Integrated HRAs

A new option exists for employers when it comes to paying for employee health care coverage. On June 13^th, the U.S. Departments of the Treasury, Labor, and Health and Human Services (the Departments) issued a final rule allowing employers to use pretax dollars to subsidize employee premiums in the individual health insurance market. Now, employers of all sizes that do not offer a group coverage plan can fund a new health reimbursement arrangement (HRA) known as individual coverage HRA (ICHRA).

Previously, under the Affordable Care Act, employers were prevented from offering stand-alone HRAs that would allow an employee to purchase coverage on the individual market. That has changed. Employers now have the option to provide their workers and their families with tax-preferred funds to pay all or a portion of the cost of coverage that workers purchase in the individual market. The departments posted an FAQs regarding the new regulation. ICHRAs are advantageous to employers because they maintain the tax favored status that apply to a traditional group health plan. Additionally, another employer-sponsored insurance called Excepted Benefit HRAs (EBHRA) allows employers to finance an additional pretax $1,800 per year to reimburse employees for certain qualified medical expenses (such as premiums for vision and dental insurance) even if the employee opts out of enrollment in the traditional group plan.

Qualified Small Employer HRAs (QSEHRA) are still an attractive alternative to group coverage for smaller employers- those with fewer than 50 full-time employees. Under QSEHRAs, employers can give their employees money tax-free to purchase individual health policies through the ACA exchange, similar to ICHRAs. Employees can use these funds to pay all or part of the insurance plan premium or pay for out-of-packet medical costs. While ICHRAs are void of caps on annual allowance amounts, in 2019, QSEHRAs allowance amounts were capped at $5,150 for self-only employees and $10,450 for employees with a family. While ICHRAs are free of caps, employees who choose ICHRAs will not be able to receive any premium tax credit/subsidy for exchange-based coverage. In some instances, if an employer funds an ICHRA or a QSEHRA coupled with individual-market insurance, this will bar the individual-market coverage from becoming part of the Employee Retirement Income Security Act (ERISA).

If employers choose to offer ICHRAs, then the new regulations require a written notice be issued to all employees who are eligible. In this notice, employers need to include a provision that states the ICHRA may make them ineligible for a premium tax credit or subsidy when buying an Affordable Care Act exchange-based plan. ICHRAs will be available for plan years starting on or after January 1, 2020. Employers offering an ICHRA with a plan year that begins on January 1, 2020 should help eligible employees understand that they must enroll in individual health insurance coverage during the open enrollment period, November 1, 2019 through December 15, 2019, for individual health insurance coverage that takes effect on January 1, 2020.

ICHRAs and EBHRA are two new health insurance arrangements that could provide smaller employers with innovative and more cost-effective ways to finance worker health insurance coverage. The IRS has noted that including safe harbor provisions to ensure employers still satisfy the ACA’s affordability and minimum value requirements with ICHRAs will come out later this year.

© 2019 Vandenack Weaver LLC

For more information, Contact Us

 

Healthcare Entities Required to Post New Non-Discrimination Notice

The Patient Protection and Affordable Care Act (ACA) prohibits health care entities from discriminating on the basis of race, color, national origin, sex, age, or disability. The ACA prohibition on discrimination applies to covered entities, which means those healthcare entities that receive federal financial assistance through the Department of Health and Human Services (HHS). For example, a covered entity includes a physician or pharmacy that accepts Medicare or Medicaid, health insurers that offer a plan on the healthcare exchange, and any entity that offers a Medicare part D plan.

In an effort to enforce the non-discrimination law, HHS issued a new rule in May of 2016 that requires all covered entities to post new non-discrimination notices. Although the rule was finalized in May of 2016, health care entities had until October 16, 2016 to post a new notice of non-discrimination. The new notice must state that the health care entity does not discriminate, that language assistance for the patient is available, and delineate how an individual can file a discrimination complaint with HHS. The new notice is intended to decrease discrimination by helping consumers become more aware of their rights.

For further information or to find example HHS non-discrimination notices, visit the following link:
http://www.hhs.gov/civil-rights/for-individuals/section-1557/translated-resources/index.html

© 2016 Vandenack Weaver LLC
For more information, Contact Us

Final rule on Medicaid Prescription Drug Programs

In January of 2016, the Centers for Medicare and Medicaid Services (CMS) issued a final rule on covered outpatient drugs. The rule changes the Medicaid Drug Rebate Program by the Patient Protection and Affordable Care Act (PPACA) and the overall Medicaid drug reimbursement program.  These changes have several goals, including reducing the cost to the federal and state governments and improving beneficiary access to covered outpatient drugs.

CMS claims the changes implemented will help the government save money in the Medicaid Drug Rebate Program, which had been subject to sustainability issues. One key change in the final rule is a definition of the Average Manufacture Price, which in turn gets used to determine rebates and pharmacy reimbursements subject to the federal upper limit. Similarly, the changes to the federal upper limit formula will incentivize pharmacies to use certain generic drugs. The final rules clarify many of the ambiguous sections of the Medicaid Drug Rebate Program by the PPACA, including the manufacturer reporting requirements. The rule also aligns the pharmacy reimbursement system with the actual acquisition cost of the drug.

Overall, the new incentives and changes should improve the reimbursement system and help manage drug costs. This rule becomes effective April 1, 2016, although CMS is allowing comment for 60 days after publication on certain elements of the rule. The new rule can be found at the following link:

https://www.gpo.gov/fdsys/pkg/CFR-2014-title42-vol4/pdf/CFR-2014-title42-vol4-part447.pdf

 © 2015 Vandenack Williams LLC
For more information, Contact Us

IRS issues final regulations on employer sponsored health insurance

In December of 2015, the Internal Revenue Service (IRS) issued final regulations that addressed some of the questions pertaining to whether employer sponsored health insurance meets the Patient Protection and Affordable Care Act minimum value requirements.  Amongst a variety of miscellaneous items pertaining to minimum value, the final regulations clarify the impact of a health reimbursement arrangement (HRA) on affordability. The regulations also clarify some of the rules regarding eligibility for the health insurance premium tax credit.

Under the final regulations, the new amounts made available by an employer to an employee in a HRA that can be used to pay health insurance premiums, when the employer also offers qualifying health coverage, will be counted towards affordability. Similarly, if the new amounts are available to an employee in a HRA integrated with qualified employer coverage, and the new amount can only be used to reduce cost-sharing, that new amount will be counted for minimum value purposes.

The health insurance premium tax credit had rules finalized in the same regulations. One rule includes the eligibility of a household that has income from a child. The premium tax credit is based on household income and when a parent includes a child’s income on their income tax return for tax credit eligibility purposes, the amount used is the child’s modified adjusted gross income, not the gross income reported on the child’s tax return.

The final regulations also addressed the impact of wellness incentives on the health insurance premium tax credit. The regulations clarify that wellness incentives that reduce the cost of health insurance premiums to an employee will not be included in the calculation for minimum value or affordability, instead the regulations assume the employee will not qualify for the incentive. This rule has one exception, which is if the incentive is based on tobacco use. If so, the regulations assume that the employee will qualify for the incentive and the incentive can be used in the minimum value and affordability calculation. Thus, only tobacco use wellness incentives can be used in the minimum value and affordability calculation for purposes of premium tax credit eligibility.

Overall, a variety of miscellaneous rules regarding health insurance were finalized in the regulation. The entirety of the IRS regulation can be found at the following link: https://www.federalregister.gov/articles/2015/12/18/2015-31866/minimum-value-of-eligible-employer-sponsored-plans-and-other-rules-regarding-the-health-insurance

© 2015 Vandenack Williams LLC
For more information, Contact Us

Clarity Emerges for Employer Sponsored Health Insurance Auto-Enrollment Requirement

In early November, 2015, the President officially signed the federal budget that included a repeal of the auto-enrollment mandate contained with the Patient Protection and Affordable Care Act (PPACA) for employers with over 200 employees.

Originally under the PPACA, an employer with 200 or more employees would be required to automatically enroll new employees into the employer-sponsored health coverage. This mandate had never been implemented and was indefinitely suspended due to problems at the Department of Labor in issuing regulations. It was unclear whether it would eventually be implemented, but the official legislative repeal ends this potential issue for employers.

Many aspects of the PPACA continue to change and evolve. As more of the law continues to be implemented, be sure to monitor the evolving requirements for both individuals and health insurance providers.

© 2015 Houghton Vandenack Williams

For more information, Contact Us

Circuit Split Leaves Nebraska and Iowa in Limbo on ACA Contraceptive Mandate

On September 17, 2015, the United States Court of Appeals for the Eighth Circuit (8th Circuit) ruled against the United States Department of Health and Human Services (HHS) in two cases regarding the contraceptive mandate found within the Patient Protection and Affordable Care Act (ACA). The 8th Circuit determined that nonprofit religious organizations do not have to provide contraceptive coverage or participate in the accommodation process designed to alleviate concerns for religious objectors under the ACA. For those residing in the court’s jurisdiction, which includes Nebraska and Iowa, this ruling interjects ambiguity because this is the only circuit court to rule against HHS on this issue.

The two cases, Dordt Coll. v. Burwell, No. 14-2726 (8th Cir. 2015) and Sharpe Holdings, Inc. v. HHS, No. 14-1507 (8th Cir. 2015), pertained to religious organizations that fell outside of the religious employer exemption, instead falling in another category. This category, designed by HHS, provides for the nonprofit entity by granting a religious accommodation. The religious accommodation allows nonprofit organizations to notify HHS of their objections, which also requires the nonprofit provide updates and further information about the objection. Once notified, HHS would begin a procedure that would ultimately require another party to provide contraceptive benefits to the beneficiary of the nonprofit’s health plan. The 8th Circuit determined the nonprofit organization is neither required to notify HHS or provide contraceptives to the health plan beneficiaries.

This poses a problem for those within the 8th Circuit’s jurisdiction because it is the lone circuit to rule against HHS on this issue and it is expected that the United States Supreme Court will take up this issue in the fall term. In the meantime, those in Nebraska, Iowa, and similar 8th Circuit jurisdictions are subject to an ambiguous and evolving standard. For those employers in the 8th Circuit’s jurisdiction considering applying this ruling, counsel should be contacted prior to moving forward.

© 2015 Houghton Vandenack Williams
For more information, Contact Us

IRS Issues Notice on PPACA “Cadillac” Tax

On July 30, 2015, the Internal Revenue Service (IRS) issued Notice 2015-52, addressing issues and seeking public comments on the implementation of the “Cadillac” tax on high-cost health insurance under the Patient Protection and Affordable Care Act (“PPACA”).  The Cadillac tax is intended to discourage expensive health care plans by imposing a non-deductible 40 percent excise tax on the portion of health plan costs that exceed a predetermined dollar amount.  The tax, which will go into effect in 2018, generally applies to healthcare benefit packages costing more than $10,200 for individuals and $27,500 for families, subject to certain proposed adjustments.  Although the law was passed in 2010, many details of how the tax will be implemented still remain to be sorted out.

For example, one of the basic issues with the Cadillac tax is determining who has the responsibility to pay it.  The law provides that the tax must be paid by the “coverage provider.” Depending on the circumstances, that may be the insurance company, the employer or “the person that administers the plan benefits.”  However, some key terminology impacting these determinations have yet to be defined.  Other unresolved complexities addressed the in IRS notice include: timing issues relating to calculation and payment of the tax, circumstances under which employers will be aggregated for purposes of the tax, and adjustments to the dollar limit based on age and gender.

The IRS has invited public comments on the issues raised in the Notice, as well as any other issues relating to the Cadillac Tax.  Public comments are due no later than October 1, 2015.  Comments received will be used in the preparation of forthcoming Treasury Regulations governing the Cadillac tax.

Notice 2015-52 is available at the following link: http://www.irs.gov/pub/irs-drop/n-15-52.pdf.

© 2015 Houghton Vandenack Williams
For more information, Contact Us

Physician Reimbursement for End of Life Planning

The Centers for Medicare and Medicaid Services released a proposed regulation, as part of the proposed Medicare Physician Fee Schedule rule, that allows doctors to be reimbursed for end of life planning with patients. These counselling sessions, known as advance care planning, allows a doctor to bill for two 30 minute sessions with a patient to discuss how they would like to be treated as they are dying.

For physicians billing Medicare for reimbursement, this will make two new codes active. Although the codes were enacted in the fiscal year 2015 fee schedule, they were not eligible for reimbursement. The new fee schedule, that would be effective January 1, 2016, allows physicians to be reimbursed for two 30 minute sessions. Although experts expect that many patients will only require one 30 minute session, up to an hour can be reimbursed.

For the approximately 55 million individuals insured by Medicare, this will allow the patient to tell the doctor what their wishes are and how they would like to be cared for at the end of life. Although some private insurers currently offer payment for these discussions, Medicare offering reimbursement will significantly increase the volume of these discussions. The proposal will be open to comment for 60 days, prior to the final rule being published at the end of 2015, with reimbursement starting on January 1, 2016.

© 2015 Houghton Vandenack Williams

For more information, Contact Us

HHS Proposes New Rules on Civil Monetary Penalties

HHS’s Office of the Inspector General (OIG) has issued a new proposed rule that makes a number of changes to its civil monetary penalty authority. Among other changes, this rule would increase the maximum reduction of penalties when providers can show mitigating circumstances. It also makes providers who cause more than $15,000 of losses to Medicare/Medicaid subject to increased penalties.

The rule also explains the factors that OIG will consider in determining how much in penalties it will assess. These include the provider’s history and whether other wrongful conduct was involved. OIG will also consider whether the provider followed self-disclosure protocols and took corrective action. Providers should review their self-disclosure policies to determine whether they reflect the new factors.

© 2014 Parsonage Vandenack Williams LLC

For more information, Contact Us

How Does the Affordable Care Act (Obamacare) Affect My Business?

 

How the Affordable Care Act will affect your business depends, in part, on the size of your business. If you are a business that has 50+ employees then you have certain requirements regarding proving health insurance or paying a penalty. If you are an employer who has less than 50 employees, there are some tax credit opportunities available to you if you do provide health insurance to your employees.

© 2014 Parsonage Vandenack Williams LLC

For more information, contact us