Benefits Compliance Overview: PPACA, Wellness Programs, Cafeteria Plans, FSAs, HSAs

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1 Benefits Compliance Overview: PPACA, Wellness Programs, Cafeteria Plans, FSAs, HSAs Andrew Malahowski, J.D. Area Senior Vice President, Compliance Counsel May 2, 2018

2 Introduction Pages in the Code of Federal Regulations , , , , , ,000 80,000 60,000 40,000 20,

3 Health and Welfare Compliance in Two Steps (1) Get off the couch. (Start with the basics) (2) Don t eat an entire sleeve of Thin Mints in one sitting. (Avoid common errors) 3

4 Agenda Eight Minute Compliance Five 8-Minute Segments With 2-Minute Cooldowns (for Q&A): Patient Protection and Affordable Care Act (PPACA) Wellness Programs Cafeteria Plans Flexible Spending Arrangements (FSAs) Health Savings Accounts (HSAs) 4

5 Patient Protection and Affordable Care Act (PPACA) 5

6 Patient Protection and Affordable Care Act (PPACA) Employer shared responsibility Who does it apply to; controlled group rules Determining full-time employee status Determining affordability Reporting 1095-C / 1094-C for Applicable Large Employers 1095-B / 1094-B for small, self-insured employers IRS Employer Shared Responsibility Payment (ESRP) notices 6

7 Patient Protection and Affordable Care Act (PPACA) Out-of-pocket maximums $7,350 single / $14,700 family; embedded single OOP maximum HRAs Design requirements under PPACA PCORI fees Self-insured plan sponsor responsibility How much; due date Vendors selling plans that are exempt from PPACA Excepted benefits are exempt from many PPACA provisions, but they have specific requirements to actually be excepted benefits 7

8 Wellness Programs 8

9 Wellness Programs Health-contingent programs (either activity-only or outcome-based) Subject to specific requirements under HIPAA / PPACA (RAS; full reward; dollar limitations) Yes, this includes a tobacco premium surcharge Programs that include a medical examination or disability-related inquiry Subject to additional requirements under the ADA Programs that ask a spouse to provide information about the manifestation of a disease or disorder (i.e., medical history) Subject to additional requirements under GINA 9

10 Wellness Programs Effect on affordability under employer shared responsibility rules Only rewards that are exclusively related to tobacco use through a wellness program are treated as earned HIPAA / PPACA, ADA, and GINA rules are not necessarily a roadmap for an effective wellness program 10

11 Cafeteria Plans 11

12 Cafeteria Plans Do you permit pre-tax contributions for qualified benefits? If so, you have a cafeteria plan and that arrangement is governed by Section 125 of the Code Written plan document; irrevocability Health FSAs, DCAPs, opt-out incentives must all be included if you use them Individuals who are permitted to participate in a cafeteria plan Only common law employees 12

13 Cafeteria Plans Prohibited arrangements Double-dipping arrangements Individual policies of insurance Can you / should you permit pre-tax contributions for particular benefits? Disability; fixed indemnity Nondiscrimination rules and red flags 13

14 Flexible Spending Arrangements (FSAs) 14

15 Flexible Spending Arrangements (FSAs) Employee, employer, or both may contribute Employee contributions limited to $2,650 for 2018 Uniform Coverage Rule = Employee s full annual health care FSA election must be available at all times during the plan year Use or Lose = Unused funds are lost at the end of the plan year (inclusive of grace period or carryover period) 15

16 Flexible Spending Arrangements (FSAs) Health FSAs must meet two criteria to be an excepted benefit (and PPACA compliant) Employee must be eligible (not necessarily enrolled) for another medical plan sponsored by the employer; and Maximum annual benefit payable for an employee under the health FSA must not exceed twice the employee s salary reduction election under the health FSA for the year (or, if greater, the amount of the employee s salary reduction under the health FSA for the year plus $500) Subject to COBRA (unless participant s account is overspent) 16

17 Health Savings Accounts (HSAs) 17

18 Health Savings Accounts (HSAs) Required high-deductible health plan (HDHP) coverage $1,350 / $2,700 minimum deductibles Note on embedded single deductible within family umbrella $6,650 / $13,300 out of pocket maximums Eligibility determined on first day of each calendar month Mid-year election changes are freely permissible not limited to mid-year status change events 18

19 Health Savings Accounts (HSAs) No disqualifying coverage Any first dollar coverage spoils contribution eligibility Medicare enrollment (but not merely turning age 65) Onsite clinics Telemedicine General purpose health FSA Maximum contributions $3,450 single / $6,850 family (reduced by IRS mid-year) Comparability rules versus nondiscrimination rules 19

20 Thank You!

21 The intent of this presentation is to provide you with general information regarding the status of, and/or potential concerns related to, your current employee benefits issue. It does not necessarily fully address all your specific issues. It should not be construed as, nor is it intended to provide, legal or tax advice. Questions regarding specific issues should be addressed by your organization s general counsel, tax advisor, or an attorney who specializes in this practice area. 21