The good news is, you survived a lot of the Affordable Care Act’s (ACA’s) major changes. The bad news is, it’s not over yet.
John Barlament is a lawyer and partner with Quarles & Brady LLP, Milwaukee who led the “All About the ACA” Alliance Learning Circle held Aug. 16 at Monona Terrace. John provided an overview of major challenges ahead for employers who self-fund their health benefits.
- The Cadillac tax is still in play. Implementation of this proposed 40 percent excise tax on the value of employer–sponsored health benefits that exceed specific limits has been delayed to 2020, but that doesn’t mean the threat is gone. “It still is a concern for employers because we don’t know what’s going to happen with it,” Barlament said. “Will it kick in in 2020? Will it be delayed further? For now, just know it’s still out there and we’ll cross our fingers that it will disappear at some point.”
- Tax reform could hit employers and employees. Barlament said powerful political figures, including Speaker of the House Paul Ryan, favor reforming the tax code’s treatment of health benefits in 2017. The current tax code allows employers to deduct their health benefit costs, with premiums paid on the employee’s behalf excluded from the employee’s taxable income. That all could change. Proposals include eliminating or capping the amount of the health benefits exclusion and then asking the employer to withhold the resulting tax from employee pay. “It’s very bad in general for the employer-sponsored system, so we’ll see if that sneaks in there,” Barlament said.
- Mental health parity rules are troublesome. Barlament called mental health parity “the worst rule out there.” Employers must demonstrate they do not violate the “nonquantitative” treatment limitation rules, which forbid limiting the scope or duration of mental health treatment differently than allowed for medical/surgical benefits. Mathematical tests can be used to show compliance, but calculations must be done to compare mental health benefits to each category of medical/surgical benefits, such as inpatient, in-network or out-of-network care. Barlament noted that plantiffs’ lawyers have successfully challenged some big employers’ mental health provisions based on this rule. An April 2016 Department of Labor FAQ document contains “words that only a lawyer could love” because it allows plantiffs’ lawyers to request proof that employers analyzed their mental health plan against each section of the medical/surgical plan. “The more complicated your plan design is, the more difficult it is to pass this test,” Barlament said. Meanwhile, the president and Congress support even stronger mental health plan provisions after the shooting that occurred in June 2016 in Orlando, Fla.
- Phase 2 audits of compliance with the Health Information Portability and Accountability Act (HIPAA) have begun. To be ready, verify that you have HIPAA policies in place and that employees are following them. The Office of Civil Rights pursued settlements with three employers with HIPAA violations, with the resulting penalties totaling $5.5 million even though Barlament said “None of them seemed all that egregious.”
- A Wisconsin case involving the Fair Labor Standards Act (FLSA) could have a big impact. In Gilbert v. City of Sheboygan, a firefighter sued the city based on how they calculated overtime pay. The case focused on whether health reimbursement arrangement (HRA) contributions must be considered part of base pay for the purpose of calculating overtime pay. The judge ruled for the firefighter. To avoid similar problems, employers may need to place HRA contributions in trusts or use irrevocable contributions to a third party.
- Don’t blame the ACA if you decide to reduce employees’ hours, even if you’re avoiding the requirement to offer health benefits to employees who work 30 or more hours per week. A company named Dave & Buster’s did and has since been sued under the anti-retaliation provision of Employee Retirement Income Security Act (ERISA). The case is pending.
- Nondiscrimination rules apply to transgender coverage. ACA Section 1557 applies to entities that receive federal financial assistance, which likely includes hospitals, educational organizations and insurers. Health plans subject to the rule cannot flatly exclude services that assist transgender individuals in changing their gender.
Barlament’s presentation also tackled Internal Revenue Service (IRS) notices, ACA penalties and Equal Employment Opportunity Commission (EEOC) rules for wellness plans. For more of Barlament’s ACA good news/bad news, access Barlament’s presentation and materials on The Alliance website.