How to take Aim at a Moving Target - 2019 EB Benefits Compliance: October 10,2019 - NHRMA 2020 Conference

2019 EB Benefits Compliance:
  How to take Aim at
  a Moving Target
  October 10,2019

     1 HUB International
© 2019       © 2018 HUBLimited.
                         International Limited.

Agenda
1    ACA a Few Reminders and Other Developments

2     HIPAA Best Practices

3     Making sure your plans are compliant with the MHPAEA

4     Q&A

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      2018 HUB International Limited.

1
ACA Updates
What’s New/Reminders?

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      2018 HUB International Limited.

ACA: Enforcement of ESPR

Federal Enforcement- IRS
IRS enforcing Employer Shared Responsibility Provisions-
2016 and now starting with 2017 enforcement
 o   Must reply within 30 days of the receipt of Letter 226-J
 o   Can request a 30-day extension to appeal letter
 o   Must have records of offers of coverage made
 o   Send letter, with completed Form 14764 and amended
     14765 ( if applicable)
 o   Most letters are issued due to faulty ACA reporting,
 o   Penalty exposure is growing for employers as penalties
     are adjusted for inflation
 o   Failure to respond on a timely basis can subject
     employer to a tax lien

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ACA: Enforcement of ESPR

Federal Enforcement- IRS
ESPR Table- Understanding what it means
o   Notifies employer which penalty they are subject
    to for each month of the year
o   Information reported is captured from the Form
    1094-C filed for that year
o   Informs employer of number of employees that
    were recipient of a Premium Tax Credit (PTC) for
    each month
o   Notifies employer of penalty amount due for each
    month
o   Compare Form 1094-C to information found in the
    ESRP Table to confirm how the appeal should be
    drafted

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ACA: Enforcement of ESPR

Federal Enforcement- IRS
Form 14765
o   Notifies employer which employees
    received a PTC and for which months of
    the year the employer owes a tax penalty
o   Only appeal the months that are not
    highlighted in gray
o   Complete the second line with the correct
    code methodology
o   Remember that every month that reflects
    1H means that an offer of coverage was
    not made to a FT employee
o   REVIEW YOUR FORMS 1095-C FOR
    ACCURACY!

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ACA: What Are the Penalties for Failure to Comply?

Employer Mandate Penalty Adjustment: The employer shared responsibility provides for an inflation adjustment
beginning in calendar years commencing after 2014.

     2015                        2016            2017               2018                2019               2020
Adjusted penalty         Adjusted penalty   Adjusted penalty   Adjusted penalty   Adjusted penalty   Adjusted penalty
amount under IRC         amount under IRC   amount under IRC   amount under IRC   amount under IRC   amount under IRC
4980H(a): $2,080         4980H(a): $2,160   4980H(a): $2,260   4980H(a): $2,320   4980H(a): $2,500   4980H(a): $2,590

Adjusted penalty         Adjusted penalty   Adjusted penalty   Adjusted penalty   Adjusted penalty   Adjusted penalty
amount under IRC         amount under IRC   amount under IRC   amount under IRC   amount under IRC   amount under IRC
4980H(b): $3,120         4980H(b): $3,240   4980H(b): $3,390   4980H(b): $3,480   4980H(b): $3,750   4980H(b): $3,890

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ACA: Enforcement of ACA Reporting

Federal Enforcement- IRS
ACA reporting Enforcement- IRS enforcing 2016 and 2017
reporting
 o   Predicated on number of W-2 Forms issued in prior year
 o   Employer has 30 days to reply to inquiry
 o   Must specify why company did not file Forms 1095-C
 o   Failure to respond will result in the imposition of a tax
     lien
 o   Penalties apply per return: $260/$265 per return

Remember: Each company files for their own employees if
each company has a different payroll and TAX ID!

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ACA: Is your Plan Affordable in 2020?

What’s New for 2020?
Affordability of employee only coverage: Decreases from 9.86% for 2019 to 9.78% in 2020
o   We need to reassess affordability of coverage plans if using W-2 or rate of pay safe harbor whenever the
    affordability safe harbor decreases !
o   Rate of Pay: 2019- $13 x 130 x 9.86% = $166.63
                          2020- $13 X 130 X 9.78%= $165.28

100% of Federal Poverty level (FPL): Calendar year plans (2/1 and 3/1 plans) must use prior year’s FPL to assess
affordability
      o     2019: 2018 FPL ($12,140 x 9.86/12)= $99.75
      o     2020: 2019 FPL ($12,490 X9.78/12)= $101.79
      o     Non-calendar year plans may use 2019 FPL guidelines ($12,490 X 9.86%/12) $102.62 per month, 2020
            thresholds released in mid-January

W-2 Safe Harbor: Use box 1 of employee’s W-2 earnings. Must use projected 2019/2020 income; amount cannot
change throughout the year.

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ACA: What to expect in 2020?
Revival of Health Insurance Tax: Estimated to increase premiums by 2%- Applies to insured plans as of 1/1/2020
New State benchmarks (2017 not 2012) - Self-funded plans will have to choose a new state benchmark and note
the elimination of certain visit limits on EHB. Impact to fully insured plans in CA, no limits on certain
rehabilitative/habilitative services
Elimination of male sterilization in HDHPs: Male sterilization not deemed to be preventive care under HDHPs as of
1/1/2020
Elimination of PCORI tax in 2020: 11/1-1/1 Plan years will not pay PCORI Tax in 2020, 2/1-10/1 plans will make final
payment on 7/31/20
Exclusion of prescription drug manufacturer coupons from deductibles and OOPM - Effective 1/1/2020,
optional to implement this restriction, noting that the IRS will not impose penalties on HDHP that count manufacturer
coupons towards the deductible/OOPM when a generic medication is not available. New guidance expected in 2021
New preventive care definition for HDHPs - Effective 7/19/19 no deductible applies to certain medications to treat
chronic conditions
ICHRAs: Surfacing on 1/1/2020 allowing employers to fund an HRA to pay for coverage under the individual market
or an exchange. There are no annual limits on employer contributions to ICHRAs. Employees can reduce their
income by the difference between premiums and ICHRA contributions via a Cafeteria Plan ( no exchange coverage).

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ACA: What to expect in the near future?

Repeal of Cadillac Plan Tax: Bill to repeal the tax in its entirety passed the House, pending Senate approval (will be
discussed post August recess), need 60 votes have 42 so far. Until Senate bill passes tax is scheduled to go into
effect on 1/1/2022

Surprise Balance-billing bill: Being debated in D.C. pending approval on mandatory arbitration, includes a mandate
for EB brokers to disclose their compensation

ACA reporting: Bill introduced in the House that simplifies ACA reporting to require employers only to report on
employees who receive a PTC

Guidance from IRS on FSA Plan rollover features: Increase in the rollover amount from prior years

EEOC guidance on wellness programs: Anticipate new rules to be released in the summer

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State Developments- Individual Mandate Penalty

o   New Individual penalty for 2020 calendar year is the lesser of : 1) $695 plus CPI per member of a household
    ($347.50 if under age 18);2) 2.5% of household income; or 3) 300% of $695 plus CPI. No penalty applies if the
    cost of coverage for the individual exceeds 8.3% of household income

o   Insurance carriers and self-funded medical plans will be required to file copies of Forms 1095-B/C with the CA
    Franchise Tax Board. Fully insured employers will rely on carriers to satisfy the reporting requirement.

o   CA- Copies of Forms 1095-B/C must be filed by March 31st of 2021 for the 2020 calendar year, every year
    thereafter, copies of returns will be filed by March 31st of the year following the calendar year for which reporting is
    due

              o   Carriers and self-funded plans will be required to provide a copy of the Form 1095-B/C to each covered
                  participant (employee/former employee/retiree) by January 31st of the year following the calendar year
                  for which reporting is due

              o   The return must include the individual’s phone number- however, a Form 1095-C/B would suffice

              o   Failure to file a return with the CA Franchise Tax Board or to issue a statement for a participant subjects
                  the reporting entity (employer/carrier) to a $50 penalty per return

o   NJ,WA, RI, VT and WA D.C. have enacted similar laws that require employers to report to state tax agency
    coverage offered to employees and their participants
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Update: OR Paid Family Leave

•   Effective January 1,2023                                   •   Program administered by the OR
•   Applies to employers of all sizes                              Employment Dept. (EOD)
                                                               •   Rules expected on or before 9/1/21
•   Provides for 12 weeks of paid leave
•   Requires payment of 100% of wages for                      •   Employee contributions to be collected by
    low income employees, others receive 65%                       1/1/22, and employer to provide notice to
    of average weekly wages capped at 120%                         employees
    of average wage ($1254)
•   Employers contribute 40% and employees
    60%
      •     Employers with less than 25 employees are
            exempt from paying the employer contribution

      •     Does not apply to tribes or self-employed
            individuals but they can opt-in into the program

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2
Enforcement of the HIPAA
Privacy, Security, and HITECH
Act Rules

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HIPAA Enforcement

HHS via OCR has received a larger number of complaints of HIPAA violations
     •    Civil monetary penalties assessed against covered entities during 2018 reached record numbers ( Fresenius-
          $3.5M, MD Anderson TX-$4.3M, Anthem-$16M)

Impermissible uses and disclosures of protected health information;
     •    Lack of safeguards of protected health information;
     •    Lack of patient access to their protected health information;
     •    Lack of administrative safeguards of electronic protected health information.
     •    Use or disclosure of more than the minimum necessary protected health information.

The most common types of covered entities that have been required to take corrective action to achieve
voluntary compliance are, in order of frequency:
     •    General Hospitals;
     •    Private Practices and Physicians;
     •    Outpatient Facilities;
     •    Pharmacies; and
     •    Health Plans (group health plans and health insurance issuers).

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HIPAA Enforcement

Best Practices
o   Remember that all self-funded plans are subject to HIPAA: medical, pharmacy, HRAs, health FSAs, vision, and
    dental plans. Also insured plans if you agreed to access PHI

o   Have you conducted a recent review of your HIPAA Policies and Procedures? How long ago did you perform a risk
    assessment?

o   Have you trained members of your staff authorized to access PHI? ( HR, finance, IT, others?) How often do you
    train your staff? Do you have records ?

o   Do you have Business Associate Agreements in place? What breach notification parameters do the BAAs have?
    Who is responsible for notifying participants of a breach?

o   Have your plan documents been amended to incorporate the right restrictions as required by Rules?

o   Are you issuing you HIPA Privacy Notices every three years?

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3
Are you complying with the
MHPAEA?

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     Advocacy.     International
               Tailored InsuranceLimited.
                                   Solutions. Peace of Mind

Mental Health Parity- Update

•    The Department of Labor (specifically, the Employee Benefits Security Administration) is “stepping up” audits of,
     and focusing on compliance with the Mental Health Parity/MHPEA for Plans;
•    FAQ 39: Proposed MHP Guidance for Plan Sponsors Issued on April 23, 2018
         •     Clarified that non-quantitative treatment limitations (“NQTLs”) on MHP/SA services and benefits are generally
               not permissible unless said NQTLs are “planned/arrived at” and executed no more stringently than non-
               quantitative treatment limitations on non-MHP/SA services and benefits
•    FAQ 41; Mental Health and Substance Abuse Parity- Implements FAQ 49
•    The FAQ gives specific scenarios of impermissible limitations, such as:
               o    Excluding coverage for ABA (to treat autism spectrum disorders),
               o    Requiring step therapy only for prescription drugs associated with Mental Health
                    and Substance Abuse; or imposing limits in the dose an individual is required to use for MH/SA conditions
               o    Lowering reimbursement rates for non-physician practitioners, and
               o    Implementing different standards for access to care (timeliness and out-patient care), limited networks for
                    MH/SA aproviders
               o    Excluding alternative types of treatment (wilderness camps)
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“Action Plan” and Proposed Guidance on MHP

ERISA Disclosure Requirements:

     o     Plans must disclose the criteria for medical necessity determinations relating to MH/SA disorders, including
           processes, standards, strategies, evidentiary standards, and other factors applicable to NQTL

     o     Reasons why claim was denied, and access to all documentation pertaining to the denied claims and
           guidelines used to deny claim

     o     SPDs may include a link to a provider directory; provider directory must be updated on a regular basis and
           should include an accurate listing of providers

NEW Form to Request Information from Plan

     o     DOL has released a sample Form participants can use to request plan information regarding coverage and benefits
           for MH/SA, the form can be used to appeal a denied claim or learn about benefit plan coverage

     o     The template can be retrieved from https://www.dol.gov/sites/dolgov/files/EBSA/laws-and-regulations/laws/mental-
           health-parity/mhpaea-disclosure-template.pdf

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Thank you.

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