Benefits Hot Topics for 2020 - Presented By Matthew Cannova & Seth Capper Maynard Cooper & Gale, P.C. November 2019 - TRUE Network Advisors

Benefits Hot Topics
     for 2020
                         Presented By
        Matthew Cannova & Seth Capper
            Maynard Cooper & Gale, P.C.
                       November 2019

AGENDA
▼ The End of PCORI!
▼ Update: Final FAQ Guidance on MHPAEA
▼ Update: Expansion of Preventive Care to Cover
  Treatments for Chronic Conditions
▼ Update: Counting Drug Discounts Toward Maximum
  Out of Pocket (MOOP) Limits
▼ Update: Genetic Testing as a Medical Expense
▼ DOL Proposed Regulations on Electronic Disclosures
▼ Notices Related to SBCs and 5500s
▼ State Law Considerations
▼ ACA Reporting

The End of PCORI!
▼ Patient-Centered Outcomes Research Institute (“PCORI”) Fees
  ▼    Sponsors of self-insured health plans are required to report and pay
       PCORI fees on Form 720 by July 31 following the end of the plan year
  ▼    PCORI fee for a plan year is equal to the average number of lives covered
       under the plan, multiplied by an applicable dollar amount for the year
       ($2.45 for plan years ending 9/30/2018 – 9/30/2019)
▼ Are you done with PCORI?
  ▼    PCORI fees applicable for policy/plan years ending
       AFTER October 1, 2012 and BEFORE October 1, 2019

                                               Still subject to PCORI Fee due in
             No more PCORI Fees
                                                              2020

      Calendar year plans and plans with a   Plan years ending before October 1,
      plan year ending in November or        2019 – between January 1 and
      December                               September 3, 2019

      Final PCORI fee (for 2018 plan year)   PCORI fee for the 2019 plan year due
      was due July 31, 2019                  July 31, 2020

Final FAQ Guidance on MHPAEA
▼ FAQs regarding implementation of the Mental Health
  Parity and Addiction Equity Act of 2008 (MHPAEA)
  ▼ MHPAEA requires that, if a group health plan offers
     mental health and substance use disorder
     (MH/SUD) benefits, the plan may not impose less
     favorable conditions or more stringent limits on
     those benefits than they do on the same
     classification of medical and surgical benefits
  ▼ MHPAEA requirements apply to both quantitative
     and non-quantitative treatment limitations (NQTLs)
  ▼ Final FAQs primarily address application MHPAEA
     to NQTLs in various contexts

Expansion of Preventive Care to Cover
  Treatments for Chronic Conditions
▼ In order to establish and contribute to a health savings
  account (“HSA”), individual must be covered under a high
  deductible health plan (“HDHP”)
   ▼ HDHP = No payment for medical care until minimum
      statutory deductible is met
   ▼ Exception for "preventive care" such as immunizations and
      annual physicals
▼ IRS Notice 2019-45 expands preventive care to include
  specified set of treatments for chronic conditions
▼ Maynard Cooper Comment  How does this affect guidance
  that preventive care includes procedures that are “incidental
  or ancillary” to preventive care?

Expansion of Preventive Care to Cover
Treatments for Chronic Conditions
Preventive Care for Specified Conditions          For Individuals Diagnosed With
Angiotensin Converting Enzyme (ACE) inhibitors    Congestive heart failure, diabetes, and/or coronary artery
                                                  disease

Anti-resorptive therapy                           Osteoporosis and/or osteopenia
Beta-blockers                                     Congestive heart failure and/or coronary artery disease

Blood pressure monitor                            Hypertension
Inhaled corticosteroids                           Asthma
Insulin and other glucose lowering agents         Diabetes
Retinopathy screening                             Diabetes
Peak flow meter                                   Asthma
Glucometer                                        Diabetes
Hemoglobin A1c testing                            Diabetes
International Normalized Ratio (INR) testing      Liver disease and/or bleeding disorders

Low-density Lipoprotein (LDL) testing             Heart disease
Selective Serotonin Reuptake Inhibitors (SSRIs)   Depression

Statins                                           Heart disease and/or diabetes

Counting Drug Discounts Toward MOOP
▼ HHS Notice of Benefit and Payment
  Parameters (“NBPP”) for 2020 Rules
   ▼   Beginning 1/1/2020, if health plan covers a        MOOOOOP!
       medically appropriate and available generic
       equivalent, it can exclude the value of the drug
       manufacturers’ coupons from a participant’s
       maximum out-of-pocket (“MOOP”) limit
   ▼   Implied that health plan must count coupons
       toward MOOP if plan does not cover a
       medically appropriate generic equivalent, or
       such generic is not available
▼ Subsequent August 2019 FAQ Clarification
   ▼   Health plans are not required to count coupons
       against deductibles or MOOP until future
       guidance is issued

Genetic Testing as a Medical Expense
▼ IRS Private Letter Ruling 201933005
   ▼ Addresses whether commercially-available genetic
     testing is a medical expense
   ▼ If so, it could be reimbursed from a Health FSA
▼ IRS required the taxpayer to allocate costs between items
  that are medical care (i.e., genotyping) and items that are
  not medical care (i.e., ancestry services)
▼ May use a “reasonable method” to value and allocated
  the cost between medical and non-medical services
▼ Be aware of the Genetic Information Nondiscrimination
  Act (GINA) – genetic information is considered protected
  health information (PHI) and receives special protections
  under GINA

Current Benefit Plan E-Disclosure Rules
1. No affirmative consent required for participants with
   computer access if:
   ▼   They can access electronic documents at any location where
       they are expected to perform their employment duties
   ▼   Access to the employer's electronic information is an integral
       part of these duties
2. Other individuals must affirmatively consent:
   ▼   Must affirmatively consent electronically, in a manner that
       reasonably demonstrates individual's ability to access info in
       the electronic form that will be used
   ▼   Provide an email address to receive e-documents
   ▼   Employer must provide clear and conspicuous statement
       setting out certain requirements

Current Benefit Plan E-Disclosure Rules
▼ Clear and conspicuous statement must set out:
   1.   Types of documents to which consent applies
   2.   That consent can be withdrawn at any time without charge
   3.   Procedures for withdrawing consent and for updating e-mail or
        other address for receipt of e-documents or other information
   4.   Right to request and obtain paper versions of e-documents,
        including whether paper versions are provided free of charge
   5.   Hardware/software requirements for accessing and retaining
        e-documents
        ▼   If change in hardware/software requirements occurs after consent and
            creates a material risk that the individual may be unable to access or
            retain e-documents, the plan administrator must provide a statement
            (1) describing the revised hardware/software requirements and (2)
            notifying individuals they can withdraw consent

Current Benefit Plan E-Disclosure Rules
▼ General requirements for plan administrators
  ▼   Current safe harbor requires plan administrators using
      e-disclosure to ensure that individuals receive the plan
      info in an appropriate manner; specifically, plan
      administrators must take measures to ensure that the
      e-disclosure system addresses various issues
      including:
        1. Actual receipt
        2. Confidentiality
        3. Style, format, and content requirements
        4. Notice of the significance of the document
        5. The individual's right to receive a paper version

DOL Proposed Regulations on E-Disclosures
▼ Proposed regulations create new safe harbor
▼ Only applies to retirement plan disclosures – does not apply to
  health and welfare plan disclosures, for now
▼ “Notice and access" structure
   ▼   Plans must provide to each covered individual a notice of internet
       availability for each covered document
   ▼   The covered documents will be posted on a website that covered
       individuals can access
▼ Covered individual = participant, beneficiary, or other person
  entitled to covered documents
       ▼   Covered individual must provide employer with an electronic
           address, including an e-mail or smartphone number
▼ Covered document = any document administrator is required to
  provide under ERISA Title I (e.g., pension benefit statement, QDIA
  notice, SPD, SMM, SAR, annual funding notice)

DOL Proposed Regulations on E-Disclosures
▼ Notice of internet availability
   ▼   Generally, must provide at the time of posting of each document;
       however, can provide a combined notice for more than one covered
       document each plan year
   ▼   Contents of notice:
          ▼   Specified disclosure language
          ▼   Brief description of the covered document
          ▼   Internet address where the covered document is available
          ▼   Statement of the recipient's right to request a paper version
   ▼   Notice must be (a) provided electronically and separately from other
       documents and (b) written in a manner calculated to be understood by
       the average participant
   ▼   Preliminary step for existing employees  Must provide an initial
       notification of default electronic delivery of each required disclosure,
       which must be provided on paper and must state (a) that documents
       will be provided electronically and (b) covered individual’s right to
       paper copies, free of charge, and right to opt out

DOL Proposed Regulations on E-Disclosures
▼ Standards for internet website
   ▼   Administrator must ensure existence of website at which a
       covered individual is able to access covered documents
   ▼   Must take reasonable measures to ensure that covered document:
       ▼   Is available on the website no later than the date on which the covered
           document must be furnished
       ▼   Remains available on the website until it is superseded by a
           subsequent version of the covered document
       ▼   Is presented on the website in a manner calculated to be understood
           by the average participant
       ▼   Is presented on the website in a widely-available format suitable to be
           both read online and printed clearly
       ▼   Is searchable electronically by numbers, letters, or words
       ▼   Is presented on the website in a widely-available format that allows the
           covered document to be permanently retained in an electronic format
   ▼   Website must also protect covered individuals’ confidentiality

Notices Related to SBCs and 5500s
▼ Must provide 60-day advance notice of changes
  impacting the Summary of Benefits and Coverage (SBC)
   ▼   ACA requires group health plans to give participants 60-day
       advance notice before making material modification in
       benefits or coverage that is not reflected in the most recent
       SBC (applies to both benefit enhancements and reductions)
   ▼   Not required if timing of modification coincides with new
       plan year, when new SBCs reflecting such change will
       already be issued
▼ Form 5500 and Summary Annual Report (SAR)
   ▼   SAR generally must be distributed within 9 months after
       plan year ends
   ▼   If Form 5500 was filed under an extension, SAR must be
       distributed within 2 months following the date on which the
       Form 5500 was due

State Law Considerations
Paid Family Medical Leave             Paid Sick Leave              Individual Mandates
California                            Arizona                      Massachusetts
New Jersey                            California                   D.C.
Rhode Island                          Connecticut                  New Jersey
                                      D.C.                         Rhode Island
New York
                                      Maryland
Washington (contributions began                                    Vermont
                                      Massachusetts
1/1/19; benefits begins 1/1/20)       New Jersey                   California (eff. 1/1/20)
D.C. (contributions began 7/1/19;     Oregon
benefits begin 7/1/20                 Rhode Island
Massachusetts (contributions began    Vermont
10/1/19; benefits begin 1/1/21)       Washington
Connecticut (contributions begin      Michigan (PTO)
1/1/21; benefits begin 1/1/22)        Nevada (PTO) (eff. 1/1/20)
Oregon (contributions begin 1/1/22;   Maine (PTO; eff. 1/1/21)
benefits begin 1/1/23)

▼ Other state law considerations
  ▼ State minimum wage and overtime laws
  ▼ Other types of leave laws
  ▼ State wage deduction laws

ACA Reporting
    2020 ACA Reporting Deadlines

     To IRS            To Employees

  Paper Filers
February 28, 2020
                      January 31, 2020
Electronic Filers
 March 31, 2020

GOLDEN “CODES”
▼   Code Series 1 & 2
    ▼ Code Series 1 (Line 14)
    ▼ Code Series 2 (Line 16)

▼ Must always have a Series 1 Code
▼ May not always have a Series 2 Code – but
  you want one!
▼ 2C is the “Trump Code” (only exception is 2E
  for multiemployer plan interim rule relief)
▼ Offers of Coverage - All or Nothing Per Month

GOLDEN “CODES”
Line 16 (Code Series 2) Test
▼   You ALWAYS want Line 16 to have a response, if possible.
▼   Did we offer coverage to the employee?
     ▼ YES – Did employee enroll?
        ▼ YES – 2C (employee enrolled)
        ▼ NO – Use your affordability safe harbor (2F, 2G, or 2H)
     ▼ NO – Why not?
        ▼ Not employed – 2A
        ▼ Not full-time (that month) – 2B*
        ▼ Limited Non-Assessment Period – 2D
            ▼   Examples: Waiting Period, Initial Measurement Period, First
                month of employment

LESSONS LEARNED
   REVIEW THE FORMS BEFORE FILING
       Especially Form 1094-C
   Line 16 – Avoid leaving Line 16 blank if possible
   Line 15
       Should only be completed if 1B, 1C, 1D, 1E, 1J, or 1K is
        entered on Line 14
       Do NOT complete Line 15 if Line 14 Code is 1A, 1F, 1G, or 1H
   Code Combinations - ACA returns with incorrect code
    combinations increase the possibility that the employer will be
    subject to an IRS audit because the IRS will be unable to properly
    process the returns
   Watch out for “strings” attached to Affordability Safe Harbors
   GET STARTED ASAP!!

Lessons from ESRP Assessments

▼   Significant liability (e.g., $2.5M)
▼   Initial focus appears to be on Code section 4980H(a)
    penalty – $2,080/year or $173.33/month
▼   Check your Form 1094-C
▼   Establish and document
    ACA Measurement Period
    (and policy)

Limits for Health & Welfare Plans
                                                                2019              2020
Annual Cost Sharing Limit (self-only coverage)                 $7,900            $8,150
Annual Cost Sharing Limit (other than self-only coverage)      $15,800           $16,300

HDHP Out-of-Pocket Maximum (self-only coverage)                $6,750            $6,900

HDHP Out-of-Pocket Maximum (family coverage)                   $13,500           $13,800
HDHP Minimum Deductible (self-only coverage)                   $1,350            $1,400
HDHP Minimum Deductible (family coverage)                      $2,700            $2,800
Maximum Annual HSA Contributions (self-only coverage)          $3,500            $3,550

Maximum Annual HSA Contributions (family coverage)             $7,000            $7,100

Maximum HSA Catch-Up Contribution                              $1,000            $1,000
Health Flexible Spending Account Maximum                       $2,700        Not yet released
Employer Mandate Penalty A (Fail to Offer)                  $2,500 per FTE   $2,590 per FTE
Employer Mandate Penalty B (Unaffordable)                   $3,750 per EE    $3,890 per EE

Copyright 2019 Maynard Cooper & Gale PC. All rights reserved. Reproduction or use of these materials, including for in-house training, without authorization of the authors is prohibited.