April 30, 2018
Final Benefit and Payment Parameters for 2019
Federal regulators have released final benefit and payment parameters for 2019. While mostly aimed at regulating insurers and the public health insurance Exchange Marketplaces, there are some elements impacting employer plans which we’d like to review for you below.
The premium adjustment percentage for 2019 is 25.16634051% (or about a 25% increase in premiums from 2013 to 2018). This reflects an increase of about 7.7% over 2018 (which was set around 16%).
- This results in a 7.48% increase to the annual in-network out-of-pocket (OOP) limits for nongrandfathered plans as compared to 2018 (single OOP is always rounded down to next lowest multiple of $50, and family is always double the single OOP figure):
- This results in a 7.76% increase to §4980H “play or pay” penalties as compared to 2018 (§4980H penalties are always rounded down to next lowest multiple of $10):
In addition, States will have until July 2, 2018, to indicate how they’d like to change their essential health benefits (EHB) benchmark plans for 2020. With new flexibilities given to the States, we may see even more wide variations in EHBs from one State to another than we see already. While self-funded plans and large employer plans do not have to cover all 10 EHB categories, they do have to choose a State’s EHB benchmark plan and ensure any EHBs their plan covers abide by the following two requirements:
- Covered EHBs cannot be subject to annual or lifetime dollar limits in any plan, and
- Non-grandfathered plans must count in-network covered EHBs toward OOP, subject to limits above.
Please let your IMA Benefits team know if you have any questions.
IRS Reverses Change to 2018 HSA Family Contribution Limit
The IRS received a lot of stakeholder feedback about reducing the family HSA contribution limit by $50 after the calendar year had already begun (that announcement was in early March 2018). Due to the hardships this was causing, the IRS has now announced they will not reduce the family HSA contribution limit to $6,850 but will leave it at $6,900 for 2018. The revenue procedure making this official also provides instructions for those that
had already contributed the maximum and had to withdraw $50 plus earnings from their HSA.
For employers, this shouldn’t have much impact.
- If employees had withdrawn the extra $50 plus earnings directly from their HSA bank/custodian, they can work directly with that entity to re-deposit it. No action required by the employer.
- If employees had elected to withhold pro-rated amounts over several paychecks to eventually total $6,900 for the year, and the employer had automatically reduced those deductions to ensure they won’t total more than $6,850 this year, then the employer will want to ask those employees to confirm whether they want to bump their paycheck deduction back up to the prior amount.
- If the employer had not yet taken action to reduce $6,900 worth of pro-rated contributions down to
$6,850, then there’s no action required by the employer at this time.
Paid FMLA Tax Credit Pilot Program for 2018 – 2019
Employers wishing to tax the new temporary tax credit for offering paid family and medical leave now have some very basic FAQs available from the IRS. They don’t appear to provide any new information we didn’t already know, but here are some highlights of how the program works:
- For 2018 and 2019, employers can be eligible for a tax credit (that’s a dollar-for-dollar reduction in tax liability) when they provide a certain amount of paid leave under FMLA.
- Employers can claim 12.5% of their paid FML wages as a tax credit if they provide (in a written plan):
- Full-time employees at least two weeks of annual paid FMLA, and
- Part-time employees a pro-rated share of that amount of leave time per a prescribed ratio (his/her expected PT hours divided by normal FT hours),
- At 50% of normal pay,
- Without requiring the employee to use other banked hours (like sick, vacation, or paid time off/PTO) and outside of any state or local mandatory paid leave.
- If the employer is more generous, the 12.5% credit can scale 0.25% higher for every 1% in additional compensation, all the way up to 25% credit for up to 12 weeks of paid FMLA per tax year.
- However, the employer cannot claim the credit on employees earning more than 60% of the highly compensated earnings threshold (so for 2018, $120,000 × 60% = $72,000 or less to qualify).
- This only covers leaves taken under FMLA (so, for example, an employer cannot claim the credit for an employee that has not even worked a year, or for an employee caring for a domestic partner).
- Any paid FMLA wages for which the employer takes this tax credit cannot be deducted as a normal business expense (that would be double dipping).
That’s the general framework, but future regulations will provide needed detail.
Mental Health Parity and Addiction Equity Act (MHPAEA)
The Department of Labor (DOL) Employee Benefits Security Administration (EBSA) and the Department of Health and Human Services (HHS) have been ramping up enforcement of the Mental Health Parity and Addiction Equity Act (MHPAEA). During these enforcement efforts, the Departments have also been providing health plans with guidance and tools needed to make sense of the often gray areas needing more clear guidance.
In 2018, the Departments have provided:
- An updated action plan
- A progress report to Congress with public hearing
- A review of 2017 investigations
- Proposed FAQ Part 39
- More non-quantitative treatment limitation (NQTL) examples which may violate MHPAEA
- A revised draft model form which plan participants and health care providers can use to request mental health and substance use disorder (MH/SUD) benefits information from the plan
- An updated self-compliance tool for plans to evaluate their own MHPAEA compliance
We continue to recommend working with your insurer or third party administrator (TPA) to ensure MHPAEA compliance as new guidance and tools are provided. Any request from plan participants or providers for MH/SUD benefits information should be responded to within 30 calendar days to avoid $110 per day penalty.
Grandmothered Plans
Back in 2013, President Obama’s administration announced that some non-grandfathered individual and small group health insurance plans would have to incorporate most but not all Affordable Care Act (ACA) requirements. Small group grandmothered plans could avoid these 3 key provisions:
- Community rating
- Covering all 10 essential health benefits (EHB) categories
- Covering services related to clinical trials
The sunset date for allowing these plans to renew has been extended a few times, and regulators have announced another extension through plan years ending December 31, 2019.
As of the date of this latest announcement, 14 States and the District of Columbia no longer permit such plans. It’s possible this list may expand.
- California
- Colorado
- Connecticut
- Delaware
- District of Columbia
- Maryland
- Massachusetts
- Minnesota
- Nevada
- New Mexico
- New York
- Oregon
- Rhode Island
- Vermont
- Washington