2021 HSA Contributions and Corrections Deadline April 18
Individuals who were HSA-eligible in 2021 have until the tax filing deadline to make or receive contributions. So, 2021 HSA contributions must generally be made by April 18, 2022. This includes employer contributions. The 2021 contribution limit is $3,600 for self-only coverage and $7,200 for any tier of coverage other than self-only. Those aged 55 and older are permitted an additional catch-up contribution of $1,000. Generally, an individual’s maximum annual contribution is limited by the number of months they were eligible for the HSA.
There is an exception to this rule. An individual that was HSA eligible on December 1 is permitted to contribute the full statutory maximum for the year. However, if eligible employees do not remain HSA eligible through December of the following year, they may experience tax consequences.
Individuals who contributed more than the allowable amount for 2021 should be refunded the excess contributions and associated interest by April 18, 2022. The excess would be subject to income tax. If the excess is not refunded from the account, it will not only be subject to income tax but also a 6% excise tax penalty. Employees who were not eligible for a contribution or contributed more than the allowable amount for 2021 should work with the HSA bank/trustee to process the excess contributions.
Illinois requires employers to disclose certain information concerning their health plans to employees who work in that state. Have there been any updates concerning the requirement?
Transitional Relief Extended for Grandmothered Plans
April 12, 2022
On March 30, 2022, Commissioner Ridling issued Bulletin Number 2022-03 to announce an extension of transitional relief for certain non-grandfathered individual and small group policies known as “grandmothered” policies. The bulletin follows the recent CMS extension of the federal nonenforcement policy concerning specific ACA compliance requirements for these plans.
On November 14, 2013, CMS announced a transitional policy with respect to the healthcare reform mandates for coverage in the individual and small group markets. This nonenforcement policy provided relief from certain market reforms, including prohibitions of coverage exclusions based on pre-existing conditions and requirements to cover essential health benefits and limit annual out-of-pocket spending.
Under the policy, state authorities could permit health insurance issuers to continue coverage that would otherwise have been cancelled for failure to comply with the ACA requirements. The commissioner has historically allowed insurers the option to continue such coverage. Bulletin 2022-03 represents the most recent extension of this policy and applies to renewals for plan or policy years beginning on or after October 1, 2022, and will remain in effect until CMS announces that all such coverage must come into compliance with the specified requirements.
Accordingly, small employers who are currently covered by such grandmothered policies issued in the state should be aware of the bulletin. These employers should work with their advisors and insurers regarding possible renewal of the coverage.
2022 COVID-19 Supplemental Paid Sick Leave FAQs
April 12, 2022
The California Department of Industrial Relations published FAQs related to the 2022 COVID-19 Supplemental Paid Sick Leave (SPSL), which was originally discussed in the March 3, 2022, edition of Compliance Corner.
The SPSL requirement applies to employers with 26 or more employees. The new guidance clarifies that employers must include all employees nationwide to determine size. Employees are eligible for the leave if they work in California and are unable to work (including telework) due to their own COVID-19 related symptoms or are caring for a family member with COVID-19 related symptoms, they or a family member is receiving the vaccine, or they or a family member is experiencing vaccine related side effects. Independent contractors are not eligible for SPSL.
The law appeared to require employers to establish two different banks of leave: 40 hours for leave related to quarantine and the vaccine and an additional 40 hours if the employee or family member tested positive for COVID-19. The new guidance clarifies that an employer may alternatively have a single bank of up to 80 hours for any of the qualifying reasons.
Lastly, the law required employers to identify on the paystub the amount of COVID-19 SPSL used by the employee. Employers are not required to add separate lines for each 40-hour bank and may instead report a single line for the 80-hour 2022 SPSL. This requirement was effective for the payday related to the first full pay period starting after February 19, 2022.
Employers should adjust their policies and documentation accordingly based on the new guidance.
Life Insurance Coverage for Living Organ Donors
April 12, 2022
On April 6, 2022, Gov. DeSantis signed HB 1099 into law, which prohibits group life insurance policies from discriminating against living organ donors in terms of coverage, premiums or any other condition of the policy. The new law is effective July 1, 2022. Employer plan sponsors should work with their insurer to understand the new prohibition and update documents accordingly.
Coverage for Newborn Hearing Loss Screening
April 12, 2022
On April 6, 2022, Gov. DeSantis signed SB 292 into law. As background, Florida law currently requires group health insurance policies to provide coverage for a screening to detect hearing loss in newborns. The test must be administered prior to discharge from the hospital or other facility.
The new law, effective January 1, 2023, will require group health insurance policies to provide additional testing to newborns who fail the initial screening. Policies must cover testing to screen for congenital cytomegalovirus within 21 days from birth or prior to hospital discharge, whichever occurs earlier.
Employer plan sponsors should work with their insurers to understand the changes and communicate to participants accordingly.
Step Therapy Protocols Restricted
April 12, 2022
On April 6, 2022, Gov. DeSantis signed HB 459 into law, which restricts step therapy protocols. Step therapy protocol is a medical management process that requires a plan participant to take a certain prescription drug (other than the drug or other course of treatment recommended by his health care provider) or take prescription drugs in a certain order before the plan provides coverage for the recommended treatment.
Under existing Florida law, an insurer may not require a step-therapy protocol for a prescription drug requested by a participant if the participant has previously been approved to receive the prescription drug through the completion of a step therapy protocol under a separate health plan. The other plan must have provided benefits for the prescription drug within the 90 days preceding the participant’s current request and when the participant provides supporting documentation.
The new law, effective July 1, 2022, requires health insurers to publish on their website and provide to participants upon request, the insurers’ procedures to request an exemption to the protocol or appeal a denial. The procedures must include:
- The instructions and form for requesting an exemption
- The timeline for such a request
- The manner and timeframe in which the insurer approves or denies the request
Employer plan sponsors should work with their insurer to understand the availability of the step therapy protocol exemption and communicate to participants accordingly.
Commissioner Issues Bulletin on ERISA Preemption
April 12, 2022
On March 7, 2022, the Insurance and Safety Fire Commissioner issued Bulletin 22-EX-1 to insurers regarding ERISA preemption. The bulletin was apparently intended to address questions from state residents regarding why state laws were not enforceable against self-funded ERISA plans.
The bulletin explains that ERISA preempts all state and local laws that “relate to” employee benefit plans covered by ERISA. This broad preemption was designed to enable large employers to offer and administer uniform benefit plans across the nation without being subject to every local and state regulation.
Additionally, the bulletin notes that the recent Rutledge v. PCMA decision by the US Supreme Court is consistent with this preemption principle, i.e., the Rutledge decision found that an Arkansas law dealing with cost regulation was not preempted by ERISA (and thus was enforceable as applied to an ERISA plan). An article on the Rutledge case can be found in this article from the December 24, 2020, edition of Compliance Corner.
Employers may want to be aware of this bulletin, which serves as a reminder of the basic ERISA preemption principle.
Illinois Secure Choice Retirement Savings Program
April 12, 2022
Effective February 8, 2022, the automatic escalation provisions of the Illinois Secure Choice Retirement Savings Program took effect. Under these provisions, employees who have been enrolled in the program for at least six months will have their contribution automatically increased by one percent each subsequent calendar year. However, the employee has the right to opt out of the contributions and/or the automatic increase.
As background, since November 1, 2018, employers with 500 or more employees and who have been in business for at least two years have been required to offer an employer sponsored retirement plan to employees or participate in the state’s Secure Choice Retirement Savings Program. The implementation dates for other sized employers are as follows. Employer size is based on the number of employees working in the state of Illinois in the previous calendar year.
- 100 to 499 employees: 7/1/2019
- 25 to 99 employees: 11/1/2019
- 15 to 24 employees: 11/1/2022
- 5 to 14 employees: 11/1/2023
Employers who are required to participate in the program must auto-enroll employees and notify them of the opt-out procedures. The standard contribution is five percent of gross earnings on a post-tax basis, with contributions going into a Roth IRA.
Enforcement of the program requirements also commences in 2022. Additional information, including the registration link and required employee information packet, are available on the program website.
Circular Letter Addresses Coverage for the Prevention of Colorectal Cancer
April 12, 2022
On March 31, 2022, the Department of Financial Services (DFS) issued a circular letter to advise health insurers of the coverage requirements for preventive care and screenings for colorectal cancer. The memo follows recent federal guidance based on a recommendation by the United States Preventive Services Task Force (USPSTF).
Excluding grandfathered health plans, insurers that issue or deliver policies in New York providing hospital, surgical, or medical care coverage must provide coverage for preventive care and screenings at no cost-sharing. This coverage requirement includes evidence-based care and screenings with an “A” or “B” rating in the USPSTF current recommendations.
The USPSTF updated the recommendation for colorectal cancer screening in May 2021. According to this update, the USPSTF continues to recommend screening for colorectal cancer in all adults aged 50 to 75 years as an “A” rating and adds screening for colorectal cancer in adults aged 45 to 49 years as a “B” rating. Additionally, when stool-based screening tests or direct visualization tests reveal abnormal or positive results, a follow-up with a colonoscopy is needed for further evaluation to achieve the screening benefits. Therefore, based on the updated recommendation, the follow-up colonoscopy must be covered without cost-sharing.
The letter reminds insurers that the updated coverage requirements for preventive care and screenings apply to policies issued or renewed six months after the date a recommendation is issued or revised. Since the USPSTF recommendation was considered issued as of May 31, 2021, insurers must provide coverage for the recommended colorectal cancer screening without cost-sharing for policies or contracts issued or renewed on and after November 30, 2021.
Although the letter is directed at insurers, employers may want to be aware of this coverage requirement.
State Insurance Regulator Can Enforce Statute Regulating PBMs
April 12, 2022
On April 4, 2022, in PCMA v. Mulready, the US District Court for the Western District of Oklahoma ruled that the state’s Patient’s Right to Pharmacy Choice Act (the Act) was not preempted by ERISA and that the state’s Insurance Commissioner could enforce it.
In 2019, the state legislature passed the Act to regulate PBMs. The PCMA, a trade organization for PBMs, filed suit against the state the same year, claiming that ERISA preempted the Act because it regulated the nature and scope of a plan’s provider network and the programs an employee benefit plan may adopt to ensure network quality and integrity. In addition, the PCMA asserted that Medicare Part D preempted the Act because Medicare Part D had already established standards for retail pharmacies and price negotiations.
The court ruled that the Act was not preempted by ERISA because the Act does not force ERISA plans to make specific choices. However, the court ruled that Medicare Part D preempted those portions of the Act that placed geographic restrictions on retail pharmacies and regulated price negotiations. Accordingly, the state’s Insurance Department can enforce those portions of the Act not preempted by Medicare Part D.
Employers with plans that contract with PBMs should be aware of the impact of the Act and this case.
Paid Parental Leave Requirement Imposed on Certain State Employers
April 12, 2022
On March 24, 2022, Gov. Cox signed legislation that will require certain state employers to offer paid parental leave for eligible state employees effective July 1, 2022. The qualifying reasons to take paid parental leave are:
- The birth of the employee's child
- The adoption of a minor child
- The appointment of legal guardianship of a minor child or incapacitated adult
Covered state employers do not include an institute of higher education under the law.
Washington State: Paid Sick Leave Mandate for Rideshare Drivers
April 12, 2022
This material was created by PPI Benefit Solutions to provide accurate and reliable information on the subjects covered but should not be regarded as a complete analysis of these subjects. It is not intended to provide specific legal, tax or other professional advice. The service of an appropriate professional should be sought regarding your individual situation. PPI does not offer tax or legal advice. "PPI®" is a service mark of Professional Pensions, Inc., a subsidiary of NFP Corp. (NFP). All rights reserved.