USA: Alliant’s Employee Benefits Compliance & Fast Facts – March 10, 2017

The following information was provided to us by Asinta Partner in the United States, Alliant.

American Health Care Act: House Advances Repeal and Replace Legislation

After long and contentious legislative sessions, the House Committees on Ways and Means and Energy and Taxation each advanced their parts of the ACA repeal and replace legislation, referred to collectively as the American Health Care Act. Votes were along party lines and resulted in no real change to the provisions impacting group health plans. GOP leaders will push for a full House vote the week of March 20. Notably, the Congressional Budget Office (CBO) has not yet provided cost estimates for the legislation, but those are expected this coming Monday. We reported on the initial drafts of the American Health Care Act in an Alert earlier this week. Those provisions are summarized again below. Notethat the bill is merely proposed legislation and, in any event, it does not eliminate ACA employer reporting requirements. Employers should timely file their Forms 1094/1095 for this reporting cycle.

What’s Out:

  • Individual and Employer Shared Responsibility Penalties: Eliminates ACA penalties for both the individual and employer mandate for any penalties payable for the 2015 calendar year and beyond.
  • ACA Taxes: Eliminates most ACA taxes.
  • Health FSAs: Repeals the H-FSA salary reduction election limit and requirement that OTC  medications have RX to be reimbursable.
  • Cost Sharing Reductions in Exchange: Repeals ACA cost sharing reductions available to individuals with incomes between 100% and 250% of the Federal Poverty Level by 2019.
  • Exchange Income-based Subsidies: Eliminates effective December 31, 2019.
  • Medicaid: Ends the ACA’s optional state Medicaid expansion.
  • Essential Health Benefits: Repeals the ACA’s list of ten Essential Health Benefits for the small group and individual markets.

What’s In:

  • Dependent Coverage to Age 26
  • Prohibition on Pre-existing Condition
  • HSAs: Increases HSA contribution limits to match HSA/HDHP OOP limits
  • Tax Credits: Extends the ACA premium tax credit through 2019 and expands it to allow the credit to apply to plans purchased outside of Exchanges. In 2020, transition to a fixed dollar tax credit based on age and phases out for higher wage earners. Can be used for individual plans and unsubsidized COBRA coverage
  • Individual and Small Group Enrollment Penalties: By 2019 in the individual and small group markets individuals would pay a 30 percent premium increase for 12 months if they had a gap in “creditable coverage” of at least 63 days during the preceding 12 months.
  • Cadillac Tax: Retained but delayed until 2025.

HIPAA Phase Two Audits in Progress

The Department of Health and Human Services’ Office of Civil Rights (OCR) is in the middle of its “Phase 2” HIPAA audit process affecting covered entities (group health plans) and business associates (entities that provide services to group health plans and have access to Protected Health Information). This consists of three rounds:

  1. Desk audits of covered entities that are being conducted remotely with no onsite OCR presence
  2. Desk audits of business associates with no onsite OCR presence
  3. Onsite audits for both covered entities and business associates.

Recent industry group dialogue suggests that these audits may be moving from education-oriented into enforcement. Cybersecurity issues appear to be an area of special interest. Make sure you’re not caught off guard, as affected entities generally have a very limited period of time to respond to an initial audit notice. You can review our HIPAA audit alert, as well as our HIPAA privacy and security checklists for additional reference.

Repeal and Replacement News on the Portal

To stay current with all the latest news, there is now a dedicated space on the Healthcare Reform tab of the portal for all things repeal and replace related. This spot will be kept up to date with all the latest pieces we have on any ACA replacement. We will link to any podcast related to the topic as well. Check here to stay up to date with all our current resources!

Paying for COBRA Can Impact HIPAA Special Enrollment Rights

Employers will sometimes as part of a severance package—or just informally—offer to pay for a terminated employee’s COBRA premium for a number of months. This can make COBRA coverage an attractive offering and delay the former employee’s enrollment in a new employer’s plan. Often, however, this COBRA subsidy doesn’t last for the maximum COBRA coverage period, which can limit the former employee’s ability to enroll in a new employer’s plan when the COBRA subsidy ends. Generally an employee cannot enroll (after initial eligibility) in an employer’s group health plan mid-year without experiencing a HIPAA special enrollment right event. A new employee who initially waives coverage on the employer’s plan because a former employer is subsidizing COBRA does not have a HIPAA special enrollment right when the COBRA subsidy ends. A HIPAA special enrollment right only exists when the individual has exhausted COBRA. It often comes as a surprise—not to mention significant cost—to the former employee when they learn they are required to exhaust COBRA before enrolling in the new employer’s plan. The best practice is for an employer that offers a COBRA subsidy to include information about the implications of the subsidy on the individual’s HIPAA special enrollment rights.

FAQ of the Week

  1. What if I failed to file and pay Reinsurance fees?
  2. 2016 is the final year plans must pay Reinsurance fees. Employers sponsoring self-funded plans (the plan technically pays the fee) should have submitted their Reinsurance data using by November 15, 2016 and paid a first or single installment no later than January 15, 2017. If an employer failed to submit data and arrange for payment they should do so right away. They can submit data and payment now with very low risk of any penalties or other consequences. In theory, any amount owed for Reinsurance is a determination of a debt and could be subject to federal debt collection rules. Additionally, reinsurance contributions are considered federal funds that would be subject to the False Claims Act. However, we have not seen any collection efforts or penalties where the employer eventually files and pays.

Special thanks to Alliant for providing us with this content. If you have any questions regarding compliance in the United States, please get in contact with Alliant via their contact page here.