R&R Insurance Blog

Employers with insured group health plans may soon receive a medical loss ratio (MLR) rebate from their health insurance issuers. Issuers who did not meet the applicable MLR percentage for the last calendar year must provide rebates to plan sponsors by September 30th. These rebates may be in the form of a premium credit or a lump-sum payment.

Most group health plans sponsored by employers in the private sector are subject to ERISA. Employers with ERISA plans should not assume they can simply retain an MLR rebate. In general, unless an employer pays the entire cost of health coverage without any employee contribution, at least a portion of the rebate will be a plan asset under ERISA.

Any rebate amount that qualifies as a plan asset must be used for the exclusive benefit of the plan’s participants and beneficiaries. The question is: do you know how to determine that? Furthermore, once you have determined that, do you know how to distribute the assets appropriately?

R&R Insurance has assisted our benefits clients with this challenge every year, providing them with the proper guidance and proprietary tools to help them conduct the proper analysis.

If you’re feeling lost and don’t know what you should be doing to be in compliance with your ERISA Fiduciary requirements, contact one of our Knowledge Brokers – we know!

 

Footnote: The Affordable Care Act (ACA) includes a provision known as the Medical Loss Ratio (MLR) which requires insurance companies to review their overall plan performance by market segments (small group and large group) to determine if they must return a portion of the premiums collected. For the small employer market segment, the insurance carriers must demonstrate that they spent $0.80 of every $1 collected in premium (80% medical loss ratio or greater) for all of their small group plans in a specific State directly on claims and health promotion for the covered members. For the large group market, the threshold is 85%. This review is conducted by calendar year and reported to the Centers for Medicare and Medicaid Services (CMS) by the following August. If a carrier’s MLR is less than the applicable 80% or 85% level for the prior calendar year, they are then required to rebate a portion of the premium back to the policyholders.

Recently, the Equal Employment Opportunity Commission (EEOC) and U.S. Department of Justice (DOJ) each issued new technical assistance documents about how employers’ use of artificial intelligence (AI) and other software tools to make employment decisions may result in unlawful disability discrimination under the Americans with Disabilities Act (ADA).

Employers increasingly use software tools to help select new employees, monitor performance, determine pay or promotions, and administer or score tests. Without safeguards, this use may result in ADA violations.

The ADA requires employers with 15 or more employees to provide reasonable accommodations and have other processes in place to ensure that their software tools do not unfairly rate or screen out qualified individuals with disabilities.

EEOC Guidance

The EEOC’s new guidance focuses on the following three ways an employer’s use of software tools for employment decisions may violate the ADA:

• The employer does not provide a reasonable accommodation necessary for an individual to be rated fairly and accurately by the software;
• The software “screens out” an individual with a disability, even though the individual is able to do the job with a reasonable accommodation; and
• The software makes disability-related inquiries or includes medical examinations.

The EEOC also provides best practices to help employers avoid these violations.

DOJ Guidance

The DOJ’s new guidance provides a broad overview of rights and responsibilities under the ADA. It also provides examples of the types of software tools employers use, clarifies that employers must consider various disabilities when designing or choosing their software, and explains when an employer must provide a reasonable accommodation when using software tools.

Employer Takeaway

Several factors have led these agencies to address this topic. One is the ongoing unemployment challenge for workers with disabilities. The Bureau of Labor Statistics’ April data revealed a labor force participation rate of 23.1% for people with a disability, compared with 67.5% for those without. Employers should review this guidance and assess their employment technology and processes to ensure they are not at risk for ADA violations.

You can read the EEOC’s new guidance here and the DOJ’s new guidance here.

Source: Zywave, Inc.

The Occupational Safety and Health Administration's (OSHA's) vaccine-or-testing Emergency Temporary Standard (ETS) is back on again. 

On Friday, December 17^th, the Sixth Circuit Court of Appeals lifted the stay of OSHA's emergency temporary standard (ETS) requiring private sector employers with at least 100 employees to ensure workers are either vaccinated or tested weekly and wear masks. With the stay lifted, employers must comply with the requirements outlined in the ETS.

Click here to download R&R Insurance's summary of reinstatement with important dates for employers.

In response, OSHA stated that it “will not issue citations for noncompliance with any requirements of the ETS before January 10 and will not issue citations for noncompliance with the standard’s testing requirements before February 9, so long as an employer is exercising reasonable, good faith efforts to come into compliance with the standard. OSHA will work closely with the regulated community to provide compliance assistance.” 

KEY TAKEAWAY ON THIS CHANGE: Affected employers now have until January 10^th, 2022 to comply with the requirements that were initially slated to begin on December 6^th, 2021. Also, weekly testing requirements for unvaccinated employees with an original deadline of January 4^th, 2022 is now delayed until February 9^th, 2022.

ETS opponents have already filed an appeal with the U.S. Supreme Court challenging the Sixth Circuit’s decision. R&R will continue to monitor developments and provide you with updates and resources that pertain to these compliance requirements as they occur. For more information and resources, click here to navigate to our dedicated OSHA Vaccine Mandate Compliance webpage.

Click here to view the full Sixth Circuit Court of Appeals opinion to dissolve the stay order as well the dissenting opinion.

On December 8, 2020, the United Kingdom became the first Western nation to vaccinate patients against COVID-19. Additionally, the Food and Drug Administration concluded in a detailed analysis that the first COVID-19 vaccine being considered for U.S. distribution “met the prescribed success criteria” in a clinical study, paving the way for the agency to green-light distribution as early as this weekend.

While the vaccine will not be available generally for citizens until 2021, employers have begun to raise the question of mandatory vaccination as a work requirement or condition of employment. At present, no law, regulation, or other guidance directly addresses whether employers may require their employees to get a COVID-19 vaccination. The idea is not new; many healthcare workers are currently required to receive certain vaccinations as a condition of their employment.

The EEOC updated its Pandemic Preparedness in the Workplace guidance on March 19, 2020 to address the COVID-19 pandemic advising employers to “follow guidance from the CDC as well as state/local public health authorities.” Notably, the CDC has issued guidance recommending influenza vaccination for critical industries during a pandemic.

It is likely that the EEOC will issue updated guidance to address the issue of COVID-19 vaccinations in the workplace in the near future. Additionally, there are currently discussions within State government concerning how to address this issue within the State law context. Until some action is taken, it appears that employers may require employees to receive vaccinations when available, subject to the restrictions identified by the EEOC and OSHA.

As the pandemic vaccine situation develops and evolves, R&R Insurance will continue to monitor new laws and guidance from federal and state authorities and continue to keep you informed. Employers should weigh the legal exposure and other risks associated with any mandatory vaccination program, and assess whether the alternative of voluntary vaccination may be a better option based on the nature and needs of their businesses. You can read more in the client advisory made available from von Briesen & Roper.

Please visit our COVID-19: Business Recovery Resources webpage for the latest information and quick references on a variety of industries with guidelines and considerations for getting back to full operation.  And visit our R&R Coronavirus Resources webpage for future updates and resources.

Please contact your R&R representative with any questions.

President Trump signed into law on March 18, 2020 the Families First Coronavirus Response Act requiring employers with 500 or fewer employees to provide emergency paid sick leave and family leave to employees dealing with the impact of COVID-19. Below is a high-level summary of these two components of the Act, which become effective as of April 1, 2020:

	Emergency Paid Sick Leave Act	Emergency Family and Medical Leave Expansion Act (EFMLEA)
What it Does	Applicable employers will be required to provide full-time employees with 10 days (80 hours) of paid sick leave when the employee cannot work or telework for reasons related to COVID-19. Part-time employees are also entitled to this benefit based on the average hours worked over a 2-week period.  Below are the allowable leave reasons: Employee is subject to a federal, state or local quarantine or isolation order related to COVID-19 Employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19 Employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis Employee is caring for an individual subject to quarantine or isolation order, or who has been advised by a health care provider to self-quarantine. Employee is caring for their own child whose school or place of care has closed due to COVID-19 concerns Employee is experiencing any other substantially similar condition specified by the Secretary of Health and Humana Services in consultation with the Secretary of the Treasury and the Secretary of Labor.	Applicable employers will be required to provide up to 12 weeks of job-protected family leave for employees who have been employed for at least 30 days and are unable to work or telework due to a need for leave to care for their child if schools are closed or their daycares are unavailable resulting from COVID-19. The first 10 days are unpaid and thereafter the benefit must replace at least two-thirds of the employee’s wages up to a maximum of $200 per day.   Employers are also required to restore employees to their same or equivalent position, and if not available, have ongoing obligation for 1-year to contact impacted employee if such position becomes available (exception for employers with less than 25 employees).
Who is Covered	Applies to employers with fewer than 500 employees	Applies to employers with fewer than 500 employees
Eligibility	All employees, regardless of length of employment are eligible for the leave.	This leave benefit covers employees who have been working for at least 30 calendar days.
Rate of Pay	Employers must pay employees their regular rate of pay if the employee is taking leave for a reason related to their own symptoms of, or exposure to, COVID-19. Employees who are taking leave to care for family members are only entitled to be paid at two-thirds of their regular rate.   Daily and total maximum limits apply see “Appendix A” for details. Special calculation rules apply for part-time employees.	A qualifying employee will not be eligible for pay from the employer for the first ten (10) days unless the employee has available accrued vacation, personal or sick leave which can be substituted for the otherwise unpaid time. An employer is not permitted to require the substitution of accrued paid leave which the employee may have for the 10 unpaid period. After the 10 day period, the employee will be eligible for pay from the employer equal to two-thirds of the employee’s regular rate of pay for the remainder of the available leave up to a maximum of $200 per day, or $10,000 total. Special calculation rules apply to part-time employees.
Employer Notice	Employers are required to post model notice of rights which the Department of Labor will be issuing by  March 25th, 2020.	None specified yet at this time.
Tax Credits	Each quarter, employers subject to the requirement are entitled to a fully refundable tax credit equal to 100 percent of the qualified paid sick leave wages paid by the employer	Each quarter, employers subject to the requirement are entitled to a fully refundable tax credit equal to 100 percent of the qualified paid Family and Medical Leave Act (FMLA) wages paid by the employer.
Exemptions	Employers of employees who are healthcare providers or emergency responders may elect to exclude such employees from eligibility for paid leave. Small businesses with fewer than 50 employees may qualify for exemption from the requirement to provide leave due to school closings or child care unavailability if the leave requirements would jeopardize the viability of the business as a going concern. An authorized officer of the business must determine that at least one of the three conditions described in the DOL’s FAQ is satisfied. Small businesses must still comply with all other allowable leave reasons stated above.	Employers of employees who are healthcare providers or emergency responders may elect to exclude such employees from eligibility for paid leave. Small businesses with fewer than 50 employees may qualify for exemption from the requirement to provide leave due to school closings or child care unavailability if the leave requirements would jeopardize the viability of the business as a going concern. An authorized officer of the business must determine that at least one of the three conditions described in the DOL’s FAQ is satisfied.
Effective Date	Goes into effect April 1, 2020 and will expire on December 31, 2020	Goes into effect April 1, 2020 and will expire on December 31, 2020
Enforcement	Eligible employers who violate the new paid sick leave law will be subject to penalties under the federal Fair Labor Standards Act.	The Department of Labor will enforce the new requirement to provide Public Health Emergency Leave under the FMLA Expansion Act.
Comments	For employers with existing leave policies, the paid sick leave allotment provided for under this act is in addition to whatever sick leave is already offered by employers.	As with other FMLA leave, Public Health Emergency Leave is job-protected leave. Employees have the right to return to their positions when their leave expires. However, that right to return is limited when covered employers with fewer than 25 employees must eliminate the position due to economic circumstances caused by the COVID-19 pandemic and there is no equivalent position available.

 

Compensation under the new paid sick leave law

Under the new paid sick leave law, employers must pay employees their regular rate of pay if the employee is taking leave for a reason related to their own symptoms of, or exposure to, COVID-19. Employees who are taking leave to care for family members are only entitled to be paid at two-thirds of their regular rate. Daily and total maximum limits apply, per the chart below:

Reason for leave	Daily pay rate/cap	Total pay cap
Quarantine or isolation order	Regular rate of pay up to a cap of $511	$5,110
Advice from health care provider to self-quarantine
Experiencing symptoms of COVID-19 and seeking a medical diagnosis
Caring for an individual subject to quarantine or isolation order, or who has been advised by a health care provider to self-quarantine	Two-thirds regular rate of pay, up to a cap of $200	$2,000
Caring for own child whose school or place of care has closed, or whose care provider is closed or unavailable
Experiencing other substantially similar condition specified by HHS

 

For an in depth look, read more here.

For more information and resources, visit MyKnowledgeBroker.com/Coronavirus-Resources-for-Businesses

 

Publish date: 3/20/20 - updated: 4/7/20

Did you know that $4.5 billion in Affordable Care Act (ACA) employer mandate penalties were assessed by the IRS for the first assessment year alone (2015)? It is expected that by 2026, over $228 billion in penalties will have been assessed. This summer, the IRS began sending Letters 226-J for proposed 2017 ACA employer mandate penalties. Additionally, the IRS is increasing efforts to identify potential non-filers via Letter 5699.

One in every six large employers is currently at risk for compliance action by the IRS regarding the ACA penalties.

This is a reality and the fines can be significant!  R&R Insurance provides evaluations and reconciliations for clients.  However this is a constantly evolving process.  In fact, we helped one client avoid a $118,213.26 penalty with our proven process.  Read more here.

For more information regarding Letter 226-J, you can refer to our previous blog here.

For more information regarding Letter 5699, you can refer to our previous blog here.

[Note: The ACA requires applicable large employers (ALEs) to offer affordable, minimum value health coverage to their fulltime employees or pay a penalty. This employer mandate provision is also known as the “employer shared responsibility” or “pay or play” rules. An ALE is only liable for a pay or play penalty if one or more of its full-time employees receive a subsidy for coverage through the Marketplace/Exchange.]

The Internal Revenue Service (IRS) has been sending Letter 5699 to employers that have not complied with their Affordable Care Act (ACA) reporting requirements under Internal Revenue Code Section 6056 for the 2015 calendar year.

Letter 5699, Request for Employer Reporting of Offers of Health Insurance Coverage (Forms 1094-C and 1095-C), requests missing information from applicable large employers (ALEs) that were required to report under Section 6056, but failed to file Forms 1094-C and 1095-C with the IRS. The IRS identifies potentially non-compliant ALEs based on their Form W-2 total employee count reported for the 2015 calendar year.

The IRS began issuing Letter 226-J to certain ALEs that filed Forms 1094-C and 1095-C to inform them of their potential liability for an employer shared responsibility penalty for the 2015 calendar year. Similarly, the IRS has been issuing Letter 5699 as its enforcement mechanism to identify and assess penalties against ALEs that failed to file Forms 1094-C and 1095-C for the 2015 calendar year.

Employers who receive a Letter 5699 should respond to the IRS within the appropriate time frame. When responding to Letter 5699, employers should provide all appropriate information requested by the IRS, including any Forms 1094-C and 1095-C that are due. Keep in mind that penalties may apply for any failures to file with the IRS by required deadlines. The IRS will use information provided in response to Letter 5699 to identify non-compliant ALEs and assess any penalties that may be owed.

For more information regarding Letter 5699 and related ACA reporting penalties, click here.

To learn more about Letter 226-J, you can refer to our previous blog here.

Source: Zywave

The IRS recently issued a Revenue Procedure to index the medical insurance premium contribution percentages used to determine the affordability of an employer’s plan under the Affordable Care Act (ACA). These updated affordability percentages are effective for taxable years and plan years beginning Jan. 1, 2019. For plan years beginning in 2019, employer-sponsored coverage will be considered affordable if the employee’s required contribution for self-only coverage does not exceed 9.86 percent of the employee’s household income for the tax year. This is for purposes of both the “play or pay” rules and premium tax credit eligibility.

This represents a significant increase from the affordability contribution percentage for 2018. The 2018 affordability percentage for the “play or pay” rules and premium tax credit eligibility was 9.56 percent. As a result, some employers may have additional flexibility with respect to their employee contributions for 2019 to meet the adjusted percentage. For more guidance on this and other compliance topics, contact a KnowledgeBroker.

On May 9, 2018, the Departments of Health and Human Service and the Treasury notified officials in Wisconsin that their application for a state innovation waiver under Section 1332 of the Affordable Care Act (ACA) was complete. The Departments will accept public comment on the waiver application until June 8, 2018 and approve or deny the application within 180 days.

Wisconsin proposes to develop and implement a state-based reinsurance program—the Wisconsin Healthcare Stability Plan (WIHSP)—for its individual insurance market. WIHSP, if approved, would begin in the 2019 plan year and reduce premiums by 10.6 percent (relative to what premiums would have been in the absence of the waiver). Wisconsin estimates a federal pass-through rate of 83 percent. Of the overall $200 million program, the federal government is expected to contribute about $166 million and state funds are expected to account for about $34 million.

Stay tuned as developments progress.

You have the opportunity to earn a premium refund on your level-funded plan but do you know what to do with it once you get it? Or maybe you’ve already received one - did you know that there are compliance rules to follow to disburse any employee share of that refund within 90 days?

In most simple terms, if employees pay a portion of health care premiums, then they are entitled to a prorated share of the premium refund. Additionally, you must distribute the appropriate funds within 90 days of receiving the refund check.

There are some interpretations being expressed in the consulting community that would suggest a very simple option exists such as “give every employee the same amount.” We strongly discourage this as it relies on comments from the U.S. Department of Labor (DOL) that contradict other guidance by the DOL. It clearly is not supported.

An employer can apply the entire refund check amount toward reducing employee contributions. However, this only eliminates the need to calculate the “split” between the employees and the employer. Unless the employer has paid 100% of the premiums, employers will still need to calculate the appropriate share of the refund for each employee prorated according to the amount they contributed.

There are basically three compliance options available to employers. If you are not familiar with the compliance options that are available to you, contact an R&R Benefits Knowledge Broker to learn more.