On April 19, 2022, the Departments of Labor, Health and Human Services, and the Treasury issued additional guidance under the Transparency in Coverage Final Rules issued in 2020. The guidance, FAQs About Affordable Care Act Implementation Part 53, provides a safe harbor for disclosing in-network healthcare costs that cannot be expressed as a dollar amount. They also serve as a timely reminder of the pending July 1, 2022, deadline to begin enforcing the Final Rules.
Background
The Final Rules require non-grandfathered health plans and health insurance issuers to post information about the cost to participants, beneficiaries, and enrollees for in-network and out-of-network healthcare services through machine-readable files posted on a public website. The Final Rules for this requirement are effective for plan years beginning on or after January 1, 2022 (an additional requirement for disclosing information about pharmacy benefits and drug costs is delayed pending further guidance). The Final Rules require that all costs be expressed as a dollar amount. After the Final Rules were published, plans and issuers pointed out that under some alternative reimbursement arrangements in-network costs are calculated as a percentage of billed charges. In those cases, dollar amounts cannot be determined in advance.
FAQ Safe Harbor
The FAQs provide a safe harbor for disclosing costs under a contractual arrangement where the plan or issuer agrees to pay an in-network provider a percentage of billed charges and cannot assign a dollar amount before delivering services. Under this kind of arrangement, they may report the percentage number instead of a dollar amount. The FAQs also provide that where the nature of the contractual arrangement requires the submission of additional information to describe the nature of the negotiated rate, plans and issuers may describe the formula, variables, methodology, or other information necessary to understand the arrangement in an open text field. This is only permitted if the current technical specifications do not support the disclosure via the machine-readable files.
Public Website Requirement
This guidance is pretty narrow and of most interest to plans, issuers, and third-party administrators responsible for the technical aspects of the disclosure. Still, it is a helpful reminder to plan sponsors that the July 1st enforcement deadline for these requirements is rapidly approaching. As a reminder, for fully insured plans the plan sponsor is considered the insurance carrier. However, for self or level funded medical plans the plan sponsor is the employer so they will be the one responsible making sure they are meeting the transparency disclosure requirements. Plans sponsors should remember that these machine-readable files must be posted on a public website. The Final Rules clearly state that the files must be accessible for free, without having to establish a user account, password, or other credentials and without submitting any personal identifying information such as a name, email address, or telephone number. If a third-party website hosts the files, the plan or issuer must post a link to the file’s location on its own public website. Simply posting the files on an individual plan website or the Plan Sponsor’s company intranet falls short of these requirements. Regardless of how a plan opts to comply, The July 1st deadline is right around the corner.
The recorded presentation of AAG’s 2022 Education Seminar held on April 7, 2022 is now available for viewing.
Guest Speaker and Attorney Keith Hammond, of Hammond Law Center, focuses on changes in employment law that have occurred over the past year. Some of the topics addressed include new regulations under the Biden administration, as well as how the new DOL Secretary Marty Walsh and Democratic controlled NLRB could impact your business.
This seminar is also approved for 2 Professional Development Credits (PDCs) with SHRM for all attendees.
In fulfillment of President Biden’s promise to make at-home COVID tests more available for all of us, two significant action steps have now occurred:
Key Points:
All group health plans and insurance carriers must now cover the cost of at-home COVID-19 test kits, passing none of that cost to employees or individuals covered under the plan, and without requiring a medical diagnosis or prescription from a health care provider.
On September 9, 2021, the White House issued Path Out of the Pandemic: President Biden’s COVID-19 Action Plan (the Plan). The Plan outlines a six-pronged approach, portions of which will impose new obligations on employers across the country.
Most notably for employers, the first prong of the Plan, “Vaccinating the Unvaccinated,” includes:
The Plan also calls on states to adopt vaccination requirements for all school employees as part of the effort to “keep schools safely open.”
The Plan indicates that the administration will increase the amount of COVID-19 testing by ramping up production of testing products, offering at-home rapid COVID-19 tests at cost through certain retailers, and expanding free testing at retail pharmacy sites, among other things.
While the Plan is far-reaching, there are still many unknowns. Employer obligations arising from OSHA’s ETS will be dictated by the timing and the specific ETS provisions and corresponding requirements. The only thing we know for certain about the forthcoming ETS is that employers will need to continue to adapt and be prepared to pivot if necessary. It is also unclear how the new ETS will fit in with OSHA’s current COVID-19 Healthcare ETS, in 29 C.F.R. 1910 Subpart U, or impact OSHA’s current guidance for non-healthcare employers. Further, the 27 states with OSHA-approved State Plans, such as California, Washington, Oregon, and Virginia, will need to determine how to respond to the ETS, once it is issued, and if certain provisions require implementation alongside the state’s standards and regulations.
CMS also issued a press release urging Medicare and Medicaid-certified facilities to “make efforts now to get health care staff vaccinated.” However, the agency noted that it is still developing an Interim Final Rule with Comment Period that will be issued in October.
Employers who are impacted by the Plan, and who may be impacted by an ETS once issued, are advised to start thinking through how they will navigate many legal issues and operational challenges related to required vaccination and testing. These issues include policy requirements, workplace testing strategies, vaccination tracking and management, medical record collection and retention, and accommodations for religion, disability and pregnancy, as well as wage and hour implications, bargaining obligations for unionized workplaces, employee confidentiality and privacy issues. Further, employers should consider the logistical impact on federal contracts and how these obligations will interplay with other state or local mandates or restrictions on vaccinations.
Stay tuned as we dive into the Plan and corresponding guidance documents, as well as await further information from federal agencies responsible for complying with the Plan and its directives.
New regulatory guidance from three federal agencies that enforce private-sector benefits laws will make employers’ daunting 2021 health benefit to-do lists slightly—but only slightly—more manageable heading into 2022.
Most importantly, the frequently asked questions (FAQ) guidance delays several of the most challenging 2021 and 2022 compliance requirements under the Consolidated Appropriations Act, 2021 (CAA) and the Patient Protection and Affordable Care Act (ACA): so-called “advanced explanations of benefits” (EOBs) providing good-faith estimates of the out-of-pocket costs for scheduled medical services; a “price comparison tool” to enable participants to compare cost-sharing amounts for specific network providers; extensive drug cost information that was to have been reported to the federal regulators in December 2021; and public pricing disclosures related to in-network rates, out-of-network allowed costs, and prescription drug prices.
The FAQ guidance, issued August 20, 2021, by the U.S. Department of Labor, U.S. Department of Health and Human Services, and U.S. Department of the Treasury, also provides some relief or useful clarifications related to other key 2021 health benefit compliance items for employers, including gag clauses, identification cards, continuity-of-care requirements, and provider directories.
The FAQ guidance neither delays nor provides other relief related to the new surprise medical billing requirements under the No Surprises Act, which was enacted as part of the CAA and is set to take effect January 1, 2022, or the Mental Health Parity and Addiction Equity Act “comparative analysis” required by the CAA, which is already in effect.
Here is a summary of the key employer takeaways in the new FAQ guidance.
Advanced EOBs
Under the No Surprises Act, plans are required to provide good-faith estimates of expected provider charges for a specific scheduled service, along with good-faith estimates of the cost sharing that would apply to a participant, and the amount already incurred toward any financial responsibility limits. This was initially set to take effect January 1, 2022, but the guidance indicates that the agencies will defer enforcement until regulations are issued on these plan disclosures and the disclosures required by medical providers. (Question 6)
Price Comparison Tool and Public Price Disclosures
Under the No Surprises Act, plans are required to offer online tools and phone support to enable participants to compare cost-sharing amounts for specific network providers in a specific region. Separately, under the ACA, plans are required to offer three “machine-readable files” on a public website covering in-network rates, out-of-network allowable amounts, and prescription drug prices. Both the No Surprises Act and ACA requirements were set to take effect on January 1, 2022. The guidance delays the effective date of the No Surprises Act requirements to January 1, 2023, and the ACA in-network and out-of-network requirements to July 1, 2022. The ACA prescription drug requirement is delayed until the agencies issue regulations on the matter. (Questions 1-3)
Drug Cost Reporting
The CAA requires employer plans to report very detailed prescription drug cost information to the agencies, including the 50 most commonly covered drugs per plan, the 50 most expensive drugs per plan, and the total health spending for each plan broken out into specific categories. The initial reports were to be provided to the agencies by December 27, 2021, and then by June 1, 2022. The agencies will defer enforcement related to the 2021 and 2022 reports until they issue further guidance, though the agencies “strongly encourage plans” to get ready to report 2020 and 2021 plan year data no later than December 27, 2022. (Question 12)
Gag Clauses
Under the CAA, plans cannot enter into network or other agreements that would prevent them from making available provider-specific cost or quality-of-care information to providers or participants, electronically accessing de-identified claims and encounter information for each participant (consistent with privacy laws), or sharing either of those types of information with business associates. Plans have to attest to the agencies each year that they have no such clauses in their agreements. This requirement took effect on enactment of the CAA on December 27, 2020, and is not changed by the FAQ guidance. The agencies have indicated that additional guidance is forthcoming on how plans will attest to their compliance. (Question 7)
Insurance Cards
Under the No Surprises Act, plans have to update physical or electronic insurance cards to include network and out-of-network deductibles and out-of-pocket limits and consumer assistance contact information. This is set to take effect on January 1, 2022, a date unchanged by the FAQ guidance. The guidance does clarify, though, that the agencies will consider both data actually on the cards and data “made available through information that is provided on the ID card.” (Question 4)
Continuity of Care
Under the No Surprises Act, when a provider or network contract is terminated, plans have to take steps to protect hospitalized or other continuing care patients. This requirement will take effect on January 1, 2022. The guidance clarifies that the agencies intend to issue formal regulations on this requirement, but will not do so before the effective date. Until such regulations take effect, plans will be held to a good-faith compliance standard. (Question 10)
Provider Directories
Under the No Surprises Act, plans are required to take several steps to improve provider directories, such as updating them at least every 90 days, and more promptly notifying participants about whether a particular provider is in the network. These requirements will take effect on January 1, 2022, and the guidance does not change that. The agencies do indicate that they intend to issue formal regulations in the future, and may also have specific additional guidance on required disclosure of balance billing information. (Questions 8 and 9)
I understand that your first thought may be that this article has nothing to do with your business and you can skip it.
Please read before you disregard. Your employees will soon receive a union message! You have a short amount of time to decide if that message comes from your organization or if you will wait and your employees will learn all they need to know about unions from the Federal Task Force, whose very existence is to encourage unionizing.
I understand the desire to avoid the topic of unions as in my thirty years of working as an Employer Advocate, I’ve skimmed over union articles, and barely skimmed at that. Unions have never been a real issue for most Florida employers, unless you are Disney or a public service entity/municipality. Yes, we must work within the regulations and rules around Section 7 rights (protected concerted activity) of the National Labor Relations Act, but unions have never been a concern. Nationally, there has been a steady decline in union activity as the rights of employees have continued to expand. What is the threat now? Why does it matter to you?
Biden vowed to be “the most pro-union president you’ve ever seen” and he appears to be living up to that promise. His first order of business, day one in office, was to fire (and replace) the sitting General Counsel of the NLRB, even though his term was set to expire November 2021. This is the first time in history a President has fired the sitting General Counsel!
Biden nominated Marty Walsh to be our Secretary of Labor. Mr. Walsh has been confirmed by the Senate and is now the first union member in nearly 50 years to run the Department of Labor.
Biden’s most recent act to abide by the union promise was an Executive Order to create a task force to encourage worker organizing and collective bargaining.
VP Harris has been tapped to chair the Federal Task Force. The task force has no more than 180 days from the Executive Order to submit recommendations for actions to promote worker organizing and to increase union density.
Most business owners and HR professionals have no history in dealing with a partial workforce rebellion. This could happen in individual companies or it could be a wider industry movement in a city or region. Again, most of us have no history in dealing with unions or collective bargaining, so where do you start? What are you supposed to do and how?
You may wish to start with training your managers. They typically have the pulse of your employees and will be the first to know if organizing starts and will likely be the ones your employees go to with questions. Mostly importantly, they need to know how to report, monitor and legally respond to employees. A manager saying “They will shut this company down, before allowing a union in” is not an appropriate response and could cause you much bigger legal problems.
Next, you will want to talk with your employees. In our current environment, they need to be communicated with regularly, regardless of union activity. It seems, we have spent most of the past year with social media, news outlets and the government focused on dividing the country and our citizens. We’ve been divided by our race, gender, religion, political party, mask and/or COVID vaccine status, views on Second Amendment rights, sexual preference, or how you identify. The media has provided you with a multitude of options to cause division in your community. Wouldn’t it be nice if employees didn’t have to endure division at their place of employment?
Communicating with employees to remind them that they do not need an intermediary to speak with their manager or the company owner is a must! You want to stress that you have good open communication between managers and employees. Remind employees that you offer competitive wages and benefits. If any of this is not true, now is the time to fix it as it will be good for your company as a whole, even if the taskforce doesn’t target your industry. Union organizers will use any real (or imagined) crack in your company’s framework to convince employees of how much better they would be with a union on their side.
You may also consider modernizing your policies in regard to your position on unions, while stressing your company’s open door policy as well as a no solicitation policy.
Remember your people are the reason your company exists, and they need to be reminded and shown that they are valued and appreciated.
Being proactive now is one of the keys to your success when it comes to preventing a union from walking through your front door.
Let us know if you would like any help with implementing a Union Avoidance management training program. With AAG on your side, we will help to ensure your team is prepared to answer employee questions.The Department of Labor (DOL) has launched a new concentrated outreach initiative. For business owners, that means the DOL has promised to actively reach out via radio announcements, social media platforms and neighborhood posters informing employees of their rights under the Fair Labor Standards Act (FLSA).
You may now be thinking “What does that have to do with me? I pay my employees to work”. While this may be mostly true, often we (or our managers) inadvertently allow or encourage our employees to work off the clock. Before your internal defenses kick into high gear, let me provide a few examples of how this could occur:
Over the past year, business owners and managers have dedicated their time, energy and focus to keeping the essential business doors open or attempting to reopen and get employees back in the office. To allow employees to safely return to work, you have had to operate/reopen your business within CDC guidelines, transition your business to accommodate a remote workforce, follow OSHA’s recommendations, keep up with Federal Equal Employment Opportunity Laws related to the COVID-19 pandemic, as well as the interaction between the Americans with Disability Act (ADA), Title VII of the Civil Rights Act of 1964, and the Genetic Information Nondiscrimination Act (GINA). It is no wonder some of our focus on day-to-day compliance may have slipped.
My company’s mission is to be The Employer Advocate. Under the new administration, changes are happening at lightning speed and, as your advocate, we are here to help you navigate through changes as they occur. Administrators Advisory Group (AAG) is a benefits brokerage that works with small to mid-size businesses, specializing in human resources compliance. We work alongside your human resource team to keep you up to date with the latest workplace rules and regulations.
The Department of Labor (DOL) campaign is the first in our four-part series designed to let you know what changes have taken place that may affect your business. In the following weeks, we will cover changes regarding the Family First Coronavirus Response Act (FFCRA) as amended under the CARES Act, changes occurring within OSHA, and a new federal taskforce created whose goal is to unionize your employees.
While Wage & Hour rules have not changed, the informational outreach by the DOL has just begun. The biggest change comes in the form of visibility and accessibility of the information, beginning with the revamp of their website. The DOL has promised to proactively reach out to employees using radio public service announcements, national webinars, social media messages, and posters.
Reminding employers and employees alike that employees must be paid for ALL hours worked is the center of this outreach! Even if you don’t ask an employee to work overtime, even if it’s done remotely, and even if you aren’t aware (but should have been), the employee is entitled to be paid.
Wage & Hour rules can be one of the many landmines that employers have to navigate on a daily basis. With AAG on your side, we will help you ensure you are prepared in case the DOL shows up on your doorstep. Let us know if you have questions or would like to review some of your existing practices or policies.
In much-anticipated guidance, the Internal Revenue Service has offered its insight on the implementation of the COBRA temporary premium subsidy provisions of the American Rescue Plan Act of 2021 (ARPA) in Notice 2021-31.
Spanning more than 40 pages, the IRS-answered frequently asked questions (FAQs) finally resolve many issues relating to temporary premium assistance for COBRA continuation coverage left unanswered in the Department of Labor’s publication of model notices, election forms, and FAQs.
The practical implications of the guidance for employers are many. Significantly, employers must take action prior to May 31, 2021, to ensure compliance with some of the requirements under ARPA and related agency guidance.
Notice 2021-31 provides comprehensive guidance on the ARPA subsidy and tax credit implementation issues (although it acknowledges there are many issues that still need to be addressed). Some of the key topics addressed include:
For employers, there are some immediate takeaways:
As expected, the IRS expansively defines an “involuntary termination.” For purposes of the ARPA COBRA subsidy, involuntary terminations include employee-initiated terminations due to good reason as a result of employer action (or inaction) resulting in a material adverse change in the employment relationship.
The guidance provides helpful COVID-19-specific examples. Employees participating in severance window programs meeting specified regulatory requirements could qualify. Voluntary employee terminations due to an involuntary material reduction in hours also could qualify. Further, voluntary terminations due to daycare challenges or concerns over workplace safety may constitute an involuntary termination, but only in the narrow circumstances in which the employer’s actions or inactions materially affected the employment relationship in an adverse way, analogous to a constructive discharge.
Employer action to terminate the employment relationship due to a disability also will constitute an involuntary termination, but only if there is a reasonable expectation before the termination the employee will return to work after the end of the illness or disability. This requires a specific analysis of the surrounding facts and circumstances. The guidance notes that a disabled employee alternatively may be eligible for the subsidy based on a reduction in hours if the reduction in hours causes a loss of coverage.
A number of the circumstances that meet the involuntary termination definition in the guidance may not be coded in payroll or HRIS systems as involuntary terminations. As employers have an affirmative obligation to reach out to employees who could be AEIs, employers will need to look behind the codes to understand the circumstances of the terminations.
Further, to identify all potential AEIs, employers may need to sweep involuntary terminations or reductions in hours occurring prior to the October 1, 2019, date referenced in the Department of Labor’s FAQs. The IRS makes clear that COBRA-qualified beneficiaries who qualified for extensions of COBRA coverage due to disability (up to 29 months), a second qualifying event (up to 36 months), or an extension under state mini-COBRA potentially can qualify for the subsidy if their coverage could have covered some part of the ARPA COBRA subsidy period (April 1, 2021–September 30, 2021).
An involuntary termination is not the only event that can make an employee potentially eligible for the subsidy. Employees who lose coverage due to a reduction in hours (regardless of the reason for the reduction) can be eligible for premium assistance as well. This can include employees who have been furloughed, experienced a voluntary or involuntary reduction of hours, or took a temporary leave of absence to facilitate home schooling during the pandemic or care for a child.
The IRS explains that, if an employer subsidizes COBRA premiums for similarly situated covered employees and qualified beneficiaries who are not AEIs, the employer may not be able to claim the full ARPA tax credit. In this case, the amount of the credit the employer can receive is the premium that would have been charged to the AEI in the absence of the premium assistance and does not include any amount of subsidy the employer would otherwise have provided. For example, if a severance plan covering all regular full-time employees provides that the employer will pay 100 percent of the COBRA premium for three months following separation, this employer could not take a tax credit for the subsidy provided during this three-month period.
Notice 2021-31 does not elaborate on this issue beyond providing specific examples involving a company severance plan. Thus, ambiguity remains as to whether this guidance would prohibit an employer from claiming a tax credit where an employer has agreed to provide a COBRA subsidy in a negotiated separation or settlement agreement and not pursuant to an existing severance plan or policy. Further IRS guidance on this point may be forthcoming. In light of this guidance, employers should re-evaluate their COBRA premium subsidy strategies.
On April 7, 2021, the U.S. Department of Labor (DOL) issued eagerly anticipated guidance on administering COBRA subsidies under the American Rescue Plan Act of 2021 (ARPA). The guidance includes Frequently Asked Questions (FAQs) and various Model Notices and election forms implementing the COBRA Premium Assistance provisions under ARPA, while also announcing the launch of a page dedicated to COBRA Premium Subsidy guidance on its website.
Since ARPA was enacted, employers have been preparing to comply, albeit with many open questions. ARPA requires that full COBRA premiums be subsidized for “Assistance Eligible Individuals” for periods of coverage between April 1, 2021, through September 30, 2021. While this guidance answers important questions on the administration of the subsidies, it does not address many other details on the minds of employers. For example, this guidance does not cover important nuances such as what is an “involuntary termination” in order to qualify for subsidized coverage, how existing separation agreement commitments to subsidize COBRA should be viewed, or details on how the corresponding payroll tax credit will work.
The FAQs are largely directed to individuals and focus on how to obtain the subsidy and how subsidized coverage fits with other types of health coverage that may be available, including Marketplace, Medicaid, and individual plan coverage. We hope that employer directed guidance will follow to fill in the gaps.
Employers will be happy to know that the FAQs confirm a few points that will impact administration. First, eligibility for coverage under another group health plan, including that of a spouse’s employer, will disqualify the employee from the subsidy. Employees must certify on election forms that they are not eligible for such coverage and will notify the employer if they subsequently become eligible for coverage (individual coverage, such as through the Marketplace or Medicaid, will not disqualify an otherwise eligible individual from subsidized COBRA). Failure to do so will subject the individual to a tax penalty of $250, or if the failure is fraudulent, the greater of $250 or 110% of the premium subsidy. The availability of other coverage (which the employer may not know about) does not impact the employer’s initial obligation to identify potential Assistance Eligible Individuals and provide the required notices and election forms.
Soon after enactment, there were also questions circling about whether ARPA applied to small employer plans not subject to COBRA, but rather state “mini-COBRA” laws. The FAQs confirm that the subsidy also applies to any continuation coverage required under state mini-COBRA laws but also notes that ARPA does not change time periods for elections under State law. Further guidance would be welcome on obligations related to small insured plans. The FAQs also confirm that plans sponsored by State or local governments subject to similar continuation requirements under the Public Health Service Act are covered by the ARPA subsidies.
One area that has caused great confusion is how the right to retroactively elect COBRA coverage (to the date active coverage was lost) due to the DOL’s extended deadlines fits with this new election right. While there is more to come on this, the DOL helpfully confirmed that these are two separate rights and thankfully, the FAQs note that the extended deadlines do not apply to the 60-day notice or election periods related to the ARPA subsidies.
The most significant part of the guidance (that we knew was coming but are still happy to see sooner rather than later) are the Model Notices and election materials. The guidance package confirms that employers have until May 31, 2021, to provide the notices of the opportunity to elect subsidized coverage and individuals have 60 days following the date that notice is provided to elect subsidized coverage. Individuals can begin subsidized coverage on the date of their election, or April 1, 2021, as long as the involuntary termination or reduction in hours supporting the election right occurred before April 1, 2021. As previously noted, in no way do these timeframes extend the otherwise applicable 18-month COBRA period.
The Notices include an ARPA General Notice and COBRA Continuation Coverage Election Notice, to be provided to all individuals who will lose coverage due to any COBRA qualifying event between April 1 and September 30, 2021, and a separate Model COBRA Continuation Coverage Notice in Connection with Extended Election Periods, to be provided to anyone who may be eligible for the subsidy due to involuntary termination or reduction in hours occurring before April 1, 2021 (i.e., generally involuntary terminations or reductions in hours occurring on or after October 1, 2019).
Plans will also have to provide individuals with a Notice of Expiration of Period of Premium Assistance 15-45 days before the expiration of the subsidy — essentially explaining that subsidies will soon expire, the ability to continue unsubsidized COBRA for any period remaining under the original 18-month coverage period and describing the coverage opportunities available through other avenues such as the Marketplace or Medicaid. Employers are highly encouraged to use the DOL’s model notices without customization except where required to insert plan or employer specific information.
With the release of the model notices, employers and COBRA administrators now largely have the tools to administer this new election right. The FAQs remind us that the DOL will ensure ARPA benefits are received by eligible individuals and employers will face an excise tax for failing to comply, which can be as much as $100 per qualified beneficiary (no more than $200 per family) for each day the employer is in violation for the COBRA rules. Accordingly, employers will want to begin or continue conversations with COBRA administrators to ensure notices are timely provided to the right group of individuals.