September Compliance Recap

From our partners at UBA

Compliance Recap | Sept. 2024 

Disclosure to Individuals 

Group health plan sponsors must provide Medicare Part D creditable coverage notices prior to October 15th, the start date of the Medicare annual enrollment period for Medicare Part D (Prescription Drug coverage). The enrollment period for Medicare Part D is October 15th – December 7th. The October 15th deadline for distributing the Notice applies for all group health plan sponsors that offer prescription drug benefits, regardless of plan year, plan size, employer size, grandfather status, or whether the plan is fully insured or self-funded. 

Purpose of Disclosure  

The purpose of the disclosure is to inform Medicare beneficiaries of whether the employer’s drug coverage is expected to provide coverage comparable to the Medicare Part D prescription drug coverage. Medicare-eligible employees should keep the creditable coverage notice for future reference. If a Medicare-eligible employee or dependent becomes eligible for Part D and decides not to enroll because he or she has employer-sponsored coverage, a creditable coverage notice allows them to enroll in Part D later without being charged a higher premium. For individuals enrolled in a non-creditable drug plan, failure to enroll in Part D when first eligible will result in a higher premium if they enroll in Part D later.  

Two Versions of the Notice  

There are different versions of the required disclosure depending on whether the group health plan the participant is enrolled in is considered creditable coverage or not. 

• Creditable Coverage: A health plan’s prescription drug coverage is creditable when the amount the plan expects to pay, on average, for prescription drugs for individuals covered by the plan is the same or more than what standard Medicare prescription drug coverage would be expected to pay.  

• Non-Creditable Coverage: A health plan’s prescription drug coverage is non-creditable when the amount the plan expects to pay, on average, for prescription drugs for individuals covered by the plan is less than that which standard Medicare prescription drug coverage would be expected to pay. 

If you offer Anthem group health coverage, click here to see a list of their plans and identify which version of the notice to send. Many plan sponsors customize the Model Medicare Part D Notices provided by the Centers for Medicare and Medicaid Services (CMS) to provide plan participants with information specific to their situation. 

Disclosure Recipients  

The Notice of Creditable Coverage must be distributed to all individuals enrolled in an employer’s group health plan that fall within one of the following categories:  

• Active employees or COBRA participants over age 65 entitled to Medicare (Part A and/or B) 
• Spouses of active employees over age 65 entitled to Medicare (Part A and/or B) 
• Dependent children of active employees entitled to Medicare (Part A and/or B) regardless of age 
• Retirees over age 65 entitled to Medicare (Part A and/or B) 
• Spouses of active employees and/or retirees entitled to Medicare Part A and/or B 
• Dependent children of a retiree entitled to Medicare (Part A and/or B) regardless of age 

Since plan sponsors often do not know with certainty which of their Plan’s enrollees are eligible for Medicare, we recommend distributing the Part D Notice to all benefit-eligible employees. There is no penalty for distributing the Notice to a non-Medicare-eligible individual.

Model Notices 

CMS provides model creditable coverage notices in their website here. Model notices are available in both English and Spanish. Morris & Garritano also offers models notices for clients use. 

Electronic Distribution 

Employers can distribute these notices electronically to participants who have the ability to access electronic documents at their regular place of work as long as those participants have access to the electronic information system on a daily basis as part of their work duties (i.e. wired at work). Employers can distribute electronically under these circumstances without the participant’s consent. Participants must be informed, however, that they are responsible for providing a copy of the electronic notice to their Medicare-eligible dependents covered under the group health plan. 

Disclosure to CMS 

Employers are also required to notify CMS online annually that they have sent out these Part D notices. The notice to CMS is due within 60 days after the start of the plan year, or no later than March 1 for calendar year plans. Click here for the online CMS Disclosure site:https://www.cms.gov/Medicare/Prescription-Drug-Coverage/CreditableCoverage/CCDisclosureForm

Timelines 

Make note of the following time periods associated with the Medicare creditable coverage notice requirements: 

• October 15th: Deadline to provide Medicare Part D creditable coverage notices.  
• October 15th – December 7th: Medicare annual enrollment period for Part D, Prescription Drug Coverage.  

• March 1st: Deadline to provide online disclosure to CMS (for calendar year plans). Provide 60 days after the plan year starts for non-calendar year plans.  

What We Do 

In today’s world of employee benefits, staying compliant with ever-evolving laws, rules and regulations is a constant challenge. Well-versed in both federal and state legislation as well as the changes brought about by the Affordable Care Act, our expert advisors have a deep knowledge of employee benefits and a detailed understanding of healthcare laws, regulations, and standards. Contact Morris & Garritano today for a complimentary compliance assessment. 

This information is general and is provided for educational purposes only. It is not intended to provide legal advice. You should not act on this information without consulting legal counsel or other knowledgeable advisors. 

Departments Release Final Rules on Implementing Mental Health Parity and Addiction Equity Act 

On September 9, 2024, the U.S. Departments of Health and Human Services, Labor, and Treasury (collectively, “the Departments”) released final rules to implement the Mental Health Parity and Addiction Equity Act (MHPAEA). The rules clarify how health plans should evaluate mental health and substance use disorder (MH/SUD) benefits compared to medical and surgical (M/S) benefits. A key focus is on nonquantitative treatment limitations (NQTLs), which are criteria that can affect access to MH/SUD benefits. The new regulations require that health plans analyze these NQTLs and address any disparities that may exist. 

This analysis must detail how NQTLs are applied to MH/SUD benefits versus M/S benefits. It includes identifying the relevant factors used to design these limitations, demonstrating comparability in both application and operation, and providing findings and conclusions. These requirements aim to ensure that MH/SUD benefits are accessible and equitable compared to M/S benefits. 

Additionally, the final rules add new definitions for the following terms: 

• “Evidentiary standards” are any evidence, sources, or standards that a plan or issuer considered or relied upon in designing or applying a factor with respect to an NQTL. 

• “Factors” are all information, including processes and strategies (but not evidentiary standards), that a plan or issuer considered or relied upon to design an NQTL or to determine whether or how the NQTL applies to benefits under the plan or coverage. 

• “Processes” are actions, steps, or procedures that a plan or issuer uses to apply an NQTL. 

• “Strategies” are practices, methods, or internal metrics that a plan or issuer considers, reviews, or uses to design an NQTL. 

The final rules also specify procedures for the Departments to request and review these comparative analyses. Plans must respond promptly to any requests, and if they do not meet the requirements, they will be given a chance to correct their submissions. In the case of noncompliance, plans must notify participants within a specified period, ensuring transparency and accountability. 

Employer Considerations 

These new rules will take effect for group health plans beginning on or after January 1, 2025, with some provisions applying as of January 1, 2026. In preparation, employers should review their health plans for compliance with existing MHPAEA requirements, ensure their comparative analyses are thorough, and work closely with their third-party administrators or service providers to fulfill these obligations. It’s essential for employers to stay informed and proactive to meet the new standards effectively. 

The Department of Labor (DOL) offers an MHPAEA Self-Compliance Tool to assist employers with compliance in this area, including a section on NQTLs that outlines a process for conducting the comparative analysis. 

California Insurers Required to Cover in Vitro Fertilization 

California Governor Gavin Newsom has signed a law mandating that certain health insurers cover in vitro fertilization (IVF) for group health plans covering at least 100 people. The new law requires large group health plans to provide coverage for infertility diagnosis and treatment, including up to three egg retrievals and unlimited embryo transfers. 

The law expands the definition of infertility to be more inclusive and will take effect in July 2025 for most beneficiaries.

2025 ACA Affordability Threshold Announced 

On September 16, 2024, the IRS announced an adjustment to the affordability percentage for employer-sponsored health coverage under the Affordable Care Act (ACA). For plan years beginning in 2025, this percentage will increase to 9.02%, up from 8.39% for 2024. This increase allows applicable large employers (ALEs) to charge employees annual premiums that do not exceed 9.02% of their household income while still meeting the affordability criteria required by the employer shared responsibility mandate. If the coverage meets this standard, employees will not qualify for federally subsidized coverage through public exchanges. 

The employer shared responsibility mandate holds ALEs accountable for offering minimum essential coverage (MEC) to at least 95% of their full-time employees. If an ALE fails to do so and an employee receives a premium tax credit through an ACA Marketplace, the employer may face penalties. For 2025, these penalties are set at $241.67 per employee per month, or $2,900 annually per employee, for not providing coverage, and $362.50 per employee per month, or $4,350 annually per employee, for offering coverage that is either unaffordable or does not meet minimum value requirements. 

Employer Considerations 

To assist employers in determining affordability, the IRS has established three safe harbor options, allowing employers to use alternative metrics instead of household income. These include using: 

• The employee’s Form W-2 wages 

• The employee’s rate of pay for 130 hours a month 

• The federal poverty line (FPL) thresholds. For 2025, the employee contribution based on the FPL cannot exceed $113.20 per month in the mainland U.S. 

Employers are encouraged to assess their ALE status, ensure their coverage meets affordability and minimum value criteria, and prepare for upcoming ACA information reporting requirements due in early 2025.The 2024 Privacy Rule is amended to strengthen protections for highly sensitive PHI 

Question of the Month 

Q: Can an employee enrolled in Medicare contribute to a medical flexible spending account (FSA) or would it have to be a limited purpose FSA? 

A: The employee can contribute to an FSA. It does not have to be a limited purpose FSA. 

Answers to the Question of the Week are provided by Kutak Rock LLP. Kutak Rock provides general compliance guidance through the UBA Compliance Help Desk, which does not constitute legal advice or create an attorney-client relationship. Please consult your legal advisor for specific legal advice. 

This information is general in nature and provided for educational purposes only. It is not intended to provide legal advice. You should not act on this information without consulting legal counsel or other knowledgeable advisors.

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