PPI in the News Compliance Corner - July 12, 2018 Archive
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CMS has imposed a new reporting requirement on employers who sponsor wraparound coverage. Few employers will be impacted by the new requirement as wraparound coverage is a specific type of coverage that is rarely offered.

As background, wraparound coverage was introduced in 2015 as a new type of excepted benefit. As an excepted benefit, it's exempt from certain ACA insurance mandates (such as the essential health benefits requirement and the prohibition on lifetime and annual dollar limits) and HIPAA portability (including special enrollment rights).

Wraparound coverage must supplement either non-grandfathered/non-grandmothered individual or multi-state plan coverage. The plan must provide meaningful coverage beyond general cost sharing. The cost of the wraparound coverage must be no more than the greater of the annually indexed health FSA employee contribution limit ($2,650 in 2018) or 15 percent of the cost of the employer's primary medical plan. Importantly, the employees who are eligible for the wraparound coverage must either be retired employees or employees who are not reasonably expected to be full-time (i.e. part-time employees). They must be offered non-excepted coverage by the employer. Further, the employer must still offer full-time employees the opportunity to enroll in minimum value, affordable employer-sponsored medical coverage. Lastly, the coverage must first be implemented between Jan. 1, 2016 and Dec. 31, 2018 and be in effect for no more than three years.

The one-time reporting requirement is due within 60 days after the publication of the form (on June 25) or 60 days after the first of the plan year that the coverage is offered, whichever is earlier. The Wraparound Coverage Reporting Form will collect the following information: the type of coverage that is supplemented (individual or multi-state plan); who is eligible to enroll; number of enrolled; and additional benefits provided by the coverage (for example, services such as home health care or access to an onsite health clinic at no cost).

While wraparound coverage has been available since 2016, very few employers have implemented such coverage because of the limited application. It's really only beneficial for employers wanting to help supplement individual coverage purchased by non-full-time employees who are already eligible for one of the employer's medical plans. Employers are generally not required to offer any type of coverage to such employees. Thus, most employers do not sponsor such a plan and will not be impacted by this new requirement.

Wraparound Coverage Reporting Form >>

The IRS recently published guidance containing certain relief for those individuals and businesses affected by the continuing Hawaii volcanic eruptions and earthquakes that started on May 3, 2018.

Specifically, the IRS offered extensions of certain tax filing deadlines because of this natural disaster. The extensions apply automatically to any individual or business in an area designated by the Federal Emergency Management Agency (FEMA) as qualifying for individual assistance. So, in Hawaii, individuals who reside or have a business in Hawaii County may qualify for tax relief. As a result, if a form was due on or after May 3, 2018, and before Sept. 17, 2018, additional time to file the form through Sept. 17, 2018, is available.

The relief would apply to quarterly payroll/employment/excise tax filings due. Additionally, employers in Hawaii County should also keep the relief in mind if they have difficulty gathering the documentation needed to complete their Form 5500. Some employers may still wish to file Form 5558 (Application for Extension of Time to File Certain Employee Returns), which, if timely filed, provides an automatic two-and-a-half months extension (i.e., to October 15 for calendar-year plans).

Announcement HI-2018-02 >>

On June 18, 2018, HHS announced that a $4,348,000 penalty against The University of Texas MD Anderson Cancer Center (MD Anderson) was affirmed by an administrative law judge (ALJ). The penalty resulted from HIPAA privacy and security rule violations and represents the fourth largest amount awarded to OCR for a HIPAA violation.

As background, HHS's Office for Civil Rights (OCR) is responsible for HIPAA enforcement and investigated MD Anderson after three separate data breaches were reported in 2012 and 2013. One breach involved the theft of an unencrypted laptop from the residence of an MD Anderson employee and the other two involved the loss of unencrypted universal serial bus (USB) thumb drives containing electronic protected health information (ePHI) of over 35,500 individuals.

OCR's investigation into MD Anderson found that it was not following its own encryption policies and did not take action when an internal risk analysis discovered that the lack of device-level encryption posed a high risk to the security of ePHI. MD Anderson asserted three different claims as to why their breach was not an unauthorized disclosure. First, they argued that a disclosure had not occurred because there was no proof that a third party had received or viewed the PHI that was left on those devices. The ALJ rejected that argument as nothing in the HIPAA regulations requires that lost information must be viewed by unauthorized individuals in order to be disclosed. Instead, simply releasing PHI constitutes a disclosure for which OCR has the authority to impose a penalty.

Second, MD Anderson defended its actions by asserting that the obligation to encrypt did not exist, since the ePHI was being used for 'research' and was, therefore, not subject to HIPAA's nondisclosure requirements. The ALJ rejected this argument because there is nothing in HIPAA that subjects that HIPAA rules do not apply to PHI that is disclosed in the course of research.

Third, MD Anderson claimed that the actions of employees were unsanctioned and the result of theft, and therefore their actions couldn't be imputed to MD Anderson. However, the ALJ reasoned that HIPAA holds principals liable for the acts of their agents, including employees, when they act within the scope of their duties. In this case, the employees in question had access to the laptop and USB pursuant to their official capacity. So MD Anderson was not off the hook for the actions of its employees.

For employers, this decision is a great reminder that the OCR is pursuing HIPAA privacy violations, especially those issues related to risk management. Employers should conduct routine risk assessments and address any discovered vulnerabilities. When a company is investigated, the OCR will likely impose penalties if a company fails to implement effective safeguards, such as data encryption, as required to protect sensitive information.

ALJ decision >>
HHS press release >>

On June 21, 2018, the United States Court of Appeals for the Fifth Circuit issued an order officially vacating the DOL's Fiduciary Rule. This action comes after the government failed to file an appeal (with the Fifth Circuit or the US Supreme Court) in the U.S. Chamber of Commerce v. DOL case. As a reminder, we discussed this case in the March 17, 2018 edition of Compliance Corner .

The fact that the Rule has been vacated means that the prior five-part test that was used to determine if an investment adviser was a fiduciary is back in place. Specifically, the original regulations identified investment fiduciaries using a test in which the fiduciary:

1. Renders advice as to the value of securities
2. Does so on a regular basis
3. Renders advice pursuant to a mutual agreement
4. Gives advice which serves as the primary basis for investment decisions
5. Provides individualized advice

It's also possible that the DOL could choose to promulgate new rules. While they have issued a non-enforcement policy for any financial institutions that have relied on the Best Interest Contract (BIC) Exemption and other Rule-related prohibited transaction exemptions (PTEs), the DOL has acknowledged that the Rule being vacated has resulted in a compliance gap that might need to be overcome by new regulations. In other words, investment advisers that are making conflicted investment advice will still need a way to comply with ERISA, even though the Rule and its PTEs have gone away. Until the DOL proposes new rules, advisers who rely on the BIC or other PTEs will be safe from DOL enforcement.

Keep in mind, also, that the SEC has now presented its own rule and some states have even proposed regulations that would mirror the Rule. So it seems clear that the Rule will still affect the retirement industry in some ways.

Although this order seems to end a years-long journey that saw the creation and ultimate demise of this Rule, we will continue to follow any developments concerning the fiduciary status of investment advisers and employer plan sponsors who provide retirement plans.

Fiduciary Rule Vacated >>

On July 3, 2018, the IRS released updated model submission forms for its Voluntary Correction Program (VCP). The updated model forms (now dated June 2018) include: Form 14568-B (Other Nonamender Failures and Failure to Adopt a 403(b) Plan Timely), Form 14568-E (Plan Loan Failures including Qualified Plans and 403(b) Plans), and Form 14568- H (Failure to Pay Required Minimum Distributions Timely).

As background, the VCP is a self-correction program that allows an employer to apply to correct mistakes in either the plan document language or plan operations. The updated forms are used in conjunction with Form 1568 -The Model VCP Compliance Statement.

When needed, employers should use the updated model forms going forward. Please note that not all of the VCP model forms have been updated. Those that weren't, seem to have been last updated in either August 2016 or September 2017.

For additional information about the VCP and the related forms, visit: https://www.irs.gov/retirement-plans/voluntary-correction-program-general-description

Form 14568-B >>
Form 14568-E >>
Form 14568-H >>

On June 12, 2018, Gov. Malloy signed SB 302 into law. The new law, effective July 1, 2018, revises provisions regarding telehealth services to specify that "telehealth" means delivering health-care services through information and communication technologies to facilitate health-care management, consultation, diagnosis, education, self-management, or treatment of plan participants' physical and mental health when participants are located at originating sites and telehealth providers are located at distant sites. Telehealth includes synchronous interactions, asynchronous store and forward transfers or remote monitoring. Telehealth doesn't include fax transmissions, audio-only telephone, texts or e-mail.

There is no specific action required of employers, but they should work with insurers to understand the required coverage and update the plan accordingly.

SB 302 »

On May 25, 2018, Gov. Malloy signed HB 5210 into law. The new law requires small employer plans to provide coverage for certain preventive care services with no cost sharing to participants. The coverage is similar to that required of non-grandfathered plans under the ACA, but the state mandate will also to grandfathered plans and will remain in place even if the federal requirement is repealed or altered.

The law also requires certain treatment for women, children and adolescents and seems aimed at protecting some of the preventive services guaranteed by the ACA on the state level (should the ACA be repealed, and based on the changes to the contraceptive mandate).

Specifically, plans must provide coverage for preventive care screenings for plan participants age 21 and younger in accordance with most recent edition of American Academy of Pediatrics' Bright Futures: Guidelines for Health Supervision of Infants, Children, and Adolescents or any subsequent corresponding publication. Issuers can't impose coinsurance, copayments, deductibles or other out-of-pocket expenses for coverage of preventive care screenings benefits and services. Cost-sharing when such benefits and services are provided out of network is permissible except in high-deductible health plans that are used to establish HSAs.

Additionally, plans that provide coverage for prescription drugs must provide coverage for immunizations recommended by the American Academy of Pediatrics, the American Academy of Family Physicians and the American College of Obstetricians and Gynecologists, and immunizations that have in effect a recommendation from the Advisory Committee on Immunization Practices of the federal Centers for Disease Control and Prevention

Plans must also provide coverage for evidence-informed preventive care screenings for infants, children, adolescents and women provided in guidelines supported by the federal Health Resources and Services Administration, as effective on Jan 1, 2018, and such additional preventive care and screenings provided for in any comprehensive guidelines effective after Jan. 1, 2018; and evidence-based items or services that have a rating of 'A' or 'B' in the current recommendations of the US Preventive Services Task Force effective after Jan. 1, 2018.

Further, plans must provide coverage for screening and counseling for interpersonal and domestic violence for female plan participants.

And as it pertains to tobacco use by women, plans must provide coverage for tobacco use intervention and cessation counseling for female plan participants who consume tobacco.

In seeking to protect some of the women's services offered under the ACA, the law also requires plans to must also provide certain women's healthcare services coverage for the following preventive care, benefits and services:

• Well-woman visits for female plan participants who are younger than age 65
• Breast cancer chemoprevention counseling for female plan participants who are at increased risk for breast cancer due to family history or prior personal history of breast cancer, positive genetic testing or other indications as determined by participants' physicians or advanced practice registered nurses
• Breast cancer risk assessment, genetic testing and counseling
• Gonorrhea, human immunodeficiency virus, chlamydia, cervical and vaginal cancer and sexually transmitted infections screenings for sexually-active female participants
• Human papillomavirus screening for female plan participants with normal cytology results who are age 30 or older
• Anemia screening and folic acid supplements for pregnant female participants and female participants likely to become pregnant
• Hepatitis B and Rh incompatibility screenings for pregnant female participants and follow-up testing for such participants who are at risk for Rh incompatibility
• Syphilis screening for pregnant female participants and female participants who are at increased risk for syphilis
• Urinary tract infection and other infection screenings for pregnant female participants
• Gestational diabetes screening for female participants who are 24-28 weeks pregnant and female participants who are at increased risk for gestational diabetes
• Osteoporosis screening for female participants who are age 60 or older

The same is true of maternity healthcare, and the law requires plans to provide coverage for:

• Anemia screening and folic acid supplements for pregnant female participants and female participants likely to become pregnant
• Rh incompatibility screenings for pregnant female participants and follow-up testing for such participants who are at risk for Rh incompatibility
• Syphilis screening for pregnant female participants and female participants who are at increased risk for syphilis
• Urinary tract infection and other infection screenings for pregnant female participants
• Breastfeeding support and counseling for pregnant or breastfeeding plan participants
• Breastfeeding supplies, including, but not limited to, breast pumps for breastfeeding participants
• Gestational diabetes screenings for female participants who are 24-28 weeks pregnant and female participants who are at increased risk for gestational diabetes

Finally, the law imposes a state requirement for plans to provide coverage for all contraceptive methods. Specifically, plans must provide coverage for the following benefits and services:

• All contraceptive drugs, including, but not limited to, all FDA-approved over-the-counter contraceptive drugs (such plans can require plan participants to use contraceptive drugs designed by the FDA as therapeutically equivalent to contraceptive drugs prescribed to participants prior to using prescribed contraceptive drugs, unless participants' prescribing health-care providers determine otherwise)
• All contraceptive devices and products, excluding all FDA approved over-the-counter contraceptive devices and products (such plans can require plan participants to use contraceptive devices or products designated by the FDA as therapeutically equivalent to contraceptive devices or participants' prescribing providers request less than a 12-month supply. Participants aren't entitled to receive a 12-month supply of such contraceptive drugs, devices, or products more than once during any policy year
• All FDA-approved sterilization procedures for female plan participants
• Routine follow-up services related to FDA-approved contraceptive drugs, devices and products
• Counseling in FDA-approved contraceptive drugs, devices, and products and proper use of such drugs, devices, and products

Keep in mind, though, that the law includes a Religious Employer Exemption. Essentially, employers that are organized to promote religious beliefs, such as churches and church-affiliated organizations aren't required to offer plans that provide coverage for prescription contraceptive methods if contraceptive use conflicts with employer's' religious beliefs. Employers that are organized to promote religious beliefs, such as churches and church-affiliated organizations, aren't required to offer plans that provide coverage for contraceptive benefits and services if contraceptive use conflicts with employers' religious beliefs. There's no specific action required of employers in this regard, but employers with fully-insured plans in Connecticut should work with insurers to understand the required coverage and update the plan accordingly.

Public Act No. 18-10 »

On June 28, 2018, Gov. Baker signed into law Chapter 175M, making Massachusetts the seventh state to provide workers with paid family and medical leave. The new law provides up to 12 weeks of paid family leave and up to 20 weeks of paid medical leave (subject to a combined maximum of 26 weeks total leave in a year). The bill imposes a three year phase-in period, but as of Jan. 1, 2021, all private MA employers must provide "covered individuals" with paid family and medical leave.

Under the law, workers on paid leave will earn 80 percent of their wages (capped at 50 percent of the state average weekly wage) and up to 50 percent of their wages beyond that amount (capped at $850/week, adjusted annually). Unlike federal FMLA that impacts employers with at least 50 employees, the state law will apply to all employers with one or more employees working in MA and will be available to eligible new employees without any hours worked or service time requirements. The law also will apply to certain former employees and self-employed workers.

The paid leave program will be paid by a newly created state trust fund, which will be funded by a payroll tax of 0.63 percent that can potentially be split between the employer and employee (slated to begin by July 1, 2019). The program will be administered by a newly established Department of Family and Medical Leave that is tasked to craft proposed regulations by March 31, 2019. The new law includes notice requirements and associated penalties for noncompliance.

This new law requires significant changes for private employers with employees in MA. Though the funding will not begin until July 1, 2019 and the law's details have not yet been provided, it is important that employers prepare and consider consulting with outside counsel to review policies and practices in response to this new law.

Chapter 175M »
Press release »

On June 8, 2018, Gov. Sununu signed HB 1577 into law. This law requires plans that provide coverage for hospital or medical expenses or oral surgery to provide coverage for general anesthesia and medically necessary hospital or surgical day care facility charges and in-office dental procedures related to dental procedures performed for plan participants who are younger than age 13 and determined by a licensed dentist, in conjunction with a licensed physician, to have a condition of significant dental complexity or have exceptional medical circumstances or developmental disabilities as determined by a licensed physician.

This bill is effective Aug. 7, 2018. This bill contains no new employer obligations, but employers with fully insured plans in New Hampshire should review the new laws to better understand the required coverages.

HB 1577 »

On June 18, 2018, Gov. Sununu signed HB 1471 into law. This law provides that plans cannot exclude health-care services from coverage solely because they are provided through telemedicine if such services are covered when provided through in-person consultation between health-care providers and plan participants. Telemedicine includes delivery of health-care services through audio, video, or other electronic medical for the purpose of diagnosis, consultation, or treatment. Telemedicine doesn't include audio-only telephone conversations or fax transmissions.

This bill becomes effective Aug. 17, 2018. This bill contains no new employer obligations, but employers with fully insured plans in New Hampshire should review the new laws to better understand the required coverages.

HB 1471 »

On June 25, 2018, the New York Department of Financial Services issued Ins. Circ. Ltr. No. 9 (2018) as a reminder to all insurers authorized to write accident and health insurance in New York State that, regardless of protections at the federal level, New York State requires non-discrimination protections based on sexual orientation, gender identity and/or gender dysphoria.

As background, Gov. Cuomo believes that the Trump Administration plans to repeal a federal regulation that includes gender identity within the ACA's nondiscrimination protections based on sex. The circular letter notes that New York State Non-Discrimination Provisions protect individuals based on sexual orientation, gender identity and gender dysphoria and remain in-force regardless of the federal non-discrimination protections or lack thereof.

Fully-insured employers do not need to take any action, but it is a good reminder that insurance carriers issuing policies in NY would continue to be bound by that state's laws regarding non-discrimination regardless of whether the related federal regulation is repealed.

Ins. Circ. Ltr No. 9 »

On May 21, 2018, Gov. Scott signed HB 639 into law. The newly enacted law requires plans to provide coverage for mammography screenings to detect the presence of occult breast cancer. Specifically, plans must provide coverage for annual screening mammograms for female plan participants age 40 and older and screening mammograms for participants younger than age 40 if recommended by participants' health-care providers. Plans must also provide coverage for screening by ultrasound for plan participants whose screening mammogram results were inconclusive, showed dense breast tissue, or both.

The coverage must meet the following requirements:

• Coverage must include the full cost of mammography services and can't be subject to any copayments, coinsurance, cost-sharing requirements or additional charges
• Coverage applies only to screening procedures conducted by test facilities accredited by the American College of Radiologists
• Mammography means x-ray examination of breasts using equipment dedicated specifically for mammography, including x-ray tubes, filters, compression devices, screens, filters and cassettes
• Screenings include mammography test procedures and a qualified physician's interpretation of procedure results, including additional views and interpretation as needed

The bill is effective for plan years beginning after Jan. 1, 2019. The bill contains no new employer obligations, but employers with fully-insured plans in Vermont should review the new laws to better understand the required coverages.

HB 639 »