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Extension of Due Date to Furnish Form 1095 to Individuals and Good Faith Transition Relief

In Notice 2018-94, the IRS extended the due date, from January 31, 2019 to March 4, 2019, for furnishing to individuals their 2018 Form 1095-B and Form 1095-C. The Notice does not extend the due date to file Forms 1094-B, 1095-B, 1094-C, and 1095-C with the IRS, which are due by February 28, 2019 (paper filing) or April 1, 2019 (filing electronically), although extensions may be available. The Notice also extends the IRS’s good-faith transition relief from penalties that could apply for incorrect or incomplete information reported on such forms furnished to individuals or filed with the IRS. This relief does not apply if the applicable forms were not filed or furnished by their respective due dates. View Notice 2018-94.

Final ACA Rules Regarding Religious and Moral Exemptions and Accommodations for Objections to Coverage of Contraceptives

The U.S. Departments of Health and Human Services, Labor, and the Treasury recently released final rules regarding religious or moral objections to the coverage of contraceptives under the preventive services requirements of the Affordable Care Act (the “ACA”) as well as accommodations for those objections. Generally, the ACA requires non-grandfathered group health plans and health insurance issuers to cover all FDA-approved contraceptive methods, sterilization procedures, and related education and counseling. The final rules expand the religious exemption to this requirement to include all types of non-governmental employers, including for-profit corporations (regardless of their size or whether they are publicly or privately held). Moreover, the moral exemption applies to certain non-governmental employers, including privately held for-profit employers, insurers, and individuals. In addition, the new rules maintain the availability of the accommodation pursuant to which the entity’s insurer or third party administrator is responsible for providing contraceptive services to the entity’s plan… Continue Reading

IRS Notice Increases Dollar Amount Basis of PCORI Fee

The IRS recently issued Notice 2018-85, which increases the dollar amount that is the basis of the fee established under the Affordable Care Act to help fund the Patient-Centered Outcomes Research Institute (“PCORI Fee”). The PCORI Fee is imposed on plan sponsors of applicable self-funded health plans and issuers of specified health insurance policies. Plan sponsors remit the PCORI Fee to the IRS annually by filing an IRS Form 720. The PCORI Fee is based on a flat dollar amount multiplied by the average number of lives covered under the plan for the applicable plan year. The dollar amount for plan and policy years that ended on or after October 1, 2017 and before October 1, 2018, is $2.39. Notice 2018-85 increases the dollar amount for plan and policy years that end on or after October 1, 2018 and before October 1, 2019, to $2.45. View Notice 2018-85.

New HRA Option for Employers in 2020 May Avoid ACA Employer Penalties

New proposed rules have been issued by the federal Departments of the Treasury, Labor, and Health and Human Services that permit employers to offer health reimbursement arrangements (“HRAs”) to employees who are enrolled in individual health insurance coverage. An employee could use such an HRA to pay the employee’s premiums for individual health insurance and other medical expenses. The same HRA must be offered to an entire “class” of employees, and a traditional group health plan could not be offered to that class. Classes of employees include full-time, part-time, seasonal, union, employees in a waiting period, employees under age 25, non-resident aliens with no U.S. income, employees in the same insurance rating area, or a combination of those classes. The HRA contribution could increase with age, reflecting the fact that health coverage for older employees is generally more expensive, and the IRS will provide an approach for varying contributions by… Continue Reading

Court Finds ERISA Requires Disclosure of “Reasonable and Customary” Methodology

A federal district court in Michigan, in Zack v. McLaren Health Advantage, Inc., recently considered whether the claims regulations under ERISA require an employer-sponsored group health plan to disclose its methodology for determining the “reasonable and customary” amount related to a benefit claim for services rendered to a plan participant by an out-of-network medical service provider, regardless of whether the participant requested such information. Summary of the Case The claimant, Zack, who was a participant in the group health plan sponsored by her husband’s employer, obtained medical services from an out-of-network provider and filed a benefits claim under the plan. The plan stated that out-of-network benefits would be paid at 60 percent of a “reasonable and customary amount”, but did not define what that term meant or how it would be calculated. In practice, the “reasonable and customary amount” under the plan (“R&C Amount”) was determined by calculating an average… Continue Reading

Negotiation of a Premium Discount May Constitute an Employer Contribution

A recent case decided by a federal district court in California highlights that employer action other than a direct payment of premiums may constitute an “employer contribution” for purposes of determining whether a group insurance program is exempt from ERISA. Under the so-called “Voluntary Plan Exemption”, generally such a program will be exempt from ERISA if (i) there are no employer contributions toward coverage, (ii) participation in the program is completely voluntary, (iii) the employer does not endorse the program, and (iv) the employer receives no consideration for the program. In Bommarito v. Northwestern Mutual Life Ins. Co., the plaintiff, who was the sole owner of her company, and nine of her employees applied for individual policies of disability insurance to be issued by Northwestern Mutual Life Insurance Company (“Northwestern”). In the submission of her application to Northwestern, the plaintiff included the nine employee applications and a request for a… Continue Reading

Class Action Case Certified for Failure to Provide COBRA Election Notices in Spanish

A U.S. District Court in the 11th Circuit certified as a class action a case in which the plaintiff argued that her former employer, the Marriott International hotel chain, violated federal law by failing to: (1) provide a COBRA notice in Spanish; (2) adequately explain the procedures to elect healthcare coverage; (3) identify itself as the plan administrator; and (4) provide a notice that an average plan participant would understand. There are over 15,000 potential class members who received the allegedly deficient COBRA notice. Employers subject to COBRA are required to offer employees the option to continue their group health plan coverage after employment termination (among other COBRA qualifying events). These notices need to comply with language and other requirements. Employers that fail to comply with COBRA may face penalties of up to $110 per day for each individual who is sent a defective notice. Vazquez v. Marriott Int’l, Inc.,… Continue Reading

Reminder: July 31, 2018 Deadline for Annual Reporting and Payment of PCORI Fee Under the Affordable Care Act

The deadline for plan sponsors of self-insured health plans to report and remit the Patient-Centered Outcomes Research Institute fee (“PCORI Fee”) due under the Affordable Care Act with respect to the 2017 plan year is July 31, 2018. For this purpose, a plan year that ended during the 2017 calendar year is considered a 2017 plan year. The PCORI Fee is assessed to fund the Patient-Centered Outcomes Research Institute and applies to plan years ending on or after October 1, 2012, and before October 1, 2019. Plans should report and remit the PCORI Fee via a second quarter IRS Form 720. The PCORI Fee is based on a flat dollar amount multiplied by the average number of lives covered under the plan for the applicable plan year. The covered lives fee amount for plan years that ended after December 31, 2016, but before October 1, 2017 is $2.26, and the… Continue Reading

Self-Funded ERISA Health Plans May Opt Into New Law Regarding Out-of-Network Service Providers

New Jersey recently enacted a law that is intended to address the issue of “surprise out-of-network charges” to patients who obtain healthcare from healthcare providers in New Jersey. The law, entitled the “Out-Of-Network Consumer Protection, Transparency, Cost Containment and Accountability Act” (the “NJ Act”), applies with respect to patients who have insured health coverage, but may also apply to patients who participate in employer-sponsored, self-funded health plans subject to ERISA (each, a “Self-Funded Health Plan”) if such plans voluntarily “opt in” to the NJ Act. The NJ Act imposes numerous new disclosure obligations on healthcare providers in New Jersey regarding information to be posted on their websites or delivered directly to patients who will receive their services. Such information includes (i) the provider’s network status with respect to the patient’s health benefit plan, (ii) a listing of the standard charges for items and services provided by a healthcare facility and… Continue Reading

Association Health Plan Final Regulations Issued

The DOL released final regulations expanding the groups of employers that may participate in one ERISA-covered employee group health plan (an “Association Health Plan”). Generally, employers (including working owners with no employees) may participate in an Association Health Plan as long as they are in the same industry, state, or metropolitan area. A major benefit of joining together to participate in one ERISA-covered group health plan, as opposed to being treated as maintaining separate ERISA group health plans, is that the total number of employees participating in the Association Health Plan, from all participating employers, will determine whether the Association Health Plan is treated as “large group,” “small group,” or individual coverage for purposes of the mandates under the Affordable Care Act (the “ACA”). The ACA places a number of requirements on small group and individual coverage that do not apply to large group health plans. An Association Health Plan… Continue Reading

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