State and Territory Updates

Alabama

June 23, 2020

Transitional Relief Extended for Grandmothered Plans

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On June 15, 2020, Insurance Commissioner Ridling issued Bulletin Number 2020-14 to announce a one-year extension of transitional relief for certain nongrandfathered individual and small group policies known as “grandmothered” policies. The bulletin follows the CMS extension of the federal nonenforcement policy with respect to specific ACA compliance requirements for these plans through December 31, 2021.

As background, on November 14, 2013, CMS issued a letter outlining a transitional policy with respect to the healthcare reform mandates for coverage in the individual and small group markets. This nonenforcement policy provided relief from specific market reforms, including requirements to cover essential health benefits and limit annual out-of-pocket spending and prohibitions of coverage exclusions based on pre-existing conditions.  

Under the policy, state authorities could choose to allow health insurance issuers to continue coverage that would otherwise have been cancelled for failure to comply with the ACA requirements. The commissioner had previously announced the state’s intent to allow insurers the option to continue such coverage. Bulletin 2020-14 represents the most recent extension of this policy.

Accordingly, small employers who are currently covered by such grandmothered policies issued in Alabama should be aware of the bulletin. These employers should work with their advisors and insurers regarding possible renewal of the coverage.

Bulletin Number 2020-14 »


April 28, 2020

Health Insurance Flexibility Encouraged

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On April 17, 2020, the Commissioner Ridling issued Bulletin No. 2020-07 regarding the need for flexibility in health insurance coverage in light of the coronavirus pandemic. The bulletin is directed at all insurers writing health insurance in the state.

The bulletin follows the declaration of a public emergency in the state and the issuance of local “shelter-in-place” orders. The duration of the emergency declaration is unknown at this time.

As a result, the commissioner urges health insurers to consider exercising flexibility with respect to maintaining employee health plan coverage. Specifically, insurers are encouraged to permit employers to continue covering employees under group policies even if the employees would otherwise become ineligible due to a reduction in hours, an “actively-at work” provision, or other eligibility requirements. Insurers are also encouraged not to increase premiums. The commissioner will not take enforcement action with respect to filed forms and rates against insurers that adjust policies and procedures to conform to these suggestions. The bulletin further reminds insurers of their COBRA obligations.

Employers with group policies issued in the state should be aware of these developments, particularly if seeking to continue coverage for employees with reduced hours due to the pandemic. However, it is important to keep in mind that most group health plans are governed by ERISA, which generally requires an amendment to update eligibility requirements. Additionally, notice must be provided to affected individuals. Accordingly, interested employers may want to discuss potential plan eligibility requirement changes with their insurer and document provider.

Bulletin No. 2020-07 »


April 14, 2020

Coronavirus Cancellation Policy Recommendations

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On March 30, 2020, the Department of Insurance issued Bulletin No. 2020-05 in relation to policy cancellations or nonrenewals due to the coronavirus (COVID-19) pandemic. The bulletin applies to all commercial and personal lines of insurance, including property, casualty, disability, accident and health, and life insurance policies.

The bulletin follows Gov. Ivey’s declaration of a public health emergency in the state and “shelter in place” orders issued by local government entities. These mitigation efforts to limit the spread of the COVID-19 virus have resulted in worker displacement and business disruption.

As a result, affected individuals and entities may be unable to timely pay insurance premium payments. Accordingly, the Commissioner of Insurance recommends insurers consider certain actions for policies in force as of March 13, 2020. These measures include relaxing premium payment due dates, extending grace periods, waiving late fees and penalties, and allowing premium payment plans to avoid a lapse in coverage. Insurers are asked to consider policy cancellation only after expending all efforts to work with policyholders to maintain coverage.

Insurers and producers are also requested to provide alternative payment options, such as online or electronic transfers, to avoid the need for in-person transactions.

The bulletin is primarily directed at insurers. However, employers should also be aware of these developments and the possibility of premium payment flexibility, as necessary.

Bulletin No. 2020-05 »


March 17, 2020

Department of Insurance Issues Coronavirus Coverage Bulletin

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On March 13, 2020, the Department of Insurance issued Bulletin No. 2020-02 regarding coronavirus (COVID-19) coverage and preparedness. The directive is issued to all insurance carriers authorized to transact health insurance in the state.

The Bulletin is released as part of the state’s proactive planning effort to address COVID-19. The outlined steps are designed to assist individuals and regulated entities in combating the urgent health challenge.

Accordingly, the Bulletin requests that health insurance carriers waive any cost sharing for COVID-19 lab tests so that cost does not hinder Alabamians from receiving testing. Carriers are also asked to waive cost sharing for in-network provider office visits and urgent care center visits, as well as for emergency room visits when testing for the coronavirus. If an insurance carrier doesn’t have an in-network provider with appropriate training and experience to meet the needs of someone needing treatment, the department requests that carriers provide an out-of-network option at the cost available for those in network.

The department asks that insurance carriers review their telehealth programs to ensure they’re equipped to meet demand amid any increased need for services. Additionally, the department requests that insurers immediately cover the cost of a COVID-19 vaccine at no cost sharing for covered members once the vaccine is developed and available to the public.

The memo is directed at insurers, but employer should also be aware of these developments.

Bulletin No. 2020-02  »


May 29, 2019

Extended Relief for Non-ACA-compliant Small Group and Individual Policies and Plans

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On May 13, 2019, Insurance Commissioner Ridling released Bulletin 2019-04 to extend the ability of health insurance carriers in the individual and small group market to continue transitional health insurance plans that renew for a policy year starting on or before October 1, 2020, as long as the coverage comes into ACA compliance by January 1, 2021.

As background, on March 25, 2019, CMS provided guidance for a transition policy extension that allows insurers the option to renew non-grandfathered non-ACA-compliant plans, as long as the state allows for such an extension. Such transition policies are not required to be in compliance with certain ACA mandates including community rating, coverage of essential health benefits, prohibition on pre-existing condition exclusions and the annual out-of-pocket maximum limit. This bulletin applies this most recent federal extension to Alabama and allows the issuer to renew these non-ACA compliant plans either as an early renewal or short policy year to implement the extension.

Small employers that are interested in renewing their non-ACA-compliant plan should work with their advisors and insurers.

Bulletin 2019-04 »


March 19, 2019

IRS Provides Tax Relief for Victims of Severe Storms, Tornados and Straight-Line Winds

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The IRS recently published guidance containing certain relief for individuals and businesses affected by severe storms, tornadoes and straight-line winds that took place on March 3, 2019, in Alabama. Specifically, the IRS offered extensions in relation to certain tax filing deadlines. The extensions apply automatically to any individual or business in an area designated by the Federal Emergency Management Agency as qualifying for individual assistance.

Specifically, individuals and businesses that reside in Lee County may qualify for tax relief. As a result of this relief, individuals or businesses that had forms due on or after March 3, 2019, and before July 31, 2019, have additional time to file the form through July 31, 2019. As it relates to benefits, the relief would generally apply to quarterly payroll, employment and excise tax filings due, as well as to any employers that may have previously applied for a Form 5500 filing extension. However, the extension of time to file and pay does not apply to the W-2, 1094, 1095, 1097, 1098 or 1099 information return series.

Impacted employers should discuss their filing obligations with their CPA or tax professional, with this relief in mind.

IRS News Release »


June 12, 2018

Alabama Enacts Data Breach Notification Law

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On March 28, 2018, Gov. Ivey signed SB 318, the Alabama Data Breach Notification Act, into law. This law requires covered entities to implement reasonable, appropriate security measures to protect personal information on state residents from a security breach. Further, it requires employers to notify employees and applicants about any breach of personal information and if the breach is likely to cause substantial harm.

A covered entity is defined as "a person, sole proprietorship, partnership, government entity, corporation, nonprofit, trust, estate, cooperative association, or other business entity that acquires or uses sensitive personally identifying information." Thus, any public or private employer that acquires or uses certain personal information on Alabama residents, including on employees and applicants, is subject to the security measure requirements and breach notification provisions.

Personal information is defined as a resident's first name or first initial and last name in combination with one or more of the following with respect to the same resident:

  • A non-truncated Social Security number or tax ID number
  • A non-truncated driver's license number, state-issued ID card number, passport number, military ID number or other unique ID number issued on a government document used to verify the identity of a specific individual
  • A financial account number, including a bank account number, credit card number or debit card number, in combination with any security code, access code, password, expiration date or PIN, that's necessary to access the financial account or to conduct a transaction that will credit or debit the financial account
  • Any information regarding an individual's medical history, mental or physical condition, or medical treatment diagnosis by a health care professional
  • An individual's health insurance policy number or subscriber identification number and any unique identifier used by a health insurer to identify the individual
  • A user name or email address, in combination with a password or security question and answer that would permit access to an online account affiliated with the covered entity that's reasonably likely to contain or is used to obtain sensitive personally identifying information

Covered entities that experience a breach must notify affected residents within a reasonable time to conduct an appropriate investigation, but no later than 45 days from the determination that a breach has occurred and is reasonably likely to cause substantial harm (with certain exceptions). Importantly, if a covered entity's third-party agent experiences a breach in the agent's system, the agent must notify the covered entity as soon as possible, but no later than 10 days following the determination of the breach or reason to believe the breach occurred. If more than 1,000 Alabama residents are affected by a breach, covered entities must notify the state attorney general and consumer reporting agencies with specific information. Therefore, covered entities need to review third-party service agreements to ensure they're meeting these requirements and to ensure breach procedures are in place should an incident occur.

In addition, the law imposes reasonable security requirements for covered entities and third-party vendors, including an assessment based on the security measures as a whole.

Therefore, employers with employees in Alabama should familiarize themselves with the specific data breach notification requirements, and they should update security measures to adequately protect the data they hold and respond appropriately to any potential data incident. This law is effective May 1, 2018.

SB 318 »


June 13, 2017

Law on Group Health Coverage for Autism Spectrum Disorder Amended

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On May 19, 2017, Gov. Ivey signed HB 284 into law, amending Alabama Code sections 10A-20-6.16, 27-21A-23 and 27-54A-2 related to the provision of coverage for autism spectrum disorder. The amendment requires fully insured plans issued in Alabama to employers with at least 51 employees to provide coverage for diagnosis, screening and treatment of autism spectrum disorders for plan participants who are age 18 or younger (under the pre-amended law, the age was 9 or younger).

The amendment is effective for health benefit plans delivered, executed, issued, amended, adjusted or renewed in Alabama on or after Oct. 1, 2017.

HB 284 »


March 7, 2017

Extension of Non-PPACA-compliant Small Group and Individual Policies and Plans

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On Mar. 3, 2017, Alabama Commissioner of Insurance Jim Ridling released Bulletin 2017-01 related to the extension of non-PPACA-compliant small group and individual policies and plans. As background, on Feb. 23, 2017, the federal government announced an additional transition policy that allows insurers (if allowed by the state) to renew non-grandfathered non-PPACA-compliant plans (this transitional relief has been extended twice before). Such policies are not required to be in compliance with certain PPACA mandates including community rating, coverage of essential health benefits, prohibition on pre-existing condition exclusions and the annual out-of-pocket maximum limit.

The Bulletin states that Alabama will allow insurers to renew policies in the individual market and the small group market according to the extended transitional policy. Issuers may use either early renewal or short policy years to implement the extension.

Bulletin No. 2017-01 »


October 20, 2015

On Oct. 1, 2015, Insurance Commissioner Ridling issued Bulletin No. 2015-06. The bulletin encourages insurers and vision care providers to review their plan form filings and provider contracts to ensure compliance with the terms of recently adopted Ala. Act No. 2015-481 (SB 270, 2015 Regular Session).

As background, on June 11, 2015, Gov. Bentley signed SB 270 into law. The law prohibits insurers of vision care services from limiting a vision care provider's ability to set fees for services and materials, to participate in specific vision care plans and to choose sources of suppliers in certain circumstances. The law also prohibits vision care providers from charging more to an insurer than the customary rates of those vision care providers and requires reasonable reimbursements for vision care services and materials to vision care providers. The Alabama Department of Insurance may adopt rules to implement this law.

The law became effective June 11, 2015.

Bulletin No. 2015-06 »


July 14, 2015

On June 11, 2015, Gov. Bentley signed SB 296 into law. The law places restrictions on the terms of certain health insurance policies, health maintenance organization plans and other health benefit plans with respect to dental services. The new law prohibits a policy or plan from setting fees for services that are not covered by the plan or policy and provides certain exceptions. Specifically, an insurance policy, plan or contract providing for third-party payment or prepayment of health or medical expenses issued after Jan. 1, 2016 may not require a dental care provider to provide service to a covered person at a fee set by the policy or plan unless the services are covered by the policy or plan. The law becomes effective Sept. 1, 2015.

Senate Bill 296 – Act No. 2015-483 »

On June 11, 2015, Gov. Bentley signed SB 270 into law. The law prohibits insurers of vision care services from limiting a vision care provider's ability to set fees for services and materials, to participate in specific vision care plans and to choose sources of suppliers in certain circumstances. The law also prohibits vision care providers from charging more to an insurer than the customary rates of those vision care providers and requires reasonable reimbursements for vision care services and materials to vision care providers. The Department of Insurance may adopt rules to implement this law. The law is effective immediately.

Senate Bill 270 – Act No. 2015-481 »


February 10, 2015

On Jan. 26, 2015, a federal district court ruled that Alabama's prohibitions against permitting same-sex marriage are unconstitutional. Previously, the court ruled that Alabama's prohibitions against recognizing out-of-state same-sex marriages are unconstitutional. The court blocked the state from enforcing these prohibitions, but stayed both rulings until Feb. 9, 2015 (Strawser v. Strange, S.D. Ala., No. 1:14-cv-00424, 1/26/15; Searcy v. Strange, S.D. Ala., No. 1:14-cv-00208, 1/23/15). On Feb. 9, 2015, the U.S. Supreme Court denied the application for a continued stay. Therefore, it appears that same-sex marriage is legal in Alabama.

The rapid changes in state marriage laws have important effects for individuals in Alabama and for employers administering state tax rules. They are less significant for purposes of administering federal tax and benefit rules due to the Supreme Court's Windsor decision and subsequent agency guidance recognizing all same-sex spouses regardless of state of residence. Employers in Alabama should work closely with their attorneys and tax advisors to ensure plan design compliance in light of the ongoing developments in this area.

This will most likely mean that group health insurance policies issued in Alabama will need to amend their plan documents to offer coverage to same-sex spouses. We are expecting further guidance from the state and will report such in future editions of Compliance Corner.

Strawser v. Strange »
Searcy v. Strange »
Feb. 9, 2015, U.S. Supreme Court Order »


October 7, 2014

On Oct. 2, 2014, the U.S. DOL’s Wage and Hour Division and the Alabama Department of Labor signed a memorandum of understanding to work together to identify misclassification of employees as independent contractors. Alabama joins other states which already have such an agreement in place, including California, Colorado, Connecticut, Hawaii, Illinois, Iowa, Louisiana, Maryland, Massachusetts, Minnesota, Missouri, Montana, New York, Utah and Washington. The issue of misclassification of workers has been emphasized over the last few years due to the potential for these workers to be denied access to health insurance, benefits, family and medical leave, overtime compensation, minimum wage and unemployment insurance. Due to health care reform, there is even greater focus on employers properly identifying workers who must be offered employer-sponsored health insurance if they are working at least 30 hours per week, or the employer may be at risk for a penalty under the employer mandate.

Press release »
DOL misclassification homepage »


August 12, 2014

On July 28, 2014, the Alabama Department of Insurance issued Bulletin No. 2014-03. The bulletin provides guidance regarding calculation of composite rates for Alabama-issued policies for policy years beginning on or after Jan. 1, 2015. As background, final rules issued by HHS March 11, 2014, provided for a two-tiered federal calculation method for composite rates (one tier for each covered adult age 21 or older and a second tier for each covered child under age 21). However, the same final rule permitted states to substitute their own alternative to the federal methodology by seeking approval from HHS. This bulletin issued by the state of Alabama is confirmation that the state has sought such alternative certification and it was approved. In this case, the state requested to use a four-tiered calculation: employee, employee + spouse, employee + children and employee + family.

This means that while health insurance carriers issuing small group market plans in the state will continue to provide per-member billing, they may choose to provide family composite premiums on an optional basis. If they do so, the carrier must follow the state's four-tiered approved alternative method. If a carrier offers the family composite methodology, it must make it available for each small employer in the market.

The bulletin provides definitions for each rating tier, as well as the factors to be used when determining the final premium charged for each employee. Importantly, the bulletin does not apply directly to small employers, although this information is important for all employers to understand. Small employers in Alabama may use composite rates rather than per member rates to determine the percentage of the premium paid by the employer versus employee contribution levels for policies issued in 2015 if the carrier has opted to follow this alternative calculation method. The bulletin is effective immediately.

Bulletin No. 2014-03 »
Federal Chart of Approved States with Rating Variations »


May 20, 2014

On April 2, 2014, Gov. Bentley signed SB 123 into law, creating Act 2014-219. The law suspends the Alabama Health Insurance Plan (AHIP), which is the state's high-risk pool. The law includes an exception that would allow the AHIP to reopen if federal law ever requires the state of Alabama to offer guaranteed-issue health coverage to eligible individuals.

Act 2014-219 »


Alaska

April 28, 2020

COVID-19 Insurance Updates

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On April 15-16, 2020, the Division of Insurance issued four more regulatory orders covering insurance issues relating to the COVID-19 outbreak. In response to the public health emergency order issued by Gov. Dunleavy on March 11, 2020, these orders seek to ensure that insureds in the state continue to have health plan coverage during the outbreak, while giving insurers the flexibility to work with insureds to continue coverage. The orders apply to insurers licensed in the state as well as insurance issued in the state.

Regulatory Order R20-04 prohibits carriers from terminating contracts due to nonpayment; requires carriers to waive late fees, and requires insurers to cover employees when employers wish to extend eligibility of employees that are not actively working or whose hours are reduced. This order expires on November 15, 2020.

Regulatory Order R20-05 prohibits carriers from instituting cost-sharing for lab work relating to respiratory illness, including COVID-19; requires carriers to provide more telehealth options; and requires carriers to allow early refills or replacements of medication without authorization. This order expires on November 15, 2020.

Regulatory Order R20-06 requires the suspension of preauthorization requirements, as well as concurrent and retrospective reviews for inpatient and outpatient services; waives location-based credentialing requirements; requires carriers to pay claims immediately; and suspends nonessential insurance audits of payments. This order expires on November 15, 2020.

Regulatory Order R20-07 extends the prohibition instituted in Regulatory Order R20-04 prohibiting carriers from terminating insurance contracts for nonpayment to June 1, 2020. Discussion of the original order can be found in the March 17, 2020, edition of Compliance Corner.

The orders are primarily directed at insurers. However, employers should also be aware of these developments.

Regulatory Order R20-04 »
Regulatory Order R20-05 »
Regulatory Order R20-06 »
Regulatory Order R20-07 »


April 14, 2020

COVID-19 Insurance Updates

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On March 27, 2020, the Division of Insurance issued Bulletin B 20-11. The bulletin requires insures to continue covering employees under group policies even if they would have been ineligible because of reduced work hours and prohibits insurers from increasing premiums or terminating policies because a group has decreased enrollment or participation due to COVID-19.

The bulletin suspends deadlines for claim and appeal filings and encourages insurers to implement fully electronic claims processes. It also requires insurers to cover services that can be offered via telehealth in order to prevent the spread of COVID-19. In order to prevent a supply shortage, the bulletin requires coverage of off-formulary prescription drugs if there is no formulary drug to treat a covered service. Finally, the bulletin requires insurers to notify the division if they become aware of price gouging or fraud.

On March 29, 2020, the division issued Bulletin 20-12. It requires insurers to pay claims for covered services even if they are provided by facilities located at, sponsored by, or facilitated by the local, state or federal government during the COVID-19 pandemic. The bulletin advises insurers to suspend pre-authorization requirements for inpatient and outpatient services for the duration of the COVID-19 pandemic and for post-acute placements. The bulletin advises insurers to suspend concurrent and retrospective reviews, and urges them to pay claims as soon as possible and to suspend nonessential audits of hospital payments. The bulletin encourages TPAs who are registered with the division to comply with the bulletin too.

The bulletins are primarily directed at insurers. However, employers should also be aware of these developments.

Bulletin 20-11 »
Bulletin 20-12 »


March 31, 2020

COVID-19 Insurance Updates

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Alaska state entities issued four Bulletins and one regulatory order relating to the COVID-19 outbreak, which apply to health insurers providing coverage through health care insurance plans to Alaska residents. In addition, an emergency rule was promulgated to include people suffering from respiratory distress syndromes as high-risk individuals for reinsurance purposes.

On March 17, 2020, the Division of Insurance issued Bulletin 20-07. The bulletin reminds the public that effective March 16, 2020, Alaska insurance law is amended to expand telehealth coverage to all covered services of health care insurance plans in the individual and group markets subject to Alaskan regulation. Services must be provided by a health care provider licensed in Alaska. A prior in-person visit must not be required. A previous bulletin, 20-04, also encouraged the liberal use of telehealth services, as a way of minimizing the spread of COVID-19. Insurers were asked to review their telehealth programs so that they are ready to handle increased demand (see below).

On March 18, 2020, the Division of Insurance issued Bulletin 20-08. The bulletin, issued under the authority granted under Alaskan statute after Gov.  Dunleavy declared a public health disaster declaration due to the COVID-19 pandemic, prohibits carriers from terminating insurance contracts due to nonpayment. This effort will provide relief to affected policyholders by allowing continuing insurance coverage. In conjunction with this effort, the DOI will work with carriers to minimize the regulatory effects of such an extension, specifically financial review requirements. The extension of the grace period does not eliminate the obligation to pay the premium, but limits policy cancellation for late payment. Carriers are encouraged to work with policyholders in the collection of premiums and to waive all late fees.

On March 18, 2020, the Division of Insurance issued Regulatory Order R20-02. The order extends deadlines for external health care reviews. Insurers are required to make reasonable efforts to meet the deadlines and expedited reviews must be processed to completion in no more than five working days. The order extends experimental and investigational health care reviews to a 30-day deadline. If there will be significant delays in meeting deadlines, the insurer should inform the Division.

On March 19, 2020, the Division of Insurance issued Bulletin 20-09. This bulletin supersedes Bulletin 20-04, by declaring that, effective March 20, 2020, respiratory panel tests are no longer subject to the zero cost-sharing requirement. In addition, health insurers are also asked to waive the cost sharing for an office visit and urgent care center visit with the above testing, as well as for an emergency room visit with testing for the above. This waiver is applicable for in-network and out-of-network providers, facilities, and laboratories.

The bulletin notifies the public that, under IRS Notice 2020-15 issued on March 11, 2020, health plans that otherwise qualify as HDHPs will not lose that status merely because they cover the cost of testing for treatment of COVID-19 before plan deductibles have been met. Finally, the bulletin confirms that in Section 6001 of HR6201 of US Congress signed by the President on March 18, 2020, health insurance insurers offering group or individual health insurance coverage shall not impose prior authorization or other medical management techniques for COVID-19 testing products, items, and services.

On March 20, 2020, the Division of Insurance issued Bulletin 20-10. This bulletin encourages insurers to allow policyholders to self-audit and self-report changes in their exposure or risk profile and adjust premiums accordingly. For policies that are subject to audit, the bulletin encourages insurers to allow self-auditing and self-reporting in lieu of physical audits to the extent that physical audits are impracticable. Prospective reductions in premium or retroactive refunds of premium made pursuant to the bulletin to accommodate COVID-19-related changes in exposure or risk profile will not be considered a rebate or unfair discrimination to the extent they are reasonable and consistently applied. The bulletin remains in effect until June 1, 2020.

On March 25, 2020, Division of Insurance promulgated an emergency rule amendment to 3 AAC 31.450, to include persons suffering from cardio-respiratory failure and shock, including respiratory distress syndromes, as high-risk individuals whose coverage is subject to reinsurance.

Employers with policies regulated by Alaska should be aware of these developments.

Bulletin 20-07 »
Bulletin 20-08 »
Bulletin 20-09 »
Bulletin 20-10 »
Regulatory Order R20-02 »
Notice of Emergency Regulation »


March 17, 2020

Insurance Updates Regarding COVID-19

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Alaska issued two Bulletins in response to the COVID-19 outbreak, which apply to health insurers providing coverage through health care insurance plans to Alaska residents.

On March 3, 2020, the Department of Commerce, Community, and Economic Development, Division of Insurance, issued Bulletin 20-03. In anticipation of possible quarantines in response to the outbreak, this Bulletin expects applicable insurers to allow consumers to obtain emergency supplies or refills without applying additional authorization requirements, and to allow consumers to refill their prescriptions at a local pharmacy without penalty, even if they normally do so by mail. Insurers are allowed to observe normal processes when prescriptions contain opioids.

Bulletin 20-03 also encourages insurers to review and update their claims and utilization review policies in light of guidance issued by the CDC and the Alaska Department of Health and Social Services.

On March 6, 2020, the Division of Insurance issued Bulletin 20-04. The Bulletin requires applicable insurers to waive any cost sharing for laboratory diagnostic testing for COVID-19, as well as for respiratory syncytial virus, influenza, and respiratory panel tests. However, in order to qualify for this waiver, patients must meet criteria set forth by the Alaska Division of Public Health/Epidemiology and the CDC at the time of service.

Bulletin 20-04 also encourages the liberal use of telehealth services as a way of minimizing the spread of COVID-19. Insurers are asked to review their telehealth programs so that they are ready to handle increased demand.

Employers with policies regulated by Alaska should be aware of these developments.

Bulletin 20-03 »
Bulletin 20-04 »


March 3, 2020

Grandmothered Plans Extended

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On February 10, 2020, the Department of Commerce, Community, and Economic Development, Division of Insurance, issued Bulletin 20-02, granting insurers the option of renewing non-ACA-compliant individual and small group coverage if coverage has been continuously in effect since December 31, 2013. Policies may continue to be renewed on or before October 1, 2021, provided that all such coverage comes into compliance with the specified requirements by January 1, 2022. Insurers may early renew coverage or issue coverage for periods less than one year if a policy terminates prior to December 31, 2021.

If insurers opt to renew these plans, then they must disclose to their enrollees information concerning how such renewal will affect their premiums. Employers should be aware of this extension and of the notice requirement to those employees enrolled in these plans.

Bulletin 20-02 »


April 2, 2019

One-Year Extension for Grandmothered Plans

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On March 27, 2019, the Alaska Division of Insurance published Bulletin 19-05. The bulletin provides another one-year extension to the transitional policy of non-ACA-compliant individual and small group policies and plans issued in Alaska.

As background, on March, 25, 2019, CMS issued guidance allowing extensions of so-called “grand mothered policies” (for example, non-ACA-compliant plans that have been continued since 2013), subject to state and carrier approval. Bulletin 19-05 represents Alaska’s approval for such extension.

Bulletin 19-05 states that insurers have the option to renew non-ACA-compliant policies if coverage has been continuously in effect since December 31, 2013. Those policies may continue to be renewed on or before October 1, 2020, provided the policy will terminate by December 31, 2020. Insurers may early renew or issue coverage for periods less than one year if a policy terminates prior to December 31, 2020, and, in the case of a small group, if the employer wants coverage through the end of the calendar year.

The bulletin presents two options for insurers that elect to extend non-ACA policies. Under the first option, an insurer may permit employer-sponsored groups currently enrolled in the insurer’s non-ACA-compliant plan to continue to renew their coverage. Under the second option, the insurer may provide an additional opportunity to renew coverage in its non-ACA-compliant plan to an employer-sponsored group that’s currently enrolled in the insurer’s non-ACA-compliant plan but has indicated its intent to not renew at the end of the plan year.

Alaska small employers that are interested in renewing a non-ACA-compliant plan should work with their advisors and insurers.

Bulletin 19-05 »


February 5, 2019

Information on AHPs

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On Jan. 30, 2019, Director Wing-Heier issued Bulletin B 19-02 to provide information to insurers and entities regarding association health plans (AHPs) and the application of AK’s insurance statutes.

As background, the DOL and EBSA published a final rule relating to AHPs on June 21, 2018, intending to expand access to AHP coverage options. The final rule establishes new standards and criteria for the creation of AHPs and, by providing additional clarifications of existing criteria, expands access to health coverage through AHPs. Specifically, the new regulatory framework expands the “commonality of interest” requirement to include geographic location and industry. The expansion is intended to allow employers from non-related industries and trades from the same geographical areas and working owners (for example, sole proprietors with no employees) to access health coverage through AHPs. This AK bulletin points out that several provisions of the final rule are in direct conflict with existing AK statutes, and while AK seeks to harmonize any conflicts to the reasonable benefit and flexibility to AK employers, the new final rules do not preempt state law.

Because AK continues to have broad authority under ERISA to regulate AHPs under state licensure and solvency statutes, insurance companies that offer health insurance plans to AHPs in AK must follow the existing state regulations. Regarding self-funded AHPs, any entity wishing to form a self-funded AHP in AK must do so within the existing framework of permissible self-funded arrangements. Specifically, AK requires employers in an AHP to be members of a “bona fide association or group of two or more businesses in the same or a closely related trade, profession or industry that provide support, services, or supplies primarily to that trade, profession or industry.” So, the expansion of “commonality of interest” within the DOL’s final rules is not permissible in AK. Also keep in mind that all AHPs, both fully-insured and self-funded, must file with the Division of Insurance for review.

AK employers interested in AHPs should work closely with insurance carriers on fully-insured arrangements. However, the provisions of the DOL’s final rule intended to expand access will likely not be permissible for self-funded AHPs under existing AK regulations.

Bulletin B 19-02 »


May 1, 2018

Extension of Non-ACA-Compliant Plans

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On April 12, 2018, the Alaska Division of Insurance published Bulletin 18-07. The bulletin relates to another one-year extension to the transitional policy of non-ACA-compliant individual and small group policies and plans.

As background, on April 9, 2018, CMS issued guidance allowing extension of so-called “grandmothered policies” (i.e., non-ACA-compliant plans that have been continued since 2013), subject to state and carrier approval. Bulletin 18-07 represents Alaska’s approval for such extension.

Bulletin 18-07 states that insurers have the option to renew non-ACA-compliant policies if coverage has been continuously in effect since Dec. 31, 2013. Those policies may continue to be renewed on or before Oct. 1, 2019, provided the policy will terminate by Dec. 31, 2019. Insurers may early renew or issue coverage for periods less than one year if a policy terminates prior to Dec. 31, 2019 and, in the case of a small group, if the employer wants coverage through the end of the calendar year.

The bulletin presents two options for insurers that elect to extend non-ACA policies. Under the first option, an insurer may permit employer-sponsored groups currently enrolled in the insurer’s non-ACA-compliant plan to continue to renew their coverage. Under the second option, the insurer may provide an additional opportunity to renew coverage in its non-ACA-compliant plan to an employer-sponsored group that’s currently enrolled in the insurer’s non-ACA-compliant plan but has indicated its intent to not renew at the end of the plan year.

Alaska small employers that are interested in renewing a non-ACA-compliant plan should work with their advisors and insurers.

Bulletin 18-07 »


July 25, 2017

HHS Approves Alaska's Section 1332 Waiver from Several ACA Requirements

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On July 7, 2017, HHS approved Alaska’s application for a state innovation waiver under Section 1332 of the ACA. As background, the ACA allows states to apply for a waiver from certain ACA requirements, so long as the state meets certain requirements (including the state showing that their own innovative ideas and strategies will result in more individuals receiving coverage). Alaska’s application sought to implement the Alaska Reinsurance Program (ARP) for 2018 and beyond. The ARP is a state-operated reinsurance program that covers claims in the individual market for individuals with one or more of 33 identified high-cost conditions. The ARP is meant to stabilize premiums and increase coverage in the individual market. Because the ARP will lower premiums, the second-lowest-cost silver plan premium is reduced, which means the federal government will spend less on premium tax credits (PTCs) for individuals in Alaska. As a result, Alaska will receive pass-through funding based on the amount of PTCs that would have been provided to individuals absent the waiver. This does not mean the individual mandate is no longer applicable in Alaska, or that individuals cannot continue to receive PTCs in Alaska. Rather, the federal government will send additional funds to Alaska to help fund the ARP.

The HHS approval is effective for Jan. 1, 2018, through Dec. 31, 2022. HHS also released a fact sheet with additional information on the Alaska waiver approval.

The HHS approval contains no new employer obligations. But employers may have heard the news about a waiver, so understanding the approval and its consequences in the individual market is helpful.

HHS Approval »

Fact Sheet »


August 23, 2016

Updates to Coverage for Primary Care Provider, Pediatrician and OB-GYN Services

On July 20, 2016, Gov. Walker signed HB 372 into law, which provides updates to coverage requirements for services provided by primary care providers (PCPs), obstetricians and gynecologists (OB-GYNs) and pediatricians. On PCPs and pediatricians, plans that provide coverage through networks of providers must allow plan participants to access out-of-network providers. Such plans may require higher copayments, deductibles or premiums for out-of-network providers. Also, if a plan requires participants to designate a PCP, participants may choose any available PCP (which, effective Oct. 16, 2016, includes a pediatrician) to receive appropriate specialty care. On OB-GYNs, effective Oct. 16, 2016, plans that provide coverage for OB-GYN services and require participants to select a PCP must allow female participants to receive OB-GYN care from participating providers that specialize in OB-GYN services without requiring prior authorization or referrals. Employers with fully insured plans in Alaska should be aware of the new law and requirements.

HB 372 »


August 9, 2016

On July 11, 2016, Gov. Walker signed SB 53 into law. The new law contains two separate requirements for fully insured plans in Alaska. The first requirement relates to coverage for autism spectrum disorder. Under current law, coverage must include treatment prescribed by a licensed physician or psychologist. Under the new law, that list includes treatment prescribed by an advanced practice registered nurse practitioner. The second requirement relates to coverage of services provided by midwives. Specifically, under the new law, plans that provide coverage for services performed for women during pregnancy and childbirth (and for a period of time following childbirth) must provide coverage for the same services performed by advanced practice registered nurses, so long as the services performed are within the practice scope of certified midwives (also sometimes referred to as ‘certified nurse midwives’). The law is effective July 7, 2016. Overall, the law adds no new employer compliance obligations, but employers with fully insured plans in Alaska should be aware of the changes.

SB 53 »

On July 11, 2016, Gov. Walker signed SB 142 into law. The new law relates to coverage for certain anti-cancer treatment for fully insured plans in Alaska. Under the new law, plans that provide coverage for anti-cancer medications that are injected or administered intravenously by a health care provider and such medications administered directly by the plan participant (such as orally administered or self-injected medications) cannot apply higher cost-sharing (including co-insurance, co-payments or deductibles) than the plan applies to injected or intravenously anti-cancer medications. This is the case regardless of the plan’s formulations or benefit category design or determination. For purposes of the new law, “anti-cancer medications” include drugs or biologics used to kill, slow or prevent the growth of cancerous cells or to treat related side effects. The new law is effective for plans beginning (or renewed) on or after Jan. 1, 2017. The law includes no new employer compliance obligations, but employers with fully insured plans in Alaska should be aware of it.

SB 142 »


July 12, 2016

On June 14, 2016, Gov. Walker signed HB 234 into law, creating Chapter 17. Under the new law, plans that provide coverage for mental health benefits must provide coverage for those benefits delivered through telehealth services by Alaska-licensed health care providers. The law applies to plans offered, issued, delivered or renewed in Alaska on or after Sept. 11, 2016. The new law does not add new employer obligations, but fully insured Alaska employers should be aware of the coverage requirements.

Chapter 17 »


May 3, 2016

On March 24, 2016, the Alaska Division of Insurance published Bulletin 16-04. The bulletin relates to an extension of non-PPACA-compliant small group policies and plans. As background, the federal government previously announced a transition policy that allows insurers (if allowed by the state) to renew non-grandfathered non-PPACA-compliant plans, so long as the transitional coverage does not extend beyond Dec. 31, 2017.

Bulletin 16-04 states that the Division will allow insurers the option to renew non-PPACA-compliant policies if coverage has been continuously in effect since Dec. 31, 2013. Those policies may continue to be renewed on or before Oct. 1, 2017, provided the policy will terminate by Dec. 31, 2017. Insurers may early renew or issue coverage for periods less than one year if a policy terminates prior to Dec. 31, 2017 and the employer wants coverage through the end of the calendar year.

The bulletin presents two options for insurers that elect to extend non-PPACA-policies. Under the first option, an insurer may permit employer-sponsored groups currently enrolled in the insurer’s non-PPACA-compliant plan to continue to renew their coverage. Under the second option, the insurer may provide an additional opportunity to renew coverage in its non-PPACA-compliant plan to an employer-sponsored group that is currently enrolled in the insurer’s non-PPACA-compliant plan but has indicated its intent to non-renew at the end of the plan year.

Alaska small employers that are interested in renewing a non-PPACA-compliant plan should work with their advisors and insurers.

Bulletin 16-04 »


August 25, 2015

On Aug. 13, 2015, the Alaska Department of Labor and Workforce Development signed a memorandum of understanding (MOU) with the DOL. The MOU is meant to announce that the state and the DOL will work together to prevent the improper classification of employees as independent contractors or other non-employee workers. The MOU states that the two entities will share information and coordinate enforcement in an effort to protect employee/worker rights under both federal and state law. The MOU arose as a result of the DOL’s Misclassification Initiative. According to the press release, Alaska is one of 25 states to sign such an MOU with the DOL.

Alaskan employers should review their employment practices to ensure that individuals are properly classified as either employees or independent contractors. The proper classification is important for purposes of PPACA’s employer mandate, as well as many other federal and state laws and calculation of employment taxes. Because the classification analysis is based on the specific facts and circumstances surrounding an employer’s situation, employers should work with outside counsel to resolve any questions.

Misclassification MOU »
DOL News Brief »
Alaska Press Release »
DOL Misclassification Initiative Web Page »


March 24, 2015

On Feb. 23, 2015, the Alaska Division of Insurance issued a press release relating to a special enrollment period (SEP) for the Alaska health insurance exchange. As background, on Feb. 20, 2015, the federal government announced it would allow a SEP related to the federal tax penalty for consumers in states with health exchanges run by the federal government. The press release states that Alaskans who "first became aware of, or understood the implications of, the shared responsibility payment in connection when preparing their 2014" federal income taxes will have the opportunity to avoid the penalty in 2015 by signing up for coverage during a SEP between March 15 and April 30. To qualify for the SEP, Alaskans must certify that they filed their tax returns and paid the penalty for not having coverage in 2014.

The news release does not require any new compliance obligations or otherwise affect employers in Alaska. However, employers will want to be aware of the news release should employees have questions relating to SEP opportunities in the exchange.

Press Release  »

On Feb. 18, 2015, the Alaska Division of Insurance published Bulletin B 15-05. The bulletin applies to insurers and relates to coverage of services relating to behavior analysis and other autism service providers, as required by Alaska law. According to the bulletin, denying a claim solely on the basis that a behavioral analyst is not licensed in Alaska is a violation of Alaska law. An insurer’s failure to promptly pay such claims may also result in late payment interest penalties.

Although the bulletin applies to insurers, employers in Alaska should be aware of the bulletin and the coverage requirements relating to behavior analysis and autism service providers, particularly those that may not be licensed in Alaska.

Bulletin B 15-05 »


November 4, 2014

On Oct 17, 2014, the U.S. Supreme Court denied Alaska’s request for a stay in a case, Parnell v. Hamby, Case No. 3:14-cv-00089-TMB (D. Alaska Oct. 12, 2014) challenging Alaska’s ban on same-sex marriage. As background, in 1998 Alaska voters passed a constitutional amendment that defines “marriage” as between one man and one woman. That constitutional amendment has been the subject of recent litigation. Earlier this month, a federal district court in Alaska ruled that the amendment is unconstitutional. That decision paved the way for same-sex couples to begin marrying in Alaska. However, the state requested a stay on the decision and over the course of a few days, that request made its way to the U.S. Supreme Court. As a result of the stay’s denial, same-sex marriage is now legal in Alaska. Although no specific guidance has been released, the ruling most likely means that group health insurance policies issued in Alaska will be required to cover same-sex spouses. NFP Benefits Compliance will continue to monitor the issue and report on any additional guidance in future editions of Compliance Corner.

Supreme Court Denial  »


September 9, 2014

On July 2, 2014, the Alaska Division of Insurance updated a document titled “2015 Alaska ACA Form and Rate Guidance.” The update relates to Alaska’s approach for composite rating requirements in the small group market. As background, final rules issued by HHS March 11, 2014, provided for a two-tiered federal calculation method for composite rates (one tier for each covered adult age 21 or older and a second tier for each covered child under age 21). However, the same final rule permitted states to substitute their own alternative to the federal methodology by seeking approval from HHS.

The Alaska document states that Alaska has been approved for and will implement a four-tiered rating structure, including employee, employee plus spouse, employee plus children, and employee plus family. This means that while insurers issuing small group market plans in the state will continue to provide per-member billing, they may choose to provide family composite premiums on an optional basis. If so, the insurer must follow the state’s four-tiered alternative method. If an insurer offers the family composite methodology, it must make it available for each small employer in the market, regardless of size. Tiered composite premium rates must be set at the beginning of the plan year and do not change through the year, even if the distribution of employees among the tier levels changes.

The tiered-composite methodology applies to Alaska small employer premium rates for plans offered outside of the federally facilitated exchange in Alaska beginning Jan. 1, 2015. Those offered on the exchange must use per-member premium ratings.

The document provides definitions for each rating tier, as well as the factors and methodology to be used when determining the final premium charged for each employee. Importantly, the bulletin does not apply directly to small employers, although this information is important for all employers to understand. If the insurer has opted to follow the four-tiered alternative calculation method, small employers in Alaska may use composite rates rather than per-member rates to determine the percentage of premium paid by the employer versus the employee.

2015 Alaska ACA Form and Rate Guidance »
Federal Chart of Approved States with Rating Variations »


April 8, 2014

On March 28, 2014, the Alaska Division of Insurance issued Bulletin B14-03. The bulletin relates to the March 5, 2014, CMS announcement of a two-year extension to the transitional policy for non-PPACA-compliant health benefit plans (as covered in the March 11, 2014, edition of Compliance Corner). The bulletin states that Alaska will allow insurers to renew non-grandfathered plans according to the extended CMS transitional policy in both the individual and small group markets. Alaska employers that have had their plans cancelled should consult with insurers on whether those plans can be continued in light of the CMS announcement and the department’s directive.
Bulletin B14-03 »


Arizona

April 28, 2020

COVID-19 Insurance Updates

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On April 3, 2020, the Department of Insurance issued Regulatory Bulletin 2020-02. As discussed in the March 31, 2020, edition of Compliance Corner, Gov. Ducey issued an executive order instructing the department to clarify the order’s requirements imposed upon health plans of any type in response to the COVID-19 outbreak. Pursuant to that mandate, this regulatory bulletin, which applies to plans issued or delivered in the state, requires those plans to: cover out-of-network lab testing; waive cost sharing for diagnostic testing related to COVID-19 (including office and urgent care visits); and to cover telemedicine services.

On April 16, 2020, the department issued Regulatory Bulletin 2020-04 to all insurers providing health coverage, among other types of coverage. The bulletin encourages insurers to work with insureds to make sure that policies do not lapse, including refraining from cancelling policies due to nonpayment.

The bulletins are primarily directed at insurers. However, employers should also be aware of these developments.

Regulatory Bulletin 2020-02 »
Regulatory Bulletin 2020-04 »


April 14, 2020

Executive Order on Prescription Drug Coverage During COVID-19

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On April 2, 2020, Gov. Ducey issued Executive Order 2020-20, which requires the Arizona Board of Pharmacy to allow pharmacists to utilize their professional judgement to dispense emergency refills of maintenance medications for up to a 90-day supply and an additional 90-day supply if necessary. The board must also waive electronic prescribing requirements, waive the requirement that companies making hand sanitizer must have a permit, and other measures to facilitate an effective response to the COVID-19 outbreak.

The executive order is primarily directed at the state’s pharmacy board. However, employers and insurers should also be aware of these developments and their impact on costs to health plans.

Executive Order 2020-20 »

FAQ Regarding the Fair Wages and Healthy Families Act

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On April 7, 2020, the Industrial Commission of Arizona updated its FAQ document concerning the state’s Fair Wages and Healthy Families Act (FWHFA) to show how the FWHFA interacts with the FFCRA. The FWHFA mandates that full-time, part-time and seasonal employees be granted paid sick leave, earning a minimum of one hour of leave for every 30 hours worked. Employers with fewer than 15 employees must provide at least 24 hours of paid sick leave each year. Businesses with 15 or more employees must provide a minimum of 40 hours yearly.

The FAQ states that FWHFA leave can be used if an employee or a member of the employee’s family is stricken with COVID-19, and that the paid sick leave provided under the FWHFA is in addition to the paid sick leave granted under the FFCRA.

Arizona employers should be aware of these developments.

FAQ »


March 31, 2020

Insurance Updates Regarding COVID-19

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On March 11, 2020, Gov. Ducey signed Executive Order 2020-07 directing insurance companies to cover the costs of COVID-19 diagnostic testing from all qualified laboratories, regardless of whether the laboratory is in the insurance company’s provider network; waive copays, coinsurance, and deductibles (cost-sharing requirements) related to COVID-19 diagnostic testing; and pass less cost to health plan members for telemedicine visits than for in-person visits, and encourage use of telemedicine during the health emergency.

On March 23, 2020, Gov. Ducey signed Executive Order 2020-12, declaring insurance services as essential business operations.

On March 25, 2020, Gov. Ducey signed Executive Order 2020-15 directing insurance companies regulated by Arizona to provide coverage for all health care services that are provided through telemedicine if the health care service would be covered were it provided through an in-person visit. Insurers can establish reasonable requirements and parameters for this coverage, but they cannot be any more restrictive or less favorable than those delivered in-person. In addition, insurers must reimburse health care providers at the same level for telemedicine visits as they would in-person visits and allow all electronic means of delivering telehealth.

Employers with policies regulated by Arizona should be aware of these developments.

Executive Orders 2020-07, 2020-12, and 2020-15 »


May 29, 2019

Mini-COBRA Law Now Applies to Employers with Fewer Employees

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On May 7, 2019, Gov. Ducey signed SB 1035 into law, creating Chapter 183. The new law relates to Arizona’s mini-COBRA law. Currently, AZ’s mini-COBRA requirement applies to employers with 1-20 employees that offer a fully insured group health insurance plan in AZ. According to Chapter 183, beginning July 27, 2019, AZ employers with 1-19 employees with such fully insured plans will be required to comply with the state’s mini-COBRA law. More information on AZ’s mini-COBRA law can be found in our article here.

Chapter 183 »


October 30, 2018

New State Coverage Continuation Requirement for Small Employers

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On April 10, 2018, Gov. Ducey signed SB 1217 into law. The new law, effective Jan. 1, 2019, requires small employer plans with up to 20 employees to provide terminated participants (and their covered dependents) with the right to continue coverage following certain qualifying events (sometimes called “mini-COBRA coverage”). To be eligible, the employee must have been covered under the group health plan for at least three months prior to the qualifying event.

There are a limited number of qualifying events:

  • Termination of employment (not including gross misconduct)
  • Reduction of hours
  • Divorce or separation
  • Death of the employee
  • The employee becoming eligible for Medicare
  • The child reaching the maximum age for coverage under the terms of the plan
  • Bankruptcy of the employer (only for covered retirees)

The employer is responsible for providing a terminated participant with notice of the qualifying event, the right to continue the coverage, the cost of continuation coverage and the election procedures. The notice must be postmarked to the participant’s home address within 44 days of the qualifying event. The cost of continuation coverage may not exceed 105 percent of the total premium.

Similar to COBRA, the terminated participant has 60 days from the date of the notice to elect the coverage and 45 days from the date of the election to submit the first premium payment. The maximum coverage period is 18 months. Coverage will terminate earlier if the participant fails to make timely payment, becomes eligible for Medicare or Medicaid, or the employer ceases to provide a group health plan. Also, a dependent child’s coverage will terminate earlier if the child reaches the maximum age under the terms of the plan. There are special rules related to the maximum coverage period for covered employees who are in the military reserve or National Guard, called to active duty, and employment is terminated.

Continuation coverage is available for up to 29 months for a qualified dependent who was disabled at the time of the qualifying event and provides the employer with the Social Security Administration disability determination within 60 days of the determination. The cost of coverage during the disability extension may be up to 150 percent of the total premium.

The Arizona Department of Insurance is tasked with providing a sample notice, which they haven’t yet provided. Small employers should work with the insurer to ensure compliance with AZ state continuation.

SB1217 »


May 15, 2018

Plans Must Provide Coverage of Pain Medicine, Substance Abuse and Urology Through Telemedicine

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On April 11, 2018, Gov. Ducey signed HB 2042 into law. This bill amends the state’s law on telemedicine to include pain medicine, substance abuse and urology as conditions that can be treated through telemedicine services. The amendments to include pain medicine and substance abuse are effective Jan. 1, 2019. The amendment to include urology is effective Jan. 1, 2020.

HB 2042 »


June 13, 2017

Arizona's Industrial Commission Releases New Guidance Regarding Paid Sick Leave Law

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On May 19, 2017, the Industrial Commission of Arizona released new FAQs which clarify implementation of the Fair Wages and Healthy Families Act (Proposition 206). Specifically, the FAQs address many aspects of Arizona’s Paid Sick Leave law and how employers are to implement these requirements effective July 1, 2017.

As discussed in the Nov. 30, 2016, edition of Compliance Corner, Proposition 206 requires employers with 15 or more employees to provide employees with up to 40 hours of paid sick leave in a calendar year. Employers with less than 15 employees must provide no less than 24 hours of paid sick leave during a calendar year. Employees accrue sick leave at a rate of one hour per every 30 hours worked up to a maximum of 40 hours over the span of one year. Time begins accruing as of the first day of employment, but employers may require a 90-day probationary period before sick time may be used. Generally, employees may use sick leave for themselves or to care for an employee’s family member (as defined under the law).

The new FAQs provide detailed information regarding sick time accrual, permissible uses of sick time, calculation procedures, notice/document/recordkeeping requirements, carryover methods and other special circumstances employers may encounter.

Employer is defined as any corporation, proprietorship, partnership, joint venture, limited liability company, trust, association, political subdivision of the state, individual or other entity acting directly or indirectly in the interest of an employer in relation to an employee, but does not include the state of Arizona or the United States. An employer with employees in multiple states will not include their non-Arizona employees in their total employee count for earned paid sick time purposes.

Applicable employers are required to begin accruals as of July 1, 2017. However, employers are required to notify employees of their rights and post the earned paid sick leave announcement in the workplace prior to July 1st.

Press Release »
Proposition 206 FAQs webpage »
Proposition 206 FAQs full copy »
Earned Paid Sick Leave Time Poster »


November 30, 2016

New Law Mandates Employee Sick Leave

On Nov. 8, 2016, Arizona voters approved “The Fair Wages and Healthy Families Initiative,” also known as Proposition 206. Beginning July 1, 2017, the law requires that most Arizona employees accrue paid sick leave.

Specifically, the law requires employers with at least 15 employees to provide employees with up to 40 hours of paid sick leave during a calendar year, excluding those employed by governmental entities. Employers with less than 15 employees are required to provide up to 24 hours of paid leave during a calendar year.

Employees accrue one hour for every 30 hours worked for a maximum of 40 hours paid sick leave over the course of one year and can roll over days to the following year, but employers are not required to provide more than 40 hours of paid sick leave in a calendar year. New employees can start accruing paid sick time on their first day of employment and may use accrued sick leave after an initial 90 day probationary period. The sick leave can be used for an employee’s own medical or health condition or to care for a “family member” as defined by the law.

Certain recordkeeping and notices are required (some prior to the effective date of the law). Employers must comply with the new law by July 1, 2017.

Initiative I-24-2016 »


September 20, 2016

Arizona Adopts Declaration of Independent Contractor Status

Earlier this year, Gov. Ducey signed into law HB 2114, which appears to be the first state law to provide certainty for the status of independent contractors and the businesses that hire them in the form of a signed declaration. Under the law, independent contractors may sign a Declaration of Independent Business Status (DIBS) that acknowledges the contractor operates as an independent business, is not entitled to unemployment status, is responsible for all taxes related to such compensation and responsible for licensing and registration related to services performed. Additionally, the independent contractor must certify that he/she meets at least six of the 10 criteria for independent status. The DIBS is optional but creates a rebuttable presumption for the status of the independent contractor.

HB 2114 »


June 14, 2016

On May 17, 2016, Gov. Ducey signed SB 1363 into law, creating Chapter 278. The law expands existing insurance coverage requirements for health care services provided through telemedicine to apply to services received in all of Arizona, rather than services received in a rural region of Arizona only. This law is effective on Jan. 1, 2018.

Chapter 278 »


May 3, 2016

On April 5, 2016, Gov. Ducey signed HB 2306 into law, creating Chapter 100. The law requires insured group health plans to cover lawful health care services performed by health care providers, regardless of whether they are related (e.g., familial relationship) to plan participants, if this coverage would be provided for plan participants who are not related to their health care providers. This law applies to policies issued, delivered or renewed on or after July 1, 2017.

HB 2306 »


April 5, 2016

On March 25, 2016, the Arizona Department of Insurance announced in a press release that insurers in the individual and small group major medical health insurance markets can choose to renew transitional policies through Dec. 31, 2017. As discussed in the March 8, 2016, edition of Compliance Corner, CMS announced an extension for small group transitional policies. Such policies are not required to be in compliance with certain PPACA mandates including community rating, coverage of essential health benefits, prohibition on pre-existing condition exclusions and the annual out-of-pocket maximum limit. The policy must have been in place on Dec. 13, 2013.

Additionally, insurers that offer this short term extension of coverage are required to send each policyholder (the employer for a group policy) a renewal notice that explains the offer to continue the transition policy to the end of 2017.

Press Release »

On March 17, 2016, Gov. Ducey signed HB 2264 into law. The law mandates that insured group health plans that cover prescription eye drops to treat glaucoma or ocular hypertension must also cover refills for these eye drops under certain conditions. This law applies to policies issued, delivered or renewed on or after Jan. 1, 2018.

HB 2264 »


November 3, 2015

On Oct. 16, 2015, the Arizona Department of Insurance published an announcement on the impact of the PACE Act in Arizona. According to the announcement, Arizona will retain its existing definition of ‘small group’ insurance under ARS Sec. 20-2301(A)(21), which states that ‘small employer’ means an employer who employs at least two but not more than 50 eligible employees on a typical business day during any one calendar year. The PACE Act repeals a PPACA requirement that mandated states to define ‘small employer’ to be an employer with between one and 100 employees. Employers in the 51-100 group should work with their carriers concerning next steps with regard to their contract or policy.

Announcement »


July 14, 2015

On June 19, 2015, the Arizona Department of Insurance published Regulatory Bulletin 2015-05, which summarizes significant newly enacted legislation relating to insurance in Arizona. Only one piece of legislation impacts health insurance coverage: SB 1288.

SB 1288 was signed April 1, 2015, creating Chapter 159. This law relates to prescription drug coverage and medication synchronization. Under the law, policies that provide prescription drug coverage may not deny coverage and must prorate the cost-sharing rate for a prescription drug if it is dispensed by a pharmacy for less than the standard refill amount. For that to apply, the covered individual must request enrollment into a medication synchronization program and must request less than the standard refill amount for the purpose of synchronizing their medications. For this purpose, ‘medical synchronization’ is defined as the coordination of medication refills for a patient taking two or more medications for a chronic condition that are being dispensed by a single pharmacy to facilitate the synchronization of the patient’s medication for the purpose of improving medication adherence. Chapter 159 is effective for plans and policies issued or renewed on or after Jan. 1, 2017.

The new law does not create additional employer compliance obligations, but employers will want to be aware of the new law in case questions arise relating to prescription drug coverage for employees enrolled in fully insured plans.

Bulletin 2015-05 »
Chapter 159 »


April 7, 2015

On March 27, 2015, the Arizona Department of Insurance (DOI) published a bulletin titled "Determination for 2016 Transition to Affordable Care Act-Compliant Policies." As background, in 2013 and again in 2014, the federal government announced a policy that permitted insurers to continue to renew non-PPACA-compliant policies in the small group market. On May 8, 2014, the Arizona DOI determined that it would allow insurers to renew such policies through policy years beginning on or before Oct. 1, 2015. According to the new bulletin, the DOI is allowing renewals in the small group market through Oct. 1, 2016. Further, the extension applies to policies sold to large businesses of 51-100 employees currently in the large group market but that, for policy years beginning on or after Jan. 1, 2016, will be redefined as small businesses purchasing insurance in the small group market. The bulletin also clarifies that while insurers are not required to extend non-PPACA-policies, they now have the option to do so through Oct. 1, 2016.

The bulletin is directed toward insurers, but Arizona employers should be aware of the bulletin, particularly if they are sponsoring a plan that is considered non-PPACA-compliant. Those employers should work with the insurer to determine if the non-PPACA-compliant plan will be extended.

Bulletin  »


October 21, 2014

On Oct. 16, 2014, the U.S. District for the District of Arizona, in Majors v. Horne, No. 2:14-cv-00518-JWS (D. Ariz. 2014), found the state’s same-sex marriage ban unconstitutional and blocked the state from enforcing the ban. Subsequently, Attorney General Horne directed county clerks of court to comply with this ruling. This will most likely mean that group health insurance policies issued in Arizona will need to amend their plan documents to offer coverage to same-sex spouses. We are expecting further guidance from the state and will report such in future editions of Compliance Corner.

Majors v. Horne  »

AG Statement  »


July 29, 2014

On April 30, 2014, Gov. Brewer signed HB 2078 into law. The law ensures cost-sharing under health insurance policies for orally administered cancer drugs equal to that allowed for injected or intravenous treatments administered by a health care provider. This mandate only applies if the policy provides coverage both for cancer treatment medications that are injected or administered intravenously (by a health care provider) and for patient‑administered cancer treatment medications. Insurers are prohibited from increasing the copayment, deductible or coinsurance amounts for covered injectable or intravenous treatments in order to avoid compliance with the cost-sharing mandate. However, the copayment, deductible or coinsurance amounts may be increased if the increase is applied generally to other medical or pharmaceutical benefits and not to circumvent the cost‑sharing mandate. This law applies to policies issued, delivered or renewed on or after Jan. 1, 2016.

HB 2078 »


May 20, 2014

On May 8, 2014, Department of Insurance Director Marks issued press release 14-01. The notice is related to the March 5, 2014, CMS announcement of a two-year extension to the transitional policy for non-PPACA-compliant health benefit plans (as covered in the March 11, 2014, edition of Compliance Corner). The Arizona Department of Insurance states that insurers that renewed existing plans, on or before Dec. 31, 2013, that otherwise would have been modified or cancelled under PPACA, may renew that coverage. Previously, through guidance in December 2013, the Arizona department had allowed insurers to early renew such policies. Since renewal of these non-PPACA-compliant plans is optional for carriers, Arizona employers that early renewed should consult with their carriers on whether the carriers will renew these plans.

Arizona Department of Insurance Notice 14-01 »


Arkansas

May 27, 2020

Coronavirus-Related Bulletins Issued

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On May 11, 2020, the Commissioner Mcclain released a series of coronavirus (COVID-19) bulletins. These included Bulletins 20-2020, 21-2020, 23-2020, and 24-2020.

As background, on March 11, 2020, a public health emergency was declared in the state due to the COVID-19 crisis. Following the declaration, the commissioner issued numerous related bulletins to insurers, health care providers, pharmacy managers and other interested parties in the state. The May 11, 2020, bulletins include rescissions of certain prior orders, as well as new emergency relief measures.

Bulletin 20-2020 rescinds certain prior COVID-19-related bulletins. Bulletin 21-2020 announces a 45-day cancellation moratorium on personal lines, life and health policies for certain state residents affected by the COVID-19 emergency. This premium nonpayment relief is available to policyholders who, since March 11, 2020, have been diagnosed with or positively tested for COVID-19 or have been terminated, laid off or, if self-employed, experienced a cessation of work due to the COVID-19 emergency.

In a further effort to assist residents affected by the outbreak and remove impediments to their receipt of health care, Bulletin 23-2020 was issued to insurers, health maintenance organizations and other interested parties. This bulletin suspends payment audits of hospitals and health care providers for the 45-day period that began on May 5, 2020. However, such audits can be performed retroactively. The bulletin also directs health insurers to toll the time limit on overpayment recovery for the 45-day period. Finally, the bulletin encourages provides to maximize the use of telemedicine services in accordance with state laws to mitigate the spread of COVID-19 in the state.

Similarly, Bulletin No. 24-2020 recognizes that pharmacists are also an integral part of the COVID-19 health response. Accordingly, this bulletin suspends random audits of pharmacies (except where fraud is suspected) for the above referenced 45-day period. Additionally, this directive reminds pharmacy benefit managers of the ban on price gouging and their responsibility to monitor drug pricing to ensure consumers have access to products during the emergency.

Although the bulletins are primarily directed at insurers and health care providers, employers may want be aware of these developments.

Bulletin 20-2020 »
Bulletin 21-2020 »
Bulletin 23-2020 »
Bulletin 24-2020 »


April 14, 2020

Insurance Regulatory Suspension

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On April 7, 2020, the Department of Insurance made an announcement in relation to the state’s response to the coronavirus (COVID-19) pandemic. The statement focuses upon the suspension of regulatory statutes, agency orders and rules determined to impede the state’s emergency efforts.

As background, on March 11, 2020, Gov. Hutchinson declared a public health emergency due to the COVID-19 crisis. On March 17, 2020, in Executive Order 20-06, the governor ordered state agencies to identify on their websites any provisions of regulatory statutes, agency orders or rules that prevented or delayed their ability to assist residents during the COVID-19 crisis.

As a result, the insurance commissioner identified certain insurance provisions that hindered COVID-19 mitigation efforts including those related to the Prior Authorization Transparency Act (Ark. Code Ann. § 23-99-1101 et seq.) Accordingly, for cases involving COVID-19 patients, the prior authorization requirements for non-urgent, urgent and emergency services found in Ark. Code Ann. §§ 1105, 1106, and 1107, are suspended. Additionally, for COVID-19 cases, § 8 of AID Rule 115 regarding utilization reviews and rescissions of prior authorizations is similarly suspended. The suspensions are currently in effect for 30 days from the issuance of Executive Order 20-06 (therefore beginning on March 17, 2020, and expiring on April 17, 2020).

Although the memo is directed at insurers, employers may want be aware of these developments.

Public Health Emergency Regulatory Suspensions Pursuant to Executive Order 20-06 »


March 31, 2020

Telemedicine Reimbursement

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On March 27, 2020, the Department of Insurance issued Bulletin No. 13-2020, regarding reimbursement for telemedicine. The bulletin was directed at all licensed insurers, health maintenance organizations, and other interested parties in the state.

As a result of the coronavirus (COVID-19) outbreak, the governor had declared a public health emergency on March 11, 2020. Following the declaration, in Executive Order 20-05, the governor encouraged treatment and communication by technology. Specifically, for the duration of the emergency, the governor called for the leveraging of telehealth to mitigate the spread of COVID-19, and suspended existing requirements for in-person physician encounters with patients to establish a professional relationship. The prior order also suspended certain specialized licensing requirements to enable mental health professionals to provide counseling to state residents through available technology.

Bulletin 13-2020 serves to remind carriers offering health insurance plans, including short-term limited-duration insurance plans regulated by the Department, that they must comply with the reimbursement requirements for health care services provided through telemedicine found in Ark. Code Ann. § 23-79-1602(c) and (d). These sections include provisions requiring reimbursement for health care services through telemedicine on the same basis as the health benefit plan provides coverage for the same health care services provided by the physician in person.

The memo is directed at insurers, but employers should be aware of this communication.

Bulletin No. 13-2020 »


February 4, 2020

Self-Funded MEWA Rules

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Effective in December 2019, Insurance Commissioner Kerr issued Rule 119 (the “Rule”) regulating multiple employer trusts and MEWAs that are not fully insured. Amongst other items, the Rule provides licensing standards and financial solvency requirements for self-insured MEWAs.

As background, Arkansas Insurance Code 23-92-101(c)(3), which pertains to self-funded MEWAs, has long permitted the Insurance Commissioner to issue a rule to establish requirements for self-funded MEWAs. Under this authority, the Rule provides clear instructions to interested employers and brokers and to protect the public and medical providers.

The Rule’s requirements are similar to those of neighboring states, specifically Texas and Oklahoma. Covered topics include the benefits offered, financial requirements, fees, insolvency procedures, examinations, filing of forms and rates, written disclosures and other consumer protections, reporting requirements, and excess or stop loss insurance. The Rule also provides the criteria and application for obtaining a certificate of authority from the State Insurance Department to conduct business in Arkansas.

Accordingly, interested employers and brokers should be aware of these standards established for the licensing, formation, and regulation of MEWAs that are not fully insured. Employers seeking to band together to create health benefit plans for their members may benefit from the new guidelines. Further information is available through the Arkansas Insurance Department.

Rule 119 »


September 4, 2019

New Bulletin on Identification of Plan’s Funding Status on Insurance ID Cards

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On July 2, 2019, the Insurance Department published Bulletin No. 6-2019, which is titled “Health Plan and Prescription Drug Coverage Identification Cards.” The bulletin is directed to health benefit plan issuers in the fully insured and self-insured health benefits markets, including third-party administrators and pharmacy benefits managers servicing such plans for enrollees in Arkansas. Arkansas recently enacted a law (effective April 4, 2019) that requires disclosure by health care payors of whether its plans are fully or self-insured on health plan identification (ID) cards. As a result, plans in both the fully insured and self-insured markets are to provide their insureds or enrollees with plan benefit ID cards that state whether the plan is insured (by an insurer or HMO) or whether it is a self-insured employer plan. According to the bulletin, the language needs to be simple, clear, and aimed toward consumers and health care payors who are not versed in insurance industry parlance or third-party network administration structures. The bulletin includes some example language that could be used.

The bulletin applies to both fully insured plans and self-insured plans that operate in Arkansas. Employers with fully insured Arkansas plans should work with their carriers in correcting ID cards. Self-insured employers in Arkansas should work with their third-party administrators in facilitating new ID cards with appropriate information on the plan’s self-insured status.

Bulletin No. 6-2019 »


May 2, 2017

Rules on Mammography Coverage Amended

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On March 27, 2017, Gov. Hutchinson signed H.B. 2022 into law, creating Act 708. This law amends the Arkansas Insurance code concerning the coverage of mammograms for female plan participants. Beginning July 20, 2017, insurance carriers must offer to provide coverage for mammography screening for breast cancer. This includes screening mammography (including digital breast tomosynthesis) and breast ultrasounds for purposes of early detection of breast cancer. If plans choose to provide this coverage, then the plan must allow one baseline mammogram for participants age 35-40, one mammogram every other year for participants age 40-49, annual mammograms for participants age 50 and older, and mammograms at any age when recommended by doctors for patients with a family history of breast cancer.

Plans must also provide coverage for comprehensive screenings of the breasts if mammography indicates heterogeneous or extremely dense breast tissue and participants’ doctors determine comprehensive ultrasound screenings are medically necessary. The law also prohibits insurers from charging copayments or deductibles to screening mammography. While insurers may apply copayments to breast ultrasounds, they may not apply deductibles to them.

This law ultimately applies to insurers. However, employers should familiarize themselves with this law so that they remain up to date as to how mammography benefits will be covered.

Act 708 »

Health Insurance Coverage for Medically Necessary Foods

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On April 7, 2017, Gov. Hutchinson signed H.B. 1900 into law, creating Act 1096. This law amends the Arkansas Insurance code to require that plans provide coverage for the treatment of certain medical disorders that require specialized formulas or medical foods. This coverage must be provided if the medical foods or specialized nutrients or formula are prescribed as medically necessary by a licensed healthcare provider, as long as those products or formula are administered under the direction of a licensed healthcare practitioner. This Act becomes effective Jan. 1, 2018.

This law ultimately applies to insurers. However, employers should familiarize themselves with this law so that they remain up to date as to how certain medical food benefits will be covered.

Act 1096 »


April 18, 2017

Injected or Intravenously Administered Cancer Treatment Medication

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On March 21, 2017, Gov. Hutchinson signed HB 1592 into law, creating Act 543. This legislation prohibits plans that provide coverage for injected or intravenously administered cancer treatment medications from providing less favorable coverage for prescribed, orally administered cancer treatment medications. Further, plans may not reclassify cancer treatment medications or increase copayments, deductibles or coinsurance for the medications that are injected or intravenously administered unless the increase is applied to all other medical and pharmaceutical benefits or the increase is consistent with the carrier’s annual increases in the cost of health care. Any reclassification must also be consistent with this legislation. This act is effective on Jan. 1, 2018.

Act 543 »


August 9, 2016

An Act to Regulate the Prior Authorization Procedure for Treatment of Terminal Illness

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Rule 114 was adopted by the Arkansas Department of Insurance to implement portions of the Arkansas Health Care Consumer Act, more specifically, “An Act to Regulate the Prior Authorization Procedure for Treatment of Terminal Illness.” The rule was added to explain that the intent of the Act was not to allow a person to receive an unlimited amount of pain medication without being subject to plan quantity limits or medical safety monitoring. Thus, the rule requires that if a prescription pain medication requires a prior authorization by a carrier or utilization review entity, the prior authorization shall not be denied if the covered person has a terminal illness. However, coverage may be subject to quantity limits and FDA approval and may be monitored by the carrier or utilization review entity to limit drug diversion and abuse. The effective date is Aug. 6, 2016.

Rule 114 »


February 9, 2016

On Dec. 18, 2015, the Arkansas Insurance Department issued Bulletin No. 15A-2015, amending the definition of small employer for purposes of the MLR requirement pursuant to passage of the PACE Act. In light of the PACE Act’s passage, and since Arkansas law is currently consistent with federal law (as amended), for plan years that begin on or after Jan. 1, 2016, Arkansas defines small employers as those who employ on average 2-50 employees on business days during the preceding calendar year. Large employers will be defined as those who employed an average of at least 51 employees on business days during the preceding calendar year. Arkansas will not be applying the state option to extend the definition of small group to those employing 1-100. A bulletin issued by the federal CMS clarified that issuers may use the definition of 50 employees as the upper threshold, rather than 100 employees, for purposes of MLR rebates. However, subsequent guidance issued by CMS on Dec. 17, 2015, (see article in the Jan. 12, 2016, edition of Compliance Corner) allowed states to delay implementation of the lower threshold until the 2017 reporting year. It is unclear at this time if Arkansas will be updating this bulletin to reflect the newest CMS guidance.

It is important to note that the PACE Act deals only with from which market (small or large) an employer must buy its plan. It does not alter in any way the PPACA employer mandate that requires an employer with 50 or more full-time equivalent employees to offer an affordable, minimum value plan or face penalties. That federal requirement‎ continues.

Bulletin No. 15A-2015 »


October 20, 2015

On Oct. 8, 2015, the Arkansas Insurance Department issued Bulletin 15-2015 in response to the passage of the federal PACE Act. The bulletin states that Arkansas will continue to follow the definition of small employer group previously announced in AID Bulletin 3-2012, which defines a small employer as having at least two but no more than 50 employees. It is important to note that the PACE Act deals only with from which market (small or large) an employer must buy its plan. It does not in any way alter the PPACA employer mandate that requires an employer with 50 or more full-time equivalent employees to offer an affordable, minimum value plan or face penalties.

Press Release »
AID Bulletin 15-2015 »
AID Bulletin 3-2012 »

October 6, 2015

On Sept. 25, 2015, the Arkansas Insurance Department issued Bulletin No. 13-2015, which provides guidance on submitting quarterly index rate changes for small employer non-grandfathered health benefit plans and small employer stand-alone dental plans. Specifically, this bulletin applies only to carriers desiring to change their index rate or plans in the small employer pool, which excludes grandfathered and transitional plans.

As background, on Feb. 18, 2014, the CCIIO issued a bulletin providing guidance on allowable quarterly changes to small employer group index rates. Pursuant to 45 CFR Section 156.80(d)(3)(iii) and the bulletin, each state is allowed to determine when and how often to accept changes for small employer group plans, subject to the qualification that rates cannot change more frequently than quarterly. This bulletin clarifies Arkansas’ position on the matter of small employer group index rates.

The bulletin states that small employer rates and plans can change as frequently as quarterly using one of the two methods specified. The bulletin also provides a submission schedule for quarterly filings. Carriers must submit annual filings according to the applicable timelines and requirements issued by the Department.

Although the bulletin is directed toward carriers, Arkansas employers with small groups should take notice of the bulletin and work with their carriers to determine how often their rates could change.

Bulletin No. 13-2015 »

September 22, 2015

On Sept. 11, 2015, the Arkansas Insurance Department issued Bulletin No. 11-2015. Due to the uniqueness of Arkansas's insurance marketplace, the department has chosen to enforce different standards than the CCIIO on the form and manner of notices that are required to be provided when a health insurer discontinues or renews a product.

As background, on July 7, 2015, the CCIIO issued a bulletin providing guidance on federal standard notices of product discontinuation and renewal in connection with the open enrollment period for the 2016 plan year. However, states are allowed to implement different standards.

Arkansas has decided to implement the following notice timing standards:

  • Issuers who have decided to discontinue plans must ensure that notification occurs 90 days prior to the discontinuation of coverage. If there will be substituted coverage for the discontinued plan and the issuer has filed a plan for certification in the Federally Facilitated Marketplace (FFM), then the notice may be delayed until after the new plan has received certification. However, the notification must be sent before the first day of open enrollment for the following plan year.
  • All plans that will renew coverage must send notice at least 60 days prior to the date of the renewal of coverage. If an issuer is awaiting notice of certification in the FFM, the issuer may delay mailing the renewal notices until after certification. All renewal letters must be sent before the first day of open enrollment for the following plan year.

Additionally, Arkansas has decided to allow issuers the flexibility in designing their own renewal and discontinuation notices. The notices for enrollees of individual and small group plans, not including Private Option eligible enrollees, must clearly explain the options for renewing or obtaining coverage both in and outside of the FFM.

Employers who are renewing a group health policy or who have purchased a plan that is being discontinued by an insurer, should be aware of the timeframe in which the insurer will provide notice to them.

Bulletin No. 11-2015 »

August 11, 2015

On Aug. 4, 2015, Rule 109 was issued by Arkansas Insurance Commissioner Kerr. Ark. Code Ann. § 23-99-417(a)(1) and Ark. Code Ann. § 23-99-417(e) give the Commissioner authority to promulgate a rule governing payment standards by health benefit plans for orthotic devices, orthotic services, prosthetic devices and prosthetic services.

As background, various members of the orthotic and prosthetic industry requested the Arkansas Insurance Department to update orthotic and prosthetic coverage reimbursement rates in fully insured health benefit plans to 80 percent of current CMS rates. The current law in Ark. Code Ann. § 23-99- 417(a)(1) ties the reimbursement rates to 80 percent of 2009 CMS Medicare coverage levels.

Rule 109 updates the orthotic and prosthetic coverage reimbursement rate from 80 percent of 2009 CMS rates to 80 percent of current levels. It also develops an automatic mechanism to tie yearly orthotic and prosthetic reimbursement levels to current CMS rates without amending the rule on a yearly basis.

The rule takes effect Oct. 19, 2015.

Rule 109 »

June 30, 2015

On June 15, 2015, HHS conditionally approved Arkansas’ application for a state-based health insurance marketplace. Arkansas will provide a SHOP exchange for 2016 and an individual exchange for 2017. The state’s marketplace is currently a state partnership model in conjunction with the federal government. If the state meets the conditions outlined by HHS, Arkansas will transition to a solely state-based exchange.

HHS Conditional Approval Letter »

June 2, 2015

On Feb. 18, 2015, Gov. Hutchinson signed HB 1161 into law, creating Act 101. Under this law, concierge health plans or arrangements are no longer considered health insurance under the insurance code or the HMO subchapter, which means that they are not subject to the jurisdiction of the Arkansas Insurance Department. For this purpose, a ‘concierge service arrangement’ is defined as a contractual agreement between a licensed health care provider and an individual to provide select medical services under a medical arrangement for an established fee. The Act requires the concierge plan to provide the following notice to concierge contract holders clarifying that the plan may not constitute the minimum essential health benefits individuals must maintain in order to avoid PPACA’s individual mandate penalty:

Notice: A concierge service arrangement is not an insurance policy, and the select medical services as specified under a concierge service arrangement may not constitute the minimum essential health benefits under federal healthcare laws established by Pub. L. No. 111-148, as amended by Pub. L. No. 111-152, and any amendments to, or regulations or guidance issued under, those statutes existing on January 1, 2015. Medical services provided under a concierge service arrangement may not be covered by or coordinated with your health insurance and you may be responsible for any payment for medical services not covered by health insurance under your insurer's statement of benefits policy.

Typically such concierge service arrangements have been considered on par with insurance because they are payable whether or not medical care is provided. Thus, they fall under the general “no reimbursement of insurance premiums” rule that applies to health FSAs and HSAs and should not be reimbursed on a pre-tax basis. It is unclear whether this new law in Arkansas will permit employees to pay for such coverage on a pre-tax basis. Further guidance would be welcome. The law is effective July 22, 2015.

Act 101 »

On March 10, 2015, Gov. Hutchison signed SB 4 into law, creating Act 374. The law provides a person with a terminal illness the right to try investigational drugs or medicine from a medical authorization level. The law does not change any underlying and already present insurance coverage exclusion for investigational or experimental drugs. The law provides that an insurance company may, but is not required to, provide coverage for an investigational drug, biological product or device and shall not deny coverage for an item or service that is otherwise covered by an insurance contract between the eligible person and an insurance company. The law is effective July 22, 2015.

Act 374 »

On April 2, 2015, Gov. Hutchison signed HB 1894 into law, creating Act 959. The law prohibits vision care plans and insurers providing vision benefits from requiring a vision provider to apply a discount to an insured or enrollee for noncovered services or noncovered materials. The law also prohibits vision care plans and insurers providing vision benefits from restricting or limiting the vision care provider's choice of optical labs or choice of sources and suppliers of services, assuming the selected lab follows or accepts the participating provider requirements. The law is effective July 22, 2015.

Act 1025 »

On April 6, 2015, Gov. Hutchison signed SB 318 into law, creating Act 1106. The law makes significant changes to the prior authorization provisions in the Arkansas Insurance Code by repealing earlier provisions and replacing them with a new subchapter in Ark. Code Ann. Section 23-99-901. The new requirements strengthen provider rights and notice under prior authorization requirements by health insurers. Act 1106 addresses urgency and emergency authorizations and nonmedical review requirements and restrictions and requires health insurers to publish written clinical criteria and processes for prior authorizations to the public portion of its website. The law is effective July 22, 2015.

Act 1106 »

On April 6, 2015, Gov. Hutchison signed SB 466 into law, creating Act 1109. The law requires health insurers and HMOs providing prescription drug coverage to post and maintain on their websites their prescription drug coverage, out-of-pocket cost information, deductibles, prior authorization procedures and appeals system. The law is effective July 22, 2015.

Act 1109 »

On April 7, 2015, Gov. Hutchison signed SB 927 into law, creating Act 1134. The law addresses health insurers and HMOs offering health plans outside the exchange as to the insurer or HMO meeting the “reasonable assurance” standard by CMS for the provision of pediatric dental coverage. Act 1134 provides that a health insurer meets the reasonable assurance standard of providing pediatric dental if a pediatric dental plan is available for purchase on the exchange and if the consumer is notified of the requirement of having to purchase pediatric dental in the EHB plan. The law becomes effective July 22, 2015.

Act 1134 »

On May 26, 2015, the Arkansas Insurance Department issued Bulletin 9-2015 summarizing legislation enacted in 2015 pertaining to Insurance. The bulletin covers general insurance provisions such as technical amendments and legislation pertaining only to insurers and financial matters. The bulletin also summarizes property and casualty, group health and life legislation, producer legislation and funeral financial legislation. The provisions most applicable to employers have been summarized in previous articles in this edition of Compliance Corner.

Bulletin 9-2015 »

May 5, 2015

On April 1, 2015, SB 133 was signed into law, creating Act 887. The law requires plans to provide coverage for health care services provided through telemedicine, provided certain requirements and parameters are met. Importantly, for employer-sponsored group health plans a plan cannot apply annual or lifetime dollar maximums for telemedicine services other than maximums that apply to all covered services. Plans also cannot apply benefit limits, coinsurance, copayments or deductibles to telemedicine services unless benefit limits, coinsurance, copayments and deductibles apply to other covered services. Employers sponsoring high-deductible health plans should be diligent when adding required telemedicine coverage to their plans so HSA eligibility is not adversely affected for participants. The law is effective for plans delivered, issued, reissued or extended on or after Jan. 1, 2016.

Act 887 »

April 21, 2015

On March 26, 2015, a federal judge granted an injunction in response to suits filed by attorneys general in the states of Arkansas, Louisiana, Texas and Nebraska. The injunction suspends enforcement of the DOL’s final rule related to same-sex spouses in those states. The final rule, which went into effect for 46 other states on March 27, 2015, expanded the definition of spouse under the FMLA to include same-sex spouses who were legally married in a place that recognizes such marriages, regardless of their place of residence (please see the March 10, 2015 edition of Compliance Corner for more information). The attorneys general argue that the DOL’s final rule puts states in the position of either violating state law or federal regulation.

Subsequently, on March 31, 2015, the DOL confirmed in a request for hearing court filing that they will not enforce the rule in the four states covered by the decision, stating:

“[W]hile the preliminary injunction remains in effect, the [DOL does] not intend to take any action to enforce the provisions of the Family and Medical Leave Act (FMLA) . . . against the states of Texas, Arkansas, Louisiana, or Nebraska, or officers, agencies, or employees of those states acting in their official capacity, in a manner that employs the definition of the term “spouse” contained in the February 25, 2015, final rule . . . .”

The court’s injunction temporarily suspends enforcement until a final ruling is made. Oral arguments occurred April 13. In the meantime, employers with operations in these four states should be aware that FMLA requests (or, if not requested, the employer’s knowledge that an FMLA request might be a factor) for the care of a same-sex spouse due to a serious health condition or other FMLA-qualifying reason, will require the assistance of outside legal counsel specializing in employment law until this issue is resolved. Finally, four pending cases before the U.S. Supreme Court, with a decision expected in June, may also indirectly resolve this issue (See the Feb. 10, 2015 Compliance Corner, specifically articles for Kentucky, Tennessee, Michigan and Ohio).

State of Texas vs. U.S. No. 7:15-cv-00056-O »
DOL Request for Hearing »
Supreme Court Pending Cases »

December 16, 2014

On Nov. 25, 2014, a federal district court ruled that Arkansas's same-sex marriage ban is unconstitutional and blocked Arkansas from enforcing the ban. However, the court stayed its ruling pending final disposition of any appeal (Jernigan v. Crane, E.D. Ark., No. 4:13-cv-00410, 11/25/14). As a reminder, the federal government recognizes same-sex marriages in states that permit such marriages. As a result of the stay, same-sex marriage remains on hold in Arkansas. NFP Benefits Compliance will continue to monitor the issue and report on any additional guidance in future editions of Compliance Corner.

Jernigan v. Crane  »

October 21, 2014

On Sept. 30, 2014, the Arkansas Insurance Department issued Bulletin No. 13-2014 requiring that insurers who have decided to discontinue health plans must provide notification 90 days prior to the discontinuation of coverage. Further, all health plans that will renew coverage must provide notice at least 60 days prior to the date of the renewal of coverage. There are special circumstances in the case of policies sold or discontinued on the federally facilitated marketplace (FFM). The Department also addresses the forms that insurers may use when notifying individuals and small group plans of their options for renewing or obtaining coverage both inside and outside of the FFM. While this notice is primarily directed towards insurers, it is helpful for small employers to be aware of the notices they may receive as the annual open enrollment period gets closer, so they may take appropriate action to either renew the existing coverage or switch to alternative coverage.

Bulletin 13-2014  »


California

July 21, 2020

Sacramento Supplemental Paid Sick Leave

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On June 30, 2020, the Sacramento City Council enacted the Worker Protection, Health and Safety Act, which includes a requirement for employers to provide paid sick leave effective July 15, 2020. The requirement will remain in effect until December 31, 2020. It applies to employers with 500 or more employees nationwide with at least one employee performing work in Sacramento. An employer may limit leave for emergency responders, healthcare workers and food service workers.

Applicable employers must provide up to two weeks of paid leave for employees who are unable to perform work (including telework) for COVID-19-related reasons. The law is similar to emergency paid sick leave under the Families First Coronavirus Response Act (FFCRA), but importantly applies to large employers that are exempt from the federal law. Full-time employees working 40 hours or more per week would receive a maximum of 80 hours of paid sick leave; while part-time employees would receive leave equivalent to their average number of hours worked over a two week period. Benefits are paid at 100% of normal wages up to a daily maximum of $511. If the employee is caring for someone, the benefits are paid at two-thirds the normal wage up to a daily maximum of $200.

The reasons for leave are similar to those under the FFCRA:

  • The employee is subject to quarantine or isolation by federal, state or local order due to COVID-19.
  • The employee is caring for someone who is quarantined or isolated due to COVID-19.
  • The employee is advised by a healthcare provider to self-quarantine due to COVID-19 or is caring for someone who is so advised by a healthcare provider.
  • The employee experiences symptoms of COVID-19 and is seeking medical diagnosis.
  • The employee is caring for a minor child because a school or care provider is closed due to COVID-19.
  • The employee is off work because the employee’s specific work location is temporarily closed due to a public health order or public official’s recommendation.

Leave is also available if the employee is over the age of 65 years or is considered vulnerable due to a compromised immune system.

The leave provided must be in addition to other available leaves. An employer cannot require an employee to take other available leave before the city’s supplemental paid sick leave.

Employers should review this act and comply with its requirements.

Sacramento Supplemental Paid Sick Leave  »

San Mateo County Emergency Paid Sick Leave

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On July 7, 2020, the San Mateo County Board of Supervisors enacted an emergency paid sick leave ordinance effective July 8, 2020. The ordinance will remain in effect until December 31, 2020. It applies to employers with 500 or more employees nationwide with at least one employee performing work in San Mateo County’s unincorporated area since January 1, 2020. Food sector workers are excluded as they are already covered by California’s executive order. Also, an employer may limit leave for emergency responders, healthcare workers and aviation security.

Applicable employers must provide up to two weeks of paid leave for employees who are unable to perform work (including telework) for COVID-19-related reasons. The law is similar to emergency paid sick leave under the Families First Coronavirus Response Act (FFCRA), but importantly applies to large employers that are exempt from the federal law. Full-time employees working 40 hours or more per week would receive a maximum of 80 hours of paid sick leave; while part-time employees would receive leave equivalent to their average number of hours worked over a two week period. Benefits are paid at 100% of normal wages up to a daily maximum of $511.

The reasons for leave are similar to those under the FFCRA:

  • The employee is subject to quarantine or isolation by federal, state or local order due to COVID-19.
  • The employee is caring for someone who is quarantined or isolated due to COVID-19.
  • The employee is advised by a healthcare provider to self-quarantine due to COVID-19 or is caring for someone who is so advised by a healthcare provider.
  • The employee experiences symptoms of COVID-19 and is seeking medical diagnosis.
  • The employee is caring for a minor child (or senior adult) because a school or care provider is closed due to COVID-19.

The leave provided must be in addition to other available leaves. An employer cannot require an employee to take other available leave before or in lieu of the county’s emergency paid sick leave.

Employers should review this act and comply with its requirements.

San Mateo County Emergency Paid Sick Leave  »

Santa Rosa Paid Sick Leave

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On July 7, 2020, the Santa Rosa City Council enacted an emergency paid sick leave ordinance effective immediately. The ordinance will remain in effect until December 31, 2020. It applies to all private employers with at least one employee performing at least two hours work in Santa Rosa. There is an exception available for smaller employers with fewer than 50 employees that are experiencing severe economic hardship.

Applicable employers must provide up to two weeks of paid leave for employees who are unable to perform work (including telework) for COVID-19-related reasons. The law is similar to emergency paid sick leave under the Families First Coronavirus Response Act (FFCRA), but importantly applies to large employers who are exempt from the federal law. Full-time employees would receive a maximum of 80 hours of paid sick leave; part-time employees would receive leave equivalent to their average number of hours worked over a two week period. Benefits are paid at 100% of normal wages up to a daily maximum of $511.

The reasons for leave are similar to those under the FFCRA:

  • The employee is subject to quarantine or isolation by federal, state or local order due to COVID-19.
  • The employee is caring for someone who is quarantined or isolated due to COVID-19.
  • The employee is advised by a healthcare provider to self-quarantine due to COVID-19 or is caring for someone who is so advised by a healthcare provider.
  • The employee experiences symptoms of COVID-19 and is seeking medical diagnosis.
  • The employee is caring for a minor child because a school or care provider is closed due to COVID-19.

The employer cannot ask for a written certification from a health care provider.

Santa Rosa Paid Sick Leave »


June 9, 2020

Oakland COVID-19 Emergency Paid Sick Leave Ordinance

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On May 12, 2020, the Oakland City Council passed an emergency ordinance establishing emergency paid sick leave related to COVID-19. Employers with 50 or more employees must provide up to two weeks of paid leave for employees who are unable to perform work (including telework) for COVID-19-related reasons. The law is similar to emergency paid sick leave under FFCRA, but importantly applies to large employers who are exempt from the federal law.

The reasons for leave are similar to those under the FFCRA:

  • The employee is subject to quarantine or isolation by federal, state or local order due to COVID-19
  • The employee is caring for someone who is quarantined or isolated due to COVID-19
  • The employee is advised by a healthcare provider to self-quarantine due to COVID-19 or is caring for someone who is so advised by a healthcare provider
  • The employee experiences symptoms of COVID-19 and is seeking medical diagnosis
  • The employee is caring for a minor child because a school or daycare is closed due to COVID-19

Additionally, an employee may be eligible for leave if the employee:

  • Is 65 years of age or older
  • Has a health condition such as heart disease, asthma, lung disease, diabetes, kidney disease or weakened immune system
  • Has any condition identified by an Alameda County, California or federal public health official as putting the public at heightened risk of serious illness or death if exposed to COVID-19
  • Has any condition certified by a healthcare professional as putting the employee at a heightened risk of serious illness or death if exposed to COVID- 19

Importantly, employers cannot request or require a healthcare provider’s certification.

Employees are eligible if they have performed at least two hours of work within the city of Oakland after February 3, 2020. Full-time employees (those who average 40 hours per week) are eligible for up to 80 hours of paid leave with part-time employees eligible for their average hours worked over a two week period. To determine average hours worked, the employer should use the period from February 3, 2020, through March 4, 2020. Employees must be paid normal wages up to $511 per day. Health benefits must be continued during the leave period.

The ordinance took effect immediately and will expire on December 31, 2020. The city intends to publish a notice that employers will need to distribute to employees.

Emergency Ordinance »


May 12, 2020

Los Angeles County Supplemental Paid Leave

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On April 28, 2020, the Los Angeles County Board of Supervisors enacted an interim urgency ordinance related to supplemental paid leave. Employers with 500 or more employees nationally must provide two weeks of paid sick leave to certain employees for reasons related to COVID-19. Employees are eligible if they perform work within the unincorporated area of Los Angeles County and have a qualifying reason. Emergency responders and health care providers may be excluded from eligibility.

There is no service requirement. An employee merely needs to be employed on the effective date of the law. To be eligible, an employee must not be able to work (including telework) due to one of the following reasons:

  • A public health official or health care provider requires or recommends the employee isolate or self-quarantine to prevent the spread of COVID-19
  • The employee is subject to a federal, state or local quarantine or isolation order related to COVID-19 (e.g., is at least 65 years old or has a health condition such as heart disease, asthma, lung disease, diabetes, kidney disease or weakened immune system)
  • The employee needs to care for a family member who is subject to a federal, state or local quarantine or isolation order related to COV1D-19 or has been advised by a health care provider to self-quarantine for reasons related to COVID-19
  • The employee takes time off work because the employee needs to provide care for a family member whose senior care provider, school or childcare provider ceases operations in response to a public health or other public official's recommendation.

The employer cannot require employees to use any accrued paid time off prior to the supplemental paid leave. Eligible full-time employees may receive up to 80 hours of paid sick leave up to a daily max of $511. Part-time employees may receive paid sick leave based on the average number of hours and pay rate for a two-week period during the eligibility period.

Importantly, an employer may not require a doctor’s note or other documentation from the employee. Additionally, if the employer has already provided paid sick leave to an employee for one of these reasons on or after March 31, 2020, the employer may reduce this amount from the maximum hours the employee would otherwise receive under this law.

The law is effective April 28, 2020, but applies to leaves taken on or after March 31, 2020.

Angeles County Supplemental Paid Leave Ordinance »

San Jose Paid Sick Leave Related to COVID-19: Additional Guidance

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On April 16, 2020, the San Jose Department of Public Works, Office of Equality Assurance provided guidance related to the COVD-19 paid sick leave ordinance. Under the new law, employers are exempt if they provide employees with some combination of paid personal leave at least equivalent to the paid sick time required by the ordinance.

The new guidance clarifies that an employer is only exempt if it provides the equivalent amount of paid leave time to an employee on the effective date of the ordinance: April 7, 2020. In other words, that amount of time must be available to an otherwise eligible employee on April 7, 2020. For example, let’s say that the employer provides employees with three weeks of PTO, which may be used as sick time. Prior to April 7, 2020, an employee had already used two weeks of the PTO for 2020. The employer must provide the employee with additional time to comply with the two week paid sick leave requirement if the employee has a COVID-19-related reason for leave.

San Jose Department of Works Memo »


April 28, 2020

San Francisco Public Health Emergency Leave

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On April 17, 2020, San Francisco Mayor Breed signed the San Francisco Public Health Emergency Leave Ordinance into law. On April 18, 2020, the San Francisco Office of Labor Standards Enforcement issued related guidelines for employers.

The law, which became effective immediately, applies to employers with 500 or more employees. To determine size, the employer should average the number of employees per pay period in 2019. This calculation should include all full-time, part-time, undocumented and temporary employees worldwide, not just those working in San Francisco. Independent contractors are not included; nor are private sector employees working at San Francisco International Airport, Fort Mason, the Presidio or the Golden Gate National recreation Area.

Employees working in San Francisco may take up to 80 hours (two weeks) of paid leave if they experience a qualifying reason. The employee’s leave entitlement is based on the average number of hours the employee worked over a one-week period for the six months prior to February 25, 2020. There are special rules for employees hired after February 25, 2020.

Importantly, the ordinance applies to businesses which are still open and those who have temporarily closed. Furloughed employees are eligible for paid leave.

For non-exempt employees, the employer has two choices for the rate of pay. The employer may use the regular rate of pay for the workweek in which the employee uses the paid leave or the employer may use the average pay, not including overtime premium pay, for the 90 days prior to the leave. For exempt employees, the employer would use the rate of pay typically used for other types of paid leave.

The reasons for leave are:

  • The employee is subject to an individual or general Federal, State, or local quarantine or isolation order related to COVID-19. This includes an employee who is a member of a “vulnerable population” who is unable to work or telework due to recommendations in Order No. C19-05. For this purpose, vulnerable populations include people who are 1) 60 years old and older; 2) people with certain health conditions such as heart disease, lung disease, diabetes, kidney disease, and weakened immune systems; and, 3) people who are pregnant or were pregnant in the last two weeks.
  • The employee has been advised by a health care provider to self-quarantine.
  • The employee is experiencing symptoms associated with COVID-19 and seeking a medical diagnosis.
  • The employee is caring for a family member who is subject to an order as described above, has been advised by a health care provider or is experiencing COVID-19 symptoms.
  • The employee is caring for a family member whose normal school or place of care has been closed, or the care provider is unavailable, due to the public health emergency.
  • The employee is experiencing any other substantially similar condition specified by the Local Health Officer, or under Section 5102(a) (6) of the Families First Coronavirus Act, by the United States Secretary of Health and Human Services.

“Family member,” for this purpose, includes a child, grandchild, parent, grandparent, legal guardian or ward, sibling, or spouse or registered domestic partner. It also includes a designated person if the employee has no spouse or registered domestic partner.

Employers must post a notice immediately. It must be provided in a manner calculated to reach all employees, such as posting at a job site, sending electronically, and/or posting to web-based or app-based platforms.

The ordinance will expire on June 17, 2020, or the termination of the public health emergency, whichever occurs earlier. Also, the Board of Supervisors may take action to extend the ordinance beyond the sunset date.

Public Health Emergency Leave Ordinance »
Public Health Emergency Leave FAQs »
Public Health Emergency Leave Poster »


April 14, 2020

State Disability Insurance and Paid Family Leave Benefits Related to COVID-19

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The Department of Employment Development Department (EDD) has issued guidance in the form of frequently asked questions related to state benefits available to employees who are unable to work because of COVID-19. If an employee is unable to work because they are sick or have been exposed and have supporting medical documentation, they may be eligible for State Disability Insurance (SDI) benefits. If an employee is unable to work because they are caring for an ill or quarantined family member with COVID-19, they may be eligible for Paid Family Leave (PFL) benefits. Pursuant to Gov. Newsome’s executive order issued on March 12, 2020, the seven-day waiting period for SDI benefits is waived for this purpose.

As a reminder, SDI and PFL apply to all sized employers with employees working in California, whereas the paid leave provided under the FFCRA applies only to private employers with fewer than 500 employees and non-federal governmental employers of any size. If an employer is subject to both laws and an employee is eligible for paid leave under both state law and FFCRA, the guidance is not clear as to how they would coordinate. Existing guidance provides information on how typically SDI/PFL would pay first with any salary continuation from an employer paying second. The employee may not receive more than their normal wage and the employer will only be eligible for the tax credit on wages it paid under FFCRA (not for benefits the employee received under SDI or PFL).

EDD Guidance on COVID-19 Related SDI and PFL Benefits »
EDD Existing Guidance on Coordination of Benefits with SDI/PFL and Employer Payments »
Executive Order, March 12, 2020 »

Los Angeles Supplemental Paid Sick Leave Due to COVID-19

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On April 7, 2020, Mayor Garcetti issued a Public Order supplementing an ordinance passed by the L.A. City Council related to supplemental paid sick leave for workers affected by COVID-19. The ordinance applies to employers with 500 or more employees within the city of Los Angeles or 2,000 or more employees within the U.S. The following employers are exempt:

  • Employers who have an existing policy which provides 160 hours or more of paid leave annually
  • New businesses (other than construction) that started in the city (or relocated from outside the city) on or after September 4, 2019, through March 4, 2020
  • Any business that has been closed or inoperable for a period of 14 days or more due to a city official’s emergency COVID-19 order

An employee is eligible if they perform any work within the city of Los Angeles for the employer and has been employed with the same employer from February 3, 2020, through March 4, 2020. This includes a corporate officer, executive or temporary staffing worker. Eligible full-time employees may receive up to 80 hours of paid sick leave up to a daily max of $511. Part-time employees may receive paid sick leave based on the average number of hours and pay rate for a two-week period during the eligibility period. Certain emergency, health services and critical parcel delivery personnel are exempt.

To be eligible, an employee must not be able to work (including telework) and satisfy one of the following conditions:

  • The employee has been diagnosed withCOVID-19.
  • The employee has isolated or self-quarantined because of a requirement or recommendation of a public health official or health care provider.
  • The employee is at least 65 years old or has a health condition such as heart disease, asthma, lung disease, diabetes, kidney disease or weakened immune system.
  • The employee needs to care for a family member who is not sick but who public health officials or health care providers have required or recommended isolation or self-quarantine.
  • The employee needs to provide care for a family member whose senior care provider or whose school or child care provider caring for a child under the age of 18 temporarily ceases operations in response to a public health or other public official’s recommendation. This provision is only applicable to an employee who is unable to secure a reasonable alternative caregiver.

Importantly, an employer may not require a doctor’s note or other documentation from the employee. Additionally, if the employer has already provided paid sick leave to an employee for one of these reasons on or after March 4, 2020, the employer may reduce this amount from the maximum hours the employee would otherwise receive under this law.

Mayor’s Supplemental Paid Sick Leave Order »

San Jose Paid Sick Leave Related to COVID-19

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Effective April 7, 2020, the San Jose COVID-19 Paid Sick Leave Ordinance requires employers to provide paid sick leave to employees who are unable to work because of one of the following reasons:

  • The employee is subject to quarantine or isolation by federal, state or local order due to COVID-19.
  • The employee is caring for someone who is quarantined or isolated due to COVID-19.
  • The employee is advised by a health care provider to self-quarantine due to COVID-19 or is caring for someone who is so advised by a health-care provider.
  • The employee experiences symptoms of COVID-19 and is seeking medical diagnosis.
  • The employee is caring for a minor child because a school or daycare is closed due to COVID-19.

Employers who are subject to the paid leave requirements under the FFCRA are exempt. Employees are eligible only if they are considered essential workers and leave their residence to perform work. They must have worked for the employer for at least two weeks for the employer within the city of San Jose.

Eligible full-time employees may receive up to 80 hours of paid sick leave up to a daily max of $511. Part-time employees may receive paid sick leave based on the average number of hours and pay rate for a two-week period.

The ordinance sunsets on December 31, 2020.

San Jose Paid Sick Leave Ordinance »


March 31, 2020

New Notices Encouraging Carriers to Provide Prompt Services During COVID-19 Pandemic

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The Insurance Department recently published two new notices meant to encourage carriers to provide prompt services during the COVID-19 pandemic. The first, published on March 18, 2020, encourages insurance carriers to take steps necessary to maintain their ability to process and pay claims and provide other required customer services in a reasonable and timely manner. The second, published on March 20, 2020, provides additional background and guidance on “essential businesses” and insurance, which confirms that insurance is an essential business. The notice also encourages insurance carriers to continue providing as many core insurance functions as possible during the COVID-19 pandemic.

The notices contain no new employer obligations, but hopefully give employers confidence that California carriers will continue to operate as best they can during the COVID-19 pandemic, including processing and paying claims in a timely manner.

March 18, 2020 Notice »
March 20, 2020 Notice »

Notice Requesting Carriers Provide 60-day Grace Period for Insurance Premium Payments

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On March 18, 2020, the Insurance Department published a notice requesting insurance carriers to provide their insureds with at least a 60-day grace period to pay insurance premiums. The notice is meant to help employers (and others who have any type of insurance policy) so that insurance policies are not cancelled for nonpayment of premium during this challenging time of COVID-19. The notice also encourages all insurance agents, brokers and other licensees who accept payments on behalf of insurance carriers to take steps to ensure that customers have the ability to make prompt insurance payments. This should include allowing alternate methods of payment (such as online payments) to eliminate the need for in-person payment methods.

The notice contains no new requirements for employers. If an employer is in need of additional time to make a premium payment, the employer should reach out to their carrier.

Notice »

Covered California Announces Special Enrollment Window for All Californians

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On March 20, 2020, Covered California – California’s state health insurance exchange – announced that any uninsured Californian can enroll in Covered California health coverage through June 30, 2020. The new enrollment window is effective on March 20, 2020. Californians do not need a special enrollment event to enroll; the window is open for all Californians. The announcement also confirms that all medically necessary screening and testing for COVID-19 are free of charge, and that all health plans available through Medi-Cal and Covered California offer telehealth options.

For employers, the announcement does not bring new compliance obligations. However, if an employee wants to drop employer coverage because they intend to enroll in coverage through the exchange (Covered California), it may be a section 125 qualifying event (even if the employee remains eligible for the employer’s plan). So, employers should be aware of a potential qualifying event that would allow an employee (including a furloughed employee) to drop employer coverage if the employee intends to enroll in Covered California coverage (proof of actual enrollment is not necessary).

Covered California Announcement »

City of Emeryville Guidance on COVID-19 and the City’s Paid Sick Leave Law

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On March 17, 2020, the City of Emeryville published guidance on COVID-19 as it relates to Emeryville’s paid sick leave law. As background, Emeryville has a paid sick leave ordinance that requires employers to provide paid sick leave to all employees (including temporary and part-time employees) who perform work in the city for at least two hours per week.

Under the new guidance, Emeryville employers must allow covered employees to use accrued sick leave in five COVID-19-related situations. These include situations where the employee takes time off work because:

  • Public health officials or health care providers require or recommend an employee self-isolate or quarantine to prevent the spread of COVID-19
  • The employee falls within the definition of “vulnerable population” under state or official guidance
  • The employee’s business or a work location temporarily ceases operation in response to a public health or other public official’s recommendation
  • The employee needs to provide care for a family member who is not sick but who public health officials or health care providers have required or recommended isolate or quarantine
  • The employee needs to provide care for a family member whose school, childcare provider, senior care provider or work temporarily ceases operations in response to a public health or public official’s recommendation

Guidance  »
Emeryville Paid Sick Leave Ordinance FAQs »

City of San Francisco Announces Program to Fund COVID-19-Related Paid Sick Leave

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On March 16, 2020, the City of San Francisco announced a Workers and Families First Program to provide paid sick leave to private sector employees who have been impacted by the COVID-19 pandemic. The program will provide city financial assistance to businesses and nonprofits to provide additional sick leave time to employees, above and beyond their existing policies. All SF employers will be eligible, with up to 20% of the funds reserved for small businesses (those with 50 or fewer employees). SF will contribute up to one week (40 hours) at $15.59 per hour (minimum wage) per employee, or $623 per employee. The employer will pay the difference between the minimum wage and an employee’s full hourly wage.

The program is available only if the employee has exhausted their currently available sick leave, has exhausted or is not eligible for federal or state supplemental sick leave, and the employer agrees to extend sick leave beyond current benefits. The program is available for employees to use pursuant to SF’s Paid Sick Leave Ordinance, including when employees are sick, self-quarantined to prevent spread, caring for a sick family member, home because of a temporary work closure in response to a public official’s recommendation, or caring for a child who is home because of school or day care closures in response to a public official’s recommendation.

Announcement »

OLSE Guidance on Use of SF Paid Sick Leave During COVID-19 Pandemic

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On March 24, 2020, the City and County of San Francisco, via the Office of Labor Standards Enforcement (OLSE), published guidance regarding the use of San Francisco paid sick leave during the current COVID-19 pandemic. As background, the SF paid sick leave ordinance requires employers to provide paid sick leave to all employees (including temporary and part-time employees) who perform work in San Francisco.

With respect to employer verification of paid sick leave, the new guidance states that employers may not require a doctor’s note or other documentation for the use of paid sick leave during the duration of the COVID-19 pandemic. This is a temporary change from the normal rule that allows employers to require a doctor’s note or other documentation for the use of paid sick leave of more than three consecutive work days.

With respect to eligibility for paid sick leave, workers who have been laid off by their employer are no longer eligible for paid sick leave. In addition, employees whose hours are reduced or eliminated are not entitled to use accrued paid sick leave to account for such reductions/eliminations; but employees who remain scheduled to work may continue to use accrued paid sick leave for any qualifying reason for any portion of their scheduled hours they are unable to work.

With respect to eligibility, employers must allow covered employees to use accrued sick leave if the employee takes time off work because:

  • Public health officials or health care providers require or recommend an employee self-isolate or quarantine to prevent the spread of COVID-19
  • The employee falls within the definition of “vulnerable population” under state or official guidance (which, as of March 6, 2020, includes a person who is 60 years old or older or a person with a health condition such as heart or lung disease, diabetes, kidney disease, or weakened immune system)
  • The employee’s business or a work location temporarily ceases operation in response to a public health or other public official’s recommendation
  • The employee needs to provide care for a family member who is not sick but who public health officials or health care providers have required or recommended isolate or quarantine
  • The employee needs to provide care for a family member whose school, childcare provider, senior care provider or work temporarily ceases operations in response to a public health or public official’s recommendation

Employers with employees in San Francisco will want to review the guidance and work with counsel to develop appropriate leave policies that reflect the changes in paid sick leave requirements outlined by the new guidance.

OLSE Guidance »
SF Paid Sick Leave Ordinance Info »


March 17, 2020

Coverage for Coronavirus

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On March 5, 2020, the Department of Insurance published Bulletin 2020-2, which relates to coverage of screening and testing for the coronavirus (COVID-19). According to the bulletin, fully insured plans in California must immediately eliminate cost sharing (including but not limited to copayments, deductibles and coinsurance) for medically necessary screening and testing for COVID-19 and associated hospital, emergency department, urgent care and provider office visits where the purpose of the visit is to be screened and/or tested for COVID-19. The bulletin also reminds plans and administrators that California law requires emergency care without prior authorization, whether that care is at an in-network or out-of-network hospital.

The bulletin is directed towards carriers, but employers should be aware of these developments.

Bulletin 2020-2 »
Press Release »


January 22, 2020

Family, Medical, and Disability Leave Poster Revised

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The Department of Fair Employment and Housing (DFEH) has published a revised Family Care and Medical Leave and Pregnancy Disability Leave poster. The poster discusses an employee’s right to leave connected with certain medical and family incidents. All employers with 20 or more employees in California must post the notice in each location where there are employees.

The DFEH also revised the Rights and Obligations as a Pregnant Employee poster. The poster discusses an employee’s right to Pregnancy Disability Leave if certain conditions are met. All employers with five or more employees in California must post the notice in each location where there are employees.

Although not directly employee benefits related, the DFEH also revised posters related to workplace discrimination and harassment and transgender rights. For all posters, if 10% or more of the workforce speaks a language other than English, the notice must also be posted in that language(s).

DFEH Posters  »
DFEH Posting Requirements »

San Francisco HCSO Rates for 2020

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The San Francisco Health Care Security Ordinance (HCSO) requires covered employers to satisfy an employer spending requirement by making health care expenditures for their covered employees, among other reporting and notice requirements. The health care expenditure rate varies depending on the size of the employer and increases incrementally each year.

As of January 1, 2020, the health care expenditure rate for large employers with 100 or more employees increases to $3.08 per hour payable (up from $2.93 per hour in 2019). For medium-sized employers with 20 to 99 employees and for nonprofit employers with 50 to 99 employees, the expenditure rate will rise to $2.05 per hour payable (up from $1.95 per hour payable in 2018). Employers with fewer than 20 employees and nonprofit employers with fewer than 50 employees are exempt.

If an employee is a managerial, supervisorial, or confidential employee earning $104,761 per year ($50.37 per hour) or more, that employee is exempt from the HCSO. This represents an increase from last year’s threshold of $100,796 per year ($48.46/hour).

All covered employers are required to post the revised notice in all workplaces and job sites.

2020 HCSO Announcement »
2020 HCSO Poster »


November 26, 2019

Coverage for Standard Fertility Preservation Services

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On October 12, 2019, Gov. Newsom signed SB 600 into law. The new law requires insurers to provide coverage for standard fertility preservation services when a covered treatment may cause iatrogenic infertility for a participant. Iatrogenic infertility is defined as infertility caused indirectly or directly by surgery, chemotherapy, radiation, or other medical treatment. For example, if a participant with cancer has received chemotherapy, standard fertility preservation services would be a covered basic health care service and could not be declined as an infertility expense. The law is effective January 1, 2020.

SB 600 »

Cost-Sharing Limit for Air Ambulance Services

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On October 7, 2019, Gov. Newsom signed AB 651 into law. Effective for policies issued or renewed on or after January 1, 2020, participants shall pay no more than the in-network cost sharing amount for services received from a non-network air ambulance.

AB 651 »

Telemedicine Parity Required

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On October 13, 2019, Gov. Newsom signed AB 744 into law. Effective for policies issued or renewed on or after January 1, 2021, the insurer shall pay benefits for the diagnosis, consultation, or treatment provided through telehealth on the same terms as it pays for in-person services. This includes applying the same copayments, coinsurance, deductibles, and out-of-pocket maximums.

AB 744 »


October 29, 2019

FSA Notice Requirement

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On August 30, 2019, Gov. Newsome signed AB 1554 into law. The new law is effective January 1, 2020 and requires employers to provide notice to health FSA, dependent care FSA, and adoption assistance account participants if the deadline to submit claims is earlier than the end of the plan year.

The notice is not required to be distributed to all participants — only those whose coverage terminates mid-plan year and who have to submit their claims before the end of the plan year. In other words, they have an accelerated run-out period. For example, let’s say that under an employer’s plan design, participants who terminate employment mid-year have 90 days from termination to submit claims. That employer would need to send the notice to those participants. Alternatively, if the FSA permits mid-year terminated employees to submit claims all the way through the end of the plan year the notice would not apply to them.

The law itself is only three sentences. As of now, there is no model notice or language. The only requirement is for employers to notify the affected participants of the appropriate deadline to submit claims. Best practice would be to add the plan name, contact information for questions, and instructions for submitting claims to the notice.

Importantly, employers are required to provide the notice in two different forms. One may be electronic (email), but the second must be telephonic, by text message, through postal mail, or in person.

Lastly, there is some question as to whether the law would be preempted by federal law since a health FSA is governed by ERISA. However, this is not clear and employers should plan on complying in 2020 until further guidance is provided.

AB 1554 »


October 15, 2019

Extension of Paid Family Leave Benefits

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On June 27, 2019, Gov. Newsome signed AB 83 into law. Under existing law, eligible employees may receive up to six weeks of benefits under the state’s Paid Family Leave program for an absence from work following the birth (or placement) of a new child or due to care for a family member. Under the new law, the duration of benefits is extended from six weeks to eight weeks effective July 1, 2020.

SB 83 »

Expansion of Paid Family Leave Benefits

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On September 27, 2019, Gov. Newsome signed SB 1123 into law. Under existing law, eligible employees may receive benefits under the state’s Paid Family Leave program for an absence from work following the birth (or placement) of a new child or due to care for a family member. Under the new law, an employee will also be eligible for benefits for an absence from work in connection with a qualifying exigency related to the covered active duty or call to covered active duty of the employee’s spouse, domestic partner, child, or parent in the armed forces of the US. The new law is effective January 1, 2021.

SB 1123  »


October 1, 2019

CA Passes Law to Avoid Misclassification of Employees

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On September 18, 2019, Gov. Newsome signed AB 5 into law. The new law codifies the decision of the California Supreme Court in Dynamex Operations West, Inc. v. Superior Court of Los Angeles, 4 Cal.5th 903 (April 30, 2018). Prior to the ruling, the determination of whether an individual was an independent contractor or employee was based on a totality of facts analyzed through a multiple-factor standard. The Superior Court established a new three prong test, commonly known as the ABC test. Effective, January 1, 2020, AB 5 codifies these provisions into California law. (See our May 15, 2018 article in Compliance Corner for more information.)

California workers are presumed to be common law employees. They can only be classified as independent contractors if they satisfy all three of the following conditions:

  • The worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of such work and in facts
  • The worker performs work that is outside the usual course of the hiring entity's business
  • The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.

The law provides many exemptions from the requirement, including the following:

  • California licensed insurance agents
  • Physicians, surgeons, dentists, podiatrists, psychologists, or veterinarians performing professional or medical services
  • Lawyers, architects, engineers, private investigators, or accountants who have an active California license
  • Securities broker-dealers or investment advisers or their agents and representatives that are registered with the Securities and Exchange Commission or the Financial Industry Regulatory Authority or licensed by the State of California
  • Direct salespeople
  • Commercial fishermen working on American vessels

The previous multi-factor test will still apply to certain professional services contracts where the worker meets the following conditions. Professional services includes marketing, human resources, graphic design, travel agency, grant writer, photographer, freelance writer, and licensed manicurist. The worker must:

  • Maintain a business location separate from the hiring entity’s location, which may be the worker’s residence
  • Have a business license, in addition to any required professional licenses (effective July 1, 2020)
  • Have the ability to set or negotiate their own rates
  • Have the ability to set their own hours
  • Have contracts with other hiring entities or hold themselves out to other potential customers
  • Customarily and regularly exercise discretion and independent judgment in performance of services

The stated purpose of the law is to reduce the harm caused to misclassified workers who miss out on payment of payroll taxes, workers compensation coverage, Social Security contributions, unemployment insurance, and state mandated disability insurance. Thus, the law doesn’t directly change eligibility for group health plan coverage under ERISA or the ACA’s employer mandate. However, an employer will need to carefully consider the classification of a worker as an independent contractor or a common law employee.

The employer mandate requires large employers (those with 50 or more full-time employees, including equivalents) to offer minimum value, affordable coverage to common law employees working 30 hours or more per week. If an independent contractor will be reclassified as a common law employee, the large employer will likely need to offer them coverage if the employee is working full-time hours. Otherwise, the employer could be at risk for a penalty under the employer mandate. Depending on the percentage of affected workers, the employer could be at risk for the more costly Penalty A for failure to offer coverage to substantially all full-time employees (95%).

An employer who wishes to review their employee classifications should contact outside counsel. If workers are found to be misclassified, there may be previous tax liability and filings to be addressed as well as future benefit offerings and labor law protections.

AB 5 »


September 4, 2019

State Individual Mandate

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On June 28, 2019, Gov. Newsom signed SB 78 into law, establishing a state individual mandate, effective January 1, 2020. This state-based individual mandate will require California residents to maintain minimum essential coverage or pay a penalty, beginning in 2020. In an effort to address health insurance affordability issues, the law also offers subsidies to individuals and families with income between 400% and 600% of the federal poverty level. Currently, only individuals and families with income between 100% and 400% are eligible for federal government subsidies for purchasing health insurance through Healthcare.gov or a state-exchange.

It is important to remember that large employers who are subject to the employer mandate are at risk for a penalty if a full-time employee purchases an individual policy through the exchange and receives a premium tax credit from the federal government to subsidize their premiums. If an employee receives premium assistance through the state of California because their income is between 400% and 600% of the federal poverty level, this should not trigger a penalty for the employer.

This new mandate was enacted in response to the effective elimination of the federal individual mandate penalty under the ACA. The ACA’s individual mandate penalty was reduced to zero under the Tax Cuts and Jobs Act, beginning in 2019.

Insurers and self-insured employers will need to report coverage information to the California Franchise Tax Board beginning in January 2021 for coverage year 2020. The law states that it will be the same information that is required on Form 1095-C. So, it may be possible that the forms will be submitted to California as well as the IRS. This will be determined in future regulations.

SB 78 »

Revised Definition of Domestic Partner

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On July 30, 2019, Gov. Newsome signed AB 30 into law, revising the definition of a domestic partner in California.

Previously, to register as a domestic partnership in California, the couple must meet all of the following criteria:

  • Both are capable of consenting to the partnership.
  • Neither is married.
  • Neither is a party to another partnership.
  • Both are at least 18 years of age. An individual younger than 18 may register as a domestic partner with a court order and parental permission.
  • Both must be of the same sex (opposite sex couples may register if at least one is over the age of 62).

It is this last requirement that has changed. Effective immediately, individuals of the opposite sex are now permitted to register as domestic partners, without regard to one being over the age of 62.

As a reminder, any group insurance policy covering a California resident must provide coverage for registered domestic partners in California. This applies regardless of where the fully insured policy is issued. Coverage provided to domestic partners must be on the same terms and conditions as that offered to spouses. The cost of coverage for a registered domestic partner would not be subject to state taxation. However, the federal government does not recognize domestic partners. Thus, if the partner is not a tax dependent, the cost of coverage would be subject to federal taxation. If an employer does not request relationship documentation (such as a marriage certificate) from married employees, it should not make a domestic partner’s coverage contingent upon submission of evidence of the domestic partnership.

Employers should work with outside counsel to revise plan documentation to reflect the change.

SB 30 »


July 23, 2019

Employers Required to Provide Retirement Plan

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Beginning June 30, 2020, employers with more than 100 employees will be required to offer employees a qualified retirement plan (such as a 401(k)) or participate in the state-run retirement savings program known as CalSavers. The requirement applies to employers with 51 to 100 employees on June 30, 2021 and to employers with five or more employees on June 30, 2022. For these purposes, employer size is based on the number of California-based employees reported on the Employment Development Department quarterly report.

Before the applicable deadline, employers must sponsor a qualified retirement plan or register with CalSavers. Under CalSavers, an employer must automatically enroll eligible employees in the retirement program with a contribution of at least 3% of earnings. New employees must be enrolled within 30 days of employment. Employees may choose to opt out of the program.

If an employer fails to comply for up to 90 days, a penalty of $250 per employee could be assessed against the employer. If noncompliance continues, the per-employee penalty could increase to $500.

CalSavers registration opened on July 1, 2019. Interested employers may register earlier than the required deadline.

CalSavers, Employer Resources »


April 16, 2019

Oakland Minimum Wage Ordinance for Hotel Workers

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In November 2018, voters in Oakland approved a ballot measure entitled “Oakland Minimum Wage Charter Amendment.” Oakland hotels with 50 or more rooms must pay workers a certain wage based on whether the employee receives health benefits from the employer. Those employees who receive health benefits must be paid at least $15 per hour. Those who do not receive health benefits must be paid at least $20 per hour.

The requirement is effective July 1, 2019, and applies to any person who leases, owns, or sublets an operation in a covered hotel. Thus, a restaurant or retail space located within a covered hotel will likely also need to comply. Employees covered by the new law are those working five hours or more for four weeks.

In addition to the minimum wage requirement, the covered hotels must also implement procedures to protect employees from threatening behavior, limit the workload for housekeeping staff, and comply with the city’s paid sick leave requirement.

The Oakland Department of Workplace and Employment Standards is expected to issue guidance and regulations. There are many unanswered questions at this time such as how the term “health benefits” will be defined and when the department will enforce the law. For now, it appears that the department may not begin enforcement until July 2020.

Oakland Minimum Wage Charter Amendment »


February 21, 2019

Drug Formulary Limitations

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Recently enacted SB 1021 prohibits a drug formulary maintained by a health insurer or health care service plan from containing more than four tiers effective Jan. 1, 2019. Additionally, the new law requires health insurance policies and contracts to cover combination antiviral drug treatments that are medically necessary for the prevention of AIDS/HIV, effective Jan. 1, 2019 until Jan. 1, 2023. Existing law already requires such coverage for the treatment of AIDS/HIV.

Finally, the bill also extends the following existing laws until Jan. 1, 2024. They previously would have expired Jan. 1, 2020:

  • The drug formulary for outpatient prescriptions of a health insurer or health care service plan cannot discourage the enrollment of or reduce benefits for individuals with particular health conditions.
  • The copayment, coinsurance or other form of cost sharing for a covered outpatient prescription drug can generally not exceed $250 for a 30-day supply with limited exceptions. This provision does not apply to a qualified HDHP until the deductible has been met.

Plan sponsors should consider these requirements and work with their insurer to make any necessary changes to their drug formulary.

SB 1021 »
EDD Announcement »


November 13, 2018

SDI and PFL Benefits Revised for 2019

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The CA Employment Development Department (EDD) recently announced that the 2019 employee contribution rate for State Disability Insurance (SDI) will remain at 1.0 percent. The taxable wage base from which the contributions will be taken will increase from $114,967 for calendar year 2018 to $118,371 in 2019. The maximum weekly benefit increases from $1,216 to $1,252.

EDD Announcement »

Limit on Prescription Costs

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On Sept. 26, 2018, Gov. Brown signed AB 2863 into law. The new law, effective Jan. 1, 2019, limits the amount that a health plan participant will pay for a covered prescription at the point of sale at the pharmacy. Specifically, a participant will pay the applicable cost-sharing amount (copayment or coinsurance) or the retail price, whichever is less. A participant cannot be required to pay a cost-sharing amount that exceeds the retail price.

AB 2863 »

San Francisco HCSO Rates for 2019

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The San Francisco Health Care Security Ordinance (HCSO) requires covered employers to satisfy an employer spending requirement by making health care expenditures for their covered employees, among other reporting and notice requirements. The health care expenditure rate varies depending on the size of the employer and increases incrementally each year.

As of Jan. 1, 2019, the health care expenditure rate for large employers with 100 or more employees increases to $2.93 per hour payable (up from $2.83 per hour in 2018). For medium-sized employers with 20 to 99 employees and for nonprofit employers with 50 to 99 employees, the expenditure rate will rise to $1.95 per hour payable (up from $1.89 per hour payable in 2018). Employers with fewer than 20 employees and nonprofit employers with fewer than 50 employees are exempt.

If an employee is a managerial, supervisorial or confidential employee earning $100,796 per year ($48.46 per hour) or more, that employee is exempt from the HCSO. This represents an increase from last year’s threshold of $97,693 per year ($46.97/hour).

All covered employers are required to post the revised notice by Jan. 1, 2019, in all workplaces and job sites. The revised notice is not yet available. Please look for it in a future edition of Compliance Corner.

2019 HCSO Announcement »

Coverage for Oral Anti-Cancer Medications Revised

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Under current law, group health plans that provide coverage for prescribed, orally administered anti-cancer medications cannot impose a cost sharing amount greater than $200 for a 30-day supply for such medication. On Sept. 17, 2018, Gov. Brown signed AB 1860 into law, which increases the permissible cost sharing limit to $250. The law is effective Jan. 1, 2019 and will expire Jan. 1, 2024 unless further legislative action is taken.

AB 1860 »


July 24, 2018

San Francisco Paid Sick Leave Ordinance Revised

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On May 7, 2018, the San Francisco Office of Labor Standards Enforcement (OLSE) published revised rules related to the Paid Sick Leave Ordinance. As a reminder, the ordinance, which has been in place since 2007, requires San Francisco employers to provide paid sick leave to all employees working in San Francisco, including part-time employees, temporary employees and undocumented immigrant employees.

Employees must accrue at least one hour of paid sick leave for every 30 hours worked. Accrual begins after the first 90 days of employment. If the employer has fewer than 10 employees, maximum accrual is 40 hours. Maximum accrual for larger employers is 72 hours. Accrued time rolls over from year to year; however, hours in excess of the total allowed for employers of each size are forfeited. To determine the number of employees, the employer must count all employees, not just the ones who work in San Francisco.

Under the new rules, an employer may not require a doctor’s note or other documentation for the use of paid sick leave of three or fewer consecutive work days. This practice is considered unreasonable with two noted exceptions:

  1. An employer may request documentation to verify an employee’s absences when there’s a pattern or clear instance of abuse, even in absences of three or fewer days.
  2. Further, an employer may request documentation when an employee’s use of paid sick leave is used to attend an appointment.

The new rules clarify treatment of an employee who terminates employment prior to completion of the 90-day waiting period. If that employee returns to employment with the employer within one year, all prior days of employment shall count toward the employee’s new waiting period.

The ordinance applies to employees who perform work in San Francisco, including working from home. The new rules clarify that the ordinance only applies to employees who perform at least 56 hours of work in San Francisco within a calendar year. If an employee stops in the city for pickups or deliveries, all hours worked in the city are covered by the ordinance, including travel time between stops.

In regards to employer size, the OLSE has clarified that an employer’s size is based on the average number of employees in the previous calendar year. For new employers, their size will be based on the number of employees in the employer’s first 90 days.

Under the new rules, an exempt employee’s accrual is based on 40 hours worked per week unless evidence shows that the employee’s regular work week is less than 40 hours.

If the OLSE determines that an employer has failed to comply with the ordinance, they will send the employer a Notice of Preliminary Determination. The employer will have 15 days to pay the amount due or appeal the determination by requesting an OLSE Review Meeting. If the failure is related to retaliation, the employer will only have seven days to respond. The penalty for noncompliance is the dollar amount of paid sick leave owed to the employees multiplied by three or $250, whichever is greater. The penalty for retaliation is $50 per day per affected employee. Additionally, the OLSE may charge the employee up to $50 per day per impacted employee to compensate the city for its investigation costs.

The new rules were effective June 7, 2018.

Paid Sick Leave Revised Rules »


May 15, 2018

Supreme Court Rules in Independent Contractor Misclassification Case

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On April 30, the California Supreme Court issued a ruling in Dynamex Operations West, Inc. v. Superior Court related to the classification of workers as independent contractors or common law employees.

The court’s ruling emphasized the importance of the issue by stating that misclassification results in a financial burden to workers and loss of labor law protections. Further, the court stated that employers who misclassify workers as independent contractors have an unfair competitive advantage over other employers, since they don’t have the cost of complying with any of the following:

  • Federal and state labor laws
  • Federal Social Security and payroll taxes
  • Unemployment insurance and state employment taxes
  • Workers’ compensation insurance requirements

The case involved drivers for a package and document delivery company. In 2004, Dynamex adopted a policy in which all delivery drivers were classified as independent contractors. Dynamex obtained the customers, set the delivery rates and determined the delivery assignments. The drivers were permitted to set their own schedules but had to inform Dynamex of the days they intended to work. The drivers were permitted to hire assistants but had to pay for the assistants themselves. The drivers had to provide their own vehicles and pay for transportation costs (fuel, tolls, vehicle maintenance and vehicle insurance). The drivers were required to purchase and wear Dynamex uniforms. In some cases, the drivers were required to attach Dynamex logos to their vehicle.

The Supreme Court ruled that the drivers were misclassified and were, in fact, common law employees. The determination was based on the following three-prong test. Importantly, this ruling establishes a new standard for employers when determining whether workers are independent contractors or employees. In the past, the determination was based on a totality of facts analyzed through a multiple-factor standard. Under the new test, workers are presumed to be common law employees. They can only be classified as independent contractors if they satisfy all three of the following conditions:

  1. That the worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of such work
  2. That the worker performs work that’s outside the usual course of the hiring entity’s business
  3. That the worker is customarily engaged in an independently established trade, occupation or business of the same nature as the work performed for the hiring entity

Importantly, the ruling specifically only applies for purposes of California wage orders (minimum wage, maximum hours, meal and rest breaks). It doesn’t directly apply to eligibility for group health plan coverage under ERISA and the ACA’s employer mandate. However, an employer will need to carefully consider the consequences of reclassifying a worker from an independent contractor to a common law employee. The employer mandate requires large employers (those with 50 or more full-time employees, including equivalents) to offer minimum value, affordable coverage to common law employees working 30 hours or more per week. If an employee has been reclassified as a common law employee, the employer will likely need to offer them coverage if they’re working full-time hours. Otherwise, the employer could be at risk for a penalty under the employer mandate. Depending on the percentage of affected workers, the employer could be at risk for the more costly Penalty A for failure to offer coverage to substantially all full-time employees (95 percent).

An employer who wishes to review their employee classifications should contact outside counsel. If workers are found to be misclassified, there may be previous tax liability and filings to be addressed as well as future benefit offerings and labor law protections.

Dynamex Operations West, Inc. v. Superior Court »

April 17, 2018

San Francisco: Employer Annual Reporting Due

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Employers who are subject to the San Francisco Health Care Security Ordinance (HCSO) or the Fair Chance Ordinance must submit the 2017 Employer Annual Reporting Form by April 30, 2018.

The HCSO applies to employers with 20 or more total employees worldwide and at least one employee who performs work within the city or county of San Francisco. The ordinance requires the employer to meet a certain spending threshold for each San Francisco employee related to health care. Employers must report the number of employees covered by the ordinance per quarter in 2017 and detail the health care expenditures made each quarter (payments for health insurance, contributions to the City Option or irrevocable expenditures to a reimbursement account).

The Fair Chance Ordinance applies to employers who have 20 or more total employees worldwide and at least one employee who performs work within the city or county of San Francisco. Additionally, employers who have a service contract with the City of San Francisco are also subject to the ordinance, regardless of the number of employees. The ordinance prohibits employers from asking about arrest or conviction records on a job application. Employers must report whether their employment application in San Francisco asks about arrest or conviction information; and whether they conducted background checks on conviction or arrest records before a live interview (including telephonic).

Failure to comply with the annual reporting may result in a penalty of $500 per quarter assessed against the employer.

Reporting Form »
Reporting Instructions »

December 12, 2017

State Disability Insurance and Paid Family Leave Benefits Revised for 2018

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As a reminder, benefits payable under California State Disability Insurance (SDI) and Paid Family Leave (PFL) are scheduled to increase effective Jan. 1, 2018. The changes are a result of AB 908, which Gov. Brown signed into law back in April 2016.

Under current law, eligible workers receive up to 55 percent of wages under SDI and PFL. However, under the new law, benefits vary based on whether the worker’s normal earnings are above or below the state’s average weekly wage. If an employee earns less than 33.3 percent of the state's average weekly wage ($1,120.67), the employee’s benefit will be 70 percent of normal earnings. Alternatively, if an employee earns at least 33.3 percent of the state's average weekly wage, that employee’s benefit will be 60 percent of normal earnings or 23.3 percent of the state average weekly wage, whichever is greater.

Also effective Jan. 1, 2018, the seven-day waiting period under PFL is eliminated.

Additionally, the California Employment Development Department (EDD) recently announced that the 2018 employee contribution rate for SDI will increase to 1.0 percent from 0.9 percent. The taxable wage base from which the contributions will be taken will increase from $110,902 for calendar year 2017 to $114,967 in 2018. The maximum weekly benefit increases from $1,173 to $1,216.

EDD Announcement »
AB 908 »

San Francisco HCSO Rates for 2018

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The San Francisco Health Care Security Ordinance (HCSO) requires covered employers to satisfy an employer spending requirement by making health care expenditures for their covered employees, among other reporting and notice requirements. For more information on what constitutes covered employers/covered employees, please visit the San Francisco HCSO website link below.

The health care expenditure rate varies depending on the size of the employer and increases incrementally each year. As of Jan. 1, 2018, the health care expenditure rate for large employers with 100 or more employees increases to $2.83 per hour payable (up from $2.64 per hour in 2017). For medium-sized employers with 20 to 99 employees and for nonprofit employers with 50 to 99 employees, the expenditure rate will rise to $1.89 per hour payable (up from $1.76 per hour payable in 2017). Employers with fewer than 20 employees and nonprofit employers with fewer than 50 employees are exempt.

If an employee is a managerial, supervisorial or confidential employee earning $97,693 per year ($46.97 per hour) or more, that employee is exempt from the HCSO. This represents an increase from last year’s threshold of $95,101 per year ($45.72/hour).

All covered employers are required to post the new notice by Jan. 1, 2018, in all workplaces and job sites.

HCSO 2018 Rates »
HCSO 2018 Poster »

November 14, 2017

Lead Poisoning Screening

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On Oct. 5, 2017, Gov. Brown signed AB 1316 into law. The new law adds blood lead level screening as a preventive care service for which a health insurer must provide coverage. Specifically, health insurance policies issued on or after Jan. 1, 2018, must provide such coverage for children age 18 and younger who are at risk for lead poisoning when the screening is prescribed by a physician or surgeon affiliated with the plan.

This new law doesn’t contain any new employer compliance obligations. However, California employers will want to be aware of the changes to the insurance laws in California should employees have questions regarding health insurance coverage.

AB 1316 »

October 17, 2017

Law Mandates Prescription Drug Price Transparency

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On Oct. 9, 2017, Gov. Brown signed SB 17 into law. This new legislation generally requires prior notice of prescription drug rate increases and better understanding of prescription drug costs for health plans and insurers.

Specifically, this law requires pharmaceutical companies to notify health insurers and issuers at least 60 days prior to the effective date of a price increase that exceeds 16 percent over a two-year period. This requirement will apply to prescription drugs that have a wholesale price of at least $40 for the course of therapy.

Manufacturers must also provide information to justify drug price increases, such as factors that lead to such a decision and documentation of increased clinical effectiveness (if any). Health plans and insurers must also annually report the 25 most frequently prescribed medications, the 25 most expensive drugs by total annual spending and the 25 drugs with the highest year over year increase in total annual spending. Lastly, regulators must assemble this data to create a consumer-friendly report that illustrates the overall impact of drug costs on health care premiums.

No employer action is required, but employers in California should be aware of this legislation’s effects on group health plans. This law becomes effective on Jan. 1, 2019.

SB 17 »
SB 17 Fact Sheet »

Small Employers Required to Provide Unpaid Leave for Baby Bonding

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On Oct. 12, 2017, Gov. Brown signed SB 63 (the New Parent Leave Act) into law. This law will require certain employers to provide 12 weeks of protected, unpaid leave for parents to bond with a new child within one year of birth, adoption or foster care placement.

This law applies to employers with 20 to 49 employees within a 75-mile radius of one another. To be eligible for parental bonding leave, an employee must have at least 12 months of service and 1,250 hours of service during the 12-month period prior to the beginning of the leave.

Employers must maintain and pay for the employee’s group health plan coverage at the same level and conditions as if the employee were still an active employee. It also protects the employee from discrimination, refusal to hire, termination, retaliation or any other prohibited action for exercising their right to parental leave. However, employers subject to the New Parent Leave Act may recover their portion of the premium if the employee fails to return to work once the leave is exhausted and the failure to return to work is not due to the continuation, reoccurrence or onset of a serious health condition, or “other circumstances beyond the control of the employee.” Further, upon funding from the legislature, the Act also provides for the creation of a two-year pilot mediation program, which aims to quell the impact of civil litigation on small employers by requiring mediation before an employee could file a civil suit.

Therefore, small employers in California should determine whether they are subject to the New Parent Leave Act and update leave policies, forms and procedures to ensure compliance with this law. Because the law impacts other employment law issues, outside counsel is the best option to assist employers with questions and policy drafting and amendments. This law is effective Jan. 1, 2018.

SB 63 »

May 31, 2017

Amendments Made to California State-Based SHOP Regulations

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On April 17, 2017, the California Office of Administrative Law approved emergency amendments to three sections of Title 10 of the California Code of Regulations (Sections 6520, 6522 and 6528). These regulations establish standards and processes for small employers to qualify for and enroll in the state-based Small Business Health Options Program (SHOP). These amendments were made as a result of updates to state and federal law, and also to streamline processes and improve language clarity.

The first amendment includes a new requirement that employers disclose any contributions to employees’ group dental premiums when applying for SHOP coverage. The second adds criteria specifically for SHOP group dental plan eligibility. The third clarifies that a new employee’s waiting period is calculated as of the eligibility date, regardless of when the employer actually notifies the SHOP.

Thus, employers wishing to enroll in California SHOP coverage should make note of these changes and include any newly applicable information. These amendments are effective as of April 17, 2017, and will expire on Oct. 1, 2018.

Emergency Readoption Action »

May 16, 2017

Labor Commissioner’s Office Releases New Paid Sick Leave FAQs

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On March 29, 2017, the California Department of Industrial Relations Labor Commissioner’s Office issued frequently asked questions (FAQs) to address the statewide paid sick leave law and its interaction with “grandfathered” paid time off (PTO) and attendance policies (those in existence prior to July 1, 2015).

As background, the California State Paid Sick Leave law, which went into effect on July 1, 2015, requires that eligible employees must accrue at least one hour of paid sick leave for every 30 hours worked starting from the date of hire. Employees may use paid sick leave for the purpose of diagnosis, treatment or care of an existing health condition, preventive care for an employee or family member, or leave due to being the victim of domestic violence, sexual assault or stalking. There is also a poster requirement for applicable employers.

The new FAQs address three common questions received from employers with pre-existing PTO policies. The first FAQ confirms that if an existing PTO policy provides adequate or more generous paid sick leave than mandated by the law, then the employer is permitted to continue providing the same PTO plan. The second FAQ verifies that the prescribed rate of pay calculation methods to be used for paid sick leave are not applicable to any other types of leave. The third FAQ generally says that employers are prohibited from disciplining an employee for taking any earned, unused paid sick leave (i.e., blanket penalties for unscheduled absences/tardiness may be prohibited).

Therefore, applicable employers should ensure any pre-existing PTO and attendance policies are in line with the new FAQs and the state’s mandated paid sick leave law. Employers may want to work with outside counsel to incorporate any employment or labor law issues, both at the state and federal levels, with respect to leaves of absence.

California Paid Sick Leave FAQs »

April 4, 2017

Los Angeles: Sick Leave Law Revised

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Like many other California cities, Los Angeles implemented its own sick leave ordinance. The ordinance requires employers to provide paid sick leave to employees who work 2 hours or more per week in the city of Los Angeles. There is a staggered effective date based on employer size. Employers with 26 or more employees were subject to the ordinance July 1, 2016; and employers with fewer than 26 employees must comply starting July 1, 2017.

For every 30 hours work, an employee accrues 1 hour of sick leave. When using this method, the employer may impose a maximum leave bank balance of 72 hours. As an alternative to the accrual method, the employer may provide 48 hours of paid sick leave as a lump sum. Under transition relief, large employers may have complied by front loading only 24 hours for July 1 through Dec. 31, 2016. New employees begin accruing on the date of hire, but cannot use the sick leave until after 90 days of employment.

Employees may use the sick leave for their own sickness or that of a family member or closely associated individual who has the equivalence of a family relationship.

On March 14, 2017, the City of Los Angeles Office of Wage Standards (OWS) revised the paid sick leave requirements and guidance. Below are a summary of the most pertinent provisions.

  • An employer’s size is based on the number of covered employees working in Los Angeles. For businesses in operation prior to Jan. 1, 2016, size is based on 2015 data. On the other hand, for businesses in operation on or after Jan. 1, 2016, size is based on the first pay period data.
  • Small employers wishing to use the front load method may comply by providing a lump sum of 24 hours of paid sick leave for the period of July 1, 2017, through Dec. 31, 2017.
  • If an employer’s policy does not fully comply with the ordinance, but is overall more generous to employees, the employer may file for approval.
  • Leave balances rollover to the next year.

Employers with existing paid leave policies are not required to provide additional leave if their existing practices comply with the ordinance. However, employers should carefully review to make sure that all aspects are in compliance, specifically providing paid sick leave to temporary and part-time employees if they work 2 hours or more in a week.

OWS, Paid Sick Leave FAQs »

OWS, Paid Sick Leave Revised Regulations »

San Francisco: Employer Annual Reporting Due

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Employers who are subject to the San Francisco Health Care Security Ordinance or the Fair Chance Ordinance must submit the 2016 Employer Annual Reporting Form by May 1, 2017.

The Health Care Security Ordinance applies to employers with 20 or more total employees worldwide and at least one employee who performs work within the city or county of San Francisco. The ordinance requires the employer to meet a certain spending threshold for each San Francisco employee related to health care.

The Fair Chance Ordinance applies to employers who have 20 or more total employees worldwide and at least one employee who performs work within the city or county of San Francisco. Additionally, employers who have a service contract with the city of San Francisco are also subject to the ordinance, regardless of the number of employees. The ordinance prohibits employers from asking about arrest or conviction records on a job application.

The 2016 online form and instructions are now available. Failure to comply with the annual reporting may result in a penalty of $500 per quarter assessed against the employer.

Reporting Form

Reporting Instructions

February 22, 2017

New Ordinance Mandates Paid Parental Leave for San Francisco Employees

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On April 21, 2016, Mayor Lee signed the San Francisco Paid Paternal Leave Ordinance (SF PPLO) into law. The ordinance will enhance the California Paid Family Leave (CA PFL) program by supplementing compensation available to covered employees who take time off to bond with a new child. Under the current CA PFL law, California workers may receive 55 percent of their wages for up to six weeks (set to increase to 60 or 70 percent in 2018, depending on income).

However, effective Jan. 1, 2017, the SF PPLO requires covered employers (as defined by the San Francisco Police Code) with 50 or more total employees to provide the balance remaining after the CA PFL so that the covered employee’s compensation equals 100 percent. Further, a phase in schedule requires covered employers with 35 or more employees to comply by July 1, 2017 and those with 20 or more employees to comply by Jan. 1, 2018.

The SF PPLO defines a “covered employee” (i.e., one who is eligible for additional compensation) as one who meets all of the following criteria:

  • Began employment at least 180 days before start of the leave period
  • Performed a minimum of 8 hours per week for the employer located in San Francisco
  • At least 40 percent of weekly hours worked for the employer were in San Francisco; and
  • Eligible to receive CA PFL compensation for purposes of bonding with a new child

In addition, covered San Francisco employers have a new SF PPLO poster requirement, compensation calculation instructions and a specific leave form that employees must complete in order to receive additional compensation. The San Francisco Office of Labor Standards Enforcement is responsible for enforcing the employer requirements of the PPLO.

San Francisco Paid Paternal Leave Ordinance »
PPLO Final Rule »
PPLO Supplemental Compensation Calculation Instructions »
PPLO FAQs »
PPLO Poster »

January 24, 2017

State Disability Rates Revised for 2017

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The California Employment Development Department (EDD) recently announced that the 2017 employee contribution rate for State Disability Insurance will remain at 0.9 percent. The taxable wage base from which the contributions will be taken will increase from $106,742 to $110,902 for calendar year 2017 and the maximum amount to withhold for each employee will be $998.12.

For claims beginning on or after Jan. 1, 2017, weekly benefits range from $50 to a maximum of $1,173. To qualify for the maximum weekly benefit amount ($1,173) an individual must earn at least $26,070.92 in a calendar quarter during the base period.

Lastly, effective Jan. 1, 2017, the tax rate for employers, partners and self-employed individuals who choose coverage in California's temporary disability insurance program is 4.55 percent.

Disability Insurance and Paid Family Leave Benefit Amounts »
Rates, Withholding Schedules and Meals and Lodging Values »


San Francisco HCSO Health Care Expenditure Rates Increased for 2017

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The San Francisco Health Care Security Ordinance (HCSO) requires covered employers to satisfy an employer spending requirement by making health care expenditures for their covered employees, among other reporting and notice requirements. For more information on what constitutes covered employers/covered employees, please visit the San Francisco HCSO website link below.

The health care expenditure rate varies depending on the size of the employer and increases incrementally each year. As of Jan. 1, 2017, the health care expenditure rate for large employers with 100 or more employees increases to $2.64 per hour payable (up from $2.53 per hour in 2016). For medium-sized employers with 20 to 99 employees, the expenditure rate will rise to $1.76 per hour payable (up from $1.68 per hour payable in 2016).

In addition, beginning Jan. 1, 2017, the city of San Francisco now requires that 100 percent of the required amount of health care expenditures for each covered employee be made as irrevocable expenditures. An irrevocable health care expenditure is a health care expenditure that has not been retained by and cannot at any time be recovered by or returned to the employer. Importantly, an irrevocable expenditure now also includes all employer contributions to HRAs. For more information on what constitutes an irrevocable expenditure, please visit the HCSO website link below.

Finally, all covered employers are required by the HCSO to post an official notice regarding the HCSO in a conspicuous place at any workplace or job site where any covered employee works. The HCSO has released the updated 2017 Official OLSE Notice. The San Francisco Office of Labor Standards Enforcement (OLSE) is responsible for enforcing the employer requirements of the HCSO. Covered employers should ensure the revised version of the notice is displayed at applicable job sites. A copy of the new 2017 Notice can be found below.

2017 San Francisco HCSO Overview and Rates »
2017 San Francisco HCSO FAQs on Health Care Expenditures »
HCSO 2017 Official OLSE Notice »

January 10, 2017

New Law Mandates Paid Sick Leave for Santa Monica Employees

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The Santa Monica City Council recently adopted new sick pay leave provisions under the City’s Minimum Wage law. This ordinance both raises the city’s minimum wage and provides additional paid sick leave benefits to employees (in addition to the 24 hours of paid sick leave required under California state law).

Effective Jan. 1, 2017, the city ordinance requires employers to provide employees with one hour of paid sick leave for every 30 hours worked. Small employers with 25 or less employees are required to provide employees with at least 32 hours of leave, and large employers with 26 or more employees must provide at least 40 hours of leave. As of Jan. 1, 2018, accrual limits will increase to 40 hours for small employers and to 72 hours for large employers.

Employees can roll over any sick time earned up to the employer’s accrual limits (i.e., 32, 40, or 72 hours). New employees can use accrued sick leave after the first 90 days of employment. However, employers may be more generous by allowing earlier sick time usage, or may front load sick leave hours at the beginning of the calendar, fiscal or anniversary year. Additionally, if an employee terminates, employers are not required to pay the individual for any unused sick leave hours.

Certain employer posters are required. Employers must comply with the new law starting on July 1, 2017.

City of Santa Monica Press Release »
Santa Monica City Ordinance »
City of Santa Monica Fact Sheet »
City of Santa Monica Required Posters »

October 4, 2016

Out-Of-Network Coverage and Cost-Sharing

On Sept. 23, 2016, Gov. Brown signed AB 72 into law. This new legislation amends the California Health & Safety Code to address reimbursement for out of network (OON) providers who provide services at in-network facilities. California joins several other states, including New York, Connecticut and Florida, which offer consumers protections against surprise OON bills, as well as a process for providers and insurers to resolve payment disputes for OON care.

The legislation provides that if an insured receives services covered by his/her health plan by an OON provider at an in-network facility, the insured is only obligated to pay the OON provider the cost sharing amount that he/she would otherwise be obligated to pay had the same covered service been provided by an in-network provider. In addition, the OON provider is prohibited from billing or collecting any amount beyond the insured’s cost sharing obligation, unless the insured has a plan that includes an OON benefit and the insured consents in writing to receive services from the OON provider at least 24 hours in advance of the episode of care. At the time consent is provided, the OON provider must give the insured a written estimate of his/her total out-of-pocket cost of care.

A health plan must pay an OON provider who provides covered services to an insured at an in-network facility the greater of the average contracted rate or 125 percent of the amount Medicare reimburses for the same or similar service. Payment made by the plan to the OON provider will constitute payment in full unless either party uses the independent dispute resolution process or other means to resolve the dispute. The Department of Managed Health Care will establish a new independent dispute resolution process for resolving payment disputes between OON providers and payers.

AB 72 is effective July 1, 2017.

AB 72 »


Contraceptives: Annual Supply

On Sept. 23, 2016, Gov. Brown signed SB 999 into law. This law enables doctors and other health-care providers to prescribe up to a 12-month supply of FDA-approved, self-administered hormonal contraceptives such as birth control pills, the ring and the patch. In addition, it authorizes pharmacists to dispense, at a patient’s request, up to a 12-month supply of FDA-approved contraceptives at one time and it requires health care service plans and health insurance policies to cover the costs of a 12-month prescription. Currently, women are allowed to fill at most a 90-day prescription of birth control at one time.

SB 999 becomes effective Jan. 1, 2017.

SB 999 »


Premium Rate Change Notice

On Sept. 23, 2016, Gov. Brown signed SB 908 into law. This law is meant to help alert consumers whenever state regulators consider increases to their health insurance premiums to be too high. Under current law, the California Department of Managed Health Care and the California Department of Insurance review premium rate increases proposed by insurers and health plans that each agency regulates. When the agencies conclude that an increase is unjustified, they can ask the insurer to rescind the increase, but the company is not legally obligated to comply. The agencies’ only recourse is to post the information on their websites.

Under this new legislation, insurers are required to send written notices to policyholders advising them that regulators found their small group premium rate increases to be unreasonable or unjustified. The notices must be sent at least 60 before the policy renewal date, or 10 days before the start of the next health insurance open enrollment period, thereby giving consumers time to shop for a new plan.

SB 908 is effective Jan. 1, 2017.

SB 908 »


Autism and Pervasive Developmental Disorders

On Sept. 23, 2016, Gov. Brown signed AB 796 into law, which amends California’s Lanterman Developmental Disabilities Services Act. Under that law, every health care service plan contract and health insurance policy issued in California must provide coverage for behavioral health treatment for pervasive developmental disorder or autism until Jan. 1, 2017. This new legislation simply deletes the sunset date in the Lanterman Act and extends the operation of these provisions indefinitely, thereby creating a new state-mandated program that will provide services for people with developmental disabilities, including autism.

AB 796 is effective Jan. 1, 2017.

AB 796 »


Notice of Timely Access to Care

On Sept. 23, 2016, Gov. Brown signed SB 1135 into law. The new legislation requires health plans and insurers in California to notify consumers and health care providers about a patient’s right to timely care and language assistance. Under current law, consumers have the right to timely access to care and care in their preferred language. However, very few people know these consumer protections exist. Therefore, this new law requires health plans and insurers to communicate these rights through existing documents and communication channels, such as:

  • Evidence of coverage documents;
  • Wherever information on language assistance is provided, as required by existing law;
  • Provider directories;
  • Health plan and insurer websites; and
  • Annual enrollment or renewal notices.

In addition, SB 1135 requires health plans and insurers in California to provide doctors, hospitals and other health providers with information about timely access requirements.

SB 1135 is effective July 1, 2017.

SB 1135 »


Cost-sharing Changes

On Aug. 25, 2016, Gov. signed SB 923 into law. This law prohibits health plans and insurers in the individual and small group markets from changing the cost-sharing design during the plan year except when required by state or federal law. Under current law, health plans and insurers are prohibited from changing the premium rates in a given “rate year.” This new law extends that protection to a plan’s cost-sharing design as well. For purposes of this legislation, cost-sharing refers to what the copays or coinsurance are for a specific benefit: For example, the copay for a generic drug is $10 or $25; the copay for the brand name drug is $20 or $50 while the coinsurance for a hospital stay is 20 percent of the cost.

SB 923 is effective on Jan. 1, 2017.

SB 923 »


Immigration Status

Earlier this year, Gov. Brown signed SB 10 into law. SB 10 expands health care coverage to all Californians, regardless of immigration status, by permitting the state to apply for a federal waiver that would allow undocumented immigrants and their non-US born children to buy coverage through Covered California, the state’s health insurance marketplace, by using their own money. PPACA explicitly excludes undocumented immigrants from receiving health coverage through federally-funded programs, including Covered California. This law removes that barrier by directing the state to apply for a waiver under PPACA Section 1332. If granted, the waiver would make it possible for undocumented adults to review and purchase plans from Covered California. These individuals will remain ineligible to receive subsidies.

While the law is effective immediately, the requirement to offer qualified health plans to undocumented individuals on the state’s exchange does not become operative until Jan. 1, 2018, for coverage beginning Jan. 1, 2019. This allows the state time to apply for and receive a Section 1332 waiver.

SB 10 »

June 1, 2016

On Oct. 8, 2015, California Gov. Jerry Brown signed AB 1305 into law. This law imposes a maximum out-of-pocket (OOP) limit for an in individual participant enrolled in family coverage that is no greater than the maximum OOP limit for self-only coverage for that insurance product. Essentially, this means that for all fully-insured plans sitused in California, an individual enrolled in family coverage will not be required to pay more than what he/she would pay in OOP expenses if he/she were enrolled in self-only coverage under the same insurance product. In other words, the self-only OOP maximum is “embedded” in the family coverage. This OOP maximum requirement went into effect on Jan. 1, 2016.

Additionally, AB 1305 requires embedded deductibles. This means that if a family plan includes a deductible, the plan may not impose a greater deductible on an individual participant in family coverage than the deductible for self-only coverage. For individual and small group plans, the embedded deductible requirement became effective Jan. 1, 2016, and for large group plans, this requirement becomes effective Jan. 1, 2017.

AB 1305 does pose a compliance concern for employers offering fully-insured HSA-compatible HDHP coverage in California if that coverage offers a self-only deductible or OOP maximum amount that is below the minimum federal deductible required for family HDHP coverage.

As background, PPACA imposes OOP maximums on individual and group health plans. For 2016, those maximum limits are $6,850 for self-only coverage, and $13,700 for family coverage. Furthermore, to be eligible to contribute to an HSA, federal law requires that an individual be covered under an HDHP that meets certain deductible thresholds (and those are indexed each year). For 2016, an HDHP must have a minimum deductible of $1,300 for self-only coverage and $2,600 for family coverage.

However, in light of this new law, let’s consider a fully-insured HSA-compatible plan with a deductible and OOP maximum of $1,500 for individual coverage and $3,000 for family coverage. AB 1305 requires that the family HSA benefit have an embedded OOP maximum of $1,500 for individuals since the OOP maximum is $1,500 for individuals; despite the fact that federal law requires that in order to be considered as a qualified HDHP for HSA purposes, the family deductible has to be no lower than $2,600. This contradicts federal rules. Therefore, in order to satisfy AB 1305 requirements and at the same time comply with federal HSA-HDHP rules, fully-insured HSA-compatible HDHP plans in California have increased their self-only OOP maximums to meet the family $2,600 deductible threshold.

Changes may be forthcoming to resolve this potential problem, and NFP Benefits Compliance will provide an update if the legislation is revised. Also, it’s worth noting that AB 1305 does not apply to grandfathered plans; rather it applies to non-grandfathered individual and group health care service plan contracts that provide for essential health benefits.

AB 1305 »

April 19, 2016

As a reminder, employers covered by San Francisco's Health Care Security Ordinance (HCSO) are required to submit the 2015 Employer Annual Reporting Form to the Office of Labor Standards Enforcement (OLSE) by April 30, 2016. Failure to submit the form may result in penalties of $500 per quarter. If you were not covered by the HCSO in any quarter of 2015, you do not need to submit the form, and no further action is required.

Employers can check whether they are required to complete the form by completing a short survey on the first page of the Annual Reporting Form. Employers that were not covered by the HCSO in 2015 will be directed to a web page indicating that they do not need to complete the remainder of the 2015 Employer Annual Reporting Form.

Annual Reporting Form »
Additional Information »

On April 11, 2016, Gov. Jerry Brown signed AB 908 into law. The law will bolster the Paid Family Leave (PFL) program for all California workers by increasing the PFL wages available to workers who take time off to care for ill family members or bond with a new child.

Under the current California PFL law, California workers may receive 55 percent of their wages for up to six weeks. However, starting Jan. 1, 2018, those wages will increase as follows:

  • If an employee earns up to 33 percent of the state's average weekly wage ($1,120.67), the employee’s PFL wage replacement will go from 55 to 70 percent of normal earnings;
  • If an employee earns more than 33 percent of the state's average weekly wage ($1,120.67), that employee’s PFL wage replacement will go from 55 to 60 percent of normal earnings.

In addition to PFL wage increases, the new law eliminates the one-week waiting period for PFL claims. The 6-week period for PFL benefits will not change.

AB 908 »

January 12, 2016

The California Employment Development Department (EDD) recently announced that the 2016 employee contribution rate for State Disability Insurance will remain at 0.9 percent. The taxable wage base from which the contributions will be taken will increase from $104,378 to $106,742 for calendar year 2016 and the maximum cost to an employee will be $960.68.

For claims beginning on or after Jan. 1, 2016, weekly benefits range from $50 to a maximum of $1,129. To qualify for the maximum weekly benefit amount ($1,129) an individual must earn at least $26,070.92 in a calendar quarter during the base period.

Finally, effective Jan. 1, 2016, the tax rate for employers, partners and self-employed individuals who choose coverage in California's temporary disability insurance program is 4.67 percent.

Disability Insurance and Paid Family Leave Benefit Amounts »

Rates, Withholding Schedules and Meals and Lodging Values »

The San Francisco Health Care Security Ordinance (HCSO) requires covered employers to satisfy an employer spending requirement by making health care expenditures for their covered employees, among other reporting and notice requirements. For more information on what constitutes covered employers/covered employees, please visit the San Francisco HCSO website, linked below.

The health care expenditure rate varies depending on the size of the employer and increases slightly each year. As of Jan. 1, 2016, the health care expenditure rate for employers with 100 or more employees will be $2.53 per hour payable (up from $2.48 per hour payable in 2015). For employers with 20 to 99 employees, the expenditure rate will increase to $1.68 per hour payable (up from $1.65 per hour payable in 2015).

The San Francisco Office of Labor Standards Enforcement (OLSE) is responsible for enforcing the employer requirements of the HCSO.

San Francisco HCSO Website »

Beginning Jan. 1, 2016, the city of San Francisco requires that at least 80 percent of the required amount of health care expenditures for each covered employee must be made as irrevocable expenditures. An irrevocable health care expenditure is a health care expenditure that has not been retained by and cannot at any time be recovered by or returned to the employer. For more information on what constitutes a revocable and irrevocable expenditure, please visit the HCSO website.

San Francisco HCSO Website »

All covered employers are required by the HCSO to post an official notice regarding the HCSO in a conspicuous place at any workplace or job site where any covered employee works. The HCSO has released a new 2016 Official OLSE Notice (note: the Notice is 8.5” x 14”). Covered employers should ensure the new version of the notice is displayed at applicable job sites. A copy of the new 2016 Notice can be found here.

November 3, 2015

On Sept. 28, 2015, Gov. Brown signed AB 1515, which clarifies and corrects sections in the insurance code and restores the requirement that interest be applied to claim payments under non-health disability policies when a payment is made more than 30 days after receipt of the claim. In addition, the law updates the California Department of Insurance’s contact information on notices and disclosures for consumers by requiring these disclosures to include the Department of Insurance’s website address. In addition, the law aims to increase the department’s efficiency in processing and approving administrative settlements by allowing the commissioner to delegate settlement authority for minor non-insurer cases to a deputy commissioner. Finally, AB 1515 makes several other changes that include increasing conformity to the National Association of Insurance Commissioner’s Model Laws.

AB 1515 is effective January 1, 2017.

AB 1515 »

On Oct. 9, 2015, Gov. Brown signed AB 387 into law. The new law is intended to improve the department's ability to approve draft disability policies by extending the period of time allowed for the department to review the policy forms and any associated risks and premium rates from 30 to 120 calendar days. Moreover, it authorizes the commissioner to develop new guidelines to streamline the file review process for life and disability insurance forms and then to publish these procedures on the department’s website for public review. The legislature hopes that by providing clearer guidelines for insurers to follow when submitting policies for approval, and increasing time allowed to review and approve policies, the new law will improve the overall process and reduce confusion for consumers and the industry.

AB 387 »

On Oct. 6, 2015, Gov. Brown signed SB 575 into law, giving consumers new protections concerning non-forfeiture benefits under their long-term care contracts. The new law protects consumers, specifically the elderly and their caregivers, by requiring long-term care insurers to provide annual notification of the availability of non-forfeiture benefits and contingent benefits to the insured and the insured's designated backup contact. The notification must include the availability of the non-forfeiture benefit, the dollar amount of the non-forfeiture benefit and the name, address and telephone number of the insurer for questions about the benefit. Insurers must send the first annual revised notice to affected policyholders by July 1, 2016.

SB 575 »

October 6, 2015

On July 16, 2015, Gov. Brown signed into law AB 987, which amends the Fair Employment and Housing Act (FEHA) to provide protection for employees who make a request for an accommodation of a disability or religious beliefs. Existing law requires an employer to provide reasonable accommodation for, among other things, a person’s disability and religious beliefs and prohibits discrimination against any person who has either opposed any practices forbidden under the act or filed a complaint. This bill would also prohibit an employer from retaliating or otherwise discriminating against a person for requesting accommodation of his or her disability or religious beliefs, regardless of whether the accommodation request was granted.

AB 987 was initiated in reaction to Rope v. Auto-Chlor System of Washington, Inc., a 2013 decision from a California appellate panel. In that case the employee requested a leave of absence to donate a kidney to his sister five months prior to the surgery. Two months before the surgery the employee was terminated. He sued for associational disability discrimination under FEHA, but the appellate panel affirmed dismissal of his suit, holding that "a mere request—or even repeated requests—for an accommodation, without more" does not constitute protected activity sufficient to support a claim for retaliation in violation of FEHA. AB 987 amends the statute to establish that "[a] request for reasonable accommodation based on religion or disability constitutes protected activity … such that when a person makes such a request, he or she is protected against retaliation for making the request."

The changes to FEHA take effect Jan. 1, 2016.

AB 987 »

August 25, 2015

On July 14, 2015, Gov. Brown signed AB 1541 into law. The new law amends Section 1798.81.5 of the California Civil Code that requires employers to protect employees' and applicants' personal information for accessing online accounts. Existing law requires employers to implement and maintain reasonable security procedures and practices to protect state residents' personal information from unauthorized access, destruction, use, modification and disclosure. Current law defines ‘personal information’ as first name/initial and last name in combination with data such as a Social Security number, where the name or data are unencrypted. AB 1541 expands the definition of personal information to include username or e-mail address in combination with a password or security question and answer that permits access to online accounts. Personal information will not include information lawfully made available to the public from government records.

The new law takes effect Jan. 1, 2016.

AB 1541 »

On July 27, 2015, California’s Office of Administrative Law voted to approve an emergency regulation submitted by the California Department of Insurance. The regulation amends Title 10 of the California Code of Regulations that requires health insurers to maintain adequate medical provider networks that meet the needs of their policyholders, maintain accurate provider directories and requires disclosure of out-of-network providers who may participate in a patient’s planned care.

The amended provisions include:

  • Insurers must ensure their networks have an adequate number of primary care physicians accepting new patients.
  • The network must include providers of the following services: Behavioral health therapy, substance use disorder, psychiatric inpatient hospitalization, detoxification, psychological testing and outpatient retail pharmacies.
  • Participants must be able to access information about mental health and substance use disorder services, such as benefits and providers, by calling a customer service representative during normal business hours.
  • The network must include an adequate number of providers with admitting and practice privileges at network hospitals.
  • If medically appropriate care cannot be obtained from a network provider, then the insurer shall arrange for care from a non-network provider with the patient only responsible for in-network cost sharing.
  • The network should have adequate capacity and availability of licensed health care providers to allow for appropriate appointment waiting times. For example, a participant should not have to wait more than 48 hours for an urgent care appointment that does not require prior authorization; 10 business days for a non-urgent primary care physician or mental health provider appointment; 15 days for a non-urgent specialist appointment.
  • The network must ensure triage or screening services are available by telephone, and that the waiting time for these services does not exceed 30 minutes.
  • Insurers shall also ensure that during normal business hours, the waiting time for a person to speak with a customer service representative does not exceed 10 minutes.
  • Policies that cover pediatric dental and/or vision essential health benefits must assure that there are adequate oral and vision providers, including general and specialists, to accommodate anticipated enrollment growth.
  • Online network provider directories must include specific information about each provider and be made available to both covered persons and consumers. The network provider directory must be updated weekly.

While the new regulations apply to insurers, employers should understand the new safeguards and provisions that will be included under their group insurance policy.

The emergency regulation is effective from July 27, 2015, to Oct. 27, 2015, with the expectation of further legislative action.

Title 10 CCR Section 2240 »

June 30, 2015

On June 17, 2015, Gov. Brown signed SB 125 into law. The law provides that for plan years starting on or after Jan. 1, 2016, employer size will be determined using the federal method of calculating full-time equivalent employees for employer mandate purposes. When determining whether an employer is eligible for a small or large group policy, the employer will need to calculate the number of full-time employees working 30 hours or more per week. They will then need to total the number of hours by all non-full-time employees and divide by 120. The sum of the two calculations will yield the employer’s number of full-time equivalents. If an employer has 100 or fewer full-time equivalent employees, they will be considered a small employer. Finally, it is important to note that when determining size, the employer must include employees of all related employers.

SB 125 »

May 5, 2015

On March 5, 2015, the California Fair Employment and Housing Council amended the California Family Rights Act, which is the state’s version of FMLA.

Existing California law is already similar to FMLA in that it provides up to 12 weeks of unpaid job protected leave for employees who have worked for the employer for at least 12 months and at least 1,250 hours in the last 12 month period. Under both laws, the employee must have a qualifying reason for leave. Qualifying reasons include birth, adoption, foster care or serious health condition of an employee or family member.

The amendments more closely align the state’s regulations with FMLA. The amended provisions include:

  • An employer may deny reinstatement to a key employee if certain requirements are met.
  • A covered employer includes a successor employer.
  • Joint employers may share responsibility for an eligible employee. A joint employment relationship occurs when two or more businesses control the work conditions of the employee (such as a PEO or staffing agency and recipient organization).
  • When determining whether the employee has met the 12-month service requirement, the employer must include employment records for the last seven years.
  • When determining whether the employer has at least 50 employees within a 75-mile radius, employees with no fixed worksite (for example, working from home) would be included in the count for the worksite from which they receive assignments or to which they report.
  • The term 'serious health condition' includes inpatient care or continuing treatment, which may include substance abuse.
  • The employee has the right be reinstated to the same or comparable position. Comparable is clarified to mean that the position is equivalent in terms of pay, benefits, shift, schedule, geographic location, working conditions, privileges, perquisites, status, duties, responsibilities, skill, effort and authority.
  • The employer must respond to a request for leave within five business days. (The deadline under CFRA was previously 10 calendar days.)
  • If the employee’s leave is unpaid, the employee may agree to prepayment of any required premiums or the employer may require payment during the leave.

The regulations include a revised certification form. There is a new posting requirement; however, the revised poster is not yet available. The amendments are effective July 1, 2015.

Regulations »

The California Division of Labor Standards Enforcement recently posted guidance related to the state’s new paid sick leave law on its website in the form of frequently asked questions. The guidance provides clarification on rehired employees. If an employee is rehired within one year by the same employer, the employee’s previously accrued hours are restored. Additionally, the rehired employee’s 90 day waiting period is waived if they met the requirement during their previous employment period.

The guidance also states that employers are required to provide individualized notice to new employees hired after Jan. 1, 2015. Existing employees must receive a notice by July 8, 2015.

Paid Sick Leave FAQs »

Employee Notice »

January 13, 2015

As discussed in the Sept. 23, 2014 edition of Compliance Corner, eligible employees must accrue at least one hour of paid sick leave for every 30 hours worked beginning July 1, 2015. Effective Jan. 1, 2015, employers must notify employees of the new law effective by posting the new employment poster.

Paid Sick Leave Poster »

On Sept. 30, 2014, Gov. Brown signed AB 1710 into law. Existing law requires businesses that maintain computerized personal information to notify affected individuals of a security breach in which their information was accessed by an unauthorized person. The new law, which took effect Jan. 1, 2015, requires the business to provide the affected individuals with 12 months of appropriate identify theft prevention and mitigation services.

AB 1710 »

December 2, 2014

The California Office of Labor Standards Enforcement (OLSE) has released the 2015 Health Care Security Ordinance (HCSO) expenditure rates. Effective Jan. 1, 2015, employers with 100 or more employees will be required to spend $2.48 per hour, which is an increase from the 2014 rate of $2.44 per hour. For-profit employers with 20 to 99 employees, as well as nonprofit employers with 50 to 99 employees, will be required to spend $1.65 per hour, which is an increase from the 2014 rate of $1.63. For-profit employers with one to 19 employees and nonprofit employers with one to 49 employees continue to be exempt from the HCSO requirement.

The OLSE has also implemented new rules regarding expenditure methods. Effective Jan. 1, 2015, at least 60 percent of the employer’s HCSO expenditures must be irrevocable expenditures, meaning the amount paid by the employer cannot be recovered or returned to the employer. Examples of irrevocable expenditures are insurance premiums, contributions to the City Option and HSA contributions. An example of a revocable expenditure is a contribution to an HRA in which the employer allocates the funds as a debit in its accounting, but does not actually pay the funds into a separate account on the employee’s behalf.

Effective Jan. 1, 2016, at least 80 percent of the employer’s expenditures must be irrevocable with that amount increasing to 100 percent Jan. 1, 2017.

2015 HCSO Rate Announcement »
Irrevocable Expenditures FAQs »

The California Employment Development Department has released the 2015 withholding rates for the State Disability Insurance (SDI) program. The withholding rate is 0.9 percent, which is a decrease from the 2014 rate of 1.0 percent. The maximum wage limit is $104,378, which is an increase from the 2014 limit of $101,636. The maximum annual contribution for an employee is $939.40, which is a decrease from the 2014 limit of $1,008.80.

SDI Rate Announcement »

October 21, 2014

On Sept. 25, 2014, Gov. Brown signed SB 1182 into law, which requires insurers to provide large group clients deidentified claims data annually upon request. For this purpose, a large group client is defined as an employer who has at least 1,000 covered lives, of which at least 500 are covered by that insurer; or a multiemployer trust with at least 500 covered lives, of which at least 250 are covered by that insurer.

The new law also requires the Department of Managed Health Care and the Department of Insurance to post the following information on its website for at least 60 days prior to the implementation of an insurer’s significant rate increase:

  • Justifications for an unreasonable rate increase
  • The plan’s overall medical trend factor assumptions
  • The plan’s actual costs by category, including hospital inpatient, hospital outpatient, physician services, prescription drugs, laboratory and radiology
  • The amount of the projected trend attributable to price inflation, fees and policy trends

SB 1182 »

On Sept. 25, 2014, Gov. Brown signed AB 1962 into law, which will apply the federal medical loss ratio rebate requirements to dental policies issued in California. The law is effective Jan. 1, 2018.

AB 1962 »

On Sept. 25, 2014, Gov. Brown signed SB 1052 into law. The new law requires insurers that provide prescription drug benefits with one or more drug formularies to post the formularies on the insurer’s website. Any changes to the formularies must be updated on at least a monthly basis. The Department of Managed Health Care and the Department of Insurance will develop a template for this purpose prior to Jan. 1, 2017.

SB 1052 »

On Sept. 25, 2014, Gov. Brown signed SB 1053 into law, which mandates certain coverage related to contraceptive services and devices. As background, PPACA requires non-grandfathered group health plans to provide coverage for contraception with no cost-sharing for participants. The new law requires all group health plans (both grandfathered and non-grandfathered) that provide coverage for hospital, medical and surgical expenses to provide coverage for:

  • All FDA-approved contraceptive drugs, devices and other products for women, including those available over the counter, as prescribed by the insured’s provider.
  • Voluntary sterilization procedures.
  • Patient education and counseling on contraception.
  • Follow-up services related to the covered drugs, devices, products and procedures, including but not limited to the management of side effects, counseling for continued adherence and device insertion and removal.

As required by PPACA, non-grandfathered plans may not impose any cost-sharing for these services and devices. The same coverage shall be provided to spouses and dependents as is provided to employees. There is an exemption for religious employers. The law is effective for policies issued or renewed on or after Jan. 1, 2016.

SB 1053 »

October 7, 2014

On Sept. 25, 2014, Gov. Brown signed SB 1053 into law. Effective for plan years starting on or after Jan. 1, 2016, group health insurance policies must provide coverage for all FDA-approved contraceptive methods for women. Covered contraceptive methods include drugs, devices and products available over the counter as prescribed by the participant’s health care provider; voluntary sterilization procedures; and patient education and counseling related to contraception. Additionally, health insurance policies must provide coverage for follow-up services related to covered drugs, devices, products and procedures including management of side effects, counseling for continued adherence and device insertion and removal. Non-grandfathered plans may not impose any cost-sharing amounts on these covered services.

An exemption is available for plans sponsored by a religious employer. For this purpose, “religious employer” is defined as an entity for which the inculcation of religious value is the purpose of the entity, the entity primarily serves and employs persons who share the religious tenets of the entity, and the entity is a nonprofit organization under IRC Section 6033(a)(3)(A).

SB 1053 »

On Sept. 25, 2014, Gov. Brown signed SB 1182 into law. Under the new law, health insurers will be required to provide large group policyholders with aggregate de-identified claims information on an annual basis. The information shall be available upon request and at no charge to the policyholder.

SB 1182 »

September 23, 2014

On Sept. 10, 2014, Gov. Brown signed AB 1522 into law. The new law requires employers to provide certain employees with paid sick leave. Employees are eligible if they work 30 days or more in the first year of employment. Eligible employees will accrue at least one hour of paid sick leave for every 30 hours worked. The paid sick leave accrues from the date of hire, but an employee may not be able to use the accrued hours until the 90th day of employment. Accrued hours carry over to subsequent years. An employer may limit an employee’s use of paid sick leave to 24 hours, or three days, per year. Employees may use paid sick leave for the purpose of diagnosis, care or treatment of an existing health condition; preventive care for an employee or family member; or leave related to the fact that the employee is a victim of domestic violence, sexual assault or stalking. The law is effective July 1, 2015.

AB 1522 »

August 26, 2014

On Aug. 15, 2015, Gov. Brown signed SB 1034 into law. The new law will bring the state’s mandated 60-day maximum waiting period in line with federal requirements by increasing the maximum waiting period to 90 days for policies issued in California. Effective Jan. 1, 2015, group health plans subject to California insurance mandates may impose a maximum waiting period of 90 days. The change creates some confusion for both employer plan sponsors and insurance carriers who have adjusted plan designs to accommodate the previous 60-day maximum requirement. It is not yet known how carriers will respond to the law. They may choose to leave the 60-day maximum waiting period as is in their group product offerings.

SB 1034 »

July 29, 2014

The DOL and the California Department of Insurance will present a free two-day compliance seminar for employer plan sponsors on Sept. 9 and 10, 2014. The seminar will be held in Los Angeles and cover a number of topics, including the employer mandate, other health care reform requirements, the California marketplace, FMLA, COBRA, California insurance mandates and fiduciary responsibility.

Additional Information and Registration »

On July 14, 2014, the San Diego City Council approved a sick pay ordinance that will apply to employers who have an employee performing work within the San Diego city limits. Employees must accrue one hour of paid sick leave for every 30 hours worked within the city, up to a maximum accrual of 40 hours per year. Unused hours will carry over to the next year, but are not required to be paid out upon termination of employment. Employees may use the paid sick leave hours for their own health care appointments or illness, to care for an ill family member or an absence related to domestic violence. The law is effective April 1, 2015. Employers will be required to post a notice informing employees of the new benefit, as well as provide a notice to new employees hired after April 1, 2015.

Ordinance »

July 15, 2014

On June 16, 2014, Gov. Brown signed SB 20 into law. The new law provides that policies sold in the individual market on or after Jan. 1, 2014, shall limit enrollment to an annual enrollment period and special enrollment periods. The annual enrollment period for coverage effective Jan. 1, 2015, will be Nov. 15, 2014, to Feb. 15, 2015. The annual enrollment period for subsequent years will be Oct. 15 to Dec. 7 of the preceding calendar year. While the law only applies to individual policies, employers may be interested in what options are available for employees.

SB 20 »

On July 7, 2014, Gov. Brown signed SB 1446 into law. The new law relates to the March 5, 2014, CMS announcement of a two-year extension to the transitional policy for non-PPACA-compliant health benefit plans (as covered in the March 11, 2014, edition of Compliance Corner). The California Department of Insurance and the Department of Managed Health Care will permit insurers to renew noncompliant policies, but on a more restrictive basis than was provided by CMS. The law allows insurers to renew non-grandfathered small employer policies that were in effect on Dec. 31, 2013, and that are still in effect on July 7, 2014, to be renewed until Jan. 1, 2015, and to continue to be in force until Dec. 31, 2015. Such policies would not be subject to the federal and state requirements related to community rating, the prohibition of pre-existing condition exclusions and coverage of essential health benefits.

SB 1446 »

June 17, 2014

On June 10, 2014, the California Court of Appeals, Second Appellate District issued a ruling in Rea v. Blue Shield of California, B244314, 2014 WL 2584433 (Cal. Ct. App. June 10, 2014). At issue was the fact that the Blue Shield policy excluded residential treatment for anorexia nervosa. The court reversed an earlier decision by a trial court and ruled that anorexia nervosa was a mental condition and, as such, was covered by the California Mental Health Parity Act. The act requires medically necessary treatment for mental conditions. Thus, the court ordered Blue Shield to provide coverage for residential treatment for anorexia nervosa when it was determined to be medically necessary for the insured.

In California, HMO's and managed care organizations (including Blue Shield) are governed by the Department of Managed Health Care, while all other insurers are governed by the Department of Insurance. On June 11, 2014, Insurance Commissioner Dave Jones issued a press release announcing that the ruling will apply to all insurance policies issued in California. Employers sponsoring group health insurance policies in California should review the exclusions of their plan and work with the carrier to make any necessary amendments regarding coverage of residential treatment for anorexia nervosa.

Rea v. Blue Shield of California »
Insurance Commissioner's Press Release »

June 3, 2014

On May 16, 2014, the California Department of Insurance issued a notice summarizing the state's security breach notification requirements. The law applies to entities that conduct business in California and own or license computerized data that contains personal information, including employers. A state resident must be notified if it is reasonably believed that his/her unencrypted personal information was acquired by an unauthorized person (i.e., security breach). If more than 500 residents are affected, the entity must also submit a copy of the breach notification to the California attorney general.

Notice »

April 22, 2014

On March 26, 2014, the California Metropolitan Transportation Commission approved the launch of the Bay Area Commuter Benefits Program. The program implements SB 1339, which was signed into law in September 2012. Bay Area employers with 50 or more full-time employees (those working 30 hours or more per week) will be required to provide commuter benefits to covered employees (those working 20 hours or more per week). It applies to employers in the following counties: Alameda, Contra Costa, Marin, Napa, San Francisco, San Mateo and Santa Clara, as well as the southern portion of Sonoma County and the southwestern portion of Solano County.

Employers must register via the program website and offer one of four commuter benefit options, listed below, by Sept. 30, 2014.

  • Option 1: Pretax Benefit – Allow employees to exclude up to $130 of their transit or vanpooling expenses each month from taxable income.
  • Option 2: Employer-provided Subsidy – Provide a subsidy to reduce or cover employees’ monthly transit or vanpool costs, up to $75 per month.
  • Option 3: Employer-provided Transit – Provide a free or low-cost transit service for employees, such as a bus, shuttle or vanpool service.
  • Option 4: Alternative Commuter Benefit – Provide an alternative commuter benefit that is as effective in reducing single-occupancy commute trips as Options 1, 2 or 3.

Announcement »
Program Registration and Details »

January 28, 2014

On Dec. 4, 2013, Section 2274.53 was added to Title 10 of the California Administrative Code. The new regulations provide additional information on the grace period that insurers must provide employer policyholders for payment of group health policies. Under existing rules, employers have a 30-day grace period in which to submit payment. The new rules clarify that the 30-day period begins the day following the last day of coverage for which the insurer has received payment. If payment is made on or before the last day of the grace period, the insurer shall continue coverage beyond the grace period without interruption. This is an important clarification for employers because nonpayment of premium is one of the few reasons that an insurer may refuse to renew a group policy. Section 2274.53 is effective Jan. 1, 2014.
Regulations »


The maximum benefit under the state-mandated disability insurance program has increased from $1,067 to $1,075 per week. The change is effective for claims beginning on or after Jan. 1, 2014. As background, California is one of a handful of states that require disability insurance coverage for employees performing work in the state.
Announcement »


On Dec. 20, 2013, the City and County of San Francisco Office of Labor Standards Enforcement posted new frequently asked questions related to the Health Care Security Ordinance. The new guidance clarifies that employer contributions toward excepted benefits constitute valid health care expenditures to satisfy the employer's spending requirement under the ordinance — including contributions for dental insurance, vision insurance, medical indemnity insurance, long-term, nursing home, home health or community-based care insurance, and insurance limited to a specific disease or illness. Contributions to a stand-alone dental or vision HRA would also count as valid health care expenditures.

FAQs »


Colorado

August 4, 2020

COVID-19 Insurance Update

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Effective July 18, 2020, the Division of Insurance promulgated Emergency Regulation 20-E-09, which replaces and extends the coverage and cost-sharing requirements for commercial insurers related to claims arising from the testing and treatment of COVID-19. These requirements were established in Emergency Regulation 20-E-01, which was discussed in the March 31, 2020, edition of Compliance Corner.

This regulation applies to insurers, but employers should be aware of the extension.

Emergency Regulation 20-E-09 »


July 21, 2020

Legislature Passes New Paid Leave Legislation

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On July 14, 2020, Gov. Polis signed SB20-205 into law. The legislation creates three categories of leave: 1) it expands the Families First Coronavirus Response Act (FFCRA) emergency paid sick leave to apply to employers who employ 500 or more employees; 2) it creates paid sick and safe leave for Colorado employees; and 3) it creates public health emergency leave for Colorado employees.

FFCRA’s emergency paid sick leave provisions apply to employers with fewer than 500 employees. The legislation expands the application of these provisions to employers with 500 or more employees. However, it does not provide tax credits to employers who provide leave under the law and is only effective until December 30, 2020.

The legislation requires employers to provide one hour of paid sick and safe leave for every 30 hours a Colorado employee works. An employee may earn up to 48 hours per year in this manner and unused hours can carry forward into the next year. An employer can offer this leave “up front” and employers that already have policies which provide this leave plus public health emergency leave at least as generous as that provided by the legislation may be exempt. Employees can use this leave to deal with physical or mental illness with themselves or their family members, as well as to deal with issues relating to domestic abuse, sexual assault, or harassment. This leave applies to employers with 16 or more employees beginning on January 1, 2021, and then will apply to all employers on January 1, 2022.

Finally the legislation requires employers to give employees up to 80 hours of leave in the event of a public health emergency, such as the COVID-19 pandemic. The paid sick and safety leave established by this legislation can be applied toward this leave, and employees can access it for up to four weeks after the emergency is officially declared over. The employee can use this leave to take care of himself or herself or a family member who is affected by the cause of the emergency, and to take care of a child who does not have access to child care as a result of the emergency. Employees must notify their employers of the need to take this leave as soon as practicable.

The legislation also requires employers to post notices regarding employees’ rights to this leave, and employers are prohibited from requiring employees to waive their access to this leave and from finding replacement workers when they take the leave. Employees will have a private cause of action to enforce this legislation in civil court, although there is an administrative requirement to report alleged violations to the state’s Department of Labor and Employment and allow that agency to resolve the matter first.

Employers with employees in the state should be aware of this new legislation. If the governor signs it into law, regulations and model notices will soon follow, so employers should keep their eyes open for those as well.

SB20-205 »


May 12, 2020

COVID-19 Insurance Updates

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On April 30, 2020, the Division of Insurance issued Bulletin No. B-4.108, which covers all carriers offering individual, small group and large group health benefit plans, and managed care plans, including health-savings-account (HSA)-qualified health benefit plans, and grandfathered health benefit plans that are subject to the insurance laws of Colorado. TPAs for self-insured plans are also encouraged to read and follow the requirements in the bulletin.

The bulletin clarifies the testing, diagnosis and screening for COVID-19 and insurers’ obligations under Emergency Regulation 20-E-01 (as discussed in the March 31, 2020, edition of Compliance Corner). It requires carriers to use both in-network and out-of-network labs in order to make sure that there is enough testing for COVID-19 to meet the demand, with no cost sharing. In addition, carriers shall cover cost sharing where licensed health care providers are administering COVID-19 tests and are prohibited from requiring providers to collect cost shares. This testing shall be covered when the testing is conducted in an in-network provider office setting, an in-network urgent care center setting, an emergency room setting, and nontraditional care settings where licensed health care providers are administering the testing.

The bulletin reminds carriers that the emergency regulation requires them to cover without cost sharing any test approved for use in detecting or diagnosing of COVID-19 in accordance with the CARES Act and subsequent federal guidance, including serological testing and any other tests a provider determines appropriate when determining the need for COVID-19 diagnostic testing, such as influenza or pneumonia testing.

The regulation is primarily directed at carriers. However, employers should also be aware of these developments.

Bulletin No. B-4.108 »


April 28, 2020

COVID-19 Insurance Updates

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The Division of Insurance promulgated Emergency Regulation 20-E-07, effective April 18, 2020, that requires carriers that issue plans regulated by the state to pay out-of-network providers for emergency services rendered for treatment of COVID-19 and suspends prior authorization requirements for emergency services.

The regulation is primarily directed at insurers. However, employers should also be aware of these developments.

Emergency Regulation 20-E-07 »


April 14, 2020

Emergency Rule Regarding Telehealth

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On April 3, 2020, the Commissioner of Insurance promulgated Regulation 20-E-05 requiring carriers to reimburse providers for the provision of telehealth services during the COVID-19 nationwide public health emergency. The regulation requires insurers to reimburse providers for telehealth service at rates that are at least the same as those paid for the in-person equivalent and that behavioral health services provided via telehealth have parity with medical services. It prohibits carriers from imposing limits on technologies to telehealth, and from imposing additional certification and training requirements. The regulation also mandates coverage of telehealth by out-of-network providers if they provide “medically necessary” services.

The rule is primarily directed at insurers. However, employers should also be aware of these developments.

Emergency Rule 20-E-05 »

Special Enrollment Period on Exchange Extended

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On April 3, 2020, the Commissioner adopted Emergency Regulation 20-E-06, which extends a special enrollment period (SEP) for residents of Colorado who have either lost their health insurance or who anticipate such a loss as a result of the COVID-19 outbreak. The extended SEP runs from April 4, 2020, through April 30, 2020 (extended from previous emergency rule deadline of April 3, 2020). This SEP was originally established by emergency regulation 20-E-02 issued by the Division of Insurance.

Employers with employees located in Colorado should be aware of this option in the event those employees experience a reduction in hours or express an intent to enroll in a plan on the exchange as a result of business decisions made in response to the COVID-19 outbreak. The SEP is also an option for employees whose jobs are terminated and health coverage is lost during this time.

Emergency Rule 20-E-06 »

COVID-19 Insurance Updates

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On April 7, 2020, the Division of Insurance issued Bulletin 4.106 to assist hospitals in anticipation of a surge in COVID-19 cases by encouraging the provision of health care services to those who can be treated at home.

To that end, the bulletin reminds carriers of their obligations to provide coverage for certain home health care services, including the provision of durable medical equipment and medications if the health care provider deems such things medically necessary. The bulletin also requests that carriers eliminate any prior authorization requirements for these products and services, and otherwise expedite requests for them.

The bulletin is primarily directed at insurers. However, employers should also be aware of these developments.

Bulletin B-4.106 »


March 31, 2020

COVID-19 Insurance Updates

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Effective March 17, 2020, the Division of Insurance promulgated emergency regulation 20-E-01 that establishes the coverage and cost-sharing requirements for commercial insurers related to claims arising from the testing and treatment of COVID-19. They also require insurers to provide coverage for COVID-19-related in-network telehealth services with no cost share for the covered person, and to cover at least one additional early refill of all necessary prescriptions to ensure that the covered person has access to necessary medications.

On March 27, 2020, the Division of Insurance issued Bulletin No. B-4.105, which applies to small and large group health benefit plans regulated by the state. The bulletin requires insurers to offer premium grace periods and waive late fees, and it prohibits insurers from canceling policies for nonpayment of premiums.

Employers with policies regulated by Colorado should be aware of these developments.

Emergency Regulation 20-E-01 »
Bulletin No. B-4.105 »

Special Enrollment Period on Exchange

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Connect for Health Colorado announced a special enrollment period (SEP) for residents of Colorado who have either lost their health insurance or who anticipate such a loss as a result of the COVID-19 outbreak. The SEP runs from March 20, 2020, through April 3, 2020. This SEP is established by emergency regulation 20-E-02 issued by the Division of Insurance.

Employers with employees located in Colorado should be aware of this option in the event those employees experience a reduction in hours or express an intent to enroll in a plan on the exchange as a result of business decisions made in response to the COVID-19 outbreak. The SEP is also an option for employees whose jobs are terminated and health coverage is lost during this time.

Connect for Health Colorado Announcement and Links »
Emergency Regulation 20-E-02  »

Emergency Rules Granting Paid Sick Leave for Eligible Workers Amended

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Effective March 11, 2020, emergency rules promulgated by the Department of Labor and Employment, and ordered by the governor, grant eligible workers up to four days of paid sick leave from their employers. The rules apply to workers in the fields of leisure and hospitality; food services; child care; education at all levels, as well as related services such as food service; home health if people are working with elderly, disabled, sick or high-risk people; and nursing homes and community living facilities. Employers must pay applicable workers their regular rate of pay for the workers’ regularly worked hours while they are on this leave. Employers should comply with FMLA when providing sick leave to the extent feasible; employers cannot terminate applicable workers if they fail to provide documentation during the illness and FMLA does not narrow the rights and responsibilities under the emergency rules.

These rules were amended on March 26, 2020, to cover add two more groups of employees to those already covered by the rules. The rules now cover employees under a health care provider's instructions to quarantine or isolate due to a risk of having COVID-19, in addition to employees with flu-like symptoms who are being tested for COVID-19. The rules also apply to employees at retail establishments that sell groceries.

The rules are effective for the longer of 30 days from the effective date or the duration of the State of Disaster Emergency declared by the governor, up to a maximum of 120 days.

Emergency Leave with Pay »


March 17, 2020

Insurance Updates Regarding COVID-19

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On March 9, 2020, the Department of Regulatory Agencies, Division of Insurance, issued Bulletin No. B-4.104 in response to the COVID-19 outbreak that provides guidance to insurers that issue health coverage plans or health benefit plans in the state. The Bulletin directs carriers to conduct an outreach and education campaign to remind individuals of their telehealth coverage options. It also directs carriers to provide telehealth services to cover COVID-19-related in-network telehealth services at no cost share, including copays, deductibles, and coinsurance that would normally apply to the telehealth visit.

The Bulletin directs carriers to cover an additional one-time early refill of any necessary prescriptions to ensure individuals have access to their necessary medications should they need to limit close contact with others. Carriers shall not apply a different cost-sharing amount to an early fill of a prescription due to concerns about COVID-19.

Finally, the Bulletin directs carriers to ensure that coverage is provided for COVID-19 testing without requiring that consumers pay copays, deductibles or co-insurance. The Bulletin directs carriers to waive cost sharing for an in-network provider office visit, an in-network urgent care center visit and an emergency room visit when a covered person is seeking testing for COVID-19. The Bulletin also reminds carriers that if an in-network provider is unable to conduct testing for COVID-19, they must cover such testing if performed by an out-of-network provider pursuant to Colorado law.

The Division of Insurance will promulgate emergency regulations to formalize the Bulletin.

Employers with policies regulated by Colorado should be aware of these developments.

Bulletin B-4.104 »

Emergency Rules Grant Paid Sick Leave for Eligible Workers

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Effective March 11, 2020, emergency rules promulgated by the Department of Labor and Employment, Division of Labor Standards and Statistics, and ordered by the governor, grant eligible workers up to four days of paid sick leave from their employers. The rules apply to workers in the fields of leisure and hospitality; food services; child care; education at all levels, as well as related services such as food service; home health if people are working with elderly, disabled, sick or high-risk people; and nursing homes and community living facilities. Employers must pay applicable workers their regular rate of pay for the workers’ regularly worked hours while they are on this leave. Employers should comply with FMLA when providing sick leave to the extent feasible, although employers cannot terminate applicable workers if they fail to provide documentation during the illness and FMLA does not narrow the rights and responsibilities under the emergency rules.

The rules are effective for the longer of 30 days from the effective date or the duration of the State of Disaster Emergency declared by the governor, up to a maximum of 120 days.

Emergency Leave with Pay  »

January 22, 2020

Surprise Billing Law Effective January 1, 2020

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On May 14, 2019, Gov. Polis signed HB19-1174, which aims to limit surprise billing by capping the amount that out-of-network providers can charge persons covered by Colorado state-regulated insurance plans at an in-network facility. The law also applies to out-of-network providers or facilities that provide emergency services to such covered persons. Additionally, the law provides for an arbitration process when a health care provider or facility has a dispute with the amount paid under these circumstances. The law requires health insurance carriers, health care providers, and health care facilities to provide patients covered by health benefit plans with information concerning the provision of services by out-of-network providers and in-network and out-of-network facilities.

The law imposes no new employer compliance obligations, but employers with fully insured plans should be aware of this law. The law is effective as of January 1, 2020.

Surprise Billing Law »
Arbitration Process »
Disclosure Rules »

Cost of Prescription Insulin Drugs Capped

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On May 22, 2019, Gov. Polis signed HB19-1216. The law is effective January 1, 2020, and requires entities providing coverage for prescription insulin drugs through a Colorado health plan to cap the amount that a person covered by the plan must pay out-of-pocket for a 30 day supply of insulin to $100, regardless of the amount or type needed to fill the person’s subscription.

The law imposes no new employer compliance obligations, but employers with fully insured plans should be aware of this law.

Insulin Cap Law  »


November 26, 2019

Task Force Formed to Study Implementation of Family Medical Leave Insurance Program

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On May 30, 2019, Gov. Polis signed SB19-188 (the FAMLI Family Medical Leave Insurance Program) into law. This law creates a study of the implementation of a paid family and medical leave program in Colorado, including a task force comprised of members appointed by the governor and the legislature to analyze the costs and administration of a paid leave program for all employees in Colorado and to make a recommendation for a FAMLI program in time for the 2020 Colorado Legislative session.

Since the task force’s recommendations have not yet been considered and a FAMLI program not yet implemented, employers don’t need to worry too much about this yet. However, employers should be mindful of potential requirements such as reporting requirements and premium contributions.

Colorado SB19-188 »


October 15, 2019

State Coverage Option for Individuals

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On October 7, 2019, the Colorado Division of Insurance and the Colorado Department of Health Care Policy and Financing issued a draft report on the development of a state option for affordable health insurance coverage, as required by the Colorado General Assembly’s legislation HB19-1004. The state option would be administered by insurance companies and sold on the individual market but will scale up to the small group market over time. The proposed state option will cover all essential health benefits, many services will be pre-deductible, and average monthly premiums would be reduced by paying hospitals less. The agencies are accepting written comments on draft report until October 25, 2019. For now, there is nothing for Colorado employers to do; but employers with smaller plans will want to follow this development, as it could potentially impact small group options in Colorado.

Draft Report »
Comment Process Information »
HB19-1004 »


September 4, 2019

Special Enrollment Period Available for Consumers Enrolled in Trinity Healthshare

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On August 28, 2019, the Division of Insurance published Bulletin No. B-4.102. According to the bulletin, the Division issued cease and desist orders for Trinity Healthshare and its administrator, Aliera Healthcare, which require the companies to immediately cease and desist conducting insurance business in Colorado. Those orders were issued because Trinity Healthshare and Aliera Healthcare offer non-compliant insurance products within the state of Colorado.

As a result, those enrolled in Trinity Healthshare plans have experienced a special enrollment period (as that term is defined in Colorado law). The trigger date of the special enrollment period is August 28, 2019 (the date of this bulletin), and therefore carriers must provide a special enrollment period for all affected consumers for a period of 60 days (from August 28, 2019).

The bulletin is directed to Colorado consumers who enrolled in Trinity Healthshare, and to carriers who issue on-exchange and off-exchange (private) health benefit plans issued in Colorado. Thus, employers with fully insured plans in Colorado may need to allow a special enrollment if any of their employees were enrolled in the Trinity Healthshare plan. Such employers should work with their carriers to facilitate the special enrollment.

Bulletin No. B-4.102 »


August 7, 2018

Data Privacy Requirements for Employers

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On May 29, 2018, Gov. Hickenlooper signed HB 18-1128 into law. This law generally requires all covered entities that maintain documents with personal identifying information of CO residents to develop and maintain written policies for the protection, destruction and proper disposal of those documents. These requirements are effective Sept. 1, 2018.

A "covered entity" under this new law is defined as any person or entity "that maintains, owns, or licenses personal identifying information." "Personal identifying information" is defined as a Social Security number, PIN, password, passcode, government-issued driver's license or ID card number, passport number, biometric data, an employer/student/military identification number, or a financial transaction device. Therefore, since virtually all employers maintain information on their employees that meet the definition of personal identifying information, employers with CO employees will be subject to the requirements of the new law.

Specifically, the provisions under the new law require that covered entities (1) implement reasonable security procedures and practices, (2) establish and follow a written policy for the destruction and proper disposal of personal information, (3) ensure third-party service providers that handle personal information follow reasonable security procedures and practices and (4) follow notification procedures in the event of a security breach.

Employers who maintain personal identifying information on CO residents must comply by Sept. 1, 2018. Thus, covered entities should take immediate steps to ensure they are complying with the law’s requirements with the help of outside counsel. Failure to adhere to these requirements could result in civil penalties of up to $2,000 per affected person, up to a maximum of $500,000 per incident, or the employer can be held directly liable to affected individuals harmed by the violation.

HB 18-1128 »


July 24, 2018

Coverage of Drugs to Treat Opioid Addiction Required

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On May 21, 2018, Gov. Hickenlooper signed HB 18-1007 into law. This law requires all health benefit plans to provide coverage for a five-day supply of at least one FDA-approved drug for the treatment of opioid dependence. The plan cannot request prior authorization for this drug if the request is the first in a 12-month period. The bill also clarifies that an “urgent prior authorization request” includes a request for authorization of medication to treat substance use disorders.

Although the insurance carriers will implement this law, employers should be aware of the change. The law is effective Jan. 1, 2019.

HB 18-1007 »


May 15, 2018

Pharmacist Health Care Services Coverage

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On April 9, 2018, Gov. Hickenlooper signed HB 1112 into law. This bill requires plans to provide coverage for health care services provided by a pharmacist if the services are provided within a health professional shortage area and the plan provides coverage for the same services provided by a licensed physician or advanced practice nurse. The effective date of HB 1112 is Aug. 8, 2018.

HB 1112 »

Step Therapy Prohibited for Stage Four Metastatic Cancer Drugs

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On April 9, 2018, Gov. Hickenlooper signed HB 1148 into law. This bill prohibits insurance carriers from requiring stage four advanced metastatic cancer patients to undergo step therapy prior to receiving a prescription drug approved by the FDA. This prohibition would apply as long as the drug is on the carrier’s prescription drug formulary and the use of the drug is consistent with best practices for the treatment of cancer. The effective date of HB 1148 is Jan. 1, 2019.

HB 1148 »

April 4, 2017

Division Releases Bulletin on Telehealth and Telemedicine

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On March 31, 2017, the Colorado Division of Insurance released Bulletin No. B-4.89 related to methods by which telehealth can be delivered. As background, Colorado recently passed HB15-1029, allowing carriers to utilize telehealth providers. This Bulletin clarifies that telehealth includes care that is received through any audio-visual communication, including texting or voice communication provided through a cellular phone.

While the Bulletin does not directly affect employers, employers should familiarize themselves with these changes in the law that will affect insurance providers.

Bulletin No. B-4.89

May 5, 2015

On April 24, 2015, the Colorado Division of Insurance published Bulletin No. B-4.83. The new bulletin is directed toward insurers and relates to preventive services that must be covered at zero cost-sharing by health benefit plans in Colorado.

As background, PPACA requires certain preventive care to be covered with no cost-sharing requirements (e.g., copayments, deductible, coinsurance, etc.) if provided by an in-network provider. The U.S. Preventive Services Task Force (USPSTF), the Advisory Committee on Immunization Practices of the Centers for Disease Control and Prevention and the Health Resources Services Administration (HRSA)) provide recommendations as to which preventive services are included under the PPACA requirement. The recommendations are ongoing and generally become applicable no later than the plan year that begins on or after the one-year anniversary of the recommendation. In addition to federal law, Colorado also requires certain preventive services to be covered at zero cost-sharing.

The bulletin provides insurers with the most recent recommendations and Colorado preventive service coverage mandates, including recommendations issued in 2013 and 2014. The bulletin has three attachments with charts listing the preventive services. Attachment A contains the USPSTF recommendations which take effect April 24, 2015. These include alcohol misuse and counseling, breast cancer preventive medications and lung cancer screenings. Attachment B contains the preventive services mandated by Colorado law (not included in the USPSTF’s recommendations). These include chicken pox vaccinations, colorectal screening and cervical cancer vaccine. Attachment C contains the HRSA women’s’ preventive services guidelines, which includes gestational diabetes screening, human papillomavirus testing and breastfeeding supplies.

Although the bulletin applies only to insurers, Colorado employers should review the bulletin to better understand which services and benefits under their group health plans will be considered preventive care that should be provided with zero cost-sharing to covered employees.

Bulletin No. B-4.83

On April 16, 2015, Gov. Hickenlooper signed SB 15-015 into law. The new law relates to health benefit plan coverage for autism spectrum disorder (ASD). Under the new law, group health plans offered in Colorado must provide coverage for ASD that is substantially equivalent to benefits for a physical illness and must not contain any limits on the number of services or visits. ASD is defined by reference to “The Diagnostic and Statistical Manual of Mental Disorders” and generally includes autistic and Asperger’s disorders.

Although the new law does not create any additional obligations for employers, Colorado employers with fully insured plans should reach out to insurers to discuss the new coverage requirements. The new law is effective for plans issued, delivered or renewed on or after Jan. 1, 2017 (although the law encourages insurers to comply as soon as possible).

SB 15-015

April 7, 2015

On March 20, 2015, Gov. Hickenlooper signed HB 15-1029 into law. The new law relates to telehealth coverage of health benefit services. According to the new law, insurers cannot require plan participants to have in-person contact with health care providers if services can be provided appropriately through telehealth. ’Telehealth’ is defined as the delivery of health care services through telecommunication systems, including information, electronic and communication technologies to facilitate the assessment, diagnosis, treatment, education or self-management of a person’s health care. Importantly, ’telehealth’ does not include communications via health care services via telephone, facsimile or email systems. The new law is effective for plans and policies issued or renewed on or after Jan. 1, 2017. While the new law applies only to insurers, employers will want to be aware of the law to assist employees that may have questions with respect to coverage of telehealth services.

HB 15-1029  »

March 24, 2015

On March 13, 2015, the Colorado Division of Insurance (DOI) issued a press release and FAQ related to phasing out non-PPACA-compliant group health plans in Colorado. Specifically, health insurance plans for small employers that do not meet PPACA requirements will not continue into 2016. Previously, the DOI allowed insurers in Colorado to continue non-PPACA-compliant plans for small groups (employers with two to 50 employees) through Dec. 31, 2015. The allowance was intended to permit time for transition to PPACA-compliant plans. The bulletin states that insurers will notify small employers that hold non-PPACA-compliant plans of the discontinuation of the plans, as well as information about available options (including whether the insurer will offer PPACA-compliant plans). The notices must be provided no later than 90 days in advance of the expiration date of the policy (180 days if the insurer is leaving the Colorado insurance market). Importantly, according to the bulletin, insurers may not automatically enroll a current policyholder into a new plan from that insurer. The DOI FAQs provide additional clarification on both the phase-out process and the insurer notices. Employers with non-PPACA-compliant plans should be aware of the press release and FAQs, and should work with insurers on identifying their options going forward.

Press Release  »
FAQs  »

On March 10, 2015, the Colorado Division of Insurance (DOI) issued a news release related to exchange special enrollment periods (SEPs) and federal income tax penalties. As background, on Feb. 20, 2015, the federal government announced it would allow a special enrollment period related to the federal tax penalty for consumers in states with health exchanges run by the federal government. According to the news release, Colorado’s exchange is not run by the federal government, and therefore Colorado may make its own decisions related to SEPs. The bulletin states that DOI will not allow a SEP for 2015 health insurance coverage for individuals who will have to pay a tax penalty for not having health insurance in 2014. The press release describes the various factors weighed in coming to that conclusion.

The SEP generally relates to individual coverage, and does not directly affect employers. However, employers should be aware of the press release, should employees have questions related to federal tax penalties or exchange enrollment. The press release includes phone numbers individuals who have questions relating to special enrollments may call for information.

News Release »

February 10, 2015

On Jan. 28, 2015, The Colorado Division of Insurance published Bulletin No. B-4.82. The new bulletin is meant to clarify the Division's position regarding consumer cost-sharing variations for prescription drug benefits. The bulletin states that certain cost-sharing structures for prescription drug benefits may constitute discrimination that would violate Colorado insurance law. As an example, the Division will view the placement of most or all drugs used to treat a specific condition on the highest cost tiers as discrimination against those individuals who have chronic conditions that require treatment with such drugs. The bulletin also describes other prescription drug plan cost-sharing arrangements that may be problematic under Colorado law. The bulletin does not apply to grandfathered plans, transitional plans, large group plans and HSA-qualified HDHPs, and is intended to apply for plan years beginning on or after Jan. 1, 2016.

The bulletin does not affect Colorado employers' compliance obligations, but is a good resource for understanding how prescription drug plans must be structured in Colorado both on and off the state health insurance exchange.

Bulletin No. B-4.82  »

January 13, 2015

On Nov. 25, 2014, the State of Colorado Civil Rights Commission adopted revisions to its rules and regulations relating to employment discrimination. Specifically, 3 CCR Sec. 708-1 was revised to include new rules relating to the prohibition on employment discrimination against qualified employees and applicants based on sex. The rules also include pregnancy discrimination. While most of the revisions relate to employment law (such as hiring or firing, selection and promotion and retirement), some relate to fringe benefits. Under the revisions, employer contributions for fringe benefits cannot discriminate based on sex. “Fringe benefits” include insurance, pension and retirement, welfare programs, profit-sharing, bonus plans and leave. In addition, employers cannot condition fringe benefits on employees’ status as “head of household” or “principal wage earner” for their family if this condition adversely affects employees based on sex. The revisions are effective Dec. 15, 2014.

Revised 3 CCR Sec. 708-1  »

September 23, 2014

On Sept. 9, 2014, the Colorado Division of Insurance issued Bulletin No. B-4.78. The bulletin clarifies that employers with grandfathered small group health plans that no longer qualify as small employers under Colorado’s current law may be allowed to continue such plans until Dec. 31, 2015. The choice to continue the plans is up to the insurer — they are under no obligation but may choose to do so. Colorado employers with small group plans should consult with their insurer in determining whether the plan will be continued pursuant to the bulletin.

Bulletin No. B-4.78 »

September 9, 2014

On Aug. 21, 2014, the Colorado Division of Insurance issued Bulletin No. B-4.77, a new bulletin relating to health benefit plan premium payment grace period considerations for consumers, providers and insurers. As background, Colorado law provides for a 31-day grace period for consumers with individual or small group health benefit plans who are not receiving the advance payment tax credit (APTC) and who have missed a premium payment, and a 90-day grace period for individuals receiving the APTC. Grace periods do not apply to the payment of the first month’s premium. During the 90-day grace period, carriers must cover claims incurred during the first month and may pend claims incurred during the second and third months. Insurers must also give notice to consumers that the claims may be denied if no further premium payments are received, and issue a 30-day advance notice before terminating the policy due to nonpayment of premiums.

The bulletin clarifies that insurers must always honor and pay claims incurred during the first month of the grace period, regardless of whether the consumer is receiving the APTC or not. Consumers are liable for the premium until the policy has been terminated in compliance with the 30-day advance notice requirement. The bulletin also clarifies notice requirements between the insurer, provider and consumer with respect to the second and third months of the grace period, in which the insurer may pend claims. If a provider receives a notice that a consumer is in those second or third months, the provider may make arrangements with the consumer – prior to delivering services – to ensure that the provider receives payment for services during those months (including collection of full or partial payment from the consumer). If the provider requires full or partial payment, and the consumer pays all past-due premiums and the insurer pays the pended claims, the provider must refund all payments received from the consumer to the extent the payments exceed the consumer’s responsibility.

Although the new bulletin does not add compliance requirements for employers or plans, employers should be aware of the bulletin in case issues arise with respect to grace periods and claim payments.

Bulletin No. B-4.77 »

August 26, 2014

On June 9, 2014, Colorado’s health insurance exchange, “Connect for Health Colorado,” announced in a press release that it has approved its budget for the 2014–15 fiscal year. To help fund the state’s exchange in future years, the budget includes transitional funding authorized by 2013 Colorado legislation, allowing the exchange to set a $1.80 per member per month health insurance carrier assessment. Other states have implemented similar assessments or user fees as a way to fund state exchanges going forward. The approved budget reduced the assessment to $1.25 per member per month. The assessment appears to apply to all health insurance policies issued in Colorado from July 1, 2014, through June 30, 2015. Thus, all health insurance policies – individual and small and large group – issued on or off the exchange in Colorado will be subject to the $1.25 per member per month assessment. While the press release and assessment relate to insurers, the assessment may be passed on to employers and individuals via increased premium rates.

Press Release »

The Colorado Division of Insurance recently promulgated regulations that require the inclusion of a two- to three-page supplement to the PPACA-required SBC for each plan provided to state residents. The SBC supplements must be distributed with SBCs and contain additional information about deductibles, covered cancer screenings, pre-existing condition rules, balanced billing and binding arbitration clauses. The regulations require insurance carriers to produce and distribute the SBC supplement for fully insured plans. Self-insured plans are exempt from the requirement. While Colorado employers have no obligation to produce or distribute the SBC, they should be aware of the additional requirement.

SBC Supplement Regulations and Sample »

August 12, 2014

On July 25, 2014, the U.S. District Court for the District of Colorado, in Burns v. Hickenlooper, No. 1:14-cv-01817-RM-KLM (D. Colo. 2014), ruled that Colorado's constitutional and statutory prohibitions against same-sex marriage are unconstitutional. The court blocked the state from enforcing the prohibitions, but stayed its ruling until Aug. 25, 2014, thereby allowing time for the state to appeal the decision. Previously, on July 9, 2014, (as reported in the July 15, 2014, edition of Compliance Corner) a Colorado state court also ruled that the state's same-sex marriage ban is unconstitutional (but also stayed its ruling). So for now, the same-sex marriage prohibitions in Colorado remain in effect, pending the outcome of the appeals.

Burns v. Hickenlooper »

July 15, 2014

On July 9, 2014, the Colorado District Court for Adams County, in Brinkman v. Long, struck down Colorado's ban on same-sex marriage. The Colorado law passed by voters in 2006 defines "marriage" as only between a man and a woman. The court struck down the law as an unconstitutional violation of due process and equal protection. The court stayed the ruling, meaning that same-sex marriages cannot take place in Colorado while the case is appealed. The issue of same-sex marriage appears to be headed to the U.S. Supreme Court, as other similar cases have already made their way further up in the appellate process. NFP Benefits Compliance will continue to monitor developments on this case, as same-sex marriage has significant implications for employers and their health benefit plan offerings.

Brinkman v. Long »

On June 30, 2014, the Colorado Division of Insurance issued Bulletin No. B-4.76, which relates to short-term, limited duration health benefit plans and special enrollment periods. The purpose of the bulletin is to inform carriers and consumers that short-term, limited duration health benefit plans do not qualify as minimum essential coverage (MEC) under PPACA's individual mandate and that loss or termination of a short-term health plan does not trigger a special enrollment period that would allow a consumer to purchase a PPACA-compliant health benefit plan outside of an open enrollment period. The bulletin states that all carriers that sell or issue short-term health plans must include on all marketing materials and the policy's face page a statement that the plan does not qualify as MEC and that a termination or other loss of a short-term plan does not constitute a special enrollment right for other coverage.

Bulletin No. B-4.76 »

June 3, 2014

On May 19, 2014, the Colorado Division of Insurance issued Bulletin No. B-4.75. The bulletin is directed toward insurers, and contains the notices that must be delivered to consumers (i.e., employers) with non-PPACA-compliant health benefit plans that an insurer has elected to continue into 2015. Previously, the division announced, in Bulletin No. B-4.73, that it will allow insurers to continue such non-PPACA-compliant plans through 2015, as allowed by a March 4, 2014, CMS announcement of a two-year extension to their transitional policy on the issue.

The new bulletin clarifies that insurers do not have to continue non-PPACA-compliant plans, but that if they choose to do so, they must use the notices attached to the bulletin. The notices must be distributed to policyholders no later than 30 days prior to the start of any limited or special enrollment period. The bulletin contains no employer requirements, but employers should be aware of the bulletin, particularly if they have previously had their plans cancelled. Employers in this situation should reach out to insurers to determine if their plans can be continued in light of the division's position.

Bulletin No. B-4.75 »

May 20, 2014

On May 5, 2014, the Colorado Division of Insurance issued Bulletin No. B-4.73, which relates to the March 4, 2014, CMS announcement of a two-year extension to the transitional policy for non-PPACA-compliant health benefit plans (as covered in the March 11, 2014, edition of Compliance Corner). The bulletin formalizes a May 2, 2014, division press release on the same topic. According to the bulletin, the division will allow insurance carriers to continue non-PPACA-compliant health plans through 2015. Since continuation of cancelled plans is optional, Colorado employers that had their plans cancelled should consult with their carriers on whether those plans can be continued in light of the bulletin.

Bulletin B-4.73 »

On May 5, 2014, the Colorado Division of Insurance issued Bulletin No. B-4.74, which relates to the definition of "renewed" as it applies to health insurance. According to the bulletin, carriers and consumers (e.g., employers) should refer to the policy contract language first whenever any questions concerning the term "renewed" arises. Absent a specific definition in the contract, though, "renewed" means a policy renewed upon the occurrence of the earliest of:

  • The annual anniversary date of issue
  • The date on which premium rates can be or are changed according to the terms of the plan
  • The date on which benefits can be or are changed according to the terms of the plan

The bulletin further expounds on the definition. Colorado employers should be aware of the definition, since it applies in several different contexts with respect to plan offerings, including the renewal date upon which federal and state regulations may take effect. Employers should review their policy contract and familiarize themselves with the appropriate definition of "renewed."

Bulletin B-4.74 »

May 6, 2014

On May 2, 2014, the Colorado Division of Insurance issued a press release relating to the March 4, 2014, CMS announcement of a two-year extension to the transitional policy for non-PPACA-compliant health benefit plans (as covered in the March 11, 2014, edition of Compliance Corner). According to the press release, the Division of Insurance will allow insurance carriers to continue non-PPACA-compliant health plans through 2015. Since continuation of cancelled plans is optional, Colorado employers that had their plans cancelled should consult with their carriers on whether those plans can be continued in light of the press release.
Bulletin No. B-4.71 »

April 22, 2014

On April 3, 2014, the Colorado Division of Insurance issued Bulletin No. B-4.71. The new bulletin relates to the minimum benefit for applied behavioral analysis (ABA) treatment for autism spectrum disorder for children, and is meant to clarify the minimum amount of such treatment that carriers must provide. Specifically, all group health insurance policies must provide, at a minimum, $34,000 annually in ABA therapy benefits for children through age 8, and $12,000 for children age 9 to age 19, regardless of the number of visits required to reach those benefit amounts. If the minimum ABA therapy benefits of $34,000 or $12,000, as applicable, have not been provided when the minimum number of visits has been reached, additional visits must be authorized until the $34,000 or $12,000 minimums have been provided. The current number of visits established by rule is 550 visits for a child through age 8 and 185 visits for a child aged 9 to 19. Although the bulletin is directed toward insurers, employers with fully insured plans in Colorado should be aware of the coverage requirements.
Bulletin No. B-4.71 »


On April 3, 2014, the Colorado Division of Insurance issued Bulletin No. B-4.72. The new bulletin is meant to clarify that limited benefit plans, hospital indemnity or other fixed indemnity plans should not be marketed or represented as substitutes for health benefit plans, and that such plans do not provide sufficient coverage to qualify as minimum essential coverage for purposes of PPACA. The bulletin reminds insurers that such plans are not major medical insurance or comprehensive policies and do not provide the necessary PPACA-compliant coverage, and therefore may leave a consumer or individual liable for the individual mandate penalty under PPACA. Insurers selling these limited benefit or indemnity plans that are marketed as a substitute for or equivalent to a PPACA-compliant plan may be inviting liability under Colorado’s misleading and deceptive practice laws. In addition, insurers who sell limited benefit plans must provide notice that the plan does not provide minimum essential coverage as mandated by PPACA. The bulletin provides required language that must be included on the policy’s front page. Although the bulletin is directed toward insurers, employers will want to be aware of the bulletin and the appropriate types of coverage that will be considered sufficient for purposes of PPACA.
Bulletin No. B-4.72 »

January 28, 2014

On Jan. 14, 2014, the Colorado Division of Insurance issued Bulletin No. B-4.69. The bulletin is directed toward insurers, and is meant to help clarify the meaning of "reasonable assurance" for purposes of ensuring an individual's (in the individual market) or employer's (in the small group market) possession of pediatric dental coverage as an essential health benefit (EHB) under PPACA. As background, individual and small group policies sold both inside and outside of the exchange now must cover EHBs, which includes pediatric dental coverage. Carriers offering health benefit plans inside the exchange do not have to provide pediatric dental coverage as long as a certified stand-alone pediatric dental plan is available for purchase on the exchange.

On the other hand, carriers offering plans outside the exchange must have reasonable assurance that the purchaser already has pediatric dental EHB coverage prior to issuing a plan that does not contain such coverage. According to the bulletin, the division has created two methods to ensure compliance with the reasonable assurance standard. The first is through an application developed by the division that allows an applicant to certify that pediatric dental coverage has been obtained under another plan (and the carrier may require the applicant to provide proof). The second is through the sale of exchange-certified "child only" pediatric dental policies at low or no cost to individuals and families that have no children. The bulletin states that these new policies allow purchasers to obtain the required pediatric dental coverage with full knowledge that the benefit will never be needed or used. The proof of purchase of that policy meets the reasonable assurance requirement.

Small employers in Colorado should review the bulletin to better understand the reasons for the pediatric dental coverage requirement, and the reasons why a carrier may be asked to provide reasonable assurances if purchasing a small group plan outside the exchange.
Bulletin No. B-4.69 »


Connecticut

April 14, 2020

Premium Grace Period Required

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On April 1, 2020, Gov. Lamont issued Executive Order No. 7S, which addressed various health and safety measures related to the coronavirus (COVID-19) pandemic. Amongst other items, the order requires insurers to provide a premium grace period for certain individuals and businesses affected by the COVID-19 emergency.

Following the coronavirus (COVID-19) outbreak, the governor declared a public health emergency on March 10, 2020. With recognition of the worker displacement and business disruption resulting from the disease and mitigation measures, the governor had previously issued a bulletin requesting that insurers take measures to prevent unnecessary policy cancellations or nonrenewals.

Order No. 7S now requires a 60-day grace period (beginning on April 1, 2020) with respect to premium payments and policy cancellations and nonrenewals for certain insureds affected financially by the COVID-19 emergency. The grace period is not a waiver or forgiveness of the owed premium, but rather an extension of time for payment.

The requirement applies to entities licensed or regulated by the Insurance Department that provide any insurance coverage in the state including, life, health, auto, property, casualty and other types. However, the extension is not automatic; eligible individuals or businesses would need to contact their carriers to avail themselves of the temporary relief.

Specifically, insurers must provide the extension to individual policy holders who, due to the COVID-19 pandemic, were laid off, furloughed, fired from employment, or otherwise sustained a significant loss in revenue. Additionally, the grace period must also be extended to businesses that are group policyholders, have group insurance and/or property/casualty insurance, and were required to close or significantly reduce operations or suffered significant revenue loss as a result of the COVID-19 pandemic. Qualifying individuals or businesses may be required to provide a supporting affidavit or other statement acceptable to their carriers.

Although this provision of the order is primarily directed at insurers, employers should be aware of these developments and the available temporary premium relief for qualifying individuals and businesses.

Executive Order No. 7S »

Financial Protections for Health Care Providers and Consumers

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On April 5, 2020, Gov. Lamont issued Executive Order No. 7U, which aimed to provide financial protections to health care providers and consumers. These measures are intended to ensure the state’s health care workforce and facilities have the necessary capacity to address the coronavirus (COVID-19) pandemic. Additionally, the order seeks to mitigate the adverse financial impacts of COVID-19 treatment on consumers.

As background, the governor had declared a public health emergency due to the COVID-19 crisis on March 10, 2020. In response, the state’s health care workforce was supplemented by professionals who did not maintain liability coverage, including volunteers and out-of-state professionals. Additionally, the state recognized that the unexpected costs of COVID-19 treatment may significantly affect the financial security of the state’s residents.

As a result, the order provides certain protections from civil liabilities for health care professionals and facilities due to acts or omissions that were undertaken in good faith while supporting the state’s COVID-19 response. Included are acts or omissions resulting from a lack of resources that prevented a level or manner of care that would normally be required absent the pandemic.

The consumer financial protections extend to the uninsured and those covered by insurance who receive out-of-network health care services during the emergency. Specifically, if emergency services are provided to an insured out-of-network, the carrier may be billed directly and is only required to pay the in-network rates as payment in full for the services. Additionally, the order specifies that a hospital providing COVID-19 treatment and management services to an uninsured patient may collect no more than the Medicare rate for such services as payment in full. Furthermore, hospitals are prohibited from billing individuals for uncovered COVID-19 treatment and management services pending clarification of the availability of federal funds to cover such services.

The order is primarily directed at health care providers, facilities and hospitals, but employers should be aware of these developments.

Executive Order No. 7U »


March 31, 2020

Access Health Announces Special Enrollment Period Due to Coronavirus Emergency

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On March 18, 2020, the state’s health insurance exchange announced a special enrollment period (SEP) available to uninsured residents. During this SEP, eligible individuals will be able to enroll in insurance coverage through Access Health CT.

This measure was taken as a result of the COVID-19 emergency to further protect the public health of state residents. Access Health and the exchange’s insurers, Anthem and ConnectiCare, recognized the need to permit the uninsured to enroll and have access to testing and treatment.

The special enrollment period extends from March 19 through April 2, 2020. Individuals who enroll during this period will generally have coverage effective starting April 1, 2020.

Employers should be aware of this limited enrollment period, which may provide an option for individuals not otherwise eligible to enroll in coverage.

SEP Announcement and FAQs »

Governor Issues Coronavirus Public Health Emergency Response Order

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On March 19, 2020, Gov. Lamont issued Executive Order No. 7G, addressing various health and safety measures related to the coronavirus (COVID-19) pandemic. Among other items, the order addressed the use of telehealth services during the pandemic.

Following the coronavirus (COVID-19) outbreak, the governor declared a public health emergency on March 10, 2020. With recognition of the benefits of expanded telehealth services during the pandemic, the order includes provisions that suspend existing telehealth limitations and restrictions.

Specifically, the order permits telehealth providers that are in-network providers for fully insured plans to provide covered telehealth services to patients with whom there is an existing provider-patient relationship through the use of audio-only phone. The order also suspends certain licensing requirements for telehealth providers. Additionally, the order requires that a provider who receives payment for telehealth services shall not bill the patient for any additional charges beyond the health plan reimbursement. Any related regulatory requirements that such telehealth services be provided from a provider’s licensed facility are also waived.

The memo is directed at state citizens and covers numerous topics in addition to telehealth services.

Executive Order No. 7G »

Insurance Department Calls for Premium Grace Period

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On March 24, 2020, the Insurance Department issued Bulletin Number IC-40 regarding insurance premium payments during the coronavirus (COVID-19) pandemic. The bulletin is directed at admitted and non-admitted insurance companies, licensed producers and other interested parties.

Due to the significant economic disruptions and loss of income following the COVID-19 outbreak, consumers and businesses have been substantially impacted. As a result, the bulletin requests insurers providing any coverage in the state, including life, health, auto, property, casualty and other types, to offer a premium grace period.

Specifically, the Department requests that all insurance companies provide their insureds with at least a 60 day grace period to pay insurance premiums and thus avoid cancellation for nonpayment. The request is intended to be applied to premiums due after the initial premium has been made to secure coverage. It is not intended as a forgiveness of the premium, but an extended grace period for payment without penalty or interest. The memo also requests that agents and brokers who accept insurance premium payments on behalf of insureds provide customers with alternative prompt payment options, such as online payments, to eliminate the need for in person payments.

Employer and brokers should be aware of this premium grace period request.

Bulletin Number IC-40  »


March 17, 2020

Coronavirus Outbreak and Testing Bulletin

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On March 9, 2020, the Connecticut Insurance Department issued Bulletin No.IC-39 to health insurance companies and health care centers authorized to conduct business in the state. The bulletin provides directions to these entities with respect to the coronavirus (COVID-19) outbreak and related issues.

As background, concerns have arisen that cost sharing may be a barrier to covered individuals seeking COVID-9 testing and treatment. Additionally, it is important that the health care insurers and centers are prepared both to inform individuals of their covered benefits and to address increased COVID-19 cases and claims.

Accordingly, the bulletin encourages these entities to waive cost sharing related to COVID-19 laboratory tests, health care provider visits and telehealth services (including out-of-network services when in-network availability is unreasonable). The Department also urges the insurers and centers to authorize payment to pharmacies for a ninety (90) day supply of maintenance prescription medications for individuals. Furthermore, leniency is encouraged with respect to enforcement of otherwise applicable utilization review penalties and claims filing deadlines.

The bulletin is directed at health care insurers and centers, who are requested to inform the Department of measures taken in response. Employers should be aware of this development.

Bulletin No. IC-39 »


February 4, 2020

Guidance Regarding Health Insurance Tax Repeal

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On December 27, 2019, the Insurance Department issued a bulletin to health insurance providers regarding necessary filing and credit adjustments following the Health Insurance Tax repeal. The guidance affects employer groups with plan years beginning between January 1, 2020, and December 1, 2020.

Since 2014, the ACA Health Insurance Tax imposed a sales tax on health insurers, and those insurers generally passed the cost along to consumers and employers by increasing the health plan premium. On December 19, 2019, Congress permanently repealed this tax effective January 2021. However, for plan years beginning after January 1, 2020 (and therefore covering part of 2021), the 2021 portion of the tax was already included in the premium rate charged.

Accordingly, the guidance directs carriers that have approved group rates for plan years beginning in 2020 to refile such rates for the second, third, and fourth quarter of 2020 to remove the fee for the corresponding portion of the plan year in 2021. Filings should be submitted no later than March 1, 2020. For groups with plan years beginning February 1, 2020, through March 31, 2020, carriers are directed to provide a credit or refund of the 2021 fee to the employer group in the 2020 plan year.

Although the bulletin is directed at insurance carriers that deliver or issue group health insurance policies in Connecticut, affected employers should also be aware of the guidance and rate refiling requirements. Additionally, employers with plan years beginning February 1, 2020, through March 31, 2020, should expect a credit or refund of the 2021 health insurance tax fee in the 2020 plan year. They should also analyze any responsibility to return a portion of any such refund to plan participants based on ERISA guidelines.

BULLETIN No. HC-127 »


July 9, 2019

Paid Family Leave Law Enacted

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On June 25, 2019, Gov. Lamont signed into law SB 1, creating Public Act No. 19-25. This is a new law in CT relating to paid family and medical leave (CT PFML). It generally requires all private employers with employees who work in CT to provide paid leave to eligible employees, and the law expands the reasons for which an employee may take a leave. As background, CT already has protections for family and medical leave under its CT family and medical leave Act (CF MLA) — but that law does not require a protected leave to be paid. The new law CT PFML creates that new paid leave requirement, as outlined below.

Beginning on January 1, 2022, eligible employees may begin taking CT PFML leave. CT PFML provides up to 12 weeks of paid family or medical leave within a 12-month period. In addition, employees who have a serious health condition resulting in incapacitation during pregnancy will be eligible for two additional weeks of paid leave. An employee is eligible for CT PFML if they have been working for at least three months prior to the leave request. Generally speaking, the benefit amount is 95% of the employee’s base weekly earnings, capped at an amount that is 60 times the state minimum wage.

CT PFML will be administered by the state (through a newly created regulatory board), so employers will not have to provide benefit payments. However, CT employers will – beginning in 2022 – have to notify their employees of their rights under CT PFML. We anticipate that the new CT regulatory board will provide model notices in advance of that employee notification requirement. Employers will have to notify employees both upon hire and annually thereafter.

CT PFML applies to employers with as few as one employee (and appears to include remote employees working in CT, even if the employer primarily operates in a different state). CT PFML also expands the definition of “family member” to include an employee’s spouse, sibling, son or daughter, grandchild, grandparent, domestic partner, or an individual related to the employee by blood or affinity (if that affinity can be shown to be the equivalent of a family relationship). Employees can take CT PFML for the same reasons they could take CFMLA, which include birth, adoption, or foster care of a child, to take care of a spouse or family member who has a serious health condition, for the employee’s own serious health condition, to serve as an organ or bone marrow donor, or because of any qualifying exigency arising out of a military duty (a family member is on active duty or has been notified of an impending call or order to active duty in the armed forces).

CT’s PFML will be funded through an employee payroll tax of 0.5%, which will begin in January 2021. The new payroll tax will be subject to the Social Security cap (currently $132,900). Employers will need to work with payroll providers to ensure the appropriate taxes are withheld — they’ll have a year and a half to work through that, considering the January 2021 applicability date.

CT PFML does allow for employers to apply for an exemption, assuming the employer provides a private plan that is at least as generous as CT PFML’s requirements for paid leave. CT’s regulatory board has been directed to outline the exemption process. Separately, employers participating in the state plan can coordinate their leave policies with CT PFML. They can require employees to substitute PTO or other paid leave during a CF MLA leave, although the employee still has the right to reserve up to two weeks of any such available PTO or other paid leave.

Overall, the new law creates additional responsibilities for employers with employees in CT. CT PFML requirements do not take effect until 2021 (employee payroll deductions commence) and 2022 (employees may begin taking leave), so there is plenty of time. But employers should work with their payroll providers and outside counsel in developing appropriate leave policies to include CT’s new PFML requirements.

Public Act No. 19-25 »
Press Release »


June 11, 2019

Guidance on Stop-Loss Insurance Policies

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On May 6, 2019, the Insurance Department published Bulletin HC-126. The bulletin relates to stop-loss insurance policies in Connecticut. According to the bulletin, the department will not approve stop-loss policies that have an annual attachment point for claims incurred per individual that is lower than $20,000. For groups of 50 or fewer, the department will not approve polices that have an annual aggregate attachment point that is lower than the greater of $4,000 times the number of group members, 120% of expected claims, or $20,000; for groups of 51 or more, that aggregate attachment point must be higher than 110% of expected claims. Lastly, the department will not approve polices that provide direct coverage of health care expenses of an individual.

The bulletin also outlines several provisions in stop-loss policies that will not be allowed, including claims denials that the employer is legally obligated to pay under the health plan, medical necessity and usual or customary determinations, experimental or investigational determinations, case management requirements and mandated provider networks, or benefits incentives for enrollees. The bulletin includes a full list of such prohibited provisions. The bulletin also states that lasering (the practice of assigning different attachment points or deductibles, or denying coverage for, individual employees or dependents with pre-existing, high cost medical conditions) is allowed during the stop-loss process, but that no attachment point for an enrollee can exceed three times the attachment point for the policy. Finally, the bulletin states that retiree-only stop-loss policies are not subject to the above restrictions, but that the department will review each such policy on a case-by-case basis.

While directed to stop-loss carriers, employers with self-insured plans that use a stop-loss policy issued in CT should be aware of the bulletin. Such employers can work with their adviser or carrier on any questions regarding the bulletin.

Bulletin HC-126 »


April 2, 2019

Clarification of Infertility Treatment Mandates

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On March 19, 2019, Ins. Commissioner Mais issued Bulletin HC-125 to clarify CT’s mandated coverage for infertility treatments. In 2017, CT started to require that carriers provide coverage for medically necessary expenses of the diagnosis and treatment of infertility. This new bulletin clarifies that the harvesting of eggs and sperm is a covered benefit in cases where the patients will undergo treatment that has the potential to render them infertile. Carriers and physicians may continue to use reasonable medical management to determine if the treatment is otherwise medically necessary. The carrier may apply plan copayments deductibles, and coinsurance (range from zero to 50 percent). Male infertility treatment is covered under this mandate.

Separately, the bulletin reminds carriers of the prohibition of the use of age-benefit restrictions in the infertility treatment for policies issued or renewed on or after January 1, 2016.

Bulletin HC-125 »


October 30, 2018

Connecticut to use AV Calculator

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On Oct. 24, 2018, Ins. Commissioner Wade published Bulletin HC-124 to eliminate the maximum copayment amounts for specified categories of benefits for health insurance plans with the exception of those cost sharing maximums set by statute, and instead use the federal Actuarial Value (AV) calculator. The bulletin rescinds HC-109 issued on Feb. 5, 2016.

The transition from benefit-by-benefit maximums to the use of the AV calculator is intended to allow more flexibility in developing innovative plan designs to meet a wider range of consumer needs while assuring that consumers still receive significant cost sharing benefits that meet ACA standards.

Going forward, the calculation of the maximum cost sharing allowed will require the use of the most recent CMS/CCIIO published AV calculator. The enrollee cost sharing amount shall never exceed 50 percent for the plan benefits provided (for both in- or out-of-network benefits) and there’s no restriction on the differential of the coinsurance level between in- and out-of-network benefits. The individual and small group market will continue to meet the standards of the ACA Metal Tiers.

Self-insured plans should familiarize themselves with the AV calculator to ensure compliance with actuarial value going forward. Employers with fully-insured plans don’t need to take any action.

HC-124 »


September 5, 2018

Association Health Plan Regulation of Out-of-state Plans

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On Aug. 27, 2018, Insurance Commissioner Wade released Bulletin HC-123 to provide additional information regarding the regulation of association health plans (AHPs) that are established out of state but offered to Connecticut residents. Specifically, fully insured plans that are established outside of CT that sell products to CT small employers or sole proprietors must file rates and forms for prior approval with the Insurance Department. Further, employers should be aware that their participation in an out-of-state fully insured MEWA (or Multiple Employer Trust (MET)) will fall under CT’s jurisdiction.

This bulletin supersedes HC-122, which was released Aug. 10, 2018. (We discussed that bulletin in the Aug. 21, 2018 edition of Compliance Corner). That bulletin reminded insurers that the state retains the right to regulate MEWAs and METs regardless of changes to federal law.

This new bulletin also reminds employers of previous guidance regarding self-insured or self-funded MEWAs or METs. In 1990, the commissioner issued Bulletin HC-43, which required self-funded MEWAs and METs to be licensed as insurance carriers because they were considered as doing the business of insurance. If a self-funded MEWA or MET is doing the business of insurance without authority or license, then they are considered an illegal operation.

CT employers don’t need to take any action, but just take note that CT is reaffirming the department’s longstanding commitment to regulating unlicensed entities for the protection of consumers.

Katherine L. Wade. “Bulletin HC-123.” Connecticut Insurance Department, www.ct.gov »


August 21, 2018

Association Health Plan Restrictions

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On Aug. 10, 2018, Commissioner Wade issued Bulletin HC-122 to remind insurers that state law continues to regulate association health plans.

As background, on June 21, 2018, the DOL issued final regulations regarding association health plans (AHPs). Under the regulations, a group or association of employers may act as a single “employer” sponsor of an association health plan under ERISA. The federal regulations attempted to encourage the creation of these associations, but emphasized that the states retain their authority to regulate AHPs. This bulletin clarifies the coordination with CT law.

CT allows fully insured AHPs, but any “small employer” participating in an AHP must continue to be rated as a small employer. CT defines a “small employer” as an employer with at least one but no more than 100 employees during the preceding calendar year and that employs at least one employee on the first day of the group plan’s year. The state does not consider a sole proprietorship that employs only the sole proprietor or the spouse of such sole proprietor to be a “small employer.”

The bulletin further clarifies that AHPs are considered MEWAs, and that self-insured MEWAs or multiple employer trusts (METs) must be licensed as an insurance carrier in the state. An employer that operates a self-insured MEWA or MET without authority or license is considered an illegal operation.

The main purpose of this bulletin is to remind insurers that the state retains the right to regulate MEWAs, regardless of changes to federal law. Employers should be aware that their participation in a fully insured MEWA will likely fall under CT’s jurisdiction. The state also took the time to reiterate that an organization operating (or seeking to operate) a self-funded MEWA must be licensed as an insurance carrier to do so or risk being considered an illegal operation.

Bulletin HC-122 »

Requirements for Short-term, Limited-Duration Health Policies

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On Aug. 9, 2018, Commissioner Wade issued Bulletin HC-121 to reiterate the state’s requirements that relate to short-term, limited-duration health insurance policies. The bulletin states that such plans are considered an individual health policy that must provide essential health benefits (EHBs) and that any plan (including a renewable plan) that’s longer than six months in duration must not exclude coverage for preexisting conditions. In addition, each issued policy must be filed with the state as one of the following: (i) basic hospital expense coverage; (ii) basic medical-surgical expense coverage; (iii) major medical expense coverage; (iv) hospital or medical service plan contract; or (v) hospital and medical coverage provided to subscribers of a health care center.

As background, the HHS and DOL issued final regulations regarding short-term, limited-duration health plans on Aug. 1, 2018. The regulations extend the permissible policy time frame to no more than 12 months (an increase from the previous maximum of three months) and allow such a policy to be renewed or extended for a period of up to 36 months in total. Such short-term policies are exempt from the ACA’s individual market rules, but remain subject to state regulation.

The primary purpose of this bulletin is to remind insurers of the state’s requirements for short-term, limited-duration health policies. Employers should be aware that though these plans may be a lower cost option for individuals that just experienced a separation of employment, it doesn’t change an employer’s obligation to make an offer of COBRA (or state continuation), if otherwise required.

Bulletin HC-121 »


July 10, 2018

Telehealth Services

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On June 12, 2018, Gov. Malloy signed SB 302 into law. The new law, effective July 1, 2018, revises provisions regarding telehealth services to specify that “telehealth” means delivering health-care services through information and communication technologies to facilitate health-care management, consultation, diagnosis, education, self-management, or treatment of plan participants' physical and mental health when participants are located at originating sites and telehealth providers are located at distant sites. Telehealth includes synchronous interactions, asynchronous store and forward transfers or remote monitoring. Telehealth doesn't include fax transmissions, audio-only telephone, texts or e-mail.

There is no specific action required of employers, but they should work with insurers to understand the required coverage and update the plan accordingly.

SB 302 »

Act Mandates Coverage of Essential Health Benefits and Expands Health Benefits for Women, Children and Adolescents

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On May 25, 2018, Gov. Malloy signed HB 5210 into law. The new law requires small employer plans to provide coverage for certain preventive care services with no cost sharing to participants. The coverage is similar to that required of non-grandfathered plans under the ACA, but the state mandate will also to grandfathered plans and will remain in place even if the federal requirement is repealed or altered.

The law also requires certain treatment for women, children and adolescents and seems aimed at protecting some of the preventive services guaranteed by the ACA on the state level (should the ACA be repealed, and based on the changes to the contraceptive mandate).

Specifically, plans must provide coverage for preventive care screenings for plan participants age 21 and younger in accordance with most recent edition of American Academy of Pediatrics' Bright Futures: Guidelines for Health Supervision of Infants, Children, and Adolescents or any subsequent corresponding publication. Issuers can't impose coinsurance, copayments, deductibles or other out-of-pocket expenses for coverage of preventive care screenings benefits and services. Cost-sharing when such benefits and services are provided out of network is permissible except in high-deductible health plans that are used to establish HSAs.

Additionally, plans that provide coverage for prescription drugs must provide coverage for immunizations recommended by the American Academy of Pediatrics, the American Academy of Family Physicians and the American College of Obstetricians and Gynecologists, and immunizations that have in effect a recommendation from the Advisory Committee on Immunization Practices of the federal Centers for Disease Control and Prevention

Plans must also provide coverage for evidence-informed preventive care screenings for infants, children, adolescents and women provided in guidelines supported by the federal Health Resources and Services Administration, as effective on Jan 1, 2018, and such additional preventive care and screenings provided for in any comprehensive guidelines effective after Jan. 1, 2018; and evidence-based items or services that have a rating of ‘A' or ‘B' in the current recommendations of the US Preventive Services Task Force effective after Jan. 1, 2018.

Further, plans must provide coverage for screening and counseling for interpersonal and domestic violence for female plan participants.

And as it pertains to tobacco use by women, plans must provide coverage for tobacco use intervention and cessation counseling for female plan participants who consume tobacco.

In seeking to protect some of the women's services offered under the ACA, the law also requires plans to must also provide certain women's healthcare services coverage for the following preventive care, benefits and services:

  • Well-woman visits for female plan participants who are younger than age 65
  • Breast cancer chemoprevention counseling for female plan participants who are at increased risk for breast cancer due to family history or prior personal history of breast cancer, positive genetic testing or other indications as determined by participants' physicians or advanced practice registered nurses
  • Breast cancer risk assessment, genetic testing and counseling
  • Gonorrhea, human immunodeficiency virus, chlamydia, cervical and vaginal cancer and sexually transmitted infections screenings for sexually-active female participants
  • Human papillomavirus screening for female plan participants with normal cytology results who are age 30 or older
  • Anemia screening and folic acid supplements for pregnant female participants and female participants likely to become pregnant
  • Hepatitis B and Rh incompatibility screenings for pregnant female participants and follow-up testing for such participants who are at risk for Rh incompatibility
  • Syphilis screening for pregnant female participants and female participants who are at increased risk for syphilis
  • Urinary tract infection and other infection screenings for pregnant female participants
  • Gestational diabetes screening for female participants who are 24-28 weeks pregnant and female participants who are at increased risk for gestational diabetes
  • Osteoporosis screening for female participants who are age 60 or older

The same is true of maternity healthcare, and the law requires plans to provide coverage for:

  • Anemia screening and folic acid supplements for pregnant female participants and female participants likely to become pregnant
  • Rh incompatibility screenings for pregnant female participants and follow-up testing for such participants who are at risk for Rh incompatibility
  • Syphilis screening for pregnant female participants and female participants who are at increased risk for syphilis
  • Urinary tract infection and other infection screenings for pregnant female participants
  • Breastfeeding support and counseling for pregnant or breastfeeding plan participants
  • Breastfeeding supplies, including, but not limited to, breast pumps for breastfeeding participants
  • Gestational diabetes screenings for female participants who are 24-28 weeks pregnant and female participants who are at increased risk for gestational diabetes

Finally, the law imposes a state requirement for plans to provide coverage for all contraceptive methods. Specifically, plans must provide coverage for the following benefits and services:

  • All contraceptive drugs, including, but not limited to, all FDA-approved over-the-counter contraceptive drugs (such plans can require plan participants to use contraceptive drugs designed by the FDA as therapeutically equivalent to contraceptive drugs prescribed to participants prior to using prescribed contraceptive drugs, unless participants' prescribing health-care providers determine otherwise)
  • All contraceptive devices and products, excluding all FDA approved over-the-counter contraceptive devices and products (such plans can require plan participants to use contraceptive devices or products designated by the FDA as therapeutically equivalent to contraceptive devices or participants' prescribing providers request less than a 12-month supply. Participants aren't entitled to receive a 12-month supply of such contraceptive drugs, devices, or products more than once during any policy year
  • All FDA-approved sterilization procedures for female plan participants
  • Routine follow-up services related to FDA-approved contraceptive drugs, devices and products
  • Counseling in FDA-approved contraceptive drugs, devices, and products and proper use of such drugs, devices, and products

Keep in mind, though, that the law includes a Religious Employer Exemption. Essentially, employers that are organized to promote religious beliefs, such as churches and church-affiliated organizations aren't required to offer plans that provide coverage for prescription contraceptive methods if contraceptive use conflicts with employer's' religious beliefs. Employers that are organized to promote religious beliefs, such as churches and church-affiliated organizations, aren't required to offer plans that provide coverage for contraceptive benefits and services if contraceptive use conflicts with employers' religious beliefs. There's no specific action required of employers in this regard, but employers with fully-insured plans in Connecticut should work with insurers to understand the required coverage and update the plan accordingly.

Public Act No. 18-10 »


March 20, 2018

Moratorium on Health Insurance Tax Impacts Carrier Rates

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On Feb. 21, 2018, the Connecticut Insurance Department published Bulletin HC-119, which relates to the 2019 moratorium on the health insurance provider fee (also known as the health insurance tax, or HIT). As background, the fee was placed on a moratorium for 2019 as part of 2017 tax reform. According to the bulletin, insurance carriers in Connecticut have included a portion of the 2019 fee as part of the 2018 premium charged to employer groups with plan years beginning between Jan. 1, 2018, and Dec. 1, 2018. The bulletin directs such carriers to refile their rates for the second, third and fourth quarters of 2018 to remove the fee for the portion of the plan year in 2019. The bulletin also directs carriers to provide a credit or refund of the 2019 fee to the employer group in the 2018 plan year.

While the bulletin is directed at carriers, employers with fully insured plans in Connecticut may want to reach out to their carriers for additional information regarding a potential credit or refund relating to the fee’s moratorium in 2019.

Bulletin HC-119 »

August 8, 2017

Limits on Participant Payments for Prescription Drugs at the Point of Sale

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On July 10, 2017, Gov. Malloy signed SB 445 into law, creating Public Act No. 17-241. This law states that health plan issuers cannot require plan participants to pay for prescription drugs at the point of sale in an amount that exceeds the applicable copayment, the allowable claim amount or the amount they must pay if they don’t have health plan coverage or other source of drug benefits or discounts (whichever of those is lowest). An “allowable claim amount” is generally defined to mean the amount the issuer pays the pharmacies for prescription medications.

This law is effective Jan. 1, 2018. Although the law doesn’t impose any new employer compliance obligations, employers may want to be aware of the new requirements in case questions should arise regarding prescription drug costs for employees.

Public Act No. 17-241 »


Treatment of Substance Abuse and Opioid Addiction

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On June 30, 2017, Gov. Malloy signed HB 7052 into law, creating Public Act. No. 17-131. The new law requires plans that provide coverage to plan participants who are diagnosed with substance use disorders (which includes opioid addiction) to provide coverage for medically necessary and monitored detoxification services and for medically necessary and medically managed intensive inpatient detoxification services. The law defines “medically monitored detoxification services” and “medically managed intensive detoxification services” by the most recent edition of the American Society of Addiction Medicine (ASAM) Treatment Criteria for Addictive, Substance-Related and Co-Occurring Conditions. More information on ASAM can be found here.

In addition, plans may not establish terms, conditions or benefits that place a greater financial burden on plan participants for diagnosis or treatment of mental or nervous conditions than that which they provide for medical, surgical or other physical health conditions. Finally, plans must provide direct reimbursement for diagnosis and treatment of substance use disorders for covered services provided in Connecticut by out-of-network health care providers. Reimbursements must be allowed for multiple screenings as part of a single-day visit and to health care providers or multi-care institutions.

The new law contains no new employer obligations. But employers should acquaint themselves with the new rules for health plans and carriers. Generally speaking, employers should treat mental health conditions the same as physical health conditions. Not only does that help avoid potential discrimination problems, but also helps address the general countrywide trend of mental health awareness.

The new law is effective Jan. 1, 2018.

Public Act No. 17-131 »


Coverage and Definition of Infertility Expanded

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On June 20, 2017, Gov. Malloy signed HB 7124, creating Public Law No. 17-55. The new law expands the definition of “infertility” to mean conditions affecting plan participants who cannot conceive, produce conception or sustain a successful pregnancy during a one-year period, regardless of the insured’s health status. Prior law included the term “presumably healthy,” which potentially excluded those who may be unhealthy and unable to conceive. The law’s summary indicates that one potential class of “unhealthy” participants could be individuals with cancer, with the goal at expanding the “infertility” definition to include that class. Overall, the expanded definition takes effect Jan. 1, 2018.

Under current law, fully insured plans in Connecticut must provide coverage for infertility. Importantly, though, there is a religious employer exemption — employers that are organized to promote religious beliefs (such as churches or church-affiliated organizations) aren’t required to offer plans that provide coverage for diagnosis and treatment of infertility (if that practice conflicts with the employer’s religious beliefs).

The law contains no new employer compliance obligations, but awareness of the law will help employers address potential employee questions with respect to the definition and coverage of infertility.

Public Law No. 17-55 »

April 18, 2017

Coinsurance in HMO Plan Designs

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On April 4, 2017, the Connecticut Insurance Department published Bulletin No. HC-118. The bulletin relates to a bill currently pending passage in the Connecticut General Assembly (Bill No. 7023), which allows health care centers to offer HMO plan designs with coinsurance (a design that was previously disallowed). The bulletin requires health care centers to proceed with their 2018 individual and small group plan design filings under the assumption that the bill will pass. Should the bill not pass, the bulletin contains remedial instructions. Although no new employer obligations result from the bulletin, employers with small group plans should be aware of the new law, particularly if HMOs are offered as part of the benefit design.

Bulletin No. HC-118 »
Bill No. 7023 »

March 7, 2017

Reminders on Plan Prescription Drug Formularies

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On March 2, 2017, the Connecticut Insurance Department published Bulletin No. HC-113-17, which relates to information on plan formularies. The purpose of the bulletin is to set requirements and minimum standards for prescription drug formularies filed with the department. The bulletin reminds insurers of certain formulary requirements, including that the formulary must be easily electronically searchable, the medications within the formulary must be grouped in alphabetical order by therapeutic class, and the definition of each formulary tier must be clearly stated. In addition, definitions for utilization controls, such as quantity and dosage controls, prior authorization, step therapy and tier coverage must be clearly stated. The formulary must also include information on how to obtain drugs that are off formulary and how drugs might be obtained via mail order pharmacy. Lastly, the formulary must include customer service contact information.

The bulletin applies to insurers in connection with their annual filing requirements and contains no new employer obligations. However, the bulletin serves as a helpful resource for employers with fully insured plans in Connecticut.

Bulletin No. HC-113-17 »

June 28, 2016

On June 7, 2016, Gov. Malloy signed SB 262 into law, creating Public Act No. 16-195. This law expands the reasons an eligible employee may take leave under the Connecticut Family and Medical Leave Act (CTFMLA). In addition to the reasons currently listed in the CTFMLA, eligible employees may take leave due to a qualifying exigency (as defined by federal FMLA regulations) arising out of the fact that the spouse, son, daughter or parent of the employee is on active duty, or has been notified of an impending call or order to active duty, in the armed forces.

Under the law, in such circumstances private employees may take up to 16 work weeks of unpaid time off during any 24 month period. In order to qualify, a private employee must work for an employer with at least 75 employees and have been employed by the employer for at least 12 months and worked at least 1,000 hours during that time.

The law is effective immediately.

Public Act No. 16-195 »

June 14, 2016

On June 2, 2016, Gov. Malloy signed HB 5233 into law, creating Public Act No. 16-82. This law requires certain individual and fully-insured group health insurance policies to cover, at the option of the covered woman, mammograms provided by breast tomosynthesis. Breast tomosynthesis is a three-dimensional mammographic method. By law, such policies must cover baseline mammograms for women age 35 through 39, and annual mammograms for women age 40 or older. This law is effective Jan. 1, 2017.

Public Act No. 16-82 »

On May 27, 2016, Gov. Malloy signed HB 5053 into law, creating Public Act No. 16-43. The law requires insured group health plans that are delivered, issued, renewed, amended or continued on or after Jan. 1, 2017, to provide coverage for prescription drugs without prior authorization when they are in their formularies and are approved for treating drug overdoses. This law contains various provisions on opioid abuse prevention and treatment and related issues. Thus, there are various effective dates, starting as soon as upon the passage of this law.

Public Act No. 16-43 »

On May 27, 2016, Gov. Malloy signed HB 5591 into law, creating Public Act No. 16-29. This law establishes the Connecticut Retirement Security Program to improve the retirement security of workers in the state who do not have access to an employer-sponsored retirement plan or payroll deduction individual retirement account (IRA).

The law's requirements apply to all “qualified employers,” defined as private sector employers that employ at least five people each of whom was paid at least $5,000 in wages in the preceding calendar year. “Covered employees” are those who have worked for a qualified employer for a minimum of 120 days and are at least age 19 years old.

The law creates the Connecticut Retirement Security Authority (“the Authority”), which has been given the task of establishing the program, which will consist of Roth IRAs for eligible private-sector employees. The individual Roth IRAs will be established and maintained through the Authority's program or a third-party entity in the business of establishing and maintaining IRAs.

Under the program, qualified employers must automatically enroll each covered employee within 60 days after the employer provides the employee with the informational material on the program the bill requires. If the employee does not affirmatively opt in (contribution options are provided) the employer must enroll the employee with a contribution of at least 3 percent but not more than 6 percent of the employee's taxable wages (up to normal IRS limits). A covered employee may opt out of the program by electing a contribution level of zero. Employers will not be required to match contributions.

Finally, the law contains penalties for employers that fail to remit contributions or that fail to enroll employees.

The program is expected to be implemented by Jan. 1, 2018. Some sections of this law are effective immediately and others are effective July 1, 2016.

Public Act No. 16-29 »

March 8, 2016

On March 2, 2016, the Connecticut Insurance Department published Bulletin HC-111 regarding health insurance coverage for preventative services and the repeal and replacement of Bulletin HC-100 issued on Nov. 3, 2014. The bulletin is directed toward insurers and health care centers operating in Connecticut.

The revised bulletin still addresses health insurance coverage for preventative services. The bulletin clarifies requirements under the federal health care reform law and reconciles these requirements with Connecticut mandates for fully insured non-grandfathered group health plans, effective Jan. 1, 2015. A discussion of the interaction between federal and state mandates follows:

  • Clarifying that the term “reasonable medical management” under federal law should be based upon the statutory definition of “medical necessity” found in the Connecticut General Statutes Section 38a-482a.
  • Clarifying that “breastfeeding support” as required under federal law should take into account Connecticut mandates found under Connecticut General Statutes Section 38a-530c(d) and 38a-503c(d) which requires two follow up lactation support visits occur when a mother is discharged early from the hospital. The first visit must occur within 48 hours of discharge and the second follow up visit must occur within seven days of discharge.
  • Clarifying that contraceptive coverage must include any prescription contraceptive method approved by the Food and Drug Administration (FDA). This means that sterilization procedures for men may not be covered under federal law but may be covered by an insurance company separately, subject to state law.
  • Clarifying that maternity coverage, including prenatal care, is covered without cost sharing under federal law. However, services related to maternity that are not preventative may be subject to cost-sharing, although any preventative service with no direct guidance may be subject to medical necessity.

Bulletin HC-111 »

February 23, 2016

On Feb. 16, 2016, the Connecticut Insurance Department published Bulletin HC-110 regarding the one-year moratorium on the fee on health insurance providers (called “covered entities”). The bulletin is directed toward insurers, and states that they must suspend the collection of the fee for the 2017 calendar year.

As background, PPACA instituted the fee to help fund the cost of PPACA implementation and exchanges. This fee applies to any "covered entity" engaged in the business of providing health insurance to U.S. citizens, residents and certain other persons present in the U.S. Put simply, this fee only applies to insurers, and the regulations specifically exclude self-insured plans (although it does apply to fully insured limited-scope dental, vision and retiree-only plans, which are exempt from most PPACA requirements). On Dec. 18, 2015, President Obama signed the Consolidated Appropriations Act, 2016 into law, which includes a one-year moratorium on the fee from Jan. 1, 2017, through Dec. 31, 2017.

The bulletin informs carriers that if they have approved group rates for plan years beginning in 2016 that they are directed to refile such rates for second, third and fourth quarter of 2016 to remove the fee for the portion of the plan year in 2017. For groups with plan years beginning Feb. 1, 2016, and Mar. 1, 2016, carriers are directed to provide a credit or refund of the 2017 fee to the employer group in the 2016 plan year. Filings should be submitted no later than Mar. 1, 2016.

While the suspension of this tax does not require any employer action, employers may see a decrease in costs since most insurers passed the fee onto the plan through rate increases.

Bulletin HC-110 »

On Feb. 5, 2016, the Connecticut Insurance Department published Bulletin HC-109 to provide guidance as to the maximum copayment amounts for health insurance plans. The bulletin rescinds Bulletin HC-94, Maximum Copays and Filing Issues, that was issued on Mar. 10, 2014.

As background, in December 2015, the Insurance Department conducted a data call to determine reasonable levels of copayment amounts regarding specified categories of benefits. The maximum copays are set to not exceed 50 percent of the 90 percentile of claims for the category. For the home health care category, 25 percent was used in lieu of 50 percent to reflect the statutory requirement in Conn. Gen. Stat. Section 38a-493 and Section 38a-520 that coinsurance cover at least 75 percent of the charges. The maximum copay for routine radiology does not apply to advance radiology services that are subject to the limits set forth in Conn. Gen. Stat. Section 38a-511 and Section 38a-550.

The following indicates the revised maximum copays and the copays will be effective for all policies issued or renewed on or after Jan. 1, 2017.

  • Durable Medical Equipment $25
  • Home Health Care $25
  • Ambulance $225
  • Laboratory $10
  • Routine radiology services $40

The maximum copays for the following categories of benefits were not part of the most recent data call and will remain at the current allowable levels.

  • PCP Office Visit $40
  • Specialist Office Visit $50
  • Urgent Care $75
  • Emergency Room $200
  • Inpatient Admission $500/day up to $2000
  • Outpatient Surgery/Services $500
  • Generic Drug $5
  • Brand Drug $60

Plans that use coinsurance may not impose an enrollee cost sharing amount that exceeds 50 percent. This applies both for in and out of network benefits. There is no restriction on the differential of the coinsurance level between in and out of network benefits. The level of coinsurance must be consistent for all services within a service category except for plans utilizing tiered networks.

Bulletin HC-109 »

October 20, 2015

On Oct. 9, 2015, the Connecticut Insurance Department published Bulletin HC-106 regarding rate filings for small employer plans. The bulletin is directed toward insurers, and states that the change to the definition of small group in CGS 38a-564, as amended by Section 17 of Public Act No. 15-247, will be postponed.

Conn. Gen. Stat. §38a-564 defines ‘small employer’ as up to 100 employees, but provides the Commissioner the ability to postpone implementation of that definition. In order to be consistent with federal law as a result of passage of the PACE Act, the Department has decided that the small group definition will remain 1-50 employees.

The bulletin informs carriers that they may modify previously approved small group rates for 2016 to the extent the revised rates would be more favorable to the marketplace. The bulletin is effective immediately.

Bulletin No. HC-106 »

August 25, 2015

On Aug. 13, 2015, Insurance Commissioner Wade issued Bulletin HC-104. The bulletin repeals and replaces Bulletin HC-64 (dated Jan. 20, 2006) and clarifies Connecticut’s mandated coverage for infertility treatment under Conn. Gen. Stat. § 38a-509 and § 38a-536 to reflect changes brought about under PPACA.

Specifically, the bulletin removes the age limit for the infertility treatment coverage mandate. This means health insurance plans sold in Connecticut will no longer be allowed to limit coverage of medically necessary infertility treatment to individuals under age 40.

The bulletin also addresses the general use of age-based benefit restrictions and refers to HHS guidance on what is considered a potentially discriminatory benefit design. Based on HHS guidance stating that age limits are discriminatory when applied to services that have been found clinically effective for all ages, Connecticut has determined infertility treatment may be clinically effective for all ages and is therefore requiring carriers to remove age limits on infertility benefits for policies issued or renewed on or after Jan. 1, 2016.

Bulletin HC-104 »

July 28, 2015

On June 30, 2015, Gov. Malloy signed SB 1085 into law. The law amends Section 38a-514 to expand services for mental or nervous conditions that certain health plans must cover. The law mandates that each group health plan cover the diagnosis and treatment of mental or nervous conditions on the same basis as medical, surgical or other physical conditions. Among other things, the law also requires plans to cover:

  • Medically necessary acute treatment and clinical stabilization services
  • General inpatient hospitalization, including at state-operated facilities
  • Services provided by advanced practice registered nurses for mental or nervous conditions
  • Programs to improve health outcomes for mothers, children and families

Moreover, a group policy may not prohibit an insured from receiving, or a provider from being reimbursed for, multiple screening services as part of a single-day visit to a health care provider or multicare institution (e.g., hospital, psychiatric outpatient clinic, or free standing facility for substance use treatment).

Finally, the law amends Section 38a-514 to substitute the term “benefits payable” for “covered expenses” as it pertains to the mental or nervous conditions coverage provisions. Under this law, these are the usual, customary, and reasonable charges for medically necessary treatment or, in the case of a managed care plan, the contracted rates.

The law applies to fully insured group health plans issued or renewed on or after Jan. 1, 2016.

Senate Bill 1085 »

On June 30, 2015, Gov. Malloy signed SB 949 into law. The law updates Connecticut’s data security laws and adds stringent new requirements to protect an individual’s confidential information.

The law creates the requirement for a comprehensive information security program. By October 1, 2017, health insurers, HMOs, and certain entities regulated by the Connecticut Insurance Department (e.g. pharmacy benefits managers and TPAs), must implement and maintain a comprehensive information security program to safeguard an insured’s and enrollee’s personal information. It specifies program requirements including encryption of personal information and disciplinary procedures for employees who violate the security policies, requires the program to be updated at least annually and requires the entities to offer at least one year of free identity theft prevention and mitigation services if there is an actual or suspected breach.

The law also adds a 90-day deadline for data breach reporting, which is applicable to anyone who conducts business in Connecticut. Generally, it requires the person to notify impacted state residents of a breach within 90 days after discovering it and offer at least one year of free identity theft prevention and mitigation services.

Both of these updates are effective Oct. 1, 2015.

Senate Bill 949 »

On June 23, 2015, Gov. Malloy signed SB 467 into law, requiring group health plans to cover telehealth services to the extent that they cover the services through in-person visits between an insured person and a health care provider. Telehealth services shall only be provided through real-time, interactive, two-way communication technology. It does not include the use of a fax machine, audio-only telephone texting or e-mail. The law also requires that a telehealth provider obtain a patient’s informed consent at the first telehealth interaction to provide services and inform the patient about the treatment methods and limitations of treating a person through telehealth.

The law applies to fully insured group health plans issued or renewed on or after Jan. 1, 2016.

Senate Bill 467 »

On July 2, 2015, Gov. Malloy signed HB 6772 into law, which amends Section 52-321a. The amendments exempt from creditors’ claims interests in or amounts payable to participants and beneficiaries of certain allocated or unallocated group annuity contracts purchased by an ERISA-covered plan.

To qualify for the exemption, a group annuity contract must be issued to an employer or pension plan to provide employees or retirees with defined retirement benefits. In addition, the original retirement benefits must be protected under ERISA or Pension Benefit Guaranty Corporation and the group annuity contract must not be protected by ERISA or the PBGC on or after the effective date of the group annuity contract.

As background, under Section 52-321a, creditors cannot claim interests in and payments from certain accounts, including certain retirement accounts, simplified employee pension plans and medical savings accounts.

The law is effective Oct. 1, 2015.

House Bill 6772 »

On June 30, 2015, Gov. Malloy signed SB 1502 into law, which provides in Section 413 that the labor commissioner must establish the procedures needed to implement a paid family and medical leave (FML) program.

By Oct. 1, 2015, the labor commissioner must contract with a consultant to create an implementation plan for the FML program and to perform an actuarial analysis and report on the employee contribution level needed to ensure a sustainable FML program.

Senate Bill 1502 »

July 14, 2015

On June 15, 2015, Insurance Commissioner Wade issued Bulletin HC-102. The bulletin clarifies Connecticut's mandated coverage for hearing aids under Conn. Gen. Stat. § 38a-490b and § 38a-516b in relation to changes brought about under PPACA. Specifically, the bulletin addresses the general use of age-based benefit restrictions and refers to HHS guidance on what is considered a potentially discriminatory benefit design. Based on HHS guidance stating that age limits are discriminatory when applied to services that have been found clinically effective for all ages, the state has determined hearing aids may be clinically effective for all ages and is therefore requiring carriers to remove the age limits on hearing aid benefits for policies issued or renewed on or after Jan. 1, 2016.

Bulletin No. HC-102 »

On July 8, 2015, Insurance Commissioner Wade issued Bulletin HC-103 to be read in conjunction with Bulletin HC-95 dated Mar. 17, 2014. The bulletin provides guidance on provisions that will not be approved in a stop-loss policy issued by an accident and health insurer, which insures the employer or its group health plan and not the enrollees covered by the plan. Policies issued or renewed on or after Jan. 1, 2016 may not contain the following provisions:

  • Mid-term rate increases at the discretion of the carrier
  • Early termination at the discretion of the carrier other than in accordance with the cancellation and nonrenewal laws
  • Rescissions for reasons other than fraud or intentional misrepresentation
  • Annual dollar limitations in coverage
  • Requirements that enrollees be actively at work
  • Mandated provider networks
  • Case management requirements
  • Differences in attachment points based on the health status of the insured

Employers who sponsor a self-insured plan with stop-loss coverage should review their stop-loss contract and work with their attorney and carrier to remove such provisions.

Bulletin No. HC-103 »

June 30, 2015

On June 22, 2015, Gov. Malloy signed Substitute SB No. 428 into law, creating Public Act 15-56. The law extends workplace harassment, discrimination and retaliation protection already available to employees covered by the Connecticut Fair Employment Practices Act to unpaid interns.

The law defines “intern” as “an individual who performs work for an employer for the purpose of training,” and imposes specific conditions that must be satisfied before the position qualifies as an internship covered by the new law. Those requirements are:

  • The employer is not committed to hire the individual performing the work at the conclusion of the training period;
  • The employer and the individual performing the work agree that the individual performing the work is not entitled to wages for the work performed; and,
  • The work performed
    • supplements training given in an educational environment that may enhance the employability of the individual,
    • provides experience for the benefit of the individual,
    • does not displace any employee of the employer,
    • is performed under the supervision of the employer or an employee of the employer, and
    • provides no immediate advantage to the employer providing the training and may occasionally impede the operations of the employer

If any of these criteria is not met, the individual is not an “intern” under the new statute.

While the new law does not require benefit coverage for an unpaid intern, it requires employers to review their practices relating to interns. Since the law also implicates non-benefits laws, such as employment and labor law, employers should work with outside counsel in ensuring compliance. The law is effective Oct. 1, 2015.

Public Act 15-56 »

June 2, 2015

On May 26, 2015, Gov. Malloy signed SB 1029 into law, creating Public Act No. 15-7. The law makes minor changes to the state statute concerning uncontested dissolutions of marriage. While employers are not directly impacted by the changes, it is worth noting that changes in the law provide for an expedited divorce or legal separation if certain factors are met. The law permits a couple to file a joint petition in the judicial district in which one of the party resides for a dissolution of marriage or legal separation and waives certain time periods if agreement on all terms of the dissolution of marriage or legal separation is reached.

Connecticut is one of the few states which recognize legal separation. Employers sponsoring group health plans, especially those subject to COBRA, should be familiar with whether their plan allows an employee to drop a spouse’s coverage due to legal separation and whether COBRA is triggered at that time. Further, employers should ensure they have communicated the proper timeframes (typically 60 days) for the employee to notify the employer that a divorce or legal separation has occurred. Employers accomplish this by distributing a COBRA Initial Notice within 90 days of the coverage effective date to both the covered employee and covered spouse. This becomes even more important for those employees entering into a uncontested legal separation or dissolution of marriage where the timeline for the proceedings occurs on an expedited basis and failure to notify the employer on a timely basis can result in a denial of COBRA coverage. The law is effective Oct. 1, 2015.

Public Act No. 15-7 »

On May 19, 2015, Gov. Malloy signed SB 426 into law, creating Public Act No. 15-6. The law limits employer access to employee social media, email and other online accounts. The law prohibits employers from requesting or requiring an employee or job applicant to 1) provide the employer with a user name, password or other way to access the employee's or applicant's personal online account 2) authenticate or access such an account in front of the employer; or 3) invite, or accept an invitation from, the employer to join a group affiliated with such an account. Employers are prohibited from firing, disciplining or otherwise retaliating against an employee who 1) refuses to provide this access or b) files a complaint with a public or private body or court about the employer's request for access or retaliation for refusing such access. Employers may not refuse to hire an applicant because the applicant would not provide access to his or her personal online account. ‘Personal online account’ is defined as any online account an employee or applicant uses solely for personal purposes, including, but not limited to email, social media and retail-based web sites.

Employees and applicants are permitted to file a complaint with the Connecticut Labor Commissioner, who can impose civil penalties of up to $25 for initial violations against job applicants and $500 for initial violations against employees. Penalties for subsequent violations can be up to $500 for violations against applicants and up to $1,000 for violations against employees.

The new law is effective Oct. 1, 2015.

Public Act No. 15-6 »

February 24, 2015

On Feb. 18, 2015, the State of Connecticut Insurance Department released Bulletin HC-90-15, which primarily affects carriers issuing health insurance policies in the state for individual and small group plans. A couple of points may interest employers, however. Specifically, the bulletin clarified that the state benchmark plan used for 2014 and 2015 will be extended for use during 2016. All non-grandfathered small employer plans both inside and outside the state exchange are required to provide coverage for essential health benefits as outlined in the state benchmark plan. Further, for small group plans offered beginning Jan. 1, 2016, the state will conform to the federal rating requirements with the exception of geographic rating areas. Connecticut was approved to establish eight rating areas by county for the small group market. As a reminder, gender differences, industry and group size, tobacco use, administrative expense differentials and network cost differentials will no longer be permitted in the Connecticut small group market for rating purposes. Finally, rating for family members will be performed in accordance with the final rule, which states that the family rate is the sum of the rates for the employee, spouse, children aged 21 or older and the rates for the three oldest children under age 21.

Bulletin No. HC-101  »

January 13, 2015

On Dec. 1, 2014, the Connecticut Insurance Department issued Bulletin No. HC-101 in order to clarify the Department’s policy on insurance benefits payable for work-related injuries or sicknesses and for policies providing for disability income protection, accident only benefits or travel health policies. The following provisions must be followed for such policies:

  • Benefits payable as a result of work-related illness or injury under these policies must be payable on a lump sum or a fixed dollar (indemnity) basis. For example: $75 per/day while hospital confined, $10 per doctor office visit, $50 per day while out of work due to an accident or sickness and $1,000 death benefit payable to an employee’s family.
  • A policy cannot provide benefits for work-related illness or injury based on the difference between what an employee was earning prior to a work-related accident or sickness and what the employee is entitled to receive from workers’ compensation following the accident or sickness.
  • A disability income policy may only provide benefits for work related injuries and/or sickness on an indemnity or lump sum basis.
  • A policy may not provide benefits for work-related illness or injury based on a percentage of pre-disability income.
  • Work-related accident and sickness benefits must be payable in addition to any workers’ compensation benefits policy approved by the Insurance Commissioner under § 31-345 of the Connecticut General Statutes. A statement needs to be included in the policy to the effect that “This policy does not replace or otherwise effect any statutorily required workers’ compensation insurance required to be provided to you by law.

Bulletin No. HC-101  »

November 18, 2014

On Nov. 3, 2014, the State of Connecticut Insurance Department issued Bulletin No. HC-100, which addresses health insurance coverage for preventative services. The bulletin clarifies requirements under the federal health care reform law and reconciles these requirements with Connecticut mandates for fully insured non-grandfathered group health plans, effective Jan. 1, 2015. A discussion of the interaction between federal and state mandates follows:

  • Clarifying that the term “reasonable medical management” under federal law should be based upon the statutory definition of “medical necessity” found in the Connecticut General Statutes Section 38a-482a.
  • Clarifying that “breastfeeding support” as required under federal law should take into account Connecticut mandates found under Connecticut General Statutes Section 38a-530c(d) and 38a-503c(d) which requires two follow up lactation support visits occur when a mother is discharged early from the hospital. The first visit must occur within 48 hours of discharge and the second follow up visit must occur within seven days of discharge.
  • Clarifying that contraceptive coverage must include any prescription contraceptive method approved by the Food and Drug Administration (FDA). This means that sterilization procedures for men may not be covered under federal law but may be covered by an insurance company separately, subject to state law.
  • Clarifying that maternity coverage, including prenatal care and ultrasounds, are covered without cost sharing under federal law. However, services related to maternity that are not preventative may be subject to cost-sharing, although any preventative service with no direct guidance may be subject to medical necessity.

Bulletin HC-100 »

August 26, 2014

On Aug. 20, 2014, the Connecticut Insurance Department issued Bulletin HC-99, which rescinds and replaces Bulletin HC-96 issued earlier this year. This updated bulletin clarifies that the current dollar limits provided under the state’s autism mandate are pre-empted by federal law under PPACA. As a result, the insurance commissioner is requesting that all carriers remove the limits to any applied behavioral analysis benefits.

Employers with fully insured policies issued in Connecticut should note that since this would be a material modification of plan provisions, employers should ensure that the issuer will notify plan participants of the removal of the annual dollar limits. If the issuer is not performing the notification, employers subject to ERISA should provide notification to plan participants within 210 days of the close of the plan year in order to comply with the SMM. This SMM should then be attached to the plan’s SPD and provided in tandem with the SPD going forward for any new plan participants.

Bulletin HC-99 »

July 1, 2014

On June 6, 2014, Gov. Malloy signed SB 10 into law, creating Public Act 14-97. The act prohibits insured group health policies issued in the state from imposing copayments greater than $20 for certain comprehensive ultrasound breast screenings. By law, policies must cover a comprehensive breast ultrasound screening if 1) a mammogram shows heterogeneous or dense breast tissue based on the American College of Radiology's Breast Imaging Reporting and Data System or 2) a woman is at an increased risk for breast cancer because of family history, her own breast cancer history, positive genetic testing or other indications determined by her physician or advanced practice registered nurse.

The act also prohibits insured group health policies that provide coverage for occupational or physical therapy from applying copayments greater than $30 per visit for in-network occupational or physical therapy services.

The act is effective Jan. 1, 2015, for insured policies, including HMO plans, issued in Connecticut. Due to ERISA, these state insurance benefit mandates do not apply to self-insured group health plans.

Public Act 14-97 »


Delaware

March 31, 2020

New COVID-19 Bulletin on Pre-Authorization Requirements, Telehealth, Non-Cancellation for Nonpayment of Premiums, and Catastrophic Plans

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On March 20, 2020, the Department of Insurance published Bulletin No. 116. The new bulletin is meant to provide additional guidance to carriers relating to COVID-19, particularly pertinent to the governor’s March 13, 2020, declaration of a state of emergency. The bulletin requests that carriers suspend cancellations and nonrenewals due to nonpayment of premium during the pendency of the state of emergency. In addition, the bulletin states that carriers should fully reimburse providers who are providing telemedicine services through telehealth, including all telehealth/telemedicine services (not just those relating to COVID-19).

The bulletin also states that early diagnosis and treatment of COVID-19 is imperative, and therefore that prior authorization requirements should be waived relating to the lab testing and treatment of confirmed or suspected COVID-19 patients. Finally, the bulletin states that catastrophic health coverage plans may be amended to provide pre-deductible coverage for services associated with the diagnosis and/or treatment of COVID-19 (normally, such plans may not provide coverage of an essential health benefits before an enrollee meets the plan’s deductible).

The bulletin contains no new employer requirements; employers should work with their carriers in understanding the bulletin’s directives for COVID-19-related coverage items and services.

Bulletin No. 116 »


March 17, 2020

Health Insurance Coverage for Coronavirus

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On March 9, 2020, the Department of Insurance published Bulletin No. 115, which relates to health insurance coverage for the coronavirus (COVID-19). According to the bulletin, small and individual plans must cover essential health benefits (EHBs), which include COVID-19-related laboratory tests.

For all fully insured plans (regardless of size), carriers cannot exclude a service for coverage solely because the service is provided through telemedicine services (which include a variety of platforms, including telephones, remote patient monitoring devices, and other electronic means such as web cameras and mobile video chat). In addition, carriers cannot use pre-authorization requirements as a barrier to access necessary treatment for COVID-19, and should expedite utilization review and appeal process for COVID-19 when medically appropriate.

On prescription drugs, an expedited formulary exception may be requested if the insured is suffering from a health condition that may seriously jeopardize the insured’s health, life or ability to regain maximum function, or if the insured is undergoing a current course of treatment using a non-formulary prescription drug. Additionally, PBMs are prohibited from requiring prior authorization for coverage of a 72-hour supply of medication that is for a non-controlled substance in an emergency. The Department expects insurers to provide for early refills or replacements of lost or damaged medications (even if the potential for quarantine is high). Lastly, consumers must be able to access their necessary prescriptions from a local retail pharmacy, even if their prescription supply is normally provided by mail order, without concern of a penalty.

Lastly, the bulletin states that carriers must cover diagnostic testing and waive patient cost sharing (deductibles, copayments and coinsurance), including for in-person and telemedicine visits.

The new bulletin applies directly to carriers, but are important reminders on coverage of COVID-19-relates services and items.

Bulletin No. 115 »

Coverage for Initial Depression Screenings

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On March 6, 2020, the Department of Insurance published Bulletin No. 114. The bulletin reminds carriers that initial depression screenings are considered a preventive service under the ACA, and therefore an enrollee should not be charged any cost sharing (deductible, copayment or coinsurance) for those screenings. The bulletin points to the American Psychiatric Association’s definition of “depression,” which is a common and serious illness that negatively affects how a person feels, thinks and acts. The bulletin reminds carriers that all people, starting at age 12, should be screened for depression (according to the U.S. Preventive Services Task Force).

The bulletin applies to carriers, but is helpful information for employers with regard to their fully insured plans and with regard to employees who may ask questions on coverage of initial depression screenings.

Bulletin No. 114 »


January 22, 2020

Contraceptive Coverage Mandate

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On December 5, 2019, the Department of Insurance issued Bulletin No. 112 related to the mandated coverage of certain contraceptives. As background, in July 2018, Gov. Carney signed SB 151 into law, which required health insurers to provide coverage for the following with no cost sharing for participants:

  • All FDA-approved birth control methods, including intrauterine devices (IUDs)
  • 12-months of birth control dispensed at one time
  • Emergency contraceptives without a prescription
  • Immediate insertion of long-acting reversible contraceptives (LARCs)

Again, this coverage is already required. The department issued the new bulletin to remind insurers of the last requirement related to LARCs, as it appears that insurers and hospitals have not been providing the service and benefit in an in-patient setting.

There is no action required of employers, but as a plan sponsor and fiduciary of a group health plan, they should monitor the performance of their carriers to make sure that the plan is providing the required coverage.

Bulletin No. 112 »


August 6, 2019

Efforts to Improve Efficiency of Claim Submissions and Payments

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On July 17, 2019, Gov. Carney signed HB 146 into law. The new law makes three changes to the relationship between health insurers and health care providers in an effort to make the process of claim submissions and payments more efficient.

First, health insurers must accept electronic claim submissions from non-pharmacy health care providers regardless of network status. Additionally, the insurer must electronically acknowledge the claim within two business days after submission.

Secondly, an insurer may not request medical records related to post-claim adjudication audits in more than 400 instances during a 45 day period per health care provider.

The third provision is the most relevant for group health plan sponsors and participants; an insurer must permit health care providers, regardless of network status, at least 180 days to submit a claim from the date of service. Any contract that imposes a shorter time frame for health care provider submission shall be revised by the insurer.

The effective date of these provisions is January 13, 2020. Although the changes do not require anything of employers, fully-insured plan sponsors should be mindful of these changes in how insurers will have to adjudicate claims.

HB 146 »

Prescription Drug Cost Sharing Limit

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On June 19, 2019, Gov. Carney signed HB 24 into law. The new law prohibits an insurer or pharmacy benefits manager from imposing a copayment or coinsurance for a covered prescription drug that exceeds the lesser of the usual and customary price or the contract price of the drug. The law is effective for policies issued or renewed on or after January 1, 2020.

HB24 »

Step Therapy Protocol Exceptions

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On June 18, 2019, Gov. Carney signed House Substitute 1 for HB 105 into law. The new law requires health plans to grant exceptions to step therapy protocols under specific circumstances. As background, step therapy protocols require patients to try one or more prescription drugs before coverage is provided for a drug selected by the patient’s health care provider.

Effective for policies issued or renewed on or after March 18, 2020, health plans must grant exceptions in the following circumstances:

  • The required prescription drug is medically inadvisable, will likely cause an adverse reaction or physical/mental harm to the patient.
  • The required prescription drug is expected to be ineffective based on the known clinical characteristics of the patient and the known characteristics of the prescription drug regimen.
  • The patient has tried the required prescription drug while under the patient’s current or previous health benefit plan, or another prescription drug in the same pharmacologic class or with the same mechanism of action, and such prescription drug was discontinued due to lack of efficacy or effectiveness, diminished effect, or an adverse event.
  • The required prescription drug is not in the best interest of the patient, based on medical necessity.
  • The patient is stable, for the medical condition under consideration, on a prescription drug prescribed by the patient’s health care provider or while the patient was insured by the patient’s current or a previous health benefit plan.

HS 1 for HB 105 »


October 30, 2018

Coverage for Treatment of Back Pain

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On Sept. 10, 2018, Gov. Carney signed SB 225 into law, which encourages the use of non-opioid methods of treating back pain. Effective 180 days from enactment, health insurance policies may not impose a limit on the number of chiropractic or physical therapy visits for the treatment of back pain.

SB 225 »


October 16, 2018

Mandated Coverage for In Vitro Fertilization and Other Fertility Services

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On Oct. 9, 2018, the Department of Insurance issued Revised Bulletin 103. The bulletin clarifies that all individual and group health insurance policies issued in Delaware on or after June 30, 2018 must provide coverage for certain fertility care services:

  • In vitro fertilization services for individuals who suffer from a disease or condition that results in the inability to procreate or to carry a pregnancy to live birth
  • Standard fertility preservation services for individual who must undergo medically necessary treatment that may cause iatrogenic infertility (an impairment due to surgery, radiation, chemotherapy or other medical treatment)

These benefits must be provided to all participants including spouses and dependents.

Bulletin 103 »

Revised Regulations Related to MEWAs

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On Sept. 1, 2018, the Department of Insurance issued emergency regulations related to multiple employer welfare arrangements (MEWAs). The regulations were effective upon signing and will apply to any association health plan (AHP) that that covers a Delaware resident.

A fully insured association must be licensed with the Department. In order to obtain a license, the association must submit the following to the Department:

  • Biographical information of all principals, officers, directors and trustees
  • Identification of all participating employers
  • Identification of third party administrators
  • Eligibility requirements for association membership
  • Description of association’s member benefits
  • Copy of the association’s by-laws, articles of incorporation or trust instrument
  • Copy of contracts between the association and insurers to provide health care benefits in DE
  • Any marketing or advertising materials used by the association
  • Most recent audited financial statements
  • Copy of the most recently filed Form M-1
  • Proof of minimum surplus in the amount of $500,000
  • Proof of surety bond in the amount of $500,000 to ensure the association’s obligations to health plan members
  • $1,000 filing fee

Additionally, the association must submit the following to the Department annually:

  • Proof of health insurance coverage
  • Demographic information of third party administrators
  • Notice of any changes to previously filed information (such as changes to trustees, officers, insurance coverage, plan document, by-laws, marketing material and so on)
  • Most recent audited financial statements
  • Documentation of preceding year’s and upcoming year’s annual premiums
  • Proof of a surety bond sufficient to cover at least 20% of annual premium for DE members
  • $150 filing fee

The association must:

  • Exist for at least 5 years
  • Be formed and maintained for purposes other than insurance
  • Not condition membership on any health status related factor

The member employers must be in the same industry or have their principal place of business in DE. The AHP can’t restrict membership to a particular part of the state.

The association may be rated on the collective group experience with each subscriber receiving the same community rate. The following rating factors are prohibited:

  • Age
  • Gender
  • Health status, including pre-existing conditions
  • Industry
  • Medical underwriting and screening

The AHP must provide coverage for all DE mandated benefits and essential health benefits. The coverage must be in compliance with the ACA’s cost sharing limits, prohibition on lifetime and annual dollar limits and 60 percent actuarial value.

The regulations also addressed self-insured AHPs. Until revised regulations are issued, self-insured AHPs will be subject to all of the state’s insurance requirements including licensure as an insurer, mandated benefits, financial reserves and reporting.

Emergency Regulations »


September 18, 2018

Stop-Loss Policies Extended to Small Employers

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On Sept. 4, 2018, Gov. Carney signed HB 406 into law, which became effective on the date of signing. The new law permits stop-loss coverage to be purchased by small employers with more than five eligible employees, the majority of whom are employed within Delaware on at least 50 percent of working days in the preceding calendar quarter. The law previously prohibited insurers from selling stop-loss coverage to small employers with 15 or fewer employees.

HB 406 »

Pharmacy Gag Clauses Prohibited

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On Aug. 28, 2018, Gov. Carney signed HB 425 into law. The new law prohibits contracts between pharmacies and pharmacy benefit managers from containing what’s commonly referred to as a gag clause. A gag clause prohibits a pharmacy from informing a consumer that they have options related to their prescription — specifically, purchasing the prescription for a retail price that’s lower than the price offered through their health insurance plan.

Under the new law, which applies to contracts entered into or renewed on or after Aug. 28, 2018, a pharmacy is permitted to:

  • Provide an insured with information regarding the retail price of a prescription drug or the amount of the cost share under the insured’s health insurance policy; and
  • Discuss with an insured information about a more affordable, therapeutically equivalent prescription drug and selling that drug to the insured

HB 425 »

Coverage for Pediatric Autoimmune Neuropsychiatric Disorders

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On Aug. 28, 2018, Gov. Carney signed HB 386 into law. Group health insurance policies issued or renewed on or after that date must provide coverage for the treatment of pediatric autoimmune neuropsychiatric disorders associated with streptococcal infections and pediatric acute onset neuropsychiatric syndrome. Treatment coverage must specifically include the use of intravenous immunoglobulin therapy.

HB 386 »

Prior Authorization Requirements Restricted for Certain Prescriptions

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On Aug. 28, 2018, Gov. Carney signed HB 441 into law, which became effective on the date of signing. The new law prohibits pharmacy benefit managers from requiring a prior authorization for an initial prescription for a narcotic or benzodiazepine drug that’s prescribed in an emergency situation for 72 hours or less. An emergency is defined as a situation that will result in the loss of life, limb or organ function.

Additionally, the new law prohibits a pharmacy benefits manager from requiring a prior authorization for a prescription medication related to a chronic or long-term condition more frequently than once per 12 months. For this purpose, the prescription medication must be necessary for the life of the patient.

HB 441 »


August 7, 2018

Experimental Treatment Coverage

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On June 13, 2018, Gov. Carney signed HS 1 into law. The new law prohibits group health policies from denying coverage for a National Coverage Determination Service on the basis that such service, item or treatment is experimental or investigational. National Coverage Determination Service is defined as a service, item or treatment which has been determined to be covered nationally by HHS for Medicare purposes. In other words, if a service has been determined to be an eligible expense under Medicare, a group health plan issued or renewed in DE cannot exclude coverage for that service based on the reason that it is experimental.

The law was effective upon the governor's approval.

HS 1 »
HHS Listing of National Coverage Determinations »


July 24, 2018

Mandated Coverage for Certain Infertility Treatments

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On June 30, 2018, Gov. Carney signed SB 139 into law. The new law requires group health plans to cover certain services related to fertility. Participants are eligible if they have a diagnosis of infertility or are at risk of iatrogenic infertility, which is an impairment of fertility due to surgery, radiation, chemotherapy or other medical treatment. Subscribers, spouses and non-spouse dependents are equally covered.

The law mandates coverage for sixteen identified services, including cryopreservation of eggs/sperm/embryos, storage of eggs/sperm/embryos, intrauterine insemination and embryo transfers. Coverage for in vitro fertilization (IVF) is only available to participants who have been unable to obtain a successful pregnancy through less costly treatments. Retrievals must be completed before the participant is age 45 and transfers must be completed before the participant is age 50. Plans aren’t required to provide monetary payment to surrogates or provide coverage for reversal of voluntary sterilization.

The requirement doesn’t apply to self-insured group health plans or plans maintained by employers with fewer than 50 employees. An exemption is available for religious employers for whom the coverage conflicts with their bona fide religious beliefs and practices.

The new law was effective upon the governor’s signature.

S.B. 139 »

October 31, 2017

Coverage of Drug and Alcohol Dependencies

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Effective for plans issued or renewed on or after Jan. 1, 2018, SB 41 amends the Insurance Code’s provisions on coverage of serious mental illness. The new law requires insurers that provide major medical coverage to provide inpatient coverage for the diagnosis and treatment of drug and alcohol dependencies and unlimited medically necessary treatment for drug and alcohol dependencies provided in residential settings. A plan that provides prescription drug coverage must provide coverage for the treatment of alcohol and drug dependencies that includes immediate access, without prior authorization, to a five-day emergency supply of medicines covered under the health plan when a medical emergency exists (such as the management of opioid withdrawal or stabilization, or reversal of an opioid overdose). Coverage may be subject to the plan’s normal cost-sharing provisions.

Additionally, an insurer may not impose precertification, prior authorization, pre-admission screening or referral requirements for the diagnosis and medically necessary treatment, including in-patient treatment, of drug and alcohol dependency.

This new law doesn’t contain any new employer compliance obligations. However, Delaware employers will want to be aware of the changes to the insurance laws in Delaware should employees have questions regarding health insurance coverage.

SB 41 »


Coverage for Cancer Treatment

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On Sept. 20, 2017, Gov. Carney signed HB 120 into law, which applies to policies that provide coverage for the treatment of stage four advanced metastatic cancer. Such policies are prohibited from mandating that the insured first be required to fail to successfully respond to a different drug or prove a history of failure of such drug before providing benefits for a prescribed drug (sometimes called step therapy). The law is effective for policies issued or renewed on or after Sept. 1, 2017.

This new law doesn’t contain any new employer compliance obligations. However, Delaware employers will want to be aware of the changes to the insurance laws in Delaware should employees have questions regarding health insurance coverage.

HB 120 »

January 24, 2017

2018 FFE State Partnership Exchange

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On Jan. 11, 2017, the Delaware Department of Insurance issued Bulletin No. 92, which proclaims the state’s intention to operate a federally-facilitated exchange (FFE) state partnership in 2018. The state’s responsibility in the partnership will be to continue to review and certify qualified health plan options to be offered through the exchange in both the individual and small group markets.

The remainder of the bulletin outlines the state’s insurance mandates with which the policies would need to comply, including coverage for essential health benefits, mental health parity, telehealth services, reimbursement of a licensed midwife and availability of provider directories for those with limited English proficiency and/or disabilities. It is worth noting that these mandates generally apply to insurance policies outside of the exchange as well.

Bulletin No. 92 »

January 10, 2017

Network Disclosure and Transparency

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Effective Jan. 1, 2017, health insurers providing major medical coverage in Delaware are required to maintain up to date and comprehensive provider directories. The new requirement was signed into law in July 2016 as part of HB 439 (House Substitute 1), which also requires health care providers to disclose their network status to a plan participant. Prior to providing non-emergency health care services to a plan participant, the health care provider must notify the participant in writing whether the provider is a participating or out-of-network provider with the participant’s health insurance policy. If the provider is out-of-network, the written disclosure must state that the participant may be responsible for additional charges beyond coinsurance, deductibles and copayments. The written disclosure must also identify the range of fees charged by the out-of-network provider for the health care services. If the provider fails to distribute the written disclosure to the participant, the provider may not balance bill the participant for the services not covered by the health insurance policy.

The Delaware Department of Insurance (the Department) was expected to issue regulations prior to the law’s effective date. On Dec. 20, 2016, the Department issued Bulletin No. 90 stating that the regulations would not be effective until Feb. 11, 2017. While the regulations were delayed, the Department still expects insurers and providers to be in compliance with the law’s requirements effective Jan. 1, 2017.

There are no requirements for employers, but the law will impact a participant’s benefits under group health insurance policies issued in Delaware.

HB 439, House Substitute 1 »
Bulletin 90 »

August 23, 2016

Pre-Authorizations

On July 13, 2016, Gov. Markell signed HB 381 into law. The new law requires utilization review entities (which include health insurers, health benefit plans and health service corporations) to detail any pre-authorization requirements and restrictions readily accessible on its website and in written/electronic form upon request for participants, health care providers, government entities and the general public. Any change in the procedures must be communicated prior to the effective date.

Utilization review entities must process clean pre-authorizations for non-emergency pharmaceuticals within two calendar days; three calendar days for those related to health care services and submitted electronically; and five calendar days for those related to health care services and not submitted electronically.

A pre-authorization shall be valid for one year from the date that the health care provider receives the authorization, dependent upon continued coverage and eligibility of the participant.

There is no requirement of employers, but it is helpful for plan sponsors to understand how their insured group health plans and participants will be impacted by the amended procedures.

The new law is effective Jan. 1, 2017.

HB 381 »

April 5, 2016

On March 23, 2016, the Delaware Department of Insurance issued Bulletin No. 86. The bulletin provides guidance regarding the Gender Identity Nondiscrimination Act of 2013, which prohibits insurers from discriminating against an individual because of gender identity. The department interprets the act along with the Unfair Trade Practices Act and the ACA to prohibit a carrier from excluding, denying or otherwise limiting coverage for medically necessary services, as determined by a medical provider, based on the individual’s gender identity if the service would be covered for another participant. Further, a carrier may not impose a general exclusion for gender dysphoria or gender identity disorder.

Carriers must provide coverage, including under a group health policy,for medically necessary surgeries or treatments related to gender transition. Importantly, the 2016 state benchmark plan includes an exclusion for “change of sex surgery,” which the department warns is a violation of the law. The bulletin and its guidance are effective immediately.

Bulletin No. 86 »

February 9, 2016

On Feb. 1, 2016, Insurance Commissioner Stewart adopted final regulations related to HB 69, which was passed July 2015. As background, HB 69, effective Jan. 1, 2016, requires group health insurance policies issued in Delaware to provide coverage for telehealth and telemedicine. For this purpose, “telehealth” is defined as the use of information and communication technologies (including telephone, remote monitoring devices and other electronic means) to support clinical health care, provider consultation and patient education. Telemedicine is defined as the delivery of health care services by real time two-way audio, visual or telecommunications (including video conferencing). The health care provider must be practicing within his or her scope of practice.

The regulations prohibit an insurer from placing additional restrictions on telehealth services, such as preauthorization, medical necessity or homebound requirements that are not placed on similar non-telehealth services. The regulations are effective Feb. 11, 2016.

Final Regulations »

January 12, 2016

On Dec. 10, 2015, the Delaware Department of Insurance amended Bulletin No. 51 regarding the state’s mini-COBRA requirements for small employers. The amended bulletin includes a revised model notice for employers to distribute to terminated employees notifying them of their right to continuation.

Bulletin No. 51 »

Model Notice »

October 20, 2015

On Oct. 15, 2015, Insurance Commissioner Stewart issued Bulletin No. 79 related to the definition of small group under state law. Delaware insurance statutes define a small group as an employer with up to 50 employees. Because the federal provision mandating the change of small group to 100 employees is no longer in effect as a result of the PACE Act, Delaware will keep the definition of small group at 50 employees. Thus, groups with 51 to 100 employees will continue to be rated as large groups and will not be required to switch to the small group market in 2016.

Bulletin No. 79 »

On Sept. 29, 2015, Insurance Commissioner Stewart announced the 2016 approved rates for qualified health plans in the state exchange. The average rate increases for individual policies range from 16.9 percent to 22.4 percent compared to 2015 rates, depending on the insurer, and -0.5 to 12.7 percent for small groups. Premium rates for small groups purchasing coverage through the SHOP will vary by age, but average from $250.48 per month for a bronze plan to $359.75 for gold. While the individual policy offerings do not affect employers, it may be helpful for employers to understand what is available through the exchange when responding to employee questions. Also, small employers with up to 50 employees have the option of purchasing group coverage through the SHOP. Please consult your advisor with any questions.

Annoucement »

September 22, 2015

On Sept. 1, 2015, the Delaware Department of Insurance issued Bulletin No. 76, which clarifies the state’s requirements related to individual hospital or other fixed indemnity policies.. For any policies issued on or after Jan. 1, 2015, the policies must meet the following criteria to be in compliance with federal and state law:

  • The insurance application must include an attestation that the insured has minimum essential coverage under another policy or plan.
  • The application must also include model notice language indicating that the policy is a supplement for health insurance and is not a substitute for major medical coverage. The notice must also inform the insured that the lack of minimum essential coverage may result in a tax penalty.

Employers who make such coverage available to employees should be aware of the new requirements.

Bulletin No. 76 »

August 11, 2015

On July 7, 2015, Gov. Markell signed HB 69 into law. The new law requires group health plans to provide coverage for health care services provided through telemedicine. ‘Telemedicine’ is defined as the delivery of health care services by means of real time two-way audio, visual or other telecommunications or electronic communications and includes the assessment, diagnosis, consultation, treatment, education, care management and self-management of a patient’s health care. The plan may not impose a higher deductible, copayment or coinsurance amount for telemedicine services than would apply if the same service were provided through in-person consultation. The law is effective for policies issued or renewed on or after Jan. 1, 2016.

HB 69 »

June 30, 2015

On June 15, 2015, HHS conditionally approved Delaware’s application for a state-based health insurance marketplace for individual and SHOP coverage. The state’s marketplace is currently a partnership. If the state meets the conditions outlined by HHS, the state-based marketplace would be effective for 2016.

HHS Conditional Approval Letter »

June 2, 2015

On May 21, 2015, Insurance Commissioner Stewart announced that Aetna Health, Inc. and Highmark Blue Cross Blue Shield Delaware will offer employers with 51 to 100 employees the opportunity to renew their group health insurance policies at large group rates for policy plan years beginning on or before Oct. 1, 2016. This is in response to Commissioner Stewart’s Bulletin No. 75 providing carriers with such an option. Employers with 51 to 100 employees who do not take advantage of the opportunity provided by Aetna Health, Inc. and Highmark Blue Cross Blue Shield Delaware will be switched to a small group policy for plan years beginning on or after Jan. 1, 2016. The change in the definition of ‘small group’ is mandated by PPACA and includes modified community rating and mandated coverage for the essential health benefit categories.

Announcement »
Bulletin No. 75 »

January 13, 2015

On Sept. 2, 2014, Gov. Markell signed HB 294 into law. The new law requires that an employer take all reasonable steps to destroy personal identifying information that is no longer to be retained by the employer. The term personal identifying information includes an employee’s name (or first initial and last name) in combination with his or her signature, date of birth, social security number, passport number, driver’s license number, state identification number, insurance policy number, financial services account number, bank account number, credit card number, debit card number or any other financial or confidential health information. The employer must shred, erase or otherwise destroy or modify personal identifying information to make it entirely unreadable or indecipherable through any means. The law became effective Jan. 1, 2015.

HB 294  »

October 21, 2014

On Sept. 30, 2014, the Delaware Department of Insurance issued Bulletin No. 72, which reminds insurers that they must provide certain coverage related to tobacco cessation. As part of PPACA’s preventive service mandate, insurers must provide the following coverage for non-grandfathered group health plans:

  • Screening for tobacco use.
  • Two quit attempts per year, consisting of four sessions of individual or group cessation counseling by telephone lasting at least 10 minutes each per quit attempt.
  • All medications approved by the FDA as safe and effective for smoking cessation for 90 days per quit attempt when prescribed by a health care provider.

These services must be provided with no cost-sharing for the participant and without requiring prior authorization. While the bulletin is directed at insurers, sponsors of group health policies should be mindful of the tobacco cessation programs that are available to participants under the plan.

Bulletin No. 72 »

August 26, 2014

On July 31, 2014, Gov. Markell signed SB 185 into law. The new law will prohibit employers with four or more employees from discriminating against employees based on a disability. The law previously applied to employers with 15 or more employees, which is consistent with the federal ADA. Small employers in Delaware will want to review their employment and leave policies to ensure that they are in compliance by providing reasonable accommodations for employees who require them. Reasonable accommodations may include making facilities accessible, modifying equipment and making reasonable changes in schedules or duties. While there is a posting requirement for applicable employers, the Delaware Department of Labor, Division of Industrial Affairs, has not yet revised the poster. They are expected to do so prior to the law’s Jan. 31, 2015, effective date.

SB 185 »

July 15, 2014

On June 30, 2014, Insurance Commissioner Stewart issued Bulletin No. 71. The bulletin reminds insurers that they must pay clean claims related to emergency services submitted by non-network providers within 30 days of receipt. The 30-day requirement applies regardless of whether the insurer or the provider has petitioned for arbitration. Further, the claim must be paid at the highest allowable charge for each emergency care service permitted by the insurer for any provider (including both network and non-network providers) during the 12-month period prior to the date of service for the claim in question.

Bulletin No. 71 »

April 8, 2014

On March 13, 2014, Delaware Insurance Commissioner Karen Weldin Stewart issued a statement related to the March 5, 2014, CMS announcement of a two-year extension to the transitional policy for non-PPACA-compliant health benefit plans (as covered in the March 11, 2014, edition of Compliance Corner). Commissioner Stewart stated that Delaware state law does not allow for the extension of non-PPACA-compliant plans.

Press Release »


District of Columbia

April 14, 2020

Declaration of Emergency Leave

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On March 17, 2020, the City Council approved the COVID-19 Response Emergency Amendment Act. The act added a new category of leave to the existing D.C. FMLA. The declaration of emergency (DOE) leave is available to employees who are unable to work during a period of time where the mayor has declared a public health emergency; and the employee has self-quarantined or isolated due to a recommendation or order by a health care provider, federal/state official, or the mayor.

Unlike existing D.C. FMLA, the DOE leave applies to employers of any size with an employee performing work in the district. Additionally, employees do not have to meet any service requirements to be eligible. The amount of unpaid leave is indefinite for the period of the public health emergency.

COVID-19 Response Emergency Amendment Act »


March 31, 2020

Order on COVID-19 Coverage

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On March 20, 2020, the Department of Insurance published Commissioner’s Order 01-2020, relating to COVID-19 screening, testing and treatment. The order requires carriers to cover all medically necessary screening, testing and treatment for COVID-19 or suspected COVID-19 or respiratory diseases/illnesses detected in the course of seeking screening, testing or treatment for COVID-19 without cost sharing of any kind (including deductibles, copayments and coinsurance). This includes all associated costs, such as processing fees and clinical evaluations. In addition, carriers may not require any preauthorization for any COVID-19-related screening, testing or treatment, and carriers must cover all out-of-network charges (including cost sharing and balance billing) unless the employee was first offered the service in-network without unreasonable delay. Further, if and when an immunization or vaccine becomes available for COVID-19 per CDC guidelines, carriers must immediately cover the cost for those services without cost sharing.

In addition, the order states that carriers must enhance their coverage of telehealth services, and are directed to review their telehealth programs with participating providers; cost sharing for telehealth must not be more than for in-person services. Also, with respect to prescription drug access, carriers must allow enrollees to obtain refills of their prescription medications before the scheduled refill date, and should waive any additional costs associated with accessing prescriptions from a mail-order pharmacy.

The order is directed towards carriers, but employers should be aware of the DC order’s requirements, and should work with their carrier on any questions relating to COVID-19-related coverage.

Commissioner’s Order 01-2020  »

Revised FAQs on Insurance Issues Related to COVID-19

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On March 24, 2020, the Department of Insurance published revised FAQs on insurance issues related to COVID-19. The revised FAQs are meant to help employers, carriers and DC residents better understand some of the challenges and questions associated with COVID-19-related coverage. Some FAQs are more aimed toward employees/DC residents, including where an employee/resident can go to get tested for COVID-19, who is responsible for the cost, whether preauthorization is required, and whether testing/treatment for COVID-19 must be done at in-network facilities. The FAQs also address the interaction between COVID-19 testing without cost sharing and an employee’s HSA eligibility.

The revised FAQs contain no new employer compliance obligations, but can serve as a great resource for employees who might have questions on their insurance and generally with respect to COVID-19.

Revised FAQs »


January 22, 2020

Paid Family Leave Poster and Resources Published

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As reported previously, D.C.’s paid family leave law becomes effective July 1, 2020. That is the date that eligible employees will become entitled to up to eight weeks of paid leave to bond with a new child, six weeks to care for a seriously ill family member, or two weeks for their own serious illness. Employers have been submitting the required tax assessment since July 1, 2019, in preparation for the new requirement. As a reminder, the new law applies to any employer with an employee who performs at least 50% of their work within the District.

The Department of Employment Services (DOES) has published a Paid Family Leave Employee Notice. The notice must be posted in the worksite with other employment posters by February 1, 2020. The notice must be provided in electronic or physical form to all existing D.C. employees at least once between February 1, 2020, and February 1, 2021, and annually thereafter. All new employees must receive a copy at the time of hire. Finally, the employer must distribute the notice to any employee who notifies the employer on or after February 1, 2020, of their need for leave for an event that could qualify for PFL benefits.

Further, DOES has posted an Employer Toolkit, which is designed to answer frequently asked questions and assist employers revise their leave policies.

DOES PFL Employee Notice »
DOES PFL Employer Toolkit »

December 10, 2019

Employer Reporting Responsibility Related to Individual Health Insurance Mandate

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Since the beginning of 2019, D.C. residents must have minimum essential health care coverage or pay a tax penalty. As a result, employers will have reporting responsibilities to the District. The responsibility will be satisfied by submitting the same IRS Forms 1094-B, 1095-B, 1094-C, and 1095-C to the D.C. Office of Tax and Revenue (OTR). In other words, employers will file them with the IRS to comply with their federal responsibility under the employer mandate. They will then file the same forms with the OTR to satisfy their District responsibility.

The requirement applies to employers with 50 or more employees, one of whom resides in D.C. The forms will need to be filed electronically through the MyTax.DC.gov website. For this first year, the filing deadline for the 2019 forms will be June 30, 2020. In future years, the deadline will be 30 days following the IRS deadline for submitting forms.

There is no mention of the requirement only applying to self-insured employers. It appears that both fully insured and self-insured large employers would need to comply, even though the carrier for a fully insured plan will already be submitting the Forms 1094-B and 1095-B on behalf of the plan. Hopefully, future guidance will be issued prior to June 2020. We will keep you updated on any developments. In the interim, employers should work with reporting vendors and internal personnel to prepare for the new requirement.

D.C. OTR Notice 2019-04 »

October 15, 2019

Enforcement of Employer Commuter Benefit Requirement

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On August 16, 2019, the D.C. Department of Employment Services published final regulations related to the enforcement of the existing commuter benefits requirement. Since January 1, 2016, employers with 20 or more employees in D.C. must offer access to one or more transit benefit options. All employees working 50% or more of their service time in D.C. are counted. Those options are:

  • Employee pays pre-tax contributions for transit benefits
  • Employer pays transit benefit costs for employees (either through reimbursement or the provision of pre-paid metro cards)
  • Employer provides transportation through a shuttle or vanpool

The employer must:

  • Notify employees of the available transit benefit program (read the notice here)
  • Provide information to covered employees on how to apply and receive benefits
  • Issue benefits to covered employees that request or apply for them
  • Maintain records to establish compliance with the requirements
  • Record that notice was given to employees
  • Records showing that elected benefits were provided

Under the final regulations, effective November 14, 2019, the penalties for failure to comply are: $100 for the first offense; $200 for the second; $400 for the third; and $800 for the fourth and subsequent offenses. Please note: an offense is considered each employee per month that is not offered at least one qualified transportation program benefit.

Notice of Final Rulemaking »

April 16, 2019

Universal Paid Leave

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As previously reported, employers with employees who perform at least 50 percent of their work in D.C. will be required to contribute to the Universal Paid Leave Program. Employers must pay 0.62 percent of all wages for such employees to fund the program, which will provide paid leave to eligible employees for leaves on or after July 1, 2020.

The employer contributions are scheduled to begin July 1, 2019. NFP’s Benefits Compliance team has received confirmation from D.C. Department of Employment Services, Office of Paid Family Leave, that the employers will owe the 0.62 percent assessment on the second quarter earnings, which is payable in July. In other words, employers need to be working with their payroll provider now to collect the tax on wages beginning April 1, 2019. The office will release final regulations and further clarification soon. They are exploring the option to include the wage reporting and tax payment in the Employer Self Service Portal, which is used for unemployment insurance reporting.

Department of Employment Services, Paid Family Leave Information »

February 5, 2019

Protecting Pregnant Workers Notice

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The Office of Human Rights has issued a revised notice regarding The Protecting Pregnant Workers Fairness Act (PPWFA). The notice must be posted in the workplace in a conspicuous place. Employers must also provide employees with notice of the law within 10 days of an employee notifying them of their pregnancy or related condition.

As a reminder, the PPWFA requires District employers of all sizes to provide reasonable accommodation for employees whose ability to perform job duties is limited because of pregnancy, childbirth, breastfeeding or a related medical condition. Reasonable accommodations include unpaid time off, modifying work equipment, providing more frequent or longer breaks and modifying work schedules.

Revised PPWFA Poster »


November 13, 2018

Universal Paid Leave Guidance

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The D.C. Department of Employment Services (DOES) has published guidance on the Universal Paid Leave (UPL) Act in the form of two FAQs that are divided into employer and employee questions. As a reminder, the new law will provide employees with paid leave beginning July 1, 2020. The leave is administered by DOES, but is funded by employers who will contribute 0.62 percent of payroll starting July 1, 2019. Eligible employees will be entitled to up to:

  • Eight weeks for parental leave (new child)
  • Six weeks for family leave (to care for a family member with a serious health condition)
  • Two weeks for medical leave (employee’s own serious health condition)

The employee FAQ clarifies the following issues:

  • Employees will be eligible for UPL if they spend 50 percent of their work time for that employer in D.C. during some or all of the previous 52 weeks. This includes those who telework/telecommute, temporary employees and seasonal employees.
  • UPL may be taken intermittently in one-day increments.

The employer FAQ clarifies the following issues:

  • Businesses of any size performing services in D.C. that also pay unemployment taxes for employees will be required to pay quarterly UPL taxes.
  • There is no exemption for employers who currently provide some sort of paid leave for employees. The employer may choose to coordinate benefit payments during the period where an employee is eligible for both, but an employee’s UPL benefits will not be reduced or eliminated by the receipt of paid leave benefits from an employer.

DOES will be providing a notice that will need to be posted in the workplace. They have already provided a calculator and a chart to assist employees in estimating paid weekly benefits. Lastly, a chart comparing the provisions of federal FMLA, DC FMLA, DC UPL (also called Paid Family Leave or PFL) and Accrued Sick and Safe Leave is also available.

D.C. Universal Paid Leave, Employee FAQ »
D.C. Universal Paid Leave, Employer FAQ »


May 31, 2017

Coverage of Women’s Preventive Care Services

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On April 24, 2017, Mayor Bowser approved emergency Act 22-0049, Defending Access to Women's Health Care Services Emergency Amendment Act of 2017. The Act amends D.C.’s insurance laws to require insurers to provide coverage for certain women’s preventive health services without cost sharing. A group health plan will be required to provide such coverage for:

  • Evidence-based items or services that have in effect a rating of "A" or “B" in the recommendations of the United States Preventive Services Task Force; and
  • Such additional preventive care and screenings as provided for in comprehensive guidelines supported by the Health Resources and Services Administration.

While group health plans issued in D.C. are already subject to this requirement because of the federal requirement under the ACA, this action would require policies to comply regardless of whether they are grandfathered and regardless of whether the federal law changes. In other words, it has become a local insurance mandate.

As with all emergency action, it is effective for 90 days and expires on July 23, 2017.

Act 22-0049 »

April 18, 2017

Universal Paid Leave Act

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On April 7, 2017, the Universal Paid Leave Act became law in the District of Columbia. It was originally introduced as Bill B21-0415 in October 2015. It was approved by the city council on Dec. 20, 2016. Mayor Bowser opposed the bill and returned it unsigned on Feb. 2, 2017. Unique to the District, any approved acts are subject to a 30 day review by the U.S. Congress. If no action is taken by Congress, the act becomes law, which is what happened with this bill. The act became law on April 7, 2017 after no action from the Mayor or Congress.

The new law establishes a paid leave system for all individuals who work within the District at least 50 percent of their work time. Employees of the federal government are excluded from eligibility. Employees will be eligible for up to a total of 16 weeks of paid leave for absences related to a serious health condition of the employee (two weeks), serious health condition of a family member (six weeks) and parental bonding time with a new child (eight weeks). The term family member includes a biological, adopted, foster or stepchild; a domestic partner and child of a domestic partner; parent, stepparent, grandparent or parent-in-law; and sibling. It also includes an individual who stood in loco parentis to the employee or a child for whom the employee stands in loco parentis.

Benefits will be paid by the Family and Medical Leave Fund, which will be funded by employers. Beginning in July 2019, employers will contribute an amount equal to 0.62 percent of employee wages. Employees will be eligible to file for claims beginning July 1, 2020 with a maximum weekly benefit of $1,000.

The benefits run concurrently with FMLA and D.C. FMLA and the new act does not provide additional job protection beyond that provided by those laws.

Proposed regulations, which will provide greater detail, are to be released by October 2017. We will report any developments in future issues of Compliance Corner.

B21-0415 »

Specialty Drug Copayment Limitation Act

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On April 7, 2017, B21-0032, the Specialty Drug Copayment Limitation Act, became law. The new law restricts the amount that a health insurance plan may charge for a specialty tier drug. The plan may charge no more than $150 per month for a 30-day supply or $300 for a 90-day supply. A specialty drug for this purpose is defined as a drug prescribed for a disease or condition that affects fewer than 200,000 persons in the U.S. and has a total monthly cost of $600 or more. The law is effective for health insurance policies that provide prescription drug coverage and that are renewed or issued on or after Jan. 1, 2018.

B21-0032 »

July 26, 2016

On March 3, 2016, the District of Columbia (DC) council enacted DC Act 21-324, which extends temporary provisions of the DC law to permit time off as a reasonable accommodation for pre-birth complications. The law is meant to protect employees who are absent from work because of such pre-birth complications or other pregnancy-related conditions. The extension is temporary, taking effect on April 20, 2016, and expiring on Dec. 1, 2016. Employers should work with outside counsel in developing and implementing their leave policies to meet the DC rules for pregnant employees.

DC Act 21-324 »

March 8, 2016

On Feb. 18, 2016, the District of Columbia (D.C.) Council enacted D.C. Act 21-314. The new law temporarily amends the Protecting Pregnant Workers Fairness Act of 2014 to require an employer to make a reasonable accommodation for an employee whose ability to perform the functions of their job is affected by a pre-birth complication. The new law prohibits employers from taking adverse action against employees who are absent from work as a result of pre-birth complications. The new law is effective Feb. 18, 2016, until May 18, 2016. The council is considering legislation to make the amendments permanent. While the law does not specifically address benefits, D.C. employers that have pregnant employees affected by a pre-birth complication should consider state and federal regulations that may require the employer to continue health coverage during any leave relating to the pregnancy. Because those situations implicate other areas of law, including labor and employment, employers should work with outside counsel in addressing leave and benefit policies with respect to pregnant employees.

D.C. Act 21-314 »

On Feb. 18, 2016, the D.C. Council enacted D.C. Act 21-322. The new law temporarily amends the D.C. Accrued Sick and Safe Leave Act of 2008 to clarify that certain employees (those in the building and construction industry) covered by a collective bargaining agreement (CBA) are exempt from the paid leave requirements if the CBA states so. Specifically, to exempt those types of employees, the CBA must expressly waive the requirements “in clear and unambiguous terms.” The new law is effective for 225 days after Congress approves the law (which is expected on April 29, 2016). Employers in the building and construction industry that have previously entered into a CBA should review the CBA to see if the new law has any affect and the employer’s paid sick leave policies (including continuation of benefits during the leave). If questions arise, employers should work with outside counsel, since the issue involves other areas of law, such as labor and employment, which are beyond the scope of benefits.

D.C. Act 21-322 »

November 3, 2015

On Oct. 20, 2015, the District of Columbia (DC) Department of Insurance published Bulletin 15-IB-07-10/20. The new bulletin relates to the definition of “small employer” under DC law, and states that as a result of the PACE Act, DC will retain the definition of small employer as an employer with 50 or fewer employees. The bulletin and definition apply for plan years that begin on or after Jan. 1, 2016. The bulletin also rescinds Bulletin 15-IB-05-04/28, “Small Employer” Transitional Policy for the 2016 Plan Year (issued April 28, 2015, and covered in the May 5, 2015, edition of Compliance Corner). The bulletin contains contact information for questions or concerns relating to the bulletin. Employers in the 51-100 group in DC should also work with their carriers concerning next steps with regard to the bulletin.

Bulletin 15-IB-07-10/20 »

October 6, 2015

On Sept. 17, 2015, DC Act 21-90 took effect. Enacted June 17, 2015, Act 21-90 is called the “Healthy Hearts of Babies Act of 2015.” Under the new law, insurers must provide coverage for critical congenital heart disease screenings for newborns delivered in hospitals, maternity centers or in homes. Specifically, ‘critical congenital heart disease’ means a group of heart defects that cause serious, life-threatening symptoms and require intervention within the first day or first year of life. Under the law, screening must be performed using pulse oximetry (noninvasive procedures used to measure blood oxygen levels) until additional alternative tests are adopted by the American Academy of Pediatrics. The new law contains no new requirements for employers, but employers should be aware of the changes should questions arise relating to coverage of newborn congenital heart disease screenings.

D.C. Act 21-90 »

On Sept. 17, 2015, DC Act 21-91 took effect. Enacted June 17, 2015, Act 21-91 is called the “Access to Contraceptives Amendment Act of 2015.” Under the new law, plans that provide coverage for prescription drugs must provide coverage for up to a 12-month supply of such drugs at one time. Specifically, ‘contraceptives’ means drugs or drug regimens approved by the U.S. FDA for the purpose of preventing pregnancy.

D.C. Act 21-91 »

May 19, 2015

On May 2, 2015, District of Columbia (DC) Act 20-593 took effect. The act, called the “Reproductive Health Non-Discrimination Amendment Act of 2014,” amends DC law to ensure that individuals are protected from discrimination based on an individual’s or dependent’s reproductive health decisions. As background, DC Code Sec. 2-1401.05 prohibits employers from discriminating against an employee (in employment decisions and benefits offerings) on the basis of pregnancy, childbirth, related medical conditions or breastfeeding. Act 20-593 amends that Code section by adding “reproductive health decisions” to the list of protections. That term is defined as a decision by an employee or an employee’s dependent (including a spouse) related to the use or intended use of a particular drug, device or medical service, including those related to contraception or fertility control or the planned intended initiation or termination of a pregnancy. The act was originally signed into law Jan. 23, 2015, but did not take effect until May 2, 2015, due to DC’s legislative process, which requires U.S. Congressional review.

Act 20-593 »

May 5, 2015

On April 28, 2015, the District of Columbia (DC) Department of Insurance published Bulletin 15-IB-05-04/28 which relates to the change in the definition of ‘small employer’ for purposes of group health insurance coverage in DC.

As background, on Jan. 1, 2016, under PPACA that definition changes from 1-50 employees to 1-100 employees. According to the bulletin, DC has adopted a transitional policy for small employers, as allowed by the CCIIO (outlined in a March 5, 2014, CCIIO bulletin, which allows transition relief for non-PPACA-compliant plans with years beginning on or before Oct. 1, 2016). The CCIIO transitional policy allows small employers with between 51-100 employees to renew their existing policies and remain in the large group market without violating PPACA. The bulletin is meant to explain the details of DC’s transitional policy and how it interacts with PPACA.

According to the bulletin, for employers with 51-100 employees the department will allow insurers to renew their current policies through policy years beginning on or before Oct. 1, 2016. Employers with 51-100 employees can continue to purchase large group market policies through Dec. 31, 2015. Under the transitional policy those large group policies may be renewed by Oct. 1, 2016. Importantly, all new policies sold to small employers (those with 1-100 employees) after Jan. 1, 2016, must comply with applicable PPACA and DC requirements. The bulletin includes a reminder that it is up to the insurer’s discretion as to whether a particular policy will be renewed under the small employer transitional policy. Thus, DC employers in the 51-100 group should work with their insurers to determine if they will be allowed to renew under DC’s transitional policy.

The new bulletin contains no new obligations for employers. However, DC employers, particularly those with 51 – 100 employees, will want to be aware of the transitional policy.

Bulletin 15-IB-05-04/28 »

January 13, 2015

On Dec. 17, 2014, the District of Columbia (DC) Department of Insurance, Securities and Banking published Bulletin 14-IB-01-12/17. The new bulletin is addressed to health insurers and relates to health insurance coverage sold to associations and MEWAs located in DC, as well as health insurance coverage sold to small DC employers by captive insurers domiciled outside of DC.

Regarding association coverage, the federal government (CMS) previously issued guidance in 2011 relating to PPACA’s individual and group insurance mandates when insurance is sold to, or through, associations. Under that guidance, CMS states that in most association situations, the group health plan exists at the individual employer level and not at the association-of-employers level. Thus, in these situations, the size of each individual employer participating in the association determines whether that employer’s coverage is subject to the small or large group market rules (most PPACA insurance mandates apply only to small groups).

A 'mixed' association is where different members have coverage that is subject to the individual, small, and/or large group market rules, as determined by each employer member’s status. According to the bulletin, an association cannot aggregate the employees of the member employers in an attempt to qualify as a large employer. Accordingly, each employer member of a mixed association must receive coverage that complies with the requirements arising out of their own status as an individual, small employer or large employer. Further, since under DC law individual and small group health plans must be sold only through DC Health Link (the DC-established health insurance exchange), each small employer association member must purchase insurance through DC Health Link.

Regarding MEWAs and captives, if a MEWA solicits or provides health benefits to one or more employers domiciled in DC, the MEWA is subject to DC insurance laws (regardless of whether the MEWA is regulated under ERISA or is domiciled in DC). DC law does allow an exemption for MEWAs maintained or established by a single employer that are self-insured (and that are not considered a governmental plan). The bulletin further describes allowable situations for fully insured MEWAs, including requirements for MEWAs that establish a trust in order to provide group health benefits.

Lastly, the bulletin addresses captive insurers, MEWAs and associations that are acting as insurers—selling or otherwise issuing or making available health insurance policies to more than one small employer located in DC. In that situation, the captive insurer, MEWA or association will be deemed to be engaged in the business of selling health insurance in DC, and therefore must obtain a certificate of authority from the Department. In addition, DC law requires a policy, certificate or coverage for a health benefit plan offered to a DC employer to be filed with the and approved by the Department—including coverage issues to an out-of-DC trust or association or by a captive.

Employers considering obtaining coverage through an association, MEWA or captive arrangement should carefully review the bulletin to better understand their rights and obligations relating to the coverage.

Bulletin 14-IB-01-12/17  »

December 2, 2014

On Oct. 23, 2014, District of Columbia (DC) Mayor Gray signed into law the Protecting Pregnant Workers Fairness Act of 2014, creating DC Act 20-458. The new law provides new protections for employees whose ability to perform job functions is limited by pregnancy, childbirth or a related medical condition. The new law applies to DC employers, and requires employers to make modest changes to accommodate the physical limitations of a normal, healthy pregnancy unless doing so would cause an undue hardship. Some examples of accommodations include the provision of more frequent or longer breaks, acquisition or modification of equipment or seating, restrictions on heavy lifting, a temporary transfer to a light duty position or a modified work schedule. The law also requires employers to provide a private, non-bathroom space to a breastfeeding mother to express milk. Importantly, employees may not be forced to use leave if a reasonable accommodation is available.

The new law also places notice requirements on the employer. Employers must post information relating to the new protections in a conspicuous place and distribute notices to new employees upon hire and existing employees within 120 days of the law’s effective date. Penalties apply for employers that willfully violate any of the law’s requirements: $1,000 for the first offense, $1,500 for the second offense, and $2,000 for each subsequent offense.

The new law may impact employee benefit offerings and employer leave policies. DC employers should work with outside counsel in developing policies and procedures that comply with the new law, particularly since the new law also affects areas outside of employee benefits. The new law takes effect after a 30-day Congressional review period and publication in the DC Register (which has not yet occurred).

DC Act 20-458 »

November 4, 2014

On Oct. 23, 2014, the District of Columbia (DC) Department of Insurance issued Bulletin 06-IB-004-8/29 which addresses summary and disclosure notices for supplemental health insurance policies marketed in DC. The purpose of the bulletin is to clarify that limited benefit health plans, hospital indemnity or other supplemental health policies may not be marketed or represented as substitutes for health benefit plans, and that such plans do not provide sufficient coverage to qualify as minimum essential coverage for purposes of PPACA’s individual mandate. According to the bulletin, insurance carriers may not bundle various benefits or coverages together into a fixed indemnity plan to be marketed to consumers as meeting the federal requirements of a health benefit plan, since they do not constitute major medical coverage. Carriers are also prohibited from representing, naming or including in the name of any new fixed indemnity health plan the terms “bronze”, “silver”, “gold” or “platinum” tier level of health coverage or any other PPACA-compliant health benefit term, such as “essential” benefits. Finally, the bulletin explains that carriers selling hospital indemnity or other fixed indemnity policies must provide notice that those policies do not provide the minimum essential coverage mandated by PPACA, and that consumers may be liable for a federal tax penalty unless they purchase a plan that does meet the minimum essential coverage requirement.

The bulletin contains a list of plan types that are and are not considered to provide supplemental benefits. Although the bulletin is directed towards insurance carriers, DC employers should be aware of the bulletin.

Bulletin 06-IB-004-8/29 »

August 26, 2014

On June 18, District of Columbia (D.C.) Mayor Gray signed into law B20-0776, creating Act 20-356. As background, under federal and D.C. law, DC Health Link must be self-sustaining by Jan. 1, 2015 (federal funding is longer available after that date). Previously, on May 22, 2014, Mayor Gray signed a law (Act 20-329) amending the Health Benefit Exchange Authority Establishment Act of 2011, which relates to funding DC Health Link (D.C.'s health insurance exchange). Act 20-329 enacted, on an emergency and temporary basis, a tax on all health-related insurance products sold in Washington, D.C., based on a percentage (expected to be around 1 percent) of an insurer's gross receipts and is assessed annually. The tax is intended to help fund DC Health Link going forward.

Act Number 20-356 extends the assessment for an additional 225 days. In the meantime, the D.C. council expects to enact a permanent version of the assessment. Employers should be aware of the new tax since it may ultimately result in higher premiums, both on and off the DC Health Link. The new law does not, however, create additional compliance or other obligations for Washington, D.C., employers.

D.C. Act 20-356 »

July 1, 2014

On May 22, 2014, District of Columbia (D.C.) Mayor Gray signed into law B20-0775, creating Act Number A20-0329. The new law amends an existing law, the Health Benefit Exchange Authority Establishment Act of 2011, which relates to funding DC Health Link (D.C.'s health insurance exchange). Generally, under federal and D.C. law, DC Health Link must be self-sustaining by Jan. 1, 2015 (federal funding is longer available after that date). The law enacts a tax on all health-related insurance products sold in Washington, D.C., which is based on the insurer's gross receipts and is assessed annually. The tax is intended to help fund DC Health Link going forward.

Employers should be aware of the new tax, since it may ultimately result in higher premiums through the exchange. The new law does not, however, create additional compliance or other obligations for Washington, D.C. employers.

Act Number A20-0329 »

March 11, 2014

On Feb. 27, 2014, the District of Columbia (DC) Department of Insurance, Securities and Banking issued Bulletin 13-IB-01-30/15 REVISED. The bulletin revises a bulletin issued on March 15, 2013, relating to insurance coverage denials based on gender identity or expression (covered in the March 26, 2013, edition of Compliance Corner). As background, DC makes it illegal to refuse to insure, continue insuring or limit the insurance coverage of an individual based on gender identity or expression. Health insurers had 90 days (from March 26, 2013) to update policy forms to come into compliance.

The revised bulletin adds some clarifications relating to discriminatory practices. First, the Department of Insurance takes the position that “gender dysphoria” (also known as “gender identity disorder”) is a recognized medical condition under health insurance policies covering medical and hospital expenses, regardless of whether explicitly referenced. Second, persons diagnosed with gender dysphoria fall squarely within the protected class of “gender identity or expression.” As a result, attempts to limit or deny medically necessary treatments for gender dysphoria, including gender reassignment surgeries, will be considered discriminatory. This means treatment for gender dysphoria, including gender reassignment surgeries, is a covered benefit, and individuals diagnosed with gender dysphoria are entitled to receive medically necessary benefits and services under individual and group health insurance policies that cover medical and hospital expenses.

While the bulletin is directed toward insurers, DC employers will want to be aware of the department’s positions, particularly if they sponsor fully insured group plans that are issued in DC.

Bulletin »

February 25, 2014

On Jan. 2, 2014, District of Columbia (D.C.) Mayor Gray signed into law the “Earned Sick and Safe Leave Amendment Act of 2013.” The new law amends the Accrued Sick and Safe Leave Act of 2008 by expanding the scope of employees, strengthening the remedies and establishing an outreach program to inform the public about the act. Generally, employers must grant covered employees paid leave on an annual basis; the amount of leave depends on the size of the employer. For example, an employer with 100 or more employees must provide one hour of paid leave for every 37 hours an employee works (with a seven-day per year cap). Employers with 25-99 employees must provide one paid leave hour for every 43 hours worked (with a five-day cap), and those with 24 or fewer employees must provide one paid leave hour for every 87 hours worked (with a three-day cap).

The new law expands the group of covered workers to include tipped restaurant employees, regardless of the employer’s size, who can now earn one hour of paid leave for every 43 hours worked (with a five-day cap). The law also expands the definition of employer to include any entity that directly or indirectly employs or exercises control over the wages, hours or working conditions of employment (including through the use of temporary workers or a staffing agency). The law allows employees to begin accruing leave on their date of hire (although they do not become eligible to use the paid leave until after 90 days of employment). Finally, the new law also requires the employer to reinstate an employee’s leave where the employee is re-hired within one year of termination or where the employee is transferred out of D.C. and is later transferred back in to D.C.

The effective date of the new law is unclear. Although it is supposed to take effect by the end of February 2014, the law will not actually be applicable until a budget statement regarding the impact of the law is included in an approved D.C. budget (which could be as late as 2015). D.C.’s Department of Employment Services is expected to issue more guidance at some point, and has said that the act will not likely take effect until 2015. Employers, though, should review their employment policies and prepare to begin tracking leave.

Earned Sick and Leave Amendment Act of 2013 »


Florida

April 14, 2020

Premium Payment Leniency Requested

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On March 25, 2020, the Office of Insurance Regulation (OIR) issued Informational Memorandum OIR-20-04M, which provides continued guidance in relation to the coronavirus (COVID-19) emergency. The memo, which is directed at health insurers and other health entities regulated by the OIR, addresses the treatment of policyholders in the state.

As background, prior Executive Orders 20-51 and 20-52 established COVID-19 protocols and declared a state of emergency in the state. The current memo outlines certain measures and accommodations to support the state’s COVID-19 response efforts.

The memo recognizes that social distancing guidelines have resulted in worker displacement and business disruptions. As a result, insurers are encouraged to be flexible with premium payments in order to prevent a lapse in coverage. Suggested measures include relaxing due dates, extending grace or reinstatement periods, waiving late fees and penalties and allowing payment plans. Insurers are urged to consider policy cancellation only if all other possible alternatives have been expended.

The guidance addresses other COVID-19 considerations, including the acceptance of electronic communications from policyholders where handwritten statements would normally be required. It also provides a 30-day extension for annual statements due to be filed with OIR by regulated entities, including insurance administrators and multiple-employer welfare arrangements, on or before May 1, 2020.

Although the memo is directed at insurers, employers may want to be aware of these developments.

Informational Memorandum OIR 20-04M »

Telehealth Guidance

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On April 6, 2020, the Office of Insurance Regulation (OIR) issued Informational Memorandum OIR-20-06M, which provides telehealth and pharmacy audit guidance in relation to the state’s coronavirus (COVID-19) response. The memo is directed at health insurers and other health entities regulated by the OIR, and all pharmacy benefit managers registered in the state.

As background, prior Executive Orders 20-51 and 20-52 established COVID-19 protocols and declared a state of emergency in the state. The purpose of the current memo is to encourage the health care industry to use technology to help combat the spread of COVID-19.

This communication follows actions taken by the CMS to expand access to telehealth services for Medicare beneficiaries. Additionally, the Florida Department of Health temporarily suspended certain restrictions on the use of telehealth services by health care professionals licensed both in and out of state who are providing care to state residents.

The current memo encourages all health insurers, health maintenance organizations, and other health entities to broaden access to telehealth services and to remove any existing impediments for residents seeking to use such services. Furthermore, it requests that these entities change to an electronic pharmacy audit process in order to avoid unnecessary exposure and maintain social distancing.

Although the memo is directed at insurers and pharmacy benefit managers, employers may wish to be aware of these developments.

Informational Memorandum OIR-20-06M »


March 17, 2020

Coronavirus Memo

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On March 6, 2020, the Office of Insurance Regulation released Informational Memorandum OIR-20-01M in response to Executive Order #2020-51, which was issued by Gov. DeSantis to establish coronavirus (COVID-19) protocols. The memo is directed at all health insurers authorized to do business in Florida.

As background, the communication was released as part of the state’s effort to protect Floridians during the COVID-19 public health emergency. The memo recognizes the integral role of insurers in addressing the pandemic.

Accordingly, these entities are instructed to work with public officials and take all possible measures at the prevention level. Specifically, insurers are directed to devote resources to disseminating information to policyholders, agents and providers regarding COVID-19 prevention and treatment. They should also be prepared to respond to insureds’ questions regarding covered benefits and related inquiries.

Additionally, insurers are directed to reduce barriers to cost sharing for COVID-19 testing and treatment during the public health emergency. Emergency services for an emergency medical condition must be covered at the in-network level regardless of which provider performs the service. General preparedness plans should also be reviewed.

Although the memo is issued to insurers, employers should be aware of this development.

Informational Memorandum OIR-20-01M »

Early Prescription Refill Mandate

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On March 10, 2020, the Office of Insurance Regulation issued Informational Memorandum OIR-20-02M in response to Executive Order #2020-52, which declared a public health emergency in the state with respect to the coronavirus (COVID-19) outbreak. The memo is directed at all health insurers, health maintenance organizations and other health entities authorized to do business in Florida.

As background, Florida statutes permit early prescription refills in the event that the governor issues an executive order declaring a state of emergency. As a result, insureds are able to fill prescriptions in advance as part of their emergency preparedness.

Accordingly, the memo reminds insurers and other health entities to waive otherwise applicable time restrictions on prescription medication refills and to authorize payment to pharmacies for at least a 30-day supply of any prescription medication, regardless of the date on which the prescription had most recently been filled. Certain limitations and conditions apply, in accordance with the applicable provisions of the Florida statutes.

Employers should be aware of the memo and direct any related question to their carriers.

Informational Memorandum OIR 20-02M »

September 6, 2017

Civil Air Patrol Leave

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On June 9, 2017, Florida Gov. Rick Scott approved S.B. 370 into law. The new law requires employers with 15 or more employees to provide at least 15 days of unpaid Civil Air Patrol leave per year. To be eligible for the leave, the employee must have been employed by the employer for at least 90 days. Additionally, the employee must be a Civil Air Patrol member, which is defined as a senior member of the Florida Wing of the Civil Air Patrol with an emergency services qualification. The leave may be related to training or a mission.

An eligible employee may elect to use accrued paid leave amounts, but may not be required to use such during the Civil Air Patrol leave period. An employer may not discharge, reprimand or otherwise penalize an eligible employee who takes such leave. At the end of the leave, the employee shall return to work unless certain conditions are met such as the employment would cause undue hardship on the employer or the employer has legally sufficient cause to terminate the employee.

The law’s been effective since July 1, 2017.

S.B. 370 »

May 3, 2016

On March 25, 2016, Gov. Scott signed Senate Bill No. 422 into law. This law addresses the provision of abuse-deterrent drugs. Specifically, plans that provide coverage for abuse-deterrent opioid analgesic drug products:

  • Can only require prior authorization for abuse-deterrent opioid analgesic drug products if they require the same prior authorization for each opioid analgesic drug product that does not have an abuse-deterrence labeling claim, and
  • Cannot require plan participants to use opioid analgesic drug products that do not have an abuse-deterrence labeling claim before authorizing the use of abuse-deterrent opioid analgesic drug products.

The law is effective on Jan. 1, 2017. Employers that sponsor plans that provide such drug products should work with their insurers to ensure compliance with this law.

Senate Bill No. 422 »

On April 14, 2016, Gov. Scott signed House Bill No. 221 into law. This law requires plans to provide coverage for treatment of down syndrome when the participant is younger than age 18 or older than age 18 and attending high school, if they were diagnosed as having developmental disabilities before reaching age eight.

The law also requires issuers to provide coverage for emergency services regardless of whether those services are performed by participating or nonparticipating health-care providers. Additionally, issuers cannot require prior authorization for emergency services. This portion of the law is very similar to PPACA’s requirement that emergency services be covered without regard to whether provided in or out of network; note though, that this requirement would apply to plans insured in Florida whether the plan is grandfathered under PPACA or not.

This law is effective July 1, 2016.

House Bill No. 221 »

June 16, 2015

Beginning July 1, 2015, Florida employers with 15 or more employees cannot discriminate on the basis of pregnancy. This prohibition comes after the Florida Supreme Court ruled in 2014 in Delva v. Cont’l Group, Inc., 137 So. 3d 371 (Fla. 2014) that pregnancy discrimination is a form of sex discrimination under Florida employment law. As a result, employers cannot fail or refuse to hire, discharge or otherwise discriminate in compensation or terms, conditions and privileges of employment on the basis of pregnancy. The law does allow employers to take an action based on pregnancy if such action is justified based on a bona fide occupational qualification that is necessary for job performance. The law also allows employers to abide by the terms of bona fide employee benefit plans that measure earnings by production as long as the terms are not designed to evade the pregnancy discrimination laws.

Fla. Stat. 760.10 »
Delva v. Cont’l Group, Inc. »

January 28, 2015

On Jan. 13, 2015, the DOL and the state of Florida signed a memorandum of understanding announcing that they will work together to prevent the improper classification of employees as independent contractors or other nonemployee workers. The agreement states that the two entities will share information and coordinate enforcement in an effort to protect employee rights by reducing the practice of misclassification of employees.

The agreement arose as part of the DOL Misclassification Initiative. Sixteen other states have signed similar agreements: Alabama, California, Colorado, Connecticut, Hawaii, Illinois, Iowa, Louisiana, Maryland, Massachusetts, Minnesota, Missouri, Montana, New York, Utah and Washington. Employers should be aware of the increased attention given to the misclassification issue by the DOL and by state agencies. This is an important issue for all size employers, but specifically large employers who are subject to the employer mandate must identify full-time employees and offer them affordable, minimum value coverage, or else pay a penalty. Misclassification of employees can significantly impact the potential liability under the employer mandate for these employers.

DOL News Release  »
DOL Misclassification Initiative Web Page  »

January 13, 2015

On Jan. 5, 2015, the stay on enforcement of same-sex marriages in Florida expired, making same-sex marriage legal in Florida as of Jan. 6, 2015. As background, in August of 2014, Federal District Court Judge Hinkle ruled in Brenner v. Scott (999 F. Supp. 2d 1278, 2014) that the Florida same-sex marriage ban is unconstitutional. However, at that time, he issued a stay on enforcement of same-sex marriage, pending appeal. Florida appealed this decision to the 11th Circuit, and on Dec.3, 2014, the 11th Circuit denied a request to extend the stay. On Dec. 19, 2014, the Supreme Court also refused to issue an injunction that would lift the stay. On Jan. 1, 2015, Judge Hinkle directed clerks in Florida to issue same-sex marriage licenses beginning Jan. 6, 2014.

Brenner v. Scott  »

September 9, 2014

On Aug. 26, 2014, the Florida Office of Insurance Regulation issued Informational Memorandum OIR-14-05M. The bulletin provides guidance regarding calculation of composite rates for Florida-issued policies for policy years beginning on or after Jan. 1, 2015. As background, final rules issued by HHS March 11, 2014, provided for a two-tiered federal calculation method for composite rates (one tier for each covered adult age 21 or older and a second tier for each covered child under age 21). However, the same final rule permitted states to substitute their own alternative to the federal methodology by seeking approval from HHS. This bulletin issued by the Florida Office of Insurance Regulation is confirmation that the state has sought such alternative certification and it was approved. In this case, the state requested to use a four-tiered calculation: employee, employee plus spouse, employee plus children and employee plus family.

This means that while health insurance carriers issuing small group market plans in the state will continue to provide per-member billing, they may choose to provide family composite premiums on an optional basis. If they do so, the carrier must follow the state's four-tiered approved alternative method. If a carrier offers the family composite methodology, it must make it available for each small employer in the market.

The bulletin provides definitions for each rating tier, as well as the factors to be used when determining the final premium charged for each employee. Importantly, the bulletin does not apply directly to small employers, although this information is important for all employers to understand. Small employers in Florida may request composite rates from the insurance carrier, rather than per member rates, to determine the percentage of the premium paid by the employer versus employee contribution levels for policies issued in 2015 if the carrier has opted to follow this alternative calculation method. The bulletin is effective for policy years beginning on or after Jan. 1, 2015.

Informational Memorandum OIR-14-05M »

Federal Chart of Approved States with Rating Variations »

August 26, 2014

On Aug. 21, 2014, the U.S. District Court for the Northern District of Florida, Tallahassee Division, in Brenner v. Scott, 298 F.R.D. 689 (N.D. Fla. 2014), ruled that Florida’s constitutional and statutory prohibitions against same-sex marriage are unconstitutional. The court blocked the state from enforcing the prohibitions, but stayed its ruling until stays have been lifted in three other pending cases, plus 90 days, allowing time for the state to seek a longer stay or a stay from the U.S. Court of Appeals for the Eleventh Circuit or the U.S. Supreme Court. The court did allow one of the plaintiffs to receive a corrected death certificate reflecting a same-sex marriage spouse no later than Sept. 22, 2014, or 14 days after the information needed is provided. The court also ordered the clerk of court in Washington County, FL, to issue a marriage license for another plaintiff within 21 days after the stay of this order expires. However, for now the same-sex marriage prohibitions in Florida remain in effect pending the outcome of the appeals.

Brenner v. Scott »


Georgia

May 12, 2020

Prior Coronavirus Directives Winding Down

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On April 28, 2020, the Insurance and Safety Fire Commissioner issued Bulletin 20-EX-7 regarding the winding down of prior coronavirus (COVID-19) directives. The bulletin was issued to consumers and insurers in the state.

Following a declaration of a COVID-19 public emergency in the state, policies were enacted to prevent cancellation of insurance coverage, including for reasons of nonpayment, and to extend certain filing deadlines. As a result of the state’s improving conditions with respect to the containment of the spread of COVID-19, expiration dates have been set with respect to these policies and extensions.

For example, the prior instructions to health insurers under Directive 20-EX-5 to refrain from canceling policies due to nonpayment will now expire on May 31, 2020. However, the commissioner encourages insurers to be accommodating to consumers facing financial difficulties. The suspension of nonfederal insurer filing deadlines and waiver of late fees will also expire on May 31, 2020. Additionally, the commissioner’s request to insurers and hospitals to suspend certain utilization and review requirements under Directive 20-EX-7 will expire on May 25, 2020.

Employers may wish to stay apprised of these developments, as the state reevaluates the COVID-19 situation and prior related orders.

Bulletin 20-EX-7 »


April 14, 2020

Consumer Protections During Coronavirus Pandemic

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On March 20, 2020, the Insurance and Safety Fire Commissioner issued Directive 20-EX-5 regarding the coronavirus (COVID-19) crisis. The directive is issued to all licensed insurance companies in the state.

The guidance is provided as part of the state’s public health emergency response to the spread of COVID-19. This directive recognizes the financial hardships and business disruptions resulting from COVID-19 mitigation measures.

Accordingly, insurance companies are directed to refrain from canceling policies due to nonpayment. As applied to health insurance policies, the directive is in effect until further notice. This initiative is intended to ensure those affected by the pandemic retain access to health care.

The directive also suspends regulatory functions requiring in-person interaction, including on-site exams, audits and licensing requirements. Certain non-federal insurer filing requirements and deadlines are similarly suspended.

This communication is directed at insurance companies. However, employers may also wish to be aware of these developments. The directive is accessible at the below link:

Directive 20-EX-5 »

Utilization Review Requirements Suspended

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On March 26, 2020, the Insurance and Safety Fire Commissioner issued Directive 20-EX-7 regarding the coronavirus (COVID-19) pandemic. The directive is issued to all insurers authorized to write accident and health insurance and health benefit plans in the state.

The directive is released as part of the state’s public health emergency response to mitigate the spread of COVID-19. The guidance recognizes that as hospitals face high demands for in-patient services and use available staff to provide direct patient care, administrative functions may need to be limited.

Accordingly, the guidance advises insurers that certain utilization review and notification requirements should be suspended for 60 days, subject to further evaluation as the COVID-19 situation evolves.

Specifically, the directive suspends preauthorization requirements for scheduled surgeries or admissions at hospitals. Instead, hospitals are asked to use their best efforts to provide 48 hours’ notice to issuers after a hospital admission. Similarly, issuers are advised to suspend concurrent reviews for inpatient services as well as retrospective reviews for inpatient services and emergency services at in-network hospitals. In order to allow hospitals to discharge patients to lower levels of care as appropriate, the insurers are further advised to suspend preauthorization requirements for post-acute placements, including skilled nursing facilities, home health care facilities, acute rehabilitation services, and long-term acute care hospitals, following an inpatient hospital admission.

Issuers are asked to pay claims from in-network hospitals that are otherwise eligible for payment as soon as possible and without reviewing for medical necessity. However, a retrospective review may be performed following the suspension and taking into account the circumstances involving the COVID-19 pandemic. Nonessential audits of hospital payments should also be temporarily suspended.

The memo is directed at insurers authorized to write insurance in the state. Additionally, third party administrators are encouraged to apply these provisions to their service arrangements with self-funded plans. Employers should also be aware of these developments.

Directive 20-EX-7 »


March 17, 2020

Coronavirus Preparedness Directive

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On March 9, 2020, the Insurance and Safety Fire Commissioner issued Directive 20-EX-3 regarding coronavirus (COVID-19) preparedness. The directive is issued to all insurers authorized to write accident and health insurance and health benefit plans in the state.

The directive is released as part of the state’s response to the spread of the respiratory illness known as COVID-19 to the United States, including Georgia. The outlined measures are designed to assist individuals and entities in providing the necessary insurance-related services during the public health challenge.

Specifically, the directive is asking health insurers who provide coverage to state residents to consider options to reduce or remove cost and procedural barriers to COVID-19 testing and treatment. These entities should be prepared to provide accurate and timely coverage information to insureds. Additionally, the insurers are instructed to review their internal procedures, telemedicine and in-network services, and access to out-of-network providers to ensure these are adequate to address an increased need for services.

The memo is directed at insurers, who are requested to provide information as to the steps taken in response. Employers should be aware of these developments.

Directive 20-EX-3 »


October 29, 2019

Georgia Telehealth Act

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On May 6, 2019, Gov. Kemp signed SB 118 into law, creating the Georgia Telehealth Act. The bill expands upon existing law in an effort to increase the availability of telemedicine for a broader array of services, and to ensure pay equity for telemedicine providers.

Specifically, the law prohibits insurers from excluding a service from coverage solely because it is provided through telemedicine rather than in-person consultation. The insurer must also reimburse the provider for the diagnosis, consultation, or treatment of an insured delivered through telemedicine on the same basis and at least the rate for the same service provided through in-person contact.

Additionally, the carrier cannot impose 1) any annual or lifetime limits on telemedicine coverage other than those that apply in the aggregate to all items and services covered under the policy or 2) any copayment, coinsurance, or deductible that is not equally imposed upon all terms and services covered under the policy. An insured cannot be required to use telemedicine services in lieu of in-person consultation.

The law goes into effect on January 1, 2020. Although the measures are primarily directed towards insurers, employers with health benefit policies issued in Georgia should be aware of the new coverage requirements.

SB 118 »


September 19, 2017

Insurers Are Encouraged to be Lenient with Deadlines for Policyholders Impacted by Hurricane Irma

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On Sept. 14, 2017, Commissioner of Insurance Hudgens issued Directive 17-EX-7 to all Georgia insurers encouraging Georgia insurers to provide relief to Georgia policyholders in the wake of severe weather due to Hurricane Irma. Noting that over a million Georgians lost power, that transportation has been severely impacted and that Gov. Deal has declared a state of emergency, Commissioner Hudgens is encouraging insurers to be lenient with policyholders that may be impacted by a disruption of services as a result of the storm. This may be accomplished by relaxing deadlines or penalties for premium payments that may be tardy. There is no requirement that carriers must comply, but this signifies the Insurance Commissioner’s hope that compassion will prevail.

Directive 17-EX-7 »


July 11, 2017

Fire Departments Must Provide Cancer Insurance

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On May 4, 2017, Gov. Deal signed HB 146 into law, amending section 25-3-23 of the Georgia Code relating to general requirements for legally organized fire departments. The law was passed to mandate insurance coverage for the 19 types of cancer firefighters contract the most.

Specifically, this law requires such fire departments in Georgia to purchase and maintain certain cancer insurance coverage for firefighters (including volunteer firefighters), and the law also requires such departments to provide income protection for up to three years.

Coverage will need to be provided for firefighters who have served 12 consecutive months. Insurance benefits will include a lump-sum benefit of $25,000 or $6,250 depending on the cancer’s severity. In addition, for those unable to perform job duties due to the diagnosis, a monthly benefit equal to 60 percent of the firefighter’s monthly salary, or a monthly benefit of $5,000, whichever is less, will begin six months after the firefighter’s diagnosis and continue for 36 months. The monthly benefit for volunteer firefighters unable to perform their job duties will be $1,500, payable in the same manner as that for paid firefighters.

This law is effective for legally organized fire departments in Georgia as of Jan. 1, 2018.

HB 146 »


June 13, 2017

Plans Must Provide Hearing Aids for Children

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On May 8, 2017, Gov. Deal signed SB 206 into law, amending section 33-24 of the Georgia Code. This law requires health plans to provide coverage for hearing aids to plan participants age 18 or younger, outlines the frequency with which such hearing aids must be replaced, addresses covered services and supplies and allows for the option of higher-priced devices.

This law is effective for health plans issued, delivered, executed or renewed in Georgia on or after Jan. 1, 2018.

SB 206 »

Synchronization of Prescription Drug Refills

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On May 9, 2017, Gov. Deal signed SB 200 into law, amending section 33-24 of the Georgia code. This law requires plans that provide prescription drug benefits to permit and apply prorated daily cost-sharing rates for prescriptions dispensed by pharmacies for less than a 30-day supply, if for the purpose of synchronizing plan participants' medications. Synchronization involves coordinating the medication refills of a patient that is taking two or more medications such that the medications are refilled on the same schedule. While plans may prorate daily cost-sharing rates for synchronized medications, they may not prorate dispensing fees, which must be based on the number of prescriptions filled.

This law is effective for plans providing prescription drug coverage that are issued, delivered, executed or renewed in Georgia on or after July 1, 2017.

SB 200 »


May 31, 2017

Available Paid Sick Leave Must be Usable to Care for Immediate Family Members

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On May 8, 2017, Gov. Deal signed SB 201 into law, creating Section 34-1-10 of the Georgia code. This law does not require the provision of paid sick leave, but allows use of existing or future paid sick leave in order to care for immediate family members. Specifically, the new law requires employers that offer paid sick leave to allow employees to use up to five days of said leave in each calendar year to care for immediate family members.

The law applies to employers, public and private, that have 25 or more eligible employees, although an employer that offers an employee stock ownership plan is exempt from the requirement. An eligible employee is defined as an employee that works at least 30 hours per week.

An immediate family member is defined as an employee’s child, spouse, grandchild, grandparent or parent, or any dependents shown on the employee’s most recent tax return. Leave must be earned before taken and employees taking leave under this law must comply with the terms of the employer’s sick leave policy.

The new law is effective July 1, 2017.

SB 201 »


February 7, 2017

IRS Provides Tax Relief for Victims of January Severe Weather in Georgia

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On Jan. 26, 2017, the IRS announced, in ATL-2017-03, tax filing relief for taxpayers who reside or have a business in Dougherty County, Georgia. Dougherty County was declared a federal disaster area following the severe storms, tornados, and straight-line winds that took place beginning on Jan. 2, 2017. Victim taxpayers in Dougherty County (those who reside or have a business there) are eligible for postponement of time to file returns, pay taxes and perform other time-sensitive acts.

Of particular interest as it relates to benefits, the IRS gives victim taxpayers until May 31, 2017 to perform certain time-sensitive actions described in the regulations (like filing Forms 5500). Specifically, if an affected employer has a Form 5500 filing that would have become due between Jan. 2, 2017 and May 31, 2017, then the due date of that filing is extended to May 31, 2017.

The IRS automatically identifies taxpayers located in Dougherty County and applies automatic filing and payment relief. However, affected employers that have a business located outside the covered disaster area, but were impacted by the disaster, must call the IRS disaster hotline at 866-562-5227 to request this tax relief.

ATL-2017-03 »


November 15, 2016

Insurance Directive Reinforces No Cost Sharing Related to Preventive Colonoscopy

On Nov. 2, 2016, Commissioner of Insurance Hudgens issued Directive 16-EX-6 to all Georgia insurers related to in-network preventive colorectal screenings. CMS and other federal agencies have provided sufficient guidance to establish that all services directly related to a preventive colonoscopy are to be provided without cost sharing. The actual findings of the screening have no bearing on the cost sharing. Yet, it has come to the Commissioner’s attention that issues continue to occur as to the breadth of coverage including improper cost sharing, denials of claims, or improper balance billing.

This directive clarifies that it is the insurer’s responsibility to adjust the claim promptly, fairly and accurately once it is determined that the claim is related to the preventive colonoscopy screening. Failure of insurers to make proper adjustments in a timely manner will be viewed as unfair claims settlement practices.

Insurers are also tasked with developing educational materials for insureds highlighting different concepts that include (but are not limited to) the differences between diagnostic and preventive, cost sharing and no cost sharing, in or out-of-network, and providing helpful guidance regarding referrals for preventive colorectal screenings.

Although this directive is aimed at insurers, it is important for employers to be aware of what insurers may be doing and what they are now directed to do.

Directive 16-EX-6 »


June 1, 2016

On April 27, 2016, Gov. Deal signed HB 965 into law, amending Chapter 24 of Title 33 of the Official Code of Georgia Annotated. This makes a change to plan requirements regarding drug treatment for those suffering from stage four advanced, metastatic cancer.

The amendment provides that health benefit plans issued, delivered or renewed in Georgia cannot limit or exclude coverage for drugs that are approved by the federal Food and Drug Administration to treat stage four advanced, metastatic cancer by requiring that plan participants first fail to respond successfully to a different drug or drugs or prove a history of failure of such drug or drugs. “Stage four advanced, metastatic cancer” means cancer that has spread from the cancer's original or primary sites to nearby tissues, lymph nodes or other areas or parts of the body.

This law applies to fully-insured plans issued, delivered or renewed on or after July 1, 2016.

HB 965 »


November 17, 2015

On Nov. 6, 2015, Commissioner of Insurance Hudgens issued Bulletin 15-EX-3 related to the Georgia definition of small group in light of passage of the PACE act. As background, the PACE act was signed into federal law Oct. 7, 2015, and repealed PPACA’s mandated small-group expansion. As a result of the PACE act, the federal government will continue to define small groups as those with 1-50 employees. As Georgia is no longer required to expand the definition of small group to 1-100 employees, this bulletin confirms that the small employer definition in Georgia is 1-50 employees and the counting methodology for grouping purposes is limited to full time equivalent employees (which, while not entirely clear, would appear to include part-time hours, similar to the counting procedures that apply under PPACA’s employer mandate). The bulletin also confirms that insurers will continue to utilize eligible employees for participation rate purposes.

Bulletin 15-EX-3 »

September 8, 2015

On July 14, 2015, the Georgia Department of Revenue (DOR) issued guidance for same-sex couples regarding filing tax returns. Effective June 26, 2015, the state of Georgia authorizes and recognizes same-sex marriages due to the U.S. Supreme Court decision in Obergefell v. Hodges. Therefore, same-sex marriages that were previously recognized for federal income tax purposes are now recognized by Georgia for state income tax purposes. For employers, this means the cost to cover same-sex partners under employer-provided benefit plans is not taxable for state purposes.

The guidance states that improper tax treatment will be corrected through the tax return process and the filing of amended returns. Therefore, while employers should no longer withhold income tax from amounts that would now be subject to pre-tax treatment, employers should not have to adjust for over-withholding of state taxes related to employer-provided benefits provided to same-sex couples.

GA DOR Guidance »

August 25, 2015

On Aug. 11, 2015, Commissioner of Insurance Hudgens issued Directive 15-EX-3 related to patient access to eye care. The directive reinforces that insurers must allow covered persons to obtain eye services from providers who are otherwise licensed to provide such services. Some insurers have been limiting coverage to services performed or products sold by certain providers only. The directive points to the recent Georgia Supreme Court case of Spectera, Inc. v. Wilson (749 S.E.2d 704 (2013)). Based on that case, a provider may provide all the services for which he or she is licensed and may receive provider panel reimbursement from an insurer as long as the service is otherwise covered by the insurance policy. Although this directive is aimed at insurers, it is important for employers to be aware that insurers cannot restrict the access to eye care in this manner.

Directive 15-EX-3 »

June 30, 2015

On June 17, 2015, Insurance and Safety Fire Commissioner Hudgens issued Bulletin 15-EX-2 related to the new autism spectrum disorder coverage requirement under HB 429, as previously reported in the May 19, 2015 edition of Compliance Corner. In the Bulletin, Commissioner Hudgens clarifies that insurers may impose a cap of $30,000 on claims paid for applied behavior analysis for the purpose of treating a person with autism spectrum disorder. This cap only applies to applied behavior analysis and does not apply to other treatments which may be required by HB 429 (such as therapy services or counseling).

The autism spectrum disorder requirements are effective for fully insured plans issued or renewed on or after July 1, 2015.

Bulletin 15-EX-2 »

May 19, 2015

On April 29, 2015, Gov. Deal signed HB 429 into law, amending Chapter 24 of Title 33 of the Official Code of Georgia Annotated. The new law makes two significant changes relating to health insurance coverage.

First, plans cannot restrict coverage for prescribed, medically appropriate treatments for participants who are diagnosed with a terminal condition. ‘Terminal condition’ is defined as any physician-diagnosed illness, health condition or disease that is expected to result in death in two years or less. The health benefit plan shall not refuse to pay/reimburse for the treatment (including for any drug or device) as long as such end-of-life care is consistent with best practices for treatment of the terminal condition and such treatment is supported by peer-reviewed medical literature.

In addition, plans must provide coverage related to autism spectrum disorders for any plan participants who are six years of age or younger. Specifically, plans must provide coverage for any assessments, evaluations or tests by a licensed physician or psychologist for diagnosis and any treatment for any such disorders diagnosed. This includes counseling, habilitative, rehabilitative and therapy services. Coverage for prescription drugs to treat autism spectrum disorders must be determined in the same manner as coverage for prescription drugs to treat other illnesses or conditions covered by plans. This provision does not apply to employers that have 10 or fewer employees. Therefore, fully-insured Georgia employers with more than 10 employees should be aware of the new terminal condition and autism spectrum disorder coverage requirements, and should work with insurers if any issues arise.

These two changes are effective July 1, 2015.

HB 429 »

February 10, 2015

On Jan. 29, 2015, Insurance and Safety Fire Commissioner Hudgens issued Executive Directive 15-EX-2 related to hospital and other fixed indemnity insurance products. The state has implemented new procedures and enforcement to align with federal requirements for such policies. As background, in May 2014, CMS issued final regulations related to fixed indemnity insurance products. An individual fixed indemnity policy would be exempt from PPACA's coverage mandates (regarding, for example, essential health benefits, annual dollar limits and maximum out-of-pocket limits) if it qualified as a HIPAA-excepted benefit. To qualify as an excepted benefit:

To qualify as an excepted benefit:

  • The policy must only cover individuals who have other coverage considered minimum essential coverage (MEC).
  • There is no coordination of benefits with another health plan.
  • The benefits are paid as a fixed-dollar amount per day or service regardless of the amount incurred.
  • The participant is provided with a written notice explaining that the policy would not qualify as MEC for individual mandate purposes.

For new policies issued with an effective date beginning on or after Jan. 1, 2015, the Georgia Department of Insurance requires that the participant certify that they have other coverage that qualifies as MEC. There is a safe harbor extension until no later than May 1, 2015 for issuers that filed policy form amendments by Oct. 1, 2014 (to allow previously approved amendments to be finish the their use for the year). For coverage that is already in force or that will take effect later in 2015, the notice and attestation requirements would apply to the first renewal application with an effective date on or after Oct. 1, 2016.

An employer offering fixed indemnity products to employees should review them carefully for compliance.

Executive Directive 15-EX-2  »

August 12, 2014

On Aug. 1, 2014, Insurance and Safety Fire Commissioner Hudgens issued Bulletin 14-L&H-1 outlining Georgia's small group health composite rating for use in preparing 2015 small group health rates. As background, in March HHS established the federal composite rating methodology, a two-tier rating system. At that time, HHS also authorized states to utilize a different composite rating strategy, provided they are submitted to and approved by HHS. Georgia has exercised this option by introducing a four-tier small group rating methodology. A carrier is not required to provide family composite rates, but if it does, it must make it available to each small employer in the market.

The methodology for developing small group premiums in Georgia and allocating them to participants is as follows:

  • Development of Aggregate Small Group Premiums — For each employee and dependent, the premium must be determined as follows:
    • For each covered adult 21 and over, multiply the base rate by the applicable age and geographic factors without applying any tobacco factor.
    • For each covered child age 0-20, calculate the rate for the three oldest children by multiplying the base rate by the applicable age and geographic factors without applying any tobacco factor.
    Age and geographic area are determined at the time the coverage is quoted.
  • Allocation of Premium to Small Group Members — Once the small group's aggregate premium has been calculated, it must be allocated back to covered employees based on their tier factor. Georgia has adopted the following four-tier approach and corresponding factors:
    • Employee only = 1
    • Employee + spouse = 2
    • Employee + children (including all covered children up to age 26) = 1.85
    • Employee + family = 2.85
  • Final Employee Premium —  Final employee premium = [group aggregate premium] / [weighted employee count] x [employee's tier factor]
  • Recalculation of Average Monthly Premiums —  The methodology above determines an employee's monthly premium based on a census of employees (and covered dependents) at the time the policy was issued. The average monthly premium for each tier must remain the same for the entire policy period despite changes to the census. The average monthly premium must be recalculated annually, based on the census at the time the policy is rated.
  • Application of Tobacco Use Factors —  The family composite premiums do not include a tobacco use factor. Any tobacco use factor must be applied to the specific individual's premium contributed to the aggregate premium. The additional premium is then added to the monthly premium for that individual based upon the tier allocation.

Note that the federally facilitated SHOP will not use composite premium methods for the 2015 plan year. The federally facilitated SHOP plans to use the federal composite premium method for the 2016 plan year.

Bulletin 14-L&H-1 »


Hawaii

May 12, 2020

Reiteration of COVID-19-Related Insurance Guidance

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On April 27, 2020, Insurance Commissioner Hayashida issued Memorandum 2020-4A. This memo incorporates and reemphasizes all previous guidance the Insurance Division has provided concerning the COVID-19 crisis. Specifically, among other things, the Insurance Division continues to encourage insurers to waive fees and penalties relating to an insured’s temporary inability to submit premium payments, extend grace periods, grant additional time to policyholders to pay premiums, and encourage policyholders to use electronic payment technology to avoid in-person payments.

This guidance applies to insurers, but employers should familiarize themselves with it should they need to seek leniency from an insurer.

Memorandum 2020-4A »


April 14, 2020

Insurance Division Requests Regarding COVID-19

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On March 27, 2020, the Insurance Division issued Memorandum 2020-23I, encouraging insurers to work with their insureds to ensure health coverage continues during the COVID-19 crises. Specifically, the memorandum encourages insurers to:

  1. Refrain from cancelling or nonrenewing policies due to nonpayment during this time of hardship and to grant a grace period for premium payments to be made
  2. Work with insureds on a structured payment plan for late premium payments
  3. Waive late fees and penalties
  4. Extend timeframes to complete property and automobile inspections or undergo medical examinations
  5. Continue working with insureds for a period of 60 days after this health emergency has passed, or as long as reasonably practical

While this guidance is aimed at insurers, employers should review this guidance so that they are aware of some of the ways insurers may be making accommodations for plan sponsors.

Memorandum 2020-3I »


August 20, 2019

Voting Leave Repealed

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On June 28, 2019, Governor Ige signed HB 1248 into law. Effective with the 2020 primary election, the law requires all elections statewide to be conducted by mail. Because of this requirement, an employee’s absence during the day will not be necessary in order to visit a polling location. Thus, the new law also repeals the voting leave law, which provided employees with up to two hours of leave for the purpose of voting.

HB 1248 »


February 5, 2019

Revised Disability Compensation Notice

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The Department of Labor and Industrial Relations has issued a revised version of the “Disability Compensation Law Notice to Employees,” which must be posted in the workplace. The poster advises employees of their right to temporary disability insurance, prepaid health care and workers compensation benefits.

Revised Disability Compensation Law Notice to Employees »


August 21, 2018

Medication Synchronization

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On July 11, 2018, Gov. Ige signed HB 2145 into law. The new law allows for medication synchronization for participants who are taking two or medications for chronic conditions. The synchronization allows for the multiple medications to be filled at the same time by the same network pharmacy, which the new law states increases medication adherence. The new law specifically requires group health insurance policies to provide coverage for partial supplies of such medication (less than a 30 day supply) with prorated cost sharing applied. The law was effective July 1, 2018.

HB 2145 »

Restrictions on Short-Term, Limited-Duration Policies

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On July 10, 2018, Gov. Ige signed HB 1520 into law. The new law prohibits an insurer from issuing or renewing a short-term, limited-duration health insurance policy for an individual who was eligible to purchase individual health insurance through the marketplace during open enrollment or a special enrollment period in the previous calendar year. Further, insurers are prohibited from issuing such a policy with a coverage period longer than 90 days. This law is more restrictive than the recently issued federal regulations related to short-term, limited-duration health insurance policies, which permits renewals for up to 36 months.

HB 1520 »


August 7, 2018

Transitional Policies Extended

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Insurance Commissioner Ito announced in Memorandum 2018-2H that insurers will be allowed to renew noncompliant individual and small group non-grandfathered plans with policy years beginning on or before Oct. 1, 2019. This is related to the CMS announcement on April 9, 2018 of an extension to the transitional policy for non-PPACA-compliant health benefit plans. Such plans must have existed before Oct. 1, 2013 and aren’t required to be in compliance with certain PPACA mandates, including community rating, coverage of essential health benefits, prohibition on pre-existing condition exclusions and the annual out-of-pocket maximum limit. Employers with non-PPACA-compliant plans should work with their carrier and advisor in determining whether their plan can be extended.

Memorandum 2018-2H »


July 24, 2018

Adoption of ACA Mandates

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On July 5, 2018, Gov. Ige signed SB 2340 into law. The new law amends Hawaii’s Revised Statutes to impose the following requirements on group health insurance policies issued in the state:

  • Provide coverage to children until age 26 (if the policy already provides coverage for children)
  • Prohibition on pre-existing health conditions exclusions
  • Prohibition on using a participant’s gender to determine premiums or contributions

This doesn’t currently impact group health insurance policies, as they’re already required to be in compliance with these provisions under the ACA. The purpose of this new law is to protect these provisions in case they’re repealed at the federal level. If that were to happen, policies issued in Hawaii would still be required to be in compliance with these three requirements.

The law was effective upon the governor’s signature.

S.B. 2340 »


September 19, 2017

Family Leave Expansion

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On July 10, 2017, Gov. Ige signed HB 213 into law. The new law expands the state’s existing family leave law. As background, employers who have 100 or more employees working in Hawaii must provide up to four weeks of unpaid leave in a 12-month period to eligible employees. Employees are eligible if they have worked for the employer for at least six months and have a qualifying reason.

Qualifying reasons include birth, adoption and to care for a family member (employee’s child, spouse, reciprocal beneficiary or parent) with a serious health condition. The new law adds a sibling to the list of family members for whom the employee may take leave. Additionally, the death of the employee’s child, spouse, reciprocal beneficiary, parent or spouse has been added as the fourth qualifying reason for leave.

The employer may require certification, such as a statement from a health care provider when leave is to care for a seriously ill family member or a death certificate following the death of a family member. The law was effective July 10, 2017.

HB 213 »

August 8, 2017

Network Access and Adequacy

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On July 12, 2017, Gov. Ige signed SB 387 into law. The new law requires insurers that offer network plans to maintain a network that is sufficient in numbers and appropriate in types of providers, including those that serve predominantly low-income, medically underserved individuals. This is to ensure that all covered benefits will be accessible without unreasonable travel or delay. Covered participants must have access to emergency services 24 hours per day, seven days per week.

If the network doesn’t include a type of participating provider or has an insufficient number or type of providers to provide a specific covered benefit to a participant without unreasonable travel or delay, the benefit must be paid at in-network levels.

Insurers must electronically post a current and accurate provider directory, which must be updated at least monthly. The general public must be able to view the directory without creating or accessing an account or entering a policy number.

The law is generally effective for policy years beginning on or after Jan. 1, 2019.

SB 387 »

April 18, 2017

Transitional Policies Extended

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On March 1, 2017, Hawaii Insurance Commissioner Ito announced in Memorandum 2017-3H that insurers will be allowed to renew noncompliant individual and small group non-grandfathered plans with policy years beginning on or before Oct. 1, 2018. This is related to the Feb. 23, 2017, CMS announcement of an extension to the transitional policy for non-PPACA-compliant health benefit plans. Such plans must have existed before Oct. 1, 2013 and are not required to be in compliance with certain PPACA mandates including community rating, coverage of essential health benefits, prohibition on pre-existing condition exclusions and the annual out-of-pocket maximum limit. Employers with non-PPACA-compliant plans should work with their carrier in determining whether their plan can be extended.

Memorandum 2017-3H »

January 24, 2017

Section 1332 State Innovation Waiver Approved

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On Dec. 30, 2016, CMS approved part of Hawaii’s Section 1332 request for a waiver of SHOP requirements. The approval is in effect for five years- Jan. 1, 2017 through Dec. 31, 2021. As a result, the following provisions are waived in Hawaii:

  • State/federal establishment of a SHOP
  • Employee choice of QHPs at a single level of coverage through the SHOP
  • Continuation of participation in the SHOP for growing employers
  • CO-OPs and multi-state plans be recognized as QHPs in the SHOP

CMS denied Hawaii’s request for state agencies other than Medicaid to participate in the exchange. The individual exchange in Hawaii will continue to be operated as a federally-facilitated exchange through www.healthcare.gov.

CMS approved Hawaii’s waiver request based upon Hawaii’s unique Prepaid Health Care Act, which requires employers to provide certain coverage to employees working 20 hours or more per week. The employer must pay at least 50 percent of the premium and the employee’s contribution for self-only coverage cannot exceed one and a half percent of the employee’s wages. There is assistance available for employers who are experiencing bankruptcy or employers who have under eight employees and who may be having financial difficulty complying. The waiver is conditioned upon the continuance of these programs and ongoing reporting.

CMS Memorandum of Approval »

January 10, 2017

2017 TDI Rates

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The Hawaii Department of Labor and Industrial Relations, Disability Compensation Division, announced its 2017 rates for state temporary disability insurance (TDI). Effective Jan. 1, 2017, the maximum weekly benefit amount is $594, a $24 increase from 2016. The maximum employee contribution rate remains 0.5 percent. However, the maximum weekly wage base increases to $1,023.31 (up from $982.36 in 2016), which means a maximum weekly deduction of $5.12 (up from $4.91 in 2016).

Announcement »


October 18, 2016


Mandated Coverage for 12-Month Contraceptive Supplies

On July 5, 2016, Gov. Ige signed SB 2319 into law. Effective for policies issued or renewed on or after Jan. 1, 2017, group health plans must provide coverage for contraceptive supplies for up to a 12-month period.

SB 2319 »


Mental Health Coverage to Include Dietician Services

On June 29, 2016, Gov. Ige signed SB 2854 into law. Effective July 1, 2016, group health insurance policies must provide coverage for mental health services provided by licensed dietitians treating eating disorders.

SB 2854 »

August 9, 2016

On July 5, 2016, Gov. Ige signed HB1897 into law. Effective for plan years beginning on or after Jan. 1, 2018, group health insurance policies must provide coverage for sexually transmitted disease screenings, including screening for human immunodeficiency virus and acquired immunodeficiency syndrome.

HB 1897 »

On June 29, 2016, Gov. Ige signed SB 2854 into law. Health insurance policies that provide coverage for children of participants must provide coverage for certain child health supervision services from birth to age five years. Covered services include developmental assessment, immunizations, lab tests and medical examinations. Existing law provides that the services may be provided by physicians, supervised by physicians or delivered by nurses. The new law adds physician assistant delivered services to the list of covered benefits. The new law is effective for plan years starting on or after Jan. 1, 2017.

SB 2854 »

On June 29, 2016, Gov. Ige signed HB 2084 into law, which prohibits insurers from discriminating in terms of eligibility or coverage based on an individual’s actual or perceived gender identity, Prohibited discrimination includes denying or limiting coverage for services related to gender transition if the plan otherwise covers the services when not related to gender transition. Plans are also prohibited from limiting coverage for a service to a single gender. The law is effective for plan years starting on or after Jan. 1, 2017.

HB 2084 »

May 3, 2016

On April 26, 2016, Gov. Ige signed SB 2775 into law. The new law authorizes the state to file an application for a Section 1332 State Innovation Waiver. As discussed in the Jan. 12, 2016, edition of Compliance Corner, states may apply for a waiver from certain provisions of PPACA, including the health insurance marketplace for individuals, SHOP, premium tax credits, employer mandate and individual mandate. To be approved, the state must present an alternative strategy that will provide coverage that is at least as comprehensive as the existing federal provision, keep care at least as affordable and not increase the federal deficit.

Hawaii’s proposed alternative would be to waive the SHOP, maintain the individual marketplace and align the ACA with the state’s Prepaid Health Care Act, which places requirements on employers related to the offer of coverage to employees.

If approved, the waiver would be effective Jan. 1, 2017.

SB 2775 »

January 12, 2016

The Hawaii Department of Labor and Industrial Relations, Disability Compensation Division, announced its 2016 rates for state disability insurance. Effective Jan. 1, 2016, the maximum weekly benefit amount is $570, an $18 increase from 2015. The maximum employee contribution rate remains 0.5 percent. However, the maximum weekly wage base increases to $982.36 (up from $951.23 in 2015), which means a maximum weekly deduction of $4.91 (up from $4.76 in 2015).

Announcement »

November 17, 2015

On Oct. 30, 2015, Insurance Commissioner Ito issued Memorandum 2015-3H related to the definition of “small group” under state law. Hawaii insurance statutes define a “small group” as an employer with up to 50 employees. Since the federal provision mandating the change of the definition of small group to 100 employees is no longer in effect as a result of the PACE Act (signed into law on Oct. 7, 2015), Hawaii will keep its definition of small group at 1 - 50 employees. Thus, groups with 51 to 100 employees will continue to be rated as large groups and will not be required to switch to the small group market in 2016.

Memorandum 2015-3H »

October 20, 2015

On Oct. 5, 2015, the Hawaii Department of Commerce and Consumer Affairs Insurance Division released 2016 final rates for qualified health plans in the exchange. The premium rates for individuals vary by age, but on average increased 34.4 percent for Kaiser as compared to 2015 rates and 27.3 percent for HMSA. There are six insurers offering coverage through the SHOP and the rate increases range from -18.9 percent to 22.6 percent.

The state’s exchange was previously state-based and called the Hawaii Health Connector. Effective for 2016, the exchange will now be federally facilitated through www.healthcare.gov.

While the individual policy offerings do not affect employers, it may be helpful for employers to understand what is available through the exchange when responding to employee questions. Also, small employers with up to 50 employees have the option of purchasing group coverage through the SHOP. Please consult your advisor with any questions.

Announcement »

July 28, 2015

On July 14, 2015, Gov. Ige signed SB 791 into law. The new law requires group health plans to provide coverage for the diagnosis and treatment of autism for children under age 14. The coverage may be subject to a deductible, coinsurance or copayment but cannot be less favorable than the cost sharing provisions for medical services under the plan. Coverage for applied behavioral analysis shall be subject to a maximum benefit of $25,000 per year. Coverage may be excluded for services provided out of state, custodial care, care provided by a family or household member, experimental care or clinically in appropriate services or supplies. The insurer must distribute a notice summarizing the coverage with 2016 plan materials. The law is effective for policies issued or renewed on or after Jan. 1, 2016.

SB 791 »

On July 6, 2015, Gov. Ige signed HB 261 into law. The new law requires insurers to post the plan’s drug formulary on a public website. The information must also be available through a toll-free number. Any change in coverage, such as an addition of a new drug or removal of an existing drug, must be posted within 72 hours of the change effective date. The law is effective for policies issued or renewed on or after Jan. 1, 2017.

HB 261 »

On July 6, 2015, Gov. Ige signed HB 174 into law. The new law requires group health plans to provide coverage for medically necessary orthodontic services for the treatment of orofacial anomalies resulting from birth defects. The maximum benefit per treatment phase is $5,500, which will be indexed for inflation in later years. The coverage may be subject to a deductible, coinsurance or copayment but cannot be less favorable than the cost sharing provisions for medical services under the plan. Coverage cannot be denied on the basis that the treatment is habilitative or non-restorative in nature. The insurer must distribute a notice summarizing the coverage with 2016 plan materials. The law is effective for policies issued or renewed on or after Jan. 1, 2016.

HB 174 »

June 30, 2015

On June 15, 2015, Hawaii’s state-based marketplace, known as Hawaii Health Connector, is discontinuing its SHOP and will not accept applications. Small employers wishing to enroll in coverage should contact a broker to apply.

SHOP Transition »

February 10, 2015

The Hawaii Department of Labor and Industrial Relations, Disability Compensation Division, announced its 2015 rates for state disability insurance. Effective Jan. 1, 2015, the maximum weekly benefit amount is $552, a $6 increase from 2014. The maximum employee contribution rate remains 0.5 percent. However, the maximum weekly wage base increases to $951.23 (up from $940.05 in 2014), which means a maximum weekly deduction of $4.76 (up from $4.70 in 2014).

Announcement »

September 9, 2014

On Sept. 2, 2014, the Hawaii Department of Commerce and Consumer Affairs Insurance Division issued a press release announcing the publication of a new consumer guide for small groups. Employers who sponsor a small group health plan in Hawaii will now be able to compare rates among the state’s five carriers: Hawaii Medical Service Association, Kaiser Permanente, University Health Alliance, Hawaii Medical Assurance Association and Family Health. The guide is a result of Act 66, which requires carriers to publish such rates in an effort to promote transparency and create competition.

News Release »
Rate Comparison Guide »

July 29, 2014

On June 30, 2014, Gov. Abercrombie signed SB 1233 into law. The new law permits employees to take an unpaid leave of absence up to seven days per calendar year for bone marrow or peripheral blood stem cell donation and up to 30 days for organ donation. It applies only to private employers that employ 50 or more employees. To be eligible for the leave, the employee must be employed by the employer for at least one year prior to the leave. An employer may require that the employee use up to three days of earned but unused paid leave time. Upon return, the employee must be restored to the same or equivalent position. The law is effective June 30, 2014.

In a related action, Gov. Abercrombie signed HB 2400 into law on June 30, 2014. The state statute related to temporary disability benefits was revised to include organ donation under the definition of disability. This means that an employee who is on a leave of absence and unable to perform his/her work duties due to organ donation will be eligible for partial salary replacement through the temporary disability benefit program. This law is effective July 1, 2014.

SB 1233 »
HB 2400 »

On July 1, 2014, Gov. Abercrombie signed SB 2820 into law. The new law revises the state's insurance code to comply with and reflect the provisions of PPACA. The law is effective July 1, 2014. Among the provisions are:

  • A group health plan may not rescind (i.e., retroactively terminate) an individual's coverage unless the individual has committed fraud, makes an intentional misrepresentation of material fact or fails to timely pay required premiums or contributions toward the cost of coverage. The plan must provide at least 30 days' advance written notice to the affected individual prior to a rescission.
  • Group health plans may not impose any financial requirements or treatment limitations on mental health or substance use disorder benefits that are more restrictive than those imposed on medical and surgical benefits. Previously, benefits for in-hospital services related to mental illness and alcohol/drug dependence could be limited to 30 days per year, and outpatient services could be limited to 24 visits per year, which was not in compliance with PPACA or the Mental Health Parity and Addiction Act of 2008.

SB 2820 »

July 15, 2014

On July 3, 2014, Gov. Abercrombie signed SB 2469 into law. The law revises the state's requirement related to telemedicine. All statutory references to telemedicine have been changed to telehealth. Any policy issued by a mutual benefit society or health maintenance organization must provide coverage for telehealth services. Reimbursement for such services must be equivalent to reimbursement for the same services provided via face-to-face contact between a health care provider and a patient.

The term "telehealth" is defined as the use of telecommunicatios – including real-time video conferencing-based communication, secure interactive or non-interactive Web-based communication and secure asynchronous information exchange – to transmit patient medical information, including diagnostic-quality digital images and laboratory results for medical interpretation and diagnosis, for the purposes of delivering enhanced health care services and information to parties separated by distance, establishing a physician-patient relationship, evaluating a patient or treating a patient. The law is effective July 3, 2014.

SB 2469 »

June 17, 2014

On June 6, 2014, Hawaii Insurance Commissioner Gordon Ito announced that insurers will be allowed to renew noncompliant individual and small group non-grandfathered plans with policy years beginning on or before Oct. 1, 2016. This is related to the March 5, 2014, CMS announcement of a two-year extension to the transitional policy for non-PPACA-compliant health benefit plans (covered in the March 11, 2014, edition of Compliance Corner). The department will allow insurers to renew noncompliant individual and small group non-grandfathered plans with policy years beginning on or before Oct. 1, 2016. Such plans must have existed before Oct. 1, 2013 and would not be required to provide coverage for essential health benefits during the transition period.

Announcement »

On May 30, 2014, Hawaii Insurance Commissioner Gordon Ito issued a press release related to a proposed rate increase by Hawaii Medical Service Association (HMSA). HMSA had submitted a proposed increase of 13.1 percent for its small employer group community rated policies. After review, Commissioner Ito approved a rate increase of 8.9 percent, which represents approximately a 5 percent increase due to medical costs and 4 percent due to PPACA fees and taxes.

Press Release »


Idaho

July 21, 2020

COVID-19 Testing Coverage Expectations

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On July 10, 2020, Director Cameron released Bulletin 20-13, which recommends that insurance carriers take a number of steps to effectively remove the barriers to testing and treatment of the COVID-19 virus. Specifically, the Department of Insurance recommends that carriers:

  • Establish and publicize how insured individuals can correspond directly with the carriers about prevention and testing of COVID-19
  • Relax prior approval requirements and procedures for receiving COVID-19 testing and treatment
  • Ease out-of-network requirements and procedures when access to urgent testing or treatment is unavailable from in-network providers
  • Forgo any cost sharing for COVID-19 testing

The guidance also recommends that carriers cover both diagnostic and antibody testing. Further, they suggest that any carriers that serve as the plan administrator for self-funded plans should also follow this guidance. Plan sponsors should be aware that the state of Idaho is suggesting these measures to insurers.

Bulletin 20-13 »


May 12, 2020

Extension of Transitional Health Insurance Plans

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On April 22, 2020, Insurance Director Cameron released Bulletin 20-07, extending the ability of health insurance carriers in the individual and small group market to continue transitional health insurance plans through December 31, 2021.

As background, on January 31, 2020, CMS provided guidance for a transition policy extension that allows insurers the option to renew non-grandfathered non-ACA-compliant plans, as long as the state allows for such an extension. Such transition policies are not required to be in compliance with certain ACA mandates including community rating, coverage of essential health benefits, prohibition on pre-existing condition exclusions and the annual out-of-pocket maximum limit. This bulletin applies this most recent federal extension to Idaho and allows the issuer to renew these non-ACA-compliant plans.

Small employers that are interested in renewing their non-ACA-compliant plan should work with their advisors and insurers.

Bulletin 20-07 »


April 14, 2020

Temporary Waiver of Pharmacy Benefit Requirements

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On April 6, 2020, Director Cameron issued Bulletin No. 20-02, providing flexibility in pharmacy benefits requirements in the hopes of maximizing healthcare access and minimizing in-person pharmacy transactions. As such, for as long as the governor’s emergency proclamation is in place, the Department of Insurance is waiving:

  • Policy limitations on the number of pharmaceutical refills and early refills
  • Restrictions that would disallow coverage of a 90-day refill at a retail (as opposed to mail-order) setting, unless doing so would be inconsistent with an applicable prescription safety limits of the Social Security Act
  • Requirements for in-person pharmacy signature logs as well as the associated signature audits by insurers or pharmacy benefit managers

While this guidance is aimed at pharmacies, insurers and pharmacy benefits managers, employers should review this guidance so that they are aware of the relaxed pharmacy rules.

Bulletin No. 20-02 »

Temporary Waiver of Telehealth Restrictions

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On April 6, 2020, Director Cameron issued Bulletin No. 20-03, providing flexibility in telehealth services provided in the state. Specifically, as long as the governor’s emergency proclamation is in place, the Department of Insurance is authorizing insurers to:

  • Immediately allow for provider-patient relationships to be established over two-way audio or audio-visual interaction
  • Provide coverage of telehealth visits for all in-network providers, if the visit would be reimbursable telehealth under the Secretary of the Department of Health and Human Services 1135 waiver published March 13, 2020
  • Allow in-network providers to use non-HIPAA compliant communication platforms (such as Skype, Facebook Messenger, or Apple FaceTime) to provide patient care, to the extent that the provider does not already have access to a HIPAA compliant platform
  • Allow health care service providers to waive or pay all or part of a claimant’s deductible or cost-sharing for COVID-19 related testing, diagnosis and treatment

While this guidance is aimed at insurers and providers, employers should review this guidance so that they are aware of the relaxed rules on telehealth services.

Bulletin No. 20-03 »


March 17, 2020

Idaho Insurers will Provide Coronavirus Coverage

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On March 9, 2020, the Department of Insurance issued a news release indicating that Idaho carriers are voluntarily waiving cost sharing for COVID-19 testing. Specifically, Blue Cross, Regence, SelectHealth, Pacific Source and Mountain Health Co-Op have indicated that they will offer COVID-19 testing without cost sharing. Employers can provide this guidance to plan participants who may need to receive testing.

Idaho News Release »


May 14, 2019

Conditional Renewal for Non-ACA-Compliant Plans Extended

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On April 4, 2019, Idaho Department of Insurance Director Cameron released Bulletin No. 19-02 related to the extension of non-ACA compliant small group and individual policies and plans. As background, on March 25, 2019, CMS provided guidance for a transition policy extension that allows insurers the option to renew non-grandfathered non-ACA-compliant plans, as long as the state allows. Such transition policies are not required to be in compliance with certain ACA mandates including community rating, coverage of essential health benefits, prohibition on pre-existing condition exclusions, and the annual out-of-pocket maximum limit.

Transitional relief for these “grandmothered” plans has been extended several times before, and this bulletin applies the most recent federal extension to ID and allows insurers to renew policies in the individual market and the small group market according to the extended transitional policy through December 31, 2020. Please note, however, that such carriers must continue to abide by requirements outlined in Bulletin 16-03 (meaning that all grandmothered plans will be on a calendar-year renewal schedule).

Additionally, carriers are required to provide a notice at renewal which informs the individual or small employer of the option to renew the existing coverage or to enroll in a new plan on or off the ID marketplace. The notice must also inform them that some ACA market reforms are not included in their current plans. There is a model notice available on the department’s website that must be used without modification, and must be mailed without any other materials except for a cover letter, which may include the renewal premium.

Small employers that are interested in renewing their non-ACA-compliant plan should work with their advisors and insurers.

Bulletin 19-02 »


May 16, 2017

Rule Amended to Allow Medicare Supplemental Coverage Regardless of Age

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On May 1, 2017, the Idaho Department of Insurance issued a news release announcing an amendment to its rule regarding Medicare Supplement insurance (often referred to as Medigap). The amendment now allows Medicare-eligible individuals under age 65 with disabilities or end-stage renal disease to be eligible for the supplemental coverage. Previously, Medicare Supplement policies were only available to individuals age 65 and older.

Carriers will be developing and submitting Medicare Supplemental plans incorporating this rule for 2018. This news release has little applicability to employers, but employers should be aware of the change as a resource for employees in case any questions arise.

News Release »


May 2, 2017

Abortifacient Drugs No Longer Prohibited From Being Prescribed Through Telemedicine

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On April 4, 2017, Gov. Otter signed H.B. 250 into law, amending existing abortion law by no longer requiring that a physician must have examined a woman in person to determine the medical appropriateness of the administration of an abortifacient. Specific to telemedicine, the law removes language providing that no drug for purposes of causing an abortion may be prescribed through telehealth services.

The amendments were effective upon passage.

H.B. 250 »


April 4, 2017

Conditional Extension of Renewal for Non-PPACA-Compliant Plans

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On March 8, 2017, Idaho Department of Insurance Director Cameron released Bulletin No. 17-01 related to the extension of non-PPACA-compliant small group and individual policies and plans. As background, on Feb. 23, 2017, the federal government announced an additional transition policy that allows insurers (if allowed by the state) to renew non-grandfathered non-PPACA-compliant plans (this transitional relief has been extended twice before). Such policies are not required to be in compliance with certain PPACA mandates including community rating, coverage of essential health benefits, prohibition on pre-existing condition exclusions and the annual out-of-pocket maximum limit.

The Bulletin states that Idaho will allow insurers to renew policies in the individual market and the small group market according to the extended transitional policy. Please note, however, that such carriers must continue to abide by requirements outlined in Bulletin 16-03 (meaning that all grandmothered plans will be on a calendar-year renewal schedule).

Carriers are required to provide a notice at renewal which informs the individual or small employer of the option to renew the existing coverage. The notice must also inform them that some PPACA market reforms are not included in their current plans. It must be mailed without any other materials except for a cover letter, which may include the renewal premium.

Small employers that are interested in renewing their non-PPACA-compliant plan should work with their advisors and insurers.

Bulletin No. 17-01


July 26, 2016

On June 28, 2016, the Idaho Department of Insurance released the final version of Bulletin 16-04. The bulletin relates to third-party payment of premiums or cost-sharing expenses. According to the bulletin, carriers must accept third-party payments (towards premiums and cost-sharing-expenses) from individuals (such as family and friends), religious institutions and other not-for-profit organizations, if the assistance is provided on the basis of the individual’s financial need, the institution/organization is not a health care provider and is not financially interested. An example of financial interest would be if the institution/organization receives funding from entities with a pecuniary interest in the payment of health insurance claims.

If the third-party payments meet those requirements, the carrier must accept those payments (both towards premiums and cost-sharing expenses) and those payments must count toward deductibles and out-of-pocket maximums as if the insured made the payment directly. This is effective as of the date of the bulletin as to those health insurance policies regulated under Title 41 of the Idaho Code.

The bulletin applies to carriers, but employers will want to be aware of the bulletin, should issues arise with respect to third-party payments of employee-related premiums and other cost-sharing expenses.

Bulletin 16-04 »

May 3, 2016

On Apr. 19, 2016, Idaho Department of Insurance Director Cameron issued Bulletin No. 16-03 related to the Feb. 29, 2016, CMS announcement of an additional extension to the transitional policy for non-PPACA-compliant health benefit plans (as covered in the March 8, 2016, edition of Compliance Corner). The Department of Insurance previously announced – in Bulletin No. 13-05- that insurers in Idaho could renew non-PPACA-compliant plans, as long as certain conditions are met. Bulletin No. 14-01 allowed a two-year CMS extension for Idaho insurers, and explained additional requirements for insurers. Such policies are not required to be in compliance with certain PPACA mandates including community rating, coverage of essential health benefits, prohibition on pre-existing condition exclusions and the annual out-of-pocket maximum limit. Bulletin No. 16-03 now allows these plans to be further extended through December 31, 2017.

The transitional policy permits issuers in the individual and small group markets to renew non-grandfathered policies that had plan or policy years beginning on or before December 31, 2013. Such coverage may now be renewed for plan or policy years starting between January 1, 2014 and October 1, 2017, so long as all policies end by December 31, 2017.

The Bulletin provides the following consumer protections. It addresses accumulation periods for deductibles and out-of-pocket maximums for plans who calculate them on a plan year, rather than on a calendar year basis. This is key because a carrier must not apply accumulation periods consisting of fewer than 12 months, even when the policy period is less than 12 months. To solve this, carriers may either have a longer than 12-month accumulation period or overlapping 12-month accumulation periods.

Finally, the bulletin includes a reminder that these plans must still comply with the following ACA provisions:

  • Elimination of annual dollar limits on EHB as defined by the Idaho benchmark plan, to the extent the plans cover EHB
  • No pre-existing condition exclusion (small groups)
  • Waiting periods not to exceed 90 days (small groups)
  • Mental health parity rules (individual plans upon renewal July 1, 2014 or later; not applicable to small group plans)

Small employers that are interested in renewing their non-PPACA-compliant plan should work with their advisors and insurers.

Bulletin No. 16-03 »

October 20, 2015

On Oct. 15, 2015, the Idaho Department of Insurance issued a news release on their decision on small employer group size. Idaho will retain its existing definition of ‘small employer’ as groups of up to 50 employees.

As background, PPACA included a provision to change the definition of small employer from 1-50 to 1-100 employees effective Jan. 1, 2016. On Oct. 1, 2015, the US Congress passed HR 1624, called the PACE Act. The PACE Act repeals the mandated small-group expansion from groups of up to 50 employees to groups of up to 100 employees. Thus, unless a state has expanded its definition of small employer, PPACA’s insurance mandates would not apply to employers in the 51-100 group in that state.

News Release »

August 25, 2015

On Aug. 6, 2015, the DOL announced an MOU with the Idaho DOL aimed at protecting employees’ rights by preventing misclassification. Under the MOU, both agencies may share information and coordinate law enforcement to ensure that workers are properly classified and that employers are not infringing on rights by misclassifying a worker into independent contractor or other non-employee status. Idaho joins 24 other states who have signed similar agreements with the DOL.

Idaho employers should review their employment practices to ensure that individuals are properly classified as either employees or independent contractors. The proper classification is important for purposes of PPACA’s employer mandate, as well as many other federal and state laws and calculation of employment taxes. Because the classification analysis is based on the specific facts and circumstances surrounding an employer’s situation, employers should work with outside counsel to resolve any questions.

DOL News Brief re: Memorandum of Understanding »
ID DOL Announcement »

November 4, 2014

On Oct. 7, 2014, in Latta v. Otter, No. 14-35420 (9th Cir. 2014), the U.S. Court of Appeals for the 9th Circuit found Idaho’s same-sex marriage ban unconstitutional. A stay was granted by the U.S. Supreme Court giving the state an opportunity to plead as to why it should be allowed to appeal. That stay was dissolved on Oct. 15, 2014.

The rapid changes in state marriage laws have important effects for individuals in Idaho and for employers administering state tax rules. They are less significant for purposes of administering federal tax and benefit rules due to the Supreme Court's Windsor decision and subsequent agency guidance recognizing all same-sex spouses regardless of state of residence. Employers in Idaho should work closely with their attorneys and tax advisors to ensure plan design compliance in light of the ongoing developments in this area.

This will most likely mean that group health insurance policies issued in Idaho will need to amend their plan documents to offer coverage to same-sex spouses. We are expecting further guidance from the state and will report such in future editions of Compliance Corner.

Latta v. Otter  »
Order Dissolving Stay  »

September 23, 2014

On July 8, 2014, CMS approved Idaho’s proposed small group composite premium rating method. As background, final rules issued by HHS on March 11, 2014, provided for a two-tiered federal calculation method for composite rates (one tier for each covered adult age 21 or older and a second tier for each covered child under age 21). However, the same final rule permitted states to substitute their own alternative to the federal methodology by seeking approval from HHS. On June 10, 2014, the Idaho Department of Insurance submitted a request to use a four-tiered calculation: employee, employee plus spouse, employee plus children and employee plus family.

This means that while health insurance carriers issuing small group market plans in Idaho will continue to provide per-member billing, they may also choose to provide family composite premiums on an optional basis. If they do so, the carrier must follow the state's four-tiered approved alternative method. Carriers will have the flexibility to choose which (if any) small group products will permit employers the composite premium option.

The bulletin provides definitions for each rating tier, as well as the factors to be used when determining the final premium charged for each employee. Composite rates would be determined at the time the policy is issued and at renewal, and would not vary during the policy year. Any tobacco surcharge is excluded from the composite rate and added to the applicable individual’s premium.

Importantly, the bulletin does not apply directly to small employers, and is important for all employers to understand. Small employers in Idaho may request composite rates, rather than per-member rates, from the insurance carrier to determine the percentage of the premium paid by the employer versus employee contribution levels for policies issued in 2015 if the carrier has opted to follow this alternative calculation method. The bulletin is effective for policy years beginning on or after Jan.1, 2015.

Idaho Department of Insurance Request »
Idaho Department of Insurance, Carrier Frequently Asked Questions 2014, No. 8 »

May 20, 2014

On May 9, the Idaho Department of Insurance issued Bulletin No. 14-02 related to pediatric dental coverage. As background, PPACA requires that non-grandfathered individual and small group policies provide coverage for all 10 categories of essential health benefits, including pediatric dental care. If the qualified health plan is purchased from the marketplace, the plan is not required to provide pediatric dental care if there is at least one exchange-certified stand-alone dental plan available through the marketplace in the service area. If the qualified health plan is purchased outside of the marketplace, coverage of pediatric dental care may be excluded if, prior to the issuance, the carrier becomes reasonably assured that an individual has obtained such coverage through an exchange-certified stand-alone dental plan.

The bulletin clarifies that an individual or small employer who purchases a qualified health plan through the state marketplace, Your Health Idaho, is not required to purchase separate pediatric dental coverage. If an individual or small employer purchases a qualified health plan outside of the marketplace, the carrier must include a written disclosure as part of the application materials stating that the plan does not include coverage for pediatric dental care and instructions for how to purchase such coverage. The carrier must not require that the consumer purchase such coverage.

Bulletin No. 14-02 »

On May 1, 2014, Idaho Department of Insurance Director Deal issued Bulletin No. 14-01. The bulletin is related to the March 5, 2014, CMS announcement of a two-year extension to the transitional policy for non-PPACA-compliant health benefit plans (as covered in the March 11, 2014, edition of Compliance Corner). The department will allow insurers to renew noncompliant individual and small group non-grandfathered plans with policy years beginning on or before Oct. 1, 2016.

Bulletin No. 14-01 »

April 8, 2014

On March 26, 2014, Gov. Otter signed HB 475 into law. The new law requires that the state exchange portal be constructed in a way that allows consumers to comparison shop without entering personal information. Passwords, login and personal information would not be required until an application is submitted. Additionally, the application for premium assistance must include a warning that consumers should estimate income carefully and that underestimating income could result in an overpayment of premium assistance and an owed amount to the IRS. The law is effective July 1, 2014.
HB 475 »


Illinois

August 4, 2020

Updated Poster for Domestic Violence Leave

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In July 2020, Illinois updated its Victims’ Economic Security and Safety Act (VESSA) poster required to be displayed by employers.

As background, VESSA provides an employee who is a victim of domestic or sexual violence (or who has a family member who is a victim of domestic or sexual violence) with up to 12 weeks of unpaid leave (per any 12 month period) to address issues arising from domestic or sexual violence. Among other requirements, employers must maintain health and other benefits for an employee exercising such leave and employers must post a notice in their workplace summarizing the requirements under the act.

VESSA applies to employers with at least one employee, the state of Illinois and any unit of local government or school district. To maintain compliance, employers should be sure to utilize the updated poster.

Victims’ Economic Security and Safety Act Poster »


July 21, 2020

Updated Chicago Paid Leave Notice

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On July 7, 2020, the City of Chicago updated the notice required by its paid sick leave (PSL) ordinance. As background, employers must provide employees with PSL to care for themselves (or a family member) if they work at least 80 hours within any 120-day period (eligible for use by the 180th day of employment).

As a reminder, recent changes to Chicago’s paid sick leave rules require employers to provide covered employees with an individual paid sick leave notice along with their first paycheck subject to the PSL ordinance (and annually thereafter), among other requirements such as a workplace posting. (See the Compliance Corner article from May 27, 2020, “Chicago Enhances Paid Sick Leave Ordinance” for additional information).

The ordinance applies to all employers with at least one covered employee. Employers with employees in Chicago should utilize the updated notice and ensure compliance with the PSL ordinance and revised rules effective July 1, 2020.

Chicago Minimum Wage and Paid Sick Leave Rules »
Paid Sick Leave Notice »


July 7, 2020

Expansion of Telehealth Services Extended Again

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On June 26, 2020, Gov. Pritzker issued Executive Order 2020-44 extending once again the applicability of several prior COVID-19-related executive orders in light of the continued public health emergency. Executive Order 2020-09 was included in the order, extending its applicability through July 26, 2020 (among several other executive orders).

As mentioned in our prior Compliance Corner March 31, 2020, Illinois article “COVID-19 and Health Insurance Coverage,” Executive Order 2020-09 expands telehealth services to also include electronic and telephonic methods, and requires health insurers to cover the costs of in-network telehealth services for any clinically appropriate, medically necessary covered services and treatments.

The order was originally effective beginning March 19, 2020, and stated that it will continue for the duration of the governor’s proclamation of disaster. It was first extended to June 27, 2020, via Executive Order 2020-39, and is now extended through July 26, 2020.

Employers should be aware of these developments.

Executive Order 2020-44 »


June 23, 2020

Discrimination Prohibited Based on Gender Identity or Sexual Orientation

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On June 15, 2020, the Department of Insurance released Company Bulletin 2020-16 in light of CMS filing a final rule that rescinds existing protections against discrimination. The bulletin reiterates that Illinois law remains unchanged despite the recently finalized federal rule regarding Section 1557 of the ACA. As background, this federal rule removes certain federal protections against discrimination based on gender identity or sexual orientation in the provision of health insurance coverage (expected to take effect August 18, 2020).

The bulletin serves as a reminder for insurers to comply with existing state laws that prohibit discrimination based on actual or perceived gender identity or sexual orientation. More specifically, the Illinois Human Rights Act prohibits unlawful discrimination on the basis of sex and sexual orientation, which includes “actual or perceived heterosexuality, homosexuality, bisexuality, or gender-related identity, whether or not traditionally associated with the person’s designated sex at birth.” Further, the Illinois Insurance Code (Code) requires insurance policies that provide coverage for the treatment of mental conditions ensure that limitations applicable to mental or emotional conditions (e.g., gender dysphoria) are no more restrictive than limitations applied to medical benefits covered by the policy (and that there are no separate limitations applicable only to mental benefits).

Part 2603 of the Code clarifies that the Illinois nondiscrimination laws apply to matters relating to gender identity and sexual orientation in health insurance coverage. Importantly, no company shall refuse to issue insurance (or decline to renew) based on sex, sexual orientation or marital status of the insured or prospective insured. In addition, no group health insurance plans may discriminate on the basis of an insured’s actual or perceived gender identity or on the basis that the insured is a transgender person. For specific prohibitions required by the regulations, see Company Bulletin 2020-16.

While the bulletin applies to Illinois-licensed health insurance issuers, employers should be aware of these developments and reminders.

Company Bulletin 2020-16 »


June 9, 2020

Expansion of Telehealth Services Extended

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On May 29, 2020, Gov. Pritzker issued Executive Order 2020-39 extending the applicability of several prior COVID-19-related Executive Orders in light of the continued public health emergency. Included in the order was reference to Executive Order 2020-09, extending its applicability through June 27, 2020 (among several other executive orders).

As mentioned in our prior Compliance Corner March 31, 2020, article “COVID-19 and Health Insurance Coverage,” Executive Order 2020-09 expands telehealth services to also include electronic and telephonic methods, and requires health insurers to cover the costs of in-network telehealth services for any clinically appropriate, medically necessary covered services and treatments.

The order was originally effective beginning March 19, 2020, and stated that it will continue for the duration of the governor’s proclamation of disaster. Executive Order 2020-39 now extends its applicability through June 27, 2020.

Employers should be aware of these developments.

Executive Order 2020-39 »


May 27, 2020

Chicago Enhances Paid Sick Leave Ordinance

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On May 20, 2020, the Chicago City Council approved Substitute Ordinance 2020-2343. In addition to protecting employees from adverse employment action in response to the COVID-19 public health crisis, the ordinance also revises Chicago’s Paid Sick Leave Ordinance (PSLO) that is effective July 1, 2020.

As background, employers must provide employees with paid sick leave (PSL) to care for themselves (or a family member) if they work at least 80 hours within any 120-day period (eligible for use by the 180th day of employment). PSLO amendments were previously enacted in December 2019 to take effect July 1, 2020. The Substitute Ordinance 2020-2343 redefines employees for purposes of paid sick leave to include certain categories that were erroneously left out, such as an outside salesperson, member of a religious corporation/organization, a student at and employed by an accredited Illinois college or university, and motor carriers regulated by the US Secretary of Transportation or the State of Illinois.

Further, changes to Chicago’s paid sick leave rules require employers to provide covered employees with an individual paid sick leave notice along with their first paycheck subject to the PSLO (and annually thereafter), among other requirements such as a workplace posting and new recordkeeping procedures.

The ordinance applies to all employers with at least one covered employee. Employers with employees in Chicago should be aware of the new requirements and ensure compliance with the PSLO and revised paid sick leave rules effective July 1, 2020.

Substitute Ordinance 2020-2343 »
Chicago Minimum Wage and Paid Sick Leave Rules »
Paid Sick Leave Notice »


April 28, 2020

COVID-19 Emergency Rules

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On April 20, 2020, the Department of Insurance issued Company Bulletin 2020-11 that summarizes emergency rules submitted to the Secretary of State addressing financial, coverage and prescription drug supply concerns arising from the COVID-19 pandemic. These rules are effective immediately. Highlights include:

  • Insurers are required to provide 30 or 60 day extensions on premium payments in certain circumstances.
  • Insurers are prohibited from interfering with an employer who wants to keep their employees eligible for coverage despite a reduction in hours or temporary layoff.
  • A special enrollment period is provided due to loss of employer-sponsored group health plan coverage (and new coverage can apply retroactively to the day after their loss of coverage).
  • Coverage is required for non-formulary prescriptions if there is a shortage of formulary drugs. In addition, coverage is required for a 90-day supply of covered maintenance medications (but not those prone to misuse).

Further, the DOI urges insurers to not raise premiums due to any decrease in enrollment or participation due to the public health crisis.

Employers should be aware of these developments.

Company Bulletin 2020-11 »


April 14, 2020

COVID-19 and Health Insurance Coverage

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On March 31, 2020, Healthcare and Family Services provided a Notice of Emergency Amendment, updating its telehealth rules in response to the global COVID-19 public health emergency. The amendment provides that to protect the public health, the department will reimburse medically necessary and clinically appropriate telehealth services with dates of service on or after March 9, 2020 (and until the public health emergency no longer exists). This includes services that do not meet the current definition of telehealth (e.g., virtual check-in that uses audio-only interactions, e-visit services that are non-face-to-face communications using online portals, and visits with distance site providers). Further, reimbursement for telehealth services will be made at the same rate as is paid for face-to-face services.

Employers should be aware of these developments.

Notice of Emergency Amendment  »


March 31, 2020

COVID-19 and Health Insurance Coverage

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On March 2, 2020, the Department of Insurance (DOI) released Company Bulletin 2020-2 providing information regarding insurance coverage for COVID-19. With the ongoing COVID-19 pandemic, the DOI issued this bulletin for guidance on the role that health insurance coverage plays regarding access to health care services. Highlights include:

  • CDC and Illinois Department of Public Health agreed to bear the cost of COVID-19 testing. However, health care providers may still charge their own fees for collecting specimen for testing, which may be billed to the insurer (or the patient if uninsured).
  • Insurers are prohibited by Illinois Insurance Code Section 356z.3a from charging higher cost sharing for out-of-network providers at an in-network facility (if there are no in-network providers available). However, this does not apply if an individual purposefully chooses an out-of-network provider when an in-network provider was available.
  • Emergency services for an emergency medical condition must be covered at the in-network levels, regardless of which provider performs the services.
  • Health insurers are prohibited from nonrenewing (or cancelling) group health coverage due to any pre-existing conditions (this includes conditions connected with COVID-19).
  • Travel insurance must cover risks related to COVID-19 if it covers sickness, accident, or death incident to travel — unless a policy contains an exception applicable to COVID-19.

In addition, Executive Order 2020-09 expands telehealth services (effective beginning March 19, 2020, and will continue for the duration of the governor’s proclamation of disaster) to also include electronic and telephonic methods, and requires health insurers to cover the costs of in-network telehealth services for any clinically appropriate, medically necessary covered services and treatments. Further, health insurers are prohibited from imposing utilization review requirements on telehealth (or any treatment limits that are more restrictive than in-person care). Bulletin 2020-04 provides guidance to carriers on the governor’s executive order, reiterating that while the executive order is in effect, prior authorizations are not permitted for telehealth services related to COVID-19 (when delivered by in-network providers).

Lastly, on March 23, 2020, CMS notified the Illinois Department of Healthcare and Family Services that the state’s request for Medicaid waivers was approved. This temporarily suspends Medicaid fee-for-service prior authorization requirements, among other items, for the duration of the public health emergency.

Employers should be aware of these developments. As a reminder, the DOI released Frequently Asked Questions about Insurance Coverage and the Coronavirus COVID 19, which answers frequently asked questions regarding health insurance access to health care services.

Bulletin 2020-02 »
Executive Order 2020-09 »
Bulletin 2020-04 »
CMS Notification »
Frequently Asked Questions about Insurance Coverage and the Coronavirus COVID 19 »


March 17, 2020

FAQ Released About Insurance Coverage and COVID 19

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On March 3, 2020, the Department of Insurance (DOI) released Frequently Asked Questions about Insurance Coverage and the Coronavirus COVID 19. With the ongoing COVID-19 pandemic, the DOI answers frequently asked questions on the critical role that health insurance coverage plays regarding access to health care services.

Of the guidance provided, the DOI explains that individuals should call their insurer to understand costs associated with paying for a COVID-19 diagnostic test (if any), that individuals will not be subject to higher cost sharing if they unintentionally receive care from out-of-network specialists in an in-network hospital, and provides contact information for further questions, among other information.

Employers with employees in Illinois should consult their carriers, as applicable, and reference the DOI’s guidance in its FAQ when addressing questions regarding health insurance coverage and COVID-19.

FAQ About Insurance Coverage and the Coronavirus COVID 19 »


November 12, 2019

Guidance on Short-Term Limited-Duration Insurance

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On September 27, 2019, Director of Insurance Muriel issued Company Bulletin 2019-07 to provide guidance on fully insured short-term limited-duration insurance (STLDI) offered in Illinois. This bulletin is intended to remind carriers doing business in the state that state law isn’t preempted regarding short-term health insurance and, thus, carriers doing business in Illinois must continue to comply with state law.

As background, the federal government issued a rule in August 2018 that extended the initial contract term of STLDI policies issued on or after October 2, 2018, to be no more than 12 months while allowing renewals or extension of such policies of no more than 36 months. Unlike the federal rule, Illinois law limits an STLDI policy to a term that is less than 181 days. Moreover, short-term policies in Illinois cannot be renewed for 365 days after termination with a single issuer, and the insurer cannot issue a different STLDI to the same consumer for a period of 60 days from the expiration of the original policy.

The main purpose of this bulletin is to remind insurers doing business in Illinois that the state retains the right to regulate STLDI coverage. Employers do not need to take any action but may want to be familiar with the state’s individual insurance market requirements.

Company Bulletin 2019-07 »


April 30, 2019

Extension for Grandmothered Plans

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On March 28, 2019, the Illinois Department of Insurance published Company Bulletin CB# 2019-03. The bulletin relates to the March 25, 2019, CMS guidance titled “Extension of Limited Non-Enforcement Policy through 2020,” which is CMS’s latest transitional policy extension for so-called “grandmothered plans” in the individual and small group markets. According to the bulletin, plans issued in Illinois continually since January 1, 2014, may renew such coverage for a policy year starting on or before October 1, 2020, so long as the policies do not extend past December 31, 2020.

Company Bulletin CB# 2019-03 »


November 28, 2018

Review of Federal Regulation of Association Health Plans and State Law

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On Sept. 19, 2018, Insurance Director Rauner issued Bulletin 2018-07. The bulletin discusses the state and federal regulation of association health plans (AHPs), after the DOL’s final rules on AHPs were issued this summer. As background, AHPs are MEWAs and can fall under the jurisdiction of both federal and state law. This bulletin addresses fully insured group health plans and how Illinois law applies to them.

The bulletin essentially confirms that insurers in IL may issue group health insurance to associations that either satisfy the requirements under state law or the DOL’s final rule. Additionally, IL laws regarding the filing and review of group health coverage apply to policies issued to associations that meet the DOL’s requirements.

Finally, the IL Department of Insurance will not require entities to file documents demonstrating an association's qualification for a group health insurance policy, unless the policy incorporates by reference the association's documents.

Bulletin 2018-07 »


June 26, 2018

Extension of Non-ACA-Compliant Small Group and Individual Policies and Plans

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On May 1, 2018, Director of Insurance Hammer released Company Bulletin 2018-02, related to the extension of non-ACA-compliant small group and individual policies and plans. As background, on April 9, 2018, the federal government announced an additional transition policy that allows insurers (if allowed by the state) to renew non-grandfathered non-ACA-compliant plans (this transitional relief has been extended several times before). Such policies aren’t required to be in compliance with certain ACA mandates, including community rating, coverage of essential health benefits, prohibition on pre-existing condition exclusions and the annual out-of-pocket maximum limit.

The bulletin states that Illinois will allow insurers to renew policies in the individual market and the small group market as long as the policy ends by Dec. 31, 2019, according to the extended transitional policy. Employers with non-ACA-compliant plans should work with their insurer and advisor on any policy extension.

Company Bulletin 2018-02 »

September 19, 2017

Synchronization of Prescription Drug Refills

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On Aug. 18, 2017, Gov. Rauner signed HB 2957, enacting Public Act 100-0138, which requires plans that provide coverage for prescription drugs to provide coverage for synchronization of prescription drug refills at least once a year for each plan participant if certain conditions are met. Specifically, this law requires insurers to provide prorated daily cost-sharing rates to any medication dispensed by a network pharmacy when necessary.

"Synchronization" is defined to mean the coordination of medication refills for a patient taking two or more medications for one or more chronic conditions (rather than for a single chronic condition) such that the patient's medications are refilled on the same schedule for a given time period. For a policy of health and accident insurance to provide for synchronization of prescriptions drug refills, the prescription drugs must be covered by the policy's clinical coverage policy or have been approved by a formulary exceptions process, among other specified conditions.

This law is effective immediately.

Public Act 100-0138 »

Mammography Screenings

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On Aug. 25, 2017, Gov. Rauner signed SB 0314, enacting Public Act 100-0395. This law amends the Illinois Insurance Code regarding coverage for low-dose