Employers and plan sponsors face no shortage of policy and compliance issues to consider when finalizing 2020 health and fringe benefit offerings, contribution strategies, vendor terms, plan operations, and employee communications.
An array of recent and potential changes from Congress, federal regulators, courts, and the states — and the quickening pace of marketplace developments — makes monitoring and planning for these issues more demanding and complicated than ever.
The divided Congress, with its Democrat-controlled House and Republican-controlled Senate, dims the odds of major changes to the Affordable Care Act (ACA). But President Trump and federal agencies are pressing forward with numerous policy changes.
Key initiatives aim to lower prescription drug costs, improve the transparency of health care cost and quality information, and set new coverage standards. For employers, some changes could increase cost-shifting and complexity.
Below are highlights of the compliance developments to address or monitor in planning group health benefits and paid leave programs for the upcoming year. Download a 40-page print-friendly PDF for more detailed information and resources related to each compliance priority.
Employers should keep aware of the current 2022 effective date of the ACA’s “Cadillac” tax on high-cost health plans, while monitoring Congress — which has twice delayed the tax’s effective date — for further action.
Examples include measures to reduce health care costs, make health savings accounts (HSAs) more flexible, simplify ACA reporting duties, and ensure that legislation curbing surprise medical bills doesn’t increase costs for employers or undermine their ability to design effective provider networks.
Major legislative changes are unlikely, but bipartisan support could move modest drug-pricing reforms and measures aimed at ending surprise medical bills to enactment this year.
Some value-based HSA reforms may also advance. These include measures allowing predeductible coverage for chronic conditions and more types of preventive care within high-deductible health plans (HDHPs), as well as predeductible use of telehealth services or onsite medical clinics without risking HSA eligibility.
Wellness programs need review for 2020, since the Equal Employment Opportunity Commission (EEOC) rescinded its rules on financial incentives under the Americans with Disabilities Act (ADA) and Genetic Information Nondiscrimination Act (GINA). This action, effective Jan. 1, 2019, came after a court order nullified the incentive limits in the EEOC’s revised rules for wellness programs.
For employers offering mental health and substance use disorder benefits, confirming ongoing compliance with the Mental Health Parity and Addiction Equity Act (MHPAEA) is a priority, given heightened agency enforcement and increased private litigation. For some employers, parity compliance requires understanding not only federal law but also state or local mandates.
Rapid development of new information technologies that allow quick access to data protected by the Health Insurance Portability and Accountability Act (HIPAA) means plan sponsors must evaluate each new IT vendor relationship for compliance with evolving guidance.
Even if HIPAA doesn’t apply, other data-protection and privacy laws — including state laws — may have implications for emerging health and wellness applications and software.
Action in the courts also has the potential to reshape benefits and program administration, as happened this year with rulings on cross-plan offsetting (Peterson v. UnitedHealth Group Inc.) and behavioral health claims administration (Wit v. United Behavioral Health).
Parties continue to seek broad repeal of the ACA through litigation (Texas v. United States). Other legal challenges seek changes to specific ACA regulations, such as the contraceptive coverage mandate’s religious and moral exemptions, and the association health plan (AHP) rules.
Legal wrangling is also expected over the Trump administration’s recent move to strike the ACA Section 1557 regulations that ban discrimination based on gender identity and termination of pregnancy in federally funded health care programs or activities.
States are intensifying their focus on health care policy by taking steps to reinforce or weaken the ACA and pursue their own reforms, cost controls, coverage mandates, and consumer protection measures. These efforts could affect even self-funded employer group health plans.
A major trend meriting close attention is the proliferation of state and local paid-leave laws. Many employers are now reviewing how to integrate their current leave programs with a growing patchwork of compliance duties. In the absence of a federal solution, more states are expected to develop paid leave requirements for employers.
2020 Group Benefit Planning
The following list highlights 10 top compliance-related priorities for 2020 health and fringe benefit planning, and recommends general actions for each item. Download the full PDF article for more detailed information and resources related to each compliance priority.
Ongoing ACA concerns for large employers. Review 2020 coverage and eligibility terms in light of employer shared-responsibility (ESR) strategy, factoring in the 2020 affordability safe harbors and minimum value determinations.
Evaluate ESR and minimum essential coverage reporting processes, including the adequacy of records to respond to any IRS inquiries. Ensure that employer-sponsored group health plans comply with ACA benefit mandates. Monitor ACA developments, including further Cadillac tax delay or repeal and litigation challenging the ACA.
State activity. Appraise state laws raising concerns for group health plans. For insured plans, expect more activity on surprise medical bills, new health coverage mandates and AHP options.
State initiatives that could affect all employers include health plan reporting mandates, prescription benefit manager regulations, new or continuing health plan assessments, and telemedicine laws.
Employers should also track state innovation waivers under ACA Section 1332 and state regulation of AHPs to identify any restrictions that may affect plan design. Employers should work with vendors to ensure compliance with these initiatives.
Data privacy and security. Evaluate each new tech vendor that has access to health and welfare plan data to determine whether HIPAA or other data-protection and privacy laws apply. Wellness and transparency tools, mobile apps, and artificial intelligence may implicate HIPAA and other laws.
Regularly review vendor compliance, since any breach or violation could create plan sponsor obligations and liabilities. Monitor how HIPAA enforcement and guidance evolves to address apps and emerging technologies. Track whether changes to public-sector HIPAA rules have an impact on data sharing in the private sector.
Health savings accounts and health reimbursement arrangements. Review employer-sponsored health benefits and programs that might provide HSA-disqualifying coverage, and determine if changes are warranted.
This review should include stand-alone, health-related benefits and programs available to all employees — regardless of HDHP enrollment — as well as benefits and programs available only to HDHP participants.
Adjust plan design and administration, and update plan documents and other employee communications for 2020 HSA/HDHP inflation-adjusted amounts. Consider whether to offer any of the two new types of health reimbursement arrangements (HRAs).
Individual-coverage HRAs can be used to reimburse premiums for Medicare or individual health insurance chosen by the employee. Excepted-benefit HRAs, which qualify as HIPAA-excepted benefits, can be funded up to $1,800 annually (indexed) and used to reimburse a wide range of medical care expenses.
Mental health parity.In light of heightened focus on the MHPAEA and the opioid crisis, review benefit plans for compliance with parity guidance, ERISA standards, and best practices. Prepare to respond to disclosure requests.
Wellness programs.For wellness programs that include a health screening, evaluate the need for any design changes due to the removal of the EEOC’s incentive limit rules. Consider working with consultants and vendors to make adjustments that minimize litigation risk and program disruption.
Keep in mind that the EEOC’s other ADA and GINA rules for wellness programs still apply. If tied to a group health plan, wellness programs must also comply with HIPAA rules, including reasonable alternative standards for health-contingent wellness programs.
Paid leave. Assess employer-sponsored paid leave programs, including sick, disability, and parental/family leave. Monitor state and local legislation for new and expanded mandates and programs. Evaluate processes for integrating state and local paid leave mandates with existing plans, and revise plans as needed to comply.
Multi-jurisdictional employers should consider developing a long-term strategy for equalizing leave benefits across jurisdictions and administering increasingly complex programs.
Prescription drug costs and coverage. Monitor legal and other changes at the federal and state levels targeting the increasing cost of prescription drugs. Evaluate the impact of these changes on prescription drug benefits, and reassess health plans’ drug-purchasing strategies.
Cross-plan offsetting by ERISA plan service providers. Review whether third-party administrators or issuers are using a practice known as cross-plan offsetting to recoup overpayments to health care providers. Decide how to address this practice, if necessary. Comply with ERISA fiduciary standards when selecting and monitoring service providers, including reviewing fees for reasonableness.
Preventive services. Confirm that non-grandfathered group health plans cover ACA-required, in-network preventive services without any deductible, copay, or other cost sharing.
Modify preventive-care benefits for the 2020 plan year to reflect the latest recommendations from the U.S. Preventive Services Task Force, the Health Resources and Services Administration, the Centers for Disease Control and Prevention’s Advisory Committee on Immunization Practices (ACIP), and ACA guidance.
Adjust benefits for new or revised recommendations on skin cancer, HIV prevention, osteoporosis, cervical cancer, obesity, unhealthy alcohol use, perinatal depression, and Vitamin D supplements for older adults.
For employers with religious or moral objections to covering women’s contraceptives, watch for court or regulatory developments on this ACA requirement. Update plan documents, summary plan descriptions (SPDs), summaries of benefits and coverage (SBCs), and other materials as needed.
Dorian Smith is national practice leader for Mercer’s law and policy group. Five other Mercer consultants contributed to this article: Cheryl Hughes, Geoff Manville, Katharine Marshall, Kaye Pestaina, Catherine Stamm.