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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.
On Friday, January 20, 2017, President Trump signed his first Executive Order, titled "Minimizing the Economic Burden of the Patient Protection and Affordable Care Act Pending Repeal."
The Executive Order instructs the Secretary of the Department of Health and Human Services (HHS) and the heads of all other executive departments and agencies with authority, or responsibility, under the ACA to exercise all authority and discretion to waive, defer, grant exemptions from, or delay the implementation of any provision or requirement of the ACA that would impose a fiscal burden on any state, or cost a fee, tax, penalty, or regulatory burden on individuals, families, health care providers, health insurers, patients, recipients of health care services, purchasers of health insurance, or makers of medical devices, products, or medications.
44North recommends that employers wait for confirmation from various federal agencies that regulations they are in the process of complying with (notably, ACA-related reporting) are on hold for the time being. We are, unfortunately, in a "wait and see" period.
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 COBRA |
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COBRA Payment Process
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 The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) allows qualified beneficiaries who lose health benefits due to a qualifying event to continue group health benefits. The COBRA payment process is subject to various rules in terms of grace periods, notification, premium payment methods, and treatment of insignificant shortfalls.
Grace Periods
The initial premium payment is due 45 days after the qualified beneficiary elects COBRA. Premium payments must be made on time; otherwise, a plan may terminate COBRA coverage. Generally, subsequent premium payments are due on the first day of the month. However, under the COBRA grace period rules, premiums will still be considered timely if made within 30 days after the due date. The statutory grace period is a minimum 30-day period, but plans may allow qualified beneficiaries a longer grace period.
Notification
The plan administrator must notify the qualified beneficiary of the COBRA premium payment obligations in terms of how much to pay and when payments are due; however, the plan does not have to renotify the qualified beneficiary to make timely payments. Even though plans are not required to send billing statements each month, many plans send reminder statements to the qualified beneficiaries.
Premium Payment Methods
The plan administrator must allow payments to be made in monthly installments, but can also permit payments weekly, quarterly, or semi-annually.
Payments by Third Parties
Plan administrators must accept COBRA premium payments from anyone making payments on behalf of a qualified beneficiary. As a result, third parties, hospitals, or employers can make payments. State Medicaid programs may pay COBRA premiums for eligible individuals, especially if the state determines that savings in Medicaid will exceed the cost of the premiums.
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| FLEXIBLE SPENDING ACCOUNTS |
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What You Need to Know
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A health flexible spending account (FSA) is a pre-tax account used to pay for out-of-pocket health care costs for a participant as well as a participant's spouse and eligible dependents. Health FSAs are employer-established benefit plans and may be offered with other employer-provided benefits as part of a cafeteria plan. Self-employed individuals are not eligible for FSAs.
Even though a health FSA may be extended to any employee, employers should design their health FSAs so that participation is offered only to employees who are eligible to participate in the employer's major medical plan. Generally, health FSAs must qualify as excepted benefits, which means other nonexcepted group health plan coverage must be available to the health FSAs participants for the year through their employment. If a health FSA fails to qualify as an excepted benefit, then this could result in excise taxes of $100 per participant per day or other penalties.
A dependent care flexible spending account (DCFSA) is a pre-tax benefit account used to pay for eligible dependent care services. The IRS determines which expenses are eligible for reimbursement and these expenses are defined by Internal Revenue Code ยง129 and the employer's plan. Eligible DCFSA expenses include: adult day care center, before/after school programs, child care, nanny, preschool, and summer day camp. Day nursing care, nursing home care, tuition for kindergarten and above, food expenses, and overnight camp are ineligible expenses
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| DOL OPINION LETTERS |
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DOL Reintroduces Opinion Letters for Employers
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On June 27, 2017, the DOL announced that its Wage and Hour Division will reinstate the practice of issuing opinion letters. The DOL discontinued the practice of issuing opinion letters seven years ago in favor of publishing more general guidance.
Opinion letters provide guidance to employers on how to comply with the law in specific situations. For example, previous opinion letters have discussed whether time spent by employees taking web-based prerequisite classes at home in preparation for a voluntary job-related training class is compensable time under the Fair Labor Standards Act (FLSA).
In contrast, administrative interpretations provide a more general interpretation of the law, making them more readily applicable to a wide variety of situations.
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| COMPLIANCE RECAP |
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July 2017
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June was a relatively quiet month in the employee benefits world, despite the U.S. Senate's release of two bills in its attempt to repeal the Patient Protection and Affordable Care Act (ACA).
Senate Releases Revision of Better Care Reconciliation Act
On July 13, 2017, the U.S. Senate released a revised draft of its Better Care Reconciliation Act (BCRA) bill. The U.S. Senate released the original draft of the BCRA on June 22, 2017, which would substitute the House's House Resolution 1628, a reconciliation bill aimed at "repealing and replacing" the Patient Protection and Affordable Care Act (ACA). The House bill was titled the "American Health Care Act of 2017" (AHCA).
The revised draft BCRA proposes to affect employer-sponsored plans in a few ways:
- Allow health savings account (HSA) funds to be used to pay for the medical expenses of children under age 27 and to pay for high-deductible health plans' (HDHPs) premiums that are not otherwise covered by tax credits, deductibles, or exclusions.
- Make HDHPs ineligible for HSAs if the HDHPs cover abortions except where necessary to save the mother's life or in cases of rape or incest.
- Allow professional employer organizations to sponsor association plans.
On July 18, 2017, the U.S. Senate declined to vote on the revised BCRA after it determined that it didn't have enough votes to pass the bill.
On July 28, 2017, the U.S. Senate voted on the Health Care Freedom Act to repeal the ACA's individual and employer mandates and temporarily repeal the medical device tax. The bill failed to pass.
Employers with group health plans should continue to monitor progress in Washington, D.C., and should not stop adhering to any provisions of the ACA in the interim, or begin planning to comply with provisions in either the AHCA or revised BCRA.
Technology is the New Frontier with ADA Accommodation
Website accessibility has become a hot topic in the world of ADA accommodation. Recently, a Florida federal judge handed down a trial verdict finding that grocery chain Winn-Dixie had violated Title III of the Americans with Disabilities Act (ADA) by having a website that was inaccessible to a blind plaintiff. Shortly thereafter, a federal judge in the Central District of California allowed another blind plaintiff to continue a case against Hobby Lobby for failing to "provide full and equal enjoyment of goods and services offered by its physical stores by not maintaining a fully accessible website."
Title III relates to public accommodation (private and non-profit business) and could impact any business offering goods and services through a website, which, in this era of e-commerce is far-reaching. Further, Title I of the ADA relates to employment, so would impact online application processes and career web pages.
In the Winn-Dixie case, the court recognized Web Content Accessibility Guidelines (WCAG) 2.0 as the website standard. WCAG are guidelines developed by a private group of accessibility experts that have been used to support accommodation initiatives. Until this case, WCAG had not been referenced by the court as the de facto legal standard.
Regarding Title I employment accommodation, the U.S. Department of Labor recently identified the Partnership on Employment & Accessible Technology (PEAT) as the source for employers who want to ensure that their workplace technology is accessible to all employees and job applicants. In particular, the "Accessible Technology Action Steps: A Guide for Employers" was recommended as a resource.
Definitive guidelines have traditionally been elusive in the amorphous arena of public accommodations within the requirements of the ADA. Businesses would be well advised to review their accessibility through these validated resources.
Court Remands ACA Section 1557 Case to HHS
ACA Section 1557 provides that individuals shall not be excluded from participation, denied the benefits of, or be subjected to discrimination under any health program or activity which receives federal financial assistance from the U.S. Department of Health and Human Services (HHS), on the basis of race, color, national origin, sex, age, or disability.
In May 2016, HHS issued a final rule implementing Section 1557, which took effect on July 18, 2016.
Eight states and three faith-based private health care providers filed a lawsuit to challenge HHS' authority under the ACA to issue regulations that interpret sex discrimination as forbidding discrimination based on gender identity and termination of pregnancy. The lawsuit also asserted that the regulations violate the Religious Freedom Restoration Act as applied to them.
On December 31, 2016, the U.S. District Court for the Northern District of Texas issued a nationwide preliminary injunction prohibiting enforcement of the rule as it prohibits discrimination on the basis of gender identity or pregnancy termination.
On July 10, 2017, the District Court stayed the case and remanded it in part to HHS for reconsideration of the rule. The injunction remains in place.
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| HR CORNER |
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FAQs: Employee Benefits, Wage Deductions, and Michigan Law
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The Michigan Payment of Wages and Fringe Benefits Act (PWFBA) allows employers to make deductions from an employee's wages. Under the Act, a written voluntary consent is required for all deductions made from an employee's wages, except for deductions required by law, statute, or a collective bargaining agreement. The Act is enforced by the Michigan Wage and Hour Division which is part of the Department of Licensing and Regulatory Affairs (LARA).
44North contacted the Michigan Wage and Hour Division for answers to some common questions related to employee benefit plan administration and wage deductions. The answers below are based on the informal guidance provided by the MI Wage and Hour investigators.
Q1: We use an online benefits administration program. Can our employees electronically consent to salary deductions to cover their portion of the premiums?
A1: Yes, an electronic signature would be sufficient authorization for the deduction to occur, as long as, somewhere in the process the employee is made aware of the amounts that will be deducted and the frequency.
Q2: What if we need to make an adjustment to the amount of the deduction, do we need to obtain a new authorization?
A2: Yes, a new authorization must be obtained from the employee to change the amount taken out of the employee's wages.
Examples include, but are not limited to:
- corrections due to error,
- changes in the employee's portion of the costs,
- employee initiated changes to HSA contributions, and
- adjustments made due to returning from a leave of absence.
Q3: What if an employee refuses to sign a new authorization?
A3: An employer is only permitted to take the deduction amount authorized in the written consent. The employer is encouraged to work with the employee to come to an agreement regarding the deductions. However, in some situations, the only recourse the employer has is to take legal action against the employee.
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Office Closure
All 44North offices will be closed Monday, September 4th, in celebration of Labor Day. For emergency assistance, please call 855-306-1099 and a service representative will be happy to assist. Please note that our check printing schedule will be delayed by one day during this week.
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The information in this newsletter is based on 44North's review of the national healthcare reform 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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