Source: United Benefit Advisors (UBA)
August 2014 brought a court case that will be of interest to employers that apply significant penalties to those who choose not to participate in wellness programs. The Department of Health and Human Services (HHS) has now provided an additional way for religious organizations that object to covering contraceptives to receive an exemption and has offered some insight into how it will allow closely-held for-profit organizations that object to covering contraceptives to receive an exemption.
EEOC Sues Employer over Wellness Penalties
For the first time, the Equal Employment Opportunity Commission (EEOC) has sued an employer on the grounds that the penalty it applied for not participating in its wellness program was so high that participation was not, as a practical matter, “voluntary.” Under EEOC rules, an employer may conduct medical examinations, which includes obtaining medical histories and blood draws, only in limited situations. One of those permitted situations is a voluntary wellness program. The employer in this case paid 100% of the premium if the employee participated in the wellness program and no part of the premium if the employee chose not to participate. Because the program did not qualify as “voluntary,” the disability-related questions employees were asked on the health risk assessment and the blood draw violated the Americans with Disabilities Act, according to the EEOC’s Complaint.
Additional Accommodations for Employers with Religious Objections to Covering Contraceptives
On August 22, 2014, the Departments of Health and Human Services, Labor, and Treasury released new rules that provide some additional accommodations to employers that have religious objections to covering contraception under their group health plans. The rules are in response to recent decisions by the U. S. Supreme Court that the approach that HHS has taken to try to balance the requirement that as part of the first-dollar preventive services requirement group health plans provide women with no-cost contraceptives with the religious objections some entities have to providing coverage for contraception.
Cost of Living Adjustments Update
As we noted in last month’s Compliance Recap, the IRS has released the cost-adjusted “affordability” thresholds for 2015. Affordability is measured differently for purposes of eligibility for the premium tax credit/subsidy, any employer-shared responsibility penalty triggered by an employee receiving a premium subsidy, and the individual-shared responsibility penalty. For 2015 an individual will be exempt from the individual-shared responsibility requirement if the cost of coverage exceeds 8.05% of the individual’s household income. An employee will be eligible for a premium subsidy if the employee’s cost for single-only coverage under the least expensive minimum value plan offered to the employee exceeds 9.56% of the employee’s safe harbor income. It is currently unclear whether for purposes of the employer-shared responsibility (play or pay) penalty the affordability threshold will be increased to 9.56% or if it will remain at 9.5% for 2015. Until the IRS provides clarification, the safest approach is to assume the safe harbor affordability thresholds will remain at 9.5% of the chosen safe harbor (W-2 income, rate of pay, or Federal Poverty Level).
Plan sponsors of self-funded group health plans need to be sure their Business Associate Agreements have been amended to meet the requirements of the HITECH Act by September 22, 2014. Generally speaking, plans need to protect the plan participants’ protected health information, and also make sure that third parties that help with plan administration, like claims administrators and many brokers, agree to equally protect this information. These third parties (called “business associates”) have more specific responsibilities than previously. Many Business Associate Agreements have already been updated to include the new responsibilities, but an extended period to amend existing agreements was provided that will end on September 22. HHS has provided a sample??Business Associate Agreement.
Question of the Month
Q:??May a health savings account (HSA) reimburse medical expenses of family members who are not eligible to contribute to an HSA on a tax-favored basis?
A:??Yes, it may. While there are limitations on who may contribute to an HSA (primarily, that the account holder is covered by a high deductible health plan, is not covered by a non-high deductible health plan, and is not covered by Medicare), the expenses of any tax-dependent or spouse may be reimbursed. This means, for example, that even if the employee’s spouse is covered by Medicare or a health flexible spending account that spouse’s expenses may be reimbursed.