June Compliance Recap

The Internal Revenue Service (IRS) released the updated patient-centered outcomes research institute (PCORI) fee amount and announced transition relief. The Department of Health and Human Services’ Office for Civil Rights (OCR) published a final rule regarding the Patient Protection and Affordable Care Act’s (ACA’s) Section 1557.

The President signed the Paycheck Protection Program Flexibility Act of 2020. The Department of Labor (DOL), Department of Health and Human Services (HHS), and the Department of the Treasury (Treasury) (collectively, the Departments), issued additional frequently asked questions (FAQs) on health plan coverage under the Families First Coronavirus Response Act (FFCRA) and the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).

The Centers for Medicare and Medicaid Services (CMS) issued a letter highlighting COVID-19 guidance for non-federal governmental plan sponsors. CMS issued an information bulletin for insurers regarding the 2019 medical loss ratio (MLR) rebate.

The IRS released a proposed rule on direct primary care, health care sharing ministries, and other medical arrangements. The DOL released proposed updates for the 2020 Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) Self-Compliance Tool. The Congressional Research Service (CRS) issued an updated version of its Health Insurance Continuation Coverage Under COBRA report. CRS also provided an overview of potential COVID-19 impacts on health flexible spending accounts (FSAs) and recent health FSA changes.

The IRS issued Notice 2020-35, which provides additional relief in the form of postponed deadlines for certain time-sensitive actions due to the COVID-19 emergency. The DOL issued a field assistance bulletin on an employee’s eligibility for leave under the FFCRA due to the closure of summer programs for an employee’s child.

IRS Releases Updated PCORI Fee and Transition Relief

The IRS released Notice 2020-44 (Notice) that provides the PCORI fee amount is $2.54 per covered life for plan years that end on or after October 1, 2019, and before October 1, 2020. The Notice also provides that plan sponsors may continue to use the actual count method, the snapshot count method, or the Form 5500 method for calculating the average number of covered lives. Additionally, the Notice provides that a plan sponsor may use any reasonable method for calculating the average number of covered lives for plan years ending on or after October 1, 2019, and before October 1, 2020. If a plan sponsor uses a reasonable method to calculate the average number of covered lives for plan years ending on or after October 1, 2019, and before October 1, 2020, then that reasonable method must be applied consistently for the duration of the plan year. The fee is due by July 31 of the year following the calendar year in which the plan/policy year ends.

Read more about the PCORI fee.

OCR Publishes Final Rule to Revise ACA Section 1557 Regulations

The OCR published a final rule, fact sheet, and press release that revise its regulations under the Patient Protection and Affordable Care Act’s Section 1557. The final rule takes effect August 18, 2020. The final rule eliminates:

• Certain definitions, including the definition of “covered entity”
• Specific nondiscrimination definitions based on sex and gender identity
• Translated taglines in significant consumer communications, the requirement to post information about Section 1557 and nondiscrimination at a covered entity’s locations and website, use of language access plans, and certain video standards for individuals with limited English proficiency (LEP)
• Any reference to a private right of action to sue covered entities for violations of the proposed rule
• The requirement to have a compliance coordinator and written grievance procedure to handle complaints about Section 1557 violations
• Enforcement-related provisions

Due to state nondiscrimination requirements and the U.S. Supreme Court’s decision in Bostock v. Clayton County Board of Commissioners on June 15, 2020, ruling that termination of an employee for being gay or transgender violates Title VII of the Civil Right Act, employers should consult with their counsel before removing protections under the health plan in reliance on the final rule.

Read more about the final rule.

President Signs Paycheck Protection Program Flexibility Act of 2020

On June 5, 2020, President Trump signed the Paycheck Protection Program Flexibility Act of 2020 (PPPFA), which amended the Paycheck Protection Program (PPP) established under the CARES Act. The PPPFA extended the maturity date of PPP loans to at least five years for loans made on or after June 5, 2020. The PPPFA extended the application period for a PPP loan from June 30, 2020, to December 31, 2020. However, the Small Business Administration announced that it will not accept
applications after June 30, 2020. Under the PPPFA, the loan forgiveness period was extended from eight weeks to 24 weeks, but no later than December 31, 2020. However, if an employer received a covered loan before June 5, 2020, the employer may elect for the covered period to end eight weeks after the origination date of the loan. The PPPFA extends the date, from June 30, 2020, to December 31, 2020, by
which employers must eliminate a reduction in employment or salary and wages that would otherwise reduce the amount of loan forgiveness the employer is entitled to. The PPPFA also extends the principal and interest payment deferral period for PPP loans.

Read more about the PPP.

DOL, HHS, and the Treasury Issue additional FAQs on Health Plan Coverage under the FFCRA and the CARES Act

The DOL, HHS, and the Treasury (collectively, the Departments), issued FAQs regarding implementation of the FFCRA, the CARES Act, and other health coverage issues related to Coronavirus Disease 2019 (COVID-19). These FAQs are in addition to the FAQs the Departments previously released regarding health plan coverage under the FFCRA and CARES Act.

Read more about the FAQs.

Download the full complete recap here.

Question of the Month

Q. Who must pay the PCORI fee and when is the fee due?
A. The fee must be determined and paid by:

• The insurer for fully insured plans (although the fee likely will be passed on to the plan)
• The plan sponsor of self-funded plans, including HRAs
  – The plan’s TPA may assist with the calculation, but the plan sponsor must file IRS Form 720 and pay the applicable fee
  – If multiple employers participate in the plan, each must file separately unless the plan document designates one as the plan sponsor