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
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
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
An administrative law judge for HHS upheld an award of $4.3 million in civil monetary penalties (the “Penalties”) against a Texas-based healthcare provider for violations of the HIPAA privacy and security rules (the “HIPAA Rules”). The provider is a “covered entity” under HIPAA (“CE”), and the Penalties are the fourth largest ever awarded to the Office of Civil Rights (“OCR”), the HHS agency that enforces the HIPAA Rules, by an administrative law judge or secured via a settlement for HIPAA violations. The Penalties stemmed from an OCR investigation of the CE in response to three separate HIPAA breach reports the CE filed with OCR during 2012 and 2013 involving the theft of an unencrypted laptop computer and the loss of two unencrypted thumb drives, which resulted in the impermissible disclosure of electronic protected health information (“EPHI”) of over 33,500 individuals. OCR’s investigation found that, although the CE had written encryption… Continue Reading
Generally, the Affordable Care Act (the “ACA”) requires coverage under a group health plan sponsored by an “applicable large employer” (at least 50 full-time equivalent employees) to be “affordable”, as determined under the ACA, in order to avoid certain ACA penalties. “Affordability” is based on whether the premium for employee-only coverage is less than a certain percentage of an employee’s household income or a designated safe harbor amount. The IRS has increased the affordability percentage for 2019 to 9.86 percent, up from 9.56 percent in 2018.
The federal Departments of Labor (“DOL”), Health and Human Services, and the Treasury have jointly issued a set of proposed frequently asked questions (“FAQs”) which address nonquantitative treatment limitations (“NQTLs”) and health plan disclosure issues under the Mental Health Parity and Addiction Equity Act of 2008 (“MHPAEA”). Generally, the MHPAEA prohibits group health plans and issuers from imposing financial requirements or treatment limitations on “mental health benefits” and “substance use disorder benefits” (collectively, “MH/SUD Benefits”) that are more restrictive than the predominant financial requirements and treatment limitations that apply to substantially all medical and surgical benefits (collectively, “Med/Surg Benefits”). With respect to NQTLs, which include medical management, step therapy, and pre-authorization (versus “quantitative treatment limitations”, which are numerical, such as visit limits and day limits), a group health plan cannot impose an NQTL on MH/SUD Benefits in any classification unless, under the terms of the plan as written and in… Continue Reading
The IRS has issued guidance stating that taxpayers may use $6,900 as the maximum health savings account (“HSA”) contribution limit for family coverage for 2018. In 2017, the IRS stated that the maximum HSA contribution for family coverage for 2018 would be $6,900. However, recent tax reform legislation changed how the contribution limit is calculated, and in March of 2018, the IRS issued a reduced limit for 2018 of $6,850. The new IRS guidance now permits taxpayers to continue to treat the 2018 limit as $6,900 and also provides guidance for taxpayers who already received a distribution of an excess contribution in 2018 based on the $6,850 limit. View the guidance in Rev. Proc. 2018-27.
Under the American Tax Cut and Jobs Act (the “Act”), employers may claim a tax credit for providing paid family and medical leave to certain qualifying employees during 2018 and 2019. This paid leave program must permit qualifying employees to take leave for the reasons permitted under the federal Family and Medical Leave Act (“FMLA”), but employers do not have to be subject to FMLA in order to qualify for the tax credit. We previously provided details about this tax credit as part of our discussion of employee compensation and benefits changes under the Act. The IRS recently issued a series of frequently asked questions (“FAQs”) regarding this tax credit, including FAQs addressing requirements for an employer’s program to qualify for the tax credit, qualifying employee eligibility, and how the tax credit is calculated. The FAQs also indicate that an employer cannot claim this tax credit for providing paid leave… Continue Reading
Recently, several states expanded their contraceptive coverage mandates under the applicable state’s insurance laws to require medical insurance policies to cover certain male contraceptive services (e.g., vasectomies) on a first dollar basis before an insured has met the policy’s annual deductible. This is problematic for an insured medical plan that is intended to qualify as a high deductible health plan (“HDHP”). An HDHP enables participants to make or receive contributions to a health savings account (“HSA”). Unless an exception applies (such as coverage for preventive services, disease management, or wellness services), a medical plan that provides benefits before an individual has met the annual deductible cannot qualify as an HDHP. The IRS recently released Notice 2018-12, which provides that male contraceptive coverage will not qualify for an exception from this rule as a preventive service or under another exception. The IRS has granted temporary transition relief for the HSA eligibility… Continue Reading