Medicare Part D Changes May Impact Creditable Coverage Status of Employer Plans

Compliance, Employee Benefits, Employee Benefits Adviser, Employee Communications, Health Care Reform, Medical, U.S. Department of Labor

Medicare Part D Changes May Impact Creditable Coverage Status of Employer Plans

The Inflation Reduction Act of 2022 (IRA) includes several cost-reduction provisions affecting Medicare Part D plans, which may impact the creditable coverage status of employer-sponsored prescription drug coverage beginning in 2025.

Employers that provide prescription drug coverage to individuals who are eligible for Medicare Part D must inform these individuals and the Centers for Medicare and Medicaid Services (CMS) whether their prescription drug coverage is creditable, meaning that the employer’s prescription drug coverage is at least as good as Medicare Part D coverage.

CMS’ Draft Part D Redesign Program Instructions state that given the significant changes that the IRA made to Medicare Part D, one of the methods for determining whether employer-sponsored prescription drug coverage is creditable will no longer be valid as of calendar year 2025. These draft program instructions are subject to change, and CMS will issue final program instructions for 2025 after considering the public comments received in response to the draft program instructions.

Creditable Coverage Determination

A group health plan’s prescription drug coverage is considered creditable if its actuarial value equals or exceeds the actuarial value of standard Medicare Part D prescription drug coverage, as demonstrated through the use of generally accepted actuarial principles and in accordance with CMS guidelines. In general, this actuarial determination measures whether the expected amount of paid claims under the group health plan’s prescription drug coverage is at least as much as the expected amount of paid claims under the Medicare Part D prescription drug benefit. For plans that have multiple benefit options (for example, PPOs, HDHPs and HMOs), the creditable coverage test must be applied separately for each benefit option.

Under existing CMS guidance, there are a few different ways for an employer to determine whether its …

By Jessica Rogers|March 26th, 2024|Compliance, Employee Benefits, Employee Benefits Adviser, Employee Communications, Health Care Reform, Medical, U.S. Department of Labor|Comments Off

HHS Encourages Urgent Review of HIPAA Compliance Following Health Care Cyberattack

Compliance, Employee Benefits, Employee Benefits Adviser, Human Resources, Legislation

HHS Encourages Urgent Review of HIPAA Compliance Following Health Care Cyberattack

The U.S. Department of Health and Human Services (HHS) recently issued a letter addressing the cybersecurity incident impacting Change Healthcare, a unit of UnitedHealth Group. Given the “unprecedented magnitude” of this cyberattack, HHS’ Office for Civil Rights (OCR) is investigating whether these entities comply with the HIPAA Privacy, Security and Breach Notification Rules (HIPAA Rules), including whether a breach of protected health information (PHI) occurred.

OCR is also encouraging HIPAA-covered entities (e.g., health plans, health insurance issuers and health care providers) and their business associates to review their cybersecurity measures “with urgency” to ensure that health information is protected.

While many employers do not have access to PHI from their health plans, employers that use third-party vendors, such as third-party administrators (TPAs) and pharmacy benefit managers (PBMs), should investigate and verify these vendors’ cybersecurity measures during the selection process. Employers should also ensure they have business associate agreements in place that include adequate security protections for electronic PHI.

Health Care Cyberattacks

On Feb. 21, 2024, Change Healthcare, one of the largest platforms for managing health insurance billing and payments in the United States, experienced a large-scale cyberattack. This attack affected millions of health care providers and patients across the country. Cybersecurity experts have deemed the incident one of the most disruptive attacks in history.

According to OCR, ransomware and hacking are the primary cyberthreats in health care. Over the past five years, there has been a 256% increase in large breaches reported to OCR involving hacking and a 264% increase in ransomware. In 2023, hacking accounted for 79% of the large breaches reported to OCR.

Compliance Resources

Safeguarding PHI is a top priority for OCR. To help covered entities and business associates protect their systems from cyberattacks, OCR …

By Jessica Rogers|March 25th, 2024|Compliance, Employee Benefits, Employee Benefits Adviser, Human Resources, Legislation|Comments Off

Fair Employment – Equal Pay Laws For New Jersey

Broad Reach Benefits, Disability, Employee Benefits, Employee Communications, Human Resources, Legislation, U.S. Department of Labor

Fair Employment – Equal Pay Laws For New Jersey

The federal Equal Pay Act (EPA) requires that men and women receive equal pay for equal work in the same establishment. In addition to the federal EPA, many states, including New Jersey, have enacted their own equal pay laws prohibiting wage discrimination based on gender and other characteristics.

This Employment Law Summary provides an overview of New Jersey’s Diane B. Allen Equal Pay Act (NJEPA), which prohibits certain pay differentials between men and women, and the Law Against Discrimination (LAD), which was amended by the NJEPA to expand protections against unequal pay based on various protected traits.

COVERED EMPLOYERS

The NJEPA applies to virtually all employers in the state, other than nonprofit hospital associations or corporations, and generally protects all employees, both male and female. However, it does not protect volunteers providing service for a nonprofit organization, farm workers, or domestic servants in a private home or hotel.

The LAD is a broader anti-discrimination law that prohibits a variety of entities, including all employers with one or more employees in the state (other than employers of domestic servants), from discriminating in compensation or against employees or job applicants based on any of several characteristics.

PROHIBITED PAY PRACTICES

The NJEPA prohibits employers from discriminating in any way in the rate or method of payment of wages to any employee based on sex. In addition, the LAD prohibits employers from discriminating against employees or applicants in compensation or the terms, conditions or privileges of employment based on any of the following, which are known as protected traits:

Race (including “traits historically associated with race,” such as hair texture, hair type and protective hairstyles);
Color;
Age (18+);
Sex (including pregnancy or breastfeeding);
Affectional or sexual orientation;
Gender identity or expression;
Creed/religion;
Marital status;

…

By Jessica Rogers|March 3rd, 2024|Broad Reach Benefits, Disability, Employee Benefits, Employee Communications, Human Resources, Legislation, U.S. Department of Labor|Comments Off

Legal Alert- Medicare Part D Disclosures due by Feb. 29, 2024 for Calendar Year Plans

Compliance, Employee Benefits, Employee Benefits Adviser, Medical

Legal Alert- Medicare Part D Disclosures due by Feb. 29, 2024 for Calendar Year Plans

Each year, group health plan sponsors are required to complete an online disclosure form with the Centers for Medicare & Medicaid Services (CMS), indicating whether the plan’s prescription drug coverage is creditable or non-creditable. This disclosure requirement applies when an employer-sponsored group health plan provides prescription drug coverage to individuals who are eligible for coverage under Medicare Part D.

CMS Disclosure Deadline

The plan sponsor must complete the online disclosure within 60 days after the beginning of the plan year. For calendar year health plans, the deadline for the annual online disclosure is Feb. 29, 2024 (since 2024 is a leap year).

In addition to the annual disclosure requirement, the disclosure to CMS must be made whenever any change occurs that affects whether the coverage is creditable. More specifically, within 30 days after any change in the plan’s creditable coverage status or after the termination of a plan’s prescription drug coverage.

Online Disclosure Method

Plan sponsors are required to use the online disclosure form on the CMS creditable coverage website. This is the sole method for compliance with the disclosure requirement unless the entity does not have internet access.

The disclosure form lists the required data fields that must be completed in order to generate the disclosure notice to CMS, such as types of coverage, number of options offered, creditable coverage status, period covered by the disclosure notice, number of Part D-eligible individuals covered, date the creditable coverage disclosure notice is provided to Part D-eligible individuals, and change in creditable coverage status.

CMS has also provided guidance and instructions on how to complete the form.

Action Steps

To determine whether the CMS reporting requirement …

By Jessica Rogers|February 5th, 2024|Compliance, Employee Benefits, Employee Benefits Adviser, Medical|Comments Off

7 Key Employee Benefits Trends in 2024

Employee Benefits, Employee Communications

7 Key Employee Benefits Trends in 2024

Attracting and retaining employees has challenged employers since the onset of the COVID-19 pandemic. In 2024, the labor market is expected to cool slightly; however, competition for talent will remain. As such, employers must remain agile and adapt to developing labor and market trends that will shape the market in 2024. In particular, current labor challenges are forcing employers to find ways to balance rising health care costs and inflation while providing employees with benefits they value and need. Understanding this year’s key employee benefits trends can help employers attract and retain talented individuals in an evolving labor market.

This article discusses seven key employee benefits trends in 2024.

1. Managing Health Care Costs

High inflation, provider shortages, an increase in serious chronic conditions and deferred care due to the pandemic continue to drive health care costs. According to several industry surveys and reports, employers anticipate health care costs to grow between 6% and 8.5% in 2024, the largest increase in more than a decade. This year, employers may struggle to mitigate skyrocketing health care costs while keeping benefits affordable for employees. Thus, many employers will plan and implement multiple cost-saving strategies in 2024 to mitigate rising health care costs, such as:

Modifying health plan designs
Incorporating health care analytics
Using artificial intelligence to streamline administrative workflows, help employees make informed benefits decisions and decrease costs
Implementing pharmacy management strategies
Maintaining full coverage of recommended prevention and screening services
Tailoring benefits to meet employees’ specific needs
Expanding voluntary benefits offerings
Improving employee health care literacy
Investing in more virtual health opportunities
Incentivizing employees to seek cost-effective care options
Revisiting cost-sharing arrangements

2. Increasing Personalization and Flexibility

The modern workforce is comprised of four or five generations of workers from various …

By Jessica Rogers|January 9th, 2024|Employee Benefits, Employee Communications|Comments Off

High Health Care Costs Are Impacting Americans’ Physical and Mental Health

Broad Reach Benefits, Employee Benefits, Human Resources

High Health Care Costs Are Impacting Americans’ Physical and Mental Health

More than half of consumers feel stressed when paying their medical bills, and more than 9 in 10 say these payments have impacted their physical and mental health, according to a study from health care payment processing company PayMedix. Unaffordable medical bills, higher deductible health plans and confusing bills have increased physical and mental health issues for many insured Americans.

The 2023 PayMedix study polled more than 1,000 Americans with employer-provided health insurance and over 200 HR benefits managers. Consider the additional key findings from the 2023 survey:

The affordability of medical bills is shifting for credit-challenged Americans. Almost half (44%) of people with a credit score of 669 or lower say their deductible is not affordable.
The impact of high medical bills is forcing employees to make tough financial decisions. Almost one-third (30%) of Americans say they dug into their savings after an unexpected medical bill, and 17% delayed payments.
Consumer confusion is a compounding factor for Americans. Employees receive more than 70 bills or statements annually, and more than a quarter are unable to decipher what they owe.
Employees want help from their employers to address financial stress and confusion. More than half (60%) say their employers are responsible for providing financial strategies. Many want flexible payment options and guaranteed credit for out-of-pocket maximums.

Billing complexities are adding to the health equity crisis in the country. Many underprivileged populations still struggle to access financial credit—even when insured. Furthermore, these affordability challenges are causing many Americans to avoid care or disengage with the health care system altogether.

Employer Takeaway

The high cost of health care is taking a toll on the health of Americans, with health care billing and payment worries …

By Jessica Rogers|December 4th, 2023|Broad Reach Benefits, Employee Benefits, Human Resources|Comments Off

IRS Announces 2024 Retirement Plan Limits

Broad Reach Benefits, Employee Benefits, Employee Benefits Adviser, Employee Communications, Human Resources, IRS, Legislation, Retired, Voluntary Benefits

IRS Announces 2024 Retirement Plan Limits

The Internal Revenue Service (IRS) has released Notice 2023-75, containing cost-of-living adjustments for 2024 that affect the amounts employees can contribute to 401(k) plans and individual retirement accounts (IRAs).

2024 Increases

The employee contribution limit for 401(k) plans in 2024 has increased to 23,000, up from $22,500 for 2023. Other key limit increases include the following:

The employee contribution limit for IRAs is increased to $7,000, up from $6,500.

The IRA catch‑up contribution limit for individuals aged 50 and over remains unchanged at $1,000 for 2024 (despite this limit now including an annual cost‑of‑living adjustment because of legislation enacted at the end of 2022, referred to as “SECURE 2.0”).

The employee contribution limit for SIMPLE IRAs and SIMPLE 401(k) plans is increased to $16,000, up from $15,500.

The limits used to define a “highly compensated employee” and a “key employee” are increased to $155,000 (up from $150,000) and $220,000 (up from $215,000), respectively.

The annual limit for defined contribution plans (for example, 401(k) plans, profit-sharing plans and money purchase plans) is increased to $69,000, up from $66,000.

The annual compensation limit (applicable to many retirement plans) is increased to $345,000, up from $330,000.

The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan remains unchanged at $7,500. Therefore, participants in these plans who are 50 and older can contribute up to $30,500, starting in 2024.

The income ranges for determining eligibility to make deductible contributions to traditional IRAs, contribute to Roth IRAs and claim the Saver’s Credit (also known as the Retirement Savings Contributions Credit) also increased for 2024.

More Information

The IRS’s news release contains more details on the cost-of-living adjustments for …

By Jessica Rogers|November 1st, 2023|Broad Reach Benefits, Employee Benefits, Employee Benefits Adviser, Employee Communications, Human Resources, IRS, Legislation, Retired, Voluntary Benefits|Comments Off

Open Enrollment 2024 – Health Savings Accounts (HSAs)

Broad Reach Benefits, Employee Benefits, Employee Benefits Adviser, Employee Communications, Human Resources, Voluntary Benefits

Open Enrollment 2024 – Health Savings Accounts (HSAs)

Employers who sponsor high deductible health plans (HDHPs) that are compatible with health savings accounts (HSAs) should prepare for open enrollment by:

Ensuring that employees understand how HSAs work, including the benefits of opening an HSA; and
Updating their HDHP’s design and communicating any plan changes to employees.

There are many advantages to selecting an HDHP/HSA option at open enrollment time—for example, HSAs have three levels of tax savings and HDHPs typically have lower monthly premiums. However, many employees may not be aware of these advantages or understand how the HSA rules apply to them. Employers should help their employees understand key HSA features during the open enrollment process.

In addition, to be compatible with HSAs, HDHPs must comply with IRS limits regarding the plan’s annual deductible and out-of-pocket maximum. The IRS adjusts these limits for inflation each year. Employers should review their plan limits to make sure they comply with the limits for the plan year beginning on or after Jan. 1, 2024.

HDHP Plan Design

To prepare for open enrollment, employers with HDHPs should:

Review their plan’s minimum deductible and out-of-pocket maximum limits to ensure they comply with the IRS’ limits for 2024;
Review coverage options for telehealth and COVID-19 testing and treatment; and
Communicate any plan changes to employees.

Communicating HSA Rules to Employees

As part of the open enrollment process, employers that offer HSA-compatible HDHPs should help their employees understand the benefits of opening an HSA and making tax-free contributions. Employees may be confused about the rules surrounding HSAs and may not realize all the advantages associated with these accounts.

Alera Group can provide sample resources for communicating the HSA rules to employees.

HSA Advantages

Open enrollment is an ideal time for employers to highlight to eligible employees the advantages …

By Jessica Rogers|August 22nd, 2023|Broad Reach Benefits, Employee Benefits, Employee Benefits Adviser, Employee Communications, Human Resources, Voluntary Benefits|Comments Off

Deadline for Employers to Receive 2023 MLR Rebates Is Approaching

Broad Reach Benefits, Employee Benefits, Employee Communications, Human Resources

Deadline for Employers to Receive 2023 MLR Rebates Is Approaching

Employers with insured group health plans may soon receive a medical loss ratio (MLR) rebate from their health insurance issuers. Issuers who did not meet the applicable MLR percentage for 2022 must provide rebates to plan sponsors by Sept. 30, 2023. These rebates may be in the form of a premium credit or a lump sum payment.

MLR Rules

Employers with insured group health plans may soon receive a medical loss ratio (MLR) rebate from their health insurance issuers. Issuers who did not meet the applicable MLR percentage for 2022 must provide rebates to plan sponsors by Sept. 30, 2023. These rebates may be in the form of a premium credit or a lump sum payment.

Issuers who did not meet their MLR percentage for 2022 must provide rebates by Sept. 30, 2023. As a general rule, an employer who receives a rebate should use it within three months to avoid ERISA’s trust requirement. For rebates received on Sept. 30, 2023, this three-month deadline is Dec. 30, 2023. This deadline should be adjusted for rebates received before Sept. 30, 2023. Employers who receive MLR rebates should also be prepared to answer questions from employees about the rebate and how it is being allocated. The MLR rules require health insurance issuers to spend a minimum percentage of their premium dollars on medical care and health care quality improvement. This percentage is 85% for issuers in the large group market and 80% for issuers in the small and individual group markets. States may set higher MLR standards than the federal 80%/85% thresholds. Issuers must report to the federal government how they spent their premium dollars for each calendar year by July 31 …

By Jessica Rogers|August 7th, 2023|Broad Reach Benefits, Employee Benefits, Employee Communications, Human Resources|Comments Off

Legal Alert- Workplace Wellness Plan Design

Broad Reach Benefits, Compliance, Employee Benefits, Employee Communications, Human Resources, Voluntary Benefits

Legal Alert- Workplace Wellness Plan Design

Many employers implement wellness plans to encourage healthier lifestyles, reduce absenteeism and help control health care spending. There are several legal compliance issues that are involved with designing workplace wellness plans. Wellness plans must be carefully structured to comply with both state and federal laws. The three main federal laws that impact the design of wellness plans are:

The Health Insurance Portability and Accountability Act (HIPAA);
The Americans with Disabilities Act (ADA); and
The Genetic Information Nondiscrimination Act (GINA).

These laws each have their own set of legal rules for acceptable wellness program design, which are not always consistent with one another.

This Compliance Overview provides an overview of the requirements for wellness plans under HIPAA, the ADA and GINA. See Page 7 for a chart that compares key wellness plan requirements under these three laws.

HIPAA Requirements

A workplace wellness program that relates to a group health plan must comply with HIPAA’s nondiscrimination rules. HIPAA generally prohibits group health plans from using health factors to discriminate among similarly situated individuals with regard to eligibility, premiums or contributions. However, HIPAA includes a special rule that allows employers to provide incentives or rewards as part of a wellness program, as long as the program follows certain guidelines.

The HIPAA nondiscrimination rules were clarified by the Affordable Care Act (ACA). Under these rules, workplace wellness programs are divided into two general categories: participatory wellness plans and health-contingent wellness plans. This distinction is important because participatory wellness plans are not required to meet the same nondiscrimination standards that apply to health-contingent wellness plans.

Wellness programs that are not part of group health plans (for example, standalone programs that pay health club dues) are NOT subject to …

By Jessica Rogers|July 6th, 2023|Broad Reach Benefits, Compliance, Employee Benefits, Employee Communications, Human Resources, Voluntary Benefits|Comments Off