Health Care Law Blog
The U.S. Department of Labor (DOL) recently issued final regulations that expanded the availability of association health plans ("AHPs").
On June 25, 2015, the Supreme Court of the United States issued a ruling related to the Patient Protection and Affordable Care Act (the "Act") in the case of King v Burwell. The issue that the Court addressed was whether tax credits were available to individuals who purchased health insurance coverage through a Health Insurance Exchange ("Exchange") that was established by the Federal government.
An Exchange serves as a marketplace where individuals can compare various health insurance plans and ultimately purchase health insurance coverage. The Act requires an Exchange to be established in each State. If a State fails to establish its own Exchange, the Federal government is required to step in and establish the Exchange for that State. The Court's decision had the potential to preclude tax credits for individuals purchasing insurance through the Federal Exchanges in 34 States, including Michigan.
This issue was of significant importance because of its implications for the Act's Employer Mandate, which generally requires large employers to offer health insurance coverage to their full-time employees. The tax credits provided under the Act serve as the lynchpin for liability under the Employer Mandate. Despite the fact that a large employer may fail to offer health insurance coverage to its full-time employees, it will not be penalized if those employees do not obtain coverage through the Exchange and receive a tax credit. Therefore, large employers located in States that have a Federal Exchange could arguably avoid penalties for their failure to offer coverage to their full-time employees; such employees would not receive a tax credit when purchasing health insurance coverage on the Exchange and would not trigger the penalty.
On February 18, 2015, the Internal Revenue Service (“IRS”) provided further guidance related to the issue of how certain employer health insurance reimbursement arrangements are treated under the Affordable Care Act (“ACA”).
As we explained in a previous post, after the Health Insurance Marketplace opened for business, many employers recommended that their employees use it to purchase individual health insurance policies, with the promise that the premium costs would be reimbursed by the employer. In fact, such employee reimbursement strategies were aggressively marketed to employers as a solution to reduce costs and comply with the requirements of the ACA. Little did these employers (and marketers) know, such arrangements exposed the employers to significant penalties under the ACA.
Prior guidance made clear that such arrangements – whether funded on a pre- or post-tax basis – may be subject to the ACA’s market reforms. Employers that offer reimbursement arrangements that violate the ACA are subject to a $100 per day per affected employee penalty.
Notice 2015-17 clarifies previous guidance and provides transition relief to certain small employers from ACA penalties. Key aspects of the new guidance are noted below.
Employers, including municipal employers, have historically struggled to develop a health insurance benefit program for their employees that provides quality benefits and is cost-effective. After the Health Insurance Marketplace opened for business, many employers recommended that their employees use it to purchase individual health insurance policies, with the promise that the premium costs would be reimbursed by the employer. In fact, such employee reimbursement strategies were aggressively marketed to employers as a solution to reduce costs and comply with the requirements of the Patient Protection and Affordable Care Act (“ACA”). Little did these employers (and marketers) know, such arrangements exposed the employers to significant penalties under the ACA.
In September 2013, the IRS issued Notice 2013-54 that made clear that an employer arrangement that paid for employees’ individual health insurance policy premiums on a pre-tax basis violated the ACA. An employer that offered such an arrangement would be subject to a $100 per day per affected employee penalty ($36,500 per year, per employee).
On Nov. 7, the U.S. Supreme Court decided it would hear a case concerning the health insurance subsidies provided to millions of Americans under the Patient Protection and Affordable Care Act. A June 2015 decision is expected in the case of King v. Burwell, which challenges the Internal Revenue Service’s authority to regulate tax-credit subsidies for coverage purchased through health insurance marketplaces established by the federal government (such as the Michigan health insurance marketplace). Nationwide, more than four out of five people who have received coverage through a federal marketplace are getting a tax credit.
In a recently released 26 page report the Department of Health and Human Services revealed that federal subsidies cover 76 percent of premiums for those who have signed up for coverage under the Affordable Care Act in the 36 federally administered markets. According to the Los Angeles Times, the total cost of subsidies could exceed $16.5 billion this year, which is significantly higher than the $10 billion cost that the Congressional Budget Office projected earlier this year.
Foster Swift health care attorneys are getting ready to attend the 20th Annual Health Law Institute March 6 and 7. The Institute provides attorneys with the opportunity to learn about the most recent statutory, regulatory, and case law developments in the health care industry. Co-sponsored by the Health Care Law Section of the State Bar of Michigan, this educational opportunity offers a range of presentations from numerous leaders in the health care legal community.
Technical glitches. Partisan rancor. Breathless media coverage. The rollout of the online Health Insurance Marketplaces (also known as Exchanges) did not lack for drama or controversy. The unveiling of the Marketplaces, one of the key elements of the Patient Protection and Affordable Care Act, was perhaps the most anticipated and controversial website launch in history. The website www.healthcare.gov was flooded with traffic from the moment it opened on October 1, 2013 and many interested consumers ran into trouble. While most of the extensive media coverage of the Marketplaces focused on problems nationally, we wanted to take a look at how Michigan’s Marketplace (and consumers) fared.
On March 7 and 8, 2013, the members of Foster Swift’s Health Care Law Group attended the 19th Annual Health Law Institute. This two-day institute, which is co-sponsored by the Institute for Continuing Legal Education and the Health Care Law Section of the State Bar of Michigan, focused on recent legal developments in health care law. Specific topics addressed at this year’s Health Law Institute included:
As previously discussed, the Patient Protection and Affordable Care Act requires employers to provide notice to their employees related to Health Insurance Exchanges (the “Notice”). The specifics concerning the Notice may be found here. The Notice was required to be given to each current employee not later than March 1, 2013.
Over the past several weeks, the nation has seen a flurry of announcements issued by states as to how such states will implement and operate the health insurance exchanges (“HIE”) required by the Affordable Care Act. States have three options as to how they may run their HIEs:
As we previously reported, the Department of Health & Human Services (“DHHS”) extended some important deadlines for states establishing State-Based Insurance Exchanges or State Partnership Exchanges for 2014. Specifically, DHHS extended the submission deadline for State-Based Exchange Blueprints to December 14, 2012. However, the administration previously still required states to submit Declaration Letters of their intent to build state-based Health Insurance Exchanges by November 16th. However, as of Thursday (November 15th), only 17 states and the District of Columbia had committed to building their own Exchanges. This is far fewer than envisioned by the Obama administration when the law was passed in 2010. To give states more time, the Obama administration extended the deadline for the Declaration letters until December 14th. Thus, both Blue Prints of the specifics of the Exchange and Declaration Letters of states wishing to run their own Exchange are due on December 14th.
Last Friday, the U.S. Department of Health & Human Services ("DHHS") extended important deadlines related to those states desiring to establish State-Based Insurance Exchanges or State Partnership Exchanges for 2014. Specifically, Kathleen Sebelius, Secretary of DHHS, advised governors that DHHS had extended certain deadlines related to the submission of Declaration Letters and Blueprints, stating that DHHS is committed to providing states with flexibility for building a marketplace that meet each state's needs.
At the end of August, Governor Rick Snyder announced that Michigan will be pursuing a federal-state partnership for its health insurance exchange. Health insurance exchanges are a requirement of the federal Health Care Reform law. Health insurance exchanges are designed to facilitate the purchase of health insurance by consumers through an online, cost-competitive forum. Each state has the option to: (1) operate its own health insurance exchange; (2) partner with the federal government; or (3) allow the federal government to manage its health insurance exchange.
Foster Swift lawyers were well represented at the Annual Meeting of the State Bar of Michigan's Health Care Law Section held on September 19th. Gilbert Frimet, Gary McRay, Jennifer Kildea Dewane, and Nicole Stratton, members of Foster Swift Health Care Law Practice Group, all traveled to Detroit to attend the meeting.
With the United States Supreme Court having ruled that nearly all of the provisions in the Patient Protection and Affordable Care Act (“PPACA”) are constitutional, employers are legally obligated to comply with PPACA's requirements. One such requirement of particular interest to employers is the employee health insurance exchange notice requirement.
Today, the United States Supreme Court released its highly anticipated opinion regarding the constitutional challenges to the Patient Protection and Affordable Care Act (the "Act"). The Court ultimately concluded that the Act was constitutional, but it did not grant a complete victory to the government. The Court also held that the federal government may not withhold all Medicaid funds from States that fail to comply with the expansion of Medicaid provisions of the Act. Instead, the federal government may only withhold new Medicaid funds from States that do not comply.
The current issue of AHLA Connections, which is published by the American Health Lawyers Association (AHLA), features a list of the top ten issues affecting the health law field in 2012. The AHLA Connections “hot topic” list includes issues that our clients are raising with us. We have covered several of these topics in previous newsletters and blogs and we plan to discuss more in the upcoming months.
Here is the AHLA’s top-ten list:
In late 2011, the Supreme Court of the United States announced that it would take up four issues regarding the Patient Protection and Affordable Care Act ("PPACA"). The Court is expected to hear oral arguments in late March of 2012 and provide a decision in June of 2012.
Three of the four issues to be reviewed by the Court center around PPACA's Individual Mandate. The Individual Mandate (also known as the minimum coverage provision) requires that, beginning in 2014, individuals who fail to maintain a minimum level of health insurance coverage for themselves and their dependents pay a penalty, calculated in part on the basis of the individual's household income as reported on the individual's federal income tax return. This is likely the most controversial provision of PPACA.
The four issues to be considered by the Court are as follows:
Even though the Republican-run Michigan House of Representatives is stalling legislation to create the Michigan Health Exchange, 2014 is quickly approaching. Starting in 2014, insurance will be available on Health Exchanges. If Michigan does create legislation creating its own Exchange, the federal government will implement one for Michigan residents. This will impact Michigan employers and individuals.
The latest edition of the Foster Swift Health Care Law Newsletter has just been released. Topics include Electronic Health Records, Medicare Reimbursement for Resident Research and Hospital Community Needs Assessments. In order to whet your appetite, below is a brief summary of the articles:
The 2010 health reform act, the Patient Protection and Affordable Care Act ("PPACA"), provides for the creation of health insurance "exchanges." Exchanges are programs designed to make it easier for eligible consumers and small businesses to compare and purchase health insurance coverage in a one-stop shopping format. An Exchange is essentially a set of state regulated and standardized private health care plans, from which individuals may purchase health insurance that is eligible for federal subsidies. States choosing to create Exchanges are required to have them up and running by 2014.
