With the US election less than one week away, what are the legal implications of a Harris-Walz administration versus a Trump-Vance administration on reproductive rights? In this Q&A, Sarah Raaii explores how the election’s outcome could impact how plan sponsors and employers address reproductive care, including fertility treatments like in vitro fertilization.
With the US election one week away, what are the legal implications of a Harris-Walz administration versus a Trump-Vance administration regarding gender-affirming care? In this Q&A, Greg Fosheim, Sarah Raaii, and Alden Bianchi discuss how the election’s outcome could affect clients in the employee benefits and healthcare spaces.
In a recent article in Managed Healthcare Executive, Peter Wehrwein examines the trend of self-funding of group health benefits by smaller employers who used to depend mainly or entirely on fully insured programs.
The shift to self-funding, the article explains, is grounded in the Employee Retirement Income Security (ERISA), which exempts self-funded plans from state health insurance mandates, and in the Affordable Care Act, which strictly regulates small group and individual health insurance policies. Wehrwein presents the issues from the perspective of state and federal policymakers and regulators, which the article characterizes as “worrisome.” But what of the perspective of small employers?
Healthcare costs are rising at rates that are well in excess of the growth of real gross domestic product. This appears unsustainable, but these costs nevertheless keep climbing inexorably. For employers, the pressure to do something is compelling.
The article claims that self-funding is more expensive than fully insured coverage. But compared to what fully insured coverage, exactly? By definition, many small employers can only purchase coverage in the small-group market. This is, however, the very market these same employers are fleeing, and they are doing so precisely because it is too expensive. Indeed, the prohibitive cost of small-group market coverage is why individual coverage Health Reimbursement Arrangements have failed to gain widespread acceptance, particularly in large urban environments.
Wehrwein correctly identifies two options for self-funding: group medical captives and level funding, both of which he views as problematic. Small employers appear to disagree, however, based on their actions. In their view, these options instead represent viable options in their quest to provide competitive group health coverage to their employees. The two options for self-funding identified in the article are fundamentally different solutions that are appropriate for different cohorts of small employers.
Group Medical Captives (50 – 200 Covered Lives)
The term “captive” insurer traditionally referred to a “single parent” captive, which is a subsidiary of an operating company/parent that insures the risks of the operating company/parent and in some instances its affiliates. Historically, single-parent captives insured property and casualty risks and workers’ compensation, but they have more recently been pressed into service to cover employee welfare plan risks.
A group captive allows a group of unrelated employers to form a collective insurance company to manage some portions of their risks. Where, as is the case here, the risk is most often medical stop-loss coverage, the arrangement is referred to colloquially as a “medical stop-loss group captive.” For an extended discussion of medical stop-loss group captive funding arrangements and their accompanying legal and regulatory issues, please see our Special Report.
There is some debate over what size employer might most benefit from participation in a medical stop-loss group captive. While the conventional wisdom is that 200 covered lives is the sweet spot, credible estimates go as low as 50 covered lives. Whatever the appropriate number, medical stop-loss captives can in the right circumstances offer substantial savings when compared to fully insured coverage. [...]
Continue Reading
Section 1557 of the Affordable Care Act (ACA) prohibits discrimination on the basis of race, color, national origin, sex, age or disability, or any combination thereof, in a health program or activity, any part of which is receiving federal financial assistance. On May 6, 2024, the US Department of Health and Human Services Office for Civil Rights (OCR) issued final regulations under Section 1557. For an overview of these regulations, please see our post available here.
In a recent post, we reported that the final regulations unambiguously prohibit categorical coverage exclusions or limitations for health services related to gender transition or other gender-affirming care. This, we predicted, is likely to result in a showdown involving the two dozen or so state laws that, among other things, limit gender-affirming care access. In this post, we take up the final regulations’ treatment of pregnancy and abortion. While a similar showdown over abortion is possible, it is (for the reasons set out below) less likely.
Rather than establish protected characteristics, Section 1557 instead cross-references four other civil rights statutes to define what discrimination is prohibited. These include Title VI of the Civil Rights Act of 1964, Title IX of the Education Amendments of 1972 (Title IX), the Age Discrimination Act of 1975 and Section 504 of the Rehabilitation Act. Notably, three of the cross-references (including Title IX) also contain the abbreviation “et seq.,” which captures the balance of the provisions constituting a given law.
An ongoing source of friction involving ACA Section 1557 is the cross-reference to the “religious exemption” in Title IX. This exemption permits conduct by a religiously controlled educational institution that might otherwise violate the statute’s requirements when the institution acts for a religious reason and compliance with the statute would conflict with a religious tenet. A subsequent amendment clarified that Title IX must be construed to neither require nor prohibit any person or entity to provide abortion-related benefits or services. This is referred to as “abortion neutrality.” The final regulations do not incorporate Title IX’s religious exemption or its abortion neutrality provision.
The final regulations define discrimination “on the basis of sex” to include pregnancy or related conditions. How this squares with abortion is addressed at some length in the preamble and the regulation itself:
On April 26, 2024, the US Department of Health and Human Services (HHS) issued a final rule (press release, fact sheet, FAQs) reinterpreting Section 1557 of the Affordable Care Act, which prohibits discrimination on the basis of race, color, national origin, sex, age or disability, or any combination thereof, in a health program or activity, any part of which is receiving federal financial assistance. The rule, which has staggered effectivity dates starting on July 5, 2024, largely finalizes the policies as proposed in HHS’s August 2022 Notice of Proposed Rulemaking, including clarifying protections for gender-affirming care, as provided by group health plans, carriers and third-party administrators under administrative-services-only (ASO) arrangements.
Section 1557 of the Affordable Care Act (ACA) prohibits discrimination on the basis of race, color, national origin, sex, age or disability, or any combination thereof, in a health program or activity, any part of which is receiving federal financial assistance.
On May 6, 2024, the US Department of Health and Human Services Office for Civil Rights (OCR) and the Centers for Medicare & Medicaid Services published final regulations (final regulations) implementing Section 1557 (Our summary and overview of the final regulations is available here.) Entities that are subject to Section 1557 (covered entities) include hospitals, health clinics, health insurance issuers, state Medicaid agencies and community health centers. While group health plans are not themselves covered entities unless they receive federal financial assistance (e.g., certain Medicare Part D programs and Employer Group Waiver Plans), carriers that provide administrative services to group health plans may themselves be covered entities if they receive federal financial assistance (e.g., by selling Medicare Advantage products).
Reversing prior law, the final regulations unambiguously prohibit categorical coverage exclusions or limitations for health services related to gender transition or other gender-affirming care. OCR finds support for this change in the US Supreme Court’s decision in Bostock v. Clayton County, which held that Title VII of the Equal Employment Act prohibits an employer from discriminating against an individual on the basis of sexual orientation. But prohibiting categorical coverage exclusions is not the same thing as requiring covered entities to provide access to gender-affirming care under all circumstances. There are limits; covered entities must not:
[D]eny or limit services based on gender identity or sex assigned at birth, adopt any policy of treating individuals differently on the basis of sex, including to the extent it prevents an individual from engaging in a health program or activity consistent with the individual’s gender identity, or deny or limit services sought for gender transition or other gender-affirming care based on sex assigned at birth or gender identity.
The provision would outlaw blanket bans on both gender-affirming care itself and on specific gender-affirming procedures (like facial feminization surgery). But it would also prohibit plans or carriers that qualify as covered entities from covering breast reconstruction for cancer treatment, or hormones to treat post-menopause symptoms, without also covering these procedures to treat gender dysphoria.
The final regulations do not interfere with individualized clinical judgment about the appropriate course of care for a patient. (The preamble makes further claims that OCR has a general practice of deferring to a clinician’s judgment about whether a particular service is medically appropriate for an individual, or whether the clinician has the appropriate expertise to provide care.) A provider’s belief that gender transition or other gender-affirming care can never be beneficial, or its compliance with a state or local law that reflects a similar judgment, is not a sufficient basis for a judgment that a health service is never clinically appropriate, however.
The 2016 final Section 1557 regulations were successfully challenged in Franciscan Alliance v. Burwell (N.D. [...]
Continue Reading
In a recent On the Subject (available here), we reported on the impact of the final rule (final rule) interpreting Section 1557 of the Affordable Care Act (ACA) on self-funded group health plans that contract with licensed health insurance issuers to provide administrative services. That article considered instances in which neither the plan sponsor nor the group health plan was a covered entity for Section 1557 purposes. This post starts by assuming that either the plan sponsor or the group health plan is or at least may be a covered entity.
Section 1557 prohibits discrimination on the basis of race, color, national origin, sex, age or disability, or any combination thereof, in a health program or activity, any part of which is receiving federal financial assistance. The final rule makes clear an employer’s employment practices, including the sponsorship of a group health plan, are not generally subject to the rule. Thus, an employer does not become subject to Section 1557 by simply offering a group health plan, and a group health plan is not a covered entity where it does not receive federal financial assistance. The preamble cites examples of plans that may (or may not) receive federal financial assistance: Employer Group Waiver Plans (EGWPs), Medicare Advantage plans and Medicare Part D plans.
Plan Sponsor/Covered Entity
There are clearly instances in which a plan sponsor is itself a covered entity for Section 1557 purposes. This is the case wherever the plan sponsor is itself principally engaged in providing or administering health programs and activities (e.g., a hospital that accepts Medicare). Where that is the case, all the entities’ operations are also subject to Section 1557. The reference to “all” an entities’ operations usually conjures up images of separate legal entities under common control (e.g., a subsidiary or affiliate of the plan sponsor). But is the covered entity’s group health plan part of the covered entity’s operations? (See, e.g., T.S. v. Heart of CarDon, LLC, holding that Section 1557 applies to all the activities of a covered entity plan sponsor, including its group health plan, regardless of whether the group health plan itself received federal financial assistance.) In the context of the final rule, we are not sure that it matters. The plan sponsor is itself a covered entity that is subject to, and will need to comply with, Section 1557 irrespective of the status of the plan.
Part D and EGWPs
According to the preamble to the final rule, EGWPs, Medicare Advantage plans and Part D plans are covered entities where the plan receives federal financial assistance. EGWPs are types of Medicare Advantage plans or Part D prescription drug plans that qualify for waivers of certain Medicare regulations. Prior to the 2003 Medicare Modernization Act, employer-sponsored Part D coverage was the primary source of coverage for retirees. EGWPs, which came later, provided a more flexible alternative for employers seeking the benefits that could be captured through waivers. Whether the EGWP, Medicare Advantage plan or [...]
Continue Reading
If you employ part-time workers and/or engage independent contractors, sit up and take note: 2024 brings significant changes to how you must manage your workforce. The US Department of Labor’s (DOL) revised Independent Contractor Rule introduces additional uncertainty as to how the agency and perhaps courts will decide independent contractor misclassification disputes. Provisions of the SECURE 2.0 Act, meanwhile, will simultaneously impose a new mandate for employers to provide part-time workers with expanded access to retirement benefits.
In this webinar, McDermott Partners Brian J. Tiemann and Joseph K. Mulherin, along with Tom Robertson of Graystone Consulting, discussed the steps employers must take to ensure compliance with these new regulations taking effect in 2024.
Topics included:
While former President Donald Trump has threatened to repeal the Affordable Care Act (ACA) if he wins reelection, the landmark healthcare law would be increasingly difficult to dismantle. In this CNN article, McDermott+Consulting’s Rodney Whitlock says the country is “as close as we’ve been to meeting the aspirational goals of 2010 for the ACA.”
The enactment of the Affordable Care Act in 2010 led to a sharp increase in employers self-funding their group health insurance plans, with the market tripling in size in the decade that followed. While larger employers can self-fund their group medical coverage in a relatively efficient manner, it does not work well for smaller employers. As year-over-year spending on healthcare in the United States outpaces growth in real gross domestic product by wide margins, employers of all sizes continue to seek to make group health insurance coverage available to their employees at a reasonable cost. Group captive-funded medical stop-loss insurance offers a way for smaller employers to obtain the full benefit of self-funding. This Special Report explains what group medical stop-loss captives are and how they are structured and regulated.
Subscribe
