IRS

Publication 969

There has been an update* to surprise billing rules for emergency services or air ambulance services with regard to high deductible health plan  (HDHP) participants and their Health Savings Account (HSA) eligibility. Public Law 116-260, December 27, 2020, amended section 223 to provide that an HDHP may provide benefits under federal and state anti-“surprise billing” laws with a $0 deductible, without disrupting their HSA eligibility. An “eligible individual” remains eligible to make contributions to its HSA even if the individual receives anti-“surprise billing” benefits outside of the HDHP. The amendment applies to plan years beginning after 2021.

Additionally, PublicLaw 117-328 amended section 223 to provide that an HDHP may have a $0 deductible for telehealth and other remote care services for plan years beginning before 2022; months beginning after March 2022 and before 2023; and plan years beginning after 2022 and before 2025. Also, an “eligible individual” remains eligible to make contributions to its HSA even if the individual has coverage outside of the HDHP during these periods for telehealth and other remote care services. Note this exception only applies to plan years noted above, and at this time, will not extend past 2025.

Sections 6055 and 6056 

The Affordable Care Act added section 6055 and 6056 to the IRC, requiring employers with at least 50 full time and equivalent employees to file information returns with the IRS. In 2024, a// employers were first required to file their 1094-C and 1095-C Forms electronically with the IRS using the AIR system. The prior rules permitting hard copy filing for employers with fewer than 250 Forms 1095-C have been replaced with a new IRS rule, reducing the paper copy filing to 10 forms or less. For 2023 plan year returns and statements filed and furnished in 2024, the penalty for failing to file electronically is increased to $310 per return, not to exceed $3,783,000.

The 4980H(a) and (b) penalty figures for 2025 have been announced, and will decrease from 2024. 

4980H(a): If Employer does not offer coverage to 95% of its full time employees, and one employee receives a subsidy to purchase insurance on the Health Exchange, the Employer is subject to a penalty equal to $2,900 x every full time employee (minus 30). 

4980H(b): If employer offers coverage that is unaffordable (affordability measure for 2025 is still TBD at the time of this writing) or doesn’t offer minimum value, and any employees qualify for a subsidy to purchase insurance on the Health Exchange, the employer is subject to a penalty equal to $4,350 x the number of full time employees that receive a subsidy to purchase insurance on the Health Exchange.

PCORI

Due on July 31st annually, the PCORI fee applies to self-funded health plans, including HRAs. The fee for plan years ending January 2023 through September 2023 is $3.00 per covered life, while the fee applicable to calendar year plans, and those ending in October or November 2023 is $3.22.

SCOTUS

Chevron Deference

The Supreme Court heard oral arguments in January challenging a longstanding rule known as ‘Chevron Deference’ (named after the famous 1984 case). The Society for Human Resource Management notes “The final ruling could impact the outcomes of employers’ future cases against federal agencies that enforce employment laws, such as the U.S. Department of Labor and the U.S. Equal Employment Opportunity Commission.” We expect a decision this June.

DOL

Transparency in Coverage 

The prescription drug data collection (RxDC) under the Consolidated Appropriations Act of 2021 required plans to submit certain pharmacy data to CMS by December 31, 2022. Annually thereafter, this data is due to CMS by June 1. Carriers of fully insured medical plans will file this on behalf of their employer clients, but generally need to collect additional information from employers this spring in order to meet the June 1 filing deadline. Self insured employer medical plans must complete this filing themselves, with the assistance of their ASO provider.

Senator James Lankford from Oklahoma, along with several other members of Congress, authored a letter to the FTC urging an investigation into the ‘anti-competitive’ pharmacy benefit managers (PBMs) business practices. Two Bills have advanced with bipartisan support (the PBM Transparency Act and the Prescription Drug Pricing for the People Act ) signaling the importance of PBM reform across political lines. It has also been reported that both the House and Senate are in negotiations over their respective price transparency bills to include these important laws in the upcoming spending bill.

Preventive Services

Non-grandfathered plans must cover the full list of preventive services without cost sharing to participants, as dictated by the Affordable Care Act. The departments issued joint FAQs this year specifically addressing coverage of contraceptives without cost share. The Departments have interpreted the applicable law as “requiring plans and issuers to cover (without cost sharing) any contraceptive services and FDA-approved, -cleared, or -granted contraceptive products that an individual’s attending provider determined to be medically appropriate for the Individual.” In response to ‘unreasonable’ techniques allegedly being used to limit access to these products by issuers and plan sponsors, the Departments offer another approach for employer sponsored plans to use in their compliance efforts with the contraceptive mandate. “Reasonable medical management techniques” may be used in plan design to determine which specific medications or products are covered without cost share, and the FAQ layout specific criteria to meet the ‘reasonable’ standard. Employers should consult their plan designs to ensure proper treatment of these products and services in light of the updated guidance.

50th Anniversary of ERISA

On September 2, 2024, ERISA will officially be 50 years old. This federal law offers plan sponsors operating in multiple states uniformity in administration of their health plans, by exempting certain ERISA plans from state law.**  In recent years, the courts have reached different conclusions when faced with questions of ERISA preemption, specifically with regard to state laws attempting to regulate PBMs. The House Committee on Education and the Workforce estimates that employer-sponsored health plans cover 153 million employees plus their dependents. Costs for employer health care premiums increased by 7% for family tiers in 2023. In an effort to control costs, and strengthen the protections under ERISA, the Committee has put out  a request for information (RFI) addressing topics such as preemption, fiduciary requirements, ways to streamline ERISA reporting, and coverage for specialty drugs.

FMLA

The DOL has issued a 2024 Fact Sheet (28D) clarifying the process employers must follow in the administration of FMLA protected leave requests by employees, and has provided updated Model Notices for employer use. In addition to mandatory  notice requirements (such as a workplace poster, notice of FMLA rights upon hire, and notice of eligibility upon FMLA leave request), the DOL reminds employers that they are ‘prohibited from interfering with, restraining, or denying the exercise of, or the attempt to exercise, any FMLA right.’ 

New York State

New York PFL for 2024

Beginning January 1, 2024, the NY PFL premium rate will be 0.373% of covered payroll (down from 0.455% in 2023). The covered payroll threshold (which is equal to the statewide average weekly wage multiplied by 52), will increase to $89,343.80 per year (up from $87,785.88 per year for 2023). The maximum employee NY PFL premium will be $333.25  for 2024 (a decrease from $399.43 in 2023).

The benefit remains 67% of the statewide average weekly wage, which is $1,718.15 for 2024 (an increase from $1,688.19 in 2023). The maximum weekly benefit for 2024 is therefore $1,151.16 (up from $1,131.09 in 2023).

* Publication 969 covers HSAs and other tax-favored health plans for purposes of preparing 2023 calendar year returns

** Employer health plans offered on a self funded basis are exempt from state laws, while those offered on a fully insured basis are required to be approved and compliant in the state they are written in.