Judge Issues National Injunction Against Certain ACA Rule 1557 Provisions

michael-berwanger-109-by-192By Michael Berwanger, JD, Director, Quality Management & Compliance

On December 31, 2016, Judge Reed O’Connor of the United States District Court for the Northern District of Texas entered a nationwide injunction in Franciscan Alliance v. Burwell. The order prohibited the Department of Health and Human Services (HHS) from enforcing certain provisions of its nondiscrimination rule promulgated under ACA section 1557, namely those that prohibit discrimination on the basis of gender identity or termination of pregnancy.

The remaining provisions of the rule—prohibiting discrimination on the basis of disability, race, color, age, national origin, or sex other than gender identity—are in effect as scheduled, mostly beginning January 1, 2017.

MedCost published a summary of Section 1557 here. HHS has published a summary here and FAQs here. Section 1557 applies antidiscrimination laws to entities receiving assistance under certain federal agencies. These rules have required various plan changes from self-funded plans to implement the protections afforded under the rules.

ACA rule 1557In the December 31 ruling, Judge O’Connor stated that “[w]hile this lawsuit involves many issues of great importance—state sovereignty, expanded healthcare coverage, anti-discrimination protections, and medical judgment—ultimately, the question before the Court is whether Defendants exceeded their authority under the ACA in the challenged regulations’ interpretation of sex discrimination and whether the regulation violates the Religious Freedom Restoration Act as applied to Private Plaintiffs.”

Finding that HHS exceeded its authority under the ACA, he enjoined the agency from enforcing the provisions of Section 1557 regarding plan changes for nondiscrimination on the basis of gender identity and pregnancy termination until further judicial or legislative action.

For more information about Section 1557, consult your broker, legal advisor or the Department of Health and Human Services.MedCost

This blog post should not be considered as legal advice.

ACA Reporting Due Early 2017

ACA DeadlinesBy Michael Berwanger, JD, Director, Quality Management & Compliance

In early 2017, employers and insurance carriers must report information to employees and the IRS about coverage offered to employees under employer-sponsored health plans during calendar year 2016.

Background

The Patient Protection and Affordable Care Act (ACA) requires self-funded employers to satisfy two reporting obligations under Sections 6055 and 6056 of the Internal Revenue Code, relating to health coverage offered to employees and about those employees who are covered under the plan.

The purpose of the reporting obligations is to allow the IRS access to data needed to monitor compliance with both the employer and individual mandates. The reporting also may be used by affected employees in assessing their own compliance with the individual mandate and/or in seeking subsidized coverage on the federal and state exchanges established under the ACA (as described in this blog post).

Section 60ACA reporting55 Reporting Compliance

Under Section 6055 of the Internal Revenue Code, all self-funded employers must annually report information to the IRS and to any individual who is covered under a health plan offered by the employer.

Currently, many employers do not have access to Social Security numbers for non-employed dependents, creating a fairly significant compliance burden to collect that data. The regulations require that employers exercise “reasonable collection efforts” to obtain that information. (Typically, an employer will satisfy that standard by documenting at least two efforts to request the data from those individuals). This same information must be reported to employees, along with basic contact information for the employer.

Section 6056 Reporting Compliance

The second reporting obligation, under Code Section 6056, applies only to “Applicable Large Employers.” Applicable Large Employers are those employers with at least 50 full-time equivalent employees and to whom the ACA’s employer mandate applies.

Unlike Section 6055 reporting, all of this information also must be provided separately to each employee, full-time, part-time, or otherwise. You can read helpful IRS guidance about 6056 reporting here.

IRS Forms 1094 and 1095

The compliance obligations are complex, and the IRS has developed forms (Forms 1094-B, 1095-B, 1094-C, and 1095-C) to provide consistency in reporting and to help simplify the process for employers.

Applicable Large Employers (ALEs) who offer coverage under a self-funded health plan may use Form 1095-C, which combines the reporting obligations of Sections 6055 and 6056 in a single form for reporting to both the IRS and individuals. When the forms are provided to the IRS, the Applicable Large Employer also must submit a transmittal form, Form 1094-C. Forms 1095-C and 1094-C, along with instructions, can be accessed here.

Small employers with fewer than 50 full-time equivalent employees are only required to meet one of the reporting obligations, the Minimum Essential Coverage reporting under Section 6055. Small employers may use Form 1095-B, with transmittal Form 1094-B. These forms, along with instructions, can be accessed onACA reporting the IRS web site here.

Changes from reporting year 2015 to 2016 for forms 1094-C and 1095-C can be found here.

Changes from reporting year 2015 to 2016 for forms 1094-B and 1095-B can be found here.

Compliance Deadline

Filings will begin in early 2017 for the 2016 calendar year.

*Form 1095-C must be provided to all employees (full-time, part-time, or otherwise) by March 2, 2017.

*All Forms 1095-C, along with the transmittal form, 1094-C, must be provided to the IRS by February 28, 2017 (if in paper form), or March 31, 2017 (if filed electronically). 

Note: Employers filing more than 250 information returns (Form 1095-C) must do so electronically.MedCost

To print this article, click on the title and scroll to “PRINT THIS PAGE” at the bottom.

2016 ACA Employer Deadlines Extended

2016 ACA Employer Deadlines

By Michael Berwanger, JD, Director, Quality Management & Compliance

The Internal Revenue Service (IRS) released Notice 2016-70, which extends the due date for furnishing to individuals the 2016 Form 1095-B (titled Health Coverage), and the 2016 Form 1095-C (titled Employer-Provided Health Insurance Offer and Coverage), from January 31, 2017 to March 2, 2017.

Self-funded employers should note that the filing deadlines remain unchanged. The Notice states that the “Treasury and the [Internal Revenue] Service have determined that there is no similar need for additional time for employers, insurers, and other providers of minimum essential coverage to file with the Service the 2016 Forms 1094-B, 1095-B, 1094-C, and 1095-C.”

Employer Deadlines

Therefore, the due dates for filing 2016 Forms 1094-B, 1095-B, 1094-C, and 1095-C with the IRS remain:

February 28, 2017 (for paper filing)

March 31, 2017 (for e-filing)

Employers may obtain a 30-day extension for filing with the IRS by filing Form 8809 on or before the forms’ due date.

The IRS has also extended last year’s good-faith transition relief for inaccurate information on the forms. Recognizing the “challenges involved in developing new procedures and systems to accurately collect and report information in compliance with new reporting requirements,” the IRS has provided relief to incorrect and incomplete information reported on the statement or return.

Please note: The good-faith relief applies only to data on the forms, not failure to comply with due dates.MedCost

 

Some ACA Insurance Markets in Turmoil

NC and SC Could Be Two of the Most Affected States

ACA insuranceSome of the Affordable Care Act’s insurance marketplaces are in turmoil as the fourth open enrollment season approaches this fall, but what’s ahead for consumers very much depends on where they live.

Competition on these exchanges will be diminished next year when three of the nation’s largest health insurers — Aetna, United Healthcare and Humana — will sell individual plans in many fewer markets. So too will several Blue Cross and Blue Shield plans in various states. That’s on top of the 16 nonprofit co-ops that have closed since January 2015.

The announcements, however, apply generally only to the individual market. The much larger market of employer-sponsored insurance is not part of the health law exchanges.

Most hurt will be marketplace consumers in Arizona, North and South Carolina, Georgia and parts of Florida, where only one or two insurers will be left when open enrollment season begins Nov. 1.

(Kaiser Health News, Phil Galewitz, August 18, 2016)
KHN

It’s Time to Plan ACA Reinsurance Payments

By Michael Berwanger, JD, Director, Quality Management & Compliance

 

shutterstock_68891791It is time for employer-sponsored health plans to begin thinking about the process for calculation and submission of enrollment data and payment of fees under the Transitional Reinsurance Program.

As background, this program was established to fund a reinsurance pool to help stabilize premiums in the insurance markets created under the Affordable Care Act (ACA).

The program is being funded by three annual assessments on employer-sponsored health plans. The assessments are for average covered lives in 2014, 2015 and 2016 calendar years.

This year, enrollment data must be submitted by November 15, 2016, and payment must be submitted no later than January 17, 2017.

The 2016 Reinsurance Contribution Rate is $27.00 per covered life.

Online Submission Process

The Centers for Medicare and Medicaid Services (CMS) has implemented a streamlined process for reinsurancethe collection of reinsurance contributions. A contributing entity, or a Third Party Administrator (TPA) on its behalf, can complete all required steps for the reinsurance contributions process online (using the government portal, pay.gov), including registration, submission of annual enrollment count, and remittance of contributions.

A form is available for the contributing entity (or its TPA) to provide basic company and contact information and the annual enrollment count for the applicable year. The form will automatically calculate the contribution amounts, and entities will be required to submit payment information and schedule a payment date for remittance of the contributions.

CMS will not send an invoice to contributing entities. All required action will be completed online at pay.gov.

Options for Payment

There are two options for how a contributing entity can make a payment: (1) a one-time lump sum payment, or (2) a full contribution in two payments. (See chart below.)

Contribution Payment Options for the 2016 Benefit Year

Reinsurance

Source: Centers for Medicare and Medicaid Services

CMS will permit contributing entities to submit each year’s contribution in two separate payments – one larger payment of $21.60 per covered life at the start of the year, and a smaller payment of $5.40 per covered life at the end of the year.

However, when submitting enrollment data, dates must immediately be scheduled for payment of the fees, whether there will be one payment prior to January 17, 2017, or two payments with the later in November 2017.

If You Are Self-funded for a Portion of the Reporting Period

health insurance noticesFor a plan that has moved from a fully insured plan to a self-funded plan during the first nine months of the 2016 calendar year, both plans will be responsible for paying a portion of the fee, using one of the permitted calculation methods.

Since fully-insured plans are not permitted to use the Snapshot Factor Method of calculation, either the Actual Count Method or the Snapshot Method of calculation must be used.

Helpful Resources

This site provides technical assistance and training related to the Marketplace and Premium Stabilization program (which includes the Transitional Reinsurance Program). Webinars are offered that provide entities with information on program and operational guidance, along with live demos of the enrollment count and contributions submission process.

This is the site where the contributing entity, or TPA, will create a profile, and submit the enrollment data and contributions for the Transitional Reinsurance Program.

This website is hosted by the Centers for Medicare and Medicaid to provide information about the Transitional Reinsurance Program.

For more information, consult your broker, legal advisor or cms.gov. MedCost

This blog post should not be considered as legal advice.

 

To print this article, click on the title and scroll to “PRINT THIS PAGE” at the bottom.

Is Your Health Plan Affected by the Cadillac Tax?

One-Fourth of Employers Now Offering CDHPs to Avoid Tax

Employers continue to take action to avoid the looming excise or “Cadillac” tax on more expensive health insurance for their employees. This Affordable Care Act tax of 40% annually is currently set to take effect in 2020, but it is already having a major impact.

A 2015 Mercer study found that total health benefits cost averaged $11,635 per employee.[i] Cadillac taxThis average amount exceeds the Cadillac tax’s threshold of $10,200 for individuals, and would trigger the 40% tax on benefits above the threshold. And small employers are seeing higher increases in medical, dental and other health benefits than large employers.

Employers Turn to
Consumer Plans                                             

For the first time, 25% of covered employees are now enrolled in Consumer-Driven Health Plans (CDHP). Large employers of 20,000 or more employees have added CDHPs the fastest (73%). A projected 34% of employers with 50+ employees will be subject to the excise tax in 2020 if they make no changes to their current health plans.

 Cadillac tax

 

High-Deductible Health Plans (HDHP) are a type of Consumer-Driven Health Plans. Employers are saving an average of 18% with an HSA-eligible HDHP instead of a traditional Preferred Provider Organization (PPO) plan.[ii]

One key reason that employees are researching medical costs in advance for services such as maternity care, joint replacements and Emergency Room visits. A 2015 Consumer Health Insights’ survey showed that 22% always talked to others about costs or searched websites for information.[iii]

Employees who have a telemedicine option in their health plans can choose a more appropriate level of Cadillac taxcare for certain respiratory infections, fevers and nausea (see “Treatment Alternatives to the Emergency Room”). Choosing the right level of care reduces time away from work, boosting productivity. And employees save unnecessary dollars from their own pockets.

Some employers offer pricing transparency tools such as HealtheReports™ which compares costs for a complete procedure. Employees can review local facilities that offer mammograms, colonoscopies, X-rays and other services. HealtheReports also lists comments from members about their recommendations for health care organizations.

A New Era in Health Care

CDHP plans require a shift in thinking about medical spending. In traditional plans, employees are used to handing over their insurance card and paying a small copay.

PiggyBankIt can come as a jolt to employees to realize that CDHP coverage begins with paying expenses up to a higher deductible before insurance kicks in. For this reason, employers must proactively educate employees when introducing CDHP options.

Our next blog will detail key steps for employers to take in providing tools for smart decision-making. Employers who can manage staff expectations with a balanced understanding of the changing health care industry will build a productive partnership with your team.MedCost

 

[i] “With the Excise Tax in Their Sights, Employers Hold Health Benefits Cost Growth to 3.8% in 2015,” Mercer Global, November 19, 2015, http://www.mercer.com/newsroom/national-survey-of-employer-sponsored-health-plans-2015.html (accessed August 8, 2016)

[ii] Ibid.

[iii] “Debunking Common Myths about Healthcare Consumerism,” McKinsey & Company, December 2015, http://www.mckinsey.com/industries/healthcare-systems-and-services/our-insights/debunking-common-myths-about-healthcare-consumerism (accessed August 11, 2016)

HHS Nondiscrimination Rule: FAQs

By Michael Berwanger, JD, Director, Quality Management & Compliance

medicalOn May 18, 2016, the Department of Health and Human Services (HHS) published a final rule (the “Rule”) to implement Section 1557 of the Affordable Care Act (ACA), which prohibits discrimination in health coverage and care based on race, color, national origin, age, disability, and sex.

Notably, the Rule:

  • Extends protections against sex discrimination to health coverage and care for the first time, including gender identity discrimination within the definition of sex discrimination;
  •  Implements guidance regarding meaningful access for individuals with Limited English Proficiency, including the provision of free, accurate, and timely language assistance services;
  •  Incorporates existing law that requires reasonable modifications, effective communication, and readily accessible buildings and information technology to avoid disability-based discrimination; and
  •   Prohibits discriminatory health insurance benefit designs and includes specific coverage protections for transgender individuals.

ACA, health insurance, health exchangesHHS has published a useful FAQ here summarizing some of the key aspects of Section 1557. The following Q&A helps explain who the Rule applies to, how the Rule protects against discrimination, and how the Rule impacts coverage offered by self-funded health plans.

I. Who does the Rule apply to?

The Rule applies to (i) every health program or activity that receives Federal financial assistance from HHS; (ii) health programs administered by HHS, and (iii) federally-facilitated and state-based marketplaces established under the Affordable Care Act.

Some examples of types of entities that are subject to the Rule include but are not limited to: physician practices, hospitals, health clinics, health insurance programs, state Medicaid agencies, community health centers, home health care agencies, the Health Insurance Marketplaces, or employers offering employee health benefit programs (in certain circumstances).

How does this impact religious organizations?

The Rule does not include a blanket religious exemption related to Section 1557’s general prohibition against sex discrimination. However, HHS stated that “[e]xisting laws protecting religious freedom and belief, including provider conscience laws, the Religious Freedom Restoration Act, the ACA’s provisions regarding abortion services, and the ACA’s preventive health services regulations, continue to apply.”

It may be prudent to consult with your legal counsel if you think your organization may qualify for a religious exemption.

EEOC, employer wellness program, wellness program, ACA, GINA
II. When does this take effect for a health plan?

Provisions of the Rule that require changes in plan benefit design take effect in the first plan year on or after January 1, 2017.

III. What does the Rule prohibit?

Under Section 1557, covered entities may not take the following actions on the basis of race, color, national origin, sex, age or disability:

  • Deny, cancel, limit, or refuse to issue or renew a health insurance policy;
  • Deny or limit coverage of a health insurance claim;
  • Impose additional cost sharing or other limitations or restrictions on coverage; or
  • Use discriminatory marketing practices or insurance benefit designs.

The Rule maintains that while health plans cannot have coverage policies that operate in a discriminatory manner, they still may apply medical necessity rules when determining covered benefits.

HHS clarified that they do not affirmatively require covered entities to cover any particular treatment, as long as the basis for exclusion is evidence based and nondiscriminatory.

What about gender transition services? Are health plans required to cover those services?

If a company is a covered entity under the Rule, not subject to an exception such as the religious exemptions, and the gender transition service is determined to be medically necessary, then it is likely that the service must be covered by the plan. Note that HHS declined to specifically require a gender transition provision.

However, covered entity plans are prevented from discriminating in the provision of benefits based on employer benefit planssex. As such, services such as transition-related services may be subject to medical necessity requirements, but the process for determining medical necessity must also be nondiscriminatory.

For example, HHS stated “[t]he range of transition-related services, which includes treatment for gender dysphoria, is not limited to surgical treatments and may include, but is not limited to, services such as hormone therapy and psychotherapy, which may occur over the lifetime of the individual. We believe the flexibility of the general language in the final rule best serves transgender individuals and covered entities.”

Note that, as mentioned above, the Rule does not affirmatively require covered entities to cover any particular procedure or treatment for transition-related care. The Rule also does not preclude a covered entity from applying neutral standards that govern the circumstances in which it will offer coverage to all its enrollees in a nondiscriminatory manner.

IV. What changes happened regarding sex discrimination?

Section 1557 and HHS’s final regulations, for the first time, extend protections against discrimination based on sex to health coverage and care. Now, covered entities must provide individuals equal accesspregnancy, pregnancies, high risk pregnancy to health programs and activities without discrimination based on sex, including but not limited to pregnancy, false pregnancy, termination of pregnancy, recovery from childbirth or related medical conditions.

Significantly, HHS extended the term “gender identity” to include gender expression, non-binary gender identities, and transgender status.

V. How will this impact the coverage offered under a Plan?

The Rule does not affirmatively require covered entities to cover any particular procedure or treatment for transition-related care. However, the Rule includes specific protections for transgender individuals and prohibits discriminatory practices. Specifically, HHS stated that “we do not affirmatively require covered entities to cover any particular treatment, as long as the basis for exclusion is evidence based and nondiscriminatory.”

DoctorNote that HHS specified a limited exception to the requirement that covered entities treat individuals consistent with their gender identity: that a covered entity may not deny or limit health services that are ordinarily or exclusively available to individuals of one sex or gender based on the fact that the individual’s sex assigned at birth, gender identity, or gender in a medical or health insurance plan record differs from the one to which such health services are ordinarily or exclusively available. HHS provided the following example:

“[A] covered entity may not deny an individual treatment for ovarian cancer where the individual could benefit medically from the treatment, based on the individual’s identification as a transgender male. HHS notes that blanket exclusions of all gender transition services, which historically have been used by some Medicaid programs and health insurers, are now recognized as outdated and not based on current standards of care.”

VI. When must covered entities post a notice regarding their non-discrimination policies?

Covered entities must post a notice by October 16, 2016, containing certain elements as required by HHS, as described at 45 CFR 92.8. Notices must be available to beneficiaries, enrollees, applicants, and members of the public. They must be printed in a conspicuously visible font and included in significant communications (such as handbooks and outreach publications), in conspicuous physical locations where the entity interacts with the public, and in a conspicuous location on the covered entity’s website accessible from the homepage. HHS has published a sample notice and nondiscrimination statement.

VII. Will covered entities need to implement a grievance procedure specificemployee benefit plans to Section 1557, and if so, are there special considerations or guidelines?

        Covered entities that employ at least 15 people must adopt a grievance procedure that incorporates appropriate due process standards and provides prompt and equitable resolution of grievances under Section 1557.

HHS and covered entities with more than 15 employees also must designate at least one employee to coordinate the entity’s efforts to carry out Section 1557 responsibilities, including the investigation of grievances. The Rule includes a sample grievance procedure.To ensure compliance with Section 1557, HHS will provide covered entities with a training curriculum on key provisions of the rule.

For more information about Section 1557, consult your broker, legal advisor or the Department of Health and Human Services.MedCost 

 

This blog post should not be considered as legal advice.

What to Do If You Receive This Notice

By Michael Berwanger, JD, Director, Quality Management & Compliance

You may receive a notice from the Health Insurance Marketplace or an Exchange regarding former or current employees who received a tax credit on an exchange. (Click here to view a redacted notice example.)

If you receive such a notice, this communication summarizes the purpose of the notice, why you as an employer are receiving the notice, and what you may need to do in response to the notice. For more information, a detailed Question and Answer document has been provided by the IRS here.

What are the notices?

The notices from the Exchanges are in connection to the employer shared responsibility provisions, sometimes referred to as pay or play” tax provisions, and notify the employer about individual(s) who:

(1) have received a premium tax credit to purchase health insurance on the Exchange, and

(2) who reported the name of their employer during the tax credit application process.

These notices are part of the Exchange verification process under the Affordable Care Act (“ACA”) for determining eligibility for premium tax credits and reduced cost-sharing, and for exemption from the individual mandate tax.

Why would an employer receive these notices?

Tax form & glassesUnder the ACA, certain employers (those with at least 50 full-time employees or full-time equivalents, also known as applicable large employers) might have to pay an employer shared responsibility payment for any month that at least one full-time employee enrolled in Marketplace coverage and received an advanced premium tax credit, or cost sharing reduction. You can read about eligibility thresholds here.

Individuals are only eligible for tax credits on the Health Insurance Marketplace/Exchange if they do not have minimum essential coverage available through their employer, or they are not offered affordable minimum value employer coverage. (Additionally, they must meet specified income and US residency requirements). Thus, employees who have affordable employer coverage available should not qualify for subsidies to buy health insurance in the Exchange.

As part of the application process for a premium tax credit or cost-sharing reduction, an applicant may submit to the Exchange that their employer:

  • did not offer coverage to the employee while employed by the employer,
  • the employer provided coverage but it was not “affordable” or did not provide “minimum value”, or
  • the employee was in a waiting period and unable to enroll in health care coverage. (Please see IRS Notice 2012-58 for an explanation of waiting period rules).

If an Exchange determines that an applicant is eligible to receive an advanced premium tax credit or cost-sharing reduction, and that finding was based at least in part on the above factors, the Marketplace will likely investigate to determine if the employer must pay an employer shared responsibility payment.

Why should an employer pay attention to these notices?

In 2016, employers with at least 50 full-time employees or full-time equivalents are subject to “play-or-pay” penalties if at least one full-time employee receives a subsidy to buy insurance in an Exchange. These notices from the Exchanges alert employers that some of their employees have qualified for premium tax credits and the employer faces potential penalties. Please note that only the IRS, not the Marketplace, can determine whether an employer will owe an employer shared responsibility payment.

health insurance noticesThe notice provides a 90-day response window from the date stated on the notice. Thus, employers will want to respond to the Exchange if they did offer a particular employee coverage that was affordable and provided minimum value, or if the notice is otherwise inaccurate.

What should employers do if they receive a notice?

Employers are not required to respond to Exchange notices, but it will be in an employer’s best interest to respond if the notice is regarding a full-time employee who was actually offered coverage, or if the employee misreported information and was not actually entitled to coverage. If you choose to appeal the notice, you can do so here, at the HealthCare.gov website. Any responses must be made within the 90-day verification process time. Please note that it is likely Exchanges will send notices to whatever employer address the employee provided on his/her application for Exchange coverage.

How can an employer file an appeal?

Employers have 90 days from the date stated on the notice from the Marketplace to file an appeal. This appeal can be filed either by:

  • Completing the Employer Appeal Request Form or:
  • Submitting a letter with the following information:
    • Business name
    • Employer ID Number (EIN)
    • Employer’s primary contact name, phone number and address
    • The reason for the appeal
    • Information from the Marketplace notice received, including date and employee information

Mail the appeal request form or letter, along with a copy of the Marketplace notice, to the following address, or fax the documents to 1-877-369-0129:

Department of Health and Human Services
Health Insurance Marketplace
465 Industrial Blvd.
London, KY 40750-0061

Information supporting your appeal may be included.MedCost

This blog post should not be considered as legal advice. For more information, consult your broker, legal advisor or the Department of Health and Human Services.

DOL Increases Employee Benefit Plan Penalties

By Michael Berwanger, JD, Director, Quality Management & Compliance

employee benefit plansOn June 30, the Department of Labor (DOL) announced two interim final rules that increase civil penalties for various violations as required by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015.

The Act requires agencies to: 1) adjust the level of civil monetary penalties with an initial “catch-up” adjustment; and (2) make subsequent annual adjustments for inflation. According to the DOL, future adjustments will be made by January 15 of each year, starting in 2017. Here are some highlights of the changes:

*Form 5500The maximum penalty for failing to file Form 5500, which must be filed by most Employment Retirement Income Security Act (ERISA) plans, will increase from $1,100 to $2,063 per day that the Form 5500 is late.

*Group Health Plans. The maximum penalty for failing to provide the summary of benefits and coverage (SBC) required under health care reform will increase from $1,000 to $1,087 per failure. Violations of the Genetic Information Nondiscrimination Act (GINA), such as establishing eligibility rules based on genetic information or requesting genetic information for underwriting purposes, may result in penalties of $110 per participant per day, up from $100. Maximum penalties relating to disclosures regarding the availability of Medicaid or Children’s Health Insurance Plan assistance, including failure to disclose to a state, on request, relevant information about the employer’s plan, will also increase from $100 to $110 per day.

*401(k) Plans. For plans with automatic contribution arrangements, penalties for failure to provide the employee benefit plansrequired ERISA § 514(e) preemption notice to participants will increase from $1,000 to $1,632 per day. Penalties for failing to provide blackout notices (required in advance of certain periods during which participants may not change their investments or take loans or distributions) or notices of diversification rights will increase from $100 to $131 per day. And the maximum penalty for failure to comply with the ERISA § 209(b) recordkeeping and reporting requirements will increase from $11 to $28 per employee.

*Multiple Employer Welfare Arrangements (MEWAs)Penalties for failure to meet applicable filing requirements, which include annual Form M-1 filings and filings upon origination, will increase from $1,100 to $1,502 per day.

Other penalties increased by the regulations include those for failure to provide certain information requested by the DOL, failures not corrected within specified time periods, and defined benefit plan compliance failures. The increases apply to penalties assessed after August 1, 2016, with respect to violations occurring after November 2, 2015.

employee benefit plansPenalty assessments made before August 1, 2016, (including those relating to violations after November 2, 2015) and assessments at any time relating to violations on or before November 2, 2015, will reflect the lower pre-adjustment amounts.

You can read the DOL FAQ here and see a full listing of new penalty amounts here.

 

To print this article, click on the title and scroll to “PRINT THIS PAGE” at the bottom.

Centers for Medicare & Medicaid Launches Employer Verification Study

By Michael Berwanger, JD, Director, Quality Management & Compliance

From April 2016 through June 2016, CMS will be contacting some employers, either by phone or letter, to request information about the Employer-Sponsored Coverage (ESC) offered to employees for the 2016 plan year.Employer health benefits, health care, employee claims

The purpose of this verification study is to evaluate whether an employee, or a sample of employees, receiving a premium subsidy for an exchange product correctly attested that he or she was not offered ESC that met affordability and minimum value requirements for plan year 2016.

While CMS has not articulated how large the sample size for the verification study will be, it is possible that some MedCost clients may be contacted. Employers will be asked to provide information regarding the lowest-cost self-only health plan that they offered for plan year 2016, as well as their employees’ eligibility for employer-sponsored coverage. If contacted by phone, calls are expected to last 10-15 minutes. Click here to view a sample of the 2016 Employer Notice letter you may receive.

CMS, employer verification studyThe study is taking place as part of efforts by HHS to meet certain “verification” requirements related to its administration of the ACA exchanges. The study is designed to help ensure that only individuals who do not otherwise have access to an “affordable/minimum value” plan outside the exchange receive subsidized coverage on the exchanges. Participation by employers in this study is voluntary.

For more detailed information regarding the Employer Verification Study, click here.