BAN Blog

CAA, 2023 Eliminates MHPAEA Exemption for Self-Funded Non-Federal Governmental Health Plans

On December 29, 2022, the President signed the Consolidated Appropriations Act, 2023  (“CAA, 2023”), into law.  The CAA 2023, which is largely a bipartisan spending bill, sunsets provisions of the Public Health Service Act which permitted large, self-funded, non-federal governmental plans (i.e., self-funded state and local governmental plans) to opt out of the Mental Health Parity and Addiction Equity Act (“MHPAEA”). Essentially, this means any self-funded state and local governmental plans that have not previously elected to opt out of the MHPAEA will no longer be able to submit an election to opt out.  Further, any self-funded state and local governmental plans that previously elected to opt out of the MHPAEA will be unable to renew their election once it expires.

There is an exception for certain collectively bargained, non-federal governmental plans with existing opt outs that are subject to multiple collective bargaining agreements (“CBA”) with varying lengths. These plans may extend their opt out elections until the date on which the term of the last CBA expires.

Background

The MHPAEA prohibits a group health plan from applying financial requirements (e.g., deductibles, co-payments, coinsurance, and out-of-pocket maximums), quantitative treatment limitations (e.g., number of treatments, visits, or days of coverage), or non-quantitative treatment limitations (such as restrictions based on facility type) to its mental health and substance use disorder benefits that are more restrictive than those applied to the plan’s medical and surgical benefits. 

With limited exceptions, the MHPAEA applies to both self-funded, fully insured, grandfathered and non-grandfathered group health plans offering medical/surgical benefits and mental health and substance use disorder benefits. Certain plans may be exempt from the MHPAEA requirements, including: (1) self-insured plans sponsored by employers with 50 or fewer employees, (2) group health plans and group or individual health insurance coverage consisting only of excepted benefits, (3) retiree-only group health plans, and (4) group health plans and health insurance issuers who are exempt due to an increased cost.  Note, small employer plans that are fully insured are indirectly required to comply with the MHPAEA by meeting the essential health benefit requirements of the Affordable Care Act.

Large, self-funded non-federal governmental employers were previously also able to opt out of MHPAEA compliance by filing a HIPAA Exemption Election with CMS prior to the beginning of each plan year, issuing a notice of opt-out to their enrollees at the time they first enrolled and annually thereafter, and filing an opt-out notice or certification of that the opt out notice has been provided to participants with CMS.

CAA, 2023 Sunset

The CAA, 2023, sunsets the HIPAA Exemption Election opt out from MHPAEA requirements for large, self-funded non-governmental employers by eliminating the ability for plans that have not previously sought an exemption from applying for a new exemption after December 29, 2022, and by eliminating the ability of large, self-funded non-federal governmental employers who have a current exemption from renewing that exemption once such exemption election expires (i.e., for exemption elections that expire 180 days from the date the CAA, 2023 is enacted). 

A limited exception applies for non-federal governmental plans subject to multiple CBAs with varying lengths. These plans may seek to have their exemption elections renewed until the date on which the term of the last CBA expires. Essentially, this means non-federal governmental employers will be able to honor their CBA commitments for the remainder their current CBA terms.

Conclusion

Any large, self-funded state or local governmental plan sponsors who have a current exemption election from the MHPAEA requirements should coordinate with their broker and third-party administrators to understand how these changes may be implemented and any potential resulting impact to their plan terms and costs.

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About the Authors.  This alert was prepared by Barrow Weatherhead Lent LLP, a national law firm with recognized experts on the Affordable Care Act.  Contact Stacy Barrow or Nicole Quinn-Gato at sbarrow@marbarlaw.com or nquinngato@marbarlaw.com.

This email is a service to our clients and friends.  It is designed only to give general information on the developments actually covered.  It is not intended to be a comprehensive summary of recent developments in the law, treat exhaustively the subjects covered, provide legal advice, or render a legal opinion.

Benefit Advisors Network and its members are not attorneys and are not responsible for any legal advice.  To fully understand how this or any legal or compliance information affects your unique situation, you should check with a qualified attorney.

© Copyright 2023 Benefit Advisors Network. All rights reserved.

On December 23, 2022, federal agencies released ACA and CAA Implementation FAQ Part 56 which extends the December 27, 2022 deadline for Prescription Drug Data Collection Reporting (“RxDC Reporting”) through January 31, 2023, and provides relief for plans that use a good faith, reasonable interpretation of the regulations and RxDC Reporting Instructions when submitting their data for the 2020 and 2021 reference years.  Further, as discussed below, the FAQ offers guidance and provides additional flexibility to assist group health plans and health insurance issuers in accomplishing the reporting.

Background

The Consolidated Appropriations Act, 2021 (“CAA, 2021”) included a provision that requires group health plans and health insurance issuers (collectively “plans and issuers”) to report certain specified data related to prescription drug and other health care spending, including, but not limited to: (1) general information regarding the plan or coverage; (2) the 50 most frequently dispensed brand prescription drugs; (3) the 50 most costly prescription drugs by total annual spending; (4) the 50 prescription drugs with the greatest increase in plan expenditures over the preceding plan year; (5) total spending by the plan or coverage broken down by the type of costs; (6) the average monthly premiums paid by participants, beneficiaries, and enrollees and paid by employers; and (7) the impact of premiums on rebates, fees, and other remuneration paid by drug manufacturers to the plan or coverage or its administrators or service providers, including the amount paid with respect to each therapeutic class of drugs and for each of the 25 drugs that yielded the highest amount of rebates and other remuneration under the plan or coverage from drug manufacturers during the plan year.

Pursuant to the CAA, 2021, initial reporting for the 2020 reference year was to be reported on December 27, 2021, and then each June 1^st thereafter for future reference years, making the 2021 reference year reporting due June 1, 2022.  However, when the agencies released final rules on November 23, 2021, which extended the statutory deadlines for plans and issuers to submit their 2020 and 2021 reference year reporting to December 27, 2022.  Thereafter future reference year reporting will be due each June 1^st. 

FAQ #56

Recognizing the operational challenges for coordinating data among multiple reporting entities and submitting data that is accurately classified, compiled, and validated, the agencies provided the following guidance, flexibility, and/or relief related to RxDC Reporting for the 2020 and 2021 reference years:

• Plans and issuers have a grace period for submitting the required RxDC Reporting from December 27, 2022 through January 31, 2023, and plans and issuers will not be considered to be out of compliance if they make a good faith submission of the 2020 and 2021 reference year data on or before January 31, 2023.
• The departments will not take enforcement action against plans or issuers who use a good faith, reasonable interpretation of the regulations and the RxDC Reporting Instructions when submitting their reporting.
• Reporting entities who submit RxDC Reporting data on behalf of more than one plan or issuer for a reference year may create more than one submission in HIOS for that reference year (in lieu of one submission combining the data of all clients within a single set of plan lists and data files).
• For plans or issuers who have data required from more than one reporting entity for the same plan, the data from the multiple reporting entities is not required to be compiled into a single data file for each type of data. Instead, each reporting entity may submit the same data file type on behalf of the same plan or issuer.
• Data aggregation requirements for multiple reporting entities that submit required data on behalf of one or more plans or issuers in a state and market segment are relaxed in that a reporting entity can submit such required data aggregated at a level less granular than the level of aggregation that is used by the reporting entity that submits the total annual spending on health care services data.
• Plans and issuers who are only submitting the plan list, premium and life-years data, and narrative response (i.e., no other data than that listed here), are not required to submit this information in the HIOS RxDC Module. Instead, they can email the information to:  RxDCsubmissions@cms.hhs.gov.  The email must include the plan list file, premium and life years data (data file D1), and a narrative response, and the naming convention for these files must include the reference year, the plan list or data file type (e.g., P2, D1), and the name of the plan sponsor.  Plans and issuers may also include any optional supplemental documents. 
• Reporting National Drug Codes for vaccines, which were only recently included in the CMS drug name and therapeutic class crosswalk (“crosswalk”) when the crosswalk was updated on October 3, 2022, is optional for plans and issuers.
• Reporting entities are not required to report a value for “Amounts not applied to the deductible or out-of-pocket maximum” and the “Rx Amounts not applied to the deductible or out-of-pocket maximum”. The columns associated with this data should not be removed from the files; instead, the data fields in the columns can be left blank.

Conclusion As set forth above, plans and issuers have until January 31, 2023 to submit the required RxDC Reporting and must use a good faith, reasonable interpretation of the regulation and RxDC Reporting Instructions when preparing their submissions. They should ensure any of their reporting entities are aware of the FAQs and are prepared to timely comply with all applicable regulations and guidance when completing their submissions. Plans and issuers who take advantage of alternative reporting (via email in lieu of the HIOS RxDC Module) must ensure they are only submitting data that is subject to the relief (P2, D1, and a narrative response) or optional supplemental documents, and that their data files comply with the required naming conventions. At this point, this relief is for the 2020 and 2021 reference years only. RxDC Reporting for the 2022 reference year is due on June 1, 2023, and all or part of this relief may not be available at that time.

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About the Authors.  This alert was prepared for [insert agency name] by Barrow Weatherhead Lent LLP, a national law firm with recognized experts on the Affordable Care Act.  Contact Stacy Barrow or Nicole Quinn-Gato at sbarrow@marbarlaw.com or nquinngato@marbarlaw.com.

_{This email is a service to our clients and friends.  It is designed only to give general information on the developments actually covered.  It is not intended to be a comprehensive summary of recent developments in the law, treat exhaustively the subjects covered, provide legal advice, or render a legal opinion. Benefit Advisors Network and its members are not attorneys and are not responsible for any legal advice.  To fully understand how this or any legal or compliance information affects your unique situation, you should check with a qualified attorney.}

© Copyright 2022 Benefit Advisors Network. All rights reserved.

IRS Releases Final Rules Extending Deadline to Furnish ACA Reporting Forms

On December 12, 2022, the IRS released a Final Rule providing for, among other things,  an automatic 30-day extension of time for applicable large employers (“ALEs”) to furnish annual Forms 1095-C to individuals for calendar years beginning after December 31, 2022. The Final Rule is substantially consistent with the proposed rule issued by the IRS in November 2021 which employers were permitted to rely upon for their calendar year 2021 Forms 1095-C (which were due in 2022).

Prior to the IRS releasing its proposed rule last year, the IRS could grant an extension of time of up to 30 days to furnish Forms 1095-B and 1095-C to individuals for good cause shown; however, recognizing the January 31 deadline was difficult to meet, the proposed rule eliminated the good cause shown standard and simply allowed for an automatic 30-day extension to furnish the forms to employees.  The Final Rule does the same and, consistent with the proposed rule, provide that in years where the deadline falls on a weekend or holiday, the forms are due the next business day. 

The deadline to file the Forms 1094-B or C and 1095-B or C with the IRS are not extended and will remain February 28 for paper filings and March 31 if filed electronically, though pursuant to current regulations, companies may receive an automatic 30-day extension of time to file the forms with the IRS by submitting Form 8809, Application for Extension of Time to File Information Returns, on or before the due date for filing the forms.

Additionally, because the penalty for the individual mandate is currently $0, for any calendar year in which it remains $0, the Final Rule provides relief (consistent with relief provided for tax years 2019, 2020, and 2021) from furnishing Forms 1095-B to individuals, if the responsible reporting entity:

1. Posts a clear and conspicuous notice in a location on its website that is reasonably accessible to individuals stating that individuals may receive a copy of their 1095-B upon request, accompanied by an email address, phone number and a physical address where the request can be sent;
2. Furnish an individual with a Form 1095-B within 30 days of a request; and
3. Retain the notice in the same location of its website until October 15 – or the first business day following October 15 if October 15 falls on a weekend or holiday – of the next calendar year. This would be October 15, 2024 for the tax year 2022 Form 1095-B.

The website notice must be written in plain, non-technical terms and with letters of a font size large enough, including any visual clues or graphical figures, to call a viewer’s attention that the information pertains to tax statements reporting that individuals had health coverage.  Per the IRS a statement or link on the company’s main page reading “Tax Information”, which takes users to a secondary page that includes a statement in capital letters such as “IMPORTANT HEALTH COVERAGE TAX DOCUMENTS”, would meet this requirement.  This relief from providing the B-series forms typically applies to insurance companies (who are required to file and furnish Forms 1095-B to participants in their fully insured plans), non-ALEs with self-insured plans, and ALEs who provide coverage under a self-insured plan to individuals who were not full-time employees during any part of the year (e.g., part-time employees, or retirees or COBRA participants in the year following retirement or termination of employment). The notice on the website must explain how responsible individuals (for purposes of the 1095-B provided by non-ALEs who sponsor self-insured plans or insurance carriers) or non-full-time employees or non-employees enrolled in an ALEs plan (for purposes of the 1095-C) may request a copy of their form.

ALEs are still required to furnish Form 1095-C to their full-time employees. They must also complete Part III if the employee is enrolled in self-insured coverage. Further, the relief from furnishing Form 1095-B does not extend to IRS reporting.  Forms 1095-B must still be submitted to the IRS, as applicable. 

The Final Rule, which is effective on December 15, 2022, applies for calendar years beginning on or after December 31, 2021 (though pursuant to the proposed rule and Final Rule, employers were permitted to apply the relief for calendar year 2021 forms).  Accordingly, the relief applies for upcoming calendar year 2022 forms which means employers have an automatic extension to March 2, 2023 to furnish the forms.

Conclusion Based on the Final Rule, ALEs have until March 2, 2023 to furnish Forms 1095-C to individuals, but still must meet the February 28 (paper filing) or March 31, 2023 (electronic filing) deadlines to file Forms 1095-C with the IRS.  Moreover, as long as the individual mandate penalty remains $0, insurance carriers, non-ALEs with self-funded plans, and ALEs with self-funded plans who provide coverage to part-time employees or non-employees, are not required to furnish Forms 1095-B to individuals if they meet the requirements for posting information regarding how individuals may receive copies of their Form 1095-B.

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About the Authors.  This alert was prepared for [insert agency name] by Barrow Weatherhead Lent LLP, a national law firm with recognized experts on the Affordable Care Act.  Contact Stacy Barrow or Nicole Quinn-Gato at sbarrow@marbarlaw.com or nquinngato@marbarlaw.com.

This email is a service to our clients and friends.  It is designed only to give general information on the developments actually covered.  It is not intended to be a comprehensive summary of recent developments in the law, treat exhaustively the subjects covered, provide legal advice, or render a legal opinion. Benefit Advisors Network and its members are not attorneys and are not responsible for any legal advice.  To fully understand how this or any legal or compliance information affects your unique situation, you should check with a qualified attorney.  

© Copyright 2022 Benefit Advisors Network. All rights reserved.

On December 20, 2022, the House and Senate released H.R. 2617, the Consolidated Appropriations Act, 2023  (“CAA, 2023”), which is expected to pass in both chambers this week before being presented to the President for signature, which is expected by the Friday deadline to avoid a partial government shutdown. 

The CAA, 2023 is largely a bipartisan spending bill but also includes, among other things, another, new telemedicine safe harbor similar to that which was created under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) for plan years beginning on or before December 31, 2021 and the CAA, 2022 for months beginning after March 31, 2022 and before January 1, 2023.  The safe harbor allows high deductible health plans (HDHPs) to cover medical and behavioral health treatment before participants meet their deductibles (i.e., without cost sharing). 

Once it is enacted, the safe harbor under the CAA, 2023 will apply for months beginning after March 31, 2022 and before January 1, 2023 and for plan years beginning on or before December 31, 2021, or after December 31, 2022, and before January 1, 2025.  Essentially, this combines the relief under the CARES Act and the CAA, 2022 and means that both calendar and non-calendar year plans will be able to take advantage of the relief from April through December 2022, then from the start of their 2023 plan year through the end of their 2024 plan year.  As drafted, there appears to be a gap under which non-calendar year plans cannot take advantage of the safe harbor for the months of their 2022 plan year that fall into 2023.

Background on Telehealth Safe Harbor under the CARES Act and CAA, 2022

On March 27, 2020, the CARES Act became law. While the CARES Act was largely an economic package intended to stabilize individuals and employers during COVID-19-related shutdowns, it also included several measures directly related to employee benefits. One specific provision was the safe harbor under which HDHPs could cover telehealth and other remote care without cost-sharing. As a result, no-cost telehealth could be provided to plan participants for any reason–not just COVID-19 related issues–without disrupting HSA eligibility.

The CARES Act safe harbor was a temporary measure, applying only to plan years beginning on or before December 31, 2021, which means, for calendar year plans, the safe harbor expired on December 31, 2021.  Without the safe harbor, telehealth programs that provide “significant benefits” in the nature of medical care or treatment generally disrupt HSA eligibility.  Whether benefits are “significant” is a facts and circumstances determination.  That said, in cases where a telehealth program provides robust benefits, such as medical advice and diagnosis for a broad range of non-emergency, common medical illnesses, general referrals to other provider types (including the emergency room), and certain prescription drugs for common medical illnesses, it may be difficult to support an argument that it does not provide “significant” benefits, in the absence of specific IRS guidance. 

Telehealth Safe Harbor Under the CAA, 2022

The safe harbor under the CARES Act was well-received, and as the December 31, 2021, deadline approached, there was a strong effort among stakeholders to encourage lawmakers to either extend the safe harbor or make it a permanent measure.

Accordingly, on March 10, 2022, Congress passed the CAA, 2022, which was subsequently signed into law on March 15, 2022.  The safe harbor under the CAA, 2022 was identical to the CARES Act safe harbor, except that it applied for the period of April 1, 2022 through December 31, 2022 only (i.e., it was tied to the calendar year, not a plan year). 

New Telehealth Safe Harbor Under the CAA, 2023

The new safe harbor is identical to both the prior safe harbors, except that it marries both the plan year approach of the CARES Act with the calendar year approach of the CAA, 2022 to ensure that it applies for both calendar and non-calendar year plans and will apply for months beginning after March 1, 2022 and plan years beginning on or before December 31, 2021, or after December 31, 2022, and before January 1, 2025.

Conclusion

If passed by both chambers and signed into law by the President, as it is expected to be, this multi-year relief will allow HDHPs to maintain their HSA-qualified status if they choose to cover telehealth services at no cost and/or without a participant first meeting the applicable deductible for plan years beginning in 2023 and 2024.

Employers are encouraged to discuss this optional relief with their insurance broker, medical plan carrier, or third-party administrator to ensure proper administration.

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About the Authors.  This alert was prepared for [insert agency name] by Barrow Weatherhead Lent LLP, a national law firm with recognized experts on the Affordable Care Act.  Contact Stacy Barrow or Nicole Quinn-Gato at sbarrow@marbarlaw.com or nquinngato@marbarlaw.com.

_{This email is a service to our clients and friends.  It is designed only to give general information on the developments actually covered.  It is not intended to be a comprehensive summary of recent developments in the law, treat exhaustively the subjects covered, provide legal advice, or render a legal opinion. Benefit Advisors Network and its members are not attorneys and are not responsible for any legal advice.  To fully understand how this or any legal or compliance information affects your unique situation, you should check with a qualified attorney.}

© Copyright 2022 Benefit Advisors Network. All rights reserved.