Preview of January Compliance Checkpoints: Focus On the Year Ahead
2017 was filled with many twists and turns for employers navigating employee benefits compliance. 2018 looks like it will be no less challenging. Tracking various laws and regulations impacting employee benefits can divert time and resources from your core functions such as recruiting top talent, developing strategic benefits and compensation programs and meeting cost targets. After all, sustaining a destination workplace that attracts, retains and engages the right people to increase your organization’s productivity and growth, takes a lot of work. How can you keep pace with evolving legislative and regulatory initiatives and still have the time, resources and drive to sustain a destination workplace?
As a trusted advisor, Gallagher will help you navigate the ever-changing landscape of employee benefits compliance issues. This year, we will release a series of Compliance Checkpoints to help guide you as you make progress toward decreasing the risks associated with human capital management and making the most of your investment in your workforce. Our first focus will be on priority areas for review in the year ahead.
1. Analyze. Update. Disclose. Now that the tax bill (referred to as the Tax Cuts and Jobs Act) has become law, employers would be well-advised to review how the Act (and future legislation) may impact their employee benefits offerings. For example, the Act contains a provision for an employer tax credit for offering paid family and medical leave, which may act as an incentive for more employers to offer paid family and medical leave. (However, the credit’s termination after two years may diminish its effectiveness.) In addition, effective for tax years beginning after December 31, 2017, qualified transportation fringe benefit plans will be impacted. The Act eliminates reimbursements for bicycle commuting expenses (up to $20 per month), which were excluded from an employee’s pay. Employers may still sponsor qualified transportation fringe benefit plans, and employees may continue to elect pre-tax salary reductions for qualified parking and transit passes (up to the regular monthly limits). However, employers will no longer be able to deduct the costs of those benefits. Further, the Act repealed the individual mandate, which will still be effective for 2018, but may impact employer medical plan enrollment in future years.
Prudent employers will analyze the potential impacts of the tax law-driven changes, update their benefits offerings, and communicate any changes clearly to employees. What steps has your organization taken to incorporate changes driven by the Tax Cuts and Jobs Act?
2. Review. Redesign. Recommit. The Departments of Labor (“DOL”) and Health and Human Services (“HHS”) recently increased their enforcement efforts related to compliance with the Mental Health Parity and Addiction Equity Act of 2008 (“MHPAEA”), which requires group health plans to ensure that financial requirements (such as co- pays and deductibles) and quantitative treatment limitations (“QTLs”) (such as visit limitations) applicable to mental health and substance use disorder (“MH/SUD”) benefits are no more restrictive than the requirements or limitations that are applicable to medical/surgical benefits. In addition, plans must ensure parity with respect to non-quantitative treatment limits (“NQTLs”), such as preauthorization rules. HHS and the DOL published a list of NQTL “red flags” that could signal compliance problems. Most employers have already taken steps to comply with MHPAEA’s
requirements. However, periodic review of plan provisions as part of an annual review of medical plan designs would be prudent to ensure that the plan continues to comply with MHPAEA - particularly if significant plan design changes were made. Practical employers will review the DOL/HHS red flag list to avoid potential missteps and coordinate with their insurance carriers or third-party administrators, as applicable, to revise any necessary plan designs. How well does your organization’s health plan comply with MHPAEA?
3. Monitor. Adjust. Implement. Although efforts in 2017 to repeal and replace the Patient Protection and Affordable Care Act (“PPACA”) failed, Republican lawmakers are highly likely to aim for legislation that alters or repeals portions of PPACA in 2018. For example, legislation has been introduced to temporarily forego or delay collection of certain taxes, such as the medical device tax and the Cadillac Plan tax. Further, the repeal of the individual mandate is likely to alter how Forms 1095-B and 1095-C must be completed. How nimbly could your organization adjust to changes in healthcare reform?
4. Incorporate. Strategize. Protect. With the increase in the scope of cybersecurity attacks, employers are well served to focus additional resources on evaluating protections for employee benefits data. Such data can include sensitive employee information such as Social Security Numbers and other personal details that have value to hackers. However, that sensitive data is often overlooked when organizations develop their enterprise-wide cybersecurity protections. Recent cyberattacks have demonstrated that risks can emerge from peripheral functions and work their way to sensitive data and/or mission critical functions. Consequently, non-core technologies and functions, such as employee benefits administration, should be incorporated as part of a holistic cybersecurity strategy and program. How does your organization’s cybersecurity strategy and program safeguard your employee benefits data?
And, there are six more action items this month. This is just a preview of the January issue of Compliance Checkpoints. If you would like the full version of Compliance Checkpoints or would like additional information on how Gallagher constantly monitors laws and regulations impacting employee benefits and supports employers in their compliance efforts, please contact your Gallagher representative or click here to Contact Us via ajg.com.
Compliance is a series of checkpoints, not a final destination. As a trusted advisor, Gallagher has developed this Compliance Checkpoints series to help you pursue a path through employee benefits compliance issues as part of an overall compliance plan.
The intent of this analysis is to provide you with general information. It does not necessarily fully address all your organization’s specific issues. It should not be construed as, nor is it intended to provide, legal advice. Questions regarding specific issues should be addressed by your organization’s general counsel or an attorney who specializes in this practice area.