Congress Repeals the ACA’s Cadillac, HIT, and Medical Device Taxes; Revives PCOR Fee; and Extends the Paid Family and Medical Leave Tax Credit
On December 20, 2019, President Trump signed the Further Consolidated Appropriations Act of 2020 (HR 1865) into law. The main purpose of this legislation is to continue funding certain government operations. However, the bill also includes a number of employee benefits-related provisions. Specifically, the bill repeals the tax on high cost health coverage (aka the Cadillac tax), the health insurance tax (HIT, aka the Health Insurance Providers Fee), and the medical device tax. The bill also extends the ACA’s PCOR fee for 10 years (until 2029) and the paid family and medical leave tax credit for one year, and retroactively eliminates a commuter benefit tax for tax-exempt organizations.
ACA Tax Repeals
- Cadillac Tax: The Cadillac tax was introduced by the ACA and would have imposed a 40% excise tax on employer-sponsored coverage that exceeded a certain threshold. The tax was originally set to become effective in 2018, but had been delayed through 2022. HR 1865 completely repeals the tax, meaning it will never be imposed on any employer plan.
- HIT: The HIT is a tax imposed on insurers that was meant to help fund the cost of ACA implementation and the exchanges. Although the tax applied to insurers, insurers were allowed to push those costs through to group health plans through increased premium rates. HR 1865 repeals the tax effective January 1, 2021. However, the tax will still be due for the 2020 plan year.
Medical Device Tax:
The medical device tax was a 2.3% excise tax on manufacturers and importers of certain medical devices. The tax was originally set to become effective in 2013, but has been delayed multiple times. HR 1865 repeals the tax entirely.
PCOR Fee Extension
HR 1865 extends the PCOR fee for 10 more years. As background, the ACA imposes a fee on issuers of specified health insurance policies and plan sponsors of applicable self-insured health plans to help fund the Patient-Centered Outcomes Research Institute. The fee, required to be reported only once a year on the second quarter Form 720 and paid by its due date, July 31, is based on the average number of lives covered under the policy or plan.
The PCOR fee previously applied to policy or plan years ending on or after October 1, 2012, and before October 1, 2019. However, HR 1865 extends the fee through 2029.
Employers with self-insured plans (including HRAs) will need to continue their compliance with the PCOR fee requirement by filing Form 720 by July 31 each year. We anticipate the IRS will issue additional guidance on the extension, including applicable fee amounts, prior to the July 31, 2020, deadline.
Employer-Paid Family and Medical Leave Tax Credit
HR 1865 extends the employer-paid family and medical leave tax credit for one year. As background, the 2017 Tax Cuts and Jobs Act established a business tax credit for certain employer-paid family and medical leave, which ranges from 12.5% to 25% of the wages paid to qualifying employees, where such wage payments are at least 50% of the wages normally paid to the employee. The credit was originally available to employers only for wages paid in 2018 and 2019, HR 1865 extends the credit through 2020.
Retroactive Elimination of Commuter Benefit Tax for Tax-Exempt Organizations
HR 1865 also eliminates a tax on commuter benefits for tax-exempt organizations. As background, Congress (as part of the 2017 Tax Cuts and Jobs Act), enacted Section 512(a)(7), which required tax-exempt organizations to include in unrelated business taxable income their costs for providing “qualified transportation fringe benefits” to their employees. HR 1865 repeals section 512(a)(7) retroactive to the date of its enactment. We anticipate that the IRS will issue guidance relating to the repeal, including how to amend Forms 990-T (used to report and pay the tax), and how to claim related refunds.
Fifth Circuit Rules ACA Individual Mandate Unconstitutional, But Does Not Rule on Whether Entire ACA Must Fall
On December 18, 2019, a three-judge panel of the United States Court of Appeals for the Fifth Circuit ruled that the MEC provision (otherwise known as the “individual mandate”) of the ACA is unconstitutional. However, the appeals court declined to rule on whether the individual mandate rendered the entire ACA unconstitutional or if it can be severed from the ACA. The appeals court remanded that matter back to the district court to make the determination. As a reminder, the matter came before the appeals court after US District Judge Reed O’Connor of the Northern District of Texas ruled that the individual mandate was unconstitutional and so integral to the ACA that the entire law must be overturned.
The question of whether the individual mandate is unconstitutional hinges upon the tax penalty imposed upon taxpayers who fail to obtain health insurance that provides MEC. A previous ruling by the US Supreme Court, back in 2012, determined that Congress had the authority to create an individual mandate in the ACA through its power to tax. Thus, as long as the law imposed a tax, the mandate was constitutional. In late 2017, Congress reduced the tax to $0, and in response 20 states and two individuals challenged the ACA on the basis that Congress waived its authority to impose the individual mandate when it declined to impose a tax. Both the district court and the appeals court accepted this argument.
The appeals court remanded back to the district court the issue regarding whether the individual mandate being invalidated causes the whole ACA to fail. The appellate court asks the district court to do two things: 1) Explain which provisions in the ACA are so intertwined with the individual mandate that they must also be severed from the ACA; and 2) Decide whether the court can enjoin only those provisions of the ACA that injure the states and individuals that brought the suit or declare the ACA unconstitutional only as to those states and individuals.
The lawsuit will continue to move through the courts for some time. The states defending the ACA in this lawsuit have already appealed this decision to the Supreme Court. Even if the Supreme Court declines to take up the matter at this time, the district court must now reconsider key issues, as noted above, and issue new rulings that will very likely be appealed as well. Although it is very difficult to predict the course of any lawsuit, it is not unreasonable to expect this one to take many more months to resolve.
For employers and group health plans, the Fifth Circuit decision does not change any requirements or obligations currently imposed under the ACA. Specifically, employers should continue their efforts toward timely ACA employer reporting and compliance with other coverage mandates, as the regulatory agencies will continue enforcing the ACA. We will report future developments in Compliance Corner .
IRS Releases Draft 2019 Instructions for Form 8941
On December 10, 2019, the IRS released a draft of the 2019 Instructions for Form 8941, Credit for Small Employer Health Insurance Premiums. This publication provides a general overview of the purpose and eligibility requirements for the small business health care tax credit, as well as specific instructions for completing the form.
As background, the small business health care tax credit allows eligible small employers that offer health insurance coverage to their employees to take a tax credit of up to 50% of the nonelective contributions they pay toward the premium cost. Tax-exempt eligible small employers are permitted a tax credit of up to 35% of such contributions. To qualify, a small employer generally must purchase the health coverage for its employees through SHOP. For tax years beginning after 2013, this credit is only available for a period of two consecutive tax years.
The instructions for Form 8941 provide the necessary information to compute the tax credit, and include worksheets to determine the applicable number of employees, average wages, and average premiums for each state’s small group health insurance market. The IRS modifies the form instructions periodically to reflect changes in regulations and/or numeric values, such as the average premium amounts. As standard procedure, the IRS releases a preliminary draft of the updated guide prior to final publication.
Employers that could potentially claim this credit should be aware of the release of the draft instructions. The IRS is accepting comments regarding the proposed publication. Accordingly, employers should also recognize that changes to the released version may occur prior to finalization.
IRS Announces 2020 Mileage Rates for Medical Expenses
On December 31, 2019, the IRS issued Notice 2020-05, which provides the 2020 standard mileage rate for use of an automobile to obtain medical care. The 2020 mileage rate is 17 cents per mile (a 3 cent decrease from the 2019 rate). Mileage costs may be deductible under Code §213 if the mileage is primarily for, and essential to, receiving medical care.
Generally, use of the standard mileage rate is optional, but it can be used instead of calculating variable expenses (e.g., gas and oil) incurred when a car is used to attain medical care. Parking fees and tolls related to use of an automobile for medical expense purposes may be deductible as separate items. However, fixed costs (such as depreciation, lease payments, insurance, and license and registration fees) are not deductible for these purposes and are not reflected in the standard mileage rate for medical care expenses.
In addition, transportation costs that are qualified medical expenses under Code § 213 generally can be reimbursed on a tax-free basis by a health FSA, HRA, or HSA, assuming the plan document allows for it.
Comment Period for Proposed "Transparency in Coverage" Rule Extended
On January 3, 2020, the HHS extended the comment period for the proposed “Transparency in Coverage” rule that was published on November 27, 2019. The comment period was originally scheduled to close on January 14, 2020. Due to considerable interest and stakeholder requests for additional time, the comment period will remain open an additional 15 days to January 29, 2020.
As background, the proposed rule imposes new cost-sharing disclosure requirements upon employer sponsored group health plans, including self-insured plans, and health insurance issuers. Further details regarding the proposed rule can be found in the November 28, 2019 edition of Compliance Corner.
Comments are sought on all facets of the proposed rule, including technological aspects. Opinions are also requested as to whether health care provider quality information should be included in the disclosure requirements. Comments can be submitted to HHS electronically, or by regular or express/overnight mail in accordance with the specified instructions. All submissions are made available to the public in their entirety.
Employers should be aware of the proposed rule and comment period extension. Those wishing to submit comments to HHS can do so through January 29, 2020. The submission should not include any personally identifiable information or confidential business information that the employer does not want publicly disclosed.
Please check in with Compliance Corner for further updates on this cost transparency initiative.
SECURE Act Adopted in Government Appropriations Bill
On December 20, 2019, President Trump signed the Further Consolidated Appropriations Act of 2020 (HR 1865) into law. The main purpose of this legislation is to continue funding certain government operations. However, the bill also adopts the Setting Every Community Up for Retirement Enhancement (SECURE) Act relating to retirement plans.
The SECURE Act is the most comprehensive retirement legislation passed since the Pension Protection Act of 2006. The law includes sweeping changes that will affect how retirement plans are offered.
As background, the SECURE Act comes after multiple bills attempted to include similar provisions. Specifically, the Retirement Enhancement and Savings Act (RESA) was approved by the Senate Finance Committee and the Family Savings Act was passed by the House in 2018, respectively. The SECURE Act was passed by the House of Representatives in May 2019 and included provisions found in both of those previous bills and added some new provisions.
The SECURE Act (as passed in the appropriations bill) is broken up into four titles, and some of the major provisions are summarized as such:
Title I: Expanding and Preserving Retirement Savings
- Allows open multiple employer plans, meaning that unrelated employers can band together to offer retirement benefits to their employees
- Increases auto enrollment safe harbor cap to 15%
- Simplifies 401(k) safe harbor, notably eliminating the notice requirement
- Increases tax credit for small employer plan start ups
- Provides credit for small employers that start plans that include automatic enrollment
- Prohibits plan loan distribution through credit cards
- Allows portability of lifetime income investments for defined contribution, 403(b), and governmental plans
- Requires employers to offer 401(k) plan participation to long-term part-time workers
- Provides penalty-free withdrawals for qualified births and adoptions
- Increases the age for required minimum distributions from age 70.5 to age 72
- Allows individuals to continue making IRA contributions after attaining age 70.5
Title II: Administrative Improvements
- Permits plans adopted by the employer’s tax return due date to be treated as in effect as of the close of the plan year
- Requires annual benefit statements to include a lifetime income disclosure
- Provides safe harbor for fiduciaries that select lifetime income provider
Title III: Other Benefits
- Expands Section 529 plans to cover additional educational costs, notably including student loan repayment
Title IV: Revenue Provisions
- Modifies required minimum distribution rules relating to death of the account owner
- Increases penalties for the failure to file a Form 5500
As noted, this legislation will result in an overhaul of many of the retirement regulations that have been in place for decades. Some provisions of the bill are effective immediately, some effective beginning in the plan year after December 31, 2019, while others will become effective at later dates. Retirement plan sponsors should work with their plan advisors, recordkeepers, and other service providers to amend their plan as necessary.
IRS Reiterates the Requirement to Execute Written Plan Documents
On December 9, 2019, the IRS published a Generic Legal Advice Memorandum that reiterates the requirement to timely adopt plans (and plan amendments). In other words, a plan sponsor must retain a validly executed plan document, as an unexecuted copy does not meet the IRC’s requirements. As background, legal advice memorandums are provided by the IRS Office of Chief Counsel to IRS personnel.
The memorandum is a result of an issue raised in Val Lanes Recreation Center v. Commissioner, T.C. Memo 2018-92, and that is whether a plan sponsor must retain a validly executed plan document. The Tax Court in Val Lanes confirmed that in order for a qualified plan to be validly adopted, the plan document needs to be signed by the employer – or someone authorized by the employer. Further, should an employer fail to retain an executed plan, the employer has the burden to prove that such executed plan document existed. In the case referenced, the employer was not able to produce an executed plan document. However, the employer met its burden of proof by providing creditable explanation regarding the lack of an executed copy.
Importantly, the IRS clarifies that the facts in Val Lanes are unusual, and reiterates that a plan is only considered adopted if proof of adoption of the plan is provided. The IRS further stresses that it is unlikely for a plan sponsor to meet its burden of proof without providing an actual signed plan document.
Per the memorandum, it is appropriate for an IRS exam agent to disqualify the plan upon failure to produce a signed plan document. This memorandum serves as an important reminder to employers that a signed copy of the plan document needs to be maintained, as an unexecuted copy is not considered validly adopted.
Reminder: Form W-2 Cost of Coverage Reporting
Large employers must report the cost of group health coverage provided to employees on the Form W-2. The requirement applies to employers that filed 250 or more Forms W-2 in 2018. Employer aggregation rules do not apply for this purpose. In other words, the number of Forms W-2 is calculated separately without consideration of controlled groups. Indian tribal governments, churches with self-funded plans, and employers contributing to a multiemployer plan are exempt from the Form W-2 reporting requirement.
Can an employee remove their spouse from coverage during open enrollment in anticipation of a divorce?
An employee may be allowed to drop their spouse from coverage during open enrollment; however, the employee should follow any court orders in place, and the employer should be mindful of the fact that there are COBRA implications when the employee does this in anticipation of divorce.
First, it’s important to note that divorcing spouses who provide health coverage to the soon-to-be ex-spouse are often ordered not to terminate that coverage until the divorce is finalized. Some state laws even require this continuation. Even in situations where an individual cancels their spouse’s coverage before they have filed for divorce, the court could seek to require the individual to either reinstate the coverage or pay for the spouse’s medical care. So the employee should discuss their desire to terminate the spouse’s coverage during open enrollment with their legal counsel or the court in which they are filing for divorce.
Second, when an employee’s spouse is covered by an employer’s health plan, the spouse is eligible for continued coverage through COBRA when a triggering event occurs, such as when the employee and the spouse divorce. As background, COBRA is required when qualified beneficiaries experience a loss of coverage due to a COBRA-triggering event. Those rules generally mean that qualified beneficiaries are only eligible for coverage if they had coverage on the day before the event. However, when a person who has coverage loses that coverage in anticipation of a triggering event, such as a divorce, the loss is disregarded in determining whether the event causes a loss of coverage. In other words, for purposes of determining whether the spouse qualifies for COBRA and when COBRA coverage starts, the spouse is treated as if they had coverage on the day before the triggering event even though they were dropped during open enrollment.
Upon receipt of notice of the divorce between the employee that dropped the coverage and their spouse, a benefit plan that is subject to COBRA must make COBRA coverage available to the divorced spouse as of the date of the divorce. This means the employer should send the COBRA election notice to the divorced spouse so that they can elect COBRA if they so choose.
So, the employee could presumably be free to drop the spouse during open enrollment as long as any court orders do not stipulate otherwise. It would be best for them to discuss their desire with legal counsel, though. Additionally, in anticipation of divorce there are COBRA issues to be mindful of. The client should consult with outside counsel regarding any additional issues that may arise in this situation, including possible disputes with the insurance carrier regarding the eligibility of the spouse for COBRA.
New Bulletin on Coverage for Tobacco Cessation Products Without Cost-Sharing
On December 30, 2019, the Division of Insurance published Bulletin 2019-10, relating to state and federal requirements that carriers cover certain tobacco cessation products without consumer cost-sharing. According to the bulletin, on November 27, 2019, changes were made to Massachusetts law to enhance tobacco cessation benefits. Specifically, the new laws require carriers to provide members with coverage for tobacco cessation counseling and all generic US FDA-approved tobacco cessation products.
In addition, under federal law and as recommended by the US Preventive Services Task Force (USPSTF), preventive services must be provided without cost-sharing. Among the preventive services recommended by USPSTF is screening for all adults for tobacco use and providing tobacco cessation interventions for those who use tobacco. Therefore, when prescribed by a health care provider, carriers may not require any member cost-sharing for either tobacco cessation counseling or any of the generic FDA-approved tobacco cessation products. Those include nicotine gum, nicotine patch, nicotine lozenges, nicotine oral or nasal spray, nicotine inhaler, bupropion, and varenicline.
Employers with fully insured plans in Massachusetts should review the bulletin, although it contains no new employer compliance obligations.
State Supreme Court Declines to Weigh in on Legislative Tactic to Amend Paid Sick Leave Law
On December 18, 2019, the Michigan Supreme Court issued a 4-3 ruling that denied the state legislature’s request for advice on whether lawmakers are allowed to adopt ballot initiatives headed to voters (including one concerning paid sick leave) and then change them after election day. The court denied this request because it believed that it lacked jurisdiction to provide such advice, since there wasn’t a lawsuit alleging an “actual controversy.”
As reported in the January 10, 2019, edition of Compliance Corner, the state legislature adopted the initiative petition creating an Earned Sick Time Act on September 5, 2018, enacting it as Public Act 338 of 2018. On December 13, 2018, Gov. Snyder approved Public Act 369 of 2018 that amended Public Act 338’s provisions prior to its effective date (March 29, 2019). If the legislature had not adopted the initiative petition, and the voters approved it in a state-wide vote, then the law could only be amended with a three-quarters vote in the legislature. By adopting the petition, the legislature needed only a simple majority to amend it.
Since the state’s Office of Attorney General had issued conflicting opinions about the legality of this “adopt-and-amend” practice, the legislature asked the court to provide an authoritative opinion.
As reported previously in Compliance Corner, the new law revises the original law's provisions by exempting more employers, lowering the leave accrual and use requirements, and repealing employees' ability to sue employers for violations.
Specifically, among other things, the bill would amend the Earned Sick Time Act to do all of the following:
- Rename the act the Paid Medical Leave Act.
- Lower the number of hours that could generally be accrued from 72 to 40, and provide that an eligible employee could accrue one hour for every 35 hours worked, instead of one for every 30.
- Limit the application of the law to employers with 50 or more employees.
- Eliminate relatives of a domestic partner from the list of qualifying family members for whom the employee could use paid medical leave time.
For the time being, the Paid Medical Leave Act, as adopted and amended, stands. Employers with employees residing in Michigan should comply with it. However, an actual lawsuit challenging the law is a real possibility so employers should keep an eye on legal developments.
Q&A on New Infertility Treatment Coverage Mandate for Fully Insured Plans
On December 3, 2019, the Department of Financial Services published Q&A guidance on the new in-vitro fertilization (IVF) and fertility preservation law that took effect on January 1, 2020. The new law, passed earlier in 2019, applies to fully insured plans issued in New York, and requires large groups (100+ employees) to provide coverage for three cycles of IVF used in the treatment of infertility. That coverage may be subject to appropriate annual deductibles and coinsurance, and “infertility” is defined as a disease or condition characterized by the incapacity to impregnate another person or to conceive, defined by the failure to establish a clinical pregnancy after 12 months of regular, unprotected sexual intercourse or therapeutic donor insemination, or after six months of regular, unprotected sexual intercourse or therapeutic donor insemination for a female 35 years of age or older. A “cycle” is defined as all treatment that starts either when preparatory medications are administered for ovarian stimulation for oocyte retrieval with the intent of undergoing IVF using a fresh embryo transfer, or when medications are administered for endometrial preparation with the intent of undergoing IVF using a frozen embryo transfer.
The Q&A provides some clarification on the applicability of the law (it applies to grandfathered plans, but not self-funded plans), and IVF and fertility preservation relating to covered services, cost-sharing (deductibles and coinsurance), medical necessity and drug formularies, and coordination of coverage. Of interest for IVF coverage, the Q&A clarifies that medications, including prescription drugs, are covered under the IVF benefit, and that carriers must cover egg and/or embryo storage if medically necessary until the three required IVF cycles are provided. Two questions confirm that the law does not permit annual dollar limits, but that it would allow lifetime limitations (limit could be three cycles of IVF over the life of the insured). The Q&A also states that age restrictions are not permitted for IVF coverage, and that any IVF treatments completed prior to January 1, 2020, will not count toward the IVF law’s three-cycle per lifetime limit.
Of interest for fertility preservation coverage, the Q&A confirms that standard fertility preservation services that must be covered include the collection, preservation, and storage of ova or sperm, and that the law requires coverage for standard fertility preservation services when medical treatment would directly or indirectly cause iatrogenic infertility. The law allows carriers to require prior authorization for fertility preservation services, and impose formulary requirements on prescription drugs (with some limitations under other related New York laws).
The Q&A also states that the law does not permit annual or lifetime dollar limitations on fertility preservation services, and that there can be no age restrictions on coverage. According to the Q&A, carriers can limit fertility preservation coverage only to in-network providers (unless the carrier doesn’t have an in-network provider with the appropriate training and expertise to meet the needs of the insured individual).
Employers with fully insured plans in New York should review the Q&A and work with carriers with regard to coverage for their employees. While the requirements are on the carrier, employers should be prepared to address questions from employees regarding their IVF and fertility preservation coverage.
New Guidance on E-Cigarette Cessation Coverage
On December 11, 2019, the Department of Financial Services published Circular Letter No. 12 (2019), which relates to coverage for e-cigarette cessation treatment coverage. According to the bulletin, and according to New York law, fully insured health plans in New York must provide coverage for smoking cessation treatment, including cessation treatment for those who use e-cigarettes. This includes nicotine use screening, behavioral interventions, and FDA-approved pharmacotherapy at no cost-sharing for adults, in addition to behavioral interventions (including educational and behavioral therapy for cessation for minors) at no cost-sharing.
Employers with fully insured plans in New York should be aware of the new coverage requirements, although there are no specific compliance obligations as a result of the bulletin.
New Guidance on Health Insurance Coverage for Contraceptive Services
On December 18, 2019, the Department of Financial Services published Supplement No. 3 to Insurance Circular Letter No. 1 (2003), which relates to health insurance coverage for contraceptive services. The bulletin states that Chapters 25 and 27 (new laws enacted in 2019) make changes to New York insurance laws that apply to contracts issued, amended, renewed, effective, or delivered on or after January 1, 2020.
Chapters 25 and 27 require fully insured plans (including grandfathered plans) to provide coverage for all contraceptive drugs, devices, and products approved by the FDA. This includes all FDA-approved over-the-counter contraceptive drugs, devices and other products as prescribed or as otherwise authorized under state or federal law that are provided for in federal guidelines. This also includes voluntary sterilization; patient education and counseling on contraception; follow-up services related to contraceptive drugs, devices, products, and other procedures (including management of side effects, counseling for continued adherence, and device insertion and removal); and prescription and over-the-counter emergency contraception.
That said, where the FDA has approved one or more therapeutic and pharmaceutical equivalent versions of a contraceptive drug, device, or product, the carrier is not required to include all of the therapeutic and pharmaceutical equivalent versions in its formulary, so long as at least one is included and covered without cost-sharing. Carriers do have to allow for the dispensing of the entire 12-month supply of a contraceptive at the same time, and may not impose any restrictions or delay on the coverage (such as preauthorization, step-therapy protocols, or quantity limits on a 12-month supply or less).
The bulletin requires no new employer compliance obligations. But employers with fully insured plans in NY should be aware of the new contraceptive coverage requirements.
Reminder: Surprise Billing Law Effective January 1, 2020
As reported in the October 18, 2019, edition of Compliance Corner, on June 14, 2019, Gov. Abbott signed Senate Bill 1264 into law. Employers who offer health care benefits to employees through Texas state-regulated health plans should be aware that this law became effective on January 1, 2020.
The law requires health insurers and health care providers to resolve billing disputes that arise when an out-of-network provider is paid less by the insurer than what the provider charged for a health care service or medical procedure. Before the law came into effect, the out-of-network provider would charge the patient the difference between the total cost of the service or procedure and what the insurer paid, a practice known as “balance billing” or “surprise billing.”
Effective January 1, 2020, this practice is prohibited in emergency care situations involving patients covered by Texas state-regulated health plans. Instead, the insurer and provider must resolve these issues through an arbitration or mediation process established by the Texas Department of Insurance (TDI). Rules put in place by TDI also require waivers from balance billing provisions when patients covered by Texas state-regulated health plans have a choice between out out-of-network providers and in-network providers. The rules give patients 10 days to make that choice.
The law involves no new employer compliance obligations, but employers with fully insured plans should be aware of this law.
Reminder: Surprise Billing Law Effective January 1, 2020
As reported in the October 18, 2019, edition of Compliance Corner, on May 21, 2019, Gov. Inslee signed the Balance Billing Prevention Act into law. Employers who offer health care benefits to employees through Washington state-regulated health plans should be aware that this law became effective on January 1, 2020. Note that self-insured plans can opt into the law after notifying the Office of the Insurance Commissioner at least 30 days in advance of when it intends to participate in and follow the Balance Billing Protection Act. If the plan is administered by a third-party administrator, that administrator also must comply with the law.
The new Balance Billing Protection Act prevents people from getting a surprise medical bill when they receive emergency care from any hospital or if they have a scheduled procedure at in-network facility and receive care from an out-of-network provider. The act also includes arbitration for disputes between insurers and providers regarding the price for those services, a notice requirement describing a patient’s rights and letting them know when they can and cannot be balance billed, and a requirement that the amount an insurer pays an out-of-network provider must be “commercially reasonable” as determined by payments made for the same or similar service in a similar geographic area.
The law involves no new employer compliance obligations, but employers with fully-insured plans should be aware of this law.
Paid Family and Medical Leave Notices and Posters Available
Washington recently provided model family and medical leave notices and posters. As background, Washington’s Paid Family & Medical Leave program became effective on January 1, 2020. We discussed this law in the November 28, 2019, edition of Compliance Corner.
Employers with employees who reside in Washington state must display a poster in their places of business to notify employees about the Paid Family and Medical Leave program. In addition, employers are required to provide notice within five business days of becoming aware of any employee who is taking time off for more than seven consecutive days of work to care for a family member or their own serious health condition.
Employers should ensure that they comply with the law by issuing the required notices and posters.
Seattle Commuter Benefits Ordinance Effective January 1, 2020
Effective January 1, 2020, businesses based in Seattle with twenty or more employees must offer those employees who work an average of ten hours or more per week the ability to deduct transit or vanpool expenses from an employee’s wages up to the maximum allowed by federal tax law. As an alternative, the employer may provide a transit pass that is either fully or partially subsidized. The employer must offer this benefit within 60 calendar days of the employee’s start date.
The Seattle Office of Labor Standards is developing rules to support the ordinance, including documentation requirements. Seattle employers covered by the ordinance should determine how they will implement these benefits and how they will comply with the rules.
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.
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Can an employee remove their spouse from coverage during open enrollment in anticipation of a divorce?