Cost-Sharing (Reductions), HIPAA

Summary of Recent Guidance on ACA, HIPAA Security, HFSAs, HSAs and more

There is always something new happening in health care reform and benefits compliance!  Here are some items in the past week or two.

New Law Repeals Limits on Annual Deductibles

On April 1, 2014, President Obama signed the Protecting Access to Medicare Act of 2014 (PAMA), which took effect immediately.  Section 213 eliminates the maximum deductible limits that were imposed by the ACA (section 1302(c)(2)) on insured small group plans.  These deductibles were $2,000 for individual coverage and $4,000 for other tiers or coverage, but plans could exceed these amounts if needed to meet their “metal level” – and most bronze plans did.   Section 213 was a minor provision of the PAMA, whose main purpose was to prevent double-digit cuts in Medicare reimbursement to doctors from taking effect this year.

The law is Protecting Access to Medicare Act of 2014, Pub. L. No. 113-93 (Apr. 1, 2014).  Available at http://www.gpo.gov/fdsys/pkg/BILLS-113hr4302enr/pdf/BILLS-113hr4302enr.pdf

HHS Releases Free  HIPAA Security Risk Assessment Tool

On March 28, 2014, HHS posted an interactive Security Risk Assessment (SRA) tool to help covered entities conduct and document a risk assessment, one of the key requirements under the HIPAA Security Rule.  The application, which is available to download free of charge at www.HealthIT.gov/security-risk-assessment, also produces a report that can be provided to auditors.

The SRA tool takes the user through 156 questions that address administrative, technical and physical safeguards.  For each “Yes” or “No” answer, the tool tells whether corrective action is needed.  It also includes resources such as definitions, explanations of the potential risks, and possible safeguards the entity can implement.

Use of the SRA tool is not required by HIPAA and does not guarantee HIPAA security compliance. The tool does not send data to the HHS or elsewhere.  It only stores information on the user’s computer for future use and/or reports. (An iPad version is also available for free on Apple’s App Store Website.)  The SRA tool was developed by the HHS Office of the National Coordinator for Health Information Technology (ONC) and the Office for Civil Rights (OCR).

IRS Allows $500 Health FSA Carryover and HSA Eligibility

The IRS issued guidance (Memorandum 201413005) that explains how employers can allow employees to carry over up to $500 in unused contributions from general-purpose health flexible spending accounts (HFSAs)  to the following plan year and also be eligible to participate in a Health Savings Account (HSA) in that year.  The way this can be accomplished is if the employer offers a limited purpose HFSA and allows employees to have unused balances (up to $500) in the general purpose HFSA carried forward to the limited purpose HFSA.

As background, an employee is not eligible for an HSA contribution for any month during which the employee is enrolled in a medical plan that is not a high deductible health plan (HDHP).  This includes enrollment in a general purpose HFSA.  However, an employee can participate in both an HSA and a limited purpose HFSA, which reimburses only for certain expenses such as dental and vision.

IRS Chief Counsel Memorandum 201413005 (Released March 28, dated Feb. 12, 2014).  Available at http://www.irs.gov/pub/irs-wd/1413005.pdf

IRS Confirms Correction Procedures for Improper HFSA Payments

Another IRS Memorandum (201413006) confirms and clarifies the methods in the proposed cafeteria plan regulations for correcting improper health FSA payments.  Improper payments are for expenses that are not properly substantiated or are later identified as not qualified expenses. The guidance confirms: 1) Correction procedures for debit card payments provided in the proposed cafeteria plan regulations may be applied.  2) An employer may apply the correction procedures in the regulations in any order but the order must be consistently applied for all participants in the HFSA. 3) Forgiveness of improper payments as uncollectable business indebtedness should be the exception rather than a routine process.  The improper payment amount should be reported as wages on the employee’s Form W-2 and would be subject to income tax, FICA and FUTA.

IRS Chief Counsel Memorandum 201413006 (dated Feb. 12, 2014, released March 28).  Available at http://www.irs.gov/pub/irs-wd/1413006.pdf

HHS announces Medicare Special Enrollment for People in Same-Sex Marriages

On April 3, 2014,  Health and Human Services (HHS) announced that the Social Security Administration (SSA) is now able to process requests for Medicare Part A and Part B Special Enrollment Periods, and reductions in Part B premium and Part A late enrollment penalties for certain eligible people in same-sex marriages. This change is a result of the Supreme Court ruling in U.S. v. Windsor (June 26, 2013), which held section 3 of the Defense of Marriage Act (DOMA) unconstitutional.  Medicare is no longer prevented by DOMA from recognizing same-sex marriages for determining entitlement to, or eligibility, for Medicare.

The HHS Press Release is at http://www.hhs.gov/news/press/2014pres/04/20140403a.html .

Additional information is at: http://medicare.gov/sign-up-change-plans/same-sex-marriage.html.