Compliance and virtual care in 2023: A Q&A with Nick Karls

The CARES Act of 2021 and the Consolidated Appropriations Act of 2022 created temporary relief through the end of 2022 in which telemedicine and other virtual health services could be provided to individuals covered by an HDHP on a no-cost or shared-cost basis before their minimum deductible was met and still be HSA contribution-eligible. CAA23 extends this relief for plans starting after December 31, 2022, and before January 1, 2025. The relief continues to cast a broad net and includes “other remote care services,” a term that is not defined but could encompass benefits and services not provided in a traditional medical facility. It’s important to note that a plan sponsor of an HSA-qualified HDHP is not required to adopt this change for their group health plan and can continue to require plan participants to pay the fair market value of the virtual health benefit option provided until the minimum deductible is met. However, if a plan participant purchases their own virtual health benefit outside of the group health plan, it appears that this will not impact their eligibility to contribute to their HSA. Another issue that should be noted is that there seems to be a conundrum for the sponsors of non-calendar year HDHP plans, as the way the legislation was drafted indicates that non-calendar year plans cannot start to provide no-cost or shared-cost virtual health services until their plan year starts in 2023, leaving a gap at the start of the year. It’s possible that agency guidance will address this issue.   Interestingly, it looks like the main impetus for the continued HSA relief was less a response to the pandemic, as it had been in past legislation, and more of a response to the growing need for better access to mental health services. As a result, it’s possible that we see some form of permanent change made in the future more tailored to these goals.

Why is it important to qualify what is considered “medical care” in relation to virtual health care services?

Virtual health care continues to trend in popularity, especially when it presents an opportunity to add value to a plan while saving on costs.  However, these programs are sometimes offered without due consideration for the compliance implications that come with offering a virtual health care option to employees.  When the virtual health care option provides medical care, it will generally be seen as a group health plan by the government, with all the compliance requirements that a group health plan designation entails.  This includes compliance with ERISA, COBRA, and HIPAA, to name a few.  These issues are mitigated to a certain extent when the virtual health care services are embedded within a major medical group health plan.   

What can employers do to keep within the lines of compliance while continuing to offer a wellness plan?

The main aspect for employers is determining if they’re comfortable with the present level of risk that surrounds a level of reward, if any, when deciding if a wellness plan is voluntary. 

If the employer is uncomfortable with the uncertainty, the wellness program can be redesigned to cut out medical exams and disability-related questions for the ADA rules to no longer apply, if the concern is incentive limits. 

Here’s a few examples of how this could work: 

• If there’s a smoking cessation program that requires a cotinine test, the employer has the option to switch to an attestation process and remove the test, which is a medical exam. 
• Require the employee to submit an attestation from their personal physician from their annual physical if the employer requires their employees to participate in a biometric screening through a specific vendor to receive an award. 
• Still offer the biometric screening without the reward. 

Overall, you should always consult with your legal counsel to affirm that you’re all comfortable with any risk as the situation with the EEOC and the final ADA wellness rules moves forward. 

What is the family glitch fix?

The family glitch was the inability of family members of employees to qualify for premium tax credits (PTCs) to purchase subsidized coverage through an exchange when the employee was offered affordable, minimum value coverage by their employer. The affordability of employer-sponsored coverage was based on whether the lowest-cost, self-only coverage was affordable to the employee based on the employee’s income, and not the cost of coverage for family members. As a result, some families were unable to qualify for PTCs even though the cost of employer-sponsored coverage as it related to family coverage was very high. 

The final rule seeks to correct this issue by allowing family members to qualify for PTCs if the cost of employer sponsored coverage for family coverage exceeds 9.12% of their household income. Impacted family members include spouses and dependents, but does not include adult children that can still be covered on their parent’s plan but no longer qualify as a dependent for tax purposes. Adult children may qualify for their own PTC based on their income and access to affordable employer-sponsored coverage. Family coverage in the context of the final rule includes any coverage beyond self-only coverage for the employee.

First and foremost, the Treasury Department and the IRS were explicit that the final rule does not change an employer’s obligations under the ACA’s employer mandate. Employers can continue to determine affordability as it relates to their employees based on the lowest-cost self-only coverage offered to an employee and they can continue to use the established affordability safe harbors. It’s also important to note that the final rule does not impact how much an employer can charge for family coverage. 

The Treasury Department and the IRS were also explicit that the final rule does not create any new reporting obligations for employers and that current reporting requirements will not be broadened to facilitate the new PTC parameters. They also state that any new notice obligations for employers is outside the scope of the regulations that the final rule is grounded in.

How does staying up to date with the latest compliance topics help brokers and advisors better serve their clients?

By staying up to date with the latest compliance rules and regulations, brokers and advisors can ensure clients are better set up for success and have better protection from any consequences stemming from violating compliance laws. Keeping up with compliance will also help provide the best service possible resulting in the best outcomes for employees.

How can brokers and advisors best stay up to date with the latest compliance news?

The best way to keep up to date with the latest compliance topics is to establish a good working relationship with experts in the field and keep up to date with various reputable media regarding any new updates to compliance rules. There are often in-person and online events where experts speak on various topics throughout the employee benefits space, including many compliance-related topics. 

Nick Karls is Holmes Murphy’s Compliance Director. In this role, he creates value for clients by keeping them abreast of the ever-frequent changes within the employee benefits regulatory landscape.