PPI in the News Compliance Corner - September 2, 2021 Archive
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On August 16, 2021, the DOL, HHS and Treasury announced that they will begin the rulemaking process to amend the rules concerning moral and religious exemptions from the ACA requirement that certain preventive services be covered by plans and issuers without cost sharing. The agencies stated that recent litigation surrounding these exemptions warrant the amendments, although the announcement does not state what the agencies believe needs to be changed or how they propose to change it. The process is expected to begin within the next six months.

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. In 2018, HHS finalized rules that expanded the religious exemption 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.

These rules were challenged in the courts. Challengers asserted that HHS lacked the authority to promulgate the 2018 rules and that the agency failed to follow the required rulemaking process when it did so. On July 8, 2020, the Supreme Court disagreed with these challenges and remanded them back to the district level for further proceedings. The particular case challenging these exemptions was covered in this article in the July 23, 2020, edition of Compliance Corner.

Although no action is necessary at this point, employers should be aware of this development and expect more agency action in this area. We will follow and report developments as they occur.

FAQs About Affordable Care Act Implementation Part 48 »

On June 25, 2021, the IRS responded to an inquiry from a congresswoman on behalf of her constituent who was concerned that the unused balance in her health FSA was forfeited when she was terminated from her employment because her health FSA was determined not to be eligible for COBRA. She asked for clarification of existing IRS guidance regarding health FSAs and the COBRA requirements (Letter 2021-0004).

In the letter, the IRS confirmed existing guidance and reiterated general information pertaining to COBRA and health FSAs. Specifically, it outlines the situation in which COBRA is triggered and, if triggered, how the COBRA premium for a health FSA should be determined in light of carryover amounts.

COBRA coverage for an FSA is triggered if a participant experiences a COBRA qualifying event (e.g. termination or reduction in hours) and as of the date of the qualifying event the amount the participant may receive from their health FSA for the rest of the plan year exceeds the amount the FSA may require to be paid for the COBRA for the rest of that plan year. The IRS confirmed that any carryover amount is included in determining the amount of the benefit that a qualified beneficiary is entitled to receive during the remainder of the plan year in which a qualifying event occurs.

The below section from the IRS Letter 2021-0004 provides additional information:

If COBRA is available, the amount the participant may be able to receive as a reimbursement for medical care following termination of employment is generally:

• The carryover amount plus the amount of the health FSA contribution elected for the plan year, minus
• The amount the plan has reimbursed the employee as of the date of the qualifying event.

The amount that a participant may be required to pay for COBRA continuation coverage for the rest of the year does not include the carryover amount and is:

• The amount of the health FSA contribution elected for the plan year, minus
• The amount contributed to the health FSA as of the date of the qualifying event.

Furthermore, IRS Notice 2015-87 provides some examples and additional guidance that may be helpful in understanding these rules. Similar to the IRS letter described above, this notice did not provide any new guidance. However, it provides helpful reminders of the applicability of COBRA on health FSA and a carryover.

IRS Letter 2021-0004 »
IRS Notice 2015-87 »

On August 20, 2021, the DOL, HHS and the Treasury jointly released FAQs regarding implementation of requirements under the Transparency in Coverage (the TiC) final rule and provisions of the Consolidated Appropriations Act of 2021 (the CAA), including the No Surprises Act. Importantly, the FAQs provide an update on the enforcement dates of provisions under these laws pending the issuance of regulatory guidance.

The TiC final rule was issued in 2020 and requires non-grandfathered group health plans to disclose in-network provider negotiated rates, historical out-of-network allowed amounts, and prescription drug pricing information to the public via machine-readable files posted to a website. Additionally, these plans must provide participants with personalized cost-sharing information for covered services via an online self-service tool. The rule includes phased-in effective dates from January 2022 through January 2024.

Subsequently, Congress passed the CAA in December 2020. This budgetary measure includes various provisions to address surprise billing and price transparency in the group health plan context. However, some of the CAA requirements duplicate the TiC requirements, but have different effective dates.

The FAQs address the overlapping TiC and CAA provisions. The guidance also sets expectations regarding the timing of implementing regulations and plan compliance in the interim.

Specifically, FAQs #1 and #2 focus upon the TiC machine-readable file requirements. Under the new guidance, the enforcement date for public posting of a plan’s in-network rates and out-of-network allowed amounts is extended from January 1, 2022, to July 1, 2022. The posting of the TiC prescription drug pricing file is deferred indefinitely pending a determination, through notice and comment rulemaking, of whether it remains necessary. (The CAA pharmacy benefit reporting provisions require plans to report some of the same prescription drug information to regulators.)

FAQ #3 speaks to the overlapping price comparison tool requirements under the TiC and CAA. Under the TiC, plans must make price comparison and cost sharing information available to participants through an internet-based self-service tool and in paper form, upon request. This requirement applies to 500 common items and services effective for plan years beginning on or after January 1, 2023, and for all items and services commencing for plan years beginning on or after January 1, 2024. The CAA requires plans to provide similar price comparison guidance by internet and phone for plan years beginning on or after January 1, 2022. The new guidance indicates that regulators intend to propose rules and seek comments as to whether compliance with the TiC pricing requirements, with the addition of fulfilling participant requests made by phone, would also satisfy the CAA requirements. Furthermore, the guidance indicates that enforcement of the CAA self-service tool requirement is postponed until plan years beginning on or after January 1, 2023, to align with the TiC effective date.

FAQ #4 explains that the CAA requirement for plans to issue updated physical or electronic insurance identification cards remains effective for plan years beginning on or after January 1, 2022. The new cards issued to enrollees must reflect cost-sharing information, including applicable deductibles, out-of-pocket maximum limitations, and a telephone number and website address for assistance. Regulatory guidance will likely not be issued until after the effective date, so plans are expected to implement the ID card requirements using a good faith, reasonable interpretation of the law in the interim.

According to FAQs #5 and #6, enforcement of the CAA provisions that require plans to provide participants with good faith cost estimates of scheduled services or advance explanations of benefits are delayed pending the issuance of regulatory guidance. Such guidance is not anticipated prior to the January 1, 2022 effective dates.

FAQ #7 confirms that the CAA prohibition against gag clauses took effect upon the law’s enactment on December 27, 2020. As a result, plans must ensure that contract provisions regarding provider networks do not directly or indirectly restrict them from accessing cost and quality of care information and providing the information to participants or from electronically accessing de-identified participant claims data. The regulators intend to issue guidance to explain how plans should submit their attestations of compliance with this prohibition and anticipate beginning to collect such attestations starting in 2022.

FAQ #8 indicates that regulatory guidance on the CAA provider directory provisions will likely not be issued prior to the January 1, 2022, effective date. These provisions generally require plans to establish a process to update and verify the accuracy of provider directory information and respond to participant requests about a provider’s network participation status. Pending guidance, plans are expected to comply in good faith and would be deemed in compliance provided that any participants given inaccurate information about a provider’s network status are assessed only the in-network rates.

FAQ #9 explains that regulations addressing the CAA balance billing disclosure requirements will not be issued prior to the January 1, 2022, effective date. Until further guidance is issued, use of the model disclosure notice provided with the July 2021 Interim Final Rules on Surprise Billing will be considered good faith compliance, if all other applicable requirements are met.

Similarly, FAQ #10 indicates that guidance will not be issued regarding the CAA continuity of care provisions before the January 1, 2022, effective date. These provisions are designed to protect participants undergoing care for certain conditions and serious illnesses from unanticipated in-network provider terminations by the plan. Plans must comply in good faith in the interim.

FAQ #11 clarifies that although ACA grandfathered plans are exempt from the TiC requirements, these plans are subject to the transparency and No Surprises Act provisions of the CAA.

Finally, FAQ #12 provides that enforcement of the CAA pharmacy benefit reporting requirements will be deferred from December 27, 2021, to December 27, 2022, pending the issuance of regulations. However, plans are encouraged to start working to ensure they are in a position to report the required information with respect to 2020 and 2021 data by December 27, 2022.

Employers who sponsor group health plans should be aware of this important regulatory update. They should continue to work with their counsel and service providers to ensure compliance with the TiC and CAA provisions by the applicable enforcement dates.

FAQs About Affordable Care Act and Consolidated Appropriations Act, 2021 Implementation Part 49 »

On August 23, 2021, the IRS released an issue snapshot on the expansion of the types of plans that can roll funds over into a SIMPLE IRA. Issue Snapshots represent the IRS’ periodic research summaries on tax-related issues. This snapshot describes the SIMPLE IRA changes made by the Protecting Americans from Tax Hikes Act of 2015 (the Act).

Before the Act, SIMPLE IRAs could only accept rollover contributions from other SIMPLE IRAs. The Act expanded the types of plans from which SIMPLE IRAs can accept rollovers to include SEP IRAs, 401(k), 403(b) and 457(b) plans if specific requirements are met. Namely, the following restrictions apply:

• SIMPLE IRAs are not allowed to accept rollovers from Roth IRAs or designated Roth accounts.
• The Act only applies to rollovers made after the two-year period beginning on the date the participant first participated in the SIMPLE IRA.
• The Act only applies to rollovers that are made after December 18, 2015.
• Any rollover from a traditional, SIMPLE or SEP IRA into a SIMPLE IRA is subject to the one-per-year limit that applies to IRA-to-IRA rollovers.

Retirement plan sponsors should keep this guidance in mind as they administer participant rollovers.

Issue Snapshot - Expansion of Rollover Options Includes Savings Incentive Match Plan for Employees (SIMPLE) IRA »