Compliance Matters Newsletter | March 2024

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

This month’s Compliance Matters newsletter provides a comprehensive review of the following topics. To obtain your copy, please use the form below to download.

• Class Action Suit Alleges Fiduciary Duty Breach
• RxDC Round Three Is Coming
• Florida Enacts Prescription Drug Reform Act
• Taxation Rules for Various Employee Benefits
• 2024 State Regulation Series: Illinois EHB Disclosure

Additional Updates & Resources

Updated CHIP Notice Now Available

A new version of the Children’s Health Insurance Program (CHIP) model notice was recently posted to the Department of Labor (DOL) website, with minor modifications from past notices.

The CHIP notice is required to be distributed annually before the beginning of the plan year to all eligible employees who live in a state offering premium assistance, although it is generally easiest to include all eligible employees. The updated notice does not need to be distributed now but should be used the next time an employer does the distribution (e.g., along with open enrollment materials).

IRS Decreases ACA Penalties in 2025

On February 12, 2024, the Internal Revenue Service (IRS) released Revenue Procedure 2024-14 which provides adjustments to applicable dollar amounts used to calculate employer shared responsibility penalties (ESRPs) under the Affordable Care Act (ACA). Employers may be subject to either Penalty A for not providing minimum essential coverage to at least 95% of full-time equivalent employees and their dependents, or Penalty B for not offering coverage that meets specific affordability and value standards set by the ACA. For the first time since the ACA’s inception, the IRS will decrease applicable penalties. The adjusted penalty amount for failures occurring in the 2025 calendar year will be $2,900 per full-time employee (less the 30-employee reduction) for Penalty A, which is a $70 decrease from 2024, and $4,350 per full-time employee that receives subsidized coverage through an Exchange for Penalty B, which is a $110 decrease from 2024.

The Impact of the FLSA Contractor Rule on Benefits

The final Department of Labor (DOL) Fair Labor Standards Act (FLSA) rule for determining worker classification goes into effect on March 11, 2024. While the definitions of “employee” under the Employee Retirement Income Security Act (ERISA) and the FLSA differ, the new rule may have some impact on employer-sponsored ERISA health plans. Employers may see some impact from the new rule when determining whether or not they are an Applicable Large Employer (ALE) under the Affordable Care Act (ACA). A change in the definition of “employee” could cause more employers to become ALEs, therefore subjecting them to the ACA and potentially to penalties for not offering minimum essential coverage that is also affordable and meets minimum value standards.

Departments Provide Additional FAQ for TiC

The Department of Labor (DOL), the Department of Health and Human Services (HHS), and the Internal Revenue Service (IRS), collectively referred to as “the Departments,” recently issued frequently asked question (FAQ) guidance Part 65, discussing transparency in coverage (TiC) regulations on the required internet-based self-service cost-sharing tool. The Departments state that plans and insurers that cannot provide accurate cost estimates for items and services with limited past data because of low utilization should indicate that while a specific service is covered, a cost estimate is not available due to insufficient data. In these cases, individuals should be encouraged to reach out to the plan for more information. The Departments state that enforcement action in these types of scenarios is unlikely.