Health & Welfare Plans Newsletter

May 13, 2016 logo logo LinkedIn logo Twitter logo Facebook logo
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[Official Guidance]

Text of HHS Final Regs: Nondiscrimination in Health Programs and Activities
362 pages. "The final rule clarifies and codifies existing nondiscrimination requirements and sets forth new standards to implement Section 1557, particularly with respect to the prohibition of discrimination on the basis of sex in health programs.... OCR decided against including a blanket religious exemption in the final rule; however, the final rule includes a provision noting that insofar as application of any requirement under the rule would violate applicable Federal statutory protections for religious freedom and conscience, such application would not be required.... OCR has changed Section 92.101 to provide that sex-specific health programs or activities are allowable only where the covered entity can demonstrate an exceedingly persuasive justification, i.e., that the sex-specific program is substantially related to the achievement of an important health-related or scientific objective." (Office for Civil Rights [OCR], U.S. Department of Health and Human Services [HHS])  


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[Guidance Overview]

Not So Safe: Affordability Safe Harbors under the ACA
"If certain conditions are satisfied, an applicable large employer may use one or more of the three affordability safe harbors to determine if it's offering affordable coverage under the ACA. There are substantial limitations and risks associated with each safe harbor." (Graydon Head & Ritchey LLP)  

[Guidance Overview]

IRS Releases ACA Affordability Rates for 2017
"For 2017, the required contribution percentage has increased to 9.69% (from 9.66% in 2016).... [If] an employee's share of the premium for employer-provided coverage (in 2017) is more than 9.69% of his or her household income ... the ALE may be liable for a penalty if that employee obtains a premium tax credit through an Exchange.... For 2017, the required contribution percentage for determining whether an employee has access to affordable coverage increases to 8.16% (from 8.13% in 2016).... [An] employee will be determined to have access to affordable coverage if the required contribution for the lowest-cost, self-only coverage does not exceed 8.16% of household income." (The Wagner Law Group)  

[Guidance Overview]

Interaction of HSAs and Medicare Addressed in IRS Information Letters
"[T]hese proration principles also apply to individuals who do not apply for Social Security, continue working past age 65, and delay their enrollment in age-based Medicare because they are covered by a group health plan based on their current employment.... When their employment or group health coverage ends, whichever occurs first, they will also have an eight-month special enrollment period to sign up for Medicare Part A. Application of the proration rules in that situation is more complicated, however, because the first month of Medicare entitlement may be retroactive." (Thomson Reuters / EBIA)  

Text of D.C. District Court Opinion: ACA Does Not Permit Cost-Sharing Reduction Payments to Insurers
"Section 1401 [of the ACA] provides tax credits to make insurance premiums more affordable, while Section 1402 reduces deductibles, co-pays, and other means of 'cost sharing' by insurers. Section 1401 was funded by adding it to a preexisting list of permanently-appropriated tax credits and refunds. Section 1402 was not added to that list. The question is whether Section 1402 can nonetheless be funded through the same, permanent appropriation. It cannot.... Such an appropriation cannot be inferred. None of Secretaries' extra-textual arguments -- whether based on economics, 'unintended' results, or legislative history -- is persuasive. The Court will enter judgment in favor of the House of Representatives and enjoin the use of unappropriated monies to fund reimbursements due to insurers under Section 1402. The Court will stay its injunction, however, pending appeal by either or both parties." [U.S. House of Representatives v. Burwell, No. 14-1967 (D.D.C. May 12, 2016)] (U.S. District Court for the District of Columbia)  


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Judge Rules Against Administration In Cost-Sharing Reduction Payment Case
"This is not a trivial matter. If the CSR payments to insurers stopped, the insurers would still be legally required to reduce cost sharing -- at a cost $7 billion this year and $130 billion over the next ten years -- without reimbursement. Burdened with this cost without reimbursement, many insurers might cease to offer marketplace coverage. Those that remained would have to raise rates dramatically to cover the costs of reducing cost sharing while ensuring solvency. Most of this increase would be covered by increased APTCs. Indeed, the increased rates might make some individuals eligible for APTC who might not have been eligible otherwise, resulting in the paradoxical situation in which eliminating appropriations for cost-sharing reduction would increase federal spending, by an estimated $47 billion over ten years." (Health Affairs)  

District Court: Billions Spent Illegally on ACA Benefits
"[U.S. District Judge Rosemary M. Collyer] decided that the cost-sharing program, as implemented since January 2014, has been spending money that Congress did not approve.... Collyer sharply ridiculed the government's basic argument that the tax credit and cost-reimbursement parts of the ACA program were interconnected, and thus could both be funded out of that permanent appropriation for tax credits.... Its 'mother was undoubtedly necessity,' she added, with some sarcasm." [U.S. House of Representatives v. Burwell, No. 14-1967 (D.D.C. May 12, 2016)] (SCOTUSblog)  

Ensure You Have Business Associate Agreements or Face HIPAA Penalties
"The OCR recently announced two hefty resolution agreements with covered entities based on their failure to obtain BAAs before disclosing protected health information (PHI) to their business associates.... In its press release, the OCR reaffirmed, 'HIPAA's obligation on covered entities to obtain business associate agreements is more than a mere check-the-box paperwork exercise. It is critical for entities to know to whom they are handing PHI and to obtain assurances that the information will be protected.' " (Holland & Hart LLP)  

Health Care Providers Can Use ERISA to Fight Back Against Insurer Recoupment Demands
"Using ERISA, providers have recovered amounts withheld with respect to unrelated claims through lawsuits they have filed based on assignments of benefits from their patients.... A provider's ability to challenge an insurer's recoupment demand may depend on a number of factors, including, among others, whether the provider has a valid assignment of benefits from the patient-participant, details underlying the insurer's overpayment determination, the contract between the provider and the payor, if any, and potential fault or misconduct by the provider." (K&L Gates LLP)  

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BenefitsLink Health & Welfare Plans Newsletter, ISSN no. 1536-9595. Copyright 2016, Inc. All materials contained in this newsletter are protected by United States copyright law and may not be reproduced, distributed, transmitted, displayed, published or broadcast without the prior written permission of, Inc., or in the case of third party materials, the owner of that content. You may not alter or remove any trademark, copyright or other notice from copies of the content.

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