Updated October 19, 2020: COVID-19 State Quick Reference Chart
HHS Publishes Rule on Transparency in Coverage
On October 29, 2020, the Departments of HHS, Treasury and Labor (the "Departments") released the Transparency in Coverage final rule. First proposed in November 2019 (as directed by Executive Order 13877 ), the final rule imposes new cost-sharing and pricing disclosure requirements upon group health plans and health insurers.
As background, the Trump administration has focused on promoting price transparency to provide individuals with necessary cost-sharing data to make informed healthcare decisions. Under rules set to take effect in 2021, hospitals will soon be required to disclose standard charges for products and services, including negotiated rates with insurers. The Transparency in Coverage final rule builds upon these regulatory initiatives and is applicable to non-grandfathered group health plans (including self-insured plans) and health insurance issuers. However, account-based plans such as HRAs and FSAs, and excepted benefits (e.g., dental and vision benefits offered under a separate policy), are not subject to these new requirements.
The final rule requires group health plans and health insurance issuers in the individual and group markets to provide increased access to pricing information through two approaches:
- Disclosing cost-sharing information for all covered healthcare items and services (including prescription drugs) through an internet-based self-service tool and in paper form upon request
- Making detailed pricing information publicly available (which includes negotiated rates for all covered items and services between the plan or issuer and in-network providers; historical payments to, and billed charges from, out-of-network providers; and in-network negotiated rates and historical net prices for all covered prescription drugs by plan or issuer at the pharmacy location level)
Under the first approach, when requested by a participant, beneficiary or enrollee, disclosures must be provided that include estimates of their cost-sharing liability with different providers (allowing them to better understand and compare healthcare costs prior to receiving care). The content will include estimated cost sharing, actual negotiated rates, out-of-network allowed amounts, real-time accumulated amounts towards deductibles and out-of-pocket maximums, and treatment limitations. Any prerequisites for coverage, such as prior authorization, would also need to be referenced. Where bundled payments are applied, disclosures must be provided if cost sharing is imposed separately for each item and service. Further, the rules do not require disclosure of balance billing amounts for out-of-network providers, but provide for a disclaimer to alert participants of a potential balance bill. This part of the rule will be phased in, with disclosures required for plan years beginning on or after January 1, 2023, for an initial list of 500 items and services, and all items and services to be disclosed for plan years that begin on or after January 1, 2024.
As for the second approach, group health plans and insurers are required to publicly disclose negotiated rates for in-network providers and historical out-of-network allowed amounts in standardized files on their website. These machine-readable files must be updated monthly (clearly indicating the date that the files were most recently updated), and are intended to encourage price comparison and innovation. This part of the rule is effective for plan years beginning on or after January 1, 2022.
The final rule also provides that beginning with the 2020 MLR reporting year, insurers can claim credit towards their MLR for “shared savings” if a participant selects a lower-cost, higher-value provider.
Employers should be aware of the final rule, its new requirements and its phased-in effective dates. Although a good faith safe harbor allows for certain mistakes (as long as the issue is corrected as soon as practicable), plans and insurers face increased compliance obligations to implement these new requirements. For fully insured plans, the insurer is responsible for these new requirements. For self-insured plans, the ultimate responsibility to comply with this rule rests on the plan sponsor; however, they can utilize TPAs to assist. That said, employers should discuss these new disclosure obligations with their insurance carriers and/or TPAs to confirm compliance as applicable.
Agencies Issue Joint Guidance on COVID-19 Vaccine Coverage
On October 28, 2020, the IRS, DOL and HHS released interim final regulations regarding various COVID-19 testing and treatment updates. The guidance includes vaccine coverage requirements applicable to group health plans. Price transparency for COVID-19 diagnostic tests is also addressed.
As background, the CARES Act requires that non-grandfathered group health plans provide coverage without cost sharing for qualifying COVID-19 preventive services. Such services include immunizations that are specifically recommended by the CDC.
To ensure rapid access to a COVID-19 vaccine, once available, the guidance incorporates the CARES Act implementation requirements. Specifically, group health plans must provide coverage for COVID-19 immunizations within 15 business days of the CDC’s recommendation for individual usage. (It is not necessary that the vaccine be recommended for routine usage, as is typically required for coverage of preventive services).
The coverage must be provided without cost sharing regardless of whether the immunization is received in-network or out-of-network. Integral items and services (such as a medical professional’s administration of the vaccine) must also be covered without cost sharing. However, cost sharing is permitted for unrelated items and services rendered during the same provider visit, if billed separately.
The CARES Act also required that providers publicize cash prices for COVID-19 diagnostic tests during the public health emergency. This new guidance defines the “cash price” as the charge that applies to an individual who pays cash (or cash equivalent) for a COVID-19 diagnostic test. Each provider must make this cash price available on its website; if the provider does not have a website, the cash price must be made available in writing within two business days upon request and through signage (if applicable). These requirements are intended to assist individuals seeking testing and provide plans with information to better negotiate provider rates.
In the event of noncompliance with this price transparency mandate, the guidance outlines potential CMS enforcement actions. These measures include written warnings, corrective action plans and the imposition of civil monetary penalties.
Group health plan sponsors should be aware of these regulations and prepare to provide coverage for COVID-19 vaccines without cost sharing within 15 days of a CDC recommendation. Grandfathered group health plans and excepted benefits are not technically covered by the rule, but are encouraged to provide similar coverage without cost sharing.
The guidance is effective immediately and extends through the duration of the public health emergency. Comments are requested regarding certain aspects of the rule and can be submitted through January 4, 2021.
Unsecured Websites and Envelopes Lead to $1,000,000 Settlement for HIPAA-Covered Entity
Aetna Life Insurance Company and an affiliated covered entity (Aetna) agreed to pay $1,000,000 to the OCR and to implement a corrective action plan in order to resolve an investigation into potential violations of HIPAA. The investigation arose from the disclosure of personal health information in correspondence and web-based services.
On April 27, 2017, Aetna discovered that two of its web services that displayed plan-related documents to health plan members could be accessed without entering login credentials and was indexed by various internet search engines. The breach disclosed the names, insurance identification numbers, claim payment amounts, procedures service codes and dates of service for 5,002 individuals. In June 2017, Aetna submitted a breach report to OCR.
On July 28, 2017, Aetna mailed benefit notices to members in windowed envelopes that revealed the words “HIV medication” to anyone who looked through the window. This breach affected 11,887 people. Aetna submitted a breach report to OCR regarding this matter in August 2017.
On September 25, 2017, a research study sent correspondence to Aetna members participating in an atrial fibrillation study with the name and logo of the study on the envelope, thus revealing the fact that the recipients may have an irregular heartbeat. This breach affected 1,600 people and Aetna submitted a breach report regarding this matter in November 2017.
While investigating these disclosures, OCR alleged that Aetna “failed to perform periodic technical and nontechnical evaluations of operational changes affecting the security of their electronic PHI (ePHI); implement procedures to verify the identity of persons or entities seeking access to ePHI; limit PHI disclosures to the minimum necessary to accomplish the purpose of the use or disclosure; and have in place appropriate administrative, technical, and physical safeguards to protect the privacy of PHI.”
The breach resulted in a settlement in which Aetna agrees to pay the OCR $1,000,000 and implement policies and procedures that comply with federal guidelines for maintaining the confidentiality of personal health information within 90 days, and submit annual reports of its compliance.
Although these HIPAA violations were perpetrated by a health insurance carrier, employer plan sponsors should review their HIPAA policies and procedures for compliance. Correspondence and web services that deal with personal health information should be carefully reviewed in order to ensure that they comply with federal confidentiality guidelines. Additionally, health plans with access to ePHI should ensure the security of that data.
DOL Finalizes Investment Duties Rule
On October 30, 2020, the DOL finalized their “Financial Factors in Selecting Plan Investments” rule. The finalized rule comes after the DOL proposed this rule in June of 2020. (See our July 9, 2020, edition of Compliance Corner for the article on the proposed rule.) The finalized rule essentially adopts the proposed rule with some modifications that were made in response to public comments.
The finalized rule makes the following modifications to ERISA’s current investment duties rules:
- The final rule adopts the proposed rule’s restatement of ERISA’s duty of loyalty, and continues to treat the original regulations’ provisions on prudence as a safe harbor.
- The final rule confirms that ERISA fiduciaries must evaluate investments based solely on pecuniary factors — which are factors that are expected to have a material effect on the risk and return of an investment. Loyalty prohibits fiduciaries from subordinating the interests of participants to unrelated objectives.
- The final rule still requires fiduciaries to consider reasonably available alternatives to meet their duty of prudence, but they don’t have to scour the marketplace or look at an infinite number of possible alternatives to do so.
In situations where a fiduciary will use non-pecuniary factors to choose between investments that are indistinguishable based on pecuniary factors, the fiduciary must document their analysis and evaluation. Specifically, with respect to the “tie-breaker” rule, fiduciaries must document all of the following:
- Why pecuniary factors alone did not provide a sufficient basis to select the investment
- How the selected investment compares to the alternative investments with regard to certain factors
- How the chosen non-pecuniary factors are consistent with the interests of participants
- The final rule states that the duties of prudence and loyalty apply to a fiduciary’s selection of a designated investment alternative, but it does not prohibit fiduciaries from considering and including investment alternatives that support non-pecuniary goals as long as participants can choose from a broad range of investment alternatives.
- The final rule prohibits plans from designating a fund that was chosen for non-pecuniary reasons as the qualified default investment alternative (QDIA).
Notably, in response to comments received by the DOL, the final rule did not contain any specific references to environmental, social and governance (ESG) investments. Based on those comments, the DOL concluded that the lack of precise or generally accepted definitions of ESG made the use of the term inappropriate for this rule. Instead, the final rule focuses on pecuniary and non-pecuniary factors.
The final rule is effective 60 days after publication in the Federal Register. Plan fiduciaries have until April 30, 2022, to amend their plan documents and operation to reflect the rule’s requirements.
Plan sponsors should consult with their adviser on the implications of the final rules.
IRS Releases Draft Instructions for 2020 Form 8955-SSA
On October 30, 2020, the IRS published a draft version of the instructions for 2020 Form 8955-SSA, Annual Registration Statement Identifying Separated Participants with Deferred Vested Benefits. As background, Form 8955-SSA is used to report information about participants who separated from service during the plan year and are entitled to deferred vested benefits under the retirement plan.
The draft instructions clarify that no attachments are permitted to be filed with the form. There is also clarification regarding which Entry Codes should be used in Part III, line 9, column (a) for the following participant scenarios:
- Entry Code A: Separated from service covered by the plan, but vested retirement benefits are not paid and were not previously reported
- Entry Code B: Were previously reported under the plan but whose information is being corrected
- Entry Code C: Were previously reported as deferred vested participants on another plan's filing if their benefits were transferred (other than in a rollover) to the plan of a new employer during the covered period
- Entry Code D: Were previously reported under the plan but have been paid out or no longer entitled to those deferred vested benefits
This draft of the instructions is only for informational purposes and may not be used for 2020 Form 8955-SSA filings, but employers should familiarize themselves with the instructions in preparation for 2020 plan year filings. While many employers outsource the preparation and filing of this form, employers should also familiarize themselves with the form’s requirements and work closely with outside vendors to collect the applicable information.
Presidential Election Announcement
Barring any successful legal challenges, the 2020 presidential election has seemingly resulted in the election of Joe Biden as the nation’s 46th president. Although control of the Senate hinges upon the results of two run-off elections in Georgia, President-Elect Biden is likely to govern with a Senate controlled by Republicans and a House of Representatives controlled by Democrats.
In the coming weeks, the Benefits Compliance team will provide a number of resources that address the potential implications of this year’s election. In the meantime, this month’s Get Wise Wednesdays will focus on the Supreme Court case involving the ACA. Additionally, you can check out the continuing 2020 Election Series podcast and stay tuned for more coverage and analysis of the implications of these political developments for benefits compliance.
FAQ: How does COBRA coverage affect Medicare entitlement?
COBRA coverage can have a big impact on a person’s entitlement to Medicare coverage. If a Medicare-enrollee is unaware of how COBRA affects Medicare entitlement, they may find themselves paying higher premiums for as long as they are covered by Medicare and could experience gaps in coverage when COBRA coverage expires.
Remember that a person is “entitled to” Medicare Parts A and B when they become eligible (generally, when the person turns 65) and actually enroll in the coverage. An eligible person becomes enrolled automatically if they sign up for Social Security benefits; otherwise, there is a window of time within which they must enroll in Medicare Parts A and B to avoid a penalty. If they enroll in Medicare within a seven-month window that begins three months before the month they turn 65, covers their birthday month, and ends three months following their birthday month, then they will not have to pay higher premiums for enrolling later. If they do not enroll during this window, they will have to wait until a subsequent Medicare general enrollment period, which runs from January 1 through March 31 of every year.
However, there is a special enrollment period for people who didn’t enroll when first eligible because they were covered by a group health plan based upon their current employment status. This special enrollment period ends eight months after the earlier of the date someone loses group health plan coverage or the date the current employment ends. Importantly, COBRA coverage is not considered a group health plan based upon current employment. So a Medicare-eligible person that has COBRA coverage and delays Medicare would not experience a special enrollment period when the COBRA ends and would be subject to premium increases if they fail to enroll when first entitled to Medicare.
So if the person does not enroll in Medicare Parts A and B in a timely manner because they chose COBRA coverage, then not only are they subject to higher premiums for enrolling late, but they would also have to wait until Medicare general enrollment rolls around to enroll.
As you can see, the Medicare rules can be difficult to follow. As such, employers should consult with Medicare-knowledgeable advisors when employees have questions about how their coverage decisions affect Medicare enrollment.
State Insurance Update
On October 2, 2020, the Division of Insurance issued Bulletin 20-18, reminding healthcare insurers in Alaska that they are required to expand telehealth coverage to all covered services of healthcare insurance plans in group markets subject to state law. Services must be provided by a healthcare provider licensed in Alaska. A prior in-person visit must not be required. Insurers cannot mislead consumers or providers concerning mandated services and failing to provide this service is a violation of state law. The insurer must also offer non-network options to those it covers, including access to telehealth services, and state law does not limit the location of telehealth services. Finally, the services must be HIPAA-compliant.
Employers with plans regulated by the state should be aware of this development.
Prop. 22: App-Based Drivers are Independent Contractors
On November 3, 2020, California voters passed Proposition 22. The proposition provides that application-based drivers in the transportation and delivery industries are independent contractors if the company permits them to work for other companies, does not require a minimum number of hours to be logged into the company’s network, does not dictate their schedule, and does not require drivers to accept any specific ride or delivery request to maintain access to the company’s network.
Though they are considered independent contractors, the company must provide the drivers with certain benefits and protections, including the following.
- The driver must receive the full gratuity provided by the customer. The company cannot retain a portion of or make a deduction from the gratuity amount.
- The minimum earnings amount for a 14-day pay period cannot be less than 120% of minimum wage. This includes bonuses and incentives, but does not include tolls, cleaning fees, gratuities or airport fees. Additionally, the driver must be paid compensation per mile, which is $0.30 per mile for 2021.
- The company must pay a quarterly healthcare subsidy amount to drivers based on the average number of hours worked for the company in that quarter. For an average of 25 hours or more per week, the subsidy must be 100% of the average employer payment toward a Covered California Plan (which is 82% of the total premium). Covered California will publish the average cost for a bronze health plan. The subsidy amount reduces to a 50% employer contribution for drivers averaging between 15 and 24 hours per week. The company may require a driver to submit proof of coverage as a condition to receiving the subsidy.
The company must also provide drivers with occupational accident insurance, death benefits, sexual harassment policy and training, and a nondiscrimination policy.
California employers who utilize application-based drivers should consult with legal counsel about their obligations under this proposal.
Voters Pass Statewide Family and Medical Leave Statute
On November 3, 2020, voters passed Proposition 118, an initiated state statute (that is, a statute passed directly by the voters, rather than through the legislature) which establishes a family and medical leave program that provides up to 16 weeks of paid leave.
Starting on January 1, 2023, each employer in the state must remit a payroll tax for each employee in an amount equal to 0.9% of the employee’s wage to a state fund established to pay for the leave taken by employees under this law. Although the employer is responsible for remitting the tax, the cost of the tax is split 50/50 between the employer and employee. After the first two years, this tax may be increased or adjusted up to a cap of 1.2% of the employee’s wage.
Starting on January 1, 2024, employees who have earned at least $2,500 at their jobs can take family and medical leave under this law. The law ensures that employees who take this leave receive insurance benefits as well as up to $1,100 per week in wages. The pay is tied to the state average weekly wage, so it may increase or decrease year to year. In addition, the employee can take up to 12 weeks of paid leave (plus an extra four weeks for pregnancy and childbirth complications). This leave can be taken intermittently if such leave is already provided for by the employer.
The employee can take this leave for any of the following reasons:
- Caring for their own serious health condition
- Caring for a new child during the first year after the birth or adoption or for foster care of a new child
- Caring for a family member with a serious health condition
- When a family member is on active duty military service or is called for active-duty military service
- When the individual or the individual’s family member is a victim of domestic violence, stalking or sexual assault
Finally, employers cannot retaliate against employees who request or take this leave. If the employee has worked for the employer for at least 180 days, then the employee is entitled to return to the same or similar position after the leave is taken.
Colorado employers should be aware of this new law.
Website Offers PFMLA Resources for Employers
New resources were recently released on the state’s Paid Family and Medical Leave Act (PFMLA) website. These include materials designed to assist employers with their PFMLA compliance obligations.
As background, in June 2019, Gov. Lamont signed legislation that requires private employers to provide paid leave to eligible employees who work in the state. The leave can be taken for life events covered under the federal FMLA, the state FMLA and the Connecticut Family Violence Leave Act. (The law was covered in our July 11, 2019, edition of Compliance Corner.)
The leave is funded through employee payroll deductions. Accordingly, effective January 1, 2021, employers are required to begin withholding a percentage (up to a maximum of .50%) of employee wages. The withheld amounts must be submitted quarterly to the Connecticut Paid Leave Authority, which is responsible for administering the leave benefits. Eligible employees may begin taking PFMLA leave on January 1, 2022.
The website materials include an employer fact sheet, toolkit and poster. Registration requirements are explained. Frequently asked questions have been updated and address a wide variety of issues regarding the paid leave and an employer’s related responsibilities.
Affected employers should be aware of the website and available PFMLA resources.
Regulations Provide Additional Guidance Related to Telehealth Services
As reported in the September 3, 2020, edition of Compliance Corner, House Substitute 1 for H.B. 348 expanded covered telehealth services to include services provided without the use of visual communication. The Department of Insurance amended regulation 1409 to conform to that Act.
Effective November 11, 2020, no insurer shall impose any limitation on the ability of an insured to seek medical care through the use of telehealth service solely because the healthcare service is being provided through telehealth. In other words, an insurer cannot impose authorization, medical necessity or homebound requirements on telehealth services that do not equally apply to other medical services.
Although these regulations apply to insurers, plan sponsors should familiarize themselves with these requirements.
Nondiscrimination Requirements Related to Gender Identity
The Department of Insurance has revised and reissued Bulletin No. 86 to clarify coverage requirements related to gender identity. Effective September 4, 2020, health insurance policies are:
- Prohibited from denying, cancelling, terminating, limiting, refusing to issue or renew, or restricting insurance coverage or benefits based on an individual’s gender identity or transgender status
- Prohibited from denying, excluding or limiting coverage for medically necessary services based on the patient’s gender identify if the services are otherwise covered
- Prohibited from containing a blanket exclusion for gender dysphoria, gender identity disorder, medically necessary surgeries or other treatments related to gender transition
- Prohibited from imposing different premiums or rates for insurance coverage based on an insured’s gender identity
This bulletin will govern any fully insured policy issued in Delaware, so plan sponsors should familiarize themselves with these rules.
Coverage Required for COVID-19 Testing of Nursing Home Workers and Residents
Insurance Commissioner Dodrill issued Insurance Bulletin No. 20-15, which clarifies that group health insurance policies covering employees or residents of nursing homes must provide COVID-19 testing for those covered individuals without any cost sharing. While the DOL, HHS and Treasury have advised that COVID-19 testing to screen for general workplace health and safety is beyond the scope of the FFCRA or CARES Act, testing may be required to be covered for both symptomatic and asymptomatic individuals with known or suspected recent exposure.
Further, the Bureau for Public Health issued a memorandum requiring testing of any resident of, or healthcare personnel working in, a nursing home who has signs or symptoms of COVID19, as well as asymptomatic residents of such facilities when there is an outbreak in a facility or exposure. Thus, such testing shall be covered under the respective group health policies with no cost sharing to such participants. The bulletin clarifies this is an ongoing requirement and not simply one-time testing coverage.
Any plan sponsors that employ nursing home workers should be aware of this requirement.
State Insurance Update
On October 13, 2020, Commissioner Afable issued Bulletin 20201013, reminding health plan issuers in the state to encourage their insureds to use telemedicine whenever practicable, and to make sure that those services are available in their networks and ready to meet increased demand. This also includes a request that claims for telehealth services not be denied when those services are normally covered if they are provided in-person.
Employers with plans regulated by the state should be aware of these reminders.
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.
Industry news topics covered in the Compliance Corner are chosen based on general interest to most employers and may include articles about services not available through PPI.
How does COBRA coverage affect Medicare entitlement?