Health & Welfare Plans Newsletter

October 20, 2014

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Means & Associates
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Webcasts and Conferences

Defined Benefit Plan Basics
RECORDED
(ASPPA [American Society of Pension Professionals & Actuaries])

Defined Contribution Allocations and Annual Additions
RECORDED
(ASPPA [American Society of Pension Professionals & Actuaries])

Retirement Assets and IRAs: Overview and Planning Issues
October 29, 2014 in NY
(American Friends of Magen David Adom)

ESOP Conference & Trade Show
November 13, 2014 in NV
(ESOP Association)

ERISA Plan Investment Committee Governance: Avoiding Breach of Fiduciary Duty Claims
November 17, 2014 WEBCAST
(Strafford)

Affordable Care Act's Reporting Requirements For Large Employers
December 11, 2014 WEBCAST
(Liebert Cassidy Whitmore)

Avoiding Dangerous Fiduciary Compliance Mistakes for Health and Welfare Plans
February 19, 2015 WEBCAST
(Cammack Retirement Group)

Building Outcome-Based Wellness Incentive Programs
March 19, 2015 WEBCAST
(Cammack Retirement Group)

View All Webcasts and Conferences



[Guidance Overview]

Latest ACA FAQ Provides Additional Guidance on Applying Cost-Sharing Limit to Reference-Based Pricing
"The new standards preserve the flexibility to exclude certain amounts from the out-of-pocket maximum. But plan sponsors and insurers anticipating improved cost-effectiveness from a reference-based pricing design should not overlook the additional complexity these standards are likely to create for themselves or their service providers (e.g., implementing a formal exceptions process and tracking the availability of providers willing to accept the reference price for each procedure)." [FAQs About Affordable Care Act Implementation (Part XXI)] (Thomson Reuters / EBIA)  


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[Guidance Overview]

New DOL Guidance Places Conditions on Employers Using Reference Pricing and Narrow Networks
"[E]mployer plans should: [1] Have procedures to ensure there are an adequate number of providers that accept the reference price ... [2] Have procedures to ensure that an adequate number of providers accepting the reference price meet reasonable quality standards; [3] Have an easily accessible exceptions process, allowing services rendered by providers that do not accept the reference price to be treated as in-network; and [4] Disclose through the plan's Summary Plan Description, or similar document, information on the pricing structure, the list of services the pricing structure applies to, and the exceptions process." (HR Policy Association)  

Participant Must Reimburse Plan Even When State Law Precluded Tort Claim for Medical Benefits
"The appeals court in this case agreed that 'the language of the plan plainly does not limit the plan's ability to recover its expenditures for medical expenses to an award for medical expenses only.' Regarding the claim that state law prevented the participant from claiming medical expenses in his tort personal injury action, the court stated that regardless of the state statute, the language of the plan requiring reimbursement to the plan is 'clear and controlling'[.]" [Board of Trustees of the Nat'l Elevator Industry Health Benefit Plan v. McLaughlin, No. 14-1308 (3d Cir. Oct. 1, 2014) (unpublished)] (Bloomberg BNA)  

HPID Application Process No Longer Requires Authorizing Official's Approval
"Eliminating the need for formal approval by a company executive will likely come as a relief for those tasked with submitting HPID applications. But the process still entails over 20 steps, so this simplification is not cause for procrastination -- if anything, it demonstrates that the HPID requirement is very much on CMS's radar." (Thomson Reuters / EBIA)  

HSAs and the Coming 'Cadillac' Tax (PDF)
"Employers are waiting for clarification of whether certain items are included when determining the cost of benefits, such as the employee contributions to HSAs.... While your organization has likely already felt the pressure to slow the rate of your health care costs, this upcoming tax forces a necessary review of your strategy for the next five years. Now is the time to evaluate tactics that will provide better results over the long haul, and to consider a multi-year approach aimed at positioning your program best in the new environment." (Fidelity Investments)  

Plan Controls Respond to PBM Spreads, Generic Cost Spikes
"Rebates and discounts between [pharmacy benefit managers (PBMs)] and drug makers can reduce drug prices for plans. Several kinds of rebates exist: [1] the drug maker rewards the PBM for putting its product on formulary; [2] the drug maker rewards the PBM for allotting a certain percentage of market share to the product in relation to comparable agents produced by competing manufacturers; and [3] the drug maker pays the PBM for market intelligence on prescribing patterns ... But when rebates disappear trouble can start." (Thompson SmartHR Manager)  

Wellness Programs Violate ADA, Claims EEOC in Lawsuits
"In the complaints, the EEOC emphasized that the wellness program requirements were not 'job related and consistent with business necessity.' This is the standard for many complaints under the ADA. However, if this becomes the standard for wellness programs, what wellness programs could possibly pass this test?" (Winston & Strawn LLP)  

To Cut Healthcare Costs, Companies Emphasize Employee Wellness
"When companies can demonstrate that their wellness plan has encouraged a significant percent of employees to receive annual physicals, address potential health concerns and embrace healthier lifestyles, they often will experience lower increases in their health insurance costs, he says. Companies will have more leverage negotiating their health insurance costs when they have about 70 percent participation[.]" (Columbus CEO)  

Will Employers Favor Private Exchanges Over Healthcare Coverage Sponsorship?
"It remains to be seen whether private exchanges can outperform conventional self-funding arrangements over time. New data from private exchanges ... claim 5-plus percent health plan cost savings, but we don't know whether those numbers will be seen across the sector, or whether they'll be sustainable." (Health Affairs)  

How to Pick the Right Health Plan for 2015
"The vast majority [of employees] end up 'auto-enrolling' -- that is, staying in the same plan year after year ... That might not be the best strategy this time around ... [M]any employees will receive enrollment materials for the first time, due to an ACA provision requiring large companies to offer health coverage to a wider pool of workers." (The Wall Street Journal; subscription may be required)  

[Opinion]

Text of Comments by ERIC to IRS on Draft Forms 1094-C and 1095-C and Corresponding Instruction (PDF)
9 pages. "Simplified reporting and/or additional time should be provided for large companies to gather and report the information on Forms 1094-C and 1095-C.... Treasury should clarify when the company is required to report covered individuals, employees, and/or non-employees ... Treasury should clarify that employees in the initial measurement period (and related administrative period) should not be included in the reporting.... Treasury should not require companies to provide information about their total number of employees ... Additional guidance is needed regarding the 'Qualifying Offer' Method.... Treasury should not require companies to identify all of the members of an Aggregated ALE Group .... The rules for reporting employees working for more than one ALE within an Aggregated ALE Group should be simplified." (The ERISA Industry Committee [ERIC])  

Benefits in General; Executive Compensation

[Guidance Overview]

IRS and DOL Publish Rules on E-Filing (PDF)
"Public access and electronic confirmation will substantially eliminate any challenge to a claim that a statement or notice was filed. Conversely, it will be impossible for a plan administrator to claim that a statement or notice was filed unless it has, in fact, been filed.... Plan sponsors filing at least 250 forms using the form count in IRS' rule are likely already filing the Form 5500 and Schedule SB and MB electronically under the DOL's EFAST program. The effect of the final regulations will be to spur more electronic filings of Form 8955-SSA." (Buck Consultants at Xerox)  

Advisory Council on Employee Welfare and Pension Benefit Plans to Meet November 3-4
"The purpose of the open meeting on November 3 and the morning of November 4 is for the Advisory Council members to finalize the recommendations they will present to the Secretary. At the November 4 afternoon session, the Council members will receive an update from the Assistant Secretary of Labor for [EBSA] and present their recommendations. The Council recommendations will be on the following issues: [1] PBM Compensation and Fee Disclosure, [2] Outsourcing Employee Benefit Plan Services, and [3] Issues and Considerations around Facilitating Lifetime Plan Participation. Descriptions of these topics are available on the Advisory Council page of the EBSA Web site[.]" (Employee Benefits Security Administration [EBSA], U.S. Department of Labor)  

Bankruptcy Judge: Trump Can Stop Paying for Healthcare and Pensions of Union Employees of Trump Taj Mahal Casino
"A federal bankruptcy court judge ruled Trump Entertainment could stop paying for healthcare and pensions of UNITE HERE Local 54 workers at Trump Taj Mahal, saving the casino for now, but potentially stripping these benefits from thousands of resort casino employees. Trump Entertainment officials have said they needed to cut $14.6 million in costs including $5 million healthcare expenses." (Press of Atlantic City)  

Shareholder 'No' Votes on Pay Show Uptick
"Broadridge Financial Solutions and PwC's Center for Board Governance found that while the percentage of shares voted in support of pay plans was 89% -- the same as in 2013 -- support levels slipped for the plans of mid-, small-, and micro-cap companies. Among mid-caps, the percentage of plans that failed to attain majority support doubled from 3% to 6%, while, among small caps, the equivalent percentage increased to 4% from 0%. Overall, 123 plans failed to win majority support in 2014, compared to 104 last year." (CFO)  

ISS Proposes New Approach to Evaluating Equity Plan Proposals
"The Scorecard proposal leaves many questions unanswered. ISS requested comments on the proposal and specifically asked for feedback on two issues. [1] Are there certain factors outlined above in our proposed scorecard approach that should be more heavily weighted when evaluating equity plan proposals? ... [2] Do you see any unintended consequences from shifting to a scorecard approach? ... ISS expects to release final 2015 policies on or around November 7[.]" (Winston & Strawn LLP)  

[Opinion]

Time for ISS to Decide: Is Stock Price Movement a Measure of Performance or Not?
"There is [an] internal inconsistency with ISS's position on standard time-vesting stock options. How can one fundamentally distinguish between: [1] Stock options (not performance-based pay according to ISS), which deliver value based exclusively on stock price movement and continued service, and [2] Stock awards tied to relative total shareholder return (TSR) (performance-based pay according to ISS), which also deliver value exclusively based on stock price movement and continued service. In fact, one could argue that stock options are the more performance-based vehicle since they deliver no compensation with negative stock price performance, which is often not true for relative TSR awards. To say that one vehicle is performance-based pay and the other is not is inconsistent." (Towers Watson)  

Press Releases

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