Compliance Updates (Benefit Minute)
This issue provides a summary of recent regulatory activity.
HSA Limits for 2017
The limits for qualified high deductible health plans (QHDHPs) and health savings accounts (HSAs) for plan years beginning in 2017 are set forth below. The only change from 2016 is the HSA contribution limit for individual coverage.
|HSA Contribution Limit (individual)||$3,400|
|HSA Contribution Limit (family)||$6,750|
|QHDHP Minimum Deductible (individual)||$1,300|
|QHDHP Minimum Deductible (family)||$2,600|
|QHDHP Out-of-Pocket Max (individual)||$6,550|
|QHDHP Out-of-Pocket Max (family)||$13,100|
Changes to SBC Documents
The Affordable Care Act (ACA) requires health insurers or group health plans to provide a Summary of Benefits & Coverage (SBC) in a uniform format. When final regulations regarding the format, content, and distribution of the SBC were amended in 2015, related revisions to the SBC template, instructions, and uniform glossary were not provided. The federal agencies have now released final changes to these documents which are generally effective for plan years beginning on or after April 1, 2017.
The changes to the SBC requirements include:
• Addition of a simple explanation of what the SBC is at the beginning of the document;
• Additional definitions in the Uniform Glossary (HHS is providing a link to the Glossary on an HHS website);
• More comprehensive description of deductibles that includes how individual deductibles impact the family deductible and what services are covered before the deductible is met;
• Change of column heading to “Limitations, Exceptions, & Other Important Information” to provide more detail on service categories that are not covered, cost-sharing that does not apply to the out-of-pocket maximum, visit or dollar limits on certain services, and when services require pre-authorization;
• A direct link or website address to the formulary drug list;
• Formatting changes for mental health, behavior health and substance abuse services and for pregnancy services to provide more detail;
• Information about whether the plan provides minimum essential coverage and meets minimum value standards;
• Addition of third Coverage Example for a simple fracture; and
• Changes to the disclosure information on the Coverage Example page.
More flexibility in form language and formatting is permitted in order to maintain the limit of four pages (double-sided).
Tax Treatment of Wellness Program Benefits
The IRS has issued a memorandum that discusses the tax treatment of rewards for participation in a wellness program when the rewards do not qualify as medical care. The memorandum makes it clear that that any cash reward received is included in gross income as wages subject to employment taxes. In addition, other rewards that are not otherwise excludable from income (such as gift cards, other in-kind gifts or payment for gym membership fees) must also be included in gross income as wages. The only exception is a de minimis fringe benefit such as a tee shirt. Cash benefits, no matter how small, are not a de minimis fringe benefit.
In addition, the IRS memorandum also discusses a program under which an employee pays a premium through salary reduction for a wellness program and then is reimbursed a portion of that premium as a reward for participation in the program (these programs are sometimes promoted as payroll tax reduction programs). The IRS makes it clear that the reimbursements must be included in an employee’s gross income, thereby eliminating any tax savings.
Unpaid Leave as a Reasonable Accommodation
The Americans with Disabilities Act (ADA) prohibits discrimination on the basis of disability and requires employers to provide reasonable accommodations to employees with disabilities. A reasonable accommodation is any change in the work environment or in the way things are customarily done that enables an individual with a disability to enjoy equal employment opportunities.
The EEOC has released new guidance that provides general information regarding when and how leave must be granted for reasons related to a disability. Employees with disabilities must be granted access to leave on the same basis as other similarly-situated employees when the request falls within the employer’s existing leave policy.
However, if a request for leave by a disabled employee does not fall within the employer’s existing leave policy, the employer must consider making an exception and providing unpaid leave as a reasonable accommodation as long as it does not create undue hardship for the employer. When assessing undue hardship, an employer may take into account leave already taken. The EEOC stresses that an employer must engage in an interactive process with the employee when leave is requested that is outside the employer’s existing programs. An employer may obtain information from a healthcare provider regarding the amount and type of leave required and whether another reasonable accommodation may be effective for the employee. An employer and employee should continue to communicate about whether the employee is ready to return to work. The EEOC guidance includes several useful examples for employers addressing this issue.