The Internal Revenue Service (“IRS”) has released Notice 2018-94, which extends the due date for furnishing the 2018 Form 1095-B and Form 1095-C to individuals from January 31, 2019 to March 4, 2019.

This extension is automatic, and, as a result, the IRS will not formally respond to any pending extension requests for furnishing the forms to individuals. In addition, filers do not need to submit a request or documentation to take advantage of this extension. Despite the extension, the IRS is encouraging employers and other coverage providers to furnish the 2018 statements as soon as they are able.

Forms 1095-B are used to report whether individuals have minimum essential coverage (“MEC”) and, therefore, are not liable for the individual shared responsibility payment. Forms 1095-C are used to report information about offers of health coverage and enrollment in health coverage for employees, to determine whether an employer owes an employer shared responsibility payment, and to determine the eligibility of employees for the premium tax credit. Under the Affordable Care Act’s (“ACA’s”) employer mandate, applicable large employers (“ALEs”) (those employing on average at least 50 full-time employees and full-time equivalents in the prior calendar year), are required to offer MEC to at least 95% of their full-time employees (and their dependents) that is “affordable” and provides “minimum value” to avoid applicable penalties. [1]

Notice 2018-94 does not extend the due date for filing the Forms 1094-B, 1095-B, 1094-C and 1095-C with the IRS, with the due date remaining February 28, 2019, if not filing electronically, or April 1, 2019, if filing electronically. Employers may still obtain an automatic 30-day extension to file the required forms by filing a Form 8809 with the IRS on or before the forms’ due date. An employer may also receive an additional 30-day extension under certain hardship conditions.

Employers who fail to comply with the extended due dates for furnishing Forms 1095-B and 1095-C to individuals or for filing the Forms 1094-B, 1095-B, 1094-C and 1095-C are subject to penalties. However, an employer that fails to meet the relevant due dates should still furnish and file the required forms as soon as possible. The IRS will take such furnishing and filing of the forms into determining whether to decrease penalties for reasonable cause.

Below is a chart of the applicable deadlines for 2018 Forms and the applicable reporting entities:

Reporting Entity

No Plan

Fully-Insured Plan Self-Insured Plan

Deadline for 2018 Forms

Non-ALE

No filing required. No filing required. Forms 1094-B and 1095-B To individuals:

March 4, 2019

 

To the IRS:

February 28, 2019, if filing by paper; or

April 1, 2019, if filing electronically.

ALE

Forms 1094-C and 1095-C (except Part III; leave blank). Forms 1094-C and 1095-C (except Part III; leave blank). Forms 1094-C and 1095-C for employees.

Either B- or C-Series forms for non-employees.

Insurance Provider

No filing required. Forms 1094-B and 1095-B. Not applicable.

Extension of Good Faith Relief

Similar to the good-faith relief provided in 2015, 2016, and 2017, the IRS will not impose penalties on employers that can show that they made good-faith efforts to comply with the requirements for calendar year 2018. This relief is available only for incorrect and incomplete information reported on the statements or returns, such as missing and inaccurate taxpayer identification numbers and dates of birth. In determining good faith, the IRS will consider whether an employer made reasonable efforts to comply with the requirements (e.g., gathering and transmitting the necessary data to an agent or testing its ability to transmit information).

Good faith relief is not available to employers who have failed to timely furnish or file a statement or comply with the regulations. However, if an employer is late filing a return, it may be possible to get a penalty abatement for failures that are due to reasonable cause and not willful neglect. To establish reasonable cause, an employer must show that it acted in a responsible manner and that the failure was due to significant mitigating factors or events beyond its control.

Individual Mandate and Reporting In Future Years

Individuals do not need to wait to receive the Form 1095-C to file their 2018 tax returns, but should keep these forms for their records. They may rely on other information provided by their employers or other service providers to determine their eligibility for a premium tax subsidy and confirming whether they have had MEC to avoid an individual mandate penalty in 2018. Individuals do not need to send the information they relied upon to the IRS when they send their returns.

Notably, while the individual shared responsibility payment is reduced to zero beginning January 1, 2019, the IRS will continue to study whether and how the reporting requirements should change, if at all, for future years. In the meantime, employers and other service providers should continue to collect information in 2019 needed to comply with all ACA reporting requirements.

_______________

[1] The penalties for failure to comply with these ACA requirements could result in penalties under Internal Revenue Code Section 4980H(a) (“A Penalty”) and Section 4980H(b) (“B Penalty”). The “A Penalty” is $2,320 in 2018 ($2,500 in 2019) for each full-time employee (minus 30 employees) of the employer, including full-time employees who have MEC from another employer plan or another source. The “B Penalty” is $3,480 in 2018 ($3,750 in 2019) for each employee that obtains a premium tax credit.

Almost ten months into the Trump Administration, the executive and legislative branches have been preoccupied with attempting to repeal and replace the Affordable Care Act (“ACA”) – but each attempt has thus far proved fruitless.  While the debate rages over the continued viability of the ACA, as we stated in our previous Take 5, employers should remember that obligations to comply with Section 1557 (the non-discrimination provision of the ACA) and the final rule implementing that provision remain.  But there have been developments regarding which characteristics are protected by Section 1557.  In this Take 5, we explore whether Section 1557 continues to cover gender identity and transition services.

Although the health care debate has received the bulk of the media attention, other legal developments also promise to have significant impact on health care employers.  For instance, the  Equal Employment Opportunity Commission (“EEOC”) appears to have set its sights on the accommodation of disabled workers in the health care industry, and recent decisions regarding employees’ rights to use medical marijuana may impose new burdens on employers.

These and other developments are discussed in this edition of Take 5:

  1. Will The Affordable Care Act’s Non-Discrimination Regulations Continue to Cover Gender Identity and Transition Services?
  2. Restrictive Covenants – How Effective are Non-Competes and Non-Solicits in the Health Care Industry?
  3. Navigating the Interactive Process:  Best Practices for Complying with the ADA
  4. A Growing Trend In Favor of Medical Marijuana Users in the Employment Context
  5. ERISA Withdrawal Liability: Make Sure to Look Before You Leap Into Mergers and Acquisitions

Read the full Take 5 online or download the PDF.

On Friday October 6, 2017, the Trump administration released two interim final rules expanding the exemptions allowed under the Patient Protection and Affordable Care Act’s (the “ACA’s”) contraceptive coverage mandate. Under the ACA, employer group health plans generally are required to cover contraceptives, sterilization, and related patient education and counseling, with exemptions provided for religious houses of worship. The exemption was expanded by the Department of Health and Human Services (HHS) as a result of the Supreme Court’s decision in Burwell v. Hobby Lobby 34 S. Ct. 2751 (2014), which held health plans of closely held for-profit corporations are not required to cover contraceptives if doing so would contradict the owner’s religious beliefs under the Religious Freedom Restoration Act.

The interim final rules, released by the Treasury Department, Department of Labor (DOL), and HHS, are effective immediately and provide exemptions from the contraceptive coverage mandate to many employers with “sincerely held religious beliefs” or “sincerely held moral convictions.” The interim final rules limit the exemption for “sincerely held moral convictions” to houses of worship, tax-exempt entities, and closely held for-profit corporations, but permit publicly traded for-profit entities to use the exemption for “sincerely held religious beliefs.”

According to the Trump administration, the United States has had a long history of providing protections in the regulation of health care for individuals and entities with objections based on religious beliefs or moral convictions.

To take advantage of the new exemption, eligible employers must notify employees that they will no longer provide contraceptive coverage but need not inform the federal government. The Employee Retirement Income Security Act of 1974, as amended (ERISA), requires that a Summary of Material Modification (SMM) is provided within 60 days of a “material reduction” in covered services or benefits provided under a group health plan. A material reduction includes the elimination of benefits payable under a group health plan.

According to an Obama administration report released last year, 55 million women have gained access to no-cost birth control as a result of the contraceptive coverage mandate. It is not clear how many entities may claim the exemptions, but HHS has predicted about 200 entities (affecting 120,000 women) may do so based on the number of entities that filed lawsuits.

Written comments on the interim final rules are due December 5, 2017.

 

A New Year and a New Administration: Five Employment, Labor & Workforce Management Issues That Employers Should MonitorIn the new issue of Take 5, our colleagues examine five employment, labor, and workforce management issues that will continue to be reviewed and remain top of mind for employers under the Trump administration:

Read the full Take 5 online or download the PDF. Also, keep track of developments with Epstein Becker Green’s new microsite, The New Administration: Insights and Strategies.

While Section 1557 imposes significant nondiscrimination requirements on “Covered Entities” (as discussed in the article above), most employers are not “Covered Entities” as defined under the final rule (“non-covered employers”). The impact of Section 1557 on non-covered employers depends on whether their respective group health plans are insured or self-insured and the level of involvement in the plans by insurance issuers that are “Covered Entities” under the final rule.

Non-Covered Employers with Fully Insured Group Health Plans

Nearly all health insurance issuers are Covered Entities under Section 1557 because they offer individual policies on a federal or state Health Insurance Marketplace or otherwise receive federal funds. Non-covered employers that sponsor fully insured group health plans will be subject to Section 1557 through the underlying insurance policy (provided that the insurer offering the policy participates in an exchange or otherwise receives federal financial assistance).

As a Covered Entity, a health insurance issuer must provide special notices to plan participants, make available appropriate translations and auxiliary aids and services, and ensure that the covered benefits offered under the insurance policy are nondiscriminatory. Plan sponsors of fully insured group health plans should expect to see changes to enrollment documents, plan participant communications, and other notices from the health insurance issuer.

One of the most significant changes being made by insurance issuers to comply with Section 1557 is the elimination of any exclusion for benefit coverage of transgender health services under the insurance policy. The final rule makes clear that sex discrimination includes discrimination based on an individual’s sex, including gender identity (as well as pregnancy, childbirth, and related medical conditions, and sex stereotyping). Specifically, Covered Entities may not deny or limit coverage for health services that are ordinarily or exclusively available to persons of one gender because the person’s sex assigned at birth, gender identity, or recorded gender is different than the one to which the services are ordinarily or exclusively available. The final rule concludes that broad coverage exclusions or limitations related to gender transition are per se discriminatory and therefore unlawful. For example, many group health plans currently have explicit exclusions of coverage for all care related to gender dysphoria or gender transition, with all treatment related to transition categorized as cosmetic or experimental. Such explicit coverage exclusions under a fully insured group health plan generally are now prohibited.

Non-Covered Employers with Self-Insured Group Health Plans

If a health insurance issuer acts as a third-party administrator for a non-covered employer’s self-insured group health plan, the issuer is directly subject to Section 1557 and must administer the plan in compliance with the nondiscrimination rules. This means that if the third-party administrator is providing claims services, it must comply with the nondiscrimination rules in making any claims determinations. The non-covered employer, however, is not required to comply. Therefore, any plan coverage design decisions made by the non-covered employer in its capacity as plan sponsor are not subject to the Section 1557 nondiscrimination protections.

Nevertheless, the Section 1557 final rule clarifies that even though HHS lacks jurisdiction over a non-covered employer, HHS has the power to refer any complaint of discrimination to the EEOC and that it intends to do so. Few courts have held that discrimination based on gender identity constitutes a form of sex-based discrimination. However, the EEOC has taken the position that sex discrimination includes discrimination on the basis of gender identity and has already begun investigating allegations of gender identity discrimination in a health program or activity. From a risk perspective, a non-covered employer with a self-insured group health plan may wish to review the plan’s benefit design and determine if any changes should be made. If there is an explicit exclusion for coverage of transgender health care, a non-covered employer may choose to remove the exclusion from the plan to minimize the possibility of an EEOC investigation as it relates to the employer’s group health plan.

Employment Discrimination

Finally, non-covered employers should be reminded of other nondiscrimination rules that might apply to them. For example, Section 1557 borrows from various antidiscrimination laws that apply to the employer directly, such as the requirement to provide auxiliary aids and services under the Americans with Disabilities Act. Although non-covered employers may not be required to comply with Section 1557, they are still required to abide by the various antidiscrimination laws and an employment discrimination complaint could arise through a referral to the EEOC in relation to an employer’s group health plan.

Takeaways

Although only Covered Entities are required to comply with the Section 1557 final rule, non-covered employers should be aware of the breadth of the final rule and how it affects them. Clearly, in developing the final rule, HHS intended for the nondiscrimination protections to apply to the greatest number of plan participants possible. To manage risk, non-covered employers may wish to review the design and operation of their group health plans to ensure that the plans do not discriminate against individuals, specifically with regards to transgender benefits, and to be aware that group health plan design and administration may be the basis of an employment discrimination complaint or EEOC investigation.

A version of this article originally appeared in the Take 5 newsletter Five Key Issues Impacting Health Care Employers.”

In May 2016, the U.S. Department of Health and Human Services (“HHS”) published a final rule implementing Section 1557 of the ACA. Section 1557 prohibits discrimination in the health programs and activities of “Covered Entities” on the basis of race, color, national origin, sex, age, or disability. Section 1557 also imposes detailed and specific notice and disclosure requirements on Covered Entities, including, among other things, the requirement to provide information about the use of auxiliary aids and services, the adoption of grievance procedures, and access for individuals with limited English proficiency. Covered Entities are also required to include specific nondiscrimination protections in the design of group health plans.

A “Covered Entity” is one that receives “federal financial assistance” for a health program or activity from HHS. If any part of a health program or activity receives federal financial assistance from HHS, then all of that entity’s programs and activities are subject to the nondiscrimination provisions of the final rule.

While the nondiscrimination provisions of the final rule went into effect on July 18, 2016, and “Covered Entities” subject to the final rule were required to comply with the notification and grievance procedures by October 16, 2016, entities are still struggling to determine if they qualify as “Covered Entities” subject to the final rule.

Is it only federal financial assistance from HHS that matters for this determination?

In general, Section 1557 of the ACA applies to all health programs and activities, any part of which receives federal financial assistance from any federal agency. However, the requirements in the final rule specifically apply only to recipients of federal financial assistance from HHS.

What does federal financial assistance include?

“Federal financial assistance” includes Medicare Parts A, C, and D and Medicaid payments, grants, loans, subsidies, contracts of insurance, and other types of assistance. Such assistance also includes premium tax credits and advance payments of premium tax credits and cost-sharing reductions for health insurance coverage purchased through the federal and state Health Insurance Marketplaces.

Importantly, HHS does not consider Medicare Part B payments to be federal financial assistance.

What are some examples of “Covered Entities”?

HHS defines “Covered Entities” that are subject to the final rule to include:

  • every health program or activity that receives HHS funding;
  • every health program or activity administered by HHS, such as the Medicare Part D program; and
  • the Health Insurance Marketplaces and all plans offered by issuers that participate in those marketplaces.

“Covered Entities” may include entities that receive federal financial assistance through their participation in Medicare or Medicaid (e.g., hospitals, nursing facilities, and home health agencies) or through grants or subsidies from HHS agencies (e.g., health clinics, community health centers, and health-related schools), state Medicaid agencies, state public health agencies, health insurance issuers that participate in the Health Insurance Marketplaces, Medicare Advantage plans and Prescription Drug Plan sponsors, and physician practices receiving Medicaid payments or other payments from HHS (e.g., meaningful use incentive payments).

What about entities that do not receive funding directly from HHS?

A wide array of entities that provide health-related services do not receive funding directly from HHS but do receive payment for their services through other HHS-funded organizations. The “Covered Entity” status for these entities is more complex and must be examined closely.

By definition, a “recipient of federal financial assistance” is an entity to which such funding is extended directly or through another recipient. However, it is important to look to the entity that Congress intended to assist or subsidize with certain funds when determining whether a downstream entity is a recipient of federal financial assistance.

Nonetheless, whether a downstream entity is covered under the final rule remains far from clear, as HHS offers only limited guidance. HHS makes some distinctions in the final rule. For example, an issuer participating in a Health Insurance Marketplace receives federal financial assistance, but a health care provider that contracts with such an issuer does not become a recipient of federal financial assistance by virtue of that contract. Similarly, physicians who contract to provide health services to hospitals or clinics that receive federal financial assistance do not become recipients of federal financial assistance by virtue of those contracts. However, HHS has confirmed that providers that receive reimbursement from a Medicare Advantage plan are subject to the final rule, regardless of whether payments from the plan go directly to the provider or to the patient.

An entity acting as a third-party administrator for an employer’s employee health benefit plan may not be a “Covered Entity” if the entity is legally separate from an issuer that receives federal financial assistance for its insurance plans. Nonetheless, if an issuer that receives federal financial assistance also provides third-party administrator services, the final rule would apply to those third-party administrator services.

As a general rule of thumb, downstream entities contracting with a recipient of federal financial assistance may not qualify as a “Covered Entity” by virtue of the contract alone. Entities unsure of their status should consider whether they are the intended recipient of the federal financial assistance when making this determination. Entities also should be aware that a “Covered Entity” may include provisions regarding compliance with Section 1557’s nondiscrimination requirements in its contracts with downstream entities. Finally, HHS has reserved the right to engage in a case-by-case inquiry to evaluate whether an entity is appropriately subject to Section 1557. A highly fact-specific inquiry should be undertaken to determine if an entity that does not directly receive funding from HHS might still be a “Covered Entity” in the eyes of HHS.

Takeaways

Entities operating a health program or activity should determine the source of funding for any such program or activity. Those programs or activities receiving federal financial assistance are subject to the nondiscrimination requirements of Section 1557, which include providing a notice of nondiscrimination to the public, implementing a grievance procedure, designating a civil rights coordinator, and providing language assistance to limited English proficiency speakers and appropriate accommodations to individuals with disabilities.

Employers sponsoring group health plans should read the following article by our colleagues to determine the extent to which the Section 1557 nondiscrimination rules apply to them.

A version of this article originally appeared in the Take 5 newsletter Five Key Issues Impacting Health Care Employers.”

Kyler Prescott was a 14 year old transgender boy who was receiving puberty-delaying medication to help him transition.  Shortly before Kyler’s death he had “suicidal ideation” and was taken to Rady Children’s Hospital – San Diego in April 2015.  The hospital has a Gender Management Clinic to provide services to children with gender dysphoria and related issues.  A lawsuit under the ACA’s non-discrimination provision, § 1557, alleges that after admission, despite assurances that he would be referred to with masculine pronouns, hospital employees referred to Kyler as a girl.  The suit claims that the hospital’s actions discriminated against Prescott “resulting in his inability to access necessary services and treatment during a dire medical crisis.” The federal lawsuit, filed in the Southern District of California, further alleges that the use of female references exacerbated his condition and that he thereafter had further difficulties and ultimately committed suicide.

As discussed in our recent October 6, 2016 webinar and in our Client Advisory, HHS’s Office of Civil Rights (“OCR”) final § 1557 regulations explicitly include coverage for gender identity and sexual stereotypes.  They also state that covered entities must “treat individuals consistent with their gender identity . . . .” 45 C.F.R. § 92.206.  This lawsuit appears to be one of the first under § 1557 for gender identity discrimination.  It will surely not be the last.

The suit focuses on claims that nurses and other staff repeatedly used feminine pronouns in referring to Kyler despite assertions in the court pleadings of multiple calls by his mother to the hospital to explain his distress at this alleged conduct.  Hospital staff failed to use Kyler’s preferred pronouns despite hospital records showing Kyler’s legal name and gender change from female to male, according to the suit.

The results of the lawsuit, which at this time are only unproven allegations, will await further court proceedings. What the suit clearly shows, however, is that compliance with § 1557’s notice and policy requirements, effective October 16, was only the beginning of § 1557 compliance needs for covered health care entities.  Among the necessary next steps in compliance with which we are assisting clients are developing appropriate training of all staff interacting with patients and companions on the requirements of § 1557 in providing services, proper categorization of gender in health care records and in-patient references, as well as the need for training and visibility on provider non-discrimination and grievance policies.  This lawsuit dramatically emphasizes the urgency for continuing efforts to achieve full compliance with § 1557 and the OCR final regulations to avoid § 1557 discrimination claims on the expansive grounds covered by § 1557 as interpreted in OCR’s final regulations.

Featured on Employment Law This Week: The Occupational Safety and Health Administration (OSHA) has issued a final rule for handling retaliation under the Affordable Care Act (ACA).

The ACA prohibits employers from retaliating against employees for receiving Marketplace financial assistance when purchasing health insurance through an Exchange. The ACA also protects employees from retaliation for raising concerns regarding conduct that they believe violates the consumer protections and health insurance reforms in the ACA. OSHA’s new final rule establishes procedures and timelines for handling these complaints.  The ACA’s whistleblower provision provides for a private right of action in a U.S. district court if agencies like OSHA do not issue a final decision within certain time limits.

Watch the segment below:

In less than three weeks, health care providers covered by the Affordable Care Act must meet various posting obligations required by the recently issued Section 1557 regulations. Epstein Becker & Green, P.C. has written extensively about the Final Rule, including the expansive nondiscrimination standards and the upcoming October 16 deadlines. While we encourage you to review these publications for more detail, covered entities urgently need to prepare by October 16, 2016, nondiscrimination notices and taglines to be posted (1) in significant publications or communications; (2) in conspicuous physical locations where they interact with the public; and (3) in a conspicuous location on their website.

Nondiscrimination notices must include, among other things, a statement of nondiscrimination, the availability of interpretive services for patients with limited English proficiency (LEP), the availability of auxiliary aids and services for individuals with disabilities, and the availability of a grievance procedure for discrimination complaints. In small-sized publications, such as postcards and pamphlets, the notice may be shortened to include only the nondiscrimination policy.

Taglines, which are statements of the availability of language assistance services, must be posted in the same locations. In large-format publications, taglines must be posted in at least the top 15 languages for the relevant state.  In small-sized publications, taglines must be posted in the top two languages.

With the October 16th deadline quickly approaching, in addition to complying with Section 1557’s notice requirements, covered entities should develop a plan to ensure they are able to provide the services and procedures promised in the required notices. On Thursday, October 6, join us as we host a webinar to discuss these topics, address practical considerations, and recommend best practices for compliance.

To register for this complimentary webinar, please click here.

I’d like to recommend an upcoming complimentary webinar, “EEOC Wellness Regulations – What Do They Mean for Employer-Sponsored Programs? (April 22, 2015, 12:00 p.m. EDT) presented by my Epstein Becker Green colleagues Frank C. Morris, Jr. and Adam C. Solander.

Below is a description of the webinar:

On April 16, 2015, the Equal Employment Opportunity Commission (“EEOC”) released its long-awaited proposed regulations governing employer-provided wellness programs under the American’s with Disabilities Act (“ADA”). Although the EEOC had not previously issued regulations governing wellness programs, the EEOC has filed a series of lawsuits against employers alleging that their wellness programs violated the ADA. Additionally, the EEOC has issued a number of public statements, which have concerned employers, indicating that the EEOC’s regulation of wellness programs would conflict with the regulations governing wellness programs under the Affordable Care Act (“ACA”) and jeopardize the programs currently offered to employees.

During this webinar, Epstein Becker Green attorneys will:

  • summarize the EEOC’s recently released proposed regulations
  • discuss where the EEOC’s proposed regulations are inconsistent with the rules currently in place under the ACA and the implications of the rules on wellness programs
  • examine the requests for comments issued by the EEOC and how its proposed regulations may change in the future
  • provide an analysis of what employers should still be concerned about and the implications of the proposed regulations on the EEOC’s lawsuits against employers

Who Should Attend:

  • Employers that offer, or are considering offering, wellness programs
  • Wellness providers, insurers, and administrators

To register for this complimentary webinar, please click here.