Compliance NewsWinter 2013

Issued by Lockton Benefit Group

L O C K T O N C O M P A N I E S

INSIDE THIS ISSUE

LOOKING AROUND THE BEND AT 2014 AND BEYOND Page 1

SEPARATING FACT FROM FICTION: HEALTH COVERAGE FOR SAME-SEX SPOUSES Page 4

FEDS ISSUE FINAL REGULATIONS IMPLEMENTING THE ANNUAL HEALTH INSURANCE FEE Page 6

EXPLOITING WRINKLES IN THE HEALTH REFORM LAW: TREAD CAREFULLY Page 8

IRS FINALIZES ADDITIONAL MEDICARE TAX REGULATIONS Page 10

STATE ROUNDUP Page 11

REMINDERS Page 15

LOOKING AROUND THE BEND AT 2014 AND

BEYONDBy: Mark Holloway, J.D.

The employer community gave a collective sigh of relief earlier this year when federal agencies postponed the employer mandate until 2015. However, other aspects of the Affordable Care Act (ACA) are on track for next year, such as the individual mandate, required plan design changes, as well as new taxes and fees. Employers will need to engage (or reengage) in the planning process for what’s ahead and keep apprised of the flood of new regulations we expect over the next few months. 2014 will be a critical year for many employers as they sort out their health reform strategies, including new coverage options. And let’s not forget, plan sponsors are faced with other new obligations, in addition to the ACA.

What Hasn’t Changed

Individual Mandate. Beginning in 2014, most individuals will have to carry health insurance or face a penalty when they file their 2014 federal tax return by April 15, 2015. Individuals who do not have access to qualifying and affordable (Q&A) coverage through their, or some other, employer might qualify for a premium tax credit if they purchase coverage from a public health insurance marketplace. Although employer penalties for failing to offer Q&A coverage won’t apply next year, an offer of Q&A coverage will disqualify employees from any tax credits on the marketplace.

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Why would this be relevant to an employer in 2014? If an individual gets a tax credit in 2014 but was not eligible for it, the individual must repay the credit when he or she files his or her 2014 tax return. Consequently, to avoid any confusion with employees, employers will want to carefully consider the extent to which they want to communicate whether or not an individual has an offer of Q&A coverage.

Out-of-Pocket Limits. The law will require a number of plan design changes for the plan year that begins in 2014. A new out-of-pocket limit will apply to nongrandfathered plans for in-network care. (For more information, see our Alert.) While agencies have clarified that some carve-out programs have an additional year to comply, such as a plan with a separate contract with its prescription drug vendor, agency guidance is still needed at this late date for many issues faced by employer plans. For example, do penalties for failing to follow prescription drug protocols count toward the out-of-pocket limit? What about deductibles and co-payments for services that are not considered to be essential health benefits (EHBs)? We expect to receive the agencies’ answers to those questions at some point in the near future (hopefully with transitional relief from any new rules).

Essential Health Benefits. And speaking of essential health benefits, how does this concept apply to a self-funded plan? The ACA contains a list of essential health benefit qualifications. Self-funded and fully insured large group plans are not required to cover all 10 categories of benefits specifically listed in the law. (These categories are ambulatory patient services; emergency services; hospitalization; maternity and newborn care; mental health and substance use disorder services, including behavioral health treatment; prescription drugs; rehabilitative and habilitative services and devices; laboratory services; preventive and wellness services and chronic disease management; and pediatric services, including oral

and vision care.) Although these plans are not required to cover every essential health benefit, they may not apply an annual or lifetime dollar limit to any EHBs they do cover.

Insured plans are required to designate a state benchmark plan to determine what qualifies as an essential health benefit. Does the same requirement apply to a self-funded plan? Way back in 2010, the Department of Health and Human Services (HHS) said that until it supplies definitive guidance to self-funded plans, plan sponsors were to use a “good faith” effort to comply. Subsequent guidance seems to mean this: Self-funded plans are permitted to use a state benchmark plan as evidence of a “good faith” approach to EHBs, but are not necessarily required to do so. What complicates an effort by a plan to select a state-based “benchmark” plan is if it operates in multiple states. (For more information, see our Alert.) Federal guidance has not yet caught up with this dilemma. Until it does, we think self-funded employers may continue to take a “good faith” approach, but might select a benchmark plan out of an abundance of caution.

Payroll Tax Refunds for Employers That Provided Health Coverage to Same-Sex Spouses

Employers who paid payroll taxes

on health coverage provided to

employees’ same-sex spouses

can qualify for a tax refund that

is retroactive to 2010. Affected

employers will need to weigh

the refund amounts against

the administrative headaches

associated with applying for

the refunds. Employers are

allowed to “fix” overwithholdings

for 2013 by the end of this

year without having to file an

amended payroll tax return. (For

more information, see our Alert.)

2014 will be a critical

year for many employers

as they sort out their

health reform strategies.

Compliance News • Winter 2013

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Wellness Awards/Penalties. Believe it or not, there is also some good news on the horizon. Beginning next year, employers will have the option of putting greater teeth in their wellness programs with increased incentives for employees to embrace healthy lifestyles. (For more information, see our Alert.) The Equal Employment Opportunity Commission (EEOC) has yet to officially address how wellness awards/penalties impact the Americans with Disabilities Act, but may be inching toward issuing guidance in the not-too-distant future.

What’s Ahead?

We expect final regulations later this year on how an employer determines whether an employee averages at least 30 hours per week (meaning the employer would need to offer coverage or face penalties in 2015). While the proposed rules would allow up to one year to make the determination for variable-hour employees, their employers would be faced with complex recordkeeping requirements requiring an overhaul of many timekeeping systems. (For more information, see our Alert.) Also unclear is whether the final rules will delay the application of the employer mandate for non-calendar year plans. For now, cautious employers with non-calendar year plans might want to assume compliance will be required by Jan. 1, 2015.

On the horizon should be final rules on employer reporting to the IRS that will be used by the agency to verify whether the employer offered health coverage to its full-time employees. (For more information, see our Alert.) We also expect guidance on the obligation on large employers to automatically enroll and reenroll full-time employees. That mandate will also increase employers’ costs, which unfortunately is a common theme of the ACA.

New COBRA Election Notice for 2014

Federal agencies have issued a revised COBRA

election that specifically mentions the availability of

public insurance marketplaces as an option in lieu of

COBRA. For many employees, coverage from a public

insurance marketplace, often with a premium tax

credit, will be a better deal than COBRA. Employers

should begin using the new model notice on or before

Jan. 1, 2014, and should ponder whether additional

communication is appropriate for COBRA beneficiaries

in order to get them to sign up for coverage via a

marketplace. (For more information, see our Alert.)

MARK HOLLOWAY, J.D.Senior Vice PresidentDirector, Compliance ServicesLockton Benefit Group

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SEPARATING FACT FROM FICTION: HEALTH COVERAGE FOR

SAME-SEX SPOUSESBy: Edward Fensholt, J.D.

Confusion still swirls around last summer’s opinion by the U.S. Supreme Court in the case titled U.S. v. Windsor. The decision struck down a portion of the federal Defense of Marriage Act (DOMA) and compelled the federal government to begin recognizing same-sex marriages because there was no compelling federal interest in not doing so. But the precise scope of the decision remains unclear to many employers. Here’s a little true-or-false test of your knowledge about the Windsor case.

The Windsor decision requires

me to offer coverage to same-sex

spouses if I offer it to opposite-sex

spouses.

False. The Windsor decision requires the federal government to construe the word “spouse,” wherever it appears in federal law or regulations, to include same-sex spouses.

But ERISA is a federal law. So if

my health plan is subject to ERISA,

and ERISA includes references

to “spouse,” then ERISA requires

me to offer coverage to same-sex

spouses.

False. ERISA is a federal law, and it does include references to “spouse,” which federal authorities must now construe to include same-sex spouses. But nothing in ERISA requires an employer to

offer coverage to a “spouse” in the first place.

But if I offer coverage to opposite-

sex spouses, it’s discriminatory

to not offer coverage to

same-sex spouses.

Generally false . . . but as a practical matter, an employer might find itself offering coverage to same-sex spouses depending on certain factors.

First, let’s be clear that employers discriminate in terms and conditions of employment, such as pay and benefits, all the time. The question is never whether an employer discriminates. The question is whether the employer discriminates impermissibly.

Federal law generally prohibits employers from discriminating on the basis of age, gender, disability, religion and race, but not sexual orientation—at least not yet. So nothing in federal employment discrimination law compels an

employer who offers coverage to opposite-sex spouses to also offer coverage to same-sex spouses.

Some state and local governments might compel an offer of coverage to same-sex spouses, but if the employer’s plans are subject to ERISA, the state or local law is deflected and can’t regulate the employer’s administration of those plans.

Employers whose plans are not subject to ERISA, such as government and church employers, enjoy no such protection from state and local law. State law also regulates insurance companies, and can compel them to offer coverage to same-sex spouses. In this way even an ERISA employer that buys group insurance might indirectly become subject to a state law compelling an offer of coverage to same-sex spouses, because the insurance policy might include such an obligation. But an employer sponsoring a self-insured ERISA plan cannot be compelled by state

The precise scope of the U.S. v.

Windsor decision remains unclear to

many employers.

Compliance News • Winter 2013

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or local law to offer coverage to same-sex spouses.

However, state and local governments may compel (with certain exceptions) even ERISA employers to offer coverage to same-sex spouses as a condition of doing business with the state or local government.

A last word of caution: We suppose an employer that denies coverage to same-sex spouses, in a state or local jurisdiction that prohibits employment discrimination on the basis of sexual orientation, might find it disadvantageous—when defending a claim of such discrimination for failing to hire a gay or lesbian job applicant—to deny health coverage to employees’ same-sex spouses.

My health plan says it covers

employees and their “lawfully

married spouses.” So do I need to

cover any lawfully wedded same-sex

spouse?

Maybe, maybe not. Not every state recognizes a same-sex marriage, even one validly performed in another state. So it’s possible that in the state whose law applies to your health plan, the same-sex spouse is not considered a “spouse.”

The terms of the health plan or insurance contract likely include a “choice of law” rule that dictates which law applies. Whether the plan does or doesn’t, if you don’t want to cover same-sex spouses it would behoove you to make that clear in the health plan’s eligibility rules. However, if you buy group insurance, state law might require the health insurer to recognize a same-sex marriage, thus complicating your effort to exclude same-sex spouses.

If I cover same-sex spouses, the

coverage supplied to the same-sex

spouse is nontaxable to the employee.

This is generally true, at least for federal tax purposes, assuming the couple wed in a state recognizing same-sex marriage. State law might compel a different conclusion for state tax purposes, for example, if the law of the state where the couple resides doesn’t recognize same-sex marriages.

If my employee and his or her

same-sex spouse are wed in a state

authorizing same-sex marriage, and

live in a state that doesn’t recognize

that marriage, but I offer health

coverage to the same-sex spouse, the

coverage is nontaxable for federal

tax purposes.

True.

I also offer coverage to domestic

partners. Is coverage supplied to a

domestic partner also nontaxable for

federal tax purposes, just like same-

sex spouse coverage?

Not necessarily. Taxability (at least under federal law) of coverage supplied to a domestic partner continues to turn on whether the domestic partner is the employee’s “dependent” for tax purposes.

EDWARD FENSHOLT, J.D.Senior Vice PresidentDirector, Compliance ServicesLockton Benefit Group

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FEDS ISSUE FINAL REGULATIONS IMPLEMENTING THE ANNUAL

HEALTH INSURANCE FEE By: Elizabeth Vollmar, J.D.

Final regulations regarding fees to be paid by the health insurance industry confirm that self-insured employers generally need not worry about the fee—at least for now.

Background

The federal health reform law imposes a variety of taxes and fees, including new assessments on individuals, employers, employer-sponsored health plans, drug manufacturers and medical device manufacturers. In addition, beginning in 2014, the health reform law imposes a substantial fee on the health insurance industry.

The annual amount of the fee is $8 billion in 2014, increasing to $14.3 billion in 2018, and rising thereafter in relation to the increase in premium costs. The fee is apportioned among health insurers based on market share.

This fee indirectly affects employers because insurers are including the fee in their costs when they set premiums for the health insurance policies they sell. Lockton’s actuaries estimate it will amount to 2.2 percent of premiums in 2014. Get more information on the fee.

Recently issued final regulations regarding this fee confirm previous guidance, which exempted employer-sponsored self-insured plans from the fee (self-insured plans remain subject to the “$63-per-enrollee” transitional reinsurance fee for 2014; that fee diminishes over the ensuing two years).

Notably, the IRS cautions in the preamble to the final regulations that a self-insured plan backed by stop loss coverage with unusually

Compliance News • Winter 2013

7

low attachment points may be a “functionally equivalent alternative to an insured group health plan.” However, the preamble goes on to assure that the health insurance fee “will not apply to stop loss coverage until such time and only to the extent that future guidance addresses the issue of whether, and if so under what circumstances, stop loss coverage constitutes health insurance.” As a result, stop loss insurers should not be raising rates in 2014 due to this health insurer fee.

An interesting wrinkle regarding the health insurer fee applies to self-insured multiple employer welfare arrangements (MEWAs). A MEWA is an employer-sponsored welfare benefit arrangement that provides benefits to employees of multiple, unrelated employers. For this purpose, employers are considered unrelated unless they are linked by very high levels of ownership or control (e.g., 80 percent equity ownership).

Deliberately created self-insured MEWAs are rare, because they are illegal in most, if not all, states (states tend to view self-insured MEWAs as unlicensed insurance companies). But employers engaged in merger or acquisition activity sometimes inadvertently create self-insured MEWAs, usually for brief periods of time, by covering employees of recently spun-off companies under a self-insured health plan. Note that MEWAs are different from multiemployer plans, which are maintained by union and management representatives under collective bargaining agreements.

While the health insurance fee applies to self-insured MEWAs, the final regulations add some protections for three types of inadvertent or short-term MEWAs, keeping them exempt from the fee and associated reporting obligations. Self-insured MEWAs dodge the insurance fee where they meet at least one of the following conditions:

� The employers whose employees are covered by the MEWA are related by at least 25 percent ownership or control.

� The MEWA exists for a limited time and resulted from a merger, acquisition, or similar transaction that has a purpose other than avoiding MEWA status.

� The MEWA resulted from covering a few (less than one percent of covered participants) nonemployees, such as independent contractors or outside directors.

Even if the MEWA is not within one of these exceptions, it is unlikely that the fee itself would be assessed (only entities with at least $25,000,000 in net premiums written in a year will pay the fee), but various reporting requirements would be triggered in connection with the health insurance fee, as well as under Department of Labor rules related to MEWAs’ filing obligations.

An interesting wrinkle regarding the health insurer

fee applies to self-insured multiple employer

welfare arrangements.

ELIZABETH VOLLMAR, J.D.Vice PresidentDirector, Compliance ServicesLockton Benefit Group

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EXPLOITING WRINKLES IN THE HEALTH REFORM LAW:

TREAD CAREFULLYBy: Edward Fensholt, J.D.

The federal health reform law imposes a multitude of obligations on employers, including a mandate on larger employers to offer coverage to full-time employees or risk penalties. Some employers plan to exploit a wrinkle in this mandate by offering inexpensive bare-bones coverage coupled with supplemental “fixed indemnity” benefits. It’s a worthy strategy for some employers, but the “fixed indemnity” sweetener must satisfy specific requirements or it can backfire on the employer.

Background

The health reform law’s individual mandate merely requires that nearly all U.S. residents have at least “minimum essential coverage” (MEC) for 2014 and later years. MEC can be bare-bones. For example, a “preventive care only” plan appears adequate.

The law requires more from larger employers, however. To satisfy one part of the law’s employer mandate, these employers must offer MEC to nearly all full-time employees and their children. Importantly, if the full-time employee

enrolls in MEC, the employer has no further obligation with respect to the employee. Otherwise, to avoid other potential penalties the employer must up the ante a bit, and offer the employee coverage that satisfies “affordability” and “minimum value” standards (we’ve called this “qualifying and affordable,” or “Q&A” coverage).

Some employers seek to take advantage of this wrinkle by offering full-time employees—and even part-time employees—bare-bones and enticingly inexpensive MEC. For young and healthy employees the advantage is obvious: for modest cost, they can satisfy the individual mandate and keep the IRS off their backs. The advantage to the employer is equally obvious: get employees to enroll in MEC and the employer avoids potential penalties without having to offer Q&A coverage.

The Sweetener

How can employers get full-time employees to bite at the MEC offering? Employers might need to sweeten the pot a bit.

First, the employer must price the MEC program appropriately. If the employer isn’t offering Q&A coverage to the employee, the employer is effectively competing against the federally subsidized coverage offerings in the public health insurance marketplaces.

Second, the employer might sweeten the pot by supplementing a bare-bones MEC offering with critical illness or other fixed indemnity insurance. Critical illness coverage is insurance that pays a fixed amount upon a diagnosis of a critical illness, like cancer. Fixed indemnity is insured coverage that pays fixed amounts per day of Employers may need to sweeten the

pot to get full-time employees to bite

at their MEC offerings.

Compliance News • Winter 2013

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hospitalization, per day an individual sees a doctor, per day an individual obtains a prescription drug, and so on.

These critical illness and fixed indemnity policies have several advantages:

� They’re inexpensive. (Under recent guidance, they’re also not subject to the $63-per-enrollee tax on health insurance for 2014.)

� They do a nice job of supplementing bare-bones MEC offerings.

� They’re considered “excepted benefits” under health reform law, meaning they’re exempt from the law’s mandates such as the prohibition on annual or lifetime dollar limits.

Some fixed indemnity insurers have sought to narrow the gap between traditional fixed indemnity coverage and health insurance by offering additional indemnity-type benefits that give the product the look of more traditional health coverage. For example, the policy might pay $50 for each office visit, $100 for each day of hospitalization, different amounts for different surgical procedures and $15 per prescription, without regard to the actual expenses incurred by the insured.

Federal authorities, however, have put the kibosh on such policies, saying they’re not truly fixed indemnity, and therefore are actually health insurance policies. The authorities’ objection is that true fixed indemnity pays benefits on a per-period basis (such as a per-day basis), not for specified services. With respect to our example above, federal authorities say the coverage is not fixed indemnity because while payment is made on a per-period basis for hospitalization, it is not for doctors’ visits, surgery and prescription drugs. In addition, the authorities appear to have taken the puzzling position that the benefit amount can’t vary depending on the type of service.

A Fixed Indemnity Evolution

Fixed indemnity insurers have responded by modifying their offerings from a “per-visit” basis to a “per-day” basis (as in, “We’ll pay you $50 per day for each day you visit the doctor.”). But the policies continue to reflect varying benefit amounts, depending on the type of service offered.

Some states have approved these policy offerings as “indemnity” policies. Others have pushed federal regulators to allow a policy to be treated as an excepted benefit even if the amount paid varies on the type of service provided. Some very large fixed indemnity insurers are convinced the new generation of fixed indemnity coverage passes federal muster (the insurers would face huge fines if they’re wrong).

It’s possible, but not likely, that federal regulators will become more definitive in the near future regarding the sorts of indemnity policies that are “excepted benefits,” and those that are not. In the meantime, employers have four options:

1. Do nothing. In other words, don’t attempt to supplement bare-bones MEC with a policy purporting to be fixed indemnity.

2. Avoid the indemnity issue altogether, and simply beef up the MEC offering to make it more robust.

3. Buy traditional fixed indemnity (the kind that pays a fixed benefit per day of hospitalization).

4. Take the view—shared by some states and many insures, including multiple large insurers—that the new generation of fixed indemnity policies qualifies as “fixed indemnity.”

EDWARD FENSHOLT, J.D.Senior Vice PresidentDirector, Compliance ServicesLockton Benefit Group

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IRS FINALIZES ADDITIONAL MEDICARE TAX REGULATIONS By: Elizabeth Vollmar, J.D.

The IRS made very few changes when, on Nov. 29, it finalized its previous guidance on employers’ obligations to withhold the additional Medicare tax that applies to certain high-wage earners.

Background

The additional Medicare tax is a .9 percent tax that is effective for 2013 and later years. The tax applies only to an individual’s wages that are above certain thresholds. While individuals’ thresholds vary depending on marital and tax filing status, for employers obligated to withhold payroll taxes the only threshold that matters is $200,000. Employers are required to withhold the tax on wages in excess of $200,000 that are paid to an employee during a calendar year.

Significantly, the employer does not pay a matching amount with respect to the additional Medicare tax as it does in the case of basic Medicare taxes. For full details on the additional Medicare tax and employers’ withholding obligations, see our Alert.

With the additional Medicare tax effective for 2013, employers and their payroll providers have already implemented the systems changes needed to ensure withholding occurs as required. The final regulations should not disrupt those arrangements.

A key point for employers, however, is that they may be liable for the additional Medicare tax if they fail to withhold it when required, and the employee does not pay the tax.

ELIZABETH VOLLMAR, J.D.Vice PresidentDirector, Compliance ServicesLockton Benefit Group

Compliance News • Winter 2013

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STATE ROUNDUP

More States Enact Laws Regarding Autism Benefits

In the past year, at least five more states have passed insurance laws requiring coverage of autism spectrum disorder (ASD) and providing standards for treatment. The laws should not apply, however, to self-insured ERISA plans.

In March 2013, California passed legislation providing that if treatment or services are medically necessary to treat ASD, then an insurer cannot impose an annual visit limit or an annual dollar limit. “Treatment or services” includes, but is not limited to, speech therapy, occupational therapy and behavioral health treatment. In cases where behavioral health treatment is medically necessary, an insurer cannot deny or unreasonably delay coverage based on an alleged need for cognitive or IQ testing, on the grounds that behavioral health treatment is experimental, investigational, or educational, or on the grounds that behavioral health treatment is not provided or supervised by a licensed person, when the provider or supervisor is certified by the Behavior Analyst Certification Board.

New York established professional standards for individuals who provide or supervise behavioral health treatment in the form of applied behavior analysis.

Oregon passed comprehensive legislation specifying that a health benefit plan must cover the screening for and diagnosis of ASD. In addition, plans must cover medically necessary treatment for ASD and care management for an individual that begins treatment before nine years of age.

South Carolina passed a bill providing that the maximum benefit for coverage for ASD is $53,100 for the calendar year beginning Jan. 1, 2014.

Texas passed a bill requiring a health plan to provide coverage for screening a child for ASD at the ages of 18 and 24 months. Texas passed a separate act requiring health plans to cover an enrollee who is diagnosed with ASD from the date of diagnosis, but only if the diagnosis was in place prior to the child’s tenth birthday. A health plan is not required to provide coverage for an enrollee 10 years of age or older for applied behavioral analysis in an amount of more than $36,000 per year.

Five more states have passed laws requiring

coverage of ASD and providing standards for

treatment.

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New Prescription Drug Legislation

Several states passed prescription drug legislation in 2013. The laws should not apply to self-insured ERISA plans.

Delaware passed legislation stating that patients’ coinsurance or co-payments for specialty tier drugs must be limited to $150 per month for up to a 30-day supply of any single specialty tier drug. An exception can be requested to obtain a specialty tier drug not otherwise available on a health plan’s formulary. A health plan is prohibited from placing all drugs in a given class on a specialty tier.

Hawaii enacted a law requiring that participants be permitted to fill any covered prescription that may be obtained by mail order at any pharmacy of the participant’s choice within the pharmacy benefits manager’s (PBM’s) retail pharmacy network.

Four states—Florida, Nevada, Oklahoma and Rhode Island—have enacted laws requiring insured plans to provide orally administered anticancer medication on a basis no less favorable than intravenously administered or injected cancer medication.

Nevada also requires that an insurer shall not impose a co-payment, deductible, or coinsurance amount for orally administered medication in an amount that is more than $100 per prescription.

Rhode Island’s law states that an increase in patient cost-sharing for anticancer medications is not a permitted method of complying with the law.

Two states—Alaska and New Jersey—passed legislation requiring that plans allow refills of topical eye medication. Alaska’s law requires plans to refill prescriptions to treat a chronic condition before the last day of the prescribed dosage period. New Jersey’s law requires coverage for refills if the doctor indicates additional quantities are needed and the refill request does not exceed the quantity indicated on the original prescription.

Three More States Cover Telemedicine

Arizona, Mississippi and Montana all enacted laws requiring insured plans to cover healthcare services provided through telemedicine. Telemedicine refers to healthcare professionals providing medical advice and diagnoses over the Internet. This brings the total number of states that require insurers to cover telemedicine to 19.

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Maryland enacted legislation requiring the Maryland Medical Assistance Program to reimburse healthcare services delivered by telemedicine that are medically necessary and are provided for the treatment of cardiovascular disease or stroke in an emergency.

Reimbursement Parity for Physical Therapists and PCPs

Missouri passed a law requiring that out-of-pocket expenses (co-payments and coinsurance) charged for physical therapy services under insured plans cannot be greater than out-of-pocket expenses charged for similar services provided by primary care physicians (PCPs). Insured plans must clearly state the availability of physical therapy coverage and all applicable limitations, conditions and exclusions.

Connecticut passed similar legislation. The state added a provision that treatment from a physical therapist cannot, under an insured plan, involve greater out-of-pocket expenses than an office visit with an osteopath.

New Restrictions on Abortion Coverage

Arkansas passed legislation prohibiting insurance contracts offered through a public health insurance marketplace from including elective abortion coverage. The law does not prohibit an individual from purchasing supplemental coverage for elective abortions with a separate premium, which must be paid outside of the marketplace.

Maryland allows individuals to purchase abortion coverage through its state marketplace, but requires separate premium payments for the coverage.

Oklahoma prohibits “morning-after” emergency contraceptives from being available to women under the age of 17 without a prescription.

Pennsylvania allows insurers selling contracts in the state marketplace to opt out of providing abortion coverage.

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Fertility Treatment Classified as Essential Health Benefit

At least 25 states, territories and the District of Columbia have classified infertility treatment as an essential health benefit.1 Six of those jurisdictions limit fertility benefits to diagnosis and testing for infertility (Arizona, Washington, D.C., Minnesota, North Dakota, Tennessee and U.S. Virgin Islands). As a results, insured plans in those jurisdictions may not impose lifetime or annual dollar maximums on infertility benefits offered under a policy.

Massachusetts enacted legislation requiring insurers to provide benefits for infertility procedures for an insured, covered spouse and other covered dependents. An insurer must provide benefits for all nonexperimental infertility procedures, but is not required to provide benefits for any experimental procedure, surrogacy or reversal of voluntary sterilization. An insurer cannot impose deductibles, coinsurance, co-payments, benefit maximums, waiting periods, or any other limitations on infertility coverage that are different from the limitations imposed on benefits for other services. No insurer can impose preexisting condition exclusions or waiting periods on infertility benefits, and an insurer cannot impose limits on coverage (either on the number of attempts or dollar limits).

1 Those jurisdictions that have made infertility treatments an essential health benefit under their marketplace plans include Arizona, Arkansas, Connecticut, Washington, D.C., Hawaii, Illinois, Iowa, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Hampshire, New Jersey, New York, North Carolina, North Dakota, Pennsylvania, Rhode Island, South Dakota, Tennessee, Vermont, U.S. Virgin Islands and Wisconsin.

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REMINDERS

Dec. 31, 2013

� File annual report with Centers for Medicare and Medicaid Services (CMS) to verify annual dollar limit waiver for plan years beginning before 2014.

� Deadline for supplying Women’s Cancer Rights Act notice (calendar year group health plans).

� Deadline for self-insured state and local government health plans to submit an optional opt-out election to CMS and provide opt-out notice to participants (calendar year group health plans).

� Deadline to provide notices of premium assistance under Medicaid or the Children’s Health Insurance Program to each employee (calendar year group health plans).

Jan. 1, 2014

� Begin tracking reportable health plan values for purposes of reporting on Forms W-2 for the 2014 taxable year.

Jan. 31, 2014

� Deadline to impute taxable income and report health plan values on Form W-2 for the 2013 taxable year.

March 1, 2014

� Deadline to provide Medicare Part D Creditable and/or Noncreditable Coverage Notices to CMS (calendar year group health plans).

� Deadline for filing annual Form M-1 on behalf of multiple employer welfare arrangements (MEWAs) providing health coverage.

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