Health & Welfare Plans Newsletter

August 29, 2014

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Webcasts and Conferences



[Official Guidance]

Text of IRS Notice and Request for Comment: Form 1094-B, Transmittal of Health Coverage Information Returns and Form 1095-B, Health Coverage
"The IRS developed Form 1094-B and Form 1095-B under the authority of IRC section 6055, added by [the ACA] ... Section 6055(a) requires every health insurance issuer, sponsor of a self-insured health plan, government agency that administers government-sponsored health insurance programs and other entity that provides minimum essential coverage to file annual returns reporting information for each individual for whom minimum essential coverage is provided. Form 1094-B, serves as a transmittal for Form 1095-B, Health Coverage." (Internal Revenue Service [IRS])  

[Official Guidance]

Text of IRS Notice and Request for Comment: Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns, and 1095-C, Employer-Provided Health Insurance Offer and Coverage
"The IRS developed Forms 1094-C and 1095-C under the authority of IRC section 6056, added by [the ACA] ... Section 6056 requires large employers, within the meaning of IRC section 4980H(c)(2), to file with the IRS returns reporting certain information about the health care coverage the employer offered with respect to each full-time employee, and to furnish to each full-time employee a related statement. Form 1094-C serves as a transmittal for Form 1095-C, Employer-Provided Health Insurance Offer and Coverage." (Internal Revenue Service [IRS])  

[Official Guidance]

Text of IRS Notice and Request for Comment: Form 1095-A, Health Insurance Marketplace Statement
"The IRS developed Form 1095-A ... for individuals to compute the amount of premium tax credit to which they are entitled under the [ACA] and file an accurate tax return. Marketplaces also must report certain information monthly to the IRS about individuals who receive from the Marketplace a certificate of exemption from the individual shared responsibility provision." (Internal Revenue Service [IRS])  

[Guidance Overview]

California Repeals 60-Day Waiting Period Limitation (PDF)
"The confusion between the California 60-day limit and the ACA's 90-day limit was exacerbated by regulations that the Departments of Treasury, Labor, and Health & Human Services recently issued permitting an 'orientation period' of no longer than one calendar month as a permissible condition of substantive eligibility for plan coverage. Sponsors of insured plans that provide benefits to California residents must still follow the California 60-day waiting period limitation through the end of 2014. However, starting in 2015, only the ACA's 90-day limit on eligibility waiting periods will apply." (Buck Consultants at Xerox)  

ACA May Benefit More Small Businesses in the Fall
"[I]nsurance companies encouraged business owners to renew their plans before the October 2013 deadline to avoid having to sign up for a new policy during the first year of the controversial ACA rollout.... As a result, not as many businesses needed to look for new policies for their employees as was originally projected. To be successful, SHOP exchanges must attract a large pool of businesses that can exert market pressure on insurance carriers and ultimately bring down prices. Whether that will happen remains to be seen." (Kaiser Health News)  

Are Health Care Costs in Retirement Really So High?
"[A] typical couple currently 65 years old could expect health care costs over their lifetimes, excluding long-term care, to run about $191,000 (with a 5% chance of exceeding $311,000). Adding in the cost of long-term nursing care, the average figure for a couple aged 65 rises to $260,000 (with a 5% chance of exceeding $570,000). To be sure, those are still high numbers, but assuming the two people combined have average life expectancies of 80, that works out to about $12,750 a year for the couple, well below a $10,000 annual, per-person cost. Why are the numbers at such odds?" (On Wall Street)  

How SHOP Exchanges Could Be So Much Better This Year
"[T]he biggest barrier to enrollment in this past year, the first for the SHOP, was the fact that many states focused most of their Marketplace resources and volunteer time on coverage for individuals.... Other factors discouraging enrollment for small businesses ... included the limited reach of tax credits, the low number of brokers and agents steering their clients to SHOP plans, and technological problems.... The study also showed a surprising lack of awareness of even the most basic features of the SHOP in the small-employer community." (Wolters Kluwer Law & Business)  

Trouble Ahead for Public Marketplace Auto-Enrollment?
"The idea behind the auto-enrollment proposal was to allow consumers to avoid going through the HealthCare.gov enrollment process again and to ensure that the insured don't lose coverage. Here's the problem ... The APTC amount won't change, but premiums almost certainly will. Last year's subsidy amounts were pegged to the second-lowest-cost silver plan in the market. Based on proposed 2015 rates for nine markets, the benchmark plan would change in eight of them ... Moreover, no 834 information will flow from the federal exchange for members who wind up being auto-enrolled for 2015 unless the subscriber intentionally goes through the eligibility process again." (HighRoads)  

Benefits in General; Executive Compensation

District Court Denies Plaintiff's Attorney Fees: Filing of Lawsuit Was Not Reason Why Benefits Were Granted
"'[T]he facts do not demonstrate that the suit was [a catalyst] or linked to the decision to approve plaintiff's benefits....Plaintiff's counsel was informed that benefits would be paid before the litigation was initiated.'" [Koloff v. Metropolitan Life Ins. Co., No. 1:13-cv-02060 (E.D. Cal. July 14, 2014)] (Lane Powell PC)  

Earthquake in the Independent Contractor Misclassification Field: Changed Landscape Following Serious Legal Blow to FedEx by Ninth Circuit
"The impact of these new Ninth Circuit decisions is likely to reinvigorate the crackdown against companies using an [independent contractor (IC)] business model that is not structured, documented, or implemented in a manner that demonstrates compliance with state or federal IC laws. As noted below, those companies that have enhanced their IC compliance consistent with the thrust of the Ninth Circuit decisions and applicable state and federal laws will have a far lesser risk for IC misclassification liability than those companies that use ICs but knowingly or unwittingly fail to do so in a compliant manner." [Alexander v. FedEx Ground Package System, Inc., No. 12-17458 (9th Cir. Aug. 27, 2014) and Slayman v. FedEx Ground Package System, Inc., No. 12-35525 (9th Cir. Aug. 27, 2014)] (Pepper Hamilton LLP)  

Healthcare Reform in the U.S. Territories; Prepayment of Taxes for Puerto Rico Retirement Plans
"[1] [M]any mandates of the ACA may still apply to issuers and employers [in the U.S. Territories]. The recent letter from HHS has no impact on: [a] the requirements of the ACA that were incorporated into the Internal Revenue Code and [ERISA], or [b] the requirements of ... the ACA that apply to non-federal governmental plans.... [2] As a practical matter, retirement plans that are dual-qualified (i.e., qualified not only under the Puerto Rico Internal Revenue Code but also under the U.S. Internal Revenue Code) cannot permit prepayment of taxes through distribution from the plan because prepayment of Puerto Rican taxes is not a distributable event under the U.S. Code." (Ogletree Deakins)  

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