Benefit Comply Service Report



2060847128270Compliance00ComplianceIn this issue TOC \o "1-2" \h \z \u 2712720196215focus00focusIntroduction PAGEREF _Toc76632368 \h 1Taxability of Infertility Benefits PAGEREF _Toc76632369 \h 1In Other News… Recap of 1st Quarter Issue Briefs and Alerts PAGEREF _Toc76632370 \h 3Quarterly Q&A PAGEREF _Toc76632371 \h 6 Introduction As we enter the second half of the year, a review of the first 6 months is in order. It has been a compliance whirlwind, from the passage of the Consolidated Appropriations Act (CAA) in late 2020 to the American Rescue Plan Act (ARP), with its DCAP limit increases and COBRA subsidy (an enormous compliance challenge that employers are still contending with). And aside from federal legislation, we’ve seen activity from the IRS on 4980H penalty collection efforts and state individual mandate employer reporting requirements. In short, it has been a busy year so far!Looking forward, we’re keeping our eyes on new Surprise Billing regulations and what that will mean for employers in the coming years. We are also focusing on the transparency requirements in the CAA, which will present some new compliance challenges for employers. Stay tuned for more on these and other issues as they arise! We’re sure there is more in store for us in the coming 6 months.Taxability of Infertility BenefitsAs more employers offer some level of coverage for infertility to employees and their family members (e.g., assisted reproductive technology, surrogacy, genetic testing, freezing of sperm or eggs), either as part of their group medical plan, or perhaps as a separate reimbursement arrangement, there is a lack of clarity for handling the taxation of such benefits. Which infertility benefits may be handled on a tax-favored basis as §213(d) qualifying medical expenses?A recent IRS Private Letter Ruling (PLR 202114001) indicates that costs for infertility treatment are a qualifying medical expense and reimbursable on a tax-favored basis if they are for the?“diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body of the taxpayer, the taxpayer’s spouse, or taxpayer’s dependent.”?In other words, if the employee, the employee’s spouse, or the employee’s tax dependent receives treatment for a medical condition affecting the ability to have children, or receives treatment affecting the function of the body, the costs likely qualify for favorable tax treatment. However, if the employee incurs costs to provide such services to a third party such as a surrogate, domestic partner or fiancé, the expenses are likely taxable to the employee. The private letter ruling can be found here:? informal IRS guidance refers to a few tax court decisions over the last decade or so. The court decisions address the taxability of expenses incurred by: (i) a single, heterosexual male who attempted to claim a tax deduction for costs involved with obtaining a surrogate; (ii) an individual who attempted to claim a tax deduction for infertility services obtained by his fiancé; and (iii) a male in a same-sex marriage who attempted to claim a tax deduction for costs involved with obtaining a surrogate. In all cases, the tax court decided against the taxpayers.In IRS Pub. 502, which provides guidance for claiming a tax deduction for various medical and dental expenses, the following language can be found under “Fertility Enhancement”:You can include in medical expenses the cost of the following procedures performed on yourself, your spouse, or your dependent to overcome an inability to have children.? Procedures such as in vitro fertilization (including temporary storage of eggs or sperm).? Surgery, including an operation to reverse prior surgery that prevented the person operated on from having children.Based on this language, the tax court decisions, and the recent IRS guidance, there is some question as to what circumstances create an “inability to have children.” Especially for unmarried individuals, individuals in same-sex marriages, or transgender individuals, it is unlikely that IVF and surrogacy expenses incurred for an unrelated third party are tax deductible. There is certainly criticism for this position, especially as employers are being advised today to be cautious about limiting coverage for such things, taking into consideration the possible discrimination claims that may arise under Title VII following the Supreme Court’s decision in?Bostock v. Clayton.Under the current administration, there is certainly more support for broader protection and equality for individuals that may find themselves in such situations and struggling with family planning, which may make it more likely that the IRS will eventually provide a broader medical tax deduction for such expenses. However, in the meantime, if the group health plan or a reimbursement arrangement provides infertility coverage or reimbursement, the taxability of such coverage or reimbursement may depend upon who is receiving the fertility treatment. The issue of whether coverage for things such as IVF, surrogacy, and related medical expenses may be provided on a tax-favored basis should be discussed with the employer’s tax adviser or counsel in light of the variation in how plans are designed and the current state of uncertainty.3467100-250190BENEFITS NEWS HIGHLIGHTSOn March 26, the Congressional Research Service?issued a paper?detailing the impact of recent federal court decisions on the status of ERISA preemption for pharmacy benefit managers (PBMs). According to the report, the recent?Rutledge v. Pharmaceutical Care Management Ass’n?“raises questions about the ability of states to regulate health care costs in the context of PBMs and beyond.”On April 15, the U.S. Department of Health and Human Services (HHS) signed a renewal of determination that?extended the current COVID-19 public health emergency?by 90 days, effective April 21, 2021. This is the fifth time the emergency has been extended since it was first effective in January 2020. A subsequent?letter?to state governors indicated that the emergency will likely remain in effect for the remainder of the year.On April 30, HHS released its Final Notice of Benefit and Payment Parameters for 2022. Health Affairs provides helpful summaries of its major provisions here and here. Importantly, the new premium adjustment percentage for 2022 will result in out-of-pocket maximum limits of $8,700 for self-only coverage and $17,400 for other than self-only coverage. The Notice also establishes a new Special Enrollment Period (SEP) for the individual market exchanges when employer or government COBRA contributions cease – which will be important when COBRA subsidies under the American Rescue Plan Act (ARP) end at the end of September.00BENEFITS NEWS HIGHLIGHTSOn March 26, the Congressional Research Service?issued a paper?detailing the impact of recent federal court decisions on the status of ERISA preemption for pharmacy benefit managers (PBMs). According to the report, the recent?Rutledge v. Pharmaceutical Care Management Ass’n?“raises questions about the ability of states to regulate health care costs in the context of PBMs and beyond.”On April 15, the U.S. Department of Health and Human Services (HHS) signed a renewal of determination that?extended the current COVID-19 public health emergency?by 90 days, effective April 21, 2021. This is the fifth time the emergency has been extended since it was first effective in January 2020. A subsequent?letter?to state governors indicated that the emergency will likely remain in effect for the remainder of the year.On April 30, HHS released its Final Notice of Benefit and Payment Parameters for 2022. Health Affairs provides helpful summaries of its major provisions here and here. Importantly, the new premium adjustment percentage for 2022 will result in out-of-pocket maximum limits of $8,700 for self-only coverage and $17,400 for other than self-only coverage. The Notice also establishes a new Special Enrollment Period (SEP) for the individual market exchanges when employer or government COBRA contributions cease – which will be important when COBRA subsidies under the American Rescue Plan Act (ARP) end at the end of September.In Other News…Recap of 1st Quarter Issue Briefs and AlertsDepartment of Labor Releases COBRA Subsidy Website and Model NoticesThe Department of Labor (DOL) has released model notices and a COBRA subsidy information website related to the COBRA subsidy that was passed as part of the American Rescue Plan Act or 2021 (ARPA). The website will be a central location that the DOL uses to inform individuals of their potential right to take advantage of the subsidy, and to assist employers with fulfilling their compliance obligations.More here: FAQs Clarifying Mental Health Parity Comparative AnalysisThe Departments of Labor (DOL), Health and Human Services (HHS), and the Treasury (collectively, “the Departments”) released frequently asked questions (FAQs) at the end of last week to provide guidance for the mental health parity comparative analysis requirement that went into effect on February 10, 2021. The FAQs confirm that group health plans that are subject to the mental health parity rules should now be prepared to make the analysis available upon request by federal or state agencies, or for plans subject to ERISA, by plan participants. In addition, the FAQs point to the steps in the DOL’s Self-Compliance Tool as a guide for what is expected to be included in the analysis. Insurance carriers will handle the analysis requirement for fully-insured plans, but employers offering self-funded group health plans need to be taking steps to comply.?More here: Medical Expenses Include COVID-Related PPEIn IRS Announcement 2021-07, the IRS clarified that amounts paid for personal protective equipment (PPE) such as masks, hand sanitizer, and sanitizing wipes may be treated as qualifying medical expenses and thereby qualify for tax-favored reimbursement if it is purchased for the primary purpose of preventing the spread of COVID-19.?3498215-193040BENEFITS NEWS HIGHLIGHTSThe new premium adjustment percentage in the Notice of Benefit and Payment Parameters may also be used to project the employer shared responsibility penalties for 2022 (projected to be $2,750 under Subsection 4980H(a) and $4,120 under Subsection 4980H(b)) and affordability percentage for 2022 (projected to be 9.61%). Note that the IRS has not yet confirmed the penalties or affordability percentage.On May 6, the DOL published a final rule withdrawing the Trump administration’s January 7 independent contractor rule, citing several factors, including the rule’s tension with the Fair Labor Standard Act (FLSA) and judicial precedent for determining independent contractor status, as well as prioritizing more narrow factors in the analysis of whether a worker is an employee or an independent contractor. On April 14, the Department of Labor (DOL) released guidance on cybersecurity for employee benefit plans. The guidance consists of 3 forms: 1) Tips for Hiring a Service Provider; 2) Cybersecurity Program Best Practices; and 3) Online Security Tips. Although the forms appear geared towards retirement plans, the DOL webpage indicates that it is intended to apply to “plan sponsors and fiduciaries regulated by ERISA.” According to the DOL, the guidance “is an important step towards helping plan sponsors, fiduciaries and participants to safeguard [benefits] and personal information.”.00BENEFITS NEWS HIGHLIGHTSThe new premium adjustment percentage in the Notice of Benefit and Payment Parameters may also be used to project the employer shared responsibility penalties for 2022 (projected to be $2,750 under Subsection 4980H(a) and $4,120 under Subsection 4980H(b)) and affordability percentage for 2022 (projected to be 9.61%). Note that the IRS has not yet confirmed the penalties or affordability percentage.On May 6, the DOL published a final rule withdrawing the Trump administration’s January 7 independent contractor rule, citing several factors, including the rule’s tension with the Fair Labor Standard Act (FLSA) and judicial precedent for determining independent contractor status, as well as prioritizing more narrow factors in the analysis of whether a worker is an employee or an independent contractor. On April 14, the Department of Labor (DOL) released guidance on cybersecurity for employee benefit plans. The guidance consists of 3 forms: 1) Tips for Hiring a Service Provider; 2) Cybersecurity Program Best Practices; and 3) Online Security Tips. Although the forms appear geared towards retirement plans, the DOL webpage indicates that it is intended to apply to “plan sponsors and fiduciaries regulated by ERISA.” According to the DOL, the guidance “is an important step towards helping plan sponsors, fiduciaries and participants to safeguard [benefits] and personal information.”.More here: Subsidy Overview and FAQsTo help clients better navigate the complexities of the recently-announced COBRA subsidies under the American Rescue Plan Act (ARP), Benefit Comply has put together the following overview and set of frequently asked questions (FAQs). We hope this document provides assistance with the basics of the requirements and some meaningful direction while we await further guidance from the agencies.More here: Cross Blue Shield SettlementMany individuals and employers have recently received a postcard informing them of a proposed $2.67 billion settlement stemming from a 2012 class action lawsuit (In re: Blue Cross Blue Shield Antitrust Litigation MDL 2406, N.D. Ala. Master File No. 2:13-cv-20000-RDP) that alleged anti-competitive behavior/collusion among member companies of the Blue Cross Blue Shield Association. The final hearing deciding whether to approve the settlement will be held on October 20, 2021.More here: Provides Clarification for DCAPs in 2021 and 2022The Internal Revenue Service (IRS) released Notice 2021-26 clarifying what amounts may be reimbursed under a dependent care assistance program (DCAP) on a tax-favored basis in 2021 and 2022. The additional flexibility in recent legislation to allow carryovers and extended grace periods, as well as the increased contribution limit of $10,500 for the 2021 calendar year, left some confusion as to exactly how much could be reimbursed on a tax-favored basis during affected DCAP plan years. The notice, which includes several examples, confirms that amounts available in 2021 and 2022 due to a carryover or extended grace period will not count toward the $10,500 limit in 2021 or the expected $5,000 limit in 2022.36118800BENEFITS NEWS HIGHLIGHTSIn May, the Government Accountability Office (GAO) released a?report?outlining findings on the Department of Labor’s (DOL’S) Employee Benefits Security Administration’s (EBSA’s) enforcement and oversight of employee benefit plans. The report highlights EBSA’s general oversight approach (e.g., the issues it tends to focus on), and includes a list of the most common types of violations uncovered during recent investigations. The list includes 5500 reporting violations, participant reporting failures, failure to follow terms of plan documents, and fiduciary breaches and prohibited transactions. The report also discusses the immediate and long-term challenges presented to employee benefit plans by the Covid-19 pandemic.On June 11, the Department of Labor (DOL)?released?its Spring 2021 Regulatory Agenda. Notable for employee health and welfare benefit plans are interim final rules for surprise medical billing – Part 1 was just published in early July, and Part II is expected in October. In addition, proposed rules for provider nondiscrimination requirements are expected in January 2022.00BENEFITS NEWS HIGHLIGHTSIn May, the Government Accountability Office (GAO) released a?report?outlining findings on the Department of Labor’s (DOL’S) Employee Benefits Security Administration’s (EBSA’s) enforcement and oversight of employee benefit plans. The report highlights EBSA’s general oversight approach (e.g., the issues it tends to focus on), and includes a list of the most common types of violations uncovered during recent investigations. The list includes 5500 reporting violations, participant reporting failures, failure to follow terms of plan documents, and fiduciary breaches and prohibited transactions. The report also discusses the immediate and long-term challenges presented to employee benefit plans by the Covid-19 pandemic.On June 11, the Department of Labor (DOL)?released?its Spring 2021 Regulatory Agenda. Notable for employee health and welfare benefit plans are interim final rules for surprise medical billing – Part 1 was just published in early July, and Part II is expected in October. In addition, proposed rules for provider nondiscrimination requirements are expected in January 2022.More here: Releases Additional COBRA Subsidy GuidanceThe Internal Revenue Service (IRS) has issued Notice 2021-31 (the Notice) which includes significant guidance regarding the American Rescue Plan (ARP) COBRA subsidy. The Notice answers some of the outstanding questions employers have and provides clarification to other important COBRA subsidy issues.More here: : PCORI FeesEmployers who sponsored self-funded medical plans that ended sometime during 2020 are required to report and pay the ACA Patient-Centered Outcomes Research Institute (PCORI) fees no later than July 31, 2021.More here: Requirements and Limits for 2022The IRS released the 2022 health savings account (HSA) annual contribution limits and high deductible health plan (HDHP) requirements in IRS Rev. Proc. 2021-25 —? updated annual dollar amounts are set forth in this employer communication.More here: Vaccine IncentivesSome employers require employees to obtain COVID vaccines as a condition of employment, while many others are instead choosing to offer incentives to encourage their workforce to obtain COVID vaccines. Any time an incentive is tied to a vaccine, it’s necessary to consider applicable nondiscrimination rules found under HIPAA, the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA). Under such rules, incentives for vaccinations are generally permitted so long as wellness program rules are followed.More here: Questions on Reimbursable ExpensesThis issue brief will focus on determining whether an expense is reimbursable under Account Based Health Plans (ABHPs).?Specifically, we will look at the rules under Flexible Spending Arrangements (FSAs), Health Reimbursement Arrangements (HRAs), and Health Savings Accounts (HSAs). In general, all three ABHP types look to the definition of medical care, as provided in Section 213(d) of the tax code.More here: Court Rejects Challenge to ACA; Upholds LawThe Supreme Court has issued a ruling that has rejected a lawsuit claiming the Affordable Care Act (ACA) was unconstitutional. In the case Texas v. California, the plaintiffs argued that the entire law was unconstitutional due to a change made by Congress in 2017 that reduced the tax for failure to carry health insurance (the “individual mandate”) to $0.00.More here: Q&AQuestion: What can employers do, from a privacy perspective, with vaccination information that is collected directly from employees? What requirements might apply under HIPAA? Answer: The simple answer is that, generally, information collected directly from employees and not from an employer’s health plan records does not constitute protected health information (PHI) and would not be subject to HIPAA’s privacy and security requirements. This is true even if that information is individually identifiable, and even if it is medical information. This is because HIPAA applies to “covered entities.” Employers are not covered entities, but the health plans they sponsor often are. Therefore, PHI is really limited to individually identifiable health information connected to a health plan. Information collected/used for other programs or purposes – even if it’s individually identifiable, even if it’s medical information, does not constitute PHI (at least not in the employer’s hands).Some examples of information that LOOK like PHI to an employer but are not:Results of drug testing as a condition of hireAn employee sharing with their manager that they are pregnantInformation an employee provides to support a request for FMLAWhy isn’t this information PHI? Because it’s coming directly from an employee or from a source other than the employer’s health plan records, and it’s not related to administration of an employer’s health plan.Therefore, when an employer wants to collect information regarding an employee’s vaccination status, assuming it is not gathering that information from its health plan records or using it for any purpose connected to administration of their health plan, then the information is not PHI. For example, perhaps an employer wants to collect vaccination information to determine which worksites should reopen, or which employees can return to the office instead of working from home. Here, an employer is gathering this information for employment-related purposes, and assuming it’s not looking for it in its claims records and is gathering it directly from employees, the information would not be PHI.Now, this doesn’t mean that the information described above shouldn’t be protected or kept confidential. In fact, other privacy requirements, such as the ADA or state law, could still apply to that information. But if it’s not PHI, then HIPAA privacy and security requirements wouldn’t come into play.Things become a bit more complicated when an employer is gathering vaccine information as part of a wellness program, which is another common way we see employers obtaining this information. Depending on how a wellness program is structured, HIPAA could apply.So let’s talk about when wellness programs are subject to HIPAA privacy and security rules.First, it’s important to remember that when a wellness program is tied to a health plan (e.g., the incentive provides for a reduction in health insurance premiums), the wellness program is subject to HIPAA, and information collected in connection with the program is PHI. For most employers in this case, they can just rely on their existing HIPAA privacy and security policies and procedures with respect to any vaccine information gathered for this purpose.But what about wellness programs that have no ties to the major medical plan? What if an employer is simply providing a gift card in exchange for proof of vaccination? This is a little trickier. There is an argument to be made that such a stand-alone wellness program is by itself a health plan to the extent that it provides medical services/testing as part of its structure. And providing an incentive for a vaccine (medical services) would likely fall into this category. (Now if an employer is offering this type of program as part of an on-site clinic, there may be an exception here, but this would depend on the facts and circumstances of the arrangement.) But either way, if HIPAA applies, an employer can often just apply its existing policies and procedures to that wellness program.But this is important to understand, because if HIPAA applies, and even if employers can rely on existing policies and procedures, they’re going to be restricted in how they can use any vaccination information collected. This is because HIPAA requires that PHI be used only for purposes of plan administration, and not for any employment-related (i.e., non-health plan related) purpose. For some employers who are satisfied with limiting their use of this information to simply administering the wellness incentive, there shouldn’t be any problem as long as they apply any applicable HIPAA privacy and security policies and procedures to that information. But there could be an issue if employers want to use an employee’s vaccine information for purposes other than just providing a wellness incentive. And as stated earlier, employers may want to use an employee’s vaccine information for employment-related purposes – such as determining which worksites can be reopen, or which employees no longer need to work from home. In this case, we really see two options for employers to consider:Employers could launch a separate initiative to collect employee vaccination information directly from employees (apart from the wellness program). In this case, the information collected as part of this separate initiative would not be PHI and employers could use it for employment-related purposes.Employers could obtain a HIPAA-compliant authorization from employees to use their vaccine information for employment-related purposes. In this case, the authorization should comply with HIPAA’s content requirements and be clear about exactly how the employer plans to use the PHI. In addition, employers should be sure they do not condition receipt of the wellness incentive (or any other health plan benefits) upon an employee signing the authorization. Finally, keep in mind that if the employer wants to utilize the same form that it collects vaccine information on to also obtain authorization, it should be aware of HIPAA’s technical prohibition on “compound authorizations.” We believe the purpose of the prohibition was to avoid situations in which individuals were asked to sign an authorization that was buried in other legal paperwork. Therefore, as long as employers are clear about their intention, we think this would likely be a low-risk undertaking. But it is something to be aware of for clients that may be more risk-adverse. For these clients, having separate forms for the vaccine collection and the authorization would be advisable.In general, HIPAA will not stand in the way of an employer collecting vaccine information from employees; it will simply impact how an employer may use that information. For this reason, it is important to understand when employee information is and is not PHI so employers can consider what restrictions might apply to its use and disclosure and what options might exist for an employer to use the information in a way that makes the most sense for its operations. ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download