November 6, 2014
2014 Compliance Expectations
Arizona Group Updates
Jason N. Sheffield, J.D.
NATIONAL LEGAL & RESEARCH GROUP
Program Overview
Affordable Care Act
• Employer Mandate
• Transition Rules
• Worker Exceptions
Agency Audits
• Agencies & Targets
• Worker Misclassification
• Audit Procedure
Privacy & Security
• HIPAA Review
• 2014 Rules
• HPID/Security Certifications
section one
AFFORDABLE CARE ACT
UPDATE
EMPLOYER MANDATE
“PAY OR PLAY” THRESHOLD
PHASE IN BASED ON EMPLOYER SIZE
Employer Size
2015 Plan Year
2016 Plan Year +
1–49 full-time employees or
full-time equivalents
Does not apply
Does not apply
50-99 full-time employees
or full-time equivalents*
Does not apply
Employer must offer
coverage to 95% of full-time
employees and dependents
to age 26
Employer must offer
coverage to 70% of full-time
employees and dependents
to age 26
Employer must offer
coverage to 95% of full-time
employees and dependents
to age 26
100 or more full-time
employees or full-time
equivalents
3
EMPLOYER MANDATE
“PAY OR PLAY” WORKBOOK
Do you offer coverage to all full-time
employees?
NO
$2,000 / Full Time Employee
(less first 30)*
YES
Does the plan provide “minimum
value”? (60%+ of total allowed costs)
NO
$3,000 full-time employee
receiving tax credit*
YES
Is the coverage affordable?
(< = to 9.5% of income)
NO
YES
No penalty
*80 for plan years beginning in 2015; 30 for PYB in 2016 and after
4
EMPLOYER MANDATE
“FULLTIME” employee performs an average of 30+ hours of service
per week or 130+ hours of service in any calendar month
“FULLTIME EQUIVALENTS” equals the sum of all hours of service
performed by all employees:
= 16 FTEs
= 16.11
 2,080
33,500
Total Hours
(max = 2,080
/ worker)
Divided by
2,080
Rounded to
next lowest
whole
number
Equals the
FTE Total
Count
5
EMPLOYER MANDATE
EMPLOYEE CLASSIFICATIONS POST-ACA
Fulltime
• Eligibility following satisfaction of waiting/orientation period
Part-time
• Eligibility following close of initial measurement period (if 30+)
Variable Hour
• Eligibility following close of initial measurement period (if 30+)
Seasonal
• Eligibility following 180 days of service (if 30+ during first 180 days)
6
EMPLOYER MANDATE
PART-TIME, VARIABLE HOUR & SEASONAL EMPLOYEES
LOOK BACK
ADMINISTRATIVE
PERIOD
STABILITY
PERIOD
Measurement
period in which
the employer
measures an
employee’s
hours of
service
Implementation
of the lookback period
observations,
e.g.,
identification of
fulltime workers
and enrollment
in the plan
The coverage
period for
fulltime
employees &
the ineligibility
period for parttime workers
7
EMPLOYER MANDATE
VARIABLE HOUR PROCESS
2014
Hired 10/5/14 Measurement Period
10/5/14 - 10/4/15
2015
First Administrative Period
10/5/15 - 11/30/15
First Stability Period
12/1/15 – 11/30/16
First Ongoing Measurement Period
1/15/15 - 1/14/15
First Ongoing Administrative
Period 1/15/16-3/31/16
2016
First Ongoing Stability Period
4/1/16-3/31/17
2017
8
EMPLOYER MANDATE
FINAL REGULATIONS ON WAITING PERIODS
Health coverage eligibility conditions based solely on the lapse of a time
period are permissible for no more than 90 days
Period before late or special enrollment is not waiting period
If Plan conditions eligibility on FT/specific hours of service and employer
reasonably believes the EE will not be FT, Plan can use a measurement
period that:
• does not exceed 12 months
• begins on any date between start date and first day of first calendar month following start
date and
• coverage is effective no later than 13 months from start date, plus time remaining until first
day of next calendar month
9
EMPLOYER MANDATE
PROPOSED RULEMAKING ON THE FEDERAL ORIENTATION PERIOD
New “reasonable and bona fide employmentbased orientation period" in addition to 90day waiting period
May delay waiting period until orientation
period is complete
• First calendar month following hire, minus one calendar day
• Orientation period must end on/before end of next calendar month
10
section two
AGENCY AUDITS
ON THE RISE
AGENCY AUDITS
WHO DOES WHAT?
Medicare
ERISA
Medicaid
Welfare Plans
CMS
HHS
ACA
Health Insurance
Exchanges
OCR/Title VII
IRS
CHIP
Retirement Plans
Misclassification (1099)
Health Insurance
Marketplace
Fringe Benefits
HIPAA Privacy
ACA/Tax
12
AGENCY AUDITS
FLSA – Wages
ERISA – Fiduciary
FMLA
Correction programs
Child Labor
Government Contracts
Immigration
DOL / EBSA
DOL / WHD
WHO DOES WHAT?
COBRA
HIPAA
GINA
MHPAEA
Agricultural Employment
CHIP
Employee Polygraphs
13
AUDIT TRIGGERS
WHAT TRIGGERS AN AGENCY AUDIT?
Random
Technical
Inquiry
Targeted
Inquiry
(Occupation,
Industry)
Compliantbased
Investigation
Regulatory
Compliance
(Filings,
Disclosures)
Agency
Information
Sharing
CURRENT STANDARDS OF WORKER CLASSIFICATION
Behavioral Control
Financial Control
Relationship of Worker &
Firm
IDENTIFYING MISCLASSIFICATION WITHIN THE ORGANIZATION
Part A – Employee Relations
Termination
On-boarding
Process
Supervision/
Management
Discipline
Promotion
IDENTIFYING MISCLASSIFICATION WITHIN THE ORGANIZATION
Part B – Organizational Alignment
Business
Units
Subsidiaries
& Affiliates
FIRM
Geographic
Boundaries
Skilled Trades &
Professional
Designations
MANAGING AGENCY AUDITS
Audit Process
Negotiation &
Settlement
Findings of Fact
& Determination
of Liability
Investigation
Agency
Notification
Closing
Agreement
MANAGING AGENCY AUDITS
Negotiation & Settlement of Audit Penalties & Civil Liabilities
Civil Liability
Workers’
Compensation
Unemployment
Taxes
Benefits
Wages – e.g., O.T.
Interest
Responsible
person liability
Federal Tax Liability
Employment tax
Penalty for failure
to withhold
Penalty for failure
to file W-2s
State Tax Liability
Penalty for failure to
withhold
Interest
SUTA (state
unemployment tax)
Responsible person
liability
section three
PRIVACY & SECURITY
UPDATE
NEW HIPAA Regulations
DESIGNED TO BUILD ON EXISTING RULES
Implementation of statutory amendments under HITECH
Modifications to increase privacy protection for genetic information (GINA)
HIPAA administrative simplification to improve workability & effectiveness
Increase flexibility for regulated entities
Decrease burden on regulated entities
21
2013 RULE NO. 1 – PART I
Final Modifications to HIPAA’s Privacy, Security & Enforcement Rules
 Business Associates are responsible for their
own compliance
 Increased restrictions on uses and disclosures
of PHI related to marketing and fundraising
 Prohibition against sales of PHI absent
individual authorization
 Expansion of individual rights to include
receipt of electronic form health records (e-PHI)
22
2013 RULE NO. 1 – PART II
Final Modifications to HIPAA’s Privacy, Security & Enforcement Rules
 Restrictions on the disclosure of self-pay treatment
information
 Modification and redistribution of NPPs (notices of privacy
practices)
 Modification of individual authorizations to:
•Facilitate research
•Enable disclosure of immunization records
•Enable access of decedent information by family members and others
 Adoption of HITECH enhancements to the Enforcement Rule
•Enforcement of noncompliance due to “willful neglect”
23
2013 RULE NO. 2
HITECH – Final Rule Modifying the Enforcement Rule
Final rule adopting HITECH
modifications to the
Enforcement Rule
• Increased penalties for noncompliance
• Incorporation of tiered penalty scheme
• Outline of civil monetary penalty
(CMP) structure
24
2013 RULE NO. 3
HITECH – Final Rule on Breach Notification
Final Rule on Breach Notification
Rule
•Outlines BNR for unsecured PHI
•Discards traditional “harm”
standard
•Implements an agency objective
standard
25
2013 RULE NO. 4
GINA – Final Rule Prohibiting Genetic Information Disclosure for Underwriting
GINA modifications
to the Privacy Rule
•Prohibition against using or
disclosing genetic information
•Specifically relates new
prohibitions to all underwriting
applications
26
THE NEW TIERED BREACH SCHEME
LEVEL D:
Uncorrected
Willful Neglect
LEVEL C:
Corrected
Willful Neglect
LEVEL B:
Reasonable
Cause
LEVEL A:
Unknowing
Breach
27
THE NEW TIERED ENFORCEMENT SCHEME
28
FACTORS AFFECTING CIVIL MONETARY PENALTY
Nature & extent of the violation
Nature & extent of harms resulting from the violation
History of prior compliance
Financial condition of the CE or BA
2014 Irvine Fall Boot Camp | 29
HISTORY OF OCR ENFORCEMENT
OCR – Resolutions by Year & Type
April 14, 2003 – December 31, 2013
30
ADMINISTRATIVE SIMPLIFICATION
UTILIZATION OF UNIQUE HEALTH PLAN IDENTIFICATION NUMBERS & OTHER ENTITY IDENTIFIERS
Rule proposes an “other entity identifier” (OEID) for entities
that are not health plans, health care providers, or individuals,
but that need to be identified in standard transactions.
Rule establishes a unique “health plan identifier” (HPID) for
use with electronic health care transactions.
• Health plans (except small health plans) are required to obtain
HPIDs by Nov. 5, 2014.
• Small health plans are required to obtain HPIDs by Nov. 5, 2015.
• All covered entities are required to use HPIDs in the standard
transaction by Nov. 7, 2016.
31
ADMINISTRATIVE SIMPLIFICATION
HIPAA-REQUIRED CERTIFICATIONS
Health plans must certify compliance with
HIPAA-standardized transactions by
December 31, 2015
• Health care claims or equivalent encounter information
• Enrollment and disenrollment in a health plan
• Health plan premium payments
• Health claims attachments
• Referral certification
• Authorizations
32
ADMINISTRATIVE SIMPLIFICATION
HIPAA-REQUIRED CERTIFICATIONS
Penalties for Noncompliance with Information
Technology Certification Requirements
• Penalty = $1 [x] total of covered lives [x] number of days of
noncompliance
• Begins at certification deadline and continues until certification
is complete
• Penalties are subject to annual caps of $20 per covered life or,
in the event of misrepresentation when certifying compliance,
$40 per covered life.
33
QUESTIONS?
PARTICIPANT RESOURCES
PARTICIPANT RESOURCES
IRS
DOL
States
EMPLOYEE MISCLASSIFICATION
ASSISTANCE
Distinguishing Employees & Independent
Contractors
http://www.irs.gov/Businesses/Small-Businesses-&Self-Employed/Independent-Contractor-SelfEmployed-or-Employee
Voluntary Classification Settlement
Program (VCSP)
http://www.irs.gov/Businesses/Small-Businesses-&Self-Employed/Voluntary-Classification-SettlementProgram
Advance Determinations & Form SS-8
http://www.irs.gov/uac/Form-SS-8,-Determination-ofWorker-Status-for-Purposes-of-Federal-EmploymentTaxes-and-Income-Tax-Withholding
Independent Contractor Standards
http://www.dol.gov/elaws/esa/flsa/docs/contractors.as
p
Misclassification Initiative of the Wage &
Hour Division (WHD)
http://www.dol.gov/whd/workers/misclassification/
Identifying Contractors under the Fair
Labor Standards Act (FLSA)
http://www.dol.gov/whd/workers/misclassification/
DOL Guide to State Labor Offices
http://www.dol.gov/whd/contacts/state_of.htm#AZ
American Institute of CPAs – Guide to
Departments of Revenue (link to state
revenue departments)
http://www.aicpa.org/Research/ExternalLinks/Pages/Taxe
sStatesDepartmentsofRevenue.aspx
PARTICIPANT RESOURCES
HIPAA
GENERAL HIPAA COMPLIANCE
Full-text version of the 2013 Rulemaking:
www.gpo.gov/fdsys/pkg/FR-2013-01-25/pdf/2013-01073.pdf
Sample revised contract language for business associate agreements:
www.hhs.gov/ocr/privacy/hipaa/understanding/coveredentities/contractprov.html
HITECH
Full-text version of HITECH:
www.hhs.gov/ocr/privacy/hipaa/understanding/coveredentities/hitechact.pdf
GINA
Full-text version of GINA:
www.govtrack.us/congress/bills/110/hr493/text
HHS
HHS fact sheets and compliance Q&As:
www.hhs.gov/ocr/privacy/hipaa/understanding/coveredentities/index.html
PARTICIPANT RESOURCES
HHS/CMS
HEALTH AND HUMAN SERVICES
CENTERS FOR MEDICARE
&
MEDICAID
Health Plan Identifier
http://www.cms.gov/Regulations-and-Guidance/HIPAA-Administrative-Simplification/AffordableCare-Act/Health-Plan-Identifier.html
Affordable Care Act
http://www.cms.gov/Regulations-and-Guidance/HIPAA-Administrative-Simplification/AffordableCare-Act/index.html
Medicare
http://www.cms.gov/Medicare/Medicare.html
Medicaid/CHIP
http://www.cms.gov/Medicare/Medicare.html
Health Insurance Marketplaces (exchange regulations)
http://www.cms.gov/CCIIO/Programs-and-Initiatives/Health-Insurance-Marketplaces/index.html
PARTICIPANT RESOURCES
HHS/OCR
HEALTH AND HUMAN SERVICES
OFFICE FOR CIVIL RIGHTS
Health Information Privacy Homepage
http://www.hhs.gov/ocr/privacy/
Understanding HIPAA
http://www.hhs.gov/ocr/privacy/hipaa/understanding/index.html
HIPAA’s privacy Rule
http://www.hhs.gov/ocr/privacy/hipaa/administrative/privacyrule/index.html
HIPAA’s Security Rule
http://www.hhs.gov/ocr/privacy/hipaa/administrative/securityrule/index.html
HIPAA’s Enforcement Rule
http://www.hhs.gov/ocr/privacy/hipaa/enforcement/index.html
HIPAA’s Breach Notification
http://www.hhs.gov/ocr/privacy/hipaa/administrative/breachnotificationrule/index.html
DEPARTMENT OF THE TREASURY
PARTICIPANT RESOURCES
INTERNAL REVENUE SERVICE
EMPLOYER PLANS UNIT
Affordable Care Act Tax Provisions
IRS
http://www.irs.gov/uac/Affordable-Care-Act-Tax-Provisions-Home
ACA Q&As
http://www.irs.gov/uac/Newsroom/Affordable-Care-Act-Tax-Provisions-Questions-and-Answers
ACA for Employers
http://www.irs.gov/uac/Affordable-Care-Act-Tax-Provisions-for-Employers
Employer Plans Division
http://www.irs.gov/Retirement-Plans/Plan-Sponsor
Wages & Withholdings
http://www.irs.gov/Individuals/Withholding-Compliance-Questions-&-Answers
Assessing Independent Contractor Classifications
http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Independent-Contractor-Self-Employed-or-Employee
Fringe Benefits
http://www.irs.gov/uac/Publication-15-B,-Employer%27s-Tax-Guide-to-Fringe-Benefits
Account-based Plans (HSAs, MSAs, FSAs, HRAs)
http://www.irs.gov/publications/p969/index.html
PARTICIPANT RESOURCES
DOL/EBSA
UNITED STATES DEPARTMENT OF LABOR
EMPLOYEE BENEFITS SECURITY ADMIN.
EBSA Home
http://www.dol.gov/ebsa/compliance_assistance.html
Employer Health Benefits Advisor
http://www.dol.gov/elaws/ebsa/health/employer/index.asp
ERISA
http://www.law.cornell.edu/uscode/text/29/chapter-18
Affordable Care Act
http://www.dol.gov/ebsa/healthreform/
COBRA
http://www.dol.gov/ebsa/COBRA.html
HIPAA Compliance Assistance Guide for Employers
http://www.dol.gov/ebsa/publications/CAG.html
GINA Fact Sheet
http://www.dol.gov/ebsa/newsroom/fsGINA.html
MHPAEA Fact Sheet
http://www.dol.gov/ebsa/newsroom/fsmhpaea.html
CHIP Fact Sheet
http://www.dol.gov/ebsa/newsroom/fschip.html
MEWA – Guide to State and Federal Regulations
http://www.dol.gov/ebsa/publications/mewas.html
ERISA Fiduciary Responsibilities
http://www.dol.gov/ebsa/publications/fiduciaryresponsibility.html
PARTICIPANT RESOURCES
DOL/WHD
UNITED STATES DEPARTMENT OF LABOR
WAGE
&
HOUR DIVISION
Wages/FLSA
http://www.dol.gov/whd/flsa/index.htm
FMLA/Newborns & Mothers
http://www.dol.gov/whd/fmla/index.htm
Child Labor
http://www.dol.gov/whd/childlabor.htm
Government Contracts
http://www.dol.gov/whd/govcontracts/index.htm
Immigration
http://www.dol.gov/whd/immigration/index.htm
Agricultural Employment
http://www.dol.gov/whd/ag/index.htm
Special Employment
http://www.dol.gov/whd/specialemployment/index.htm
Polygraph Protection Act
http://www.dol.gov/whd/polygraph/index.htm