A Compliance Newsletter by: The Baldwin Regulatory Compliance Collaborative (BRCC)
Welcome to Issue No. 3 of the Baldwin Bulletin – A compliance Newsletter by: The Baldwin Regulatory Compliance Collaborative (BRCC). This serves as a monthly guide to important regulatory developments, legal news, and employee benefits-related industry happenings, designed to keep you abreast of the latest developments. Below, we are summarizing a digest of current news and other developments from the industry over the past few weeks, along with important interrelated and upcoming deadlines.
Significant Upcoming Compliance Deadlines
To view the September Baldwin Bulletin, click here. To view the CMS website, click here. To view the Price Comparison Tool Required for 2023 Plan Years, click here.
High Deductible Health Plan Waivers for Telehealth Services to Expire at Year-End Unless Congress Acts
The U.S. Senate is being urged by advocates of telehealth services to pass a two-year extension of certain pandemic related telehealth waivers, including the waiver for high deductible health plans (HDHP) to permit the use of telehealth services without potentially jeopardizing eligibility to participate in a health savings account (HSA). Under HSA rules, preventive care expenses (and certain other permitted coverage) may be incurred prior to satisfying the minimum statutory deductible amount without causing loss of HSA eligibility. However, services offered through telehealth are typically for actual medical care and thus not reimbursable until the deductible has been satisfied. During the pandemic, Congress passed legislation providing that telehealth services will not cause a loss of HSA eligibility for plan years beginning on or before December 31, 2021. This waiver for telehealth services is set to expire unless extended by Congress.
The U.S. House of Representatives recently passed H.R. 4040, extending certain pandemic telehealth waivers. However, H.R. 4040 did not contain a provision that would extend the waiver to permit HDHPs to offer telehealth services without impacting a participant’s eligibility to make contributions to an HSA. More to come on this development.
Mental Health Parity Updates
Mental Health Matters Act Passes U.S. House of Representatives
On September 29, 2022, the U.S. House of Representatives passed the Mental Health Matters Act (H.R. 7780), on a 220-205, mostly party line vote. The bill is intended to address mental health concerns among students, families, and educators-all three groups severely impacted by the COVID-19 pandemic. The legislation also includes funding for parity enforcement. Of note, the bill contains a somewhat controversial provision that allows the Department of Labor to levy civil monetary penalties on plan sponsors and administrators should they not fulfill mental health parity requirements. The bill now moves onto the Senate.
FMLA Leave Available for Mental Health Conditions
The U.S. Department of Labor (DOL) recently issued a fact sheet as a reminder of an employee’s ability to use FMLA leave for their own or a family member’s mental health condition. A summary is available here, and the DOL fact sheet is here.
EBRI Publishes Report on Spending Trends for Mental Health Services
The Employee Benefit Research Institute (EBRI) published “Use of Health Care Services for Mental Health Disorders and Spending Trends,”, EBRI Issue Brief, no. 569 (September 8, 2022). This study investigated trends in spending on mental health disorders, how diagnoses are changing and associated changes in use of health care services and spending. Despite heightened awareness, response, and public policy efforts to address access to mental health services, higher spending will continue to be a concern to plan sponsors. The study was conducted through the EBRI Center for Research on Health Benefits Innovation, with the funding support of the following organizations: Aon, Blue Cross Blue Shield, Association, ICUBA, JP Morgan Chase, Pfizer, and PhRMA.
California Governor Signs Community Assistance, Recovery and Empowerment Court Program into Law
California Governor, Gavin Newsom, has signed the Community Assistance, Recovery and Empowerment (CARE) Court Program (SB 1338) into law. The bill permits family members, first responders and others to ask a judge to draw up a treatment plan for up to one year (with the potential for an extension) for someone diagnosed with certain severe mental health disorders. The individual will be placed under court conservatorship and ordered to comply with the plan.
Massachusetts Individual Mandate Compliance
HIRD Filing Deadline Approaching
Every employer, whether in-state or out-of-state, with six or more employees in Massachusetts during the previous 12 months, is required to annually submit a Health Insurance Responsibility Disclosure (HIRD) form (Form 1099-HC). The HIRD form collects employer-level information about an employer’s sponsored health insurance offerings.
An individual is considered an employee if that individual is included in the employer’s quarterly wage report to the Department of Unemployment Assistance (DUA) during the past 12 months. For out-of-state employers not required to file a quarterly wage report to the DUA, an individual is considered an employee if they are hired for a wage or salary in Massachusetts to perform work, regardless of full-time or part-time status.
The form will be available electronically beginning November 15, 2022, and must be completed by December 15, 2022. For additional information, please visit the Massachusetts Department of Revenue’s Frequently Asked Questions here. The latest Form 1099-H and instructions are available here.
2023 Individual Mandate Coverage Limits
The Commonwealth Health Insurance Connector Authority (Health Connector) has released its deductible and maximum out-of-pocket limits for 2023 (see Administrative Information Bulletin 02-22):
California Governor Signs Several Key Employment and Labor Bills into Law
During the recent legislative session that ended September 30, 2022, California Governor, Gavin Newsom, signed into law several bills expanding workplace protections for California employees that will have an impact on most employers with employees in the state. Approximately 35 labor and employment related bills made it to the Governor’s desk this year and all but two were signed into law. The following briefly summarizes a few of these laws which are generally scheduled to take effect on January 1, 2023, unless otherwise noted:
- Leave Permitted to Care for Designated Person. AB 1041 amends the California Family Rights Act to permit an employee to take job-protected leave to care for a “designated person”, defined as an individual related by blood or whose association with the employee is the “equivalent of a family relationship”.
- Salary and Wage Transparency. SB 1162 amends current law to require employers with at least 100 employees to report certain specific pay data about their employees to the Department of Civil Rights (formerly known as the Department of Fair Employment and Housing); revises the deadline required to submit the information until the second Wednesday of May every year; and requires employers with at least 15 or more employees to provide the pay scale for a position on job applications and postings, and upon request, for the position an individual is currently employed in.
- Increase in SDI and Paid Family Leave Benefits. SB 951 accomplishes the following: (1) extends existing wage replacement rates for the State Disability Insurance (SDI) and Paid Family Leave programs until January 1, 2025; (2) for claims commencing on or after January 1, 2025. SB 951 revises the formulas under both programs to provide an increased wage replacement rate, ranging from 70 percent to 90 percent, depending on the employee’s wages; and (3) effective January 1, 2024, it repeals the current contribution wage ceiling, and makes all wages subject to the SDI contribution rate.
- Pandemic Related Legislation:
- Extension of California Supplemental Paid Sick Leave. AB 152 extends California’s current Supplemental Paid Sick Leave law for an additional three months, until the end of 2022, and enacts a $50,000 grant program to assist covered small businesses with covering the costs of the law in 2022.
- COVID-19 Workers’ Compensation Presumption for Critical Workers. AB 1751 extends the current presumption for one additional year, until January 1, 2024.
- COVID-19 Notices Re: Exposure. AB 2693 extends the statutory notice requirements enacted by AB 685 for another year, until January 1, 2024. Employers may comply by providing postings in lieu of individual notices.
- Bereavement Leave. AB 1949 requires California employers with 5 or more employees to provide up to 5 days of bereavement leave upon the death of a family member.
- Employment Discrimination – Cannabis. AB 2188 prohibits adverse action if an employee uses cannabis off-the-job and away from the workplace, or if cannabis metabolites are found during a drug screening test.
- Prohibition Against Employee Retaliation in Emergencies. SB 1044 makes it unlawful for employers to take or threaten adverse action against an employee for refusing to report to work, or by leaving a workplace, because of a reasonable belief that the workplace is unsafe.
- Establishment of Fast Food Sector Council. The Fast Food Accountability and Standards Recovery Act (AB 257) is a first of its kind in the country, and creates a 10-member unelected body to establish industry-wide standards on wages, working hours, and other working conditions that will be applied across the board to the entire fast food industry.
- Card Check Process for Agricultural Employees. Under AB 2183, if an agricultural employer agrees to sign a “labor peace compact”, prohibiting it from making statements against unions in an organizing campaign and conducting captive audience meetings with employees, employees will vote for union membership via a mail-in ballot process (currently a secret ballot election process is used). However, if the employer chooses not to sign the compact, employees will now be able to select a union via “card check” without an election.
For additional information, please refer to a Fisher Phillips in-depth analysis of the most significant legislation signed into law here.
California Consumer Privacy Law to Apply to Employment Records Beginning January 1
What is interesting to note is that the current exemption in the California Consumer Privacy Act (CCPA) for employee personal information (and a related exemption for business-to-business data) was not extended during this year’s legislative session and will expire at year-end. Thus, employers subject to the CCPA must be prepared to comply with the many data privacy obligations relating to employment and job applicant data beginning on January 1, 2023.
Overview of California’s Privacy Law
The California Consumer Privacy Act (CCPA) was signed into law and became effective January 1, 2020. At the time of its passage in 2018, it was considered the strongest consumer protection law in the country. Moreover, under the law, employees are included in the definition of “consumers”. As such, the CCPA applies to employment-related personal information maintained by an employer with respect to its employees in California (for example, job applicant, beneficiary and emergency contact information). Note that the CCPA doesn’t apply to data that is already protected by HIPAA.
California voters passed a ballot initiative “The California Privacy Rights Act (CPRA)” in November 2020, that amended the CCPA and strengthened the law even further. It gave businesses until January 1, 2023, to bring themselves into compliance with all the CPRA amendments. The California Legislature previously amended the CCPA to include a one-year moratorium for the application of most CCPA requirements for employee personal information, that was ultimately extended through the end of 2022. However, as noted above, this exemption has not been extended in this year’s legislative session.
Please refer to the accompanying articles by Fisher Phillips here, in which the firm announced the launching of its CCPA Resource Center to assist employers in complying with the California consumer privacy law, and here, discussing the applicability of the law to your business and when it applies to out-of-state businesses.
Additional resources are available on the state website here, including 13 enforcement case examples here, evidencing instances of non-compliance and remedial action taken by businesses to bring themselves into compliance.
California Health Care Foundation Issues 2022 California Health Policy Survey
The California Health Care Foundation (CHCF), together with a nonpartisan research organization at the University of Chicago, conducted a statewide survey of California’s residents in late 2021 to understand their views on health care policy, as well as their experiences with COVID-19 and the health care system overall. Key findings from the survey include the following:
- Nearly 50 percent of Californians skipped or postponed some type of health care during the previous 12 months.
- 25 percent either had problems or knew of someone in their family that had problems paying their medical bills, a nearly one-third increase from the previous year.
- An increase in the number of Californians who are receiving health care via telehealth.
- Nearly 20 percent say they or someone close to them have experienced homelessness in the past five years.
- Nearly 60 percent believe that the health care system treats people unfairly based on their race or ethnic background.
For more information, including downloads of the full report, charts and survey toplines, see here.
Walmart to Cover Fertility Treatments Under Insurance Plan
The Associated Press has reported that Walmart is partnering with Kindbody, a New-York based start-up company, to offer fertility treatment benefits under its insurance plan, such as in vitro fertilization and infertility testing, regardless of sex, sexual orientation, gender identity, or marital status. This will give Walmart employees access to more than 30 fertility clinics and in vitro laboratories across the U.S., as well as assist employees in accessing surrogacy and adoption benefits. The expanded offerings will begin effective November 1, 2022.
Cyber Criminals Targeting Healthcare Payments
The Cyber Division of the FBI has issued a Notification in response to multiple reports of hackers targeting healthcare payment processors to redirect victim payments to attacker-controlled accounts. In each of these reports, unknown cyber criminals used employees’ publicly available, personally identifiable information and social engineering techniques to impersonate victims and obtain access to files, healthcare portals, payment information, and websites. So far this year alone, hackers have already stolen more than $4.6 million from healthcare organizations by accessing customer accounts and altering payment details. In one case, the attacker changed victims’ direct deposit information to a bank account controlled by the attacker, redirecting $3.1 million from victims’ payments. The FBI Notification summarizes these threats and provides recommendations on how entities involved in processing and distributing healthcare payments through processors can mitigate the risk of compromise from cyber threats.
ASPE Releases Results of Prescription Drug Spending Analyses
A report describing the drivers of total spending on prescription drugs between the years of 2016-2021 has been published in the Assistant Secretary for Planning and Evaluation (ASPE) Office of Science & Data Policy’s, September 22, 2022 Issue Brief. The findings reflect that the U.S. health care system spent $603 billion on prescription drugs (before accounting for rebates) in 2021, of which $421 billion was on retail drugs. This was compared to $520 billion in 2016. The spending growth was largely attributed to growth in spending per prescription versus increased utilization. The Report is available here.
A second report was issued by the ASPE Office of Health Policy on September 30, 2022, describing changes in prescription drug prices that have occurred between 2016 and 2022, focusing on list prices (those set by manufacturers, and which determine what a patient must pay at a pharmacy). See here.
Kaiser Health News Wins Prestigious Award for COVID Related Story
Kaiser Family Foundation’s Kaiser Health News (KHN), together with the radio program “This American Life”, have won the Loeb Award for its story about the threats directed toward public health officials during the COVID-19 pandemic. Read more and listen to the story here.
Patient Satisfaction Surveys Earn a Zero on Tracking Whether Hospitals Deliver Culturally Competent Care
Some researchers are pointing out that experience surveys completed by patients upon their discharge from a hospital stay do not go far enough in assessing whether the patient has experienced discrimination or has received culturally competent care during their treatment. Read the full article from Kaiser Health News here.
Employee Benefits Litigation
District Court Rules Against ACA Preventive Care Coverage Requirement
On September 7, 2022, in the case of Braidwood Management v. Becerra, a Federal judge for the U.S. District Court for the Northern District of Texas ruled that parts of the Affordable Care Act (ACA)’s process for determining which types of preventive care must be covered by private health insurance on a no-cost basis is unconstitutional. In addition, another portion of the ruling indicated that a requirement that H.I.V. prevention drug therapy be covered on a no-cost basis violates the religious freedom of an employer. In addition to H.I.V. prevention drugs, however, this ruling potentially could impact millions of Americans’ access to cancer screenings, as well as alcohol abuse counseling, which are currently covered as preventive care under the law. The ruling is expected to be appealed. The judge’s ruling is available here.
GINA Discrimination Claims May Proceed against Sponsor of Wellness Program
A group of City of Chicago (City) employees and their spouses who were participants in the City’s sponsored wellness program brought suit against the city, alleging that the program’s requirement to provide information regarding the spouse’s medical history, or pay a penalty of $50, violated the Genetic Information Nondiscrimination Act (GINA). The court dismissed a related Americans with Disabilities Act (ADA) claim as well as those claims made by employees without spouses. However, for the employees with covered spouses, the court allowed the GINA claims to proceed to determine whether the wellness program is “voluntary” considering the financial penalty for nonparticipation. See Willaims v. City of Chicago, 2022 WL 2915632 (N.D. Ill.2022), available here.
D.C. Federal Judge Rejects DOJ Challenge to UnitedHealth’s Bid to Purchase Change Healthcare for $13.8 Billion
UnitedHealth’s $13.8 billion bid to purchase Change Healthcare is still on after a D.C. Federal judge refused, in a sealed opinion, to block the deal, rejecting a U.S. Department of Justice challenge alleging the deal creates a monopoly for key insurance claims processing technology and gives UnitedHealthcare (a division of UnitedHealth) too much data from rival insurers.
More COBRA Litigation
In yet another cause of action involving a plaintiff alleging violations under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), an Alabama district court recently addressed the respective liabilities of a self-insured plan’s TPA and the employer/plan sponsor for providing the COBRA election notice. In the case of Howard v. Ivy Creek of Tallapoosa, LLC, 2022 WL 4390431 (M.D. Ala. September 22, 2022), the court ruled that an employer who sponsors a self-insured health plan may still be held liable if its third-party administrator (TPA) fails to provide a COBRA election notice to a plan participant at the correct address. This case underscores the need for employers to ensure that mailing addresses for COBRA notices are kept current, and the employer has a responsibility to provide the updated address information to the TPA. The case is available here.
Question of the Month
Our company sponsors a general-purpose health care flexible spending account (FSA) plan that reimburses participating employees, as well as their spouses and eligible dependents, for qualifying medical expenses. An employee’s spouse participates in a high deductible health plan (HDHP) sponsored by his employer, in which he makes contributions to a health savings account (HSA). Will the employee’s participation in the health care FSA make her spouse ineligible to contribute to the HSA?
Answer: Yes. An employees’ participation in a general-purpose health care FSA that reimburses any qualifying medical expense that is not limited to the expenses of the employee, will prevent a spouse (or any adult children who may also be eligible to seek reimbursement from the FSA) from contributing to an HSA.
In addition, as noted by Thompson Reuters, employees participating in a general-purpose health care FSA cannot protect the HSA eligibility of their spouses and adult children simply by not submitting their expenses for reimbursement. However, if the company’s health care FSA allows participating employees to limit the individuals whose expenses can be reimbursed, and the plan documents are amended accordingly, employees may be able to preserve HSA eligibility for their spouses and adult children by electing in advance to use the healthcare FSA only for their own expenses. An employee may also enroll in a limited-purpose or a post-deductible health care FSA if offered by his or her employer, both of which will not prevent HSA eligibility.