IRS Issues Guidance on Tax Credit for Paid Family and Medical Leave

California Expands Sexual Harassment Training Law Again for 2019

Overview: 

On Sept. 30, 2018, California enacted a series of laws that strengthen the state’s protections against workplace harassment. Effective Jan. 1, 2019, these new laws:

• Require employers with five or more employees in the state to provide sexual harassment prevention training to all employees; 
• Expand and clarify employer liability for workplace harassment; and 
• Prohibit employers from entering certain agreements related to sexual harassment and other unlawful acts in the workplace. 

Action Items:

All California employers should become familiar with the new laws. Those with five or more employees should review the new training requirements and monitor the California Department of Fair Employment and Housing’s (DFEH) website for training courses and additional guidance.

Background:

The California Fair Employment and Housing Act (FEHA) broadly prohibits workplace harassment. All employers in the state are prohibited from harassing individuals or allowing harassment based on any of the protected traits listed below. Employees, applicants, unpaid interns, unpaid volunteers and anyone providing services under a contract in the workplace are all protected under the law.

FEHA Protected Traits
Race	Disability/medical condition	Sex
Color	Genetic information	Gender
Religion	Marital status	Gender identity
National origin	Age (40 and older)	Gender expression
Ancestry	Military/veteran status	Sexual orientation

Under the FEHA, any employer, regardless of size, may be held liable for sexual harassment committed in its workplace, even if the harasser is not an employee. The FEHA also requires employers with 50 or more employees in the state to provide sexual harassment prevention training to all supervisory employees every two years.

Overview of Changes Effective Jan. 1, 2019

Effective Jan. 1, 2019, the FEHA is expanded as follows:

• The current requirements for supervisor training on sexual harassment are expanded to employers with five or more employees. These employers must also provide one hour of sexual harassment training to all nonsupervisory employees. 
• Employers may be held liable for workplace harassment that is based on any protected trait (not just sexual harassment) committed by nonemployees in the workplace. The rules on what an employee must prove in a harassment claim have also been clarified. 
• Employers may not require an employee to sign any agreement that waives a claim or right for workplace discrimination or harassment, or that prevents disclosure of any information about unlawful acts in the workplace. 

California law has also been changed to prohibit confidentiality requirements in sexual harassment claim settlements and sex discrimination claim settlements.

New Training Requirements

Effective Jan. 1, 2019, every California employer with five or more employees must provide:

• Each supervisory employee with at least two hours of sexual harassment training; and 
• Each nonsupervisory employee with at least one hour of sexual harassment training. 

The appropriate training must be completed by each employee within six months of assuming his or her job. Each employee must receive the appropriate training once every two years. The deadline for initial compliance with these requirements is Jan. 1, 2020. Employers must provide the initial training after Jan. 1, 2019, in order to meet this deadline.   

As of Jan. 1, 2020, special requirements will apply for seasonal employees, temporary employees and any employees who are hired to work for less than six months. For these employees, employers must provide the required training within 30 calendar days after the employees’ hire dates or before the employees have worked 100 hours, whichever comes first.

The DFEH plans to develop two online training courses that employers may use to satisfy the training requirements. Employers should monitor the DFEH website for these courses and additional guidance.

Expanded Employer Liability for Workplace Harassment

The FEHA allows an employer to be held liable for acts of workplace sexual harassment committed by nonemployees under certain circumstances. Effective Jan. 1, 2019, employers may also be held liable for nonemployees’ acts of any type of unlawful workplace harassment. An employer may be held liable if:

• A nonemployee commits harassment against any of the employers’ employees, applicants, unpaid interns, unpaid volunteers or people providing services pursuant to a contract in the workplace; 
• The harassment is based on any FEHA-protected trait; 
• The employer (or its agents or supervisors) knows or should have known of the conduct; and 
• The employer fails to take immediate and appropriate corrective action. 

Prohibited Waivers and Confidentiality Agreements

An employer may not require an employee to sign either of the following in exchange for a raise or bonus, or as a condition of employment or continued employment:

• A release of a claim or right against the employer for employment practices that violate the FEHA; or 
• A non-disparagement agreement or other document that prevents the employee from disclosing information about unlawful or potentially unlawful acts in the workplace. 

These rules apply to agreements executed on or after Jan. 1, 2019.

These rules do not apply to agreements to settle claims involving unlawful acts in the workplace that have been filed by an employee either in court, with an administrative agency, in an alternative dispute resolution forum or through an employer’s internal complaint process. However, there are new restrictions on settlement agreements involving claims of:

• Workplace sexual harassment; 
• Employment discrimination based on sex; or 
• Retaliation related to claims of sex discrimination or sexual harassment in the workplace. 

Effective Jan. 1, 2019, these settlement agreements may not include any provision that prevents the disclosure of factual information related to the underlying claim. Settlement agreements executed on or after Jan. 1, 2019, that violate this prohibition are void and unenforceable. The bill also prohibits courts from issuing any order or stipulation that restricts this type of disclosure in sex discrimination or sexual harassment cases.

However, settlements for sex discrimination or sexual harassment may shield the claimant’s identity and all facts that could lead to the discovery of his or her identity (including pleadings filed in court), as long as the claimant is the one who requests it (and as long as no government agencies or public officials are parties to the settlement agreement). In addition, settlement provisions may prevent parties from disclosing the amount paid for a claim settlement.  

Hardship Exemption Rules Gutted for 2018 Individual Mandate

On Sept. 12, 2018, the Centers for Medicare & Medicaid Services (CMS) provided guidance on claiming a hardship exemption from the individual mandate under the Affordable Care Act (ACA) for 2018. Individuals may claim a hardship exemption on their 2018 federal income tax return without:

• Obtaining a hardship exemption certification from the Exchange; or 

• Providing any explanation or documentation of the hardship. 

In past years, most individuals had to apply for the exemption and receive a certification from an Exchange to qualify.

This change applies to 2018 only. However, for all eligible years, individuals can still apply for hardship exemptions through the Exchange, and CMS will continue to process those as normal. No exemptions are required after 2018 because the individual mandate has been effectively repealed beginning in 2019. 

  

The IRS Issues Letter 5699 to Noncompliant Employers - Action Steps

Telemedicine Compliance Issues for Employers

PPACA 2019 Compliance Checklist

Beware of Sales Pitches for the New "Association Healthcare Plans" in California

Almost immediately after the new Trump Administration regulation on Association Healthcare Plans (AHPs) was released, a number of brokerages and advisors were out touting the new plans as a way employers can save money.  While this may be true in many states, the Republic of California is a different story.   

This is an excellent summary from Katrina Veldkamp at Boutwell Fay LLP: 

The DOL acknowledged that AHPs will be MEWAs and that states will retain their existing authority related to MEWA regulation and enforcement. Fully insured MEWAs are subject to state laws that regulate the maintenance of specific contribution and reserve levels. Self-insured MEWAs are subject to state law to the extent not inconsistent with ERISA. Since many states, including California, have substantially limited the establishment of MEWAs – particularly self-insured MEWAs – in order to avoid abuse, it is unclear whether the expanded availability on AHPs under the new regulations will even be feasible in some states. In fact, the California Insurance Commissioner made a statement on the day the AHP regulations were issued that California law prohibits the formation of any new MEWAs and cautioned against AHP fiscal insolvency and fraud. (Note: California prohibits new self-insured MEWAs but does not explicitly prohibit fully insured MEWAs; however, it is unclear whether a fully insured AHP would be able to form under current California law.)

Another hurdle for AHPs will be state mandates and definitions for small and large group insurance. AHPs remain subject to state and federal laws mandating the provision of certain benefits (other than essential health benefits). The DOL declined to rule on whether state laws that differ from the AHP rules regarding group size calculation would be upheld. For example, California’s definition of “small employer” for small group status has different criteria than the AHP regulations and does not reference working owners. Since the DOL specified that the AHP regulations do not modify existing state authority, it is not clear whether state laws would be superseded by the AHP regulations. 

The regulations also result in differing treatment of AHPs under various federal laws. For example, the DOL states in the preamble that size of an employer for purposes of determining applicability of the Mental Health Parity and Addiction Equity Act (“MHPAEA”) should be determined based on the aggregate number of employees of all employer members in an AHP. On the other hand, the number of employees for purposes of determining whether an employer member is an “applicable large employer” under the employer shared responsibility rules of Internal Revenue Code Section 4980H is based on each individual employer member.  This means that employers with 50 or more full time employees may be subject to tax if they are members of an AHP that does not provide minimum value coverage. The DOL declined to provide guidance on how COBRA would apply to an AHP and its employer members because COBRA is within the interpretive jurisdiction of the Treasury and IRS, but it intends to provide further guidance after consulting with the Treasury and IRS. 

AHPs will be subject to all applicable ERISA requirements, including fiduciary duties and reporting and disclosure, such as Form 5500 and M-1. 

  

Big Brother the Insurer - Health Insurers Are Vacuuming Up Alarmingly Private Details About You

Incredibly alarming trend in our industry expounded on by Marshall Allen at Pro Publica / NPR:

Without any public scrutiny, insurers and data brokers are predicting your health costs based on data about things like race, marital status, how much TV you watch, whether you pay your bills on time or even buy plus-size clothing. ... 

With little public scrutiny, the health insurance industry has joined forces with data brokers to vacuum up personal details about hundreds of millions of Americans, including, odds are, many readers of this story. The companies are tracking your race, education level, TV habits, marital status, net worth. They’re collecting what you post on social media, whether you’re behind on your bills, what you order online. Then they feed this information into complicated computer algorithms that spit out predictions about how much your health care could cost them.

Are you a woman who recently changed your name? You could be newly married and have a pricey pregnancy pending. Or maybe you’re stressed and anxious from a recent divorce. That, too, the computer models predict, may run up your medical bills.

Are you a woman who’s purchased plus-size clothing? You’re considered at risk of depression. Mental health care can be expensive.

Low-income and a minority? That means, the data brokers say, you are more likely to live in a dilapidated and dangerous neighborhood, increasing your health risks.  ...

The industry has a history of boosting profits by signing up healthy people and finding ways to avoid sick people — called “cherry-picking” and “lemon-dropping,” experts say. Among the classic examples: A company was accused of putting its enrollment office on the third floor of a building without an elevator, so only healthy patients could make the trek to sign up. Another tried to appeal to spry seniors by holding square dances. ... 

Robert Greenwald, faculty director of Harvard Law School’s Center for Health Law and Policy Innovation, said insurance companies still cherry-pick, but now they’re subtler. The center analyzes health insurance plans to see if they discriminate. He said insurers will do things like failing to include enough information about which drugs a plan covers — which pushes sick people who need specific medications elsewhere. Or they may change the things a plan covers, or how much a patient has to pay for a type of care, after a patient has enrolled. Or, Greenwald added, they might exclude or limit certain types of providers from their networks — like those who have skill caring for patients with HIV or hepatitis C. ...

The full story is absolutely worth your time to read. 
 

Why Insurers Are Not Fighting to Eliminate PPACA

No, insurers aren't fighting to eliminate PPACA, why would they? Big business loves big government.

House Passes Bill Greatly Expanding HSAs

From EBN: 

[The proposed legislation would allow for] dollar caps on first-dollar coverage for newly includable health services. [Those caps] would be $250 for an employee with individual coverage, and $500 for an employee with family coverage.

Other liberalizations under the measures include allowing employees to use HSA dollars for certain over-the-counter health-related items, including menstrual care products. Another provision would deem qualified “physical activity, fitness, and exercise” related services, including sports activities, as qualified medical expenses, allowing coverage for up to $500 of qualified sports and fitness expenses ($1,000 for family coverage).

The bill also would increase employee HSA contribution limits substantially — to $6,900 (from today’s $3,450) for individual coverage, and to $13,300 (from $6,900) for families. …  

If the measure ultimately becomes law, employers would have to opt to take advantage of the liberalized provisions; they would not otherwise be available to employees.

Full story here.  

'Medicare for All' Plan Would Cost Federal Government $32 Trillion

Not Even Doubling All Federal Individual and Corporate Incomes Taxes Would Fully Fund the Proposal

From Chad Reese at Mercatus:

A “Medicare for all” proposal would cost the federal government more than $32 trillion over the course of ten years. That’s according to a new study by Charles Blahous, Mercatus Center senior research strategist and former public trustee for Social Security and Medicare. 

Dr. Blahous analyzed the “Medicare for All Act” (M4A), legislation introduced by Senator Bernie Sanders (I-VT) last September, in an effort to determine how much such a proposal would cost the federal government. 

Here are the numbers:

• M4A total cost over its first ten years: $32.6 trillion
• Federal spending on healthcare by 2031: 12.7 percent of all economic activity in the United States

Other studies aimed at estimating the cost of providing Medicare-like coverage to all Americans had similar findings. 

• A 2016 Center for Health and Economy (CHE) study of the same proposal estimated more than $27 trillion more in federal budget deficits
• Kenneth Thorpe, a professor with Emory University, also estimated that the proposal would require nearly $25 trillion in federal financing
• If you consider the same time frame and the same set of benefits, the estimates in these studies are similar to Dr. Blahous’s results

Financing such a massive cost increase would be extremely challenging. Even doubling all federal individual and corporate income tax collections would fall short of fully funding the plan. 

You can find the full study here.

 

How Socialized Medicine Creates Dependence

From David Henderson:

"A few years ago, an acquaintance who moved here from Canada told me that under Canadian’s single-payer system, his wife was in a years-long queue to get her foot operated on. This was a big deal because one of his and his wife’s regular pleasures was to go walking together after dinner and her foot problem made that difficult. 

Once they arrived here, he got good health insurance from his employer and his wife quickly got the surgery. The surgery worked, and he and his wife started doing their evening walks again. And their out-of-pocket expense for the surgery, which cost a couple of thousand dollars, was a little over $200. 

All good news, right? That’s what I would have thought. Can you see what’s coming? His wife complained bitterly about the $200." 

Full story.