December 5, 2023
Published in California Broker Magazine
As we ring in 2024, there are a number of healthcare industry legislative and compliance issues that brokers and employers need to be aware of. Yes, there’s a presidential election later in the year and the potential for changes in the balance of power at the national and state levels. But before we get to November, there are plenty of other issues impacting the industry, from new IRS regulations and transparency requirements to parity compliance.
New IRS Filing Threshold for 2024
The Internal Revenue Service (IRS) recently released draft instructions for preparing, distributing, and filing 2023 Forms 1094 B/C and 1095 B/C. These instructions largely mirror guidance the IRS has published in previous years, except that the electronic filing threshold has been reduced from 250 forms to ten forms in aggregate.
Previously, employers could mail their Forms 1094 and 1095 to the IRS if their submission included fewer than 250 forms. For the 2023 ACA filing and beyond, employers that cumulatively submit at least ten forms to the IRS (including W-2s, 1099s, ACA Forms 1094/1095, and other common form series), must file all of those forms electronically.
For example, if an entity issues four 2023 Forms W-2, five 2023 Forms 1095 B, and one 2023 Form 1094 B, then that sum of ten forms means they must file all of them electronically with the IRS when due in 2024. This change resulted from a final regulation the IRS issued earlier this year that officially reduced the electronic filing threshold for many form series.
Employers that have historically submitted their Forms 1094/1095 to the government via paper mailing will need to consider overall how many forms they will be filing with the IRS in 2024, not just Forms 1094/1095, to determine whether they can continue to do so.
Ultimately, the ten-form aggregate threshold will necessitate electronic filing for nearly every employer. Employers that have traditionally paper filed their ACA forms are urged to either register with the IRS as soon as possible so they can eFile themselves, or to contract with a vendor that can confidently eFile on their behalf.
Price Comparison Tools and Cost-Sharing Estimators
Finalized in 2020, the Transparency in Coverage (TiC) rule has a multi-year, phased implementation with a goal of helping health care plan participants make informed choices about medical procedures and services. Earlier phases of the TiC included requirements around accurate provider directories, prohibitions on balance billing, gag clause attestation, and more.
The latest phase of the TiC requires health plans or issuers to provide internet-based, self-service price comparison tools and cost-share estimators. These tools must 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. In 2023, these tools were required to cover 500 specific healthcare services. For plan years beginning on or after January 1, 2024, all covered items and services must be included in the cost-share tool.
Employers will need to educate employees on how to access and use price comparison tools and cost-share estimators, but it may also be necessary to create incentives to encourage and remind employees to make use of these resources.
New Proposed Rule Impacting Mental Health and Addiction Coverage
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 financial requirements, as well as quantitative treatment and non-quantitative treatment limitations (NQTLs).
Group health plans and health insurance issuers must document their comparative analysis related to the processes, strategies, evidentiary standards, and other factors used to apply NQTLs to mental health or substance use disorder benefits. The analysis must show that the application of NQTLs is comparable to limitations on medical/surgical benefits and is not being applied more stringently.
In 2022, regulators released a report to Congress in which more than 200 NQTL analyses were reviewed, but none were found to meet regulators’ expectations. Failure to comply with the MHPAEA incurs a number of penalties, including corrective action, excise taxes, and potential litigation. Additionally, the Consolidated Appropriations Act of 2021 (CAA) requires regulators to identify by name all carriers and plans that are out of compliance, which can generate negative publicity for employers.
In July 2023, regulators released a new proposed rule to clarify requirements and strengthen enforcement around the MHPAEA. Once finalized, the new rule would likely take effect on Jan. 1, 2025 for group health plans and Jan. 1, 2026 for individual health plans. Brokers and employers will want to watch this area carefully to ensure compliance with the new rule when planning 2025 benefits.
IRS Changes to the Affordability Threshold
The Patient Protection and Affordable Care Act (ACA) Employer mandate specifies that applicable large employers (ALEs) must offer full-time employees affordable health coverage that meets minimum value requirements or face penalties. The IRS affordability threshold is updated annually. The cost of self-only health care coverage must be below the threshold to be deemed affordable.
In 2023, the threshold was 9.12%. However, for 2024, the affordability threshold has been reduced to 8.39%. Employers should review their compensation structures to ensure that they are in compliance with the affordability requirements for 2024.
When it comes to compliance, the new year brings new challenges and many unknowns. While some of the issues mentioned here require immediate action, they are just a starting point for 2024. Brokers and employers should remain vigilant to ensure they have a clear understanding of their responsibilities and key deadlines throughout the year.
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. She was a registered lobbyist in Texas for four years and is a strategic leader focused on compliance, agent knowledge, legislative advocacy, and ultimate client understanding of how to be successful in the changing world of compliance. Her passions include agent education, insurance advocacy inside and outside of the Capitol, and compliance.