The Crystal Connection monthly magazine provides the most up-to-date developments in federal and state regulations that affect employer-sponsored benefits programs, as well as trends in benefits. This is a must read for employers who want to stay compliant and in the know!

1. Crystal
Connection
Employee Benefits News for Employers January 2019
Timely Topics
EEOC Officially Removes Problematic Incentive Limit
Provision from the ADA and GINA Wellness Regulations
Federal Litigation Settlement is a Strong Reminder that
Tobacco Cessation Programs Require a Reasonable
Alternative Standard Under HIPAA
New York Governor Vetoes Bereavement Bill
Reminder! New York Paid Family Leave Benefits Increase
for 2019
ACA Reporting: It’s Getting To Be That Time…
Next Steps after Losing an Exchange Subsidy
Determination Appeal
Imputing Income on Domestic Partner Coverage
Newly Self-Funded? Check Off This HIPAA Obligation
Webinar:
Employee Benefits Compliance
Changes in 2019
March 7, 2019
Learn more and register:
crystalco.com/EBSEducation

2. 2 | Crystal Connection: January 2019
Proposed Elimination of the HPID
On December 18, 2018, the Department of Health and
Human Services (HHS) released a proposed rule that would
rescind the adopted standard unique Health Plan Identifier
(HPID) and the Other Entity Identifier (OEID) standards. HPID
requirements apply to group health plans subject to HIPAA’s
administrative simplification provisions, including insured
and self-funded plans.
HHS released the final rule to adopt the HPID and OEID
standards on September 5, 2012. The rule requires health
plans to use an HPID to promote efficient and uniform
transmission of health information in HIPAA transactions. The
deadline for health plans to start using their identifiers was
set to November 7, 2016. However, this requirement created
a good deal of administrative confusion and frustration for
group health plans, and on October 31, 2014, HHS announced
that enforcement of the HPID requirement was delayed until
further notice.
The proposal to rescind the HPID requirement was made after
considering feedback from health plans, associations, and
providers who stated that there was no need for the HPID in
HIPAA transactions and that the policy requirements were
problematic, costly, and burdensome.
EEOC Officially Removes Problematic
Incentive Limit Provision from the ADA
and GINA Wellness Regulations
On December 19, 2018, the Equal Employment Opportunity
Commission (EEOC) released a final rule that removes a section
of its regulations under the Americans With Disabilities Act (ADA),
which was originally published on May 17, 2016 (29 C.F.R. §
1630.14(d)(3)).
The action is in response to litigation filed by the AARP and a
subsequent decision by the U.S. District Court for the District of
Columbia that vacated only the incentive limits section of the
EEOC’s ADA rule effective January 1, 2019. The section vacated
by the court—and now formally removed from the regulations by
EEOC—indicated that a permissible incentive under the ADA for
programs that involved a medical exam or inquiry was generally
limited to 30% of the cost of coverage. All other portions of the
regulations remain in force.
This rule making (like the court’s order) does not require that
employers change existing compliant wellness plan designs. The
EEOC will not challenge wellness programs designed to comply
with the 30% incentive limit it proposed and defended.
EEOC also issued similar guidance on its Genetic Information
Nondiscrimination Act (GINA) incentive limit (29 C.F.R. § 1635.8(b)
(2)(iii)), which related to incentives for spousal participation in
wellness plans involving a medical exam or inquiry.
Federal Litigation Settlement is
a Strong Reminder that Tobacco
Cessation Programs Require a
Reasonable Alternative Standard
Under HIPAA
A federal court recently approved a settlement in Acosta v.
Dorel Juvenile Group., Inc. that requires a group health plan
to repay over $145,000 to participant tobacco users who paid
“premium surcharges” as part of a wellness program without
being offered a reasonable alternative standard. The plan also
agreed to pay penalties to the Department of Labor (DOL) of
almost $15,000 (an amount reflecting a DOL compromise and
penalty reduction of 50%) and revise its wellness program to
comply with HIPAA. The DOL brought the lawsuit following
an investigation that uncovered a five-year period during
2 | Crystal Connection: January 2019
Compliance Now

3. Crystal Connection: January 2019 | 3
Quick Tip
QDuring open enrollment,
we discovered that some of
our employees dropped their
spouses and/or dependents
from the group health plan for
the upcoming plan year. Do we
need to offer COBRA to these
individuals?
ANo. COBRA is only offered to those who lose
their group health coverage due to specific
qualifying events, such as the employee’s
termination of employment or reduction in hours,
loss of eligibility due to the employee’s death or
divorce, or a child reaching the age limit. Dropping
the plan during open enrollment is not a COBRA-
qualifying event. The loss of coverage is simply due
to the employee’s voluntary enrollment choice.
However, a special COBRA rule comes into play if
a couple were to later divorce. A plan is required
to make COBRA coverage available to a spouse
following a divorce, even if that spouse is not
enrolled in the plan at the time of the divorce, if
the spouse’s coverage was eliminated during open
enrollment by the employee in “anticipation of the
divorce.” The divorce would be a qualifying event
for the ex-spouse and he/she would be entitled to
elect COBRA for 36 months from the date of the
divorce. Determining whether a change was made
in anticipation of a divorce can be challenging.
Some plan administrators may have a practice
(though not required by COBRA) of automatically
sending a letter to spouses and dependents who
have been dropped, to advise them that they no
longer have coverage and to remind them that to
protect their COBRA rights, they must notify the plan
administrator of any divorce or legal separation
that has occurred or may subsequently occur. In
addition, some description of the plan’s policies on
anticipation of divorce may appear in the COBRA
initial notice, especially if the plan will require the
spouse to provide information to substantiate that
the loss was in anticipation of divorce—e.g., a copy
of the petition for divorce to establish when the
parties first took action to dissolve the marriage.
which the wellness program required tobacco users to pay more than
non-tobacco users (a tobacco use surcharge or tobacco-free incentive)
without offering reasonable alternative standards or waivers as
required by HIPAA.
Importantly, wellness programs that offer a reward to employees
meeting a standard related to a health factor, such as not using
tobacco, are regulated under HIPAA as health contingent programs.
HIPAA expressly requires these programs to provide a reasonable
alternative standard or waiver of the standard. Reasonable
alternative standards that are easy to implement include attending a
free tobacco use counseling appointment with a primary care provider
(non-grandfathered plans must cover tobacco cessation without cost
sharing as a preventive care benefit), calling a free quit line (800-QUIT-
NOW connect directly to a state’s free quit line), or downloading the
QuitGuide free app.
NY Governor Vetoes Bereavement Leave
In August 2018, the New York State Legislature passed a bill that would
have allowed employees to use paid family leave (PFL) to grieve the
loss of a family member. The NY Paid Family Leave Act would have
been amended to include a fourth qualifying reason for leave, “leave
taken for the purposes of bereavement due to the death of a family
member.”
However, New York Governor Andrew Cuomo vetoed this bill on
December 29, 2018. Many business groups, particularly small
employers, had been opposed to the bill as they claimed it compliance
would be too burdensome. As of now, no new bereavement leave
legislation has been introduced in the New York State Legislature. We
will continue to monitor this topic and provide timely updates.
Reminder! New York Paid Family Leave
Benefits Increase for 2019
The New York Paid Family Leave (NYPFL) law went into effect in
January 1, 2018. The law provides job-protected leave with partial
wage replacement for eligible New York employees who take leave
to bond with a child, care for an injured or ill family member, or in
connection with active duty military service. This law was written to
phase in over four years, with increasing wage replacement benefits
and leave entitlements until full implementation in January 2021.
Effective January 1, 2019, the maximum benefit has increased from
50% to 55% of the employee’s average weekly wage (capped at 55%
of the statewide average weekly wage) and from 8 weeks to 10 weeks
of leave. In addition, the state average weekly wage increased from
$1,305.92 to $1,357.11, and contributions increased to 0.153% of
weekly earnings, with a maximum annual contribution of $107.97.

4. REGISTER
TODAY TO
RESERVE YOUR
SPOT!
2019 EMPLOYEE BENEFITS COMPLIANCE CHANGES:
Preparing for 2020 with Clarity
Start the year off on the right
foot. Join benefits compliance
experts for a summary of recent
legislation that affects your
employee benefits program in
2019 and beyond.
MARCH 7, 2019
2:00 -3:00 p.m. Eastern
11:00 -12 noon Pacific
Learn more:
www.crystalco.com/EBSEducation
4 | Crystal Connection: January 2019
This program has been approved in accordance with the requirements of the New York State Continuing Legal Education Board.
Attendees will receive 1.0 credit for attendance. For credit outside of New York, please contact your state CLE Board.
Hosted by Michael S. Grant
Michael is the Senior Managing Director of Crystal’s Employee Benefits, a division of Alliant Insurance
Services. The team provides customized brokerage and consulting services in group benefits, executive
benefits, retirement services, and HR operations support, working collaboratively with clients across
all industries.
Presented by Alan Han
Alan is Partner/Co-Chair of the Benefits & Compensation Practice Group at Davis & Gilbert LLP based
in New York. His practice is devoted to advising clients in the design and implementation of creative,
unique and tax-effective employee benefit plans and programs.
Special appearance by Priya Setty
Priya is a Compliance Consultant at Alliant Employee Benefits. An attorney with nine years of
experience, she advises clients on employee benefits matters including ERISA, ACA, COBRA, and
HIPAA. Her background includes consulting with clients on health and welfare plan requirements and
participant rights under ERISA.
REGISTER NOW!

5. Crystal Connection: January 2019 | 5
ACA Reporting: It’s Getting To Be That
Time…
Now that we’re officially into the 2019 calendar year, ACA reporting
is once again a hot topic. Here are a few reminders as we head into
reporting season:
Forms 1094/1095 have to be completed by “applicable large
employers.” Employers that had 50 or more full-time employees
(including full-time equivalents) on business days in the preceding
calendar year are applicable large employers and are subject to the
reporting rules. Remember that if you are a self-funded plan, you will
complete Sections 1, 2, and 3 of Form 1095C, whereas fully-insured
plans will only complete Sections 1 and 2.
In late 2018, the IRS issued Notice 2018-94, which extended the due
date for furnishing Form 1095C statements to employees by 30 days.
The new due date for furnishing employee statements is March
4, 2019 (extended from January 31, 2019). The 30-day extension
is automatic and does not need to be affirmatively claimed by
employers. Note that the due date for filing with the IRS remains
unchanged. For 2019, the IRS filing due date is February 28 for paper
filers and April 1 for electronic filers.
Notice 2018-94 also extended good faith transition relief from
reporting penalties to the 2018 information-reporting year. Note that
this relief only applies to entities that timely file. If you are changing
reporting vendors (or engaging a vendor for the first time), we
encourage you to finalize this process as soon as possible.
Next Steps after Losing an Exchange
Subsidy Determination Appeal
It’s easy to get frustrated after losing an Exchange Subsidy Appeal.
However, an employee’s eligibility for subsidized exchange coverage
does not necessarily mean an employer will be assessed a shared
responsibility (“Pay or Play”) penalty. These are two separate processes.
Some employees may qualify for subsidized coverage based on
household income alone—even if the employer offers affordable,
minimum value coverage and uses an affordability safe harbor.
Nonetheless, you should still appeal subsidy determinations if
you believe an employee is claiming a subsidy for which they are
ineligible. If the employee is ineligible, he or she will ultimately have
to repay the subsidy, so it’s in both the employer and employee’s
best interest to resolve the issue of subsidy eligibility as early in the
process as possible.
Imputing Income on Domestic Partner
Coverage
As you begin to prepare tax forms for 2018 filings, it is important to
understand the tax implications of employer-provided domestic
partner (DP) coverage.
Where an employee’s DP is eligible for coverage under the
employer plan, and the DP is not otherwise a tax dependent, the
full fair market value of the coverage is taxable to the employee.
In most situations, the employee and the employer make
contributions toward the cost of coverage.
For employees who cover their DP on the employer’s health plan,
there are generally two approaches to imputing income: The
employee can pay their portion of the DP’s coverage on a post-tax
basis and then subtract that post tax payment from the full fair
market value of the coverage, or the employee can pay their entire
premium (employee plus DP and any other dependents) on a pre-
Compliance
Considerations

6. 6 | Crystal Connection: January 2019
ACTION STEP:
HIPAA requires self-funded
group health plans to
identify their protected health
information (PHI) and keep that
PHI private and secure.
tax basis through the cafeteria plan, in which case the employer
taxes the full fair market value of the domestic partner coverage
(“imputes income”).
While the Internal Revenue Code does not provide specific
guidance on calculating fair market value, employers have used
several options to calculate the monthly value of DP coverage:
(1) the single COBRA rate, (2) the incremental cost of adding an
individual to the coverage (this can never be zero), or (3) making an
actuarial determination of the fair market value.
Newly Self-Funded? Check Off This HIPAA
Obligation
If you've implemented a new self-funded health plan for the 2019,
keep in mind that your organization has new obligations arising from
HIPAA.
A group health plan is a plan that provides or pays for healthcare for
employees. Common examples include major medical, Rx, dental,
vision, health reimbursement arrangement (HRA), and health flexible
spending account (Health FSA) coverage. Plans that are not Group
Health Plans (such as life insurance or disability insurance) are not
subject to HIPAA’s Privacy and Security Rules.
HIPAA requires that self-funded group health plans identify their
protected health information (PHI) and keep that PHI private and
secure. The Privacy Rule generally prohibits a Group Health Plan
from using or disclosing PHI except for certain purposes. The
Security Rule generally provides that electronic PHI needs to be
securely held and transmitted (for example, protected by firewalls
and other mechanisms).
We encourage you to review your HIPAA-related practices with legal
counsel to confirm compliance. Also, reach out to your Crystal &
Company representative for access to the HIPAA toolkit.
Quick Tip
QIs an employer obligated to
police an employee’s HSA
eligibility or confirm participants
are not enrolled in other HDHP-
eligible plans?
AGenerally, no. Employers have limited
responsibility for determining whether an
employee is eligible to make HSA contributions. IRS
guidance provides that employers are only responsible
for confirming the following with respect to an employee’s
eligibility: (1) whether the employee is covered under
an HDHP sponsored by that employer; (2) whether the
employee is covered under a non-HDHP (including health
FSAs and HRAs) sponsored by that employer; and (3) the
employee’s age (for catch-up contributions). However,
employers should also monitor an employee’s HSA salary
reduction elections to make sure that those amounts
coupled with any employer contributions do not exceed the
maximum annual contribution limit for HSAs. If an employer
happens to learn that an employee who is contributing
to an HSA in connection with that employer’s HDHP also
has other incompatible coverage, (often a spouse’s general
purpose H-FSA) they may want to raise that issue with the
employee but they have no further obligation to confirm the
status of the other potentially incompatible coverage.

7. The information contained in this document is neither intended nor implied to be legal or regulatory advice or counsel. It is
provided for general informational purposes only and represents a summary based on publicly available sources. We make
no representations about and assume no responsibility for the accuracy or completeness of information contained in this
document and such information is subject to change without notice. Sources available upon request.
Crystal & Company is the home for talented insurance professionals: creative, committed to their clients and driven to deliver
extraordinary results. The company drives the strategy and execution behind insurance and employee benefits programs for
businesses that want to be smart about risk. Crystal was recently acquired by Alliant Insurance Services, one of the nation’s
largest specialty insurance brokerage firms.
To learn more about Alliant, please visit www.alliant.com.

8. 8 | Crystal Connection: January 2019
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