The Vita Blog

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.

 

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.

 

In 2018, CA passed SB 1008 which requires fully insured dental plans in California to provide a dental Summary of Benefits Coverage. This requirement mirrors the health plan Summary of Benefits Coverage introduced by the Affordable Care Act, only this law applies to dental plans.

The intention behind the ACA provision was to make it easier for employees to compare their medical plan options (in an apples-to-apples format). Now, California has added an equivalent disclosure for dental plans.
 

Fully Insured Dental Plans Only

This applies to fully insured dental plans only, as self-funded plans are exempt from state legislative authority. Only plans written in California are subject to this disclosure law.
 

Required Format

The law prescribes that the Summary of Dental Benefits Coverage (SDBC) follow a very specific format. The law outlines the “uniform benefits and disclosure matrix” down to the requirement to use an Arial 12-point font. This matrix has been dubbed the dental SBC or SDBC.
 

Who Must Create the SDBC?

Insurance carriers are responsible for creating and providing the dental SBC to employers.
 

Distribution Requirements

Employers must distribute the dental SBCs to all eligible employees. The dental SBC must be distributed at the following times:

1. Upon being newly eligible

2. At open enrollment

3. At Special Enrollment

The method of distribution must be in one of three formats:

1. Paper form free of charge to the individual’s mailing address

2. Electronically by email

3. Electronically by directing the participant to the insurer’s website for a copy of the dental SBC.

In the case of either electronic distribution option, notice must be provided that a paper copy is available free of charge.
 

Effective Date

The effective date for this law is January 1, 2022, so dental carriers are now required to provide dental SBCs to employer groups.
 

How Does ERISA Fit In?

Generally, ERISA preempts state laws that “relate to” employee benefit plans. This typically relegates state legislators to governing (or mandating) insurers, not employers sponsoring employee benefit plans. In this case, legislators have done a bit of an end-run around by including specific “Group Policyholders Obligations” in the law. Most pundits would say that the inclusion of Group Policy Holder Obligations regulates something that “relates to” an employee benefit plan (in this case a dental plan) by specifically requiring employers to provide the dental SBC matrix disclosures to plan participants.

While the insurer provisions are not controversial, the employer disclosure requirements will likely be challenged at some point. That said, in the meantime, employers would be wise to include the dental SBCs with their health plan SBC disclosure materials.
 

What are Dental Carriers Doing?

At this point, we are seeing dental carriers, well, scrambling. Despite the long runway on this law, as a rule, carriers are not prepared to distribute the customized dental SBC to employers. We are seeing carriers send out “generic” dental SBCs (along with directions to pair it with the plan certificate) despite the law’s very detailed customization instructions. It is our sense that carriers have been expecting the law to be challenged, and thus have been lulled into non-action. But with 2022 here, the carriers are now scrambling to get something out to comply with the law.

On Wednesday, February 9th, Governor Gavin Newsom signed Senate Bill 114, providing additional COVID-19 supplemental paid sick leave for covered employees unable to work or telework due to certain reasons related to COVID-19.
 

Who is subject?

Employers with 26 or more employees are subject to this new legislation. Small employers with 25 or fewer workers are exempt.
 

When will it take effect?

The law will take effect on February 19th, 2022, ten days after the bill was signed. It will be retroactive to January 1st, 2022, and will remain in effect through September 30th, 2022.
 

Who is eligible?

Covered employees include those working full-time, or those that are scheduled to work an average of 40 hours per week in the 2 weeks preceding the date the covered employee took COVID-19 supplemental paid sick leave.

Employees who do not work 40 hours per week are entitled to COVID-19 supplemental paid sick leave equal to the total number of hours the employee is normally scheduled to work over one week. Employees who work variable hours are entitled to seven times the average number of hours worked per day over a six-month lookback period preceding the date the covered employee took COVID-19 supplemental paid sick leave.
 

What is the duration of, and the qualifying reasons for, the additional leave?

Covered employees are now entitled to two separate 40 hour allotments of supplemental paid sick leave.

A covered employee may take up to 40 hours of COVID-19 paid sick leave if they are unable to work or telework due to one or more of the following reasons:
 

• The covered employee is subject to a quarantine or isolation period related to COVID-19 as defined by federal, state or local orders
• The covered employee is advised by a healthcare provider to self-quarantine or isolate due to COVID-19 related concerns
• The covered employee is attending an appointment for themselves or a family member to receive a COVID-19 vaccine or vaccine booster (employers may limit the supplemental paid sick leave to 3 days (or 24 hours) unless the covered employee provides verification from a healthcare provider that the employee or family member is continuing to experience symptoms related to the vaccine or vaccine booster)
• The covered employee is experiencing symptoms, or caring for a family member experiencing symptoms, related to a COVID-19 vaccine or vaccine booster
• The covered employee is experiencing symptoms of COVID-19 and is seeking a medical diagnosis
• The covered employee is caring for a child whose school or place of care is closed or otherwise unavailable due to COVID-19

A covered employee may take up to an additional 40 hours of COVID-19 paid sick leave if they or a family member tests positive for COVID-19.

Employers are authorized to require the covered employee to take another test on the fifth day after the first positive test and provide documentation of the results. Employers are also authorized to require the covered employee to provide documentation of a family member’s positive test result before paying the COVID-19 paid sick leave. If the covered employee refuses to provide documentation as requested, the employer is not obligated to provide the additional COVID-19 paid sick leave. Employers are required to make a test available at no cost to the covered employee.
 

What is the rate of pay?

A covered employee is to be compensated for each hour of COVID-19 paid sick leave at their regular rate of pay, not to exceed $511 per day, or $5,110 in aggregate. An employer cannot require a covered employee to use any other paid or unpaid leave, time off, or vacation time prior to or in lieu of the COVID-19 paid sick leave.

The legislation does not provide any direct tax or financial relief to employers for providing the additional COVID-19 paid sick leave. As such, there is no mechanism in place for employers to recoup any pay amounts associated with the additional COVID-19 paid sick leave.

Summary: This applies to all employers offering medical plan coverage with a plan renewal date of January 1. The online disclosure must be completed by March 1, 2022 (assuming a calendar year medical plan contract).
 

Overview

Federal law requires that employers provide annual notification of the Medicare Part D Prescription Benefit "creditability" to employees prior to October 15th. However, that same law also requires plan sponsors to report creditability information directly to the Centers for Medicare and Medicaid Services (CMS) within 60 days of the first day of the contract year if coverage is offered to Part D eligible individuals. Many employers have a January 1 renewal plan year. So, for many employers, the deadline is in a couple of weeks! If your plan renews some time other than January 1, you have 60 days after the start of your plan year to complete this disclosure.
 

Mandatory Online Creditable Coverage Disclosure 

Virtually all employers are required to complete the online questionnaire at the CMS website, with the only exception being employers who have been approved for the Retiree Drug Subsidy (RDS). This disclosure requirement also applies to individual health insurance, government assistance programs, military coverage, and Medicare supplement plans. There is no alternative method to comply with this requirement! Please remember that you must provide this disclosure annually.

The required Disclosure Notice is made through completion of the disclosure form on the CMS Creditable Coverage Disclosure web page. Click on the following link: CMS Disclosure Form.

Employers must also update their questionnaire if there has been a change to the creditability status of their prescription drug plan, or if they terminate prescription drug benefits altogether.
 

Detailed Instructions and Screenshots Available

If you would like additional information on completing the online disclosure, a detailed instruction guide is available online. The instructions also include helpful screenshots so that you will know what data to have handy. More info here: CMS Notification Instruction Guide.

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Helpful Tip for Vita's Clients

The Medicare Part D creditability status of your medical plans is outlined in the Welfare Summary Plan Description that we provide to all clients. Please refer to this document as you will need this information to complete the online disclosure. 

The joint departments have issued yet another set of five (5) FAQs addressing coverage of COVID tests under health plans. These build on the last FAQ release.

The full FAQ is fairly readable and available here. This article attempts to summarize the most critical guidance in as few words as possible.
 

Health Plans and Self-Funded Plans

Importantly, this guidance applies to health plans (insurers) and to self-funded plans. The guidance is not directly actionable for employers with fully insured plans, but it is important to be aware of the guidance for underlying health plans. Self-funded plans must address these issues directly.
 

Q1: Direct to Consumer COVID Tests

The safe harbor has been revised to allow significant flexibility to plans in how they provide access to over-the-counter (OTC) COVID-19 tests. Plans must ensure participants have adequate access with no upfront out-of-pocket expenditure. This generally means there is at least one direct-to-consumer shipping mechanism and at least one in-person mechanism.
 

Q2: Supply Shortages

Plans will not face enforcement action if they are temporarily unable to provide adequate access to OTC COVID-19 tests through their direct coverage program due to a supply shortage. In that case, plans may continue to limit reimbursement to $12 per test (or the full cost of the test, whichever is lower) for tests purchased outside of the direct coverage program.
 

Q3: Suspected Fraud

While medical management is prohibited, plans are permitted to address suspected fraud and abuse related to the reimbursement of OTC COVID-19 tests purchased by a participant from a private individual or via online auctions, resale marketplaces, or resellers. Specifically, plans may disallow reimbursement for tests that are purchased by a participant from a private individual via an in-person or online person-to-person sale, or from a seller that uses an online auction or resale marketplace. (Resale marketplaces refer to services like eBay, Facebook Marketplace, etc. In-person sales refers to purchasing from a friend or other contact that may have a supply of tests.)
 

Q4: Self-Collected/Lab Processed Tests

Plans are not required to provide coverage for tests that use a self-collected sample, but require processing by a laboratory or other health care provider to return results (such as home-collection PCR tests that can be purchased directly by consumers). However, when a test is ordered by an attending health care provider, such a test must be covered.
 

Q5: Reimbursement Through FSA/HRAs

While the cost of OTC tests purchased by an individual is a medical expense and thus generally reimbursable by a health FSA, HRA, or HSA, an individual cannot be reimbursed more than once for the same medical expense. Therefore, the cost (or the portion of the cost) of OTC COVID-19 tests paid or reimbursed by a plan cannot be reimbursed by a health FSA, HRA, or HSA. If an individual mistakenly receives reimbursement from a health FSA, HRA, or HSA, corrective measures should be initiated.

On January 10, the Departments of Labor, Health and Human Services (HHS), and the Treasury issued Frequently Asked Questions (FAQs) that require group health plans/insurers to cover the costs of at-home, over-the-counter COVID-19 tests. Key requirements are as follows:
 

• Tests must be approved by the U.S. Food and Drug Administration (FDA).
• Tests must be purchased on or after January 15, 2022.
  • The requirement will continue through the Coronavirus public health emergency period, which is expected to extend to at least April 15, 2022.
• Tests can be purchased online, at a pharmacy, or at a retail store.
• Each individual may purchase up to eight COVID-19 tests per month (note the per-test limit, not per-kit limit; kits may contain multiple tests).
• Plans and insurers may provide tests through existing pharmacy or direct delivery networks, as long as they take reasonable steps to ensure access.
  • If individuals obtain tests outside of the above channels, tests may be limited to reimbursement of $12 per test (or the cost of the test if under $12).
• Tests for employment purposes are not required to be covered.
• There is currently no limit on COVID-19 tests ordered or administered by a healthcare provider.

Note this blog only covers the federal mandate, not any state-specific mandates.
 

How will insurance carriers comply?

Vita is working with all major insurance carriers to identify more details for fully insured plans. Vita clients are encouraged to reach out to their benefits account management teams if there are any questions about how specific insurance carriers are receiving claims or processing reimbursements. Below are links to major medical carriers’ coronavirus pages:
 

• Aetna
• Anthem Blue Cross of CA
• Blue Shield of CA
• Cigna
• Kaiser
• UnitedHealthcare

The IRS has released an advanced copy of proposed regulations that, if finalized, will ease some of the ACA reporting requirements for employers. The IRS also used the publication as another opportunity to announce that the era of leniency for inaccurate or incomplete reporting has ended. There are three key changes proposed in the regulations:

• Extension of 1095 Deadline
• Alternative to Furnishing 1095 Statements
• Elimination of Transitional Good Faith Relief 
   

Deadline Extension for Furnishing 1095s to Individuals

The proposed regulations would permanently extend the deadline for furnishing Form 1095-B and 1095-C to individuals. The deadline would change from January 31 (current) to 30 days after January 31 or March 2nd (except in a leap year). If the deadline falls on a weekend or legal holiday, the form is due on the next business day. This proposed extension generally aligns with the extensions that have been granted each year since the requirements took effect. This action would make the change permanent.
 

Alternative to Automatically Furnishing Statements: 1095-B

The proposed regulations offer an alternative to automatically furnishing statements in certain situations. In short, carriers who are required to furnish Forms 1095-B to insureds (to report fully-insured minimum essential coverage being provided) would be able to employ an alternate communication method rather than mailing forms to individuals. This includes:

• Posting a “clear and conspicuous” notice on its website
• Providing information about how to request a form
• Furnishing a Form 1095-B within 30 days after an individual’s request is received.

The notice must remain in the same location on the website until October 15 of the year following the calendar year to which the statement relates.

The IRS is easing these reporting requirements primarily due to fact that the information has little utility, since Congress lowered the penalty for the “individual mandate” to $0, effective as of 2020. It is subject to change if the individual mandate is increased in the future.
 

Alternative to Automatically Furnishing Statements: 1095-C

Unlike the individual mandate penalty, the employer Shared Responsibility Payment penalties are still in play. Therefore, this relief does not apply to furnishing statements to an Applicable Large Employer’s (ALE) full-time employees or reporting information to the IRS. However, similar relief is available to ALEs with respect to furnishing Forms 1095-C to non-full-time employees and non-employees enrolled in the ALE’s self-insured health plan.
 

Elimination of Good Faith Relief

Since the requirements came into play, employers have enjoyed an era of transitional good faith relief where the IRS has been accommodating of employers filing incomplete or inaccurate information on Forms 1094 and 1095. In 2020, the IRS first announced that it would cease to provide the “transitional good faith relief” that it had previously offered. These new regulations reiterate that this relief from penalties for reporting incorrect or incomplete information will no longer be available for reporting for tax year 2021 and beyond. The IRS noted that an exception from penalties may still be available if the filer can show reasonable cause for the failures.
 

What About State Reporting?

To date, we are not aware that any states have followed suit in offering parallel relief for state reporting requirements. Stay tuned for more updates.
 

Effective Date

The changes in the proposal would apply for calendar years beginning after December 31, 2021, but insurers and ALEs may choose to apply the changes for calendar years beginning after December 31, 2020. Although these are proposed regulations, they may be relied upon by taxpayers.

The Internal Revenue Service has announced the 2022 cost-of-living adjustments (COLAs) to the various dollar limits for retirement plans. The Social Security Administration (SSA) has also announced the taxable wage base for 2022:
 

	2022	2021
Elective Deferral Limit (401(k) & 403(b) Plans)	$20,500	$19,500
Catch Up Contributions (Age 50 and over)	$6,500	$6,500
Annual Defined Contribution Limit	$61,000	$58,000
Annual Compensation Limit	$305,000	$290,000
Highly Compensated Employee Threshold	$135,000	$130,000
Key Employee Compensation	$200,000	$185,000
Social Security Wage Base	$147,000	$142,800

 

Definitions 

• Elective Deferral Limit means the maximum contribution that an employee can make to all 401(k) and 403(b) plans during the calendar year (IRC section 402(g)(1)).
   
• Catch-up Contributions refers to the additional contribution amount that individuals age 50 or over can make above the Elective Deferral and Annual Contribution limits, if permitted by the company’s retirement plan.
    
• Annual Contribution Limit means the maximum annual contribution amount that can be made to a participant's account (IRC section 415). This limit is expressed as the lesser of the dollar limit or 100% of the participant's compensation, and is applied to the combination of employee contributions, employer contributions and forfeitures allocated to a participant's account.
   
• Annual Compensation Limit means the maximum compensation amount that can be considered in calculating contribution allocations and non-discrimination tests. A plan cannot consider compensation in excess of this amount (IRC Section 401(a)(17)).
   
• Highly Compensated Employee Threshold means the minimum compensation level established to determine highly compensated employees for purposes of non-discrimination testing (IRC Section 414(q)(1)(B)).
   
• Social Security Wage Base is the maximum amount of earnings subject to Social Security payroll taxes.

Health FSA

The annual Health FSA limit will increase $100 from $2,750 in 2021 to $2,850 in 2022.

FSA Balance Rollovers

The increase of the Health FSA limit means an increase to the Health FSA rollover amount allowed for 2022. Up to $570 (20% of the regular election maximum) will be rolled from the 2022 plan year into the 2023 plan year.

Commuter Benefits Limits

The monthly transit and parking limits will increase from $270 in 2021 to $280 in 2022.
 

Adoption Assistance Limit

The annual Adoption Assistance limit will increase from $14,400 in 2021 to $14,890 in 2022.


If you are a Vita Flex FSA client who currently offers the IRS maximum and your plan renews January 1, 2022, your limits have been automatically increased for the 2022 plan year, unless you previously requested otherwise.

If you are a Vita Flex Commuter Benefits client, the monthly pre-tax limit will be automatically increased to the IRS maximum for the January benefit month.