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IRS Proposed Regulations Clarify the Definition of Tax “Dependent”

The IRS recently issued proposed regulations regarding the definition of “dependent” under the Internal Revenue Code (“Code”). The proposed regulations generally update existing regulations to conform to amendments previously made to Code Section 152 and other Code sections by the Working Families Tax Relief Act of 2004 (“WFTRA”) and subsequent legislation. Under WFTRA, Code Section 152 was amended to provide that a federal income tax dependent is either a taxpayer’s “qualifying child” or “qualifying relative.” These definitions are relevant for employers that sponsor (i) group health plans if such plans provide coverage for an employee’s dependent who is not his or her spouse or child under age 27, but who is the employee’s federal income tax dependent, and (ii) dependent care assistance programs which reimburse covered employees for qualifying dependent care expenses of qualifying children and certain other federal income tax dependents. The proposed regulations also provide new guidance with… Continue Reading

Employers Should Continue to Comply with the ACA

President Trump signed an executive order on January 20, 2017, generally directing the heads of government agencies to halt enforcement of Affordable Care Act (“ACA”) provisions that cause financial or regulatory burdens on a host of entities, to the extent permitted by law. While this executive order did not specifically use the word “employer” in the list of entities, the list can be construed to include employers providing health coverage to employees. The executive order itself does not relieve employers of any obligations to comply with the ACA, and this action should not occur until the various federal agencies issue guidance delaying or halting the enforcement of specific ACA provisions. The Departments of HHS, Labor, and the Treasury are unlikely to take any action until their new Secretaries are confirmed. In the meantime, employers should continue to comply with the ACA pending issuance of future guidance. View the executive order.

Federal District Court Issues Preliminary Injunction Blocking Enforcement of ACA Section 1557

The U.S. District Court for the Northern District of Texas issued a preliminary nationwide injunction December 31, 2016, blocking HHS from enforcing Section 1557 of the Affordable Care Act in Franciscan Alliance, Inc. et. al. v. Burwell. We previously reported on Section 1557 (which prohibits discrimination in certain healthcare programs and activities for Title IX reasons, e.g., race, color, national origin, sex, age, or disability), the final Section 1557 regulations issued by HHS, and the potential effects on healthcare providers, insurers, and employer-provided health care coverage here. The Franciscan Alliance plaintiffs are three religiously affiliated healthcare providers (later joined by five states) that claimed (i) HHS impermissibly extended Title IX to include gender identity and termination of pregnancy as forms of sex discrimination contrary to Title IX’s history and legislative intent, (ii) Section 1557 requires covered entities to perform and/or provide insurance coverage for abortion and transition-related procedures, and (iii)… Continue Reading

Federal Agencies Release Additional Frequently Asked Questions on Special Enrollment Opportunities, Preventive Services, and Qualified Small Employer HRAs

On December 20, 2016, the federal Departments of Health and Human Services, Labor, and the Treasury issued a set of three frequently asked questions (“FAQs”) addressing issues under the Affordable Care Act (the “ACA”). These FAQs confirm that: (i) an individual who loses eligibility for individual coverage purchased through the public health insurance marketplace is entitled to a HIPAA special enrollment opportunity in employer group health plan coverage, if eligible, even if other coverage in the marketplace or in the individual market remains available; (ii) for non-grandfathered group health plans subject to the ACA, the effective date for the revised Women’s Preventive Services Guidelines released on December 20, 2016, is the first plan year beginning on or after December 20, 2017 (e.g., January 1, 2018 for calendar year plans); and (iii) the Qualified Small Employer Health Reimbursement Arrangement introduced in the 21st Century Cures Act and available to small employers… Continue Reading

Small Employers Can Reimburse Premiums and Medical Expenses

The 21st Century Cures Act, which recently passed in Congress and President Obama has stated he will sign, creates a new “qualified small employer health reimbursement arrangement” (“QSEHRA”) effective January 1, 2017. The QSEHRA is a new form of health reimbursement arrangement (“HRA”) that can reimburse substantiated medical care expenses, including premiums, of up to $4,950 per year (as adjusted for inflation) or up to $10,000 per year (as adjusted for inflation) if the QSEHRA reimburses family member expenses. The QSEHRA is available to an employer that (i) is not an “applicable large employer” under the Affordable Care Act (“ACA”) (which generally means having at least 50 full-time or full-time equivalent employees, determined on a controlled group basis) and (ii) does not offer a group health plan to any of its employees in the controlled group. Unlike “regular” HRAs, the QSEHRA generally is not considered a group health plan for… Continue Reading

2016 Health and Welfare Plan Year-End Action Items

There are a number of health and welfare plan action items to address as 2016 closes and 2017 begins. In addition, many employers are wondering how these action items may be affected by the November election results. We have addressed these action items and the possible effects of the election results in our HB Health and Welfare blog here, including: Affordable Care Act (“ACA”) reporting for 2016 (i.e. Forms 1094/1095) and related issues; Issues that may impact plan design and/or written materials, such as the ACA, recent wellness regulations, and federal agency enforcement activity; and Certain other reporting and communication requirements.

Extension of Due Dates for 2016 Individual Statements Under Affordable Care Act Information Reporting

In Notice 2016-70 (the “Notice”), the IRS extended the due date, from January 31, 2017 to March 2, 2017, for employers (including so-called “applicable large employers”), insurers, and other providers of “minimum essential coverage” in 2016 (“Reporting Entities”) to furnish statements to individuals on IRS Forms 1095-B and 1095-C, pursuant to the Affordable Care Act’s information reporting requirements (the “ACA Reporting Requirements”). The Notice also extends the IRS’s transition relief from penalties that Reporting Entities could otherwise incur for incorrect or incomplete information reported on their 2016 information returns. To obtain this relief, a Reporting Entity must show that it made a good faith effort to comply with the ACA Reporting Requirements in furnishing statements to individuals and filing with the IRS. Notably, the Notice does not extend the due date under the ACA Reporting Requirements for Reporting Entities to file their 2016 information returns with the IRS. Accordingly, that… Continue Reading

Agencies Issue New FAQs Regarding Preventive Services under the ACA and Implementation of the Mental Health Parity and Addiction Equity Act

The federal Departments of Health and Human Services, Labor, and the Treasury (the “Agencies“) recently issued a set of Frequently Asked Questions, Part 34 (the “FAQs“), regarding the coverage of certain preventive services under the ACA and the implementation of requirements under the Mental Health Parity and Addiction Equity Act, as amended by the ACA (the “MHPAEA“). With respect to preventive services, the FAQs (i) highlight updated recommendations issued in 2015 by the U.S. Preventive Services Task Force (which form the basis, in part, of the ACA preventive services requirements) regarding tobacco cessation and (ii) request comments on several questions about items and services that must be provided without cost-sharing by health plans and health insurance issuers for compliance with the updated recommendations. The updated recommendations become effective the first day of the plan/policy year beginning on or after September 22, 2016 (i.e., January 1, 2017 for calendar year plans/policies). The… Continue Reading

Final Rules: Travel and Supplemental Health Insurance as ACA Excepted Benefits

The federal Departments of Health and Human Services, Labor, and the Treasury (the “Agencies“) recently issued final regulations which provide criteria for travel insurance and supplemental health insurance coverage to be considered “excepted benefits” and thus exempt from many requirements under the Affordable Care Act (the “ACA“). Generally, travel insurance must offer health benefits incidental to other coverage. Supplemental health insurance must cover cost-sharing gaps (such as deductibles) and/or provide benefits for services that are not “essential health benefits” and not covered by primary coverage, and not be supplemental due to coordination of benefits provisions. The final regulations apply to group health plans on the first day of the first plan year beginning on or after January 1, 2017, and are available here.

In-Depth Look at IRS Forms 1094 and 1095 for 2016 ACA Reporting

Earlier this month, we provided information regarding the IRS’s release of final Forms 1094 and 1095 and instructions for the 2016 Affordable Care Act (“ACA“) reporting year, which is available here. A more in-depth look at the changes to the ACA’s shared responsibility reporting requirements is available on our new companion blog, HB Health and Welfare. HB Health and Welfare provides more details regarding health and welfare benefits topics of interest, and also provides information about upcoming speaking engagements by Haynes and Boone’s benefits lawyers.

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