Implications of Abortion Decision for Employee Benefit Plans

By Jennifer Berman, CEO, MZQ Consulting

On Friday, June 24, the Supreme Court released its decision in Dobbs v. Jackson Women’s Health Organization finding that the United States Constitution does not guarantee a right to abortion access.  This decision effectively overturns its prior decisions in Roe v. Wade and Planned Parenthood v. Casey.  The decision will result in near immediate abortion bans in thirteen states.  Those states had previously passed laws providing such bans would go into effect upon a decision by the Supreme Court making such a prohibition legal. 

Last week’s decisions raise many questions for employee benefit plan sponsors that may take months or even years to fully resolve.  However, existing law does help to answer certain key questions:

How is it determined if fully insured plans cover abortion?

The benefits available through fully insured plans are generally prescribed by state law.  Under previously existing state laws, abortion is not covered under such policies.  In some such states, employers are permitted to purchase riders providing for abortion coverage, but in others there is no option to cover abortion in the fully insured market.  Conversely, other states require that all fully insured plans issued in the state cover abortion.  A map showing which states have laws limiting or requiring coverage is available here.

How is it determined if self-funded plans cover abortion?

Employer plan sponsors can generally decide if their plans cover abortion.  Self-funded plans are generally not subject to state laws prescribing benefits because ERISA preempts such laws.  However, a self-funded plan cannot pay for a procedure that is illegal in the location in which it is performed.  Therefore, plans that continue providing for abortion coverage will only be able to pay for such procedures when performed legally.

It is also worth noting that in recent years there has been litigation surrounding the extent to which state laws seeking to regulate self-funded health plans are preempted.  In a 2020 decision, the Supreme Court ruled that an Arkansas state law regulating pharmacy benefit managers was not preempted by ERISA because it did not govern “a central matter of plan administration or interfere with nationally uniform plan administration.”  It is likely that certain states will pass legislation attempting to limit the autonomy of self-funded plans to determine the extent to which they cover abortions and/or travel out of state for the purpose of obtaining an abortion.

Can an employer provide a benefit covering the cost of travel to obtain an abortion?

Generally, yes, but this will create certain legal risks.  Existing tax law includes travel expenses incurred “primarily for, and essential to, receiving medical expenses” in the definition of medical expenses that can be paid for on a pre-tax basis through a medical plan.  Thus, it appears that employers will be able to amend their self-funded plans to pay for such expenses.  However, plans are still subject to criminal laws, and such coverage may not be permissible if provided to a participant living in a state where it is illegal to assist a state resident in traveling to obtain an abortion.

Employers wishing to provide a travel benefit outside their health plan risk such a benefit being deemed to provide medical care.  Any employer program providing medical care is by definition a group health plan.  If such a plan only provided for travel benefits, it would raise its own set of compliance issues (e.g., failure to comply with the ACA, COBRA, HIPAA, etc.).

Other Considerations

As demonstrated above, even for established rules, the implications of the Dobbs ruling are broad and complex.  Other open issues that will need to be addressed moving forward include how to:

  • Design and administer plans operating in multiple states in light of competing state laws;
  • Handle prescription drug benefits for medications that can induce medical abortions; and
  • Apply illegal act coverage exclusions.

Delaware Passes Mandatory Paid Leave Law

By: Jennifer Berman, CEO, MZQ Consulting

On May 10, Delaware Governor Carney signed the Healthy Delaware Families Act establishing a mandatory paid leave program, making Delaware the eleventh state to enact such a program. Contributions towards the program will begin on January 1, 2025.  Benefits will be available starting January 1, 2026.

The available benefits under this program are keyed to employer size.  At companies with more than 25 employees, employees are eligible for all leave types available under the new rules.  At companies with 10 to 24 employees, employees are only eligible for parental leave.  At companies with fewer than 10 employees, none of the benefits created by this program are mandated, but employers may “opt in” to participation.

To be eligible for benefits, an individual must be employed by the company for a full 12-month period before taking leave and must have completed 1,250 hours of work in the 12-month period preceding their leave.  Program benefits include job protection and payments up to 80% of the covered employee’s average weekly wage.  Total benefits are capped at $900/week for 2026 and 2027, and indexed thereafter.  The benefit is available for the following reasons:

  • To care for a child during the first year after the birth, adoption, or placement through foster care;
  • To care for a family member with a serious health condition;
  • Due to a serious health condition that makes the covered individual unable to perform the functions of their job; or
  • Due to a “qualifying exigency” as defined by the FMLA.

Such benefits are available for up to 12 weeks in the applicable year for parental leave and a maximum of 6 weeks in any 24-month period for medical and family caregiver leave.

Program benefits will be made available through a new Family and Medical Leave Insurance Account Fund.  Contributions to this Fund in the form of a 0.8% payroll tax for employers with greater than 25 employees will begin on January 1, 2025.  This contribution amount drops to .32% for employers with 10 to 25 employees that elect to only provide for parental leave.  Employers have the option to pass on up to 50% of the new payroll tax to employees or make the contributions in full on their behalf.  Employers may also elect instead to opt out if they have an established paid leave program that offers comparable benefits.  All such private plans require approval from the Delaware Department of Labor.

We will continue to monitor the implementation of this new program in Delaware and bring you updates as they become available.

Revised Surprise Billing Independent Dispute Resolution Guidance

By: Jessica Waltman, Principal, Forward Health Consulting

The Centers for Medicare and Medicaid Services recently opened the much-anticipated federal Independent Dispute Resolution (IDR) Portal, a component of the No Surprises Act section of the Consolidated Appropriations Act of 2021 (the Act).  The opening of the portal and newly released guidance are part of the implementation of the balance billing protections contained in the Act.  For plan years beginning January 1, 2022, and any date thereafter, the Act prohibits health care providers from charging “out-of-network” rates for emergency care, air ambulance services, and all care from an “out-of-network” provider at an “in-network” facility.  Per the Act, the IDR portal is available to facilitate the resolution of disputes between providers and health plans over claims costs for those “out-of-network” services when the parties cannot otherwise come to an agreement on payment details.  

To support the IDR process, several federal departments jointly released; (1) guidance for IDR entities, those entities that are approved to mediate these billing disputes, (2) updated guidance for health plans and providers who might engage in the IDR process, and (3) FAQs for healthcare providers.

The updated IDR guidance accounts for the late-February 2022 federal court ruling that IDR entities should not rely predominantly on the plan’s qualifying payment amount (QPA), meaning the median rate for a particular “in-network” service, when resolving disputes.  These amounts are one of the components that health plans are required to submit when engaging in the IDR process.  With the exception of air ambulance services, the revised guidance now reflects that the QPA should be considered equally alongside other creditable information in the IDR’s determination process.  Notably, the guidance indicates that IDR entities should continue to rely on QPAs when resolving disputes regarding air ambulance services unless compelling evidence is presented to justify a different approach. 

As these updates underscore, the IDR process continues to evolve.  We will continue to monitor developments and provide relevant updates.

2023 Limits Announced for High Deductible Health Plans and Health Savings Accounts

By: Megan Diehl, Manager, Compliance Consulting, MZQ Consulting

Late last week, the Internal Revenue Service released updates to the maximum annual 2023 contribution limits for health savings accounts (HSAs) under high deductible health plans (HDHPs). These adjustments, which have increased slightly from 2022, apply to both individual and family coverage. The updates also include deductible minimums and out-of-pocket expense limits for HDHPs and an increase to the maximum amount that may be made newly available for excepted benefit health reimbursement arrangements (HRAs).

The 2023 limits are summarized below:

Annual HSA Contribution Limits

  • Individual with self-only coverage is $3,850.
  • Individual with family coverage is $7,750.

Annual Minimum Deductibles for HDHPs

  • Self-only coverage $1,500 or more.
  • Family coverage $3,000 or more.

Annual Maximum Out-of-Pocket Expense Limits for HDHPs

  • Self-only coverage may not exceed $7,500.
  • Family coverage may not exceed $15,000.

Plan Year Excepted Benefit HRA Maximum

  • Maximum amount for a plan year may not exceed $1,950.

Maryland Passes Mandatory Paid Leave Law

Jennifer Berman, CEO, MZQ Consulting

On April 9, 2022, the Maryland General Assembly overrode Governor Larry Hogan’s veto of the Time to Care Act of 2022 to establish a mandatory paid leave program. This program will provide for up to 12 weeks of paid leave for all employees in the State who meet minimum eligibility criteria. Such benefits will be provided either through a State-based program known as the Family and Medical Leave Insurance (FAMLI) Program or by private employers who elect to opt out of the FAMLI Program and instead pay such benefits either directly or through an insurance policy.

It will take several years to implement these new leave rules. Outlined below is the key information we know now about how this program will work.

Program Basics:

  • Any employer employing one or more employees in Maryland will be impacted.
  • Benefits must be made available to all “covered employees” in Maryland.
  • A “covered employee” is any individual who worked at least 680 hours in the 12 months immediately before the date leave begins.
  • Both employees and any employer with 15 or more employees must contribute towards the program’s cost.
  • Private employers may opt out of the FAMLI Program. However, if they do so, they must offer an alternative that meets the rights, protections, and benefits provided through the FAMLI Program. Any such private plan must be filed and approved by the Maryland Department of Labor.
  • Employers will be required to provide notice to employees about these new rules. The State will provide model notices.
  • Self-employed individuals may opt-in to the FAMLI Program for an initial term of three years. After that, they can decide each year if they wish to participate.

Program Benefits:

  • Benefits are available for up to 12 weeks per year for covered employees taking leave to:
    • Care for a newborn child or a child newly placed for adoption, foster care, or kinship care with the individual during the first year after the birth, adoption, or placement;
    • Care for a family member with a serious health condition;
    • Attend to a health condition that results in the individual being unable to perform functions of their job;
    • Care for a next-of-kin service member; or
    • Attend to a qualifying event arising out of a family member’s deployment.
  • The definition of “family member” for this purpose is quite broad, including, for example, legal guardians, grandparents, stepfamily members, and foster family members.
  • Leave may be taken on an intermittent basis.
  • The weekly benefit is based on a covered employee’s average weekly salary and can range from $50 to $1,000. 
  • Within this range, the required benefit is calculated using a benchmark equal to 65% of the State average weekly wage. The benefit is calculated as follows:
For employees making the State benchmark or less:90% of average weekly wage
For employees making more than the State benchmark:90% of average weekly wage up to the State benchmark PLUS 50% of remaining average weekly wages
  • Coverage runs concurrently with FMLA job-protected leave, if applicable.
  • The same benefit protection that applies during FMLA applies while an employee is on FAMLI Program leave.

Implementation is anticipated to follow the schedule outlined below:

June 1, 2022Effective date for the Time to Care Act of 2022
December 1, 2022Deadline for the Maryland Department of Labor (MDL) to make a recommendation of rates for participation in the FAMLI Program and the appropriate cost-sharing formula for employers and employees
June 1, 2023Maryland Secretary of Labor must set total contributions and % of the rate to be paid by employers (with > 15 employees) and employees
October 1, 2023Contributions to the FAMLI Program begin
January 1, 2025Benefits from the FAMLI Program begin

Notably, the new FAMLI Program does not supersede or change other existing federal and state laws requiring employers to provide paid and unpaid leave. 

We will continue to carefully follow the implementation of the FAMLI Program and its private employer alternative and provide additional information as it becomes available.

Proposed Regulations Issued to Substantially Increase Access to Federally Subsidized Health Insurance

Jennifer Berman, CEO, MZQ Consulting

On April 5, 2022, the Administration issued new proposed regulations changing certain aspects of the affordability and minimum value rules under the Affordable Care Act (“ACA”).  Notably, the rules only impact whether an individual is eligible for federally subsidized health insurance; they DO NOT change the affordability requirements for applicable large employers under the ACA’s employer mandate.  If finalized, the new rules will increase access to federal subsidies beginning January 1, 2023.

Current guidance provides that an individual is ineligible for a federal subsidy (known as the premium tax credit or PTC) if that individual is eligible for affordable, minimum value coverage through an employer-sponsored plan.  However, since its inception, concerns have been raised about the “family glitch.”  Specifically, previously existing rules interpret the ACA to provide that any spouse or dependent offered medical coverage through an employer-sponsored plan was ineligible for the federal subsidy if that coverage was affordable to the employee.  This interpretation did not consider whether family coverage was affordable.  As a result, many individuals were unable to qualify for the federal subsidy even though the family coverage they were offered through an employer was not in fact affordable.

The new proposed rules change the definition of affordability for purposes of qualifying for the federal subsidy.  Under these rules, coverage is affordable for family members only if the premium for family coverage does not exceed 9.5% (as adjusted for inflation) of the family’s household income.  Where an individual is offered coverage through multiple employer-sponsored plans (i.e., spouses are each eligible for family coverage through separate employers), any offer of affordable coverage will be sufficient to disqualify all members of that family from receiving the federal tax subsidy.  The proposed regulations also provide that if a plan offers coverage to an individual who is not a member of the employee’s household for tax purposes (such as a child under age 26 who is no longer the employee’s tax dependent), the premium attributable for that non-dependent individual will not be considered for affordability purposes.

The proposed rules also adjust the definition of minimum value.  As with the affordability rules, these revisions will take into account family coverage when determining if a plan provides minimum value.  The rules also formalize existing guidance that provides that any plan that does not provide substantial coverage for inpatient hospital services and physician services cannot, by definition, provide minimum value. 

While these proposed rules do not directly impact the employer mandate (i.e., employers are still only required to offer affordable coverage to full-time employees), they could ultimately have a major impact on applicable large employers.  Specifically, to administer the new provisions, the IRS will need to collect substantial additional information about the coverage that employers offer.  This will presumably require major revisions to IRS Forms 1094-C and 1095-C.

The IRS has indicated it intends to finalize the proposed regulations by the end of 2022, with an official effective date of January 1, 2023, as indicated above.  However, we note that these rules are highly likely to be challenged in the courts—particularly because the IRS formerly determined they did not have the regulatory authority to interpret the ACA in this manner.  We will continue to monitor these rules and provide updates when they become available.

CAA of 2022 Includes Federal Extension to Telehealth Protections for HDHPs

By: Jessica Waltman, Principal, Forward Health Consulting

Last week, Congress passed the Consolidated Appropriations Act (CAA) of 2022, a $1.5 trillion governmental funding package.  Among its many provisions, the bill extends access to telehealth services for individuals who are covered under a health savings account (HSA)-qualified high deductible health plan (HDHP).

Typically, HSA-qualified HDHPs cannot pay for covered services, except for specified preventative care, until the participant meets the plan’s deductible.  This legislation permits sponsors of HDHPs to offer telemedicine services at no cost to participants, regardless of the plan’s annual deductible, without impacting participant HSA eligibility.  This relief was initially established as a component of emergency COVID-19 legislation, and it expired on December 31, 2021.  The 2022 CAA reinstates these telemedicine protections for the period of April 1, 2022, through December 31, 2022.

There is a three-month gap in this relief between January 1, 2022, and March 31, 2022, which means that participant deductibles should be applied to any non-preventative telehealth claims incurred during this time.  If the IRS chooses to take enforcement action against HDHP plan participants who accessed telemedicine services without cost-sharing at the beginning of this year, those individuals could lose eligibility to contribute to their HSAs from January-March 2022.  It is unclear if the IRS will pursue enforcement for the period when this relief lapsed or not.

Employers who sponsor HDHPs and want to take advantage of this optional relief should change their plan on a prospective basis and limit the complete coverage of telehealth services to April 1-December 31, 2022.  Employers and brokers should work with their insurance carriers and/or third-party claims administrators to ensure that this relief is only applied to telehealth services provided during that time.

In addition to the extension of telemedicine protections for HDHPs, the 2022 CAA expands the scope of telehealth services that Medicare will cover.  The legislation also allows both Medicare and Medicaid to continue covering select telehealth services for 151 days after the COVID-19 public health emergency ends.

Recent Guidance Expands Preventive Care for Women

By: Megan Diehl, Manager, Compliance Consulting, MZQ Consulting

Under the ACA, non-grandfathered group health plans must provide benefits for “preventive care” on a first-dollar basis. This means such coverage must be provided at no cost to participants (i.e., no co-payments, co-insurance, or deductibles may be applied).  For this purpose, preventive care includes:

  • Evidence-based items or services with an A or B rating recommended by the United States Preventive Services Task Force (USPSTF);
  • Immunizations for routine use for children, adolescents, or adults recommended by the Advisory Committee on Immunization Practices of the Centers for Disease Control and Prevention;
  • Evidence-informed preventive care and screenings provided for in the comprehensive guidelines supported by the Health Resources and Services Administration (HRSA) for infants, children, and adolescents; and
  • Other evidence-informed preventive care and screenings provided for in the comprehensive guidelines supported by the HRSA for women.

The HRSA, which maintains responsibility for the comprehensive guidelines for women, recently issued new guidance that updates and expands the list of women’s preventive services.  These revised guidelines apply to plan years beginning on or after December 30, 2022.

The updates to women’s preventive services include:

  • A new guideline for counseling for women ages 40-60 with normal or overweight body mass index to prevent obesity.
  • An expansion to the breastfeeding services and supplies guideline to include double electric breast pumps, their parts and maintenance, and breast milk storage supplies.
  • An update to the list of women’s contraceptives found in the FDA Birth Control Guide.
  • Revisions to the HIV screening guidelines that recommend (1) all women ages 15 and older receive HIV screening at least once during their lifetime, with earlier and/or additional risk-based screening and (2) that risk assessment and Preventive education begin at age 13.
  • Updates to the well-women Preventive visits to include pre-pregnancy, prenatal, postpartum, and interpregnancy visits.

A full list of women’s preventive services guidelines can be found on the HRSA’s website.

New Updates to Surprise Billing Independent Dispute Resolution Process

By: Megan Diehl, Manager, Compliance Consulting, MZQ Consulting

Last week, a federal judge for the Eastern District of Texas invalidated a portion of the independent dispute resolution (IDR) process outlined in the interim final rules for the No Surprises Act (the Act).  The Act, which applies to plan years that take effect on or after January 1, 2022, prohibits providers from charging “out-of-network” rates for emergency care, air ambulance services, and all care by an “out-of-network” provider in an “in-network” facility.  The provider and the health plan must resolve any differences between what a provider charges in these circumstances and what a plan is willing to pay.  If the two parties cannot agree on payment details within 30 days of billing, either may start the IDR process. 

The rule in question requires IDR entities, the arbitrators responsible for resolving payment disputes, to assume that the plan’s median rate for a particular “in-network” service is the appropriate rate for that same service when provided “out-of-network.”  The Act refers to this median as the qualified payment amount (QPA), and generally requires IDR entities to select the payment offer closest to the QPA unless compelling evidence is presented as to why that should not be the case.  The court’s ruling removes the requirement that IDR entities generally rely on the QPA in making their determination.  Instead, IDR entities must now weigh the QPA equally with other factors included in the evidence to make their decision.

On February 28, 2022, the Employee Benefits Security Administration released a memorandum in response to this ruling.  The memorandum emphasizes that all other provisions of the No Surprises Act are still in place and that the Departments of Health and Human Services, Labor, and the Treasury (the Departments) are working through next steps to comply with the court’s decision.  The Departments plan to:

  • Withdraw existing guidance pertaining to the invalidated portion of the IDR process and publish updated documents that conform with the court’s order;
  • Train IDR entities on the updated guidance once it is available; and
  • Open the federal IDR portal for IDR submissions.  Parties whose open negotiation period has already expired will have fifteen days after the portal opens to initiate the IDR process.

As the Departments emphasize, this court ruling is currently the only change to the No Surprises Act—all other requirements, including the IDR process itself, are still in effect.  We will continue to monitor developments and provide updates as they become available.

New Guidance on the Federal Surprise Billing Process

By: Lee Susan Spiegel

The new federal prohibition on surprise billing first went into effect on January 1, 2022 (and applies to plan years beginning on or after that date).  The new rules prohibit providers from charging “out-of-network” rates for emergency care, air ambulance services, and all care by an “out-of-network” provider in an “in-network” facility.  Any differences between what a provider charges in these circumstances and what a plan is willing to pay must be resolved between the provider and the health plan.  If payment details cannot be settled on within 30 days of billing, either party may start the independent dispute resolution (IDR) process that utilizes a web-based portal maintained by the federal government.  A new FAQ  published last week by the Departments of Health and Human Services, Labor, and Treasury details how that process will work. Included below are several key points from the FAQs.

  • Plans and issuers seeking to use the federal IDR process to resolve a surprise bill are required to start a 30-day open negotiation period before initiating the IDR through the federal portal.
  • The federal portal for IDR requests was launched on January 1, 2022.  As of this writing, it is available for uninsured (or self-pay) individuals.  Over the next few weeks, the system will go “live” for plans, issuers, providers, facilities, and air ambulance services. Certified IDR entities will also be able to use the portal at that time.
  • Model notices are now available for both payers and providers to use during the fee negotiation process.  Almost all actions by the IDR entity and parties need to be completed through the federal IDR portal.
  • The initial list of certified IDR entities is currently available online.  The list will be updated on an ongoing basis, and newly certified entities will be added as approved.
  • The initiating party selects a certified IDR entity from the list on the federal IDR portal.  The non-initiating party may then accept or reject the proposed certified IDR entity.  Federal officials will randomly select a certified IDR entity when the parties cannot agree.
  • There are two fee types related to the IDR process.  An administrative fee of $50 (for 2022) that each participating party must pay, and the IDR entity’s arbitration fee (which must be paid by the losing party).  An IDR entity is permitted to charge between $200 to $500 for a single case, and can charge between $268 to $670 for batched determinations.  Federal approval is needed if an IDR entity wants to charge more for a particular case. 
  • Multiple claims can be batched together, but each included claim must meet the criteria for claims batching.  Importantly, claims from different plans may not be batched together.  Thus, for example, a TPA may not include claims related to different self-funded medical plans in a “batch” of claims.
  • Each party must pay the IDR entity fees upfront.  The fee will be refunded to the prevailing party within 30 business days after the settling of the dispute.  When determinations are batched, the party with the lowest number of findings in its favor is determined to be the non-prevailing party.  The certified IDR entity fee will be split evenly if each party prevails in an equal number of determinations within a batched case.
  • If a settlement is reached by the parties after a certified IDR entity has been selected and started its review, each party must pay half of the IDR entity’s fee (unless the parties agree otherwise).  The administrative fee paid by the parties will not be refunded.
  • The federal IDR process is a document-based review.  Both parties will submit all required information and supporting documents to their IDR entity, and the arbitrator will make their determination based on those materials alone.
  • The information that must be submitted to the IDR entity includes the final offer of payment expressed as both a dollar amount and a percentage of the qualifying payment amount (QPA).  The QPA for the applicable year for the same/similar items or services must also be submitted.  Providers or facilities need to include the size of their practice or facility, their specialty, and their coverage area.  Plans and issuers must include the coverage area of the plan or issuer, the relevant geographic region for purposes of the QPA, and whether the coverage is fully insured or self-funded.
  • Certified IDR entities have 30 business days after selection to settle the dispute.  The external review process for coverage disputes between individuals and plans or issuers remains in place.  The federal IDR process involves disputes regarding payment amounts between providers, facilities, or providers of air ambulance services and plans or issuers.  No coverage determinations are made by IDR entities.

Fully insured groups will generally rely on their health insurance carrier to handle surprise billing issues. It is important to review all contracts to ensure this division of responsibility is reflected. Self-funded group plans should develop parameters with their third-party administrators regarding the negotiation process, a strategy for proposed fee payments, and how an IDR claim is to be handled. Groups with January 1 plan years are beginning to see affected claims. These details should be resolved soon and likely need to be reflected in an amendment to the group’s administrative services agreement.

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