By: Erin M. Hussey, Esq.
In our previous blog post, The Final AHP Rules Take a Hard Hit, we discussed the court decision that vacated (1) the bona fide provisions (including the provisions about a substantial business purpose, control, and the expanded commonality of interest requirements), and (2) the working owner provisions from the Final Rule on Association Health Plans (“AHPs”). The court remanded their decision to the Department of Labor (“DOL”) to determine how this ruling would affect the rest of the Final Rule given the severability clause. The DOL has provided an initial response via Question and Answers (“Q&As”). Those DOL Q&As detail the following:
“The Department disagrees with the District Court’s ruling and is considering all available options in consultation with the Department of Justice including the possibility of appealing the District Court’s decision and the possibility of requesting that the District Court stay its decision pending an appeal. At this time, we have not reached a decision on how to proceed.”
As such, without any action from the DOL, it appears the above-noted bona-fide and working owner provisions remain inoperative. However, the House and Senate have taken matters into their own hands. On April 11th, Sen. Mike Enzi (R-WY) and Lamar Alexander (R-TN) introduced a bill in order to protect the AHP Final Rule (S. 1170). The text of the bill is not available yet but will be made available here: https://www.govtrack.us/congress/bills/116/s1170. Sen. Enzi noted the following in his statement on the legislation:
“I rise to introduce the Association Health Plans Act of 2019 . . . My bill will simply codify the Labor Department's final rule to provide certainty for current enrollees and to ensure the pathway remains available for new association health plans to form.”
The following day, on April 12th, U.S. Representative Tim Walberg (MI-07), joined by Rep. Michael C. Burgess, M.D. (TX-26) and Rep. Virginia Foxx (NC-05), introduced the Association Health Plans Act of 2019 (H.R. 2294). The text of that bill is not available yet but will be made available here: https://www.congress.gov/bill/116th-congress/house-bill/2294.
While it is unlikely these bills will get bipartisan support, this legislation will be something to keep in mind while we await the ultimate outcome of the AHP Final Rule. If you need help understanding AHP's or self-funded health plans please contact us, today!
By: Philip Qualo, J.D.
On March 14, 2019, the U.S. Department of Labor (“DOL”) released an Opinion Letter advising that an employer may not delay designating a leave of absence, paid or unpaid, as a leave under the Family and Medical Leave Act ("FMLA”) (if the leave qualifies as an FMLA leave). In addition, this Opinion Letter details that an employer may not permit employees to extend FMLA leave beyond the 12-weeks (or 26 weeks for military caregiver leave) granted under the FMLA.
Under the FMLA, employees of covered employers are entitled to up to 12 weeks of unpaid leave with job protection benefits in the event of certain family and medical situations. The FMLA also permits eligible employees to take up to 26 weeks of leave to care for a covered service member with a serious illness or injury. It is the employer’s responsibility under the FMLA to designate leave as qualifying leave for FMLA purposes.
Prior to the release of the Opinion, many employers permitted employees to delay FMLA designation in specific situations. For example, in order to allow for a full 12-week FMLA leave for a new mother and her newborn to bond, employers would usually allow expectant mothers who needed to commence leave prior to the delivery date the ability to use accrued Personal Time Off (“PTO”) or sick pay until the delivery date. For example, the FMLA designation would begin onthe date of birth instead of the date the mother went on leave prior to delivery. Many employers were under the impression FMLA designation was a matter of mutual agreement between an employer and employee as opposed to a matter of law.
The Opinion Letter specifically provides that employers are prohibited from delaying the designation of FMLA-qualifying leave as FMLA leave. The Opinion Letter also notes that neither the employee nor employer can decline FMLA protection for FMLA qualifying leave once the employee has communicated a need to take leave for an FMLA-qualifying reason. Thus, once the employer determines that the leave request is for a FMLA-qualifying leave, the leave is FMLA-protected and is counted towards the employee’s 12-week (or 26-week) FMLA leave entitlement. The Opinion Letter advises that once the employer determines the leave is FMLA-qualifying leave, the employer must provide notice of the determination to the employee within five business days. The employer does not have the option to delay this determination once the employer has the information to make such a determination.
The Opinion letter further noted that an employer is prohibited from designating more than 12 weeks of leave (26 weeks in the case of military caregiver leave) as FMLA leave. The DOL notes that an employer can still honor any family and medical leave program it offers outside of the FMLA requirements, even if the offered leave program provides greater leave benefits than that offered under the FMLA. However, any employer-provided leave is separate from the FMLA leave and cannot expand an employee’s FMLA-designated leave beyond 12 (or 26) weeks. If the employer wishes to be generous and extend leave for an employee after FMLA leave exhausts, it should specify in its plan document and employee handbook that any employer-provided leave will not run concurrently with FMLA and therefore once FMLA exhausts, an employer-provided leave can be offered thereafter. An employer should be careful when it comes to continuation of coverage during an employer-provided leave, and if coverage is offered during such a leave, it should be outlined in the plan document.
Employers subject to the FMLA should review their practices, policies, and employee communications regarding FMLA-leave designation and to ensure they are consistent with the guidance provided by the DOL in the Opinion Letter. Specifically, employers should be providing notice of determination within five days of making a FMLA-leave designation, and should not designate more than 12 (or 26) weeks as FMLA-qualifying leave, even if the employee requests to have more than 12 (or 26) weeks designated as FMLA leave or to have an FMLA-qualifying leave treated as non-FMLA leave. Compliance with FMLA and the Opinion Letter is especially important employers who sponsor self-funded health plans as incorrectly designating or extending FMLA for employees could run afoul of the plan document’s continuation of coverage provisions and create issues with stop-loss reimbursement.
The Occupational Safety and Health Administration (OSHA) released a memorandum last month clarifying the agency’s position on post-incident drug testing under 29 C.F.R. § 1904.35(b)(1)(iv). Although OSHA requirements are generally set by statute, standards and regulations, memorandums from the agency are helpful as they explain these requirements and how they apply to particular circumstances.
On May 12, 2016, OSHA published a final rule that, among other things, amended 29 C.F.R. § 1904.35 to add a provision prohibiting employers from retaliating against employees for reporting work-related injuries or illnesses. In the preamble to the final rule and post-promulgation interpretive documents, OSHA discussed how the final rule could apply to action taken under workplace safety incentive programs and post-incident drug testing policies. Specifically, OSHA’s guidance cautioned employers against administering blanket post-accident drug tests in situations when drug use likely did not cause an injury. Without further clarification by OSHA, the final rule left many employers confused regarding their own post-incident drug testing policies and whether enforcing such a requirement would be considered retaliatory under the new rules.
In the memorandum issued by the agency on October 11, 2018, OSHA clarified its position on post-accident drug testing and confirmed that such policies are not prohibited under applicable regulations. The agency concluded that most employers that conduct post-incident drug testing likely do so to promote workplace safety and health. The agency further elaborated their position by noting that action taken under a post-incident drug-testing policy would only violate the law if an employer conducted the drug test to penalize an employee for reporting a work-related injury or illness rather than for the legitimate purpose of promoting workplace safety and health.
The key takeaway from this guidance is that most workplace drug-testing programs are permissible, including:
Furthermore, OSHA noted that drug testing that is conducted to evaluate the root cause of a workplace incident that harmed or could have harmed employees is allowed if the employer tests all workers who could have contributed to the incident, rather than just the employees who reported injuries.
Since the final Association Health Plan (AHP) rules were issued in June, many states have opposed them arguing they would create adverse selection. The argument is that healthy individuals would join AHPs as a cheaper option, because they do not have to cover certain benefits such as essential health benefits (EHBs), while unhealthier individuals would join the individual and small group markets for more robust coverage. As a result, the more people that move from the individual and small group markets, in order to join AHPs, will cause an increase in premiums for those markets making it less affordable for unhealthy individuals who stay on them. In addition, Massachusetts Attorney General Maura Healey argues that the new rules are unlawful as they will create deception, fraud and mismanagement.
The final AHP rules have also left states with more questions than answers. As a result, states have recently been taking their own actions with the continued lack of guidance from the U.S. Department of Labor (DOL). For example, Michael Pieciak, Vermont Commissioner of the Department of Financial Regulation, issued an emergency regulation on August 1st stating, among other things, that fully-insured AHPs must offer EHBs. Additionally, on August 2nd Jessica Altman, the Pennsylvania Insurance Commissioner, sent a letter to the secretaries at the DOL and Health and Human Services (HHS) stating that AHPs must comply with ACA individual and small group market rules and ACA benefits and protections. This is in stark contrast to the AHP final rules which detail that an employer member who is considered a small employer would be able to avoid the small group market rules, such as covering EHBs, by joining an AHP that would constitute as a large employer or by joining a self-funded AHP. The final AHP rules attracted small employers since they would have the opportunity to offer large group market health coverage to their employees, but some states could make it difficult to do so.
With the final AHP rules becoming effective on August 20th, it is expected that states will continue to take matters into their own hands without further guidance from the DOL. As states continue to challenge the ability for AHPs to operate under the new rules, it is likely that lawsuits will be brought by business groups and individuals who seek to operate an AHP under the new rules.
By: Jen McCormick, Esq.
On January 5, 2018, the Department of Labor (DOL) responded with a proposed regulation which would extend the circumstances in which an association may function as an “employer” under ERISA, and would alter the way in which it would be regulated. The proposed regulations make two important modifications: (1) create a unique dual status for working owners and (2) modifies the interpretation of the commonality of interest requirements. The “dual status” requirement would permit a working owner or sole proprietor to function as both the employer for purposes of joining the association and as the employee for purposes of being covered by the plan. The “commonality of interest” requirement would allow formation of an association for the purpose of offering health insurance. The rule does not impose prohibitions on forming new associations (or specify size limitations), but it does provide formal organizational requirements for associations. While it may seem this rule will not have a major impact on self-funding, these two changes will expand the pool of employers who may be eligible to create, join or establish a self-funded. This could create new opportunities.