Trump Signs Executive Order Aimed at Lowering Drug Prices

On July 24, 2020, President Donald Trump signed four executive orders to lower the cost of prescription drugs, including insulin and epinephrine.

Reducing drug prices has been a long-standing campaign promise of the administration. The executive orders focus on insulin prices, drug importation, drug rebates and international pricing. Here’s an overview of the four orders:

1.       The first order, Executive Order on Access to Affordable Life-saving Medications, directs federally qualified health centers (FQHCs) to pass along discounts on insulin and epinephrine received from drug companies to certain low-income Americans.

2.       The second order, Executive Order on Increasing Drug Importation to Lower Prices for American Patients, allows for individual state plans for the importation of certain drugs, authorizes the re-importation of insulin products made in the United States and initiates widespread use of personal importation waivers at authorized pharmacies throughout the United States. The administration has been working with Florida on a method to enable the importation of cheaper Canadian drugs, and may be using Florida as a model for other interested states.

3.       The third order, Executive Order on Lowering Prices for Patients by Eliminating Kickbacks to Middlemen, prohibits secret deals between drug manufacturers and pharmacy benefit managers, ensuring patients directly benefit from available discounts at the pharmacy counter.

4. The fourth and final order ensures that the United States will pay the lowest price available in economically comparable countries for all Medicare Part B drugs. This order does not become effective until Aug. 24, pending industry negotiations. The United States often pays 80% more for these drugs than other developed countries. Trump wants input from the pharmaceutical industry on how to reduce that pricing.

What’s Next?

The pharmaceutical industry quickly condemned the orders and will have an opportunity to respond directly to the president. On Tuesday, July 28, a group of industry executives will visit the White House to discuss proposal alternatives to reduce costs—and specifically, international pricing in the fourth executive order.

Employers Must Report Pay for FFCRA Leave on W2

Employers are required to report the amount of qualified sick and family leave wages paid to employees under the Families First Coronavirus Response Act (FFCRA) on Form W-2, according to guidance from the IRS and the U.S. Treasury Department. The guidance was provided in Notice 2020-54, issued by the agencies on July 8, 2020.

Reporting FFCRA Compensation on the W-2

Employers will be required to report FFCRA leave compensation in either Box 14 of Form W-2, or in a statement provided with the Form W-2.

The reporting requirement provides self-employed individuals who are also employees with the information necessary to claim sick and family leave tax credits for which they are eligible. According to the Notice, these individuals must also report on Form 7202, Credits for Sick Leave and Family Leave for Certain Self-Employed Individuals, included with their income tax returns.

The guidance provides employers with optional language to use in the Form W-2 instructions for employees, explaining that the FFCRA leave wages may limit employees’ tax credits for FFCRA leave with respect to any additional self-employment income.

Employee Leave Under FFCRA

The FFCRA requires covered employers to provide employees with up to 80 hours of paid sick leave and up to 10 weeks of partially compensated leave under the Family and Medical Leave Act for specified reasons relating to COVID-19.

Employers may take a dollar-for-dollar reimbursement through tax credits for all qualifying wages paid under the FFCRA. Applicable tax credits also extend to amounts paid or incurred to maintain health insurance coverage.

Draft Forms for 2020 ACA Reporting Released

On July 13, 2020, the Internal Revenue Service (IRS) released draft 2020 forms for reporting under Internal Revenue Code (Code) Section 6056. 2020 draft Forms 1094-C and 1095-C are draft versions of forms that will be used by applicable large employers (ALEs) to report under Section 6056, as well as for combined Section 6055 and 6056 reporting by ALEs who sponsor self-insured plans. Draft instructions for Forms 1094-C and 1095-C have not yet been released.

In addition, 2020 draft forms for reporting under Section 6055 (Forms 1094-B and 1095-B, and related draft instructions) have not been released at this time. These forms, when finalized, will be used by entities reporting under Section 6055, including self-insured plan sponsors that are not ALEs.

Draft Forms 1094-C and 1095-C are substantially similar to the final 2019 versions. However, the draft Form 1095-C includes:

·         A new section to enter the employee’s age on Jan. 1;

·         Additional codes in Code Series 1 related to offers of individual coverage health reimbursement arrangements (ICHRAs); and

·         A new section to enter the zip code used to determine affordability for an ICHRA, if one was offered to the employee.

DOL Launches Employee Tool for Assessing FFCRA Leave Eligibility

The U.S. Department of Labor (DOL) has created an online tool to help workers determine whether they qualify for paid sick leave or expanded family and medical leave under the Families First Coronavirus Response Act (FFCRA).

The tool works by posing a series of questions that help employees assess whether the paid leave provisions of the FFCRA apply to their employer. Once employees learn the provisions do apply, the tool then assists them in determining whether they qualify for FFCRA paid sick leave or expanded family and medical leave. The DOL is also developing a similar tool for employers.

Employee Leave Under the FFCRA The FFCRA, enacted on March 18, 2020, created two types of employee leave for coronavirus-related purposes: paid sick leave and expanded Family and Medical Leave Act leave. Paid sick leave provides eligible employees with 80 hours of compensated leave for specified COVID-19 reasons, including:

• A quarantine or isolation order for the employee or someone the employee is caring for, or medical advice to self-quarantine;

• When the employee has symptoms of COVID-19; or

• When the employee’s child’s school or child care facility is closed.

Compensation rates for paid sick leave under the FFCRA depend on the reason for the leave. The expanded family and medical leave provisions of the law allow 12 weeks of partially compensated leave to care for a child whose school or child care facility has been closed due to COVID-19.

Trump Asks Supreme Court to Overturn ACA

Late on June 25, 2020, President Donald Trump’s administration asked the Supreme Court to strike down the Affordable Care Act (ACA). If successful, such action would eliminate health coverage for up to 23 million Americans.

The administration’s argument hinges on Congress’ decision in 2017 to remove the individual mandate, the tax penalty for not purchasing insurance. Removing that provision invalidated the entire law because the remaining provisions were intended to work in tandem, according to the White House’s position.

It’s unclear when the Supreme Court will hear oral arguments, but the proceedings will likely happen in the fall just before the November election. The Supreme Court agreed to consider three critical legal questions in the case:

1.       Whether Texas and the other plaintiffs have legal standing

2.       Whether the individual mandate was actually rendered unconstitutional by Congress in 2017

3.       If rendered unconstitutional, whether the entire law must be struck down as a result

What’s next?

The Supreme Court won’t hear any arguments until fall, at the earliest. Employers and employees should proceed as usual for the time being.

If the individual mandate is deemed unconstitutional, but the remainder of the ACA is upheld, then little will change from the current state of affairs. If the ACA is struck down, then nearly everyone in the country will be affected.

Coffman Insurance Agency, Inc. will monitor this story and will apprise you to any important developments.