The Internal Revenue Service (IRS) recently issued a Chief Counsel Advice memorandum to remind sponsors of health and dependent care flexible spending arrangements (FSAs) about their responsibility to adequately substantiate claims in order to receive favorable tax treatment under Section 125 of the Internal Revenue Code (the Code). The IRS emphasizes that the standards for substantiation are stringent, and employers who fail to comply will face significant and undesirable consequences. The memorandum also provides a helpful overview of the relevant laws, illustrated through six examples of claims practices.
Buyer Beware: The Newest Wave of Hospital/Fixed Indemnity Programs Promising Payroll Tax Savings
For decades, promoters have marketed programs to employers seeking to leverage the favorable tax treatment accorded employer-provided medical benefits. These programs are variously described as “wellness” or “preventive services” arrangements, and they are usually wrapped in or offered with hospital indemnity policies. While varying in their design features and terminology, these programs all hold out the promise of outsized income and/or payroll tax savings. But can these programs deliver on that promise?
In a new article published by the American Staffing Association, McDermott’s Alden J. Bianchi and American Staffing Association Senior Counsel Edward Lenz express their view that any such health program that claims to achieve material payroll tax savings exposes adopting employers to a significant risk of violating federal tax and other laws.
CMS Releases Proposed Rule: Medicaid Program; Ensuring Access to Medicaid Services
On May 3, 2023, the Centers for Medicare & Medicaid Services (CMS) published the proposed rule Medicaid Program; Ensuring Access to Medicaid Services. The aim of the proposed rule is to enhance transparency in payment rates, establish uniformity in data and monitoring and provide states with fresh avenues to encourage the active involvement of beneficiaries in their Medicaid programs. These efforts are aimed at enhancing access to care. The rule places a special emphasis on home and community-based services (HCBS), encompassing mandates for direct care worker compensation, the development of grievance processes, defining critical incident reporting and implementing HCBS quality reporting measures.
Bipartisan Health Bills Pick Up Steam, but Contentious Debt Ceiling Negotiations Continue
As lawmakers race to put together a debt ceiling deal, Republicans and Democrats are working on healthcare legislation that they believe could have bipartisan support. According to this InsideHealthPolicy article, the potential legislation could include limited site-neutral pay expansions and duals reform.
CMS Ups Hospital Price Transparency Enforcement, Seeks More Authority from Congress
The Centers for Medicare & Medicaid Services recently unveiled plans to toughen its hospital price transparency enforcement. According to this InsideHealthPolicy article, these proposals include earlier and automatic civil penalties, eliminating warning notices for hospitals that have not attempted to comply with price transparency requirements and giving hospitals no more than 45 days to implement a corrective action plan.
