After several quiet months this year, April saw renewed compliance activity.
The IRS provided guidance on transportation fringe benefits unused due to COVID-19 workplace changes and announced inflation-adjusted amounts for HSAs and HRAs. The Centers for Medicare & Medicaid Services (CMS) announced Medicare Part D rates and the parameters and thresholds for qualified retiree prescription drug coverage. The Department of the Treasury and the IRS issued a proposed rule to base Marketplace premium tax credit (PTC) eligibility on the cost of family health insurance coverage rather than individual coverage to fix the “family glitch” related to PTC eligibility.
Treasury Reminds Employers that Unused Transportation Fringe Benefits Cannot Be Cashed Out or Deposited in FSA
The Department of the Treasury released Information Letter 2022-0002 in which the Office of Associate Chief Counsel (Employee Benefits, Exempt Organizations, and Employment Taxes) reminded employers the Internal Revenue Code (Code) prohibits cafeteria plans from offering qualified transportation fringe benefits, and IRS rules do not permit unused compensation reduction amounts under a qualified transportation plan to be transferred to a health flexible spending arrangement (FSA) under a cafeteria plan. As more individuals are working remotely while the COVID-19 pandemic lingers, they may have transportation deductions that remain unused at the end of the year. The Information Letter suggests that because there is some heightened risk of loss due to changing circumstances, employers should inform employees of the risk before they elect transportation fringe deductions.
CMS Releases 2023 Parameters for Medicare Part D Prescription Drug Benefit
On April 4, 2022, the Centers for Medicare & Medicaid Services (CMS) released a Medicare Part D Fact Sheet and Rate Announcement detailing the parameters and thresholds for the defined standard Medicare Part D prescription drug benefit for 2023:
Biden Administration Announces Proposed Rule to Fix Family Glitch in Obtaining ACA Marketplace Tax Credits
On April 5, 2022, the White House released a Fact Sheet in which it announced that the Treasury Department (Treasury) and the Internal Revenue Service (IRS) were issuing a proposed rule to eliminate the “family glitch” under which certain dependents cannot qualify for a premium tax credit (PTC) on the Marketplace because individual coverage provided by an employer is affordable even though family coverage – which would cover the individual seeking the PTC – is unaffordable. The Administration declared that if the Departments finalize the proposed rule, family members of workers who are offered affordable self-only coverage, but unaffordable family coverage may qualify for premium tax credits to buy Affordable Care Act (ACA) coverage, which the White House estimates could provide coverage to more than 200,000 currently uninsured people and reduce health insurance costs for over one million Americans.
OCR Issues Request for Information Regarding HIPAA Breach Avoidance and Methods for Distributing Penalties and Settlement Funds
On April 6, 2022, the Office for Civil Rights (OCR) released a Request for Information (RFI) as it begins to implement and enforce 2021 legislation requiring the agency to consider whether HIPAA covered entities and business associates have adopted and applied certain recognized security practices, particularly those focused on avoiding cybersecurity threats. The RFI also seeks public input on potential information or clarifications OCR could provide in future rulemaking or guidance regarding its implementation of HIPAA and HITECH. Finally, the RFI seeks public comment on recommended methods for sharing monetary penalties or settlements with individuals harmed by a privacy violation or security breach. The RFI seeks feedback on recognized security practices and how best to address individual harm resulting from a HIPAA Rules violation, including the proper distribution of payments to individuals. Public comments are due by June 6, 2022. Overall, the final rule seeks to strengthen the coverage offered by qualified health plans (QHPs) on the federal Marketplace. These policies will also ensure consumers can more easily find the right form of quality, affordable coverage for their circumstances.
Departments Provide Guidance on Machine-Readable File Format under New Transparency Rules
On April 19, 2022, the Departments of Labor, Health and Human Services, and the Treasury (collectively, the Departments) issued FAQ guidance regarding the Transparency in Coverage Final Rules (TiC Final Rules). The TiC Final Rules require non-grandfathered group health plans and health insurance issuers offering non-grandfathered coverage in the group and individual markets to disclose, on a public website, information regarding in-network rates and out-of-network allowed amounts and billed charges for covered items and services in separate machine-readable files by July 1, 2022. The FAQs clarify that where a plan or issuer agrees to pay an in-network provider a percentage of billed charges and cannot assign a dollar amount prior to a bill being generated, plans and issuers may report a percentage number in lieu of a dollar amount. Further, the FAQs provide that where the TiC Final Rules reporting method does not support a particular alternative reimbursement arrangement, or where an arrangement requires submitting additional information to describe the nature of the negotiated rate, plans and issuers may disclose in an open text field a description of the formula, variables, methodology, or other information necessary to understand the arrangement.
Q: Does coverage under an Employee Assistance Program (EAP), disease management program, or wellness program make an individual ineligible to contribute to a health savings account (HSA)?
A: In general, an individual will still be allowed to contribute to an HSA even if they are covered under an EAP, disease management program, or wellness program if the program is not considered a “health plan” because it does not provide significant benefits in the nature of medical care or treatment. Generally, screening and other preventive care services do not count as significant medical care or treatment. The following examples help illustrate this point.
Example 1. An employer offers a program that provides employees with benefits under an EAP, regardless of enrollment in a health plan. The EAP is specifically designed to assist the employer in improving productivity by helping employees identify and resolve personal and work concerns that affect job performance and the work environment. The benefits consist primarily of free or low-cost confidential short-term counseling to identify an employee's problem that may affect job performance and, when appropriate, referrals to an outside source to help the employee resolve the problem. The issues addressed during the short-term counseling include, but are not limited to, substance abuse, alcoholism, mental health or emotional disorders, financial or legal difficulties, and dependent care needs. This EAP is not a health plan because it does not provide significant benefits in the nature of medical care or treatment. The EAP will not cause the employee to be ineligible to contribute to an HSA.
Example 2. An employer maintains a disease management program that identifies employees and their family members who have, or are at risk for, certain chronic conditions. The disease management program provides evidence-based information, disease specific support, case monitoring, and coordination of the care and treatment provided by a health plan. Typical interventions include monitoring laboratory or other test results, telephone contacts or web-based reminders of health care schedules, and providing information to minimize health risks. This disease management program is not a health plan because it does not provide significant benefits in the nature of medical care or treatment. The disease management program will not cause the employee to be ineligible to contribute to an HSA.
Example 3. An employer offers a wellness program for all employees regardless of participation in a health plan. The wellness program provides a range of education and fitness services designed to improve the overall health of the employees and prevent illness. Typical services include education, fitness, sports, and recreation activities, stress management and health screenings. Any cost charged to the individual for participating in the services are separate from the individual's coverage under the health plan. This wellness program is not a health plan because it does not provide significant benefits in the nature of medical care or treatment. The wellness program will not cause the employee to be ineligible to contribute to an HSA.
This information has been prepared for UBA by Fisher & Phillips LLP. It is general information and provided for educational purposes only. It is not intended to provide legal advice. You should not act on this information without consulting legal counsel or other knowledgeable advisors.