Hamilton Headlines
June 6, 2016
 
Relaxed Guidance for Opt-Out Payments, SCA Cash-in-Lieu Payments, and the Like
 
  1. The IRS Position. As discussed at prior seminars and in our e-Alerts, beginning in 2014 the regulators began to state that Section 125 Cafeteria Plan benefit dollars, payments to participants who opt-out of medical benefits, Service Contract Act and Davis-Bacon cash-in-lieu-of-fringe payments, cash options required under Union contracts, and similar types of payments create issues under the "affordability test" of the Affordable Care Act. The typical example provided by the regulators was as follows: An employer charges $200 per month for its lowest cost self-only medical benefits coverage. The employer offers a $100 opt-out bonus if the employee waives coverage (or simply pays the employee $100 as cash-in-lieu of coverage). The employer is treated, for ACA affordability purposes, as "charging" the employee $300 for its lowest cost self-only coverage. (The regulators' rationale is that an employee wishing to enjoy coverage must pay $200 plus "forego $100" to have coverage, and therefore the coverage "costs" the employee $300.) 
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Voluntary Benefits Issues
 
Voluntary benefit plans are plans that are insured, completely optional for election, and paid for by employees. Typically, voluntary benefits include life, dental, vision, disability, critical illness and hospital indemnity insurance. Employers are often surprised to learn that their "voluntary benefits" are truly not voluntary under ERISA, and that, consequently, they have not met their ERISA compliance obligations (which include the requirement to file a Form 5500, provide an SPD to plan participants and comply with ERISA's claims procedures.
 
  1. DOL Safe-Harbor Voluntary Benefit Exemption. DOL regulations provide a safe harbor under which ERISA does not apply to certain voluntary group, or group type insurance programs. To fall within the safe-harbor, the program must meet several specific requirements, including that it be established as a voluntary, 100% employee pay-all arrangement and that the employer have minimal involvement.
ACA Audit Preparation

Your annual ACA reporting requirements are complete. Now, it's time to prepare for the possibility of an IRS audit. Employers who prepare now for an ACA audit are well-positioned to avoid disruption, possibly escape penalties, and resume operations as quickly as possible. Start your planning by reviewing this list, and then contact your legal advisor to fill in the gaps.

1. Establish a Fiduciary File
Maintaining solid, documented evidence of your ACA-compliance efforts is the most important defensive strategy to avoid possible audit penalties. The IRS may request a large number of health plan(s) and HR documents, so gather all relevant materials that showcase and substantiate your efforts.
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More Guidance on ACA, Mental Health Parity and Women's Health and Cancer Rights
 
The departments recently issued FAQs addressing a potpourri of topics related to the ACA's market reforms, mental health parity and women's health and cancer rights. Among other things, the guidance covers specific preventive care issues, rescissions, reference-based pricing as it relates to cost-sharing limits, mental health parity disclosure requirements and breast reconstruction.

Background
On April 20, 2016, the Departments of Labor, Health & Human Services and Treasury (departments) issued guidance in the form of Frequently Asked Questions (FAQs) on Affordable Care Act (ACA) market reforms, the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA), and the Women's Health and Cancer Rights Act of 1998 (WHCRA).

Affordable Care Act Market Reforms  
The FAQs provide helpful guidance and clarification on ACA market reforms, including preventive services, rescissions, out-of-network emergency services and cost-sharing.

Preventive Services
Under the ACA, non-grandfathered group health plans must cover certain preventive services without cost-sharing.
 
Colonoscopy-Related Medications
Prior guidance established that a colonoscopy is a preventive procedure when recommended as a screening for colorectal cancer. The FAQs clarify that bowel preparation medications prescribed for a colonoscopy performed as a preventive service must be covered without cost-sharing, as an integral part of this procedure.
 
Click HERE for more information. 
New DOL Rules Expand Definitions of "Fiduciary" and "Advice"  

Last month, the DOL published its long awaited/feared final regulations expanding the definition of "fiduciaries" who provide "advice" (as very broadly defined) relating to retirement plans, IRAs, Health Savings Accounts, Education Savings Accounts, and participants in those arrangements.
 
In addition to imposing statutory duties and liability exposure on this expanded group of individuals and firms, and expanded categories of advice, the new rules increase significantly the number of hoops through which this group must jump if they wish to be paid (directly or indirectly) for their services.

The primary impact of the new rules is on investment and financial professionals, but it is not an overstatement to say that the new rules require professionals who provide almost any service relating to these arrangements (or to participants in these arrangements) to alter significantly the way they do business.
 
Final Rules on Employer Wellness Programs Under the ADA and GINA

On May 16, the Equal Employment Opportunity Commission (EEOC) issued final regulations under the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA) as they relate to employer wellness programs. These rules provide guidance around employer-sponsored wellness and incentive programs as they pertain to employees with health restrictions and disabilities (ADA) and non-employee/spouse health information (GINA). The rules apply to programs that include disability-related inquiries, medical examinations, and/or inquiries on family health information.
 
 
Employers have been using wellness programs to promote better health among employees and help control health care costs for a number of years. The Affordable Care Act (ACA) wellness rules were finalized in 2013 and became effective for plan years beginning in 2014. These new final regulations provide important guidance as to how employer wellness programs can comply with the ADA and GINA, but there are areas where they do not align with the existing ACA rules. Because of these differences, employers should work with their legal counsel to ensure compliance with each set of regulations.

The final regulations include some changes and clarifications from the proposed rules* that were issued April 20, 2015 (ADA) and October 30, 2015 (GINA). They apply to wellness programs for plan years beginning on or after January 1, 2017.

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Please note that Hamilton Insurance does not provide legal advice, and this does not constitute advice of any kind for any particular situation. Instead, this is intended as non-comprehensive general information serving as a starting point for further discussion. Please contact your tax and/or legal advisors for information about how these issues affect you.  
 
About Us
H amilton Insurance , a top ranked independent broker in the Washington DC/Metropolitan Area and the nation, has over 35 years of experience in providing insurance brokerage, risk management and employee benefit solutions. It represents a full suite of commercial, health & welfare, and personal insurance solutions, supported by risk compliance and group benefit administrative services. 

 
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