Last month, on August 1st, Governor Charlie Baker signed into law S. 3822<https://malegislature.gov/Bills/190/H3822> “An Act Further Regulating Employer Contributions to Health Care.” This new law which will take effect in 2018 will apply to all employers with 6 or more employees residing in Massachusetts. It imposes a penalty of up to $750 for each active employee who is enrolled in either Mass Health or who receives subsidized coverage through the Mass Health Connector. In addition, it raises the Employer Medical Assistance Contribution (“EMAC”) from it’s current annual maximum fee of $51/worker up to $77/worker.
This change is a temporary increase in fees and penalties to help offset the approximately $300 million budget deficit faced by the state’s Medicaid and Children’s Health Insurance Programs (CHIP). Together the increased EMAC fee and penalty are expected to generate approximately $200 million, far less than what is needed to fix the shortfall. Other proposals, including limiting the eligibility rules for MassHealth to restrict people who have coverage available through their employer were considered but not adopted. As this will not solve the Medicaid budget deficit, we expect that the legislature will look to other areas for cost control in the future. The additional fee and penalty will apply for two years, ending on December 31st, 2019.
Both the EMAC fee and the penalty are going to follow Mass unemployment insurance contributions, and the assessments are likely to be paid through the Department of Unemployment Assistance. The EMAC will be based on .51% of wages up to $15,000, while the penalty (only for those workers covered by either Medicaid or a subsidized Health Connector plan) will be assessed 5.00% up to $15,000 in wages. Based on the wage caps that could result in fees of $77 and $750 per worker, respectvely.
Tips for Responding to Cyber-Related Security Incidents
The Department of Health and Human Services (HHS) Office of Civil Rights (OCR) has released a quick-response checklist briefly describing the steps that HIPAA-covered entities (including medical and dental offices) and their business associates should take in response to a cyber-related security incident. Steps include:
Executing the entity’s response and mitigation procedures and contingency plans, such as immediately fixing any technical or other problems to stop the incident;
Reporting the breach to the OCR as soon as possible, but no later than 60 days after the discovery of a breach affecting 500 or more individuals, and notifying affected individuals and the media unless a law enforcement official has requested a delay in the reporting.
Note: OCR considers all mitigation efforts taken by the entity during any particular breach investigation. Such efforts include the voluntary sharing of breach-related information with law enforcement agencies and other federal and analysis organizations.
Click here to read the entire cyber-attack checklist.
Please visit our HIPAA section for more on the law’s requirements.
Yesterday the IRS announced an extension in the deadline for the 1095 and 1094 forms.
For Applicable Large Employers (ALEs), who need to provide the 1095-C in 2015, this change extends the deadline two months from February 1st to March 31st, 2016.
In addition, ALEs will have an extra three months to file the 1094-C, or until May 31st (June 30th if filing electronically).
The IRS Bulletin also confirms that penalties will apply if ALEs do not file by the new deadlines and that since these new deadlines are more generous than previous extensions offered, that any ongoing requests for an extension will not be formally granted.
Lastly, there is some guidance for individuals who file their taxes before receiving their 1095 forms.
Matt Hollister, L.I.A., M.P.H.
Last Friday President Obama signed H.R.2029 – Consolidated Appropriations Act, 2016, which made a couple of key changes to the “Cadillac Plan Tax”, an excise tax on high cost employer-sponsored health plans.
First, the implementation of the tax has been delayed two years from 2018 to 2020. Second, the tax payment will be a deductible business expense – initially the excise tax was not going to be a deductible expense and therefore more costly for employers.
The Cadillac Tax is an excise tax on the cost of “high cost plans” which are plans that have an premium that exceeds a certain threshold. Currently, the amounts for high-cost plans are $10,200 for individual coverage, and $27,500 for family coverage. These amounts are indexed for inflation and will change.
Opponents of the Cadillac Tax seek a repeal of the law that will cause further pressure on employers who already face a high cost of providing health insurance. Included in the “premium” calculation for Cadillac plans are benefits such as Health FSAs, HRAs, Health Savings Accounts, most wellness plans and of course fully insured and self insured health plans.
Matt Hollister, L.I.A., M.P.H.
Employers who sponsor group health plans must provide notices of creditable or non-creditable coverage to Medicare-eligible individuals before each year’s Medicare Part D annual enrollment period by October 15th. This notice is meant to educate Medicare beneficiaries of their options by informing them of whether the group health plan is “creditable”, meaning it is expected to cover, on average, as much as the standard Medicare Part D prescription drug plan. The timing is also tied to the Medicare open enrollment period so beneficiaries can compare their group health plan options against their Medicare options.
Some employers will choose to provide the notice to all covered employees while others, generally smaller companies, will distribute the notice to only those who are Medicare eligible. Keep in mind, however, that Medicare eligibility can include people under 65 with disabilities.
If your company has fewer than 100 employees, we advise that you give this notice just to those Medicare eligible employees or dependents who are members of your health plan. If your company has 100 or more employees, we recommend sending the notice to all health plan subscribers. A short cover note explaining why the notice is being sent can help prevent calls from confused recipients.
CMS also requires that employers disclose to CMS within 60 days of the status of the company’s creditable coverage. The disclosure form can be found in the link below.
The link also contains the most current copy of the Model Notice. Please let us know if you have any questions in completing the form or prefer to have a copy of the notice forwarded to you.
Governor Charlie Baker Announced last Thursday that the Federal Health Care Reform mandate, which would expand the definition of “small group” up to 100 employees, has been delayed for at least a year. Governor Baker cited “price shock” for employers with between 50 and 100 employees as a reason for Massachusetts to seek a waiver in the new rule. Governor Baker had originally sought a permanent waiver but was granted a delay of the expansion by federal regulators instead.
According to our sources, insurance carriers will have the option of whether or not to delay the expansion of small group, and some may move ahead with the change regardless of the announcement. At Hollister Insurance, as we prepare for 2016 renewals, we will be working closely with clients in the development of a renewal strategy that works best given the regulatory environment.
Overall we feel that this is a step in the right direction, although we still support a permanent waiver which would allow Massachusetts state government, along with the MA Division of Insurance with the flexibility in defining the size of a “small group.”
More information on this announcement can be found on Governor Baker’s website.
The MA Attorney general posted last week on its web site a revised safe harbor for employers with existing paid time off policies. These revisions directly address use of the safe harbor by employers that have some employees who do not currently receive a paid leave/sick benefit under the employer’s existing paid time off policy.
The revised safe harbor also clarifies that employers opting to use the safe harbor may also choose full compliance with the Earned Sick Time law and regulations beginning July 1, 2015 for some or all employees — which would include the ability to create a separate EST compliant plan for employees who do not currently receive a paid leave/sick benefit under the employer’s existing paid time off policy.
NOTICE TO EMPLOYEES ALSO RELEASED
Also today, the AG released the English-language version of the “Notice to Employees.” The statute requires that employers “shall post this notice in a conspicuous location accessible to employees in every establishment where employees with rights under this section work, and shall provide a copy to their employees.”
The Notice to Employees is now available for download on the Attorney General’s Earned Sick Time website: www.mass.gov/ago/earnedsicktime. Notices in other languages will be coming soon.
Hollister Insurance and J.F. Conlon and Associates will be hosting a seminar on: Wednesday, May 27th, from 9:00am to 10:30am, to discuss the ACA Reporting Requirements, including forms 1094-C and 1095-C, which will need to be completed by all applicable large employers for 2015. Clients and prospective clients are welcome to attend.
The seminar is designed to provide employers with the background and important deadlines for the forms, as well as specific instructions on how to complete them. There are numerous service providers who have developed products designed to complete and file the forms. However, in order to assess whether these forms should be done in house or outsourced will require a basic understanding of what is involved.
Coffee, Tea, Juice & Muffins/Bagels will be served
WHEN: Wednesday, May 27th, 2015, Registration 8:30; Program 9:00 – 10:30 AM
WHERE: Cyprian Keyes Golf Club, 284 E Temple St, Boylston, MA 01505, Phone: (508) 869-9900
Rick has more than 25 years of experience as an ERISA employee benefits lawyer and consultant. He is Of Counsel to Parker Brown Macaulay & Sheerin, P.C., in Foxborough, Massachusetts, where he concentrates his practice exclusively in employee benefit matters including compliance with state and federal health care reform. During the past 7 years Rick has also been a special legal advisor to the MA Health Connector Authority in connection with Mass Health Care Reform. Rick is a graduate of the University of Massachusetts and Marquette University Law School.
Mass. Parental Leave Act (PLA) replaces the Maternity Leave Act (MMLA) to add Paternity and other new provisions
Key terms and conditions about PLA that you need to know:
PLA is effective April 7, 2015 for all Mass. Employers with 6 or more employees,
Requires equal treatment of male and female employees,
Provides up to a minimum of 8 weeks of unpaid, job-protected leave for full-time employee-parents:
o At the time of childbirth or adoption, and
o When a child is placed pursuant to a court order.
Important nuances of the law that you also need to know include:
o Employees cannot be required to use accrued sick, vacation or other paid time off (PTO) during this time although they may voluntarily elect to do so.
o Should both parents be employed by the same company, the same 8 week minimum leave will concurrently apply to both.
o Employee date of eligibility cannot exceed three months from date of hire, with or without a probationary period.
o If you do not intend to permit such a leave to extend beyond 8 weeks, you must notify your employee, in writing, before the leave begins. Failure to do so may automatically extend the leave beyond 8 weeks.
o Employees desiring such a leave must provide you with at least two weeks’ advanced written notice, or as soon as practicable, if such notice is beyond the employee’s control.
For employers with 50 or more employees who come under the Family Medical Leave Act, the 8 weeks leave covered under the PLA may be counted concurrently with the first 8 weeks of the FMLA’s 12 week leave period.
You must be sure to post proper notice of employee rights and your company’s policy under the PLA at all job locations.
You need to be sure to update your policies and procedures and effectively communicate with and train all those in a position to have any impact on the proper administration of the PLA at your company.
Employees on approved PLA leaves must be restored to the same or similar position with the same status, pay, seniority, and other such conditions as existed for the position held prior to going out on leave.
Should there be a layoff due to economic or operating conditions during an employee’s leave, job protections of the PLA will not apply to such employees if it is determined that they would have been so affected if they had not been on leave. However, the employee must retain any preferential consideration for another position, the same as they may have had prior to taking a leave.
Nothing in the PLA is meant to affect any bargaining agreement or company policy that provides for greater or additional benefits beyond the PLA.