, if the program includes a medical exam or inquiry, such as biometric screening or cotinine testing, then it will be subject to the 30% limit described in the Final Regulations. The EEOC does not consider medical exams or inquiries related to a spouse’s tobacco use to be a request for genetic information covered by GINA.

HRAs and Biometric Screening

There continues to be deep disconnect between the EEOC and DOL when it comes to HRAs and biometric screening. Under DOL rules, employers may require employees to complete an HRA and biometric screening in order to be eligible to enroll in benefits. However, the Final Regulations specifically prohibit an employer from denying access to the plan or a particular benefit option if an employee or spouse declines to participate in a wellness program that includes a medical exam or inquiry. The EEOC continues to assert this position, although two district courts that have examined the issue have come to a different conclusion, as discussed below.

EEOC’s Position on Recent Court Cases

Two district courts in Florida and Wisconsin have held that a certain provision in the ADA known as the “insurance safe harbor” applies to wellness programs in a way that allows employers to penalize employees who do not answer disability-related questions or undergo medical examinations in connection with wellness programs (e.g., employees who refuse to complete an HRA and/or biometric screening).

The EEOC believes both cases (Seff v. Broward County and EEOC v. Flambeau)were wrongly decided. The EEOC’s position is that the safe harbor is a relic that was included in the ADA to allow health plans to engage in some practices that are no longer permitted, such as charging enrollees higher rates based on increased risks associated with their medical conditions. The ADA’s safe harbor provision, the EEOC argues, was intended to protect this now unlawful practice, provided that any decision to treat people differently because of their medical conditions was based on risks and costs associated with those conditions.

The EEOC rejects the idea that the safe harbor could apply to employer wellness programs, since employers are not using information to determine whether employees with certain health conditions are insurable or to set insurance premiums. The Final Regulations contain a new provision explicitly stating that the safe harbor provision does not apply to wellness programs even if they are part of an employer’s health plan.

Reasonably Designed

The Final Regulations affirm that a wellness program must be “reasonably designed to promote health or prevent disease” in order to offer incentives.

A wellness program will not be “reasonably designed” if the employer collects health-related information without giving any feedback to the employees or spouses who provide it, or without using the information to design a program that addresses at least a subset of conditions identified. Nor will it be “reasonably designed” if it simply shifts health costs from the employer to the employee.

Employers must also provide employees with detailed information about what medical information will be obtained through the wellness program, how it will be used, who will receive it, and the restrictions on disclosure. An employer’s existing wellness program materials may suffice, although an employer may need to revise its materials if their existing communications are not detailed enough. The EEOC also intends to provide a sample notice on its website within the next 30 days that employers may use.

Lastly, an employer may only receive information collected by a wellness program in aggregate form. The format cannot be likely to disclose the identity of specific individuals except as necessary to administer a health plan.

About The Authors. This alert was prepared for Benico, Ltd. by Stacy Barrow and Mitchell Geiger. Mr. Barrow and Mr. Geiger are employee benefits attorneys with Marathas Barrow & Weatherhead LLP, a premier employee benefits, executive compensation and employment law firm.

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DOL’s Final Fiduciary Rules for Investment Advisors Apply to HSAs

May 4th, 2016 § 0 comments § permalink

On April 8, 2016, the DOL finalized its fiduciary regulations which, among other things, expand the definition of who is an ERISA fiduciary to those providing “investment advice” with respect to Health Savings Accounts (HSAs). As a result, the new guidance regarding what constitutes investment advice and the rules for best interest standards apply to HSAs in the same way in which they apply to IRAs, 401(k) and other retirement plans.

There is, however, exclusion for health insurance policies, disability insurance policies, term life insurance policies and similar assets that do not include an investment component from the final rule definition of “investment property.”

Investment Advice

Under the final regulations, two types of advice will trigger fiduciary status when provided for a fee or other compensation: (1) recommendations to buy, sell, hold, or exchange securities or other investment property, or regarding how to invest securities or other property following a rollover, transfer, or distribution; and (2) recommendations on managing securities or other investment property, including investment policies, portfolio composition, selection of other persons as investment advisers or managers, selection of account type (e.g., brokerage versus advisory), or recommendations about rollovers, transfers, and distributions (including whether to make, amount, form, and destination).

The key aspect of this definition is whether or not a recommendation is made. According to the rule, a recommendation is a communication that, based on its content, context, and presentation, would reasonably be viewed as a suggestion that the participant engage in or refrain from taking a particular course of action. The more specific and individually tailored the communication, the more likely the communication will be viewed as a recommendation and therefore fall under the provisions of the fiduciary rule.

The DOL listed three types of relationships that must exist for a recommendation to trigger fiduciary status. This includes both direct and indirect recommendations in exchange for a fee or other compensation. If a person:

  • Represents or acknowledges that they are acting as a fiduciary within the meaning of ERISA or the Internal Revenue Code (Code);
  • Renders advice pursuant to a written or verbal agreement, arrangement or understanding that the advice is based on the particular investment needs of the advice recipient; or
  • Directs the advice to a specific recipient or recipients regarding the advisability of a particular investment or management decision with respect to securities or other investment property of the plan or IRA.

The Best Interest Standard

The Best Interest Contract Exemption (BIC) provides relief for common compensation and fee structures, such as commissions, revenue sharing, and 12b-1 fees, so long as firms adhere to certain conditions that minimize conflicts of interest and provide advice that is in the best interest of their clients. BIC requires financial institutions to acknowledge that the firm and its advisors are fiduciaries and commit to an impartial conduct standard (i.e., prudent advice in the investor’s best interest, no misleading statements, and reasonable compensation). For IRAs and HSAs, the advice must be provided under a written, binding contract.

The final regulations require a regularly updated website that contains information about the financial institution’s business model; any associated conflicts of interest, a written description of the institution’s policies to mitigate the conflict, and disclosure of any compensation and incentive arrangements with advisors or third parties.

Impact on Insurance Brokers

The Fiduciary Rules should have little impact, if any, on group insurance brokers who do not provide investment advice. As mentioned above, group insurance policies for health and welfare benefits with no investment components are excluded from the definition of “investment property” and a broker’s involvement in helping an employer identify an HSA custodian will not rise to the level of investment advice as it relates to an HSA.

Effective Date

The final regulations are effective June 7, 2016, but most of the provisions do not apply until April 10, 2017.

 

About The Authors. This alert was prepared for Benico, Ltd. by Stacy Barrow and Mitchell Geiger. Mr. Barrow and Mr. Geiger are employee benefits attorneys with Marathas Barrow & Weatherhead LLP, a premier employee benefits, executive compensation and employment law firm

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HHS Announces Start to Phase 2 of HIPAA Audit Program

April 12th, 2016 § 0 comments § permalink

Benico, Ltd. News Alerts

On March 21, 2016 the U.S. Department of Health and Human Services’ Office for Civil Rights (OCR) announced the start of phase 2 (Phase 2) of the Health Insurance Portability and Accountability Act (HIPAA) Audit Program. Phase 2 will consist of more than 200 desk and onsite audits of both covered entities and business associates to determine their compliance with HIPAA’s Privacy, Security, and Breach Notification rules. By contrast, the Phase 1 pilot audit program conducted in 2011 and 2012 targeted only covered entities and involved just 115 audits.

According to an OCR press release, Phase 2 will include “a broad spectrum of audit candidates” that OCR will randomly select from pools that “represent a wide range of health care providers, health plans, health care clearinghouses and business associates.”

OCR is currently verifying contact information and sending initial emails to potential subjects with a pre-audit questionnaire that will gather data about the “size, type, and operations of potential auditees.” Based on pre-audit questionnaires, OCR will choose the final pool of auditees and send letters shortly. OCR has stated that it is “committed to transparency about the process” and will post on its website updated audit protocols that have been developed based on the Phase 1 HIPAA Audits. Phase 2 Audits will include both desk and on-site audits for covered entities and their business associates.

Covered entities and business associates will have 10 business days to respond to OCR’s audit request. The data requests will specify the content, file names and other documentation requirements, and the auditors may contact the covered entities and business associates for clarifications or additional documentation. In addition, all documents must be in digital form and must be submitted electronically to a secure online portal that OCR has specifically developed for Phase 2. Auditors will then perform a desk audit and provide draft findings. OCR will begin a round of desk audits for covered entities, followed by a round of desk audits for business associates and all desk audits are expected to be completed by the end of December 2016.

Auditors will review the documentation and provide draft findings. Subjects of the audit will then have 10 business days to review the findings and return written comments, if desired. If an on-site audit is required, auditors will schedule a date and provide information about the process. On-site audits will last three to five days depending upon the size of the entity. Like desk audits, auditees will have 10 days to review the findings from the audit and return written comments if any.

While Phase 2 audits aren’t intended “to be a punitive mechanism,” more serious compliance reviews may be triggered if audits uncover serious compliance issues. Based on the results of the further compliance reviews, covered entities and business associates may be liable for penalties.

For the time being, covered entities should respond to OCR’s pre-audit screening questionnaire if they receive one, including providing the names of business associates. The individual identified to OCR as a primary contact should be on the lookout for email from OCR, including by checking their junk or spam email folders. If an entity doesn’t respond to OCR, OCR will use publically available information to create its audit pool, and so the entity may still be selected for an audit or subject to a compliance review despite not responding. To prepare for a possible HIPAA audit, employers sponsoring group health plans should review their compliance with HIPAA’s Privacy, Security and Breach Notification Rules and ensure their policies, procedures and training materials are up-to-date.

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HHS Finalizes 2017 Notice of Benefit and Payment Parameters

March 24th, 2016 § 0 comments § permalink

Out-of-Pocket Maximums, Marketplace Guidance

On March 8, 2016, HHS published the final version of its 2017 Notice of Benefit and Payment Parameters.  The Notice is issued each year as part of the Affordable Care Act (ACA). For the most part, the guidance is focused on the ACA Marketplaces and insurers offering qualified health plans. It does, however, include several items relevant to employers and group health plans, specifically:

  • Annual limits for cost sharing (out-of-pocket limits)
  • Marketplace eligibility notifications to employers
  • Marketplace annual open enrollment period
  • Small Business Health Options (SHOP) Exchange

 

Annual Limits for Cost Sharing:  The annual out of pocket limits for plan years beginning on or after January 1, 2017 are $7,150 for individual coverage and $14,300 for family coverage.  These cost sharing limits apply to in-network essential health benefits offered under non-grandfathered health plans, both fully and self-insured.  Annual deductibles, in-network co-insurance and other types of in-network cost sharing accumulate toward the out-of-pocket limit, including prescription drug copayments.  Not included are premium payments, out-of-network cost sharing and spending on non-essential health benefits.

Marketplace Eligibility Notifications to Employers:  Beginning in 2017, the Marketplace will notify an employer as soon as possible when one of its employee’s first enrolls in subsidized Marketplace coverage.  Since some employers may be liable for a penalty under the ACA’s employer mandate when an employee qualifies for a subsidized Marketplace coverage, this change to a more proactive notification process will hopefully provide employers with the opportunity to work with CMS in cases where an improper subsidy has been provided.

Marketplace Annual Open Enrollment Period:  Open Enrollment in the Health Insurance Marketplace, Healthcare.gov, for 2017 and 2018 will take place from November 1, 2016 through January 31, 2017 and November 1, 2017 through January 31, 2018, respectively.

Small Business Health Options (SHOP) Exchange:  Beginning in 2017, small employers electing coverage in the SHOP Exchange will have the option of “vertical choice,” offering plans across all metal levels (platinum, gold, silver and bronze) from one insurer. States who opt out of the vertical choice option will continue to offer employers the choice of selecting health plans that are available at one single metal level of coverage.

About The Authors. This alert was prepared for Benico, Ltd. by Stacy Barrow and Mitchell Geiger. Mr. Barrow and Mr. Geiger are employee benefits attorneys with Marathas Barrow & Weatherhead LLP, a premier employee benefits, executive compensation and employment law firm. They can be reached at sbarrow@marbarlaw.com or mgeiger@marbarlaw.com. This is a service to our clients and friends. It is designed only to give general information on the developments actually covered. It is not intended to be a comprehensive summary of recent developments in the law, treat exhaustively the subjects covered, provide legal advice, or render a legal opinion. Benefit Advisors Network and its smart partners are not attorneys and are not responsible for any legal advice. To fully understand how this or any legal or compliance information affects your unique situation, you should check with a qualified attorney.
© Copyright 2015 Benefit Advisors Network. All rights reserved.

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HRCI Continuing Education Credits Now Available

March 8th, 2016 § 0 comments § permalink

HRCI Continuing EducationHRCI Continuing Education Credits are now available when you attend a Benico, Ltd. webinar.

All of our webinars are designed to give you the critical information you need to stay abreast of HR trends, Health and Welfare plans, and insight into Healthcare Reform and benefits regulations. And now, the same great webinars you already attend will afford you the benefit of continuing education credits.

What is HRCI?

The HR Certification Institute™ (HRCI™) is an independent, nonprofit organization dedicated to advancing the HR profession by developing and administering best-in-class accredited certifications.

Recertification and Continuing Education

Achieving certification from the HR Certification Institute is a long-term commitment, and recertification is the process of renewing one’s certification. To maintain certification, one must be prepared to continue to learn, grow and increase current knowledge. Recertification demonstrates a commitment to staying current in the field of Human Resources, and says you are building upon your knowledge, growing as a professional and increasing one’s experience daily. One of the many ways HRCI credits can be earned is through approved continuing education, such as the regular Benico, Ltd. HR and benefits webinars.

How does it work

Participants who wish to receive HRCI credit must participate in the full webinar. Shortly after the completion of a webinar, Benico, Ltd. will send the HRCI Activity ID that you will use to verify your attendance.

Instructions for submitting this activity for recertification credit

  1. Login to your profile at https://hrci.org/login
  2. Click the My Recertification link
  3. Review your progress dashboard and requirements
  4. Find the Continuing Education: Pre-Approved Activities section of your learning plan
  5. Click Add Activity
  6. Enter the Activity ID and click Search
  7. Click Select next to the activity title
  8. Enter the Start and End Dates that you attended the activity* and click Next
  9. Review the activity details, agree to the attestation and click Submit

* Because some activities are ongoing throughout the year, the Start and End Dates are left intentionally blank.

The use of this seal is not an endorsement by the HR Certification Institute of the quality of the program. It means that this program has met the HR Certification Institute’s criteria to be pre-approved for recertification credit.

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Agencies Release New Summary of Benefits and Coverage Templates

March 3rd, 2016 § 0 comments § permalink

Health care reform expands ERISA’s disclosure requirements by requiring that a summary of benefits and coverage (SBC) be provided to applicants and enrollees before enrollment or re-enrollment. Specifically, an SBC must be provided at open enrollment, initial enrollment and special enrollment or upon request. The SBCs allow health insurance shoppers to more easily make comparisons among available health plans and assist enrollees to better understand and use their own coverage.

The initial templates, instructions, and related materials were published in 2011. After input from a stakeholders group, convened by the National Association of Insurance Commissioners (NAIC) which included consumer testing, an updated set of forms were suggested to the Departments of Labor, Health and Human Services, and Treasury. On February 25, 2016 the departments released a proposed five page revised SBC template, proposed individual and group instructions, and a proposed uniform glossary. The documents are currently under a thirty-day comment period. It is anticipated that once changes to the templates are finalized, they will apply in connection with coverage renewing or beginning on the first day of the first plan year that begins on or after January 1, 2017 (including open enrollment periods that occur in the Fall of 2016 for coverage beginning on or after January 1, 2017).

The proposed template includes a new question to better identify first dollar coverage and also requires plans offering family coverage to disclose whether the plan has “embedded” deductibles or out-of-pocket limits, or “non-embedded” deductibles and out-of-pocket limits.

The proposed instructions require the disclosure of tiered networks with more information in the common medical events chart. Plans must make clear which provider tiers are most and least expensive. Also under the proposed instructions, qualified health plans offered through the Marketplaces are required to disclose whether or not they cover abortion services.

The proposed Summary of Benefits and Coverage includes three coverage examples: maternity, diabetes, and a simple fracture. It focuses on cost-sharing parameters that would apply to services received for these conditions and on what consumers would spend in cost sharing for these services. The coverage examples are to be calculated by plans that have wellness programs assuming that enrollees are not participating in the wellness program, although the plan can also indicate that costs may be reduced if enrollees do participate.

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New Agency Guidance and Relief on Offering Student Health Insurance

February 22nd, 2016 § 0 comments § permalink

On Feb. 5, 2016, the Departments of the Treasury, Labor, and Health and Human Services (the Departments) issued a technical release (2016-01) addressing the application of market reforms and other provisions of the Affordable Care Act (ACA) to student health coverage, and providing temporary transition relief from enforcement by the Departments for non-compliant colleges and universities.

The release discusses previous guidance which established that employer payment plans (EPPs) (i.e. arrangements that reimburse employees for all or some of the premium expenses incurred for individual market coverage) and health reimbursement arrangements (HRAs) that do the same will fail to comply with certain ACA market reforms; namely, the prohibition on annual dollar limits and the requirement to provide certain preventive services without cost sharing.

That previous guidance also provided that these health care arrangements wouldn’t violate the market reforms when integrated with a group health plan that does comply with those requirements, as long as they do not reimburse premiums for individual market coverage. HHS has previously defined “student health insurance coverage” as a type of individual market health insurance coverage that is offered to students and their dependents under a written agreement between an institution of higher education (as that term is defined for purposes of the Higher Education Act of 1965) and an issuer. So, in some cases, when a school defrays the costs of student health insurance through a subsidy, it creates an EPP and violates the ACA market reforms.

Many colleges and universities provide students (typically graduate students) with student health coverage at reduced or no cost as part of their student package, which often includes tuition assistance and a stipend for living expenses. For these students, the bill they receive from the school for the health coverage premium may take into account a premium reduction arrangement. It appears that, if the amounts are paid towards student health insurance coverage in a student’s capacity as an employee (as a graduate assistant), then the subsidy is an EPP and subject to the market reforms.

The Departments recognize that many schools have unintentionally been using EPP arrangements, and that schools may need additional time to adopt a suitable alternative or make other arrangements to come into compliance. Accordingly, the Departments indicate that they will not assert that a premium reduction arrangement fails to satisfy the ACA’s mandates regarding annual limits and preventive care if the arrangement is offered in connection with other student health coverage (insured or self-insured) for a plan year or policy year beginning before January 1, 2017 (therefore including, for example, plan years or policy years that are roughly coterminous with academic years beginning in the summer or fall of 2016 and ending in 2017).

Educational institutions should be reviewing all health coverage offered to students and determining whether the coverage offered is student health insurance or coverage under an employer’s group health plan, to make sure that all coverage offered meets the requirements of the ACA.

This alert was prepared for Benico, Ltd. by Peter Marathas and Stacy Barrow. Mr. Marathas and Mr. Barrow are nationally recognized experts on the Affordable Care Act. Their firm, Marathas Barrow & Weatherhead LLP, is a premier employee benefits, executive compensation and employment law firm.This alert is designed only to give general information on the developments actually covered. It is not intended to be a comprehensive summary of recent developments in the law, treat exhaustively the subjects covered, provide legal advice, or render a legal opinion. Benefit Advisors Network and its smart partners are not attorneys and are not responsible for any legal advice. To fully understand how this or any legal or compliance information affects your unique situation, you should check with a qualified attorney.
© Copyright 2015 Benefit Advisors Network. All rights reserved.

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ACA Delay in Reporting Deadlines

December 28th, 2015 § 0 comments § permalink

Today (12/28) the Internal Revenue Service (IRS) sent out a belated Christmas present to employers and other plan sponsors when it announced it was delaying the 2016 Affordable Care Act reporting requirements. In Notice 2016-4 the IRS announced that the deadline for providing to individuals the 2015 Form 1095-B and Form 1095-C is delayed from February 1, 2016 to March 31, 2016. Similarly, the deadline for filing with the IRS Forms 1094-B and 1094-C is delayed from February 29 to May 31, 2016 for non-electric filers and from March 31 to June 30, 2016 for electronic filers.

Because of the delay, some employees will not receive their forms until after the April 15 tax filing deadline. The IRS indicates that these employees do not have to file an amended tax return. They should simply keep their forms in a file should they need them later.

Stay tuned.

This alert was prepared for Benico, Ltd. by Peter Marathas and Stacy Barrow. Mr. Marathas and Mr. Barrow are nationally recognized experts on the Affordable Care Act. Their firm, Marathas Barrow & Weatherhead LLP, is a premier employee benefits, executive compensation and employment law firm.This alert is designed only to give general information on the developments actually covered. It is not intended to be a comprehensive summary of recent developments in the law, treat exhaustively the subjects covered, provide legal advice, or render a legal opinion. Benefit Advisors Network and its smart partners are not attorneys and are not responsible for any legal advice. To fully understand how this or any legal or compliance information affects your unique situation, you should check with a qualified attorney.
© Copyright 2015 Benefit Advisors Network. All rights reserved.

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Tax Bill Proposes Cadillac Tax Delay

December 17th, 2015 § 0 comments § permalink

Tax Bill Proposes Cadillac Tax Delay

On Tuesday, December 15, 2015, the U.S. House of Representatives released a tax bill called the Protecting Americans From Tax Hikes Act of 2015, which, if passed into law, will place a two-year moratorium on the Affordable Care Act’s (ACA) medical device tax and the excise tax on high cost employer-sponsored health coverage (the “Cadillac tax”), and a one-year moratorium on the ACA’s annual fee on health insurers.

The bill also extends several expiring tax breaks and could be voted on as early as Thursday, although it seems that a Friday vote is more likely, as the tax package was also negotiated alongside a $1.1 trillion omnibus spending bill that was not released along with the tax bill. If passed by the House of Representatives, the bill will still have to pass the Senate and be signed by the President to take effect.

Cadillac Tax

Although the Obama administration seemingly opposes a delay of the Cadillac tax, the tax bill includes a two-year delay of its 2018 effective date to tax years beginning after December 31, 2019.

Medical Device Tax

The tax bill will place a two-year moratorium on the ACA’s 2.3% tax on the sale of medical devices. The tax imposed under this provision will not apply to sales during the period beginning on January 1, 2016, and ending on December 31, 2017. This applies to sales after December 31, 2015.

Health Insurance Industry Tax

The tax bill places a one-year moratorium on the so-called HIT tax (Health Insurance Industry Tax). If passed, the industry tax will not apply for calendar year 2017, which should result in less of an increase to group health insurance premiums for 2017.

This alert was prepared for Benico, Ltd. by Peter Marathas and Stacy Barrow. Mr. Marathas and Mr. Barrow are nationally recognized experts on the Affordable Care Act. Their firm, Marathas Barrow & Weatherhead LLP, is a premier employee benefits, executive compensation and employment law firm.
This alert is designed only to give general information on the developments actually covered. It is not intended to be a comprehensive summary of recent developments in the law, treat exhaustively the subjects covered, provide legal advice, or render a legal opinion. Benefit Advisors Network and its smart partners are not attorneys and are not responsible for any legal advice. To fully understand how this or any legal or compliance information affects your unique situation, you should check with a qualified attorney.
© Copyright 2015 Benefit Advisors Network. All rights reserved.

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South Suburban School Business Officials

November 6th, 2015 § 0 comments § permalink

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IRS Reverses Course on HRA Reporting

September 17th, 2015 § 0 comments § permalink

The IRS released updated instructions for the 2015 ACA reporting forms today and reversed its earlier guidance regarding reporting for HRAs.

Per the instructions, an employer with an insured major medical plan and HRA coverage for which an individual is eligible because the individual enrolls in the insured major medical plan is not required to report the coverage under the HRA for an individual covered by both arrangements. If an individual is covered by an HRA sponsored by one employer and a non-HRA group health plan sponsored by another employer (such as spousal coverage), each employer must report the coverage the employer provides.

This is welcome relief for employers that provide HRA coverage to employees enrolled in their fully insured group health plan, as separate reporting is not required for the HRA.

Benefit Advisors Network and its smart partners are not attorneys and are not responsible for any legal advice. To fully understand how this or any legal or compliance information affects your unique situation, you should check with a qualified attorney.

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Enrollment Counts for Transitional Reinsurance Fee Due Nov. 16, 2015

September 17th, 2015 § 0 comments § permalink

Employers with self-insured major medical plans are reminded to report their membership count to the U.S. Department of Health and Human Services (“HHS”) via the pay.gov website by November 16, 2015, as part of the Affordable Care Act’s (“ACA”) transitional reinsurance fee (the “Fee”).

The Fee is assessed on both insured and self-insured group health plans, and applies on a calendar year basis from 2014-2016. Carriers offering group health insurance and sponsors of self-insured medical plans are required to pay the Fee to support payments to carriers in the individual market that cover high-cost claimants. Carriers pay the fee on behalf of fully insured plans; employers are responsible for paying the fee for a self-insured plan.  Below is a brief summary of key dates and information for employers:

  • October 1, 2015:  2015 ACA Transitional Reinsurance Program Annual Enrollment and Contributions Submission Form Available on Pay.gov
    • When the Form becomes available, a notice will be sent to REGTAP registrants.
    • Employers may visit https://www.REGTAP.info to register.
  • November 16, 2015:  Deadline for employers with self-insured plans to report their annual enrollment of covered lives to HHS via the pay.gov website
  • January 15, 2016:  Payment deadline if making a single payment ($44 per covered life)
    • $33 per covered life if making a two-part payment
  • November 15, 2016:  Payment deadline for second payment for employers making a two-part payment ($11 per covered life)

KEY INFORMATION FOR EMPLOYERS

  • The Fee applies to major medical coverage
    • It does not apply to stand-alone dental and vision plans, prescription drug-only plans, HRAs, HSAs, FSAs, employee assistance programs (EAPs) and wellness plans that do not provide major medical coverage, post-65 retiree medical coverage, and plans that do not provide coverage that is “minimum value”
    • For 2015 and 2016, plans that are both self-insured and self-administered are exempt from the fee (i.e., the plan cannot use a third party administrator (TPA) in connection with claims processing or adjudication, including managing appeals,  or for plan enrollment)

The Take-Away: Employers sponsoring self-insured plans should work closely with their benefits broker to select the most advantageous counting methodology. The counting methods can be complex and results may vary significantly based on the chosen method. Once the enrollment form has been submitted and the Fee paid, an employer cannot later amend that filing if it is discovered that another counting method would have been more advantageous.

About The Authors. This alert was prepared by Peter Marathas and Stacy Barrow. Mr. Marathas and Mr. Barrow are nationally recognized experts on the Affordable Care Act. Their firm, Marathas Barrow & Weatherhead LLP, is a premier employee benefits, executive compensation and employment law firm. They can be reached at pmarathas@marbarlaw.com or sbarrow@marbarlaw.com.

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IRS Releases Draft 2015 Instructions for ACA Reporting Forms

August 18th, 2015 § 0 comments § permalink

The IRS has released draft 2015 instructions for the B-Series and C-Series reporting forms (Forms 1094-B, 1095-B, 1094-C and 1095-C) that will be used by employers and coverage providers to report certain information to full-time employees and the Internal Revenue Service (IRS).

By way of background, the Affordable Care Act (ACA) added Sections 6055 and 6056 to the Internal Revenue Code. These new sections require employers, plans, and health insurance issuers to report health coverage information to the IRS and to participants annually.  The Section 6055 reporting requirements apply to insurers, employers that sponsor self-insured group health plans, and other entities that provide minimum essential coverage (such as multiemployer plans). The Section 6056 reporting requirements apply to “applicable large employers” or “ALEs” (generally, employers with 50 or more full-time employees) and require reporting of health care coverage provided to the employer’s full-time employees.

Reporting under Sections 6055 and 6056 will involve one or both of two sets of forms – the “B-Series” (Forms 1094-B and 1095-B) and the “C-Series” (Forms 1094-C and 1095-C).  Each set of forms includes a transmittal form (Forms 1094-B and 1094-C), which serves as a cover page and provides aggregate information, and an individualized form (Forms 1095-B and 1095-C) for each employee for whom the employer is required to report.

ACA reporting became mandatory for responsible entities starting in 2015.  The first forms will be provided in early 2016 reflecting the 2015 calendar year.  The forms that must be filed and distributed depend on whether the employer is an ALE and the type of coverage provided.  Employers filing 250 or more of a particular form are required to file with the IRS electronically.  The following table summarizes the responsible parties and forms applicable to the ACA’s reporting requirements.

Responsible Entity Fully Insured Plan Self-Insured Plan
Applicable Large Employer (ALE)50 or more full-time equivalent employees on average in prior calendar year Forms 1094-C and 1095-C(Parts I and II of Form 1095-C) Forms 1094-C and 1095-C(Parts I, II and III of Form 1095-C)

Either B-Series or C-Series Forms for covered non-employees

Non-ALEFewer than 50 full-time equivalent employees on average in prior calendar year Not required to file Forms 1094-B and 1095-B 
Insurance Carrier Forms 1094-B and 1095-B Not Applicable

 

2015 Draft Instructions

The draft forms and instructions can be found here:

Highlights of changes/clarifications contained in the draft forms and instructions are discussed below.

  • Form Revisions.  For 2015, form 1094-C is reorganized to move line 19 (the Authoritative Transmittal question) into Part I of the form.  Line 23 of Part III of form 1094-C is also revised to allow for an entry in the “All 12 Months field.” Form 1095-C is revised to include a first month of the plan year indicator (plan start month) in Part II and “Covered Individuals Continuation Sheet” in Part III.
  • Increased Penalties.  The draft instructions reflect the newly increased penalty structure (generally increasing penalties from $100 per return to $250 per return, and increasing the penalty cap from $1.5M to $3M).
  • Hand Delivery.  The draft instructions clarify that hand delivery is an acceptable method of delivery.  Electronic delivery is permissible with the recipient’s affirmative consent.
  • ALE Determination Transition Relief.  The draft instructions reiterate that employers may determine their ALE status for 2015 over a period of at least six consecutive months in 2014 (rather than having to use the entire calendar year when determining average employee count).
  • COBRA Coverage (for Terminating Employees).  The instructions provide that COBRA coverage offered to a terminating employee is reported as an offer of coverage only if the terminating employee enrolls in COBRA.  If the former employee does not enroll in COBRA, the employer should use code 1H in line 14 of form 1095-C (the “no offer” code) even if the employee’s spouse or dependent enrolls in COBRA.
  • COBRA Coverage (for Reductions in Hours).  The instructions provide that COBRA coverage offered to an employee who has experienced a reduction in hours that resulted in a loss of coverage under the plan is reported in the same manner and using the same code as an offer of that type of coverage to any other active employee.
  • Multiemployer Plans.  The draft instructions provide relief for employers reporting on offers of coverage made under a multiemployer plan.  The instructions direct ALEs to use code 1H on line 14 of form 1095-C for any month for which the employer enters code 2E on line 16 of form 1095-C (indicating that the employer is eligible for relief under the interim guidance for multiemployer plans).  This allows employers to enter Code 1H regardless of whether coverage was actually offered under the multiemployer plan (in case the employer is unable to obtain such information from the multiemployer plan).
  • Filing Extensions (for Returns to the IRS).  Employers may obtain automatic extensions of time to file the applicable returns with the IRS; however, extensions of time to provide the employee statement (e.g., 1095-B or 1095-C) are more limited.  The draft instructions provide that entities filing form 8809 before the returns are due are granted an automatic 30-day extension.  An additional 30-day hardship extension may be requested (see the instructions for form 8809 for more information).
  • Filing Extensions (for Employee Statements).  Thedraft instructions allow employers to request an extension of time to furnish the employee statements by sending a letter to the IRS.  The letter must include certain identifying information (e.g., filer name, address and TIN) along with the reason for the delay.  The request must be postmarked by the date on which the statements are due to the recipients. If approved, the extension will generally be for a maximum of 30 days.
  • Waiver of Electronic Filing Requirement.  The draft instructions allow employers to request a waiver from having to file information returns electronically via Form 8508.  The form must be filed at least 45 days before the due date of the returns.  An employer cannot apply for a waiver for more than one year at a time.

Employers should continue to work closely with their insurance broker and other trusted advisors when determining how their organization will address these new requirements.

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Agencies Finalize Preventive Care Rules, Accommodation for Closely Held For-Profit Entities

August 18th, 2015 § 0 comments § permalink

The Internal Revenue Service, U.S. Department of Labor, and Health and Human Services (the “Agencies”) have released final regulations on several aspects of the Affordable Care Act’s (ACA’s) preventive care requirements. The regulations finalize prior guidance on coverage of preventive services and define standards regarding a “closely held” for-profit entity’s decision not to provide coverage for contraceptive services. The final regulations are effective for plan years beginning on or after September 14, 2015.

The final regulations related to the coverage of preventive services generally follow prior guidance and contain relatively few changes. Additions include standards to ensure that when a recommended preventive service is downgraded mid-year, a plan generally must continue coverage for the service with no cost sharing through the end of the plan year.

Most notably, the regulations finalize the definition of “closely held” for purposes of determining whether a for-profit entity whose owners have a religious objection to providing coverage for some or all contraceptive services qualifies for an “accommodation” (i.e., an exemption) from the contraceptive coverage requirement. Under the ACA, non-grandfathered group health plans must provide coverage for all FDA-approved contraceptive methods prescribed by a physician, unless a religious exemption applies.

Accommodation for Closely Held For-Profit Entities

In response to the U.S. Supreme Court’s decision in the Hobby Lobby case in 2014, the Agencies released proposed regulations that solicited comments on expanding the availability of an accommodation previously reserved for non-profit organizations to closely held for-profit organizations that have a religious objection to providing coverage for certain contraceptive services.

The final regulations confirm the availability of the accommodation for closely held for-profit organizations and establish parameters for the types of for-profit entities that can be considered “closely held.” To be considered a closely held for-profit entity, the entity:

  • Must not be a non-profit organization;
  • Cannot have any publicly traded ownership interests; and
  • Must have more than 50% of the value of its ownership interest, owned directly or indirectly by five or fewer individuals.

For these purposes, ownership interests held by family members are treated as being owned by a single individual. Family members are limited to brothers and sisters (including half-brothers and half-sisters), a spouse, ancestors, and lineal descendants. Also, ownership interests owned by a nonprofit entity are considered to be owned by a single owner. In other words, any for-profit entity that is controlled directly or indirectly by a nonprofit eligible organization may be eligible for an accommodation because the nonprofit entity will represent one shareholder that owns more than 50% of the ownership interests in the for-profit entity.

Under the final regulations, eligible employers may avail themselves of either of two accommodation options identified in prior guidance. An eligible employer may file EBSA Form 700 with its insurance carrier or TPA, or simply notify HHS in writing of its religious objection to providing coverage for contraceptive services. The Agencies will work with insurers and TPAs to ensure that participants will receive separate payments for contraceptive services, with no additional cost to the participant or involvement by the employer.

Employers that wish to confirm their eligibility for an accommodation may send a letter describing their ownership structure to HHS at accommodation@cms.hhs.gov. If they do not receive a response from HHS within 60 calendar days, and the letter properly described the entity’s current ownership structure, then as long as the entity maintains that structure, it will be considered to have satisfied the 50% ownership test.

In terms of documenting an eligible organization’s intent to avail itself of an accommodation, the organization’s highest governing body (such as its board of directors, board of trustees, or owners, if managed directly by the owners) must adopt a resolution (or take other similar action consistent with the organization’s applicable rules of governance and with state law) establishing that the organization objects to covering some or all of the contraceptive services on account of its owners’ sincerely held religious beliefs.

The final regulations generally rely on current notice and disclosure standards and do not establish any additional requirements to disclose the decision. Current standards require that, for each plan year to which the accommodation applies, an issuer or TPA that is required to provide coverage for contraceptive services, provide to participants written notice of the availability of separate payments for these services contemporaneous with (to the extent possible), but separate from, any application materials distributed in connection with enrollment or re-enrollment in health coverage. Model language for this notice is provided in the regulations.

Lastly, the regulations do not require eligible organizations to operate in a manner consistent with religious principles or “hold themselves out” as religious organizations. The Supreme Court’s decision in Hobby Lobby discussed the application of the Religious Freedom Restoration Act (“RFRA”) in connection with the religious beliefs of the owners of a closely held corporation. The Final Regulations likewise focus on the religious exercise of the owners of the closely held entity and provide that the entity, in advancing the religious objection, represent that it does so on the basis of the religious beliefs of the owners. The Agencies do not require that the entity itself demonstrate by its bylaws, mission statement, or other documents or practices that it has a religious character.

Eligible employers that wish to consider opting out of providing coverage for some or all contraceptive services should consult with their insurance broker or employee benefits attorney to ensure that they meet the requirements for an accommodation and document their intent accordingly.

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