• Annual HIPAA Report to Congress

    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

  • 401(k) Update: Q2 2022

    401(k) News


    SECURE Act 2.0 Passes the House1

    The Securing a Strong Retirement Act of 2021 (aka SECURE Act 2.0) was passed by the House of Representatives on March 29, 2022. The measure is intended to build upon the original SECURE Act of 2019 and provide for additional improvements to the retirement savings industry. 

    Below is an outline of key provisions that would apply to existing retirement plans:
    • Raising the Required Minimum Distribution age from 72 to age 75 by 2032.
    • Requiring all catch-up contributions to be subject to Roth tax treatment and increasing the allowance for participants ages 62 to 64 by an additional $3,500 (for a total of $10,000 in catch-up contributions)
    • Allowing employers to make matching contributions to an employee’s retirement account based on the employee’s personal student loan repayments
    • Permitting employer matching contributions to be made as Roth contributions
    • Mandatory eligibility of part-time employees who work more than 500 hours for two years consecutively
    • Creation of a national retirement savings lost and found registry to aid in locating missing participants
    • Penalty-free withdrawal exception for participants who experience domestic abuse 
    • Requiring newly established plans to implement an automatic enrollment feature (not applicable to existing plans)
    Now that the bill has passed the House, the legislation will move to the Senate for possible action later this Spring. There are other bills that overlap these goals so please note that certain details may change as these bills move through the legislative process.

    As with any major reform, we expect there will be a period of time between this legislation being enacted into law and when new changes will be implemented into retirement plans, as service providers will first need to update their systems and records to align with all new provisions. We look forward to keeping you informed of any updates and progress on the SECURE Act 2.0.
     

    To Crypto or not to Crypto? 

    Cryptocurrency, also known as “crypto,” is a digital currency that does not have a central issuing or regulating authority (such as a central bank like the Federal Reserve) and instead, uses a decentralized system to record transactions and issue units. Cryptocurrencies have skyrocketed in notoriety and public attention over the last few years, and this has employers asking – Is crypto an investment offering we should make available in our retirement plan? Our current answer to this is a resounding No.
     
    There have been two relevant developments in the world of digital currencies:
    1.  On March 10, 2022, the Department of Labor issued guidance on 401(k) Plan Investments in “Cryptocurrencies”2 cautioning “…plan fiduciaries to exercise extreme care before they consider adding a cryptocurrency option to a 401(k) plan….” The guidance reminds plan sponsors that they may be personally liable for cryptocurrency investments that do not meet “an exacting standard of professional care,” and that they “may not shift responsibility to plan participants to identify and avoid imprudent investment options, but rather must evaluate the designated investment alternatives made available to participants and take appropriate measures to ensure that they are prudent.”
    2. On March 28, 2022, Representative Stephen Lynch, Chairman of the House of Representatives Committee on Financial Services’ Task Force on Financial Technology introduced the Electronic Currency and Secure Hardware Act3 (aka ECASH Act). The bill instructs the Secretary of the Treasury “to develop and pilot digital dollar technologies that replicate the privacy-respecting features of physical cash, in order to promote greater financial inclusion, maximize consumer protection and data privacy, and advance U.S. efforts to develop and regulate digital assets.”
    While these two developments may seem at odds to with each other, they speak to the search in Washington DC for the government’s role in the regulation and/or development of digital currencies.
     
    We will continue to monitor this space as we expect to hear more about crypto and its potential place (or prohibited role) in retirement plans.
     

    Administration


    Independent Audit Time for Large Retirement Plan Filers 

    Now that the retirement plan nondiscrimination testing season is wrapping up for calendar year retirement plans, steps should be taken toward completion of the annual independent audit. The independent audit report must be included with the Form 5500 filing, due on July 31st, or October 15th, for plans that are on the extended filing due date.

    The independent audit requirement applies to employers who sponsor “large” plans – those with over 100 participants on the first day of the Plan Year (January 1st for Calendar Year plans). There are special rules that allow for growing companies to first exceed 120 participants before becoming subject to the audit requirement, and thereafter continue being subject to the requirement while staying above the 100-participant threshold. Please contact Vita Planning Group if you have questions about whether the independent audit applies to your plan.

    For other important dates on the horizon, download our online Compliance Calendar.
     

    Plan Document Restatement

    We are coming to the end of the current, Third Cycle Plan Document Restatement4 period. 401(k) and 403(b) plans that use an IRS-pre-approved plan document created by their recordkeeper or third-party administrator are required to complete this restatement process by July 31, 2022.

    Many plans will have already completed the Plan Document Restatement Process; those that have not should reach out to their recordkeeper to ensure compliance with the plan restatement timing.
     

    CalSavers

    An important deadline is on the horizon for California employers (with 5 or more employees) who do not sponsor a company retirement savings plan. Employers without a retirement plan are required to either offer a workplace savings plan or sign up for the state-mandated CalSavers4 Retirement Savings Program by June 30, 2022. 

    Employers who already offer a retirement plan to employees are exempt from CalSavers and should report the exemption online, if you have not done so already. For more information about CalSavers, visit Calsavers.com.
     

    Market Update5

    All asset markets finished Q1 2022 down, but there were signs of resiliency despite the triple whammy of a spike in Omicron COVID infections globally, the rise of interest rates in the US and the Russian invasion of Ukraine. In the US equity markets, the S&P 500 bounced off its low of -13% on March 14th to finish the quarter down 4.6%. The bond markets fared less well, experiencing a steady, one-way decline throughout the quarter with the BarCap US Aggregate Bond Index finishing down 5.9%. Overseas equity markets also saw a steady decline with the MSCI All Country World ex US Index down 4.7% for the quarter. European markets were most directly affected by the events in Ukraine, but emerging Market less so. One reason is that Russia’s weight in the MSCI Emerging Market Index had been steadily declining, from a high of 10% in 2008 to just under 4% when MSCI removed it from the index on March 2, 2022.6 The other reason is that Emerging Market economies tend to have a higher percentage of primary industries hence may benefit from the increase of energy and other commodity prices. 

    The American economy has continued its solid performance. The US economy is now 3.4% above pre-COVID levels. Although Q4 2021 GDP growth was 5.5% YOY, the spike in Omicron COVID cases along with inventory building at the end of 2021 may result in weaker GDP growth in Q1 2022 of between 1%-2%. However, by the end of Q2 2022, the US economic growth should be right back to its 20-year trend line of 2% per year. One very interesting impact of the COVID recession has been the impact on US productivity. Since 2020, US productivity has increased by 2.7% per year, more than twice its 20-year average, much of that driven by more efficient work practices (conference calling, working from home, etc.) and use of online retailing. While many of those productivity gains may be permanent, as part of a “new normal,” the constraint on GDP growth in the future will be labor force participation. 

    Unemployment in March 2022 was 3.62%. This is 40% below the 50-year average of 6.2% and there have only been five months since 1961 with a lower rate of unemployment. The JOLTS index of job openings shows a 3.5 million gap between the number of jobs to those unemployed: there are 1.89 jobs for each one American looking for work. This situation has resulted in accelerated wage growth. Wages in March grew at an annual rate of 6.7%, well above the 50-year average of 4%. The US does not have the population growth to fill the demand for labor, so unemployment is expected to continue at these historically low levels. The lack of labor force participation in the US will constrain GDP growth over the long-term; in the short-term, it will continue the pressure on wages, adding to inflation in the US.

    The re-emergence of inflation, the dramatic rise in oil prices, and sanctions against Russia caused some economists to predict a return of the “stagflation” (low GDP growth and high inflation) of the 1970s.7 However, it is important to keep some perspective on how current economic conditions are different. First and foremost is the fact that the US is not reliant on imported oil. Energy as a percentage of consumer spending has diminished from 10% in the 1970s to 4.3% in February 2022, and oil imports have declined from 3.2% of GDP in 1979 to zero at the end of 2021. Yes, the rise in energy prices will be a drain on the finances of US consumers, but it should be transitory as higher oil prices bring currently mothballed US capacity back online and those extra dollars spent on oil will be kept circulating in the US economy. In addition, the finances of US households are much healthier. In the ‘70s, debt payment as a percentage of disposable income was 10.6%, rising to 13.2% during the Great Financial Crisis of 2008/09. Today it is a 9.2% and the net balance sheet of US households stands at $162.7 trillion, nearly twice the pre-2008/09 recession peak of $85.1T. Finally, whereas the Soviet Union of the ‘70s stylized itself as the champion of the Third World, including OPEC, against the West, today Russia has shown itself as an enemy of national self-determination and its invasion has elicited an unprecedently swift and strong reaction from the West and most developing countries.

    Asset markets are now having to deal with geopolitical forces that were not present just three months ago. But strong fundamentals should continue to present opportunities for long-term US investors. US corporate margins finished 2021 at an all time high of 14.3% (earnings/sales). US corporate earnings finished at $221/share and are expected to continue to grow between 10%-20% in 2022. Value stocks have historically done better in a rising interest rate environment because of the prevalence of financial, energy, and industrial companies in this market sector. Within fixed income, high yield, leveraged loans, and convertibles have historically been the best performing sectors when interest rates rise. Volatility will most certainly be a feature of markets in 2022, but not a lack of healthy long-term investment opportunities.



    This material represents an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor.
    Past performance does not guarantee future results.


    Sources:
    1. https://www.natlawreview.com/article/secure-20-what-employers-need-to-know
    2. Department of Labor Compliance Assistance Release No 2022-01 “401(k) Plan Investments in “Cryptocurrencies”.
    3. https://ecashact.us/
    4. https://employer.calsavers.com/home.html
    5. Unless otherwise indicated, data and commentary is sourced from three JPMorgan Asset Management sources: 1) Guide to the Markets – U.S. Economic and Market Update, 1Q 2022, December 31, 2021, 2) the “Q1 2022 Guide to the Markets Webcast” on April 4, 2022, and 3) JPM Weekly Market Recap of April 4, 2022.
    6. Article: "Russia’s Diminished Role in Emerging Markets"
    7. Article: "What is Stagflation..."

    Disclosures:

    Cryptocurrency is a digital representation of value that functions as a medium of exchange, a unit of account, or a store of value, but it does not have legal tender status. Cryptocurrencies are sometimes exchanged for U.S. dollars or other currencies around the world, but they are not generally backed or supported by any government or central bank. Their value is completely derived by market forces of supply and demand, and they are more volatile than traditional currencies. Cryptocurrencies are not covered by either FDIC or SIPC insurance. Legislative and regulatory changes or actions at the state, federal, or international level may adversely affect the use, transfer, exchange, and value of cryptocurrency. 

    Purchasing cryptocurrencies comes with a number of risks, including volatile market price swings or flash crashes, market manipulation, and cybersecurity risks. In addition, cryptocurrency markets and exchanges are not regulated with the same controls or customer protections available in equity, option, futures, or foreign exchange investing.

    Indices are unmanaged and investors cannot invest directly in an index. Unless otherwise noted, performance of indices do not account for any fees, commissions or other expenses that would be incurred. Returns do not include reinvested dividends.

    The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. It is a market value weighted index with each stock's weight in the index proportionate to its market value.

    The Bloomberg Barclays US Aggregate Bond Index, or the Agg, is a broad base, market capitalization-weighted bond market index representing intermediate term investment grade bonds traded in the United States. Investors frequently use the index as a stand-in for measuring the performance of the US bond market.

    The MSCI All Country World Index ex USA Investable Market Index (IMI) captures large, mid and small cap representation across 22 of 23 Developed Markets (DM) countries (excluding the United States) and 23 Emerging Markets (EM) countries*. With 6,062 constituents, the index covers approximately 99% of the global equity opportunity set outside the US.
    National Association of Real Estate Investment Trusts

    The MSCI Emerging Markets Index is a float-adjusted market capitalization index that consists of indices in 21 emerging economies: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, and Turkey.

     
  • Telehealth Exemption for HDHPs Extended

    In March 2022, Congress passed, and the President signed, a $1.5 trillion omnibus spending bill (the Consolidated Appropriations Act, 2022). This law includes a temporary extension of the ability for HDHP plans to provide telehealth and other remote care services without being subject to the deductible. Importantly, this avoids the problem of having that no-deductible coverage disqualify contributions to health savings accounts (HSA). This provision restores employers’ option to adopt pre-deductible telehealth visits in their HDHP plans (but it does not mandate it).

    Since the early days of the COVID-19 pandemic, telehealth has been an important way to obtain necessary medical care while maintaining recommended social distancing. Because of this, most employers adopted these provisions to enhance access to COVID-safe office visits for participants in HDHP plans.
     

    Background

    By way of background, tax-advantaged contributions generally cannot be made to an HSA unless the account holder is covered by a qualifying high-deductible health plan (HDHP) and does not have disqualifying non-HDHP coverage. The CARES Act (signed in March 2020) created exceptions to those rules to facilitate the use of telehealth during the COVID-19 pandemic, however, those exceptions applied only to plan years beginning on or before December 31, 2021. The new legislation restores these exceptions for the last nine months of 2022.

    The vast majority of employer-sponsored HDHPs with HSAs elected to cover telehealth services on a pre-deductible basis. Specifically, 83% of fully insured plans and 81% of self-insured plans, according to a study from the trade group America's Health Insurance Plans (AHIP). As a reminder, the HDHP minimum statutory deductible for 2022 is $1,400 for single coverage and $2,800 for family coverage.
     

    Two Key Provisions

    The new legislation amends two key provisions for HSAs:
     
    1. Telehealth and other remote care services will be considered disregarded coverage; therefore, such pre-deductible coverage will not cause a loss of HSA eligibility. This new provision applies from April 1, 2022 through December 31, 2022.
       
    2. Plans may provide coverage for telehealth and other remote care services before the HDHP minimum deductible is satisfied without losing their HDHP status during that nine-month period.

    Both amendments apply only to the nine-month period from April 1, 2022 through December 31, 2022, without regard to the HDHP’s plan year. Importantly, the relief does not apply for the first three months of 2022, therefore some plans (specifically, calendar-year plans) must still apply the minimum deductible to telehealth and other remote care services during those months to remain compliant.
     

    Not Retroactive - A Few Wrinkles

    Permissive, Not Mandatory: The legislation offers permission for plans to adopt these changes, but the changes are not mandatory. Thus, HDHPs are not required to waive their minimum deductible for telehealth and other remote services during the additional relief period. As a result, some plan sponsors may conclude that a midyear change to take advantage of the restored exception is too difficult to communicate and administer, and not worth the effort.

    Pre-Deductible Coverage Gap: The legislation also is expressly not retroactive, and this leaves an unfortunate gap in first-dollar coverage for participants. HDHP participants in plans that previously adopted this provision have enjoyed telehealth services not being subject to the deductible in 2021 and may do so for nine additional months (April 1, 2022 through December 31, 2022), but this leaves a 3-month gap in first-dollar coverage for these services. This could create confusion for plan participants and certainly would require careful communication.

    Not Retroactive: Plan sponsors, who expected that Congress would extend the CARES Act relief without a gap and thus continued providing telehealth services during the first three months of 2022 without applying the minimum deductible, have a unique problem. Specifically, determining whether their plans can and should apply the minimum deductible to telehealth and other remote services retroactively to the gap period. Some covered individuals may be able to avoid the adverse HSA-eligibility consequences of their plan’s failure to satisfy the minimum deductible requirement during the first three months of 2022 by using the full contribution rule, which allows a full year’s worth of HSA contributions to be made by someone who is HSA-eligible for only a portion of the year. However, that rule may not be available to all plan participants because some may not remain HSA-eligible through December 1, 2022, and some may not remain HSA-eligible throughout the 13-month testing period beginning on that date. If an employer wanted to take corrective action, participants could be billed for any telehealth visits between January 1, 2022 and March 31, 2022. Those billed charges would then apply to the deductible. This solution would require re-adjudicating telehealth claims incurred during those interim months.
  • San Francisco Health Care Security Ordinance Updates

    The San Francisco Health Care Security Ordinance (SF HCSO) requires covered employers to make a minimum health care expenditure on behalf of their covered employees. SF HCSO rules were first issued in January 2008. While it has been in place for many years, many employers are still out-of-compliance or unsure how the rules apply. Additionally, the reporting was waived for the past two years due to COVID Public Health Emergency. That reporting requirement is again required for the 2021 plan year.

    Below is a brief overview of the HCSO. For more details, visit the San Francisco Office of Labor Standards Enforcement (OLSE) page on HCSO, which includes training slides, new rules, an administrative guide and FAQ, as well as links to the required HCSO poster and waiver form. The OLSE page contains a link and instructions for the online Annual Reporting Form due April 30. The reporting form is available now.


    Covered Employers: Have 20+ employees (50+ for non-profits), with 1 or more working in the geographic boundary of San Francisco, and required to obtain a San Francisco business registration certificate. Small employers 0-19 (0-49 non-profit) are exempt.

    Tip: The headcount for determining your company size under HCSO – both for determining applicability and expenditure rate – includes ALL employees, regardless of status, classification, or contract status. That means even temp or contract employees that are 1099 or through an agency still counts!


    Covered Employees: Works an average of 8 or more hours per week in San Francisco and entitled to be paid minimum wage. There is a waiting period of 90 days.

    Tip: Look at the exemption criteria closely. The manager/supervisor exemption is coupled with the salary exemption amount, meaning the two are not separate. An employee needs to make more than the salary exemption (2021: $107,991 annually) AND be considered a manager/supervisor/confidential employee per HCSO.


    Calculating Expenditure Rate: Rates are based on employer size and are calculated per hour payable to covered employees. For 2021, a medium size employer is 20-99 employees (50-99 non-profit) with a rate of $2.12 per hour, while a large employer is 100+ employees with a rate of $3.18 per hour. Keep in mind the new expenditure for 2022 is $2.20 per hour for the medium sized employers outlined above and $3.30 per hour for large employers.

    Tip: Hours worked include both paid and entitled, like PTO. Maximum hours for the calculation is capped at 172 a month.


    Making Expenditures: For your full-time, benefit eligible employees, average costs for medical, dental, and vision can be used. For most employers, the minimum expenditure is easily reached. For 2021, a large employer would need to spend approximately $547 a month on an exempt or 40-hour non-exempt employee (that number increases to approximately $568 for 2022). Most medical, dental, and vision premiums, when combined, would exceed that amount. Just be sure to factor out employee contribution amounts. For non-benefit eligible employees, the expenditure would be made quarterly. The simplest method for making an expenditure is via the San Francisco City Option.

    Tip: Being benefit eligible does not immediately mean that HCSO requirements are met and expenditures do not need to be made. If a benefit-eligible employee waives the employer’s company sponsored health plan, the employer is still required to make a minimum expenditure on behalf of that employee. That means paying into the City Option, similar to non-benefit eligible employees. The exception is if the employee voluntarily signs the HCSO Waiver Form. You may NOT coerce an employee to sign the form and the form language dissuades one from signing it! Due diligence would mean sending the form to a waived employee and if the employee chooses not to sign, be sure to make the quarterly expenditure.


    Due Dates: Quarterly expenditures are due 30 days following the end of the quarter. First quarter 2022 will be due April 30. Annual Reporting to HCSO of covered employees and expenditures made for the 2021 plan year are also due April 30 and is completed online. The online reporting form is available now. 


    Risk:There are penalties for non-compliance – up to $100 per employee per quarter for failure to make expenditures and up to $500 per quarter if the annual reporting is not submitted. There are other penalties as well for retaliation, failure to provide records to OLSE, and failure to post the required notice. However, while there’s no guarantee, the OLSE generally does not fine an employer that has been out-of-compliance that now comes into compliance. The bigger risk is if an employee complains as that is generally when the OLSE would take action and penalize for non-compliance.

     

    More Information 

    SF HCSO Resources including training slides, rules, and administrative guide and FAQs. This site also contains instruction links.  




     

  • California Dental Summary of Benefit Coverage

    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.

  • COVID National Emergency Extended

    President Biden again formally extended the COVID-19 National Emergency (which was previously set to expire on March 1, 2022). Each National Emergency declaration generally lasts for one year unless the President announces an earlier termination or an extension (for up to another year). President Trump first declared the National Emergency on March 1, 2020. On Feb. 24, 2021, President Biden extended the National Emergency. Most recently, it was unclear whether President Biden would extend it again because, although many stakeholders requested another extension, the Biden administration is also facing some political pressure to move the country onto an "off-ramp" from the COVID-19 pandemic. Nonetheless, a formal extension was made. However, it is possible that President Biden could take action to end the National Emergency in the coming months (assuming COVID-19 cases, hospitalizations, and deaths continue to decline).
     

    Employee Benefits Deadlines Will Be Further Tolled

    As a result, the “tolling” of health, welfare, and retirement plan deadlines will also remain in effect. This means plan sponsors and administrators should continue to apply the deadline extensions to affected individuals on a participant-by-participant basis for the foreseeable future. This further extension means that the deadlines summarized below must continue to be tolled for one year or for 60 days from the end of the National Emergency (if President Biden declares an earlier end to the National Emergency).
     

    The First Year of the National Emergency

    Shortly after the COVID-19 pandemic began, joint guidance from the Department of Labor and the Department of the Treasury suspended, or “tolled,” certain deadlines for benefit plans and participants for the period beginning on March 1, 2020 and ending 60 days after the announced end of the National Emergency. This extension period is referred to as the “Outbreak Period.” The following deadlines were extended by the length of the Outbreak Period.

    For Participants:
    • HIPAA Special Enrollment. The 30-day deadline (or 60-day deadline, in some instances) to request enrollment in a group health plan following the loss of other group health plan coverage, the acquisition of a new dependent through marriage, birth, adoption or placement for adoption or the eligibility for premium assistance through state premium assistance subsidy, Medicaid, or CHIP.
    • COBRA Notifications (by Employee to Employer). The 60-day deadline by which individuals must notify the plan of certain COBRA-qualifying events (such as a divorce or a child losing eligibility as a dependent under the plan), or a Social Security Administration determination of disability.
    • COBRA Elections. The 60-day deadline for electing COBRA coverage.
    • COBRA Premium Payments. The 45-day (initial) and 30-day (subsequent monthly) COBRA premium payment deadlines.
    • Benefit Claims and Appeals. The plan deadlines by which participants may file a claim for benefits (under the terms of the plan) and the deadline for appealing an adverse benefit determination. This includes extensions of claims filing deadlines for Health FSAs.
    • External Review. The 4-month deadline by which a claimant must request an external review of a final determination on appeal.

    For Employers/Plan Sponsors:
    • COBRA Notifications (by Employer to QB). The 14-day deadline to provide a COBRA election notice to qualified beneficiaries or the 44-day (14+30 days) deadline for employers who are plan administrators.
     

    The Second Year of the National Emergency

    Because the COVID-19 pandemic had not yet ended at the time the regulatory guidance was set to expire, the DOL issued additional guidance in February 2021, providing that the deadlines would continue to be tolled, or remain disregarded, through the earlier of:
    • One year from the date the individual was first entitled to the extension relief (i.e., a date on or after March 1, 2020).
    • 60 days after the end of the National Emergency (i.e., the end of the Outbreak Period).
    Importantly, the second year ushered in the position that the tolling period applies on a person-by-person basis. It can be challenging to track these deadlines when the tolling period applies, so plan administrators need to take care that they are calculating the deadlines correctly.
     

    The Third Year of the National Emergency

    While this latest extension of the National Emergency does not change the previous guidance, it does further extend the timeline of the tolling period; participants will continue to have more time to act on these deadlines than they normally would under the applicable plan terms. Note that the individualized tolling periods continue into the third year. Also, because the National Emergency’s end remains open at this time, exactly how long participants have under these deadlines remains a moving target until the National Emergency ends.
     

    Different from the Public Health Emergency

    Importantly, this National Emergency declaration is different from the Public Health Emergency declaration made by the Secretary of HHS, which is tied to the COVID-19 testing requirements in the Families First Coronavirus Response Act and the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

    The Public Health Emergency is set to expire on April 16, 2022. However, the Secretary may extend it for subsequent 90-day periods for as long as the public health emergency continues to exist or may terminate the declaration whenever it is determined that the public health emergency has ceased to exist.
  • 2022 California COVID-19 Paid Sick Leave Extension

    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.
  • Employers' Medicare Part D 2022 Creditability Disclosure Due March 1

    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.


    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. 

  • COVID Test Coverage: More Guidance for Health Plans

    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.

  • Health Insurers to Cover At-Home COVID-19 Testing

    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: