Healthcare Reform
Federal Updates
Retirement Update
IRS Issues Determination Letter Guidance for Individually Designed Qualified and Section 403(b) Plans
IRS Issues Notice on 2022 Required Amendments List for Individually Designed Qualified and Section 403(b) Plans
DOL Proposes Amendment to Voluntary Fiduciary Correction Program and Related Prohibited Transaction Exemption
Announcements
Reminder: It’s MLR Rebate Time Again!
The ACA requires insurers to submit an annual report to HHS accounting for plan costs. If the insurer does not meet the medical loss ratio standards, they must provide rebates to policyholders. Rebates must be distributed to employer plan sponsors between August 1, 2022, and September 30, 2022. Employers should keep in mind that if they receive a rebate, there are strict guidelines as to how the rebate may be used or distributed. The plan asset portion of a rebate generally must be applied within three months of receipt by the employer, or the amount would need to be held in trust to comply with ERISA’s requirements.
For more information, please see our August FAQ.
Reminder: CAA Pharmacy Benefit and Healthcare Spending Reporting Deadline Approaching
Under the CAA, Section 204, insured and self-insured group health plans are required to report significant information regarding prescription drug and healthcare spending to the government. After delayed enforcement, the 2020 and 2021 calendar year (termed “reference year”) data must be reported to CMS by December 27, 2022. The data must be submitted to the Health Insurance Oversight System (HIOS) in files and formats specified by CMS.
Fully insured carriers will handle the reporting for their employer clients, and self-insured employers should work closely with their carriers, TPAs, PBMs and other vendors, as applicable, to ensure the required information is timely and accurately provided. In some cases, employers that sponsor self-insured plans may need to register and create an account with HIOS to submit the data directly.
Detailed information regarding the reporting requirements, including instructions, FAQs and a HIOS portal user guide, is available on the CMS website.
FAQ
We have failed to file the required Forms 5500 for one of our benefits offerings for several years. What can we do to come into compliance?
State Updates
California
SDI and PFL Rates and Limits Revised for 2023
December 06, 2022
The Employment Development Department (EDD) recently announced that the 2023 employee contribution rate for State Disability Insurance and Paid Family Leave will decrease from 1.1% to 0.9%. The taxable wage base from which the contributions will be taken will increase from $145,600 in 2022 to $153,164 in 2023.
Employers should be aware of this change in rates and limits, and they should work with their payroll provider to adjust employee contributions.
San Francisco HCSO Rates for 2023
December 06, 2022
The San Francisco Health Care Security Ordinance (HCSO) requires covered employers to satisfy an employer spending requirement by making healthcare expenditures for their covered employees, among other reporting and notice requirements. The healthcare expenditure rate varies depending on the size of the employer and increases incrementally each year.
As of January 1, 2023, the healthcare expenditure rate for large employers with 100 or more employees increases to $3.40 per hour payable (up from $3.30 per hour in 2022). For medium-sized employers with 20 to 99 employees and for nonprofit employers with 50 to 99 employees, the expenditure rate will rise to $2.27 per hour payable (up from $2.20 per hour payable in 2022). Employers with fewer than 20 employees and nonprofit employers with fewer than 50 employees are exempt.
If an employee is a managerial, supervisorial or confidential employee earning $114,141 per year ($54.88 per hour) or more, that employee is exempt from the HCSO. This represents an increase from last year’s threshold of $109,643 per year ($52.71 per hour).
All covered employers will be required to post the revised notice in all workplaces and job sites, when the poster becomes available.
Employees Eligible to Take Paid Sick Days and CFRA Leave for “Designated Persons”
December 06, 2022
On September 29, 2022, Gov. Newsom signed AB 1041 into law. The new law expands the definition of “family member” under CFRA and California Paid Sick Leave to include a “designated person” identified by the employee. Effective for leaves starting on or after January 1, 2023, eligible employees may take leave under CFRA to care for a designated person, which is defined as any individual related by blood or whose association with the employee is the equivalent of a family relationship. An employer may limit the employee to one designated person per 12-month period.
Summary of Dental Benefits and Coverage Matrix (SDBC) SB 1008
December 06, 2022
California’s SB 1008 requires fully insured health plans and health insurance policies that provide dental benefits coverage in California to use a standardized form (called the Summary of Dental Benefits and Coverage Disclosure Matrix or SDBC) to report and disclose each plan’s dental benefits, such as cost-sharing, exclusion and examples of commonly used benefits. Like the ACA’s Summary of Benefits and Coverage requirement, which applies for medical plans, SB1008 requires insurers and employers to utilize SDBCs to assist eligible employees and individuals to help them understand and compare each dental plan.
For group plans, dental insurers subject to the requirement will complete SDBCs and provide the completed SDBCs to plan sponsors (generally, employers) for each dental plan. Insurers are required to provide the applicable SDBCs to the plan sponsors upon delivery of the policies and provide them at the same time the insurers provide other disclosure materials, including the applicable evidence of coverage. Then, plan sponsors are required to distribute SDBC copies to their eligible employees and other individuals prior to their enrollment, and other specified time indicated in the law.
A plan sponsor can provide a SDBC using one of the following methods:
- Email (and notify the individual that a paper copy is available free of charge)
- Direct the individual to the insurer’s website for a copy of SDBC (and notify the individual the availability of a paper copy upon request)
Employers should discuss with their dental insurers the applicability of SDBC and distribute SDBC to their eligible employees and other individuals timely.
Connecticut
2023 Paid Family and Medical Leave Information Announced
December 06, 2022
The state has announced the 2023 maximum contribution rates and benefit rates payable for Paid Family and Medical Leave (PFML).
The contribution rate will stay at 0.5%, up to the Social Security wage contribution cap, which is $160,200 for 2023. Accordingly, an employee’s maximum contribution in 2023 to the state’s plan will be $801 for the year. For this purpose, wages used to determine earnings for FICA purposes are counted and may include salary or hourly pay, vacation pay, holiday pay, tips, commissions and severance pay.
This rate information does not apply to private plans; however, private plan coverage cannot cost employees more than what they would be required to pay under the state plan. If the private plan rate exceeds the state plan rate, the employer would need to cover the amount exceeding the state rate. If the private plan is lower than the state rate, employees could not be charged more that the private plan rate.
For a covered employee with average weekly wages (AWW) less than or equal to the state’s minimum wage multiplied by 40, which is $560 (increasing to $600 on June 1, 2023), the weekly benefit rate payable under the PFML will be 95% of the employee’s AWW. For wages exceeding the state’s minimum wage multiplied by 40, the weekly benefit rate payable will be increased by 60% of the excess amounts. For example, the weekly benefit payable in June 2023 for an employee with AWW of $800 would be 95% of their first $600 in earnings ($570), plus 60% of their next $200 in earnings ($120), for a total of $690 in weekly compensation. The benefit rate is capped at 60 times the state’s minimum wage, which is $840 as of July 1, 2022, and will increase to $900 on June 1, 2023.
For more information, please visit the PFML website. In addition, ask your consultant for a copy of our publication, Connecticut Paid Leave Program: A Guide for Employers.
District of Columbia
Reminder: Employer Reporting for DC Parking Cashout Law Due January 15, 2023
December 06, 2022
By January 15, 2023, all employers with 20 or more employees who work at least 50% of their working time in the district (“covered employees”) must submit a report to the District Department of Transportation regarding their compliance with or exemption from the DC Parking Cashout Law of 2020. The report is due every two years thereafter.
The reporting system, called “Commutifi,” is now live. For instructions on how to complete and submit the reporting, please refer to the district’s DC Parking Cashout Law Toolkit, page 11 and 12. In addition to the reporting requirement, the DC Parking Cashout Law requires employers with at least 20 covered employees that offer free or subsidized parking to their employees to either offer a clean air fringe benefit to employees receiving the parking benefit, develop a transportation demand management plan, or pay a clean air compliance fee.
Please note that the Cashout Law is in addition to the Employer Commuter Requirement. Since January 1, 2016, employers with 20 or more employees in DC must offer access to one or more of the transit benefit options.
For additional information about the DC Parking Cashout Law, see the September 1, 2022, edition of Compliance Corner.
Commutifi (The Reporting Dashboard) »
DC Parking Cashout Law Toolkit »
Massachusetts
MA PFML 2023 Poster and Notices Updated
December 06, 2022
The Department of Family and Medical Leave (DFML) recently released the 2023 Paid Family Medical Leave (PFML) workplace posters, model notices and rate sheets to reflect the 2023 rates in several languages. The poster and notices must be available in English and each language that is the primary language of five or more individuals in an employer’s workforce if these translations are available from DFML.
All employers (including employers with private or self-insured plans) are required to distribute these updated notices to current employees annually and new employees who start their employment on or after January 1, 2023. All the required notices and posters can be found here.
For the MA PFML 2023 premium rate and maximum benefit amount information, see the article published in the November 10, 2022, edition (third article) of Compliance Corner.
Covered employers should review the updated posters and notices and display the workplace poster and distribute the notice to their employees timely.
Oregon
Oregon PFML Program Changing the Way to Count Employees
December 06, 2022
Paid Leave Oregon has recently changed the way an employer should count its employees to determine if the employer is classified as a “large” or “small” employer. This classification affects whether the employer is required to pay contributions or not. Under the Paid Leave Oregon rules, employers with 25 or more employees are required to contribute to the program. The new counting method aligns with how employees are counted for unemployment insurance.
Specifically, the new way to count the employer size is to use the average number of employees on the 12th of each month for the previous 12 months. This new method uses 12 numbers to calculate the average instead of just four. Detailed descriptions of how to count an employer size for 2023 are outlined in the state’s 2023 Employer Size Instructions.
Paid Leave Oregon: Employee Count Bulletin (November 2022) »
Pennsylvania
City of Philadelphia Employee Commuter Transit Benefit Programs: Effective December 31, 2022
December 06, 2022
The City of Philadelphia has enacted an ordinance requiring certain employers to offer a commuter transit benefit program to eligible employees effective December 31, 2022. Below is a key summary of the programs.
Effective Date: December 31, 2022
Covered Employers: Employers with 50 or more compensated employees who work on average 30 hours per week within the geographic boundaries of Philadelphia for the same employer within the previous 12 months.
Requirement: Covered employers must make available to all its covered employees at least one of the following employee commuter transit benefit programs:
- Election of pre-tax payroll deduction for mass transit expense or qualified bicycle expense consistent with the IRC (e.g., reasonable expenses related to the purchase, maintenance, repair and storage of bicycles used for commuting).
- Employer-provided fare instrument (e.g., any pass, token, fare card or similar item entitling a person to transportation on public transit).
- Any combination of (1) or (2).
Maximum Limits: At least up to the federal limits (2023: $300/ month).
Penalty: If an employee alleges that the employer failed to comply with the programs, that will trigger an investigation of the employer. If the employer is found to be in violation of the programs, they will have 30 days to comply with the ordinance. Subsequently, if the employer continues to be in violation of the programs, the penalty may be assessed each day that the employer fails to satisfy the program requirements.
The City of Philadelphia Ordinance: Employee Commuter Transit Benefit Programs »
Rhode Island
New Health Benefit Mandates: PANDAS and Uterine Fibroid Treatments
December 06, 2022
The following new Rhode Island health benefit mandates will take effect on January 1, 2023:
- H 7503/S 2203 (signed into law June 30, 2022): Expands coverage for treatment of pediatric autoimmune neuropsychiatric disorders with streptococcal infection (PANDAS) and pediatric acute-onset neuropsychiatric syndrome, including the use of intravenous immunoglobin therapy.
- H 7561/S 3035 (signed into law June 29, 2022): Expands coverage for hysterectomy, myomectomy and laparoscopic removal of uterine fibroids, including uterine artery embolization intraoperative ultrasound guidance and monitoring and radiofrequency ablation.
These coverage mandates will apply to policies issued, delivered or renewed in Rhode Island on or after January 1, 2023. Employers sponsoring health plans in Rhode Island should be aware of these developments and contact their carrier for further information.
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.