Compliance Monthly Update: October 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.
DOL blog post and internal DOL audit letter further signal the regulatory agencies’ focus on MHPAEA compliance.
On October 4, the DOL released a blog post on the importance of and enforcement of the Mental Health Parity and Addiction Equity Act (MHPAEA). The DOL Office of Inspector General also published a letter dated October 25 informing that an internal audit is being initiated to assess the extent of the DOL’s enforcement of MHPAEA laws and regulations, as well as its corresponding corrective actions. Along with the multitude of MHPAEA guidance that was issued and discussed in our July Compliance Update, this blog post and internal audit letter further show how MHPAEA compliance is at the top of the regulatory agencies’ agendas. Group health plan sponsors should make sure they are working with their carrier or TPA to confirm their plans are complying with MHPAEA and have an updated NQTL comparative analysis documented. Of note, the DOL states in the blog post that “[despite] the law’s clear promise of parity between mental health and medical or surgical benefits, that promise has not been kept. … We’re proposing new regulations, committing unprecedented resources to bringing plans into compliance with the law, and … our enforcement program has required plans to address discriminatory practices by:
- eliminating blanket pre-authorization requirements for mental health benefits;
- ensuring comparable coverage of nutrition counseling for people with eating disorders, applied behavioral analysis therapy to treat autism, and medication-assisted treatment for opioid use disorders; and
- eliminating special gatekeepers for mental health and substance use disorder treatment.”
Court strikes down HHS drug manufacturer coupon accumulation choice.
A court set aside a 2021 HHS rule that changed how direct drug manufacturer assistance accrues towards the ACA annual limits on cost-sharing. The HHS rule that was struck down had allowed (but did not require) plans and insurers to exclude the value of a drug manufacturer’s coupon towards an individual’s out-of-pocket costs. This ruling may require plans to comply with a prior HHS rule that only permitted plans to exclude the value of a manufacturer’s coupon from an individual’s out-of-pocket maximum when there is a medically equivalent generic available and only if permitted by state law. Hopefully the IRS and HHS will issue guidance in light of this ruling to help with potential HSA-eligibility complications under the prior HHS rule that now seems to be in effect.
Surprise billing guidance addresses recent court rulings on the IDR process.
The regulatory agencies (DOL, HHS, and IRS) issued FAQ guidance on calculating the qualifying payment amount (QPA) under the No Surprises Act (NSA) and separate guidance on the phased reopening of the federal independent dispute resolution (IDR) process under the NSA, in response to recent court rulings. Regulations implementing the NSA have faced constant litigation and disruption to the IDR process. The FAQ guidance indicates that the government will appeal the most recent court rulings, but no additional interim guidance is planned in the meantime.
HHS increases civil monetary penalties for HIPAA, MSP, and SBC noncompliance.
HHS announced adjusted penalty amounts effective for penalties assessed on or after October 6, 2023, for violations occurring on or after November 1, 2015. The indexed amounts for violations are as follows:
- The HIPAA Privacy and Security Rules have four tiers of violations that reflect increasing levels of culpability, with minimum and maximum penalty amounts within each tier and an annual cap on penalties for multiple violations of an identical provision.
- No Knowledge. For violations where the covered entity does not know about the violation (and by exercising reasonable diligence, would not have known about the violation) the penalty amount is between $137 and $68,928 for each violation. The calendar year penalty cap is $2,067,813 for all violations of an identical requirement.
- Reasonable Cause. If the violation is due to reasonable cause, the penalty amount is between $1,379 and $68,928 for each violation. The calendar year penalty cap is $2,067,813 for all violations of an identical requirement.
- Willful Neglect (but corrected within 30 days). For corrected violations that are caused by willful neglect, the penalty amount is between $13,785 and $68,928 for each violation. The calendar year penalty cap is $2,067,813 for all violations of an identical requirement.
- Willful Neglect (but not corrected within 30 days). For violations caused by willful neglect that are not corrected, the penalty amount is between $68,928 and $2,067,813 per violation. The calendar year penalty cap is $2,067,813 for all violations of an identical requirement.
- Medicare Secondary Payer (MSP) rules prohibit plans from “taking into account” the Medicare entitlement of employees and dependents. The violation for offering incentives to Medicare-eligible individuals not to enroll in a plan that would otherwise be primary is $11,162.
- Summary of Benefits and Coverage (SBC) generally must be provided to participants and beneficiaries before enrollment and during open enrollment. The penalty for a willful failure to provide an SBC is $1,362.
Final 2023 ACA reporting forms and instructions.
The IRS released final 2023 forms and instructions for ACA reporting under IRS Code Sections 6055 and 6056. As a reminder, Forms 1094-B and 1095-B are filed by minimum essential coverage providers (including small employers with a self-insured plan) to report coverage information in accordance with Section 6055. Forms 1094-C and 1095-C are filed by applicable large employers (ALEs) to provide information that the IRS needs to administer employer shared responsibility penalties and eligibility for premium tax credits, as required under Section 6056. Forms are required to be filed with the IRS by February 28, 2024, or April 1, 2024 (if filing electronically). The deadline to furnish forms to individuals is March 1, 2024. In prior years, employers could file their ACA reporting forms by paper if the employer was filing fewer than 250 returns—however, starting in 2024 (for the 2023 calendar year reporting), employers filing 10 or more returns must file their forms electronically with the IRS.
3 CMS announces 2024 Medicare Parts A and B premiums and deductibles.
On October 12, CMS published indexed 2024 values for Medicare Parts A and B. The published CMS fact sheet contains:
- Part A deductibles and copayments as well as Part A premiums for individuals required to pay premiums for Part A.
- Part B deductible and income-related monthly adjustment amounts for individuals required to pay more than the standard part B premium based on their income level and tax filing status.
State/Local Compliance Update: October 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.
California expands paid sick leave to five days per year. On October 4, Governor Newsom signed Senate Bill 616 which expands existing paid sick leave requirements under the Healthy Workplaces, Healthy Families Act of 2014. The amendment, that takes effect on January 1, 2024, increases the annual amount of California paid sick leave from three days (or 24 hours) to five days (or 40 hours) for eligible employees. The amendment also raises the accrual cap from 48 hours to 80 hours.
New California leave entitlement for miscarriage or other reproductive loss. On October 11, Governor Newsom signed Senate Bill 848 which makes it an unlawful employment practice for an employer (with five or more employees who are covered under the law) to refuse to grant an eligible employee’s request to take up to five days of leave following a reproductive loss event. The new law goes into effect January 1, 2024. Previously, California law required bereavement leave upon the death of an employee’s family member. This new law increases an employee’s leave entitlements for a reproductive loss event, which is defined as the day or, for a multiple-day event, the final day of a failed adoption, failed surrogacy, miscarriage, stillbirth, or an unsuccessful assisted reproduction.
San Francisco Health Care Accountability Ordinance. We have previously discussed the San Francisco Health Care Security Ordinance (HCSO), which requires covered employers (i.e., employers that must obtain a San Francisco business registration certificate and have at least 20 employees in any location if at least one works in the city or county of San Francisco) to spend minimum amounts on health care for their covered employees. There is also a similar but separate San Francisco Health Care Accountability Ordinance (HCAO) that requires certain employers to comply with minimum health plan standards (or provide alternative payment) for covered employees. Covered employers are either subject to the HCSO or HCAO, but not both. If an employer is subject to HCAO, they will need to comply with it rather than the HCSO. The HCAO applies only to contractors of the City and County of San Francisco that have 20+ employees (50+ for nonprofits) with a contract or lease of $25k+ annually ($50k+ for nonprofits). The HCAO requires employers to (a) offer health plan benefits to their covered employees, (b) make payments to the City for use by the Department of Public Health, or (c) under limited circumstances, make payments directly to their covered employees. The HCAO also requires covered employers to display a worksite poster, collect signed HCAO Know Your Rights notices from covered employees annually, and collect an HCAO waiver form from employees who choose to waive their coverage rights. See the San Francisco HCAO website for more information and copies of the poster and forms.
Illinois law provides additional protections and benefits requirements for temporary labor. Illinois HB 2862 was passed into law and provides protections for temporary workers. Specifically, if a temporary worker is assigned to work for a third-party client for more than 90
calendar days (non
-consecutive), the temporary worker must be provided equivalent benefits as a comparable directly hired employee.
Illinois provides FAQ guidance for Paid Leave for All Workers Act. As background, the Illinois Paid Leave for All Workers Act goes into effect on 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). On October 18, the State published additional Paid Leave for All Workers Act FAQs confirming that an employer does not need to modify the terms of its existing vacation or PTO policy if that existing policy meets or provides the minimum amount of leave required by the law in a 12-month period and employees can take that amount of leave for any reason of their choosing. Note that this Illinois paid leave law 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.
Updates to Massachusetts Paid Family and Medical Leave Act. The Massachusetts Department of Family and Medical Leave (1) updated the Massachusetts Paid Family and Medical Leave Act (PFML) 2024 contribution rates and weekly benefit amounts and (2) revised guidance on topping off benefits with accrued paid leave.
- 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.
New Jersey law provides additional protections and benefits requirements for temporary labor. Proposed regulations were released under the New Jersey Temporary Workers’ Bill of Rights (that was signed into law earlier this year). Like the Illinois law discussed above, this New Jersey law aims to provided covered temporary workers with equal pay and benefits to directly hired employees. Note that New Jersey does not require temporary workers to be employed for a specific amount of time before entitlement to equal pay and benefits. New Jersey also takes a different approach than Illinois about how equal pay and benefits are determined—while Illinois uses the lowest paid, directly hired comparable employee to determine pay and benefits for temporary workers, New Jersey uses the average rate of pay and average cost of benefits. So, the potential financial impact is greater in New Jersey if the comparable workers are paid at different rates. Just like Illinois however, New Jersey does allow employees to be paid cash in lieu of comparable benefits. See the State’s Temporary Workers in NJ: Rights and Protections website for more information.