Government Issues Final Rules on ACA Cost-Sharing and Contraceptives; Ohio and Oregon Weigh In on State Taxes Post-DOMA

July 12, 2015

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Article by Gretchen Young, ERIC Senior Vice President for Health Policy

New final tri-agency regulations on coverage of preventive services: Late this past Friday afternoon (!), HHS and its pals issued final regulations on the rules under the Affordable Care Act (ACA) that require the provision of certain preventive services without cost sharing. These new rules relate primarily to the highly charged issue of when a religious employer or religious organization must provide employees and their families with an alternative means of coverage of all FDA-approved contraceptive devices. These new rules largely follow the pathways laid down by the U.S. Supreme Court in its decision in Burwell v. Hobby Lobby Stores, Inc. as well as the Court’s interim order in connection with an application for an injunction in Wheaton College v. Burwell

The final regulation, however, also confirms some other, non-contraceptive related policies with respect to required preventive services (many of which have already been promulgated through the FAQ approach). These include:

  • The “primary purpose” test: the final regulation continues to provide that when a recommended preventive services is not billed separately or tracked separately from an office visit, plans may look to the primary purpose of the office visit to determine whether cost sharing may be imposed;
  • If the plan does not have an in-network provider who can provide a particular item or service, then the plan must cover the item or service performed by an out-of-network  provider with no cost sharing;
  • A plan may rely on the relevant evidence base and established “reasonable medical management techniques” to determine coverage limitations if the guideline for the recommended preventive service does not specify any;
  • Plans may cover preventive services in addition to those required by the ACA and may impose cost sharing on these additional services;
  • Although the regulation does provide some exceptions, in general it provides that a plan must provide coverage for recommended preventive items and services for the entire plan year, even if the recommendation or guideline is changed during the year; and
  • Plans do not need to make changes to coverage and cost sharing requirements based on a new recommendation or guideline until the first plan year beginning on or after the date that is one year after the new recommendation or guideline goes into effect. 

By my reckoning, the new regulations are effective and applicable on September 12, 2015. 

Links to the rules on coverage of certain preventive services:

• Final Rules at https://s3.amazonaws.com/public-inspection.federalregister.gov/2015-17076.pdf

• HHS Fact Sheet at http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/womens-preven-02012013.html

• HHS News Release at http://www.hhs.gov/news/press/2015pres/07/20150710a.html

The Minutiae from the Black Lagoon: After the June 26 SCOTUS decision in Obergefell v. Hodges, one of the central questions for self-funded health plans has been the effective date of the decision in states that did not recognize same-sex marriage prior to the Court’s ruling. 

Ohio: Last week I told you about the announcement in Ohio, stating that as of June 26, 2015, Ohio employers must determine withholding for employer-provided benefits in a manner consistent with the federal rules. The release goes on to state that the guidance is effective for all of tax year 2015 and all subsequent tax years. Although I think this last sentence is somewhat ambiguous, my guess is that it means that no income need be imputed for health benefits of same-sex married couples, for state income tax purposes, for any part of the 2015 taxable year. 

Nebraska: Now Nebraska has released Revenue Ruling 22-15-2, which states that same-sex married couples should file their Nebraska tax returns for 2015 and after using the same filing status as used for their federal returns. These couples may also amend state returns for previous tax years that are still open. Although the Revenue Ruling does not state this explicitly, I would think that the same approach would be used for state taxation (in Nebraska) of the imputation of income on health benefits of the non-employee spouse. 

Last but not least: During our ERIC FocusOn call on July 1 on the Obergefell v. Hodges decision (and thank you again to Tom Meagher of Aon Hewitt and Rich Stover of Buck Consultants for a FABULOUS call), the question came up as to what would happen with respect to the jurisdictions that require the provision of domestic partner benefits in order for a company to do business with the jurisdiction. While that question was not settled, one of the participants on the call provided me with a list (possibly not all-inclusive) of localities that require domestic partner benefits under these circumstances. 

Here is the list

San Mateo County, CA
Berkeley, CA
Long Beach, CA
Los Angeles, CA
Oakland, CA
Sacramento, CA
San Francisco, CA
King County, WA
Seattle, WA
Olympia, WA
Tumwater, WA
Broward County, FL
Miami Beach, FL
Hallandale Beach, FL
Key West, FL
Oakland Park, FL
Wilton Manors, FL
West Palm Beach, FL
Minneapolis, MN
Philadelphia, PA

Contact Gretchen Young at gyoung@eric.org with any questions or comments regarding this issue.