PCORI Fee Extended Until 2030
Before the holidays, we sent information about President Trump signing into law a spending bill that prevented a government shutdown and repealed the following three taxes and fees under the Affordable Care Act (ACA):
- The Cadillac tax on high-cost group health coverage, beginning in 2020;
- The medical devices excise tax, beginning in 2020; and
- The health insurance providers fee, beginning in 2021.
As a reminder, the ACA created the Patient-Centered Outcomes Research Institute (PCORI) to help patients, clinicians, payers and the public make informed health decisions by advancing comparative effectiveness research. The Institute’s research is funded, in part, by fees paid by health insurance issuers and sponsors of self-insured health plans. Under the ACA, the PCORI fees were scheduled to apply to policy or plan years ending on or after Oct. 1, 2012, and before Oct. 1, 2019. This means that for many plan sponsors, 2019 was the last year they were required to file/pay the PCORI fee.
However, the 2019 continuing spending resolution reinstates PCORI fees for the 2020-2029 fiscal years. As a result, specified health insurance policies and applicable self-insured health plans (including HRAs) must continue to pay these fees through 2029.insured plans. The draft 2019 forms and instructions are substantially similar to the final 2018 versions.
The Internal Revenue Service (IRS) issued Notice 2018-85 to announce the PCORI fee of $2.45 for policy and plan years that end on or after Oct. 1, 2018, and before Oct. 1, 2019, which was supposed to be the last fee increase. We don't yet know if the amount will increase for this next year, but it's a fair assumption that it'll be indexed for inflation. We'll send more information as we receive it and – as always – will send a reminder before the payment/filing deadline in July.
Texas Balance Billing and Freestanding ER Laws Take Effect on Jan. 1, 2020
Last session, legislation protecting Texas patients from surprise medical bills was signed into law by Governor Greg Abbott. These laws went into effect on Sept. 19, 2019, and apply to a health care or medical service or supply provided on or after Jan. 1, 2020.
SB 1264 prohibits health care providers from sending patients surprise bills in situations in which patients have no choice of provider, such as when patients receive care from an out-of-network doctor at an in-network emergency room or when they receive care from an out-of-network doctor at an in-network facility. SB 1264:
- Ends surprise billing by out-of-network doctors and facilities when patients have little or no choice over who provides their care;
- Removes patients from the middle of the payment dispute resolution process between health care providers and insurers;
- Makes patients responsible only for their applicable co-pays, coinsurance and deductibles amounts with no additional amounts due resulting from arbitration between the out-of-network provider and health plan;
- Requires health plans to pay reasonable or agreed-to amounts to out-of-network emergency care and facility-based providers and allows those providers to dispute payment amounts through binding arbitration; and
- Protects consumers and employers from premium increases and high out-of-pocket costs from excessive billing and charges in Texas.
Additionally, Governor Abbott signed two bills into law designed to protect Texas patients from price-gouging, deceptive practices and misleading information at freestanding emergency rooms (FERs).
HB 1941 prohibits FERs from price-gouging, specifically preventing charges of “unconscionable” prices, defined as more than 200 percent of what a hospital ER charges for the same care. And the law grants the state the power to take action against FERs that engage in such price-gouging.
HB 2041 creates price transparency because many Texas FERs have used a combination of confusing language, deceptive advertising and vague pricing to mislead patients about their network status with insurance carriers and their pricing methods. HB 2041 requires FERs to notify patients about any applicable facility and observation fees before providing a service and to post a notice declaring the facility may be out-of-network with a patient’s health plan. The bill also prohibits FERs from advertising a health plan’s logo unless they are in that health plan’s network. It also prohibits them from using language suggesting they "take” or “accept” a patient’s insurance unless they are actually an in-network provider with that health plan.
These rules apply to fully-insured plans in Texas only. The original version had an option for self-funded plans to be able to “opt-in,” but it appears that section was severed and introduced as a separate bill that never made it out of committee. If a participant receives a balance bill for services rendered after January 1st, he or she can seek assistance directly from the insurance carrier or from the Texas Department of Insurance here.
California New Worker Classification Standard Effective Jan. 1, 2020
Last year California adopted a AB 5, a new law that changed the process for determining whether a worker should be classified as an employee or independent contractor. The new law adopts the California Supreme Court’s decision in Dynamex Operations West, Inc. v. Superior Court of Los Angeles (Dynamex).
AB 5 dictates that a worker is an employee if he or she provides labor or services for remuneration. The new law also shifts responsibility to employers to prove that independent contractors are classified correctly – the ABC Test.
The ABC Test presumes that a worker is an employee, unless the employer can prove that the worker:
- Is free from the control and direction of the employer when performing work, both practically and in the contractual agreement between the parties;
- Performs work that is outside the usual course of the employer’s business; and
- Is culturally engaged in an independently established trade, occupation or business of the same nature as the work performed for the employer.
The new ABC Test is a fundamental departure from the traditional or common-law approach to worker classification. Given the wide impact of this rule, employers with independent contractors in California should:
- Review current independent contractor agreements and related hiring procedures and policies; and
- Train managers, supervisors, HR and other hiring personnel.
Secure Act Brings Changes to Retirement Plans and Student Loan Repayments
The end of the year spending bill also brought forth changes to the retirement plan landscape. The Setting Every Community Up for Retirement Enhancement Act of 2019, better known as the SECURE Act, which originally passed the House in July, was approved by the Senate on Dec.19, 2019, as part of an end-of-year appropriations act, and signed into law on Dec. 20 by President Donald Trump. The far-reaching bill includes significant provisions aimed at increasing access to tax-advantaged accounts and preventing older Americans from outliving their assets.
Some of the key takeaways from the bill include:
- Makes it easier for smaller businesses to set up 401(k)s by increasing the cap under which they can automatically enroll workers in safe harbor retirement plans, and it provides a maximum tax credit of $500 per year to employers that create a 401(k) or SIMPLE IRA plan with automatic enrollment;
- Lowers the threshold for signing up part-time employees who work either 1,000 hours throughout the year or have three consecutive years with 500 hours of service;
- Allows employers to include more annuities in 401(k) plans by removing some fear of legal liability if the annuity provider fails to provide benefits or if their fees are higher than average;
- Widens access to multiple employer plans for small businesses – employers no longer have to share “a common characteristic,” such as being in the same industry to form a multiemployer plan;
- Moves back the age at which retirement plan participants need to take required minimum distributions (RMDs), from 70½ to 72; and
- Allows the use of tax-advantaged 529 accounts for qualified student loan repayments (up to $10,000 annually).
Employers will want to get with their retirement plan advisors to determine how these new rules may affect your particular retirement plan. Additionally, they may also want to explore adding 529 plans through payroll to their total rewards package if their workforce has high student loan balances. If you are interested in learning more about offering a retirement plan to your employees, please contact the retirement plan experts at Higginbotham: firstname.lastname@example.org.
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