Fiduciary Rollout: DOL to Extend a Hand
Original post employeebenefitadvisor.com
WASHINGTON -- As the dust begins to settle after the Department of Labor issued its hotly contested fiduciary regulation, one of the key officials who led the rulemaking initiative says that he anticipates issuing clarifying guidance on an ongoing basis as industry feedback trickles back on how the rules are working in practice.
“This is a major undertaking and that we need to be mindful of what impact it's having as people are implementing it,” said Timothy Hauser, a deputy assistant secretary at the Labor Department, on Tuesday at a policy forum hosted by the Investment Company Institute. “We need to have the courage to make changes and to be responsive as problems emerge. And I can assure you we have every intent of doing so."
The ICI is a trade group that has been sharply critical of the rulemaking process.
Rule opponents have argued that many firms would be more likely to abandon middle-income clients planning for retirement, rather than submit to the contractual provisions relating to best-interest advice. But Hauser noted that the department made changes as it redrafted the final rule, in a bid to make the provisions less burdensome.
FURTHER TWEAKS TO RULE
Hauser took pains to explain that that process is still ongoing, insisting that he will entertain further tweaks to the rule and will publish clarifying guidance, likely in a question-and-answer format on a "rolling basis."
"We did our level best, really, to try to find the legitimate concerns and objections people had to what we were doing and try to be responsive," Hauser said. "We'll continue to do that as we move forward."
At the same time, Hauser offered a strong defense of the rule and the underlying rationale for the department's effort to crack down on conflicted advice in the retirement sector.
"The basic idea, first and foremost, is that we want advice to be in the customer's interest rather than in the interest of the adviser," he said. "The basis for this project — the reason we undertook this in the first place — was our belief that there was a significant problem in this marketplace."
The department's solution: update its rules under the 1974 Employee Retirement Income Security Act to extend fiduciary obligations to financial professionals working with retirement savers and plans, a threshold that is generally met when an adviser makes an investment recommendation and in turn receives compensation, Hauser said.
Hauser acknowledged that the ERISA statute has a "strong default position against conflicts of interest," but pointed out that the new rule explicitly permits conflicts such as commissions and proprietary products, provided that advisers offer up-front disclosures and aver in a binding contract that they will act in their clients' best interests.
That so-called best interest contract exemption has been one of the chief complaints of industry critics. But Hauser was quick to remind his audience that the rule will have minimal impact on advisers who offer advice that is free of conflicts.
"[T]there's nothing in the natural order of things that requires people to receive conflicted compensation streams as a condition of giving advice," he said. "However, we also don't outlaw conflicted compensation streams. The firm can continue to get commissions, it can get 12b-1 fees, it can get revenue sharing, it can get the variety of third-party payments."
Hauser continued: "But there's a quid pro quo for that. There's a basic deal that you need to strike with your customer, by and large, if you want to do that, and the deal is simple. You have to make a commitment to the customer that you're going to act in their best interest, and it needs to be enforceable."
NOT FOR PUNITIVE ENFORCEMENT
Hauser also said the DoL is not looking at the rule as a vehicle for a punitive enforcement policy. Instead, he said that the department is hoping to serve as a resource for affected firms and to work with them in a collaborative spirit as they implement the new rules.
"Our primary efforts are not going to be about finding people to sue, it's going to be about helping people to comply," he said. "Any problems you're wrestling with, issues you're trying to deal with, operational issues you're confronting — we'd love to hear from you, we'd love to be able to give advice. I would much rather get advice out early rather than have you build entire systems only to have us say, 'Nah, we don't think that complies.' I think it's in all our interest to make this work."
Final Rule on Nondiscrimination in Health Programs and Activities
From the Department of Health and Human Services.
Final rule prohibits discrimination based on race, color, national origin, sex, age or disability; enhances language assistance for individuals with limited English proficiency; and protects individuals with disabilities.
The Department of Health and Human Services (HHS) issued a final rule to advance health equity and reduce health care disparities. Under the rule, individuals are protected from discrimination in health care on the basis of race, color, national origin, age, disability and sex, including discrimination based on pregnancy, gender identity and sex stereotyping. In addition to implementing Section 1557’s prohibition on sex discrimination, the final rule also enhances language assistance for people with limited English proficiency and helps to ensure effective communication for individuals with disabilities. The protections in the final rule and Section 1557 regarding individuals’ rights and the responsibilities of many health insurers, hospitals, and health plans administered by or receiving federal funds from HHS build on existing federal civil rights laws to advance protections for underserved, underinsured, and often excluded populations.
The Nondiscrimination in Health Programs and Activities final rule implements Section 1557 of the Affordable Care Act, which is the first federal civil rights law to broadly prohibit discrimination on the basis of sex in federally funded health programs. Previously, civil rights laws enforced by HHS’s Office for Civil Rights (OCR) broadly barred discrimination based only on race, color, national origin, disability, or age.
“A central goal of the Affordable Care Act is to help all Americans access quality, affordable health care. Today’s announcement is a key step toward realizing equity within our health care system and reaffirms this Administration's commitment to giving every American access to the health care they deserve," said HHS Secretary Sylvia M. Burwell.
The final rule helps consumers who are seeking to understand their rights and clarifies the responsibilities of health care providers and insurers that receive federal funds. The final rule also addresses the responsibilities of issuers that offer plans in the Health Insurance Marketplaces. Among other things, the final rule prohibits marketing practices or benefit designs that discriminate on the basis of race, color, national origin, sex, age, or disability. The final rule also prohibits discriminatory practices by health care providers, such as hospitals that accept Medicare or doctors who participate in the Medicaid program.
The final rule prohibits sex discrimination in health care including by:
- Requiring that women must be treated equally with men in the health care they receive. Other provisions of the ACA bar certain types of sex discrimination in insurance, for example by prohibiting women from being charged more than men for coverage. Under Section 1557, women are protected from discrimination not only in the health coverage they obtain but in the health services they seek from providers.
- Prohibiting denial of health care or health coverage based on an individual’s sex, including discrimination based on pregnancy, gender identity, and sex stereotyping.
It also includes important protections for individuals with disabilities and enhances language assistance for people with limited English proficiency including by:
- Requiring covered entities to make electronic information and newly constructed or altered facilities accessible to individuals with disabilities and to provide appropriate auxiliary aids and services for individuals with disabilities.
- Requiring covered entities to take reasonable steps to provide meaningful access to individuals with limited English proficiency. Covered entities are also encouraged to develop language access plans.
While the final rule does not resolve whether discrimination on the basis of an individual’s sexual orientation status alone is a form of sex discrimination under Section 1557, the rule makes clear that OCR will evaluate complaints that allege sex discrimination related to an individual’s sexual orientation to determine if they involve the sorts of stereotyping that can be addressed under 1557. HHS supports prohibiting sexual orientation discrimination as a matter of policy and will continue to monitor legal developments on this issue.
The final rule states that where application of any requirement of the rule would violate applicable Federal statutes protecting religious freedom and conscience, that application will not be required.
For more information about Section 1557, including factsheets on key provisions and frequently asked questions, visit https://www.hhs.gov/civil-rights/for-individuals/section-1557.
To learn more about non-discrimination and health information privacy laws, your civil rights, and privacy rights in health care and human service settings, and to find information on how to file a complaint, visit us at www.hhs.gov/ocr.
Final Rule Released: Fair Labor Standards Act, Overtime Regulation
From the Society for Human Resources.
Today, the Department of Labor (DOL) released its final regulations making changes to Part 541 governing overtime exemptions under the Fair Labor Standards Act (FLSA). As you know, SHRM leads the employer coalition, the Partnership to Protect Workplace Opportunity, on the rule and SHRM members have shared their views on numerous occasions with Congress and the Administration through testimony, listening sessions, comments on the regulation, and thousands of letters to policymakers.
While SHRM appreciates the Administration’s attention to some of the concerns relayed by SHRM members, we are disappointed that the final rule includes a significant increase to the salary threshold and automatic increases in the future. These will present considerable challenges to employees and employers. This is why SHRM-supported legislation to block the rule, pending a full economic analysis of the changes to overtime regulations, is still needed. This legislation also contains critical provisions preventing the rule from including automatic updates to the salary threshold.
SHRM is reviewing the final rule and will provide information and resources over the next few days to help you understand the changes and prepare to implement the rule in your workplace.
In the meantime, here are the key elements of the new regulation that you need to know now:
1. Salary Threshold Changed to $913/week ($47,476 per Year)
This threshold doubles the current salary threshold level. While this level is slightly lower than the threshold in the proposed rule, it still encompasses many employees that are currently classified as exempt. SHRM was disappointed that DOL did not offer a more reasonable increase and set the threshold, as it has in the past, at a level designed to encompass those employees that are clearly not engaged in exempt-type work.
2. Automatic Salary Threshold Increases Every 3 Years (Not Annually) to Maintain Level at 40th Percentile in Lowest-Wage Census Region
DOL reduced the frequency of the automatic increases in response to concerns raised by SHRM and others. Instead of annual increases, the threshold will be adjusted every 3 years to maintain the level at the 40th percentile of full-time salaried workers in the lowest-wage Census region. Automatically updating the salary threshold, however, does not allow the government to take into account changing economic conditions, specific impact on certain industries, or regional differences. It also denies the public the ability to have input on the threshold as required by the regulatory process.
3. Duties Test is Unchanged
The absence of a duties test change is a significant win for the thousands of SHRM members who expressed concern in this area. DOL did not make changes to the standard duties test.
4. Effective Date is December 1, 2016.
SHRM advocated for a longer implementation period than the standard 60 days and the final rule provides additional time for employers to prepare. With the rule going into effect on December 1, 2016, HR professionals should review their current workforce immediately to determine which employees are affected, whether to re-classify those employees, and execute a communications strategy. HR should keep in mind the periodic adjustments and set a regular review process.
5. Highly Compensated Employee (HCE) Exemption Is Now $134,004 Per Year
The final rule retains the methodology in the proposed rule setting the threshold at the 90th percentile of full-time salaried workers nationally.
6. Stay Tuned for SHRM Member Resources…
• SHRM Webcast – Understanding DOL's New Overtime Rule. Register Now for the Thursday, May 19, 2 p.m. ET webcast!
• SHRM Special Report for HR – coming soon! Look for an upcoming SHRM summary of the final rule with tips on compliance. Visit SHRM’s Overtime Resource Page for additional resources.
• SHRM’s 2016 Annual Conference -- From the final FLSA overtime regulations to health care to performance management to the latest innovations in HR, you’ll get the practical tools and resources you need to solve your toughest HR challenges.
7. Advocacy in Congress is Even More Important
While the final rule contains some limited improvements, it is critical for Congress to pass the Protecting Workplace Advancement and Opportunity Act (S. 2707 and H.R. 4773), which would nullify this rule and require DOL to perform an economic analysis of how changes to overtime regulations will impact nonprofits, small businesses, and employers in other vulnerable industry sectors before issuing a new rule. Visit SHRM’s call to action to quickly and easily send an email to your members of Congress to ask that they cosponsor this important workplace legislation.
NEXT STEPS: As referenced above, Congress will continue to try to nullify the rule through legislation requiring DOL to conduct a robust economic analysis, by refusing to fund the rule’s enforcement, and other means. Given the breadth of the rule, SHRM is considering all policy options.
SHRM has taken a leading role in educating the Administration and Congress on the rule’s impact on the workplace. As a member, you can trust that SHRM will keep you up-to-date on every critical detail of the regulations. We’ll also be here to answer your specific questions as you begin to implement these changes over the coming weeks – this is just one way your SHRM membership works for you.
EEOC Issues Final Rules on Employee Wellness Programs
From the U.S. Equal Employment Opportunity Commission.
WASHINGTON, DC--The U.S. Equal Employment Opportunity Commission (EEOC) today issued final rules that describe how Title I of the Americans with Disabilities Act (ADA) and Title II of the Genetic Information Nondiscrimination Act (GINA) apply to wellness programs offered by employers that request health information from employees and their spouses. The two rules provide guidance to both employers and employees about how workplace wellness programs can comply with the ADA and GINA consistent with provisions governing wellness programs in the Health Insurance Portability and Accountability Act, as amended by the Affordable Care Act (Affordable Care Act).
The rules permit wellness programs to operate consistent with their stated purpose of improving employee health, while including protections for employees against discrimination. The rules are available in the Federal Register at Regulations Under the Americans with Disabilities Act and Genetic Information Nondiscrimination Act (GINA). EEOC also published question-and-answer documents on both rules today, available at Q&A ADA Wellness Final Rule and Q&A GINA Final Rule, and two documents for small businesses Facts on ADA and Wellness and Facts on GINA and Wellness.
Many employers offer workplace wellness programs intended to encourage healthier lifestyles or prevent disease. These programs sometimes use medical questionnaires or health risk assessments and biometric screenings to determine an employee's health risk factors, such as body weight and cholesterol, blood glucose, and blood pressure levels. Some of these programs offer financial and other incentives for employees to participate or to achieve certain health outcomes.
The ADA and GINA generally prohibit employers from obtaining and using information about employees’ own health conditions or about the health conditions of their family members, including spouses. Both laws, however, allow employers to ask health-related questions and conduct medical examinations, such as biometric screenings to determine risk factors, if the employer is providing health or genetic services as part of a voluntary wellness program. Last year, EEOC issued proposed rules that addressed whether offering an incentive for employees or their family members to provide health information as part of a wellness program would render the program involuntary.
The final ADA rule provides that wellness programs that are part of a group health plan and that ask questions about employees’ health or include medical examinations may offer incentives of up to 30 percent of the total cost of self-only coverage. The final GINA rule provides that the value of the maximum incentive attributable to a spouse’s participation may not exceed 30 percent of the total cost of self-only coverage, the same incentive allowed for the employee. No incentives are allowed in exchange for the current or past health status information of employees’ children or in exchange for specified genetic information (such as family medical history or the results of genetic tests) of an employee, an employee’s spouse, and an employee’s children.
The final rules, which will go into effect in 2017, apply to all workplace wellness programs, including those in which employees or their family members may participate without also enrolling in a particular health plan.
“The EEOC received comments on both rules from a broad array of stakeholders and considered them carefully in developing this final rule,” said EEOC Chair Jenny R. Yang. “The Commission worked to harmonize HIPAA’s goal of allowing incentives to encourage participation in wellness programs with ADA and GINA provisions that require that participation in certain types of wellness programs is voluntary. These rules make clear that the ADA and GINA provide important safeguards to employees to protect against discrimination.”
Program Design
Both rules also seek to ensure that wellness programs actually promote good health and are not just used to collect or sell sensitive medical information about employees and family members or to impermissibly shift health insurance costs to them. The ADA and GINA rules require wellness programs to be reasonably designed to promote health and prevent disease.
Protecting Confidentiality
The two rules also make clear that the ADA and GINA provide important protections for safeguarding health information. The ADA and GINA rules state that information from wellness programs may be disclosed to employers only in aggregate terms.
The ADA rule requires that employers give participating employees a notice that tells them what information will be collected as part of the wellness program, with whom it will be shared and for what purpose, the limits on disclosure and the way information will be kept confidential. GINA includes statutory notice and consent provisions for health and genetic services provided to employees and their family members.
Both rules prohibit employers from requiring employees or their family members to agree to the sale, exchange, transfer, or other disclosure of their health information to participate in a wellness program or to receive an incentive.
The interpretive guidance published along with the final ADA rule and the preamble to the GINA final rule identify some best practices for ensuring confidentiality, such as adopting and communicating clear policies, training employees who handle confidential information, encrypting health information, and providing prompt notification of employees and their family members if breaches occur.
EEOC enforces federal laws prohibiting employment discrimination. Further information about the EEOC is available on its web site at EEOC.gov.
Employers' Greatest Fears: PPACA & Compliance
Original post benefitspro.com
The last few years have put employers in the position of becoming compliance officers. The Department of Labor, Health and Human Services, and the Internal Revenue Service have actively been pursuing small- and mid-size businesses about various issues, from PPACA reporting to wage and hour miscalculations.
It is becoming a full-time job for manager HR representatives to keep up with the requirements of a compliant business.
The average employer cannot tell you what the affordability test is compared to the value test, but they know that it is now a requirement. Most important is the employer's concern for their employees to have the best health insurance available for the least expensive price. The employees are now looking for jobs that will provide them with health insurance in order to not be penalized at tax filing time. Employers are trying to understand what exactly they should be providing under health care reform in order to not pay additional fines for doing it incorrectly.
IRS fines are increasing in 2016 for employees to either $695 or 2.5 percent of adjusted family income per uninsured adult, whichever is greater. Employers will have to pay $2,160 per employee (after the first 30) if not providing health insurance or for an incorrect plan, and $3,240 for each employee getting a subsidy through the marketplace. Penalties for not filing certain documents in time, such as form 5500 or form 1094C, can add up to $1,100 per late day.
Insurance agents are becoming consultants in a very different world than we first began. Employers are asking accounting and legal questions which are requiring research and partnerships with other professionals.
Employers want to know the difference now in using a professional employer organization (PEO) versus outsourcing their HR and payroll departments. If the employer decides to do it themselves, questions they ask are:
- How long do I keep the necessary paperwork?
- Should I use the qualifying offer method or the 98 percent offer method?
- Which Safe Harbor would be best for my situation?
Insurance consultants will be the ones answering these questions with their employers as well as reviewing the documents and procedures.
Education and wisdom are the most important values for an insurance consultant’s job security. Just about the time you learn it, it will change.
How Agents Can Help Comply with PPACA
Original post benefitspro.com
“You can help your employer clients comply with the Patient Protection and Affordable Care Act [PPACA] by becoming their trusted advisors,” Julie L. Hulsey, CLU, LUTCF, president and CEO, Zynia Business Solutions, Amarillo, Texas, told her audience in her presentation, “Employers’ Greatest Fears: PPACA and Compliance.”
As of Jan. 1, 2016, Hulsey reminded the audience, employers of 50 or more full-time equivalent (FTE) employees are required to provide health insurance to at least 95% of their employees or face a penalty. One key issue for employers is that many federal government entities are auditing small businesses with little to no coordination, for example:
1. Department of Labor, including the Wage and Hour Division, the Equal Employment Opportunity Commission and the Occupational Safety and Health Administration
2. Internal Revenue Service
3. Office for Civil Rights
4. Immigration Customs Enforcement
5. Department of Transportation
“Smaller employers, those with less than 50 employees, or 50 to 100 employees, don’t have an HR department or even an HR professional on staff,” Hulsey observed. One way agents and brokers can demonstrate their value is by providing clients with charts showing affordable coverage employee wage calculations for a 40-hour work week and for a 30-hour work week, she explained, showing the charts she had created for her clients.
Penalties 101 for agents and brokers
Hulsey reminded the audience that for 2016 the employer shared responsibility penalty of $2,000 is now $2,160, and the $3,000 penalty is now $3,240. If an employer is considering paying the penalty instead of offering insurance, you can point out that the penalty is not a tax deductible business expense but health insurance premiums are, which may affect the employer’s decision.
“Penalties will be calculated on a monthly basis so if you are out of compliance for just one month, you will only be penalized for that month,” Hulsey pointed out. “Therefore, become compliant as soon as possible to avoid accumulating more monthly penalties.”
If an employer offers a “minimum essential coverage” plan that meets the “affordable” and “minimum value” tests to an employee who declines it, no employer penalty will be owed for that employee. “Tell the employer to keep a copy of the signed waiver of coverage form, and get a signed waiver every year!” Hulsey said.
It’s important to let our clients know what the Department of Labor and the Department of Justice are targeting, Hulsey said. Quoting from a recent presentation by the DOL and DOJ that she attended, Hulsey said that the DOL’s FY 2013 Strategic Plan has a goal to generate $1,172,108,000 in enforcement results through 4,330 reporting compliance reviews. They indicated their enforcement program will use a series of approaches (including national/regional priorities, civil/criminal litigation, and sample Investigation Programs) to achieve this goal. The current strategic plan is under review and that enforcement goal is likely to increase.
Hulsey acknowledged that agents and brokers are losing commissions but you can take some action to limit those losses “Connect with professionals like TPAs and payroll vendors to offer some of those third party services,” she suggested. “Also, be sure you understand your clients’ needs so you can answer their questions.” Employers need answers about PPACA and compliance, and they’ll be calling you or their attorneys. “It’s better if they call you,” she said.
Counting Employees Doesn't Always Add Up
Original post benefitspro.com
Employee counts are used to determine what laws, rules, fees and penalties apply to a health plan and/or the employer sponsor. But the methods for counting employees are as varied as the laws that affect them. This creates confusion and frustration among employers and can significantly hinder their compliance efforts. To make sense out of all this, we have put together a synopsis of 12 counting methods that employers must utilize to properly administer their health plans. Read on to find out how to stay compliant as you move forward.
Employers with at least 15 employees
Law or compliance requirement applied:
Title VII of the Civil Rights Act, as amended by the Pregnancy Discrimination Act (PDA): Employers may not consider a person's race, color, sex (including sexual orientation), national origin, religion, or pregnancy in determining eligibility for, amount of, or charges for employee benefits. Denying coverage for a condition or treatment that disproportionately affects members of a protected group is also considered a violation of Title VII.
Americans with Disabilities Act (ADA): An employer may not deny an individual with a disability equal access to insurance, or require such an individual to have terms and conditions of insurance different than those of employees without disabilities. The ADA also applies to wellness and disease management programs.
Who to count: Employees working 20 or more calendar weeks in the current or preceding calendar year.
How to count: Count each full-time and part-time employee as one.
Consequences of noncompliance: The EEOC may bring an action in court, and individuals may file private lawsuits to correct violations and obtain appropriate legal or equitable relief (including attorney’s fees and other costs).
Employers with at least 20 employees
Law or compliance requriement applied:
Genetic Information Nondisclosure Act (GINA): Group health plans may not discriminate against individuals based on genetic information and may not use this information in underwriting or determining premiums or contributions. It also restricts questions that can be asked on a Health Risk Assessment (HRA) if an incentive is offered for its completion.
Age Discrimination in Employment Act (ADEA): Benefits provided to older workers (40 years and older) must be the same as those provided to younger workers in all respects, including payment options, types of benefits and amount of benefits (although certain exceptions may apply).
Who to count: Employees working 20 or more calendar weeks in the current or preceding calendar year.
How to count: Count each full-time and part-time employee as one.
Consequences of noncompliance: The DOL may assess special penalties and the EEOC may bring an action in court against a plan sponsor for violations. Individuals may file private lawsuits to correct violations and obtain appropriate legal or equitable relief (including attorney’s fees and other costs).
Employers with at least 20 employees
Law or compliance requriement applied:
COBRA: COBRA provides certain former employees, retirees, spouses, former spouses, and dependent children the right to temporary continuation of health coverage at group rates.
Who to count: Employees (in all commonly-owned businesses) on more than 50 percent of the typical business days in the previous calendar year.
How to count: Count each full-time employee as one. Each part-time employee counts as a fraction, with the numerator equal to the number of hours worked by that employee and the denominator equal to the number of hours that must be worked on a typical business day in order to be considered full-time.
Consequences of noncompliance: COBRA compliance failures can result in excise taxes and statutory penalties. Qualified beneficiaries may also file private lawsuits to correct violations and obtain appropriate legal or equitable relief (including attorney’s fees and other costs).
Employers with 20 or more employees
Law or compliance requriement applied:
Medicare Secondary Payer (MSP) rules based on age: A group health plan is the primary payer and Medicare is the secondary payer for individuals age 65 or over if their group health coverage is by virtue of the individual's (or his/her spouse’s) current employment status.
Who to count: Employees on each working day in at least 20 weeks in either the current or the preceding calendar year. The 20-employee test must be run at the time the individual receives the services for which Medicare benefits are claimed.
How to count: Count each full-time and part-time employee as one.
Consequences of noncompliance: Medicare can collect any incorrect claim payments directly from the employer, regardless of whether the employer's plan is fully insured or self-insured.
Employers with at least 50 employees
Law or compliance requriement applied:
Family and Medical Leave Act (FMLA): FMLA requires employers that sponsor group health plans to provide group health plan benefits to employees on an FMLA leave. Please note that public agencies and public and private schools are covered regardless of the number of employees.
Who to count: Employees working 20 or more weeks in the current or preceding calendar year within a 75 mile radius of the applicable work location.
How to count: Count each full-time and part-time employee as one.
Consequences of noncompliance: The EEOC may bring an action in court and individuals may file private lawsuits to correct violations and obtain appropriate legal or equitable relief (including attorney’s fees and other costs).
Applicable Large Employers (ALEs)
Law or compliance requriement applied:
Shared responsibility provisions of the Affordable Care Act (ACA): ALEs must offer minimum essential coverage that is “affordable” and that provides “minimum value” to their full-time employees, must report to the IRS information about the health care coverage, if any, they offered to full-time employees, and must provide a statement to employees.
Who to count: Full-time employees and full-time equivalent (FTE) employees in each month of the preceding year. Divide this number by 12, and if the result is 50 or greater, the employer is an ALE for the current year.
How to count: Count full-time (30 or more hours per week determined on a monthly basis) and FTE employees as one. Aggregate part-time hours (no more than 120 hours per employee) and divide by 120 to determine FTEs. Special counting rules apply with respect to special situations, such as teachers, seasonal workers, etc.
Consequences of noncompliance: ALEs are subject to a penalty if one or more full-time employees are certified to the employer as having received an applicable premium tax credit or cost-sharing reduction, and either: 1) the employer fails to offer to its full-time employees (and their dependents) minimum essential coverage; or, 2) the employer's coverage is deemed to be unaffordable or does not provide minimum value (as defined by the ACA). Failure to file a return with the IRS or furnish a statement to employees can result in penalties up to $250 per return/statement, with a maximum penalty of $3 million.
Law or compliance requriement applied:
Mental Health Parity and Addiction Equity Act (MHPAEA):Group health plans that provide mental health coverage must provide parity between medical/surgical benefits and mental health/substance use disorder benefits.
Who to count: Employees on business days during the preceding calendar year.
How to count: Count each full-time and part-time employee as one.
Consequences of noncompliance: Individuals and the DOL may use ERISA's civil enforcement provisions to file lawsuits to enforce the MHPAEA's requirements. In addition, noncompliance with the MHPAEA can trigger an IRS excise tax.
Employers with 100 or more employees
Law or compliance requirement applied:
Medicare Secondary Payer (MSP) rules based on disability:A group health plan is the primary payer, and Medicare is the secondary payer for individuals under age 65 entitled to Medicare on the basis of a disability, if their group health coverage is by virtue of the individual's (or his/her spouse’s) current employment status.
Who to count: Employees on at least 50 percent of regular business days during the previous calendar year.
How to count: Count each full-time and part-time employee as one.
Consequences of noncompliance: Medicare can collect any incorrect claim payments directly from the employer, regardless of whether the employer's plan is fully insured or self-insured.
Welfare plans that cover at least 100 employees
Law or compliance requirement applied:
Form 5500: Employee benefit plans must file the Form 5500 reporting and disclosure document on an annual basis with the Department of Labor (DOL). Please note that the Form 5500 requirement applies to ERISA plans only.
Who to count: Employees enrolled in the plan at the beginning of the plan year.
How to count: Count each full-time and part-time employee as one.
Consequences of noncompliance: The penalty for failing to file a Form 5500 is $1,100 per day, which is cumulative from the filing deadline. Lesser penalties may be assessed for incomplete or otherwise deficient Form 5500s.
Employers that filed 250 or more W-2s
Law or compliance requirement applied:
Reporting the cost of health benefits on W-2: The Affordable Care Act (ACA) requires employers to report the total cost of employer-provided health coverage on Form W-2.
What to count: W-2s filed with the IRS in the preceding calendar year.
How to count: W-2s for full-time and part-time employees count as one.
Consequences of noncompliance: Penalties for compliance failures range from $30 to $250 per form.
All self-insured medical plans
Law or compliance requirement applied:
Transitional reinsurance program fee: The ACA requires self-insured group health plans to make contributions to help stabilize premiums for coverage in the individual market during the years 2014 through 2016.
Who to count: Covered lives, which includes both employee and dependent lives.
How to count: The fee is calculated based on the average number of covered lives, which can be determined using one of the following four methods:
- Actual Count: Add the total number of lives covered for each day of the first nine months of the calendar year and divide that total by the number of days in the first nine months.
- Snapshot Count: Add the total number of lives covered on any date during the same corresponding month in each of the first three quarters of the calendar year, and divide that total by the number of dates on which a count was made.
- Snapshot Factor: Use the Snapshot Count method, except the number of lives covered on a given date is calculated by adding the number of participants with self-only coverage to the product of the number of participants with coverage other than self-only coverage and a factor of 2.35. This method can be used to estimate the number of total lives included in coverage that is not self-only coverage.
- Form 5500 Method: The number of participants as of the beginning and end of the plan year as reported on Form 5500 for the last applicable time period.
Consequences of noncompliance: As with any amount owed to the federal government, an unpaid/underpaid Reinsurance Program Fee will be subject to federal debt collection rules.
All self-insured medical plans
Law or compliance requirement applied:
Patient-Centered Outcomes Research Institute (PCORI) fee:The PCORI fee supports the Patient-Centered Outcomes Research Trust Fund and will be imposed for each policy year ending on or after October 1, 2012 and before October 1, 2019.
Who to count: Covered lives, which includes both employee and dependent lives.
How to count: The fee is calculated based on the average number of covered lives, which can be determined using one of the following three methods:
- Actual Count Method: Add the total lives covered for each day of the plan year and divide that total by the total number of days in the plan year.
- Snapshot Method: Add the total number of lives covered on one date during the first, second or third month of each quarter, and divide that total by the number of dates on which a count was made.
- Form 5500 Method: The number of participants as of the beginning and end of the plan year as reported on Form 5500 for the last applicable time period.
Consequences of noncompliance: As with any amount owed to the federal government, an unpaid/underpaid PCORI Fee will be subject to federal debt collection rules.
2017 HSA Limits Released
Original post benefitspro.com
Change is not the order of the day for health savings account (HSA) limits in 2017.
The Internal Revenue Service (IRS) issued its new guidelines for contributions and out-of-pocket expenses for HSAs that are tied to a high-deductible plan this week.
Maximum OOPs for individual and family accounts won’t budge next year, and contributions will remain intact for family plans. Individual contributions increased slightly.
Here’s the run-down of the details:
- Out-of-pocket maximums are unchanged at $6,550 for individuals and $13,100 for families;
- Maximum contributions for family plans remain the same at $6,750;
- Individual contributions can increase from $3,350 to $3,400.
High deductible plans in 2017 will be those that have an annual deductible of least $1,300 for self-only coverage and $2,600 for family coverage.
HSAs are open to all men and women enrolled in a high-deductible health insurance program (exceeding $1,300 for individuals and $2,600 for family) aside from those policyholders currently covered by Medicare or listed as a dependent.
For both 2015 and 2016, IRS regulations mandating the potential contributions on plans covering families (a minimum of two people) held successive increases of $100. Individual restrictions, meanwhile, were bumped up by $50 in 2015, but remained stable the following year.
The annual fluctuations of HSA contribution levels are based directly upon federal cost of living adjustments. They will be applied for the calendar year of 2017.
A full account of the new guidelines may be read under Revenue Procedure 2016-28.
Compliance Alert: New Affordable Care Act FAQs Released
Original post jdsupra.com
The U.S. Department of Labor, the Department of Health and Human Services, and the Department of the Treasury (collectively, the “Departments”) have jointly issued a new set of answers to frequently asked questions about the Affordable Care Act (the “ACA”). Below are some highlights from the FAQs.
Rescissions of Coverage
The FAQs provides some specific guidance regarding rescissions of coverage that is of interest for K-12 schools and higher education institutions. Under the ACA, a plan generally cannot retroactively cancel coverage (referred to as a “rescission” of coverage) unless the participant commits fraud or makes an intentional misrepresentation of material fact prohibited by the terms of the plan. The FAQs answer a very specific question about rescissions, which may have broader application. The question raised by the FAQs is whether a school can retroactively cancel coverage for a teacher who was employed on a 10-month contract from August 1 to May 31 and gave notice of resignation on July 31. The plan attempted to terminate coverage retroactively to May 31. According to the FAQs, such a rescission violates the ACA’s restrictions.
Preventive Care Mandate
Under the ACA, non-grandfathered group health plans must cover certain preventive services without imposing any cost-sharing requirements. In the new FAQs, the Departments issued the following guidance regarding preventive services:
- Any required preparation for a preventive screening colonoscopy is an integral part of the procedure and must be covered without cost-sharing.
- Plans and issuers that use reasonable medical management techniques for specific methods of contraception can develop a standard exception form and instructions for providers to use in prescribing a particular service or FDA-approved item based on medical necessity. The Medicare Part D Coverage Determination Request Form can be used as a model in developing a standard exception form.
Additionally, the FAQs clarify that if a non-grandfathered plan pays a fixed amount (a “reference price”) for a particular procedure, the plan must either (1) ensure that participants have adequate access to quality providers that accept the reference price as payment in full or (2) count an individual’s out-of-pocket expenses for providers who do not accept the reference price toward the individual’s maximum out-of-pocket limit.
Out-of-Network Emergency Services Coverage
The ACA also prohibitsnon-grandfathered group health plans from imposing cost-sharing on out-of-network emergency services in an amount that is greater than that imposed for in-network emergency services. The statute does not specify whether “balance billing” is included in the definition of cost-sharing. “Balance billing” is the practice of providers billing a patient for the difference between the provider’s billed charges and the amount collected from the plan plus the amount collected from the patient in the form of a copay or coinsurance. To avoid circumvention of the ACA requirements, the Departments previously issued regulations requiring a plan or issuer to pay a reasonable amount before the patient becomes responsible for balance billing. Under this regulation, the plan or issuer must provide benefits at least equal to the greatest of: (1) the median amount negotiated with in-network providers for the emergency service; (2) the amount for the emergency service calculated using the same method the plan generally uses to determine payments for out-of-network services; or (3) the amount that would be paid under Medicare for the emergency service (collectively, the “Minimum Payment Standards”). The FAQs now make clear that plans that are subject to the Employee Retirement Income Security Act must disclose the documentation and data they use to calculate the Minimum Payment Standards (1) upon request by a participant (or authorized representative) or (2) if relevant to an appeal of an adverse benefit determination.
Mental Health Parity
Lastly, the Mental Health Parity and Addiction Equity Act (“MHPAEA”) and underlying regulations generally prohibit group health plans from imposing more restrictions on financial requirements and treatment limitations provided for mental health/substance abuse disorder services than the “predominant” financial requirements and treatment limitations that apply to “substantially all” medical/surgical services. “Substantially all” for this purpose is a requirement or limitations that apply to at least 2/3 of all medical/surgical benefits in a classification. If a limitation meets the substantially all requirement, then the “predominant” level that may apply to the mental health/substance abuse disorder benefits is the one that applies to more than half of the medical/surgical benefits within the classification. In the FAQs, the Departments clarify that when calculating the “substantially all” and “predominant” tests, a plan or issuer may not base its analysis on an issuer’s entire book of business for the year. Group health plan-specific data must be used where available. If not available, data from plans with similar structures and demographics can be used.
The FAQs also clarify that under MHPAEA, criteria for medical necessity determinations must be made available to any current or potential enrollee in a group health plan, not just active participants.
This is the 31st set of FAQs issued by the Departments on the ACA, which reflects the complexity of implementing the ACA’s many requirements.
How Employers Should Respond to Increased DOL Audits
Original post benefitnews.com
The Department of Labor says it will be stepping up enforcement efforts and employer audits, which should prompt brokers, who formerly worried little about such regulatory efforts, to prepare to serve as a trusted adviser to clients concerned about such efforts, says Julie Hulsey, president and CEO of Amarillo, Texas-based Zynia Business Solutions.
Speaking at an industry conference in Hollywood, Fla. last week, Hulsey said employers are feeling pressured by the weight of increased DOL and health care reform regulations and brokers need to stay up to date on regulations, including those related to the Affordable Care Act and ERISA.
The ACA reporting requirements have brought increased scrutiny of employer-sponsored health care plans and the government is largely expected to respond to anomalies or red flags with an employer audit. But industry experts agree the government won’t limit its inquiries to ACA-related information only, and employers should be prepared for full-blown audits of health care plans.
Quoting from a DOL presentation in Austin, Texas, Hulsey says the Department said, “leniency is over; the EBSA has staffed up and is focusing its resources on health and welfare plan ERISA compliance.”
Additionally, in her small Texas town alone, she says she’s heard that the DOL has added 10-12 auditors, who are conducting random audits of employers, mostly on the smaller employee size.
Increased compliance needs can be a strain for small employers, some of which may not even have a designated Human Resources department or manager.
When a DOL audit is announced, an employer’s first phone call will be their broker or an attorney.
Among the topics that brokers should be aware,
- Variable Employee Testing: Based on employee classifications, an employer can group employees into different groups, such as part-time and seasonal.
- HR 3236-The Transportation and Veteran Health care Choice Improvement Act of 2016: This Act regulates that employees covered by Tricare can be excluded from counting employee numbers.
- Cadillac Tax: Although delayed until 2020, it is important to start planning now.
- Waivers: If employers offer a minimum-essential coverage plan that meets affordable and minimum value test and an employee declines coverage, it is important the employer have a signed waiver. “That waiver is gold,” Hulsey said.
- Individual Mandate: The period will run from Nov. 1, 2016 to Jan. 31, 2016.
- Special Enrollment Period: Presenting a sales opportunity to brokers, these enrollment periods take affect when an employee experiences any change that affects income or household size, such as becoming pregnant. Other special enrollments include marriage/divorce, changing place of residence and having a change in disability.
The DOL has the authority to audit for compliance with several laws, including the ACA, HIPAA and the Mental Health Parity and Addiction Equity Act. They also have the authority to audit for minimum loss ratio rebates and PECORI fees.