As we start looking forward to 2017, and as many employers head into annual enrollment periods this fall, employers need to be aware of recent changes in the law that have a significant impact on health benefit plans. This short list of significant developments may help you prepare for what is coming:

Affordable Care Act (ACA) Reporting. The IRS has published drafts of the forms and instructions for reporting information on the individual and employer mandates (and the qualification for Marketplace subsidies) for the 2016 calendar year. These materials include:

Along with newly proposed regulations issued under the individual mandate reporting requirements, the new forms and instructions contain various clarifying changes. Many of the transitional rules for 2015 will no longer apply, but the special relief afforded to employers participating in multi-employer health plans remains.

Most significantly, the reporting requirements for 2016 are fast approaching, and there is no extension in place to delay them. Although the extensions for 2015 make it seem if these reports were just filed with the IRS, employers, insurers, and other reporting entities need to have systems and procedures in place to meet the next set of deadlines for issuing statements to employees (January 31, 2017) and filing IRS submissions (February 28, 2017 for paper filings or March 31, 2017 for electronic filings).

Affordability and Opt-outs. The IRS has proposed guidance under the ACA's employer mandate for plans that allow employees to receive a payment if they opt out of coverage. In general, the payment that is available will increase the contribution that the employee needs to make for coverage. This increase in cost could cause coverage to be regarded as unaffordable, resulting in IRS assessments.

The deemed increase in contributions will not apply in situations where the payment is available only when an employee annually certifies that he or she (and his or her dependents, if any) have minimum essential coverage under another group health plan, and the employer has no reason to doubt the certification.

These rules take effect January 1, 2017.

Nondiscrimination under Affordable Care Act Section 1557. Certain group health plans will be subject to new nondiscrimination requirements set forth in final regulations issued under Section 1557 of the ACA this spring. The new rules affect health programs and activities that receive financial assistance from the Department of Health and Human Services (HHS). The rules apply to the operations and health plans of health care systems and many other health care providers, to the plans, products, and certain services of health care insurers, and to a number of group health plans maintained by employers outside of the health care and health insurance industries. Employers should particularly consider if any of their retiree health plans receive financial assistance from HHS or whether they have any non-health plan activities that are funded by HHS. The rules are complex, but include:

  • A prohibition against a blanket exclusion of transgender services;

  • A requirement to offer language assistance services to plan participants;

  • A requirement to notify employees of the nondiscrimination requirements, and particularly the availability of language assistance services, by October 16, 2016.

The regulations include a model notice for this purpose. Employers who are subject to the new rules should consider addressing the new rules in annual enrollment materials and in plan amendments for the coming year.

HIPAA Audits. The new audit program initiated by the Office of Civil Rights of the Department of Health and Human Services began in earnest in July with the audit of 167 covered entities. The first wave of business associate audits is expected soon. These audits focus on specific aspects of HIPAA compliance and will be followed by a limited number of more extensive on-site audits, which may reach some of the covered entities and business associates already audited as well as new audit targets. Although the timing has yet to be determined, a new round of audits is likely to begin after that. Plan sponsors and vendors should be reviewing their HIPAA compliance programs and taking appropriate measures to improve their compliance and preparation for a possible audit.

Wellness Programs. Employers that maintain wellness programs for their employees need to confirm their compliance with regulations issued by the Equal Employment Opportunity Commission under the Americans with Disabilities Act (ADA) and Genetic Information Nondiscrimination Act (GINA). The ADA regulations apply to wellness programs that request medical information from employees. The GINA regulations apply to wellness programs that request information from an employee's spouse and children. In particular, employers will need to issue a required ACA notice, obtain authorization from spouses who participate in a wellness program, and amend plans to reflect certain incentive limits before plan years that begin on or after January 1, 2017.

As the federal health care reform effort gained steam, Ballard Spahr attorneys established the Health Care Reform Initiative to monitor and analyze legislative developments. With federal health care reform now a reality, our attorneys are assisting health care entities and employers in understanding the relevant changes and planning for the future. They also have launched the Health Care Reform Dashboard, an online resource center for news and analysis on developments under the Affordable Care Act. Our Employee Benefits and Executive Compensation Group helps clients design and implement compensation and benefits packages that comply with today's complex regulatory requirements, attract and retain a quality workforce, and maintain fiscal and fiduciary responsibility.


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This alert is a periodic publication of Ballard Spahr LLP and is intended to notify recipients of new developments in the law. It should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own attorney concerning your situation and specific legal questions you have.