Healthcare Reform Legal Considerations for Employers

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Healthcare ReformLegal Considerations for
Employers
Isabella Lee, Esq. May 14, 2013
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Healthcare Reform (a.k.a.)

• Patient Protection and Affordable Care Act
  (PPACA)
• Affordable Care Act (ACA)
• Obamacare

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WhistleblowerProtections
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PPACA Whistleblower Protections

• ACA Protected Activity
• Reporting PPACA Title I violations
• Assisting or participating in an investigation of
  such a violation
• Receiving tax credit / cost-sharing reduction as
  a result of participating in an Exchange or
  Marketplace (i.e. pay-or-play penalty)
• 180 days to file complaint
• Enforcement by OSHA

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PPACA Whistleblower Protections

• Adverse or retaliatory action may include
• Reducing pay or hours
• Firing or laying off
• Denying overtime or promotions
• Disciplining
• Denying benefits
• Failing to hire or rehire and
• Intimidating.

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Whistleblower Complaint Procedure

• Generally
• 60 day initial response to complaint
• Secy issues written findings
• 30 days to object and request ALJ hearing
• If none, order is final with no judicial review
• 120 days after hearing to issue final order
• 60 days to appeal to U.S. Court of Appeals

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Whistleblower Example

• Full- time employee status and the number of
  employees are key factors in determining the
  penalties
• Employers incentivized to limit number of
  full-time employees to reduce or avoid play or
  pay penalties
• Job eliminations / reduced hour employees may
  turn to the whistleblower provisions

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PPACA Damages

• Reinstatement
• Restore benefits
• Back pay other compensatory damages
• All costs and expenses (including attorneys
  fees)
• If complaint frivolous, employer might be awarded
  attorneys fees up to 1,000

Interim Final Rule Comments were due by April
29, 2013
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HIPAAWellness Programs
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HIPAA General Rule
HIPAA Nondiscrimination Rules prohibit ERISA
group health plans from discriminating based on a
health factor. Health factors include

• health status
• medical condition, including both physical and
  mental illnesses
• claims experience
• receipt of health care
• medical history
• genetic information
• evidence of insurability
• disability

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HIPAA Nondiscrimination Examples
Examples of impermissible discrimination based on
a health factor include

• requiring individuals to take a physical exam
  before enrollment
• charging different premiums or contributions
• charging different deductibles
• charging different co-pays

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HIPAA Outcome-based Exception
Five Requirements for Outcome-Based Incentives

• Promotes Health Disease Prevention
• Limited Reward / Incentive (20 participant
  cost)
• Offered to all Similarly Situated Individuals on
  a voluntary basis
• Reasonable Alternative
• Annual Qualification

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Wellness Program Incentives

• HIPAA Programs (i.e. incentives based on health
  factor)
• PPACA 30 in 2014
• Proposed Regulations 50 with tobacco-use
  prevention component
• Total Cost of Coverage (i.e. COBRA cost)

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PPACA Unanswered Questions

• Affordable Coverage requirement
• Minimum Value (60 of anticipated cost)
  requirement

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Know YourPPACA Obligations
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PPACA Already in Effect

• Age 26 dependent coverage plan limits
  pre-existing conditions
• W-2 Reporting
• Summary of Benefits Coverage (SBC)
• FSA Limit at 2,500
• Amend cafeteria plans

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PPACA 2014 Provisions

• Employer Mandate Pay-or-Play
• Large employers with 50 FTEs
• Affordable / Minimum value coverage offered to
  all full-time employees working 30 hours a week
  95 ok
• Employer Penalties
• no-offer penalty 2,000 per full-time
  employee first 30 employees not counted
• unaffordable penalty is the lesser of
• 3,000 x ( of full-time employees receiving
  premium assistance minus excludable employees)
• 2,000 x ( of full-time employee minus 30)

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PPACA Exchange Insurance

• Individuals and small employers can purchase
  health insurance in a marketplace
• Individual purchase through Exchange cannot be
  made through cafeteria plan
• not a qualified benefit under cafeteria plan
  rules
• States may allow large employers to purchase
  insurance through an Exchange in 2017

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PPACA Exchange Notification

• Technical Release No. 2013-02 (5/8/13)
• Employer must notify all employees of the
  availability of Exchanges by 10/1/13
• Model notice language issued

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PPACA Exchange Notification

• All employees, regardless of plan enrollment
  status, or of part-time or full-time status.
• Notice provided to current employees no later
  than October 1, 2013
• Notice provided to new employees at the time of
  hiring beginning October 1, 2013 (14 day window)
• COBRA Model Notices New version to account for
  Exchange option

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Waiting Period 90-day Limit

• Waiting period is the period that must pass
  before coverage for a participant or dependent
  who is otherwise eligible to enroll under the
  terms of the plan can become effective
• Eligibility conditions that are based solely on
  the lapse of a time period are permissible for no
  more than 90 days.
• All calendar days must be counted, including
  holidays and weekends, and the maximum waiting
  period is 90 days.

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DOL Audit
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DOL Audit Increased Enforcement

• In 2012
• 239,250 individual employee complaints
• 3,566 civil investigations
• 2,570 (72.1) resulting in monetary results for
  plans or other corrective action
• 218 referred for litigation 100 civil cases
  filed
• Referrals, news reports, Form 5500s, random
• DOL to substantially increase the number of ERISA
  plan audits

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DOL Audit Overview

• Notice of Audit
• Documents Request
• Onsite Interviews
• Follow-up Requests
• 10-day Letter
• Reply / Negotiation

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DOL Audit Preparation

• Call your lawyer
• Notify Applicable Insurance policies
• DO
• ERISA fiduciary coverage

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DOL Audit Preparation

• Know your plan document
• Actual plan operations follow plan document
• Plan document in compliance with laws and
  regulations proper disclosures
• Form 5500s are timely filed
• Timing of participant contributions

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DOL Audit Preparation

• Logistics of Investigators Onsite Visit
• Witnesses
• Interview Questions

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DOL Audit Advanced Planning

• Internal audit
• Legal review of plan documents
• Training
• Self-Correction Programs
• Voluntary Fiduciary Correction Program (VFCP)
• Delinquent Filer Voluntary Compliance Program
  (DFVCP)

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You had the power all along, my dear
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Q A
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Contact Information
Isabella Lee Atlanta [phone] ilee_at_fordharr
ison.com
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Agenda

• Whistleblower Provisions
• HIPAA Wellness Programs
• Know Your PPACA Obligations
• DOL Audit
• Q A
• Appendix

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Appendix Slides
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Pay or Play Penalty

• The ACAs play or pay rules generally apply to
  employers with at least 50 full-time (or
  full-time equivalent) employees beginning in
  2014.
• If an employer doesnt offer minimum essential
  coverage to substantially all full-time employees
  (and their dependents), then it is subject to a
  penalty tax of 2,000 per year for each full-time
  employee (minus the first 30) if at least one
  full-time employee obtains federal tax credits or
  subsidies to purchase health coverage through a
  federal or state exchange.
• Penalties also may be imposed if the coverage
  doesnt provide minimum value or is
  unaffordable. The penalty is 3,000 per full-time
  employee for whom coverage is not affordable and
  who receives a credit or subsidy in connection
  with exchange coverage.

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FSA Annual Limit 2,500

• Previously no limit on FSA contributions
• Effective Jan. 1, 2013

• Action Steps
• Amend cafeteria plan documents and summary plan
  descriptions
• Passive enrollment considerations

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W-2 Reporting Requirements

• Reports the value of health care
• Non-taxable
• Effective beginning with W-2s issued in January
  2013
• Employee assistance program (EAP), wellness
  program, or on-site medical clinic?

• Small Employer Exception
• Fewer than 250 W-2s issued the prior year

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Summary of Benefits Coverage

• Simple and concise explanation of benefits
• Model SBC notice available
• Effective 1st day of the 1st OE / Plan Year
  after Sept. 23, 2012
• 60-day notice rule

• Action Steps
• New hires or special enrollees NOW
• Ensure consistency between SBC and plan
  documents amendments where necessary

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PPACA Individual Mandate Penalty

• Flat dollar amount or of taxable income,
  whichever is greater
• Flat dollar amount per individual is 95 in 2014
  325 in 2015 and 695 in 2016.
• of a households income that is in excess of
  the tax filing threshold
• 1 in 2014 2 in 2015 2.5 in 2016

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PPACA Individual Mandate Penalty

• EXAMPLE
• 2014
• 50,000 household income
• Flat fee penalty 95
• 1 of difference between 50,000 and tax
  threshold
• Assume tax threshold for 2014 is 10,000
• penalty 400
• Capped at a certain national average premium
  amount

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Disclaimer
These presentation materials are provided as a
general informational service to clients and
friends of Ford Harrison LLP. It should not be
construed as, and does not constitute, legal
advice on any specific matter, nor do these
materials create an attorney-client relationship.