Notice Requirements When Making Health Plan Design Changes

As employers work to stay financially solvent during the COVID-19 pandemic, many are looking to change their health plan designs in order to ensure employees have access to the care they need while balancing the financial impact on the business. The type of change contemplated dictates when notice must be given to employees.

Type of Change Notice Requirement Which Plans
Changes to any information found in the Summary of Benefits and Coverage (SBC) which includes deductibles, out of pocket limits, whether or not referrals are needed for specialists, copays, coinsurance, whether or not preauthorization is needed, services the plan does not cover, and what additional services are covered by your plan. Prior to implementing any change that would require an updated SBC, plan participants must be given 60 days advance notice in the form of an updated SBC. This is a firm requirement. This notice requirement is for ALL group health plans, regardless of whether or not they are subject to ERISA.
Modifications to a summary plan description (SPD) that constitute a material reduction in covered services or benefits. For example, a decrease in employer contributions, or a material modification to plan terms. Notice must be provided within 60 days of making the change. Practically speaking, employers should strive to give notice prior to making the change, but under ERISA, they have until 60 days after the change to inform employees. Notice should be provided in the format of a Notice of Material Modification. This notice requirement is only for group health plans subject to ERISA.
All other changes (not a material reduction in benefits and no impact on the SBC) Notice must be provided within 210 days after the end of the plan year, in the format of a Notice of Material Modification. This notice requirement is only for group health plans subject to ERISA.

Offering Telehealth to Employees Not Eligible for Group Health Plans

Many employers that sponsor group health plans have portions of their employee population that are not eligible for the group health plan, typically because they are part-time employees. Employers sometimes wish to give these part-time employees something to assist them with their health care needs or expenditures, and it can be tempting to offer that population telemedicine benefits instead of the group health plan.

There are significant compliance concerns with this design however, as a telemedicine program can be robust enough to qualify as a group health plan subject to ERISA, COBRA, HIPAA, and other regulations. When telemedicine is coupled with a major medical program, this only raises minor concerns or compliance needs. When offered as a stand-alone service however, this raises more serious issues. This is because on its own, a telemedicine program cannot meet the ACA’s market reforms, such as offering preventive care like immunizations; or certain health screenings. A group health plan that fails to meet market reforms can be subject to penalties of up to $100 a day per employee.

Offering these employees telemedicine in the short term during the COVID-19 pandemic is likely less risky than a blanket offer of telemedicine coverage for an entire calendar or plan year, but it is currently unclear how regulators will respond to this approach. If an employer wishes to offer telemedicine to employees who are not eligible for the group health plan, they should consult with counsel to ensure they understand the potential risks. Alternatively, employers in this situation could offer part-time employees Individual Coverage HRAs (ICHRAs) to offset the cost of coverage the employee purchases individually. Alera Group will continue to monitor for any signals from Washington DC that telemedicine may be used in unique ways during the COVID-19 pandemic.

COVID-19 Info Hub

COVID 19 Employer resourcesSo much information, so little time. Our goal is to cut through the clutter and get you the most pertinent information in a timely manner. Below you will find articles and resources that can help answer your questions, including but not limited to those that relate to:

  • Leave management, including the newly expanded FMLA program
  • Health plan coverage pertaining to COVID-19 testing and treatment
  • Furloughs, termination and benefits news
  • Health & safety tips
  • Compliance
  • P&C coverage
  • Insurance market impacts

Whitepapers

COVID-19 and Employee Termination and Benefits Consideration

Legal Alerts

Dependent Care Assistance Programs & COVID-19
Notice Requirements When Making Health Plan Design Changes
Families First Coronavirus Response Act Passes
COVID-19 Update Employee Terminations, Furloughs, and Lay-offs: COBRA, Reinstatement, and Closed Businesses
Offering Telehealth to Employees Not Eligible for Group Health Plans

Insights & Other Resources

What Does Your Health Plan Cover? How Different Carriers Are Addressing COVID-19
State Department of Insurance Responses to COVID-19

 

Legal Alert: What Employers Need to Know About the New Transparency Rules

Proposed Transparency Rule Released

Following President Trump’s Executive Order on Improving Price and Transparency in American Healthcare, one final and one proposed rule was released by HHS and CMS that aim to increase price transparency for hospitals and insurance companies.  These rules would have an impact on employers who sponsor group health plans. Healthcare Reform

It is important for employers to remember that the Transparency in Coverage Proposed Rule is only a proposed rule and will not be finalized until after the public comment period if it all. There is also a possibility it may not become a final rule. It is anticipated that many organizations and entities will provide comments on this rule, and there is a likelihood that if finalized in the future, it could be markedly different from the proposed rule. Furthermore, for rules of this magnitude, additional guidance will be required by federal agencies to assist employers, Third-party administrators, insurance carriers, and hospitals, with the specific implementation processes and policies. Employers should look for updates on this rule but should not make decisions or changes based on these proposed rules at this time.

The final rule for hospitals is the Calendar Year (CY) 2020 Outpatient Prospective Payment System (OPPS) & Ambulatory Surgical Center (ASC) Price Transparency Requirements for Hospitals to Make Standard Charges Public Final Rule. This rule will require hospitals to provide, publicly on the internet, standard charges (gross charges, payer-specific negotiated charges, the amount the hospital will accept in cash from a patient, and the minimum and maximum negotiated charges) for all items and services. This rule will go into effect in 2021. The information must include common billing and/or accounting codes and descriptions of the items or services so consumers can compare standard charges between hospitals.

The rule will also require hospitals to make similar information available for 300 common shoppable services, which include services that consumers can schedule in advance such as x-rays, outpatient visits, and bundled services such as a cesarean delivery including pre- and post-delivery care.

Civil monetary penalties of $300 a day will be imposed on hospitals that do not comply.

The second rule which could impact employers and carriers is the Transparency in Coverage Proposed Rule. This rule is aimed to ensure consumers would be able to get estimates of their cost-sharing liability for health care for different providers, allowing them to both understand how costs for covered health care items and services are determined by their plan, and shop and compare costs for health care before receiving care. The rule is also intended to increase consumerism and provide opportunities for innovation in health care.

The proposed rule would require all non-grandfathered group health plans or health insurance issuer:

  • Make available to participants, beneficiaries and enrollees (or their authorized representative) personalized out-of-pocket cost information for all covered health care items and services through an internet-based self-service tool and in paper form upon request.
  • Make available to the public, including stakeholders such as consumers, researchers, employers, and third-party developers the in-network negotiated rates with their network providers and historical payments of allowed amounts to out-of-network providers through standardized, regularly updated machine-readable files.

In addition to comments on the above items, the rule seeks comments on whether group health plans and insurance issuers should be required to make available through a standards-based application programming interface the cost-sharing information referenced above that is proposed to be disclosed through the internet-based self –service tool and the machine-readable files.

The information provided by the health plan would have to include: 

•    The participant’s estimated cost-sharing liability
•    Accumulated amounts (financial responsibility already incurred w/ respect to the deductible or out of pocket limits)
•    The negotiated rate, reflected as a dollar amount
•    Out-of-network allowed amount (if requested item or service is out of network)
•    Items and services content list
•    Notice of pre-requisites of coverage
•    Disclosure notice

This information would have to be provided in the following manners: 

•    Internet-based self-service tool
•    Paper form at no fee provided via mail no later than 2 business days after it is requested by the participant, beneficiary, or enrollee, with an option to allow participants to select delivery over the phone, via email, by fax, or face to face.

The proposed rule would allow employers and health insurance carriers to contractually agree that the information will be provided by the carrier.

 


Danielle Capilla, JD
Director of Compliance, Employee Benefits
In her role as Director of Compliance, Employee Benefits, Capilla focuses on enhancing  Alera Group’s existing compliance capabilities and building new world-class solutions for Alera Group’s employee benefits clients. Her legal background helps Alera Group clients navigate the complex landscape of healthcare legislation, regulation and reform. Capilla currently serves as an adjunct professor at DePaul University College of Law and is the Federal and State Legislative Chair for the Downtown Chicago Chapter of the National Association of Health Underwriters (NAHU).

The information provided in this alert is not, is not intended to be, and shall not be construed to be, either the provision of legal advice or an offer to provide legal services, nor does it necessarily reflect the opinions of the agency, our employee or our clients. This is not legal advice and no client-lawyer relationship between you and Alera Group or any of its employees is or may be created by your use of this information. Rather, the content is intended as a general overview of the subject matter covered. This agency and the Alera Group are not obligated to provide updates on the information presented herein. Those reading this alert are encouraged to seek direct counsel on legal questions.

Legal Alert: IRS Releases Draft 2019 ACA Reporting Forms and Instructions

The IRS has released draft forms and instructions for the 2019 B-Series and C-Series reporting forms (Forms 1094-B, 1095-B, 1094-C and 1095-C) used by employers and coverage providers to report certain information to full-time employees and the Internal Revenue Service (IRS). ACA Reporting

As background, the Affordable Care Act (ACA) added Sections 6055 and 6056 to the Internal Revenue Code. These sections require employers, plans, and health insurance issuers to report health coverage information to the IRS and to participants annually. Section 6055 reporting requirements apply to insurers, employers that sponsor self-insured group health plans, and other entities that provide minimum essential coverage (such as multiemployer plans). Section 6056 reporting requirements apply to “applicable large employers” or “ALEs” (generally, employers with 50 or more full-time employees) and require reporting of health care coverage provided to the employer’s full-time employees.

Reporting under Sections 6055 and 6056 involves two sets of forms:  the “B-Series” (Forms 1094-B and 1095-B); and the “C-Series” (Forms 1094-C and 1095-C).  Each includes a transmittal form (Form 1094-B or 1094-C), which serves as a cover page and provides aggregate information, and an individualized form (Form 1095-B or 1095-C) for each employee for whom the employer is required to report.

The forms for calendar year 2019 are due to employees by January 31, 2020. Forms are due to the IRS by February 28, 2020 if filing by paper and by March 31, 2020 if filing electronically.  The forms that must be filed and distributed depend on whether the employer is an ALE and the type of coverage provided. Employers filing 250 or more of a particular form are required to file with the IRS electronically. The following table summarizes the responsible parties and forms applicable to the ACA’s reporting requirements.

Responsible Entity Fully Insured Plan Self-Funded Plan
Applicable Large Employer (ALE)

50 or more full-time equivalent employees on average in prior calendar year

Forms 1094-C and 1095-C

(Parts I and II of Form 1095-C)

Forms 1094-C and 1095-C

(Parts I, II, and III of Form 1095-C)

Either B-Series or C-Series Forms for covered non-employees

Non-ALE

Fewer than 50 full-time equivalent employees on average in prior calendar year

Not required to file Forms 1094-B and 1095-B
Insurance Carrier Forms 1094-B and 1095-B Not Applicable


2019 Draft Instructions

The draft forms and instructions can be found here:

The draft instructions reflect the newly increased penalty structure (generally leaving the penalty at $270 per return but increasing the penalty cap from $3.275 million to $3.339 million).

Note Regarding 2019 Form 1095-C, Line 15.  The section 4980H “affordability” safe harbor percentage threshold is adjusted to 9.86% for plan years beginning in 2019, up from 9.56%.

Employers should continue to work closely with their insurance broker and other trusted advisors when determining how their organization will address the reporting requirements. Unless extended, 1095-C and 1095-B forms for the 2019 calendar year are due to participants by January 31, 2020. Forms 1094/1095-C and 1094/1095-B are due to the IRS by February 28, 2020 if filing by paper and by March 31, 2020 if filing electronically.  Employers should endeavor to file timely, as the IRS has begun enforcing penalties against employers who have failed to file timely or file electronically when required.

 

 

About the Author.  This alert was prepared for Spring Consulting Group by Stacy Barrow.  Mr. Barrow is a nationally recognized expert on the Affordable Care Act.  His firm, Marathas Barrow Weatherhead Lent LLP, is a premier employee benefits, executive compensation and employment law firm.  He can be reached at sbarrow@marbarlaw.com.
This email is a service to our clients and friends.  It is designed only to give general information on the developments actually covered.  It is not intended to be a comprehensive summary of recent developments in the law, treat exhaustively the subjects covered, provide legal advice, or render a legal opinion.

Benefit Advisors Network and its members are not attorneys and are not responsible for any legal advice.  To fully understand how this or any legal or compliance information affects your unique situation, you should check with a qualified attorney.

© Copyright 2019 Benefit Advisors Network. All rights reserved.

Legal Alert: Massachusetts Employers Must File HIRD Form by December 15

Massachusetts Employers Must File HIRD Form by December 15

As part of Massachusetts’ expanded Employer Medical Assistance Contribution (EMAC) program, employers with 6 or more employees in Massachusetts must submit a health insurance responsibility disclosure (HIRD) form annually, which collects information about employer-sponsored health insurance offerings.  Employers throughout the Commonwealth should have received email communication from the Department of Revenue (DOR) indicating that the HIRD form must be completed by December 15, 2019Massachusetts HIRD Form

The HIRD reporting requirement is administered by MassHealth and the DOR through the employer’s MassTaxConnect (MTC) account.  Employers may complete the HIRD form by logging into their MTC Withholding Tax account and selecting the “File HIRD” hyperlink under the “I Want To” section. The form will be available starting November 15 and will be used to assist MassHealth in identifying its members with access to qualifying insurance who may be eligible for the MassHealth Premium Assistance Program.  The DOR has published FAQs available here: https://www.mass.gov/info-details/health-insurance-responsibility-disclosure-hird-faqs.

Under the law, employers who knowingly falsify or fail to file the form may be subject to a penalty of $1,000 – $5,000 for each violation.

Next Steps

Employers should check with their payroll provider to determine if they will assist with the filing.  While the HIRD form may be filed by either the employer or its payroll company, it’s the employer’s responsibility to ensure that the form is timely filed.

The form is used to indicate whether the employer has offered to pay or arrange for the purchase of health insurance and information about that insurance, such as the premium cost, benefits offered, cost sharing details, eligibility criteria and other relevant information.  The HIRD form will be used to assist MassHealth in identifying its members with access to qualifying insurance who may be eligible for the MassHealth Premium Assistance Program. The Premium Assistance Program helps eligible working individuals and families pay for qualifying employer-sponsored insurance.

 

About the Authors.  This alert was prepared for Spring Consulting Group by Marathas Barrow Weatherhead Lent LLP, a national law firm with recognized experts on the Affordable Care Act.  Contact Peter Marathas or Stacy Barrow at pmarathas@marbarlaw.com or sbarrow@marbarlaw.com.

DOL Issues Ruling to Further Support Retirement Income Security for Small & Mid-Sized Employers

Summary

The U.S. Department of Labor (DOL) finalized a ruling that will improve retirement security for small and mid-sized employers as it estimates that 38 million private sector employees do not have access to retirement benefits. The ruling was issued on July 29, 2019 and was effective September 30, 2019. The ruling is as a result of an executive order issued by President Trump in October 2018 that focused on retirement plan security for small and mid-sized employers. The DOL used its delegated authority under ERISA to create this ruling. The ruling from the DOL is specific to defined contribution plans and did not include defined benefit plans.Association Retirement Plans

The DOL ruling states that small and mid-sized employers can now offer retirement savings plans through Association Retirement Plans (ARPs), otherwise known as Multiple Employer Plans (MEPs). These plans allow employers to come together to offer retirement plans to their employees. For this purpose, the association can be in a certain geography (i.e., split by city, state, or multi-state metropolitan area) or in a common industry with-out regard to geography. The DOL ruling also provides a safe harbor for a Professional Employer Organization (PEO) to offer an ARP.

An ARP is considered a single ERISA plan and therefore ERISA requirements (such as reporting, disclosure, plan documents, and investment monitoring) do not apply to each participating employer separately as the ERISA requirements instead apply to the ARP. The participating employers, however, would still have a fiduciary duty to ensure the plan is operating appropriately.

Key Reasons to Consider an ARP or MEP

Organizations that would like to offer traditional 401(k) retirement plans to help retain and attract new talent, may want to consider these types of programs as they will be more cost effective and will require far less internal resources than a traditional individual employer plan. Importantly, ARPs can provide substantial fiduciary support and improved level of governance, including investment management and oversight services. Outsourcing plan administration and investment fiduciary services will provide for better overall plan management and much lower risk for each adopting employer versus setting up individual employer plans.

In addition, there could be access to lower cost investment options that would be available in the ARP due to larger purchasing power versus an individual small employer plan. While there is a single plan document, each adopting employer still has the flexibility to design key provisions of the benefit program that would work for them. Examples include plan eligibility, contribution levels, and vesting provisions.

Association Retirement Plans versus Association Health Plans

A similar ruling was passed for Association Health Plans (AHPs) in 2018. However, in March 2019, a federal district court found that the ruling violated ERISA. This case developed after push back by several states and the District of Columbia of the AHP ruling. It is possible that the federal dis-trict court’s decision could be overturned in the appeals process. AHPs have had very different outcomes versus ARPs, given involvement from the states for AHPs. ARPs are federally regulated and therefore consistent in all areas.

Conclusion

Retirement income security continues to be an important topic for employers and employees. The DOL ruling provides additional opportunities for small and mid-sized employers to offer defined contribution retirement benefits to their employees in this competitive employment landscape. We expect more of these employers to focus on retirement benefits as they assess their over-all benefits package for recruiting and retention purposes.

Navigating Transgender Leave

The societal understanding of what it means for an employer to be truly inclusive of all diversity groups has expanded exponentially since the turn of the 21st century. Employers are increasingly faced with multifaceted Human Resources related topics including cannabis, cybersecurity, sexual harassment, and a push, in many states, for equal opportunity for paid leave. Equal opportunity accommodations do not just vary between male and female employees but also between groups based on race, religion, and gender identity.

Gender identity itself varies extensively, but one concentration is the difference between individuals that identify as either cisgender (the same gender as their sex at birth) or non-cisgender (not the same gender as their sex at birth). The non-cisgender identity includes a wide umbrella of individuals who do not identify or present themselves with the sex they were assigned at birth, including transgender (not the same gender as their sex at birth) and non-binary (neither exclusively female or male) individuals. This particular group of individuals has historically faced major roadblocks in society and until recently, had not experienced inclusion and accommodations in the corporate world. Even with the progress that has been made, there is still a gap in today’s employee benefits environment for anyone deviating from “the norm”.

Fill out the form below for the full white paper, which covers:

  • Unique challenges faced by LGBTQ employees and their employers, including leaves of absence and insurance coverage
  • Terminology and proper usage
  • Protective regulations, including a state-by-state analysis
  • How to expand inclusivity to the LGBTQ population and tips for building a benefits program and culture that accommodates accordingly