November 2017 Focus

Extended Leave – A Reasonable Accommodation? The Seventh Circuit View:

After an employee’s initial 12-week FMLA leave is exhausted, should additional time off be granted as an ADA accommodation? According to a recent ruling by the Seventh Circuit on the Severson v. Heartland Woodcraft, Inc. case, the answer is no. This ruling was made primarily on the basis that by adopting the EEOC approach, it would essentially transform the ADA, an anti-discrimination statute, into a medical leave statute, therefore becoming an open-ended extension of FMLA. However, keep in mind, this is the ruling of only one federal circuit. Many of the 11 additional circuits have ruled in favor of extending FMLA leave, deeming it a “reasonable accommodation” under the ADA. Eventually, this matter will likely reach the Supreme Court for review, so employers should be mindful of adopting this case as policy.

Employers faced with a similar situation will want to evaluate, prior to termination, whether the individual can perform essential job functions, with or without reasonable accommodations, per the ADA, even though the FMLA requires no reasonable accommodation analysis. It is also important for employers to confirm any mandatory reassignment-obligations existing in their Circuit before terminating.

2018 FSA Contribution Cap Increase

On October 20, 2017, just in time for open enrollment, the IRS increased the health Flexible Spending Account (FSA) salary reduction contribution limit by $50 to $2,650 for plan years beginning in 2018. Although FSA contribution caps for employees are routine and seemingly understood by both parties, many employers may not be aware of regulations regarding employer contributions. For example, technically, there is no set maximum for employer contributions to an FSA; however, most employers limit their contributions to no more than $500 or to an exact match of the employee contribution. This simply makes it easier for the FSA to meet certain requirements of the Affordable Care Act (ACA), and easier for employers to administer. For further information about this change and other contribution limits noted on the Revenue Procedure 2017-58 by the IRS, please feel free to contact us at MWG Employer Services.

Executive Order to Expand Association Health Plans

On October 12, 2017, President Trump took the first step in expanding choices and alternatives to Obamacare plans by signing an executive order directing the Departments of Labor, Health and Human Services, and the Treasury to review regulations issued under the Affordable Care Act (ACA) in an effort to reform the United States healthcare system.

According to the official Order, these measures should ultimately “1) Expand rules for Association Health Plans (AHPs) to allow more employers to band together and purchase health care plans across state lines, 2) Create rules that allow employees to use Health Reimbursement Arrangement (HRA) funds to pay for health care premiums, even for plans purchased on the individual market, such as the ACA’s Marketplace exchanges, and 3) Increase the availability of coverage under short-term limited-duration health insurance (STLDI).”

Note: The executive order does not alter the current employer mandate or ACA information reporting obligations due in early 2018. Employers with 50 or more full-time employees should continue preparations for 2017 ACA annual reporting.

Trump Administration Narrows ACA’s Contraception Mandate

On October 6, 2017, the Trump administration officially issued regulations that significantly increases the range of employers and insurers who may invoke religious or moral beliefs to avoid the ACA’s requirement that birth control pills and other contraceptives be covered as preventative care by insurance. Loosening this mandate was the Trump administration’s most concrete exhibition of the pledge he amplified this spring through an executive order to expand religious liberty.

Predictably, this has caused an uproar from many administration opponents. Anne Davis, the consulting medical director for Physicians for Reproductive Health, said, “The expanded exemptions leave women vulnerable to the whims of their employers.” The Trump administration struck back saying, “Women will have access to affordable contraceptive options should their employer elect to drop coverage, which include several government programs that provide free or subsidized contraception for low-income women, including Title X family planning grants.” Multiple organizations and attorneys general have announced their pursuit to challenge this ruling; however, until the outcome of those challenges are decided, the new rules govern.

Promoting Healthcare Choice and Competition Across the US – Smoke and Mirrors

On October 12, 2017, President Trump issued an executive order titled Promoting Healthcare Choice and Competition Across the United States. The inability to get enough votes to “repeal and replace” major components of the Patient Protection and Affordable Care Act, as promised in his campaign, has pushed the President to use the executive privileges of the office to make changes in the enforcement of the ACA where possible, and to promote other ideas. It is in my humble opinion that these ideas are just “smoke and mirrors” and will not make much difference when it comes to solving the problem of financing healthcare in the US. After all, we do not have a problem with the delivery of healthcare in the US. We have a problem paying for over-priced healthcare in the US.

The executive order focused on relaxing regulations to promote three areas: Association Health Plans (AHPs), short-term medical plans, and Health Reimbursement Arrangements (HRAs).

AHP’s are nothing new and current laws do permit them to exist. The problem with AHP’s is, employers who consider them always want to know if the plan is cheaper than buying small group coverage or individual coverage elsewhere. Although this may be labeled as competition, it’s not very healthy for the association that is sponsoring the plan. For the AHP to be successful, it must gain a big enough pool of participants early to spread the risk, which requires underpricing the plan to make it more attractive. If the risk of the pool exceeds the cost of the pool its competing against, the participants in the AHP bail, leaving only the sickest groups in the AHP. This begins the death spiral of the AHP. To protect itself against this type of abuse, the AHP must require participants to be jointly and severally liable for the losses (and gains, if any) of the group. The insurance companies will rarely quote these types of arrangements because of the adverse selection between the association and writing the coverage directly. In most instances, the insurance company already has a much larger pool than the association will ever be able to obtain.

Short-term medical plans have been around a long time. The purpose of short-term medical plans is to bridge the gap of losing coverage from one employer and eligibility with another. They were never intended to be a permanent form of insurance. The reason why they are so cheap is these plans do not cover pre-existing conditions. These plans are limited to a maximum of 12 months because the Health Insurance Portability and Accountability Act limited pre-existing conditions to 12 months. Therefore, the insurers will not allow a participant to stay on these plans past 12 months. The previous administration had limited these plans to 3 months to force people to purchase permanent insurance. The executive order seeks to remove this 3-month limit and pre-existing conditions will still be excluded from coverage.

The IRS and DOL placed restrictions on HRAs which prevented employers from using the HRA as a health plan and avoiding the employer mandate penalties. The rules required an HRA to be part of a health plan that meets the minimum coverage rules of the ACA. But in December of 2016, President Obama signed into law the CURES Act allowing small employers to use the HRA as a tax-free benefit for their employee to pay for individual health insurance coverage. On October 31, 2017, the IRS released Notice 2017-67 containing proposed rules for the specific circumstances for which a small employer may provide a stand-alone HRA for their employees. These programs are called Qualified Small Employer Health Reimbursement Arrangements or QSEHRAs for short. Employers who may be considering using this approach should take the time to personally review the qualifications, requirements, reporting and tax implications of sponsoring such plans before taking any action. Many small employers will quickly discover these requirements are very restrictive. These proposed rules go into effect for plan years beginning on or after November 20, 2017 and failure to meet the requirements could be costly for the employer.

Although there is nothing inherently wrong with any of the aforementioned approaches to buying health insurance, the impact is not going to significantly effect enough people to make a difference. You could make the argument that something is better than nothing, but each time a new concept or idea is implemented, more rules and regulations are implemented, thus burying the idea in even more red tape and bureaucracy. In the end, the simple truth remains; each concept is merely a band-aid to avoid dealing with the much larger issue of what we actually pay for healthcare, hence the “Smoke and Mirrors”.

Payroll and Human Resource Basic Training Class Dates

Do not wait, sign up today. Below is the current class schedule to be held at the Ridgeland Campus of Holmes Community College. The cost of each class is $300 and includes a desk reference for future use.

  • Payroll Basics will be held Nov. 15th.
  • HR Basics will be held Nov. 16th.

Classes are limited to the first 24 registrants. Click below to register for upcoming classes.

ProSential Group Webinars for November

As a client of MWG Employer Services, we are pleased to offer free, monthly educational webinars through ProSential Group. Previous webinars are available through the ProSential Group Client Portal. To register for this month’s webinars, click on the links below.

Compliance Year in Review and a Look Ahead to 2018

Tuesday, November 28th

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The Basics of Worker's Compensation

Thursday, November 30th

Register Online