The HIPAA Privacy and Security Rules apply to employer group health plans (generally group health plans for employers with over 50 employees). A new rule – the HIPAA Omnibus Rule (the “New Rule”) – becomes effective September 23, 2013. Employers should reach out to their third-party administrators and health plan providers to confirm compliance with the New Rule.
The New Rule includes a requirement to distribute a new Notice of HIPAA Privacy Practices (the “Notice”), although in the case of an insured group health plan, the insurer has the obligation to provide the Notice. Earlier this month the federal regulators issued a model privacy notice to assist group health plans in meeting this new requirement. If a plan has previously posted a privacy notice on a website, it must post the new Notice on its website by September 23, 2013 and provide the Notice in connection with open enrollment. Plans that do not post their privacy notice should provide a new Notice not later than November 23, 2013. In addition, HIPAA Privacy Policies may need to be updated.
Business associate agreements for a plan’s third-party administrators and covered service providers should also be reviewed to determine if amendments are needed to comply with the New Rule. There is a delay in the required effective date for a new business associate agreement until September 23, 2014 if a group health plan had an existing contract that complied with HIPAA as of January 23, 2013, provided the arrangement was not revised or modified between March 26, 2013 and September 23, 2013.
Federal Health Reform
Many of the requirements of the Patient Protection and Affordable Care Act (the “ACA”) will go into effect as scheduled, while others have been delayed. The regulatory landscape is continually changing; employers should work with their brokers and health plan administrators to keep abreast of ACA requirements and developments.
One ACA notice requirement that is fast approaching is the notice described below:
- Health Insurance Market Place Notice. Employers are required to send a notice to all employees by October 1, 2013 explaining the new “health insurance market place” coverages that are available starting in 2014 under the ACA. This October notice requirement has not been delayed. Information and a sample notice can be found on the Department of Labor’s website. This model notice should be revised as appropriate for each employer.
ACA requirements that have been delayed include the following:
- Section 4980H Tax. The ACA includes so-called “pay or play” rules that require an employer with more than 50 full-time employees to self-report and pay a tax under Section 4980H of the Internal Revenue Code if the employer does not provide qualified health coverage to its full-time employees in accordance with the ACA. This requirement originally was to have applied for 2014; however, the effective date has been delayed until further guidance is issued by the IRS.
- Health Plan Auto-Enrollment. The ACA originally required that, beginning in 2014, employer health plans of employers with at least 200 employees implement automatic enrollment of their employees in health plans. This requirement has been delayed and will not be become effective until guidance is issued by the regulatory agencies; such guidance is not expected until sometime next year at the earliest.
- Non-Discrimination Rules for Insured Plans. Self-insured plans have been subject to IRS nondiscrimination rules for many years. The ACA added nondiscrimination requirements for insured plans (originally to become effective in 2012). The enforcement of the nondiscrimination rules applicable to insured plans continues to be delayed until regulations are issued.
Special Cafeteria Plan Rules for Massachusetts Employers
Beginning in 2007, Massachusetts health reform imposed a requirement on employers with Massachusetts employees to offer a pre-tax premium arrangement for all employees in Massachusetts who were regularly scheduled to work more than 64 hours per month (a “Massachusetts Eligible Employee”). If a Massachusetts Eligible Employee is not eligible for employer-provided health benefits, in order to avoid assessment of the “Free Rider Surcharge” the employer is obligated to offer such employee an opportunity to direct pre-tax premium payments to a health insurance option selected by the employee.
Many employers adopted arrangements requiring employees who elected this option to select a health insurance arrangement available from the Massachusetts Health Connector. Pre-tax premium payments to the Massachusetts Health Connector will not be permitted under the ACA beginning January 1, 2014. (Special rules apply to employers with under 50 employees.) Employers subject to this pre-tax premium arrangement requirement should review their Section 125 documents and options to determine what changes should be made for open enrollment this fall.
Some insurers (or self-insured plans) may permit Massachusetts Eligible Employees to participate in the employer’s plan if they pay 100% of the required premium. Alternatively, employers may permit Massachusetts Eligible Employees to direct their pre-tax premium payments to insurers whose individual health insurance products are available on a private, non-governmental exchange.
Mosaic Health Insurance Exchange, Inc. is a private, non-government exchange that is assisting some employers in complying with the pre-tax premium requirements for Massachusetts Eligible Employees. Information from Mosaic can be requested at email@example.com or by calling 888-806-1041.