New Year, new compliance requirements: 4 things brokers should flag for clients
The new year brings a host of new health care industry changes and regulatory compliance issues that will challenge employers–and they’ll be looking to their broker partners to help them stay ahead of deadlines and keep abreast of new legislation.
Brokers play a key role as trusted advisors to clients, helping them understand their compliance obligations by simplifying complex legislative changes and identifying action items. After all, it’s not just new legislation that employers need to be aware of. Many existing rules and regulations have new requirements or phased implementations that change the expectations for employers over time.
New Transparency in Coverage Requirements
The Transparency in Coverage (TiC) rule was finalized in 2020, but featured a multi-year, phased implementation to give carriers and employers a roadmap for creating and launching self-service tools. The goal of the TiC is to enable health care plan participants to make informed choices about medical procedures and services. The prior phases of the TiC included requirements around accurate provider directories, prohibitions on balance billing, gag clause attestation, and more.
The current phase of the TiC involves internet-based, self-service price comparison tools and cost-share estimators. Health plans or issuers are required to provide real-time, personalized out-of-pocket cost information based on the member’s plan for covered items and services furnished by a particular provider. These tools were required to cover 500 specific health care services in 2023.
What’s changing:
For plan years beginning on or after January 1, 2024, cost-share tools must include all covered items and services, not just the initial 500.
What brokers need to know:
While cost-share tools may be available to all employees, using the tools to compare prices for health care services requires a behavioral change for many plan participants. Employers will want to educate employees on the various TiC tools available to them, how to use them, and where they can be found. By helping employees manage and plan for health care services, employers can better control their overall health care costs.
New Proposed Rule Around Parity in Mental Health Coverage
Another familiar piece of legislation, the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA), requires group health plans and health insurance issuers to have parity between mental health/substance use disorder benefits and medical/surgical benefits. This includes quantitative treatment and non-quantitative treatment limitations (NQTLs), as well as financial requirements.
Employers are already familiar with comparative analysis, which requires documentation of the processes and evidentiary standards that are used to apply NQTLs to benefits related to mental health and substance use disorders. Health insurance issuers and group health plans must be able to show through analysis that NQTLs are being applied comparably across mental health/substance use disorder and medical/surgical benefits; in other words, they must demonstrate parity.
As part of the MHPAEA, regulators reviewed more than 200 NQTL analyses and issued a report to Congress in 2022. The report found that none of the NQTL analyses met regulators expectations.
What’s changing:
As a result of the 2022 report, regulators released a new proposed rule in July 2023 that would clarify requirements and strengthen enforcement around the MHPAEA. Failure to comply with MHPAEA can bring about a range of penalties, ranging from corrective action to litigation and excise taxes. Additionally, the Consolidated Appropriations Act of 2021 (CAA) includes a “naming and shaming” clause — carriers and plans that are out of compliance must be publicly identified by name.
What brokers need to know:
As of this writing, the new rule has not yet been finalized, but is expected to take effect on January 1, 2025 for group health plans and January 1, 2026 for individual health plans. Brokers will want to watch this area carefully for rule finalization in order to ensure that 2025 benefits planning discussions include consideration of the MHPAEA’s updated compliance rules.
Finally, there are two new IRS changes that will impact both planning and filing for employers.
New IRS Electronic Filing Threshold for 2024
The Internal Revenue Service (IRS) released draft instructions for preparing, distributing, and filing 2023 Forms 1094 B/C and 1095 B/C. While the guidance largely aligns with previous instructions, there is one key difference: the electronic filing threshold has been reduced from 250 forms to 10 forms in aggregate.
What’s changing:
Previously, employers submitting fewer than 250 forms could mail their Forms 1094 and 1095 to the IRS. For the 2023 ACA filing and beyond, employers must file electronically if they are cumulatively submitting at least 10 forms —including W-2s, 1099s, ACA Forms 1094/1095, and other common form series.
For example, if an employer issues four 2023 Forms W-2, five 2023 Forms 1095 B, and one 2023 Form 1094 B, their total of 10 forms requires them to file electronically when forms are due in 2024. In previous years, this employer would have been able to mail their submission, as they would have been well under the old 250 form threshold.
What brokers need to know:
The lower threshold is a significant change that will require nearly every employer to file electronically. Now is the time for employers to determine how many total forms they will be filing with the IRS in 2024 — not just Forms 1094/1095. Additionally, brokers should encourage any clients that have traditionally filed by mail to register with the IRS to eFile directly, or to identify and contract a vendor that can eFile on their behalf.
IRS Changes to the Affordability Threshold for 2024
Employers are aware of the Patient Protection and Affordable Care Act (ACA) Employer mandate, which specifies that applicable large employers (ALEs) must offer full-time employees affordable health coverage that meets minimum value requirements or face penalties. In order to comply with the mandate, the cost of self-only health care coverage must be below a set threshold to be deemed affordable. The threshold for availability is updated annually by the IRS.
What’s changing:
For 2024, the IRS has set the affordability threshold at 8.39%. This is a reduction from the 2023 affordability threshold of 9.12%.
What brokers need to know:
Remind clients of the lower affordability threshold for 2024. Employers may want to review their compensation structure with the 8.39% threshold in mind to ensure they are complying with the updated affordability requirements for 2024.
Staying on top of compliance changes can be overwhelming for employers, but the stakes are high. The penalties for failure can be substantial, creating negative publicity for companies and raising concern among employees and other stakeholders. Savvy brokers ensure their clients are always aware of pending changes and upcoming deadlines, creating a sense of trust and elevating the relationship to one of a valued business partner.
Misty Baker, director of compliance and government affairs at BenefitMall, is an Affordable Care Act compliance and agent advocate, specializing in ACA, ERISA, FMLA, COBRA, and legislative advocacy for over 20 years.
