Keep an eye on these pending state regulations 

All is mostly quiet in statehouses this time of year, but don’t hit the snooze button on state law issues until January 2025. State agencies are at work on rules affecting employer-provided insurance, leave and benefits.

As you might expect, Paid Family and Medical Leave  dominates the regulatory landscape, but rules implicating ERISA preemption and mandating certain insurance coverages are also in play. Here is a sampling of regulations awaiting final approval:

• New PFML programs. Four states — Delaware, Maine, Maryland and Minnesota — are in the implementation stage. Delaware has already issued two rounds of regulations but anticipates more to come. Maine’s current rulemaking comment period ends on Sept. 30. The comment period on Maryland’s draft regulations ended in July, but employers may review discussion documents on selected topics, including private plans and contributions. Minnesota held “listening sessions” on its initial draft rules (which should be finalized this fall) while a request for comment is pending on the state’s unrelated earned sick and safe time law (already in effect).
• Existing PFML programs. Even states with mature programs update regulations from time to time. The family temporary disability insurance portion of California’s program (otherwise known as Paid Family Leave) should see a change related to qualifying exigencies when regulations are finalized to incorporate a 2018 law. Specifically, the regulations would update claim requirements, relevant definitions and provide examples where a qualifying exigency is a permitted use of PFL benefits. In Washington, a rule is being developed to address the definition of "health care provider," weekly claim requirements, authorization of a designated representative and good cause for late applications, among other things. For details on all PFML laws, see our GRIST: 2024 state paid family and medical leave contributions and benefits.
• ERISA preemption issues. Indiana has an All Payer Claims Database. Current law appears to apply the APCD requirement to self-funded ERISA plans, despite a 2016 US Supreme Court decision finding that a Vermont APCD law couldn’t be applied to self-funded plans because of ERISA preemption. Hopefully, rules — when finalized — will provide clarity on the law’s scope. New York’s Department of Financial Services is finalizing Pharmacy Benefit Manager regulations. The proposed version does not contain an explicit exemption for PBMs administering self-funded ERISA plans. The rules restrict use of mail-order services and network steerage, among other things.
• Coverage issues. In 2019, a California law required health care service plans (including HMOs) to provide standard fertility-preservation services when treatment might impair fertility (i.e., iatrogenic fertility). Proposed regulations provide details on the scope of the coverage requirement. New York’s DFS is finalizing rules related to network adequacy and access standards for behavioral health services, applicable to fully insured plans. The rules emphasize appointment wait times as a key metric.

Recently finalized rule. Earlier this month, New Jersey’s Division of Wage and Hour Compliance finalized rules related to its Temporary Workers Bill of Rights law , which took effect on Aug. 5, 2023. The law requires temporary laborers to be paid at least the average rate of pay and cost of benefits (or the cash equivalent) of employees working at the recipient organization. Effective Sept. 16, the final rules define benefits broadly as “employee fringe benefits, including but not limited to, health insurance, life insurance, disability insurance, paid time off (including vacation, holidays, personal leave and sick leave in excess of what is required by law), training, and pension."

Timing. Like their federal counterparts, state rule-makers do not operate on a precise timetable. Unlike their federal counterparts (where some rules linger for years), state regulations tend to have a shelf life measured in weeks and months, especially if they are tied to a law with a definite start date. A final rule time span between issuance and effective date is often short. Sometimes, those two dates are the same.

Agency deference. The US Supreme Court’s opinion in Loper Bright Enterprises v. Raimondo significantly changed the federal regulatory landscape, particularly related to the level of judicial deference. This ruling did not directly apply to state regulations. However, over the past four decades many judicial decisions on state regulations have adopted (or alluded to) the prior standard, known as Chevron deference. It remains to be seen if state regulations will receive a higher level of scrutiny. For a discussion of Loper Bright, see this 15-minute US Health News video discussion.