HR professionals: Are you looking to catch up on 2019 compliance updates and know what to expect for the year ahead? Here are tips from Stacy Barrow, of Marathas Barrow Weatherhead Lent LLP, who recently hosted a webinar on the topic.
Washington update and future of the ACA
- The ACA turned 9 on March 23, 2019. About 24 million more people are now covered compared to when it was passed – about half via the Marketplace and half through Medicaid expansion.
- Last year saw the repeal of the individual mandate penalty under the Affordable Care Act, but that doesn’t mean the mandate itself has been repealed.
- Some states are battling it out in the courts over its constitutionality now that the penalty is gone. One lower court has even held that the entire law must be struck down.
- In addition, several states now have their own mandates/penalties, including New Jersey, Washington DC, California, Vermont, Rhode Island and Massachusetts. Some are still working out the reporting requirements.
Compliance in 2019
- Federal district court rulings on contraceptive coverage are still in play. For now, only religious employers are fully exempted from the requirement to cover contraception, but a workaround “accommodation” process is available to many others.
- Cost-sharing reductions also are up in the air. Although President Trump ordered Health and Human Services to stop making CSR payments in October 2017, carriers have been suing and have been successful. That means they are legally entitled to the CSRs. But they have been increasing individual premiums to make up for the unpaid CSRs.
- The Trump administration tried to expand association health plans, but several states challenged the expansion and few new associations have been formed.
- A bill to extend the Patient-Centered Outcomes Research Institute fee through 2029 passed.
- The Cadillac Tax, originally effective in 2018, has been repealed completely.
- The Centers for Medicare and Medicaid Services released a rule in November 2019 requiring greater price transparency from hospitals and health plans. The rule is designed to improve consumerism, but it’s being challenged heavily.
What to expect in 2020
- New IRS rules allowing HSA-eligible individuals to have coverage for certain types of specific chronic conditions should start to have an impact.
- The affordability percentage for 2020 is 9.78%, down from 9.86%.
- The Federal Poverty Level safe harbor for calendar year 2020 plans is $12,490 FPL (2019) × 9.78% ÷ 12 months = $101.79/month.
- The employer mandate penalties for 2020 are projected to be $2,570 (for failure to offer coverage to at least 95% of FT employees) and $3,860 (for failure to offer affordable coverage to an employee who gets subsidized coverage through the Health Insurance Marketplace).
- The new health FSA contribution limit is $2,750.
- The IRS is issuing multiple letters for employer mandate penalties, failure to report and late filings. Most responses are due 30 or 45 days from receipt of the letters, and we suggest consulting with your ERISA counsel before responding.
- The EEOC’s limits on wellness incentives are also still in play, and no one is sure when or if they’ll be settled. For now, Mr. Barrow believes wellness programs that are designed to comply with existing limits (the 30% cap) are safe from being challenged by the EEOC, but not necessarily employees. However, particularly risk-averse employers may want to consider tying incentives to tobacco user surcharges without medical testing or to participation in activities such as health seminars, gym use and walking programs. This would further reduce the risk of lawsuits by employees challenging the legality of your wellness program incentives.
Final rules for individual coverage HRAs or ICHRAs
A final rule effective January 1, 2020, allows employers to offer an HRA that is essentially a pathway to reimburse employees for individual health insurance they obtain on their own. Although employers can’t offer a choice between group health coverage and an ICHRA, they can offer the ICHRA to certain classes of employees or employees hired after a certain date.
Another final rule was issued regarding “excepted benefit” HRAs that can be offered alongside non-excepted group health plan coverage. They allow the employer to offer up to $1,800 in reimbursement for out-of-pocket medical expenses, including premiums for limited-scope dental or vision benefits, short-term insurance policies and COBRA coverage.
Based on the IRS’s stated priorities for 2020, we may see more guidance on Section 125 plans – including the highly desirable repeal of the use-it-or-lose-it rule. Additional topics to be addressed include Certified PEOs and grandfathered plans.
Compliance is not for the faint of heart. We’ll do our best to keep you posted as new rules and regulations are finalized.