In HIV and Hepatitis Policy Institute, et al. v. United States Department of Health and Human Services, et al., Civil Action No. 22-2604, a U.S. District Court for the District of Columbia has remanded the 2021 regulations related to manufacturer assistance back to HHS for additional consideration. In a nutshell the 2021 regulations allow a plan to decide whether to count manufacturer assistance such as coupons and the like, toward satisfaction of the plan’s deductible. The challengers to the regulations want such assistance to count toward the insured’s financial obligation.

This could raise potential issues for HSA compatible high-deductible health coverage. As a reminder, an individual must pay all expenses, with limited exceptions for preventive services, until the minimum statutory deductible is satisfied. HHS has filed a motion to clarify and a motion to appeal.

This litigation is ongoing and can be tracked here. As more information becomes available, we will share it.

PREVENTIVE SERVICES CHALLENGED

You may recall certain Affordable Care Act (ACA) Preventive Services must be covered without cost to the patient. The preventive services were challenged and U.S. District Judge Reed O’Connor rendered his decision in Braidwood Management Inc. v. Becerra, finding that health plans no longer need to cover certain ACA Preventive Services. Judge O’Connor’s decision was appealed, and his ruling has been stayed pending any ruling by the appeals court. In the meantime, plans should continue to cover preventive services.

NO SURPRISES ACT

In the continuing saga between health care providers and the Department of Health and Human Services, the Department of Labor, and the Treasury, a federal court in Texas has once again vacated additional portions of the regulations that implement the surprise billing independent dispute resolution (IDR) process. For more information and to track the status see here.

As a reminder the No Surprises Act (NSA) replaces the emergency provisions of the Affordable Care Act (ACA) and prohibits balanced billing in three instances (1) emergency services, (2) out-of-network services received in-network, and (3) emergent air ambulance services.

OTHER COMPLIANCE ISSUES

For a summary of certain other employment compliance obligations to be aware of in 2023 and beyond, see the 2023 Year End At Issue here.

YEAR-END REMINDERS

Preventive Health Services

A preventive service must be covered by the plan (in-network services) at no cost. When a new preventive mandate is approved a plan must begin covering it by the first date of the plan year beginning one year after the date of approval. A complete list of ACA-required preventive services can be accessed from the Healthcare.gov website.

The preventive service mandate has been challenged and litigation is ongoing, see above.

Employer Shared Responsibility Provisions

Applicability. For purposes of the ACA’s employer shared responsibility requirement as well as the reporting and disclosure requirements, applicable large employer (ALE) status is determined each calendar year, based on the average size of the employer’s workforce during the prior year. Thus, if you averaged at least 50 full-time employees, including full-time equivalent employees during 2023, you are most likely an ALE for 2024, and are subject to the reporting requirements due in early 2025.

Affordability Standard. For purposes of determining affordability, coverage under an employer-sponsored plan is deemed affordable if the employee’s required contribution to the plan does not exceed 9.12% of the employee’s household income for the taxable year, based on the cost of single coverage in the employer’s least expensive plan. For 2024 the affordability goes down to 8.39%.

Increase in Excise Tax Penalties. The chart below reflects the annual penalties, for purposes of calculating the ‘no coverage’ excise tax pursuant to Code Section 4980H(a), and the ‘inadequate or unaffordable’ excise tax pursuant to Code Section 4980H(b) for 2022 to 2024. These are the excise taxes that could apply if an applicable large employer is found not to have offered health coverage to a full-time employee. These amounts are based on the HHS inflationary percentage contained in its annual benefit and payment parameter standards for the relevant year, and as officially released by the Internal Revenue Service. Annualized penalties are assessed on a monthly basis.

Small Business Tax Credit (SBTC)

Small businesses and tax-exempt employers who provide health care coverage to their employees under a qualified health care arrangement are entitled to a tax credit, known as the small business tax credit (SBTC). To be eligible for the SBTC, the employer must employ fewer than 25 full-time equivalent employees, whose average annual wages are less than $66,650 (indexed for 2024; the wage ceiling in 2023 is $61,400).

The tax credit phases out for eligible small employers when the number of its full-time employees (FTEs) exceeds 10; or, when the average annual wage for the FTEs exceeds $32,400 in the 2024 tax year (the phase-out wage limit in 2023 is $30,700). As a reminder, only qualified health plan coverage purchased through a SHOP marketplace is available for the tax credit, and only for a 2-consecutive year period.

For purposes of calculating the SBTC, the Form 8941 is filed annually on the employer’s tax return as a general business credit; tax exempt entities would file the Form 8941 with its Form 990-T.

Additional ACA-related Fees

Patient-Centered Outcomes Research Institute (PCORI) Fees

The PCORI fee is assessed on the average number of lives covered under the policy or plan. The fee will continue to be assessed through 2029.

For policy and plan years ending between October 1, 2022, and October 1, 2023, the fee is $3.00 per covered life. The fee increases to $3.22 per covered life for policy and plan years ending between October 1, 2023 and before October 1, 2024 (applicable for a 2023 calendar year plan. Affected entities are required to pay the fees and file the Form 720 by July 31st of each year.

For further explanation of the reporting obligations see Health Reform Bulletin 162.

ACA Cost Share Restrictions

The chart below reflects the 2024 and 2023 inflationary adjustments applicable to out-of-pocket (OOP) limits including deductibles, co-insurance and co-payments in ACA plans. These cost-share restrictions apply to insured plans offered via the marketplace and insured and self-funded plans offered outside marketplace. These amounts differ from the OOP limits applicable to high deductible health plans used in conjunction with a health savings account (HSA).

As a reminder, individuals aged 55 or older may make an additional $1,000 “catch-up” contribution to their HSAs.

Notably, for 2025 the ACA out-of-pocket limits will decrease and will be $9,200 for self-only and $18,400 for family. This is the first time the out-of-pocket limits have decreased.

UPDATES: STATE-REQUIRED INDIVIDUAL MANDATE REPORTING

The states of California, District of Columbia, Massachusetts, New Jersey, Rhode Island, and Vermont have enacted individual mandate laws that require residents to be covered by minimum essential coverage (MEC) or pay a state tax. Further, certain states require entities who provide MEC to file information returns to the relevant state revenue departments.

Most of these states accept the Form 1094 and 1095 series used for federal MEC filing purposes. Recently, several state revenue departments have issued updates relating to these reporting obligations, as reflect in the charts below.

Notable, unlike many other employment laws, these state individual mandates are not based on place of employment; rather, the applicability of the state individual mandate laws is based on state of residence.

HIGHLIGHTS OF ACA-RELATED REPORTING AND DISCLOSURE REMINDERS

The two tables below reflect certain reporting and disclosure requirements.

ACA-required Reporting Reminders

*Beginning in 2024, employers issuing 10 or more forms in aggregate must e-file their information returns.

ADDITIONAL ACA-RELATED DISCLOSURE REMINDERS

Note: Below are select ACA-required disclosures. For a more descriptive list of notice obligations relating to the ACA and other welfare benefit plans, ask your CBIZ representative for a Chart of Notice Obligations.

INCREASED PENALTIES FOR CERTAIN COMPLIANCE VIOLATIONS

Federal government agencies who enforce the ACA, including the Departments of Labor, Treasury and Health and Human Services, have authority to adjust civil penalties attributable to compliance failures.