Health and Welfare Plans Archives - Page 7 of 7

Another U.S. Supreme Court Review of Affordable Care Act Could Impact Employer Health Plans

On March 2, 2020, the U.S. Supreme Court granted two petitions by interested states asking the Court to review the constitutionality of the individual health coverage mandate in the Affordable Care Act (ACA) and, if unconstitutional, determine whether other provisions of the ACA also are invalid.

In 2017, Congress changed the penalty tax associated with the individual mandate to zero as part of the Tax Cuts and Jobs Act of 2017. Following that change, a group of states challenged whether the individual health coverage mandate, with no associated penalty for an individual’s failure to purchase coverage, could still be upheld under the taxing power of Congress. In 2018, a Texas district court agreed and held that the other provisions of the ACA also are invalid as they are so closely linked to the individual mandate that they are inseverable. The recent petitions to the Supreme Court followed a ruling issued by the U.S. Court of Appeals for the Fifth Circuit that upheld the Texas district court’s 2018 finding that the individual mandate is unconstitutional, but sent back for further review the district court’s finding that the rest of the ACA also is invalid. This will be the Supreme Court’s third time reviewing the ACA since its enactment in 2010.

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2019 ACA Information Reporting: IRS Extends Deadline and Good Faith Relief

In IRS Notice 2019-63, the IRS extended the deadline to March 2, 2020, for employers and health insurance providers to provide individuals with 2019 Forms 1095-B and 1095-C (previous date was January 31, 2020). Nonetheless, the IRS encourages employers and other coverage providers to furnish 2019 statements as soon as possible.

Below is background on the information reporting requirements added by the Affordable Care Act (“ACA”) under Internal Revenue Code sections 6055 and 6056:

Now Hear This: California Enacts FSA Notice Requirement

A new California law requires California employers to notify employees who participate in a flexible spending account (FSA) and work in California of any deadlines applicable to withdrawing funds from their FSA before the end of the year. This includes health care FSAs, dependent care FSAs and adoption assistance FSAs.

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Traps for the Unwary: Is your Company’s Severance Arrangement Subject to ERISA?

Severance arrangements generally provide for cash payments to an employee whose employment is involuntarily terminated and may include certain benefits, such as subsidized medical coverage and outplacement assistance.

Severance arrangements take a variety of forms. Formal severance plans often are used as a retention tool for employees across the board with no individual negotiations. In our experience, companies with formal severance plans typically treat them as ERISA plans.

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IRS Notice Expands Preventive Care Available under HDHPs

In Notice 2019-45 (the Notice) the IRS expands the definition of preventive care available under a high deductible health plan (HDHP) to include additional medical services and items for an individual with certain chronic conditions. This Notice was issued in response to President Trump’s June 2019 Executive Order on “Improving Price and Quality Transparency in American Healthcare to Put Patients First.” This Order directed regulatory agencies to issue guidance on a number of initiatives as a means to promote health care price transparency and enhance consumer-driven health care, such as health savings accounts (HSAs). The Notice responds to the Order’s directive that the IRS provide guidance expanding the definition of preventive care for participants with chronic conditions.

Individuals may contribute to a HSA if they are covered by a HDHP and have no disqualifying health coverage. To qualify as a HDHP, a health plan generally may not provide benefits, except for preventive care services, for any year until the participant satisfies the minimum deductible for that year. The Notice specifically expands the definition of preventive care that may be covered by a HDHP to include certain medical care services and items for chronic conditions. Based on the guidance, plan sponsors may amend their HDHPs to cover additional medical services and items for an individual with certain chronic conditions before the individual meets the HDHP deductible. Note that this expanded definition only applies for purposes of HDHPs and does not affect the definition of preventive care as used under the Affordable Care Act (ACA) rule prohibiting cost-sharing for network preventive care.

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Enforcement Delay: Agencies to Reconsider Impact of Rule Applying Drug Manufacturer Coupons to ACA Cost-Sharing Limits

On August 26, 2019, the Internal Revenue Service (IRS), Department of Labor (DOL), and Department of Health and Human Services (HHS), collectively the “Agencies,” issued a joint FAQ announcing their intent to delay enforcement of a recent HHS final rule that would require group health plans and issuers of health insurance coverage to count certain drug manufacturer coupons toward the maximum annual out-of-pocket cost-sharing limit under the Affordable Care Act (the maximum out-of-pocket or MOOP limit). For plan years beginning in 2020, the MOOP limit on cost sharing is $8,150 for self-only coverage and $16,300 for other than self-only coverage. Drug manufacturers’ “coupons” are a form of cost-sharing assistance that offsets the amount of a participant’s copayment or coinsurance for a brand name drug.

The MOOP limit under ERISA and the Internal Revenue Code incorporates the HHS rule, thereby applying it to all non-grandfathered group health plans, self-funded or insured. The HHS rule states that plans and issuers are permitted to exclude the value of such coupons for specific prescription brand drugs from counting toward MOOP limits when a medically appropriate generic equivalent is available. However, based on language in the preamble to the HHS rule, health plans would have to count coupons toward MOOP limits when a medically appropriate generic drug is not available.

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Benefits and Breakfast: Latest Developments in Welfare Plans

Missed last month’s Benefits & Breakfast meeting on the latest developments in welfare plans in Chicago, Los Angeles and Philadelphia? We have you covered!

Listen to recordings for each meeting, where we covered the following topics:

New Health Reimbursement Account (HRA) Regulations – Will a standalone HRA work for you?
Recent Welfare Plan Litigation – Are you prepared to defend a lawsuit based on your current plan documentation and procedures?
Privacy – Are changes to the HIPAA Privacy Rule in the future? Will new California privacy rules affect you?
Health Plan Executive Order – What is coming for HSAs, FSAs, and health care price transparency initiatives?

Recordings: Chicago | Los Angeles | Philadelphia