On July 31, 2019, the DOL updated its Employer CHIP Model Notice that employers with group health plans may use to notify eligible employees about premium assistance available through their state Medicaid or Children's Health Insurance Program (CHIP). Since its initial release in 2010, the DOL has been updating the notice twice annually, on or around January 31 and July 31 of each year. The updates generally reflect any changes to contact information for the list of states offering premium assistance programs.
Employers creating their own notices, rather than the DOL’s model notice, should pay special attention to ensure the most recent information is used. Employees residing in one of the states identified on the notice must receive this information automatically, before the start of the plan year, and free of charge.
DOL Issues Final Rules Expanding Access to Multiple Employer Plans
On July 31, 2019, the DOL issued final rules expanding access to multiple employer plans (MEPs). As background, in October 2018, the DOL issued proposed rules that redefined the term “employer” under ERISA to allow certain employer groups and associations or PEOs to sponsor defined contribution retirement plans. That proposed rule was the DOL’s response to an executive order directing them to propose rules that would make it easier for small employers to band together to offer retirement plans. (We discussed the proposed rules in the November 1st, 2018 edition of Compliance Corner , found here .)
The final rules do not vary much from the proposed rules. “Bona fide groups or associations of employers” and “bona fide professional employer organizations” can establish MEPs. Working owners with no employees can also participate in the MEPs under certain circumstances. The final rules still require the following for a MEP that wants to form under the new rules:
- There must be a formal organizational structure that’s controlled by its employer members with at least one substantial business purpose outside of providing a retirement plan.
- The members of the group or association must share a commonality of interest, which would be met if the members are in the same trade, industry, line of business or profession, OR if the members are in the same state or metropolitan area.
- The members must employ at least one participant and participation must only be offered to employees and former employees.
- The group or association must not be a financial services company such as a bank, trust company, insurance issuer, or broker-dealer.
One difference between the proposed rules and the final rules is that the final rules do not contain a safe harbor for “certified PEOs.” Instead, a PEO must show that they bear responsibility for employees’ wages, tax withholding and reporting, job offer and terminations, and employee benefits. Additionally, the final rules require that PEOs continue in their obligations as plan sponsor to participants even after the PEO ends its relationship with the client-employer.
The IRS simultaneously published a Request for Information (ROI) on “Open MEPs.” Open MEPs are MEPs that would potentially cover employers that have no relationship. The ROI also asks for comments on “corporate MEPs,” which would cover related employers that are not related enough to be considered a controlled group. This would allow even more employers the chance to band together to provide retirement plans. Comments must be submitted by October 29, 2019. Interestingly, Congress is also considering providing open MEPs through legislation.
The final rule will go into effect on September 30, 2019. Any plan sponsor that is considering joining a MEP should work with their adviser.
DOL Offers Temporary Relief to Multiple Employer Plans with Annual Reporting Failures
On July 24, 2019, the DOL issued Field Assistance Bulletin No. 2019-01, which provides temporary penalty relief from certain Form 5500 filing requirements for multiple employer plans (MEPs) subject to Title 1 of ERISA. Generally, MEPs file one Form 5500 that aggregates the data of the underlying participating employers.
However, in 2014, Congress added Section 103(g) to ERISA, which requires MEPS to include a list of names and EINs of participating employers and a good faith estimate of the percentage of total contributions made by each employer for the plan year. Unfunded or insured welfare plans must also specify the participating employers, but do not need to include the contribution information.
The DOL initiated enforcement action in 2019, upon recognition that a significant number of MEP filings in recent years had failed to fully comply with the ERISA Section 103(g) requirements. Following a dialogue with MEP plan sponsors, some of whom objected to the release of the employer-specific data, the DOL reiterated its position that such data is public information and must be open for public inspection.
Before proceeding with further civil penalty enforcement actions, the DOL is offering transition relief to MEPs who voluntarily comply with ERISA Section 103(g) by providing complete and accurate employer information for the 2017 plan year or any prior plan year. Specifically, the DOL will not reject such filings or assess civil penalties solely for the failure to include the ERISA Section 103(g) employer details, provided the plan’s 2018 Form 5500 complies with the requirements.
Additionally, for 2018 calendar year plans, which have a July 31, 2019 Form 5500 filing deadline, the DOL granted a special two and a half month extension to comply with ERISA Section 103(g). The special extension requires only the selection of a designated box on the Form 5500; however, the filer can also complete the standard Form 5558 to request an extension. The relief is also available to MEPs that already filed the 2018 Form 5500, provided the filing is amended by October 15, 2019.
Affected MEP sponsors should review previous Form 5500 filings (beginning with the 2014 plan year) to determine if the ERISA Section 103(g) required information was provided. Sponsors who failed to specify the necessary employer details on past filings can voluntarily provide such information and take advantage of the available penalty relief.
For the 2018 plan year, MEPs on extension (either through the special extension option or the Form 5558) should ensure the required employer data is attached. If the 2018 Form 5500 was already filed without the complete ERISA Section 103(g) data, relief under this guidance is still available to sponsors who amend the form to include the missing employer specifics prior to October 15, 2019.
If an employer makes changes to their benefits in the middle of a plan year, what notice requirements apply?
There are actually a few different notice requirements in play when an employer makes a change to benefits. ERISA has the summary of material modification (SMM) requirement — any material change to the plan requires the employer to send an SMM within 210 days of the end of the plan year in which the change occurs. If it’s a “material reduction” to benefits, then the notice (SMM or a summary of material reduction of benefits) actually needs to be sent within 60 days of the change. So, those notices are generally after the change occurs.
However, the summary of benefits and coverage (SBC) rules (which came into play under the ACA) say that if there's a material change that impacts the information provided in the SBC, and that change occurs outside of open enrollment (it occurs mid-plan-year), then the employer must distribute an updated SBC (or a notice describing the change) 60 days in advance of the change. So, for modifications to the plan that occur mid-plan-year, that advance-notice SBC will likely need to be distributed. Keep in mind that providing the updated SBC will also meet ERISA’s summary of material modification and material reduction requirements.
Now, if the change or modification (even if it’s a reduction) is occurring as part of renewal or open enrollment (that is, changes that are taking effect for the new plan year), then those changes can be included in open enrollment materials (and a new SBC) that is distributed during open enrollment. So, in that case, there's no need to distribute an updated SBC/notice 60 days in advance. Instead, the employer could just include the updated SBC/notice in the open enrollment materials.
Efforts to Improve Efficiency of Claim Submissions and Payments
On July 17, 2019, Gov. Carney signed HB 146 into law. The new law makes three changes to the relationship between health insurers and health care providers in an effort to make the process of claim submissions and payments more efficient.
First, health insurers must accept electronic claim submissions from non-pharmacy health care providers regardless of network status. Additionally, the insurer must electronically acknowledge the claim within two business days after submission.
Secondly, an insurer may not request medical records related to post-claim adjudication audits in more than 400 instances during a 45 day period per health care provider.
The third provision is the most relevant for group health plan sponsors and participants; an insurer must permit health care providers, regardless of network status, at least 180 days to submit a claim from the date of service. Any contract that imposes a shorter time frame for health care provider submission shall be revised by the insurer.
The effective date of these provisions is January 13, 2020. Although the changes do not require anything of employers, fully-insured plan sponsors should be mindful of these changes in how insurers will have to adjudicate claims.
Prescription Drug Cost Sharing Limit
On June 19, 2019, Gov. Carney signed HB 24 into law. The new law prohibits an insurer or pharmacy benefits manager from imposing a copayment or coinsurance for a covered prescription drug that exceeds the lesser of the usual and customary price or the contract price of the drug. The law is effective for policies issued or renewed on or after January 1, 2020.
Step Therapy Protocol Exceptions
On June 18, 2019, Gov. Carney signed House Substitute 1 for HB 105 into law. The new law requires health plans to grant exceptions to step therapy protocols under specific circumstances. As background, step therapy protocols require patients to try one or more prescription drugs before coverage is provided for a drug selected by the patient’s health care provider.
Effective for policies issued or renewed on or after March 18, 2020, health plans must grant exceptions in the following circumstances:
- The required prescription drug is medically inadvisable, will likely cause an adverse reaction or physical/mental harm to the patient.
- The required prescription drug is expected to be ineffective based on the known clinical characteristics of the patient and the known characteristics of the prescription drug regimen.
- The patient has tried the required prescription drug while under the patient’s current or previous health benefit plan, or another prescription drug in the same pharmacologic class or with the same mechanism of action, and such prescription drug was discontinued due to lack of efficacy or effectiveness, diminished effect, or an adverse event.
- The required prescription drug is not in the best interest of the patient, based on medical necessity.
- The patient is stable, for the medical condition under consideration, on a prescription drug prescribed by the patient’s health care provider or while the patient was insured by the patient’s current or a previous health benefit plan.
New Bulletin on Coverage/Reimbursement for Emergency Room Boarding
On July 25, 2019, the Insurance Department published Bulletin Docket No. INS No. 19-106-AB. The new bulletin relates to SB 11, a new law enacted in 2019 (which takes effect July 1 2019), which requires certain coverage and reimbursement for emergency room boarding. The law and bulletin expands required coverage and provider reimbursements for individuals who are in an acute care hospital, awaiting admission on a voluntary basis for services to treat a mental health condition as a result of mental illness, or when the individual is waiting to be admitted to a NH hospital (or community-based designed receiving facility to treat a mental health condition), the hospital has completed an involuntary admission certificate that meets certain criteria.
The law and bulletin require carriers to pay the acute care hospital a per diem rate required to board and care for the patient. The law prohibits the per diem rate from being all inclusive, and the bulletin interprets the law to mean that a hospital may bill for services not included in the per diem rate and that the hospital shall receive payment for these additional services insofar as they are medically necessary from the perspective of the treating provider. The per diem rate is distinct from inpatient reimbursement, and the per diem rate for the hospital stay may include member cost sharing liabilities consistent with the IRS requirements for HDHPs. The bulletin also includes additional guidance on provider reimbursement rates and consecutive days of coverage.
The bulletin contains no new employer compliance obligations. But employers with fully insured plans in NH should be aware of the coverage requirements under the new law and bulletin.
New Bulletin on Balance Billing and Network Adequacy
On July 25, 2019, the Insurance Department published Bulletin Docket No. INS. No. 19-015-AB. The new bulletin relates to a 2018 law (HB 1809) that is aimed at protecting patients from surprise medical bills (sometimes referred to as “balance billing”) by certain hospital based providers, which became effective July 1, 2018. The 2018 law expands NH’s balance protections by prohibiting anesthesiologists, radiologists, pathologists, and emergency medicine providers from billing patients for more than regular cost sharing when a patient is treated at an in-network hospital or ambulatory surgery center, even if the provider is out-of-network. When the providers listed above are not participating in the carrier network, the carrier must provide for a commercially reasonable amount to be paid to the provider, provider group, or provider employer. This will help provide balance in the dispute between providers and carriers, and will help curb the surprise medical bill issue in NH.
The law also requires the Department’s network adequacy rules to include standards for addressing in-network access to hospital-based providers such as those listed above. In response, the Department amended its network adequacy rule to require that carriers assure that providers whose services are integral to care in a hospital or similar facility either be included in their networks or provided without additional cost sharing.
None of the above rules apply specifically to an employer. So, the bulletin does not create any new employer compliance obligations. But NH employers will want to be aware of the application of the new law and bulletin guidance on surprise medical billing and network adequacy.
New Bulletin on Discrimination Based on Sexual Orientation, Gender Identity or Expression, or Transgender Status
On July 23, 2019, the Department of Financial Services published Insurance Letter No. 8 (2019). The bulletin is a response to HHS’s proposed rule that repeals a federal regulation that clarifies that the ACA’s nondiscrimination protections based on sex include protections based on gender identity. That proposed rule would also remove protections and no longer considers discrimination based on pregnancy, false pregnancy, termination of pregnancy, and recovery therefrom, childbirth or related medical conditions, and sex stereotyping to be discrimination based on sex.
According to the bulletin, NY has its own requirements relating to nondiscrimination protections based on sexual orientation, gender identity or expression, and transgender status. As a result, NY law prohibits all carriers from refusing to issue an insurance policy or contract, or to cancel or decline to renew such policy or contract, because of the sex or marital status of the applicant or policyholder. Similarly, NY law prohibits carriers from discriminating in health insurance policies or contracts because of sex, marital status; or based on pregnancy, false pregnancy, termination of pregnancy, or recovery therefrom; childbirth, or related medical conditions; or on gender identity or expression, sexual orientation, sex stereotyping, and transgender status. Those prohibitions apply to individual, small group and large group policies and contracts, as well as student health plan policies.
Lastly, the bulletin reminds carriers that there are three prior circular letters that address these types of nondiscrimination prohibitions (which we covered in prior editions of Compliance Corner). Insurance Circular Letter No. 7 (2014) reminds carriers that policies that cover mental health conditions cannot exclude coverage for the diagnosis and treatment of gender dysphoria. Insurance Circular Letter No. 12 (2017) clarifies that carriers should not automatically deny claims for transgender individuals because the gender with which the individual identifies does not match the gender of someone to whom those services are typically provided. Lastly, Insurance Circular Letter No. 7 (2017) addresses coverage for infertility treatment and advises carriers that the law prohibits them from discriminating based on sexual orientation, marital status, or gender identity with respect to infertility treatment.
For employers, there are no immediate requirements resulting from the bulletin. Employers with fully insured plans should work with carriers with any questions relating to coverage; self-insured plans are generally exempt from state rules (but employers should work with outside counsel if they want to treat any employees differently based on any of the above statuses.
New Supplemental Bulletin on Insurance Coverage for PrEP and HIV Screening
On July 23, 2019, the Department of Financial Services published Supplement No. 1 to Insurance Circular Letter No. 21 (2017). The bulletin reminds carriers of the requirements of Circular Letter No. 21, published back in 2017 (and covered in the January 11th, 2018, edition of Compliance Corner here), which reminded carriers that coverage of pre-exposure prophylaxis (PrEP, used for HIV prevention) should be subject only to reasonable utilization management measures and must follow written clinical review criteria in a nondiscriminatory manner. This means that there’s no justification for denying coverage for PrEP on the ground that the patient is at risk for HIV based on sexual orientation.
According to the new supplemental bulletin, under NY law and the ACA, carriers must provide coverage for evidence-based care and screenings with an “A” or “B” rating (as recommended by the US Preventive Services Task Force (USPSTF)) with zero cost sharing for participants. On June 11, 2019, the USPSTF issued an “A” rating recommendation that clinicians offer PrEP with effective antiretroviral therapy to persons who are at high risk of HIV acquisition.
Now that offering PrEP with effective antiretroviral therapy to persons who are at high risk of HIV acquisition is an “A” rated recommendation, carriers (other than grandfathered health plans) must provide coverage for PrEP for the prevention of HIV at no cost sharing. NY carriers must provide this PrEP coverage without cost sharing as soon as possible, but no later than January 1, 2020, for policies or contracts that are issued on or after that date.
The bulletin contains no new employer compliance obligations. But employers should be aware of the PrEP coverage requirements.
Pittsburg Paid Leave Law to Become Effective
On July 17, 2019, the Supreme Court of Pennsylvania Western District overturned a lower court’s ruling related to Pittsburgh’s Paid Sick Leave. As a reminder, in August 2015, the Pittsburgh City Council passed and Mayor Peduto signed into law the Paid Sick Days Ordinance. The law requires employers doing business in the city of Pittsburgh to provide paid sick leave to employees in the amount of one hour for every 35 hours worked (up to 40 hours per year for employers with 15 or more employees; 24 hours for employers with fewer than 15). Employees could take the leave for their own or family member’s illness, preventive care, or in the event of declared public health emergency.
However, the law never went into effect as it was later overturned by a trial court and the Pennsylvania Commonwealth Court. In September 2015, a group of businesses – mostly restaurants – challenged the ordinance. The argument was that Pittsburgh is a home rule charter municipality. Under Pennsylvania law, no such municipality may impose requirements on businesses unless those requirements are applicable to all municipalities. There is an exception for rules related to general health and the prevention of disease.
The Supreme Court of Pennsylvania Western District has now overturned the lower courts decisions and agrees with the city’s argument that the sick leave ordinance falls under the health and prevention of disease exception.
There is no immediate action for employers as we must await the city’s guidance on effective dates and revised notices. However, employers should be prepared to comply in the future. We will report any developments in Compliance Corner.
Prescription Drug Synchronization
On July 2, 2019, Gov. Wolf signed HB 195 into law. The new law requires policies that cover prescription drugs to provide coverage for a partial supply of a prescription drug if the prescribing provider or pharmacist determines the fill or refill to be in the best interest of the participant or for the purpose of medical synchronization. Medical synchronization occurs when there is coordination of prescription refills for a patient who is taking two or more maintenance drugs. The practice is believed to improve medication adherence. Policies are prohibited from denying a prescription refill on the basis that it is being filled too soon if the purpose is medical synchronization. Lastly, the cost-sharing for the partial supply must be prorated accordingly.
The law is effective July 2, 2020.
New Bulletin on Coverage of Mental Health Services
On August 1, 2019, the Department of Insurance published Bulletin 19-01, which relates to coverage of mental health services for TN-based insurance policies. According to the bulletin, TN law requires all health benefit plans to cover mental health, alcoholism, drug dependency services, and autism spectrum disorders for people under 12 years of age. In addition, TN law also requires coverage of any treatment that is medically necessary and appropriate and is not experimental, such as applied behavioral analysis therapy — such treatment must be covered at parity as outlined by the federal Mental Health Parity and Addiction Equity Act.
The law applies to individual, small group, and large group policies issued in TN, including short-term, limited duration policies, grandfathered plans that include mental health benefits and policies issued to or plans issued by MEWAs.
Revised Bulletin Addresses Prohibited Discrimination on the Basis of Gender Identity
On June 12, 2019, the Department of Financial Regulation (DFR) published Insurance Bulletin 174. According to the bulletin, Vermont law prohibits discrimination on the basis of gender identity. For this purpose, “gender identity” means an individual’s actual or perceived gender identity, or gender-related characteristics intrinsically related to an individual’s gender or gender identity, regardless of the individual’s assigned sex at birth.
The bulletin reminds carriers that they cannot exclude coverage for medically necessary treatment, including gender affirmation surgery for gender dysphoria and related health conditions. In addition, carriers may not deny coverage of gender affirmation as not medically necessary on the basis of age without other clinical factors or circumstances supporting the decision. The bulletin applies to new policies filed on or after June 12, 2019.
Employers have no new compliance obligations as a result of the bulletin. But employers should be aware of the prohibitions on discrimination based on gender identity, both in working with carriers on coverage and in answering employee questions relating to the issue.
Association Health Plan Guidance
On June 12, 2019, the Department of Financial Regulation (DFR) published Insurance Bulletin No. 205. The bulletin addresses DFR’s position with regard to association health plans (AHPs) in conjunction with a district court ruling invalidating a portion of the DOL’s AHP final regulations. As background, the U.S. District Court for the District of Columbia invalidated the DOL’s 2018 AHP rules which provided additional avenues for AHP formation (referred to by DFR as “Pathway 2 AHPs”), concluding that the DOL exceeded its rulemaking authority under ERISA by modifying the definition of “employer” to expand the availability of AHPs. The court’s ruling vacated the AHP rule and remanded it to the DOL for reconsideration, and is in effect nationwide, including Vermont. The DOL has appealed that decision, but in the meantime did not request a stay — that means the AHP rule will remain vacated unless the court’s decision is overturned on appeal.
According to the bulletin, DFR – following a DOL FAQ – states that existing Pathway 2 AHPs may continue to operate through Plan Year 2019, but may not enroll new employer groups (or individuals who do not qualify for special enrollment within existing employer groups). Further, VT insurers must honor existing AHP policies and pay valid claims through the end of 2019 or at the expiration of the policy (whichever is later).
DFR also states that it cannot approve Pathway 2 AHPs to operate beyond plan year 2019 because the court’s decision vacated the Pathway 2 AHP rules, there was no stay on that decision, and the decision has nationwide effect. As a result, Pathway 2 AHPs may not advertise for plan years 2019 or 2020. DFR goes even further to state that Pathway 2 AHPs operating in Vermont must post a public-facing notice prominently on their website stating that new groups cannot be accepted and that current plan members will have to seek alternative coverage during open enrollment for plan year 2020. Pathway 1 MEWAs and AHPs (those formed prior to the DOL’s Pathway 2 AHP rules) will be allowed to operate in VT consistent with the above-mentioned rules in plan year 2019 and beyond.
AHPs that are operating in VT should work with carriers to ensure coverage continues for AHP participants for the remainder of the plan year 2019. Pathway 2 AHPs will have to comply with DFR’s rules pursuant to the bulletin, though.
Wage Payment Statements
Effective January 1, 2020, HB 2664 requires all sized employers operating a business in Virginia to provide a detailed pay statement to each employee on each regular pay date. The statement may be provided in the form of a paystub or online accounting. The statement must show the name and address of the employer, the number of hours worked during the pay period, the rate of pay, the gross wages earned by the employee during any the pay period, and the amount and purpose of any deductions therefrom. There is an exception for agricultural employers who must only provide statements upon request of its employees detailing gross wages earned by the employee during any pay period and the amount and purpose of any deductions.
This law is not directly related to employee benefits. However, the law likely requires the wage statements to include information on health and retirement benefits since those are generally deductions from employees’ wages. Employers should ensure that they provide an adequate statement to employees pursuant to this rule.
This material was created by PPI Benefit Solutions to provide accurate and reliable information on the subjects covered but should not be regarded as a complete analysis of these subjects. It is not intended to provide specific legal, tax or other professional advice. The service of an appropriate professional should be sought regarding your individual situation. PPI does not offer tax or legal advice. "PPI®" is a service mark of Professional Pensions, Inc., a subsidiary of NFP Corp. (NFP). All rights reserved.
Industry news topics covered in the Compliance Corner are chosen based on general interest to most employers and may include articles about services not available through PPI.
If an employer makes changes to their benefits in the middle of a plan year, what notice requirements apply?