On December 20, 2019, President Donald Trump signed into law the Further Consolidated Appropriations Act, 2020 (Act). After years of delayed effective dates, the Act finally repeals the 40% excise tax on high-cost health coverage, often referred to as the “Cadillac tax.” Furthermore, the Act extends the Patient-Centered Outcomes Research Institute (PCORI) fee scheduled to originally sunset at the end of 2019.
In the much anticipated decision State of Texas v. United States of America, et al., the US Court of Appeals for the Fifth Circuit upheld a district court ruling that the individual mandate under the Affordable Care Act (ACA) is unconstitutional. Because the Tax Cuts and Jobs Act of 2017 zeroed out the federal tax penalty under the individual mandate, effective January 1, 2019, the Fifth Circuit concluded that since there is no longer a penalty or tax resulting from the individual mandate, the mandate can no longer be sustained constitutionally under Congress’s taxing power.
Despite its definitive ruling on the constitutionality of the individual mandate, the Fifth Circuit was not prepared to rule on the most anticipated issue of the case: whether the rest of the ACA is inseverable from the individual mandate, which could result in a holding that the ACA is unconstitutional. Instead, the Fifth Circuit remanded the case to the district court for a ruling on this issue. In doing so, the Fifth Circuit directed the district court to conduct a “finer-toothed comb” inquiry into the issue of severability.
There is no immediate action that group health plan sponsors need to take as a result of the Fifth Circuit’s decision. The ACA wars continue, and for the next episode, patiently wait we must.
The Internal Revenue Service (IRS) has released IRS Notice 2019-63, which provides a 30-day automatic extension to furnish to employees/covered individuals the 2019 IRS Forms 1095-B (Health Coverage) and 1095-C (Employer-Provided Health Insurance Offer and Coverage) from January 31, 2020 to March 2, 2020. This extension is similar to the extension issued in earlier years and does not impact the deadline to furnish transmittal Forms 1094-C and 1094-B and copies of the individual forms to the IRS. The deadline to file these forms remains February 28, 2020 (March 31, 2020, if filing electronically).
As we look forward to 2020, we bring you a few key takeaways on the hot topics and trends that individuals operating in the employee benefits space are watching in health and welfare, plan sponsor considerations, executive compensation, fiduciary, and fringe benefits.
Please join our July 16 webinar, Final HRA Regulations: Roadmap to the Future or Bridge to Nowhere? This webinar will be a discussion about the recent Tri-Agency rules on Health Reimbursement Arrangements.
Texas has passed one of the strongest new laws on drug transparency—HB 2536. To learn how this law may apply to drug manufacturers, pharmacy benefit managers, and health plans, please see our recent Health Law Scan blog post: New Texas Law Mandating Drug Price Transparency Considered Among Strongest in Nation.
Partner Andy Anderson was quoted in a recent article by the Society of Human Resource Management (SHRM) on the Health Reimbursement Arrangements and Other Account-Based Group Health Plans final rule issued by the US Departments of Health and Human Services, Labor, and Treasury. Andy discusses the new excepted-benefit health reimbursement arrangement. Read the full article, New Final Rule Lets Employees Use HRAs to Buy Health Insurance.
Now that spring has arrived, thoughts turn to the design, communication, and eventual implementation of next year’s health and welfare benefits. Reviewing and drafting open enrollment communication materials can help address the following issues, as well as inform plan design decisions for next year’s benefits:
- Compliance with the myriad Code, ERISA, and ACA provisions applicable to health and welfare benefits
- The interplay between high-deductible health plans and existing onsite clinics or rapidly growing telemedicine initiatives
- Wellness rules and requirements
- Interactions between open enrollment materials, plan documents, and SPDs
- Impact of upcoming changes on prior benefits
- Health flexible spending account interactions with health savings accounts
- Electronic communication rules and best practices
- Legally mandated annual communication requirements
Please reach out to the authors or your Morgan Lewis contact if you have any questions about your upcoming open enrollment materials, or any related aspects of next year’s health and welfare benefits.
Judge John Bates of the US District Court for the District of Columbia recently struck down two parts of the US Department of Labor’s (DOL’s) final regulations on Association Health Plans (AHPs). On March 28, Judge Bates ruled in favor of the plaintiffs, 11 states and the District of Columbia, which claimed that the DOL’s final AHP regulations misinterpreted the definition of “employer” under ERISA and also violated the Patient Protection and Affordable Care Act (ACA).
The New York City Council has approved an amendment to the Administrative Code of the City of New York (Int. 0863-2018) that prohibits employment discrimination and harassment based on an individual’s reproductive health choices, which goes into effect on May 20, 2019. Please see our recent LawFlash about this amendment, and reach out to the LawFlash authors or your Morgan Lewis contacts if you have additional questions.