Fate Uncertain for HHS’s Extension of ACA Discrimination Protections to Abortion & Gender Transition

In May 2016 HHS issued a final rule implementing the Affordable Care Act’s Section 1557 nondiscrimination provision, which applies to recipients of funding from HHS. The rule prohibits discrimination on the basis of gender identity and termination of pregnancy, as well as race, color, national origin, sex, age, and disability. The new rule has been interpreted to require covered entities to perform and provide insurance coverage for gender transitions and abortions, regardless of their contrary religious beliefs or medical judgment.

The HHS rule has been challenged in court at least twice. On December 31, 2016, the U.S. District Court in Wichita Falls, Texas enjoined nationally the portions of the rule prohibiting discrimination on the basis of gender identity and termination of pregnancy. Franciscan Alliance, Inc. v. Burwell, Civil Action No. 16-cv-00108. The Order was appealed by the ACLU and the River City Gender Alliance and the appeals remain pending.

The Trump Administration has not indicated whether it will challenge the Court’s injunction and enforce the rule. The current Administration position favoring repeal of ACA in its entirety is consistent with the policy changes already made by the Trump administration. On February 22 the Departments of Education and Justice withdrew agency guidance that mandated transgender student access to restrooms consistent with gender identity. In late March President Trump appointed Roger Severino to head HHS’s Office of Civil Rights (OCR) which is charged with enforcing the HHS rule. Although Severino’s appointment has been controversial, as yet there is no indication from the OCR as to its enforcement position under new HHS leadership.

In the only other reported case brought under the rule’s prohibition of discrimination based on gender identity, on December 6, 2016 the U.S. District Court in Oakland, California stayed further proceedings in a case challenging an employer’s denial of gender transition health coverage. Robinson v. Dignity Health, Civil Action No. 16-cv-3035. The stay was granted pending the outcome of Gloucester County School Bd. v. G.G., a case scheduled for hearing before the Supreme Court. However, on March 6 the Supreme Court remanded the case back to the Court of Appeals for further consideration in light of Justice’s and Education’s withdrawal of guidance on February 22.  The California court has continued the stay in the Robinson v. Dignity Health case based on the pending bankruptcy of the plaintiff and scheduled the next hearing for May 19.

The Supreme Court’s action suggests that courts across the country may be taking a “kick the can down the road” approach on the Section 1557 rule as the Trump Administration has promised to repeal and replace ACA, or alternatively that the Court prefers to review the case only when the Court is back to full strength. Currently, the HHS rule’s provisions relating to gender identity and termination of pregnancy remain enjoined nationally.

If you have any questions or would like to discuss how the Section 1557 rule affects you or your business, please contact Patrick W. McGovern, Esq. at 973-535-7129 or pmcgovern@nullgenovaburns.com, Gina M. Schneider, Esq. at 973-535-7134 or gmschneider@nullgenovaburns.com or Ryann M. Aaron, Esq. at 973-387-7812 or raaron@nullgenovaburns.com.

IRS Proposes Restrictions on Employer Opt-Out Payments for ACA Coverage Waivers

In early July the IRS issued proposed regulations addressing the effect that employer payments to employees who waive employer-sponsored health coverage, known as Opt-Out Payments, have on determining whether an ACA-covered employer must pay an ACA penalty known as the Affordability Penalty. Generally, the proposed regulation will apply to Opt-Out Payments adopted after December 16, 2015, but there will be a phase-in period for Opt-Out Payments in labor agreements.

By way of background, ACA-covered employers are subject to a monthly Affordability Penalty for each full-time employee who (1) is required to pay more than 9.66% (indexed for 2016) of the employee’s household income to purchase self-only coverage under the employer’s health plan (“employee premium payment”) and (2) instead purchases individual coverage through an ACA exchange. In determining the amount of the employee premium payment and whether the affordability standard is satisfied, the proposed regulations would allow the employer to exclude the value of any Opt-Out Payment from the employee premium payment, but only where receipt of the Opt-Out Payment is conditioned on the employee’s (1) declining employer-sponsored coverage and (2) providing reasonable evidence that the employee and all other individuals for whom the employee expects to claim a personal exemption deduction have minimum essential coverage (other than coverage in the individual market, whether or not obtained through an ACA exchange).  This example illustrates when the value of an Opt-Out Payment would be excluded in calculating the employee premium payment: Employer offers its employees coverage under a plan that requires Employee to contribute $3,000 for self-only coverage. Employer also makes available to Employee a payment of $500 if Employee (1) declines to enroll in the plan and (2) provides reasonable evidence that Employee and all other members of B’s expected tax family are or will be enrolled in minimum essential coverage through another source (other than coverage in the individual market, whether or not obtained through the Marketplace). The Opt-Out Payment provided by Employer is a conditional Opt-Out Payment as defined under the regulations, and, therefore, Employee’s required contribution for self-only coverage under the plan is $3,000 since the $500 Opt-Out Payment is disregarded.

On the other hand, the value of an unconditional Opt-Out Payment (i.e., Opt-Out Payments conditioned only on waiving coverage) must be included in the calculation of the employee premium payment in determining affordability.  Therefore, any unconditional Opt-Out Payment will increase the employee premium payment, and make it less likely that the premium payment will come below the 9.66% household income percentage limit. Under the same facts as in the example above, except that eligibility for the Opt-Out Payment is unconditional, the $500 Opt-Out Payment increases the employee premium payment from $3,000 to $3,500, regardless of whether the employee accepts or declines the employer’s offer of coverage.

The proposed regulations are subject to public comment and our firm will continue to monitor and report on any developments. In the meantime, we recommend that ACA-covered employers review their current and planned Opt-Out Payment arrangements to determine how these payments will be treated under the proposed regulations and what adjustments must be made to avoid ACA penalties.  If you have any questions or for more information regarding the impact of the proposed regulations or ACA requirements generally on your organization, please contact Patrick W. McGovern, Esq., pmcgovern@nullgenovaburns.com or Gina M. Schneider, Esq., gmschneider@nullgenovaburns.com in the Firm’s Employee Benefits Practice Group.

Supreme Court Rejects Challenge to Affordable Care Act’s Tax Credit Provisions

On June 25, the U.S. Supreme Court, in a 6-3 decision, finally resolved a central issue under the Affordable Care Act (“ACA”) as to whether Congress’ failure to provide expressly for Federal subsidies to States that did not create their own health care Exchanges but opted for the Federal tax credits should prohibit payments of Federal tax credits to individuals who purchase their coverage from the Federal Healthcare Exchange.

The Court held that despite the inartful drafting and ambiguities in the legislation, the Court would enforce what it viewed to be Congress’ intent in the legislation to have State and Federal Healthcare Exchanges work the same in every State, regardless of whether the State has its own Exchange or depends on the Federal Exchange. The Court reasoned that its job was to read the words of the statute “in their context and with a view to their place in the overall statutory scheme” and concluded that the ACA “indicates that State and Federal exchanges should be the same,” and therefore, tax credits must be available on both State and Federal Exchanges.

In sum, the Court ruled that ACA tax credits are available under the State and the Federal Exchanges “to avoid the type of calamitous result that Congress plainly meant to avoid.”

For questions related to this development or ACA generally, please contact Patrick W. McGovern, Esq., Director of the Employee Benefits Practice Group and Partner in the Labor Law Group, at pmcgovern@nullgenovaburns.com, or Gina M. Schneider, Esq., a member of the Employee Benefits Practice Group and Counsel in the Labor Law Group, at gmschneider@nullgenovaburns.com.

Court Denies EEOC’s Requested Preliminary Injunction to Block Wellness Plan Biometric Testing

On November 3 U.S. District Court Judge Ann Montgomery gave Honeywell International a victory in Round One of the EEOC’s legal challenge to Honeywell’s wellness program, by refusing to grant the EEOC preliminary restraints barring Honeywell from imposing monetary penalties on employees who refuse to submit to biometric screening. Judge Montgomery reasoned that she was not prepared to decide whether the EEOC would prevail on the merits, and it would be easier to require Honeywell to reimburse employees for monetary penalties they suffer as opposed to blocking the penalties for now and assessing the penalties later if the wellness program is determined to be lawful. So for now, Honeywell’s biometric screening may continue.

If you have any questions about whether your company’s wellness program is compliant with the Affordable Care Act, HIPAA, the ADA or GINA, please contact Patrick W. McGovern, Esq., in our Employee Benefits Group at 973-535-7129, pmcgovern@nullgenovaburns.com.

Affordable Care Act Update: Volunteer Firefighters And Other Emergency Responders Are Not Full-Time Employees Or FTE’s Under ACA

On January 10, 2014 the U.S. Department of Treasury announced that volunteer firefighters and other emergency responders (“volunteer emergency personnel”) at governmental or tax-exempt organizations “generally” need not be counted as full-time employees or full-time equivalents (“FTE’s”) under the Affordable Care Act’s (“ACA”) final regulations.  The Treasury also announced that the final regulations will issue “shortly.”

Effective January 1, 2015 an employer with 50 or more full-time employees or FTE’s will be subject to ACA’s penalties unless it offers affordable health coverage to an employee who works an average of at least 30 hours per week or 130 hours per month.  Although the tax treatment of stipends and other reimbursements paid to volunteer emergency personnel provides some precedent for treating volunteer firefighters as employees, ACA’s proposed regulations do not address whether these workers will be treated as full-time employees or FTE’s.  Local fire and EMS departments could potentially exceed the 50-employee threshold and be subject to ACA’s penalties if volunteer emergency personnel must be counted as full-time employees or FTE’s under ACA.

The Treasury’s announcement this week clearly states that volunteer emergency personnel hours will not count in determining whether an employer meets the 50-employee threshold.  Likewise, an employer that exceeds the 50-employee threshold will not be subject to ACA’s penalties on the sole grounds that it does not offer coverage to volunteer emergency personnel.  Consequently, municipalities that offer volunteer emergency services avoid a potential financial burden with the final regulations’ exemption of voluntary emergency personnel.  If you have any questions or for more information about ACA and its impact on your organization or your employees’ benefit plans, please contact Patrick W. McGovern, Esq., pmcgovern@nullgenovaburns.com, Gina M. Schneider, Esq., gmschneider@nullgenovaburns.com, or Phillip M. Rofsky, Esq., profsky@nullgenovaburns.com, in the Firm’s Employee Benefits Practice Group.

Lactation and Breast-Feeding Are “Pregnancy Related Conditions” Protected Under Title VII

In EEOC v. Houston Funding II, Ltd., the Fifth Circuit issued a landmark decision finding that terminating a female employee because she is lactating or expressing milk is unlawful sex discrimination under Title VII of the Civil Rights Act of 1964 (as amended by the Pregnancy Discrimination Act of 1978) (PDA).  The Court also found that lactation is a medical condition related to pregnancy.

Donnica Venters (“Venters”) took a leave of absence to give birth, and subsequently asked her supervisor whether she could use a breast pump at work.  Instead of responding to her inquiry, Venters was told that she was being discharged for job abandonment.  The EEOC filed suit claiming that Houston Funding discriminated against Venters based on her sex, including her pregnancy, childbirth, or related medical conditions (citing the language from the PDA).  The Fifth Circuit agreed that terminating Venters simply because she is lactating or expressing breast milk constitutes sex discrimination, and that an adverse action “motivated by these factors clearly imposes upon women a burden that male employees need not – – indeed, could not – suffer.”

The Fifth Circuit held that lactation is a physiological condition distinct to women who have undergone pregnancy and childbirth, and that men, as a matter of biological fact, cannot lactate. As such, the Court held that lactation is included in the term “pregnancy related conditions” and protected by Title VII and the PDA.  Female employees, who are lactating and/or breast-feeding, may now bring claims under Title VII and the PDA.  Employers should also be aware that the Affordable Care Act already amended the Fair Labor Standards Act (FLSA) to require an employer provide “reasonable time for an employee to express milk for her nursing child for 1 year after the child’s birth each time such employee has need to express the milk.”  Employers must take their obligation to provide time and space to express breast milk seriously and must also take caution when considering taking adverse action against such employees.  The EEOC has made pregnancy- related limitations one of its six national priorities to address in the context of equal employment law, so employers should critically analyze any request or inquiry from employees regarding pregnancy or post-pregnancy accommodations to avoid unnecessary negative liability.

For more information on the implications of the EEOC v. Houston Funding II, Ltd. decision and other sex and pregnancy policies and regulations in the workplace, please contact Dena B. Calo, Esq, dcalo@nullgenovaburns.com, Director of the Human Resources Practice Group and Partner in the Employment Law & Litigation Group, or Jane Khodarkovsky, Esq., Associate in the Employment Law & Litigation Group, at jkhodarkovsky@nullgenovaburns.com.

ACA’s Employer Penalties Delayed To 2015 But Remaining 2014 Requirements Unchanged

On July 2, 2013 the U.S. Treasury Department announced that enforcement of the Affordable Care Act’s (“ACA”) employer penalties will be delayed until 2015. Under ACA businesses with at least 50 full-time employees plus full-time equivalents that do not offer affordable health coverage to at least 95% of their full-time employees and dependents are subject to monetary penalties.

The Treasury Department stated that the one year delay “will allow us to consider ways to simplify the new reporting requirements consistent with the law. Second, it will provide time to adapt health coverage and reporting systems while employers are moving toward making health coverage affordable and accessible for their employees.”  The Treasury Department will provide guidance regarding reporting requirements for insurers, self-insuring employers, and other parties that provide health coverage later this summer.

The Treasury Department’s announcement affects no other ACA provisions.  The state and federal health care exchanges are still scheduled to become operational on October 1, 2013.  Likewise, the effective date for health insurance purchased on the exchanges remains January 1, 2014.

If you have any questions or for more information about ACA and its impact on your organization or your employees’ benefit plans, please contact Patrick W. McGovern, Esq.pmcgovern@nullgenovaburns.com, Gina M. Schneider, Esq., gmschneider@nullgenovaburns.com, or Phillip M. Rofsky, Esq., profsky@nullgenovaburns.com, in the Firm’s Employee Benefits Practice Group.