IRS Gives Employers Guidance On Claiming ARP Tax Credits For Paid COVID Leave

April 27, 2021

Small and midsize employers and government employers interested in claiming refundable tax credits allowed by the American Rescue Plan Act of 2021 (“ARP”) to reimburse the employer for the cost of providing ARP-mandated paid sick and family leave to their employees due to COVID-19 (“COVID Leave”) between April 1, 2021 and September 30, 2021 should review the new fact sheet designated FS-2021-09 (“FS-2021-9”) published by the Internal Revenue Service on April 21, 2021.

ARP Paid Sick And Family Leave For Which Tax Credits Can Be Claimed

The Families First Coronavirus Response Act (“FFCRA”) required employers with 500 or fewer employees to provide employees with paid sick leave (“COVID Paid Leave”) or expanded family and medical leave (“COVID Unpaid Leave”) for specified reasons (“COVID Events”) related to COVID-19 through December 31, 2020, but provided for Covered Employers to be reimbursed for these expenditures through employment tax credits claimed by the employer.

Although the FFCRA COVID Paid Leave mandate expired on December 31, 2021 and was not revived or extended by ARP, ARP preserved and extended the availability of the employment tax credits for eligible employers opting to voluntarily continue to provide COVID Paid Leave for all employees between December 31, 2021 and September 30, 2021.  Thus, ARP authorizes employers of 500 or fewer employees that voluntarily provide COVID Paid Leave for all employees to claim a tax credit against their employment taxes.

While the FFCRA mandate was in effect, Covered Employers generally were required to excuse from work and pay the a percentage of the employee’s regular pay up to the specified statutory cap (“COVID Pay”) to any employee unable to work due to a COVID Event until the first work shift that begins on or after the earlier of the following dates:

  • The termination of the need for the COVID Paid Leave; or
  • The date the employee exhausts his maximum entitlement to Paid COVID Leave.

Employers Eligible To Claim ARP Tax Credit

The ARP tax credits generally are available to any eligible employer that voluntarily pays the COVID Paid Leave previously mandated by FFCRA through September 30, 2021.  An eligible employer is any business, including a tax-exempt organization, with fewer than 500 employees. An eligible employer also includes a governmental employer, other than the federal government and any agency or instrumentality of the federal government that is not an organization described in section 501(c)(1) of the Internal Revenue Code. Self-employed individuals also are eligible for similar tax credits.  FS-2021-9 clarifies how employers that provide COVID Paid Leave can claim the ARP employment tax credits.

ARP Tax Credit Amounts

The ARP paid leave credits are tax credits against the employer’s share of the Medicare tax. The tax credits are refundable, which means that the employer is entitled to payment of the full amount of the credits if it exceeds the employer’s share of the Medicare tax.

The tax credit for paid sick leave wages is equal to the sick leave wages paid for COVID-19 related reasons for up to 80 hours for full-time employees (or for each part-time employee, up to the average number of hours such employee works over a 2-week period), limited to $511 per day and $5,110 in the aggregate, at 100 percent of the employee’s regular rate of pay. The tax credit for paid family leave wages is equal to the family leave wages paid for up to twelve weeks, limited to $200 per day and $12,000 in the aggregate, at 2/3rds of the employee’s regular rate of pay. The amount of these tax credits is increased by allocable health plan expenses and contributions for certain collectively bargained benefits, as well as the employer’s share of social security and Medicare taxes paid on the wages (up to the respective daily and total caps).

Claiming The Credit

Eligible employers may claim tax credits for sick and family leave paid to employees, including leave taken to receive or recover from COVID-19 vaccinations, for leave  between April 1, 2021, through September 30, 2021.

Eligible employers report their total paid sick and family leave wages (plus the eligible health plan expenses and collectively bargained contributions and the eligible employer’s share of social security and Medicare taxes on the paid leave wages) for each quarter on their federal employment tax return.  Form 941, Employer’s Quarterly Federal Tax Return is used by most employers to report income tax and social security and Medicare taxes withheld from employee wages, as well as the employer’s own share of social security and Medicare taxes.

In anticipation of claiming the credits on the Form 941, FS-2021-9 confirms eligible employers can keep the federal employment taxes that they otherwise would have deposited, including federal income tax withheld from employees, the employees’ share of social security and Medicare taxes and the eligible employer’s share of social security and Medicare taxes with respect to all employees up to the amount of credit for which they are eligible. The Form 941 instructions  explain how to reflect the reduced liabilities for the quarter related to the deposit schedule.

If an eligible employer does not have enough federal employment taxes set aside for deposit to cover amounts provided as paid sick and family leave wages (plus the eligible health plan expenses and collectively bargained contributions and the eligible employer’s share of social security and Medicare taxes on the paid leave wages), the eligible employer may request an advance of the credits by filing Form 7200, Advance Payment of Employer Credits Due to COVID-19. The eligible employer will account for the amounts received as an advance when it files its Form 941for the relevant quarter.

FS-2021-9 states that self-employed individuals may claim comparable tax credits on their individual Form 1040, U.S. Individual Income Tax Return.

Reminder About Complying With ARP COVID-19 Premium Subsidy Mandates

Employers also should keep in mind that while ARP made paying COVID Paid Leave voluntary, compliance with ARP’s COVID Premium Subsidy rule is mandatory for covered group health plans and their sponsors.  Covered group health plans generally include all group health plans sponsored by private-sector employers or employee organizations (unions) subject to the COBRA rules under the Employee Retirement Income Security Act of 1974 (ERISA); group health plans sponsored by State or local governments subject to the continuation provisions under the Public Health Service Act and group health insurance required to comply with state mini-COBRA laws.

ARP’s COBRA Premium Subsidy rules dictate that covered group health plans offer and allow individuals previously enrolled in employee or dependent coverage who qualify as “assistance eligible individuals” to reinstate if necessary and continue health benefits by enrolling in continuation coverage under the Consolidated Omnibus Reconciliation Act (“COBRA Coverage”) at no charge during their applicable Premium Subsidy Period, but simultaneously allows employer or other sponsors of these group health plans to claim an employment tax credit to reimburse the employer or other health plan sponsor for the amount of the foregone COBRA premiums.

Assistance eligible individuals generally are COBRA qualified beneficiaries who lost coverage under the group health plan due to an involuntary reduction in hours or termination of employment enrolled in COBRA Coverage between April 1, 2021 and September 31, 2021 including those qualifying event was an involuntary employment loss occurring during the 18-month period (29-months for individuals qualifying for extended COBRA eligibility due to disability) prior to April 1, 2021 not enrolled in COBRA as of April 1, 2021.  This generally includes COBRA qualified beneficiaries whose loss of group health coverage results from an involuntary employment reduction or loss for a reason other than gross misconduct after  ARP’s enactment on March 11, 2021 as well as qualified beneficiaries whose involuntary employment loss happened before the effective date who but for their previous failure to elect COBRA or to maintain COBRA Coverage would still be entitled to COBRA Coverage because less than 18 months (29 months for qualified beneficiaries disabled on the date of coverage loss who qualify for extension of the disability coverage period) has elapsed since their employment loss and an event has not occurred following the coverage termination that would terminate their COBRA eligibility before the end of such otherwise applicable maximum COBRA eligibility period.  Group health plans must offer a second opportunity to enroll in COBRA Coverage with COBRA premium assistance to qualified beneficiaries eligible for premium assistance not enrolled in COBRA Coverage as of April 1, 2021.

Assistance eligible individuals who timely enroll in COBRA Coverage with premium assistance generally must receive COBRA Coverage free of charge from the group health plan for any coverage period during the period that begins on or after April 1, 2021 until the earliest of the following dates (the “Premium Subsidy Period”):[1]

  • The date the qualified beneficiary is eligible[2] for coverage under any other group health plan (other than coverage consisting of only excepted benefits,[3] coverage under a health flexible spending arrangement under Code Section 106(c)(2), coverage under a qualified small employer health reimbursement arrangement under Code Section 9831(d)(2) or eligible for benefits under the Medicare program under title XVIII of the Social Security Act;
  • The date of the expiration of the otherwise applicable maximum period of COBRA continuation coverage under Code Section 4980B (other than due to a failure to elect or discontinuation of coverage for nonpayment of COBRA premium that occurred before April 1, 2021).

To implement these rules, ARP also requires that no later than May 31, 2021, covered group health plan administrators notify eligible qualified beneficiaries eligible to obtain COBRA coverage due to a reduction in hours or termination of employment with premium assistance during their Premium Subsidy Period.  In addition to notifying employees and dependents experiencing employment loss related terminations of group health plan coverage of these rules on or after April 1, 2021, the ARP COBRA Premium Subsidy rules also require covered group health plans to notify certain former covered employees or dependents that lost coverage due to a loss of reduction in hours of employment within the last 18 (or in the case of an individual disabled on the date of the loss of coverage meeting certain other rules, potentially 29) months prior to April 1, 2021 qualify to enroll in COBRA coverage at no cost from April 1, 2021 through the end of the Premium Subsidy Period.  Group health plans also are required to send a notification to assistance eligible individuals that elect to enroll using the COBRA Premium Subsidy when their COBRA Premium Subsidy Period expiration is impending.

Regulatory guidance released by the Employee Benefit Security Administration on April 7, 2021 includes model notices and other preliminary guidance on the COBRA Premium Assistance Rules.

Compliance with these requirements is critical for group health plans and their employer or other sponsors.  Plans and their administrators can face administrative sanctions, lawsuits brought by assistance eligible individuals or the Department of Labor or both.  Additionally, as COBRA is one of the 40 laws listed in Internal Revenue Code section 6039D, employer or other plan sponsors of noncompliant plans could become responsible for self-identifying, reporting, self-assessing and paying excise taxes if the violation is not corrected by the due date of their business tax return (without extensions).

To mitigate the impact of complying with the COBRA Premium Subsidy rule, the employer or other entity that bears the cost of providing the COBRA Premium Subsidy should investigate and, if applicable, claim the ARP authorized employment tax credit.  Section 6432 of ARP authorizes the following party  to claim a quarterly tax credit toward the employment taxes under Internal Revenue Code section 3111(b), or so much of the taxes imposed under section 3221(a) as attributable to the rate in effect under section 3111(b), for each calendar quarter.  The amount of the available tax credit is equal to the premiums paid on behalf of the assistance eligible individuals for COBRA Coverage under the COBRA Premium Subsidy rule:

  • If the group health plan is a “multiemployer plan” under ERISA section 3(37), the plan;
  • If the group health plan is not a multiemployer plan and either (a) subject to COBRA or (b) is a plan under which some or all of the coverage is not provided by insurance, and (c), is not a multiemployer plan, the employer; and
  • In the case of any group health plan not described in paragraph (1) or (2), the insurer providing the coverage under the group health plan.

The credit allowed under these provisions for any calendar quarter can’t exceed the tax imposed under those sections for the calendar quarter (reduced by any credits allowed against such taxes under sections 3131, 3132, and 3134) on the wages paid with respect to the employment of all employees of the employer.  Rather, ARP provides that if the amount of the credit allowed exceeds the amount of tax due for that calendar quarter, such excess is treated as an overpayment refundable under Code sections 6402(a) and 6413(b).   Moreover, ARP allows for the credit, including the refundable portion under subparagraph (A),to be advanced, according to forms and instructions provided by the Secretary through the end of the most recent payroll period in the quarter and authorizes the Secretary of Treasury to waive any penalty under section 6656 for any failure to make a deposit of the employment taxes tax imposed by section 3111(b) or section 3221(a)  where the failure was due to the anticipation of the credit allowed under this section.

ARP includes various other rules regarding the calculation and claiming of the credits and for handling situations where assistance eligible individuals make payments which should have been waived.  The Department of Treasury is expected to issue guidance about these and other details of regarding the COBRA Premium Subsidy rules tax credit provisions soon.  Stay tuned for added guidance.

More Information

If you need assistance or would like additional information about these or other legal, management or public policy developments, please contact the author Cynthia Marcotte Stamer via e-mail or via telephone at (214) 452 -8297.

Solutions Law Press, Inc. also invites you receive future updates by registering here and participating and contributing to the discussions in our Solutions Law Press, Inc. LinkedIn SLP Health Care Risk Management & Operations GroupHR & Benefits Update Compliance Group, and/or Coalition for Responsible Health Care Policy. If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating your profile here. For specific information about the these or other legal, management or public policy developments, please contact the author Cynthia Marcotte Stamer via e-mail or via telephone at (214) 452 -8297.

About the Author

Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for 30+ years working as an on demand, special project, consulting, general counsel or other basis with domestic and international business, charitable, community and government organizations of all types, sizes and industries and their leaders on labor and employment and other workforce compliance, performance management, internal controls and governance, compensation and benefits, regulatory compliance, investigations and audits, change management and restructuring, disaster preparedness and response and other operational, risk management and tactical concerns.

Most widely recognized for her work with workforce, health care, life sciences, insurance and data and technology organizations, she also has worked extensively with health plan and insurance, employee benefits, financial, transportation, manufacturing, energy, real estate, accounting and other services, public and private academic and other education, hospitality, charitable, civic and other business, government and community organizations. and their leaders.

Ms. Stamer has extensive experience advising, representing, defending and training domestic and international public and private business, charitable, community and governmental organizations and their leaders, employee benefit plans, their fiduciaries and service providers, insurers, and others has published and spoken extensively on these concerns. As part of these involvements, she has worked, published and spoken extensively on these and other federal and state wage and hour and other compensation, discrimination, performance management, and other related human resources, employee benefits and other workforce and services; insurance; workers’ compensation and occupational disease; business reengineering, disaster and distress;  and many other risk management, compliance, public policy and performance concerns.

A former lead advisor to the Government of Bolivia on its pension  project, Ms. Stamer also has worked internationally and domestically as an advisor to business, community and government leaders on these and other legislative, regulatory and other legislative and regulatory design, drafting, interpretation and enforcement, as well as regularly advises and represents organizations on the design, administration and defense of workforce, employee benefit and compensation, safety, discipline, reengineering, regulatory and operational compliance and other management practices and actions.

Ms. Stamer also serves in leadership of a broad range of professional and civic organizations and provides insights and thought leadership through her extensive publications, public speaking and volunteer service with a diverse range of organizations including as Chair of the American Bar Association (“ABA”) Intellectual Property Section Law Practice Management Committee, Vice Chair of the International Section Life Sciences and Health Committee, Past ABA RPTE Employee Benefits & Other Compensation Group Chair and Council Representative and current Welfare Benefit Committee Co-Chair, Past Chair of the ABA Managed Care & Insurance Interest Group, past Region IV Chair and national Society of Human Resources Management Consultant Forum Board Member,  past Texas Association of Business BACPAC Chair, Regional Chair and Dallas Chapter Chair, former Vice President and Executive Director of the North Texas Health Care Compliance Professionals Association, past Board President of Richardson Development Center (now Warren Center) for Children Early Childhood Intervention Agency, past North Texas United Way Long Range Planning Committee Member, past Board Member and Compliance Chair of the National Kidney Foundation of North Texas, a Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation and many others.

For more information about these concerns or Ms. Stamer’s work, experience, involvements, other publications, or programs, see www.cynthiastamer.com or contact Ms. Stamer via e-mail here.

About Solutions Law Press, Inc.™

Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns.

©2021 Cynthia Marcotte Stamer. Non-exclusive right to republish granted to Solutions Law Press, Inc.™


Model Notice & Related Guidance For Complying With COVID Bill COBRA Subsidy Rules Released; Send Notices & Begin Compliance ASAP

April 7, 2021

Group health plans, their plan administrators and fiduciaries, employer or other sponsors, administrative services providers and insurers should act quickly to distribute required notices using the regulatory guidance just released today (April 7, 2021) and take other actions needed to comply with the Consolidated Omnibus Reconciliation Act of 1985 (“COBRA”) coverage and premium subsidy notification, enrollment and coverage continuation requirements created by Section 9501 (the “COBRA Premium Assistance Rules”) of the American Rescue Plan Act of 2021 (“ARP ”) enacted last month.

The guidance package released today by the Employee Benefit Security Administration includes model notices and other preliminary guidance on the COBRA Premium Assistance Rules, which among other things require group health plans to notify “assistance eligible individuals” no later than May 31, 2021 of right under ARP Section 9501 to enroll in free COBRA Coverage during the ARP Premium Subsidy Period that began April 1, 2021.

As the deadline for providing notification to qualified beneficiaries is May 31, 2021 and the 60 day period for enrolling in COBRA coverage under the ARP COBRA Subsidy Rules does not begin until proper notification is provided, group health plan should move quickly to prepare and distribute the notifications and make other necessary plan arrangements.

This article provides an general overview of the ARP COBRA Premium Subsidy Rules and the Model Notices published by the Department of Labor Employee Benefit Security Administration (“EBSA”) on April 7, 2021 to assist group health plans and their administrators to comply with their notification obligations under these Rules.  For a more comprehensive discussion of these requirements, see here.

New COVID COBRA Premium Subsidy Rules Overview

Section 9501 of the ARP seeks to help “assistance eligible individuals” continue their health benefits by providing assistance to maintain enrollment in covered group health plans by allowing them to enroll and maintain COBRA coverage under those plans without paying their COBRA continuation coverage premiums.  

Covered group health plans generally include all group health plans sponsored by private-sector employers or employee organizations (unions) subject to the COBRA rules under the Employee Retirement Income Security Act of 1974 (ERISA); group health plans sponsored by State or local governments subject to the continuation provisions under the Public Health Service Act and group health insurance required to comply with state mini-COBRA laws.

In addition to mandating the provision of COBRA Coverage at no cost, no later than May 31, 2021, the ARP requires covered group health plans to notify certain former covered employees or dependents that qualify to enroll in COBRA coverage as “assistance eligible individuals” of their right within 60 days of notification to enroll in COBRA Coverage under the group health plan at no cost from April 1, 2021 through September 30, 2021 or, if earlier, the date their COBRA eligibility otherwise end (the “Premium Subsidy Period”). 

From April 1 to September 31, 2021, group health plans cannot require an assistance eligible individual to pay any premiums for COBRA Coverage during his Premium Subsidy Period. ARP requires group health plans to provide COBRA Coverage without charge to assistance eligible individuals who qualify for and elect to enroll in COBRA Coverage with premium subsidy unless individual’s eligibility for COBRA or COBRA premium assistance ends before that date.  Specific notifications to qualified beneficiaries also are required.  

To implement these rules, ARP also requires that no later than May 31, 2021, covered group health plan administrators notify eligible qualified beneficiaries eligible to obtain COBRA coverage with premium assistance by applying for enrollment within the 60 day period following notification.

Assistance eligible individuals who timely enroll in COBRA Coverage with premium assistance generally must receive COBRA Coverage free of charge from the group health plan for any coverage period during the period that begins on or after April 1, 2021 until the earliest of the following dates (the “Premium Subsidy Period”):[1]

  • The date the qualified beneficiary is eligible[2] for coverage under any other group health plan (other than coverage consisting of only excepted benefits,[3] coverage under a health flexible spending arrangement under Code Section 106(c)(2), coverage under a qualified small employer health reimbursement arrangement under Code Section 9831(d)(2) or eligible for benefits under the Medicare program under title XVIII of the Social Security Act;
  • The date of the expiration of the otherwise applicable maximum period of COBRA continuation coverage under Code Section 4980B (other than due to a failure to elect or discontinuation of coverage for nonpayment of COBRA premium that occurred before April 1, 2021).

Assistance eligible individuals generally are qualified beneficiaries who lost coverage under the group health plan due to an involuntary reduction in hours or termination of employment enrolled in COBRA Coverage between April 1, 2021 and September 31, 2021 including those qualifying event was an involuntary employment loss occurring during the 18-month period (29-months for individuals qualifying for extended COBRA eligibility due to disability) prior to April 1, 2021 not enrolled in COBRA as of April 1, 2021.  This generally includes COBRA qualified beneficiaries whose loss of group health coverage results from an involuntary employment reduction or loss for a reason other than gross misconduct after  ARP’s enactment on March 11, 2021 as well as qualified beneficiaries whose involuntary employment loss happened before the effective date who but for their previous failure to elect COBRA or to maintain COBRA Coverage would still be entitled to COBRA Coverage because less than 18 months (29 months for qualified beneficiaries disabled on the date of coverage loss who qualify for extension of the disability coverage period) has elapsed since their employment loss and an event has not occurred following the coverage termination that would terminate their COBRA eligibility before the end of such otherwise applicable maximum COBRA eligibility period.  Group health plans must offer a second opportunity to enroll in COBRA Coverage with COBRA premium assistance to qualified beneficiaries eligible for premium assistance not enrolled in COBRA Coverage as of April 1, 2021.

Sponsoring employers or other plan sponsors may qualify to claim an employment tax credit for COBRA premiums paid on behalf of assistance eligible individuals.  Guidance on these tax rules is pending.

Required Group Health Plan Notifications To Assistance Eligible Individuals

ARP requires group health plans to provide certain written notifications to qualified beneficiaries entitled to qualify to enroll in COBRA coverage with premium assistance.  This generally includes a requirement to provide an initial notification of the availability of premium assistance for COBRA coverage to assistance eligible individuals by the later of May 31, 2021 and subsequently to provide notice of the impending termination of eligibility for the COBRA Premium Subsidy during the 30 day period that begins 45 days before eligibility for COBRA Premium Subsidy ends. ARP dictates the minimum required content of such notices.  Failure to provide the required notification is a failure to meet the notice requirements under the applicable COBRA continuation provision that subjects the group health plan administer and its sponsor to liability.

While ARP allows plan administrators the option of designing their own notices and forms to fulfill this requirement, it also directed the Department of Labor in consultation with the Secretary of the Treasury and the Secretary of Health and Human Services to develop model notices for plans to use for this purpose.  In response to this directive, the Department of Labor EBSA on April 7, 2021 published the following model notices and forms for group health plans to use to fulfill their ARP COBRA Premium Subsidy Rule notification requirements:

More Information

The ARP COBRA Premium Subsidy Rules are only one of a plethora of COVID health care emergency driven regulatory and enforcement changes impacting employers and their employee benefit plans.  If you need assistance or would like additional information about these or other legal, management or public policy developments, please contact the author Cynthia Marcotte Stamer via e-mail or via telephone at (214) 452 -8297.

Solutions Law Press, Inc. also invites you receive future updates by registering here and participating and contributing to the discussions in our Solutions Law Press, Inc. LinkedIn SLP Health Care Risk Management & Operations GroupHR & Benefits Update Compliance Group, and/or Coalition for Responsible Health Care Policy. If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating your profile here. For specific information about the these or other legal, management or public policy developments, please contact the author Cynthia Marcotte Stamer via e-mail or via telephone at (214) 452 -8297.

About the Author

Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for 30+ years working as an on demand, special project, consulting, general counsel or other basis with domestic and international business, charitable, community and government organizations of all types, sizes and industries and their leaders on labor and employment and other workforce compliance, performance management, internal controls and governance, compensation and benefits, regulatory compliance, investigations and audits, change management and restructuring, disaster preparedness and response and other operational, risk management and tactical concerns. 

Most widely recognized for her work with workforce, health care, life sciences, insurance and data and technology organizations, she also has worked extensively with health plan and insurance, employee benefits, financial, transportation, manufacturing, energy, real estate, accounting and other services, public and private academic and other education, hospitality, charitable, civic and other business, government and community organizations. and their leaders.

Ms. Stamer has extensive experience advising, representing, defending and training domestic and international public and private business, charitable, community and governmental organizations and their leaders, employee benefit plans, their fiduciaries and service providers, insurers, and others has published and spoken extensively on these concerns. As part of these involvements, she has worked, published and spoken extensively on these and other federal and state wage and hour and other compensation, discrimination, performance management, and other related human resources, employee benefits and other workforce and services; insurance; workers’ compensation and occupational disease; business reengineering, disaster and distress;  and many other risk management, compliance, public policy and performance concerns.

A former lead advisor to the Government of Bolivia on its pension  project, Ms. Stamer also has worked internationally and domestically as an advisor to business, community and government leaders on these and other legislative, regulatory and other legislative and regulatory design, drafting, interpretation and enforcement, as well as regularly advises and represents organizations on the design, administration and defense of workforce, employee benefit and compensation, safety, discipline, reengineering, regulatory and operational compliance and other management practices and actions.

Ms. Stamer also serves in leadership of a broad range of professional and civic organizations and provides insights and thought leadership through her extensive publications, public speaking and volunteer service with a diverse range of organizations including as Chair of the American Bar Association (“ABA”) Intellectual Property Section Law Practice Management Committee, Vice Chair of the International Section Life Sciences and Health Committee, Past ABA RPTE Employee Benefits & Other Compensation Group Chair and Council Representative and current Welfare Benefit Committee Co-Chair, Past Chair of the ABA Managed Care & Insurance Interest Group, past Region IV Chair and national Society of Human Resources Management Consultant Forum Board Member,  past Texas Association of Business BACPAC Chair, Regional Chair and Dallas Chapter Chair, former Vice President and Executive Director of the North Texas Health Care Compliance Professionals Association, past Board President of Richardson Development Center (now Warren Center) for Children Early Childhood Intervention Agency, past North Texas United Way Long Range Planning Committee Member, past Board Member and Compliance Chair of the National Kidney Foundation of North Texas, a Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation and many others.

For more information about these concerns or Ms. Stamer’s work, experience, involvements, other publications, or programs, see www.cynthiastamer.com or contact Ms. Stamer via e-mail here.

About Solutions Law Press, Inc.™

Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. 

©2021 Cynthia Marcotte Stamer. Non-exclusive right to republish granted to Solutions Law Press, Inc.™

Group health plans, their plan administrators and fiduciaries, employer or other sponsors, administrative services providers and insurers should act quickly to distribute required notices using the regulatory guidance just released today (April 7, 2021) and take other actions needed to comply with the Consolidated Omnibus Reconciliation Act of 1985 (“COBRA”) coverage and premium subsidy notification, enrollment and coverage continuation requirements created by Section 9501 (the “COBRA Premium Assistance Rules”) of the American Rescue Plan Act of 2021 (“ARP ”) enacted last month.

The guidance package released today by the Employee Benefit Security Administration includes model notices and other preliminary guidance on the COBRA Premium Assistance Rules, which among other things require group health plans to notify “assistance eligible individuals” no later than May 31, 2021 of right under ARP Section 9501 to enroll in free COBRA Coverage during the ARP Premium Subsidy Period that began April 1, 2021.

As the deadline for providing notification to qualified beneficiaries is May 31, 2021 and the 60 day period for enrolling in COBRA coverage under the ARP COBRA Subsidy Rules does not begin until proper notification is provided, group health plan should move quickly to prepare and distribute the notifications and make other necessary plan arrangements.

This article provides an general overview of the ARP COBRA Premium Subsidy Rules and the Model Notices published by the Department of Labor Employee Benefit Security Administration (“EBSA”) on April 7, 2021 to assist group health plans and their administrators to comply with their notification obligations under these Rules.  For a more comprehensive discussion of these requirements, see here.

New COVID COBRA Premium Subsidy Rules Overview

Section 9501 of the ARP seeks to help “assistance eligible individuals” continue their health benefits by providing assistance to maintain enrollment in covered group health plans by allowing them to enroll and maintain COBRA coverage under those plans without paying their COBRA continuation coverage premiums.  

Covered group health plans generally include all group health plans sponsored by private-sector employers or employee organizations (unions) subject to the COBRA rules under the Employee Retirement Income Security Act of 1974 (ERISA); group health plans sponsored by State or local governments subject to the continuation provisions under the Public Health Service Act and group health insurance required to comply with state mini-COBRA laws.

In addition to mandating the provision of COBRA Coverage at no cost, no later than May 31, 2021, the ARP requires covered group health plans to notify certain former covered employees or dependents that qualify to enroll in COBRA coverage as “assistance eligible individuals” of their right within 60 days of notification to enroll in COBRA Coverage under the group health plan at no cost from April 1, 2021 through September 30, 2021 or, if earlier, the date their COBRA eligibility otherwise end (the “Premium Subsidy Period”). 

From April 1 to September 31, 2021, group health plans cannot require an assistance eligible individual to pay any premiums for COBRA Coverage during his Premium Subsidy Period. ARP requires group health plans to provide COBRA Coverage without charge to assistance eligible individuals who qualify for and elect to enroll in COBRA Coverage with premium subsidy unless individual’s eligibility for COBRA or COBRA premium assistance ends before that date.  Specific notifications to qualified beneficiaries also are required.  

To implement these rules, ARP also requires that no later than May 31, 2021, covered group health plan administrators notify eligible qualified beneficiaries eligible to obtain COBRA coverage with premium assistance by applying for enrollment within the 60 day period following notification.

Assistance eligible individuals who timely enroll in COBRA Coverage with premium assistance generally must receive COBRA Coverage free of charge from the group health plan for any coverage period during the period that begins on or after April 1, 2021 until the earliest of the following dates (the “Premium Subsidy Period”):[1]

  • The date the qualified beneficiary is eligible[2] for coverage under any other group health plan (other than coverage consisting of only excepted benefits,[3] coverage under a health flexible spending arrangement under Code Section 106(c)(2), coverage under a qualified small employer health reimbursement arrangement under Code Section 9831(d)(2) or eligible for benefits under the Medicare program under title XVIII of the Social Security Act;
  • The date of the expiration of the otherwise applicable maximum period of COBRA continuation coverage under Code Section 4980B (other than due to a failure to elect or discontinuation of coverage for nonpayment of COBRA premium that occurred before April 1, 2021).

Assistance eligible individuals generally are qualified beneficiaries who lost coverage under the group health plan due to an involuntary reduction in hours or termination of employment enrolled in COBRA Coverage between April 1, 2021 and September 31, 2021 including those qualifying event was an involuntary employment loss occurring during the 18-month period (29-months for individuals qualifying for extended COBRA eligibility due to disability) prior to April 1, 2021 not enrolled in COBRA as of April 1, 2021.  This generally includes COBRA qualified beneficiaries whose loss of group health coverage results from an involuntary employment reduction or loss for a reason other than gross misconduct after  ARP’s enactment on March 11, 2021 as well as qualified beneficiaries whose involuntary employment loss happened before the effective date who but for their previous failure to elect COBRA or to maintain COBRA Coverage would still be entitled to COBRA Coverage because less than 18 months (29 months for qualified beneficiaries disabled on the date of coverage loss who qualify for extension of the disability coverage period) has elapsed since their employment loss and an event has not occurred following the coverage termination that would terminate their COBRA eligibility before the end of such otherwise applicable maximum COBRA eligibility period.  Group health plans must offer a second opportunity to enroll in COBRA Coverage with COBRA premium assistance to qualified beneficiaries eligible for premium assistance not enrolled in COBRA Coverage as of April 1, 2021.

Sponsoring employers or other plan sponsors may qualify to claim an employment tax credit for COBRA premiums paid on behalf of assistance eligible individuals.  Guidance on these tax rules is pending.

Required Group Health Plan Notifications To Assistance Eligible Individuals

ARP requires group health plans to provide certain written notifications to qualified beneficiaries entitled to qualify to enroll in COBRA coverage with premium assistance.  This generally includes a requirement to provide an initial notification of the availability of premium assistance for COBRA coverage to assistance eligible individuals by the later of May 31, 2021 and subsequently to provide notice of the impending termination of eligibility for the COBRA Premium Subsidy during the 30 day period that begins 45 days before eligibility for COBRA Premium Subsidy ends. ARP dictates the minimum required content of such notices.  Failure to provide the required notification is a failure to meet the notice requirements under the applicable COBRA continuation provision that subjects the group health plan administer and its sponsor to liability.

While ARP allows plan administrators the option of designing their own notices and forms to fulfill this requirement, it also directed the Department of Labor in consultation with the Secretary of the Treasury and the Secretary of Health and Human Services to develop model notices for plans to use for this purpose.  In response to this directive, the Department of Labor EBSA on April 7, 2021 published the following model notices and forms for group health plans to use to fulfill their ARP COBRA Premium Subsidy Rule notification requirements:

More Information

The ARP COBRA Premium Subsidy Rules are only one of a plethora of COVID health care emergency driven regulatory and enforcement changes impacting employers and their employee benefit plans.  If you need assistance or would like additional information about these or other legal, management or public policy developments, please contact the author Cynthia Marcotte Stamer via e-mail or via telephone at (214) 452 -8297.

Solutions Law Press, Inc. also invites you receive future updates by registering here and participating and contributing to the discussions in our Solutions Law Press, Inc. LinkedIn SLP Health Care Risk Management & Operations GroupHR & Benefits Update Compliance Group, and/or Coalition for Responsible Health Care Policy. If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating your profile here. For specific information about the these or other legal, management or public policy developments, please contact the author Cynthia Marcotte Stamer via e-mail or via telephone at (214) 452 -8297.

About the Author

Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for 30+ years working as an on demand, special project, consulting, general counsel or other basis with domestic and international business, charitable, community and government organizations of all types, sizes and industries and their leaders on labor and employment and other workforce compliance, performance management, internal controls and governance, compensation and benefits, regulatory compliance, investigations and audits, change management and restructuring, disaster preparedness and response and other operational, risk management and tactical concerns. 

Most widely recognized for her work with workforce, health care, life sciences, insurance and data and technology organizations, she also has worked extensively with health plan and insurance, employee benefits, financial, transportation, manufacturing, energy, real estate, accounting and other services, public and private academic and other education, hospitality, charitable, civic and other business, government and community organizations. and their leaders.

Ms. Stamer has extensive experience advising, representing, defending and training domestic and international public and private business, charitable, community and governmental organizations and their leaders, employee benefit plans, their fiduciaries and service providers, insurers, and others has published and spoken extensively on these concerns. As part of these involvements, she has worked, published and spoken extensively on these and other federal and state wage and hour and other compensation, discrimination, performance management, and other related human resources, employee benefits and other workforce and services; insurance; workers’ compensation and occupational disease; business reengineering, disaster and distress;  and many other risk management, compliance, public policy and performance concerns.

A former lead advisor to the Government of Bolivia on its pension  project, Ms. Stamer also has worked internationally and domestically as an advisor to business, community and government leaders on these and other legislative, regulatory and other legislative and regulatory design, drafting, interpretation and enforcement, as well as regularly advises and represents organizations on the design, administration and defense of workforce, employee benefit and compensation, safety, discipline, reengineering, regulatory and operational compliance and other management practices and actions.

Ms. Stamer also serves in leadership of a broad range of professional and civic organizations and provides insights and thought leadership through her extensive publications, public speaking and volunteer service with a diverse range of organizations including as Chair of the American Bar Association (“ABA”) Intellectual Property Section Law Practice Management Committee, Vice Chair of the International Section Life Sciences and Health Committee, Past ABA RPTE Employee Benefits & Other Compensation Group Chair and Council Representative and current Welfare Benefit Committee Co-Chair, Past Chair of the ABA Managed Care & Insurance Interest Group, past Region IV Chair and national Society of Human Resources Management Consultant Forum Board Member,  past Texas Association of Business BACPAC Chair, Regional Chair and Dallas Chapter Chair, former Vice President and Executive Director of the North Texas Health Care Compliance Professionals Association, past Board President of Richardson Development Center (now Warren Center) for Children Early Childhood Intervention Agency, past North Texas United Way Long Range Planning Committee Member, past Board Member and Compliance Chair of the National Kidney Foundation of North Texas, a Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation and many others.

For more information about these concerns or Ms. Stamer’s work, experience, involvements, other publications, or programs, see www.cynthiastamer.com or contact Ms. Stamer via e-mail here.

About Solutions Law Press, Inc.™

Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. 

©2021 Cynthia Marcotte Stamer. Non-exclusive right to republish granted to Solutions Law Press, Inc.™


Businesses Face Increased Wage Costs & Risks From American Rescue Plan Act Of 2021 FLSA Minimum Wage Changes

March 2, 2021

U.S businesses will face sharply increased wage costs if Senate Democrats succeed in their plan to pass as soon as this week the American Rescue Plan Act of 2021 (the “Act”) passed by the House of Representatives on Friday, February 24, 2021.    

One of many provisions impacting employers and their employee benefit plans in the Act that Congressional Democrats are pushing through as a COVID-19 relief package, Section 2101 of the Act amends the Fair Labor Standards Act of 1938 (“FLSA”) to increase immediately upon enactment the federal minimum wage employers covered by the FLSA must pay to most non-exempt employees (“regular rate”) by $2.25 per hour from the current rate of $7.25 to $9.50 per hour, then provides for  additional annual increases the gradual increase of the federal minimum wage that will raise the regular rate to $15.00 per hour over the next four years.  Beginning in 2026, the Act also provides for annual increases in the regular rate based on the median hourly wage of all employees as determined by the Bureau of Labor Statistics rounded up to the nearest multiple of $0.05.  This means the regular minimum wage employers must pay most hourly employees would more than double by 2025 and continue to increase thereafter.

In addition, the Act also phases out current rules allowing employers to pay tipped employees, new employees under age 20 and handicapped employees less than the regular minimum wage over the next five years and raises the minimum wage the FLSA allows employers to pay those employees gradually over the intervening period, with the initial increases slated to take effect upon enactment.  

As Senate Majority Leader Chuck Schumer has announced plans to bring the Act before the Senate for a vote as early as this week and President Biden committed to promptly sign the Act that is the centerpiece of the Democrats latest COVID-19 relief package, businesses are likely to feel the impact of the increased minimum wage and other mandates within days if not by month’s end.

These amendments will directly and immediately increase labor costs for non-exempt workers as well as employee benefit and fringe benefit costs and obligations tied to compensation or based on FLSA classifications. Other Biden-Harris Administration policies expanding the scope of the FLSA and other federal laws through revisions and enforcement of rules for characterizing workers as employees rather than independent contractors and enforcing expansive joint employer liability rules as well as other announced or expected Biden-Harris Administration proworker regulatory and enforcement changes almost certainly will expand the reach and implications of these changes.  The Biden-Harris Administration’s January 20, 2021 Memorandum on Regulatory Freeze Pending Review suspended the implementation of the Trump Administration led Labor Department’s Final Rule: Independent Contractor Status under the Fair Labor Standards Act slated to take effect on March 8, 2021, which sought to restore and clarify historical more employer friendly policies for distinguishing employee versus independent contractor relationships for purposes of the FLSA, the WHD’s withdrawal of previously issued Trump Administration era opinions that applied that Administration’s more expansive view of independent contractor status, and  WHD’s issuance of new opinions articulating and apply applying significantly narrower definitions of independent contractor and broader definitions of employees. 

Based on the agenda announced by the Biden-Harris Administration, businesses also should expect the Biden-Harris Administration and private plaintiffs to use these more employee friendly interpretation and enforcement policies to attack employer characterizations of workers as contractors to justify nonpayment of minimum wage and overtime to those workers.  Along with being forced to pay unpaid wages and overtime with interest, businesses unsuccessful in defending their worker classification characterizations can expect to face liquidated damage awards to private litigants equal to two times the amount of the back pay liability or in the case of WHD enforcement for repeated or willful violations, civil monetary penalties.

In assessing and managing these risks, businesses should evaluate their potential joint employer exposure to liability for unpaid minimum wage and overtime violations by other businesses providing labor or other services as the Biden-Harris Administration also is expected to seek to apply the much more expansive interpretation of joint employment applied during the Obama Administration abandoned during the Trump Administration.

These misclassification mistakes can be particularly costly.  FLSA liabilities arising from misclassification of workers as independent contractors carry significant risk both because businesses often fail to pay required minimum wages or overtime as well as don’t keep required time records.  The Biden-Harris Administration has made clear that it plans to move quickly to reimplement the regulatory and enforcement practices used during the Obama Administration to aggressively challenge employers’ characterization of workers as exempt from the FLSA’s minimum wage and overtime rules as independent contractors.

Considering these developments, all U.S. businesses and business leaders are well-advised both to begin preparing to comply with anticipated increases in federal minimum wage rates, as well as well as assess and take appropriate steps to mitigate their exposure to anticipated aggressive efforts to reclassify service providers considered to perform work as independent contractors, as contractors or employees of subcontractors or other businesses or both. 

More Information

The FLSA reforms are only one of a number of provisions of the Act impacting employers and their employee benefit plans. For more a more comprehensive discussion of the FLSA amendments included in the Act, see here.

Solutions Law Press, Inc. also invites you receive future updates by registering here and participating and contributing to the discussions in our Solutions Law Press, Inc. LinkedIn SLP Health Care Risk Management & Operations GroupHR & Benefits Update Compliance Group, and/or Coalition for Responsible Health Care Policy. If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating your profile here. For specific information about the these or other legal, management or public policy developments, please contact the author Cynthia Marcotte Stamer via e-mail or via telephone at (214) 452 -8297.

About the Author

Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for 30+ years working as an on demand, special project, consulting, general counsel or other basis with domestic and international business, charitable, community and government organizations of all types, sizes and industries and their leaders on labor and employment and other workforce compliance, performance management, internal controls and governance, compensation and benefits, regulatory compliance, investigations and audits, change management and restructuring, disaster preparedness and response and other operational, risk management and tactical concerns. 

Most widely recognized for her work with workforce, health care, life sciences, insurance and data and technology organizations, she also has worked extensively with health plan and insurance, employee benefits, financial, transportation, manufacturing, energy, real estate, accounting and other services, public and private academic and other education, hospitality, charitable, civic and other business, government and community organizations. and their leaders.

Ms. Stamer has extensive experience advising, representing, defending and training domestic and international public and private business, charitable, community and governmental organizations and their leaders, employee benefit plans, their fiduciaries and service providers, insurers, and others has published and spoken extensively on these concerns. As part of these involvements, she has worked, published and spoken extensively on these and other federal and state wage and hour and other compensation, discrimination, performance management, and other related human resources, employee benefits and other workforce and services; insurance; workers’ compensation and occupational disease; business reengineering, disaster and distress;  and many other risk management, compliance, public policy and performance concerns.

A former lead advisor to the Government of Bolivia on its pension  project, Ms. Stamer also has worked internationally and domestically as an advisor to business, community and government leaders on these and other legislative, regulatory and other legislative and regulatory design, drafting, interpretation and enforcement, as well as regularly advises and represents organizations on the design, administration and defense of workforce, employee benefit and compensation, safety, discipline, reengineering, regulatory and operational compliance and other management practices and actions.

Ms. Stamer also serves in leadership of a broad range of professional and civic organizations and provides insights and thought leadership through her extensive publications, public speaking and volunteer service with a diverse range of organizations including as Chair of the American Bar Association (“ABA”) Intellectual Property Section Law Practice Management Committee, Vice Chair of the International Section Life Sciences and Health Committee, Past ABA RPTE Employee Benefits & Other Compensation Group Chair and Council Representative and current Welfare Benefit Committee Co-Chair, Past Chair of the ABA Managed Care & Insurance Interest Group, past Region IV Chair and national Society of Human Resources Management Consultant Forum Board Member,  past Texas Association of Business BACPAC Chair, Regional Chair and Dallas Chapter Chair, former Vice President and Executive Director of the North Texas Health Care Compliance Professionals Association, past Board President of Richardson Development Center (now Warren Center) for Children Early Childhood Intervention Agency, past North Texas United Way Long Range Planning Committee Member, past Board Member and Compliance Chair of the National Kidney Foundation of North Texas, a Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation and many others.

For more information about these concerns or Ms. Stamer’s work, experience, involvements, other publications, or programs, see www.cynthiastamer.com or contact Ms. Stamer via e-mail here.

About Solutions Law Press, Inc.™

Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. 

©2021 Cynthia Marcotte Stamer. Non-exclusive right to republish granted to Solutions Law Press, Inc.™


To 2/18 Complimentary Update On Proposed COVID Relief Provisions Impacting Employers & Employee Benefit Plans

February 12, 2021
Register for 2/18 Complimentary Zoom Briefing

Solutions Law Press, Inc.™ invites employers, employee benefit plan fiduciaries and vendors and other impacted business leaders participate in a complimentary briefing on the employer and employee benefit requirements of the H.R. 6379, Take Responsibility for Workers and Families Act as approved by the Ways & Means Committee as of February 12, 2021. The live Zoom briefing now will begin at 9:00 a.m. Central Time on Thursday, February 18, 2021 to avoid potential weather-related power and other disruptions associated with winter storms at its originally scheduled presentation time on Monday, February 15.

Employers and employee benefit plan fiduciaries and vendors should get up to speed on a new mandate to subsidize health coverage continuation and other requirements of the Act that the House Ways & Means Committee voted on February 11, 2021 to include in the lasted COVID-19 relief package the Democrat Majority plans to fast track through Congress.  By the end of February if not before, Congress is expected to pass a final COVID-19 relief package including these employer and employee benefit plan mandates in substantially the same form as approved by the Ways and Means Committee. As these provisions will require quick action by employers and plans, employers, employee benefit plans, their fiduciaries and plan vendors should begin preparing now to comply with the anticipated new requirements

Registration & Program Details

Solutions Law Press, Inc. will host the 30-minute Zoom briefing beginning at 9:00 a.m. Central Time on Thursday, February 18, 2021 on the current provisions of the Act. The briefing will be conducted attorney Cynthia Marcotte Stamer. Participation is complimentary, but space is limited. Accordingly, registration is required and registration and participation will be granted on a first come, first serve basis here.

About Presenter Cynthia Marcotte Stamer

A Fellow in the American College of Employee Benefits Counsel, Board Certified in Labor and Employment Law by the Texas Board of Legal Specialization and recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney, 30+ years working as an on demand, special project, consulting, general counsel or other basis with domestic and international business, employee benefit plan, health care, insurance, financial service, charitable, community and government organizations of all types, sizes and industries and their leaders on labor and employment and other workforce, employee benefits and compensation, performance management, internal controls, governance, regulatory and operational compliance, investigations and audits, change management and restructuring, disaster preparedness and response and other operational, risk management and tactical concerns.  Best known for her leading edge work and thought leadership on workforce management and reengineering and health and other employee benefits concerns, Ms. Stamer regularly advises and represents organizations on the design, administration and defense of workforce, employee benefit and compensation, safety, discipline, reengineering, regulatory and operational compliance and other management practices and actions.  Along with advising and representing management organizations, Ms. Stamer also has worked continuously throughout her career internationally and domestically as an advisor to business, community and government leaders on health care, savings and retirement, workforce, and other legislative and regulatory design, drafting, interpretation, enforcement and other domestic and international public policy.

Ms. Stamer also serves in leadership of a broad range of professional and civic organizations and provides insights and thought leadership through her extensive publications, public speaking and volunteer service with a diverse range of organizations including as Chair of the American Bar Association (“ABA”) Intellectual Property Section Law Practice Management Committee, Vice Chair of the International Section Life Sciences and Health Committee, Past ABA RPTE Employee Benefits & Other Compensation Group Chair and Council Representative and current Welfare Benefit Committee Co-Chair, Past Chair of the ABA Managed Care & Insurance Interest Group, past Region IV Chair and national Society of Human Resources Management Consultant Forum Board Member,  past Texas Association of Business BACPAC Chair, Regional Chair and Dallas Chapter Chair, former Vice President and Executive Director of the North Texas Health Care Compliance Professionals Association, past Board President of Richardson Development Center (now Warren Center) for Children Early Childhood Intervention Agency, past North Texas United Way Long Range Planning Committee Member, past Board Member and Compliance Chair of the National Kidney Foundation of North Texas, a Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation and many others.

For more information about these concerns or Ms. Stamer’s work, experience, involvements, other publications, or programs, see www.cynthiastamer.com or contact Ms. Stamer via e-mailhere.

About Solutions Law Press, Inc.™

Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns.

Solutions Law Press, Inc. invites you receive future updates by registering on our Solutions Law Press, Inc. Website and participating and contributing to the discussions in our Solutions Law Press, Inc. LinkedIn SLP Health Care Risk Management & Operations GroupHR & Benefits Update Compliance Group, and/or Coalition for Responsible Health Care Policy Group.


Businesses Should Confirm Using Benefits, Meeting Mandates Of Special COVID-19 Tax Rules

June 26, 2020

Earlier this week, the Internal Revenue Service (“IRS”) announced that employee benefit plan participants that already took a required minimum distribution (RMD) in 2020 from certain retirement accounts now has the opportunity through August 31, 2020 to roll those funds back into a retirement account following the Coronavirus Aid, Relief, and Economic Security (CARES) Act RMD waiver for 2020.  The announcement of this relief covers one of a long and growing list of special tax and other COVID-19 responsive special rules and requirements that may change requirements, provide special relief or both for businesses and individuals that every business leader and individual should carefully monitor and respond to appropriately.

Retirement Plan Rollover Relief

On July 23, 2020, the IRS announced its extension of the 60-day rollover period for any RMDs already taken this year to August 31, 2020 to give taxpayers time to take advantage of this opportunity in Notice 2020-51 (PDF).  The Notice also answers questions regarding the waiver of RMDs for 2020 under the Coronavirus Aid, Relief, and Economic Security Act, known as the CARES Act.

The CARES Act enabled any taxpayer with an RMD due in 2020 from a defined-contribution retirement plan, including a 401(k) or 403(b) plan, or an IRA, to skip those RMDs this year. This includes anyone who turned age 70 1/2 in 2019 and would have had to take the first RMD by April 1, 2020. This waiver does not apply to defined-benefit plans.

In addition to the rollover opportunity, an IRA owner or beneficiary who has already received a distribution from an IRA of an amount that would have been an RMD in 2020 can repay the distribution to the IRA by August 31, 2020. The notice provides that this repayment is not subject to the one rollover per 12-month period limitation and the restriction on rollovers for inherited IRAs.

The notice provides two sample amendments that employers may adopt to give plan participants and beneficiaries whose RMDs are waived a choice as to whether or not to receive the waived RMD.

Other COVID-19 Tax Rules & Relief

The guidance and relief in Notice 2020-51 highlights only one of a long list of special COVID-19 associated tax rules and relief that could apply to a business, its employees or employee benefit plan participants or both including the following:

Along with these tax rules, businesses and their employees also may be impacted by a broad range of special federal and state labor and employment and other rules adopted in response to the continuing COVID-19 health care emergency and its fallout.  Businesses and their leaders should carefully review and monitor these and other COVID-19 specific rules to ensure that their businesses don’t trigger unanticipated liability by failing to meet critical requirements or to ensure that they take full advantage of all available relief.

More Information

We hope this update is helpful. For more information about the these or other health or other legal, management or public policy developments, please contact the author Cynthia Marcotte Stamer via e-mail or via telephone at (214) 452 -8297.

Solutions Law Press, Inc. invites you receive future updates by registering on our Solutions Law Press, Inc. Website and participating and contributing to the discussions in our Solutions Law Press, Inc. LinkedIn SLP Health Care Risk Management & Operations GroupHR & Benefits Update Compliance Group, and/or Coalition for Responsible Health Care Policy.

About the Author

Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for 30+ years legal and operational management work, coaching, public policy and regulatory affairs leadership and advocacy, training and public speaking and publications. As a significant part of her work, Ms. Stamer has worked extensively domestically and internationally on an demand, special project and ongoing basis with health industry, health plan and insurance and other businesses of all types, government and community organizations and their leaders, spoken and published extensively on workforce and other services, compensation and benefits, and related tax; insurance; workers’ compensation and occupational disease; business reengineering, disaster and distress;  and many other management concerns.

Board Certified in Labor and Employment Law By the Texas Board of Legal Specialization, Scribe for the ABA JCEB Annual Agency Meeting with OCR, Vice Chair of the ABA International Section Life Sciences Committee, and the ABA RPTE Employee Benefits & Other Compensation Group and a former Council Representative, Past Chair of the ABA Managed Care & Insurance Interest Group, former Vice President and Executive Director of the North Texas Health Care Compliance Professionals Association, past Board President of Richardson Development Center (now Warren Center) for Children Early Childhood Intervention Agency, past North Texas United Way Long Range Planning Committee Member, and past Board Member and Compliance Chair of the National Kidney Foundation of North Texas, and a Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer has extensive experience advising, representing, defending and training health care providers, health plans and insurers, employers, community organizations and others about HIPAA and other privacy concerns and has published and spoken extensively on these concerns.

Her involvement with HIPAA and other privacy and data concerns has taken place as part of her more than 30 years involvement working with with public and private health industry, health insurance and other employers and organizations of all sizes, employee benefit plans, insurance and financial services, health industry and a broad range of public and private domestic and international business, community and government organizations and leaders on pandemic and other health and safety, workforce and performance preparedness, risks and change management, disaster preparedness and response and other operational and tactical concerns throughout her adult life. A former lead advisor to the Government of Bolivia on its pension  project, Ms. Stamer also has worked internationally and domestically as an advisor to business, community and government leaders on crisis preparedness and response, privacy and data security, workforce, health care and other policy and enforcement, as well as regularly advises and defends organizations about the design, administration and defense of their organizations workforce, employee benefit and compensation, safety, discipline and other management practices and actions.

Ms. Stamer also serves in leadership of a broad range of professional and civic organizations and shares insights and thought leadership through her extensive publications and public speaking. For more information about Ms. Stamer or her health industry and other experience and involvements, see www.cynthiastamer.com or contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.

About Solutions Law Press, Inc.™

Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources available here such as:

If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating your profile here.  ©2020 Cynthia Marcotte Stamer. Non-exclusive right to republish granted to Solutions Law Press, Inc.


Ezekiel Elliott COVID-19 Diagnosis Disclosure Outrage Highlights Need To Handle COVID-19 & Other Medical Information With Care

June 16, 2020

While most COVID-19 test results won’t draw the widespread coverage and public interest that Elliott’s diagnosis did, businesses generally and health care providers, health plans, health care clearinghouses specifically need to recognize that coverage of the Elliott outrage will heighten awareness and therefore their need to properly handle and protect COVID-19 or other infectious disease and other testing, diagnosis, treatment and other medical and disability information collected or encountered in the course of their operation through the current COVID-19 health care emergency and otherwise in their own organizations.

ADA Responsibilities of Employers In Handling Medical Information

Protecting COVID-19 testing and other medical information isn’t just a concern for covered entities and their business associates, however.  Businesses that are not covered entities also generally should use care in their collection, use, protection and disclosure of COVID-19 testing and other medical information to mitigate their potential liability under the disability discrimination requirements of the ADA, the Rehabilitation Act  and other laws.   For instance, along with prohibiting employers covered by the ADA from discriminating against qualified individuals with disabilities and requiring those employers to provide reasonable accommodations to such employees, the ADA also regulates the ability of covered employers to perform or require medical testing and imposes specific medical confidentiality requirements on all covered employers.  See e.g., What You Should Know About COVID-19 and the ADA, the Rehabilitation Act, and Other EEO Laws.

The ADA’s medical confidentiality requirements dictate that covered employers maintain medical information and records about employees and applicants in separate, confidential files.  Covered employers are responsible for maintaining the confidentiality of medical information and records and cannot disclose it without authorization from the subject employee except under the specific conditions allowed by the ADA.

EEOC guidance provided in its publication entitled Pandemic Preparedness in the Workplace and the Americans With Disabilities Act as updated as of March 19, 2020 emphasizes that covered employers remain accountable for complying with the requirements of the ADA and Rehabilitation Act during the current COVID-19 health care emergency and other pandemics.

While the EEOC Technical Assistance Questions and Answers in its publication What You Should Know About COVID-19 and the ADA, the Rehabilitation Act, and Other EEO Laws
Technical Assistance Questions and Answers as updated on June 11, 2020 recognizes temperature checks and certain other COVID-19 inquiries to screen for COVID-19 exposure or infection might be permitted under the safety exception to the ADA during the current COVID-19 health care emergency, that and other EEOC guidance makes clear that covered employers remain responsible for ensuring that the ADA medical confidentiality requirements are met with regarding to testing and related medical information.  As a result, all ADA-covered employers generally and health care employers specifically are urged to use care both in the administration and collection of information regarding COVID-19 testing and diagnosis, and the protection of the confidentiality of COVID-19 and other medical information and records collected in the course of administering employment, safety, medical leave or other absence or other operations throughout the COVID-19 health care emergency.

Added HIPAA & Texas HIPAA Concerns For Health Plans & Other HIPAA Covered Entities

Assuming that the disclosure of Elliott’s information is traced to a testing provider, laboratory or other health care provider, health plan or insurer, health care clearing house subject to HIPAA (“covered entity”), a service provider acting as a business associate to a covered entity, or a member of their workforce, the unauthorized release of Elliott’s test results, that he underwent the testing, or other medical information, Elliott’s complaint about a possible HIPAA violation could be well-founded as both HIPAA and the somewhat broader provisions of the Texas Medical Privacy Act (“Tex-HIPAA”) (hereafter collectively the “HIPAA Laws”) both generally prohibit unauthorized disclosure of protected medical information such as his COVID-19 test or test results to the media.

The COVID-19 test results and of “individually identifiable personal health information” about Elliott and his encounter created, used, access or disclosed by the testing facility or other health care provider, a health plan, health care clearinghouse (“covered entity”) or a member of its workforce or a subcontractor acting as a business associated qualify as “protected health information subject to HIPAA’s privacy, security, breach and privacy rights protections of HIPAA and Tex-HIPAA.

The HIPAA and Tex-HIPAA prohibition against unauthorized disclosure of protected health information to the media stem from the HIPAA Laws’ broader requirement that covered entities and business associates affirmatively safeguard protected health information against unauthorized use, access or disclosure and sweeping prohibition against their disclosing or allowing the disclosure of protected health information without a HIPAA-compliant authorization except under the narrow and specifically delineated exceptions identified in the rule, none of which appear relevant to the media disclosure objected to by Elliott from the currently available public information.

Both HIPAA Laws expressly prohibit unauthorized disclosure of protected health information by covered entities or their business associates except under the specifically detailed conditions specified in one or more exceptions to this general rule.  Assuming all relevant conditions to qualify for the exception are met, HIPAA does allow covered entities and business associates treatment, payment, operations, public health activities or another situation meeting all applicable requirements of an express exception to the HIPAA prohibition against disclosure.

The federal agency primarily responsible for the implementation and enforcement of HIPAA, the Department of Health & Human Services Office of Civil Rights (“OCR”) regulatory guidance and enforcement history clearly communicates OCR’s view that covered entities or business associates violate HIPAA by disclosing protected health information to the media or other third parties without first obtaining a HIPAA-compliant authorization from the subject of the information except under the specific circumstances described in an applicable Privacy Rule exception.

In its May 5, 2020 Guidance on Covered Health Care Providers and Restrictions on Media Access to Protected Health Information about Individuals in Their Facilities (“5/5 Guidance”), for instance, OCR specifically reminded HIPAA covered health care providers that the HIPAA Privacy Rule does not permit them to give media and film crews access to protected health information including access to facilities where patients’ protected health information will be accessible without the patients’ prior authorization. has made clear that testing facilities and other health care providers generally remain accountable for complying with the HIPAA Privacy Rule that prohibits unauthorized use, access or disclosure of test results and other protected health information except   as specifically allowed in the applicable HIPAA Law.

The 5/5 Guidance specifically states, “The COVID-19 public health emergency does not alter the HIPAA Privacy Rule’s existing restrictions on disclosures of protected health information (PHI) to the media.’  Additionally, it states confirmed that even during the current COVID-19 public health emergency, covered health care providers remain required to obtain a valid HIPAA authorization from each patient whose PHI will be accessible to the media before the media is given access to that PHI. In this regard, the 5/5 Guidance states, As explained in prior guidance,1 HIPAA does not permit covered health care providers to give the media, including film crews, access to any areas of their facilities where patients’ PHI will be accessible in any form (e.g., written, electronic, oral, or other visual or audio form), without first obtaining a written HIPAA authorization from each patient whose PHI would be accessible to the media. 2 Additionally, covered health care providers may not require a patient to sign a HIPAA authorization as a condition of receiving treatment.  The guidance clarifies that masking or obscuring patients’ faces or identifying information before broadcasting a recording of a patient is not sufficient, as a valid HIPAA authorization is still required before giving the media such access.  Additionally, the guidance describes reasonable safeguards that should be used to protect the privacy of patients whenever the media is granted access to facilities.

OCR’s positions on disclosures to the media in the 5/5 Guidance reaffirm OCR’s longstanding interpretation and enforcement of HIPAA as prohibiting disclosures of PHI and media access to areas where patients or their protected health information might be visible or accessible is long standing.

In June, 2013, for instance, OCR sent a clear message to covered entities and business associates not to make unconsented disclosures of protected health information to or allow media access to areas where patients or their protected health information could be accessed or observed when it required Shasta Regional Medical Center (SRMC) to pay $275,000 to resolve OCR HIPAA charges stemming from SRMC’s unauthorized disclosure of protected health information to multiple media outlets as part of a public relations effort to mitigate damage from fraud and misconduct allegations made against it by the patient.  See HIPAA Sanctions Triggered From Covered Entity Statements To Media, Workforce.

OCR subsequently reinforced its warning to covered entities and business associates about  unauthorized disclosures of protected health information in a 2016 Frequently Asked Question (Media FAQ) that discussed covered entities HIPAA responsibilities when dealing with the media.  The Media FAQ was issued in conjunction with OCR’s collection of its $2.2 million settlement with New York-Presbyterian Hospital and a series of other settlements totaling $999,000 from three other health care providers accused of violating HIPAA by allowing media personnel into treatment or other areas where patients or patient protected health information was accessible without first obtaining a HIPAA compliant written authorization from each patient or other subject present or whose protected health information otherwise would be accessible to the media.  See $999K Price Hospitals Pay To Settle HIPAA Privacy Charges From Allowing ABC To Film Patients Without Authorization.

In the Media FAQ, OCR stated HIPAA required covered entities to obtain prior written authorization before disclosing protected health information to the media or allowing media to film or access exam rooms or other areas where patients or protected health information could be observed or accessed.  The Media FAQ also stated that masking or blurring the identity of the patient or their specific information was not an adequate substitute for written authorization and that covered entities also were responsible for ensuring that reasonable safeguards were in place to protect against impermissible disclosures or to limit incidental disclosures of other PHI in areas where media is allowed access where prior authorization has not been obtained.  While stressing the importance of compliance with these requirements, however, the Media FAQ clarified that the HIPAA Privacy Rule does not require health care providers to prevent members of the media from entering areas of their facilities that are otherwise generally accessible to the public like public waiting areas or areas where the public enters or exits the facility In addition, the Media FAQ states a health care provider or other Covered Entity also highlighted certain other limited circumstances where HIPAA might allow limited disclosure of protected health information to the media in accordance with specific provisions of the Privacy Rule about an incapacitated patient when in the patient’s best interest; or disclose a patient’s location in the facility and condition in general terms that do not communicate specific medical information about the individual to the media or any other person any person where the individual has not objected to his information being included in the facility directory and the media representative or other person asks for the individual by name.

In the intervening years, OCR periodically has issued additional reminders to covered entities about HIPAA’s general prohibition against unconsented disclosures to the media as well as sanctioned harshly various covered entities for violating these prohibitions.  In 2017, OCR required the largest not-for-profit health system in Southeast Texas, Memorial Hermann Health System (MHHS), to pay OCR $2.4 million to settle charges it violated HIPAA by issuing a press release to the media that shared the name and other protected health information about a patient suspected of using a fraudulent insurance card to obtain care at a clinic without the patient’s prior HIPAA-compliant authorization. While OCR concluded a report made MHHS made to law enforcement about the patient was allowable under the Privacy Rule, OCR found MHHS violated the Privacy Rule by issuing the press release disclosing the patient’s name and other PHI without authorization from the patient and also by failing to timely document the sanctioning of its workforce members for impermissibly disclosing the patient’s information.  See $2.4M HIPAA Settlement Warns Providers About Media Disclosures Of PHI.

While OCR has announced certain temporary enforcement relief from a narrow set of HIPAA requirements during the COVID-19 health care emergency as applied to certain qualifying testing facilities, telemedicine providers and other specific health care providers engaging in certain  types of health care during the COVID-19 health care emergency, OCR consistently has made clear that its COVID-19 HIPAA relief is very limited in scope, applicability and duration and in no way waives the prohibition against unauthorized disclosure to the media or other third parties not generally permitted under HIPAA.  See e.g., 5/5 Guidance; OCR Issues Guidance on How Health Care Providers Can Contact Former COVID-19 Patients About Blood and Plasma Donation Opportunities; OCR Announces Notification of Enforcement Discretion for Community-Based Testing Sites During the COVID-19 Nationwide Public Health EmergencyOCR Announces Notification of Enforcement Discretion to Allow Uses and Disclosures of Protected Health Information by Business Associates for Public Health and Health Oversight Activities During The COVID-19 Nationwide Public Health Emergency; OCR Issues Bulletin on Civil Rights Laws and HIPAA Flexibilities That Apply During the COVID-19 Emergency; OCR Issues Guidance to Help Ensure First Responders and Others Receive Protected Health Information about Individuals Exposed to COVID-19; OCR Issues Guidance on Telehealth Remote Communications Following Its Notification of Enforcement Discretion; OCR Announces Notification of Enforcement Discretion for Telehealth Remote Communications During the COVID-19 Nationwide Public Health Emergency.  To the contrary, OCR’s announcement of the 5/5 guidance quotes OCR Director Roger Severino, as stating “Hospitals and health care providers must get authorization from patients before giving the media access to their medical information; obscuring faces after the fact just doesn’t cut it,” Severino added.

Minimize Exposures By Preventing Unauthorized Media & Other Disclosures

Even without Mr. Elliott’s outrage heightening awareness about HIPAA’s prohibitions against unauthorized disclosures of protected health information to the media, the recent warning about HIPAA’s restrictions on media disclosure and access to protected health information and patient treatment areas in OCR’s 5/5 Guidance alone should serve as a strong incentive for covered entities and business associate promptly to reverify that the adequacy of their current policies, practices and training to prevent inappropriate media disclosures of protected health information and otherwise defend their compliance with OCR’s interpretation of HIPAA’s requirements for dealing with the media.  Predictable heightened patient and public awareness and expectations about these and other HIPAA responsibilities fueled by the widespread media coverage of Mr. Elliott’s COVID-19 test results and his outrage about the unauthorized disclosure of his test results makes it more important than ever that health care providers and other covered entities and business associates take steps to prepare to respond to foreseeable complaints and questions by other patients, their families and others.

As part of these efforts, most covered entities and business associates may want to consider, at minimum, reconfirming the adequacy and understanding of their current media and other disclosure policies and practices, as well as sending strategic communications to their business associates and members of their workforce reminding them of the covered entity’s policies regarding media access and disclosures.

As part of these activities, covered entities should consider conducting a well-documented assessment of their current policies, practices and workforce training on disclosure of information to the media and other parties generally, as well as policies on allowing media or other parties to enter, film, photograph or record within their facilities or otherwise disclosing or allowing media access to their facilities.  Along with these efforts, most covered entities also may want to consider also reminding workforce members that their patient privacy responsibilities also requires that they not share or discuss patient protected health information, film, photograph, or otherwise record, patients or areas where patients or patient protected health information is or might be present without prior written consent of the patient and the consent of their organization.

Since covered entities and members of their workforce also are likely to be subject to other statutory, ethical, contractual or other privacy or confidentiality requirements beyond those imposed by the HIPAA Laws such as medical confidentiality duties applicable to physicians and other health care providers under medical ethics, professional licensure or other similar rules, contractual responsibilities, as well as common law or statutory privacy, theft of likeness or other statutory or common law tort claims and exposures.  Covered entities and business associates generally should consider whether other steps are advisable to manage these exposures along with managing their HIPAA Law compliance.

Given the high incidence of COVID-19 exposure and infection within their workplace, covered entities, business associates and other employers should use care fulfill their HIPAA Law relevant employment law confidentiality responsibilities when dealing with testing or other medical information about employees.  In this respect, along with any HIPAA Law obligations that a covered entity or business associate has in handling medical information about a patient who also is an employee or family member of an employee, covered entities also should use care to ensure that medical confidentiality requirements of the Americans With Disabilities Act (“ADA”) and other applicable employment laws are met.

Since this analysis and review in most cases will result in the uncovering or discussion of potentially legally or politically sensitive information, Covered Entities should consider consulting with or engaging experienced legal counsel for assistance in structuring and executing these activities to maximize their ability to claim attorney-client privilege or other evidentiary protections against discovery or disclosure of certain aspects of these activities.

Finally, covered entities should keep in mind that HIPAA and other medical privacy compliance and risk management is an ongoing process requiring constant awareness and diligence.  Consequently, covered entities and business associates also should use care both to monitor OCR and other regulatory and enforcement developments as well as exercise ongoing vigilance to monitor and maintain compliance within their organizations.

More Information

We hope this update is helpful. For more information about the these or other health or other legal, management or public policy developments, please contact the author Cynthia Marcotte Stamer via e-mail or via telephone at (214) 452 -8297.

Solutions Law Press, Inc. invites you receive future updates by registering on our Solutions Law Press, Inc. Website and participating and contributing to the discussions in our Solutions Law Press, Inc. LinkedIn SLP Health Care Risk Management & Operations GroupHR & Benefits Update Compliance Group, and/or Coalition for Responsible Health Care Policy.

About the Author

Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for 30+ years legal and operational management work, coaching, public policy and regulatory affairs leadership and advocacy, training and public speaking and publications. As a significant part of her work, Ms. Stamer has worked extensively domestically and internationally on an demand, special project and ongoing basis with health industry, health plan and insurance and other business, government and community organizations and their leaders, spoken and published extensively on HIPAA and other privacy and data security concerns, as well as other health care and health benefits;  human resources, employee benefits and other workforce and services; insurance; workers’ compensation and occupational disease; business reengineering, disaster and distress;  and many other management concerns.

Board Certified in Labor and Employment Law By the Texas Board of Legal Specialization, Scribe for the ABA JCEB Annual Agency Meeting with OCR, Vice Chair of the ABA International Section Life Sciences Committee, and the ABA RPTE Employee Benefits & Other Compensation Group and a former Council Representative, Past Chair of the ABA Managed Care & Insurance Interest Group, former Vice President and Executive Director of the North Texas Health Care Compliance Professionals Association, past Board President of Richardson Development Center (now Warren Center) for Children Early Childhood Intervention Agency, past North Texas United Way Long Range Planning Committee Member, and past Board Member and Compliance Chair of the National Kidney Foundation of North Texas, and a Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer has extensive experience advising, representing, defending and training health care providers, health plans and insurers, employers, community organizations and others about HIPAA and other privacy concerns and has published and spoken extensively on these concerns.

Her involvement with HIPAA and other privacy and data concerns has taken place as part of her more than 30 years involvement working with with public and private health industry, health insurance and other employers and organizations of all sizes, employee benefit plans, insurance and financial services, health industry and a broad range of public and private domestic and international business, community and government organizations and leaders on pandemic and other health and safety, workforce and performance preparedness, risks and change management, disaster preparedness and response and other operational and tactical concerns throughout her adult life. A former lead advisor to the Government of Bolivia on its pension  project, Ms. Stamer also has worked internationally and domestically as an advisor to business, community and government leaders on crisis preparedness and response, privacy and data security, workforce, health care and other policy and enforcement, as well as regularly advises and defends organizations about the design, administration and defense of their organizations workforce, employee benefit and compensation, safety, discipline and other management practices and actions.

Ms. Stamer also serves in leadership of a broad range of professional and civic organizations and shares insights and thought leadership through her extensive publications and public speaking. For more information about Ms. Stamer or her health industry and other experience and involvements, see www.cynthiastamer.com or contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.

About Solutions Law Press, Inc.™

Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources available here such as:

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Don’t Get Stuck Paying Another Employer’s Overtime Or Other Backpay

January 13, 2020

No business wants to get hit with a bill or judgement for unpaid overtime or other wages and penalties under the Fair Labor Standards Act (“FLSA”). It’s even worse when the order to pay is for back pay another business owed but didn’t pay. New FLSA joint employer regulations released today update the rules about when your business could get stuck paying another business’ backpay. That’s why all U.S. employers should re-evaluate their potential minimum wage, overtime, recordkeeping and other Fair Labor Standards Acts (“FLSA”) liability exposure from work performed by workers employed by subcontractors or contractors, staffing, leasing, manpower and workforce and other separate business entities in light of the new Final Rule: Joint Employer Status under the Fair Labor Standards Act (“Final Rule”) on determining joint employer status under the FLSA released by the Department of Labor Wage and Hour Division (“Labor Department”).  The Labor Department released a copy of the Final Rule to the public today today (January 13, 2020) in anticipation of its scheduled official publication in the Federal Register on January 16, 2019.

Joint Employer Liability Long Standing FLSA Risk

Many businesses and their management are unaware that if their business meets the definition of a “joint employer” for purposes of the FLSA, their businesses could be required to pay unpaid wages and penalties another business owes for failing to pay minimum wage or overtime or other FLSA violations. even though their business never directly employed those workers.  This is because the FLSA also makes business that are “joint employers” as defined for purposes of the FLSA  jointly and severally liable with the direct employer for proper payment of wages and other compliance with the FLSA.  The FLSA requires covered employers to pay their employees at least the federal minimum wage for every hour worked and overtime for every hour worked over 40 in a workweek. To be liable for paying minimum wage or overtime, an individual or entity must be an “employer,” which the FLSA defines in Section 3(d) to include “any person acting directly or indirectly in the interest of an employer in relation to an employee[.]” Under the FLSA, an employee may have—in addition to his or her employer—one or more joint employers. A joint employer is any additional “person” (i.e., an individual or entity) who is jointly and severally liable with the employer for the employee’s wages under the applicable Labor Department regulations.

While both the Labor Department and private litigants have used the joint employer rules and precedent to nail businesses for other employer’s wage and hour liability frequently for the past sixty plus years, Obama Administration changes in the Labor Department’s interpretation and enforcement of the joint employer rule have significantly broadened the scope of relationships found to constitute joint employment to include a broad range of subcontractor and other business relationships not historically recognized as triggering joint employer liability.  Historically, joint employer determinations were reached by applying highly subjective, fact specific analysis heavily reliant upon decades of court decisions which required some evidence that the alleged joint employer possessed or exercised some control over the employees to support the finding of joint employment.   Under these historical tests, mere benefit from work performed by individuals employed by another employer did not establish a presumption, much less proof of joint employment.

During the Obama Administration, however, the Department of Labor both stepped up its efforts to identify and enforce these joint employer provisions and concurrently without formally issuing new regulations adopted interpretive and enforcement guidelines for finding joint employer status that that significantly broadened the employment relationships that the Labor Department treated as joint employers in a manner that presumed the existence of a joint employment relationship whenever the alleged joint employer benefitted from the performance of work even when the facts showed little or any evidence that the alleged joint employer possessed or exercised any control over the employee or the details of his work.  As a consequences, construction and other businesses uses contractors, health care organizations, and a host of other entities were surprised to be nailed with wage and hour liabilities arising from work performed by subcontractors, contractors, and other businesses including overtime liability attributable to work performed for the benefit of other customers of the employer.

Final Joint Employer Rule Changes Rules Effective March 16, 2020

Prompted by the Trump Administration’s broader effort to roll back these and other Obama Era pro-labor rulemaking and enforcement, the new Final Rule seeks to restore and reaffirm the requirement of evidence of the possession of authority or exercise of some traditional employer control by the alleged joint employer.  Scheduled to take effect on March 16, 2020, the new Final Rule will continue to recognize two potential scenarios where an employee may have one or more joint employers based on a highly subjective analysis of the factual realities of an alleged joint employer with another business or businesses under two scenarios:

  • The employee has an employer who suffers, permits, or otherwise employs the employee to work, but another individual or entity simultaneously benefits from that work (“Scenario One”); versus
  • One employer employs an employee for one set of hours in a workweek, and another employer employs the same employee for a separate set of hours in the same workweek (“Scenario Two”).

The Final Rule modifies and clarifies the Labor Department’s historical joint employer rule as it relates to the determination of joint employment status in Scenario One situations but leaves substantially unchanged its existing rules on joint employer determinations in Scenario Two situations.

Finally, the Final Rule provides several examples of how the Department’s joint employer guidance should be applied in various factual circumstances

Final Rule Modifications To Existing Rules On Joint Employment in Scenario One Situations

Under the Final Rule in a Scenario One situation under which an employee performs work for the employer that simultaneously benefits another individual or entity, the Final Rule adopts a four-factor balancing test to determine whether the potential joint employer is directly or indirectly controlling the employee, assessing whether the potential joint employer:

  • hires or fires the employee;
  • supervises and controls the employee’s work schedule or conditions of employment to a substantial degree;
  • determines the employee’s rate and method of payment; and
  • maintains the employee’s employment records.

Businesses should keep in mind that proof of the exercise of exercise direct control over these details of employment of an employee is not required for a finding of joint employment. Indirect exercise of control is sufficient.  Examples of indirect exercise of control recognized in the Final Regulations as supporting joint employer liability include control over an employee through mandatory directions to another employer that directly control the employee. However, indirect control does not include the direct employer’s voluntary decision to accommodate the potential joint employer’s request, recommendation, or suggestion. Similarly, acts that incidentally impact the employee do not indicate joint employer status. For example, a restaurant could request lower fees from its cleaning contractor, which, if agreed to, could impact the wages of the cleaning contractor’s employees. However, this request would not constitute an exercise of indirect control over the employee’s rate of payment.

Like under the prior rules and standards, whether a person is a joint employer under the new standards established in the Final Rule will continue to depend upon all the facts in a particular case, and the appropriate weight to give each factor will vary depending on the circumstances. Moreover, all of these factors need not be present for joint employment to exist.  However, the Final Rule states the potential joint employer’s maintenance of the employee’s employment records alone will not lead to a finding of joint employer status.  For purposes of its provisions, the Final Rule defines the “employment records” referred to in the fourth factor to mean only those records, such as payroll records, that reflect, relate to, or otherwise record information pertaining to the hiring or firing, supervision and control of the work schedules or conditions of employment, or determining the rate and method of payment of the employee.

Additionally, the Final Rule also notes that additional factors may also be relevant in determining whether another person is a joint employer in this situation, but only when they show whether the potential joint employer is exercising significant control over the terms and conditions of the employee’s work.

The Final Rule also identifies factors that are not relevant to the determination of FLSA joint employer status. For example, the Final Rule specifies that whether the employee is economically dependent on the potential joint employer, including factors traditionally used to establish whether a particular worker is a bona fide independent contractor (e.g., the worker’s opportunity for profit or loss, their investment in equipment and materials, etc.), are not relevant to determine joint employer liability. Economic dependence was an evidentiary factor promoted as evidence of joint employment in several Obama Administration era enforcement actions.

The Final Rule also identifies certain other factors that do not make joint employer status more or less likely under the Act which had been relied upon by the Labor Department under the Obama Administration era interpretation of the FLSA, including:

  • operating as a franchisor or entering into a brand and supply agreement, or using a similar business model;
  • the potential joint employer’s contractual agreements with the employer requiring the employer to comply with its legal obligations or to meet certain standards to protect the health or safety of its employees or the public;
  • the potential joint employer’s contractual agreements with the employer requiring quality control standards to ensure the consistent quality of the work product, brand, or business reputation; and
  • the potential joint employer’s practice of providing the employer with a sample employee handbook, or other forms, allowing the employer to operate a business on its premises (including “store within a store” arrangements), offering an association health plan or association retirement plan to the employer or participating in such a plan with the employer, jointly participating in an apprenticeship program with the employer, or any other similar business practice.

Additionally, the Final Rule makes clear that a finding of joint employer status in Scenario One situations must be based on an actual exercise of control by the alleged joint employer.  In this respect, the Final Rule provides that although an individual or entity’s power, ability, or reserved contractual right to exercise control relating to one or more of the factors may be relevant in determining whether they are an FLSA joint employer, such power, ability, or reserved contractual rights are not in themselves sufficient to establish FLSA joint employer status without some actual exercise of control.

Final Rule Retains Existing Rules On Joint Employment In Scenario Two Situations

The Final Rule did not make any substantive changes to the standard for determining joint employer liability in Scenario Two situations. If the employers are acting independently of each other and are disassociated with respect to the employment of the employee, the Final Rule continues to provide that each employer may disregard all work performed by the employee for the other employer in determining its liability under the FLSA. However, if the factual realities show that the employers are sufficiently associated with respect to the employment of the employee, the Final Rule continues to state that the two businesses are joint employers and must aggregate the hours worked for each for purposes of determining if they are in compliance.

For purposes of the Scenario Two analysis, the Final Rule provides that employers generally will be sufficiently associated if there is an arrangement between them to share the employee’s services, the employer is acting directly or indirectly in the interest of the other employer in relation to the employee, or they share control of the employee, directly or indirectly, by reason of the fact that one employer controls, is controlled by, or is under common control with the other employer.  Employers using manpower, staffing, employee leasing or other shared or part time workforces should keep in mind that a finding that their business is a joint employer with the supplier of the workers can result in liability for their business associated both for hours of work performed for the benefit of their business as well as any work the employee worked for another client of the supplier business.  As these shared workforces often perform work for several competitors, ironically this often means that a joint employer often ends up payment overtime liability attributable to unpaid overtime or other wages performed for a competitor business or businesses that also are clients of the same partial workforce supplier.

Businesses Should Act To Assess & Mitigate Joint Employer & Other FLSA Liability

The Labor Departments that its adoption of the revisions to the joint employer rule made by the Final Rule will add greater certainty regarding what business practices may result in joint employer status: and promote greater uniformity among court decisions by providing a clearer interpretation of FLSA joint employer status.  While the clarifications may help businesses to better predict certain relationships and arrangements that carry a higher risk of joint employer liability exposure, businesses must keep in mind that joint employer determinations under the Final Rule will continue to turn on highly subjective analysis of facts and circumstances that existing precedent suggests often finds the requisite evidence to find a joint employer relationship in many circumstances surprising to many business owners even taking into account the modifications made by the Final Rule,  For this reason, virtually all businesses generally will want to critically evaluate their existing and prospective relationships for potential joint employer liability under the FLSA in light of the Final Regulations.

Businesses should look to the guidance in the new Final Rule initially to evaluate whether their existing or prospective relationships meet, or could be restructured to meet all of the requisites to avoid or reduce the risk of findings of joint employer status.  When possible, businesses should seek to structure their contractual relationships and business dealings with other businesses to fit as closely as possible with those arrangements that the new Final Regulations identify as not constituting joint employer relationships in form and operation.  When engaging in these efforts, businesses need to look beyond their contractual agreements to examine the factual realities of their relationships with other businesses realistically based upon a clear understanding of the historical precedent to avoid mischaracterizing their relationships and their associated risks.  For added protection, businesses also should consider seeking contractual representations of compliance, coupled with requirements that other businesses whose employment practices could create joint employment risk provide records and other documentation needed to verify compliance and defend against potential joint employer liability claims.

Concurrently, businesses looking at FLSA joint employer liability risk management also should keep in mind that the new Final Rule only addresses joint employer determinations under the FLSA.  This Final Rule does not address “joint employer” status or other characterizations of relationships under other federal employment laws, such as the National Labor Relations Act (NLRA), the Employee Retirement Income Security Act of 1974 (ERISA), the Migrant and Seasonal Agricultural Worker Protection Act, Title VII of the Civil Rights Act, state labor, tax, unemployment, workers’ compensation or other laws, which often apply different standards for finding joint employment or other imputed liability of businesses other than the direct or nominal employer.  While different rules apply for those laws, government agencies and private litigants also increasingly successfully assert joint employer or other theories to impute liability to businesses that are not the nominal employer of workers protected by these laws.  To effectively plan for a control their broader joint employer risk, most businesses benefit from looking at their exposure holistically taking into account the potential characterization and liabilities under all of these rules concurrently.

Before beginning these assessments, businesses and their leaders are encouraged to engage an attorney experienced in FLSA and other joint employer and other worker classification laws in light of the legally sensitive evidence and discussions inherently involved in this process.  Conducting this analysis within the scope of attorney-client privilege helps protector limit the discoverability of sensitive discussions and work product in the event of a Labor Department investigation or litigation.

For More Information

We hope this update is helpful. For more information about this or other labor and employment developments, please contact the author Cynthia Marcotte Stamer via e-mail or via telephone at (214) 452 -8297.

Solutions Law Press, Inc. invites you receive future updates by registering on our Solutions Law Press, Inc. Website and participating and contributing to the discussions in our Solutions Law Press, Inc. LinkedIn SLP Health Care Risk Management & Operations Group, HR & Benefits Update Compliance Group, and/or Coalition for Responsible Health Care Policy.

About the Author

Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Law and Labor and Employment Law and Health Care; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, and a Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for 30+ years of health industry and other management work, public policy leadership and advocacy, coaching, teachings, and publications.

Ms. Stamer’s work throughout her 30 plus year career has focused heavily on working with health care and managed care, health and other employee benefit plan, insurance and financial services, construction, manufacturing, staffing and workforce and other public and private organizations and their technology, data, and other service providers and advisors domestically and internationally with legal and operational compliance and risk management, performance and workforce management, regulatory and public policy and other legal and operational concerns. As a part of this work, she has continuously and extensively worked with domestic and international employer and other management, employee benefit and other clients to assess, manage and defend joint employer and other worker classifications and practices under the FLSA and other federal and state laws including both advising and and assisting employers to minimize joint employer and other FLSA liability and defending a multitude of employers against joint employer and other FLSA and other worker classification liability. She also has been heavily involved in advocating for the Trump Administration’s restoration of more historical principles for determining and enforcing joint employer liability over the past several years.

Author of hundreds of highly regarded books, articles and other publications, Ms. Stamer also is widely recognized for her scholarship, coaching, legislative and regulatory advocacy, leadership and mentorship on wage and hour, worker classification and a diverse range of other labor and employment, employee benefits, health and safety, education, performance management, privacy and data security, leadership and governance, and other management concerns within the American Bar Association (ABA), the International Information Security Association, the Southwest Benefits Association, and a variety of other international, national and local professional, business and civic organizations including highly regarded works on worker reclassification and joint employment liability under the FLSA and other laws published by the Bureau of National Affairs and others.  Examples of these involvements include her service as the ABA Intellectual Property Law Section Law Practice Management Committee; the ABA International Section Life Sciences and Health Committee Vice Chair-Policy; a Scribe for the ABA Joint Committee on Employee Benefits (JCEB) Annual OCR Agency Meeting and a former JCEB Council Representative and Marketing Chair; Past Chair of the ABA RPTE Employee Benefits and Other Compensation Group and Vice Chair of its Law Practice Management Committee; Past Chair of the ABA Managed Care & Insurance Interest Group; former Vice President and Executive Director of the North Texas Health Care Compliance Professionals Association, past Southwest Benefits Association Board member; past Texas Association of Business State Board Member, BACPAC Committee Meeting, Regional and Dallas Chapter Chair; past Dallas Bar Association Employee Benefits Committee Executive Committee; former SHRM Region IV Chair and National Consultants Forum Board Member; for WEB Network of Benefit Professionals National Board Member and Dallas Chapter Chair; former Dallas World Affairs Council Board Member; founding Board Member, past President and Patient Empowerment and Health Care Heroes founder for the Alliance for Health Care Excellence; former Gulf States TEGE Council Exempt Organizations Coordinator and Board member; past Board President of Richardson Development Center (now Warren Center) for Children Early Childhood Intervention Agency, past North Texas United Way Long Range Planning Committee Member, and past Board Member and Compliance Chair of the National Kidney Foundation of North Texas, and involvement in a broad range of other professional and civic organizations. For more information about Ms. Stamer or her health industry and other experience and involvements, see www.cynthiastamer.com or contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.

About Solutions Law Press, Inc.™

Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources available here such as:

If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating your profile here.

NOTICE: These statements and materials are for general informational and purposes only. They do not establish an attorney-client relationship, are not legal advice or an offer or commitment to provide legal advice, and do not serve as a substitute for legal advice. Readers are urged to engage competent legal counsel for consultation and representation in light of the specific facts and circumstances presented in their unique circumstance at any particular time. No comment or statement in this publication is to be construed as legal advice or an admission. The author reserves the right to qualify or retract any of these statements at any time. Likewise, the content is not tailored to any particular situation and does not necessarily address all relevant issues. Because the law is rapidly evolving and rapidly evolving rules makes it highly likely that subsequent developments could impact the currency and completeness of this discussion. The author and Solutions Law Press, Inc. disclaim, and have no responsibility to provide any update or otherwise notify anyone any such change, limitation, or other condition that might affect the suitability of reliance upon these materials or information otherwise conveyed in connection with this program. Readers may not rely upon, are solely responsible for, and assume the risk and all liabilities resulting from their use of this publication.

Circular 230 Compliance. The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations. Any statements contained herein are not intended or written by the writer to be used, and nothing contained herein can be used by you or any other person, for the purpose of (1) avoiding penalties that may be imposed under federal tax law, or (2) promoting, marketing or recommending to another party any tax-related transaction or matter addressed herein.

©2020 Cynthia Marcotte Stamer. Non-exclusive right to republish granted to Solutions Law Press, Inc.™ For information about republication, please contact the author directly. All other rights reserved.


2018 US National Health Expenditures Grew Again

December 10, 2019

Total U.S. national healthcare spending in 2018 grew 4.6 percent according to a study conducted by the Office of the Actuary at the Centers for Medicare & Medicaid Services (CMS). CMS reports this growth rate was slower than the 5.4 percent overall economic growth as measured by Gross Domestic Product (GDP). Consequently, the share of the economy devoted to health spending decreased from 17.9 percent in 2017 to 17.7 percent in 2018. 

Growth in overall healthcare spending has averaged 4.5 percent for 2016-2018, slower than the 5.5 percent average growth for 2014-2015, that was affected by expanded Medicaid and private insurance coverage and increased spending for prescription drugs, particularly for drugs used to treat hepatitis C. 

The growth in total national healthcare expenditures was approximately 0.4 percentage point higher than the rate in 2017 and reached $3.6 trillion in 2018, or $11,172 per person.

According to the report, private health insurance, Medicare, and Medicaid experienced faster growth in 2018.  The faster growth for these payers was influenced by the reinstatement of the health insurance tax which was applied to private health insurance, Medicare Advantage, and Medicaid Managed care plans. The health insurance tax was a fee imposed on all health insurance providers beginning in 2014 as a part of the funding for the Affordable Care Act (ACA) and was subsequently amended to institute a one-year moratorium on the fee for 2017.

  • Private health insurance spending(34 percent of total health care spending) increased 5.8 percent to $1.2 trillion in 2018, which was faster than the 4.9 percent growth in 2017.  The acceleration was driven in part by an increase in the net cost of private health insurance, which was a result of the reinstatement of the health insurance tax in 2018 following a one-year moratorium in 2017.
  • Medicare spending (21 percent of total health care spending) grew 6.4 percent to $750.2 billion in 2018, which was faster than the 4.2 percent growth in 2017. The faster growth in Medicare spending in 2018 was influenced by faster growth in the net cost of insurance of Medicare private health plans (mostly Medicare Advantage plans) due to the reinstatement of the health insurance tax in 2018, faster growth in Medicare spending for medical goods and services, and an increase in government administration spending after a reduction in 2017.
  • Medicaid spending (16 percent of total health care spending) increased 3.0 percent to $597.4 billion in 2018.  This was faster than the rate of growth in 2017 of 2.6 percent.  The faster rate of growth in 2018 was driven by faster growth in the net cost of insurance for Medicaid managed care plans, also due in part to the reinstatement of the health insurance tax.  
  • Out-of-pocket spending (10 percent of total health care spending) includes direct consumer payments such as copayments, deductibles, and spending not covered by insurance.  Out-of-pocket spending grew 2.8 percent to $375.6 billion in 2018, which was faster than the 2.2 percent growth in 2017. Faster out-of-pocket spending growth for retail prescription drugs, durable medical equipment, and dental services more than offset a slowdown in out-of-pocket spending for hospital care.

Health care spending growth was mixed in 2018 for the three largest goods and service categories – hospital care, physician and clinical services, and retail prescription drugs.

  • Hospital spending (33 percent of total healthcare spending) increased at about the same rate in 2018 as in 2017, growing 4.5 percent and 4.7 percent, respectively, to reach $1.2 trillion in 2018.  The steady growth in 2018 was driven by an acceleration in hospital price growth that was offset by slower growth in the use and intensity of hospital services.
  • Physician and clinical services spending (20 percent of total healthcare spending) increased 4.1 percent to reach $725.6 billion in 2018.  This was slower than the rate of growth in 2017 of 4.7 percent.  The deceleration in 2018 was driven by slower growth in the use and intensity of physician and clinical services, as physician and clinical price growth accelerated in 2018. 
  • Retail prescription drug spending(9 percent of total healthcare spending) grew 2.5 percent in 2018 to $335.0 billion following slower growth of 1.4 percent in 2017.  This faster rate of growth was driven by non-price factors, such as the use and mix of drugs consumed, which more than offset a decline of 1.0 percent in prices for retail prescription drugs.

Additional highlights from the report include:

  • Sponsors of Healthcare. In 2018, the federal government’s spending on health care increased 5.6 percent, accelerating from growth of 2.8 percent in 2017, and was driven by faster growth in the federally-funded portions of Medicare and Medicaid expenditures.  Private businesses’ health care spending increased 6.2 percent in 2018 due primarily to faster growth in employer-sponsored private health insurance premiums. The federal government and households accounted for the largest shares of spending (28 percent each), followed by private businesses (20 percent), state and local governments (17 percent), and other private revenues (7 percent).

The National Health Expenditure estimates have been revised to reflect the most recent and up-to-date source data that is available (and may not have been available for last year’s vintage of the National Health Expenditure Accounts).

The 2018 National Health Expenditures data and supporting information will appear here.

For More Information

We hope this update is helpful. For more information about this or other labor and employment developments, please contact the author Cynthia Marcotte Stamer via e-mail or via telephone at (214) 452 -8297.

Solutions Law Press, Inc. invites you receive future updates and join discussions about these and other human resources, health and other employee benefit and patient empowerment concerns by participating and contributing to the discussions in our LinkedIn Solutions Law Groups and registering for updates on our Solutions Law Press Website.

About the Author

Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for 30+ years of health industry and other management work, public policy leadership and advocacy, coaching, teachings, and publications.

As a primary focus of this work, Ms. Stamer has worked extensively with domestic and international hospitals, health care systems, clinics, skilled nursing, long term care, rehabilitation and other health care providers and facilities; medical staff, accreditation, peer review and quality committees and organizations; billing, utilization management, management services organizations, group purchasing organizations; pharmaceutical, pharmacy, and prescription benefit management and organizations; consultants; investors; technology, billing and reimbursement and other services and product vendors; products and solutions consultants and developers; investors; managed care organizations, insurers, self-insured health plans and other payers, health industry advocacy and other service providers and groups and other health industry clients as well as federal and state legislative, regulatory, investigatory and enforcement bodies and agencies.

Scribe for the ABA JCEB Annual Agency Meeting with OCR, Vice Chair of the ABA International Section Life Sciences Committee, past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, the ABA RPTE Employee Benefits & Other Compensation Group, Ms. Stamer is noted for her decades-long leading edge work, scholarship and thought leadership on health and other privacy and data security and other health industry legal, public policy and operational concerns. This involvement encompasses helping health care systems and organizations, group and individual health care providers, health plans and insurers, health IT, life sciences and other health industry clients prevent, investigate, manage and resolve sexual assault, abuse, harassment and other organizational, provider and employee misconduct and other performance and behavior; manage Section 1557, Civil Rights Act and other discrimination and accommodation, and other regulatory, contractual and other compliance; vendors and suppliers; contracting and other terms of participation, medical billing, reimbursement, claims administration and coordination, Medicare, Medicaid, CHIP, Medicare/Medicaid Advantage, ERISA and other payers and other provider-payer relations, contracting, compliance and enforcement; Form 990 and other nonprofit and tax-exemption; fundraising, investors, joint venture, and other business partners; quality and other performance measurement, management, discipline and reporting; physician and other workforce recruiting, performance management, peer review and other investigations and discipline, wage and hour, payroll, gain-sharing and other pay-for performance and other compensation, training, outsourcing and other human resources and workforce matters; board, medical staff and other governance; strategic planning, process and quality improvement; meaningful use, EMR, HIPAA and other technology, data security and breach and other health IT and data; STARK, antikickback, insurance, and other fraud prevention, investigation, defense and enforcement; audits, investigations, and enforcement actions; trade secrets and other intellectual property; crisis preparedness and response; internal, government and third-party licensure, credentialing, accreditation, HCQIA and other peer review and quality reporting, audits, investigations, enforcement and defense; patient relations and care; internal controls and regulatory compliance; payer-provider, provider-provider, vendor, patient, governmental and community relations; facilities, practice, products and other sales, mergers, acquisitions and other business and commercial transactions; government procurement and contracting; grants; tax-exemption and not-for-profit; privacy and data security; training; risk and change management; regulatory affairs and public policy; process, product and service improvement, development and innovation, and other legal and operational compliance and risk management, government and regulatory affairs and operations concerns. to establish, administer and defend workforce and staffing, quality, and other compliance, risk management and operational practices, policies and actions; comply with requirements; investigate and respond to Board of Medicine, Health, Nursing, Pharmacy, Chiropractic, and other licensing agencies, Department of Aging & Disability, FDA, Drug Enforcement Agency, OCR Privacy and Civil Rights, Department of Labor, IRS, HHS, DOD, FTC, SEC, CDC and other public health, Department of Justice and state attorneys’ general and other federal and state agencies; JCHO and other accreditation and quality organizations; private litigation and other federal and state health care industry actions: regulatory and public policy advocacy; training and discipline; enforcement; and other strategic and operational concerns.

Author of leading works on HIPAA and a multitude of other health care, health plan and other health industry matters, the American Bar Association (ABA) International Section Life Sciences Committee Vice Chair, a Scribe for the ABA Joint Committee on Employee Benefits (JCEB) Annual OCR Agency Meeting and a former Council Representative, Past Chair of the ABA Managed Care & Insurance Interest Group, former Vice President and Executive Director of the North Texas Health Care Compliance Professionals Association, past Board President of Richardson Development Center (now Warren Center) for Children Early Childhood Intervention Agency, past North Texas United Way Long Range Planning Committee Member, and past Board Member and Compliance Chair of the National Kidney Foundation of North Texas, and a Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also shares her extensive publications and thought leadership as well as leadership involvement in a broad range of other professional and civic organizations. For more information about Ms. Stamer or her experience and involvements, see here or contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.

About Solutions Law Press, Inc.™

Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources available here.

If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating your profile here

NOTICE: These statements and materials are for general informational and purposes only. They do not establish an attorney-client relationship, are not legal advice or an offer or commitment to provide legal advice, and do not serve as a substitute for legal advice. Readers are urged to engage competent legal counsel for consultation and representation in light of the specific facts and circumstances presented in their unique circumstance at any particular time. No comment or statement in this publication is to be construed as legal advice or an admission. The author reserves the right to qualify or retract any of these statements at any time. Likewise, the content is not tailored to any particular situation and does not necessarily address all relevant issues. Because the law is rapidly evolving and rapidly evolving rules makes it highly likely that subsequent developments could impact the currency and completeness of this discussion. The author and Solutions Law Press, Inc. disclaim, and have no responsibility for the suitability, completeness, accuracy or other content or to provide any update or otherwise notify anyone any such change, limitation, or other condition that might affect the suitability of reliance upon these materials or information otherwise conveyed in connection with this program. Readers may not rely upon, are solely responsible for, and assume the risk and all liabilities resulting from their use of this publication.

Circular 230 Compliance. The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations. Any statements contained herein are not intended or written by the writer to be used, and nothing contained herein can be used by you or any other person, for the purpose of (1) avoiding penalties that may be imposed under federal tax law, or (2) promoting, marketing or recommending to another party any tax-related transaction or matter addressed herein.

©2019 Cynthia Marcotte Stamer. Non-exclusive right to republish granted to Solutions Law Press, Inc.™ For information about republication, please contact the author directly. All other rights reserved.


SBA Hosts Employee Benefits Roundtable 11/21

November 18, 2019

The Small Business Administration (“SBA”) Advocacy Office will is host an Employee Benefits Roundtable on Thursday, Nov. 21 from 10:00 AM until 12:00 noon at the SBA Headquarters in Washington, D.C. with the following agenda:

Welcome and Introductions (10:00 am – 10:15 am)

  • Charles G. Jeane, Assistant Chief Counsel, SBA Office of Advocacy

Discussion of Small Business Use of Cafeteria Plans (10:15 am – 10:45 am)

  • Gary Kushner, President and CEO of Kushner & Company

Discussion of MEPs and Open MEPs (10:45 am – 11:15 am)

  • Sandra Turner, President of Retirement Plan Specialists, Inc.

Discussion of Adding Annuities as An Option for Plan Participants (11:15 am – 11:45 am)

  • Chantel Sheaks, Executive Director, Retirement Policy, U.S. Chamber of Commerce

Open Discussion/Other Small Business Issues (11:45 am – 12:00 pm).  

The purpose of these roundtable meetings is to exchange opinions, facts, and information and to obtain the attendees’ individual views and opinions regarding small business concerns.  The meetings are not intended to communicate or achieve any consensus positions of the attendees.

Roundtable meetings are open to all interested persons, except the press. Press are excluded in order to facilitate an open and frank discussion about small business-related issues.

About The Author

A Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation; Former Chair of the RPTE Employee Benefits and Compensation Committee, a current Co-Chair of the Committee, and the former Chair of its Welfare Benefit and its Defined Compensation Plan Committees and former RPTE Joint Committee on Employee Benefits Council (JCEB) Representative, Cynthia Marcotte Stamer is a Martindale-Hubble “AV-Preeminent” practicing attorney and management consultant, author, public policy advocate, author and lecturer repeatedly recognized for her 30 plus years’ of work and pragmatic thought leadership, publications and training on health, pension and other employee benefit,  insurance, labor and employment, and health care  fiduciary responsibility, payment, investment, contracting  and other design, administration and compliance concerns as among the “Top Rated Labor & Employment Lawyers in Texas,” a “Legal Leader,” a “Top Woman Lawyer” and with other awards by LexisNexis® Martindale-Hubbell®; as among the “Best Lawyers In Dallas” for her work in the field of “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, in International Who’s Who of Professionals and with numerous other awards and distinctions.

Highly valued for her ability to meld her extensive legal and industry knowledge and experience with her talents as an insightful innovator and pragmatic problem solver, Ms. Stamer advises, represents and defends employer, union, multi-employer, association and other employee benefit plan sponsors, insurers and managed care organizations, fiduciaries, plan administrators, technology and other service providers, government and community leaders and others about health and other employee benefit and insurance program and policy design and innovation, funding, documentation, administration, communication, data security and use, contracting, plan, public and regulatory reforms and enforcement, and other risk management, compliance and operations matters.

Her experience encompasses leading and supporting the development and defense of innovative new policies, programs, practices and solutions; advising and representing clients on routine plan establishment, plan documentation and contract drafting and review, administration, change and other compliance and operations; crisis prevention and response, compliance and risk management audits and investigations, enforcement actions and other dealings with the US Congress, Departments of Labor, Treasury, Health & Human Services, Federal Trade Commission, Justice, Securities and Exchange Commission, Education and other federal agencies, state legislatures, attorneys general, insurance, labor, worker’s compensation, and other agencies and regulators, and various other foreign and domestic governmental bodies and agencies.

She also provides strategic and other supports clients in defending litigation as lead strategy counsel, special counsel and as an expert witness. Alongside her extensive legal and operational experience, Ms. Stamer also is recognized for her work as a public and regulatory policy advocate and community leader with a gift for finding pragmatic solutions and helping to forge the common ground necessary to build consensus. Best known for her domestic public policy and community leadership on health care and insurance reform, Ms. Stamer’s lifelong public policy and community service involvement includes service as a lead consultant to the Government of Bolivia on its pension privatization project, as well as extensive legislative and regulatory reform, advocacy and input workforce, worker classification, employee benefit, public health and healthcare, social security and other disability and aging in place, education, migration reforms domestically and internationally throughout her adult life.

In addition to her public and regulatory policy involvement, Ms. Stamer also contributes her service and leadership to a professional and civic organizations and efforts including her involvement as the Founder and Executive Director of the Coalition on Responsible Health Policy and its PROJECT COPE; Coalition on Patient Empowerment, a founding Board Member and past President of the Alliance for Healthcare Excellence; Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee; Vice Chair, Policy for the Life Sciences Committee of the ABA International Section, Past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group; current Fiduciary Responsibility Committee Co-Chair and Membership Committee member of the ABA RPTE Section; former RPTE Employee Benefits and Other Compensation Group Chair, former Chair and Co-Chair of its Welfare Plans Committee, and Defined Contribution Plans Committee; former RPTE Representative to ABA Joint Committee on Employee Benefits Council; former RPTE Representative to the ABA Health Law Coordinating Counsel; former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division, past Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee, former Board Member, Continuing Education Chair and Treasurer of the Southwest Benefits Association; Vice President of the North Texas Healthcare Compliance Professionals Association; past Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; former Board President of the early childhood development intervention agency, The Richardson Development Center for Children; past Dallas World Affairs Council Board Member, and in leadership of many other professional, civic and community organizations.

Ms. Stamer also is a highly popular public speaker, symposia chair and author, who publishes and speaks extensively on health and managed care industry, human resources, employment and other privacy, data security and other technology, regulatory and operational risk management for the American Bar Association, ALI-ABA, American Health Lawyers, Society of Human Resources Professionals, the Southwest Benefits Association, the Society of Employee Benefits Administrators, the American Law Institute, Lexis-Nexis, Atlantic Information Services, The Bureau of National Affairs (BNA), InsuranceThoughtLeaders.com, the Society of Professional Benefits Administrators, Benefits Magazine, Employee Benefit News, Texas CEO Magazine, HealthLeaders, the HCCA, ISSA, HIMSS, Modern Healthcare, Managed Healthcare, Institute of Internal Auditors, Society of CPAs, Business Insurance, Employee Benefits News, World At Work, Benefits Magazine, the Wall Street Journal, the Dallas Morning News, the Dallas Business Journal, the Houston Business Journal, and many other symposia and publications. She also has served as an Editorial Advisory Board Member for human resources, employee benefit and other management focused publications of BNA, HR.com, Employee Benefit News, InsuranceThoughtLeadership.com and many other prominent publications and speaks and conducts training for a broad range of professional organizations and for clients, serves on the faculty and planning committee of many workshops, seminars, and symposia, and on the Advisory Boards of InsuranceThoughtLeadership.com, HR.com, Employee Benefit News, and many other publications.

Beyond these involvements, Ms. Stamer also is active in the leadership of a broad range of other public policy advocacy and other professional and civic organizations and involvements. Through these and other involvements, she helps develop and build solutions, build consensus, garner funding and other resources, manage compliance and other operations, and take other actions to identify promote tangible improvements in health care and other policy and operational areas.

Before founding her current law firm, Cynthia Marcotte Stamer, P.C., Ms. Stamer practiced law as a partner with several prominent national and international law firms for more than 10 years before founding Cynthia Marcotte Stamer, P.C. to practice her unique brand of “Solutions law™” and to devote more time to the pragmatic policy and system reform, community education and innovation, and other health system improvement efforts of her PROJECT COPE: the Coalition on Patient Empowerment initiative.

About Solutions Law Press, Inc.™

Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources at SolutionsLawPress.com.

If you or someone else you know would like to receive future updates about developments on these and other concerns, please provide your current contact information and preferences including your preferred e-mail by creating or updating your profile here.

NOTICE: These statements and materials are for general informational and purposes only. They do not establish an attorney-client relationship, are not legal advice, and do not serve as a substitute for legal advice. Readers are urged to engage competent legal counsel for consultation and representation in light of the specific facts and circumstances presented in their unique circumstance at any particular time. No comment or statement in this publication is to be construed as an admission. The author reserves the right to qualify or retract any of these statements at any time. Likewise, the content is not tailored to any particular situation and does not necessarily address all relevant issues. Because the law is rapidly evolving and rapidly evolving rules makes it highly likely that subsequent developments could impact the currency and completeness of this discussion. The presenter and the program sponsor disclaim, and have no responsibility to provide any update or otherwise notify any participant of any such change, limitation, or other condition that might affect the suitability of reliance upon these materials or information otherwise conveyed in connection with this program. Readers may not rely upon, are solely responsible for, and assume the risk and all liabilities resulting from their use of this publication.

Circular 230 Compliance. The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations. Any statements contained herein are not intended or written by the writer to be used, and nothing contained herein can be used by you or any other person, for the purpose of (1) avoiding penalties that may be imposed under federal tax law, or (2) promoting, marketing or recommending to another party any tax-related transaction or matter addressed herein.

©2019 Cynthia Marcotte Stamer. Non-exclusive right to republish granted to Solutions  Law Press, Inc.™. For information about republication, please contact the author directly. All other rights reserved.


Health Plans Must Share PHI To Apps When Members Request, Responsible For Security On Plan-Sponsored Apps

April 30, 2019

Health plans must deliver electronic protected health information (“ePHI”) to electronic applications or software (“apps”) used by plan members, and are responsible under the Health Insurance Portability & Accountability Act (“HIPAA”) Privacy and Security Rules for the security of electronic protected health information (“ePHI”) on apps they sponsor or provide, according to new guidance from the Department of Health & Human Services (“HHS”) Office of Civil Rights (“OCR”).

With health plans and their sponsors and insurers increasingly offering or promoting the use of apps to plan members members to access, maintain and use their health information, health plans, health care providers, health care clearinghouses and their business associates (“covered entities”) covered by HIPAA must understand and be prepared meet their HIPAA responsibilities to provide and protect ePHI to and on these apps, but may want to rethink sponsoring or providing a particular app for that purpose.

New HIPAA FAQ guidance (the “FAQs”) from OCR that addresses the implications of HIPAA on covered entities responsibility when asked to share or for ePHI shared or stored on apps or application programming interfaces (“APIs”) systems, covered entities have a legal obligation to disclose ePHI to an app when subjects of the ePHI or their personal representatives request such disclosures. However, the FAQs also state a covered entity or its business associates won’t be responsible for the security of the data shared to the app unless it sponsors or provides it. 

pends upon whether the AP or API interface provider is a business associate of the covered entity versus just a third-party provider whose involvement and receipt of the PHI is requested and arranged by the subject of the PHI.

Covered Entities Obligated To Disclose ePHI to Apps Chosen By Individuals

The FAQs make crystal clear that covered entities do not have the option of refusing to share ePHI to an app when requested to do so by the subject of the ePHI or its personal representative. The FAQs states that covered entities cannot refuse to disclose ePHI to an app chosen by an individual because of concerns about how the app will use or disclose the ePHI it receives. In this regard, the FAQs state that the HIPAA Privacy Rule generally prohibits a covered entity from refusing to disclose ePHI to a third-party app designated by the individual if the ePHI is readily producible in the form and format used by the app. See 45 CFR 164.524(a)(1), (c)(2)(ii), (c)(3)(ii).According to the FAQ, the HIPAA Rules do not impose any restrictions on how an individual or the individual’s designee, such as an app, may use the health information that has been disclosed pursuant to the individual’s right of access. For instance, a covered entity is not permitted to deny an individual’s right of access to their ePHI where the individual directs the information to a third-party app because the app will share the individual’s ePHI for research or because the app does not encrypt the individual’s data when at rest.According to the FAQs, the liability a covered entity or business associate bears for sharing ePHI to an App under the HIPAA Privacy, Security, or Breach Notification Rules (HIPAA Rules) depends on the relationship between the covered entity and the app.

Breaches of Health Information Disclosed To An App

If an app that is neither a covered entity nor a business associate of the covered entity under HIPAA receives ePHI at the request of the subject or its personal representative, the FAQ states that the shared ePHI is no longer subject to the protections of the HIPAA Rules. Thus if the individual’s app – chosen by an individual to receive the individual’s requested ePHI – was not provided by or on behalf of the covered entity (and, thus, does not create, receive, transmit, or maintain ePHI on its behalf), the covered entity would not be liable under the HIPAA Rules for any subsequent use or disclosure of the requested ePHI received by the app. For example, the covered entity would have no HIPAA responsibilities or liability if such an app that the individual designated to receive their ePHI later experiences a breach. See also, See also OCR FAQ 2039, “What is the liability of a covered entity in responding to an individual’s access request to send the individual’s PHI to a third party.In contrast, however, the FAQ states that if the app was developed for, or provided by or on behalf of the covered entity – and, thus, creates, receives, maintains, or transmits ePHI on behalf of the covered entity – the covered entity could be liable under the HIPAA Rules for a subsequent impermissible disclosure because of the business associate relationship between the covered entity and the app developer. For example, if the individual selects an app that the covered health care provider uses to provide services to individuals involving ePHI, the FAQs state that the health care provider may be subject to liability under the HIPAA Rules if the app impermissibly discloses the ePHI received.

Transmission of ePHI to App Using Unsecured Method

The FAQs also address the potential exposures of covered entities and their business associates arising from the transmission of ePHI to an App using an unsecure method. According to the FAQs, the access rights HIPAA guarantees to individuals allows an individual to request that a covered entity to direct their ePHI to a third-party app in an unsecure manner or through an unsecure channel. See 45 CFR 164.524(a)(1), (c)(2)(ii), (c)(3)(ii). For instance, an individual may request that their unencrypted ePHI be transmitted to an app as a matter of convenience. The FAQ states that a covered entity that transmits ePHI through an unsecured means under such circumstances would not be responsible for unauthorized access to the individual’s ePHI while in transmission to the app. With respect to such apps, however, the FAQs also suggest that the covered entity may want to consider informing the individual of the potential risks involved the first time that the individual makes the request.

Post Transmission Exposure of Covered Entity’s EHR Systems Developer

The FAQ also discusses the potential exposure of a covered entity’s electronic health record (EHR) system developer under HIPAA after completing the transmission on behalf of a covered entity of ePHI to an app designated by the subject of the ePHI. According to the FAQs, the exposure of the HER system developer depends on the relationship, if any, between the covered entity, the EHR system developer, and the app chosen by the individual to receive the individual’s ePHI. A business associate relationship exists if an entity creates, receives, maintains, or transmits ePHI on behalf of a covered entity (directly or through another business associate) to carry out the covered functions of the covered entity. A business associate relationship exists between an EHR system developer and a covered entity. If the EHR system developer does not own the app, or if it owns the app but does not provide the app to, through, or on behalf of, the covered entity – e.g., if it creates the app and makes it available in an app store as part of a different line of business (and not as part of its business associate relationship with any covered entity) – the EHR system developer would not be liable under the HIPAA Rules for any subsequent use or disclosure of the requested ePHI received by the app.If the EHR system developer owns the app or has a business associate relationship with the app developer, and provides the app to, through or on behalf of, the covered entity (directly or through another business associate), however, the FAQs state the EHR system developer then potentially could face HIPAA liability (as a business associate of a HIPAA covered entity) for any impermissible uses and disclosures of the health information received by the app. For example, if an EHR system developer contracts with the app developer to create the app on behalf of a covered entity and the individual later identifies that app to receive ePHI, then the EHR system developer could be subject to HIPAA liability if the app impermissibly uses or discloses the ePHI received.

Covered Entity’s Duty To Enter Into Business Associate Agreement Depends Upon Relationship

Likewise, the FAQs also state that whether HIPAA requires a a covered entity or its EHR system developer to enter into a business associate agreement with an app designated by the individual in order to transmit ePHI to the app depends upon the relationship between the app developer and the covered entity and/or its EHR system developer. A business associate is a person or entity who creates, receives, maintains or transmits PHI on behalf of (or for the benefit of) a covered entity (directly or through another business associate) to carry out covered functions of the covered entity. An app’s facilitation of access to the individual’s ePHI at the individual’s request alone does not create a business associate relationship. Such facilitation may include API terms of use agreed to by the third-party app (i.e., interoperability arrangements).HIPAA does not require a covered entity or its business associate (e.g., EHR system developer) to enter into a business associate agreement with an app developer that does not create, receive, maintain, or transmit ePHI on behalf of or for the benefit of the covered entity (whether directly or through another business associate).  However if the app was developed to create, receive, maintain, or transmit ePHI on behalf of the covered entity, or was provided by or on behalf of the covered entity (directly or through its EHR system developer as the covered entity’s business associate), then a business associate agreement would be required.

Health Plan & Other Covered Entity Take Aways

The new FAQ raises several action items for health plans, their sponsoring employers or unions, fiduciaries, administrators, brokers and insurers as well as other covered entities.  Among other things, health plans and other covered entities must recognize and be prepared currently to provide PHI to subjects of that information on the apps of the requesting individual’s preference within the time frames dictated by HIPAA.  Health plans and other covered entities need to recognize that the FAQs reflect this is a current, not future responsibility.

Second, health plans, health care providers and others that have or are considering providing apps or other tools to health plan members or patients for use in accessing or using PHI also generally need to recognize that the health plan or health care provider generally will bear responsibility under HIPAA for the adequacy of the security of the apps provided by or on behalf of the health plan or health care provider.  Given the general responsibility to provide PHI to any apps designated by a subject of PHI, many health plans and health care providers may wish to reconsider whether providing or endorsing a particular app continues to make sense taking into account the HIPAA data privacy and security responsibilities and risks attendent to maintaining the security of PHI stored and accessed using those tools.  Those electing to provide apps or other tools need to take steps to ensure the current and future adequacy of the data security of the app and its associated storage and other components including any future modifications to those tools. 

Furthermore,  health plans and other covered entities also should consider the advisability of revising existing notices and authorizations in response to the new FAQs.  For instance, health plans, health  care providers and others supplying PHI to an app designated by the requesting individual may want to consider revising forms to document the direction and consent of the requestor to the electronic delivery of the PHI to the designated app to better position themselves to claim the protection against liability for breaches on these subject designate apps described in the FAQs.  Meanwhile, health plans or other covered entities providing apps also may wish to weigh options for supplementing disclosures to mitigate potential risks from use or failure to upgrade apps that might be viewed as covered entity provided or sponsored.   

Certainly, before sponsoring or allowing a business associate to offer or provide an app or other similar solution, health care providers and other covered entities must ensure that the business associate agreement requirements of HIPAA are met from the app developer and others providing services or the app as business associates to the covered entity.  Covered entities also should take steps to ensure that the interfaces between the apps and other systems are properly secured at the point of implementation and during any subsequent upgrades keeping in mind that OCR guidance expects covered entities to reconfirm security for any system, software or app upgrades.  Meeting this expectation for apps within the possession of patients or plan members can present special challenges requiring careful planning. 

Have questions about the new FAQs or other health care regulatory developments or their implications on your organization, contact the author.  You also are invited to stay abreast of these and other health care developments by participating in our Solutions Law Press, Inc. Linkedin HR & Benefits Update LinkedIn Group or COPE: Coalition On Patient Empowerment Group or Project COPE: Coalition on Patient Empowerment Facebook Page.

 

About the Author

Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: Erisa & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for 30+ years of health industry, health and other benefit and insurance, workforce and other management work, public policy leadership and advocacy, coaching, teachings, and publications.

Highly valued for her rare ability to find pragmatic client-centric solutions by combining her detailed legal and operational knowledge and experience with her talent for creative problem-solving, Ms. Stamer’s clients include employers and other workforce management organizations; employer, union, association, government and other insured and self-insured health and other employee benefit plan sponsors, benefit plans, fiduciaries, administrators, and other plan vendors;  managed care organizations, insurers, self-insured health plans and other payers and their management; public and private, domestic and international hospitals, health care systems, clinics, skilled nursing, long term care, rehabilitation and other health care providers and facilities; medical staff, health care accreditation, peer review and quality committees and organizations; managed care organizations, insurers, third party administrative services organizations and other payer organizations;  billing, utilization management, management services organizations; group purchasing organizations; pharmaceutical, pharmacy, and prescription benefit management and organizations; claims, billing and other health care and insurance technology and data service organizations; other health, employee benefit, insurance and financial services product and solutions consultants, developers and vendors; and other health, employee benefit, insurance, technology, government and other management clients.

A former lead consultant to the Government of Bolivia on its Pension Privatization Project with extensive domestic and international public policy concerns in pensions, healthcare, workforce, immigration, tax, education and other areas, Ms. Stamer has been extensively involved in U.S. federal, state and local health care and other legislative and regulatory reform impacting these concerns throughout her career. Her public policy and regulatory affairs experience encompassess advising and representing domestic and multinational private sector health, insurance, employee benefit, employer, staffing and other outsourced service providers, and other clients in dealings with Congress, state legislatures, and federal, state and local regulators and government entities, as well as providing advice and input to U.S. and foreign government leaders on these and other policy concerns.

Beyond her public policy and regulatory affairs involvement, Ms. Stamer also has extensive experience helping these and other clients to design, implement, document, administer and defend workforce, employee benefit, insurance and risk management, health and safety, and other programs, products and solutions, and practices; establish and administer compliance and risk management policies; comply with requirements, investigate and respond to government; accreditation and quality organizations; private litigation and other federal and state health care industry investigations and enforcement actions; evaluate and influence legislative and regulatory reforms and other regulatory and public policy advocacy; training and discipline; enforcement, and a host of other related concerns. Ms. Stamer’s experience in these matters includes supporting these organizations and their leaders on both a real-time, “on demand” basis with crisis preparedness, intervention and response as well as consulting and representing clients on ongoing compliance and risk management; plan and program design; vendor and employee credentialing, selection, contracting, performance management and other dealings; strategic planning; policy, program, product and services development and innovation; mergers, acquisitions, and change management; workforce and operations management, and other opportunities and challenges arising in the course of their operations.

Past Chair of the ABA Managed Care & Insurance Interest Group and, a Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, heavily involved in health benefit, health care, health, financial and other information technology, data and related process and systems development, policy and operations throughout her career, and scribe of the ABA JCEB annual Office of Civil Rights agency meeting, Ms. Stamer also is widely recognized for her extensive work and leadership on leading edge health care and benefit policy and operational issues. She regularly helps employer and other health benefit plan sponsors and vendors, health industry, insurers, health IT, life sciences and other health and insurance industry clients design, document and enforce plans, practices, policies, systems and solutions; manage regulatory, contractual and other legal and operational compliance; vendors and suppliers; deal with Medicare, Medicaid, CHIP, Medicare/Medicaid Advantage, ERISA, state insurance law and other private payer rules and requirements; contracting; licensing; terms of participation; medical billing, reimbursement, claims administration and coordination, and other provider-payer relations; reporting and disclosure, government investigations and enforcement, privacy and data security; and other compliance and enforcement; Form 990 and other nonprofit and tax-exemption; fundraising, investors, joint venture, and other business partners; quality and other performance measurement, management, discipline and reporting; physician and other workforce recruiting, performance management, peer review and other investigations and discipline, wage and hour, payroll, gain-sharing and other pay-for performance and other compensation, training, outsourcing and other human resources and workforce matters; board, medical staff and other governance; strategic planning, process and quality improvement; HIPAA administrative simplification, meaningful use, EMR, HIPAA and other technology, data security and breach and other health IT and data; STARK, antikickback, insurance, and other fraud prevention, investigation, defense and enforcement; audits, investigations, and enforcement actions; trade secrets and other intellectual property; crisis preparedness and response; internal, government and third-party licensure, credentialing, accreditation, HCQIA, HEDIS and other peer review and quality reporting, audits, investigations, enforcement and defense; patient relations and care; internal controls and regulatory compliance; payer-provider, provider-provider, vendor, patient, governmental and community relations; facilities, practice, products and other sales, mergers, acquisitions and other business and commercial transactions; government procurement and contracting; grants; tax-exemption and not-for-profit; 1557 and other Civil Rights; privacy and data security; training; risk and change management; regulatory affairs and public policy; process, product and service improvement, development and innovation, and other legal and operational compliance and risk management, government and regulatory affairs and operations concerns.

Ms. Stamer has extensive health care reimbursement and insurance experience advising and defending plan sponsors, administrators, insurance and managed care organizations, health care providers, payers, and others about Medicare, Medicaid, Medicare and Medicaid Advantage, Tri-Care, self-insured group, association, individual and employer and association group and other health benefit programs and coverages including but not limited to advising public and private payers about coverage and program design and documentation, advising and defending providers, payers and systems and billing services entities about systems and process design, audits, and other processes; provider credentialing, and contracting; providers and payer billing, reimbursement, claims audits, denials and appeals, coverage coordination, reporting, direct contracting, False Claims Act, Medicare & Medicaid, ERISA, state Prompt Pay, out-of-network and other nonpar insured, and other health care claims, prepayment, post-payment and other coverage, claims denials, appeals, billing and fraud investigations and actions and other reimbursement and payment related investigation, enforcement, litigation and actions. Scribe for the ABA JCEB annual agency meeting with HHS OCR, she also has worked extensively on health and health benefit coding, billing and claims, meaningful use and EMR, billing and reimbursement, quality measurement and reimbursement, HIPAA, FACTA, PCI, trade secret, physician and other medical, workforce, consumer financial and other data confidentiality and privacy, federal and state data security, data breach and mitigation, and other information privacy and data security concerns.

Author of leading works on a multitude of health care, health plan and other health industry matters, the American Bar Association (ABA) International Section Life Sciences Committee Vice Chair, a Scribe for the ABA Joint Committee on Employee Benefits (JCEB) Annual OCR Agency Meeting, former Vice President of the North Texas Health Care Compliance Professionals Association, past Chair of the ABA Health Law Section Managed Care & Insurance Section, past ABA JCEB Council Representative and CLE and Marketing Committee Chair, past Board President of Richardson Development Center (now Warren Center) for Children Early Childhood Intervention Agency, past North Texas United Way Long Range Planning Committee Member, and past Board Member and Compliance Chair of the National Kidney Foundation of North Texas, Ms. Stamer’s health industry clients include public health organizations; public and private hospitals, healthcare systems, clinics and other health care facilities; physicians, physician practices, medical staff, and other provider organizations; skilled nursing, long term care, assisted living, home health, ambulatory surgery, dialysis, telemedicine, DME, Pharma, clinics, and other health care providers; billing, management and other administrative services organizations; insured, self-insured, association and other health plans; PPOs, HMOs and other managed care organizations, insurance, claims administration, utilization management, and other health care payers; public and private peer review, quality assurance, accreditation and licensing; technology and other outsourcing; healthcare clearinghouse and other data; research; public and private social and community organizations; real estate, technology, clinical pathways, and other developers; investors, banks and financial institutions; audit, accounting, law firm; consulting; document management and recordkeeping, business associates, vendors, and service providers and other professional and other health industry organizations; academic medicine; trade associations; legislative and other law making bodies and others.

A popular lecturer and widely published author on health industry concerns, Ms. Stamer continuously advises health industry clients about compliance and internal controls, workforce and medical staff performance, quality, governance, reimbursement, privacy and data security, and other risk management and operational matters. Ms. Stamer also publishes and speaks extensively on health and managed care industry regulatory, staffing and human resources, compensation and benefits, technology, public policy, reimbursement and other operations and risk management concerns.

A Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also shares her thought leadership, experience and advocacy on these and other related concerns by her service in the leadership of the Solutions Law Press, Inc. Coalition for Responsible Health Policy, its PROJECT COPE: Coalition on Patient Empowerment, and a broad range of other professional and civic organizations including North Texas Healthcare Compliance Association, a founding Board Member and past President of the Alliance for Healthcare Excellence, past Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; former Board President of the early childhood development intervention agency, The Richardson Development Center for Children (now Warren Center For Children); current Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee, current Vice Chair of Policy for the Life Sciences Committee of the ABA International Section, Past Chair of the ABA Health Law Section Managed Care & Insurance Section, a current Defined Contribution Plan Committee Co-Chair, former Group Chair and Co-Chair of the ABA RPTE Section Employee Benefits Group, past Representative and chair of various committees of ABA Joint Committee on Employee Benefits; a ABA Health Law Coordinating Council representative, former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division, past Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee, a former member of the Board of Directors of the Southwest Benefits Association and others.

For more information about Ms. Stamer or her health industry and other experience and involvements, see here or contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.

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