2019 End of Year Plan Sponsor “To Do” List (Part 1) Health & Welfare

Snell & Wilmer

As 2019 comes to an end, we are pleased to present our traditional End of Year Plan Sponsor “To Do” Lists. This year, we present our “To Do” Lists in four separate Employee Benefits Updates. This Part 1 covers year-end health and welfare plan issues. Parts 2, 3, and 4 will cover executive compensation issues, qualified plan issues, and cost-of-living increases, but not necessarily in that order. We are publishing Part 1 to coincide with fall open enrollment. We expect to publish the other Parts in late October or early November. Each Employee Benefits Update provides a checklist of items to consider before the end of 2019 or in early 2020. As always, we appreciate your relationship with Snell & Wilmer and hope that these “To Do” Lists help focus your efforts over the next few months.

Almost three years into Donald Trump’s presidency, the Affordable Care Act (“ACA”) lives on despite efforts to dismantle it. No significant changes have been made to ACA other than the repeal of the individual mandate, which took effect January 1, 2019. The repeal of the individual mandate had little impact on employer group health plans, although it spawned a significant case challenging the lawfulness of ACA. As reported in our December 18, 2018 SW Benefits Blog, ”Texas Judge Declares the Affordable Care Act Unconstitutional – What’s Next?,” a Fifth Circuit judge found the whole of ACA to be unconstitutional on December 14, 2018. After the ruling, the agencies responsible for enforcing ACA announced that the ruling was not final and they will continue to enforce the law while an appeal pends. The case (discussed in more detail below), will decide, hopefully for once and all, the constitutionality of ACA, which has already survived numerous legal challenges. As we await a ruling, ACA is still the law of the land and employers must continue to comply.

Part 1 - Health & Welfare Plans “To Do” List

  • Affordable Care Act Lawsuit: On December 14, 2018, Judge Reed O’Connor of the U.S. District Court for the Northern District of Texas ruled the whole of ACA to be unconstitutional in Texas v. United States of America, No. 4:18-cv-00167. Judge O’Connor agreed with the plaintiffs’ allegations that the repeal of the individual mandate “renders legally impossible” the Supreme Court’s prior savings construction of ACA and that the individual mandate is not severable from the rest of ACA. On December 30, 2018, Judge O’Connor granted a stay of his December 14 ruling until appeal of the case is complete. Many legal scholars consider Judge O’Connor’s opinion to be a shocking and overly broad ruling and believe that judicial invalidation of the whole of ACA, when Congress only invalidated the individual mandate, violates the doctrine of severability. The Department of Justice (“DOJ”) is also facing criticism for its dramatic shift of position in the case. Before Judge O’Connor’s ruling, the DOJ agreed that ACA was severable from the individual mandate. Subsequently, the DOJ changed course to express support for the judge’s ruling in a brief filed with the Fifth Circuit on May 1, 2019. The lawsuit is now before the Fifth Circuit where a three-judge panel heard oral arguments on July 9, 2019. The Fifth Circuit is expected to issue a ruling this fall. For now, ACA remains the law of the land, and employers should continue with compliance efforts.
  • Comply with Large Employer Shared Responsibility Rules if Applicable, or Face Penalties: In the fall of 2017, the Internal Revenue Service (“IRS”) began issuing Letters 226J to enforce penalties under Code Section 4980H. 2020 will be the sixth year large employers are operating under the large employer shared responsibility penalties. Large employers can be subject to penalties if any full-time employee receives a premium tax credit and either: (a) the employer fails to offer minimum essential coverage (“MEC”) to 95% of its full-time employees (and their dependents); or (b) the coverage is either not affordable or does not provide minimum value. Missing the 95% test even slightly, for example, coming in at 94%, will require the employer to pay a $2,570 (for 2020) annual penalty for each full-time employee (minus the first 30 full-time employees). The rules are explained in more detail in our Health Care Reform’s Employer Shared Responsibility Penalties: A Checklist for Employers. Below are important penalties, percentages, and premiums under Code Section 4980H, as adjusted:
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Code Section 4980H Adjusted Penalties, Affordability Percentages, and Federal Poverty Level (“FPL”) Allowable Premium

 

2015

2016

2017

2018

2019

2020

Code Section 4980H(a) $2,000 penalty for failing 95% offer of coverage test

$2,080 annual or $173.33 monthly

$2,160 annual or $180 monthly

$2,260 annual or $188.33 monthly

$2,320 annual or $193.33 monthly

$2,500 annual or $208.33 monthly

$2,570 annual or $214.16 monthly

Code Section 4980H(b) $3,000 penalty for coverage failing to be minimum value and affordable

$3,120 annual or $260 monthly

$3,240 annual or $270 monthly

$3,390 annual or $282.50 monthly

$3,480 annual or $290 monthly

$3,750 annual or $312.50 monthly

$3,860 annual or $321.66 monthly

Code Section 4980H percentage for W-2, rate of pay, and FPL affordability safe harbors

9.56%

9.66%

9.69%

9.56%

9.86%

9.78%

FPL compensation amount posted in January for 48 Contiguous United States (FPLs are higher for Alaska and Hawaii)

$11,770

$11,880

$12,060

$12,140

$12,490

To be announced in January 2020

FPL monthly allowable premium for calendar year plans (using FPL for 48 contiguous United States)

$11,670 x 9.56%/12 =$92.97 or $11,770 x 9.56%/12 =$93.76

$11,770 x 9.66%/12 =$94.74 or $11,880 x 9.66%/12 =$95.63

$11,880 x 9.69%/12 =$95.93 or $12,060 x 9.69%/12 =$97.38

$12,060 x 9.56%/12 =$96.07 or $12,140 x 9.56%/12 =$96.71

$12,140 x 9.86%/12 = $99.75 or $12,490 x 9.86%/12 = $102.62

$12,490 x 9.78%/12 = $101.79 or $_______ x 9.78%/12 = $_____*
* This amount cannot be calculated until January 2020 FPLs are published

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  • Consider Amendments to Align Plan with Code Section 4980H Full-Time Employee Determinations: Some employers are making eligibility determinations under their health plans align with full-time employee status under Code Section 4980H. Employers who want to do so may need to amend their health plans to reflect these complicated eligibility rules. Employers may also need to consider how to administer COBRA if they are using the look-back measurement method to determine full-time status under Code Section 4980H.
  • Do Code Sections 6055 and 6056 Reporting:
  • All Employers with Self-Insured Health Plans are Required to Report MEC: Code Section 6055, which was added by ACA, requires all entities providing MEC to submit information concerning each covered individual for the calendar year to the IRS and to certain covered individuals. MEC is broadly defined to include any group health plan or group health insurance that is not an excepted benefit (such as a stand-alone dental or vision plan). Reporting is again required in early 2020 for coverage offered in 2019. The deadlines for this reporting are set out below. Unlike Code Section 6056 (discussed below), all employers sponsoring self-insured health plans are required to report on all covered employees, regardless of the size of the employer or the status of the covered employee (e.g., part-time). Employers sponsoring insured health plans are not required to comply because the insurance company is required to complete the reporting. However, such employers may need to collect and provide employee information to the insurer so that the insurer can meet its Code Section 6055 obligations. Generally, entities reporting under Code Section 6055 are required to use Form 1094-B (the IRS transmittal form) and Forms 1095-B (individual statements). Large employers sponsoring self-insured health plans may use combined reporting to comply with both Code Section 6055 and Section 6056 by completing one form per individual, permitting large employers sponsoring self-insured health plans to disregard Forms 1094-B and 1095-B.
  • Large Employers are Required to Report on Health Coverage Offered to Full-Time Employees: Code Section 6056, which was also added by ACA, requires applicable large employers to report to the IRS information regarding health coverage offered to full-time employees for each calendar year. Reporting is again required in early 2020 for coverage offered in calendar year 2019. The deadlines for this reporting are set out below. Additionally, applicable large employers are required to provide individual statements to each full-time employee regarding the type of coverage that was offered to that employee during 2019. All applicable large employers are required to comply, regardless of whether the employer sponsors a self-insured or fully insured health plan, or if the employer does not offer health coverage to its employees. Employers are required to use Form 1094-C (the IRS transmittal form) and Forms 1095-C (the individual statements) to complete this reporting.
  • Reporting Deadlines: While the IRS has provided an extended deadline for certain information reporting under Code Sections 6055 and 6056 in prior years, as of the date of this Employee Benefits Update, no such extensions have been announced for reporting offers of coverage for 2019. Prior year extensions usually have been announced at year-end. An extension may yet be published for the 2019 calendar year. Absent an extension, the following deadlines apply:

Code Section 6055: Health Coverage Reporting

Form

Filing Deadline

Form 1095-B (to employees)

January 31, 2020

Form 1094-B (to IRS)

February 28, 2020 (paper filing)
March 31, 2020 (electronic filing)

 

Code Section 6056: Employer-Provided Health Insurance Offer and Coverage Reporting

Form

Filing Deadline

Form 1095-C (to employees)

January 31, 2020

Form 1094-C (to IRS)

February 28, 2020 (paper filing)
March 31, 2020 (electronic filing)

  • Penalty Assessments for Coverage Failures: The IRS continues to enforce the large employer shared responsibility penalties under Code Sections 4980H(a) and 4980H(b). To that end, the IRS has been issuing Letters 226J to certain applicable large employers who failed to offer compliant health care coverage under Code Section 4980H. Employers that receive a Letter 226J are required to respond within 30 days or request an extension. If an employer does not respond within the 30-day period (plus any extension), the IRS will assess the penalty indicated in the Letter 226J and will issue a notice and demand for payment. The penalty amounts for 2015 through 2020 are set forth above.
  • Penalty Assessments for Late or Incorrect Filings: In addition to penalty assessments for coverage failures under Code Sections 4980H(a) and 4980H(b), as described above, the IRS has begun assessing penalties against applicable large employers that failed to file, or filed incomplete or inaccurate information returns. These penalties can be significant. Late filing penalties are assessed on a graduated basis based on the length of time that has elapsed from the filing deadline. Penalties range from $50 per form for returns filed within 30 days of the filing deadline to $270 per form for returns filed after August 1 of the applicable year. These penalties substantially increase if the failure is the result of intentional disregard. Note that the IRS may offer penalty relief on a showing of good faith and reasonable cause.
  • Record Retention: The IRS has not provided specific guidance about records that should be kept to demonstrate compliance with the requirements of Code Section 4980H and its related reporting requirements. Nevertheless, employers should give careful consideration to all potential records that might be needed to defend against penalty assessments. In particular, employers should consider retaining vendor communications regarding qualifying offers of coverage, confirmation of enrollment information, employee waivers, Forms 1094-C and 1095-C, and other related documents for the 2015 calendar year to the present. For more information about record retention in this context, see our SW Benefits Blog of April 25, 2019, “IRS Letters 226J: Having the Right Section 4980H Records Can Be Worth a Small Fortune.”
  • Review Plan Eligibility Provisions in Light of California Assembly Bill 5: As reported in our recent Legal Alert, “A New Law Passed Raising the Standard for Classifying Workers as Independent Contractors in California,” California Assembly Bill 5 (“AB 5”) sets forth a new test for determining whether workers are employees or independent contractors for purposes of the California Labor and Unemployment Insurance Codes. Employers with operations in California are now tasked with ensuring they properly classify workers in light of AB 5. As a reminder, most health and welfare plans are governed by ERISA and the Code, both of which have their own tests for determining whether workers are employees. As employers examine their workforce under AB 5, they also should consider whether any reclassified workers are employees for purposes of ERISA and the Code. Employers should then review the eligibility provisions of their employee benefit plans to ensure that plan coverage is consistent with the employer’s intent.
  • Follow State Individual Mandate Laws and Associated Reporting: Despite the repeal of the individual mandate under ACA, some states have, or are considering their own statewide individual mandate. A Kaiser survey indicates that six states have enacted individual mandate requirements including: California, D.C., Massachusetts, New Jersey, Rhode Island, and Vermont. Accordingly, employers, particularly those with operations in these states, may want to track developments in this area so they can be prepared to comply with any state obligations. Some states require reporting.
  • Consider Providing Free Preventive Care for Chronic Conditions: As reported in our August 8, 2019 SW Benefits Blog, “Preventive Care Can Now Be Covered for Specified Chronic Conditions Before HDHP Deductible,” in July the IRS released Notice 2019-45 that now allows health plans to provide free preventive care before a deductible is met for certain chronic conditions, such as asthma, diabetes, and heart disease, without jeopardizing a plan’s status as a high deductible health plan (“HDHP”). The Notice is effective July 17, 2019. Before IRS Notice 2019-45 was released, free preventive care for certain chronic conditions could not be provided under an HDHP before the deductible was met because prior IRS guidance provided that preventive care generally does not include any service or benefit intended to treat an existing illness or injury. Now, in addition to items that are preventive care under prior guidance, the medical services and drugs for certain chronic conditions are deemed to be preventive care for someone with that chronic condition. The Appendix to the Notice contains an exhaustive list of the medical services and drugs that are deemed to be preventive care for the treatment of the specified chronic conditions. Health plans must be careful that they do not provide free preventive care for chronic conditions beyond what is listed in the Appendix. Doing so could cause a health plan to not be an HDHP, rendering all participants, not just those who receive free preventive care for chronic conditions, ineligible to make or receive health savings account (“HSA”) contributions. Employers that want to take advantage of these new rules may need to coordinate with third party administrators (“TPA”), adopt plan amendments, and prepare employee communications explaining the new rules.
  • Consider Whether to Count Drug Discounts Toward Maximum Out-of-Pocket Limits: The Department of Health and Human Services (“HHS”) indicated in its Notice of Benefit and Payment Parameters (“NBPP”) for 2020 Rules that for plan years beginning on or after January 1, 2020, if a health plan covers a medically appropriate and available generic equivalent, the health plan can exclude the value of the drug manufacturers’ coupons from a participant’s maximum out-of-pocket limit (“MOOP”). The rule implies that if a health plan does not cover a medically appropriate generic equivalent, or such generic equivalent is not available, the health plan must count coupons toward MOOP. HHS, the Department of Labor (“DOL”) and Treasury (collectively the “Departments”) subsequently acknowledged in an FAQ that counting coupons toward MOOP contradicts IRS Notice 2004-50, Q&A 9. Q&A 9 requires an HDHP to disregard drug discounts and other manufacturers’ and providers’ discounts in determining if the minimum deductible for an HDHP has been satisfied and only allows amounts actually paid by the individual to count against the deductible. Consequently, the Departments have decided not to require group health plans to count coupons against deductibles or MOOP until future guidance is issued.
  • Self-Funded Plans: Sponsors of self-funded plans may decide the safer approach is to rely on the Departments’ non-enforcement relief and not count drug discounts or coupons towards deductibles or MOOP. This way they do not risk disqualifying their HDHPs or rendering their HDHP participants HSA-ineligible.
  • Insured Plans: Sponsors of insured plans may also decide the safer approach is to not count drug discounts or coupons toward deductibles or MOOP. However, in some states, sponsors may be restricted by state insurance laws. Currently, Arizona, Illinois, Virginia, and West Virginia have their own rules regarding when drug discounts and coupons count towards MOOP, deductibles, copayments, coinsurance, or other applicable cost sharing requirements. Employers who offer insured health plans in those states need to consider whether these state laws mean their health plans cannot operate as HDHPs, which would also make participants HSA-ineligible.
  • For more information regarding this issue, please see our October 10, 2019, SW Benefits Blog, “Must Drug Manufacturer Coupons Count Toward Annual Maximum Out-Of-Pocket Limits? Stay Tuned …”
  • Consider Duty to Monitor TPAs for Cross Plan Offsetting Practices: “Cross plan offsetting” occurs when a TPA mistakenly overpays an out-of-network provider under one plan, and then to recover such amounts, underpays that same provider under another plan. In Peterson v. UnitedHealth Group, Inc., 913 F.3d, 769 (8th Cir. 2019), the Eighth Circuit ruled that it was not reasonable to rely on generic grants of administrative authority to interpret a plan as authorizing cross-plan offsetting. While the Court did not expressly permit or prohibit cross-plan offsetting, it noted that the practice “is in some tension with ERISA” and “is questionable at the very least.” Meanwhile, the DOL clearly opposes cross-plan offsetting and has taken the position in an amicus brief that it violates ERISA Sections 404 (duty of loyalty) and 406 (prohibited transactions). Although the courts have yet to rule on whether cross-plan offsetting violates ERISA, plan sponsors may want to consider whether their TPAs engage in this practice and if so, further evaluate the risk and update their plan language to allow the practice if necessary.
  • Monitor Federal Legislation Regarding Surprise Billing: The term “surprise billing” refers to the high, unexpected bills, when an insured individual unintentionally receives care from an out-of-network provider. This occurs most often when an individual receives planned services from an in-network provider, but an out-of-network provider is brought in for ancillary services (e.g., an anesthesiologist or radiologist). Employers often wrestle with how to handle surprise bills, including whether they should intervene and if so, what are they legally permitted to do. Although there currently is no good answer, Congress is working on a bipartisan solution and there could be legislation by year end. For patients, the proposals indicate they would pay providers an amount based on their in-network cost-sharing requirements and providers would be prohibited from balance-billing the remainder. For insurance companies/self-funded plans, the proposals indicate that the health plan would pay providers an amount based on a market-based benchmark or arbitration (or some combination thereof). The Trump Administration is also committed to protecting patients from surprise billing as demonstrated by its May 9, 2019 Fact Sheet and the President’s June 24, 2019 Executive Order, which, in relevant part, requires HHS to submit a report to the President on surprise billing.
  • Two New HRA Options for 2020: Effective January 1, 2020, there are two new health reimbursement arrangements (“HRAs”) that both small and large employers may offer to employees – Individual Coverage HRAs (“ICHRAs”) and Excepted Benefit HRAs (“EBHRAs”). A longer overview of these two new HRAs is provided in our September 5, 2019 SW Benefits Update, “Zombie Benefits Part II: Health Reimbursement Arrangements (“HRAs”) Are Back From the Dead.” A shorter overview is shown in the chart below. The final regulations are long, incredibly complex, and in some cases require advance notice to employees. Accordingly, employers wanting to offer one of these new HRAs as of January 1, 2020 need to move quickly, prepare plan documents and summaries, and timely distribute applicable notices. The Agencies have issued a News Release, Frequently Asked Questions (“FAQs”), a Model ICHRA Notice, and two Model ICHRA Attestations (for annual and ongoing substantiation). The FAQs provide a helpful overview of the new HRA requirements. Additional details can be found in the final regulations. In addition, on September 30, 2019, the IRS issued proposed regulations to clarify how Section 4980H and Section 105(h) apply to ICHRAs. The proposed regulations are intended to facilitate employers adopting ICHRAs.

 

Individual Coverage HRA ("ICHRA")

Excepted Benefit HRA (“EBHRA”)

Key Requirements

  1. Participants must be enrolled in individual health coverage (“IHC”) that satisfies certain requirements;
  2. no traditional employer group health plan may be offered to the same class of participants;
  3. the same terms and benefits apply to all participants in a class, with a few limited exceptions, such as number of dependents and age;
  4. participants must be given the right to opt out annually and at termination;
  5. enrollment in IHC must be substantiated (the Agencies have issued a model form); and
  6. written notice of the ICHRA (including specified content) must be provided 90 days before each plan year, and new participants must receive notice before their eligibility date (the Agencies have issued a model notice including the required content). A special rule applies for new ICHRAs for the first plan year.
  1. Participants must be offered a traditional group health plan, but employees are not required to enroll;
  2. maximum $1,800 annual contribution, indexed for inflation;
  3. cannot reimburse premiums for any of the following: individual health coverage (“IHC”); Medicare Parts A, B, C, or D; or group health plan coverage, (other than COBRA coverage); and
  4. the EBHRA must be uniformly available to all similarly situated employees, as defined under HIPAA.

Eligible Expenses

An employer may design an ICHRA to reimburse some, or all, of the following:

  1. premiums for IHC, (including premiums for Medicare Parts A, B, C, and D); and
  2. Code Section 213(d) medical expenses.

An employer may design an EBHRA to reimburse some, or all, of the following:

  1. premiums for excepted benefit (e.g., dental or vision) coverage, short-term limited duration insurance coverage (until further notice), and COBRA coverage; and
  2. Code Section 213(d) medical expenses.

Can the HRA Be Structured to Avoid Code Section 4980H Penalties?

Yes.

No.

  • Association Health Plans: As explained in our SW Benefits Blog of June 29, 2018 “Association Health Plans – A New Frontier?” the DOL published a final association health plan (“AHP”) rule on June 21, 2018 that allows unrelated employers to participate in a single employer group health plan. On March 28, 2019, the U.S. District Court for the District of Columbia struck down key provisions of the final rule in State of New York v. United States Department of Labor for being an “end-run around” ACA and for doing “violence” to ERISA. The DOL filed a notice of appeal on April 26 and the appeal is now before the D.C. Circuit. After the March 28 ruling, the DOL issued additional guidance addressing the status of AHPs, including an official statement and two Q&As (Part 1 and Part 2). Under the guidance, the DOL will not pursue any enforcement actions against AHPs formed prior to the March 28 ruling in good faith reliance on the final rule’s validity (subject to certain conditions). Such plans can continue to provide benefits to members who enrolled in good-faith reliance on the final rule through the remainder of the applicable plan year. However, new AHPs cannot be formed during the interim period and AHPs formed prior to the March 28 ruling in good faith reliance on the final rule’s validity cannot market to, or sign up, new employer members.
  • Consider Impact of Nondiscrimination Rules: Employers may want to consider the impact of the following nondiscrimination rules in the context of providing health and welfare benefits:
  • Section 1557 of ACA: Final regulations implementing Section 1557 of ACA prohibit individuals from being excluded from participation, denied benefits, or subjected to discrimination under any health program or activity that receives federal financial assistance from HHS on the basis of race, color, national origin, sex, age, or disability. In part, the final rule focused on the provision of health services to transgender participants and prohibited the blanket exclusion of services designed to treat gender dysphoria and to assist in gender transition. Since taking effect in 2016, the regulations have faced sustained legal challenges. The Trump Administration ultimately withdrew, revised and reissued the regulations as of June 14, 2019. The proposed regulations would repeal large portions of the original nondiscrimination rules and would redefine the scope of various protections under Section 1557. Specifically, the revised regulations would negate the provisions of Section 1557 covering nondiscrimination based on sex and gender identity. By amending these provisions, HHS would eliminate the prohibition on categorically refusing coverage to transgender participants and denying treatment that is inconsistent with self-selected gender identity. However, many employers who decided to cover or expand transgender benefits under the prior rule will likely not reverse coverage. For more information on the proposed changes to Section 1557, see our SW Benefits Blog of June 10, 2019, “Reassigning Section 1557: Trump Administration Proposes Reversal of Transgender Benefits Rule.”
  • Federal Contractors: Final regulations issued by the Office of Federal Contract Compliance Programs (“OFCCP”) on June 15, 2016, extended nondiscrimination principles similar to those embodied in (the unamended) Section 1557 to employers holding federal contracts valued in excess of $10,000 in any 12-month period. These rules prohibited the categorical exclusion of health care coverage related to gender dysphoria or gender transition and became effective August 15, 2016. A directive published by the OFCCP on August 10, 2018, purports to exclude religious corporations, associations, educational institutions or societies from this nondiscrimination rule to the extent the rule conflicts with the religious tenets of the entity. By notice of proposed rulemaking dated August 15, 2019, the DOL indicated that it would further limit the application of the transgender nondiscrimination rules in favor of religious and other considerations.
  • Title VII of the Civil Rights Act of 1964: While Section 1557 of ACA and the federal contractor rule are both now limited in scope and application, the discrimination that those rules targeted may be prohibited by other federal laws. For instance, Title VII prohibits employers from discriminating against employees with respect to compensation, terms, conditions, or privileges of employment because of such individual’s race, color, religion, sex, or national origin. The Equal Employment Opportunity Commission (the “EEOC”) has ruled that discrimination based on sexual orientation is a form of sex discrimination prohibited under Title VII. Accordingly, Title VII may require that: (1) employers offer some level of transgender coverage under their health plans; and (2) spousal and domestic partner benefits be sexual-orientation neutral. Case law in this area continues to develop. In fact, the DOJ recently filed a brief before the Supreme Court arguing that “sex” in the context of Title VII means “biological sex” and does not encompass “gender identity.”
  • Other Nondiscrimination Considerations: Despite the changes to the principle of nondiscrimination with respect to gender identity, employers may wish to consider other business criteria when deciding whether to extend certain benefits to transgender individuals. In particular, the 2020 Human Rights Campaign Corporate Equality Index, a national benchmarking tool on employer policies affecting LGBTQ employees, considers whether an employer excludes transgender benefits from its benefit plans. The Human Rights Campaign has indicated that for a business to achieve a perfect score on the Corporate Equality Index, an employer must remove transgender exclusions from its benefit plans.
  • Be Proactive with HIPAA Compliance: As indicated in our May 4, 2015, SW Benefits Blog, “HIPAA ‘Phase 2’ Audits: Are You Ready?,” HHS’s Office for Civil Rights (“OCR”) implemented its HIPAA Phase 2 Audit Program in 2016. During these audits, OCR has been focusing on reviewing the policies and procedures adopted and employed by covered entities and their business associates to ensure compliance with HIPAA’s Privacy, Security, and Breach Notification Rules. HHS has not updated its website regarding the status of the Program since December 1, 2016 so presumably the Program has not concluded. Notwithstanding the status of the Phase 2 Audit Program, employers would be wise to continue their compliance efforts and may want to consider the following:
  • Review OCR Cybersecurity Resources: OCR issues quarterly cybersecurity newsletters, available here, to educate covered entities and business associates about various security threats and vulnerabilities (including steps they can take to minimize such threats), and how to reduce breaches of electronic protected health information (“ePHI”).
  • Update HIPAA Policies and Procedures and Business Associate Agreements: Employers may want to consider reviewing and, if necessary, updating their HIPAA privacy and security policies and procedures. As a general matter, the IT department is integral to an employer’s HIPAA compliance, and therefore should be involved when drafting, reviewing, and updating HIPAA policies and procedures. In addition, employers may want to consider ensuring that they have updated business associate agreements (“BAAs”) with all business associates, including cloud service providers. For more information on the requirement to establish and maintain HIPAA privacy and security policies and procedures, please see our March 14, 2017, SW Benefits Blog, “HIPAA Checkup – How Good Are Your Policies and Procedures?.”
  • Be Aware of a New Compliance Review Program: The CMS Division of National Standards, on behalf of HHS, launched the Compliance Review Program to ensure compliance among covered entities with HIPAA Administrative Simplification rules for electronic health care transactions. HHS will randomly select health plans and clearinghouses to assess compliance with: (1) transaction formats; (2) code sets; and (3) unique identifiers. Participants in the Program will also have to attest whether they comply with the operating rules, which are required by ACA and are defined as “the necessary business rules and guidelines for the electronic exchange of information that are not defined by a standard or its implementation specifications.” For more information on the Program, please see our April 22, 2019, SW Benefits Blog, “HHS to Start Randomly Selecting Health Plans for HIPAA Compliance – Are You Ready?.”
  • Keep an Eye Out for Updated HIPAA Guidance: In December 2018, HHS issued a request for information seeking comments on ways to modify and develop new HIPAA Privacy and Security Rules. The topics included: (1) how to promote information sharing for treatment and care coordination; (2) how to facilitate parental and caregiver involvement and address the opioid crisis and serious mental illness; (3) how individuals can obtain a meaningful accounting of disclosures; (4) whether certain Notice of Privacy Practices requirements for providers should be eliminated or modified; and (5) how to remove regulatory obstacles, reduce regulatory burdens to facilitate care coordination, and promote value-based health care transformation.
  • Note the Revised HIPAA Penalties: OCR announced here, that in 2018 it collected an all-time record of $28.7 million from enforcement activity. Then, surprisingly, in April 2019, it issued a Notification of Enforcement Discretion Regarding HIPAA Civil Money Penalties, where it reduced cumulative annual civil money penalty (“CMP”) limits for each of the four penalty tiers in the HITECH Act. The new CMP structure, noted below, is effective indefinitely.

Culpability

Minimum Penalty/Violation

Maximum Penalty/Violation

Annual Limit

No Knowledge

$100

$50,000

$25,000 (changed from $1.5m)

Reasonable Cause

$1,000

$50,000

$100,000 (changed from $1.5m)

Willful Neglect – Corrected

$10,000

$50,000

$250,000 (changed from $1.5m)

Willful Neglect –
Not Corrected

$50,000

$50,000

$1,500,000

  • Review Wellness Programs: Depending on the particular benefits a wellness program offers, a wellness program may be subject to a unique combination of varying requirements under statutes such as ERISA, the Code, HIPAA, ADA, GINA, and COBRA, to name a few. This leaves substantial compliance risk when trying to design wellness programs. Minor changes can have a major impact. Periodically reviewing wellness offerings may help avoid costly mistakes. For more information please see our September 20, 2018, SW Benefits Blog, “New Plan Year, New Wellness Program – Some Things to Keep in Mind.”
  • Consider Incentive Limits: In the August 22, 2017, AARP v. EEOC (D.D.C., No. 1:16-cv-02113) decision, the District Court for the District of Columbia ordered the EEOC to review the ADA and GINA final rules and to consider whether the 30% incentive/penalty renders participation in a wellness program “involuntary” and thereby violates the statutes. On December 20, 2017, the Court ordered that such incentive/penalty provision be vacated effective January 1, 2019. One year later, the EEOC issued final rules, formally removing the 30% incentive provisions from its regulations effective January 1, 2019. Because employers can no longer rely on the EEOC’s old rules to demonstrate that their financial incentive is voluntary, employers may want to consider reevaluating the financial incentives under their wellness programs until the EEOC issues updated guidance. For more information please see our May 17, 2018, SW Benefits Blog, “Wellness Rules Under the ADA – Will There Ever Be Certainty?.”
  • Include ADA Notice with Open Enrollment Wellness Program Communications: Although the Court vacated the ADA’s 30% incentive provision, the other provisions under the ADA wellness rules, such as the ADA Notice requirement, remain in effect. In 2016, the EEOC published a Sample Notice for Employer-Sponsored Wellness Programs to assist employers in complying with the requirements of the ADA final rule. Employers who offer wellness programs subject to the ADA are required to send a tailored notice to all employees eligible to participate in an employer’s wellness program. The EEOC requires that employees receive a notice before submitting certain health information so that employees can decide whether they would like to participate in the program. The notice can be provided in any format that will be effective in reaching employees, including email or hard copy.
  • Consider Whether to Compensate Employees During Participation in Voluntary Wellness Activities: On August 28, 2018, the DOL released an opinion letter stating that employers do not have to pay employees for time spent participating in employer-provided voluntary wellness programs. If, however, the activity occurs during an employee’s 20-minute work break, the employer is required to still pay the employee during the break because that time is ordinarily compensable regardless of how the employee spends the time.
  • Consider Taxation of Wellness Incentives: On April 14, 2016, the IRS issued IRS Memorandum 201622031, which provides clarification regarding taxation of certain wellness program incentives. Many employer-provided wellness incentives, such as cash rewards or gym membership reimbursements, are required to be taxed as income to the employee.
  • Consider Proper Treatment of Genetic Testing Services: The IRS recently issued a private letter ruling (“PLR”) indicating that certain genetic testing services will qualify as medical care under Code Section 213(d) and the taxpayer at issue could use his health flexible spending account to purchase such services. Importantly, the IRS required the taxpayer to allocate which items are medical care (i.e., genotyping) and which items are not medical care (i.e., ancestry services). Although the ruling is not binding precedent, and only the taxpayer at issue may rely on it, it offers employers some insight into the IRS’s position on genetic testing services.
  • Comply with Mental Health Parity Requirements: In general, the mental health parity rules require group health plans to ensure that financial requirements (e.g., co-pays, deductibles, and coinsurance) and quantitative and non-quantitative treatment limitations (e.g., visit limits, days of coverage maximums, and medical necessity standards) applicable to mental health or substance use disorder benefits are no more restrictive than the predominant requirements or limitations applied to substantially all medical/surgical benefits. The parity rules concerning financial requirements and treatment limitations were created by the Mental Health Parity and Addiction Equity Act of 2008 (“MHPAEA”), which supplemented the Mental Health Parity Act of 1996. In November 2013, final regulations were issued implementing the provisions of MHPAEA. The final MHPAEA regulations apply to group health plans for plan years beginning on or after July 1, 2014. Employers sponsoring plans were required to comply with these parity requirements in 2015. Employers who have not done so yet may want to consider reviewing their plans and consulting with their insurers and TPAs to ensure that they are complying with these rules.
  • Enforcement: Agency enforcement is ongoing. On September 5, 2019, the DOL issued a Fact Sheet, Introduction, and Compendium that summarize its mental health parity enforcement data and enforcement strategy for 2018.
  • Guidance: Pursuant to the 21st Century Cures Act, federal agencies are issuing guidance to help improve compliance with the MHPAEA rules. Under this statute, they are also required to audit plans that have violated the rules at least five times. The DOL generally posts its MHPAEA guidance here.
  • Litigation: There continue to be numerous lawsuits claiming various MHPAEA violations. Common issues involve failure to cover autism benefits, particularly Applied Behavior Analysis (“ABA”); failure to cover wilderness therapy for certain mental health or substance use disorders; and failure to cover residential treatment for mental health and substance use disorders. For more information about wilderness therapy, see our SW Benefits Blog of February 6, 2019, “Wilderness Therapy – Should We Give It Another Look?.”
  • Consider Offering Alternatives to Opioids and Access to Addiction Support Services: As can be seen on the White House website, the Trump Administration has prioritized the fight against opioid drug addiction. Accordingly, employers may wish to evaluate benefits they might offer under their group health plans. Multi-disciplinary alternatives to opioids include, for example, physical therapy, acupuncture, and lifestyle counseling. However, employers that are considering covering medical marijuana and cannabis products, should proceed with caution because there is considerable risk including the taxation of such products, and in the worst case scenario the disqualification of the plan upon IRS audit. Employers may also wish to evaluate whether their group health plans impose any treatment limitations (e.g., a fail-first requirement) or exclusions (e.g. excluding methadone for opioid addiction), and if so, whether they comply with federal mental health parity rules.
  • Continue to Track and Comply with ACA Changes: Employers may want to consider moving forward with the implementation of, and compliance with, ACA. See our updated checklist that provides a more detailed summary of the principal requirements under ACA, beginning with those that first became effective in 2010 and continuing through those that will become effective in 2022. The purpose of that checklist is to provide a summary of the principal requirements under ACA that apply to employer-sponsored group health plans. ACA and its related guidance go into much more detail and should always be consulted when considering its application to any particular plan.
  • If a Group Health Plan is a Grandfathered Plan, Review Grandfathered Status: Group health plans that were in existence on or before March 23, 2010, and that have not undergone significant changes since then (“grandfathered plans”) have to comply with some, but not all, of the requirements under ACA. Employers that have made any changes to their health plans or added a wellness component in 2019, or in connection with open enrollment for an upcoming plan year, may want to consider whether those changes cause the plan to lose grandfathered plan status. If grandfathered plan status is lost, the plan is required to comply with additional requirements that apply to non-grandfathered plans as of the date grandfathered plan status is lost. Very few plans still have grandfathered plan status. Those that do are required to make sure that they comply with the grandfathered plan notice requirements.
  • Cover Preventive Services without Cost Sharing in Non-Grandfathered Health Plans: Non-grandfathered group health plans were first required to provide coverage for preventive services without cost sharing for plan years beginning on or after September 23, 2010. Non-grandfathered group health plans were required to cover additional women’s preventive services without cost sharing for plan years beginning on or after August 1, 2012 (i.e., January 1, 2013, for calendar year plans). Plan sponsors and insurers that are subject to the preventive services mandate may want to consider periodically reviewing and updating their plans to ensure that they are covering all the preventive services described in the recommendations and guidelines, which change from year-to-year. Information about the recommendations and guidelines is available here, which is updated periodically. As reported in our June 21, 2017, SW Benefits Blog “Why Isn’t My ‘Free’ Preventive Health Care Free?,” it appears that many providers incorrectly code preventive care services, so the entire procedure is not free as it should be. Employers should consult with their insurers and TPAs to make sure that their employees are receiving the free preventive care to which they are entitled. If an employee’s “free” preventive care ends up not being free, the employee may be less likely to use free preventive care benefits in the future.
  • Consider Contraceptive Coverage Changes: On November 7, 2018, HHS, DOL, and Treasury released final regulations, effective January 1, 2019, that generally adopted the interim final regulations regarding religious and moral objections to ACA’s free contraceptive coverage mandate. However, on July 12, 2019, the Third Circuit, in Pennsylvania v. President United States, 930 F.3d 543 (3d. Cir. 2019), upheld the Eastern District of Pennsylvania’s preliminary nationwide injunction blocking enforcement of these rules on the grounds that they likely violated the Administrative Procedures Act, and neither ACA nor the Religious Freedom Restoration Act authorized or required the final rules.
  • Religious Exemption: The first rule provides a religious exemption for organizations that object to offering coverage for contraceptive services with respect to a group health plan established or maintained by the objecting organization. Objecting organizations are defined broadly to include churches, nonprofit organizations, for-profit entities, institutions of higher education, and any other non-governmental employers. Objecting organizations are not required to provide coverage of some or all contraceptive services if the objection is based on sincerely held religious beliefs.
  • Moral Exemption: The second rule provides a moral exemption for organizations that object to offering contraceptive care coverage based on moral conviction rather than a specific religious belief. This exemption is narrower in scope and applies to non-profit organizations, closely held for-profit entities, and institutions of higher education.
  • It is anticipated that very few employers will make changes to their contraceptive care coverage based on the above rules. Employers that are considering changes may be served well by continuing to monitor developments in the law and being aware that other laws such as Title VII and state insurance laws may also have an effect on what changes can be made to contraceptive coverage.
  • Health Care Exchange Changes: Employers may determine that Health Care Exchanges benefit their employees and former employees. For example, coverage under a Health Care Exchange may sometimes be cheaper than COBRA coverage under the employer’s group health plan. Employers who wish to communicate to employees about Health Care Exchanges may want to consider the following:
  • Open Enrollment Period for 2020: The open enrollment period for 2020 will run from November 1 to December 15, 2019. Coverage sold during the open enrollment period takes effect January 1, 2020.
  • Special Enrollment Periods: In order to sign up for Health Care Exchange coverage outside of the annual open enrollment period, individuals are required to experience a “qualifying event,” and sign up for coverage within 60 days. The Trump Administration is enforcing these rules more strictly than before, requiring proof of qualifying events. Employers may be required to provide proof of qualifying events to employees, such as termination of employment, so employees can enroll in Health Care Exchange coverage.
  • Model Health Care Exchange Notices: ACA amended the Fair Labor Standards Act to require that employers provide employees with written notice about the existence of the Health Care Exchanges and other relevant information. The DOL has provided two model notices to help employers comply with this requirement, one for employers that offer health plan coverage to their employees and another for employers that do not. More information about the Health Care Exchange notice requirement, and links to the model notices, can be found on the DOL website here.
  • Patient-Centered Outcomes Research Institute (“PCORI”) Fees: Health insurance issuers and sponsors of self-insured health plans are required to report and pay PCORI fees for plan and policy years ending before October 1, 2019 on the Form 720 by the July 31 following the last day of the plan year. Calendar year plans should have paid their final PCORI fee by July 31, 2019. Non-calendar year plans may still owe a PCORI fee for the 2019 plan year. The PCORI fee for a plan or policy year is equal to the average number of lives covered under the plan or policy, multiplied by an applicable dollar amount for the year. The applicable dollar amount for plan years that end after September 30, 2018 and before October 1, 2019 is $2.45.
  • Review Whether Plan Documents and Summary Plan Descriptions (“SPDs”) Grant Discretionary Authority to Plan Decisionmakers and Their Delegates: Given a couple recent court decisions, it is a good time for employers to review their health and welfare plan documents and SPDs to confirm that the plan’s language expressly and unambiguously grants its decisionmakers and their delegates discretionary authority. The purpose of including this language is to increase the likelihood a court will apply a more favorable abuse of discretion standard of review. Although the level of formality may vary by court, generally a court may require a de novo standard of review if the plan document at issue does not grant discretionary authority to the party at issue.
  • Document Employee Medical Emergency Leave-Sharing Programs: Employers often sponsor leave-sharing programs to allow employees to donate leave to co-workers who are experiencing medical emergencies. If properly structured, these leave transfers can be excluded from the gross income of the donor employee and included in the gross income of the donee. The only formal guidance available to employers seeking this favorable tax treatment for medical emergency leave-sharing programs is Revenue Ruling 90-29 (“Rev. Rul. 90-29”). Other leave-sharing programs, such as those for major disaster or military leave, are subject to different rules and may or may not receive similar tax treatment. Departure from the program design approved by the IRS in Rev. Rul. 90-29 increases chances of noncompliance and loss of the favorable tax treatment for leave donors. Although these programs seem simple, they are surprisingly complex, and improper administration and documentation can result in unintended tax and other consequences. Plan sponsors should consult with counsel when setting up any leave-sharing program. For more information, see our September 27, 2019 blog, “Design Considerations for Medical Emergency Leave-Sharing Programs.”
  • Identify and Correct COBRA Notice Failures: If applicable, COBRA requires employers to distribute initial and election notices. Employers that fail to timely comply with these notice rules are subject to an excise tax of $100 per day per affected individual (or $200 per day per family). In general, this failure and the related penalty must be self-reported to the IRS on the Form 8928. An employer may avoid the excise tax penalty and the related filing requirement if the failure was due to reasonable cause (and not willful neglect) and the failure is corrected within 30 days of the date that it was discovered or should have been discovered using reasonable diligence. Employers should regularly confirm they are complying with both COBRA notice requirements and, if necessary, correct failures immediately upon discovery.
  • Arizona Mini-COBRA: Effective January 1, 2019, Section 20-2330 of the Arizona Revised Statutes (“A.R.S.”), also referred to as “mini-COBRA,” requires small-employer health benefit plans issued in Arizona, covering Arizona employees and dependents, to offer continuation of coverage to enrollees and any qualifying dependents upon the occurrence of certain qualifying events. A.R.S. Section 20-2330 additionally requires small employers to notify enrollees and qualifying dependents of the right to continue coverage at the full cost of the coverage plus an employer-administrative fee. The Arizona Department of Insurance has provided a sample form which can be found here. Coverage under A.R.S. Section 20-2330 generally must continue for 18 months but can be longer. There currently appears to be no penalty for failure to comply with A.R.S. Section 20-2330. Presumably, most health insurance companies offering health insurance in Arizona will comply with the new rule. Small employers should coordinate with their health insurers regarding compliance. Employers whose health insurers do not assist with compliance may need to hire a COBRA administrator if they do not have the in-house resources to do so. For more information, please see our February 22, 2019 SW Benefits Blog “Arizona’s New Mini-COBRA Statute Has Arrived, but Is Preemption a Concern?.”
  • Reconsider Offering Domestic Partner Benefits: In June 2015, the Supreme Court of the United States decided the Obergefell v. Hodges case, which legalized same-sex marriage in all 50 states. In response to that case, many employers that offered same-sex domestic partner benefits terminated those benefits. In 2017, the Human Rights Campaign announced that for employers to score a 100% on the Corporate Equality Index for 2019, employers would have to offer domestic partner benefits to both same-sex and opposite-sex couples starting January 1, 2019. Offering same-sex and opposite-sex domestic partner benefits may not only help an employer obtain a 100% score on the Corporate Equality Index, but it also may make it easier to hire younger workers, and older workers who do not want to give up Social Security survivor benefits. Now may be a good time to reconsider offering domestic partner benefits for 2020.
  • Track VEBA Payments for Non-Tax Dependents: Employers who pay health benefits through a voluntary employees’ beneficiary association (“VEBA”) for non-tax dependents may be at risk of violating an IRS regulation. The regulation provides that an organization does not qualify as a VEBA unless it pays benefits only for its “members, their dependents, or their designated beneficiaries.” For this purpose, “dependent” means “tax dependent,” so paying benefits from a VEBA for individuals such as domestic partners, who often do not qualify as tax dependents, can be problematic. There is an exception for “de minimis” payments for individuals who are not members, dependents or designated beneficiaries, even if such payments are systematically and knowingly provided from the VEBA. Unfortunately, there is little guidance as to what constitutes a “de minimis” amount. In PLR 201415011, which can be found here, the IRS ruled that a VEBA, which represented that the total amount of impermissible benefits paid for non-dependent domestic partners would not exceed 3% of total benefits paid, would not lose its tax-exempt status. Although PLR 201415011 indicates how the IRS might interpret the de minimis rule, it is not binding precedent. However, it provides food for thought. Employers sponsoring VEBAs that pay benefits for non-tax dependents should be aware how easily the de minimis rule can be violated and should consider how to monitor compliance. For example, if a VEBA typically pays $5,000,000 in benefits in a year, paying a $200,000 claim for a non-tax dependent domestic partner, which is 4% of benefits for the year, could cause the VEBA to lose its tax-exempt status. There are two approaches employers can use to address this risk. First, employers can continue to pay claims for non-tax dependents from the VEBA and monitor such claims to be sure they do not exceed a de minimis amount. Second, employers can pay claims for non-tax dependents from an alternate source, such as a taxable trust or the employer’s general assets. This may be the easier approach. Once an employer decides on an appropriate approach, plan and/or trust amendments may be required.
  • Consider Impact of New Disability Claims Regulations: On December 19, 2016, the DOL issued regulations that revise the ERISA claims procedure regulations for employee benefit plans that provide disability benefits (the “New Disability Claims Regulations”). The New Disability Claims Regulations took effect for all claims for disability benefits filed on or after April 1, 2018. The rules apply to any plan, regardless of how it is characterized, that provides benefits or rights that are contingent on whether the plan determines an individual to be disabled. This can include ERISA governed short-term disability plans, long-term disability plans, qualified retirement plans (e.g., a 401(k) plan), nonqualified retirement plans, and health and welfare plans. By now, employers should be complying with these rules in operation and on paper. For more information on the requirements under the New Disability Claims Regulations, please see our January 18, 2018 SW Benefits Blog, “New Disability Claims Regulations Take Effect for All Plans April 1, 2018,” and our August 29, 2017 SW Benefits Blog, “The New Disability Claims Regulations: They Don’t Only Apply to Disability Plans.”
  • Consider Proper Treatment of Telemedicine Benefits: Telemedicine is becoming an increasingly popular option. However, failure to follow applicable regulations can subject employers to large excise taxes on a per-participant basis. To avoid this liability, employers may want to consider how to best structure telemedicine programs to ensure compliance with ERISA, ACA, and other applicable laws. For more information regarding telemedicine benefits, please see our August 29, 2016, SW Benefits Blog, “What is Telemedicine? A Cool Benefit or a Hot Mess?."
  • Gear Up for the Cadillac Tax: ACA requires employers to pay a 40% excise tax on the value of health plans that exceed $10,200 for an individual and $27,500 for a family, indexed for inflation. The excise tax was originally scheduled to take effect for taxable years beginning after 2017, but it was delayed two years by subsequent legislation. On January 22, 2018, legislation again delayed the excise tax for another two years until 2022. Although there is bipartisan support to repeal the Cadillac tax, employers may wish to begin preparing for the Cadillac tax and assess possible plan design changes, if necessary, to avoid the Cadillac tax. For more information, please see our February 21, 2018 SW Benefits Blog “Congress Kicks the Can Down the Road Again – Cadillac Tax On High Cost Employer Health Coverage Delayed to 2022.”
  • Continue to Comply with IRS Form W-2 Reporting of the Cost of Employer-Sponsored Group Health Plan Coverage: Beginning with the Form W-2 issued in January 2013 (i.e., the Form W-2 issued for the 2012 calendar year), employers have been required to report to employees the cost of their employer-sponsored group health plan coverage. This reporting is for informational purposes only and is intended to communicate the cost of health care coverage to employees. It does not change how such benefits are taxed. This requirement continues to apply for future years.
  • Distribute Revised Summaries of Benefits and Coverage (“SBC”): ACA requires employers offering group health plan coverage to provide employees with an SBC, which summarizes the health plan or coverage offered by the employer. Information about the SBC requirement, and links to the SBC instructions and template, can be found on the DOL website. Although this is not a new requirement, the SBC is a rigid document and generally all form language and formatting must be precisely reproduced, unless the instructions allow or instruct otherwise. Therefore, employers that outsource SBC drafting to a TPA may want to review an SBC draft to make sure it complies with the instructions before sending it to employees. Employers may also want to ensure that SBCs are provided at requisite times including open enrollment, initial or special enrollment, and upon request. Otherwise, the penalties for failure to issue SBCs can be significant.
  • Provide 60-Day Advance Notice of Changes Impacting SBC: ACA requires group health plans to give participants a 60-day advance notice before making any material modification in plan benefits or coverage that is not reflected in the most recently provided SBC. This applies to both benefit enhancements and reductions that take effect mid-year.
  • Update and Distribute SPDs if Needed: SPDs are required to be updated once every five years if the plan has been materially amended during the five-year period and once every 10 years if no material changes have been made. Further, an updated SPD is required to incorporate all material amendments that occurred during the five-year period, even if the changes were communicated in a timely manner through summaries of material modification. In addition to updating SPDs, employers must also distribute updated SPDs to participants and beneficiaries. Posting updated SPDs on intranet sites is not an effective method of distribution.
  • Potential New Electronic Distribution Rules: The SPD electronic distribution rules are outdated and burdensome, however, there may be some relief on the horizon. On August 16, 2019, the DOL sent a proposed rule regarding electronic disclosures to the Office of Management and Budget (“OMB”). After OMB completes its review, we expect the DOL to issue proposed rules in the Federal Register. Until then, employers should comply with the existing electronic distribution rules available here.
  • Distribute Summary Annual Report: Distribute a summary annual report, which is a summary of the information reported on the Form 5500. The summary annual report is generally due nine months after the plan year ends. If the Form 5500 was filed under an extension, the summary annual report is required to be distributed within two months following the date on which the Form 5500 was due.
  • Reflect Cost-of-Living Increases: The IRS recently announced cost-of-living adjustments for 2019, some of which have an impact on health and welfare plans. A selection of important cost-of-living increases in the health and welfare context is provided below.

Health & Welfare Plan Dollar Limits

 

2017 Limit

2018 Limit

2019 Limit

2020 Limit

Annual Cost Sharing Limit (self-only coverage)

$7,150

$7,350

$7,900

$8,150

Annual Cost Sharing Limit (other than self-only coverage)

$14,300

$14,700

$15,800

$16,300

HDHP Out-of-Pocket Maximum (self-only coverage)

$6,550

$6,650

$6,750

$6,900

HDHP Out-of-Pocket Maximum (family coverage)

$13,100

$13,300

$13,500

$13,800

Annual HDHP Deductible (self-only coverage)

Not less than $1,300

Not less than $1,350

Not less than $1,350

Not less than $1,400

Annual HDHP Deductible (family coverage)

Not less than $2,600

Not less than $2,700

Not less than $2,700

Not less than $2,800

Maximum Annual HSA Contributions (self-only coverage)

$3,400

$3,450

$3,500

$3,550

Maximum Annual HSA Contributions (family coverage)

$6,750

$6,900

$7,000

$7,100

Maximum HSA Catch-Up Contribution

$1,000

$1,000

$1,000

$1,000

Health Flexible Spending Account Maximum

$2,600

$2,650

$2,700

Not yet announced

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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We will make all practical efforts to respect your wishes. There may be times, however, where we are not able to fulfill your request, for example, if applicable law prohibits our compliance. Please note that JD Supra does not use "automatic decision making" or "profiling" as those terms are defined in the GDPR.

  • Timeframe for retaining your personal information: We will retain your personal information in a form that identifies you only for as long as it serves the purpose(s) for which it was initially collected as stated in this Privacy Policy, or subsequently authorized. We may continue processing your personal information for longer periods, but only for the time and to the extent such processing reasonably serves the purposes of archiving in the public interest, journalism, literature and art, scientific or historical research and statistical analysis, and subject to the protection of this Privacy Policy. For example, if you are an author, your personal information may continue to be published in connection with your article indefinitely. When we have no ongoing legitimate business need to process your personal information, we will either delete or anonymize it, or, if this is not possible (for example, because your personal information has been stored in backup archives), then we will securely store your personal information and isolate it from any further processing until deletion is possible.
  • Onward Transfer to Third Parties: As noted in the "How We Share Your Data" Section above, JD Supra may share your information with third parties. When JD Supra discloses your personal information to third parties, we have ensured that such third parties have either certified under the EU-U.S. or Swiss Privacy Shield Framework and will process all personal data received from EU member states/Switzerland in reliance on the applicable Privacy Shield Framework or that they have been subjected to strict contractual provisions in their contract with us to guarantee an adequate level of data protection for your data.

California Privacy Rights

Pursuant to Section 1798.83 of the California Civil Code, our customers who are California residents have the right to request certain information regarding our disclosure of personal information to third parties for their direct marketing purposes.

You can make a request for this information by emailing us at privacy@jdsupra.com or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

Some browsers have incorporated a Do Not Track (DNT) feature. These features, when turned on, send a signal that you prefer that the website you are visiting not collect and use data regarding your online searching and browsing activities. As there is not yet a common understanding on how to interpret the DNT signal, we currently do not respond to DNT signals on our site.

Access/Correct/Update/Delete Personal Information

For non-EU/Swiss residents, if you would like to know what personal information we have about you, you can send an e-mail to privacy@jdsupra.com. We will be in contact with you (by mail or otherwise) to verify your identity and provide you the information you request. We will respond within 30 days to your request for access to your personal information. In some cases, we may not be able to remove your personal information, in which case we will let you know if we are unable to do so and why. If you would like to correct or update your personal information, you can manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard. If you would like to delete your account or remove your information from our Website and Services, send an e-mail to privacy@jdsupra.com.

Changes in Our Privacy Policy

We reserve the right to change this Privacy Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our Privacy Policy will become effective upon posting of the revised policy on the Website. By continuing to use our Website and Services following such changes, you will be deemed to have agreed to such changes.

Contacting JD Supra

If you have any questions about this Privacy Policy, the practices of this site, your dealings with our Website or Services, or if you would like to change any of the information you have provided to us, please contact us at: privacy@jdsupra.com.

JD Supra Cookie Guide

As with many websites, JD Supra's website (located at www.jdsupra.com) (our "Website") and our services (such as our email article digests)(our "Services") use a standard technology called a "cookie" and other similar technologies (such as, pixels and web beacons), which are small data files that are transferred to your computer when you use our Website and Services. These technologies automatically identify your browser whenever you interact with our Website and Services.

How We Use Cookies and Other Tracking Technologies

We use cookies and other tracking technologies to:

  1. Improve the user experience on our Website and Services;
  2. Store the authorization token that users receive when they login to the private areas of our Website. This token is specific to a user's login session and requires a valid username and password to obtain. It is required to access the user's profile information, subscriptions, and analytics;
  3. Track anonymous site usage; and
  4. Permit connectivity with social media networks to permit content sharing.

There are different types of cookies and other technologies used our Website, notably:

  • "Session cookies" - These cookies only last as long as your online session, and disappear from your computer or device when you close your browser (like Internet Explorer, Google Chrome or Safari).
  • "Persistent cookies" - These cookies stay on your computer or device after your browser has been closed and last for a time specified in the cookie. We use persistent cookies when we need to know who you are for more than one browsing session. For example, we use them to remember your preferences for the next time you visit.
  • "Web Beacons/Pixels" - Some of our web pages and emails may also contain small electronic images known as web beacons, clear GIFs or single-pixel GIFs. These images are placed on a web page or email and typically work in conjunction with cookies to collect data. We use these images to identify our users and user behavior, such as counting the number of users who have visited a web page or acted upon one of our email digests.

JD Supra Cookies. We place our own cookies on your computer to track certain information about you while you are using our Website and Services. For example, we place a session cookie on your computer each time you visit our Website. We use these cookies to allow you to log-in to your subscriber account. In addition, through these cookies we are able to collect information about how you use the Website, including what browser you may be using, your IP address, and the URL address you came from upon visiting our Website and the URL you next visit (even if those URLs are not on our Website). We also utilize email web beacons to monitor whether our emails are being delivered and read. We also use these tools to help deliver reader analytics to our authors to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

Analytics/Performance Cookies. JD Supra also uses the following analytic tools to help us analyze the performance of our Website and Services as well as how visitors use our Website and Services:

  • HubSpot - For more information about HubSpot cookies, please visit legal.hubspot.com/privacy-policy.
  • New Relic - For more information on New Relic cookies, please visit www.newrelic.com/privacy.
  • Google Analytics - For more information on Google Analytics cookies, visit www.google.com/policies. To opt-out of being tracked by Google Analytics across all websites visit http://tools.google.com/dlpage/gaoptout. This will allow you to download and install a Google Analytics cookie-free web browser.

Facebook, Twitter and other Social Network Cookies. Our content pages allow you to share content appearing on our Website and Services to your social media accounts through the "Like," "Tweet," or similar buttons displayed on such pages. To accomplish this Service, we embed code that such third party social networks provide and that we do not control. These buttons know that you are logged in to your social network account and therefore such social networks could also know that you are viewing the JD Supra Website.

Controlling and Deleting Cookies

If you would like to change how a browser uses cookies, including blocking or deleting cookies from the JD Supra Website and Services you can do so by changing the settings in your web browser. To control cookies, most browsers allow you to either accept or reject all cookies, only accept certain types of cookies, or prompt you every time a site wishes to save a cookie. It's also easy to delete cookies that are already saved on your device by a browser.

The processes for controlling and deleting cookies vary depending on which browser you use. To find out how to do so with a particular browser, you can use your browser's "Help" function or alternatively, you can visit http://www.aboutcookies.org which explains, step-by-step, how to control and delete cookies in most browsers.

Updates to This Policy

We may update this cookie policy and our Privacy Policy from time-to-time, particularly as technology changes. You can always check this page for the latest version. We may also notify you of changes to our privacy policy by email.

Contacting JD Supra

If you have any questions about how we use cookies and other tracking technologies, please contact us at: privacy@jdsupra.com.

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This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.