President Obama has signed the 21st Century Cures Act, which includes a number of benefit-related provisions, in addition to providing funding for medical research, mental health resources and other provisions. Most of the publicity about benefit-related provisions has centered on the new health reimbursement arrangement (HRA) rules for small employers; other benefit-related provisions include a change in the rules regarding Medicare open enrollment, provisions related to mental health parity and provisions related to the Health Insurance Portability and Accountability Act (HIPAA) privacy rules.
The legislation acknowledges there is confusion regarding permissible practices under the HIPAA regulations and cites the need for clarification. This new law instructs the Department of Health and Human Services (HHS) to ensure availability of resources regarding appropriate uses and disclosures of protected health information.
Mental Health Parity
This new law includes several provisions intended to enhance compliance with the mental health parity and substance use disorder rules by group health plans. The legislation requires the Departments of Labor, HHS and Treasury to issue guidance to improve compliance. The legislation requires audits of plan documents if a plan year has multiple violations. The new law also explicitly makes eating disorders subject to the mental health parity requirements.
Medicare beneficiaries enrolled in a Medicare Advantage plan can make a one-time switch to another Medicare Advantage plan between January and March, effective in 2019.
Qualified Small Employer Health Reimbursement Arrangements
The new law creates Qualified Small Employer Health Reimbursement Arrangements (QSEHRAs). QSEHRAs are exempt from the prohibition on standalone HRAs. QSEHRAs allow small employers (employers with fewer than 50 employees, including full-time equivalent employees) to reimburse employees for individual health insurance premiums. Reimbursements are limited to $4,950 for a single employee and $10,000 for a family. These amounts will be indexed. QSEHRAs must be provided on the same terms to all eligible employees and must be funded solely by employer contributions. In order to be eligible to sponsor a QSEHRA, an employer cannot offer any other group health plan to any of its employees. QSEHRAs will be allowed for plan years beginning after December 31, 2016. Employers sponsoring QSEHRAs must provide a notice 90 days before the beginning of the year or when an employee is first eligible for the plan. The notice must include:
- a statement of the amount of the eligible employee’s benefit,
- a statement that information regarding the benefit must be provided by the employee to any health insurance exchange, if the employee is applying for a subsidy (the amount of the subsidy will be reduced by the amount of the benefit), and
- a statement that if the employee is not covered under minimum essential coverage for any month that the employee may be subject to the individual mandate penalty for the month and any reimbursements under the arrangement may be included in the employee’s gross income.
Failure to provide the notice can result in a penalty of $50 per employee. The first notices will not be required until 90 days after the date of enactment of the new law.
IRS Notice 2015-17 provided transition relief from penalties until June 30, 2015 for small employers that reimbursed (or directly paid) individual health insurance. This new law extends that relief to any plan year beginning on or before December 31, 2016.