Each year, Medicare Part D requires group health plan sponsors to disclose to individuals who are eligible for Medicare Part D and to the Centers for Medicare and Medicaid Services (CMS) whether the health plan’s prescription drug coverage is creditable.
Plan sponsors must provide the annual disclosure notice to Medicare-eligible individuals before Oct. 15, 2020—the start date of the annual enrollment period for Medicare Part D. CMS has provided model disclosure notices for employers to use.
This notice is important because Medicare beneficiaries who are not covered by creditable prescription drug coverage and do not enroll in Medicare Part D when first eligible will likely pay higher premiums if they enroll at a later date. Although there are no specific penalties associated with this notice requirement, failing to provide the notice may be detrimental to employees.
Employers should confirm whether their health plans’ prescription drug coverage is creditable or non-creditable and prepare to send their Medicare Part D disclosure notices before Oct. 15, 2020. To make the process easier, employers often include Medicare Part D notices in open enrollment packets they send out prior to Oct. 15.
The IRS recently issued Revenue Procedure 2020-36 to index the contribution percentages in 2021 for determining affordability of an employer’s plan under the Affordable Care Act (ACA).
For plan years beginning in 2021, employer-sponsored coverage will be considered affordable if the employee’s required contribution for self-only coverage does not exceed:
On Tuesday, June 23, 2020, District Judge Carl Nichols ruled in favor of the Trump administration’s final rule requiring hospitals to disclose their negotiated prices. The rule was released on Nov. 15, 2019, and set to take effect Jan. 1, 2021.
However, in December 2019, the American Hospital Association (AHA) filed a lawsuit attempting to block the rule’s implementation, stating that the requirement to disclose negotiated prices violated their First Amendment rights.
Nichols ruled that it was within the Department of Health and Human Services’ (HHS) scope to require the disclosure of these negotiated rates, rejecting the AHA’s claims.
What’s included in the final rule?
Hospitals will be required to provide easily accessible billing information to patients. This means having all standard charges available online and in one single data file that can be “read by other computer systems,” according to a Centers for Medicare & Medicaid Services (CMS) press release.
The charges listed would include “the gross charges, payer-specific negotiated charges, the amount the hospital is willing to accept in cash from a patient, and the minimum and maximum negotiated charges,” according to the initial press release about the final rule.
As part of the final rule, CMS was granted more authority over enforcement. Specifically, the department has greater capability to audit hospitals and issue fines of $300 per day to those who are noncompliant.
The rule won’t be effective until Jan. 1, 2021. In that time, hospitals will be working to make the applicable data available online, if it isn’t already. The AHA is expected to appeal the ruling, which could potentially delay the rule’s effective date.
The IRS recently released Revenue Procedure 2020-32 to provide the inflation-adjusted limits for health savings accounts (HSAs) and high deductible health plans (HDHPs) for 2021. The IRS is required to publish these limits by June 1 of each year.
These limits include:
Eligible individuals with self-only HDHP coverage will be able to contribute $3,600 to their HSAs for 2021, up from $3,550 for 2020. Eligible individuals with family HDHP coverage will be able to contribute $7,200 to their HSAs for 2021, up from $7,100 for 2020. Individuals who are age 55 or older are permitted to make an additional $1,000 “catch-up” contribution to their HSAs.
The minimum deductible amount for HDHPs remains the same for 2021 plan years ($1,400 for self-only coverage and $2,800 for family coverage). However, the HDHP maximum out-of-pocket expense limit increases to $7,000 for self-only coverage and $14,000 for family coverage.
Employers that sponsor HDHPs should review their plan’s cost-sharing limits (minimum deductibles and maximum out-of-pocket expense limit) when preparing for the plan year beginning in 2021. Also, employers that allow employees to make pre-tax HSA contributions should update their plan communications for the increased contribution limits.
After observing a 30-day non-enforcement period to help employers come into compliance with new paid leave rules, the U.S. Department of Labor (DOL) has announced that it is fully enforcing all provisions of the Families First Coronavirus Response Act (FFCRA).
The FFCRA requires private employers with fewer than 500 employees and certain government employers to provide paid leave for their employees, either for the employees’ own health needs or to care for others, for reasons related to the coronavirus (COVID-19) pandemic. These requirements apply for employee leave taken between April 1 and Dec. 31, 2020.
Now that the temporary policy has expired, the DOL is fully enforcing the FFCRA. Employers may still face retroactive penalties for violations committed during the non-enforcement period under certain circumstances. According to the DOL’s frequently asked questions (FAQs) about the FFCRA, the agency will retroactively enforce violations back to the effective date of April 1, 2020, if employers have not remedied the violations. Penalties for FFCRA violations include civil lawsuits and criminal charges punishable by imprisonment and fines of up to $10,000.
The laws take effect within 15 days of passage; the leave benefits will expire on Dec. 31, 2020.
The Department of Labor (DOL) recently released its 2020 inflation-adjusted civil monetary penalties that may be assessed on employers for violations of a wide range of federal laws, including:
The U.S. Department of Labor (DOL), announced a new final rule that clarifies how to calculate an employee’s regular wage rate under the Fair Labor Standards Act (FLSA). The final rule became effective on Jan. 15, 2020.
Calculating the regular rate is an essential first step when determining an employee’s overtime compensation.
Under the FLSA, an employee’s regular rate includes all forms of compensation paid to that employee in a workweek. The final rule clarifies what qualifies as compensation.
The DOL’s stated objective with this rule is to provide more certainty for employers that offer additional perks to their employees, but aren’t sure of whether these benefits should be counted as income under the FLSA.
New Rule at a Glance
Employers should become familiar with this final rule and adjust their payroll practices to account for this new guidance on what should be considered compensation.
Employers must comply with numerous reporting and disclosure requirements throughout the year in connection with their group health plans.
Listed below are upcoming important compliance deadlines for employer-sponsored group health plans, organized chronologically. For these requirements, the information provided herein shows the deadlines that apply to calendar year plans. For non-calendar year plans, these deadlines will need to be adjusted to reflect each plan’s specific plan year.
Employers that filed 250 or more IRS Forms W-2 for the prior calendar year must file Forms W-2 with the Social Security Administration and furnish Forms W-2 to employees by Jan. 31 of each year, unless an extension applies.
ALEs that sponsor fully or self-insured health plans are required to report information about the coverage to the IRS each year, using IRS Forms 1094-C and 1095-C. Employers that are not ALEs use IRS Forms 1094-B and 1095-B to meet these reporting obligations. The deadline for filing paper versions of the forms is Feb. 28, 2020. The deadline for electronic filing is March 31, 2020.
Group health plan sponsors that provide prescription drug coverage to Medicare Part D-eligible individuals must disclose to the Centers for Medicare & Medicaid Services (CMS) whether prescription drug coverage is creditable or non-creditable within 60 days after the beginning of the plan year. For calendar year plans, the deadline is March 1, 2020.
ALEs that sponsor fully or self-insured health plans to report information about the coverage to covered employees each year, using IRS Form 1095-C. Employers that are not ALEs use IRS Form 1095-B to provide this information. The IRS recently extended the deadline for furnishing 2019 employee statements, from Jan. 31, 2020, to March 2, 2020.
The electronic filing deadline for Code Sections 6055 and 6056 reporting is March 31, 2020. ALEs that sponsor fully or self-insured health plans are required to report information about the coverage to the IRS each year, using IRS Forms 1094-C and 1095-C. Employers that are not ALEs use IRS Forms 1094-B and 1095-B to meet these reporting obligations.
The IRS announced an increase to flexible spending account (FSA) contribution limits for the 2020 plan year. Individuals can contribute $2,750 in 2020, up $50 from the previous year.
Since this announcement came so late in the year, some employers may not use the updated figures in their benefits limits—as doing so would require an addendum.
In fact, some employers have been known to use limits from the previous year because they cannot wait until this far into the enrollment season to release benefits materials. With that in mind, it wouldn’t be surprising if employers use the 2019 limits for their FSA plans in 2020.
In addition to the FSA contribution limits, the IRS announced increases for transportation benefits and adoption services. Qualified transportation benefit limits (for parking or transit passes) increased to $270 for 2020. Maximum employer subsidies for qualified adoption expenses rose to $14,300, up $220. Other adoption-related limits increased as well.
On Sept. 24, 2019, the U.S. Department of Labor (DOL) announced a new final rule that updates the salary thresholds that some individuals must meet in order to qualify for a minimum wage and overtime exemption under the federal Fair Labor Standards Act (FLSA). The final rule becomes effective on Jan. 1, 2020.
2019 Overtime Final Rule
The final rule affects the exemptions for executive, administrative and professional (EAP) employees, highly compensated employees (HCEs), employees in the motion picture industry and individuals who work in various U.S. territories.
The final rule’s salary levels differ from both the 2016 and 2019 proposed levels. For 2020, the final rule EAP and HCE salary exemptions are as follows:
Employer Action Steps
To prepare for the final rule’s Jan. 1, 2020 effective date, employers should:
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