New Covid Legislation to provide COBRA subsidies

One of the more pertinent provisions in ARPA is the impact it has on COBRA subsidies moving forward. The legislation offers federal subsidies for COBRA premiums at 100 percent coverage. These subsidies apply from April 1 to September 30, but they are not retroactive.

Organizations will be required to cover the monthly premium expense but will be able to reimburse these expenses through a quarterly credit against payroll taxes. If the overall amount an employer pays for subsidized coverage is greater than its quarterly tax liability, it may claim a refund. One major component of this subsidization that sets it apart from a normal COBRA-election period is that it allows qualified individuals to make a prospective COBRA election for the period beginning April 1 without requiring payment of premiums retroactive to the original loss of coverage.

In regards to eligibility, any employee who lost health coverage for qualifying reasons between November 1, 2019, and September 31, 2021, could take advantage of COBRA subsidies. More specifically, these subsidies will be available to any previously covered employee or family member who may have lost coverage due to involuntary termination or reduction of hours and are still within their 18-month eligibility period. Any individual who loses their job from now until September will be able to instantly elect to stay on their employer’s health plan. However, as previously mentioned, an individual is only eligible if their termination was involuntary. It is also available to those who did not elect COBRA when initially eligible, or anyone who elected but subsequently dropped coverage. 

Subsidized coverage will terminate if the qualified individual exhausts the 18-month COBRA period prior to September 30. It could also end if the individual becomes eligible for coverage under another group health plan during the subsidy period or becomes eligible for Medicare. Additionally, since COBRA-election deadlines were already extended as a result of the pandemic, many individuals are still within their original COBRA-election periods. 

Those who are eligible under these parameters can sign up during a 60-day SEP beginning April 1. Plan administrators will be required to amend existing COBRA notices and share a separate document with forms necessary for the employee to establish eligibility, but they must act quickly due to the relatively short timeframe. For efficacy’s sake, organizations should begin identifying potentially eligible employees as soon as possible.

Several details of the rollout of this will be decided in regulatory guidance from the relevant federal agencies. We anticipate this federal guidance to include precisely how to set up these provisions, likely prior to the implementation date of April 1. Specifically, the Treasury Department may permit an advance credit for employers, while the Department of Labor is expected to issue model COBRA notices addressing the subsidy.  

Excerpt from NAHU Article dated March 12, 2021

Sign-ups for Biden's Obamacare special enrollment period nearly triple

 More than 206,000 people signed up for Affordable Care Act policies on the federal exchange in the first two weeks of the special enrollment period ordered by President Joe Biden, federal data released Wednesday shows.

Uninsured Americans who want to buy 2021 coverage on healthcare.gov could start doing so on February 15, thanks to an executive order Biden signed in January. Special enrollment runs until May 15. Most states that operate their own marketplaces are also extending their enrollment seasons.

"These numbers are an encouraging sign — but we can't slow down until every American has the security and peace of mind that quality, affordable health coverage provides," Biden said.

Typically, signing up for coverage outside of the traditional enrollment period in the fall is restricted to those who lose their job-based policies or have a change in status, such as a divorce. Last year, only 76,000 people picked Obamacare plans during the second half of February, according to the Centers for Medicare and Medicaid Services, which runs the federal exchange.

Excerpt from article By Tami Luhby / CNN

Congress Repeals the Cadillac Tax and Health Insurance Tax

Congress overwhelmingly passed an end-of-year spending bill and a companion tax extenders measure that contain several agenda items, including full repeal of the so-called Cadillac tax on high-cost health plans. The SECURE Act, a measure to promote savings by easing compliance burdens on defined-contribution and defined-benefit retirement plans, was attached to the appropriations bill.

E-Verify also was extended for another year, along with other workplace-immigration programs.

The House approved these measures on Dec. 17 and Senate passage followed two days later. President Donald Trump is expected to sign the bills into law.

Some of the items in the package that were previously passed by the House were consolidated in the new bills to facilitate the Senate's consideration and approval.


'Cadillac Tax' Repeal

The spending bill includes full repeal of the so-called Cadillac tax on high-cost health plans, which the House passed in July but the Senate had yet to consider. The spending bill also repeals two other Affordable Care Act (ACA) taxes not paid directly by employers: the health insurance tax (HIT) on fully insured health plans and the ACA's tax on medical devices.

The Cadillac tax, included in the ACA but delayed several times from taking effect, is a 40 percent excise tax on the cost of employer health plans in excess of annual cost thresholds. While the excise tax was intended to target high-value plans, without repeal "modest plans will also be impacted, meaning millions of Americans and their families could face higher co-pays and deductibles, causing some to decline employer-provided health care," wrote Johnny C. Taylor, Jr., SHRM-SCP, president and CEO of SHRM, in a letter sent in July to Congress.

Neil Bradley, chief policy officer at the U.S. Chamber of Commerce, commended congressional leaders for "setting the stage for permanently repealing the Cadillac tax, the HIT and the [medical device tax], which would finally put an end to the higher health costs that come from the taxes and would improve access to more affordable coverage."

AHIP, a national association of health insurers, said that because insurers passed along the cost of the HIT to employers in the form of higher premiums, "families in the small-employer market could see their premiums go up an additional $7,000 over the next 10 years because of this tax," absent repeal.

HR consultancy Mercer noted: "By axing the ACA's Cadillac, health insurance (repealed effective 2021) and medical device (repealed effective 2020) taxes, the spending package removes nearly all of the law's major funding provisions, except the employer shared-responsibility assessments."

Excerpt from Stephen Miller, CEBSDecember 19, 2019

New Overtime Rule Raises Salary Cut-Off to $35,568

Employees who make less than $35,568 are now eligible for overtime pay under a final rule issued today by the U.S. Department of Labor (DOL). The new rate will take effect Jan. 1, 2020. To be exempt from overtime under the federal Fair Labor Standards Act, employees must be paid a salary of at least the threshold amount and meet certain duties tests. If they are paid less or do not meet the tests, they must be paid 1 1/2 times their regular hourly rate for hours worked in excess of 40 in a workweek. The new rule will raise the salary threshold to $684 a week ($35,568 annualized) from $455 a week ($23,660 annualized). A blocked Obama-era rule would have doubled the threshold, but a federal judge held that the DOL exceeded its authority by raising the rate too high. The new rule is expected to prompt employers to reclassify more than a million currently exempt workers to nonexempt status and raise pay for others above the new threshold. excerpt from SHRM article dated 9/24/19

PREVENTATIVE CARE BENEFITS ENHANCED FOR HSA PARTICIPANTS

The Internal Revenue Service (IRS) has issued a notice that expands preventative care benefits for high deductible health plans.  Prior to this notice, care and services for an existing or chronic condition were not included as preventative. The IRS and the Department of Health and Human Services (HHS) determined that certain medical care services received and items purchased, including prescription drugs for certain chronic conditions, should be classified as preventative care.

These medical services and items are limited to the specific medical care services or items listed for the associated chronic conditions specified in Notice 2019-45. The treasury has noted that each medical service, when prescribed for an individual with the related chronic condition, should be characterized by the following:

• The service or item is low-cost.
• There is medical evidence supporting high-cost efficiency (a large expected impact) of preventing exacerbation of the chronic condition or the development of a secondary condition.
• There is a strong likelihood, documented by clinical evidence, that with respect to the class of individuals prescribed the item or service, the specific service or use of the item will prevent the exacerbation of the chronic condition or the development of a secondary condition that requires significantly higher-cost treatments.

Any medical care previously recognized as preventive care for these rules is still treated as preventive care.

From BenefitMall August 7, 2019

House Passes Health Care 'Cadillac Tax' Repeal Bill

The U.S. House of Representatives voted on July 17 to abolish the so-called "Cadillac tax" on employer-sponsored high-value health plans, set to take effect in 2022. If the Senate passes the measure and the president signs it into law, the threat employers have faced from the tax would disappear.

The Cadillac tax, part of the Affordable Care Act (ACA) passed in 2010, is a 40 percent excise tax on the cost of employer health plans in excess of annual cost thresholds. It was intended to help generate tax revenue to help fund the ACA's subsidies for marketplace plans.

The tax, originally intended to take effect in 2018, was delayed twice by Congress and is now scheduled to go into effect in 2022. It is calculated based on: the costs of plan premiums (whether employer- or employee-paid and whether the plan is fully insured or self-funded); employer contributions and employee-elected payroll deductions to health savings accounts and flexible spending accounts; employer contributions to health reimbursement arrangements; the cost of group wellness programs; the value of coverage in onsite medical clinics; and certain other health benefits.  As currently projected: If the average plan cost to cover employees and dependents is more than $11,200 for individual coverage and $30,150 for family coverage, employers would pay the tax on plan costs for each covered person above these threshold amounts. 

"The House action to repeal the Cadillac tax is welcome news for both employers and employees," said Brian Marcotte, president and CEO of the National Business Group on Health. "Any tax that raises the cost of health benefits will harm the millions of working Americans and their families who rely on and value employer-sponsored health coverage.”

The Cadillac tax also has supporters. The tax "has a strong policy rationale: It will help slow health care cost growth," wrote Paul N. Van de Water, a senior fellow at the nonprofit Center for Budget and Policy Priorities, which advocates for sound fiscal policy.

Excerpt from SHRM Article dated 7-17-19 by Stephen Miller, CEBS

FINAL RULE RELEASED ON HRA'S

On June 13, 2019, the Departments of Labor, Health & Human Services and Treasury released final rules concerning Health Reimbursement Arrangements (HRAs).  The 497-page rule includes the creation of two new types of HRAs, the "Individual Coverage HRA” and the "Excepted Benefit HRA."

Advantages of the Individual Coverage HRA include, but are not limited to:

• Funds can be used to reimburse the employee's premiums for an individual health insurance policy.
• Reimbursements made to employees do not count towards the employee's taxable wages.
• The employer can choose to roll-over unused amounts into the following year.
• Coverage can be offered to different classes of employees (e.g.; full-time, part-time, seasonal, salaried, hourly)
• An offer of the Individual Coverage HRA represents an "offer of coverage" under the employer mandate, however, contributions must meet affordability guidelines. The IRS will release further guidelines regarding this later.

The Individual Coverage HRA also comes with restrictions and regulations including but not limited to:

• An offer of an Individual Coverage HRA cannot be made to any employee that is offered a traditional group health plan.
• If an offer of coverage is made to a class of employees, there is a minimum class size that is required. Size is typically 10% of that specific class of employees. For example, if an employer has 200 employees, a minimum of 20 employees would have to be in a specified class.
• Contributions can be in any amount that the employer chooses, but contributions must be consistent for all employees in a specified class.
• The employer must provide notice of the Individual Coverage HRA to employees.
• The employer must be able to substantiate that the employee is enrolled in an individual plan or Medicare (model notices are available).
• The employer must notify employees on an annual basis that the individual health insurance is NOT subject to ERISA.

The final rule also created the "Excepted Benefit HRA" which, starting in January of 2020, will permit employers to finance additional medical care. Employees can use the HRA without having to be enrolled in the group's traditional health plan.

The requirements associated with the "Excepted Benefit HRA" include, but are not limited to:

• The annual contribution is capped at $1,800.
• It must be offered in conjunction with a group health plan, but there is no requirement for the employee to enroll in that plan.
• The "Excepted Benefit HRA" cannot be used to fund group health or Medicare premiums.
• It can fund premiums for dental, vision, or short-term limited duration insurance.

Employers who want to offer the "Individual Coverage HRA" for January 1, 2020, can do so but employees will need to enroll in an individual plan during the 2019 open enrollment period (November 1, 2019 - December 15, 2019).

From Benefitmall, June 20, 2019

Carefirst Blue Rewards

It's not very often that you have chance to earn money back from your health care insurer.  Carefirst offers Blue Rewards and a way to do just that.

Blue Rewards-Health Incentive-From $100 to $175.  Financial Reward for

taking a more active role in your health.  Three Steps:

1)  Select a Patient-Centered Medical Home (PCMH) PCP and complete health screening with PCP or CVS Minute Clinic ($100)

2)  Answer on-line RealAge health assessment questions and consent to receive emails ($50)

3)  Re-Take the RealAge assessment after 6 months if you already  completed once during step 1. ($25)

Incentives are no longer result based.  All active employees on a Carefirst Medical Plan should participate as this is free money!  Additional incentives available for participation in health coaching.   The first two steps must be complete within 120 days of the plans effective date.  To get started you or your employees can visit: www.carefirst.com/sharecare.

UnitedHealth Group to Pass Drug Maker Rebates to Employer Customers

UnitedHealth Group and its pharmacy benefit manager, OptumRx, are expanding a new program that passes along pharmacy discounts they get from drug manufacturer rebates to all new employer customers.

The program will be for "all new employer-sponsored plans," taking effect Jan. 1, 2020, UnitedHealth and OptumRx said Tuesday. The effort builds on a program that began Jan. 1 of this year for people enrolled in UnitedHealthcare “fully insured commercial group benefit plans" who now have discounts applied when they fill their prescriptions at the retail pharmacy or through home delivery.

It’s the latest effort by health insurers and pharmacy benefit managers (PBMs) to pass along more prescription drug savings to customers in the face of intense criticism from employers, Congress and the Trump administration. The PBM’s share of rebates, which is the portion of the drug returned by the seller to the buyer, has turned into a nationwide controversy.

Rivals of UnitedHealth Group and OptumRx are also changing their business practices. Last year, for example, CVS Health, which owns the Caremark PBM and the health insurer Aetna, launched a “guaranteed net cost” pricing model that the company says returns 100% of drug rebates to its clients for better “predictability and pricing simplicity,” CVS executives said in December. And other PBMs like Cigna's Express Scripts subsidiary, have introduced programs with point-of-sale rebates for their clients.  

UnitedHealthcare and OptumRx said they “will only support new employer clients that incorporate point-of-sale discounts to consumers as part of their plan design” for new business proposals they receive for 2020. They expect the effort to save employers and health plan customers money, saying the “existing program has already lowered prescription drug costs for consumers by an average of $130 per eligible prescription.”

Excerpt from Forbes, Bruce Japsen 3-12-19

New HRA rules could allow businesses to circumvent ACA's employer mandate

Currently it is a violation of the ACA for large employers to allow health reimbursement arrangements to be used to help pay workers’ premiums instead of providing group health insurance. Under the ACA, large employers must offer affordable minimum essential coverage to 95 percent of employees in order to avoid penalties.

“Under current ACA rules there is a blanket prohibition, which a lot of employers in the under-200 employee market were bummed about. They would rather have a defined-contribution approach,” Welle said. 

The Trump administration under Executive Order 13813, issued in October 2017, proposed expanding the defined-contribution approach to employer health insurance coverage as part of an overall plan to repeal and/or replace the ACA and promote competition in U.S. health care. The proposals also included allowing association health plans and limited-duration, limited-benefit health plans. While legislation overturning the ACA seems dead, some rule-making continues.

Under the proposed HRA rules, employers generally would have to contribute a fixed amount into each individual HRA sufficient that any remaining premiums the employee would have to pay wouldn’t exceed a percentage of his or her household income to be considered affordable under the employer mandate, in order to avoid penalties, Welle said.

If finalized, the new rules wouldn’t take effect until Jan. 1, 2020, at the earliest. Welle said he believes that most large employers in the interim would probably continue to offer group health plans because they provide employers with a valuable recruitment incentive. In the latest statistics from Kaiser Family Foundation, roughly 16 million Americans were enrolled in the ACA marketplace or a Basic Health Program.

“But in the future, I see employers in the range of 50 to 200 employees who are burdened by the administrative responsibilities and the cost of administering health plans say this is a way they can do something for their employees but off-load some of the responsibilities. It is still developing and there is nothing to hang their hats on yet, but in 2021 or 2022 I can see the [smaller ones] saying this might be a good solution for us,” Welle said.

Pressly said the employers who right now are most interested in this are those with 50 to 100 workers and those who employ lots of part-time workers, as this could be a solution for providing coverage for them.  

But for larger employers, he said, “it looks really appealing but the way the rules are written if you roll it out for one class of employees, you will have to push it to all employees in that class and the benefits vary wildly from state to state.”

Employers and employees might not fully grasp all the differences between the individual health insurance marketplaces in the states and its limitations, and employer-sponsored group health insurance coverage, Pressly said. Resistance could arise when top executives accustomed to group health plans’ flexibility and coverage for expensive procedures such as in vitro fertilization encounter the limitations of many individual health insurance plans, including differences in what states require them to provide, he said.

In 2017, only 7 percent of the total U.S. population were in non group health insurance and 49 percent received employer-provided insurance. A combined 35 percent were on Medicaid or Medicare; 1 percent were on some other public plan and 9 percent were uninsured, according to the Kaiser.

Pressly said, “This goes hand-in-hand with state insurance markets and you really need to understand what that is, the cost and the coverage that is available to know what the ultimate employee experience is going to look like.”

Excerpt By:By MP McQueen | January 28, 2019 at 10:58 AM 

IRS Extends 2018 Reporting Due Dates for 1095 Forms Sent to Individuals

December 3, 2018

On Nov. 29, 2018, the Internal Revenue Service (IRS) announced extended deadlines for 2018 Minimum Essential Coverage (Section 6055) and Large Employer Shared Responsibility (Section 6056) reporting due to individuals in early 2019. The extended deadlines are as follows:

2018 Forms Sent to Individuals	Original Deadline	Extended Deadline
Form 1095-B Form 1095-C	1/31/2019	3/4/2019

Employers and insurers are encouraged to provide the forms to individuals as soon as possible, but no later than March 4, 2019. Individuals who file their 2018 federal income tax returns before receiving their 1095-B and 1095-C forms will not be required to amend their income tax returns once they receive their forms. They should keep their forms, once received, with their tax records.

It is important to note the IRS has not extended the due date for filing 2018 Forms 1094-B, 1095-B, 1094-C, or 1095-C with the IRS. The deadline remains February 28, 2019, for those with 250 or fewer forms filing by paper, or April 1, 2019, if filing electronically.

The IRS also extended its transition relief with respect to penalties if good faith efforts are made to comply with information reporting requirements.  Read the IRS notice on reporting extensions

Excerpt from Cigna Health Plan

Note: Employers with less than Full Time Equivalent employees and fully-insured, the carrier will take care of this filing.

Medicare Eligible Beware: COBRA Is Dangerous When Electing Part B

Caution

Advocates have seen an increase in the number of Medicare beneficiaries who have delayed enrolling in Medicare Part B, thinking, erroneously, that because they are paying for and receiving continued health coverage under COBRA, they do not have to enroll in Medicare Part B. COBRA-qualified beneficiaries who have delayed enrollment in Medicare Part B do not qualify for a special enrollment period (SEP) to enroll in Part B after their COBRA coverage ends. (They may, however, qualify for a SEP to enroll in Part D at that time if the drug coverage they had under COBRA constitutes creditable coverage.) Only individuals who delay enrolling in Part B because they are covered under an employee group health plan (EGHP) by reason of "current" employment may take advantage of the SEP rules. Individuals on COBRA do not meet the definition of having current employment status.

Consequences

Medicare Part B – The consequences of delayed Part B enrollment can be severe.  Generally, the beneficiary who does not enroll during his or her initial enrollment period and who is not entitled to a SEP must wait to enroll in the next general enrollment period (January – March), with benefits starting on July 1 of that year. Further, there is a 10% late enrollment penalty added to the standard monthly premium for every 12 months of delayed enrollment in Part B. The penalty has no durational limit.

Under Part D, the penalty is 1% of the national base beneficiary premium in a given year times the number of full, uncovered months of eligibility without other creditable drug coverage. A Part D eligible individual must pay the late penalty if there is a continuous period of 63 days or longer at any time after the end of the individual's initial enrollment period during which the individual meets all of the following conditions: (1) The individual was eligible to enroll in a Part D plan; (2) The individual was not covered under any creditable prescription drug coverage; and (3) The individual was not enrolled in a Part D plan.

from Center of Medicare Advocacy

Medicare Part D Creditable Coverage Certificates to Employees

It is that time of the year again when the annual Notice of Creditable Coverage as required under Medicare Part D must be distributed by Employers. The notice informs participants if the prescription drug coverage offered under the Employer's group health plan is considered "creditable" or "non-creditable" coverage. Employers who sponsor a health plan that includes prescription drug benefits must provide the annual notice to all Medicare-eligible participants. The notice will explain whether or not the prescription drug benefits offered under the group health plan are at least as good as the benefits offered under the Medicare Part D plan. The Notice of Credible Coverage must be provided: At least once a year before October 15th (the start of the annual Medicare Part D enrollment period which is from October 15th through December 7th for 2019). Whenever a Medicare-eligible employee, spouse or dependent enrolls in the employer's health plan (including Medicare eligible COBRA individuals and their dependents; Medicare eligible disabled individuals covered under the group health plan's prescription drug plan and any retirees and their dependents). Whenever there is a change in the creditable or non-creditable status of the employer's health plan prescription drug coverage. Whenever an individual requests the notice. CMS (The Centers for Medicare and Medicaid Services) has posted forms and instructions for providing this notice. Forms are available in English and Spanish. To access more information on this subject, please click on the link below: https://www.cms.gov/CreditableCoverage/ To access the notices, please click on the link below: https://www.cms.gov/Medicare/Prescription-Drug-Coverage/CreditableCoverage/CCDisclosureForm.html

Important Note for Employers! Employers must provide a disclosure to CMS on an annual basis, via an online form, reporting whether their prescription drug coverage is creditable or non-creditable. CMS requires that the disclosure be provided within: 60 days after the beginning date of the Plan Year for which the entity is providing the Disclosure to CMS Form; 30 days after the termination of the prescription drug plan; and 30 days after any change in the creditable coverage status of the prescription drug plan. Information regarding the Employer's Disclosure to CMS can be found by clicking on the link below: https://www.cms.gov/medicare/prescription-drug-coverage/creditablecoverage/ccdisclosureform.html

House Passes Bill Enhancing HSA's

H.R. 6311, renamed the Increasing Access to Lower Premium Plans and Expanding Health Savings Accounts Act and passed 242-176, would allow the ACA's premium tax credit for low and moderate earners to be applied when buying lower-premium, "catastrophic" copper plans; let people over age 30 buy copper plans; and allow copper and bronze-level individual and small-group market plans to qualify for HSA contributions. The bill also would make these modifications to tax-advantaged accounts:

• Raise HSA contributions to $6,650 for individuals and $13,300 for families, which is the combined annual limit on out-of-pocket and deductible expenses under an HSA-qualified insurance plan in 2018. Currently, for 2018, HSA contribution limits are $3,450 for individuals and $6,900 for those covered under family medical plans.

• Permit HSAs to pay for qualified medical expenses as of the start of HDHP coverage if the accounts are opened within 60 days after coverage under a HDHP begins.

• Allow working seniors participating in Medicare Part A and covered by a qualifying HDHP to contribute to an HSA.

• Permit spouses over the age of 55 to make an annual catch-up contribution (an extra $1,000) to an HSA that's linked to a health plan providing family coverage. Currently, only the account holder can make an annual catch-up contribution.

• At an employer's discretion, allow employees with an FSA or a health reimbursement arrangement (HRA) who enroll in a qualifying high-deductible health plan with an HSA to transfer balances from their FSA or HRA to the HSA. Transfers would be capped at $2,650 for individuals and $5,300 for families.

• Permit health FSA balances to be carried over to the following plan year. This rollover could not exceed three times the annual FSA contribution limit.

Excerpt from SHRM Article Dated 7-27-18 by Stephen Miller, CEBS

Congress Eliminates the Insurer Tax for 2019 but Maryland Adds It Back

Lawmakers pass bill to generate $380 million with a 2019 tax on insurers

In April 2018, Gov. Hogan also signed SB387/HB1782 which will implement a 2.75 percent tax on insurers in the state in 2019. The fee will apply to insurers in all markets (ie, not just the individual market), including Medicaid managed care insurers, and will be used, in part, to provide the state’s portion of the funding for the reinsurance program. The ACA implemented a similar fee at the federal level, although there was a moratorium on the fee in 2017. The fee does apply in 2018, but in January 2018, Congress imposed another moratorium on collection of the fee for 2019. So the idea behind SB387 is to recoup the money that insurers would have otherwise paid if Congress hadn’t suspended the provider fee for 2019.
The measure is expected to generate $380 million ($365 million, according to the state’s draft 1332 waiver) for the Maryland Health Benefit Exchange fund. The money will be used to lower premiums, but it’s only a temporary fix, described as “a Band-Aid” by Senator Thomas Middleton, who sponsored the legislation.
Using the money generated from the insurer fee, the exchange will establish and oversee a “health care access program” that will be “designed to mitigate the impact of high-risk individuals on rates for health benefit plans in the individual market in the state, both inside and outside the exchange.” The money will be used to provide reinsurance and additional premium subsidies, contingent on approval of a 1332 waiver from the federal government.
SB387/HB1782 also limits short-term plans to no more than three months in duration, and prevents them from being renewed at the end of the policy term. The federal government has proposed regulatory reforms that would return to the definition of short-term plans that was used before 2017 (ie, a plan that lasts no more than 364 days). But states can implement more restrictive rules. State-based restrictions on short-term plans will be especially important starting in 2019, when there will no longer be a federal individual mandate penalty for people who rely on short-term insurance.
SB387/HB1782 also places restrictions on association health plans (which the Trump Administration is working to expand), clarifying that association health plans sold in the state will be subject to state regulations.

Source: https://www.healthinsurance.org/maryland-state-health-insurance-exchange/#premiumtax

Trump Administration releases final rule on Association Health plans

This afternoon the Trump Administration released a final rule regarding Association Health Plans as well as a fact sheet on the new rule. The rule was in response to an executive order issued by President Trump on October 12 directing federal agencies to expand the availability of AHPs, short-term limited duration insurance policies and Health Reimbursement Arrangements. The proposal calls for a revision to ERISA in order to redefine "employer" to allow more groups to qualify as associations and treating health coverage sponsored by an employer association as a single group health plan that would not be subject to the ACA's essential health benefits.
 

The final rule does not differ much from the proposed rule that came out in January, and the Congressional Budget Office now estimates that 4 million Americans, including 400,000 who otherwise would lack insurance, will join an AHP by 2023.
 

The goal of the rule is to provide small-business owners, employees of small businesses and family members of working owners/employees more coverage options, more affordable pricing, enhanced ability to self-insure, less regulatory burden and complexity, and reduced administrative costs.
 

The rule does this by eliminating the requirement that an association exist for a bona fide purpose other than offering health coverage. To qualify under the rule, employers would need to be either in the same trade, industry, line of business or profession, or have a principal place of business within a region that does not exceed the boundaries of the same state or the same metropolitan area. Therefore, AHPs could cross state lines if the metropolitan area includes more than one state. These plans would be subject to state regulation of insurance and plans across multiple states could be subject to varying rules. The Department of Labor has committed to continuing to partner with states to protect consumers and enforce state regulations.
 

Under the final rule, self-employed individuals, sole proprietors and common-law employees would be permitted to join an AHP. These individuals would be treated as an employee of the trade or business for purposes of being covered by the AHP. The proposal includes non-discrimination protections to avoid potential of adverse selection. It would require that the association not restrict membership based on any health factor, as defined in the HIPAA/ACA health nondiscrimination rules. These include health status, medical condition (including both physical and mental illnesses), claims experience, receipt of healthcare, medical history, genetic information, evidence of insurability, and disability.
 

The final rule has staggered dates for implementation:
 

· All associations (new or existing) may establish a fully insured AHP on September 1, 2018.
· Existing associations that sponsored an AHP on or before the date the final rule was published may establish a self-funded AHP on January 1, 2019.
· All other associations (new or existing) may establish a self-funded AHP on April 1, 2019.
 

From NAHU(National Association of Health Underwriters)

What to do if the IRS sends an ACA non-compliance notice in error

The Internal Revenue Service is beginning to send out Employer Shared Responsibility Payment notices to employers that it believes failed to comply with the ACA coverage requirements in 2015 calendar year.

Some employers receiving these notices actually complied with the ACA requirements in 2015, but the IRS received inaccurate or incomplete information and has thus incorrectly identified these employers as failing to satisfy the ACA coverage requirements.

If an employer receives an ESRP notice, the employer must dispute the IRS penalty within 30 days of the date of the notice.

We have seen employers receiving very large fines for periods in which they actually complied with the ACA coverage requirements. Accordingly, all employers that were subject to the ACA coverage requirements in 2015 should review their 2015 ACA filings (on Form 1094-C) to determine who at the company will receive the ESRP notice from the IRS; and make sure the contact address is correct. For reference, see Part 1; Lines 1 thru 8 of Form 1094-C).

If any of the contact information on the Form 1094-C is inaccurate or if the contact person is no longer employed by the company, the employer should consider updating its contact information with the IRS.

Bret Busacker
Busacker is a partner at Holland & Hart LLP.

Maryland Sick and Safe Leave Law-FAQ and Model Policy Notice Guidance

Maryland Healthy Working Families Act Additional Guidance: Model Policies and Updated FAQs small.business@maryland.gov On February 11, 2018, the Maryland Healthy Working Families Act went into effect. To date, the Office of Small Business Regulatory Assistance has received more than 2,000 emails from employers and employees with specific questions about complying with the law. The most common of these questions have been compiled into a Frequently Asked Questions (FAQs) document, available at www.dllr.maryland.gov/paidleave. As employers delve deeper into implementation, new questions are being asked. Today’s revised FAQ provides answers to these questions, as well as revisions to the previous FAQ document. In addition to the updated FAQs, the department has provided an updated employee notice poster for your place of business, and model policies for your employee handbook or other employee benefits documents. These resources are also available on the paid leave website. Today's documents will assist employers with compliance as well as facilitating a discussion with employees regarding their rights under the law. Responses are preliminary and subject to change. Please note that the department cannot provide legal advice regarding specific employer leave policies or employee exemptions under the law. These documents are for informational purposes and are intended to provide general guidance to employers and employees about the requirements of the law. The Department of Labor continues to encourage stakeholders to provide input on these documents. Final guidance documents will be released based on your continued feedback, as well as changes to the law during the General Assembly session. Governor Larry Hogan issued Executive Order 01.01.2018.04 creating the Office of Small Business Regulatory Assistance to assist small businesses in complying with the Maryland Healthy Working Families Act. Questions can be sent to this office at small.business@maryland.gov.

Transition Relief for Non-Qualifying HSA's

As you know, the state of Maryland passed legislation adding Male Sterilization as part of preventive care.  In doing so it disqualified ALL HSA participants in funding their HSA's for 2018.  Scrambling to get this corrected the Maryland Insurance Administration contacted the IRS for determination and relief.  Finally the IRS has offered transition relief until 2020.  Therefore, you are free to fund your HSA's for 2018.  Please see below and highlighted area at the end:

Notice of Transition Relief Regarding the Application of Section 223 to Certain Health Plans Providing Benefits for Male Sterilization or Male Contraceptives

Notice 2018-12

PURPOSE

This notice clarifies that a health plan providing benefits for male sterilization or male contraceptives without a deductible, or with a deductible below the minimum deductible for a high deductible health plan (HDHP) under section 223(c)(2)(A) of the Internal Revenue Code (Code), is not an HDHP under current guidance interpreting the requirements of section 223(c)(2) of the Code. This notice further provides transition relief for periods before 2020 during which coverage has been provided for male sterilization or male contraceptives without a deductible, or with a deductible below the minimum deductible for an HDHP.

BACKGROUND

Section 223 of the Code permits eligible individuals to deduct contributions to Health Savings Accounts (HSAs).[1] Among the requirements for an individual to qualify as an eligible individual under section 223(c)(1) is that the individual be covered under an HDHP and have no disqualifying health coverage. As defined in section 223(c)(2), an HDHP is a health plan that satisfies certain requirements, including requirements with respect to minimum deductibles and maximum out-of-pocket expenses.

Generally, under section 223(c)(2)(A), an HDHP may not provide benefits for any year until the minimum deductible for that year is satisfied. However, section 223(c)(2)(C) provides that “[a] plan shall not fail to be treated as a high deductible health plan by reason of failing to have a deductible for preventive care (within the meaning of section 1871 of the Social Security Act, except as otherwise provided by the Secretary).”[2] Therefore, an HDHP may provide preventive care benefits as defined for purposes of section 223 without a deductible, or with a deductible below the minimum annual deductible otherwise required by section 223(c)(2)(A) of the Code. To be a preventive care benefit as defined for purposes of section 223, the benefit must either be described as preventive care for purposes of the SSA or be determined to be preventive care in guidance issued by the Department of the Treasury (Treasury Department) and the Internal Revenue Service (IRS).

Notice 2004-23 (2004-15 I.R.B. 725) and Q&As 26 and 27 of Notice 2004-50 (2004-33 I.R.B. 196) provide guidance issued by the Treasury Department and the IRS regarding preventive care benefits that an HDHP may provide without satisfying the minimum deductible requirement of section 223(c)(2)(A). Notice 2004-23 clarifies that preventive care generally does not include any service or benefit intended to treat an existing illness, injury, or condition.

Notice 2004-23 also explains that state law requirements do not determine whether health care constitutes preventive care under section 223(c)(2)(C). State insurance laws often require health insurance policies and similar arrangements subject to state regulation to provide certain health care benefits without regard to a deductible or on terms no less favorable than other care provided by the health insurance policy or arrangement. However, the determination whether a health care benefit that is required by state law to be provided by an HDHP without regard to a deductible is “preventive” for purposes of the exception for preventive care under section 223(c)(2)(C) is based on the standards set forth in guidance issued by the Treasury Department and the IRS, rather than on how that care is characterized by state law.

Notice 2004-23 further indicates that the Treasury Department and the IRS are considering the appropriate standard for determining preventive care under section 223(c)(2)(C) and, in particular, whether any benefit or service should be added to the list of preventive care benefits and services set forth in Notice 2004-23 or other guidance.

Notice 2004-50, Q&A 27, provides that drugs or medications are preventive care when taken by a person who has developed risk factors for a disease that has not manifested itself or become clinically apparent, or to prevent the reoccurrence of a disease from which a person has recovered.

Section 1001 of the Patient Protection and Affordable Care Act, Pub. L. No. 111-148, 124 Stat. 119 (2010) (Affordable Care Act), added section 2713 to the Public Health Service Act (PHS Act) requiring non-grandfathered group health plans and health insurance issuers offering group and individual health insurance coverage to provide benefits for certain preventive health services without imposing cost-sharing requirements.[3] The Affordable Care Act also added section 715(a)(1) to the Employee Retirement Income Security Act of 1974 (ERISA) and section 9815(a)(1) to the Code to incorporate the provisions of part A of title XXVII of the PHS Act, including section 2713 of the PHS Act, into ERISA and the Code. Guidance under section 2713 of the PHS Act is published jointly by the Treasury Department and the Departments of Labor and Health and Human Services.

Under section 2713(a)(1) of the PHS Act, evidence-based items or services constitute preventive health services if they have in effect a rating of A or B in the current recommendations of the United States Preventive Services Task Force (USPSTF) with respect to the individual involved. Also, preventive health services under section 2713(a)(4) of the PHS Act include, “with respect to women, such additional preventive care and screenings not described in paragraph (1) [concerning the USPSTF A or B rated recommendations] as provided for in comprehensive guidelines supported by the Health Resources and Services Administration” (HRSA). HRSA guidelines generally provide for coverage of all Food and Drug Administration approved contraceptive methods, sterilization procedures, and patient education and counseling for all women with reproductive capacity. The guidelines, however, do not provide for coverage of benefits or services relating to a man’s reproductive capacity, such as vasectomies and condoms. (78 FR 8456 (Feb. 6, 2013) at 8458 n. 3.)

Notice 2013-57 (2013-40 I.R.B. 293) provides that any item that is a preventive service under section 2713 of the PHS Act will also be treated as preventive care under section 223(c)(2)(C) of the Code.

The Treasury Department and the IRS are aware that several states have recently adopted laws that require certain health insurance policies and arrangements to provide benefits for male sterilization or male contraceptives without cost sharing.[4] Some individuals in those states are participants or beneficiaries in insured health plans or other arrangements subject to the state’s insurance laws. Certain stakeholders have asked the Treasury Department and the IRS whether benefits for male sterilization or male contraceptives constitute preventive care for purposes of section 223(c)(2)(C).

ANALYSIS

Under section 223(c)(2)(C), “preventive care” means (1) preventive care within the meaning of section 1871 of the SSA, and (2) preventive care as otherwise provided for by the Treasury Department and the IRS. Benefits for male sterilization or male contraceptives are not preventive care under the SSA, and no applicable guidance issued by the Treasury Department and the IRS provides for the treatment of these benefits as preventive care within the meaning of section 223(c)(2)(C). Accordingly, under current guidance, a health plan that provides benefits for male sterilization or male contraceptives before satisfying the minimum deductible for an HDHP under section 223(c)(2)(A) does not constitute an HDHP, regardless of whether the coverage of such benefits is required by state law. An individual who is not covered by an HDHP with respect to a month is not an eligible individual under section 223(c)(1) and, consequently, may not deduct contributions to an HSA for that month. Similarly, HSA contributions made by an employer on behalf of the individual are not excludible from income and wages.

TRANSITION RELIEF

The Treasury Department and the IRS are aware that certain states require benefits for male sterilization or male contraceptives to be provided without a deductible, and that individuals have enrolled in health insurance policies and other arrangements that otherwise would qualify as HDHPs with the understanding that coverage for male sterilization or male contraceptives without a deductible did not disqualify the policies or arrangements from being HDHPs. The Treasury Department and IRS also understand that certain states may wish to change their laws that require benefits for male sterilization or male contraceptives to be provided without a deductible in response to this notice, but may be unable to do so in 2018 because of limitations on their legislative calendars or for other reasons. Until these states are able to change their laws, residents of these states may be unable to purchase health insurance coverage that qualifies as an HDHP and would be unable to deduct contributions to an HSA.

Accordingly, this notice provides transition relief for periods before 2020 (including periods before the issuance of this notice), to individuals who are, have been, or become participants in or beneficiaries of a health insurance policy or arrangement that provides benefits for male sterilization or male contraceptives without a deductible, or with a deductible below the minimum deductible for an HDHP. For these periods, an individual will not be treated as failing to qualify as an eligible individual under section 223(c)(1) merely because the individual is covered by a health insurance policy or arrangement that fails to qualify as an HDHP under section 223(c)(2) solely because it provides (or provided) coverage for male sterilization or male contraceptives without a deductible, or with a deductible below the minimum deductible for an HDHP.

REQUEST FOR COMMENTS

The Treasury Department and the IRS continue to consider ways to expand the use and flexibility of HSAs and HDHPs consistent with the provisions of section 223. Accordingly, the Treasury Department and the IRS request comments on the appropriate standards for preventive care under section 223(c)(2)(C) (in particular, the appropriate standards for differentiating between benefits and services that would be considered preventive care and those that would not be considered preventive care) and other issues related to the provision of preventive care under an HDHP.

Comments should include a reference to Notice 2018-12. Send submissions to CC:PA:LPD:PR (Notice 2018-12), Room 5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, 54 Washington, DC 20044. Submissions may be hand delivered Monday through Friday between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR