On March 29, 2022, the DOL, HHS and IRS (the departments) released eight FAQs that address various aspects of the end of the COVID-19 Public Health Emergency (PHE) and National Emergency, as implemented under the FFCRA, CARES Act and HIPAA.

On January 30, 2023, the Biden Administration announced their intention to extend the COVID-19 National Emergency and PHE Declarations to May 11, 2023, and then end both emergencies on that date. The FAQs are based on the timeframes proposed in this announcement.

Alert:however, a subsequent Congressional Resolution, which was signed by President Biden on April 10, 2023, has resulted in the National Emergency (but not the PHE) ending earlier than anticipated. Absent further guidance, this means that the tolling of certain deadlines during the “Outbreak Period,” which extends 60 days after the announced end of the National Emergency, will also end earlier (i.e., on June 9, 2023). The affected deadlines include those for COBRA elections, payments and certain notices, HIPAA special enrollments, and claim and appeal filings. As a result, employers may need to determine (in consultation with their legal counsel, carriers and TPAs) whether to recognize the earlier end of the National Emergency or proceed with the later May 11, 2023, date, which may already have been communicated to plan participants.

COVID-19 Diagnostic Testing
FAQ #1 explains that for the duration of the PHE, the FFCRA requires plans and insurers to cover COVID-19 diagnostic tests and certain related items and services without cost-sharing, prior authorization, or medical management requirements. However, the FFCRA does not require coverage of COVID-19 diagnostic tests, including over-the-counter (OTC) tests, nor prohibit cost-sharing for such tests, once the PHE ends (although the departments encourage plans and insurers to continue to provide coverage without cost-sharing).

The FAQ also clarifies that generally, an item or service is furnished on the date the item or service was rendered to the individual (or for an OTC COVID-19 diagnostic test, the date the test was purchased) and not the date the claim is submitted. Additionally, plans and insurers should look to the earliest date on which an item or service is furnished within an episode of care to determine the date that a COVID-19 diagnostic test is rendered when the test involves multiple items and services (e.g., the date of the specimen collection and not the subsequent laboratory analysis).

Participant Notification of Coverage Changes
FAQ #2 addresses notification to participants of changes to coverage of COVID-19 diagnosis and treatment, including testing (such as the date the plan will cease to cover COVID-19 diagnostic tests or will begin to impose cost-sharing). The departments encourage plans and insurers to continue covering benefits for COVID-19 diagnosis and treatment and for telehealth services after the end of the PHE.

Importantly, the FAQ reinforces that if a plan or insurer makes a mid-year material change to the plan or coverage terms that affect the summary of benefits and coverage (SBC) content, a notice of the change must be provided to participants at least 60 days in advance of the effective date. Prior guidance provided that an SBC would not be required to reverse a COVID-19 benefit enhancement if participants were previously notified that the increased coverage only applied during the PHE. However, the FAQ clarifies that notice provided for a prior plan year will not satisfy the SBC advance notice obligation for a coverage change in the current plan year.

COVID-19 Diagnostic Test Reimbursement
FAQ #3 confirms that for COVID-19 diagnostic tests furnished after the PHE ends, plans and insurers will no longer be required to reimburse a provider the cash price listed on the provider’s website (if a negotiated rate was not in effect before the PHE).

Rapid Coverage of COVID-19 Preventive Services and Vaccines
FAQ #4 explains that after the PHE ends, plans and insurers generally must continue to cover, without cost-sharing, qualifying COVID-19 preventive services, including COVID-19 vaccines and administration, within 15 days of a recommendation for the specific vaccine by a qualifying agency (e.g., ACIP).

However, after the PHE ends, plans and insurers with provider networks are not required to provide coverage for COVID-19 preventive services from out-of-network (OON) providers, nor are they prohibited from imposing cost-sharing for such services delivered by OON providers.

Extension of Certain Timeframes During the Outbreak Period
FAQ #5 reviews the tolling of applicable deadlines for COBRA elections, payments and notices, HIPAA special enrollments, and ERISA claim filings, appeals and external review requests. The FAQ also provides practical examples of the application of the end of the 60-day Outbreak Period (based upon the previously announced May 11, 2023, COVID-19 National Emergency end date).

Given the earlier-than-expected National Emergency end date, the Outbreak Period will end on June 9, 2023, absent further guidance. However, employers may decide (in consultation with their legal counsel, carriers and TPAs) to proceed based on the originally anticipated May 11, 2023, National Emergency end date, and thus voluntarily extend the Outbreak Period to July 10, 2023, for their participants. Before adopting any extended deadline, employers should obtain express approval from their carriers (including stop loss) and ensure that communications to participants accurately reflect the agreed-upon approach. These communications should clearly state that any extension only applies to deadlines impacted by the Outbreak Period relief. Accordingly, employers should review their potential options and related communications with their legal counsel, carriers, TPAs and COBRA vendors as soon as possible.

Special Enrollment After Loss of Medicaid or CHIP
FAQ #6 reminds us that employees and their dependents may be eligible for special enrollment in a group health plan if their Medicaid or CHIP coverage is terminated because of a loss of eligibility. Due to the end of COVID-19 continuous enrollment policies, more individuals will be losing eligibility for Medicaid and CHIP coverage, so employers should anticipate a possible increase in special enrollment requests. The normal 60-day timeframe to request a special enrollment remains extended through the end of the Outbreak Period, and the FAQ encourages employers to allow for a longer special enrollment period. The FAQ notes that employees and dependents losing Medicaid or CHIP coverage are also eligible for special enrollment in individual health coverage (on or off the Marketplace).

FAQ #7 emphasizes that employers can also assist employees losing Medicaid or CHIP eligibility by ensuring their benefits staff are aware of the resumption of Medicaid and CHIP eligibility determinations and encouraging employees enrolled in Medicaid or CHIP coverage to update their address with the state agencies and respond promptly to state communications regarding their coverage.

Impact of Pre-Deductible COVID-19 Testing and Treatment on HSA Eligibility
Finally, FAQ #8 confirms that an individual covered by an HDHP that provides for COVID-19 testing and treatment prior to satisfying the HDHP statutory minimum deductible may continue to contribute to an HSA, as permitted under IRS Notice 2020-15 until further guidance is issued. The FAQ explains that the IRS intends to issue such guidance soon; however, generally, plans will not be required to conform to the new guidance in the middle of a plan year.

Employers may find the new FAQs helpful in administering their group health plans as the COVID-19 PHE and National Emergency periods end. As per usual, employers should work closely with their legal counsel, carriers and TPAs to ensure their plan procedures, documents and communications are updated to reflect related changes. Additionally, employers should monitor for further updates and guidance.

FAQs about Families First Coronavirus Response Act, Coronavirus Aid, Relief, and Economic Security Act, and Health Insurance Portability and Accountability Act Implementation Part 58 »

On March 30, 2023, the US District Court for the Northern District of Texas (the “court”) issued a final judgment in Braidwood Management Inc. v. Becerra, which invalidates and prohibits enforcement of certain ACA preventive care requirements on a nationwide basis. As explained below, the final judgment follows the court’s September 7, 2022, ruling in a case challenging the legality of the preventive care mandates.

Under the ACA, non-grandfathered group health plans must cover certain preventive services without cost-sharing when they are delivered by an in-network provider. The covered requirements have historically included services given an “A” or “B” rating from the US Preventive Services Task Force (PSTF), vaccines recommended by the Advisory Committee on Immunization Practices (ACIP), and preventive care and screenings for children and women recommended by the Health Resources and Services Administration (HRSA).

In this case, the plaintiffs included two businesses and six individuals who sought health insurance that excluded or limited coverage required by the ACA preventive care mandates. Among other claims, the plaintiffs argued that the ACA preventive care mandates violate the US Constitution because the appointment process for members of the PSTF, ACIP and HRSA did not satisfy the constitutional method for appointing US “officers.” A person is a US “officer” if that person occupies a continuing position established by federal law and exercises significant authority under that law.

On September 7, 2022, the court ruled that the appointment of ACIP and HRSA officers satisfied the constitutional requirements, since they are supervised and directed by the HHS Secretary. In contrast, PSTF members are independent experts that provide evidence-based recommendations related to preventive care services. The court found that the appointments of PSTF experts violated the US Constitution because they exercise officer-level authority but are not supervised or directed by an administrative agency. The plaintiffs had also asserted that the PSTF-recommended requirement to cover pre-exposure prophylaxis (PrEP) drugs to prevent HIV infection violated their religious rights under the Religious Freedom Restoration Act. On this issue, the court ruled in favor of the plaintiffs. Please see our previous article summarizing the court’s prior ruling.

The court reserved ruling on the appropriate remedies in their September 7, 2022, opinion. Accordingly, the March 30, 2023, judgment invalidates and prohibits the DOL, IRS and HHS (the “departments”) from enforcing all PSTF-recommended preventive care mandates issued since the ACA’s March 23, 2010, enactment, on a nationwide basis. Additionally, the final judgment prevents the departments from enforcing the PrEP coverage requirements as to the plaintiffs with religious objections.

Braidwood Management Inc. v. Becerra Second Memorandum Opinion and Order on Remedies »

Group Health Plan Considerations

First, it’s important to recognize that the court ruling only removes the ACA coverage requirements and cost-sharing prohibitions for preventive care based on the PSTF recommendations. Preventive care recommendations by ACIP (e.g., vaccines and immunizations) and HRSA for women's health services (including contraceptive coverage requirements) would not be affected and therefore, could not be subject to cost-sharing requirements. Employers may want to consult with their carriers or TPAs for further details on which preventive care coverage requirements (e.g., specific screenings for various types of cancer) are affected.

Second, the departments announced their intention to appeal the decision to the US Court of Appeals for the Fifth Circuit. The departments may also ask for a stay (i.e., delay) of the court’s remedy pending the outcome of the final litigation. If a stay is not granted, the US Supreme Court may be asked to review the issue of the stay. The merits of the underlying case could eventually be reviewed by the US Supreme Court, depending upon the outcome of any appeal. We will have to wait and see, but if a stay is granted at either appellate level, the PSTF-recommended services would continue to be required without cost-sharing, as they have been under the ACA.

Third, during the appeal proceedings, it is anticipated many group health plans will continue to cover all preventive services without cost-sharing. Typically, health plan contracts are in place for the plan year, and employers generally do not make coverage or cost changes midyear. Employers that sponsor fully insured plans may be limited in their ability to make midyear plan changes and should always consult with their carriers regarding potential plan changes and the relating timing and disclosures. (The related rules would generally require 60-days advance notice if a change to cost-sharing occurs outside of open enrollment.) Additionally, states may pass insurance laws mandating coverage of the PSTF-recommended services if the federal coverage requirement is not reinstated.

Generally, employers that sponsor self-insured plans have greater plan design flexibility than fully insured plans. However, cost or coverage changes based on the court’s ruling may need to be reversed if the ruling is overturned on appeal. Employers may also want to consider whether assessing cost sharing for PSTF-recommended preventive services could deter participants from receiving routine screenings, thus delaying disease detection and hindering long-term cost containment strategies. Employers contemplating plan changes should also be mindful that midyear changes that affect the content of the Summary of Benefits Coverage will generally require at least 60 days’ notice to participants in advance of the change effective date. Accordingly, self-insured plan sponsors should always consult with their TPAs, service providers and counsel regarding the implementation of any plan changes and related plan document and disclosure requirements.

Fourth, it's unclear whether HSA eligibility could be negatively impacted for participants who receive the invalidated PSTF-recommended preventive care. It is possible that the IRS will consider these services to be preventive care for this purpose. Hopefully, the IRS will address this concern soon; employers should watch for IRS guidance.

Fifth, plan participants may be confused by the case developments and seek reassurances from employers as plan sponsors that their preventive care coverage has not been adversely impacted. Employers should consult with their carriers and TPAs regarding any related updates or participant communications.

As this case continues through the legal process, employers should be aware of the recent court judgment, consult with their carriers and TPAs and monitor future developments. For specific advice and guidance, employers should always engage their legal counsel.

The ACA requires the DOL to provide Congress with an annual report regarding private-sector self-insured health benefits plans and financial information of employers that sponsor such plans. The DOL recently released the 2023 annual report based on 2020 Form 5500 filings, including the number of participants, benefits offered, funding arrangements and plan assets. Along with the annual report, the DOL released two detailed appendices to complement the report: Appendix A, which describes the abstract of 2020 Form 5500 Annual Reports and Appendix B, which analyzes self-insured health benefit plans based on filings through 2020 and publicly available corporate financial data for some health plan sponsors.

The report summarizes that approximately 74,100 group health plans covering about 78 million participants filed a Form 5500 for 2020. Of those plans, about 37,900 were self-insured plans, covering about 35 million participants, and 4,400 were mixed of both fully insured and self-insured plans (“mixed-insured”) when filed in a single Form 5500 filing, covering about 29 million participants.

The 2020 Form 5500 filings show approximately 51% of plans were self-insured, 43% were fully insured, and 6% were mixed-insured. According to the report, while the number of group health plans that filed Form 5500 filings increased by 13%, the number of covered participants decreased by about 1 million compared with 2019 data.

According to the report, the increase in the number of plans came from mostly small, self-insured plans and small plans participating in multiple employer welfare arrangements (MEWAs).

Employers should keep in mind that though the report provides insights about self-insured plans and its historical trends, many group health plans are exempt from filing Form 5500, including small employers, so the report represents only large group plans that are subject to Form 5500 filing.

2023 Annual Report on Self-Insured Group Health Plan »
Appendix A »
Appendix B »

Following the US Supreme Court’s lead, a trial court has changed its view as to whether a church-affiliated hospital’s retirement plan qualifies as a “church plan” under ERISA.

Saint Peter’s Healthcare System, Inc. (Saint Peter’s) is a Roman Catholic Church-affiliated medical provider network headquartered in New Jersey. In May 2013, former employee Laurence Kaplan challenged Saint Peter’s claim to ERISA’s church plan exemption and alleged multiple statutory violations, including insufficient documentation and underfunding of the plan by more than $70 million. Notably, shortly after Kaplan filed suit, the IRS affirmed Saint Peter’s plan’s status as a church plan.

Notwithstanding the IRS determination, the trial court concluded that the church plan exemption (employee benefit plans “established and maintained” by churches) did not apply to Saint Peter’s plan. ERISA’s church plan exemption only extends to plans maintained by organizations controlled by or associated with churches with a principal purpose to administer benefits for employees of churches and/or church-affiliated nonprofit entities (“principal-purpose organizations”). In the trial court’s view, since Saint Peter’s established the plan and Saint Peter’s was not a church, the plan could not qualify as a “church plan.”

The Third Circuit affirmed the trial court’s ruling, but the Supreme Court offered a different take on the relevant statutory language when it reviewed this case together with two similar cases from the Seventh and Ninth Circuits in 2017. In the Supreme Court’s view, ERISA’s church plan exemption does not require that a plan maintained by a principal-purpose organization must have also been established by a church to qualify for the exemption. Rather, if a principal-purpose organization maintains a plan, the plan qualifies as a “church plan” for purposes of ERISA, regardless of who established it.

When the trial court reconsidered the case, it applied a three-step analysis developed by the Tenth Circuit after the Supreme Court’s ruling:

First, was the employer plan sponsor associated with a church?

Second, was the plan maintained by a principal-purpose organization?

Third, was the principal-purpose organization associated with a church?

In its analysis, the court found plenty of ties between the hospital and the Roman Catholic Church (e.g., Saint Peter’s was included in the church’s “Official Catholic Directory”) to establish an association with a church (Step One); that the plan’s administrative committee had overall responsibility for plan oversight, including final authority over claims and responsibility for assets and investments (Step Two); and that the committee was a subpart of the church-affiliated hospital and operated under the supervision of the bishop of the diocese that owned the hospital (Step Three). The court therefore determined that Saint Peter’s plan qualified as a “church plan” under ERISA.

Laurence Kaplan v. Saint Peter’s Healthcare System »

The IRS recently released its Employee Plans Examination Process Guide, which provides a general explanation of the EP Examination process and provides resources for retirement plan compliance. The guide is divided into six sections:

• Section 1 – Overview of EP Examinations : Provides a general overview of the examination process from initial contact through conclusion, including a helpful flowchart showing the various steps in the examination process.
  
• Section 2 – Initiation of an Examination : Provides insight into how plans are selected for examination and the procedures used to contact taxpayers, schedule appointments, and request information. It also includes information on an individual’s rights as a taxpayer and the right to representation during the examination.
  
• Section 3 – Communications During Examination : Includes samples of communications that may occur during the examination, such as exam appointment requests, information requests, and extension requests. It also provides information on how to request a status update during an examination.
  
• Section 4 – Audit Guidelines : Provides information on the forms used during a Form 5500 audit, including the Internal Review Manual, EP workpaper summary, and referral to the Pension Benefit Guaranty Corporation (for certain retirement plans only).
  
• Section 5 – Resolution of Issues and Closing the Examination : Depending on whether or not the plan sponsor and examination agent agree or disagree on the issue and resolution, there are procedures both parties will follow to communicate and come to a resolution. Once a resolution is reached, it results in a closing agreement which is outlined in further detail in the IRS’ Audit Closing Agreement Program (Audit CAP).
  
• Section 6 – Appeals Process : Outlines the appeals process for various aspects of the examination, including discrepancy adjustments, excise taxes, and unrelated business taxable income. This section also provides an overview of the statute of limitations, prohibited transactions, and procedures used by the IRS when protecting a statute.

Employers and plan sponsors should review the guide and be aware of the examination process and their rights in the event of a retirement plan audit.

EP Examination Process Guide »

Beginning January 1, 2024, virtually all employers will be required to file ACA reporting Forms 1094-B/1095-B and 1094-C/1095-C electronically. On February 21, 2023, the IRS published final regulations to the Taxpayer First Act of 2019, significantly expanding the e-filing mandate for certain tax returns.

Specifically, Forms 1094-B/1095-B and 1094-C/1095-C must be filed electronically if the total number of information returns (including Forms W-2 and 1099s) an employer files that year exceeds 10. As a result, all applicable large employers (ALEs) and most non-ALE self-insured employers completing ACA reporting will be required to do so electronically. If an employer demonstrates undue hardship, such as increased filing costs, the IRS may waive the e-filing requirement. Applications for an e-filing waiver are made via Form 8508.

Employers currently completing ACA reporting via paper mailing should consult with their tax advisor on e-filing requirements in 2024, discuss any potential undue hardship waiver and, if required, prepare to complete ACA reporting electronically. While employers may use third-party vendors to e-file on their behalf, they remain liable for any reporting failures.

For further information regarding the upcoming filing changes, please also see our February 28, 2023, article.