Frequently Asked Questions

Generally, an employee’s election made through a cafeteria plan is irrevocable once the plan year begins, unless the individual experiences an Internal Revenue Code Section 125 qualifying event that allows them to change their elections (assuming the Section 125 plan document also recognizes the event). But Section 125 (i.e., the cafeteria plan regulations) does not prohibit election changes before the period of coverage begins. This means the employer may allow election changes before the plan year begins but is not required to do so.

It is ultimately the employer’s choice whether to allow any changes. If the employer allows changes, an employee does not need any particular reason to make a change. Note that cafeteria plan terms must be applied uniformly to all participants, so any exceptions to a plan requirement that elections be made during the open enrollment period must be applied equally. Despite the added administrative difficulty, there are certain employee circumstances that may persuade an employer to allow post-open enrollment/pre-plan year election changes, such as if an employee has a shift in health insurance needs or was unavailable during the open enrollment window. Many employers will end open enrollment with enough time before the plan year begins to fix any mistakes and conduct any preliminary discrimination testing.

Under Section 125, employees make annual elections under a cafeteria plan that are irrevocable during the plan year. However, regulations allow midyear changes to those elections when an employee or their dependents experience specific qualifying events. One of these events occurs when an employee, their spouse, or their dependent experience a change in status, such as a change in residence. However, there are limits to the change in residence qualifying event.

The change in residence becomes a qualifying event when that change affects the employee’s or dependent’s eligibility for coverage. Unless the relocation makes the moving individual ineligible or newly eligible under the plan, the move would not be considered a change in status qualifying event.

On the other hand, there would likely be a qualifying event if the relocation resulted in the employee or dependent moving outside of a network that would provide service. For example, if the plan were an HMO and the employee or dependent moved out of the HMO service area and therefore couldn't receive any coverage where they lived, then that move would be a qualifying event. However, if the employee or dependent is eligible under the plan before and after the move (which is often the case for PPO plans or HDHPs with a national network), then a change in residence is not a qualifying event.

It is important to understand these limits. Employers that allow midyear changes without a qualifying event risk disqualifying the entire plan. If the plan is disqualified, then neither the employer nor employees can pay for their coverage on a pretax basis.

That said, there could be other qualifying events that would apply, given the circumstances. For example, a cafeteria plan may permit a qualifying event for a loss of coverage under any group health coverage sponsored by a governmental or educational institution, including a foreign government group health plan. If the relocating dependent has coverage through their government and will lose it by virtue of moving to the US, then that could make the move a qualifying event.

There are a few other points to keep in mind. Changes in residence and the loss of coverage under a governmental health plan are permissible qualifying events, which means that employers can choose whether to include them in their plan. Additionally, these events do not apply to health FSAs, so the employee could not change their health FSA election on account of either of those qualifying events.

With any wellness program, the compliance considerations and required disclosures vary depending upon the specific design, activities, and rewards. Numerous benefits compliance laws can be implicated, as explained at a high-level below.

ERISA, COBRA, and Other Group Health Plan Laws

First, some wellness programs provide medical care (e.g., a medical exam); others simply provide general health and fitness information (e.g., a nutritional webinar). The determination of whether a program provides medical care is normally based upon whether it involves individualized diagnosis and treatment as opposed to broad-based education and general recommendations.

If a wellness program provides medical care, it generally would be considered a group health plan and thus required to comply with group health plan laws, including the ACA, ERISA, COBRA, and HIPAA. In such case, the employer would typically offer the wellness program only to those participating in the major medical plan because it would be difficult for the wellness program to satisfy these laws independently. Among other items, the ERISA plan documents and COBRA materials would need to be updated to incorporate the wellness program, and a HIPAA business associate agreement should be entered with the wellness vendor.

HIPAA, ADA, and GINA Wellness Plan Rules

Second, specific wellness plan nondiscrimination rules may be implicated.

HIPAA’s health status nondiscrimination rules classify wellness programs as “participatory” or “health contingent”. Participatory programs provide a reward to participants who complete some wellness-based health activity that does not require satisfying a health standard. Participatory standards may involve completing a health risk assessment or receiving preventive care. Participatory programs must be made available to all similarly situated individuals.

Health contingent wellness programs require an individual to satisfy a standard related to a health factor to obtain a reward. Health contingent programs can be either activity-based, requiring completion of a physical activity (e.g., walking) or outcome-based, requiring attainment of a particular outcome (e.g., not smoking, achieving certain blood pressure level). HIPAA requires such programs to be reasonably designed and available to all similarly situated employees at least once per year, with the reward amount not more than 30% (or 50% if tobacco-related) of the group health premium. Additionally, and importantly, notice of a reasonable alternative standard (i.e., another way to achieve the reward) must be included in all materials, including enrollment materials, involving the health contingent wellness program. HHS has provided sample language for this purpose.

The ADA wellness rules apply if the wellness program involves a medical exam (e.g., biometric screening) or disability-related inquiries (e.g., as part of a health risk assessment). The ADA rules require voluntary participation, confidentiality, and reasonable design and accommodation (so those with a disability can participate). Notice must also be provided explaining how any medical information is collected and used. The EEOC, which enforces the ADA, has provided a sample notice.

The Genetic Information Nondiscrimination Act (GINA) comes into play if the wellness program involves the collection of genetic information, such as family medical history (including that of a spouse), as part of a health risk assessment. GINA requires, among other items, specific written authorization from a program participant using a form that describes the type of genetic information that will be collected, the purposes for which it will be used, and the restrictions that will apply.

A concern with any wellness program that implicates the ADA or GINA is the lack of any current guidance regarding permitted reward incentive limits. (Prior EEOC rules were withdrawn in 2019 after a legal challenge and never replaced.) Employers should consult with legal counsel for guidance on this issue.

Internal Revenue Code

Third, employers should consider potential tax implications when providing wellness program rewards. Generally, employer contributions towards the group medical premium or to an HSA, HRA or FSA (within permitted limits) would be nontaxable. However, cash or cash equivalent rewards (e.g., gift cards) are taxable, and the employer should make sure these amounts are properly reported.

ACA Employer Mandate

Additionally, an applicable large employer subject to the ACA employer mandate would need to consider the effect of any premium discount on the determination of whether the coverage offered to a full-time employee is affordable. Generally, employer wellness program discounts, except for tobacco-related discounts, are not factored into the employee premium rate for ACA affordability purposes.

Enrollment season is a great time for employers to review their wellness program compliance and ensure any required notices are provided to employees. Given the complexity of laws that can be implicated with any wellness program, it is advisable for employers to engage their legal counsel in the review process.

For further information regarding wellness program compliance, please ask your consultant or broker for copies of our related publications, including our employer guides on Point Solution Programs and the Final HIPAA Wellness Program Rules.

Medicare Part D Creditable Coverage notices must be distributed to all "Part D eligible individuals" who are "enrolled in or seeking to enroll" in the employer's prescription drug plan. The notice is due annually by October 14 and discloses whether the plan’s prescription drug coverage is creditable (i.e., whether, on average, the prescription drug coverage pays benefits at least equal to the benefits available through the Medicare prescription drug benefit).

Part D eligible individuals include those who are enrolled in either Medicare Part A or B and live in the service area of a Part D plan. Notably, individuals who are incarcerated or living abroad are not considered to be residing in the service area of a Part D plan.

Part D eligible individuals must receive the notice if they are enrolled in or seeking to enroll in the plan. While the guidance doesn’t specify when an individual is "seeking to enroll" in a plan, it’s likely that CMS meant for employers to include participants who are eligible for the employer’s prescription drug coverage (even if they’re not currently enrolled).

Given the concepts above, it’s widely considered a best practice for employers to distribute the notice to all plan-eligible participants. Since employers don’t always know when an employee, spouse, or dependent is enrolled in Medicare for reasons other than age (i.e., disability or end-stage renal disease), distributing the notice to all eligible participants will ensure that the employer meets their compliance obligation to provide the notice to all Part D eligible individuals.

To improve transparency in the group health plan context, the Consolidated Appropriations Act, 2021 (CAA, 2021) amended ERISA to require the removal of gag clauses in service provider contracts. In addition, employers annually must formally attest to satisfying this requirement, with the first attestation due by the end of 2023.

Specifically, under the CAA, 2021 gag clause prohibition, group health plans and insurers are prohibited from entering into agreements with a healthcare provider, provider network, TPA, or other service provider offering access to a provider network that include:

1. Restrictions on the disclosure of provider-specific cost or quality of care information or data to the plan sponsor, participants, beneficiaries, or enrollees (or those eligible to become participants, beneficiaries, or enrollees of the plan or coverage).
2. Restrictions on electronic access to de-identified claims and encounter information for each participant, beneficiary, or enrollee upon request and consistent with HIPAA, GINA, and ADA privacy regulations.
3. Restrictions on sharing information or data described in (1) and (2) or directing that such information or data be shared with a business associate, consistent with applicable privacy regulations.

Group health plans subject to the prohibition and attestation requirements include, but are not limited to, major medical plans, prescription drug plans, and pharmacy benefit plans. Point solution programs that are group health plans are subject to the requirements unless an exception applies. There are no exceptions for non-federal governmental plans (such as plans sponsored by state and local governments), church plans, or grandfathered or grandmothered plans.

However, the gag clause prohibition and attestation requirements do not apply to short-term limited duration insurance and ACA-excepted benefits, such as limited-scope dental and vision plans, long-term care plans, certain hospital or other fixed indemnity insurance, specific disease or illness insurance, and accident, disability, and workers’ compensation benefits. Additionally, the departments are not enforcing the requirements with respect to health reimbursement arrangements (HRAs) or health flexible spending accounts (Health FSAs).

Group health plans and health insurers must annually submit to CMS an attestation of compliance with the CAA, 2021 gag clause prohibition. The first Gag Clause Prohibition Compliance Attestation (GCPCA) is due no later than December 31, 2023, covering the period beginning December 27, 2020, or the effective date of the applicable group health plan (if later), through the date of attestation. Subsequent attestations, covering the period since the last preceding attestation, are due by December 31 of each year thereafter. Plans and insurers that do not submit their required attestation by the deadlines may be subject to enforcement action.

Contact your NFP consultant for a copy of our CAA Gag Clause Prohibition and Attestation: A Guide for Employers publication. Also, the Benefits Compliance team presented an informative webinar on this topic.

An Individual Coverage Health Reimbursement Arrangement (ICHRA) is the only way an employer may reimburse an employee or directly pay the cost of an employee's individual health insurance policy or Medicare premium on a tax-advantaged basis. To do so outside of an ICHRA, an employer risks an excise penalty of up to $100 per day per employee for an impermissible employer payment plan.

ICHRA Basic Requirements

An employer must meet the following requirements to sponsor an ICHRA:

• No traditional group health plan (that is neither limited to excepted benefits nor account-based) can be offered to the class of employees who are offered the ICHRA.
• Permitted classifications include full-time, part-time, seasonal, hourly, salaried, collectively bargained, nonresident aliens with no US-based income, employees whose primary site of employment is in the same rating area, and employees who have not yet satisfied an ACA-compliant waiting period.
  Note: Classes are determined at the common-law employer level rather than on a controlled group basis (under Code Section 414).
• The minimum class size is 10 for an employer with fewer than 100 employees; a number (rounded down to a whole number) equal to 10% of the total number of employees for an employer with 100 to 200 employees; and 20 for an employer with more than 200 employees.
• The employee must be enrolled in individual health coverage or Medicare (Parts A and B or Part C) and requires annual substantiation generally no later than the first day of the plan year or before the date when the ICHRA coverage begins.
• The ICHRA must be offered on the same terms and conditions to all employees within a class.
• Employees must have the ability to waive coverage under the ICHRA. However, an employer cannot provide a cash incentive if employees opt out.
• An employer must distribute a notice to employees regarding the ICHRA’s benefits. A notice must be provided to eligible employees at least 90 days before the beginning of each plan year or no later than the date an employee is first eligible to participate in the ICHRA. A model notice is available here.
• An ICHRA is subject to ERISA, including the SPD, Form 5500, and plan fiduciary requirements.
• An ICHRA is also subject to COBRA, including the initial COBRA notice and COBRA election notice. Failure to maintain individual medical coverage is not a COBRA qualifying event.

ICHRAs and MSP Rules

Medicare Secondary Payer (MSP) rules generally prohibit employers from offering financial incentives to Medicare-eligible employees to waive or cancel coverage in an employer-sponsored group health plan. As a reminder, age–based MSP rules apply to employers with 20 or more employees, while disability-based MSP rules apply to employers with 100 or more employees.

However, employers subject to the MSP rules may offer ICHRAs to a class of employees without violating the MSP rules as long as all employees in the class are offered the ICHRA on the same terms.

The idea is that if an employer only provided the ICHRA to those employees who are not Medicare-eligible, it could be seen as discriminating against those employees. Second, allowing the ICHRA to reimburse Medicare expenses does not incentivize them to enroll in Medicare if the opportunity to enroll in the ICHRA is available to everyone in the class. Importantly, an employer who is subject to the MSP rules must allow employees in a class that is offered an ICHRA to enroll in either individual or Medicare coverage.

ICHRAs and ACA Employer Mandate

An ICHRA may be used to satisfy an employer’s obligation under the ACA’s employer mandate. An ICHRA is considered minimum essential coverage (MEC) for purposes of Penalty A. It will also satisfy Penalty B if the employee's required contribution after the employer's monthly ICHRA contribution is less than 9.12% (2023) or 8.39% (2024) of the employee's earnings. The employer may use the lowest-cost silver plan available in the worksite rating area based on the employee's age as a safe harbor (rather than each residential area). The difference between the employer's contribution and the premium cost is what would be reported on Line 15 of Forms 1095-C for purposes of affordability.

Additional information can be found in our prior Compliance Corner, July 19, 2022, article. Employers interested in implementing an ICHRA should contact their consultant for additional information.

Forty-four states currently have laws that require the continuation of group health insurance coverage that would otherwise be lost because of the termination of employment, reduction of hours, or other reasons. Many of these laws mirror some or most of the provisions of the federal COBRA law and are for this reason often called “mini-COBRA” laws for short.

Benefits consultants and human resource professionals are generally familiar with the continuation requirements of federal COBRA, but even veteran employee benefits professionals can find it difficult to understand how mini-COBRA laws may or may not apply to their groups and, if so, what their own obligations may be if they do apply.

The key to understanding mini-COBRA laws is the general principle that where a state law and a federal law conflict, the federal law takes precedence. However, state laws do not necessarily conflict with federal law simply because they expand upon its requirements. As an example in the employment context, states may mandate higher minimum wages than federal minimum wage law requires. The minimum wage thresholds differ, but there is no conflict so long as the state’s minimum wage is higher than the federal law requires.

This is why mini-COBRA laws:

1. Often apply only to small employer health coverage: Many mini-COBRA laws apply only to insured plans offered through employers with 19 or fewer employees because employers with 20 or more employees are already subject to federal COBRA.
2. Generally impose their requirements on insurers: ERISA preempts state laws that relate to ERISA employee benefit plans but exempts state laws that regulate insurance from this rule. Thus, insurers rather than employers generally bear the burden of mini-COBRA compliance, and self-insured plans are generally exempt from mini-COBRA laws altogether.
3. May go beyond what federal COBRA requires: Some mini-COBRA laws expand upon the requirements of federal COBRA by extending maximum-duration coverage periods, expanding upon notice requirements, or other means. New York and California, for example, generally require maximum-continuation coverage periods of 36 months after qualifying events for which federal COBRA requires less (e.g., termination of employment or reduction of hours).

Some states (such as New York) may have additional requirements in the event a covered individual no longer qualifies as a dependent. Others, such as Massachusetts and Louisiana, may have very specific provisions for divorced spouses and surviving spouses. Still others may have especially unique requirements, such as Nebraska, which provides special continuation coverage rights to victims of domestic abuse.

Even though insurers largely bear the burden of mini-COBRA compliance, employers have an obligation to plan participants to be familiar with how mini-COBRA laws may apply to the group health insurance offered through the benefit plans they sponsor and to undertake reasonable efforts to ensure that its health insurance carriers are aware of and comply with all applicable mini-COBRA requirements.

Yes, employer-provided group term life insurance (GTLI) is subject to nondiscrimination rules under Section 79 of the Internal Revenue Code. Section 79 allows for the value of up to $50,000 of GTLI coverage on an employee’s life to be excluded from the employee’s gross income. However, certain nondiscrimination requirements must be satisfied in order for all employees to benefit from the $50,000 coverage tax exclusion.

At a high level, the nondiscrimination rules provide that employer-provided GTLI plans cannot discriminate in favor of certain “key employees” with respect to eligibility to participate in the plan or contributions or benefits under the plan. A key employee is defined as an officer with annual compensation in excess of the specified threshold ($200,000 for 2022; $215,000 for 2023), a more-than-5% owner/shareholder, or a more-than-1% owner with compensation in excess of $150,000. Part-time or seasonal employees, full-time employees with fewer than three years of service, and certain employees covered by a collectively bargained agreement may be excluded from testing. Former employees (e.g., retirees) are tested separately from active employees.

GTLI plans that offer all full-time employees the same fixed-dollar or multiple-of-salary benefit will pass the relevant eligibility and benefits nondiscrimination tests (Section 79 provides a safe harbor for these coverage designs). By contrast, GTLI plans that provide benefits exclusively or at a lower cost to key employees, or that provide a higher fixed-dollar or multiple-of-salary benefit to one or more key employees (such as a plan that provides a $200,000 benefit to the company’s CEO but a $100,000 benefit to all other employees), are at risk of being discriminatory. Any GTLI plan that does not cover all benefits-eligible employees at the same fixed-dollar amount or multiple-of-salary formula requires further scrutiny under the nondiscrimination rules.

When a GTLI plan fails a Section 79 nondiscrimination test as to one or more key employees, all key employees lose the benefit of excluding from income tax the value of the first $50,000 of employer-provided coverage. However, non-key employees are not affected by a discriminatory plan design. Employers are encouraged to review the proper taxation of their specific GTLI benefits with their tax advisors.

For further information, please ask your consultant for a copy of our NFP publication, Group Term Life Insurance: A Guide for Employers.

Note the focus of this FAQ is on Medicare coverage for individuals age 65 or older, not those who may be Medicare-eligible due to disability. This addresses the effective dates of Part A (inpatient hospital and skilled nursing facilities) and Part B (physician’s visits, outpatient hospital services, durable medical equipment, etc.); however, it does not cover the effective date of Part D (prescription drug coverage) or Part C (also known as Medicare Advantage).

Generally, Medicare coverage begins on the first day of a given month. The actual effective date of coverage will depend on when the individual signs up relative to their 65th birthday. Part A coverage is retroactive six months from when an individual signs up but no sooner than the month in which they turn 65.

Effective January 1, 2023, the effective date of Part B coverage for individuals enrolling in coverage during either the Initial Enrollment Period (IEP) or the General Enrollment Period (GEP) changed, making coverage effective sooner than in years past. Additional information on this welcome change can be found on the SSA’s Medicare website.

There are three timeframes during which an individual might enroll in Medicare and different effective dates of coverage for each type of enrollment situation.

1. Initial Enrollment Period (IEP): An individual’s initial Medicare effective date is the first day of the month of their 65th birthday. For coverage to begin on this date, an individual must enroll in the three-month period prior to turning 65. If an individual enrolls during the 65th birthday month or any of the three months after, coverage begins on the first day of the month following enrollment. As mentioned above, this was a recent change for 2023; in prior years, if an individual enrolled during the three months following their 65th birthday, Part B coverage may have been delayed two or three months.
2. Special Enrollment Period (SEP): If an individual does not enroll in Medicare during the IEP – most commonly because they are continuing to work and are covered under an employer’s group health plan – they will enroll in Medicare via a SEP. The SEP spans eight months once active group health coverage is lost, although individuals likely want to enroll prior to the end of the SEP. If enrolling during the SEP, coverage will begin on the first day of the month following enrollment; however, in some situations, an individual can choose to have coverage start on the first day of any of the three following months.
3. General Enrollment Period (GEP): If an individual does not enroll during the IEP or SEP, the last opportunity to enroll in Medicare is the GEP. The GEP runs each January 1 through March 31 with coverage beginning the first day of the month following enrollment. Like the IEP, prior to 2023, if an individual enrolled during the GEP, coverage was not effective until July 1 of that year, so this is a welcome change for individuals enrolling during the GEP.

Individuals should always work with a licensed Medicare agent when determining the effective date of coverage for their specific situation to avoid late enrollment penalties. Additional information about Medicare effective dates can be found on Medicare.gov.

Additionally, please register for our upcoming webinar “Medicare Basics for an Aging Workforce” for information on employee rights and employer obligations related to Medicare.

“Point solution” programs are specific services that add value to an employer’s major medical plan or benefits program. Point solution programs are generally provided through third-party vendors. They often target benefit plan enhancements that range from specific condition management to digital solutions and apps to overall benefit program simplification. Some common examples of services provided through point solution programs include fertility, musculoskeletal, developmental disability, and mental and behavioral health.

Whether ERISA (which governs the Form 5500 requirement) or the ACA (which includes the PCOR fee requirement) applies to any particular point solution program depends on whether the program provides medical care. “Medical care” is broadly defined to include amounts paid for the diagnosis, cure, mitigation, treatment or prevention of disease or for the purpose of affecting any structure or function of the body. Although each point solution program should be analyzed on a case-by-case basis, it essentially boils down to whether the program provides individualized diagnosis, treatment or prescription services for an employee (or an employee’s family member, if applicable). If it does, then the program is typically a group health plan and is therefore subject to these and other laws. For more information, please contact your NFP benefits consultant or broker for a copy of the NFP publication, Point Solution Programs: A Guide for Employers.

Point solution programs that provide medical care are subject to ERISA, including the Form 5500 and Summary Annual Report (SAR) reporting requirements. Point solution programs that are integrated or wrapped together with the major medical plan can comply with the Form 5500/SAR requirements by adding the program benefits to the medical plan Form 5500. Non-integrated/non-wrapped plans must file a separate Form 5500 (and they may have to do so without a Schedule A since many vendors take the position that their products are not “insurance products” subject to Schedule A reporting; see the Form 5500 Instructions for more information about filing Form 5500 without Schedule A). For further information about Form 5500/SAR requirements, please contact your NFP benefits consultant or broker for a copy of the NFP publications, Form 5500: A Guide for Employers and Summary Annual Report: A Guide for Employers.

Note that point solution programs that provide significant benefits in the nature of medical care or treatment are likely considered self-insured plans that are subject to the PCOR fee. This is especially relevant for point solution programs that are structured as a reimbursement that is outside of a self-insured medical plan or pairs with a fully insured medical plan. The PCOR fee count for such point solution programs follows the same rule as for HRAs: the employer simply counts one covered life per program, exclusive of spouses, domestic partners or dependents. For further information about PCOR fees, please contact your NFP benefits consultant or broker for a copy of the NFP publication, ACA: A Quick Reference Guide to the PCOR Fee.

To review, the HIPAA privacy rule requires covered entities, which include group health plans and insurers, to enter a written agreement with a plan service provider before sharing protected health information (PHI) with them. PHI is any individually identifiable health information maintained or transmitted in any form or media, whether electronic, paper or oral. The written business associate agreement (BAA) is designed to ensure the plan service provider (i.e., business associate) will appropriately safeguard PHI and only use or disclose PHI for permissible purposes.

Importantly, the HIPAA privacy and security requirements, including the BAA, apply only to health plans and not to all welfare benefit plans. A health plan is an individual or group plan that provides (or pays the cost of) medical care.

Major medical plans, dental and vision plans, health FSAs and HRAs are health plans that must comply with the HIPAA privacy and security rules. There is no exception for governmental, church and retiree health plans.

By contrast, plans providing only certain incidental coverage for nonmedical benefits, such as accident-only, workers' compensation, disability income, or life insurance coverage, are exempt from the HIPAA privacy and security rules. Similarly, stop-loss coverage is typically not health insurance because it does not pay for medical care. Additionally, an ERISA-exempt HSA program is likely not considered to be a health plan subject to HIPAA's privacy and security requirements.

With a fixed indemnity (e.g., hospital indemnity) or specific illness (e.g., cancer insurance) policy, the particular coverage terms must be reviewed. Generally, coverage that pays a flat amount per day for hospitalization or illness without regard to medical services received is not considered to be a health plan. However, policies that provide reimbursement based on the medical care received likely are health plans subject to HIPAA privacy and security rules.

A wellness program included as part of the major medical plan or a stand-alone wellness program providing medical care (e.g., medical testing with individual results) would normally be required to comply with HIPAA's privacy and security requirements. The same would be true for an employee assistance plan that provides mental health coverage (since that is medical care).

Accordingly, employers should review their various benefits carefully and determine which are health plans subject to the HIPAA privacy and security rules. Insurers and health plans that will be disclosing PHI to a plan service provider should enter a BAA with the service provider. Generally, the insurer would enter the BAA for a fully insured plan, and the employer/plan sponsor would enter the BAA on behalf of a self-insured plan.

However, if the benefit plan serviced is not a health plan, then a BAA would not be appropriate because the HIPAA privacy and security rules would not be implicated. Rather, for non-health plans that will be disclosing confidential data to a plan service provider, the parties could consider entering a nondisclosure or confidentiality agreement.

Of course, employers are always advised to consult with their legal counsel for specific advice and guidance regarding any contractual agreements (including BAAs and nondisclosure or confidentiality agreements).

Although COBRA is not a new law, there are still mistakes that employer plan sponsors can make when administering their COBRA offering. Among the possible mistakes is failing to include the required content in the COBRA election notice. As a reminder, the following 14 items must be included in every COBRA election notice:

1. Contact information for the plan, including the plan name and the name, address and telephone number of the entity that administers COBRA on behalf of the plan.
2. The qualifying event that has triggered an offer of COBRA. Remember that COBRA is required to be provided due to an employee's termination of employment, reduction in hours, entitlement to Medicare, death, divorce or a dependent child's ceasing to be a dependent under the plan terms.
3. An identification of the qualified beneficiaries who are due an independent right to elect COBRA and the date that plan coverage will end if COBRA is not elected.
4. A statement indicating that all COBRA qualified beneficiaries have an independent right to elect COBRA coverage.
5. A provision explaining how to go about electing COBRA coverage, including the deadline by which COBRA must be elected.
6. A provision that lays out the consequences of failing to elect COBRA, including the failure's effect on future rights of qualified beneficiaries and information on how to revoke a waiver of the right to continuation coverage.
7. A description of the continuation coverage that will be provided if elected (i.e., the benefits that may be continued under COBRA).
8. The duration of COBRA coverage, including the maximum number of months that continuation is available if elected, the date COBRA would terminate and any situations that would cause the maximum COBRA coverage period to be shortened.
9. A description of situations where COBRA may be extended due to a second qualifying event.
10. A description of how qualified beneficiaries may provide notice of a second qualifying event or disability determination.
11. COBRA premium amounts for each qualified beneficiary.
12. Premium payment procedures, including due dates.
13. An explanation of the importance of keeping the plan administrator informed of qualified beneficiaries' address(es).
14. A statement indicating that more complete information about the right to continuation under COBRA may be found in the plan SPD.

Any COBRA election notice that does not include all the items above would be considered deficient and could subject the employer to a lawsuit by COBRA qualified beneficiaries and/or DOL investigation and penalties. Helpfully, the DOL provides a model notice that is available here.

Even if the employer utilizes a third party to administer COBRA, compliance with COBRA regulations is still ultimately the employer's responsibility. As such, employer plan sponsors who rely on a third party to provide the COBRA election notice should routinely ensure that the notice, as provided, includes all the elements required under the COBRA regulations.

HRAs are generally considered self-insured plans that are subject to the PCOR fee. Employers who sponsor self-insured plans (including HRAs) must report and pay the annual PCOR fee with their second quarterly filing of Form 720 (Quarterly Federal Excise Tax Return). The filing is due no later than July 31 of the calendar year immediately following the last day of the plan year to which the fee applies. This means that employers with 2022 calendar year self-insured plans must report and remit the PCOR payment with Form 720 by July 31, 2023.

For example, let's assume an employer sponsored an integrated HRA with a fully insured medical plan in 2022. At its plan renewal, the employer changed its medical plan from fully insured to self-insured and continues to offer an integrated HRA effective January 1, 2023. The employer's ERISA plan year is January 1. When does the employer need to file and pay the PCOR fee along with the completed Form 720 with the IRS?

For the employer's calendar year plans in 2022, the employer is required to file and remit the payment of the PCOR fee for its integrated HRA by July 31, 2023, even when the employer sponsors a fully insured medical plan. The medical carrier pays the PCOR fee for the fully insured medical plan, which is generally included in the premiums, and the employer pays the PCOR fee for the HRA. To calculate the PCOR fee for HRAs, the employer simply counts one covered life per HRA. Unlike the rule that applies to self-insured medical plans, the count for HRAs should not include spouses or other dependents. For example, if the employer had 300 covered lives (including spouses and children) who were enrolled in its medical plan and 80 employees who enrolled in its HRA plan in 2022 (based on the allowable calculation methods further described below), the employer would multiply 80 times the $3, which is the PCOR fee amount per covered life for the plan year ending between October 1, 2022 and September 30, 2023.

The PCOR fee and filing for the employer's 2023 calendar year plans is due July 31, 2024. The employer sponsors two self-insured plans: its medical plan and integrated HRA. Under the PCOR fee regulations, if an employer sponsors multiple self-insured arrangements with the same plan year (e.g., a self-insured medical plan combined with an integrated HRA like this illustration), the employer can treat the multiple arrangements as one plan. Therefore, the employer pays only one PCOR fee for the same participant. Employers can use any of the following four methods to calculate the number of covered lives for the employer's PCOR fee that is due in July 2024.

Actual Count Method: Under the actual count method, the employer calculates the sum of the lives covered for each day of the plan year and divides that sum by the number of days in the plan year (365/366 days for 12-month plan years, reduced as applicable for short plan years).

Snapshot Method: Under the snapshot method, the employer adds the total number of lives covered on one date (or on an equal number of dates) in each quarter of the plan year and then divides the total by the number of dates for which a count was made.

Snapshot Factor Method: The snapshot factor method works the same as the snapshot method, except that the employer counts the number of participants with self-only coverage on the designated dates plus the number of participants with coverage other than self-only coverage on the designated dates multiplied by 2.35.

Form 5500 Method: Under the Form 5500 method, the employer uses the number of participants reported on Form 5500 for the applicable plan year, provided the Form 5500 is filed by no later than the July 31 due date for remittance of the corresponding PCOR fee. If the employer exclusively offers self-only coverage, then the employer adds the participant count on the first and last days of the plan year (respectively lines 5 and 6d in Part II on Form 5500) and divides the sum by two. If the employer offers family coverage (or any coverage other than self-only coverage), then the employer adds the participant count on the first and last days of the plan year (but does not divide that sum by two).

The IRS recently published an updated Form 720 (Rev. June 2023) that reflects accurate PCOR fee rates in Part II, No. 133, for plan years ending on or after October 1, 2022, and before October 1, 2023.

For additional information about the PCOR fee requirements, please contact your NFP benefits consultant or broker for a copy of the NFP publication, ACA: A Quick Reference Guide to the PCOR Fee.

Health and welfare plans subject to ERISA's Form 5500 reporting requirements (generally, plans with 100 or more participants) must report certain information to the DOL. For plans with fully insured coverage, this reporting obligation includes specific information about each insurance policy using the form's Schedule A ('Insurance Information').

Insurers are statutorily required to provide Schedule A information to plans, and although most insurers generally do so, mistakes, miscommunications, and other issues can sometimes result in plan administrators not receiving the information they need to complete the Form 5500 as the filing deadline approaches.

Importantly, plan administrators remain responsible for filing Schedule A even if they lack the information to do so. While plan administrators can report an insurance company's failure to provide the necessary information on Schedule A's Part IV, this should be a last resort undertaken only after all reasonable efforts have been made to obtain the information.

Before assuming that an insurance company didn't send any Schedule A information, plan administrators should first ensure that the information wasn't simply misidentified, misfiled or otherwise misplaced. Insurers may (and often do) deliver their Schedule A information electronically, and it is not uncommon to find Schedule A information delivered to the wrong person or department, diverted to 'junk' or 'spam' email folders, or simply buried unopened in an inbox because the recipient didn't recognize it. (There is no standard format for Schedule A information and carriers' approaches vary widely.)

If the above approach doesn't yield any results, the plan administrator should contact the insurance company to see if there's been an oversight. This usually solves the problem, as the insurer can tell the plan administrator where they sent the information, or just simply send it again.

Sometimes, however, plan administrators will discover that insurance companies really didn't send any Schedule A information, and the plan administrator will need to know why.

A few of the more common reasons insurers have for not sending out Schedule A information are:

• The insurance policy year has not ended: Plans sometimes include insurance policies with policy years that differ from the plan year. For instance, a plan that runs from July 1 to June 30 may have an insured benefit with a calendar year policy year. If so, the insurer may not have any Schedule A information to provide because its policy year hasn't concluded. (The plan administrator may nevertheless want to check for Schedule A information for the previous policy year (if any), since Form 5500 reporting should include Schedule A's for any insured benefits with policy years ending within the applicable plan year.)
• The insurer thought the plan was a small plan: Sometimes plans with insured benefits covering fewer than 100 participants must still file Form 5500 for those benefits (usually because those benefits are offered through a wrap plan alongside other benefits covering 100 or more participants). Plan administrators may have to proactively request Schedule A information because these insurers assume that the plan is exempt from the Form 5500 requirement.
• The plan hadn't needed Schedule A information in the past: Insurers that hadn't provided Schedule A information in the past because the plan had not needed it (usually because the plan had truly been a 'small plan') may continue to withhold it even if its own benefit surpasses 100 participants, usually because of operational lag or another form of administrative inertia.

If, after conferring with the insurer, the plan administrator determines that no Schedule A information is necessary (e.g., the policy year did not end until after the reportable plan year or other appropriate reason), no further action is required.

However, if the plan administrator does determine that Schedule A information is necessary (e.g., because the insurer's 'small plan' is just one component of the plan administrator's 'large plan'), then the insurer should provide that information to the plan administrator as soon as practicable.

If absolutely necessary, a plan administrator can ask the local DOL office to intervene and, if all else fails, the plan administrator should answer 'Yes' on Schedule A, Part IV, Line 11 ('Did the insurance company fail to provide any information necessary to complete Schedule A?') and explain on Line 12 in detail the information that the insurer failed to provide. This will fulfill the plan administrator's obligation to complete Schedule A despite the insurance company's failure to provide the information to do so.

If an employer has 20 or more employees, the answer is no. Employers with 20 or more employees are subject to Medicare Secondary Payer (MSP) rules, which say an employer cannot provide a financial incentive to an active employee or spouse to encourage enrollment in Medicare instead of the group health plan. Reimbursing an employee's Medicare premiums or providing additional compensation if the employee drops the group health plan are both considered to be providing a financial incentive.

There are two relevant guidelines under the MSP Regulations. The first prohibits an employer with 20 or more employees from taking an individual's Medicare status into consideration. The second guideline prohibits an employer (again, with 20 or more employees) from providing a financial incentive for a Medicare-eligible individual to not enroll or terminate group coverage to make Medicare primary.

To summarize, employers should not take into account an employee's or spouse's Medicare status and should offer the same benefit options that are available to other employees and spouses who have not reached Medicare age. Employers who violate MSP rules can be subject to penalties of up to $5,000 per violation, legal action and liability for damages, and excise tax penalties.

Beginning January 1, 2024, virtually all employers will be required to file ACA reporting Forms 1094-B/1095-B and 1094-C/1095-C electronically. On February 21, 2023, the IRS published final regulations to the Taxpayer First Act of 2019, significantly expanding the e-filing mandate for certain tax returns.

Specifically, Forms 1094-B/1095-B and 1094-C/1095-C must be filed electronically if the total number of information returns (including Forms W-2 and 1099s) an employer files that year exceeds 10. As a result, all applicable large employers (ALEs) and most non-ALE self-insured employers completing ACA reporting will be required to do so electronically. If an employer demonstrates undue hardship, such as increased filing costs, the IRS may waive the e-filing requirement. Applications for an e-filing waiver are made via Form 8508.

Employers currently completing ACA reporting via paper mailing should consult with their tax advisor on e-filing requirements in 2024, discuss any potential undue hardship waiver and, if required, prepare to complete ACA reporting electronically. While employers may use third-party vendors to e-file on their behalf, they remain liable for any reporting failures.

For further information regarding the upcoming filing changes, please also see our February 28, 2023, article.

There is still time! The standard deadlines for an employee to notify the plan of a HIPAA special enrollment right (SER) have been significantly extended because of COVID-19 relief guidance. These deadline extensions are mandatory and are still in effect.

To review, HIPAA requires that group medical plans provide midyear special enrollment opportunities under certain circumstances. A HIPAA SER can arise in the event of a birth or a child's adoption/placement for adoption, marriage, loss of eligibility for other group coverage or health insurance, loss of Medicaid or CHIP coverage, or a gain of eligibility for a Medicaid or CHIP premium assistance program.

The COVID-19 relief guidance extends the normal 30- and 60-day HIPAA special enrollment periods until the earlier of one year or 60 days after the declared end of the COVID-19 National Emergency. The COVID-19 National Emergency is scheduled to end on May 11, 2023. Since the event occurred in December 2022, the extension will end 60 days after the National Emergency ends, and the normal deadline will begin running.

Note that of the HIPAA SERs, only the birth, adoption or placement of adoption events allow for retroactive coverage. Therefore, a newborn would be eligible to enroll in the employer's group health plan with coverage retroactive to the date of birth. If the employee was enrolled in the medical coverage and the employer offered more than one option, the HIPAA SER would also permit a change in benefit options (e.g., from HMO to PPO). Finally, the employee would be required to pay their share of the premiums for this coverage dating back to the date of birth.

In both cases corrections are necessary. Generally, if the corrections are made before the 2022 income tax filing deadline, which is April 18, 2023, for most taxpayers, the process is greatly simplified. We can provide general information regarding the correction process for each situation. However, the employee and employer should consult with a tax advisor or counsel for specific advice and guidance.

Correction of Excess HSA Contribution

The 2022 contribution limit is $3,650 for self-only coverage and $7,300 for any tier of coverage other than self-only. Those aged 55 and older by the 2022 calendar year-end are permitted an additional catch-up contribution of $1,000.

Generally, an individual's maximum annual contribution is limited by the number of months they were eligible for the HSA. Medicare coverage is impermissible for HSA eligibility purposes. So, when an employee enrolls in Medicare mid-year, their HSA annual contribution limit must be prorated. For example, an employee who was otherwise HSA-eligible but enrolled in Medicare on July 1, 2022, could not contribute more than half of the applicable maximum for the coverage tier ($1,825 for self-only coverage or $3,650 for coverage other than self-only) plus half of the $1,000 catch-up contribution ($500).

An employee's HSA contribution that is greater than their 2022 applicable maximum is considered an 'excess' contribution and should be removed from the HSA. Therefore, the employee should contact the HSA custodian promptly to request that the excess contribution and applicable earnings be removed from the HSA. These amounts would then be included in the employee's gross income. If the employee fails to remove the excess contribution by the income tax filing deadline, an additional 6% penalty applies for each tax year the excess remains in the account.

IRS Publication 969 (2022), Health Savings Accounts and Other Tax-Favored Health Plans provides further information on excess contributions.

HSA Contribution for a Prior Year

Individuals who were HSA-eligible in 2022 have until the tax filing deadline to make or receive HSA contributions. So, 2022 HSA contributions, including employer contributions, must be made by April 18, 2023.

In the situation described, the employer should notify both the employee and HSA custodian that they will be making an HSA contribution for 2022. The employer should follow any specific instructions provided by the custodian to ensure the HSA contribution is designated for the prior year.

Both the employer and employee should review the proper reporting of the prior year HSA contribution with a tax advisor. Generally, the employer would report the prior year HSA contribution on the employee's 2023 Form W-2. The employee would include this prior year contribution (along with any other HSA contributions reported on their 2022 Form W-2) when completing the 2022 IRS Form 8889, which is used to report HSA contributions and distributions, and subtract it (from the HSA contribution amount reported on their 2023 Form W-2) when completing the 2023 IRS Form 8889.

Once the 2022 income tax filing deadline has passed, the employer can no longer make an HSA contribution for 2022.

Accordingly, employers and employees should take action to address 2022 HSA contribution compliance failures before the tax filing deadline.

For further information on HSAs, please contact your NFP consultant or broker for a copy of our publication, Health Savings Accounts: A Guide for Employers.

In 2019, the IRS issued final regulations on hardship distributions, as directed under the Bipartisan Budget Act of 2018. The regulations made several changes to the requirements plan sponsors must impose on participants seeking hardship distributions. The changes were effective for hardship distributions made on or after January 1, 2020.

Uniform Standard and Participant Representation of Need
The final regulations changed the previous rules by requiring plan sponsors to apply a uniform standard for determining that a hardship distribution is necessary to meet an immediate and necessary financial need. The regulations require participants seeking a hardship distribution to take any distribution available to them under the plan or any other employer-sponsored plan. The distribution also can be no more than is necessary to meet the need. Additionally, the participant must certify in writing that they have no available cash or liquid assets to meet the financial need. If those requirements are met, a participant may take a hardship distribution from the plan.

Taking a Plan Loan No Longer Required
Previously, participants had to take any available plan loan before taking a hardship distribution. The final regulations changed that requirement. While the employer may still choose to require that any potential plan loans be taken before allowing a hardship distribution, the IRS rules no longer impose this requirement.

Six-Month Contribution Suspension Eliminated
Similarly, the final regulations changed prior rules requiring participants to suspend contribution deferrals for the six months after they received a hardship distribution. Now, participants may continue deferring plan contributions following their hardship distribution.

Expanded Accounts from Which Participants May Take a Distribution
Retirement plan participants (who are not enrolled in custodial 403(b) plans) can now access hardship distributions from all the different funding sources, including:

• Employee contributions
• Vested matching and other employer contributions
• Safe harbor contributions
• Qualified matching contributions (QMACs)
• Qualified nonelective contributions (QNECs)
• Earnings on eligible sources

As employers continue to administer hardship distributions, they should familiarize themselves with the final regulations and continue to work with their service providers to ensure compliance.

Largely in response to Congress reducing the federal ACA individual mandate penalty to $0 (effective since 2019), several states have passed their own individual mandates. Similar to the ACA's federal mandate reporting requirements, each state's individual mandate, as applicable, generally requires employers to submit employee coverage reports and distribute statements to covered employees. Meaning, employers with employees located in the states with an individual mandate may have to comply with state individual mandate reporting requirements in addition to complying with federal reporting requirements.

Whether an employer is subject to state individual mandate reporting requirements generally depends on the following: 1) The state(s) in which employees reside. 2) Whether the plan is self-insured or fully insured. 3) Whether an employer is an Applicable Large Employer (ALE) who is subject to the ACA employer mandate.

As to the first factor, if an employer has employee(s) who reside in any of the states listed in the below table, the employer is subject to the state's individual mandate reporting requirement(s). (Importantly, an employee's residence state triggers the reporting requirement regardless of the employee's work location.)

As to the remaining factors, generally, insurers complete and file the required forms with the respective states for fully insured plans (except the District of Columbia). However, fully insured employers should confirm with their medical insurers regarding their intent to fulfill the state reporting requirements for the employers.

Below is a high-level overview of the state individual mandate reporting filing deadlines and employers' (ERs) relative reporting responsibility under a fully insured or self-insured plan.

 
Regarding the type of required forms, except in Massachusetts and under certain circumstances in New Jersey, all the other above states require copies of ACA Form 1095. Massachusetts requires a different form called Form MA 1099-HC.

For more information regarding the Massachusetts individual mandate reporting requirement (aka 'Minimum Creditable Coverage'), see the article published in the November 8, 2022, edition of Compliance Corner. Additionally, NFP's State Individual Mandate Reporting Requirements publication outlines each state's reporting requirements and the links to each state's reporting site. For copies, contact your NFP benefits consultant.

Employers that sponsor group health plans have an obligation to report whether the prescription drug coverage offered under the plan is creditable or non-creditable. Employers are likely more familiar with the obligation to notify employees, and their family members, regarding the creditable status of their plan(s) by each October 14, as this is the Part D notice that employers typically include with open enrollment documents. A second obligation also exists where employers must report the creditable status of the plan(s) to the CMS within 60 days after the start of the plan year. The second obligation is the focus of this FAQ.

Unlike some compliance requirements, the disclosure to CMS exists for health plans regardless of employer size, plan funding type (i.e., fully insured or self-insured) or whether the plan is primary or secondary to Medicare. The disclosure requirement also applies to church plans and federal, state and local government plans. For entities that are part of a controlled group and participate in the same plan, the requirement applies to the plan sponsor, not necessarily to each participating entity.

As mentioned above, disclosures are due within 60 days after the start of the plan year. Plan sponsors may be required to file an additional disclosure in limited circumstances:

• Within 30 days after any change in the creditable coverage status of the plan.
• Within 30 days after the termination of the plan (regardless of whether the termination is midyear or at the end of the plan year).

The CMS Disclosure Instructions provide detailed information on the two situations above and how to properly report that information.

Currently, there are no specific penalties for failing to timely file the disclosure, and CMS does not have a correction process for failures. However, plan sponsors have a fiduciary duty under ERISA to comply with all federal laws related to their plans, so it is important employers comply with this requirement in a timely manner. Additionally, employers that fail to meet the disclosure requirements are unable to claim retiree drug plan subsidies.

NFP clients can request a copy of our publication Medicare Part D Disclosures: A Guide for Employers from your consultant for additional information on how to file the disclosures.

Disclosure to CMS Form »

Employers should consider all the facts and circumstances surrounding the mistake before taking any action to correct it.

Under section 125, the employee's election must occur prior to the coverage effective date, and the related deduction should come out of a future paycheck. Section 125 also states that employees should not have the ability to change their elections after the effective date of coverage (i.e., during the plan year) unless the employee experiences a qualifying event. Under ERISA, the employer should operate/administer the plan according to the plan terms, according to relevant laws and in the best interest of plan participants/beneficiaries. So, for all those reasons, the employer should not allow election changes for any period following the effective date of coverage. Rather, allowing election changes after the effective date could be viewed as a violation of section 125 and ERISA. Accordingly, the practice of allowing those changes post effective date should generally be discouraged.

However, employers can allow election changes AFTER open enrollment and BEFORE the coverage effective date. That's a good idea and practice to keep in place to catch errors before the coverage period starts. Also, it's permissible to correct true errors and mistakes that are discovered after the coverage period begins. But it must be a true mistake, not an employee simply changing their mind.

There is a lack of formal guidance when it comes to correcting mistakes, but the general notion from the IRS is that if there's clear evidence of some type of mistake, then the employer can take steps to place everyone back in the position they would've been absent the mistake. Whether the clear and convincing standard is satisfied depends on the nature of the mistake, including when it occurred and when it was discovered. Generally, employer clerical or data entry type mistakes would qualify. Additionally, situations in which the employee could not have benefitted from the election are clear and convincing. For example, if an employee made a dependent care deferral election at enrollment but did not have a dependent, this seems rather clear and convincing evidence of a mistake.

Essentially, it is a facts and circumstances analysis. Factors to consider include:

• The employee's past elections and benefit usage.
• Assessment of the employee's truthfulness.
• Time that has elapsed since the first payroll date after the election was in force.
• Changed circumstances experienced by the employee that might be evidence of reconsideration rather than a mistake.
• Other extrinsic evidence of a mistake.

These factors should be applied on a consistent and nondiscriminatory basis and documented.

In the end, it would be the employer's decision as a plan sponsor to determine whether there is clear and convincing evidence of a mistake. However, the employer should consider the situation carefully before making exceptions because the employer has an obligation to follow the terms of the plan document. Additionally, the employer has an obligation to treat all eligible employees in a like manner. Finally, making an exception may also create an undesirable precedent.

If the employer chooses to recognize the mistake, the insurer or stop loss carrier would need to be agreeable. From a payroll perspective, again, there is no formal guidance, but the general principle is that corrections should put the plan and the participant in the same position as if the mistake had not occurred. The document should be reviewed to see if there is any language that addresses the correction of mistaken elections and recoupment of amounts not withheld. The employer should also confirm that any necessary withholding from an employee's pay does not violate any state wage withholding laws.

Due to the lack of formal IRS guidance regarding the recognition of mistakes and related corrections, the employer should consult with counsel for guidance. Generally, to avoid section 125 and ERISA compliance issues, the best practice is not allowing employees to change their elections once the coverage period has begun and once salary has been taken from their paychecks '” unless there is clear evidence of a mistake.

Most group health plans and insurers that provide either mental health or substance use disorder (MH/SUD) benefits in addition to medical/surgical benefits (MED/SURG) are subject to the Mental Health Parity and Addiction Equity Act (MHPAEA). This means plans and insurers cannot impose financial requirements (e.g., deductibles, copays, coinsurance or out-of-pocket maximums), quantitative treatment limitations (e.g., number of covered days, visits or treatments) or non-quantitative treatment limitations (e.g., coverage exclusions, prior authorization requirements, medical necessity guidelines or network restrictions) on MH/SUD benefits that are more restrictive than those applied to MED/SURG benefits. In other words, MH/SUD benefits must be provided in parity with MED/SURG benefits. MHPAEA applies to both fully insured and self-insured plans. There are limited exemptions from MHPAEA, including:

• Self-insured plans with 50 or fewer employees (including employees of related employers in a controlled group).
• Stand-alone retiree-only medical plan that does not cover current employees.

Church plans are not exempt from MHPAEA.

The Consolidated Appropriations Act, 2023 (CAA 2023) sunset a MHPAEA opt-out for self-insured non-federal governmental group health plans. As of September 2022, 229 group health plans covering municipal employees, public school teachers, firefighters, police and public healthcare workers were opting out of MHPAEA. With the enactment of the CAA 2023, new opt-out elections are no longer permitted and existing elections expiring on or after June 30, 2023, cannot be renewed.