On Friday, a district court judge in Texas found the ACA to be unconstitutional after the Tax Cuts and Jobs Act’s changes to the ACA’s individual mandate penalty. The ACA remains in effect pending appeal of the judge’s decision, and employers are advised to continue to abide by the ACA’s employer mandate and reporting requirements.

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On November 15, 2018, the Internal Revenue Service (IRS) announced an increase to the health Flexible Spending Account (FSA) salary reduction contribution limit of $50 to $2,700 for plan years beginning in 2019 along with other cost-of-living adjustments that apply to dollar limitations in certain sections of the Internal Revenue Code. This Legal Alert summarizes the adjustments relevant to individuals and employer sponsors of welfare and fringe benefit plans.

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The U.S. Department of Health and Human Services (“HHS”) has provided guidance on the Affordable Care Act’s (“ACA’s”) medical loss ratio (“MLR”) rule, which requires health insurers to spend a certain percentage of premium dollars on claims or activities that improve health care quality or provide a rebate to policyholders. HHS has released amended and final regulations (the “Regulations”), which govern the distribution of rebates by issuers in group markets. At the same time, the U.S. Department of Labor (“DOL”) issued Technical Release 2011-04 (“TR 2011-04″), which clarifies how rebates will be treated under the Employee Retirement Income Security Act of 1974 (“ERISA”).

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The U.S. Department of Labor (DOL) has issued a final rule expanding the opportunity of unrelated employers of all sizes (but particularly small employers) to offer employment-based health insurance through Association Health Plans (AHPs). Significantly, the final rule applies“large group” coverage rules under the Affordable Care Act (ACA) to qualifying AHPs.

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In Rev. Proc. 2018-34, the IRS released the inflation adjusted amounts for 2019 relevant to determining whether employer-sponsored coverage is “affordable” for purposes of the Affordable Care Act’s (“ACA’s”) employer shared responsibility provisions and premium tax credit program. As shown in the table below, for plan years beginning in 2019, the affordability percentage is 9.86% of an employee’s household income or applicable safe harbor.

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The IRS has released the inflation adjusted amounts for 2019 relevant to health savings accounts (HSAs) and high deductible health plans (HDHPs). Notably, the 2019 Self-Only HSA contribution limit is increasing to $3,500, and the 2019 Family HSA contribution limit is increasing to $7,000. We do not anticipate that the HSA contribution limits for 2019 will change as they did for 2018.

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The IRS has announced it is modifying the annual limitation on deductions for contributions to a health savings account (“HSA”) allowed for taxpayers with family coverage under a high deductible health plan (“HDHP”) for the 2018 calendar year. Under Rev. Proc. 2018-27, taxpayers will be allowed to treat $6,900 as the annual limitation, rather than the $6,850 limitation announced in Rev. Proc. 2018-18 earlier this year.

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In its March 30 status report to the U.S. District Court for the District of Columbia in American Association for Retired Persons (AARP) v. EEOC, the EEOC stated that “it does not currently have plans to issue a Notice of Proposed Rulemaking addressing incentives for participation in employee wellness programs by a particular date certain, but it also has not ruled out the possibility that it may issue such a Notice in the future.”

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On April 9, 2018, the Centers for Medicare & Medicaid Services (CMS) announced another one-year extension to the transition policy for individual and small group health plans that allows issuers to continue policies (called “grandmothered” plans) that do not meet ACA standards. The transition policy was originally announced in 2013 and has previously been extended several times. Now, it has been extended to policy years beginning on or before October 1, 2019, provided that all policies end by December 31, 2019. This means individuals and small businesses may be able to keep their non-ACA compliant coverage through the end of 2019, depending on the policy year. Carriers may have the option to implement policy years that are shorter than 12 months or allow early renewals with a January 1, 2019 start date in order to take full advantage of the extension.

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In Rev. Proc. 2018-18, the IRS has released adjusted contribution limits for health savings accounts (HSAs) due to changes made by the Tax Cuts and Jobs Act (TCJA).  As shown below, the new HSA contribution limit for individuals with family high deductible health plan (HDHP) coverage is $6,850, a $50 reduction from the previously announced inflation-adjusted amount for 2018. Other HSA/HDHPfigures remain unchanged.

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