Category: Legal Alerts

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.

The IRS has released Notice 2022-59, which sets the applicable PCORI fee for plan years ending between October 1, 2022 and September 30, 2023 at $3.00 per covered life.

As a reminder, the PCORI was established as part of the Affordable Care Act (ACA) to conduct research to evaluate the effectiveness of medical treatments, procedures and strategies that treat, manage, diagnose or prevent illness or injury.  Under the ACA, most employer sponsors and insurers were required to pay PCORI fees until 2019 or 2020, as it only applied to plan years ending on or before September 30, 2019.  However, the PCORI fee was extended to plan years ending on or before September 30, 2029 as part of the Further Consolidated Appropriations Act, 2020. 

The amount of PCORI fees due by employer sponsors and insurers is based upon the number of covered lives under each “applicable self-insured health plan” and “specified health insurance policy” (as defined by regulations) and the plan or policy year end date.  The fee must be paid on or before July 31^st each year.  The fees due by July 31, 2023 are for plan years ending in 2022 and are as follows:

• For plan years ending between January 1, 2022 and September 30, 2022, the fee is $2.79 per covered life.
• For plan years ending between October 1, 2022 and December 31, 2022, the fee is $3.00 per covered life.

Insurance carriers are responsible for calculating and paying the PCORI fee for fully insured plans.  The employer is responsible for paying the fee on behalf of a self-insured plan, including an HRA.  In general, health FSAs are not subject to the PCORI fee.

Employers that sponsor self-insured group health plans must report and pay PCORI fees using the second quarter IRS Form 720, Quarterly Federal Excise Tax Return.  The second quarter form is generally not released by the IRS until the second quarter of the applicable filing year (usually in or around May of the applicable filing year).  Therefore, the Form 720 used for the 2023 filing deadline will not likely be available until in or around May 2023, and employers who sponsor self-insured group health plans subject to the PCORI fee must wait to file until the correct Form 720 is available. 

The average number of covered lives for the plan year is generally calculated using the snapshot, snapshot factor, actual count, or Form 5500 method.  These counting methods will be described in more detail in a future alert as we approach the 2023 filing deadline.  Also note that because the PCORI fee is assessed on the plan sponsor of a self-insured plan, it generally should not be included in the premium equivalent rate that is developed for self-insured plans if the plan includes employee contributions.  However, an employer’s payment of PCORI fees is tax deductible as an ordinary and necessary business expense.

______________________________

About the Author.  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.

^{The information provided in this alert is not, is not intended to be, and shall not be construed to be, either the provision of legal advice or an offer to provide legal services, nor does it necessarily reflect the opinions of the agency, our lawyers or our clients.  This is not legal advice.  No client-lawyer relationship between you and our lawyers is or may be created by your use of this information.  Rather, the content is intended as a general overview of the subject matter covered.  This agency and Barrow Weatherhead Lent LLP are not obligated to provide updates on the information presented herein.  Those reading this alert are encouraged to seek direct counsel on legal questions.}

^{© 2022 Barrow Weatherhead Lent LLP.  All Rights Reserved.}

On October 18, 2022, the Internal Revenue Service (IRS) released Revenue Procedure 2022-38, which increases the health flexible spending account (FSA) salary reduction contribution limit to $3,050 for plan years beginning in 2023, an increase of $200 from 2022.  Thus, for health FSAs with a carryover feature, the maximum carryover amount is $610 (20% of the $3,050 salary reduction limit) for plan years beginning in 2023.

The Revenue Procedure also contains the cost-of-living adjustments that apply to dollar limitations in certain other sections of the Internal Revenue Code. 

Qualified Commuter Parking and Mass Transit Pass Monthly Limit

For 2023, the monthly limits for qualified parking and mass transit are increased to $300 each, an increase of $20 from 2022.

Adoption Assistance Tax Credit Increase

For 2023, the credit allowed for adoption of a child is $15,950 (up $1,060 from 2022). The credit begins to phase out for taxpayers with modified adjusted gross income in excess of $239,230 (up $15,820 from 2022) and is completely phased out for taxpayers with modified adjusted gross income of $279,230 or more (up $15,820 from 2022).

Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) Increase

For 2022, reimbursements under a QSEHRA cannot exceed $5,850 (single) / $11,800 (family), an increase of $400 (single) / $750 (family) from 2022.

Reminder: 2023 HSA Contribution Limits and HDHP Deductible and Out-of-Pocket Limits

Earlier this year, in Rev. Proc. 2022-24, the IRS announced the inflation-adjusted amounts for HSAs and high deductible health plans (HDHPs).

The ACA’s out-of-pocket limits for in-network essential health benefits have also been announced and have increased for 2023.  Note that all non-grandfathered group health plans must contain an embedded individual out-of-pocket limit if the family out-of-pocket limit is above $9,100 (2023 plan years). Exceptions to the ACA’s out-of-pocket limit rule are available for certain small group plans eligible for transition relief (referred to as “Grandmothered” plans). While historically CMS has renewed the transition relief for Grandmothered plans each year, it announced in March that the transition relief will remain in effect until it announces that all such coverage must come into compliance with the specified requirements.

A Reporting Penalties (Forms 1094-B, 1095-B, 1094-C, 1095-C)

The table below describes late filing penalties for ACA reporting.  The 2024 penalty is for returns filed in 2024 for the calendar year 2023, and the 2023 penalty is for returns filed in 2023 for the calendar year 2022.  Note that failure to issue a Form 1095-C when required may result in two penalties, as the IRS and the employee are each entitled to receive a copy.

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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 October 13, 2022, the IRS finalized regulations (the “Final Rule”) intended to revise the method of determining affordability under the Affordable Care Act (ACA) for an employee’s family members by considering whether the coverage offered by the employer to the employee and their family members is affordable. The final regulations are effective on December 12, 2022. 

In addition, the IRS released Notice 2022-41 (the “Notice”), which is effective for cafeteria plan elections effective on or after January 1, 2023, and facilitates the changes under the Final Rule by permitting plans to update their change in status rules to allow employees to prospectively revoke their election under a group health plan (excluding health FSAs) for their family members who have enrolled or intend to enroll in Marketplace coverage. Most notably, for applicable large employers, the requirement to offer “affordable” coverage to full-time employees remains tied to the cost of employee-only coverage.  The rule does not require employers to make family coverage “affordable.”

The details of the Final Rule and Notice are discussed in more detail below.

Background

The ACA provides for a premium tax credit (PTC) for coverage purchased in the Marketplace if individuals do not have affordable, minimum value coverage available to them under an employer-sponsored group health plan.  After the ACA was enacted, the IRS interpreted the law to require affordability to be determined based on the lowest cost, self-only coverage offered to the employee by the employer.  In other words, an employer’s offer of family coverage was “affordable” if the employee’s cost for self-only coverage did not exceed 9.5% (as indexed) of the employee’s income.  Therefore, if self-only coverage offered to the employee was affordable, the employee’s family members would not be eligible for a PTC if they purchased coverage in the Marketplace even if the cost of family coverage was not affordable.

Over the years, this caused significant hardship to many families as the cost of family coverage offered by employers is often significantly higher than that of self-only coverage, and many family members were denied access to PTCs if the employee declined the employer’s offer of coverage for his or her family members because the coverage was cost prohibitive.  Advocacy groups routinely reached out to the Executive Branch regarding their concerns about the interpretation of the law. 

On January 28, 2021, President Biden issued Executive Order 14009 which directed the IRS to, among other things, review existing regulations and agency actions to determine whether the regulations or actions were inconsistent with “the policy to protect and strengthen the ACA” and to examine policies or practices that may reduce the affordability of coverage or financial assistance for coverage, including for dependents. Accordingly, the IRS began to reevaluate the prior interpretation of the law, and, in April 2022, the IRS released proposed regulations intending to address affordability of coverage for family members.  Based on a renewed interpretation of the law, the proposed regulations provided that, for purposes of determining eligibility for PTCs, affordability of employer coverage for family members (referred to as “individuals eligible to enroll in the coverage because of their relationship to an employee of the employer” or “related individuals”) would be determined based on the cost of covering the employee and those family members.  Therefore, the portion of the annual premium the employee must pay for coverage of the employee and eligible family members would be used to determine whether the employee’s family members would be eligible for a PTC.

After the ACA was enacted, the IRS released Notice 2014-55 which was intended to address, among other things, the ability of employees to prospectively revoke their election in an employer’s group health plan to enroll in Marketplace plans during the Marketplace’s open enrollment or the employee is eligible for a special enrollment in the Marketplace. In this situation, if the employee was not eligible for Marketplace coverage, they could not revoke coverage for their family members to enroll in the Marketplace and would have to wait until the employer’s next open enrollment period.

IRS Releases Final Rule to Fix ACA’s Family “Glitch”

On October 13, 2022, the IRS finalized regulations (the “Final Rule”) intended to revise the method of determining affordability under the Affordable Care Act (ACA) for an employee’s family members by considering whether the coverage offered by the employer to the employee and their family members is affordable. The final regulations are effective on December 12, 2022. 

In addition, the IRS released Notice 2022-41 (the “Notice”), which is effective for cafeteria plan elections effective on or after January 1, 2023, and facilitates the changes under the Final Rule by permitting plans to update their change in status rules to allow employees to prospectively revoke their election under a group health plan (excluding health FSAs) for their family members who have enrolled or intend to enroll in Marketplace coverage. Most notably, for applicable large employers, the requirement to offer “affordable” coverage to full-time employees remains tied to the cost of employee-only coverage.  The rule does not require employers to make family coverage “affordable.”

The details of the Final Rule and Notice are discussed in more detail below.

Background

The ACA provides for a premium tax credit (PTC) for coverage purchased in the Marketplace if individuals do not have affordable, minimum value coverage available to them under an employer-sponsored group health plan.  After the ACA was enacted, the IRS interpreted the law to require affordability to be determined based on the lowest cost, self-only coverage offered to the employee by the employer.  In other words, an employer’s offer of family coverage was “affordable” if the employee’s cost for self-only coverage did not exceed 9.5% (as indexed) of the employee’s income.  Therefore, if self-only coverage offered to the employee was affordable, the employee’s family members would not be eligible for a PTC if they purchased coverage in the Marketplace even if the cost of family coverage was not affordable.

Over the years, this caused significant hardship to many families as the cost of family coverage offered by employers is often significantly higher than that of self-only coverage, and many family members were denied access to PTCs if the employee declined the employer’s offer of coverage for his or her family members because the coverage was cost prohibitive.  Advocacy groups routinely reached out to the Executive Branch regarding their concerns about the interpretation of the law. 

On January 28, 2021, President Biden issued Executive Order 14009 which directed the IRS to, among other things, review existing regulations and agency actions to determine whether the regulations or actions were inconsistent with “the policy to protect and strengthen the ACA” and to examine policies or practices that may reduce the affordability of coverage or financial assistance for coverage, including for dependents. Accordingly, the IRS began to reevaluate the prior interpretation of the law, and, in April 2022, the IRS released proposed regulations intending to address affordability of coverage for family members.  Based on a renewed interpretation of the law, the proposed regulations provided that, for purposes of determining eligibility for PTCs, affordability of employer coverage for family members (referred to as “individuals eligible to enroll in the coverage because of their relationship to an employee of the employer” or “related individuals”) would be determined based on the cost of covering the employee and those family members.  Therefore, the portion of the annual premium the employee must pay for coverage of the employee and eligible family members would be used to determine whether the employee’s family members would be eligible for a PTC.

After the ACA was enacted, the IRS released Notice 2014-55 which was intended to address, among other things, the ability of employees to prospectively revoke their election in an employer’s group health plan to enroll in Marketplace plans during the Marketplace’s open enrollment or the employee is eligible for a special enrollment in the Marketplace. In this situation, if the employee was not eligible for Marketplace coverage, they could not revoke coverage for their family members to enroll in the Marketplace and would have to wait until the employer’s next open enrollment period.

Final Rule and Notice 2022-41

Final Rule Related to Affordability and Eligibility for Premium Tax Credits

Under the final rule, for purposes of determining eligibility for a PTC, affordability of employer coverage for eligible family members is determined based on the employee’s share of the cost of covering the employee and those family members. In the preamble to the rule, the IRS explains that they believe the new reading represents a better reading of the relevant statutes and is consistent with Congress’s overall goal of expanding access to affordable health care coverage when enacting the ACA.

Additionally, the final regulations include, among other things, amendments to the rules relating to the determination of whether employer coverage provides minimum value.

Notice 2022-41

Consistent with the changes in determining affordability for family members’ coverage, effective for plan years beginning in 2023, Notice 2022-41 expands current election change rules by allowing for elections for family members’ coverage under an employer’s non-calendar year cafeteria plan, to be prospectively revoked if the following conditions are met:

• One or more related individuals are eligible for a special enrollment period to enroll in Marketplace coverage pursuant to guidance issued by HHS and any other applicable guidance during the Marketplace’s annual open enrollment period; and
• The revocation of the election of coverage under the group health plan corresponds to the intended enrollment of the related individual or related individuals in new Marketplace coverage that is effective immediately following termination of coverage under the group plan.

If adopted by the employer’s cafeteria plan, this new permitted election change does not apply to employee-only coverage.  Employees would still have to meet the eligibility specified in IRS Notice 2014-55 to revoke their own election under the employer’s plan, which requires the employee to be eligible for Marketplace open enrollment or special enrollment.   If the employee’s family members qualify for a special enrollment period under the Marketplace (or enroll in Marketplace coverage during the Marketplace open enrollment), the employee would be permitted to revoke their coverage and either enroll in self-only coverage offered by the employer or Marketplace coverage, if enrolling during a Marketplace open enrollment or special enrollment period. 

The employer can rely on the reasonable representation of the employee that the employee’s family members have enrolled or intend to enroll in Marketplace coverage for new coverage that is effective immediately following termination of group health plan coverage.

If an employer intends to adopt this new permitted election change, then the employer must amend their cafeteria plan to permit these changes and adopt this amendment no later than the last day of the plan year that begins in 2024.  The amendment can be retroactive/effective as of the first day of the 2023 plan year as long as the cafeteria plan operated in accordance with the changes within the 2023 plan year and notified employees of the changes for the 2023 plan year; however, the plan cannot be operated in a manner to allow revocation of coverage retroactively.

Next Steps for Employers

Employers do not need to make any changes to the way they determine affordability of coverage offered to employees, as affordability for purposes of the ACA’s employer shared responsibility provision (ESRP) has not changed.  Whether coverage offered by the employer is “affordable” for ESRP purposes will still be determined using the lowest cost, self-only coverage offered by the employer.  Employers are not penalized for failing to offer coverage that is affordable for an employee’s spouses or dependents.  

Additionally, if for the 2023 plan year, the employer intends to allow mid-year election changes pursuant to IRS Notice 2022-41, employers must communicate the change to employees effective not later than the beginning of the 2023 plan year and operate the plan in accordance with this change.  Further, the employer must adopt an amendment to the plan no later than the last day of the plan year that begins in 2024.

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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 2022 Benefit Advisors Network. All rights reserved.

On July 28, 2022, the DOL, HHS, and the IRS (collectively, the “Agencies”) released FAQs About Affordable Care Act Implementation Part 54, which, according to the Agencies, is intended to make it clear that, despite the Supreme Court’s ruling in Dobbs, the ACA’s preventive care mandate requires non-grandfathered group health plans and health insurance issuers to cover birth control/contraception, including emergency contraception, and family planning counseling without any cost sharing.

Background

The ACA requires non-grandfathered group health plans and health insurance issuers offering non-grandfathered group or individual health insurance coverage to cover (without the imposition of any cost-sharing requirements) certain items or services, including evidence-based items and services having a rating of “A” or “B” by the United States Preventive Services Task Force (USPSTF). For women, infants, children, and adolescents, non-grandfathered plans must also cover evidence-informed preventive care and screenings provided for in comprehensive guidelines supported by the Health Resources and Services Administration (HRSA).  Items and services required to be provided without cost-sharing include any items or services “integral to the furnishing of the recommended preventive services” as well.

The HRSA-supported Women’s Preventive Services Guidelines (2019 HRSA-Supported Guidelines), recommend that adolescent and adult women have access to the full range of female-controlled FDA-approved contraceptive methods, effective family planning practices, and sterilization procedures to prevent unintended pregnancy and improve birth outcomes.  As set forth in the guidelines, contraceptive care should include contraceptive counseling, initiation of contraceptive use, and follow-up care, and that instruction in fertility awareness-based methods, including the lactation amenorrhea method, should be provided for women desiring an alternative method.

On December 30, 2021, the HRSA-Supported Guidelines were updated with regard to a number of items, including breastfeeding services and supplies, well-woman preventive care visits, access to contraceptives and contraceptive counseling, screening for human immunodeficiency virus, and counseling for sexually transmitted infections, and expand the 2019 recommendation to encompass contraceptives that are not female-controlled, such as male condoms.

Per the ACA, non-grandfathered health plans must implement any new HRSA recommendations for plans years that begin on or after 1 year from the date the recommendation or guideline is issued.  For calendar year plans, this means January 1, 2023.

Guidelines Addressed in the FAQs

The recently issued FAQs provide the following:

(1) Anesthesia services integral to the furnishing of recommended preventive services must be covered without cost sharing.  For example, anesthesia provided in conjunction with a tubal ligation procedure.

(2)  Pursuant to the HRSA guidelines, contraceptive care for adolescent and adult women must include access to the full range of female-controlled FDA-approved contraceptive methods (as well as FDA-approved contraceptives that are not female-controlled for in plan years beginning in 2023), effective family planning practices, and sterilization procedures, which includes, among many other items, birth control methods such as IUDs, oral contraceptives, contraceptive patches, rings, and sponges, female condoms, and emergency contraception.  Note:  As explained in number 10 below, at least one form of contraception in the various categories must be covered by a plan or issuer.

(3) Any contraceptive services and FDA-approved, cleared, or granted contraceptive products that an individual and their attending provider have determined to be medically appropriate for the individual, even if not listed specifically in the HRSA guidelines, such as newly FDA cleared contraceptive products, must also be covered without cost-sharing; however, reasonable medical management techniques may be employed by the plan or issuer if multiple, substantially similar services or products that are not included in a category described in the Guidelines are available and are medically appropriate for the individual (though at least one such service or product must be provided without cost sharing).  The agencies clarify that the plan or issuer must defer to the determination of the attending provider, and make available an easily accessible, transparent, and sufficiently expedient exceptions process that is not unduly burdensome so the individual or their provider can obtain coverage for the medically necessary service or product without cost sharing.

(4)  Instruction in fertility-awareness-based methods, including lactation amenorrhea must also be covered without cost sharing, as they are forms of “counseling and education.”

(5)  Coverage for FDA-approved emergency contraceptives without cost-sharing includes coverage for over-the-counter (OTC) emergency contraceptives.  The plan or issuer must cover any OTC emergency contraceptives that are prescribed and are encouraged to cover any OTC emergency contraceptives purchased without a prescription.

(6)  HRAs, health FSAs, and HSAs can also reimburse FDA-approved OTC emergency contraceptives, but only to the extent they are not paid or reimbursed by another plan or coverage (such as the employer’s medical plan).  If the plan sponsor does not want to reimburse OTC emergency contraceptives that are not prescribed by a physician, then they must indicate such in the plan materials.

(7) Plans and issuers may reimburse up to a 12-month supply of contraceptives at one time, though they are not required to do so.

(8) These requirements under the ACA preempt any contrary state law.  Accordingly, if state law bans a particular contraceptive method, the ACA would preempt that contrary state law.

(9) Unless HRSA guidelines specify a frequency, method, treatment or setting within a specified category of contraception, plans may use reasonable medical management techniques within that specified category. The reasonableness of the medical management technique will be determined based on the relevant facts and circumstances.

(10) Plans and issuers must cover, without cost sharing, at least one form of contraception in each category that is described in the HRSA-Supported Guidelines or, for contraceptive categories not described in the HRSA-Supported Guidelines, at least one form of contraception in a group of substantially similar services or products.

(11) Plans must have an exceptions process; however, it must not be unduly burdensome for participants, beneficiaries, or enrollees.  Requiring participants, beneficiaries, or enrollees to appeal adverse benefit determinations using the plan or issuer’s internal claims and appeals process to seek an exception is not a reasonable medical management technique.  Moreover, the process the plan uses for exceptions, including the type of information required to be provided when seeking an exception, should be transparent to participants and beneficiaries.  The FAQs provide that plans can satisfy this requirement by, at a minimum, prominently displaying the exceptions process in plan documents and SPDs as well as in any other plan materials that describe how the plan covers contraceptive items and services, such as a prescription drug formulary.  

Next Steps for Employers

Employers, particularly those with self-funded plans, should be mindful of these guidelines when working with their TPAs and when making plan design choices.  For employers who sponsor HRAs and health FSAs, if the employer’s plan covers all Code Section 213(d) expenses, employers should not need to make any changes to the plan. If the employer wishes to exclude OTC emergency contraception that is not prescribed by a medical doctor, then the employer should specify this as an exclusion in the plan materials.

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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 2022 Benefit Advisors Network. All rights reserved.