Healthcare Reform
Federal District Court Invalidates the ACA
On Dec. 14, 2018, a federal judge in the U.S. District Court for the Northern District of Texas held, in Texas v. U.S. , that the ACA's individual mandate is unconstitutional and therefore the entire ACA is invalid. The ruling is a result of a challenge to the ACA brought by a coalition of Republican-led states, including Texas. Because the current administration refused to defend the ACA, several Democratic-led states intervened to defend the law. The challenge is focused on the ACA's individual mandate -- the requirement for all US citizens to purchase health insurance or pay a penalty tax.
As background, in 2012, the U.S. Supreme Court held the individual mandate (and thereby the ACA) constitutional, stating that the individual mandate was actually a tax, and that imposing a tax is a valid exercise of Congress's authority. The coalition of states in Texas v. U.S. argued that Congress erased that constitutional basis for the individual mandate when it reduced the tax penalty to $0 under the Tax Cuts and Jobs Act of 2017. The district court agreed, stating that because the penalty tax is now gone, there's no constitutional justification for the individual mandate; and because the individual mandate is "essential to" and "inseverable from" the other provisions of the ACA, the entire ACA falls.
On Dec. 30, 2018, Judge O'Connor granted the intervenor states' request for final judgement based on the Dec. 14 decision and a stay of that judgement. This means that the coalition of intervening states can now appeal the law. An appeal would likely go to the U.S. Court of Appeals for the Fifth Circuit. Many legal experts believe the case is headed to the U.S. Supreme Court, meaning the ACA's future could once again be in the hands of the highest court in the land. There is also a chance Congress could revisit health care as an issue in 2019, although with Democrats taking control of the House, any legislative changes would require bipartisan support.
If the district court's ruling is ultimately upheld, the ACA would be deemed invalid. That would have far-reaching consequences, as the ACA goes beyond just the exchanges, premium tax credits and employer obligations most people are familiar with. For employers, though, while the employer mandate, reporting and other obligations would disappear, so would some of the more popular provisions. For example, plans could once again exclude adult children, impose cost-sharing for preventive services and annual exams, and exclude or impose surcharges for individuals with pre-existing conditions. While there does appear to be bipartisan congressional support for those more popular provisions of the ACA, it remains to be seen whether Congress would enact new legislation that would maintain those protections.
As for impact on employers, because the ACA remains the law for now, employer-related requirements remain in place. This includes the employer mandate, employer reporting (Forms 1094/95-C), Summary of Benefits and Coverage, W-2 reporting of employer-sponsored coverage, and all insurance mandates: coverage of dependents up to age 26, coverage of preventive services without cost-sharing, and the prohibitions on annual limits for essential health benefits and pre-existing condition exclusions. In addition, the exchanges remain open for business for individuals; people who enrolled by the Dec. 15, 2018, deadline received coverage effective Jan. 1, 2019. Employers should continue to monitor their compliance obligations.
As always, PPI's Benefits Compliance team will continue to track and report on future developments on this issue.
Texas v. U.S.
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Partial Final Judgement >>
Order Granting Stay >>
Ninth Circuit Narrows Application of Injunction on Contraceptive Mandate Exemptions
On Dec. 13, 2018, the U.S. Court of Appeals for the Ninth Circuit issued a preliminary opinion in the case of California v. Azar . This case, which was brought by the states of California, Delaware, Virginia, Maryland and New York, challenges the Trump administration's exemptions for the ACA's contraceptive mandate. As background, the ACA requires most employers to provide certain preventive services, including contraceptive services and items, without cost-sharing. Under the ACA, certain qualifying religious employers were already exempt from the contraceptive coverage requirement, and other employers that held religious objections could also request an exemption via an accommodation process.
However, in October 2017, HHS published two interim final rules that significantly expanded the religious exemption (as outlined in our Oct. 20, 2017, article here ) by allowing any employer (including non-closely held companies and publicly traded companies) to claim a religious or moral objection to offering certain contraceptive items and services. The interim final rules also provided an exemption for insurers with sincerely held moral objections to contraceptive coverage.
The states filed this lawsuit in early 2018, challenging the new exemptions. They argued that the DOL had failed to follow the Administrative Procedures Act (APA) and that the new exemptions would harm their state residents. The federal district court in which the case was filed agreed and imposed a nationwide preliminary injunction on the interim final rules. A federal court in Pennsylvania did the same.
The government appealed this case, arguing (among other things) that the states didn't have standing to sue. The Ninth Circuit disagreed with that argument, holding that the states do have standing to sue on this issue and that the government likely violated the APA's requirements. However, the court found the district court's nationwide injunction to be overbroad and so they limited the injunction to the states of California, Delaware, Virginia, Maryland, and New York (which are the states that filed the lawsuit).
Ultimately, the future of these exemptions remains uncertain. As we recently discussed in Compliance Corner (see our Nov. 15, 2018, article here ), the government released the final versions of these exemptions. They are scheduled to become effective later this month. Additionally, the nationwide injunction imposed by the federal district court in Pennsylvania is still intact.
For employers, neither the court decisions nor the final rules settle the issue. As such, employers wishing to rely upon any expanded religious exemptions to the ACA's contraceptive mandate should work with outside counsel to better understand the risks inherent in going forward with claiming an exemption.
Federal Updates
EEOC Wellness Incentive Rule Removed
As expected, the part of the final ADA wellness rules related to incentives has been removed from the regulations. The rules were originally effective for plan years starting on or after Jan. 1, 2017. They limited the amount of a reward or incentive offered through an employer sponsored wellness program to 30 percent of the premium cost if the program involved a disability related inquiry or medical examination. The AARP then challenged the incentive part of the regulations arguing that the incentive differential was too high considering the high cost of health coverage and lead to discrimination against older Americans. As discussed in the Jan. 10, 2018, edition of Compliance Corner , the U.S. District Court for the District of Columbia ruled in December 2017 that the relevant section of the regulations would be vacated effective 2019.
The EEOC had an opportunity to reconsider their regulations and issue revised rules. They have not done so to date. Thus, the incentive portion of the regulations are no longer in effect and are removed effective Jan. 1, 2019.
Importantly, the HIPAA rules related to wellness programs (including a limitation on reward amounts, requirement to provide a reasonable alternative standard, and an additional notice requirement) aren't impacted by this action and remain applicable to employer-sponsored wellness programs.
Additionally, the EEOC Wellness Notice requirement was not impacted and is still required for employer sponsored programs involving a disability related inquiry (such as a health risk assessment) or medical examination (including a biometric screening). Employers who continue to impose a penalty or provide an incentive for such programs should work with outside counsel to determine next steps and guidance for their program.
Removal of ADA Wellness Rules >>
Removal of GINA Wellness Rules >>
IRS Releases 2019 HSA Reporting Forms 1099-SA and 5498-SA and Instructions
The IRS recently published updated versions of Forms 5498-SA and 1099-SA and combined instructions for 2019.
As background, the IRS requires HSA trustees and custodians to report certain information to the IRS and to the HSA holder regarding contributions, distributions, the return of excess contributions and other matters the IRS deems appropriate. Form 5498-SA is used by trustees and custodians of HSAs and Archer MSAs to report contributions and any administration or account maintenance fees. Form 1099-SA is used to report distributions, including any curative distributions in the event of excess contributions. HSA account holders report contributions and distributions on Form 8889.
Other than updated filing and delivery deadlines, the 2019 forms and related instructions are largely unchanged from the 2018 versions.
Forms 1099-SA and 5498-SA generally apply only to HSA trustees and custodians. However, employers that offer an HSA may want to familiarize themselves with these forms, particularly in the event of any excess contributions.
Form 5498-SA >>
Form 1099-SA >>
Form 1099-SA and 5498-SA Instructions >>
IRS Published Guidance for Tax-Exempt Organizations on Nondeductible Parking Benefits, Including Limited UBTI Relief
On Dec. 10, 2018, the IRS published two notices (2018-99 and 2018-100) and a news release relating to tax-exempt organizations, nondeductible parking expenses and limited unrelated business taxable income (UBTI) relief. As background, the Tax Cuts and Jobs Act of 2017, enacted in December 2017, makes qualified transportation benefit expenses nondeductible (for 2018 and beyond). If such expenses are incurred by a tax-exempt organization, those expenses are treated as UBTI. The two 2018 notices provide guidance on nondeductible parking expenses and UBTI.
On nondeductible parking expenses (under Notice 2018-99), the amount of parking expenses that will be treated as nondeductible business expenses (and therefore UBTI for a tax-exempt organization) depends on how those parking expenses are provided -- as payments to a third party or through employer-owned or leased parking facilities. On payments to a third party, the process is straightforward: the nondeductible expense is the amount paid to the third party (up to the monthly limit for qualified parking benefits (which was $260 for 2018). Since payments above the monthly limit are not excludable from an employee's income, those payments are unaffected by the rule that disallows deductions for qualified transportation fringe benefits. Instead, they are treated as employee compensation (subject to employment and income tax withholding, the same as any other taxable compensation).
On employer-owned or leased facilities, the process is less clear: the employer should use any reasonable method to determine the nondeductible expense. The notice outlines a four-step process that would be deemed reasonable; the process looks at several factors relating to the employee's use of the employer-owned parking facility, and whether that use is a primary use for employees versus the general public.
Notice 2018-99 also addresses UBTI. Specifically, the notice confirms the general notion that rules for determining UBTI attributable to qualified transportation fringe benefits provided by a tax-exempt organization mirror the rules for other taxpayers. In addition, though, the notice clarifies that tax-exempt organizations that have only one unrelated business or trade may reduce UBTI by the amount of any unused deductions that exceed the gross income of that trade or business. The notice also explains that tax-exempt organizations with less than $1,000 in UBTI do not need to file Form 990-T (Exempt Organization Business Income Tax Return) or pay UBTI tax.
Lastly, Notice 2018-100 provides a waiver for certain tax-exempt organizations. As background, tax-exempt organizations that underpay their estimated taxes are normally assessed a penalty. The notice provides a waiver from that penalty if the underpayment results from changes to the tax treatment of qualified transportation fringe benefits. In other words, if the employer otherwise reported and paid UBTI for all unrelated business income except that relating to qualified transportation fringe benefits, the underpayment penalty will be waived. The notice provides details on how tax-exempt organizations would claim that waiver.
Overall, because tax-exempt organizations face many challenges with regard to federal taxation and filings, and because UBTI is really outside the scope of employee benefits, employers should work with their accountant or tax counsel in understanding and applying the above IRS guidance.
Company Ordered to Pay Restitution after DOL Investigates Tobacco Surcharge Failures
On Nov. 30, 2018, the DOL announced that it has entered into a settlement to resolve its lawsuit against Dorel Juvenile Group, Inc., a Massachusetts based juvenile products company with thirty-four locations worldwide. The DOL challenged Dorel's wellness program under ERISA by alleging that the employer breached their fiduciary responsibilities and discriminated against employees from 2013 to 2017 by requiring them to pay health premium surcharges through the imposition of an impermissible wellness program.
Specifically, the DOL filed its lawsuit in U.S. District Court for the Southern District of Indiana and contended that Dorel instituted a wellness program that unlawfully required employees to pay a tobacco use surcharge without the availability of the required reasonable alternative standard or waiver.
As background, if a wellness program provides a reward (premium reduction) for individuals satisfying a standard related to a health factor (in this case, the health factor being nicotine-free), then this is called an outcomes-based health contingent wellness program and the program must meet five requirements in order to comply with the HIPAA nondiscrimination rules.
First, the premium differential may not exceed 30 percent. If the program is designed to eliminate or reduce tobacco usage, the reward may be up to 50 percent of the premium cost. This means that the amount of the reward (or premium reduction) given for being nicotine free cannot be more than 50 percent of the total premium cost. The cost is based on the employer and employee contributions for self-only coverage. If the spouse and dependents are also included in the wellness program, then the reward may be based on the cost of the applicable premium.
Second, the program should be designed to "promote health and prevent disease." The employer should have written documents explaining the program and its purpose.
Third, participants must be offered an opportunity at least once annually to meet the standard and thus qualify for the reward.
Fourth, the employer must offer a reasonable alternative standard for obtaining the reward. In other words, the employer must provide an alternative way for an employee (spouse or child) to receive the reward other than being tobacco free. A reasonable alternative must be provided to all individuals who do not meet the requirement of being tobacco free. For example, many employers choose to require a smoking cessation program as the reasonable alternative standard.
So, the employer can require the employees to meet this standard each plan year. However, the employer has to give the employee the entire plan year to complete the reasonable alternative standard. Additionally, the employer would have to make the reward retroactive to the beginning of the plan year.
Fifth and finally, all program materials must include information on the availability of a reasonable alternative standard.
As part of the settlement Dorel must revise the tobacco surcharge contained in its wellness program to comply with HIPAA, which prohibits group health plans from discriminating against individuals in eligibility and continued eligibility for benefits and in individual premium or contribution rates on the basis of any health status-related factor. Dorel must also ensure that participants who utilize a reasonable alternative standard earn the same reward as non-tobacco users and cannot require plan participants to submit a tobacco use certification more than once per year.
Additionally, under the settlement Dorel agreed to pay restitution of $145,635 to 596 employees of their California, Indiana, and Massachusetts facilities who paid a tobacco use surcharge as part of their medical insurance premium during the period 2013 to 2017.
Finally, Dorel was also assessed a civil penalty under ERISA for breach of fiduciary duty totaling $29,127, which is twenty percent of the applicable recovery amount. The DOL agreed to compromise and reduce the amount of the penalty to $14,563.50, which is a fifty percent reduction, if Dorel waived certain notice rights regarding the penalty and its right to seek any further reduction of the penalty under ERISA.
Employers sponsoring a wellness program should consider the consequences of failing to do so in a HIPAA-compliant manner.
IRS Announces 2019 Mileage Rates for Medical Expenses
On Dec. 14, 2018, the IRS issued Notice 2019-02 which provides the 2019 standard mileage rate for use of an automobile to obtain medical care. The 2019 mileage rate increased to 20 cents per mile, which is up two cents from the 2018 rate. Mileage costs may be deductible under Code SS 213 if it is primarily for, and essential to, receiving medical care.
Generally, use of the standard mileage rate is optional, but it can be used instead of calculating variable expenses (e.g., gas and oil) incurred when a car is used to attain medical care. Parking fees and tolls related to use of an automobile for medical expense purposes may be deductible as separate items. However, fixed costs (such as depreciation, lease payments, insurance, and license and registration fees) are not deductible for these purposes and are not reflected in the standard mileage rate for medical care expenses.
In addition, transportation costs that are qualified medical expenses under Code SS 213 generally can be reimbursed on a tax-free basis by a health FSA, HRA, or HSA, assuming the plan document allows for it.
Retirement Update
IRS Updates Publication 571 on 403(b) Plans
In January 2019, the IRS updated Publication 571, entitled "Tax-Sheltered Annuity Plans (403(b) Plans) For Employees of Public Schools and Certain Tax-Exempt Organizations." This publication is designed to help tax filers better understand 403(b) plans and the related tax rules.
Specifically, Publication 571 provides information that will help individuals determine the amounts that can be contributed to their 403(b) plans (in 2018 and 2019), identify excess contributions, understand the basic rules for claiming the retirement savings contribution credits and understand the basic distribution rules.
Although the updates to the publication mainly describe the increased contribution and tax credit limits, this publication would be helpful to any employer that sponsors a 403(b) plan.
Announcements
Form W-2 Cost of Coverage Reporting
Large employers must report the cost of group health coverage provided to employees on the Form W-2. The requirement applies to employers that filed 250 or more Forms W-2 in 2017. Employer aggregation rules do not apply for this purpose. In other words, the number of Forms W-2 is calculated separately without consideration of controlled groups. Indian tribes, self-funded church plans and employers contributing to a multiemployer plan are exempt from the Form W-2 reporting requirement.
FAQ
With the ACA Section 6056 employer reporting deadlines fast approaching, what are some of the most common reporting errors that employers make?
Large employers with 50 or more full-time employees in 2017, including full-time equivalents, are required to comply with certain reporting requirements under Section 6056 of the IRC for calendar year 2018. The employer must complete and distribute a Form 1095-C by March 4, 2019, to each employee who was full-time for at least one month in 2018. If filing by paper, the employer must file those forms and the transmittal Form 1094-C with the IRS by Feb. 28, 2019; if filing electronically, the deadline is April 1, 2019. Employers filing 250 or more forms are required to file electronically.
As this is the fourth year of reporting and the IRS has begun enforcement, there are some common errors made by employers that can be identified:
Failure to file. Remember that size is determined in the previous calendar year and is based on the total size of all related employers. Thus, if a small employer is part of a controlled group and the total number of full-time employees across the group is 50 or more, then all employer members of a controlled group are subject to the employer mandate and reporting requirements.
If an employer discovers that they were delinquent in a previous year, they should work to correct the failure as soon as possible. This would include both filing the late forms with the IRS and distributing the forms to full-time employees. Failure to file can carry a penalty of $540 per form with possible increased penalties for willful neglect.
Qualifying Offer. The code 1A used on Line 14 of the Form 1095-C and the related "Qualifying Offer Method" on Line 22 of the Form 1094-C are often misunderstood. Many think that if they complied with the employer mandate by providing minimum value and affordable coverage then they use this code and check that box. But the term "qualifying offer" is very specific and most employers will not qualify for this method. A qualifying offer means that the employer's offer is not only of minimum value but also that it is affordable per the federal poverty level safe harbor. In order to qualify, the employee's required cost for self-only coverage must have been $96.71 or less per month in 2018. If the employee's cost of coverage was more, that does not necessarily mean that the coverage was not affordable or that the employer did not comply with the mandate. It simply means that the employer may need to use 1E on Line 14 and the cost of coverage may have been affordable using one of the other two affordability safe harbors: rate of pay or Form W-2.
Failure to review forms prior to submission. In Column (a), Part III of the Form 1094-C, large employers must indicate whether they offered minimum essential coverage to substantially all of their full-time employees for every month in 2018. Substantially all means at least 95 percent of full-time employees.
In previous years, many employers who indeed complied with the requirement indicated a "No" response in the column. In many cases, this error was due to how data was processed either by the software or the vendor that was utilized for reporting. Remember that even if there is a third party completing the reporting on behalf of the employer, the employer is ultimately responsible for the accuracy of the information and any associated penalties for failures.
A "No" response in Column (a), Part III of the Form 1094-C can result in Penalty A being assessed against the employer by the IRS, which is $2,320 ($193.33 prorated monthly) multiplied by the total number of full-time employees minus the first 30 employees. Thus, it is crucial for an employer to review all forms for accuracy prior to filing with the IRS and distributing to employees.
State Updates
Michigan
Paid Sick Leave
On Dec. 13, 2018, Governor Snyder approved a paid medical leave law that takes effect on March 29, 2019, and revises a previously enacted earned sick time law that had an April 1, 2019, effective date and was included in the Oct. 3, 2018, edition of Compliance Corner .
As background, the legislature adopted the initiative petition creating an Earned Sick Time Act on Sept. 5, 2018, enacting it as Public Act 338 of 2018. Senate Bill 1175 (now Public Act 369 of 2018) would amend Public Act 338's provisions prior to its effective date.
The new law revises the original law's provisions by exempting more employers, lowering the leave accrual and use requirements, and repealing employees' ability to sue employers for violations.
Specifically, among other things, the bill would amend the Earned Sick Time Act to do all of the following:
- Rename the Act the Paid Medical Leave Act.
- Lower the number of hours that could generally be accrued from 72 to 40, and provide that an eligible employee could accrue one hour for every 35 hours worked, instead of one for every 30.
- Limit the application of the law to employers with 50 or more employees.
- Eliminate relatives of a domestic partner from the list of qualifying family members for whom the employee could use paid medical leave time.
As for takeaways for employers, the law takes effect in March of this year and employers should be mindful of upcoming compliance requirements. Additional guidance will likely be forthcoming. Ultimately, employers that have employees in Michigan will want to work with outside counsel to incorporate the new requirements into their overall leave policy.
New York
2019 Paid Family Leave Increases Now In Effect
Effective Jan 1, 2019, New York increased the number of weeks eligible employees can take under the Paid Family Leave Law from eight weeks to ten weeks per year. In addition, the average weekly wage increased to 55 percent (up from 50 percent in 2018), up to a cap of 55 percent of the current statewide average weekly wage of $1,357.11. As a result, the new maximum weekly benefit for 2019 for employees who are on NY Paid Family Leave is $746.41.
An eligible employee can take NY Paid Family Leave to bond with a new child, care for a family member with a serious health condition, or assist loved ones when a family member is deployed abroad on active military service. The law contains a phased-in system for eligible workers that will continue to rise through 2021, when eligible employees will be able to take up to twelve weeks of paid, job-protected leave.
Correspondingly, the 2019 employee contribution rate will also increase from 0.126 percent to 0.153 percent of an employee's gross wages each pay period (capped at the statewide average weekly wage). So, an employee's maximum annual contribution will increase from $85.56 to $107.97. Employers were able to start taking deductions at the new 2019 rate as of Jan. 1, 2019.
The state has also updated their website to describe the 2019 benefits available under NY Paid Family Leave, including an outline of the 2019 weekly benefit as well as the phase-in transition through to 2021. The website also provides additional FAQs specifically related to the 2019 changes, including how to address individuals that began a leave in 2018 that extended into 2019, and those employees that experience an additional qualifying event in 2019 after already exhausting the eight week leave within the last 52-week period.
Please also note that effective Feb. 3, 2019, the definition of "serious health condition" was expanded to include preparation for and recovery from surgery related to organ or tissue donation, ensuring those who donate organs can be cared for by their eligible family members under NY Paid Family Leave.
Utah
Reminder of Existing Requirements for AHPs
On Dec. 11, 2018, Ins. Commissioner Kiser issued Bulletin 2018-5 to remind health insurers, health insurance producers and third-party administrators of the existing Utah statutory requirements related to health coverage offered through an Association Health Plan (AHP). Generally, UT law subjects an AHP to the same statutory and regulatory requirements as any other association group coverage. However, there are differences between UT law and federal requirements.
As background, on June 21, 2018, the DOL released the final AHP rule to provide additional flexibility for a group or association of employers to establish a group health plan as an employer welfare benefit plan under ERISA. The rule acknowledged that no health care coverage provided through a MEWA or AHP is preempted from state regulation.
Self-funded AHPs (or level-funded AHPs) offering health coverage in UT are required to be an admitted insurer in UT. Information regarding the process to obtain a certificate of authority is available here: https://insurance.utah.gov/licensee/insurers/company-licensing . In addition, an AHP must be a valid association group authorized by the insurance commissioner as well as comply with applicable state laws.
To distinguish from the federal DOL rule, this bulletin identifies separate "pathways" for AHPs; Pathway I AHP applies to those formed under federal requirements prior to Sept. 1, 2018, and Pathway II AHP applies to an AHP formed after Sept. 1, 2018, under the newly available federal rules. In UT, an AHP may select which pathway it is operating under at issuance of the policy or at renewal, but no more frequently than once every twelve months. The applicable experience/claim rating and benefit requirements depend upon the pathway selected.
Finally, an out-of-state AHP may only offer a fully-insured plan to UT employers, including sole proprietors (assuming the AHP is properly filed and meets all applicable UT laws). A self-funded AHP may not provide coverage to UT residents, unless the AHP obtains a certificate of authority as is required of insurers and producers offering coverage to UT residents.
Vermont
Rules for Self-Funded MEWAs and AHPs
On Dec. 28, 2018, Vermont's Dept. of Financial Regulation issued Rule I-2018-02-E to set forth rules, forms and procedures regarding self-funded multiple employer welfare arrangements (MEWAs) and association health plans (AHPs). This rule is intended to protect VT consumers and promote the stability of VT's health insurance markets through implementing licensure, solvency, reserve and rating requirements. It is important to note that the rule does not apply to fully funded AHPs (including self-funded associations and MEWAs insured via a captive insurance company).
As background, this rule is in response to the DOL's amendment on June 21, 2018, to ERISA that expanded the definition of "employer" as related to AHPs. VT clarifies that it retains the authority over domestic and foreign self-funded association health benefit plans offering plans to its residents and has authority to regulate any association or MEWA offering a self-funded health benefit plan, to the extent permitted by federal law. This new rule details the new requirements for a self-funded MEWA or AHP and also highlights that self-funded AHPs or MEWAs did not have any authority to operate in the state prior to Jan. 1, 2019.
Among other details provided in the rule, a self-funded health benefit plan offered by an association or MEWA must be licensed and subject to the state's applicable regulations. The rule details the requirements for licensure, including the requirement to maintain a compliant stop-loss insurance policy or contract, as well as to establish and maintain appropriate reserves for loss and loss adjustment as determined by sound actuarial principles.
In addition to the above, the AHP or MEWA must obtain rate approval from the Green Mountain Care Board on an annual basis. A community rating methodology is required, but permits the AHP or MEWA to be rated based on the collective group experience of its members (rather than at the employer level) provided that each certificate holder and dependent is charged the same community rate and that all members (and their dependents) are guaranteed to be accepted into the plan. Regarding rates -- there are several prohibited risk classification factors (for both the employee members and dependents), as well as medical loss ratio requirements.
Each health benefit plan offered must also comply with the state's essential health benefits, cost sharing requirements, lifetime and annual limits, and all other insurance and benefit mandates. In addition, the plans must follow the requirements for membership, benefits, enrollment periods, financial auditing, advertising/marketing, record retention, advertising/marketing and enforcement authority.
Employers in VT that are considering an AHP or MEWA should familiarize themselves with these rules and also ensure that any agent or broker is aware of them before engaging in such a plan structure.
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.