8/10/2018. Employment Law Seminar 2018 Hawaii s most well attended and comprehensive employment law and personnel seminar.

Transcription

1 Employment Law Seminar 2018 Hawaii s most well attended and comprehensive employment law and personnel seminar Tuesday, August 14, 2018 Hawaii Convention Center Health Law Developments, HIPAA, ACA & More Afternoon Breakout Session: 2:00 2:50 p.m. Hawaii Convention Center, Room 304 Download session handouts at: Rachael T. Brant Senior Associate Business Organizations and Activities, Health Care Jennifer L.Z. Ontai Associate Business Organizations and Activities, Health Care Disclaimer The statutes, rules, and legal concepts we will be discussing today are complex and continue to undergo significant revisions. This presentation provides basic information to help you become familiar with certain health care laws applicable to employers. This presentation is provided for informational and educational purposes only and does not provide specific legal advice for specific situations. You should consult an attorney for specific questions. 1

2 Topics Covered Affordable Care Act Prepaid Health Care Act Health Insurance Portability and Accountability Act (HIPAA) Future of Health Law Issues Affordable Care Act Overview Enacted in March 2010 The ACA remains intact for 2018 especially as it relates to employers Employer Mandate The employer shared responsibility provision of the ACA penalizes employers with 50 or more FTE employees who do not offer affordable coverage that provides minimum value. Upcoming changes to the Individual Mandate Tax Cuts and Jobs Act Repeal of the Individual Mandate Tax Cuts and Jobs Act was signed into law on December 22, 2017 Effectively repealed the ACA s requirement that most Americans obtain ACA compliant health coverage, effective in 2019 Reduced the tax penalty for going without coverage to zero The repeal of the individual mandate does not directly alter an employer s offer of coverage or reporting obligations under the employer mandate 2

3 What does the individual mandate s repeal mean for employer? Fewer health plan enrollees Spike in premiums Repeal or softening of the employer mandate Tax Cuts and Jobs Act Other ACA Changes Affecting Employers Cadillac Tax delayed for two more years (until 2022) 40% tax on the value of health plans that are above $10,200 per individual and $27,500 for family coverage Included to help fund benefits to the uninsured under the ACA Health Insurance Tax (HIT) suspended for 2019 Annual fee charged to insurance companies on earned premiums Suspended for 2017 and 2019, but effective 2018 Barring further legislative action, the fee will apply again in 2020 Employer Mandate Pay or Play Employers who do not play are subject to penalty taxes under IRC 4980H In order to play, an ALE must offer coverage that is: Affordable Minimum Value Minimum Essential Coverage All Full Time Employees and Their Dependents 3

4 ACA Reporting Requirements Applicable Large Employers (ALEs) must still report to the IRS: Whether health coverage was offered to their employees Information about the coverage offered Self Insured ALEs have additional reporting requirements ALE status must be determined each calendar year You are most likely an ALE if you had at least 50 FTEs, including fulltime equivalent employees, on average last year ACA Reporting Requirements Reporting Forms File with the IRS: Form 1094 C (Transmittal) Form 1095 C (Employee Statement) Furnish to each full time employee a Form 1095 C Purpose: For ALEs to report information about offers of health coverage and enrollment of health coverage for their employees. ACA Reporting Requirements Alternative Methods Reporting based on a certified Qualifying Offer Employer must certify that it made an offer of Qualifying Coverage to an employee. Reporting without separate identification of full time employees if certain conditions related to offers of coverage are satisfied (98% Offers) Offered affordable coverage providing minimum value to at least 98% of its employees for whom it is filing a Form 1095 C. 4

5 2019 ACA Affordability Adjustment On May 21, 2018, the IRS increased the affordability threshold for ACA employer pay or play purposes to 9.86%. To meet the affordability requirement, the lowest cost self only coverage option available to employees must not exceed 9.86% of an employee s household income. Consider this in developing your 2019 health care plan cost sharing strategies. Pricing at least one plan option below the threshold will avoid triggering employer shared responsibility penalties. Affordability Safe Harbors The ACA created three safe harbors, any of which can be used in place of household income: Federal Poverty Level (FPL) For 2019 calendar year plans using the FPL safe harbor to determine affordability, an employee s premium payment can t exceed $ per month (up from $ per month in 2018) Employee s Rate of Pay hourly wage multiplied by 130 hours per month Employee s W 2 Wages generally the least desirable affordability safe harbor because of several disadvantages: No predictability Box 1 of Form W 2 does not account for all forms of compensation No ability to adjust premiums based on fluctuating compensation amounts IRC 4980H(a) The A Penalty Applies where an ALE fails to offer minimum essential coverage to at least 95% of its full time employees in any given calendar month and at least one FTE who was not offered minimum essential coverage enrolls in subsidized coverage on the Exchange A Penalty is $193.33/month ($2,320 annualized) multiplied by ALL full time employees (reduced by the first 30). A Penalty liability is focused solely on whether the employer offered a major medical plan to a sufficient percentage of FTEs, not whether that offer was affordable or provided minimum value. 5

6 IRC 4980H(b) The B Penalty Penalty applies where coverage is offered, but such coverage does not provide minimum value or is not affordable and at least one FTE who was not offered minimum essential coverage enrolls in subsidized coverage on the Exchange B Penalty is $290/month ($3,480 annualized) multiplied only by those employees not offered adequate coverage who actually enrolled in the Exchange. ACA Compliance Going Forward The ACA is very much intact. Keep thorough records and make sure your reporting is done accurately and timely. The IRS has been mailing Employer Shared Responsibility Payment (ESRP) notices to employers that it believes have failed to comply with ACA coverage requirement in prior reporting years. If you receive such a notice, it may be the result of the IRS receiving inaccurate or incomplete information. Don t panic, but be sure to timely dispute any IRS penalty if you feel it was in error. Prepaid Health Care Act Overview of the law Focus: Issue of Independent Contractors vs. Employees 6

7 Prepaid Health Care Act Overview The Hawaii Prepaid Health Care Act ( PHCA ) Hawaii Revised Statutes ( HRS ), Chapter 393 First enacted in 1974 Requires Hawaii employers to provide health care coverage for eligible employees to ensure protection against high costs of medical care for non work illness or injury Employer must pay at least half of the premium cost, but the employee s contribution cannot exceed 1.5% of salary, if it does, employer must cover remaining portion Prepaid Health Care Act Overview Employee eligibility: Employees who work at least 20 hours per week and earn at least times the state minimum wage a month (effective 1/1/2018, $10.10/hour x = $875.36) Coverage starts after four (4) consecutive weeks of employment or the earliest time thereafter coverage can be provided by the health care plan (usually the first of the month) Employees can waive by signing exemption form (renew every year) Prepaid Health Care Act Overview Required minimum coverage 3 options: 1. Purchase a plan sold in Hawaii approved by Prepaid Health Care Advisory Council and the Department of Labor and Industrial Relations (DLIR) 2. Have a non Hawaii plan approved by the Prepaid Health Care Advisory Council and DLIR 3. Obtaining approval of self insured plan by the Prepaid Health Advisory Council and DLIR 2 Plan Types: 7(a) benefits equal to or better than state plan with most subscribers 7(b) Sound basic hospital, surgical, medical and other benefits (employer must pay employee s coverage except may require limited contributions) 7

8 Employees vs. Independent Contractors Basics: How you categorize workers can have significant consequences For Prepaid Health Care Act, test is the ABC test: A. Individual free from control or direction over performance B. Service provided outside usual course of business or performed outside all the places of business of the enterprise C. Individual is customarily engaged in an independently established trade, occupation, profession etc. of the same nature as the service provided Must meet all three of the above. Strictly construed AGAINST finding independent contractor status Employees vs. Independent Contractors Liabilities for inaccurate classification: Actual medical costs for worker who was entitled to healthcare coverage Monetary fines per violation penalties DLIR can enjoin enterprise from carrying on business while noncompliance continues Practical tips: Review all independent contractor relationships to analyze if test met Review and strengthen written agreements with test in mind Avoid practices that contradict your classification (e.g., referring to your independent contractors as staff on your website; exercising too much control over the worker) HIPAA Does it apply to employers? New developments The future of HIPAA 8

9 HIPAA Does it apply to employers? Employers and employees may throw around the HIPAA laws HIPAA only applies to covered entities Most employers are not covered entities Common scenarios where employers are covered entities: Self Insured Health Plan Even if you are not a covered entity, how might HIPAA affect you anyway? A covered entity is one of the following: HIPAA Self Insured Health Plans Self Insured Health Plans are Group Health Plans and therefore covered entities subject to HIPAA Narrow exception: Self insured, self administered, < 50 employees A self insured group health plan is one in which an employer assumes the financial risk for providing healthcare benefits to its employees as opposed to purchasing a fully insured plan from an insurance carrier Must implement a complete HIPAA compliance program Note: Nuances depending on structure of your plan check with a HIPAA expert to understand your situation 9

10 HIPAA How might HIPAA affect you anyway? Employment records: HIPAA does not protect employment records even if health related information is in the record Employers may ask employee for doctor s notes or other health information if needed for sick leave, workers compensation, wellness program, or health insurance (but cannot ask provider) But make sure to consider other laws such as ADA, GINA Workers Comp: Exception under HIPAA so providers can send information to employer without authorization to the extent required to comply with workers comp law Anything else you ve seen? Hawaii s Health Privacy Laws In 2012, a new law was enacted that harmonized Hawaii s state medical privacy laws with HIPAA. Essentially eliminated the need for entities covered by HIPAA to also comply with Hawaii s (formerly) complex array of medical privacy laws. HIPAA New Developments Malware attacks 78% of providers report healthcare ransomware, malware attacks 62% increase in 2017 Not exclusive to providers, affects all enterprises somehow So pervasive, HHS OCR has issued malware specific guidance *Decline* in enforcement? Some are analyzing a recent slowdown in HIPAA enforcement actions in 2018 Split views as to what this means 10

11 HIPAA The Future. U.S. Department of Health and Human Services indicating that HIPAA may see big changes Will seek comments on potential changes to HIPAA HHS Secretary Alex Azar said recently the agency is looking to reform the healthcare system and is reviewing regulations that impede the ability of doctors, hospitals and payers to coordinate in delivering better care at lower costs. Changes would require full rulemaking process (maybe legislation) Although, just recently put out bids for $5 Million for establishment of a Center of Excellence to educate about HIPAA and Part 2 Rule (Substance Abuse Treatment records). On Site Health Clinics Does anyone have on site health care resources beyond basic first aid? What are the benefits? Improved productivity Less absenteeism Lower medical claim costs Boost morale, recruitment, retention What are the legal considerations? (A LOT) ERISA COBRA HIPAA HSAs Tax considerations Privacy Protection Recommendations for Employers Be cognizant of your employee s legitimate privacy concerns. Good practice to safeguard employee medical information, social security numbers, and other personal information. Develop appropriate policies and procedures Consider obtaining a release and consent from the employee Train management Employees may still firmly, but wrongly believe they are entitled to HIPAA protection over workplace medical records. 11

12 Questions? 12