Final disability and genetic nondiscrimination rules issued May 16 by the Equal Employment Opportunity Commission (EEOC) clarify how employer-sponsored wellness programs can condition incentives on an employee's or a spouse's undergoing a medical exam or disclosing details about current or past health status in response to disability-related inquiries. The rules, effective as of the first day of the plan year beginning in 2017, retain largely the same requirements as the original proposals, but the EEOC has clarified that the new rules apply to all employer-sponsored wellness programs — whether tied to or independent of any group health plan — that include medical exams or disability-related inquiries. EEOC continues to assert that employer wellness programs must satisfy these rules and cannot rely on the Americans with Disability Act’s statutory safe harbor for insurance underwriting and risk practices of benefit plans.
On May 13, the Department of Health and Human Services (HHS) published final ACA “Section 1557” nondiscrimination regulations. The rules give group health plans and insurers until the first plan or policy year starting on or after Jan. 1, 2017, to bring benefit designs into compliance. ACA Section 1557 broadly prohibits age, race, sex, disability, and national origin discrimination in any health program or activity that receives federal financial assistance. While that definition generally applies to organizations such as hospitals and health systems, even employer-sponsored plans that don't receive federal financial assistance may feel the impact if their insurer or third-party administrator has other health programs or activities that receive federal funds, such as public exchange subsidies.
Treasury payments to insurers — to cover reduced cost sharing available under the ACA to some individuals with health insurance from a public exchange — aren’t proper because Congress didn’t appropriate funds for that purpose, a District of Columbia federal district court has ruled (US House of Reps. v. Burwell). But Treasury can continue the payments until an appellate decision is reached, which will take some time. The lawsuit doesn't involve premium tax credits, which can trigger employer shared-responsibility assessments. While the lawsuit's final outcome is uncertain, an eventual House Republican victory could lead to higher exchange premiums and reduced enrollments, and may prompt some insurers to exit the public exchanges. Employers whose ACA strategies rely on the public exchanges will want to follow developments in the suit.
A group of employers urged White House officials at a recent meeting to alter HHS's proposed insurance nondiscrimination rules under ACA Section 1557 as it undergoes final review. Section 1557 prohibits age, race, sex, disability, and national origin discrimination in any health program or activity that receives federal financial assistance. However, the proposed rules suggest that all operations -- not just ones receiving federal funds -- of any covered organization must comply with these nondiscrimination standards. This could subject some employer health plans and their third-party administrators to the rules.
The latest set of ACA implementation FAQs tackle a variety of coverage, cost-sharing, and disclosure issues and give new details on parity testing under the Mental Health Parity and Addiction Equity Act.
The HHS Office for Civil Rights has launched Phase 2 of its audit program aimed at ensuring compliance with HIPAA privacy, security, and breach notice rules. Covered entities and business associates should be alert for audit notices via email.
A group of employees can proceed with a lawsuit claiming their employer violated ERISA by reducing their work hours to avoid liability under the ACA, a federal court has ordered (Marin v. Dave & Buster's Inc.) This is the first lawsuit to consider whether workforce changes allegedly initiated to limit an employer's anticipated ACA costs unlawfully interfere with affected employees' eligibility for benefits under an ERISA plan. Although the court has yet to decide the ERISA claims, its refusal to dismiss the lawsuit shows that employers should carefully approach workforce changes that negatively affect employees' access to group health plans.
The current employee tax exclusion for employer-provided health benefits came under scrutiny by lawmakers at an April 14 hearing held by the House Ways and Means Committee. Hearing witnesses included experts who argued that capping the employee income tax exclusion and providing universal tax credits would help to raise workforce wages, among other advantages. But a third witness warned that capping or ending the tax exclusion would undermine employer-sponsored coverage by removing a key incentive for employers to offer health plans, and break up employer risk pools that now include participation by younger, healthier workers.
The hearing comes as a House Republican task force continues work on developing an alternative to the Affordable Care Act (including repeal of the law’s “Cadillac” excise tax on high-cost plans). The task force is considering proposals that would cap or end the employee tax exclusion, using the resulting revenue to establish income tax credits or a standard deduction for the purchase of health insurance.
Recent Labor Department guidance clarifies how the ACA interacts with the Service Contract and Davis-Bacon Acts, which require government contract workers to receive prevailing local wages and fringe benefits. The new memorandum to federal contracting agencies addresses several questions, including that employers paying an employer shared responsibility assessment can’t credit that amount against their Service Contract Act or similar obligations.
Just-released Department of Labor final regulations treat a wider range of investment recommendations -- including HSAs, Archer MSAs, and Coverdell education savings accounts -- as fiduciary investment advice. The regulations exempt health, disability, and term life insurance policies that do not include an investment component. The new rule sets aside 40-year-old regulations that DOL believes fail to protect participants from investment advice skewed by undisclosed conflicts of interest.
Medicare Advantage plans will see an average rate increase of 0.85% in the final rate notice released April 4, which is slightly lower than the increase proposed by the Center for Medicare and Medicaid Services (CMS) in February. For employer group waiver (EGWP) plans, CMS intends to move forward with its proposal to link employer plan payments to individual market bids and will provide a two-year transition for employer-sponsored plans.
On Capitol Hill, a House Republican Health Care Reform Task Force is developing a plan to repeal and replace the ACA. The plan is expected to include a proposal to cap or eliminate the employee tax exclusion for employer-provided coverage to help pay for new tax credits to help individuals buy health insurance. The House Ways and Means Committee will hold an April 14th hearing on taxes and health care.
In a recent report to Congress on the Mental Health Parity and Addiction Equity Act, the Department of Labor summarizes the law’s requirements, its impact, and plan compliance issues. The report also outlines common violations of the law involving mental health and substance use disorder benefits that aren’t imposed for medical/surgical benefits. The ACA broadened the scope of the Act, requiring individual and small-group plans to provide essential health benefits in compliance with its provisions.
In addition, lawmakers are considering how to improve access to and broaden the scope of mental health and substance use disorder services and benefits. Congress is now debating legislation to improve the behavioral health care delivery system and better integrate it with the provision of medical care. While this legislation does not include new coverage mandates for employer-sponsored health plans, a leading bipartisan Senate bill would increase pressure on federal agencies to enforce mental health parity requirements and provide more useful guidance on nonquantitative treatment limits and other topics.
The Expatriate Health Coverage Clarification Act (EHCCA) and certain transition guidance excuse qualifying expatriate plans and their sponsoring employers from many Affordable Care Act (ACA) requirements. However, as reported last year, neither EHCCA nor the transition guidance exempt expatriate plans or policies from the ACA's minimum essential coverage (MEC) or employer shared-responsibility (ESR) reporting obligations.
Even employers sponsoring coverage that isn't subject to any US laws may have an interest in voluntarily reporting MEC in some cases. The MEC and ESR deadlines for the 2015 calendar year range from March 31 to June 30, 2016, for distributing completed forms to individuals and filing related information with the IRS.
To provide the Affordable Care Act's summary of benefits and coverage (SBC), health plans will have an updated final template and related materials to use beginning with open-enrollment periods after March 31, 2017, according to a new triagency FAQ. This means calendar-year group health plans will use the new SBC materials during fall 2017 open enrollment for the 2018 plan year.
The latest proposed SBC materials, issued for public comment last month, incorporate some modifications to the current models. The new FAQ says regulators plan to review feedback and "expeditiously" finalize the updates once the comment period closes March 28. The new SBC materials will apply for the first annual open-enrollment period starting on or after April 1, 2017, for a plan year beginning on or after that date. Plans that don't hold annual open enrollment will have to use the revised SBC materials starting with the first plan year that begins on or after April 1, 2017.
The Department of Health and Human Services (HHS) issued wide-ranging final marketplace rules on Monday that set key guidelines for 2017 exchange health plans and contain some changes affecting large-employer plans. These changes include 2017 cost-sharing limits, new rules regarding HHS audits of reinsurance fee payments, updated essential health benefit standards, and clarification of the public exchange process for notifying employers if a worker is eligible for a federal subsidy.
For individual and small-group plans, the rules focus on market rating rules and definitions, and separate guidance again extends the administration's transitional policy exempting nongrandfathered individual and small-group policies from certain ACA standards, if state law allows. HHS has also finalized some network adequacy standards for the federal exchange. HHS backed off on an earlier proposal to impose federal network adequacy standards on states that are not deemed to have sufficiently strict regulations. The guidance also addresses renewability of large-group insurance coverage and expands employee choice for federal Small Business Health Options Program (SHOP) exchange plans. Student health coverage is also addressed in the guidance.
Employers can also now review recent proposed updates by the Department of Labor to the template used to prepare the summaries of benefits and coverage required by the ACA. Although described as proposed, the new models may apply to this fall's open enrollment for the 2017 plan year. Clarification on the effective date is needed.
In the courts, the Supreme Court has ruled that ERISA pre-empts Vermont's all-payer claims reporting mandate, and a federal district court held that a Wisconsin employer can condition its self-insured group health plan eligibility on whether an employee completes a health risk assessment and biometric screening.
Donald Trump unveiled a raft of new health care policy proposals Wednesday after facing criticism for failing to provide a credible plan for replacing the ACA. In addition to the proposals laid out on his website, Trump wants to keep the ACA’s prohibition on insurers denying coverage to individuals with pre-existing medical conditions, repeal the individual mandate, and expand tax benefits for health savings accounts.
New IRS guidance on health flexible spending arrangements (FSAs) addresses what COBRA rights and employer constraints may apply to carryovers. The Q&As are effective for plan years starting after Dec. 16, 2015 (Jan. 1, 2016, for calendar-year plans), although employers may rely on this guidance for earlier periods. Employers that permit health FSA carryovers should work with vendors to consider compliance issues, and some also may want to take advantage of the new permitted carryover restrictions.
A college or university that subsidizes health insurance premiums for student workers has until 2017 to ensure these arrangements do not violate the ACA, according to new triagency guidance.
Updated HHS guidelines set the 2016 federal poverty line (FPL) at $11,880 -- up $110 from 2015 -- for a person living in the mainland US. The 2016 FPL is set at $13,670 for someone living in Hawaii and at $14,840 in Alaska. Employers can use the FPL under one ACA employer shared responsibility safe harbor to test whether their coverage is “affordable” to employees. Which year’s FPL can be applied depends on the plan year of the arrangement tested.
President Obama introduced his budget plan for fiscal 2017 on Feb. 9, which includes new proposals to increase the thresholds for the ACA’s “Cadillac tax” in high-cost states, make it easier for employers with flexible spending arrangements to calculate the tax, and entice more states to expand Medicaid. The proposals aren’t expected to gain traction in Congress, where Republicans are drafting their own budget plans.
Federal agencies released several notable pieces of guidance impacting employers in the last days of 2015. The ACA’s upcoming deadlines are now delayed for reporting minimum essential coverage and employer shared responsibility; the new due dates give employers nearly two extra months -- until March 31 -- to distribute information statements to individuals and three extra months -- until June 30 for many employers -- to submit transmittals to IRS with related data.
Regulators also offered new details affecting the integration of family HRAs with other group health plans; the impact of opt-out payments and flex credits on the affordability of employer-offered health coverage; permitted design options and COBRA administration of health flexible spending arrangements (FSAs) with carryovers; and gave specifics for determining employer shared responsibility status of employees with paid leaves and breaks in service.
In addition, the IRS expanded tax-free treatment for identity-theft benefits and explained how eligible taxpayers can claim the Trade Adjustment Assistance program's health coverage tax credit for 2014 and 2015, as well as the interaction of the credit with the premium tax credits available to help individuals buy public insurance exchange coverage.
The 114th Congress begins its second session this week with the House passing a bill cleared by the Senate last month (HR 3762) that would dismantle the ACA. The White House has promised a veto, making the vote largely symbolic, but Republicans see political benefit to forcing President Obama to defend the law and showing voters what could be accomplished with a GOP-led Congress and a Republican president. The bill would repeal many of the law’s taxes -- including the “Cadillac” tax on high-cost health plans -- and remove the penalties used to enforce the law’s individual mandate and employer play-or-play rules. A two-year delay in the Cadillac tax was signed into law Dec. 18 as part of a year-end appropriations and tax package.
Long-awaited 2016 spending and tax bills teed up for final House and Senate votes within days would postpone the Affordable Care Act’s (ACA) “Cadillac” tax on high-cost health plans to 2020, make this levy deductible to employers, and mandate a study of suitable benchmarks to use for age and gender adjustments to the limits triggering the tax. Other changes would provide a one-year moratorium on ACA’s annual fee on health insurers' net premiums (for US risks) and a two-year halt to the tax on sales of medical devices.
The spending bill also seeks to maintain budget neutrality by prohibiting the Centers for Medicare and Medicaid Services from using certain program funding to cover ACA’s “risk corridor” payments to insurers in the individual and small-group markets. The provision is similar to last year's budget deal that led to a funding shortfall for the program in 2015, and payments are likely to come up short again next year.
The excise tax delay was included in one of two bills unveiled late December 15 and early December 16 after private negotiations between congressional leaders from both parties and the White House. While some political snags could lie ahead, the delay is expected to clear Congress and get signed into law by the president within the next several days.