Compliance Monthly Update: January 2023

Compliance Monthly Update: January 2023

A brief update on what happened the prior month in group health plan compliance at the federal level, organized chronologically. If you would like additional information, please reach out to the GBS Compliance Team.

Additional links to resources are included inside the PDF at the bottom of the post.

IRS announces 2023 milage rates including for medical travel.

IRS Notice 2023-03 was issued along with a news release providing the 2023 standard mileage rates for business, medical, and other uses of an automobile. The rate to obtain medical care (which may be deductible under Section 213 if it is primarily for, and essential to, the medical care) is 22 cents per mile for 2023. This is the same rate that was in effect during the second half of 2022. Transportation expenses that are deductible medical expenses under Section 213 generally can be reimbursed on a tax-free basis by a health FSA, HRA, or HSA (if the plan’s governing documents allow for the reimbursement).

Federal court finds plan exclusion of “gender affirming care” violates ACA Section 1557.

A federal trial court has ruled in favor of transgender individuals who challenged a group health plan’s exclusion of coverage for “gender affirming care” based on the nondiscrimination protections of ACA Section 1557. Section 1557’s application to group health plans remains unclear—for example, see our discussion in last month’s compliance update where a court blocked enforcement of Section 1557 against Catholic entities. As we wait for Section 1557 proposed regulations to be finalized, plan sponsors should monitor developments and be mindful of plan provisions that could invite costly legal challenges.

DOL issues 2023 adjusted penalty amounts for group health plan violations.

On January 13, the DOL issued the 2023 annual adjustments to civil monetary penalties for a wide range of benefit-related violations. The adjustments are effective for penalties assessed after January 15, 2023, with respect to violations occurring after November 2, 2015. Here are the highlights:

  • Form 5500 maximum penalty for failing to file increases from $2,400 to $2,586 per day that the filing is late.
  • Summary of Benefits and Coverage (SBC) maximum penalty for failing to provide the SBC increases from $1,264 to $1,362 per failure.
  • Multiple Employer Welfare Arrangement (MEWA) annual report (Form M-1) filing failures increases from $1,746 to $1,811 per day.
  • Children’s Health Insurance Program (CHIP) notice penalty for failing to provide the notice increases from $127 to $137 per day.

Updated federal poverty guidelines released.

On January 19, HHS published the annually updated federal poverty level (FPL) guidelines setting the 2023 FPL at $14,580 (up from $13,590 in 2022) for a person living in the mainland US, $16,770 in Hawaii, and $18,210 in Alaska. The FPL impacts the ACA FPL affordability safe harbor determination. When using the FPL affordability safe harbor, an employer may use the FPL in effect within six months before the start of the plan year.

Proposed ACA preventive service rule would rescind contraceptive coverage mandate’s moral exemption and create “individual contraceptive arrangement.”

On January 30, the IRS, DOL, and HHS issued proposed regulations, a fact sheet, and press release about a proposed new method for individuals to obtain no-cost contraceptive services if their plan does not provide those services due to a religious exemption. Under prior rules, a qualifying religious employer and other entities with sincerely held religious beliefs or moral convictions are exempt from the ACA’s contraceptive coverage mandate, which generally requires coverage of contraceptive services without cost-sharing. Exempt entities may voluntarily engage in an accommodation process that allows plan participants to receive contraceptive services directly from a TPA or insurer without the employer’s involvement. Highlights of the proposed rule include:

  • Remove the exemption for entities or individuals that have sincerely held moral objections to providing coverage for women’s contraception through their group health plans.
  • Retain the exemptions for religious employers and individuals or entities with sincerely held religious beliefs.
  • Establishing an “individual contraceptive arrangement” that enables individuals enrolled in plans sponsored by employers with religious objections to seek access to free contraceptive care if their employer does not initiate one of the available accommodations processes.

End of COVID emergency periods announced.

On January 30, the White House released a statement announcing it plans to end the COVID public health emergency (PHE) and national emergency (NE) on May 11, 2023. The end of the emergency periods triggers the end of numerous emergency measures related to the federal government’s pandemic response, including requirements for group health plans including:

  • When the PHE ends, health plans will no longer be required to cover COVID-19 diagnostic tests and related services without cost sharing. Non-grandfathered health plans will still be required to cover recommended preventive services, including COVID-19 immunizations, without cost sharing; however, this coverage requirement will be limited to in-network providers.
  • The COVID Outbreak Period will end 60 days after the NE ends. Therefore, the Outbreak Period will end on July 10, 2023. During the Outbreak Period, certain health plan deadlines are extended (e.g., HIPAA special enrollment periods, COBRA notice and premium payment deadlines, and claims/appeals deadlines) until the end of the Outbreak Period or, if earlier, after an individual has been eligible for a specific deadline extension for one year.

State/Local Level January 2023

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