Category: Legislative Updates

The Biden Administration has announced its plan to end the COVID-19 public health emergency (PHE) and National Emergency (NE) on May 11, 2023. The COVID-19 Outbreak Period (OP) ends 60 days after the NE ends, so under this timeline, the OP will end on July 10, 2023. We are aware that there are key questions to be addressed in light of this latest decision. We have provided herein an overview of the items to be aware of when the emergencies end, including health plan coverage rules related to the COVID-19 pandemic. This is as follows:

Public Health Emergency (PHE)

• COVID-19 Diagnostic Testing Without Cost Sharing — During the PHE, health plans must cover COVID-19 tests and related services without imposing any cost sharing (such as deductibles, copayments, or coinsurance) or prior authorization or other medical management requirements, and on January 15, 2022, this coverage requirement extended to at-home COVID-19 diagnostic tests. Health plans will no longer be required to provide this first-dollar coverage when the PHE ends.

• COVID-19 Vaccines — Non-grandfathered group health plans must cover coronavirus preventive services, including recommended COVID-19 immunizations, without cost sharing requirements. During the PHE, covered services may be provided by in-network or out-of-network providers. Once the PHE ends, health plans must continue to cover recommended COVID-19 immunizations without cost sharing but can limit this coverage to in-network providers.

• Standalone Telehealth Benefits — For plan years beginning during the PHE, a large employer (more than 50 employees) may offer standalone telehealth benefits and other remote care services to individuals who are not eligible for coverage under any other group health plan offered by the employer without violating the Affordable Care Act’s market reforms. These types of standalone arrangements will not be permitted after the PHE ends.

• Pre-Deductible Telehealth Coverage Relief Not Linked to Emergencies — The pre-deductible telehealth coverage relief is not linked to the PHE or OP. This relief allows high deductible health plans (HDHPs) compatible with health savings accounts (HSAs) to provide benefits for telehealth or other remote care services before plan deductibles are met without jeopardizing HSA eligibility. Note that since this relief is not linked to the PHE or OP, HDHPs may be designed to waive the deductible for any telehealth services for plan years beginning in 2023 and 2024 without causing participants to lose HSA eligibility.

National Emergency (NE)

• Outbreak Period Deadline Extensions — When the COVID-19 OP ends, health plans can go back to their nonextended deadlines for purposes of HIPAA special enrollment, COBRA, and claims and appeals procedures. The following deadline extensions end when the OP is over or, if earlier, after an individual has been eligible for a specific deadline extension for one year.

• • Claims and Appeals Deadlines—The deadlines to file a benefit claim, file an appeal of an adverse benefit determination or request an external review of a claim under the plan’s claims and appeals procedures.

• • COBRA Notice and Premium Payment Deadlines—The 60-day period to elect COBRA; the date for making COBRA premium payments (generally at least 45 days after the day of the initial COBRA election, with a grace period of at least 30 days for subsequent premium payments); and the date for individuals to notify the plan of a qualifying event or disability determination (generally 60 days from the date of the event, loss of coverage or disability determination).

• • • Example 1: COBRA qualified beneficiary (QB) enrolls in COBRA and makes several payments but fails to make the COBRA payment for November 2022 coverage by the normal grace period of 11/30/22. The payment deadline is tolled as of 11/30/22. The one-year tolling period would end 11/30/23 (if the NE continued), and the payment deadline would be 11/30/23. But if the NE ends on 5/11/23, the OP will end on 7/10/23 and the 30-day payment period would start 7/10/23 and end 8/9/23.

• • • Example 2: COBRA QB offered COBRA and election period started 11/1/22. The election deadline is tolled as of 11/1/22. The one-year tolling period would end 10/31/23 (if the NE continued), so the 60-day election period would start 11/1/23 and end 12/30/23. But if the NE ends on 5/11/23, the OP will end on 7/10/23 and the 60-day election period would start 7/10/23 and end 9/8/23.

• • • Example 3: COBRA QB offered COBRA and election period started 7/10/23. The election deadline is not tolled. The 60-day election period would start 7/10/23 and end 9/8/23.

• • HIPAA Special Enrollment — The 30-day period (or 60-day period, if applicable) to request special enrollment. HIPAA special enrollment events are a subset of the Section 125 permitted election change events that provide special rights. A member qualifies for HIPAA special enrollment under a health plan for certain limited events like loss of eligibility for coverage and acquisition of a new spouse or dependent by marriage, birth, adoption, or placement for adoption.

• • • Example 4: Employee has baby on 11/1/22. The election deadline is tolled as of 11/1/22. The normal 30-day timeline to notify the employer is by 12/1/22. The one-year tolling period would end 10/31/23 (if the NE continued), so the normal 30-day election period (for coverage retroactive to the date of birth) would start 11/1/23. But if the NE ends on 5/11/23, the OP will end on 7/10/23 and the 30-day election period would start 7/10/23 and end 8/9/23.

• • • Example 5: Employee has baby on 7/10/23. The election deadline is not tolled. The normal 30-day timeline to notify the employer would start 7/10/23 and end 8/9/23.

We do expect that the agencies will issue more guidance prior to May 11^th on the ending of the PHE and NE emergencies, and we certainly expect that the various carriers and TPAs will also be providing information on their next steps in response. COBRA vendors and carriers/TPAs will need to adopt the necessary measures to comply with and administer the new changes and plan sponsors will need to consider how and when to communicate the new health plan coverage rules and revised deadlines for elections, payments, and losses of coverage.

Conner Strong & Buckelew will provide updates and additional guidance as new information becomes available. Please contact your Conner Strong & Buckelew account representative toll-free at 1-877-861-3220 with any questions. For a complete list of Legislative Updates issued by Conner Strong & Buckelew, visit our online Resource Center.

The U.S. Department of Health & Human Services (HHS), Labor and Treasury have proposed a rule to strengthen access to birth control coverage under the Affordable Care Act (ACA).  For more information on the proposed rule, consult this HHS fact sheet. Under the ACA, most group health plans (GHPs) are required to offer coverage of birth control with no out-of-pocket cost. For those few plans that do not offer such coverage due to a religious objection, the proposed rule seeks to ensure broader access by allowing enrollees to make their own choices to access contraceptive services at no cost. The rule is subject to a comment period and it will be months before the proposed rule might ultimately be finalized. Potentially impacted GHP sponsors should stay tuned for updates from Conner Strong & Buckelew, but otherwise operate as usual.

Biden Administration’s Continued Efforts to Protect Reproductive Health Care
The issuance of the proposed rule is the latest effort by the Biden Administration to bolster access to birth control at no cost. The U.S. Supreme Court’s decision in Dobbs has placed a heightened importance on access to contraceptive services nationwide. HHS released a report in August on actions taken to ensure access to reproductive health care, including contraception, following the Supreme Court’s ruling, with further details on future actions and commitments. In addition, HHS also recently released a report which outlines the actions HHS has taken in the face of the health crisis precipitated by the Dobbs decision.

Next Steps if Rule is Finalized
If this proposed rule is finalized, individuals in GHPs that would otherwise be subject to the ACA preventive services requirements but do not cover contraceptive services because of a moral or religious objection, would now have access. The proposed rule would leave in place the existing religious exemption for entities with objections, as well as the optional accommodation for contraception, but it would create an independent pathway for individuals enrolled in plans arranged or offered by objecting entities to make their own choice to access contraceptive services directly through a willing contraceptive provider without any costs. This would allow women and covered dependents to navigate their own care and obtain birth control if their plan or insurer has a religious objection. The individual contraceptive arrangement would not require any involvement on the part of an objecting entity.

We will provide alerts and updates as new information becomes available. Please contact your Conner Strong & Buckelew account representative toll-free at 1-877-861-3220 with any questions. For a complete list of Legislative Updates issued by Conner Strong & Buckelew, visit our online Resource Center.

Group health plan (GHP) sponsors that offer prescription drug (Rx) coverage must, at least annually, notify Medicare Part D eligible individuals and the Centers for Medicare & Medicaid Services (CMS) of their plan’s creditable coverage status. Both disclosures (to Medicare Part D eligible individuals and to CMS) must meet specific form, content and timing requirements as prescribed by CMS. This update addresses the required disclosure to CMS and reminds plan sponsors that online disclosure should be completed annually no later than 60 days from the beginning of the plan year. This means that an employer with a calendar year plan that began January 1, 2023, must complete the CMS online reporting no later than March 1, 2023, and an employer with a plan year that begins July 1, 2023 must complete the reporting no later than August 29, 2023. (For more information on the Medicare Part D disclosure requirement for individuals, please see our update Medicare Part D Notices Due Before October 15th).

Medicare Part D Notice to CMS Rules
Medicare Part D rules generally require that GHPs with an Rx benefit must disclose to CMS whether the Rx coverage offered is “creditable” or “non-creditable.” “Creditable” Rx coverage generally means the actuarial value of Rx coverage under the GHP is equal to (pays out as much) or better than the Rx benefits offered under Medicare Part D. “Non-creditable” Rx coverage is coverage that is actuarially less in value (expected to pay out less) than the coverage offered under Medicare Part D. This disclosure is required whether the entity’s coverage is primary or secondary to Medicare. An Rx plan must use the online CMS Disclosure Form to report its “creditable” or “non-creditable” Rx status at the times noted below. Guidance and instructions are provided to assist Rx plan sponsors with completing the form.

Disclosure Timing
The CMS disclosure must be made annually and whenever any change occurs that affects whether the Rx plan’s coverage is creditable. CMS should receive a creditable coverage disclosure:

• Within 60 days of the beginning of the plan year for which the disclosure is being reported.
• Within 30 days of a change in creditable coverage status.
• Within 30 days of the Rx plan’s termination.

A GHP is not required to submit the online disclosure form to CMS for any plan year where the plan does not offer Rx benefits to any Medicare Part D eligible individuals as of the beginning of the plan year. Also, plan sponsors approved for the retiree drug subsidy are exempt from filing the CMS disclosure notice with respect to those qualified covered retirees for whom the sponsor is claiming the subsidy. Note that this creditable coverage reporting is in addition to the mandatory CMS Medicare Secondary Payer (MSP) reporting typically handled by an insurer or third-party administrator for a GHP (see the CMS site on Mandatory MSP Reporting for more information).

Should you have questions about this or any aspect of GHP requirements, please contact your Conner Strong & Buckelew account representative toll-free at 1-877-861-3220 with any questions. For a complete list of Legislative Updates issued by Conner Strong & Buckelew, visit our online Resource Center.

Congress recently passed and President Biden signed into law a $1.7 trillion governmental funding package (the 2023 CAA) that includes a provision to again temporarily allow plan sponsors that offer high deductible health plans (“HDHPs”) to provide first-dollar telehealth and other remote care services (waive the deductible) for plan years beginning after 12/31/22 and before 1/1/25, without causing participants to lose health savings account (“HSA”) eligibility. This Update is of interest to plan sponsors with HDHPs who may want to take advantage of this optional relief. The details are herein.

Telehealth HSA/HDHP – General Rule
For an individual to be eligible to make or receive contributions to an HSA, the individual must be covered by an HSA-qualified HDHP. Typically, this type of HDHP cannot pay for covered services, except for specified preventive care, until the participant meets the plan’s deductible. Coverage provided under the HDHP before the minimum deductible is satisfied would make plan participants ineligible to make or receive HSA contributions, and failure to follow the rules could result in a portion of an employees’ HSA contributions being subject to income taxes and penalties. Therefore, under the general rules, a telehealth program is not compatible with an HSA unless the HDHP charges a fair market value (FMV) fee each time a participant uses the telehealth service until the minimum deductible required for the qualifying HDHP is met.

Temporary Relief Granted
Temporary relief from this requirement was provided in 2021 through the Coronavirus Aid, Relief, and Economic Security (CARES) Act, and then extended through 12/31/22 in the 2022 Consolidated Appropriations Act (CAA). Now the 2023 CAA has further extended this temporary relief permitting employees with HSAs to participate in a calendar year telehealth plan with no cost-sharing and remain HSA eligible for the 2023 and 2024 calendar plan years. For non-calendar year plans, there will be a gap in the relief starting 1/1/23 as the new relief in CAA 2023 does not begin until the start of the 2023 plan year. Below is a history of the relief granted over the last few years:

• The 2020 CARES Act added an exception permitting sponsors of HDHPs to offer telehealth services at no cost to participants, regardless of the plan’s annual deductible, without impacting participant HSA eligibility, for the period from 1/1/20 through the last day of the plan year beginning in 2021 (e.g., 12/31/21 for calendar year plans; 6/30/22 for a plan year that began 7/1/21).

• The 2022 CAA extended the CARES Act provision starting 4/1/22 and through 12/31/22. For plan sponsors adopting this optional extension, this left as much as a three-month gap from 1/1/22-3/31/22 in which the standard deductible would still apply. So, for example:

• • Calendar year HDHPs had a three-month gap from 1/1/22-3/31/22, so these plans should have ended the deductible waiver for telehealth services as of 12/31/21 and could start the deductible waiver for telehealth services received on or after 4/1/22 and through 12/31/22.

• • Non-calendar year HDHPs whose 2021 plan year ended before 3/31/22 (e.g., 3/1/21-2/28/22 plan year) had a gap through 3/31/22, so these plans should have ended the deductible waiver for telehealth services occurring after the end of the 2021 plan year. They could again start the deductible waiver for telehealth services received on or after 4/1/22 and through 12/31/22.

• • Non-calendar year HDHPs whose 2021 plan year ended on or after 3/31/22 (e.g., 5/1/21-4/30/22 plan year) had no gap from 1/1/22-3/31/22 because the original CARES Act waiver of the deductible for telehealth services continued until no later than 12/31/22.

• The 2023 CAA has now further extended this temporary relief as follows:

• • Calendar year HDHPs have no gap because the 2022 CAA waiver of the deductible for telehealth services continued until 12/31/22, so employees with HSAs can participate in a calendar year telehealth plan with no cost-sharing and remain HSA eligible for the 2023 and 2024 calendar plan years.

• • Non-calendar year HDHPs will have a gap in the relief starting 1/1/23 as the 2022 CAA telehealth/HSA relief ended as of 12/31/22, but the 2023 CAA does not begin until the start of the 2023 plan year. So, from 1/1/23 until the start of the 2023 plan year, employees must either be excluded from the telehealth program or must pay a FMV fee each time they use the telehealth service until they have incurred medical expenses at least equal to the minimum required HDHP deductible. Then from the start of the 2023 non-calendar year plan, employees can once again participate in the telehealth program and/or the FMV fees may be discontinued for the 2023 and 2024 non-calendar year plan year.

Next Steps
The relief provisions are optional, so it is left to each plan sponsor with an HDHP to determine whether to adopt the deductible waiver for telehealth (fully insured carriers will make the determination and self-insured plan sponsors must coordinate with their TPA/stop-loss provider in order to implement the plan design changes as deemed appropriate). Note too that if the IRS fails to issue guidance closing the non-calendar year plan gap, employers may also want to consider charging FMV fees on their telehealth programs for the 2023 gap period.

Conner Strong & Buckelew will provide alerts and updates as new information becomes available. Please contact your Conner Strong & Buckelew account representative toll-free at 1-877-861-3220 with any questions. For a complete list of Legislative Updates issued by Conner Strong & Buckelew, visit our online Resource Center.

On Friday, December 23rd various federal agencies issued a “last-minute” update related to the new federal requirements for group health plans’ Rx reporting. By way of reminder, the 2021 Consolidated Appropriations Act established new transparency requirements for reporting specific information about prescription drugs and health care spending to the federal government. This data submission is called the “RxDC” report. The Rx stands for prescription drug and the DC stands for data collection. The first RxDC report is due by December 27, 2022 and covers data for both the 2020 and 2021 “reference years.” Plans must then submit data for the 2022 reference year by June 1, 2023, and by June 1 annually thereafter. For plans that are fully insured, most of the reporting will be handled by insurers. For plans that are self-funded, more is required. See our Conner Strong & Buckelew legislative update for more details on this requirement.

For more than a year, Conner Strong & Buckelew has been working directly with health insurance carriers, TPAs, PBMs and others to monitor guidance and confirm vendor approaches to assist our clients in remaining compliant with these RxDC requirements. We anticipated additional guidance given the significant operational challenges plans and issuers have encountered in complying with these reporting requirements. So in the spirit of giving, on December 23rd, the agencies issued much-anticipated FAQ enforcement action guidance and information on clarifications and flexibilities related to the RxDC reporting rules:

“For the 2020 and 2021 data submissions that are due by December 27, 2022, the Departments will not take enforcement action with respect to any plan or issuer that uses a good faith, reasonable interpretation of the regulations and the Prescription Drug Data Collection (RxDC) Reporting Instructions in making its submission. The Departments are also providing a submission grace period through January 31, 2023, and will not consider a plan or issuer to be out of compliance with these requirements provided that a good faith submission of 2020 and 2021 data is made on or before that date. In addition, to facilitate the submission process, the Departments are providing … clarifications and flexibilities with respect to reporting requirements (including operational requirements within the Health Insurance Oversight System (HIOS) reporting system) for the 2020 and 2021 data”.

The updated guidance is welcome news and makes clear that employers and plan sponsors making a good faith effort to comply will not be subject to penalty in the event there are issues in the early stages of the new requirements. The extension for initial submissions to January 31, 2023 is also welcome news. Regardless of the latest guidance, employers and plan sponsors are advised to continue to fully comply with the new requirements. We anticipate additional guidance and updates to the reporting instructions in advance of the next reporting due date in June 2023.

We will provide alerts and updates as new information becomes available. Please contact your Conner Strong & Buckelew account representative toll-free at 1-877-861-3220 with any questions. For a complete list of Legislative Updates issued by Conner Strong & Buckelew, visit our online Resource Center.

Pursuant to the Affordable Care Act (“ACA”), applicable large employers (ALEs) — those with 50 or more full-time or equivalent employees — must adhere to the ACA’s annual reporting rules to remain compliant regarding group health plan offerings. Also, an employer that sponsors self-insured health insurance coverage, no matter their size and whether or not the employer is an ALE, has information reporting responsibilities as a provider of minimum essential coverage (MEC). Employers report their health plan information to the IRS retroactively, so companies will file their ACA forms regarding their 2022 health plans in spring 2023.

Since these rules are complex and reporting is upon us, this update provides details on these ACA reporting requirements.

ACA Health Coverage Information Reporting
Under the ACA employer shared responsibility (ESR) provisions, applicable large employers or ALEs must either offer MEC that is “affordable” and that provides “minimum value” to their full-time employees (and their dependents), or potentially owe an ESR penalty payment to the IRS. The ESR provisions are sometimes referred to as “the employer mandate” or “the pay or play provisions.” The same employers that are subject to the ESR provisions (that is, ALEs) also have information reporting responsibilities regarding MEC offered to employees. These responsibilities require employers to send reports to employees and to the IRS. An employer that sponsors self-insured health insurance coverage – whether or not the employer is an ALE – has information reporting responsibilities as a provider of MEC.

ACA Information Reporting Forms
The IRS released the final 2022 forms needed for this ACA reporting. No major substantive changes were made to the forms for 2022 reporting, however additional information regarding these forms may become available once the IRS finalizes the instructions for the forms.

• Form 1095-B; Form 1094-B; Draft B Form Instructions
• Form 1095-C; Form 1094-C; Draft C Form Instructions

Reporting to Employees and Other Covered Individuals
Here’s a quick summary of the employee and individual Form 1095-B/C information reporting requirements:

• Insurance carriers must send Form 1095-B to individuals covered under a fully insured plan.
• ALEs must send Form 1095-C to full-time employees showing information on the employee coverage offer, and must also send Form 1095-C (with Part III completed) to individuals covered under a self-insured plan (individuals will not receive Form 1095-B).
• Non-ALEs must send Form 1095-B to individuals covered under a self-insured plan (individuals will not receive Form 1095-C).

Insurers, self-insuring employers, other coverage providers, and ALEs have until March 2, 2023, to provide Forms 1095-B/C to employees and individuals. This reflects a 30-day extension for providing Forms 1095-B/C to individuals which is automatic for 2023 (employers and providers don’t have to request the extension). The IRS will not grant an additional 30-day extension beyond this deadline.

Filing Forms with IRS
Employers/coverage providers must also send the IRS copies of the Forms 1095-B/C information using Forms 1094-B/C. The due dates for filing Forms 1094-B and 1094-C with the IRS are not extended. Employers filing by paper must submit their Forms to the IRS by February 28, 2023. Those filing electronically have until March 31, 2023. Extensions of these filing deadlines are available by filing Form 8809. Employers and coverage providers who are filing more than 250 of these reporting forms are required to file electronically.

Note on State Employer Reporting Requirements
Note that insurers and employers in certain states (e.g., California, Massachusetts, New Jersey, Rhode Island, Vermont, and the District of Columbia) that have enacted individual mandates may have reporting requirements similar to the ACA federal requirements. See, for example, the New Jersey website for more information on that state’s employer reporting requirement. In some cases, the federal ACA forms can be used to satisfy these state requirements. We recommend that clients touch base with their ACA reporting vendors to ask whether they will assist with satisfying any relevant state reporting requirements on the client’s behalf.

IRS Resources and Penalty Assessments
Employers and plan sponsors should take note of the filing and timing requirements and review the information reporting requirements through IRS resources available at the IRS Applicable Large Employer Information Center. The webpage can be used to understand the Forms 1094/5, to determine ALE status, and as a means to finding additional resources on these complicated filing rules. Employers should also continue to be on the lookout for IRS penalty letters or notices related to past ACA filings and should immediately present any materials received to their ACA reporting vendors, legal counsel, and qualified tax advisers. We note that the IRS continues to assess ACA employer penalties (see Letter 226-J) for previous reporting years and also note that good faith relief from penalties for certain errors on the ACA forms no longer applies. It is important for employers to fully understand their ACA reporting obligations as it is expected the IRS will continue to be less lenient with basic reporting errors.

We will continue to monitor developments under the ACA including the ongoing legislative efforts to develop a common-sense reporting solution to ease what has become an enormously expensive compliance burden for employers. We will provide details on any new or revised employer obligations as they take shape over time.

Should you have questions about this or any aspect of federal health insurance reform, contact your Conner Strong & Buckelew account representative toll-free at 1-877-861-3220. For a complete list of Legislative Updates issued by Conner Strong & Buckelew, visit our online Resource Center.

The 2021 Consolidated Appropriations Act established new transparency requirements for group health plans to report specific information about prescription drugs and health care spending. This data submission is called the “RxDC” report. The Rx stands for prescription drug and the DC stands for data collection. The first RxDC report is due by December 27, 2022, and covers data for both the 2020 and 2021 “reference years.” Plans must then submit data for the 2022 reference year by June 1, 2023, and by June 1 annually thereafter. For plans that are fully insured, most of the reporting will be handled by your insurer. For plans that are self-funded, more is required. Outlined herein is another summary of what is required.

Self-Insured Plans Responsible for Reporting

The RxDC reporting requirement applies to both fully insured and self-insured plans, however fully insured carriers will handle the reporting for their clients. Self-insured plans are responsible for their own reporting. Self-insured employers may use third-party administrators (TPAs), pharmacy benefit managers (PBMs) or other third parties to submit the RxDC reports on their behalf. Although employers can submit these reports on their own, it is expected that it will be rare for employers to do so. For self-insured plan sponsors, this effort will require coordination between the TPA, the plan sponsor and any PBM. Self-insured employers will look primarily to their broker for guidance and management of the employer’s compliance and reporting and should also monitor TPA and PBM compliance.

Information to Be Reported
Plans must submit information about:

• Spending on prescription drugs and health care services
• Prescription drugs that account for the most spending
• Drugs that are prescribed most frequently
• Prescription drug rebates from drug manufacturers
• Premiums and cost-sharing that patients pay

Plans must specifically submit identifying plan information in conjunction with eight data files. The complete reporting is a collection of ten total files that are submitted together:

• One plan level summary file (P2)
• Eight different data files (D1-D8)
• One narrative file explaining the data submitted (from carrier, TPA, PBM)
  

How Information Is to Be Submitted, Used and Released
The Centers for Medicare and Medicaid Services (CMS) is collecting the RxDC information on behalf of the Departments of Health and Human Services, Labor, and Treasury. The data is uploaded electronically by a “reporting entity” to a CMS website called HIOS. There could be multiple reporting entities involved in compiling and submitting data for an employer self-insured plan, and various vendors are taking different approaches. Some may report aggregated data directly to CMS and others may provide the data to the employer for submission. For example, some vendors will submit all files except the D1 file that includes membership data, employer/employee contributions, and ASO and stop-loss costs. If an employer/plan is required to submit any data themselves, they must first set up their organization with a HIOS account (see HIOS User Manual and Guide and HIOS Portal Quick Guide  for step-by-step instructions). CMS has issued detailed helpful and easy to follow RxDC reporting/submission instructions which can be found on a CMS RxDC website where FAQs, templates for the data files, and much more information is posted. The CMS help desk is available to provide assistance with the RxDC reporting/submission process (access them by email or telephone at 855-267-1515).

The data submitted will help to:

• Identify major drivers of increases in prescription drug and health care spending
• Understand how prescription drug rebates impact premiums and out-of-pocket costs
• Promote transparency in prescription drug pricing

The information being submitted will not be available to the public. Rather CMS intends to eventually publish a report on the data that will be available to the public with aggregated observations and findings about prescription drug pricing trends and the impact of prescription drug rebates on patient out-of-pocket costs.

Recent Guidance Issued
Recently CMS has been issuing new FAQs providing administrative clarity, including six new FAQs issued in late September providing guidance for scenarios where a plan sponsor has multiple reporting entities and/or when a plan sponsor experiences a change in reporting entity from the prior year. This newest guidance provides a degree of flexibility to plan sponsors with these types of circumstances. As compliance related questions and issues continue to surface from vendors and employers, we are hopeful that the vendor industry will continue to evolve their processes to provide maximum assistance to the employer community and also that the Departments will continue to provide further guidance, clarifications, and support as we approach the December reporting due date. CMS recognizes the practical filing considerations and continues to address the administrative burdens to comply for employers and the industry.

Employer Next Steps
Employers with fully insured medical plans should confirm with their insurance carriers that they will be timely processing the RxDC reporting. For self-insured employers, the RxDC regulations permit the employer to rely on their TPA and PBM to submit the RxDC report on their behalf, even though the obligation technically lies with the employer. Self-insured plans should confirm that their TPA or PBM will be completing the RxDC report on behalf of the plan, and promptly respond to any questionnaires received from the vendors to assist with compiling some of the basic plan information needed in addition to the main content handled by the vendor. Being proactive and communicating with vendor partners to coordinate reporting responsibilities is an essential aspect of this process.

Conner Strong & Buckelew is working directly with health insurance carriers, TPAs, PBMs and others to monitor guidance and confirm vendor approaches to assist our clients in remaining compliant with these RxDC requirements. Plan sponsors, who may also have difficulty obtaining cooperation or information from their vendors, would obviously benefit greatly from relief granted for good faith efforts offered by the Departments in advance of the first reporting deadline. This would be appropriate given the sweeping nature of the requested data, the many reporting challenges associated with this requirement, and the Departments’ recognition that self-insured plan sponsors do not possess much of the requested data. We will provide alerts and updates as new information becomes available. Please contact your Conner Strong & Buckelew account representative toll-free at 1-877-861-3220 with any questions.

For a complete list of Legislative Updates issued by Conner Strong & Buckelew, visit our online Resource Center.

On October 11, 2022, final regulations were released addressing the so-called “family glitch” under the Affordable Care Act (ACA) premium tax credit (PTC) rules. The “family glitch” refers to the fact that from 2014 to 2022 when the ACA marketplace considered the affordability of an employer-sponsored health plan, it was based on just the cost for the employee. The cost to add family members was not taken into consideration. Due to this glitch, employer-based health insurance has been considered “affordable” if the coverage is affordable for the employee even if it is not for their family members—making those family members ineligible for the ACA PTC marketplace subsidies. The new rule now extends eligibility for the ACA marketplace subsidies to the family members of low-wage employees who were previously ineligible for the subsidies. The new rule goes into effect for the 2023 tax year, meaning family members who are offered unaffordable job-based family coverage will be newly eligible for subsidized marketplace coverage and will have the option of enrolling in affordable marketplace coverage during the open enrollment period which begins on November 1st.

The Final Rules Impose No New Requirements on Employers

• The rules do not affect the liability of an applicable large employer (ALE) under the employer mandate because the rules do not change the affordability rules for employees (the employer mandate is only triggered when an employee receives a PTC, so when a family member purchases subsidized exchange coverage the employer is not penalized).
• The affordability safe harbors based on self-only coverage under the employer mandate regulations continue to be available to employers (an employee’s family member may have an unaffordable offer of employer coverage even though the employee has an affordable self-only offer).
• Nothing in the rules affects any information reporting requirements for employers, including on IRS Forms 1094/5-C and the IRS does not intend to revise Forms 1095-B or -C to require any new/additional data elements.
• The rule is not expected to have any meaningful impact on employer premiums because a relatively small number of individuals are expected to move to the exchange and for those who do move, some will be higher risk, and some will be lower.

New Cafeteria Plan Status Change Rule – Applicable for Non-Calendar Year Plans

At the same time the “family glitch” final regulations were released, the IRS released Notice 2022-41 which allows employers who offer non-calendar year cafeteria plans to amend their plans to allow family members to leave the employer’s plan and enroll in an exchange plan mid-plan year (i.e., generally during the January exchange open enrollment period, which would be mid-plan year for a non-calendar year plan). Existing cafeteria plan rules do not allow the revocation of coverage when only related individuals (not the employee) become eligible to enroll in the exchange, so a related individual enrolled in a non-calendar year cafeteria plan would not be able to avoid either an overlapping period of coverage or a gap in coverage.

Employers are not required to offer this option but are permitted to do so. For an employer who chooses to amend their non-calendar year cafeteria plan to allow this option, the employee can be permitted to revoke coverage in a cafeteria plan beginning in 2023 so the family members can then enroll in marketplace coverage through a special enrollment period. Non-calendar year cafeteria plans may be amended to allow employees to prospectively revoke an election of family coverage under a group health plan (that is not a health FSA), provided the following conditions are satisfied:

• One or more related individuals are eligible for a special enrollment period to enroll in exchange coverage, or one or more already-covered related individuals seek to enroll in exchange coverage during the Exchange’s annual open enrollment period; and
• The revocation corresponds to the intended enrollment of the related individual(s) in exchange coverage for new coverage that is effective no later than the day immediately following the last day of the original revoked coverage. If the employee does not enroll in exchange coverage, the employee must elect self-only coverage (or family coverage including one or more already-covered related individuals) under the group health plan.

The cafeteria plan may rely on the reasonable representation of an employee that the employee and/or related individuals have enrolled or intend to enroll in exchange coverage for new coverage that is effective beginning no later than the day immediately following the last day of the original coverage that is revoked. Employers that want to permit employees to cancel family coverage mid-year must amend their cafeteria plans to formally adopt the change. Amendments must be adopted on or before the last day of the plan year in which the elections are allowed and the amendment may be effective retroactively back to the first day of the plan year, provided the cafeteria plan operates in accordance with the notice and participants are informed. However, in no event may an employer amend a cafeteria plan to allow an election to revoke coverage on a retroactive basis.

Employers considering adopting this cafeteria plan amendment will need to ensure that they have properly coordinated the potential modifications to the plan with their insurer/TPA and other vendors to determine their ability to accommodate the amendment. Conner Strong & Buckelew will continue to provide alerts and updates as new information becomes available on this and related topics. Please contact your Conner Strong & Buckelew account representative for assistance with the above updates. For a complete list of Legislative Updates issued by Conner Strong & Buckelew, visit our online Resource Center.

Medicare Part D Notices Due Before October 15
Medicare includes a voluntary prescription drug benefit (Part D) for “Part D eligible individuals.” These are individuals who have coverage under Medicare Part A or B and who live in the service area of a Part D plan. Such individuals may include active employees, disabled employees, COBRA participants, retirees, and their covered spouses and dependents. Group health plan sponsors that provide prescription drug coverage are required to annually disclose to these Part D eligible individuals whether the coverage they offer is “creditable” or “non-creditable”.

Creditable Coverage and Why It Matters
Creditable coverage means that the coverage is expected to pay on average as much as the standard Medicare prescription drug coverage. A Medicare Part D late enrollment penalty is imposed on individuals who do not maintain creditable coverage for a period of 63 days or longer following their initial enrollment period for the Medicare prescription drug benefit. Accordingly, the Medicare Part D notice information is essential to an individual’s decision whether to enroll in a Medicare Part D plan or stay with the employer plan.

Sponsors Must Determine Creditable Coverage Status of Each Applicable Option and Provide Notice
Group health plans subject to this notice requirement include health plans as defined under ERISA, including certain account-based medical plans, as well as group health plans sponsored for employees or retirees by unions, churches, and federal, state or local governments. For a list of entities subject to the Medicare D disclosure requirement, see CMS’ Entities Required to Provide Disclosure to All Medicare Eligible Individuals. The notice requirements apply to insured and self-funded plans, regardless of plan size, employer size, or grandfathered status. See the CMS Creditable Coverage web page for general Part D notice guidance for employer and union-sponsored plans.

When Must Notice Be Provided
Medicare Part D notices must be provided prior to the Medicare Part D annual coordinated election period—beginning October 15 through December 7 of each year. This means the individual must be provided with the notice at least once annually in every 12 month period ending on October 14, which is just before the start date of the Medicare Part D annual period. Plan sponsors must also provide notice at various other times as required under the law, including to a Medicare eligible individual when he/she joins the plan, upon request, and if the prescription drug benefit ever changes from creditable to non-creditable (or vice versa).

Form of Notice
CMS has provided English and Spanish model disclosure notices that can be tailored by plan sponsors to satisfy their notice obligation. For plans that have multiple benefit options (e.g., PPO and HDHP), the creditable coverage determination test and related notice obligation must be addressed separately for each benefit option.

Who Must Receive Notice
Notice must be provided to all Medicare Part D eligible individuals, which may include active employees, disabled employees, COBRA participants and retirees, as well as their covered spouses and dependents. As a practical matter, group health plan sponsors will often provide the notices to all plan participants.

How Must Notice Be Provided
As a practical matter, group health plan sponsors will often provide the disclosure notices to all plan participants by including the notice in the new hire and annual open enrollment materials.

1. If a plan sponsor chooses to provide the disclosure notice with other plan participant information, the creditable coverage disclosure must be prominent and conspicuous. This means that the disclosure notice portion of the document—or a reference to the section in the document that contains the disclosure notice portion—must be prominently referenced in at least 14-point font in a separate box, bolded or offset on the first page of the provided plan participant information.
2. As a general rule, a single disclosure notice may be provided to the covered Medicare beneficiary and all of his or her Medicare Part D-eligible dependents covered under the same plan. However, if it is known that any spouse or dependent who is eligible for Medicare Part D lives at a different address than where the participant materials were mailed, a separate notice must be provided to the Medicare-eligible spouse or dependent residing at a different address.
3. The notice may be sent electronically under certain circumstances. CMS has issued guidance indicating that health plan sponsors may use the electronic disclosure standards under DOL regulations in order to send the creditable coverage disclosure notices electronically. Also, if a plan sponsor uses electronic delivery, the sponsor must inform plan participants that they are responsible for providing a copy to their Medicare-entitled dependents, and the sponsor must also post the current version of their notices on their websites.

Related Online CMS Disclosure
A related Medicare Part D disclosure rule requires that sponsors complete the Online Disclosure to CMS Form to report the creditable coverage status of their prescription drug plan. This online disclosure should be completed annually no later than 60 days from the beginning of a plan year (contract year, renewal year), within 30 days after termination of a prescription drug plan, or within 30 days after any change in creditable coverage status. See our update for more information on this requirement.

Should you have questions about this or any aspect of group health plan requirements, contact your Conner Strong & Buckelew account representative toll free at 1-877-861-3220. For a complete list of Legislative Updates issued by Conner Strong & Buckelew, visit our online Resource Center.