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  • May 2022

The Vita Blog May 2022

  1. Transparency in Coverage Rules: Action Required for Self-Insured Health Plans

    System Administrator – Tue, 24 May 2022 15:00:00 GMT – 0
    The Transparency in Coverage final rule was issued in October of 2020 by the HHS, DOL, and Department of the Treasury. These rules require non-grandfathered group health plans (both fully insured and self-insured) to disclose information regarding in-network and out-of-network allowed amounts for billed services. The ultimate goal of the legislation is to reveal in real time the cost of health care services.
     

    Implemented in Phases

    The first phase of compliance requires the posting of three Machine-Readable Files (MRF) that disclose the cost of healthcare services. These are files that can be imported and read by computer systems. The three files disclose the following data:
     
    • In-Network Rate (negotiated rates with contracted providers)
    • Out-of-Network Allowed Rates (billed charges and allowed amounts)
    • In-Network Prescription Drug File

    These files must be updated monthly and must be accessible without login credentials or fees to access the files. The In-Network and Out-of-Network files must be posted and accessible by July 1, 2022. The prescription drug file has been delayed until further notice. It should be noted that the format of these files is not something that is decipherable at the consumer level.

    The second phase will include the rollout of an online cost estimator tool which will provide consumers with cost share estimates for all covered services. The first round of the consumer level disclosure requirement is effective January 1, 2023 and reflects a list of 500 designated services. The final phase will require costs for all services to be disclosed. This last phase is effective January 1, 2024.
     

    Fully Insured Plans – No Action Required

    For those employer groups with fully insured plans, it is the responsibility of the insurance carrier to comply with the MRF requirements. Vita is in the process of confirming that all insurance carriers will be in compliance with this requirement.
     

    Self-Insured Plans – Action Required for July 1, 2022

    Employers that offer self-insured health plans must take action to comply with these requirements. The specific requirement is to post somewhere on their public website a link to the MRF. Employers will be able to determine where, on their website, this file is posted as long as it is publicly facing and does not require login credentials. The requirements state that anyone in the United States should be able to locate this link.

    Employers should start working with IT resources now to ensure compliance by the July 1 deadline.
     

    Next Steps

    Vita clients with self-insured plans will receive an email with additional instructions based on the specifics of the health plans in place and recommendations on verbiage to assist in the process.

    Vita will continue to monitor the developments of the cost estimator tool and post further updates as information is solidified.

     
    • Compliance
  2. Implementing a Medical Travel Benefit

    System Administrator – Wed, 11 May 2022 15:00:00 GMT – 0
    (6/30/2022 Update) See Vita's Medical Travel HRAs solution for detailed guidance on how employers can implement a medical travel HRA benefit.


    Following the leaked draft opinion from the Supreme Court of the United States last week, a number of employers have asked about the best practices and considerations for implementing a medical travel reimbursement benefit for employees who find it necessary to access healthcare in another region.

    Medical travel benefits to support or even incentivize care in other locations are not necessarily new. Beyond politics, some employers have already implemented programs to drive care towards centers of excellence for certain high-cost or complex conditions.
     

    Taxation and Eligible Expenses

    IRS Publication 502 defines medical care that is tax-deductible. For individuals, such expenses would only be tax-deductible to the extent they exceed 7.5% of Adjusted Gross Income (AGI). However, these definitions are also relied upon to define eligible medical care that can be provided on a tax-deductible basis through employer plans. The following types of medically-related travel expenses are considered eligible:
     
    1. Transportation: amounts paid for transportation to another city to receive medical treatment are eligible. The expenses must be primarily for, and essential to, receiving medical care. This includes:
       
      • Bus, taxi, train, or plane fares
      • Mileage reimbursement for driving a personally owned car
      • Car services, such as taxis, Uber, Lyft, or another similar rideshare service
      • Transportation expenses of a parent who must accompany a child who needs medical care
      • Transportation expenses of a nurse or other person who can give injections, medications, or other treatment required by a patient who is traveling to get medical care and is unable to travel alone. Note that expenses for a friend, family member, or other non-medically trained support person would not be eligible.

         
    2. Lodging: the cost of lodging while away from home receiving medical care if all of the following requirements are met:
       
      • The lodging is primarily for, and essential to, medical care.
      • The medical care is provided by a doctor in a licensed hospital or in a medical care facility related to, or the equivalent of, a licensed hospital.
      • The lodging isn't lavish or extravagant under the circumstances.
      • There is no significant element of personal pleasure, recreation, or vacation in the travel away from home.

    The maximum amount for lodging is $50 per person per night. For example, if a parent is traveling with a child, up to $100 per night would be considered as an eligible medical expense for lodging.

    Note that you can include lodging for an eligible caregiver traveling with the person receiving the medical care; however, the same rules apply for defining an eligible travel partner as outlined above for transportation expenses.
     
    1. Car expenses: costs associated with driving to receive medically necessary treatment are eligible. The IRS authorizes a standard medical mileage rate on an annual basis. The rate for 2022 is $0.18 per mile. Parking fees and tolls are also eligible.
    The IRS also authorizes a significantly more complex methodology that allows for actual expenses for operating your car for the medical treatment. This includes calculating the actual out-of-pocket costs, such as the cost of gas, oil, parking, and tolls when you use a car for medical reasons. Items such as depreciation, insurance, general repair, or maintenance expenses are not eligible. This method also requires detailed logging of all mileage and expenses. Therefore, most people elect to use the simple medical mileage rate.
     

    Not Eligible Expenses

    Excluded expenses include:
     
    1. Meals (other than meals provided through inpatient care)
    2. Childcare expenses/babysitting
    3. Extending an otherwise-medical trip for vacation or personal enjoyment
    4. Expenses for a caregiver or travel companion other than the following two cases:
      • A parent accompanying a child under age 18
      • A qualified caregiver who can administer medication (such as a nurse)
         

    Strategy

    There are two paths that employers can take when establishing a medical travel Health Reimbursement Account (HRA). The two options are outlined below along with the basic pros and cons for each method:

    Option #1: Integrated HRA
    An Integrated HRA is one that is integrated with the health plan. This type of medical travel benefit would be available to all employees and dependents who are enrolled on the employer’s medical plan.
     
    • Pro: Employers may elect any reimbursement maximum, with no limit.
    • Con: Only employees who are actively enrolled on the health plan may be provided the medical travel benefit. In addition, only dependents that are actively enrolled on the health plan would be eligible under the plan. 

    Option #2: Standalone HRA (Excepted Benefit HRA, or EBHRA)
    Alternatively, a Standalone HRA is one that may be offered to ALL employees, independent of whether they are covered under the employer’s group health plan.
     
    • Pro: Employers may offer the benefit to a wider set of employees and eligible dependents (including those who waive the employer’s group medical plan). There is no restriction that the employee and dependents be enrolled in their employer sponsored health plan.
    • Con: There is a maximum benefit of $1,800 per employee per year for this type of HRA (the standard EBHRA limit). Expenses for dependent would still be covered, but the maximum is capped at $1,800 per employee. 

    Employers may wish to exclude emergency transportation from this plan benefit in order to funnel emergency transport services through the medical plan for cost management and claims processing expertise.

    Employers may also wish to clarify that the medical travel expense reimbursement plan is available when seeking medical services that are not available within 100 miles of an employee’s home. While the impetus for many employers who may be considering launching a medical travel HRA at this time is the potential non-availability of abortion services, the benefit would typically be written to cover medical travel expenses for any procedure that was not available within a certain radius of the employee’s home.
     

    A Few Thoughts About Reality

    Just as our country is divided, employees hold strong beliefs on both sides of the underlying abortion issue. Our experience has been that employers are thoughtfully considering the importance of this issue and how it will impact their employees. 

    What about cost? Some employers have jumped to offering a medical travel benefit without much regard for the potential cost, assuming benefits can be capped and will be low compared to other healthcare costs. Others have expressed concerns such as, “There are a lot of additional benefits we would like to offer our employees. Should we be investing those limited dollars in a medical travel benefit?” 

    It is possible that for many employers who adopt a medical travel benefit, it may be largely symbolic. The reality that both stigma and confidentiality loom large under such a medical travel benefit cannot be ignored.
     

    Next Steps

    Vita is prepared to assist clients who wish to implement such plans by providing formal plan documentation and confidentially administering the Health Reimbursement Arrangement (HRA) on behalf of clients. Please reach out to your Vita account management team if you would like to further explore or implement this benefit.

    If employers choose to administer the reimbursement internally, it is recommended that careful consideration be given to privacy and confidentiality concerns. In addition, employers should consult with a third-party administrator or legal counsel to draft formal plan documentation and create guidelines for acceptable documentation for reimbursement.

    Lastly, Vita will monitor legislative activity to stay up to date on potential new restrictions to health care that is currently covered under medical plans. Should abortion or other reproductive services be restricted from reimbursement, employers who may wish to maintain such coverage can consider expanding the HRA to include direct reimbursement for those medical services as well.

     
    • Employee Benefits
  3. 2023 Health Savings Account (HSA) Limits Announced

    System Administrator – Tue, 03 May 2022 15:02:00 GMT – 0

    The Internal Revenue Service has announced the 2023 dollar limitations for Health Savings Accounts as well as underlying qualifying High Deductible Health Plans. All limits are increasing significantly in response to the recent inflation surge.
     

    High Deductible Health Plan Policy Limits


    2023 Minimum Deductible

    • Individual: $1,500  (2022 - $1,400)
    • Family: $3,000  (2022 - $2,800)

    2023 Maximum Out of Pocket Limit

    • Individual: $7,500  (2022 - $7,000)
    • Famiily: $15,000  (2022 - $14,000)


    Health Savings Account Limits


    2023 Maximum HSA Contribution

    • Individual: $3,850  (2022 - $3,650)
    • Family: $7,750  (2022 - $7,300)

    Over Age 55 Catch-Up Contribution

    • 2023: $1,000  (2022 - $1,000)



    High Deductible Health Plan Policy Limits

    Any amount can be contributed to an HSA up to the maximum annual contribution, regardless of the actual deductible of the underlying HDHP plan.
     
    The general rule is that HSA contributions are calculated on a monthly basis (reflecting the number of months that an individual was covered under a qualified HDHP).

    For individuals covered under an HDHP for only a portion of the calendar year, there is a special rule that allows them to contribute the full annual maximum to an HSA. This is known as the “full contribution rule.” The catch is that individuals who make contributions in reliance upon the full-contribution rule must remain HSA-eligible (that is, covered under an HDHP without other disqualifying coverage) during a 13-month period from December of that year through the following calendar year) to avoid adverse tax consequences.
     

    A Reminder about Embedded Deductibles

    HDHPs are typically structured with an aggregate family deductible. This means that when any dependents are covered on the plan, the deductible applies collectively to all family members, and the individual deductible is not taken into account.

    However, there are some plans that have an embedded individual deductible. Notably, California law requires that HDHPs have an embedded individual deductible. This means that once an individual covered on a family plan meets the embedded individual deductible, the plan coinsurance would start to pay for that individual (but not for other family members). In order for such a plan to remain a qualified HDHP, the embedded individual deductible must be at least the minimum family deductible outlined above. As an example, the minimum embedded individual deductible on a family plan in 2023 would be $3,000.

     
    • Pre-Tax
  4. Annual HIPAA Report to Congress

    System Administrator – Tue, 03 May 2022 15:00:00 GMT – 0

    HIPAA Reports Released

    The HHS Office for Civil Rights (OCR) recently released two reports for Congressional review. These reports address HIPAA breaches and complaints reported to OCR during the 2020 calendar year as well as the enforcement actions taken by OCR in response to those reports.
     

    How Does This Apply to Employee Benefits?

    As a reminder, all group health plans are subject to the HIPAA Privacy and Security rules as well as breach notification requirements. These reports provide a useful synopsis of enforcement activity and offer some additional insights, including the reminder that OCR opens compliance reviews for all breaches affecting 500 or more individuals. The breach notification report includes a helpful list of the most common post-breach remedial actions taken to mitigate harm and prevent potential future breaches (summarized at the end of this article). Covered Entities should take note of the trends identified in these reports and examine their own compliance in light of these developments.
     

    Compliance Report Highlights

    Report Contents: This report provides an overview of HIPAA’s privacy, security, and breach notification rules, followed by a more detailed discussion of OCR’s enforcement process and a summary of 2020 complaints and compliance reviews.

    No Penalties: OCR did not assess any civil monetary penalties or initiate any audits in 2020.

    Top Violations: The breach report contains useful information regarding the most commonly reported categories of breaches. The top five violations alleged in complaints resolved by OCR involved:

    • Uses and disclosures of PHI

    • Unspecified safeguards

    • Access rights

    • Administrative safeguards for electronic PHI

    • Technical safeguards

    Complaint Resolution: Technical assistance or corrective action resolved 59% of the complaints. Of the compliance reviews opened in 2020, 88% resulted from large breach notifications, and 2% resulted from small breach notifications. The remaining compliance reviews stemmed from incidents brought to OCR’s attention by other means, including media reports.

    Resolution Agreements: An appendix includes a summary of the 11 resolution agreements reached following the compliance investigations. While the facts of the cases vary, there were commonalities in compliance issues identified and in the requirements of resolution agreements. Many of the resolution agreements required the covered entities to conduct enterprise-wide risk analysis and develop and implement risk management. The development of right of access policies and workforce training regarding those policies was another recurring requirement. Risk analysis and management and the right of access have been areas of focus for OCR for several years, and this report makes clear that both remain high on OCR’s list of enforcement priorities.
     

    Breach Notification Report Highlights

    Overview: This report begins with an overview of the notification requirements for covered entities and business associates following discovery of a breach of unsecured PHI.

    Breach Notifications Received: The OCR reports that they received 656 large breach notifications (affecting 500 or more individuals), 66,509 notifications of breaches affecting fewer than 500 individuals, and 27,182 complaints alleging violations of HIPAA and the HITECH Act. The number of “500+” breaches increased by 61% from the number received in 2019, and those 656 breaches affected over 37 million individuals. In addition, 66,509 small breach notifications were received, affecting more than 312,000 individuals.

    Source of Breaches: Breaches at health plans and business associates represented 23% of large breach reports. Following is a summary of the breach source areas: 

    • 68% of the “500+” breaches involved hacking/IT incidents of electronic equipment or a network server (which involved use of malware, ransomware, phishing, and posting PHI on public websites)

    • 23% involved unauthorized access or disclosure of records containing PHI

    • 5% involved thefts of electronic equipment/devices

    • 2% involved loss of electronic media or paper records (2%)

    • 2% involved improper disposal of protected health information

    OCR Recommendations: The report concludes with a summary of security standards and implementation specifications that, based on investigations, need improvement. The OCR urged covered entities to focus on the following areas:

    • Risk analysis and risk management processes

    • Information system activity reviews

    • Audit controls

    • Security awareness and training

    • Authentication processes
       

    Links to OCR Reports

    Compliance Report

    Breach Notification Report

    • Compliance
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