Compliance Monthly Update: November 2023
A brief update on what happened the prior month in group health plan compliance at the federal level, organized chronologically. An update for the state and local level are further down. If you would like additional information, please reach out to the GBS Compliance Team.
Biden issues executive order for HHS to establish health care specific AI programs and policies.
President Biden released and signed an Executive Order on the Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence. The Executive Order acknowledges the extraordinary potential of AI for both promise and peril—and it outlines eight governing principles and priorities to advance and govern the development and use of AI across different sectors including for health care. To address how AI should be used safely and effectively in health care, the Executive Order requires HHS to, among other things, establish an HHS AI Task Force by January 28, 2024. Once created, the task force has one year to develop a regulatory action plan for predictive and generative AI-enabled technologies in health care. AI technology is advancing quickly and is something that will need to be monitored closely as it will inevitably impact health care and group health plans.
2024 retirement plan limits announced including updated income thresholds for determining HCEs and key employees.
On November 1, IRS Notice 2023-75 was released (along with a news release) with 2024 dollar limits and thresholds relevant to 401(k) plans. The IRS notice also includes the income thresholds for determining who is a “highly compensated employee” (HCE) and who is a “key employee” when conducting group health plan nondiscrimination testing.
Proposed modifications to surprise billing IDR regulations issued.
On November 3, proposed regulations were published by the regulatory agencies addressing the independent dispute resolution (IDR) process under the surprise billing rules of the No Surprises Act (NSA). As background, prior regulations implementing the NSA have faced constant litigation and disruption to the IDR process. These new proposed regulations would adjust the IDR process to target inefficiencies in the process; change the fee structure (in part to address certain issues brought up during litigation); facilitate improved communications between payers, providers, and certified IDR entities; adjust specific timelines and steps of the Federal IDR process; and establish new batching provisions. It is the regulatory agencies’ goal that these proposals would result in improved operations of the Federal IDR process and more timely payment determinations.
2024 cost of living adjustments (COLAs) released for health FSAs, etc.
On November 9, IRS Rev. Proc. 2023-34 was released (along with a news release) with annual inflation adjustments for numerous tax provisions for tax year 2024. This includes limit adjustments relating to health FSAs, DCAPs, qualified transportation fringe benefits, adoption assistance, QSEHRAs, and premium tax credits.
- Health FSAs. For 2024, the dollar limit on employee salary reduction contributions to health FSAs will be $3,200 (up from $3,050). If the cafeteria plan permits health FSA carryovers, the maximum amount that can be carried over from plan years starting in 2024 is $640 (up from $610).
- DCAPs. The maximum amount of DCAP benefits that can be excluded from income has not been adjusted (it is a non-indexed limit). The amount will remain at $5,000/$2,500 for 2024 and future years unless extended or otherwise changed by Congress.
- Qualified transportation fringe benefits. For 2024, the monthly limit on the amount that may be excluded from an employee’s income for qualified parking benefits will be $315 (up from $300). The combined monthly limit for transit passes and vanpooling expenses for 2024 will be $315 (up from $300).
- QSEHRAs. For 2024, the maximum amount of payments and reimbursements under a QSEHRA will be $6,150 for self-only coverage and $12,450 for family coverage (up from $5,850 and $11,800, respectively).
- Adoption assistance exclusion and adoption credit. The maximum amount that may be excluded from an employee’s gross income under an employer-provided adoption assistance program for the adoption of a child will be $16,810 for 2024 (up from $15,950). In addition, the maximum adoption credit allowed to an individual for the adoption of a child will be $16,810 for 2024 (up from $15,950). Both the exclusion and the credit will begin to be phased out for individuals with modified adjusted gross incomes greater than $252,150 and will be entirely phased out for individuals with modified adjusted gross incomes of $292,150 or more.
- Excess premium tax credit penalty limits. This tax is imposed if a taxpayer’s advance premium tax credit payments for health insurance purchased through an Exchange for a year exceed the allowed credit. For taxable years beginning in 2024, the following limitations on the tax for excess advance credit payments will apply:
- For unmarried individuals (other than surviving spouses and heads of household): $375 for household income less than 200% of the federal poverty line (FPL); $950 for household income at least 200% but less than 300% of FPL; and $1,575 for household income at least 300% but less than 400% of FPL.
- For all other taxpayers: $750 for household income less than 200% of FPL; $1,900 for household income at least 200% but less than 300% of FPL; and $3,150 for household income at least 300% but less than 400% of FPL.
Note that the 2024 COLAs for HSAs, HDHPs, and EBHRAs were announced by the IRS on May 16 earlier this year in Rev. Proc. 2023-23 as follows:
- HSA contribution limits. The 2024 annual HSA contribution limit is $4,150 for individuals with self-only HDHP coverage (up from $3,850 in 2023), and $8,300 for individuals with family HDHP coverage (up from $7,750 in 2023). The catch-up contribution limit for HSA-eligible individuals 55 or older remains unchanged at $1,000.
- HDHP minimum deductibles. The 2024 minimum annual deductible is $1,600 for self-only HDHP coverage (up from $1,500 in 2023) and $3,200 for family HDHP coverage (up from $3,000 in 2023).
- HDHP out-of-pocket maximums. The 2024 limit on out-of-pocket expenses (including items such as deductibles, copayments, and coinsurance, but not premiums) is $8,050 for self-only HDHP coverage (up from $7,500 in 2023), and $16,100 for family HDHP coverage (up from $15,000 in 2023).
- EBHRA contribution limit. The maximum amount that may be made newly available for plan years beginning in 2024 is $2,100 (up from $1,950 for plan years beginning in 2023).
CMS reminder that gag clause attestation is due December 31.
On November 11, CMS sent out a reminder that they are collecting Gag Clause Prohibition Compliance Attestations (GCPCA) via the HIOS portal. Group health plans and health insurance issuers offering group or individual health insurance coverage must annually submit a GCPCA. The first attestation is due no later than December 31, 2023—and subsequent GCPCAs are due by December 31 of each year thereafter.
The gag clause rules (under the broader transparency rules) generally prohibit plans and issuers from entering into an agreement with a health care provider, network or association of providers, TPA, or other service provider offering access to a network of providers that would directly or indirectly restrict a plan or issuer from providing, accessing, or sharing certain information related to cost or quality of care or de-identified claims and encounter information. Instructions, a user manual, step-by-step explanation of the process, and a template for submitting the GCPCA and additional information are available HERE.
Additional assistance is provided by CMS through their Marketplace Service Desk at 1-855-267-1515 or at CMS_FEPS@cms.hhs.gov.
Cost sharing limits for 2025 released.
On November 15, HHS issued a memo announcing the maximum annual limits on cost-sharing for the 2025 benefit year for non-grandfathered group health plans under the ACA. The maximum annual limit on cost-sharing for 2025 will decrease to $9,200 for self-only coverage and $18,400 for other than self-only coverage (the 2024 limits are $9,450 and $18,900). In general, cost-sharing includes deductibles, coinsurance, copayments, and any other required expenditure that is a qualified medical expense with respect to essential health benefits covered under the plan.
2023 Form 5500 series and instructions released.
On November 17, federal regulators issued the 2023 Form 5500 series and instructions and also provided a news release highlighting the 2023 changes. The substantive revisions for the 2023 5500 forms reflect ERISA amendments made by the SECURE Act which are mostly relevant to 401k plans. The instructions have also been updated for the current maximum DOL administrative penalty for Form 5500 filing failures ($2,586 per day) with a note to check the DOL’s website for annual increases. As a reminder, the Form 5500 is filed by the end of the seventh month after the end of the plan year (i.e., July 31 for calendar year plans), unless a 2.5-month extension is obtained.
HHS issues proposed 2025 benefit and payment parameters.
The proposed HHS Notice of Benefit and Payment Parameters for 2025 were published (along with a fact sheet) on November 24. The proposed rule contain a variety of insurance market and Exchange establishment and functionality standards. It also includes several proposals impacting the Medicaid program, Children’s Health Insurance Program
(CHIP), and the Basic Health Program (BHP). These changes would “further the Biden-Harris Administration’s goals of advancing health equity by addressing the health disparities that underlie our health system.”
ACA FAQs Part 63 released addressing IDR batching issues and requirements to provide certain notices in culturally and linguistically appropriate manner.
On November 28, the regulatory agencies issued FAQs Part 63 guidance addressing (a) the independent dispute resolution (IDR) requirements under the No Surprises Act and (b) the ACA requirement to provide certain notices in a culturally and linguistically appropriate manner.
- Recent court rulings have set aside several provisions of the IDR interim final regulations and related guidance, including rules related to batching claims for resolution in a single proceeding. The agencies also recently proposed wide-ranging modifications to the IDR regulations (see above) including when items “related to treatment of a similar condition” could be batched. This FAQ guidance says that until the proposed regulations are finalized, IDR submissions should be done in a manner consistent with the statute and regulations that were not struck down due to the litigation. The agencies advise that certified IDR entities have the sole responsibility for determining whether the items and services submitted as part of a batched dispute meet the standards.
- Along with the FAQ guidance, the agencies released the 2023 Culturally and Linguistically Appropriate Services (CLAS) County Data, which includes an updated list of all counties for which 10% or more of the population is literate only in the same non-English language. The FAQs highlights that the CLAS guidance includes sample taglines stating how to access the language services provided by the plan or insurer in each of the languages that meet the 10% threshold. The agencies also advise that they intend to update several documents to reflect the updated guidance, including the summary of benefits and coverage (SBC) template and sample completed SBCs and the model notices for internal claims and appeals and external review. Group health plans and health insurers offering non-grandfathered health insurance coverage are required to provide SBCs and claims and appeals notices in a manner that is consistent with the updated guidance for plan years beginning on or after January 1, 2025.
State/Local Compliance Update: November 2023
A brief update on what happened the prior month in group health plan compliance at the state and local level, listed alphabetically. If you would like additional information, please reach out to the GBS Compliance Team.
- Updated guide released regarding insurance coverage for “gender-affirming” care. In 2023, Colorado became the first state in the country to explicitly include “gender-affirming” care services in its benchmark plans for essential health benefits (EHBs). To help better understand the new requirements, the CO DOI created a guide on insurance coverage of “gender-affirming” medical services for individual and small group health insurance plans. The DOI has updated the guide to reflect the insurance companies and plans that will be available in 2024 in light of the current open enrollment. The DOI notes that the information in the guide is not an exhaustive list of all procedures, but rather a list of many common services to treat gender dysphoria. It also does not include the different processes, like prior authorization or letters from a provider, that may be required by an insurance company in order to show that it is medically necessary to receive a service or medication.
- Employees eligible for Colorado’s Family and Medical Leave Insurance (FAMLI) program benefits starting January 1, 2024. FAMLI will provide most employees with up to 12 weeks of paid leave for various family and medical reasons starting in 2024. Covered Colorado employers should already be withholding premium contributions from employee wages, reporting wage data to the Colorado Division of Labor & Employment (CDLE) on a quarterly basis, have the required program notice posted in the workplace, and be registered for an employer FAMLI account with the CDLE. Colorado employers should also make sure their leave policies have been updated, adjust payroll systems to account for new FAMLI benefits, and educate employees.
- Proposed regulations issued for Illinois Paid Leave for All Workers Act. On November 3, Illinois published proposed regulations under the Illinois Paid Leave for All Workers Act (“Act”). The Act goes into effect January 1, 2024, and requires covered employers to provide eligible Illinois employees with up to 40 hours of paid leave each year (which employees can use for any reason). As a reminder, the Act is expansive, covering all employers that have one or more employees in the state of Illinois with certain exceptions for some state, federal, and unionized workers. Illinois rulemaking procedures require at least a 90-day notice period before the proposed regulations can be finalized, so employers will not have the benefit of final regulations prior to the Act’s effective date on January 1. But, employers should take careful note of these proposed regulations when implementing their paid leave policies to help comply with the new law.
- New paid leave ordinance for Chicago employers. On November 9, the Chicago City Council passed the Chicago’s Paid Leave and Paid Sick and Safe Leave Ordinance requiring employers to provide employees with 10 paid leave days (5 general paid leave days and 5 paid sick leave days). This new ordinance replaces the current Chicago Paid Sick Leave Ordinance and goes into effect December 31, 2023. Like the prior sick leave ordinance, the new law provides that if an employer has an existing policy that meets or exceeds the requirements of the paid leave and sick leave created by the ordinance, that is sufficient for compliance. The ordinance applies to all employers with employees in Illinois. A covered employee is any employee who, in a two-week period, works at least two hours for an employer while physically present in the geographic boundaries of the city. And as mentioned above, the ordinance will require employers with employees working in Chicago to provide eligible employees with up to 40 hours of paid leave for any purpose and 40 hours of paid sick leave per year—for a total of 80 hours. Note that The Illinois Paid Leave for All Workers Act, which takes effect on January 1, 2024, does not apply to any employer located in a municipality or county where the employer is required by local law or ordinance to provide paid leave time to its employees. So, employers located within Chicago will be subject only to the requirements of the ordinance. However, an Illinois employer located outside of Chicago that has employees who work in Chicago for at least two hours over any two-week period will have to comply with the Paid Leave for All Workers Act for its employees who do not work in Chicago and comply with the Ordinance for its employees who work in Chicago.
Initial contribution rate for new Family and Medical Leave Insurance State Plan has been released. Starting in 2026, Maryland workers will receive job protection and up to $1000 a week for up to 12 weeks to take time away from work to care for themselves or a loved one, to bond with a child, and for certain military-related events. When benefits start in January 2026, either the employer’s private plan or the State Plan will provide partial wage replacement to the worker while they are on leave. Employers participating in the State Plan will begin making contributions on wages paid to employees starting October 1, 2024. The total rate of 0.9% of covered wages up to the Social Security wage base will be evenly split between employees and employers, who will each contribute 0.45%. Small businesses with 14 or fewer employees are exempt from the employer’s portion of the contributions. Employees of those small businesses will continue to contribute their 0.45% share. The 0.90% contribution rate will continue through at least June 30, 2026.
- The contribution rates and benefits amounts for 2024 have been announced and are available on the State’s Paid Family and Medical Leave employer contribution rates and calculator website. The weekly maximum benefit amount available to individuals is $1,144.90 for 2024 (up from $1,129.82 for 2023). The change in benefit amounts is based on the average weekly wage in the State and the change in contribution rates is made to ensure the Fund’s solvency for paying out benefits. See the Paid Family and Medical Leave in Massachusetts website for more details and information.
- The PFML law was amended (as part of 2024 state budget) to now allow employees to supplement (“top off”) benefits received from the State with any available accrued paid leave (e.g., sick time, vacation, PTO, personal time, etc.). This change is effective November 1, 2023. Note that employees still cannot be required to use accrued paid leave either before or while on PFML.
- Massachusetts HIRD form filing due December 15. Massachusetts employers with six or more employees in Massachusetts are required to file the annual Health Insurance Responsibility Disclosure (HIRD) form by December 15, 2023. Filing is done on the MassTaxConnect (MTC) Web Portal. The HIRD form assists MassHealth in identifying members who have access to qualifying employer-sponsored coverage who may be eligible for the MassHealth Premium Assistance Program. In-state or out-of-state employers who had six or more employees who were employed within the state of Massachusetts during the past 12 months are required to complete the HIRD form. For more information see the Mass HIRD FAQs website.
- 2024 contribution rate for State Paid Family and Medical Leave (PFML) program announced. The contribution rate for PFML will increase to 0.88% in 2024, up from 0.63% in 2023. The medical leave portion accounts for 0.70% of eligible wages—0.42% of which is contributed by the employer, and 0.28% of which is contributed by the employee. Contributions for the family leave program are 0.18% of eligible wages in 2024 and up to 100 percent of the family leave contribution can be withheld from the covered employee’s wages. Employers with fewer than 25 covered individuals must send an effective contribution rate of 0.46% of eligible wages. This contribution rate is less because small employers are not required to pay the employer share of the medical leave contribution. However, they may elect to cover some or all the covered individuals’ share.
- Bloomington amends its Sick and Safe Time Ordinance to line up with Minnesota ESST law. The City Council for the City of Bloomington, Minnesota, has adopted amendments to its Sick and Safe Time Ordinance. Minnesota’s separate state-wide Earned Sick and Safe Time (ESST) mandate does not preempt related ordinances enacted in four Minnesota cities, but the changes to Bloomington’s Ordinance were made to align with language implemented by Minnesota’s ESST legislation. Both this amendment and the state-wide ESST go into effect January 1, 2024.
- Minnesota publishes sample ESST employee notice and additional guidance. Minnesota’s state-wide Earned Sick and Safe Time (ESST) requires covered employers (starting January 1, 2024) to provide eligible Minnesota employees with at least one hour of paid ESST for every 30 hours worked, up to a maximum of 48 hours per year and an overall balance of 80 hours. Minnesota also currently has four local paid sick and safe leave mandates in effect in Bloomington, Duluth, Minneapolis, and Saint Paul. The Minnesota statewide ESST mandate will not preempt these local mandates. The State released a sample notice for employers to use when satisfying the ESST law’s notice requirements, and the sample notice includes several areas that need to be customized by the employer before it is distributed, posted or displayed. Employers may forego use of the sample, but the alternative notice must include all information mandated by the ESST law. The notice must be provided to employees on their date of hire or by January 1, 2024, whichever is later. Also, any employer that maintains an employee handbook must include the ESST notice within the handbook. The Bloomington, Minneapolis, and St. Paul local paid sick time ordinances also require notice in employee handbooks. Minnesota’s DOL also issued FAQs, a fact sheet, and a video overview of the law to aid employers. Additional information and links to the sample notice, FAQs, workplace poster, and video overview are available on the State’s ESST website.
Expiration of requirement to provide paid leave for COVID vaccination. As of January 1, 2024, New York employers are no longer required to provide up to four hours of paid leave for employees to receive a COVID vaccine.
Ohio extends coverage age for dependents under dental/vision policies issued in the state. Governor DeWine signed House Bill Number 33 which includes an amendment extending dependent coverage under fully insured dental and vision policies issued, delivered, renewed, or amended in Ohio beginning January 1, 2024. The amendment extends coverage for dependents up to age 26 if they are: (1) an unmarried natural child, stepchild, or adopted child of the subscriber, (2) reside in Ohio or be enrolled as a full-time student at an accredited institution of higher education, (3) are ineligible for coverage under their own employer plan, and (4) are ineligible for Medicaid or Medicare.
Puerto Rico extends maternity/adoption leave requirements for public sector employees. On November 13, Governor Pierluisi signed Act No. 129-2023, increasing the duration of maternity leave for government employees to 16 weeks (4 weeks for prenatal leave, 8 weeks after birth, and 4 additional weeks for childcare). Leave is also increased for government employees who chose to adopt. If a woman adopts a minor 5 years of age or younger who is not enrolled in an educational institution, she is entitled to the same maternity benefits leave as an employee who has given birth. However, if she adopts a minor 6 years of age or older, she is entitled to paid maternity leave of 15 days. Note that adoption leave is available to men, but this new amendment with the increased adoption leave does not apply for men.
Washington Paid Family and Medical Leave (PFML) 2024 premium rates announced. Effective January 1, 2024, the WA PFML total premium rate will be 0.74% of wages up to the Social Security cap of $168,600. This new rate is a decrease of the current rate of 0.8%. The total contribution of 0.74% is split between employers and employees, depending on the size of the employer. Employers with 50 or more employees working in the state of Washington will contribute up to 28.57% of 0.74%, and their Washington state employees will pay 71.43% of 0.74%. Employers with fewer than 50 employees working in the state of Washington are not required to contribute the employer portion of the premium. However, they must still withhold the employee premium or pay the employees’ premiums on their behalf. See the State’s PFML website for more information.