Category: Abentras Blog

CMS Announces 2020 Medicare Part D Parameters

On April 1, 2019, CMS released the 2020 parameters for the Medicare Part D prescription drug benefit. This information is used by employers to determine whether the prescription drug coverage offered by their group coverage is creditable or non-creditable. To be creditable, the actuarial value of the coverage must equal or exceed the value-defined standard Medicare part D coverage provides.

For 2020, the defined standard Medicare Part D prescription drug benefit is:

•Deductible: $435 (a $20 increase from 2019)
•Initial coverage limit: $4,020 (a $200 increase from 2019)
•Out of pocket threshold: $ 6,350 (a $1,250 increase from 2019)
•Total covered Part D spending at the out-of-pocket expense threshold for beneficiaries not eligible for the coverage gap discount program: $9,038.75 (a $1,385 increase from 2019)
•Estimated total covered Part D spending at the out-of-pocket expense threshold for those eligible for the coverage gap discount programs: $9,719.38 (a $1,579.84 increase from 2019)
•Minimum cost-sharing under catastrophic coverage benefit: $3.60 for generic/preferred multi-source drug (a $.20 increase from 2019) and $8.95 for all other drugs (a $.45 increase from 2019)

Employers should use these 2020 parameters for the actuarial determination of whether their plans’ prescription drug coverage continues to be creditable for 2020. For additional information, please consult with your adviser.

CMS Announcement »

Additional information on Medicare Part D coverage »

Source: NFP BenefitsPartners

Filed under: Abentras Blog

IRS Updates Operational Compliance List for 2019

On March 26, 2019, the IRS updated their operational compliance list (“OC List”) to include changes to the hardship distribution rules. As background, the OC List is provided by the IRS to help plan sponsors and practitioners achieve operational compliance by identifying changes in qualification requirements effective during a calendar year.

The updated list incorporated the most recent changes to the hardship distribution rules. (We discussed those changes in the November 28, 2018, edition of Compliance Corner.) The list also highlights the relief available to victims of the hurricanes that occurred in 2018.

The IRS periodically updates the OC List to reflect new legislation and guidance. As such, it is a useful tool for plan sponsors. However, the list is not intended to be a comprehensive list of every item of IRS legislation or guidance. Plan sponsors should work with their advisers to ensure their continued compliance with the retirement plan regulations.

Operational Compliance List »

Source: NFP BenefitsPartners

Filed under: Abentras Blog

D.C. District Court Invalidates DOL’s Rules on Association Health Plans

On March 28, 2019, in New York v. DOL, the U.S. District Court for the District of Columbia invalidated the DOL’s rules relating to association health plans (AHPs). As background, prior to 2018, AHPs (which are considered multiple employer welfare arrangements, or MEWAs, under ERISA) could only be sponsored by employer groups or associations whose members shared a “commonality of interest” that was unrelated to benefits. That meant employers within the association had to be in the same trade, industry, or profession and could not just be in the same geographic location. The DOL’s rules also prohibited AHPs from forming solely for the purpose of providing benefits; AHPs had to show that their association was primarily for business purposes, with benefits being an afterthought.

In 2018, pursuant to a White House executive order, the DOL published new rules (in proposed form in January 2018 and in finalized form in June 2018) that allow AHPs to include employers without a commonality of interest if they are located in the same state or metropolitan area (for example, DC/MD/VA or NY/NJ/CT). Further, AHPs can now form for the primary purpose of providing benefits (something that was prohibited before 2018), as long as they can show a “substantial business purpose,” which includes fairly minimal proof — anything from setting business standards and practices to publishing a newsletter. Importantly, the 2018 rules also allow an AHP to cover non-employees (sole proprietors, independent contractors, partners, and other businesses without any employees). The 2018 rules have staggered applicability dates — they applied to fully insured AHPs on September 1, 2018, existing self-insured AHPs on January 1, 2019, and newly-formed self-insured AHPs on April 1, 2019. Finally, the 2018 rules did not address state enforcement of MEWAs; ERISA generally allows (and the 2018 rules explicitly allow) states to enforce their own rules with regard to MEWAs. Many states have a particular interest in regulating self-insured MEWAs as a way to protect against consumer fraud and misrepresentation regarding the MEWAs’ ability to pay benefits.

Following the finalization of the 2018 rules, a coalition of state attorneys general (AGs) — led by New York and Massachusetts — filed a lawsuit challenging the 2018 rules, stating that the DOL violated the Administrative Procedure Act by overreaching on its regulatory authority. The other states involved include California, Delaware, District of Columbia, Kentucky, Maryland, Massachusetts, New Jersey, New York, Oregon, Pennsylvania, Virginia, and Washington. The AGs’ lawsuit claimed that the DOL’s new interpretation of “employer” was inconsistent with the purpose and language of ERISA, and that the 2018 rules allowed businesses (some without employees) to form AHPs and avoid the ACA’s consumer protections (those that apply to individual and small group plans). Self-insured AHPs could also avoid certain state insurance laws, including benefit and other mandates meant to protect the residents of that particular state. Finally, the AGs’ lawsuit claimed that the 2018 rules increased the risk for consumer fraud and harm and jeopardized states’ ability to add stronger consumer protections and protect against consumer fraud and harm.

The court agreed with the state AGs. After concluding that the states had standing, the court concluded that the DOL did not reasonably interpret ERISA and that the primary provisions of the 2018 rules must be invalidated. Those primary provisions are the expanded definition of “commonality of interest” and the inclusion of working owners. Specifically, the court stated that the commonality of interest expansion in the 2018 rules failed to meaningfully limit the types of associations that could qualify as sponsors of an ERISA plan. The judge concluded that the 2018 rules establish “such a low bar that virtually no association could fail to meet it.” In addition, because ERISA is meant to regulate benefit plans that arise from employment relationships, the inclusion of working owners impermissibly expanded ERISA’s regulation to plans outside of such employment relationships. The judge concluded that the outcome would be “absurd,” since it ignores ERISA’s definitions and structure, case law, and ERISA’s 40-year history of excluding employers without employees.

In the opinion, the court invalidated the major provisions of the AHP rule and remanded the rule back to the DOL to determine if any remaining portions of the rules (relating to nondiscrimination and organizational structure) are severable. On that, the court noted its opinion that the remaining portions, were “collateral” to the more major portions which it held invalid. Additionally, in his order, the judge did not issue a stay. That leaves the DOL with a few options. First, the DOL could seek a stay (meaning the decision would not go into effect) and appeal the decision, sending the case to the Court of Appeals for the D.C. Circuit. Second, the DOL could try and find a way to re-craft the rule in a way that meets the district court ruling. Third, the DOL could rescind the rule altogether.

The ruling leaves associations and AHPs in a difficult spot. The ruling prevents the formation of self-insured AHPs under the 2018 rules – those rules would’ve gone into effect on April 1, 2019 – that effective date is clearly after the decision, and prevents the formation of other AHPs that rely on the 2018 rules. The ruling’s impact is much trickier to discern for those AHPs that have already formed pursuant to the new rule. The status of the AHP as an ERISA plan could be in jeopardy, meaning the AHP would have to comply with the ACA’s individual and small group protections, and any working owners (sole proprietors, etc.) would have to exit the AHP (they could potentially qualify for a special enrollment in the exchange). Some of that impact, however, depends on the next steps in the lawsuit. Since the decision could potentially be placed on hold pending an appeal, AHPs that have formed under the 2018 rules could wait and see what happens before making any decisions on the future. However, they should likely consult with legal counsel to determine their next steps.

One thing is for certain, though: AHPs formed under the old AHP rules (those that have a commonality of interest, exclude sole proprietors, and exercise control over the AHP) are not impacted by the 2018 DOL rules or by the court’s ruling here. So, if an AHP formed under that older ERISA definition, they can continue to operate as they have been. On April 2, 2019, the DOL published an FAQ document in response to the court ruling, wherein the DOL stated that “Participants in AHPs affected by the District Court’s decision have a right to benefits as provided by the plan or policy. Plans and health insurance issuers must keep their promises in accordance with the policies and pay valid claims.” The DOL also reiterated that its considering its options for appealing the decision, with more to come on that.

NFP Benefits Compliance will continue to monitor the lawsuit and any related developments.

New York v. DOL »

April 2 DOL FAQs »

Source: NFP BenefitsPartners

Filed under: Abentras Blog

IRS Issues 2018 Version of Publication 969 Addressing HSAs, HRAs and Health FSAs

On March 1, 2018, the IRS released an updated version of Publication 969 for use in preparing 2018 individual federal income tax returns. While there are no major changes to the 2018 version (as compared to the 2017 version), the publication provides a general overview of HSAs, HRAs and health FSAs, including brief descriptions of benefits, eligibility requirements, contribution limits and distribution issues.

Minor changes include the 2018 limits for HSA contributions (the single-only contribution limit increased to $3,450 and the family contribution limit increased to $6,900). A note explains that the 2018 HSA contribution maximum for individuals with family coverage was lowered to $6,850 and then restored to $6,900. Taxpayers who received distributions of excess contributions because of the temporary limit reduction are informed that they may recontribute those distributions without adverse tax consequences.

Further, regarding the updated annual deductible and out-of-pocket maximums for HSA-qualifying HDHPs, the deductible limit increased to $1,350 for single-only coverage and $2,700 for family coverage, and the out-of-pocket maximum limit increased to $6,650 for single-only coverage and remained at $13,300 for family coverage. The publication also reminds employers that for plan years beginning in 2018, salary reduction contributions to a health FSA cannot be more than $2,650 per year.

The publication serves as a helpful guide for employers with these types of consumer reimbursement arrangements, particularly for employees that may have questions in preparing their 2018 individual federal income tax returns.

IRS Publication 969 »

Source: NFP BenefitsPartners

Filed under: Abentras Blog

IRS Updates Q&As on Sections 6055 and 6056 Reporting

On March 2, 2019, the IRS updated their questions and answers (Q&As) providing additional guidance on employer compliance with PPACA reporting requirements under IRC Sections 6055 and 6056. The only updates to the Q&As appear to be updated links to the required forms to route the user to the 2018 versions (instead of the 2017 versions).

As background, Section 6055 requires every provider of minimum essential coverage to report coverage information by filing an information return with the IRS and furnishing a statement to individuals. Section 6056 is meant to allow employers to report on their compliance with the employer mandate. Those reports also allow the government to determine whether a specific individual was offered minimum value, affordable employer-sponsored coverage for each month, which affects that individual’s ability to qualify for an premium tax credit.

The Section 6055 Q&As address the basics of employer reporting, including which entities are required to report, what information must be reported and how and when reporting entities must report required information, as follows:

•Basics of Provider Reporting: Questions 1-3
•Who is Required to Report: Questions 4-14
•What Information Must Providers Report: Questions 15-18
•How and When to Report the Required Information: Questions 19-28
•Extended Due Dates and Transition Relief: Questions 19-35

The Section 6056 Q&As cover the same topics and also address questions related to the methods of reporting, as follows:

•Basics of Employer Reporting: Questions 1-3
•Who is Required to Report: Questions 4-11
•Methods of Reporting: Questions 12-16
•How and When to Report the Required Information: Questions 17-24
•Designated Government Entity: Questions 25-28
•Other Third Party Service Providers: Questions 29
•Extended Due Dates and Transition Relief for 2015 and 2016 Reporting: Questions 30-34
•Additional Information

Overall, the Sections 6055 and 6056 Q&As appear to have remained the same and haven’t been revised. Still, employers should ensure that they have followed this guidance in preparing their 2018 forms. NFP has resources to assist. Ask your advisor for more information.

Q&As on Section 6055 Reporting »

IRS Q&As on Section 6056 Reporting »

Source: NFP BenefitsPartners

Filed under: Abentras Blog

Agencies Request Public Comment on Grandfathered Status

On Feb. 25, 2019, the DOL, IRS and HHS (the “agencies”) jointly issued a request for information regarding grandfathered health plans. As background, grandfathered plans are group health plans or health insurance coverage that have continuously provided coverage and have not made certain prohibited design changes since March 23, 2010. Grandfathered plans are exempt from some requirements under the ACA, including coverage of preventive services with no cost-sharing and the expanded appeals process and external review, but are still subject to other ACA provisions. Grandfathered status can be maintained indefinitely as long as the plan continues to cover at least one person, no prohibited plan design changes are made, and the required disclosure and recordkeeping obligations are met.

Consistent with Pres. Trump’s Executive Order issued on Jan. 20, 2017, the purpose of this request is to better understand challenges that group health plans and issuers face in avoiding loss of grandfathered status. The agencies aim to determine how they can help to preserve grandfathered status in ways that benefit employers, employee organizations, plan participants and other stakeholders. The agencies also seek to understand why plans have chosen to maintain grandfathered status (including costs, benefits and other factors) and why participants continue to enroll in grandfathered coverage. Finally, the agencies ask how many plan sponsors and carriers anticipate changes that would cause a loss of grandfathered status.

The request explains that the number of grandfathered plans has decreased each year since the ACA was enacted. However, despite those declining numbers, the agencies note that some employers, insurers and participants continue to find value in keeping grandfathered status. Importantly, no changes to the grandfathered rules have been made as of yet, but our team will continue to stay abreast of any modifications. Comments are due by March 27, 2019.

Proposed Rule »

Source: NFP BenefitPartners

Filed under: Abentras Blog

Agencies Request Public Comment on Grandfathered Status

On Feb. 25, 2019, the DOL, IRS and HHS (the “agencies”) jointly issued a request for information regarding grandfathered health plans. As background, grandfathered plans are group health plans or health insurance coverage that have continuously provided coverage and have not made certain prohibited design changes since March 23, 2010. Grandfathered plans are exempt from some requirements under the ACA, including coverage of preventive services with no cost-sharing and the expanded appeals process and external review, but are still subject to other ACA provisions. Grandfathered status can be maintained indefinitely as long as the plan continues to cover at least one person, no prohibited plan design changes are made, and the required disclosure and recordkeeping obligations are met.

Consistent with Pres. Trump’s Executive Order issued on Jan. 20, 2017, the purpose of this request is to better understand challenges that group health plans and issuers face in avoiding loss of grandfathered status. The agencies aim to determine how they can help to preserve grandfathered status in ways that benefit employers, employee organizations, plan participants and other stakeholders. The agencies also seek to understand why plans have chosen to maintain grandfathered status (including costs, benefits and other factors) and why participants continue to enroll in grandfathered coverage. Finally, the agencies ask how many plan sponsors and carriers anticipate changes that would cause a loss of grandfathered status.

The request explains that the number of grandfathered plans has decreased each year since the ACA was enacted. However, despite those declining numbers, the agencies note that some employers, insurers and participants continue to find value in keeping grandfathered status. Importantly, no changes to the grandfathered rules have been made as of yet, but our team will continue to stay abreast of any modifications. Comments are due by March 27, 2019.

Proposed Rule »

Source: NFP BenefitPartners

Filed under: Abentras Blog

2019 Federal Poverty Levels Announced

Earlier this month, HHS announced the 2019 federal poverty levels (FPL). The guidelines for the 48 contiguous states is $12,490 for a single person household and $25,750 for a four person household. The guidelines are different for Alaska ($15,600 and $32,190, respectively) and Hawaii ($14,380 and $29,620, respectively).

The FPL plays an important role under the ACA. Individuals who purchase coverage through the exchange may qualify for a premium tax credit if their household earnings are within 100 percent to 400 percent of the FPL. Employers wishing to avoid a penalty under the employer mandate may use the FPL affordability safe harbor, which means the cost of an employee’s required contribution for employer sponsored coverage does not exceed 9.86 percent (for 2019), up from 9.56 percent (for 2018), of the single person FPL. This means that the FPL affordability safe harbor threshold in the 48 contiguous states for 2019 would be $102.62 per month, which is $12,490 divided by twelve and times 9.86 percent. As a reminder, the FPL safe harbor is only one of the affordability safe harbors; the other two are the rate of pay and Form W-2 safe harbors.

Employers should consider this adjustment to the FPL when determining whether their coverage is affordable, especially if they’re using the FPL affordability safe harbor. The 2019 FPL is applicable beginning Jan. 11, 2019.

FPL Announcement »

Source: NFP BenefitPartners

Filed under: Abentras Blog

IRS Issues Form 8994, Employer Credit for Paid Family Leave

The IRS recently issued 2018 Form 8994 and the corresponding instructions intended for employers to determine the tax credit available to them for providing paid family and medical leave.

As background, the Tax Cut and Jobs Act of 2017 created a new employer credit available for those that offer qualifying paid family and medical leave for tax years beginning after 2017 and before 2020. To claim the credit, eligible employers must have a written program that pays at least 50 percent of wages paid for up to 12 weeks of family and medical leave a year, with the credit ranging from 12.5 to 25 percent.

Form 8994 requires employers to confirm four statements:

1.That there is a written policy providing for at least two weeks of annual paid family and medical leave for qualifying employees.

2.That the written policy provides paid family and medical leave of at least 50 percent of the wages normally paid to a qualifying employee.

3.That the family and medical leave was paid to at least one qualifying employee during the tax year.

4.That if at least one qualifying employee that was not covered by the FMLA was employed during the year, that the written paid family and medical leave policy complies with FMLA’s “non-interference” language.

Form 8994 also provides the lines to calculate the appropriate credit amount.

Employers that provided qualifying paid family and medical leave during the 2018 tax year should work with their tax advisers to properly complete this form. If an employer didn’t offer paid family and medical leave during 2018, but is considering the opportunity for 2019, then this Form can be used as a guide. The IRS has indicated that it intends to issue proposed regulations on this tax credit, so we will continue to monitor and update as needed.

Form 8994 »

Form 8994 Instructions »

Source: NFP BenefitPartners

Filed under: Abentras Blog

Federal District Courts Enjoin Final Rules on Contraceptive Mandate Exemptions

Two federal district courts recently issued injunctions on the final rules providing exemptions from the ACA’s contraceptive mandate. As background, the ACA requires most employers to provide certain preventive services, including contraceptive services and items, without cost-sharing. Under the ACA, certain qualifying religious employers were already exempt from the contraceptive coverage requirement, and other employers that held religious objections could also request an exemption via an accommodation process.

However, in October 2017, HHS published two interim final rules that significantly expanded the religious exemption (as outlined in our Oct. 17, 2017, article here) by allowing any employer (including non-closely held companies and publicly traded companies) to claim a religious or moral objection to offering certain contraceptive items and services. The government went on to issue final versions of the rules (as outlined in our Nov. 13, 2018, article here).

Following the publication of the interim final rules, a number of states filed lawsuits, challenging the new exemptions. They argued that the DOL had failed to follow the Administrative Procedures Act (APA) and that the new exemptions would harm their state residents and run afoul of the ACA. The federal district courts in Pennsylvania and California initially issued injunctions blocking enforcement of the interim final rules.

After government appeals, the courts again chose to enjoin the enforcement of the final rules. Specifically, on Jan. 13, 2019, the U.S. District Court for the Northern District of California enjoined the implementation of the final rules in the states of California, Connecticut, Delaware, Hawaii, Illinois, Maryland, Minnesota, New York, North Carolina, Rhode Island, Vermont, Virginia, and Washington and the District of Columbia. In its decision, the court agreed that the states could succeed on their claims that the final rules violated the ACA and APA.

On Jan. 14, 2019, the U.S. District Court for the Eastern District of Pennsylvania issued an injunction that blocks implementation of the final rules nationwide. The Pennsylvania court also found that the states that filed (Pennsylvania and New Jersey) are likely to prevail on their claim that the final rules violate the APA.

We expect the government to continue to appeal these decisions, and it is also likely that the filing states will do the same should an appeals court rule in the government’s favor. Ultimately this means that the future of these exemptions remains uncertain. For employers, neither the court decisions nor the final rules settle the issue. As such, employers wishing to claim any expanded religious exemptions to the ACA’s contraceptive mandate should work with outside counsel to better understand the risks inherent in going forward with doing so.

California v. HHS »

Pennsylvania v. Trump »

Source: NFP BenefitPartners

Filed under: Abentras Blog