Medicare Part D Notice to Employees Is Due October 14, 2023
Employers must notify individuals who are eligible to participate in their medical plan whether the plan's prescription drug coverage is "creditable" or "non-creditable" as compared to Medicare Part D coverage.
As a reminder, the Medicare Part D notice of creditable coverage should be distributed to employees by October 14, 2023. CMS provides a model notice for employers. The notice serves to inform Medicare-eligible individuals of whether or not their employer group coverage is creditable. This information can help such individuals avoid paying higher premiums (also known as late enrollment penalties) for Medicare Part D coverage.
Employers should consult with their service providers to determine whether their coverage is creditable using the simplified determination method or actuarial analysis.
For more information, please download Medicare Part D Disclosures: A Guide for Employers publication.
It’s MLR Rebate Time Again!
The ACA requires insurers to submit an annual report to HHS to account for plan costs. If the insurer does not meet the medical loss ratio standards, this means too large a portion of the premiums charged in the previous year went towards the insurer’s administration, marketing, and profit, instead of going toward paying claims and quality improvement initiatives. In such case, the insurer must provide rebates to policyholders. For 2023, insurers must distribute rebates to employer plan sponsors between August 1, 2023, and September 30, 2023.
Employers should keep in mind that if they receive a rebate, there are strict guidelines as to how the rebate may be used or distributed. Generally, any portion of the rebate that is considered ERISA plan assets (e.g., the portion attributable to participant contributions) must be returned to participants in some form within 90 days of receipt.
For more information, download a copy of our publication, Medical Loss Ratio Rebates: A Guide for Employers.
Can an employer pay for individual health policies and Medicare premiums rather than offering a group health plan to their employees?
San Francisco Health Care Security Ordinance (SFHCSO) Rates Released for 2024
The SFHCSO requires covered employers (generally, employers with 20 or more employees, at least one of whom works in San Francisco) to spend a minimum amount on healthcare for their San Francisco employees. The healthcare expenditure rate varies depending on the size of the employer.
As of January 1, 2024, the healthcare expenditure rate for large employers with 100 or more employees increases to $3.51 per hour payable (up from $3.40 per hour in 2023). For medium-sized employers with 20 to 99 employees and for nonprofit employers with 50 to 99 employees, the expenditure rate will rise to $2.34 per hour payable (up from $2.27 per hour payable in 2023). Employers with fewer than 20 employees and nonprofit employers with fewer than 50 employees are exempt.
If an employee is a managerial, supervisorial, or confidential employee earning $121,372 per year ($58.35 per hour) or more, that employee is exempt from the HCSO. This represents an increase from last year's threshold of $114,141 per year ($54.88/hour).
All covered employers will be required to post the revised notice in all workplaces and job sites when the poster becomes available.
Illinois Enacts Transportation Benefits Program Act, Effective January 1, 2024
Gov. Pritzker recently signed Public Act 103-0291, known as the Transportation Benefits Program Act (the Act), which will require certain employers in specific geographic areas to provide pre-tax commuter benefits to covered employees.
Employers subject to this statute are those that employ 50 or more employees with an office located within one mile of the transit office within Cook County and in several townships in surrounding counties (please refer to the link to the Act for a full list of geographic areas). The Regional Transit Authority will publish a searchable map of addresses located within the designated areas prior to the effective date of the Act.
This benefit must be offered to all “covered employees” starting on the employees' first full pay period after 120 days of employment. Covered employees are those who perform at least 35 hours of work per week for compensation on a full-time basis for a covered employer within the designated geographic area.
Employers subject to the law must provide employees with the option to purchase transit passes on a pre-tax basis. The amount spent for this benefit may be excluded from the employee’s taxable wages and compensation, so the benefit must comply with Section 132 of the IRC. Note that Section 132 imposes a limit on the amount that can be paid pre-tax to $300 (for 2023, it is subject to annual cost-of-living adjustments). Employers can comply with this requirement by participating in a program offered by the Chicago Transit Authority or the Regional Transportation Authority.
Covered employers should be aware of the new law and begin working with their tax advisor or legal counsel concerning how to design a commuter benefit that complies with Section 132 to ensure compliance ahead of the January 1, 2024, deadline. Additional information or FAQs for employers may be released as we move closer to the law’s effective date.
Illinois Issues FAQs for Paid Leave for All Workers Act
On August 30, 2023, the Illinois Department of Labor published FAQs to provide additional information on the Paid Leave for All Workers Act (the Act), which we reported on in a previous edition of Compliance Corner. As a reminder, the Act is effective January 1, 2024, and will require covered Illinois employers to provide paid leave to certain employees.
The FAQs cover topics such as the Act’s interaction with employers’ existing time off policies, the application of the rules on various employee groups, and how accrued leave is treated upon termination.
Covered employers should continue to monitor the FAQs for further guidance as we approach the January 1, 2024, effective date.
2024 New York Paid Family Leave Premium Rate and Maximum Contribution Announced
The New York Department of Financial Services (NY DFS) announced the applicable premium rate and maximum employee contribution for Paid Family Leave (NY PFL) coverage beginning January 1, 2024.
NY PFL applies to all private employers, including out-of-state employers, with at least one employee working in New York. The state’s PFL program provides eligible employees with a portion of their wages while taking time off to bond with a child, care for a family member with a serious health condition, or handle personal matters when a family member is deployed abroad on active military service. PFL may also be available for use in situations when an employee or minor dependent child is under an order of quarantine or isolation due to COVID-19.
The PFL premium rate, like the benefit amount, is set as a percentage of an employee's covered wages, so the premium paid by an employee depends on how much an employee earns. NY PFL premiums can be funded through post-tax employee payroll deductions or can be paid directly by the employer at the employer’s discretion.
Effective January 1, 2024, the NY PFL premium rate will be 0.373% of covered payroll (down from 0.455% in 2023). The covered payroll threshold (i.e., the statewide average weekly wage multiplied by 52) will increase to $89,343.80/year (up from $87,785.88/year for 2023). Therefore, the maximum per employee NY PFL premium will be $333.25/year for 2024 (down from $399.43/year for 2023).
Those earning less pay a lower premium, and those earning more will pay a higher premium as they are eligible for higher benefits, up to the maximum PFL benefit of 67% of the statewide average weekly wage, which is $1,718.15 for 2024 (up from $1,688.19 in 2023). This means the maximum weekly benefit for 2024 is $1,151.16 (up from $1,131.09/week for 2023).
Employers should work with their carriers and payroll providers to ensure the premium rates are properly implemented and communicated. Additionally, employers should be aware that the Model Language for Employee Materials and Payroll Deduction Notice were updated for 2024.
For further information on NY PFL, download our publication, New York Paid Family Leave: A Guide for Employers.
New Statutes Effective September 1, 2023
On May 23, 2023, Gov. Abbott signed HB 290 into law. This bill allows multiple employer welfare arrangements (MEWAs) based on the employers' geographical association, allows for "working owners" to get MEWA coverage, waives the two-year business existence requirement, and requires demonstration of federal compliance. The bill also authorizes MEWAs to provide comprehensive health benefit plans and structure them like a PPO/EPO, provided the MEWA complies with additional Insurance Code provisions.
On May 29, 2023, Gov. Abbott signed SB 622 into law. This bill requires health plan issuers in the state to list those generic and brand-name prescription drugs covered by a specific health insurance plan, the enrollee's eligibility, cost-sharing information, and applicable utilization management requirements. The bill also specifies that the health benefit plan issuer must respond to requests in real time and cannot restrict a prescribing provider from communicating information about the drug or penalize a provider for disclosing or prescribing lower cost alternative drugs.
On June 12, 2023, Gov. Abbott signed HB 711 into law. This bill prohibits the use of gag clauses, among other things, within network provider contracts. Note that the bill contains provisions that may affect its effective date. The Department of Insurance will promulgate rules to administer and enforce this bill.
On June 12, 2023, Gov. Abbott signed HB 1592 into law. This bill allows self-insured plans to opt into the state’s surprise billing and related independent dispute resolution process. This process was covered in the January 9, 2020, edition of Compliance Corner.
On June 18, 2023, Gov. Abbott signed SB 2476 into law. This bill adds ground ambulance services to those services subject to the state’s surprise billing law. However, this service will not be covered by the state’s independent dispute resolution process. Instead, the Department of Insurance will develop a billing rate database and promulgate rules that require health plans to reimburse ground ambulance services at either of the following:
- A rate set, controlled, or regulated by a political subdivision if the entity has submitted the rate to the Texas Department of Insurance database (with an annual increase per Medicare Inflation Index, not to exceed 10%).
- The lesser of the billed charge or 325% of Medicare.
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.