DOL Releases Fact Sheet on Surprise Billing Final Rules

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DOL Releases Fact Sheet on Surprise Billing Final Rules

On August 19, 2022, the U.S. Department of Labor (DOL) released a Fact Sheet, Requirements Related to Surprise Billing: Final Rules. The final rules cover the finalized provisions of the Consolidated Appropriations Act of 2021, known as the “No Surprises Act,” intended to protect consumers from excessive out-of-pocket health costs caused by surprise billing.

The final rules were issued by the U.S. Department of Health and Human Services (HHS), Department of Labor (DOL) and the Treasury Department (the Departments) that provide certain requirements under the July 2021 interim final rules relating to information that group health plans and health insurance issuers offering group or individual health insurance coverage must share about the qualifying payment amount (QPA). These interim final rules required plans and issuers to disclose the QPA for each item or service to providers, facilities, and providers of air ambulance services with each initial payment or notice of denial of payment when the QPA serves as the amount upon which cost sharing is based.

In addition, the final rules provide Information about the payment determinations under the Federal independent dispute resolution (IDR) process. Under these final rules, certified IDR entities must consider the QPA and must also consider all additional permissible information submitted by each party to determine which offer best reflects the appropriate out-of-network rate. The final rules focus on the process that IDR entities should use when choosing between two competing offers.

The fact sheet is available here.

CRR Analyzes the Effects of Rising Inflation and Investment Losses on Public Pension Plans

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CRR Analyzes the Effects of Rising Inflation and Investment Losses on Public Pension Plans

On August 16, 2022, the Center for Retirement Research (CRR) at Boston College issued its brief, Public Pensions Contend with Falling Markets and Rising Inflation. According to the brief, Fiscal Year (FY) 2022 has been challenging for state and local pension plans due to large investment losses and rising inflation.

Some key findings include:

  • In FY 2022, the aggregate funded ratio declined from 78% to 74%, considerably reversing the gains from FY 2021.
  • The effect of rising inflation on pension finances has been moderated by limits to plans’ cost-of-living adjustments (COLAs).
  • However, due to limited COLAs, inflation protection is reduced for retirees, mainly for those not covered by Social Security.

The brief is available here.

Fitch Ratings Reports on Higher Inflation Moderately Pressuring Public Pension Liabilities

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Fitch Ratings Reports on Higher Inflation Moderately Pressuring Public Pension Liabilities

On August 15, 2022, Fitch Ratings released its report, Inflation Moderately Pressures US Public Pension Liabilities. The report indicates that the high inflation environment will likely only have moderate negative effects on state and local government public pension plan liabilities through automatic cost-of-living adjustment (COLA) mechanisms. However, Fitch states that higher inflation will pressure plans by weakening asset performance and increasing payroll costs. To help mitigate these challenges, some governments may consider market value smoothing and supplemental pension contributions from budget surpluses this year.

According to the report, “Beyond COLA provisions, inflation will affect defined benefit pensions through asset value fluctuations and wage pressures, ultimately exerting upward pressure on actuarial contributions. Most plans phase in market value changes over a multi-year smoothing period to moderate shifts in budgetary demands on governments.”

It adds, “On the asset side, high inflation, the US Federal Reserve’s policy response and the risk of recession are driving weaker financial markets, dragging down pension asset values and lowering funded ratios. Almost 75% of funds held by the 73 largest state public pension plans are allocated to equities or alternative assets.”

The report is available here.

CRS Updates Report on Health Savings Accounts

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CRS Updates Report on Health Savings Accounts

On August 8, 2022, the Congressional Research Service (CRS) released its updated report, Health Savings Accounts (HSAs). HSAs are tax-favored individual accounts that can be used to accumulate funds to cover unreimbursed medical expenses (e.g., deductibles, copayments, coinsurance and other services not covered by insurance). The updated report incorporates changes made to HSAs as a result of the COVID-19 pandemic and recent recession.   

The report summarizes the principal rules governing HSAs, including: 1) eligibility; 2) qualifying health insurance; 3) contributions; 4) withdrawals; and 5) tax advantages. In addition, the report provides information regarding HSA data limitations and current research data findings on High Deductible Health Plans (HDHP) enrollment and HSA utilization trends. 

In 2022, the maximum annual contribution limit is $3,650 for individuals with self-only coverage and $7,300 for those with family coverage. In 2023, the maximum annual contribution limit is $3,850 for self-only coverage and $7,750 for family coverage. The applicable annual limits apply to total contributions to the HSA from all sources (i.e., from individuals and employers). These amounts are adjusted for inflation annually (rounded to the nearest $50).

In addition, those age 55 and older may contribute an additional catch-up contribution of $1,000 per year, which is not annually indexed for inflation.

The tax advantages of HSAs include:

  • Individual contributions are tax deductible unless made through a pretax salary reduction agreement;
  • Employer contributions (including individual contributions made through pretax salary reductions) are excluded from taxable income and from Social Security, Medicare, and unemployment insurance taxes;
  • Account earnings are tax exempt; and
  • Withdrawals are not taxed if used for qualified medical expenses.

The qualified individuals who contribute to their HSAs may claim a deduction on their federal income tax return to reduce their tax burden. Generally, individuals are penalized for withdrawing funds for nonqualified medical expenses and for making contributions above the annual HSA limit.

The report is available here. 

 

Groom Law Group Summarizes IRS Notice 2022-33 to Extend SECURE Act and CARES Act Amendments Deadlines

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Groom Law Group Summarizes IRS Notice 2022-33 to Extend SECURE Act and CARES Act Amendments Deadlines

On August 4, 2022, the Groom Law Group published its summary, IRS Provides Three-Year Extension for SECURE Act Amendments and Additional Limited Relief. This publication summarizes IRS Notice 2022-33 that was published by the Internal Revenue Service (IRS) on August 3, 2022. Notice 2022-33 provides extensions to the amendment deadlines for certain provisions of the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act), the Bipartisan American Miners Act of 2019 (Miners Act), and the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).  

The Notice extends the deadline for certain amendments under the SECURE Act from the end of the 2022 plan year to the following:

  • For non-governmental qualified and 403(b) plans, the amendment deadline is December 31, 2025.
  • For governmental qualified and 403(b) plans, the amendment deadline is 90 days after the close of the third regular legislative session of the legislative body with the authority to amend the plan that begins after December 31, 2023.
  • For governmental 457(b) plans, the amendment deadline is the later of: 1) 90 days after the close of the third regular legislative session of the legislative body with the authority to amend the plan that begins after December 31, 2023; or 2) the first day of the first plan year beginning more than 180 days after the date of notification by the IRS that the plan was administered inconsistent with Code section 457(b) (if applicable).

In addition, the deadlines outlined above also apply to amendments under the Miners Act to lower the minimum age for allowable in-service distributions from age 62 to age 59½ from a qualified pension plan pension. Moreover, for governmental 457(b) plans, the minimum age for in-service distributions has been lowered for a participant to be as early as the calendar year in which the participant attains age 59½.

The Notice also extends amendments due under the CARES Act related to the 2020 waiver of required minimum distributions for defined contribution plans and IRAs. The deadline to amend for this provision generally follows the deadlines outlined above being December 31, 2025 for non-governmental plans and, for governmental plans, 90 days after the close of the third regular legislative session of the legislative body with the authority to amend the plan that begins after December 31, 2023 (subject to the special rule for 457(b) plans). 

The summary is available here and IRS Notice 2022-33 is available here.

EBRI Releases Brief on Elderly Americans’ Retirement Expectations Being Uninterrupted Due to COVID-19

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EBRI Releases Brief on Elderly Americans’ Retirement Expectations Being Uninterrupted Due to COVID-19

On August 4, 2022, the Employee Benefit Research Institute (EBRI) released its issue brief, Staying Optimistic: Elderly Americans’ Retirement Expectations Remain Uninterrupted Despite COVID-19 Impact. The brief reports on the influence of the COVID-19 pandemic on the working and financial situations of Americans in 2020. In addition, it discusses their decisions on retirement and Social Security claiming ages. Based on EBRI’s 2020 Health and Retirement Study (HRS), COVID-19 significantly affected elderly Americans’ work and financial situations. However, their retirement expectations remained unchanged.

According to the 2020 HRS, about 60% of the respondents reported that their work was affected by COVID-19; 55% had to stop working entirely; 15% lost their job permanently; and about 20% indicated that their work became harder or more risky or dangerous. However, about 76% of the respondents reported that their financial situation remained the same and 60% stated that their household spending remained unchanged in 2020.

Although many HRS respondents indicated that the COVID-19 pandemic affected their work and financial situations, most elderly American adults did not significantly adjust their retirement expectations, including planned retirement age and Social Security benefit claiming age. 

The report summary is available here.

CRR Reports on the Effects of Health Care Spending on Retirement Income

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CRR Reports on the Effects of Health Care Spending on Retirement Income

On August 2, 2022, the Center for Retirement Research (CRR) at Boston College released its issue brief, How Much Does Health Spending Eat Away at Retirement Income? The brief indicates that retirees will face significant out-of-pocket (OOP) costs for premiums, copays, and uncovered services regardless of Medicare coverage and ignoring long term care. The CRR study examined the effects of health care spending on retirees’ Social Security benefits and other income.

CRR found that the typical retiree has only 75% of Social Security and 88% of total income remaining after deducting these OOP costs. In the future, these percentages will decline further if health care costs continue to increase more rapidly than incomes.

The brief concludes, “This study shows that, at the median, OOP medical costs – including premiums, cost-sharing, and uncovered services (excluding long-term care) – leave only 75 percent of Social Security benefits available for spending on other items. Premiums for Medicare Parts B and D, Medicare Advantage, and supplemental plans (including retiree health insurance) make up the lion’s share of medical spending for most retirees, except those with the highest spending. The share of income remaining after OOP spending is lower for women and those in low-income households. With OOP health expenditures eating away at retirement income, and Part B premiums on the rise, it is understandable why many retirees likely feel that making ends meet is difficult.”

The report is available here.