By Jennifer S. Kiesewetter
As we enter the fall of 2016, business owners and health plan sponsors should be aware of Affordable Care Act (ACA) changes taking place in 2017, and how these changes may impact their businesses and health plans. The Department of Labor (DOL) began auditing group health plans in 2012 for compliance with ACA along with other standing federal laws such as the Employee Retirement Income Security Act of 1974 (ERISA), the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and the Consolidated Omnibus Budget Reconciliation Act (COBRA), among other federal laws, and continues to do so. The Internal Revenue Service (IRS) launched its full ACA audit enforcement this year. In its Fiscal Year 2016 Budget, released on February 2, 2015, the budget included a specific provision proposing the hiring of over 400 full-time employees to enforce ACA statutory requirements. Thus, compliance with the ACA should be at the forefront of business planning for not only the remaining 2016 calendar year but as we plan for 2017 and beyond.
Here are 4 top compliance issues to consider for 2017:
Complying with the EEOC’s Final Rules on Employer Wellness Programs
On May 17, 2016, the Equal Employment Opportunity Commission (EEOC) issued final rules describing how the American with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA) apply to employer-offered wellness plans. Many employers offer wellness programs to encourage employees to maintain a healthy lifestyle. As a part of these programs, employers use questionnaires, risk assessments, or biometric screenings to determine an employee’s health risk factors. Some programs then offer financial or other incentives for employees to participate in the wellness program or to achieve certain health outcomes or milestones.
Generally, both the ADA and GINA prohibit employers from obtaining and using information about the employee’s health conditions or about the health conditions of the employee’s family members. However, under the final rules, for purposes of the ADA, wellness programs that are a part of a group health plan and that inquire about an employee’s health or include medical examinations may offer incentives of up to 30% of the total cost of self-only coverage. For purposes of GINA, the value of the maximum incentive attributable to the spouse’s participation may not exceed 30% of the total of self-only coverage, the same allowed for the employee. No incentives are allowed in exchange for health status information for the employee’s children or in exchange for specific genetic information of an employee, the employee’s spouse or children.
These final rules go into effect for wellness programs as of the first day of the first plan year that begins on or after January 1, 2017, for the health plan that is used to determine the level of incentives permitted under these new rules. Plan sponsors should analyze their wellness plans, questionnaires, risk assessments, biometric screenings, communication methods, policies and procedures, incentives, among other issues, for compliance with the EEOC final regulations. Additionally, plan sponsors should verify that their wellness programs still meet compliance standards with HIPAA.
Complying with the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA)
The Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) prevents group health plans and health insurance issuers that provide mental health or substance use disorder benefits from imposing less favorable limitations on those benefits than on medical or surgical benefits. Limitations include both “financial requirements,” including deductibles, copayments, coinsurance, and other out of pocket expenses, and “treatment limitations,” including limits on the number of visits or limits on the scope of treatment.
The Departments of the Treasury, Labor and Health and Human Services jointly published a final rule on the MHPAEA on November 13, 2013, effective January 13, 2014, and applicable to plan years, or policy years, beginning on or after July 1, 2014. The final rule applies to non-federal governmental plans with more than 50 employees, and to private group health plans with more than 50 employees. Additionally, the rule is applicable to individual health policies.
Among other issues, the final rule addresses classifications of benefits, financial requirements, claims processing (including external review decisions), coverage for treatment facilities, disclosure of certain claims, and quantitative and nonquantitative treatment limitations.
The DOL has increased its audits on MHPAEA compliance over the past year, as the MHPAEA falls under Part 7 of ERISA. Additionally, HHS has had an increase in audits with respect to MHPAEA; however, HHS usually targets insurers and audits across the insurers book of business for compliance.
Plan sponsors should analyze their plan documents and other related plan materials to confirm compliance with MHPAEA. Additionally, plan sponsors should analyze plan documents and other related materials to confirm compliance with all federal laws falling under Part 7 of ERISA so that they are “audit ready.”
Assessing Fiduciary Liability Impacting Health Savings Accounts (HSAs)
On April 6, 2016, the Department of Labor (DOL) publicly announced its final conflict of interest rule, or the “fiduciary rule,” as more often referenced, and published the rule in the Federal Register two (2) days later, on April 8, 2016. Under this new re-proposed definition, more investment advisors would be subject to the ERISA investment advice fiduciary rules, thus subjecting these advisors to a heightened ERISA fiduciary status. ERISA fiduciary standards are considered the highest in the industry, where advisors must act prudently, must act in the best interests of the participants and beneficiaries, and must disclose all conflicts of interests.
The Fiduciary Rule impacts more than just ERISA retirement plans. It also impacts health savings accounts (HSAs). The Fiduciary Rule does not cover welfare plans, such as health plans, disability plans and term life insurance plans to the extent that they do not include an investment component. However, if these plans do contain an investment component, such as universal or whole life insurance policies, then those plans would be covered by the Fiduciary Rule as well.
The Fiduciary Rule goes into effect on April 10, 2017. However, with respect to the Best Interest Contract Exemption, which provides relief to advisors providing non-discretionary advice while earning commissions on such advice, only part of the exemption goes into effect next April. Advisors will be required next April to comply with acknowledging their fiduciary status, adhering to the best interest standard, and making basic disclosure of conflicts and interest. The remainder of the rule will go into full effect on January 1, 2018.
If a plan sponsor offers a health savings account, or has a welfare plan that has an investment component, then that plan sponsor needs to examine whether the adviser of broker associated with that HSA or welfare plan meets the definition of a fiduciary under the new fiduciary rule. Such process should be documented to show prudence on the part of the plan sponsor.
Prohibiting Discrimination under the ACA
Beginning on or after January 1, 2017, the ACA prohibits discrimination on the basis of race, color, national origin, sex, age, or disability in a health program or activity that receives Federal financial assistance from HHS (such as hospitals that accept Medicare or doctors that accept Medicaid), in the Health Insurance Marketplaces and issuers that participate in the Marketplaces (including both Federally-facilitated and Stated-based Marketplaces), or in any health program administered by HHS. Under the final regulations, which were published on May 18, 2016, a covered entity cannot deny, cancel, limit, or refuse to issue or renew a health-related insurance policy or other health-related coverage; deny or limit coverage of a claim, or impose additional cost sharing or other limitations or restrictions; or employ marketing practices or benefit designs that discriminate on the basis of race, color, national origin, sex, age, or disability.
For example, with respect to sex discrimination, the final regulations require that women be treated equally with men in the health care they receive. Thus, the ACA prohibits insurance companies from charging women higher premiums and other cost-sharing measures for their health insurance as opposed to men. The ACA further requires covered entities to provide for coverage of maternity services, birth control, and breastfeeding supports.
The final regulations require covered entities with fifteen (15) or more employees to have a grievance procedure and a compliance coordinator. HHS’s Office for Civil Rights (OCR) has provided a model grievance procedure. Entities with fewer than fifteen (15) employees are not required to have a grievance procedure or a compliance coordinator.
Additionally, the final regulations require covered entities to post notices of nondiscrimination and taglines that alert individuals with limited English proficiency to the availability or language assistance services. To help covered entities comply, the OCR has translated a sample notice and taglines into 64 languages.
With the effective date quickly approaching, covered entities that may be impacted by the ACA’s nondiscrimination rule and its final regulations should analyze their plans, insurance documents, communication methods, policies and procedures, among other issues, for compliance with the nondiscrimination final regulations. Further, and simply, covered entities must make sure that they have been in compliance since 2010. Any changes that may be required now are imposed by the final regulations. However, the nondiscrimination rule has been effective, and compliance has been required, since 2010.
The health plan world is moving quickly. Plan sponsors should implement a strategic game plan to keep up with the changing tide of laws, regulations, and interpretative guidance, all while being “audit ready.” Staying proactive is key.