IRS Letters 226J: Having the Right Section 4980H Records Can Be Worth a Small Fortune

As reported in our 2018 End of Year Plan Sponsor “To Do” List (Part 1) Health & Welfare, the Section 4980H penalties are still in effect and the IRS is enforcing them.  Employers continue to receive Letters 226J, which the IRS uses to propose employer shared responsibility payments. During the Letter 226J process, the IRS has been allowing employers to challenge proposed penalties and to correct reporting errors. However, the IRS will not necessarily accept an employer’s word at face value.

Recordkeeping is key

One of the biggest problems employers may face is finding records to prove they satisfied the 95% offer of coverage test (to avoid the subsection (a) penalty) or that they offered a specified employee minimum value affordable coverage (to avoid the subsection (b) penalty).  Read More ›

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HHS to Start Randomly Selecting Health Plans for HIPAA Compliance – Are You Ready?

The CMS Division of National Standards, on behalf of HHS, is launching the Compliance Review Program (the “Program”) to ensure compliance among covered entities with HIPAA Administrative Simplification rules for electronic health care transactions.  HHS will randomly select health plans and clearinghouses to assess compliance with: (1) transaction formats; (2) code sets; and (3) unique identifiers.  Participants in the Program will also have to attest whether they comply with the operating rules, which are required by the ACA and are defined as “the necessary business rules and guidelines for the electronic exchange of information that are not defined by a standard or its implementation specifications.”

If HHS finds that a health plan or clearinghouse is not compliant, HHS has indicated that it will give the covered entity the opportunity to correct issues and achieve compliance, but may impose penalties on covered entities that do not achieve compliance.  Read More ›

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Seeing the Big Picture – How Proposed Health Reimbursement Arrangements Might Harmonize with Existing Law

On October 29, 2018, proposed regulations were published in the Federal Register that would permit employers to offer two new types of health reimbursement arrangements (“HRAs”) that align with the requirements of the Affordable Care Act (the “ACA”). The proposed HRAs are designed to expand the availability of account-based group health plans. A summary of the proposed regulations – and the HRAs that they would permit if finalized – can be found in our November 7, 2018, blog, “Zombie Benefits – Are Health Reimbursement Arrangements Back from the Dead?

As an addendum to the proposed regulations, the IRS published Notice 2018-88, which considers the interaction of the new HRAs with the employer shared responsibility mandate set out in Code Section 4980H and the non-discrimination rules contained in Code Section 105(h). Read More ›

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Wilderness Therapy – Should We Give It Another Look?

1.     What is it?

Wilderness therapy generally is traditional therapy in an outdoor setting that seeks to treat young adults with behavioral or substance use disorders.  Some programs are licensed and accredited and the treatment they provide can be expensive.  It is not uncommon for wilderness therapy to cost $500 per day or over $40,000 in total.

2.     Why should you care?

A participant in your employer-sponsored group health plan might submit a claim for wilderness therapy or request that your plan cover it.  If the terms of your plan exclude wilderness therapy or are ambiguous with respect to its coverage, and if you choose not to cover it, the participant might argue that your plan violates the Mental Health Parity Act of 1996 (MHPA) and the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) (collectively, “Federal Mental Health Parity Law”). Read More ›

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Texas Judge Declares the Affordable Care Act Unconstitutional – What’s Next?

As reported in our “2018 End of Year Plan Sponsor “To Do” List (Part 1) Health & Welfare,” the Tax Cuts and Jobs Act repealed the individual mandate, which spawned a lawsuit challenging the whole of the Affordable Care Act (“ACA”).  The lawsuit, filed in the Northern District of Texas in February 2018 by the Texas and Wisconsin Attorneys General, leading a 20-state coalition, alleged that because the repeal of the individual mandate “renders legally impossible the Supreme Court’s prior savings construction of the Affordable Care Act’s core provision – the individual mandate – the Court should hold that all of the ACA is unlawful and enjoin its operations.” The plaintiffs argued that not only is the individual mandate now unlawful, but also that this core provision is not severable from the rest of the ACA. Read More ›

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A Holiday Surprise – IRS Extends Certain ACA Reporting Deadlines and Transition Relief

The IRS delivered welcome news to employers preparing to meet the Affordable Care Act’s (“ACA”) information reporting deadlines in early 2019 for the 2018 calendar year. In Notice 2018-94 (the “Notice”), the IRS extended the employer’s deadline to furnish Forms 1095-B and 1095-C to employees. The new deadlines are provided below.

Original Distribution Deadline Extended Distribution Deadline
Form 1095-B (to employees) January 31, 2019 March 4, 2019
Form 1095-C (to employees) January 31, 2019 March 4, 2019

It is important to note that the Notice does not extend the deadline for filing Forms with the IRS. The deadline to file with the IRS remains February 28, 2019 (for paper filings) and April 1, 2019 (for electronic filings). Read More ›

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Reminder for SBCs – Yes, Please!

The Affordable Care Act’s requirement that group health plans provide summaries of benefits and coverage (“SBCs”) to applicants and enrollees at various times is not new.  Nevertheless, because of the steep penalties for noncompliance (i.e., $1,000 per failure with respect to each participant or beneficiary and an excise tax of $100 per day with respect to each individual to whom such failure relates) we think it’s worthy of another blog post.  See our July 19, 2012 Newsletter Summary of Benefits and Coverage for Group Health Plans and follow-up August 11, 2016 blog post Departments Finally Publish Updated SBC Template and Instructions for additional background information. Read More ›

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New Plan Year, New Wellness Program – Some Things to Keep in Mind

As a follow-up to our recent blog Count Down to Open Enrollment – Some Quick Thoughts, below is a little more detail on how seemingly simple wellness program design changes can have significant legal consequences.

  • HIPAA – Employers feeling extra generous this plan year may want to increase their wellness program’s financial incentive.  It is important that such employers remain mindful of the limitations under HIPAA, i.e., 30% of the total cost of health plan coverage, or 50% for programs designed to prevent or reduce tobacco use.  As noted in our previous blog “Wellness Rules Under the ADA – Will There Ever Be Certainty?
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Count Down to Open Enrollment – Some Quick Thoughts

As open enrollment approaches for the 2019 calendar year, below are some items employers may want to consider:

  • Wellness program changes – Many employers change their wellness programs during open enrollment.  This is a reminder that even small changes to a wellness program may have significant consequences.  For example, if an employer increases wellness rewards, it may impact not only whether a program complies with the 30% test under HIPAA but it may also impact affordability under Code Section 4980H.  Making changes to a wellness program structure may also create problems.  For example, employers with tobacco surcharges might allow people to avoid surcharges by attesting that they do not use tobacco. 
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The 95 Percent Test: Gearing up for Another Round of Employer Shared Responsibility Penalties

Late last year, the Internal Revenue Service (the “Service”) began enforcing penalties with respect to failures to comply with the employer shared responsibility provisions of Section 4980H of the Internal Revenue Code.  In the coming months, the Service is expected to begin assessing penalties with respect to such failures occurring in calendar year 2016.  These penalties are of two varieties:

  1. Section 4980H(a) penalties are assessed for any month in which an applicable large employer (“ALE”) does not offer minimum essential coverage to substantially all (95% for 2016 and future years) of its full-time employees and their dependents and at least one full-time employee receives a premium tax credit. 
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