Medical Marijuana and Group Health Insurance Plans – Continued Legalization May Provide In-Roads to Coverage

By: Charles A. Bruder, Member, Norris McLaughlin, P.A.

As the legalization of medical marijuana becomes more prevalent both in New Jersey and nationwide, group health insurance plan administrators face the daunting task of keeping up with an ever-evolving legal landscape. One question, however, is likely familiar to all such individuals: “Can our group health insurance plan provide coverage for medical marijuana claims?”

Currently, the answer is no. Despite legalization in several states, the federal Controlled Substances Act (CSA) continues to categorize marijuana as a Schedule I drug. As such, marijuana (including cannabis and Tetrahydrocannabinol (THC)) has not been approved for medical use by the Food and Drug Administration (FDA). As FDA approval is the benchmark for drug coverage under all group health insurance plans in the U.S., it is unlikely that any fully insured group health insurance plan will provide medical marijuana coverage until there is a change in the CSA.

What about potential coverage under self-insured group health plans? While self-insured group health plans afford a plan administrator with a degree of discretion otherwise unavailable under a group health insurance policy, the administrator of any such a plan must consider several factors, including the income tax consequences of such coverage.

Under current Internal Revenue Service (IRS) guidance, “qualified medical expenses” cannot include medical care through the use illegal drugs, even if used for valid medical treatments. As such, any payment for such drugs under a group health insurance plan (including payment through a flexible spending arrangement (FSA), health savings account (HSA) or health reimbursement account (HRA)) would be taxable to the recipient. While some plan administrators may be tempted to use state legalization of medical marijuana as a basis to provide coverage under a group health insurance plan, IRS Publication 502 effectively ends such a pipe-dream:

“You can’t include in medical expenses amounts you pay for controlled substances (such as marijuana…etc.) that aren’t legal under federal law, even if such substances are legalized by state law.”

In addition, it is possible for the IRS to disqualify a group health insurance plan that provides impermissible benefits to its participants. While such occurrences are rare, disqualification results in all benefits paid under the plan becoming taxable to the participants.

Potentially significant coverage changes, however, may be forthcoming. This past June, the FDA approved Epidiolex, a cannabidiol (CBD)-based medication that treats seizures. As a result, the DEA removed Epidiolex from Schedule I of the CSA, thereby permitting its coverage under group health insurance plans. With continuing advancement, it is likely that more CBD-based drugs will find approval with the FDA, thereby opening the door for health insurance coverage.

Similarly, the recently-enacted Agriculture Improvement Act of 2018 (the 2018 Farm Bill) legalized the manufacture and production of certain hemp-derived products, which likely will fuel advances in CBD-based medication. However, the availability of such medications is probably several years away, as federal and state regulatory hurdles (including FDA approval) remain before such drugs are available for public use.

If you have any questions about this post or any other related matter, please email me at [email protected].

A New Year, A New Legislature: A Look Ahead at 2020


THE 219TH New Jersey Legislature will be sworn in this month and Governor Murphy will begin his third year in office the same way he began his first year—looking to fulfill certain campaign promises he made, especially when it comes to finalizing a true millionaires’ tax.

As elections always have conse­quences, November 2020 is going to be a busy and hectic month when voters will decide whether New Jersey becomes the next state to legalize the recreation­al use of cannabis, in addition to casting a vote for president and their congres­sional representative. One thing is for certain with so much on the line for our state—voter turnout will be higher than normal.

Trenton lawmakers will also need to address another major issue—fixing the now defunct tax incentive program. No one knows for sure what the final program will look like, but 2019 will be remembered for the intense focus this issue received from the media and stakeholders and for the lawsuits filed. On this issue, CIANJ will remain vigilant in its efforts to secure a fair and trans­parent tax incentive program that helps businesses grow and remain competitive with the rest of the region and with other states.

The use of independent contractors may also receive additional attention in Trenton, where legislators have been trying to mimic a complex California law that overclassifies workers as employ­ees—it began as an attempt to address the ride share services and their employ­ment relationship with drivers, and has overreached.

Thanks to our efforts, and the efforts of a business coalition, the independent contractor legislation introduced during the lame duck session stalled. But will it have new life in 2020? No one knows for sure, but both the governor and the legislature have made it a priority to go after businesses that “misclassify” employees.

The state budget is always an issue of contention, when the debate over revenues and expenses takes center stage until the curtain closes on July 1. Will revenues trend up? Will there be an April surprise? We will be present when the governor delivers his budget address in February or March.

CIANJ will continue its advocacy efforts in Trenton to promote and protect free enterprise for the purpose of fostering—through education, legislative vigilance and membership interaction—an economic climate that enhances business potential and makes New Jersey a better state in which to live, work and conduct business.

Recycling Adds Nearly $6 Billion to the New Jersey Economy


RECYCLING HAS FAR-REACHING environmental and economic impacts that help reduce the need for new landfills and incinerators. In addition, a National Recycling Coalition report found that the recycling and reuse industry adds almost $6 billion annually to New Jersey’s econ­omy. “It is important to remember that recyclable materials are not trash, but rather valuable raw materials used to make new products,” explains New Jersey Department of Environmental Protection (NJDEP) Commissioner Catherine R. McCabe.

An economic impact study by the Institute of Scrap Recycling Industries showed that the nation’s scrap recycling industry is similar in scope to that of the radio and TV broadcasting, building services, and warehousing and storage industries.

“New Jersey has been a national leader in recycling for more than 30 years because we recognize the positive impacts recycling has on our environ­ment, economy and efforts to protect and conserve natural resources,” adds Francis Steitz, NJDEP Acting Assistant Commissioner for Air Quality, Energy and Sustainability. “We remind the public that recycling keeps communities clean, safeguards public health and improves the overall quality of life. This is one way everyone can make a real difference every day to protect the environment.”

In 1987, New Jersey became the first state to make recycling mandatory, adopting the Statewide Mandatory Source Separation and Recycling Act. The law requires recycling in residential, commercial and institutional settings.

New Jersey achieved an overall recy­cling rate of 61 percent in 2016—the most recent year for which data is avail­able—and remains a national leader in recycling. The NJDEP administers several grant and educational programs on behalf of recycling.

As part of recycling, it is important to keep nonrecyclable items such as plastic bags, propane tanks and used syringes out of curbside and workplace recycling bins. Recyclable items are valuable raw materials used to make new products and should not be mixed with other materials.

“For recycling to work, we need to keep our recycling mix clean and free of problematic items,” explains Commissioner McCabe.

The NJDEP and the Association of New Jersey Recyclers co-sponsor annual recycling awards that are presented to outstanding businesses, organizations, local government agencies, and individ­uals who have made significant contri­butions to recycling in New Jersey. Here are just two examples from the most recent class of honorees.

IKEA Distribution Services North America “recycles materials including bottles and cans, paper, corrugated cardboard, metal, plastics, shrink wrap, strapping, mattresses and wooden pal­lets. Food waste from the facility’s staff café is collected and composted off-site. In addition, damaged glass, candles and ceramics are sent to a facility that pul­verizes the materials into a powder that is used to reinforce concrete. As a result of these efforts, IKEA was able to recycle 77.5 percent of its waste. To ensure that recycling and sustainability programs are working well, IKEA does biweekly site audits to document progress or note areas needing improvement. The business regularly educates employees about recycling and sustainability pro­grams and goals.”

Monmouth University “has a broad-based program to recycle glass, plastic, aluminum, paper, corrugated cardboard, metal, tires, yard waste, concrete, light bulbs, batteries, used oil, antifreeze, electronic waste, toner cartridges and more. The university also donates old electronic equipment, clothes and books to charitable organizations and has installed water hydration stations to encourage use of reusable containers. As a result of these initiatives, the uni­versity was able to recycle 46 percent of the waste generated on campus in 2018. The school also purchases green cleaning products and recycled content products for campus operations.”

Delta Dental Survey Indicates Widespread Lack of Mouth Guard Use in Kids’ Sports


WITH PARENTS IN THE UNITED States preparing their kids for sports, there is an important piece of protective equipment that remains relevant year-round—the mouth guard. But a recent national survey of parents, sponsored by Delta Dental, indicates a widespread lack of mouth guard use in sporting activities that poses risks to children’s teeth and facial bones.

According to the Children’s Oral Health Survey, a majority of American children are not wearing mouth guards during basketball (72 percent), soccer (71 percent) and baseball (70 percent), among other sports.

This Delta Dental-sponsored survey identified that a significant gap in mouth guard use translates to millions of children nationwide participating in sports unprotected. For example, the results showed about 37 million children age 12 years old and under are not wearing mouth guards while playing soccer.

“A child’s healthy smile needs to last a lifetime,” explains Joseph Dill, DDS, MBA, Delta Dental Plans Association’s vice president of dental science and network strategy. “Sports-related injuries cause millions of lost teeth annually. Well-fitted mouth guards can help significantly reduce the possi­bility of oral injuries during sporting activities, including non-contact sports too. Young athletes can grow to appre­ciate the mouth guard as one more essential layer of their protective uniforms.”

Respondents also indicated their children are not wearing mouth guards during gymnastics (79 percent), volley­ball (65 percent), skiing (61 percent), rugby (48 percent), lacrosse (40 percent), ice hockey (38 percent), field hockey (34 percent), boxing (34 percent) and football (26 percent).

Mouth guards can help protect against lost or cracked teeth; fractures to roots, crowns, cheekbones and jaw­bones; teeth being pushed out of the socket; abrasions and broken or dam­aged blood vessels; and cuts to soft tissue, such as the tongue, cheeks, gums and lips.