Health & Welfare Plans Newsletter

September 22, 2014

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Webcasts and Conferences

Industry Update
September 24, 2014 WEBCAST
(Health Partners America)

Pension Plan Funding Strategy in Light of Extended Funding Relief (HATFA)
October 8, 2014 WEBCAST
(Findley Davies, Inc.)

Benchmarking Service Provider Fees and Services
October 16, 2014 in CA
(Western Pension & Benefits Council - Orange County Chapter)

Understanding the Actuaries: Pension Funding Overview for Attorneys and HR Professionals
October 16, 2014 in NY
(Worldwide Employee Benefits Network [WEB] - New York Chapter)

Public and Private Exchanges 2015: Enrollment Trends and Outlook
November 5, 2014 WEBCAST
(Healthcare Web Summit)

Exchanges: Fact or Fiction?
November 12, 2014 WEBCAST
(Conference of Consulting Actuaries)

View All Webcasts and Conferences



[Guidance Overview]

IRS Notice 2014-55 Gets Employer Shared Responsibility Rules to Play Nice with Rules Governing Mid-Year Cafeteria Plan Elections
"Notice 2014-55 addresses two specific situations in which a cafeteria plan participant may wish to revoke coverage mid-year. [1] Revocation due to reduction in hours of service.... [2] Revocation due to enrollment in a Qualified Health Plan.... Importantly, due to the consistency requirement that applies to mid-year cafeteria plan election changes, an employee in a stability period who reduces hours may not drop coverage altogether. Instead, he or she must get coverage elsewhere -- i.e., either through a public exchange, coverage under a spouse's plan, or some other source." (Mintz Levin)  


[Advert.]

NBCH 19th Annual Conference -- November 10-12, 2014 - Washington, DC

Sponsored by National Business Coalition on Health [NBCH]

Employers, health plans, providers and other key stakeholders focus on improving health outcomes, lowering cost by benefit design, care management, payment reform, and reducing waste. Free admission for employers that are members of an NBCH coalition. Join us.



[Guidance Overview]

No More Election-Lock for Cafeteria Plans with Non-Calendar Plan Years
"There are six important things for employer-sponsors to note: [1] The cafeteria plan is permitted to rely upon the employee's representation of intent to enroll in a Marketplace plan ... (actual proof of enrollment is not required). [2] The employer-sponsored cafeteria plan document must be amended to allow for such a mid-year election change.... [3] In no event under this guidance may a cafeteria plan allow a participant to revoke a coverage election on a retroactive basis. [4] Mid-year election changes under this guidance are permitted, but not required. [5] This guidance does not extend to health FSA elections. [6] As long as the employee is still eligible for the employer-sponsored coverage (assuming it is affordable and of minimum value), the employee will not be eligible for tax credits in the Marketplace." (Hill, Chesson & Woody)  

[Guidance Overview]

Two New Section 125 Qualifying Events Permit Eased Access to Subsidized ACA Exchange Plans
"An employer may rely on the reasonable representation of an employee who is reasonably expected to have an average of less than 30 hours of service per week for future periods that the employee (and dependents) have enrolled or intend to enroll in another plan that provides minimum essential coverage for new coverage that is effective no later than the first day of the second month following the month that includes the date the original coverage is revoked." (Benefit Revolution)  

[Guidance Overview]

Special Per Diem Rates Issued for 2014-2015 Travel Expenses
"[The IRS had] provided, in Rev. Proc. 2011-47, the general rules for using a federal per diem rate to substantiate the amount of ordinary and necessary expenses for lodging, meals, and incidental costs paid or incurred for business-related travel away from home. Taxpayers using the rates and the list of localities in Notice 2014-57 must comply with the rules in Rev. Proc. 2011-47. The updated rates are effective ... on or after Oct. 1, 2014, for travel away from home on or after that date[.]" (Journal of Accountancy)  

[Guidance Overview]

California Passes Paid Sick Leave Law, Joining Nationwide Trend
"Notably, the law applies to employers of all sizes, and to California employees of companies based in other states.... California is the second state (after Connecticut) to pass a paid sick leave law, and these laws appear to be on the rise. Several municipalities have also mandated paid sick leave, including New York City, San Francisco, San Diego, Seattle, Jersey City and Newark, New Jersey and Eugene, Oregon. In Massachusetts, paid sick leave is a statewide ballot measure in the November 2014 election." (Choate Hall & Stewart LLP)  


[Advert.]

WEB's mission is to further the development of benefits professionals

Sponsored by WEB - Worldwide Employee Benefits Network

We are committed to helping define the role of the benefits professional in the 21st century, and as changing market forces reshape the profession, WEB will help its members meet the challenges ahead.



[Guidance Overview]

California Enacts Paid Sick Leave Law (PDF)
"The Act applies to all public and private employers, regardless of the number of employees. Employees are entitled to paid sick days if they work in California for 30 or more days within a year from commencing employment. Thus, the Act could apply to employees who reside in other states but spend substantial time working in California.... Employees accrue one hour of paid sick leave for every 30 hours they work.... An employee working 2,080 hours per year would earn more than eight days of sick leave per year at this accrual rate, but employers can place caps on sick leave use and accrual." (Bryan Cave LLP)  

EEOC Challenges Employer's Wellness Program under ADA
"Although the alleged facts [in this case indicate the employer's] practices might be much more aggressive than in common use by most employers, the principles argued by the EEOC ... raise potential concerns for the growing number of employers relying on health risk assessment and other wellness programs to help manage health benefit costs, employee disabilities, and other concerns.... The sponsors of these arrangements often are unaware of or discount the likelihood that the EEOC might view these and other wellness benefit arrangements as violating the ADA prohibitions against medical inquiries that are not both job related and necessary to the job or other ADA disability discrimination prohibitions." [EEOC v. Orion Energy Systems, No. 1:14-cv-1019 (E.D. Wis., filed Aug. 20, 2014)] (Solutions Law Press)  

Courts Remind Employers That Notice Is the Key in Administering the FMLA
"Now is as good a time as any for employers to review their FMLA certification and notice documents and procedures to ensure that they not only include all of the necessary instructions to employees, but also are calculated to provide proof that the documents actually were provided to the employee. The FMLA is very stringent in its requirements and, as the Lupyan court noted, the digital age provides several ways for employers to communicate with employees and to document such communications." [Lupyan v. Corinthian Colleges Inc., No. 13-1843 (3d Cir. Aug. 5, 2014); and Wallace v. FedEx, Nos. 11-5500/5577 (6th Cir. Aug. 22, 2014)] (Porter Wright Morris & Arthur LLP)  

How Many Employers Actually Comply with the Family and Medical Leave Act?
"Using partial identification methods, [the authors] estimate that FMLA compliance among firms with 50 or more employees in the private sector is at least 54.3% and at most 76.8%.... [O]rganizational characteristics that predict compliance, noncompliance, and nonresponse ... suggests that firms with missing data are more similar to noncompliant than compliant firms and that nonresponse may indicate organizational defiance of policy." (Work and Occupations)  

Health Insurance Plan Rankings by NCQA, 2014-2015
NCQA ranks health plans using the methodology they have used every year since 2005. For these 2014-2015 rankings, NCQA studied almost 1,400 health plans and ranked more than 1,000 of them based on clinical performance, member satisfaction and results from NCQA Accreditation surveys. (National Committee for Quality Assurance [NCQA])  

Text of District Court Opinion: CBAs Granted Lifetime Company-Paid Retiree Health Benefits to Most Whirlpool Retirees (PDF)
"The bench trial was held to decide one narrow question: Have Retirees proven by a preponderance of the evidence that the governing CBAs entitle them to receive retiree health benefits for life? ... The ambiguity ... regarding the duration for which the Company agreed to fund retiree health benefits, and the conflict between Item 6(c) and the 1977 Welfare Plan, are resolved by the evidence presented at trial proving that the Company and the Union intended for the members of Subclass A to receive retiree health benefits for life." [Zino, et al. v. Whirlpool, No. 5:11CV01676 (N.D. Ohio Sept. 19, 2014)] (U.S. District Court for the Northern District of Ohio)  

Insurer Spared Penalties But Forced to Pay Inpatient Rehab Benefits Despite Repeated Denials
"The cases are mixed on whether internal guidelines used by a plan decisionmaker (e.g., a claims administrator) in deciding a benefits claim constitute 'other instruments under which the plan is established or operated,' for purposes of ERISA's rule requiring provision of documents on request. Nevertheless, as this case illustrates, it is the employer as plan administrator -- not the insurer -- who bears the responsibility to respond to participants' requests for plan documents." [Butler v. United Healthcare of Tennessee, No. 13-6446 (6th Cir. Aug. 22, 2014)] (Thomson Reuters / EBIA)  

California Ballot Initiative Would Add Controls on Health Insurance Premiums
"Proposition 45 would require health insurance companies to publicly justify their rates and allow the state insurance commissioner to reject rate hikes deemed excessive. The same rules for auto insurance in California have saved drivers $102 billion since 1988. Currently state insurance regulators can review rate hikes, but cannot reject them if they are found to be unreasonable." (Consumer Watchdog)  

Text of Respondents' Brief to Supreme Court on Appeal of Sixth Circuit Decision Upholding Lifetime Retiree Health Benefits Under Collective Bargaining Agreement (PDF)
"M&G has framed the question presented as a choice among what it portrays as three special rules that courts of appeals have employed to determine whether a CBA requires an employer to continue providing health benefits to its retirees beyond the expiration date of that particular agreement. This brief will show that no special rules are needed -- or appropriate -- for that task, but that the courts should employ traditional rules of contract interpretation, to the extent consistent with national labor policy, to resolve this question, just as they employ them to resolve other questions that arise under CBAs. And, applying those rules, the Court should affirm the judgment below." [M&G Polymers USA, LLC v. Tackett, No. 13-1010 (on appeal from 6th Cir., cert. granted May 5, 2014)] (U.S. Supreme Court)  

Silicon Valley Start-Up Rattles Entire Healthcare Brokerage Industry
"By registering as a broker, Zenefits could collect the monthly commission that traditional brokers are now paid. In return for that fee, Zenefits would give small businesses some very good H.R. software.... This unusual model is threatening to traditional health brokerage firms. In slightly more than a year of operation in California, Zenefits became the No. 1 broker submitting new plans to Anthem Blue Cross, one of the state's largest providers, in the 'small group' market, which serves businesses with fewer than 50 employees. Zenefits has since expanded and is now licensed as a broker in 50 states and has customers in 41." (The New York Times; subscription may be required)  

Fortune 500 Employees Can Expect to Pay More for Health Insurance
"Key findings ... include: [1] 78 percent [of the surveyed Human Resources officers] report a rise in health insurance costs (average of 7.73 percent); [2] 37 percent report a rise in labor costs (average of 5.6 percent); [3] 73 percent report having moved or will move employees to Consumer Directed Health Plans; [4] 71 percent report raising or plans to raise employee contributions to health insurance; [5] 30 percent report moving or plans to move pre-65 retirees to ACA health exchanges; [6] 27 percent report cutting back health insurance coverage eligibility[.]" (University of South Carolina)  

'Relative Value Health Insurance' and 'Pay for Performance for Insurers' -- New Proposals are Complements, Not Substitutes
"A recent insurance reform proposal, known as Relative Value Health Insurance (RVHI) ... enables insurers to reduce their contractual obligation to cover 'usual and customary' care.... Less well-covered, however, are proposals to alter the very incentives of insurers to improve health, ... 'pay-for-performance-for-insurers' (P4P4I).... P4P4I proposals allow insurers to deny coverage for expensive care that provides few health benefits, but they also incentivize insurers to cover care that they suspect will improve health cheaply. P4P4I faces substantial drawbacks, however, which limit its ability to substitute for traditional health insurance or its RVHI-reformed variants." (Health Affairs)  

Risk Corridors and Reinsurance in Health Insurance Marketplaces: Insurance for Insurers
"[The authors] compare reinsurance and risk corridors in terms of insurer risk reduction and incentives for cost containment, finding that one-sided risk corridors achieve more risk reduction for a given level of cost containment incentives than both reinsurance and two-sided risk corridors. [They] find that the ACA policies being implemented in the Marketplaces (a mix of reinsurance and two-sided risk corridor policies) substantially limit insurer risk but that they are outperformed by a simpler one-sided risk corridor policy according to our measures of insurer risk and incentives." (National Bureau of Economic Research [NBER])  

[Opinion]

In Context, Health Premium Increases Don't Actually Look Like Increases
"By nearly any comparison, the average 1 percent premium increases available to consumers willing to switch plans is remarkably low. We are in a period of record-low health-care spending growth. But even in this period, premium increases lower than inflation are unusually good news." (The New York Times; subscription may be required)  

[Opinion]

Obamacare Will Devour Your Pay Raise
"To be sure, we should be grateful that CDHPs are surviving Obamacare, but they have been increasing market share for years. The real effect of Obamacare ... is eliminating pay raises.... All of our increased compensation will be in the form of health benefits, which will not be better, but merely Obamacare-compliant. Isn't it time American workers took home more of their compensation as wages, instead of paying it to health insurers?" (National Center for Policy Analysis Health Policy Blog)  

Benefits in General; Executive Compensation

ERISA Did Not Preempt Misclassified FedEx Workers' State-Law Claims for Value of Benefits They Should Have Received
"While ERISA's preemptive reach is fairly broad, cases like this one remind us that not every claim that has some association with an ERISA plan will be found to 'relate to' an ERISA plan in a manner that triggers preemption." [Gray v. FedEx, No. 4:06-CV-00422 (E.D. Mo. Sept. 5, 2014)] (Thomson Reuters / EBIA)  

Final Regs Under Section 162(m)(6) Address Deduction Limit on Compensation Paid by Health Insurance Providers
"Although the final regulations generally adopted the regulations as proposed, they also contained some modifications suggested by commenters, including providing: [1] Additional clarification for the aggregated group rules ... [2] Additional clarification for the types of amounts that will be considered premiums for providing health insurance coverage. [3] Revised approaches to the attribution of deferred compensation payments from account balance plans and nonaccount balance plans. [4] An alternative method for attributing remuneration resulting from the exercise of stock options and stock appreciation rights that are subject to a substantial risk of forfeiture. [5] A flexible approach to the application of the attribution consistency rules after a corporate transaction." (Practical Law Company)  

Press Releases

PSCA Announces the Winners of the 2014 Signature Awards
PSCA [Plan Sponsor Council of America]

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