By: HUB’s EB Compliance Team
In the ever-changing world of employee benefits, it can sometimes be difficult to keep up with what has already been announced, but won’t kick in until next year. Here is a brief list of what to expect in 2020 employee benefits based on what we’ve heard so far this year:
The “For Sure” Items
- Prescription Drug Coverage Reporting Required. Starting January 1, 2020, Medicare Secondary Payer reporting will now include prescription drug coverage, as described in more detail here. This is optional currently. Insurers and third party administrators will generally handle this reporting. However, employers should be aware of it since they may receive information requests from their carriers and third party administrators related to this new reporting.
- PCORI Fee goes away for all plans. The Patient Centered Outcomes Research Institute Fee is scheduled to go away for plan years ending before October 1, 2019. If an employer’s plan year ended between October 1, 2018 and December 31, 2018, then the last PCORI fee for that plan should have been paid by the end of July. This would generally include plans that have plan years beginning November 1, December 1, or January 1. All other plans will make their last PCORI fee payment by the end of July 2020.
- High Deductible Health Plan and Health Savings Account (“HSA”) limits will increase, as we stated here.
- ACA Cost Sharing Changes. As we mentioned here, the out-of-pocket maximums allowed under the Affordable Care Act increased for 2020. As also highlighted in that article, plans are allowed (but not required) to exclude prescription drug payment assistance from drug manufacturers from accumulating toward deductibles and out-of-pocket maximums.
- Other Cost of Living Adjustments. While we do not yet know what the numbers will be, we expect amounts like the maximum annual health FSA contribution to increase for 2020. Those amounts will likely be released in October.
- ACA Employer Mandate Affordability will be 9.78%. Note that the 2020 Federal Poverty Line will not be released until January or February. Plans with plan years that start early in the year will need to use the 2019 Federal Poverty Line if they want to use the Federal Poverty Line safe harbor for affordability. Employers should review their contribution structure to ensure it is still affordable in 2020, as we stated in our prior article here.
- The Return of the HIT Tax. The Health Insurance Tax is scheduled to return January 1, 2020. Per some estimates, this will increase premiums by 2%.
- Relief for high deductible health plans covering male sterilization as preventive care ends. As we wrote about here, the IRS gave a temporary reprieve from HSA excise taxes for employees covered by insured plans in certain states where those plans are required to cover male sterilization as a preventive service. That relief ends January 1.
- Self-funded plans have some work to do on determining essential health benefits.
- On the one hand, they may have some more flexibility in determining which benefits are not subject to annual and lifetime limits (that is, which ones are essential health benefits), as we mentioned here.
- However, state benchmark plans are also being updated for 2020. Currently, self-funded plans can use the 2012 state benchmark plans for determining essential health benefits. However, starting in 2020, they will need to use the 2017 state benchmark plans. Self-funded employers should check to make sure the state they chose has not changed its list of essential health benefits. For example, some states have eliminated restrictions on rehabilitative and habilitative care which means that self-funded plans must also remove those limits or choose a different state as a benchmark.
- Changes in preventive services. Under the ACA, non-grandfathered health plans are required to cover certain preventive services without cost sharing. The required preventive services change based on the recommendations of three different organizations: the US Preventive Services Task Force (A or B recommendations only), the Advisory Committee on Immunization Practices of the CDC, and the Health Resources and Services Administration (for women’s preventive health). Plans are required to cover these items or services for the first plan year that begins at least one year after the recommendation is made. In other words, plans with a January 1, 2020 plan year beginning would need to cover recommendations made through December 31, 2018. Current information on preventive services, and the dates the recommendations were made, are available at the following website:
- US Preventive Services Task Force – A&B Recommendations by Date (Note that some of the recommendations may have already been labeled “A” or “B” in an earlier year, which means plans would already be covering them.)
- Advisory Committee on Immunization Practices
- Health Resources & Services Administration – Women’s Preventive Services Guidelines Insurance carriers and third-party administrators (for self-funded plans) should be on top of these changes and be making appropriate plan design suggestions to accommodate the required recommendations. However, employers may want to familiarize themselves with these recommendations.
- State Individual Mandates and Employer Reporting.
- California and Rhode Island have individual health insurance mandates coming into effect beginning January 1, 2020 which will require employer reporting in 2021. Additionally, New Jersey is going to require the first reporting for its individual mandate in 2020. Washington, D.C. enacted an individual mandate starting this year and recently announced that it too would require reporting from employers and coverage providers, but only electronically. All three states and D.C. require employers to report and employers may use the ACA employer reporting forms to satisfy this requirement.
- Vermont also has an individual mandate starting in 2020 and Massachusetts already has an individual mandate. However, as of now, no employer reporting is required. Massachusetts requires reporting by carriers. Vermont currently requires individuals to send in the reporting forms they receive from carriers and other coverage providers.
Of course, even though we list these items as “for sure,” a change in the law could always undo one or more of these items.
The “Expected” Items
- Consistent with prior years, HUB fully expects to see additional cost of living adjustments for items like health flexible spending accounts, ACA employer mandate penalties, and other items. Those likely will not be released until October or early November.
- While there has been no formal announcement, HUB expects the IRS to continue its ACA employer mandate enforcement efforts. The IRS will likely focus on the 2017 and 2018 calendar years.
The “Maybe” Items
- Legislation could impact health plan compliance. There are bills being circulated in Congress now that could have an impact on health plan compliance, such as:
- Repealing the Cadillac tax;
- Limiting so-called “surprise” medical bills; and
- Simplifying ACA reporting.
- ACA nondiscrimination notice and taglines may be removed. As we noted here, the government has proposed this change, but the rules are not finalized yet. Until they are, employers should continue to provide these notices and the associated taglines.
NOTICE OF DISCLAIMER
The information herein is intended to be educational only and is based on information that is generally available. HUB International makes no representation or warranty as to its accuracy and is not obligated to update the information should it change in the future. The information is not intended to be legal or tax advice. Consult your attorney and/or professional advisor as to your organization’s specific circumstances and legal, tax or other requirements.