by admin | Jul 9, 2024 | ACA, Compliance
The Patient-Centered Outcomes Research Trust Fund fee, often referred to as the PCORI fee, can be a source of confusion for employers offering health insurance plans. This article aims to simplify what the PCORI fee is, why it exists, and how it impacts your business.
What is the PCORI Fee?
The PCORI fee is an annual charge levied on most health insurance plans and self-funded employer health plans. It was established by the Affordable Care Act (ACA) to fund the Patient-Centered Outcomes Research Institute (PCORI).
What Does PCORI Do?
PCORI is an independent, non-profit organization dedicated to conducting research on the effectiveness of different medical treatments and approaches. Their research helps patients, caregivers, and healthcare providers make more informed decisions about treatment options.
The IRS offers useful resources, including a chart that explains how the fees apply to different types of health coverage and arrangements.
How Much is the PCORI Fee?
The PCORI fee is calculated based on the average number of lives covered under a plan during the policy year. The fee amount is adjusted annually based on inflation in National Health Expenditures. Here’s a quick breakdown:
- For plans ending after September 30, 2023 and before October 1, 2024: The applicable dollar amount is $3.22 per covered life.
- For plans ending after September 30, 2022 and before October 1, 2023: The applicable dollar amount is $3.00 per covered life.
Who Pays the PCORI Fee?
The PCORI fee is generally paid by the issuer of a health insurance plan or the plan sponsor of a self-funded health plan. Employers offering group health plans will typically see the PCORI fee reflected in their health insurance premium statements.
When is the PCORI Fee Due?
The PCORI fee is typically due on July 31st of the year following the last day of the plan year.
Are There Any Exemptions?
Certain types of health plans are exempt from the PCORI fee, including:
- Health Reimbursement Arrangements (HRAs)
- Certain government-funded plans (Medicare, Medicaid)
- Some limited-flexibility plans
The Bottom Line:
The PCORI fee is a relatively small annual cost that helps fund valuable research in patient-centered outcomes. Understanding the purpose and calculation of the PCORI fee can help employers better manage their health insurance expenses and contribute to the advancement of healthcare knowledge.
Additional Resources:
by admin | Jun 17, 2024 | Compliance
PREPARE NOW TO PAY THE PCORI FEE
The Patient-Centered Outcomes Research Institute (PCORI) fee funds research that evaluates and compares health outcomes, clinical effectiveness, and the risks and benefits of medical treatments and services. Effective through 2029, the IRS treats this fee like an excise tax, applied to all covered lives, including employees, retirees, spouses, and dependents. The fee is due on July 31, 2024.
For plan and policy years ending between October 1, 2023, and September 30, 2024, the PCORI fee is $3.22 per covered life, reflecting a 7.33% increase.
For plan and policy years ending between October 1, 2022, and September 30, 2023, the fee was $3.00 per covered life.
Employers with self-funded medical plans or applicable health reimbursement arrangements (HRAs) must use Form 720 to fulfill their reporting obligations and pay PCORI fees.
Calculating the PCORI fee requires employers to determine the average number of lives covered under a self-insured health plan using one of the IRS-approved methods.
EMPLOYER CONSIDERATIONS
Employers should be prepared to file Form 720 and pay the fee by July 31. Refer to the IRS Form 720 instructions, FAQs, and chart of applicable coverage types.
IRS RELEASES 2025 LIMITS FOR HDHPS AND HSAS
The IRS released the inflation-adjusted amounts for 2025 health savings accounts (HSAs), excepted benefit health reimbursement arrangements (EBHRAs), and high-deductible health plans (HDHPs).
2024 and 2025 HSA and HDHP Limits
|
2024 |
2025 |
|
Self-Only |
Family |
Self-Only |
Family |
| HSA Maximum Contribution |
$4,150 |
$8,300 |
$4,300 |
$8,550 |
| HSA Maximum Catch-up Contribution |
$1,000 |
$1,000 |
$1,000 |
$1,000 |
| HDHP Minimum Deductible |
$1,600 |
$3,200 |
$1,650 |
$3,300 |
HDHP Maximum Out-of-Pocket Expense
(In Network) |
$8,050 |
$16,100 |
$8,300 |
$16,600 |
Maximum EBHRA Contribution Limits
2024 $2,100
2025 $2,150
EMPLOYER CONSIDERATIONS
Employers offering these benefits must update all plan communications, open enrollment materials, and other relevant documentation to ensure that participants and beneficiaries are adequately informed about the new limits.
HHS FINALIZES SECTION 1557 NONDISCRIMINATION REGULATIONS
The U.S. Department of Health and Human Services (HHS) released new regulations under Section 1557 of the Affordable Care Act (ACA), known as the “Final Rule” nearly two years after the proposed rule was published. The regulations are set to become effective on July 5, 2024, though some provisions will be phased in later. The Final Rule reinstates certain provisions from the previous regulations and introduces additional clarifications and guidelines.
Section 1557 of the ACA aims to prevent discrimination in health programs or activities receiving federal financial assistance. The new regulations under the Final Rule extend coverage to all products offered by a health insurance issuer if any of these products receive federal financial assistance. This expansion will bring a significant number of entities under the purview of Section 1557 for the first time. Those entities may include:
- Insurers offering qualified health plans through the health exchange marketplace, large group market plans, excepted benefit plans, self-insured group health plans.
- Third-party administrators (TPAs) and pharmacy benefit managers (PBMs) if any part of their business is operated by an insurer subject to Section 1557 or if they are sub-recipients of federal financial assistance.
- Insurance agents or brokers paid by a covered entity receiving federal financial assistance.
EMPLOYER CONSIDERATIONS
The Final Rule significantly broadens the definition of a covered entity under Section 1557, extending its reach beyond the scope of the 2020 Rule. Consequently, insurers, TPAs, PBMs, insurance brokers, and other related entities need to review their business models to determine if they are now subject to Section 1557. If covered, these entities must ensure that their practices, policies, and products comply with the new regulations.
HHS updated its Frequently Asked Questions to offer further guidance on implementing the Final Rule.
MEDICAL DEBT CANCELLATION ACT INTRODUCED
On May 8, legislators introduced the Medical Debt Cancellation Act (S.4289), a proposal aiming to eliminate current medical debt in the United States. The Act involves the federal government paying off medical-related debts under specific conditions. Its multiple components, which would be phased in over time, seek to eradicate existing medical debt and limit the ways consumers can incur future debt. Currently in draft form, the Act is subject to amendment and further clarification before moving to a congressional vote.
A central provision of the Act is the establishment of a federal grant program administered by the Department of Health and Human Services (HHS) to fund the payment, or “cancellation,” of medical debts held by hospitals, provided the debt is out-of-pocket, unpaid, and owed for services rendered before the bill’s enactment. Excluded from the program are amounts covered by federal health care programs or other insurance plans. Hospitals would apply for these grants, with HHS prioritizing safety net hospitals that agree to cancel debts owed by low-income and vulnerable populations.
The Act also mandates that within one year of enactment, federally funded health care programs must eliminate medical debt collections. HHS would report annually to Congress on the progress of the debt forgiveness program, which would conclude once all eligible medical debt is canceled. Additionally, the Act proposes amendments to the Fair Debt Collection Practices Act, prohibiting the collection of pre-enactment medical debt and creating a private right of action for individuals harmed by violations.
While the Act aims to cancel existing medical debt, it does not ban future medical debt but imposes new billing and debt collection requirements on healthcare providers. These include assessing eligibility for charity care or financial assistance 45 days before the payment due date and providing related information to patients. The Act prohibits 501(c)(3) hospitals from charging uninsured patients more than generally billed amounts and bans interest on outstanding payments. Amendments to the Fair Credit Reporting Act would prevent credit reporting agencies from including medical debt information. The Act, still in the proposal stage, draws attention due to its potential broad impact.
GOVERNOR LAMONT SIGNS LEGISLATION EXPANDING CONNECTICUT PAID SICK DAYS LAWS
Governor Ned Lamont has signed new legislation expanding Connecticut’s paid sick leave laws to include a broader range of workers. The updated laws will ensure that more employees have access to paid sick leave, addressing gaps in the current system that covers only specific retail and service occupations. The goal of the legislation is to help retain young workers in the state, enhance employee productivity, and support economic growth by reducing the financial hardships of missing work due to illness.
Starting January 1, 2025, the law will apply to almost every occupation, excluding seasonal and certain temporary workers. The threshold for employer coverage will be reduced in phases: employers with at least 25 employees by January 1, 2025; those with at least 11 employees by January 1, 2026; and all employers by January 1, 2027. Additionally, the definition of a family member for sick leave purposes will be broadened, and the reasons for using paid sick leave will include public health emergencies.
EMPLOYER CONSIDERATIONS
Employers should prepare to update existing documents to reflect the new legislation.
QUESTION OF THE MONTH
Q: We have a client that never filed their 2022 plan year D1 and P2 files for RxDC reporting (assuming the carrier filed the D2-D8). Was the $100-a-day penalty in place for this filing in 2023?
A: There was penalty relief for 2020 and 2021, but not for 2022 filings. The penalty is found in Internal Revenue Code Section 4980D. The good faith relief came from the Departments of Labor, Health and Human Services, and Treasury in the form of FAQ 56 issued on December 23, 2022.
©2024 United Benefit Advisors
by admin | May 21, 2024 | Compliance
FEDERAL TRADE COMMISSION BANS NON-COMPETE CLAUSES
On April 23, 2024, the Federal Trade Commission (FTC) finalized a rule banning most employers and employees from entering into non-compete clauses, effective 120 days post-publication in the Federal Register. This move aims to eliminate these clauses across all levels of workers, with a narrow exception for senior executives’ pre-existing agreements.
The rule broadly defines non-compete clauses, including any terms that prevent or penalize employees from seeking employment elsewhere after their current employment ends. It also outlaws “forfeiture-for-competition” clauses, where employees must choose between severance and working for a competitor.
Moreover, the rule mandates that employers notify all employees, except senior executives, that their non-compete clauses are no longer enforceable, providing suggested language for such notifications.
An exception remains for non-compete clauses entered into during the bona fide sale of a business, which now potentially includes certain employee scenarios.
EMPLOYER CONSIDERATIONS
This rule marks a significant shift in U.S. employment practice, and employers are urged to reassess their compensation and retention strategies immediately.
PORTAL OPEN FOR RXDC SUBMISSIONS
On April 10, 2024, the Centers for Medicare and Medicaid Services (CMS) announced through its RegTap portal that the Health Insurance Oversight System (HIOS) is now open to Prescription Drug Data Collection (RxDC) submissions for 2023. Any plan sponsor submitting the RxDC report on its own must be registered with HIOS.
CMS has provided several resources for navigating the registration process:
HIOS Access Training
HIOS Access RxDC User Guide
RxDC User Manual
EMPLOYER CONSIDERATIONS
While this is a one-time registration, the first time can take several weeks, so plan sponsors are encouraged to register early. The 2023 reference year submission is due June 1, 2024.
PREGNANT WORKERS FAIRNESS ACT ISSUED
On April 15, 2024, The Equal Employment Opportunity Commission (EEOC) issued final regulations for the Pregnant Workers Fairness Act (PWFA), effective June 18, 2024. This law mandates that employers with 15 or more employees must handle accommodation requests for pregnancy, childbirth, or related conditions as they would under the Americans with Disabilities Act (ADA).
Key aspects of the PWFA include a broad definition of “pregnancy, childbirth, or related medical conditions” that covers a wide range of situations from fertility treatments to lactation. Employers are required to provide reasonable accommodations, which might include job restructuring, flexible working hours, and modifications to the work environment, among others.
The regulations emphasize that accommodations need not be based on the severity of conditions, and employers can deny accommodations only if they pose an undue hardship, which must be carefully assessed through an interactive process.
EMPLOYER CONSIDERATIONS
Employers should review and update their HR policies and training to ensure compliance with the PWFA, considering any additional local or state regulations.
2024 PRIVACY RULE AMENDED TO STRENGTHEN PROTECTIONS FOR HIGHLY SENSITIVE PHI
On April 22, 2024, the Department of Health and Human Services (HHS) introduced new regulations under the Health Insurance Portability and Accountability Act (HIPAA) to safeguard protected health information (PHI) related to reproductive health care. This action follows concerns that PHI could be misused under new state laws following the Supreme Court’s decision in Dobbs v. Jackson Women’s Health Organization. This regulatory update aims to preserve patient confidentiality and uphold individuals’ rights under shifting legal landscapes in reproductive health.
Key features of these regulations include:
- Enhanced P\protection of PHI: The new rule prevents regulated entities, like healthcare providers and health plans, from using or disclosing PHI to investigate or penalize individuals or providers related to lawful reproductive healthcare.
- Definition of reproductive health care: The scope covers a broad range of services, including contraception, prenatal care, pregnancy termination, and fertility treatments, among others.
- Attestation requirement: Regulated entities must obtain a signed attestation confirming that any request for PHI is not for the purpose of investigating or penalizing lawful reproductive health care.
- Updated Notice of Privacy Practices (NPP): Covered entities are required to revise their NPPs to clearly inform individuals about the use and disclosure of their PHI concerning reproductive health care, with updates to be completed by February 16, 2026.
EMPLOYER CONSIDERATIONS
It’s crucial to stay updated with HHS guidance, ensure NPPs are current, and consult legal counsel when handling PHI related to reproductive health care.
HARASSMENT PREVENTION GUIDANCE RELEASED
The Equal Employment Opportunity Commission (EEOC) has recently published final enforcement guidance on workplace harassment. This comprehensive document updates and consolidates previous guidance from 1987 to 1999 into a unified resource that reflects changes in law and evolving workplace dynamics, including virtual environments and the influence of digital technology.
Key highlights of the guidance:
- Protection from harassment: It reaffirms that federal laws protect employees from harassment based on race, color, religion, sex, national origin, disability, age (40 or over), or genetic information.
- Scope of harassment: Harassment can occur not only between coworkers and supervisors but also through interactions with customers, contractors, and other third parties.
- Legal and technological updates: The guidance incorporates recent legal precedents, such as the Supreme Court’s decision in Bostock v. Clayton County and addresses new challenges like online harassment.
EMPLOYER CONSIDERATIONS
Employers should review the Summary of Key Provisions, and consider whether their employees may experience barriers to understanding the law. Employers should:
- Have a clear, easy-to-understand anti-harassment policy.
- Have a safe and effective procedure that employees can use to report harassment, including more than one option for reporting.
- Provide recurring training to all employees, including supervisors and managers, about the company’s anti-harassment policy and complaint process.
- Take steps to make sure the anti-harassment policy is being followed and the complaint process is working.
QUESTION OF THE MONTH
Q: If an enrolled employee’s dependent loses coverage and needs to enroll under the employee’s plan, is that an opportunity to switch medical plans and carriers, or are they restricted to their current plan?
A: The employee can enroll the dependent in any plan option offered by the employee’s employer. This is a HIPAA special enrollment right and the right extends to any benefit plan option, even if the employee was not previously on that option.
Here is an example from the HIPAA special enrollment regulations:
Facts. Individual A works for Employer X. X maintains a group health plan with two benefit packages—an HMO option and an indemnity option. Self-only and family coverage are available under both options. A enrolls for self-only coverage in the HMO option. A’s spouse works for Employer Y and was enrolled for self-only coverage under Y’s plan at the time coverage was offered under X’s plan. Then, A’s spouse loses coverage under Y’s plan. A requests special enrollment for A and A’s spouse under the plan’s indemnity option.
Conclusion. In this example, because A’s spouse satisfies the conditions for special enrollment under paragraph (a)(2)(ii) of this section, both A and A’s spouse can enroll in either benefit package under X’s plan. Therefore, if A requests enrollment in accordance with the requirements of this section, the plan must allow A and A’s spouse to enroll in the indemnity option.
This information is general in nature and provided for educational purposes only. It is not intended to provide legal advice. You should not act on this information without consulting legal counsel or other knowledgeable advisors.
©2024 United Benefit Advisors
by admin | May 2, 2024 | Compliance, Employee Benefits
A health plan is more than a product or service; it’s a relationship. All productive and healthy relationships—especially in the benefits space—rely on trust. When an employer extends trust in a broker or insurance carrier to purchase something as critical as healthcare—for people as critical as their workers and families—we’re obligated to raise all factors that affect that purchase.
Assisting employers with benefits compliance requires understanding key benefits laws to effectively engage, educate, and be a better partner to employer clients. The six compliance obligations listed below are just as important to check on when talking with clients about their organizational health.
1. Employee Retirement Income Safety Act (ERISA)
Dating back nearly a half century, ERISA is essentially the heart of benefits law—setting the standards of protection for employees and their families when they enroll in employer-sponsored benefit plans. Meeting those standards can cause a compliance migraine for employers—particularly when it comes to creating, updating, and distributing Summary Plan Descriptions (SPDs).
Compounding the pain, employers might think their SPD will be created by their insurance carrier or broker, but this isn’t typically the case. It’s important that employers understand their responsibility to know which benefits are subject to ERISA rules, to have these documents created through a reputable vendor or an attorney, and to adhere to ERISA’s distribution requirements.
2. Affordable Care Act (ACA)
Upheld after a contentious congressional approval and multiple Supreme Court challenges, this 2010 law changed the landscape of health insurance in many ways, not least of which was creating new compliance obligations for employers. ACA requires employers to distribute a Summary of Benefits and Coverage (SBC) to participants and beneficiaries—including enrolled, nonactive employees—plus additional requirements for ALEs (applicable large employers), those with 50 or more full-time and full-time equivalent employees.
ACA’s hidden health hazard for employers is that the law requires commonly or jointly owned businesses to count all employees together. An HR professional for one business may not know that their employer owns multiple businesses (since commonly owned businesses may not share resources like HR and benefits departments). So, asking about ALE status is an important question brokers and carriers can ask clients as a way to open the conversation about overall ACA compliance obligations.
3. Transparency in Coverage
Signed into law in 2021, the No Surprises Act builds on ACA transparency rules by requiring group health plans to:
- Post in-network negotiated rates, and out-of-network allowed amounts on a public-facing website.
- Provide a web-based price comparison tool that allows individuals to estimate their cost-sharing responsibility for a specific item/service from a particular provider.
- Annually report detailed information related to prescription drug costs, including most frequently dispersed brand-name drugs and most costly drugs.
Although fully insured plans will rely heavily on insurance carriers to make the information available, self-funded groups will bear the compliance obligations. It is critical for plan sponsors to work with carriers and third-party administrators to outline and clearly document who is responsible for each requirement.
4. Family and Medical Leave Act (FMLA)
FMLA, specifically designed to protect employees and their jobs when taking leave to care for themselves or a family member, exposes employers to compliance risk—especially as it pertains to maintaining employee health benefits.
The law requires employers to maintain an employee’s coverage, including employee contributions, as if they had not taken leave, and prohibits benefits termination while on leave except in limited circumstances.
To keep a compliance cold from turning into a full FMLA flu, broker partners must help employer clients understand their FMLA obligations, including: which benefits fall under the group health category, how to collect employee premiums while on FMLA leave, and how to provide mandatory information and notices while an employee is on FMLA leave.
5. COBRA
The Consolidated Omnibus Budget Reconciliation Act (COBRA), passed in 1985, applies to most employers with 20 or more employees that sponsor group health plans. The law is relatively straightforward, a rarity in benefits regulations.
Still, it is imperative to know help clients understand COBRA’s key provisions to effectively support them in meeting compliance obligations, including the rules for removing an ineligible dependent if an employee neglects to notify their employer for six months after a divorce is final.
6. Medicare
As employees stay in the workforce longer, employers must understand Medicare rules related to:
- Prescriptions—in particular, calculating whether their plan offers creditable coverage (compared to the standard Part D plan) and notifying Medicare-eligible employees about the creditable/non-creditable coverage calculation.
- Disclosures—specifically, preparing and submitting to CMS (Centers for Medicare and Medicaid Services) disclosure about whether the plan provides creditable coverage.
- Plan limits for cost-shifting when Medicare-eligible employees have dual coverage. The rules differ for employers with fewer than 20 employees, 20 to 99 employees, and 100 or more employees. For employers with 20 or more employees, Medicare rules limit employer plans as the primary payer from shifting an individual’s healthcare costs onto Medicare. Employers need to understand the interaction between their plan and Medicare to meet their compliance obligations.
It’s important for all parties involved to have a baseline understanding of benefits compliance obligations so they can effectively support employer clients in finding a benefits administration platform, a broker to assist with enrollment meetings, a carrier to find an in-network provider for a specialty service, and other scenarios. Compliance rules and regulations are complex. Partnering with other industry professionals, such as Mineral, is an excellent way to ensure that employer groups are educated, supported, and compliant.
by admin | Apr 12, 2024 | Compliance
AFFORDABLE CARE ACT INFORMATION REPORTING
Beginning in 2024, most employers obligated to report under the Affordable Care Act (ACA) must file returns electronically by March 31, 2024. Employers filing fewer than 10 returns a year are allowed to use paper filing. Since March 31 falls on a weekend, the deadline this year is April 1, 2024.
Applicable large employers (ALEs) and smaller employers with self-insured health plans are required to e-file Forms 1095-C or 1095-B, as well as the accompanying Forms 1094-C or 1094-B, using the IRS’ Affordable Care Act Information Returns (AIR) system. Employers can apply for a 30-day extension for filing these forms by submitting Form 8809 by the original due date.
2023 HEALTH SAVINGS ACCOUNT CONTRIBUTIONS AND CORRECTIONS
For employers offering a health savings account (HSA), contributions toward the 2023 HSA limits and corrections for the 2023 calendar year must be made by April 15, 2024. Employers and employees can contribute to HSAs and make adjustments until the tax filing deadline, which is typically the individual’s tax filing due date.
Contributions that exceed the annual allowed limit are subject to a 6% tax on the excess contribution. That tax is assessed each year that the excess funds and their earnings remain in the account. Additionally, excess contributions are taxed as income.
Remember that using HSA funds for non-qualified expenses can result in significant penalties. Individuals under age 65 who use HSA money for non-qualified expenses will face a 20% penalty and pay income taxes on the withdrawal. After age 65, HSA funds may be used for non-qualified expenses without incurring the 20% penalty, however the funds will be considered taxable income.
EMPLOYER CONSIDERATIONS
Employers should ensure that employees are aware of the annual contribution limits and the deadline for contribution adjustments, as well as potential tax penalties.
PREPARING FOR JUNE PRESCRIPTION DRUG DATA (RXDC) REPORTING
The third season of Prescription Drug Data Collection (RxDC) reporting is underway, with the annual deadline set for June 1 each year, reporting on the previous calendar year. The Consolidated Appropriations Act requires all group medical plans to file a report with the Centers for Medicare & Medicaid (CMS) detailing the cost and other medical data for the group health plans’ prescription drug and other benefits, excluding excepted benefits. RxDC reporting is mandatory regardless of the group’s insurance status, size, or whether it is a grandfathered plan.
The filing must be completed electronically through the CMS Enterprise Portal. While employers are ultimately responsible for RxDC filing, most third-party administrators (TPAs) pharmacy benefit managers (PBMs) contracted to provide services to the group health plan will assist or submit filings on behalf of the group health plan.
Changes for 2024 RxDC Reporting
The average monthly premium calculation has been simplified. Instead of calculating per member per month, this is stated as the total annual premium divided by 12.
CMS has introduced restrictions on data aggregation. Data in files D1 and D3 through D8 must match the level of detail in the D2 file. This means that if the D2 data is specific to an employer’s plan, the data in files D3 through D8 must be equally specific.
EMPLOYER CONSIDERATIONS
- Insurance carriers will handle RxDC reporting on behalf of employers with fully insured plans. However, employers should confirm with carriers that the reporting has been completed and provide any necessary information.
- Employers with self-insured plans have final responsibility for RxDC filing. If they rely on TPAs or PBMs to assist with filing, it’s crucial to ensure that it is completed on time.
NEW YORK CITY WORKERS ALLOWED TO SUE FOR SICK LEAVE VIOLATIONS
On March 20, the New York City Council enacted a provision allowing an individual to initiate a private legal action against employers for non-compliance with the Earned Safe and Sick Time Act (ESSTA).
Individuals may now file lawsuits for alleged violations of the Act directly in court, bypassing the need to file an administrative complaint with the Department of Consumer and Worker Protection. Legal action can be initiated within two years from the date the individual became aware or should have been aware of the alleged violation and may seek penalties, injunctive and declaratory relief, legal fees, costs, and other pertinent damages against the violating entity or individual.
Under the Act, the amount of safe and sick leave provided is contingent on the size of the employer.
- Employers with 100 or more employees are required to provide up to 56 hours of paid leave annually.
- Employers with 5 to 99 employees must offer up to 40 hours of paid leave annually.
- Small employers with four or fewer employees and an annual net income exceeding $1 million are obligated to provide up to 40 hours of paid leave. In contrast, if the employer’s net income is less than $1 million, they are only required to offer up to 40 hours of unpaid leave annually.
- Employers with one or more domestic workers must provide up to 40 hours of paid leave annually, with an increase to 56 hours for employers with 100 or more domestic workers.
Eligible employees are entitled to use accrued safe and sick leave immediately, including newly hired personnel. In cases of unforeseen leave, employers cannot mandate advance notice but can request documentation for absences exceeding three consecutive workdays. Employers must provide employees with written policy details regarding safe and sick leave, including information about accrued, utilized, and total leave balances, either on paystubs or via an accessible electronic system.
Significant amendments to the were implemented on October 15, 2023, to clarify the Act:
- The assessment of an employer’s size is based on the total number of employees nationwide, determined by the peak number of concurrently employed staff within a calendar year.
- Full time, part-time, joint employees, and employees on leave of absence are included in the employee count for determining employer size.
- Employees telecommuting from outside New York City are not considered employed within the city.
- Employees based outside of New York City that are “expected to regularly perform work in New York City during a calendar year” will be counted, but only for hours worked by the employee within New York City.
EMPLOYER CONSIDERATIONS
In light of these developments, it is imperative for New York City employers to thoroughly review their safe and sick leave policies to ensure full compliance and mitigate the risk of potential litigation.
QUESTION OF THE MONTH
Q: If an employee carries her full family on a qualified high deductible health plan (QHDHP) but her children are mandated to also be enrolled in Medicaid, can she contribute the full family amount to her health savings account (HSA)?
A: If the owner of the HSA (employee) is only eligible for the HDHP and the employee has enrolled in family coverage, the employee can contribute the full family limit to the HSA even if the employee’s dependents are not otherwise eligible due to Medicaid.
Answers to the Question of the Week are provided by Kutak Rock LLP. Kutak Rock provides general compliance guidance through the UBA Compliance Help Desk, which does not constitute legal advice or create an attorney-client relationship. Please consult your legal advisor for specific legal advice.
| This information is general in nature and provided for educational purposes only. It is not intended to provide legal advice. You should not act on this information without consulting legal counsel or other knowledgeable advisors. |
| ©2024 United Benefit Advisors |
by admin | Mar 18, 2024 | Compliance
In early February, a federal class action lawsuit was filed against Johnson & Johnson (JNJ) and its plan fiduciaries, alleging overpayment for prescription drugs within its prescription drug plan. The complaint alleges that under the Employee Retirement Income Security Act of 1974 (ERISA), JNJ’s plan fiduciaries are obligated to diligently compare service providers, seek cost-effective options, and monitor expenses. It is claimed that the plan fiduciaries failed to act prudently by agreeing to terms with a pharmacy benefit manager (PBM) that resulted in excessive costs for numerous drugs compared to other market options.
The lawsuit highlights the importance of transparency in facilitating comparisons between prescription drug prices across different plans or pharmacies and underscored significant risks faced by health and welfare plan fiduciaries. Publicly available information on drug prices enables individuals – including class action plaintiff attorneys – to scrutinize plan expenses, further emphasizing the need for prudent fiduciary actions.
EMPLOYER CONSIDERATIONS
Given the evolving landscape and heightened litigation risks, health plan fiduciaries should take proactive steps to mitigate litigation exposure and safeguard the interests of plan participants:
- Establish a fiduciary committee dedicated to health and welfare benefits and delegate responsibilities accordingly.
- Engage qualified consultants to assess PBMs and prescription drug arrangements, ensuring impartiality.
- Review and negotiate terms of PBM agreements, fee structures, and formularies to ensure reasonability.
- Collect and analyze benchmark information from various sources to evaluate vendor agreements.
- Scrutinize compensation arrangements for reasonability and conflicts of interest.
- Periodically solicit proposals from PBMs and vendors to reassess market competitiveness.
- Document all policies, procedures, and decisions regarding vendor selection and performance monitoring to demonstrate procedural prudence.
UNITEDHEALTHCARE CYBERATTACK IMPACTS MILLIONS
Change Healthcare, a division of UnitedHealthcare’s Optum, was the target of a cyberattack resulting in significant disruptions to prescription orders at thousands of pharmacies nationwide. The impact in the U.S. has been profound, as parent company Optum provides services to more than 60,000 pharmacies and care for more than 100 million consumers.
While it works to recover, the company has isolated services related to billing, claims management, payment, and data exchanges, forcing some healthcare organizations and systems to revert to manual procedures. Full restoration of services remains pending. The American Hospital Association recommended that companies using Optum services temporarily disconnect from them.
Change Healthcare processes approximately 15 billion transactions annually, impacting a significant portion of U.S. patient records, including prescriptions, dental, clinical, and other medical needs. The disruption has led to difficulties in verifying patients’ insurance coverage for prescriptions, forcing some individuals to pay in cash. While larger pharmacy chains like Walgreens have reported limited effects, smaller pharmacies heavily reliant on Change Healthcare for insurance verification and billing services are facing significant challenges.
The attack highlights the vulnerability of healthcare data, especially patients’ private medical records, in the face of cyber threats. Federal officials are closely monitoring the situation, emphasizing the need to strengthen cybersecurity resilience across the healthcare ecosystem.
EMPLOYER CONSIDERATIONS
Given the ongoing disruptions and potential risks to data security, affected employers should:
- Remain vigilant and communicate any updates or developments to enrollees.
- Encourage employees to exercise caution regarding any unusual communications or activities related to prescription orders or insurance verification.
- Stay informed about further updates from Change Healthcare and UnitedHealth Group regarding the restoration of services and any measures to enhance cybersecurity.
UPDATED INSTRUCTIONS RELEASED FOR JUNE 1 RXDC REPORTING
The No Surprises Act, as part of the Consolidated Appropriations Act, 2021 (CAA), requires employer-sponsored health plans to comply with annual prescription drug data collection (RxDC) reporting to provide transparency in prescription drug and health care spending. Data is reported to the U.S. Department of Labor (DOL), the Department of the Treasury (Treasury), and the Department of Health and Human Services (HHS) to monitor spending trends and facilitate regulatory control measures.
The reporting deadline for the 2023 reference year data is June 1, 2024. The Centers for Medicare & Medicaid Services (CMS) has issued revised instructions and templates for RxDC reporting. The instructions are mostly consistent with prior years; however, one significant change is the new enforcement of the “aggregation restriction” beginning with the 2023 reference year. The restrictions will limit the ability of plan sponsors to have their vendors report certain data on their behalf.
Additional changes in the instructions for the 2023 reference year reporting include prescription exclusions and simplified calculations.
Failure to comply with RxDC reporting requirements may result in penalties under Internal Revenue Code Section 4980D of $100 per day.
EMPLOYER CONSIDERATIONS
- Ensure timely completion of the RxDC reporting for calendar year 2023 by June 1, 2024.
- Confirm filing status with insurance carriers for fully insured plans or follow up with third party administrators (TPAs), pharmacy benefit managers (PBMs), or administrative services only providers (ASOs) for self-insured plans.
- Provide necessary information requested by relevant parties for reporting.
- Determine whether data should be reported on a plan level or aggregated basis.
- Consider requesting pharmacy data reporting on a plan level basis to access detailed pharmacy benefit spend information.
2025 EMPLOYER SHARED RESPONSIBILITY PENALTIES
The IRS has released the 2025 employer shared responsibility payments under the Affordable Care Act (ACA). Applicable large employers (ALEs) may face penalties for failing to provide minimum essential coverage to 95% of full-time employees, or for offering coverage that is not affordable or does not meet minimum value. The adjusted penalty amounts for 2025 will be $2,900 per full-time employee for Penalty “A” (a $70 decrease from 2024) and $4,350 per full-time employee for Penalty “B” (a $110 decrease from 2024).
EMPLOYER CONSIDERATIONS
To avoid penalties, ALEs should consistently ensure full-time employees receive minimum essential coverage that meets affordability and minimum value standards. The IRS uses Letter 226-J to notify ALEs of potential penalties, with a response form included for ALEs to address proposed penalties. Employers and advisors should remain vigilant for this letter to promptly review and respond accordingly.
QUESTION OF THE MONTH
Q: What are the time and dollar limits for flexible spending arrangements (FSA) and FSA carryovers?
A: For 2024, the most that can be deferred to an FSA is $3,200 (a $150 increase from 2023). The amount of a 2024 FSA balance that can be carried over into 2025 is $640 (up from $610 in 2023). A carryover is only available if the FSA does not offer a grace period. The carryover amount can be used all year.
A grace period, on the other hand, is the amount of time in a new year that an employee can incur and be reimbursed for claims from the prior year’s balance. A grace period can be as long as 2 ½ months after the close of the plan year (usually the calendar year). So, if an employee has $1,000 left in the 2023 FSA, that employee could incur $1,000 of reimbursable expense prior to March 15, 2024, and spend that $1,000 if the FSA uses a grace period. An FSA cannot have both a grace period and a carryover.
And finally, most FSAs offer a run-out period. This is a period after the close of the plan year when employees can submit claims incurred in the prior year. There is no maximum run-out period set by the IRS, but most employers (or FSA administrators) will set a limit of 60 to 90 days. The run-out period only allows people to submit claims incurred in the prior year, unlike the grace period, which allows new claims incurred prior to March 15 to be reimbursed.
This information is general in nature and provided for educational purposes only. It is not intended to provide legal advice. You should not act on this information without consulting legal counsel or other knowledgeable advisors.
©2023 United Benefit Advisors
