Health Benefits for Employees

Recently, the attorneys general of eleven states and the District of Columbia filed suit to challenge the Department of Labor’s (DOL) new association health plan (AHP) regulations (the “AG Litigation”). Although it is unclear at this time whether the AG Litigation will be successful in invalidating the regulations, it creates a potential impediment for a key aspect of the Trump administration’s effort to change the health insurance marketplace.

The AHP Regulations

An AHP is a group health plan that is sponsored by an association of employers and is treated as a single employee benefit plan for regulatory purposes. According to the DOL, AHPs offer small employers (and now self-employed individuals) the following key advantages over sponsoring a group health plan at the individual employer level (or procuring individual coverage):

  • Because AHPs can negotiate with insurers or healthcare providers on behalf of the entire group (instead of each employer negotiating individually), the AHP will theoretically obtain lower premium rates; and
  • Because AHPs typically have enough participants to qualify as a “large group” plan, an AHP is not subject to the more stringent Affordable Care Act (ACA) requirements imposed on plans in the “small group” and individual markets.

Although the concept of AHPs predates the DOL’s new regulations, associations had difficulty forming AHPs under prior law. Before the new regulations, an association could form an AHP only if it satisfied stringent “commonality of interest” standards. Those standards require that the association be formed for a purpose unrelated to the provision of benefits, and that it have a common economic or representational interest in a narrow sense. As a practical matter, few employers could satisfy these requirements, and AHPs have not been commonplace.

Continue Reading New Association Health Plan Rules and What the Recent Attorneys General Lawsuit Means for These New Rules

The new Tax Bill (H.R. 1), which President Trump is expected to sign soon, will have an impact on healthcare in the U.S.

First, the Tax Bill will permit a taxpayer to deduct medical expenses that exceed 7.5% of the taxpayer’s adjusted gross income (which has been reduced from the previously 10% threshold). This will allow more Americans to deduct their medical expenses.

Second, and more notably, the Tax Bill repeals the “individual mandate” under the Affordable Care Act (“ACA”), effective January 2019. While the repeal of individual mandate is estimated to reduce the Federal deficit—its impact on the health insurance market is difficult to estimate. Back in November of 2017, the Congressional Budget Office (“CBO”) reported that the repeal of the individual mandate would increase the number of uninsured Americans by 4 million in 2019 and 13 million by 2027. Additionally, the CBO projected that the repeal would likely increase average premiums by 10% in the individual insurance market. The CBO cited the fact that, without a tax penalty, fewer healthy Americans would purchase health insurance as the primary reason for these projections. The CBO also noted that the likely increase in premiums would further result in fewer insureds, especially in the individual insurance market, because the premiums would become less affordable. The Tax Bill leaves the ACA’s “employer mandate” and the corresponding employer reporting requirements untouched.

Interestingly, the Tax Bill did not repeal the Cadillac tax on health coverage or the medical device tax.

Venable’s Healthcare attorneys are happy to address any specific questions you may have on the Tax Bill’s effects on healthcare.

The Office for Civil Rights (“OCR”) within the U.S. Department of Health and Human Services, the federal agency that enforces the HIPAA Privacy, Security, and Breach Notification Rules, recently released its preliminary results for Covered Entities participating in its Phase 2 HIPAA compliance audit program.  Overall, the audit shows significant compliance gaps for the entities audited.

While the Phase 2 audits examined Covered Entities and Business Associates, the preliminary results are limited to the 166 audited Covered Entities.  The audits of Business Associates, 41 in total, are still in process.  The vast majority of Covered Entities audited (90%) were healthcare providers and the rest were health plans or healthcare clearinghouses.

The 166 Covered Entities surveyed were broken up into two groups.  There were 103 Covered Entities reviewed for privacy and breach notice compliance and another 63 assessed on security compliance efforts.

Continue Reading Preliminary Results for Covered Entities Participating in the Phase 2 HIPAA Audit Program