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DOL, State Regulators Step Up Enforcement Around Mental Health Parity

DOL, State Regulators Step Up Enforcement Around Mental Health Parity

The U.S. Department of Labor (DOL) and state insurance regulators are stepping up enforcement actions relating to the Mental Health Parity and Addiction Equity Act, which prevents group health plans that provide mental health or substance abuse benefits from imposing stricter limits on those benefits than on medical/surgical benefits. The recent actions have focused on what the law, which took effect in 2008, terms non-quantitative treatment limitations (NQTLs), as opposed to quantitative limits such as paying for the same number of visits whether for mental or physical health treatment.The Consolidated Appropriations Act, 2021, also amended the Mental Health Parity and Addiction Equity Act to require group health plans and issuers to complete an analysis that explains whether the factors used to justify NQTLs for mental health coverage differ from limits imposed for medical and surgical benefits. The analysis must be provided to the DOL on the agency’s request.Among recent NQTL actions, in August the DOL announced a $15.6 million settlement in a case involving United Healthcare and its affiliates. The insurers, served with separate enforcement lawsuits by the DOL and the New York Attorney General, were charged with reducing reimbursements for certain out-of-network mental health treatments depending on the type of license held by the service provider, but not doing so for those providing medical services.The settlement included $13.6 million to affected participants and beneficiaries and $2.08 million in penalties.”Plans and insurance companies cannot place special hurdles in the paths of workers and their families when they seek mental health and substance use disorder benefits,” said Acting Assistant Secretary for Employee Benefits Security Ali Khawar. “The law requires parity between these benefits and medical benefits. We are committed to vigorously enforcing the law’s requirement and making sure workers in need of help are treated fairly.”The DOL created a self-compliance tool that plans can use to meet the law’s requirements, Khawar noted.The stepped-up enforcement actions “highlight the continued scrutiny by regulators and law enforcement on issues relating to mental health parity” according to a Sept. 14 post by Los Angeles and San Francisco-based attorneys at law firm Manatt. While the recent actions have been brought against insurance companies, “it is possible that regulators and law enforcement may target other payers that engage in similar practices” such as employers that sponsor mental health benefits. These payers “should carefully examine their practices relating to … out-of-network reimbursement for compliance with parity requirements,” the firm advised.Bloomberg Law similarly reported on Sept. 22 that “health insurance companies are now in the crosshairs of the Department of Labor’s aggressive enforcement of mental health parity, but it’s unlikely to mean employers will escape scrutiny.”New Penalties ProposedThe Biden administration also “has made mental health parity enforcement a high priority, going so far as to ask Congress for additional authority to fine violators, including employers,” Bloomberg reported. In the Democrats’ 2022 budget reconciliation measure, for instance, the House Education and Labor Committee “included a provision to allow the Labor Department to impose civil monetary penalties on plan sponsors, insurers, and …

Agencies Seek Input on Form 5500 Revisions

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Agencies Seek Input on Form 5500 Revisions

Federal agencies are seeking public comments on proposed revisions to the Form 5500 Annual Return/Report filed by private-sector employee benefit plans to comply with statutory changes under the Setting Every Community Up for Retirement Enhancement (SECURE) Act, which became law in 2019.”The proposed form changes and related regulatory amendments address [SECURE] Act changes, especially for multiple employer plans, and improve [Form 5500 as a] critical enforcement, research and public disclosure tool,” said Ali Khawar, Department of Labor (DOL) acting assistant secretary for employee benefits security.On Sept. 15, the DOL’s Employee Benefits Security Administration (EBSA), the IRS and the Pension Benefit Guaranty Corporation (PBGC) published two proposed rules in the Federal Register: Annual Reporting and Disclosure, to conform Form 5500 reporting regulations under the Employee Retirement Income Security Act (ERISA) with the proposed Form 5500 revisions.The agencies also released a fact sheet summarizing the proposed changes.SECURE Act ChangesWhile employers in the same industry had previously been allowed to form multiple employer plans, known as MEPs, the SECURE Act permits unaffiliated employers, as of January 2021, to join together in a single 401(k) pooled employer plan (PEP).”A PEP has a single plan document, a single Form 5500 filing and a single independent plan audit,” noted Craig P. Hoffman, an attorney with San Francisco-based Trucker Huss, when the SECURE Act became law. A pooled plan provider, whether a financial services firm, insurance company, third-party administrator or similar entity, “must serve as the ERISA section 3(16) plan administrator, as well as the named fiduciary for the plan,” he explained.Defined Contribution Group PlansThe SECURE Act also established another new type of plan arrangement, often referred to as a group of plans (GoP) but which the proposed rules now call a defined contribution group (DCG).A DCG allows employers, whether unrelated or related, to file a single Form 5500 for multiple defined contribution plans if the plans have the same trustee, administrator, fiduciaries, investments and plan year. However, unlike PEPs, plans in a DCG remain distinct entities. While they can file a single consolidated Form 5500, individual plans participating in a DCG arrangement with a consolidated Form 5500 filing remain subject to audit requirements, the proposed revisions clarify.After considering multiple issues, “the departments decided to propose that a large plan that elects to participate in a DCG must continue to be subject to an IQPA [independent qualified plan accountant] audit and that the audit report for the plan would have to be filed with the consolidated Form 5500 of the DCG reporting arrangement,” the Proposed Revision of Annual Information Return/Reports states.Pete Swisher, president of Waypoint Fiduciary, a consultancy in Versailles, Ky., focused on group retirement plans, wrote that “as part of the package of guidance, the Departments addressed the audit requirement in GoPs by killing the hopes of those who expected a GoP to have a single consolidated audit like that of multiple employer plans.”MEWAs Also AffectedAs an ancillary matter, some of the proposed Form 5500 revisions would apply to multiple employer welfare arrangements (MEWAs) that offer …

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