Maryland Sick and Safe Leave Law Compliance Update

From: Maryland Healthy Working Families Act (House Bill 1) - Enforcement and Implementation small.business@maryland.gov, February 5, 2018

Maryland Employers and Employees:

Governor Larry Hogan understands the business community has many questions regarding the Maryland Healthy Working Families Act, so he established the Office of Small Business Regulatory Assistance (OSBRA) within the Department of Labor, Licensing and Regulation to assist small businesses in complying with the law, as well as an email address where employers may direct specific questions: small.business@maryland.gov. 

To assist employers with compliance, the department is developing draft guidance documents and model policies, including an extensive Q&A document based on questions received through small.business@maryland.gov, and will continue to provide answers to specific questions upon request. These documents will be emailed to stakeholders and published to DLLR’s paid leave website at www.dllr.maryland.gov/paidleave. 

Before promulgating official guidance documents, the department encourages stakeholder input to be certain that the draft guidance documents address all concerns. Comments on these draft guidance documents and specific implementation questions should be directed to small.business@maryland.gov. Following a public comment period, the department will finalize the policies based on stakeholder input and include any amendments to the Maryland Healthy Working Families Act from this General Assembly session.

The General Assembly is in session until April 9, 2018, and there are several bills that could affect this legislation. Although HB1 goes into effect on February 11, 2018, bills have been introduced that would substantially impact the law.

February 11, 2018 Effective Day: What you need to know

Emergency legislation to delay implementation of this law until July 1, 2018, is moving in the Maryland Senate. On Friday, February 2, it passed the Senate Finance Committee and will next be considered by the full Senate. After that, it would go to the House of Delegates for consideration. If this bill should pass before February 11, 2018, the Department of Labor will notify employers. However, in the event implementation is not delayed, employers should be prepared to begin tracking sick and safe leave accrual on February 11, 2018.

MD Contraceptive Equity Act and its Impact on 2018 High Deductible Health Plans (HSA)

In 2016, Maryland passed the Contraceptive Equity Act, which requires health care insurers to:

• Provide coverage for a single dispensing of up to a six-month supply for covered, FDA-    approved, prescription contraceptives and devices (after a two-month trial). 
• Provide coverage for over-the-counter emergency contraceptives without a prescription
• Expand access to male sterilization benefits with no out-of-pocket costs. 

The IRS requires that high deductible health plans (HDHP) not cover benefits until the deductible for that year is satisfied. As you know, under current IRS rules for HDHPs, only preventive care benefits can be provided without a deductible. Preventive care includes a variety of screenings and services for adults and children. Food and Drug Administration-approved contraceptive methods, sterilization procedures, and patient education and counseling, as prescribed by a health care provider for women with reproductive capacity also must be covered without a copayment or coinsurance before the deductible is met. Male sterilization is not included in the IRS’ list of preventive services. 

The new Maryland law, effective January 1, 2018, creates a conflict with the IRS rules regarding the treatment of male sterilization as a preventive service. This new law impacts HSA plans sold in Maryland. Members who fund HSA's may be subject to tax penalties when they file their 2018 taxes – regardless of whether they use the covered benefit (male sterilization) or not. Subscribers and members with Grandfathered plans are not impacted. 

The Maryland Insurance Administration is aware of this issue and has asked the IRS for clarification as to whether or not they consider male sterilization to be a preventive benefit for the purposes of IRS regulatory guidance. In the meantime, members who fund an HSA with these plans may be subject to tax penalties if the IRS does not recognize male sterilization as a preventive care benefit. Members can continue to use their previously-funded HSA account to pay for health care services and should consult with a tax professional if they have further questions. 

Excerpt from Carefirst Blue Cross Bliue Shield of Maryland, 12-5-2017

Carefirst Response to the Opioid Addiction Crisis

From Carefirst, December 15, 2017

CareFirst’s Response to the Addiction Crisis

Addiction is a national health epidemic affecting millions every day.
In 2016, approximately 204,000 CareFirst members received at least one opioid prescription. In the same time frame, nearly 18,000 CareFirst members had a diagnosis for substance use disorder. However, because diagnoses are based on insurance claims, these figures may only represent a fraction of the total impact of opioid use or those living with a substance use disorder.

CareFirst is committed to meeting our members’ needs through identification, prevention and treatment. Our comprehensive approach to combat the opioid crisis includes:
• Restricting unnecessary or excessive opioid prescription use through formulary design
• Monitoring members and prescribers for drug safety, potential fraud, waste and abuse
• Connecting members with high-touch care coordination and essential treatment
• Reducing financial barriers through a cost-share waiver

On December 13, CareFirst held a press event at Baltimore’s City Hall to highlight our efforts to address substance use disorders and the opioid addiction crisis across the region. Baltimore Mayor Catherine Pugh and other elected officials were in attendance.

Repeal of Definition of Small Employer Group back to 1-50 Employees under ACA

On October 8, 2015, the federal government repealed the legislation that had redefined employer groups with 51 to 100 full-time-equivalent employees as small groups for 2016 health insurance coverage.

However, the federal legislation still allows individual states the option to expand the definition of small group from 1 to 100 employees in 2016, which is the definition currently set by the Virginia and District of Columbia legislatures.

Following the federal announcement to repeal the decision to redefine employers with 51-100 employees as small groups, Maryland issued bulletin (15-27) stating that Maryland's definition of small group will align with the federal changes and remain at the 1-50 employee level.

Bulletin 15-27 states, "Since Maryland law has been drafted to follow the federal law, for plan years that begin on or after January 1, 2016, small employers will be those that during the preceding calendar year employed an average of not more than 50 employees.”

Excerpt from Kaiser Foundation Health plan

This is good news as groups over 50 Full-Time and Full Time Equivalents were being pushed down to small group which historically has had higher rates and more ACA mandates.

Maryland Parental Leave Law for Employers with 15-49 Employees

Beginning October 1, 2014, all Maryland businesses with 15-49 employees will be required to provide six weeks of unpaid leave to an employee upon the birth of their child or the placement of an adopted or foster care child. This new law requires that the employer hold the employee’s job and benefits for up to six weeks or return the employee to an “equivalent position” when the employee returns within the six week leave period. Premiums for benefits may be recovered by the employer if the employee fails to return to work after the leave ends 

This new Maryland law is geared to providing employees who work for smaller employers with a watered-down version of federal Family and Medical Leave Act (FMLA).  Under FMLA employers with 50 or more employees must offer 12 weeks of unpaid leave for a medical condition or to provide care for a family member with a medical condition.   .

Employers may want to draft policy and take necessary steps to comply with the new law.

Parental Leave Law Now In Effect October 1, 2014-FMLA Light

Beginning October 1, 2014, all Maryland businesses with 15-49 employees will be required to provide up to six weeks of unpaid parental leave to an employee upon the birth of their child or the placement of an adopted or foster care child. The Parental Leave Law requires the employer to hold the employee’s job for up to six weeks or return the employee to an “equivalent position” when the employee returns within the six week leave period.  In order to qualify under this law, the employee must have worked for the employer 12 months and a minimum of 1250 hours in the previous 12 months. 

For employers with more than fifty employees, Family and Medical Leave Act (FMLA) already requires those employers grant 12 weeks of unpaid leave for various qualifying family and medical events, the new Maryland law is geared to providing employees who work for smaller employers with a lighter version of FMLA.  One major difference is that the new Maryland law does not cover medical leave (as it is limited to parental leave) and it only provides for six weeks of leave.  As is under FMLA, employee benefits must be maintained by the employer while on leave.  Premiums may be recovered by the employer if the employee fails to return to work after the leave ends

Employers should update employee handbooks and draft Parental Leave Policy that adheres to the new law.

Maryland Delaying The Launch of the Small Business Exchange

The state’s health department changed the start date for businesses to enroll in the small business exchange from October, 2013 to January 2014. The state’s decision comes after the federal government said it would give states until January 2015 to get up and running a key piece of the small business exchange that gives employees more insurance options.

The health insurance marketplaces for both small businesses and individuals were supposed to begin enrollment this October for coverage that would take effect in January. The individual exchange is still expected to stick to that timeline. The exchanges are part of the federal Affordable Care Act.

Excerpt from the Baltimore Business Journal, April 3, 2013

Maryland Launches New Health Plan Portal

According to Health Reform (PPACA), by 2014 all states must have a health benefit exchange set-up to make health plans to individuals and small businesses.  What appears to be the Maryland Health Care Commission's initial attempt, is their new Health Plan Portal (Virtual Compare) which allows small business with 2-50 employees, to compare plans from several different carriers including:  Carefirst, Aetna, Kaiser, Coventry etc.  At this point it does not allow an employer to purchase coverage through the portal.  Employers are able to contact carriers or health insurance brokers to help them with their plan choices and questions.  Brooks Benefit Services, LLC is listed within the portal. 

Following is a link to the Virtual Compare website: http://mhcc.maryland.gov/virtualcompare

The Individual Mandate-What Coverage Every Person Must Take-Or Else....

Individual Mandate

Individuals must have health coverage effective January 1, 2014 either through employer coverage, government, private or the exchange.  If individuals elect to purchase coverage through their State run Exchanges (place where we will purchase coverage) they will be able to choose from several options:  The plans will range from minimum plan or Bronze Plan to the Silver plan, Gold and Platinum Plans.  In addition for those under 30 years old, you will be able to purchase a catastrophic plan which is kindly named the "young and invincible" plan.  This plan makes absolutely no sense.  Since all health coverage offered through the exchange will be community rated, you want the younger and healthiers on plan and paying into the system to help off-set the older and/or unhealthiers. 

Many States are arguing the constitutionality of the Individual Mandate

This is how the cost of the plans will break-down for people earning at or below 400% of the Federal Poverty Level (FPL)

Individuals earning  up to 133% of Federal Poverty Level (around $14,000/Year) will be eligible for free coverage under expanded version of Medicaid.  Individuals earning 133%-400% of Federal Poverty Level will receive a subsidy based on a sliding scale up to 400%.  400% of FPL for an individual is $44,000 per year and a family of four is $88,000 per year.  Nobody will pay more than 9.5% of their annual household income on health coverage if they fall at or below 400% of the FPL.

     

So What if You Say Forget It, No Coverage for Me........?

Fines for not having coverage

In 2014 you will pay a fine of $95 per year or 1% of income whichever is greater and by 2017 amount goes to $695 or 2.5% of income to a maximum of 3X the individual penalty.

Non-payers will receive a notice from the IRS.  If they don’t pay, the IRS will take it from their tax refund in the future.  If they continue to not pay the fine, they will not be subject to any criminal prosecution or penalties.  The secretary cannot file a notice of lien or file a levy on any property……..In other words, no teeth to this penalty.

To Include or Not Include the Value of Employees Medical Coverage on W-2's in 2011

The answer is NO.......at least for now. Under PPACA (Health Reform), the IRS required reporting of the value of “employer sponsored” health coverage on each employee’s 2011, W-2. In notice (2010-69), the IRS has provided interim relief from the reporting requirements of the value of employer sponsored health coverage on employees W-2’s in 2011. Whats interesting is that many employers see this as a pre-cursor to the cost of benefits becoming taxable to employees. Which could be constued as one more step towards single-payor. Please see below, the notice issued. I am assuming this will be brought back For 2012.




W-2 Reporting Relief under PPACA
Interim Relief with Respect to Form W-2 Reporting of the Cost of Coverage of Group Health Insurance Under § 6051(a)(14) Notice 2010-69

This notice provides interim relief to employers with respect to reporting the cost of coverage under an employer-sponsored group health plan on Form W-2, Wage and Tax Statement, pursuant to § 6051(a)(14) of the Code. Specifically, this notice provides that reporting the cost of such coverage will not be mandatory for Forms W-2 issued for 2011. The Treasury Department and the IRS have determined that this relief is appropriate to provide employers with additional time to make any necessary changes to their payroll systems or procedures in preparation for compliance with the reporting requirement.

BACKGROUNDSection 6051(a)(14) was added to the Code by § 9002 of the Patient Protection and Affordable Care Act of 2010, Public Law 111-148, enacted March 23, 2010. Section 6051(a)(14) provides generally that the aggregate cost of applicable employer sponsored overage (as defined in § 4980I(d)(1)) must be reported on Form W-2. Section 6051(a)(14) further provides that, for this purpose, the aggregate cost is to be determined under rules similar to the rules of § 4980B(f)(4), referring to the definition of the “applicable premium” under the rules providing for COBRA continuation coverage. Section 6051(a)(14) is effective for taxable years beginning on or after January 1, 2011.

INTERIM RELIEFPursuant to this notice, the reporting requirement set forth in § 6051(a)(14) is not mandatory for Forms W-2 issued for 2011. Accordingly, an employer will not be treated as failing to meet the requirements of § 6051 for 2011, and will not be subject to any penalties for failure to meet such requirements, merely because it does not report the aggregate cost of employer-sponsored coverage (as defined in § 4980I(d)(1)) on Forms W-2 issued for 2011. The Treasury Department and the IRS anticipate issuing guidance on the reporting requirement set forth in § 6051(a)(14) before the end of this year.

DRAFTING INFORMATIONThe principal author of this notice is Leslie Paul of the Office of Division Counsel/Associate Chief Counsel (Tax Exempt and Government Entities) though other Treasury Department and IRS officials participated in its development. For further information on the provisions of this notice, contact Leslie Paul at (202) 622-6080 (not a toll-free number).