IRS Announces 2019 Adjustments for Qualified HDHPs and HSA Contributions

On May 10, the IRS announced 2019 Health Savings Account contribution limit increases within their release of Revenue Procedure 2018-30.

HSA 2018 2019
Individual contribution limit $3,450 $3,500
Family contribution limit $6,900* $7,000

In 2019, the HSA contribution limit for an individual will increase by $50 to $3,500 and for a family by $100 to $7,000. As a reminder, the 2018 family contribution limit recently increased to $6,900 with the update released by the IRS* on April 26, 2018.

In addition, the 2019 High Deductible Health Plan deductible amounts and out-of-pocket expense limits were also announced. To be eligible to contribute to an HSA in 2019, one must be enrolled in a high deductible health plan that meets the following requirements:

HDHP (individual) 2018 2019
Minimum annual deductible $1,350 $1,350
Maximum annual out-of-pocket $6,650 $6,750

HDHP (family) 2018 2019
Minimum annual deductible $2,700 $2,700
Maximum annual out-of-pocket $13,300 $13,500

HSA Family Contribution Amount Lowered for 2018

Today, the IRS published Internal Revenue Bulletin (IRB) 2018-10 that contains Revenue Procedure (Rev. Proc.) 2018-19.

Effective for calendar year 2018, the family contribution limit for HSAs has been lowered to $6,850 from the previously set amount of $6,900.

This change came as a result of the tax reform law (P.L. 115-97) that changed the annual inflation adjustment factor from the Consumer Price Index (CPI) to a new factor known as ‘chained CPI’. This change was anticipated to slow the rate of changes in all programs under the tax code, including HSAs.


Top 10 Workplace Discrimination Claims  

In 2017, the Equal Employment Opportunity Commission (EEOC) resolved more than 99,109 workplace discrimination claims—securing more than $398 million from employers in the private and public sectors as a result of these claims. Discrimination lawsuits can be very time-consuming and expensive for employers, and can result in a loss of employee morale or reputation within the community.

Top Causes of Discrimination Claims

According to the EEOC, the following are the top 10 reasons for workplace discrimination claims in fiscal year 2017:

  1. Retaliation—41,097 (48.8 percent of all charges filed)
  2. Race—28,528 (33.9 percent)
  3. Disability—26,838 (31.9 percent)
  4. Sex—25,605 (30.4 percent)
  5. Age—18,376 (21.8 percent)
  6. National origin—8,299 (9.8 percent)
  7. Religion—3,436 (4.1 percent)
  8. Color—3,240 (3.8 percent)
  9. Equal Pay Act—996 (1.2 percent)
  10. Genetic Information Nondiscrimination Act—206 (0.2 percent)

These percentages add up to more than 100 percent because some lawsuits were filed alleging multiple reasons for discrimination.

What Employers Should Do

Employers should take the following steps to protect themselves from retaliation and other discrimination claims:

  • Audit their practices to uncover any problematic situations.
  • Create a clear anti-retaliation policy that includes specific examples of what management can and cannot do when disciplining or terminating employees.
  • Provide training to management and employees on anti-retaliation and other discrimination policies.
  • Implement a user-friendly internal complaint procedure for employees.
  • Uphold a standard of workplace civility, which can reduce retaliatory behaviors.

For more information on discrimination claims and for tips on how to protect your business, contact gente today.


Healthcare Spending For People Covered By Employers Increased In 2016 Due To Rising Prices, Data Indicate.

The Wall Street Journal Share to FacebookShare to Twitter (1/23, Whalen, Subscription Publication) reports that healthcare spending for Americans with employer-sponsored coverage rose in 2016 even though their usage decreased, according to an analysis conducted by the Health Care Cost Institute.

The Hill Share to FacebookShare to Twitter (1/23, Hellmann) reports that spending on healthcare “has increased because prices are rising, not because Americans are using more health care,” according to an analysis conducted by the Health Care Cost Institute. Data show “total health-care spending grew by 4.6 percent per person from 2015 to 2016 even as utilization of services remained steady, or declined in some cases.” Consequently, “health-care spending per person reached a new high of $5,407 in 2016.”

The Miami Herald Share to FacebookShare to Twitter (1/23, Chang) reports the analysis revealed that working Americans paid more for healthcare “every year from 2012 to 2016 – mostly due to double-digit price hikes for brand-name prescription drugs, inpatient surgeries and emergency room visits.” For the study, HCCI examined “more than 4 billion insurance claims for about 39 million people younger than 65 who were covered through their jobs.”

Modern Healthcare Share to FacebookShare to Twitter (1/23, Livingston, Subscription Publication) reports that overall, per capita healthcare spending grew by 15% from 2012 to 2016.

 

h/t to NAHU for the great brief!


IRS Announces Employee Benefit Plan Limits for 2018

 

OVERVIEW

Many employee benefits are subject to annual dollar limits that are periodically increased for inflation. The Internal Revenue Service (IRS) recently announced cost-of-living adjustments to the annual dollar limits for various welfare and retirement plan limits for 2018. Although some of the limits will remain the same, many of the limits will increase for 2018.

The annual limits for the following commonly offered employee benefits will increase for 2018:

*   *  High deductible health plans (HDHPs) and health savings accounts (HSAs);  

*    *  Health flexible spending accounts (FSAs);

*    * Transportation fringe benefit plans; and  401(k) plans.

ACTION STEPS

Employers should update their benefit plan designs for the new limits and also make sure that their plan administration will be consistent with the new limits in 2018. Employers may also want to communicate the new benefit plan limits to employees in connection with annual open enrollment.

HSA and HDHP Limits

 

(HSA Contribution Limit)
Limit 2017 2018 Change
Self-only HDHP coverage $3,400 $3,450 Up $50
Family HDHP coverage $6,750 $6,900 Up $150
Catch-up contributions* $1,000 $1,000 No change
(HDHP Limits)

Limit

2017

2018

Change

Minimum deductible Self-only coverage

$1,300

$1,350

Up $50

Family coverage

$2,600

$2,700

Up $100

 

Maximum

out-of-pocket

 

Self-only coverage

$6,550

$6,650

Up $100

Family coverage

$13,100

$13,300

Up $200

FSA Benefits

(FSA Limits)
Limit 2017 2018 Change
Health FSA (limit on employees’ pre-tax contributions) $2,600 $2,650 Up $50
Dependent care FSA

(tax exclusion)*

$5,000 ($2,500 if married  and filing taxes separately) $5,000 ($2,500 if married and filing taxes separately)

No change

*Not adjusted for inflation

Transportation Fringe Benefits

 

(Transportation Benefits)
Limit (monthly limits)

2017

2018

Change

Transit pass and vanpooling (combined) $255 $260 Up $5
Parking $255 $260 Up $5

Adoption Assistance Benefits

 

(Adoption Benefits) 
Limit 2017 2018 Change
Tax exclusion (employer-provided assistance) $13,570 $13,840 Up $270

Qualified Small Employer HRA (QSEHRA)

 

(QSEHRA) 

Limit

2017

2018

Change

Payments and Reimbursements Employee-only coverage $4,950 $5,050 Up $100
Family coverage $10,000 $10,250 Up $250

401(k) Contributions

 

(401(k) Contributions)
Limit

2017

2018

Change

Employee elective deferrals $18,000 $18,500 Up $500
Catch-up contributions $6,000 $6,000 No change

 


New Regulations Expand Exemptions from the Contraceptive Mandate

On Oct. 6, 2017, the Departments of Labor (DOL), Health and Human Services (HHS) and the Treasury (Departments) issued two interim final rules expanding certain exemptions from the Affordable Care Act’s (ACA) contraceptive coverage mandate.

The first interim final rule expands the availability of the exemption for employers that object to providing contraceptive coverage based on their religious beliefs.

The second interim final rule provides an additional exemption for certain employers that object to providing contraceptive coverage based on their moral convictions (but not religious beliefs).

ACTION STEPS

This guidance, which is effective immediately, significantly expands the number of employers that are eligible for an exemption from the contraceptive coverage mandate. Under the expanded exemptions, a plan sponsor, issuer and plan covered by these exemptions will not be penalized for failing to include contraceptive coverage in the plan’s benefits.

Background

Effective for plan years beginning on or after Aug. 1, 2012, the ACA requires non-grandfathered health plans to cover certain women’s preventive health services without cost-sharing (such as a copay, coinsurance or deductible). Under these rules, plans must cover all FDA-approved contraceptive methods, sterilization procedures, and patient education and counseling for all women with reproductive capacity.

However, special contraceptive coverage rules apply for certain religious employers and organizations. These rules exempt churches and other houses of worship from the ACA’s requirement to cover contraceptives. For other church-affiliated institutions that object to contraceptive coverage (such as schools, charities, hospitals and universities), these rules establish an accommodations approach.

Under the accommodations approach, eligible organizations do not have to contract, arrange, pay or refer for any contraceptive coverage to which they object on religious grounds. However, separate payments for contraceptive services will be provided to females in the health plan by an independent third party, such as an insurance company or third-party administrator (TPA), directly and free of charge.

For this purpose, an “eligible organization” is one that:

– Opposes providing coverage for some or all contraceptive services that are required to be covered, on account of religious objections;

– Is organized and operates as a nonprofit entity; and

– Holds itself out as a religious organization.

In addition, on June 30, 2014, in Burwell v. Hobby Lobby Stores, Inc. et al., the U.S. Supreme Court created a narrow exception to the contraceptive mandate for closely held for-profit businesses that object to providing coverage for certain types of contraceptives based on their sincerely held religious beliefs.

To be eligible for the accommodations, an organization must also self-certify (or notify HHS) that it meets the criteria and provide the self-certification to the plan’s issuer or TPA.

Expansion of the Religious Exemption

A number of lawsuits have been filed challenging the Departments’ accommodations approach, asserting that it infringes on religious liberty. The two new regulations issued by the Departments are intended to end this long-running litigation by:

Extending the exemption to include nongovernmental employers, issuers and individuals that have sincerely-held religious or moral beliefs objecting to contraceptive or sterilization coverage; and

Making the accommodations approach optional for eligible organizations.

As a result, objecting employers are no longer required to choose between direct compliance and compliance through the accommodation. A plan sponsor, issuer and plan covered by these exemptions will not be penalized for failing to include contraceptive coverage in the plan’s benefits.

Eligible Organizations

This exemption may apply to all types of nongovernmental employers, including:

  • – Churches, integrated church auxiliaries, conventions or associations of churches, or religious orders;
  • – Nonprofit organizations;
  • – For-profit entities, regardless of whether they are closely held;
  • – Institutions of higher education; and
  • – Any other nongovernmental employers.

This exemption also applies to health insurance issuers offering group or individual insurance coverage that have sincerely-held religious or moral beliefs objecting to contraceptive or sterilization coverage.

This exemption is narrower in scope than the exemption based on religious objections. It may only apply to the following types of nongovernmental employers:

  • – Nonprofit organizations;
  • – Privately held for-profit entities; and
  • – Institutions of higher education.

Health insurance issuers offering group or individual insurance coverage that have sincerely-held moral objections to providing contraceptive or sterilization coverage may also qualify for this exemption. The Departments are requesting comment on whether this moral objection exemption should also be extended to all for-profit entities (regardless of whether they are closely held or publicly traded) and nonfederal governmental employers, such as local government hospitals.

No Self-certification Requirement

Under these new rules, employers who claim an exemption may voluntarily, but are not required to, provide any self-certification or notice to the government. The legal challenges to the accommodations approach have focused on whether the requirement to self-certify (or notify HHS) of an organization’s objections infringes on religious liberty by making the organization complicit in the provision of contraceptives. The new rules are intended to end this litigation by making the self-certification requirement optional.


Why Tax Reform Is the Next Hot Ticket for Healthcare Regulation

In spite of the many headlines and healthcare bills that have centered on repealing or replacing the Affordable Care Act (ACA), the healthcare landscape in the United States today looks remarkably similar to the way it did when the ACA was passed seven years ago: The majority of Americans still receive insurance through their employers.

To date, the ACA has supported the growth of consumer-directed healthcare and account-based healthcare, such as health savings accounts (HSAs), flexible spending accounts (FSAs) and health reimbursement arrangements (HRAs). It has also given rise to a robust debate about the longstanding tax exclusion on employer-sponsored healthcare.

After multiple failed attempts at repealing the ACA, the focus for the Trump administration and Republican leaders in Congress is now likely to shift to tax reform. The ACA is ultimately a tax law – and though the current tax structure for employer-sponsored health insurance works, it won’t for long. Starting in 2020, the so-called “Cadillac tax,” which is arguably the number one issue for employers in healthcare today, will be levied on insurance companies who provide employer-sponsored health benefits whose value exceeds legally specified thresholds. The concern is that by limiting the tax preference for employer-sponsored health insurance, this controversial 40-percent excise tax will burden employees. The Cadillac tax was originally to take effect in 2018, but the effective date was delayed by the Consolidated Appropriations Act to 2020. The tax is projected to be imposed on plans that cost more than $10,800 for single health plans and $29,100 for non-single (e.g., family) plans.

Already the looming Cadillac tax is leading employers to adjust the plans they offer employees. According to the American Health Policy Institute survey in 2015, 19 percent of employers were already curtailing or eliminating FSAs in order to avoid triggering the excise tax; and 13 percent were curtailing or eliminating employee contributions to HSAs. A separate survey, published in August 2017 by the National Business Group on Health, found that uncertainty surrounding the surcharge is influencing efforts to control healthcare costs for nearly 10 percent of large employers surveyed. The NBGH survey also found that 90 percent of large employers are likely to offer consumer-driven healthcare plans by 2018, with 39 percent of employers offering only higher deductible plans by that time.

In 2015, 164 million people below age 65 got insurance coverage from employers, and most of them said they were satisfied with what they received. To protect these consumers – and all Americans – from rising healthcare costs, it is essential that both employer-sponsored and consumer-driven healthcare plans remain accessible and affordable. Not only does employer-sponsored healthcare help to self-regulate the marketplace – employers want to keep costs down and competitive benefits serve to attract and retain top talent – but it also fosters an environment where high-quality healthcare can be provided to Americans in a cost-effective manner. In a tax reform package that protects the tax exclusion on employer-sponsored healthcare, there are likely to be opportunities to insert provisions that are also friendly to HSAs and consumer-driven healthcare plans.


New Rules for Disability Benefit Claims Take Effect in 2018

OVERVIEW

On Dec. 16, 2016, the Department of Labor (DOL) released a final rule to strengthen the claims and appeals requirements for plans that provide disability benefits. According to the DOL, these new protections will ensure that disability claimants receive a full and fair review of their benefit claims, as required by the Employee Retirement Income Security Act of 1974 (ERISA).
The new requirements provide disability claimants with protections that are similar to those that apply to claims for group health benefits. They are intended to protect disability claimants from conflicts of interest, increase transparency and allow claimants to respond more effectively to benefit decisions.

ACTION STEPS

ERISA plans that include disability benefits must comply with the new procedural protections, effective for claims that are submitted on or after Jan. 1, 2018. Entities that administer disability benefit claims, including issuers and third-party administrators, will need to revise their claims procedures to comply with the final rule. Although the DOL has recently indicated that it may delay or amend the final rule, it is possible that the rule’s new requirements will still take effect as scheduled.

ERISA plans that include disability benefits must comply with the new procedural protections, effective for claims that are submitted on or after Jan. 1, 2018. Entities that administer disability benefit claims, including issuers and third-party administrators, will need to revise their claims procedures to comply with the final rule. Although the DOL has recently indicated that it may delay or amend the final rule, it is possible that the rule’s new requirements will still take effect as scheduled.

ERISA Requirements

Section 503 of ERISA requires every employee benefit plan to:

Provide adequate notice in writing to any participant or beneficiary whose claim for benefits under the plan has been denied, setting forth the specific reasons for the denial, written in a manner calculated to be understood by the participant; and

Afford a reasonable opportunity to any participant whose claim for benefits has been denied for a full and fair review by the appropriate named fiduciary of the decision denying the claim.

The DOL first adopted claims procedure regulations for employee benefit plans in 1977. In 2000, the DOL updated its claims procedure regulations by improving and strengthening the minimum requirements for employee benefit plans, including plans that provide disability benefits.

Effective for plan years beginning on or after Sept. 23, 2010, the Affordable Care Act (ACA) amended ERISA to include enhanced internal claims and appeals requirements for group health plans.

Section 503 of ERISA requires every employee benefit plan to:

*  Provide adequate notice in writing to any participant or beneficiary whose claim for benefits under the plan has been denied, setting forth the specific reasons for the denial, written in a manner calculated to be understood by the participant; and

* Afford a reasonable opportunity to any participant whose claim for benefits has been denied for a full and fair review by the appropriate named fiduciary of the decision denying the claim.

The DOL first adopted claims procedure regulations for employee benefit plans in 1977. In 2000, the DOL updated its claims procedure regulations by improving and strengthening the minimum requirements for employee benefit plans, including plans that provide disability benefits.

Effective for plan years beginning on or after Sept. 23, 2010, the Affordable Care Act (ACA) amended ERISA to include enhanced internal claims and appeals requirements for group health plans.

Additional Protections for Disability Claimants

According to the DOL, it can be challenging for workers seeking disability benefits from an employer-sponsored plan to understand the process and why their claim is approved or denied. To improve the fairness, transparency and accuracy of the disability claims process, the final rule requires that plans, plan fiduciaries and insurance providers comply with additional procedural protections when dealing with disability benefit claimants.

The final rule includes the following requirements for the processing of claims and appeals for disability benefits:

  • Improvement to Basic Disclosure Requirements: Benefit denial notices must contain a more complete discussion of why the plan denied a claim and the standards used in making the decision.
  • Right to Claim File and Internal Protocols: Benefit denial notices must include a statement that the claimant is entitled to receive, upon request, the entire claim file and other relevant documents. Benefit denial notices also have to include the internal rules, guidelines, protocols, standards or other similar criteria of the plan that were used in denying a claim or a statement that none were used.
  • Right to Review and Respond to New Information Before Final Decision: The final rule prohibits plans from denying benefits on appeal based on new or additional evidence or rationales that were not included when the benefit was denied at the claims stage, unless the claimant is given notice and a fair opportunity to respond.
  • Avoiding Conflicts of Interest: Plans must ensure that disability benefit claims and appeals are adjudicated in a manner designed to ensure the independence and impartiality of the persons involved in making the decision. For example, a claims adjudicator or medical or vocational expert could not be hired, promoted, terminated or compensated based on the likelihood of the person denying benefit claims.
  • Deemed Exhaustion of Claims and Appeal Processes: If plans do not adhere to all claims processing rules, the claimant is deemed to have exhausted the administrative remedies available under the plan, unless the violation was the result of a minor error and other specified conditions are met. If the claimant is deemed to have exhausted the administrative remedies available under the plan, the claim or appeal is deemed denied on review without the exercise of discretion by a fiduciary and the claimant may immediately pursue his or her claim in court.
  • Certain Coverage Rescissions Are Adverse Benefit Determinations Subject to the Claims Procedure Protections: Rescissions of coverage, including retroactive terminations due to alleged misrepresentation of fact (for example, errors in the application for coverage), must be treated as adverse benefit determinations that trigger the plan’s appeals procedures. Rescissions for nonpayment of premiums are not covered by this provision.
  • Notices Written in a Culturally and Linguistically Appropriate Manner: Similar to the ACA standard for group health plan notices, the final rule requires that benefit denial notices be provided in a culturally and linguistically appropriate manner in certain situations.

Court Orders EEOC to Reconsider Wellness Rules

The U.S. District Court for the District of Columbia has issued a ruling affecting the Equal Employment Opportunity final wellness rules . In AARP v. EEOC, the  court directed the EEOC to reconsider its final wellness rules under the American with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA).

The final rule allows employers to offer wellness incentives of up to 30 percent of the cost of health plan coverage. The court held that the EEOC failed to provide a reasoned explanation for adopting the incentive limit. Rather than vacating the final rules, the court sent them back to the EEOC for reconsideration.

ACTION STEPS

It is unclear how the EEOC will respond to the court’s decision—the EEOC may appeal the ruling or reduce the January 1, 2017 amount of permitted incentives. For now, the EEOC’s final EEOC’s final wellness rules under wellness rules remain in place.

Due to this new legal uncertainty, employers should carefully August 22, 2017 consider the level of incentives they use with their wellness District court remands final wellness programs. Employers should also monitor any developments rules to the EEOC for related to the EEOC’s rules.

Final Wellness Rules

  • ** Under the ADA, an employer may make disability- EEOC’s final wellness rules, related inquiries and require medical examinations after concluding that it was not well employment begins only if they are job-related and consistent with business necessity. However, these reasoned, and sent the rules back inquiries and exams are permitted if they are part of a to the EEOC for reconsideration. voluntary wellness program.
  • ** Under GINA, employers cannot request, require or purchase genetic information. This includes information about an employee’s genetic tests, the genetic tests of family members and the manifestation of a disease or disorder of a family member. Like the ADA, GINA includes an exception that permits employers to collect this information as part of a wellness program, as long as the provision of information is voluntary.

Neither the ADA nor GINA define the term “voluntary” in the context of wellness programs. For many years, the EEOC did not definitively address whether incentives to participate in wellness programs are permissible under the ADA and, if so, in what amount. On May 16, 2016, the EEOC issued long-awaited final rules that describe how the ADA and GINA apply to employer-sponsored wellness programs. These rules became effective on Jan. 1, 2017.

  • ** The final ADA rule provides that incentives offered to an employee who answers disability-related questions or undergoes medical examinations as part of a wellness program may not exceed 30 percent of the total cost for self-only health plan coverage.
  • ** The final GINA rule clarifies that an employer may offer an incentive of up to 30 percent of the total cost of self-only coverage to an employee whose spouse provides information about his or her current or past health status as part of the employer’s wellness program.

Court Decision

On Aug. 22, 2017, the U.S. District Court for the District of Columbia ruled against the EEOC and remanded the final wellness rules back to the agency for reconsideration. In this case, the AARP argued that the 30 percent incentive limit is inconsistent with the voluntary requirements of the ADA and GINA, and that employees who cannot afford to pay a 30 percent increase in premiums will be forced to disclose their protected information when they would otherwise choose not to do so. The EEOC identified numerous reasons for why it adopted the 30 percent incentive limit. However, the court concluded that the EEOC’s basis for establishing this incentive level was not well reasoned and not entitled to deference from the court. Rather than vacating the rules altogether, however, the court remanded them to the EEOC for reconsideration.


US Citizenship and Immigration Services Revises Form I-9

Updated Form I-9 Required Beginning Sept. 18

On July 17, 2017, U.S. Citizenship and Immigration Services (USCIS), part of the U.S. Department of Homeland Security, issued an updated version of Form I-9: Employment Eligibility Verification (Form I-9). Under federal law, every employer that recruits, refers for a fee or hires an individual for employment in the United States must complete a Form I-9. The updated form replaces a version that was issued in 2016. Employers must begin using the new form on Sept. 18, 2017. The new form expires on Aug. 31, 2019. The updated Form I-9 includes revisions to the instructions and to the list of acceptable documents, but does not include substantive revisions for completing the Form I-9.