April 30 Deadline Set for Correcting Certain TRF Overpayments

Posted by on April 20, 2015 | Be the First to Comment

Posted on behalf of Elizabeth Vollmar, J.D.

The Centers for Medicare and Medicaid Services (CMS), the federal agency that collects the transitional reinsurance fee (TRF) has announced an April 30, 2015 deadline for claiming certain overpayments of that fee with respect to 2014. Specifically, the deadline applies to overpayments that result from misapplication of a permitted method for determining the annual enrollment count on which the fee is calculated or including individuals in the count for whom the fee was not required. Employers with self-insured plans who paid the TRF for 2014 may wish to review the enrollment counts reported if they have concerns that they may have paid more than required.

IMPORTANT: Employers that did not sponsor a self-insured plan during 2014 were not required to remit the TRF for 2014.

Most of us have given little, if any, thought to the TRF requirements since completing the annual online filing last November or December. For those who could use a refresher, here are some of the more important details:

  • The TRF is an annual per capita fee that is required with respect to each and every individual that has coverage under a policy or plan subject to the requirement (e.g., it applies to enrolled spouses and children, not just employees). Insurers and sponsors of self-insured plans are required to pay the TRF with respect to the major medical coverage they provide.
  • For fully-insured coverage, insurers are responsible for completing the TRF filing and remitting the TRF. Therefore, employers providing fully-insured coverage don’t need to worry about the TRF filing or the accuracy of the information reported. 
  • For 2014, the TRF was generally $63 per covered life. (For 2015, it drops to $44 per covered life and, for 2016, it drops to $27.) The TRF is assessed and paid on a calendar-year basis (regardless of plan year). 
  • For 2014, it could be paid in one installment that is due no later than Jan. 15, 2015, or in two installments, the first of which ($52.50 per covered life) was due no later than Jan. 15, 2015, and the balance ($10.50 per covered life) is due the following Nov. 15. 
  • Assessment of the TRF is based on an annual enrollment count, and entities required to remit the TRF were to report their annual enrollment counts for 2014 no later than Dec. 5, 2014. 
  • Using pay.gov, filers reported annual enrollment counts and arranged remittance of TRF payments online. 
  • Various methods were provided to determine annual enrollment counts, with repeated modifications and changes being announced in agency webcasts, conference calls and FAQs. Confusion about how to count and how to report the count abounded.

The agency has now noted in an announcement that “some contributing entities may have misreported their annual enrollment count for the 2014 benefit year…potentially resulting in an overpayment.” Exactly what should be done to correct any errors and obtain a refund is a bit unclear. The announcement first says that filers “can generally correct these errors by simply refiling a form through pay.gov…with the correct annual enrollment count and CMS refunds the payment associated with the erroneous filing.” It sounds simple.  

In the next paragraph, however, the agency states that filers “must send refund requests resulting from annual enrollment count misreporting to CMS by April 30, 2015, or 90 days from the date of their form submission, whichever is later. These requests and other inquiries regarding the reinsurance contribution submission process should be sent to reinsurancecontributions@cms.hhs.gov. So, it appears that an entity seeking a refund must first re-file its form with the adjusted annual enrollment count and then send an email requesting a refund. And it must do this by April 30, 2015. The guidance notes that the deadline is extended to 90 days after the original filing date if that’s later that April 30, but that would mean that the original filing was delinquent.

The guidance notes that this April 30 deadline does not apply to requests for refunds resulting from paying the fee more than once for the same individual. It also notes that filers cannot now change the counting method they used previously to determine their annual enrollment count – only corrections due to misapplication of the method used are permitted.

Employees Receiving ACA Premium Subsidies May File Retaliation Claims on DOL Website

Posted by on February 6, 2015 | Be the First to Comment

Posted on behalf of Mark Holloway, J.D.

When a full-time employee qualifies for premium assistance to purchase coverage on an exchange his or her employer may incur a penalty under the play or pay mandate (see our Alert). Employers will know when their employees qualify for premium assistance because exchanges are required to notify the employee’s employer of the premium assistance and the potential for penalties. With the employer mandate becoming effective for most larger employers on Jan. 1, 2015, premium assistance notices from the exchanges are generating considerable concern (for information on handling such notices, please contact your Lockton Account Team). Today, we wanted to alert employers to a potential compliance trap associated with these notices that is hidden deep in the ACA: The Whistleblower Provision.

The ACA amends the Fair Labor Standards Act to prohibit employers from retaliating against employees who  either: report violations of the ACA’s insurance reforms, or receive premium assistance for coverage purchased on an insurance exchange.  An aggrieved employee can get the ball rolling by filing a complaint online. If a violation has occurred, the employer is potentially required to reinstate the employee, as well as provide back pay (with interest), compensatory damages and attorney fees.  These “whistleblower” protections are enforced by the U.S. Department of Labor’s (DOL) Occupational Health and Safety Administration (OSHA).  Although OSHA is typically absent from ACA issues, the agency is tasked with enforcing the anti-retaliation provisions of most federal laws, including the ACA. 

Interim final regulations explain the procedural hoops that apply once an individual files a complaint, but the rules do not explain the factors OSHA will consider in assessing whether retaliation has occurred.  For example, does an employee have a whistleblower claim if, after qualifying for premium assistance, his hours of employment are reduced so he doesn’t qualify as a full-time employee for purposes of the employer mandate?  The answer should be “no,” but the regulations are silent on this issue and employment actions are frequently misconstrued as retaliation.

One way that an employer might address this is to treat any premium assistance notice it receives from an exchange as if it were information about a disability (e.g., filing it separately from other HR records, not disclosing it internally except as needed, etc.). If possible, an employer might wish to insulate anyone who will make employment decisions about an employee from knowing whether the employee is receiving premium assistance. Given all the vagaries of retaliation claims, the best advice is that employers should exercise common sense when dealing with employees who have qualified for ACA premium assistance or who complain that an employer practice violates the ACA.  For employers that have existing anti-retaliation policies, those policies should be revised to address these ACA-related protections.  

Deadlines and Reminders

Posted by on January 15, 2015 | Be the First to Comment

Compliance deadlines for health and welfare plans continue to abound as we start 2015. In the listing below, we focus on compliance deadlines during the first half of 2015. Although Jan. 1 has passed, we have also included items having compliance deadlines related to plan years beginning during 2015. (For Jan. 1, 2015 and fourth quarter 2014 compliance deadlines, see our Oct. 13, 2014 post.) If you have any questions about compliance deadlines, or wish to get additional information on them, please contact your Lockton account team.

Jan. 31, 2015

  • Deadline to issue Forms W-2 for the 2014 taxable year that include:
    • Taxable income for certain coverage provided during 2014 (e.g., life insurance in excess of $50,000 for which the employee did not pay the full Table I rate on an after-tax basis, and health coverage for non-dependent domestic partners paid by employer or by employee on pre-tax basis).
    • Reportable health plan values during 2014 as required by the ACA (exemption for small employers).
    • Employer and employee pre-tax health savings account (HSA) contributions for the 2014 taxable year.

Feb. 15, 2015

  • Last day of Health Insurance Marketplace open enrollment for coverage during 2015.

March 1, 2015

  • Deadline to provide Medicare Part D Creditable and/or Non-creditable Coverage Notices to CMS (calendar year group health plans).
  • Deadline for filing annual Form M-1 on behalf of multiple employer welfare arrangements (MEWAs) providing health coverage unless they meet a filing exemption.

April 14, 2015

  • For group health plans that became subject to HIPAA privacy rules on April 14, 2003 and are self-insured, deadline for reminder notice regarding health plan’s HIPAA Privacy Notice (due every third year, unless otherwise provided, such as in enrollment packets; insurer provides for insured coverage).

July 31, 2015

  • Deadline for employers to file Form 720 and pay PCORI fee with respect to self-insured calendar-year health plans and other self-insured health plans that have plan years ending on or after October 1, 2014 and before January 1, 2015.
  • Deadline to file Form 5500 for plan years ending Dec. 31. 2014 (unless extension is obtained).

Various Dates (as indicated)

  • Make changes to comply with final Mental Health Parity and Addiction Equity Act (MHPAEA) regulations, including providing coverage for treatment of mental health and substance abuse disorders in non-hospital settings (e.g., in residential treatment facilities) with no greater cost sharing than applies to coverage for medical or surgical treatment in non-hospital settings (e.g., skilled nursing facilities). Applies to group health plans for plan years beginning on or after July 1, 2014.
  • For employers not required to do so starting Jan. 1, 2015, begin providing health coverage to prevent play or pay penalties (subject to various exceptions, caveats and transition rules, including those that apply to employers with non-calendar year plans and employers with fewer than 100 full-time employees).
  • Non-grandfathered health plans begin covering the following preventive services with no cost sharing:
    • Healthy diet and physical activity counseling for adults at risk of cardiovascular disease (for plan years beginning on or after Sept. 1, 2015).
    • Hepatitis B screening for persons at risk for infection (for plan years beginning on or after June 1, 2015).
    • Hepatitis C screening for adults at high risk for infection, as well as a one-time screening for adults born between 1945 and 1965 (for plan years beginning on or after July 1, 2014).
    • Lung cancer screening for certain current and former smokers who are 55 to 80 years of age (for plan years beginning on or after Jan. 1, 2015).
  • Non-grandfathered group health plans (other than high-deductible health plans offered in connection with health savings accounts) must limit in-network out-of-pocket expenses for essential health benefits to no more than $6,600 for self-only coverage and $13,200 for other coverage. Applies for plan years beginning in 2015.
    • Such plans may, however, apply separate limits on out-of-pocket expenses for two or more types of essential health benefits so long as all limits on out-of-pocket expenses for in-network essential health benefits total no more than the $6,600/$13,200 overall limits.
    • For example, such a plan may limit out-of-pocket expenses for prescription drugs that are essential health benefits to $2,600/$5,200 and apply separate limits of $4,000/$8,000 on out-of-pocket expenses for all other essential health benefits.
    • CAUTION: High-deductible health plans offered in connection with health savings accounts must, for plan years beginning in 2015, limit in-network out-of-pocket expenses to no more than $6,450 for self-only coverage and $12,900 for other coverage.

The Collision of Progressive Politics and Fiscal Limitations: Vermont Slams the Brakes on its Single-Payer Healthcare Initiative

Posted by on December 24, 2014 | Be the First to Comment

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Posted on behalf of Ed Fensholt, J.D. – Senior Vice President and Director – Lockton Compliance Services

Something worth noticing played out in the Green Mountain State last week. Vermont, no stranger to progressive politics, abandoned its single-payer healthcare initiative, almost four years after becoming the first state to enact such legislation.

The state’s action is noteworthy because it illuminates the fiscal challenges sometimes inherent in worthy social welfare legislation. Vermont passed with great fanfare a universal coverage law shortly after enactment of the federal Affordable Care Act (ACA). But the failure of the state legislature to include a plan for raising revenue to pay for universal coverage suggested the law, from the beginning, was more aspirational than realistic. As it turns out, that’s precisely the case.

The law gave Vermont until 2013 to come up with a plan to finance universal coverage, a deadline the state missed by more than a year. Only recently did a plan surface, and it called for an 11.5 percent payroll tax on employers and an additional income tax of up to 9.5 percent. Vermont’s governor, Peter Shumlin, concluded the tax hit was too steep a hill for the state’s employers and other taxpayers to climb, and pulled the plug.

During the debate on the Affordable Care Act in 2009, several of the more progressive political players on Capitol Hill publicly applauded the Act as the best way to take America to a universal coverage platform like those in Canada and other western industrialized nations. But if Vermont’s lesson is indicative of the cost to the nation of a federal universal coverage initiative, one might legitimately question just how a nation barreling toward a $20 trillion national debt could afford such an initiative without crushing tax increases or doubling down on our aggressive borrowing.

A closer look at the budgeting process behind the Affordable Care Act might suggest the ACA was never intended to move the nation to single payer, but to shift to private parties—employers mostly—the cost of insuring the bulk of the nation’s employees. Congressional Budget Office cost estimates, for example, cap projections for public health insurance exchange enrollment at 19 million Americans, acknowledging the Act’s estimated $1 trillion price tag over 10 years cannot accommodate subsidized coverage for more than about six percent of us.

Perhaps what Vermont’s action tells us above all else is that we must remember we cannot have it all. There are only so many dollars in the public treasury. While it’s absolutely worthwhile to think about all the things we’d like to do with that money, we must remember that there is a very finite list of things we’re able to do with it.

Problem Solved? Congress Exempts Expat Coverage from Some ACA Rules

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Posted on behalf of Mark Holloway, J.D. – Senior Vice President and Director – Lockton Compliance Services

One of the areas in the employee benefit world where agency guidance has been sorely needed is the application of federal tax and ERISA rules, particularly rules added by the Affordable Care Act (ACA), to health insurance plans that cover foreign-bound U.S. employees (expatriates). 78431584     

The application to expatriate health coverage of the ACA’s various  benefit mandates and taxes and fees, and the extent to which such coverage satisfies the ACA’s  individual and employer mandates, resulted in a mishmash of complex and nearly unworkable rules. The federal agencies realized the complexity of these issues and issued FAQ guidance that exempted insured expatriate programs from some of the ACA requirements through 2015; see our blog post. Subsequent guidance pushed the compliance date for plan years ending through Dec. 31, 2016. Even with the regulatory leeway, U.S. health insurers argued the complexity and associated costs of the ACA rules created a competitive disadvantage with non-U.S. insurers writing expatriate coverage that did not comply with all of the ACA-related mandates. 

We now have some good news, sort of. Buried in the budget bill signed by the President last week is the “Expatriate Health Coverage Clarification Act of 2014” (EHCCA) that exempts some expat coverage from several thorny ACA-related requirements, and treats the coverage as adequate for both the individual and employer mandates…but only if the coverage meets several specific and potentially difficult requirements.

The new rules and their potential accommodations apply to insurance contracts issued or renewed on or after July 1, 2015. Unfortunately, the law does not exempt expat coverage from meeting the tax reporting requirements under the ACA (the so called “Section 6055/6056 reporting rules” that apply beginning in calendar year 2015) and does nothing to exempt expatriate coverage from pre-ACA ERISA rules, such as COBRA and mental health parity requirements.

Nevertheless, the EHCCA does hold some advantages for expat coverage that can clear three hurdles. Here they are:

Hurdle #1 – Expat Plan’s Enrollees Must Be Substantially All “Qualified Expats”

To qualify for the relief, the expatriate health plan must be a group health plan (including a self-funded plan) or insured program where substantially all “primary enrollees” meet one of the three criteria below (the law refers to these as “qualified expatriates”).   Primary enrollees include not only the employee, but other enrollees including the employee’s spouse, children and other family members, such as domestic partners. 

The three types of qualified expatriates are:

  1. Expatriates outside the U.S.  – Persons who work outside the U.S. for a period of at least 180 days in a consecutive 12-month period that overlaps the plan year.
  2. U.S.-bound inpatriates – Foreign workers transferred or assigned to the U.S. on temporary assignment who need access to health insurance in multiple countries and their employer offers them multinational benefits, such as tax equalization, cross-border moving expenses, etc. Persons who are not U.S. nationals and who reside in their country of citizenship do not qualify.
  3. Students/missionaries/charity workers – These individuals also meet the definition of qualified expatriate, subject to future criteria to be determined by the federal agencies.

The new law does not define “substantially all.” However, the U.S. Department of Labor has issued rulings on when a plan covers persons “substantially all” of whom are nonresident aliens, to determine whether ERISA applies to the plan.  Those rulings, some up which are decades old, seem to indicate that at least 93 percent of the plan’s enrollees must fit within the criterion to meet the “substantially all” threshold.  It remains to be seen if the agencies will adopt a similar standard for an expatriate health plan under the new law. 

Hurdle #2 – Expat Plan’s Coverage Must Meet Specific Criteria

Assuming the plan clears the first hurdle, the coverage must then meet specific criteria to qualify for the partial exemption from the ACA discussed below.  These conditions include:

  • Insurance coverage for inpatient hospital services, outpatient facility and physician services, and emergency care.
  • The plan has an actuarial value of at least 60 percent and substantially all of the plan’s benefits cannot be ACA excepted benefits (dental, vision, etc.).
  • If the plan provides for coverage of children, that coverage extends through age 26.
  • If the coverage is insured, the insurer is licensed to sell insurance in more than two countries and meets network adequacy and other standards, including maintaining call centers and providing global evacuation and repatriation coverage.
  • The coverage satisfies the applicable pre-ACA ERISA standards for health insurance, including mental health/substance abuse parity,  48 hours of maternity care, COBRA, claims appeal requirements, distribution of summary plan descriptions and filing of Form 5500 (as applicable).  Expat coverage issued by a U.S. carrier typically meets these requirements, but often coverage issued by a foreign carrier does not.

Keep in mind that ERISA will apply to expat coverage except if the plan is established and maintained outside the United States primarily for the benefit of persons, substantially all of whom are nonresident aliens.  

Hurdle #3 – Insurer Agrees to Handle ACA Tax Reporting

ACA tax reporting still applies to the expat coverage (the dreaded “Section 6055/6056 reporting”), but the IRS forms can be supplied electronically to the enrollee without consent, unless the enrollee explicitly refuses electronic delivery.  

Significantly, if the insurance carrier does not agree to facilitate the tax reporting, then the expat coverage falls outside the scope of the new law and becomes subject to the full array of ACA mandates.  It remains to be seen whether the federal agencies would assess penalties on the insurer – which may be outside the agencies’ jurisdiction if the carrier is not licensed in the U.S. – or whether penalties could accrue to a U.S.-based employer/plan sponsor.

If My Expat Plan Clears All the Hurdles, What Relief Applies?

First, the good news:   Expat plans that meet the criteria above do not have to comply with the following ACA mandates:

  • Dollar limits on essential health benefits
  • Waiting period limits of 90 days
  • Out-of-pocket maximums for in-network care
  • Cost sharing on in-network preventive care
  • Rigorous claim appeal procedures
  • Preexisting condition exclusions
  • Retroactive coverage terminations (except fraud)
  • Distribution of summaries of benefits and coverage (SBCs)

Coverage under the expat plan is also deemed to satisfy the individual and employer mandates and is exempt from the ACA’s taxes and fees, including the transitional reinsurance fee, PCORI fee, and the insurance company excise tax (after 2015, subject to transition rules).  The new law contains an exemption for some expat coverage with respect to the “Cadillac tax” on high value health plans that will apply in 2018 (see discussion below).

Now, the not-so-good news:   The exemption from the Cadillac tax does not apply with respect to a U.S.-bound inpat (second bullet under Hurdle #1, above), if the person is assigned, rather than transferred, to the U.S. 

What Next?

The federal agencies – IRS, DOL and HHS – will need to issue regulatory guidance on the new requirements.  It is unclear whether plans can rely on the existing FAQ guidance though 2016 or will need to comply when coverage is renewed on or after July 1, 2015 (the law’s effective date).