November 2023

Let our team help you navigate the ever-changing benefits compliance landscape each month. Check out this month’s latest alerts, additional updates, and resources – hot off the press:

Employee Benefits Compliance Alerts

Additional Updates & Resources

IRS Updates PCORI Fee for 2024

On October 18, 2023, the Internal Revenue Service (IRS) issued Notice 2023-70, providing the adjusted Patient-Centered Outcomes Research Institute (PCORI) fees for plan years ending in October 2023 through September 2024. Employers who sponsor self-funded medical plans ending in 2023 are required to report and pay the Affordable Care Act (ACA) PCORI fees no later than July 31, 2024. The fees are used to fund the Patient-Centered Outcomes Research Trust Fund (PCORTF) and the PCORI, which help patients, clinicians, purchasers, and policymakers make better-informed healthcare choices by advancing clinical effectiveness research.

Payment amounts due in 2024 will differ based on the employer’s plan year. The fees due on July 31, 2024, are as follows:

• $3.00 per covered life for plan years ending October 2022 – September 2023
• $3.22 per covered life for plan years ending October 2023 – September 2024

The IRS put together a chart showing applicable fee amounts depending on the plan year end date; however, as of the date of this publication, the chart has not been updated to include the applicable rates for filings due in 2024. Plan sponsors should use the Form 720 to file and pay the PCORI fee. The Form 720 is updated annually in the spring to reflect the updated PCORI fee.

HHS Updates Civil & Monetary Penalties

The Department of Health and Human Services (HHS) has announced annual updates for certain civil monetary penalties related to compliance with the Health Insurance Portability and Accountability Act (HIPAA), Summary of Benefits and Coverage (SBC) and Medicare Secondary Payer (MSP) requirements. These amounts are typically updated annually. The updated amounts for SBC and MSP penalties are as follows:

• Failure to provide an SBC: $1,362 (up from $1,264) for each failure
• Offering incentives to Medicare-eligible individuals not to enroll in a plan that would otherwise be primary: $11,162 (up from $10,360)
• Failure of responsible reporting entities to provide information identifying situations where the group health plan is primary: $1,428 (up from $1,325)

For HIPAA, penalties are based on different tiers of knowledge/severity and range from $137 to $2,067,813, with a calendar year cap for each penalty of $2,067,813. Note that in 2019, HHS announced a lower maximum penalty amount for each penalty tier ($1.5 million) but continues to index the original statutory amounts each year, which leaves some confusion in place about exactly which penalty cap would apply.

Departments Provide Guidance on TiC Enforcement

The Transparency in Coverage (TiC) final rules require group health plans to make available three different machine-readable files (MRFs) that provide pricing information for in- and out-of-network items and services and prescription drugs. MRFs for medical plan items and services were first required to be posted by July 1, 2022, but the deadline to post MRFs for prescription drugs was delayed pending additional guidance. The original thought from the Department of Labor (DOL), Department of Health and Human Services (HHS) and the Treasury Department, collectively known as “the Departments,” was that requirements under TiC and the Consolidated Appropriations Act of 2021 (CAA) were duplicative and therefore TiC MRFs for prescription drugs may not be necessary.

In recently released guidance FAQs Part 61, the Departments stated that “after reviewing recent Prescription Drug Data Collection (RxDC) reporting there is no meaningful conflict between the reporting requirements.” Therefore, the Departments intend to develop guidelines and implement requirements for prescription drug MRFs. Plan sponsors should note that there is no specific action they need to take to comply with the prescription MRF requirement right now. The FAQ was simply a notification that the Departments intend to implement and enforce this requirement in the future. EPIC will continue to monitor developments and notify our clients when action is required.

Agencies Request Comments on Certain OTC Preventive Services

On September 29, 2023, The Department of Health and Human Services (HHS), the Department of Labor (DOL), and the Treasury, collectively referred to as “the Departments,” issued a Request for Information (RFI) for input on how to ensure access and coverage to certain over-the-counter (OTC) preventive services. The included services are those such as contraceptives, smoking cessation products, and other services for pregnant and nursing mothers that are available without a prescription.

Along with the RFI, the Departments issued a press release stating: “The goal of the RFI is to understand the potential challenges and benefits for various interested parties, including consumers, plans, issuers, pharmacies, and health care providers, to provide coverage at no cost for recommended OTC preventive products without requiring a prescription. The Departments are committed to ensuring that everyone is able to access affordable and critical preventive items and services, including OTC preventive products.”

There is a 60-day comment period that started October 4, 2023, the day the RFI was published in the Federal Register. For more information on how to submit comments or to review the entire rule, visit the Federal Register.

Massachusetts HIRD Due December 15

Since 2018, Massachusetts has required employers with six or more employees in MA to file a healthcare coverage form called the Health Insurance Responsibility Disclosure (HIRD) that discloses information about employer-sponsored health coverage, including information about employee cost, benefits offered, cost sharing and employee eligibility. The form does not require employers to submit employee-specific information or protected health information (PHI). The state uses the information collected on the HIRD form to assist MassHealth in identifying its members with access to qualifying employer-sponsored coverage through the MassHealth Premium Assistance Program, a program that helps eligible individuals pay for employer-sponsored coverage. Often, the HIRD form will eliminate the need for employers to complete a separate Premium Assistance Application for the employee.

Information required to submit the form can be found in plan documents such as summary plan descriptions (SPDs), summary of benefits and coverage (SBC), and open enrollment materials. Examples of information required for submission include the employee’s monthly contribution, in-network deductible and in-network out-of-pocket maximum, benefits waiting periods, hours worked per week to qualify for health insurance, and other benefits eligibility criteria.

Plans with plan years ending on or before December 31, 2023, should submit the HIRD form using upcoming plan year information for the health plan(s) instead of using the current plan year information. If health plan information such as rates or plan designs is not available before the filing deadline, employers may submit the HIRD form using the current plan year information for the health plan(s).

The 2023 HIRD submission deadline is December 15, 2023, and the form must be filed through the Mass Tax Connect website. Employers with multiple Federal Employer Identification Numbers (FEINs) should file a separate HIRD form for each FEIN. You may access screenshots of the HIRD form and form completion frequently asked questions (FAQs). If you have questions about filing the HIRD, please call the HIRD information line at (617) 466-3940.