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The Patient Protection and Affordable Care Act (ACA) was signed into law on March 23, 2010, bringing many changes for employers and health plans. The law continues to evolve as regulations are released. This monthly alert brings you information on the major provisions and regulations coming from Washington, connects you to valuable tools in understanding and complying with the law, and keeps you informed of Michigan legislation enacted in response to ACA.
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 EXECUTIVE ORDERS |
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President Trump Signs Executive Orders
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 On October 12, 2017, the White House announced that two Executive Orders were signed by the President; one making changes to certain rules under the Affordable Care Act (ACA) and one eliminating cost sharing reduction for low income Americans.
Executive Order Designed to Change ACA Rules
The Department of Labor is ordered to explore expansion of association health plans (AHPs) by broadening the scope of ERISA to allow employers within the same line of business across the country to join together in a group health plan. The Executive Order notes employers will not be permitted to exclude employees from an AHP or develop premiums based on health conditions. The Secretary of Labor has 60 days to consider proposing regulations or revising guidance.
Practically speaking, this type of expansion would require considerable effort with all state departments of insurance and key stakeholders across the industry. Employers should not wait to make group health plan decisions based on the Executive Order, as it will take time for even proposed regulations to be developed.
The Department of the Treasury, Department of Labor, and Department of Health and Human Services (the agencies) are directed to consider expanding coverage options from short term limited-duration coverage (STLDI), which are often much less expensive than Marketplace plans or employer plans. The Secretaries of these agencies have 60 days to consider proposing regulations or revising guidance.
Finally, the EO directs the same three agencies to review and consider changing regulations for HRAs so employers have more flexibility when implementing them for employees. This could lead to an expanded use of HRA dollars for employees, such as for premiums. However, employers should not make any changes to existing HRAs until regulations are issued at a later date. The Secretaries have 120 days to consider proposing regulations or revising guidance.
Executive Order Ending ACA Cost Sharing Reductions
PPACA created two types of subsidies available to low income individuals who purchase coverage on the marketplace: premium tax credits and cost-sharing reductions. For premium tax credits, the government pays the carrier directly the portion of the premium of the plan equaling the subsidy provided to the individual. For cost-sharing reductions, carriers discount out-of-pocket costs, such as lower deductibles and copays, and is then reimbursed by the government.
This Executive Order stops the federal government from reimbursing the carriers for these reductions. However, the ACA requires insurance carriers to offer such cost-share reductions so the carriers will continue to provide them.
There is no direct impact to employers at this time; however, employers with fully insured health plans might see group health plan rate increases in future years as insurance companies work to make up for the loss of revenue.
Premium tax credits are not affected by this Executive Order.
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| INDIVIDUAL HEALTHCARE REPORTING |
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IRS Reverses Policy on Certifying Individual Mandate Compliance
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On October 13, 2017, the IRS reversed a recent policy change in how it monitors compliance with the ACA's individual mandate. For the upcoming 2018 filing season (filing 2017 tax returns), the IRS will not accept electronically filed tax returns where the taxpayer does not certify whether the individual had health insurance for the year. In addition, paper returns that do not certify compliance with the individual mandate may be suspended pending receipt of additional information, and any refunds due may be delayed.
This upcoming tax filing season will be the first time the IRS will not accept tax returns that omit this health coverage information. As a result, taxpayers should indicate on their 2017 tax returns whether they (and everyone on their return) had health coverage, qualified for an exemption, or are paying an individual mandate penalty.
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| WOMEN'S PREVENTIVE |
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Contraception Mandate Rolled Back for Employers
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Two tri-agency (Internal Revenue Service, Employee Benefits Security Administration, and Centers for Medicare and Medicaid Services) Interim Final Rules were released and became effective on October 6, 2017, and will be published on October 31, 2017, allowing a greater number of employers to opt out of providing contraception to employees at no cost through their employer-sponsored health plan. The expanded exemption encompasses all non-governmental plan sponsors that object based on sincerely held religious beliefs, and institutions of higher education in their arrangement of student health plans. The exemption also now encompasses employers who object to providing contraception coverage on the basis of sincerely held moral objections and institutions of higher education in their arrangement of student health plans. Furthermore, if an issuer of health coverage (an insurance company) had sincere religious beliefs or moral objections, it would be exempt from having to sell coverage that provides contraception. The exemptions apply to both non-profit and for-profit entities.
The currently-in-place accommodation is also maintained as an optional process for exempt employers, and will provide contraceptive availability for persons covered by the plans of entities that use it (a legitimate program purpose). These rules leave in place the government's discretion to continue to require contraceptive and sterilization coverage where no such objection exists. These interim final rules also maintain the existence of an accommodation process, but consistent with expansion of the exemption, the process is optional for eligible organizations. Effectively this removes a prior requirement that an employer be a "closely held for-profit" employer to utilize the exemption.
Employers that object to providing contraception on the basis of sincerely held religious beliefs or moral objections, who were previously required to offer contraceptive coverage at no cost, and that wish to remove the benefit from their medical plan are still subject (as applicable) to ERISA, its plan document and SPD requirements, notice requirements, and disclosure requirements relating to a reduction in covered services or benefits. These employers would be obligated to update their plan documents, SBCs, and other reference materials accordingly, and provide notice as required
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| FSA CONTRIBUTION CAP |
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Health Flexible Spending Limit
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The Affordable Care Act (ACA) imposes a dollar limit on employees' salary reduction contributions to health flexible spending accounts (FSAs) offered under cafeteria plans. This dollar limit is indexed for cost-of-living adjustments and may be increased each year.
On Oct. 19, 2017, the IRS released Revenue Procedure 2017-50
, which increased the FSA dollar limit on employee salary reduction contributions to $2,650 for taxable years beginning in 2018. It also includes annual inflation numbers for 2018 for a number of other tax provisions.
Any plan year that starts in 2018 can increase its limit to $2,650. If the plan year starts in the 2017 calendar year, November or December for example, the plan cannot increase the limit until the 2018 renewal (November or December of 2018).
The Dependent Care FSA limit is not indexed and remains at $5,000.
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| BENEFIT PLAN DESIGNS |
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Charging Employees Different Premiums
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 Employers who are designing a health and welfare benefit plan for their employees often wonder about the rules relating to setting premiums for employees. Employers generally have significant flexibility in this part of their plan's design. Common structures contemplated by employers include, but are not limited to:
- Charging all employees a flat amount for their health plan
- Charging employees a percentage of the premium for the health plan, with the percentages changing as employees move between tiers (single, two-person, family)
- Giving employees a set dollar amount that they can use to offset the cost of whatever plan and tier they enroll in
Employers are also interested in setting different contribution structures for different groups of employees. Sometimes this is due to a geographic difference between employees, job types, staff versus management, and more. Employers may wish to give lower-paid employees more employer-provided money; sometimes employers wish to give managers or executive staff more employer-provided money.
Employers should be aware that there are different nondiscrimination requirements to consider.
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| COMPLIANCE RECAP |
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September 2017
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September was another quiet month in the employee benefits world.
IRS Issues Forms 1094 and 1095
The IRS issued Forms 1094-B, 1095-B, 1094-C, and 1095-C for the 2017 tax year. Coverage providers use Forms 1094-B and 1095-B to report health plan enrollment. Applicable large employers use Forms 1094-C and 1095-C to report information related to their employer shared responsibility provisions under the ACA
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CMS Announces Special Enrollment Period for Hurricane Victims
CMS established a Medicare special enrollment period for individuals affected by Hurricanes Harvey, Irma, and Maria. The special enrollment period will allow individuals to enroll, dis-enroll, or switch Medicare health or prescription drug plans from the start of the incident period through the end of 2017
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Court Remands Regulations to HHS, DOL, and IRS
The United States District Court for the District of Columbia held that the Departments of Health and Human Services, Labor, and the Treasury (the Departments) acted arbitrarily and capriciously by failing to seriously respond to comments and proposed alternatives as part of the notice and comment process for the Departments' rule on how much plans are required to pay out-of-network physicians for emergency health care services.
Under the Patient Protection and Affordable Care Act (ACA), group health plans cannot impose a higher copayment or coinsurance rates for participants who receive emergency medical treatment from an out-of-network provider.
Pursuant to that ACA provision, the Departments issued an interim final rule to establish that "a plan or issuer satisfies the copayment and coinsurance limitations in the statute if it provides benefits for out-of-network emergency services in an amount equal to the greatest of three possible amounts--
(1) The amount negotiated with in-network providers for the emergency service furnished;
(2) The amount for the emergency service calculated using the same method the plan generally uses to determine payments for out-of-network services (such as the usual, customary, and reasonable charges) but substituting the in-network cost-sharing provisions for the out-of-network cost-sharing provisions; or
3) The amount that would be paid under Medicare for the emergency service."
Despite extensive public comment, the Departments issued the final rule without substantive revision. A college of emergency physicians was dissatisfied with the Departments' response to public comments and filed suit against the Departments.
Although the court determined that the Departments failed to seriously respond to public comments, the court declined to vacate the rule. The court remanded the case to the Departments for further explanation of their rule
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| HR CORNER |
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Health Plan Related Notices and Disclosures
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With health plan open enrollment season in full swing, now is the perfect time to make sure you are providing the required annual notices to plan participants. Federal law requires health plans to send a variety of notices to participating employees and dependents, usually concerning their rights under the health plan. Some of the notices are required annually and employers generally meet this obligation by including them with the health plan enrollment materials that they distribute each year. This chart summarizes health plan related notices and disclosure requirements.
Contact 44North for more information about how we can help!
Table of Contents
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Office Closure
All 44North offices will be closed Thursday, November 23rd, and Friday, November 24th, in recognition of the Thanksgiving holiday. For emergency assistance, please call 855-306-1099 and a service representative will be happy to assist you.
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The information in this newsletter is based on 44North's review of the employee benefit related legislation and is not intended to impart legal advice. Interpretations of the reform legislation vary, and efforts will be made to present and update accurate information. This overview is intended as an educational tool only and does not replace a more rigorous review of the law's applicability to individual circumstances and attendant legal counsel and should not be relied upon as legal or compliance advice. Analysis is ongoing and additional guidance is also anticipated from the Department of Health and Human Services.
Questions or comments? Please email us at
[email protected] .
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Does Your Plan Renew This Month?
DON'T FORGET!
- Due 7 months after the plan year ends.
- SAR, if applicable, is due 2 months later.
Health Plan Related Notices and Disclosures
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- SPD
- SMM
- SBC
- For full list click here.
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