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  1. In December 2019, the Fifth Circuit Court of Appeals1 struck down the individual mandate penalty under the Affordable Care Act (ACA) for an individual who does not maintain qualifying health coverage. Although a federal judge in Texas found this conclusion invalidated the entire ACA, the Fifth Circuit was unconvinced. On January 21, 2020, the Supreme Court rejected a request for expedited review. For now, the ACA remains in place.
  1. Following an Executive Order, the IRS, DOL, and HHS (the Departments) proposed regulations seeking to improve healthcare price and quality transparency by group health plans and insurers. The proposed regulations would require disclosure of cost-sharing information on covered items or services from particular providers, including estimates. They would also require online posting of in-network negotiated rates and historical allowed amounts for out-of-network providers. These proposed regulations were issued alongside final regulations requiring hospitals to post their “standard charges” for the items and services they provide.
  1. As we described last year, the Departments published two 2018 regulations expanding exceptions for entities claiming religious or moral objections to the ACA’s contraception coverage requirement. Both the Third and Ninth Circuit Courts of Appeals temporarily blocked these exceptions as likely exceeding the Departments’ authority because they could not be justified under the ACA or the Religious Freedom Restoration Act.2  The Administration and an intervening party are seeking Supreme Court review.
  1. In May 2019, HHS proposed new regulations implementing the ACA’s rule against discrimination in certain health programs on the basis of race, color, national origin, sex, age, or disability. The proposed regulations would amend HHS’s original 2016 regulations by narrowing the circumstances that are considered “sex discrimination” to address only the forms of discrimination already condemned by existing federal civil rights laws. The proposed regulations would also remove requirements to include multi-lingual taglines on plan documents and mailings. The regulations would not apply to self-funded group health plans under ERISA except to the extent they receive financial assistance from HHS.
  1. In June 2019, the IRS, DOL and HHS issued final regulations expanding the availability of Health Reimbursement Arrangements (HRAs) by permitting two new types of HRAs, beginning January 1, 2020: Individual Coverage HRAs (ICHRAs) and Excepted Benefits HRAs (EBHRAs). With ICHRAs, employers may offer a standalone HRA, which employees can use to reimburse premiums for individual health insurance coverage on the marketplace. With EBHRAs, employers may offer a non-integrated HRA to reimburse certain excepted medical expenses, such as premiums for dental, vision, or short-term, limited duration insurance. The IRS also issued proposed regulations addressing applicability of the self-insured health plan nondiscrimination requirements under Code Section 105(h) to ICHRAs and application of the employer shared responsibility (a.k.a. “play or pay”) rules under Code Section 4980H to HRAs, generally.
  1. For health plans and certain large employers, the IRS again extended the ACA deadline to furnish Forms 1095-B and 1095-C to individuals from January 31, 2020 to March 2, 2020 but did not extend the filing deadline with the IRS. The IRS also extended its relief for entities showing they made a good faith effort to comply with the information reporting requirements. And due to reduction of the individual mandate tax to $0, the IRS will not impose penalties for failing to furnish Form 1095-B to participants, provided the plan posts a notice online stating how to request a copy of the form. Similar relief applies to Form 1095-C for large employers, but only as to employees who were part-time the full year.
  1. The Eighth Circuit Court of Appeals held a third-party administrator who overpaid on some claims cannot recoup the overpayment by underpaying another claim on behalf of a different plan—described as “cross-plan offsetting.”3  The court held it was unreasonable to interpret silence in a plan document to permit this practice because such “cross-plan offsetting is in some tension with the requirements of ERISA.”
  1. Following an Executive Order, the DOL issued regulations making it easier for small employers to collaborate to offer association health plans. Since these plans are treated as if offered by a single large employer, they avoid several ACA mandates (such as covering “essential health benefits”). In a legal challenge by multiple states, a court ruled the regulations are unlawful and exceed DOL authority.4  The DOL appealed the ruling.
  1. Under the ACA, plans must limit the cost-sharing (e.g., copays, deductibles, coinsurance) that participants pay each year. Resolving uncertainty created in earlier guidance, the Departments announced, in August 2019, that until further notice a plan need not count drug manufacturer coupons toward these cost-sharing limits.
  1. In September 2019, the Departments issued new guidance on the Mental Health Parity and Addiction Equity Act (Mental Health Parity Act), providing examples emphasizing that non-quantitative treatment limitations (NQTLs) must be both designed and administered the same for mental health and substance abuse treatments as for medical and surgical treatments. The Departments also emphasized plans’ obligations to disclose upon request documents specifying the procedures, methods, or factors used in applying NQTLs. The Departments also published a model form which can be used to request such documentation.
  1. Two cases show how a plan administrator’s failure to comply with regulatory benefit claim procedures can forfeit the court’s deference to the plan decision. The Seventh Circuit Court of Appeals ruled one plan lost its right to deference because it was not enough to “substantially comply” with the final determination deadline.5  Likewise, a federal district court in Ohio gave no deference to a claim denial when the named plan administrator delegated final claim determination to another party without authorization to do so in the plan document.6
  1. HHS continues to assess penalties for HIPAA violations, including a $3 million settlement with a hospital system for data breaches resulting from an unsecured server. Other common penalty triggers included failure to obtain business associate agreements, late breach notifications, failure to allow individuals to timely access their health information, and inadequate policies and procedures. Premera also recently agreed to pay $74 million to settle a class action resulting from its data breach a few years ago.
  1. Most health plans were required to obtain a health plan identifier (HPID) by November 2014. Shortly before the deadline, HHS announced an indefinite enforcement delay so it could give the matter further study. In 2019, HHS eliminated the HPID requirement.
  1. Courts continue to address lawsuits asserting the Mental Health Parity Act requires coverage of wilderness treatment therapy. While several early court decisions were receptive to participants’ arguments that wilderness treatment exclusions in their plans violated the Act,7 a growing number of courts have upheld decisions to deny coverage for such facilities. Because these cases often turn on the particular language of the plan document, one court observed that the results of such cases are “all over the map.”8
  1. A federal district court in Iowa ruled an employee’s nondisclosure of undocumented immigrant status did not justify rescission of health coverage. Under the ACA, a health plan cannot retroactively cancel coverage except in cases of fraud or intentional misrepresentation of a “material fact.” The Plan’s definition of “employee” did not depend on the individual’s immigration status, and the court concluded immigration status wasn’t material.9
  1. A federal district court in Arizona permitted a claim denial lawsuit to proceed even though no claim appeal had been filed, because the plan documents did not clearly state the participant’s appeal rights must be exercised and exhausted before a filing suit.10
  1. The DOL and HHS jointly issued a new template Summary of Benefits of Coverage (SBC) for plan years beginning on or after January 1, 2021.
  1. For 2020, the annual dollar limit on employee contributions to health Flexible Spending Accounts (FSAs) is increased from $2,700 to $2,750. The limit on Health Savings Account (HSA) contributions for self-only coverage is increased from $3,500 to $3,550, and the limit for family coverage is increased from $7,000 to $7,100. The age 55+ catch-up limit remains at $1,000.

From all of us here at MMPL, your employee benefits law firm.

Not intended as legal advice.

  1. Texas v. United States, 945 F.3d 355 (5th Cir. 2019), as revised (Dec. 20, 2019).
  2. California v. U.S. Dep’t of Health & Human Services, 941 F.3d 410 (9th Cir. 2019); Pennsylvania v. President United States, 930 F.3d 543 (3d Cir. 2019), as amended (July 18, 2019).
  3. Peterson v. UnitedHealth Group Inc., 913 F.3d 769 (8th Cir. 2019).
  4. New York v. United States Dep’t of Labor, 363 F. Supp. 3d 109 (D.D.C. 2019).
  5. Fessenden v. Reliance Standard Life Insurance Co., 927 F. 3d 998 (7th Cir. 2019). Other circuits have found “substantial compliance” suffices.
  6. Bruton v. American United Life Insurance Co., No. 2:16-cv-928, 2019 WL 1856275 (S.D. Ohio April 25, 2019), rev’d on other grounds, No. 19-3466, 2020 WL 398539, at *7 (6th Cir. Jan. 23, 2020).
  7. For more information on older case law, please see our 2018 year-end update.
  8. Alice F. v. Health Care Service Corp., 367 F. Supp. 3d 817 (N.D. Ill. 2019).
  9. Avera McKenna v. Meadowvale Dairy Employee Benefit Plan, 374 F. Supp. 3d 771 (N.D. Iowa 2019).
  10. Greiff v. Life Insurance Co. of North America, 386 F. Supp. 3d 1111 (D. Ariz. 2019).