Health & Welfare Plans Newsletter

January 27, 2015

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Employee Benefits Jobs


Webcasts and Conferences

Target-Date Funds: Does Your Plan Come Up Short?
January 27, 2015 WEBCAST
(CFO.com)

ERISA Audits: What We All Knew but Forgot
February 5, 2015 WEBCAST
(Clear Law Institute)

Mental Illness and the ADA
February 6, 2015 WEBCAST
(Clear Law Institute)

Recordkeeping for HR: What to Keep, What to Throw Away, and How to Transition from Paper to Electronic Files
February 11, 2015 WEBCAST
(Clear Law Institute)

Rural Accountable Care Initiatives: The National Rural Accountable Care Consortium Approach
March 11, 2015 WEBCAST
(Healthcare Web Summit)

National Conference
May 3, 2015 in FL
(State and Local Government Benefits Association [SALGBA])

View All Webcasts and Conferences



[Official Guidance]

Text of IRS Notice 2015-9: Penalty Relief Related to Advance Payments of the Premium Tax Credit for 2014 (PDF)
"This Notice provides limited relief for taxpayers who have a balance due on their 2014 income tax return as a result of reconciling advance payments of the premium tax credit against the premium tax credit allowed on the tax return. Specifically, this Notice provides relief from the penalty under Section 6651(a)(2) of the Internal Revenue Code for late payment of a balance due and the penalty under Section 6654(a) for underpayment of estimated tax. To qualify for the relief, taxpayers must meet certain requirements... This relief applies only for the 2014 taxable year." (Internal Revenue Service [IRS])  


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[Guidance Overview]

IRS Waives Penalties for Late Payments Linked to Obamacare
"On tax returns, [individuals] must reconcile eligibility for the credit with their actual income and pay back some of the subsidy if they received too much. That can happen if someone got a higher-paying job or a raise during 2014 and didn't ask the government to alter the subsidy. The IRS will waive penalties for making that payment late or for failing to pay estimated taxes throughout 2014. Taxpayers must send in a letter for a penalty waiver. They still must pay the taxes within a year and will owe interest after April 15, the due date for individual tax returns." (Bloomberg)  

[Guidance Overview]

Proposed Regs Address Wraparound Coverage (PDF)
"[One] alternative could be of interest to employers who want to provide alternative coverage to part-timers and/or early retirees. Employers are not subject to ACA assessments for part-time employees or early retirees who receive subsidized marketplace coverage... [Another] alternative can be offered to full-time employees and could be of interest to small employers (under 50 full-time employees) who want to offer wraparound coverage to full-time employees and who are not subject to the employer shared responsibility requirements and assessments." (Buck Consultants at Xerox)  

Supreme Court Rejects Presumption of Lifetime Health Benefit Vesting, Calling for Analysis Under Ordinary Contract Principles
"Because the Court explicitly declines to apply ordinary principles of contract law to the contract before it, it is not so clear how the case will end up. The parties both argued strenuously that ordinary principles of contract law compelled a ruling in their favor, and nothing in the Court's opinion directly addresses what the court of appeals should do with that argument. But it is fair to expect the courts of appeals -- reading the 'tea leaves' of the Court's opinion -- to look carefully at the examples of misunderstood contract doctrine that the Court identifies. As it happens, all of those examples reflect incorrect interpretations that favored the employees." (SCOTUSblog)  

Supreme Court Rejects Analysis of Duration of Retiree Benefits as Contrary to Contract Law
"By expressly discarding the Yard-Man presumption, the Court has made it significantly easier for employers to restructure retiree health obligations for their unionized employees without challenge. Even so, Justice Ginsburg and the [three] justices who joined her concurrence might not be so quick to dismiss claims that retiree health care benefits can vest through less-than-explicit agreements between employers and unions. As a result, employers should remain aware of 'informal' evidence of intent regarding the vested status of retiree and other employee benefits throughout the bargaining process and be sure to clearly reserve appropriate amounts of discretion to modify or terminate these benefits." (Ogletree Deakins)  


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The Long-Awaited Death of Yard-Man
"Justice Thomas delivered the opinion of the Court and dismantled the Yard-Man presumption. In Yard-Man, the Sixth Circuit professed to apply traditional rules for contract interpretation in finding that retiree medical benefits ... had vested.... The Supreme Court found that the Yard-Man inference violates ordinary contract principles 'by placing a thumb on the scale in favor of vested retiree benefits in all collective bargaining agreements.' Instead, as in traditional contract interpretation, ascertaining the intention of the parties should be paramount." (Seyfarth Shaw LLP)  

Traditional Contract Rules Determine Whether Retirees Are Entitled to Lifetime Healthcare Benefits
"For many employers, this important term will already be explicitly addressed in their CBAs.... These employers can stop a traditional contract interpretation challenge due to the unambiguous written terms of the contract.... [If] an existing CBA remains silent or ambiguous as to this term, the intent of the parties will be left to the judgment of a court. The Supreme Court provided a list of areas that a court should evaluate before coming to a conclusion as to the intent of parties. But relying on an ambiguous term is a dangerous and arbitrary way to contract[.]" [M&G Polymers v. Tackett, No. 13-1010 (U.S. Jan. 26, 2015)] (Fisher & Phillips LLP)  

Supreme Court Rules Against Retirees in Union Health Benefits Case
"In a concurrence, Justice Ruth Bader Ginsburg made the case that the retirees could prevail under the new, stricter standard. 'No rule requires "clear and express" language in order to show that parties intended health care benefits to vest,' she wrote. She urged the appeals court to consider other factors. One signal that the health benefits had vested, she said, was that the retirees had vested pensions. The contract tied health benefits to those 'receiving a monthly pension,' she said." (The New York Times; subscription may be required)  

Second Circuit Affirms that Health Plan's Same-Sex Spouse Exclusion Does Not Violate ERISA
"On December 23, 2014, the U.S. Court of Appeals for the Second Circuit upheld the District Court's dismissal of plaintiffs' claims alleging that the same-sex spouse exclusion in the employer's self-insured medical plan violated Section 510 of [ERISA] and also dismissed plaintiffs' breach of fiduciary duty claim under Section 404 of ERISA.... Employers considering such an exclusion for their self-insured plans should note that the decision is expressly limited to consideration of the ERISA claims and both the District Court and Second Circuit declined to address whether the exclusion is constitutional or valid under any other federal or state law." [Roe v. Empire Blue Cross Blue Shield, No. 14-1759-CV (2d Cir. Dec. 23, 2014; unpublished)] (Benefits Bryan Cave)  

Winter Storms Raise a Blizzard of Questions for Employers
"[B]lizzard warnings remain in effect for much of Massachusetts and Rhode Island, and coastal flood warnings have been issued from Delaware to Maine. Even though the storm was less severe than predicted for some areas, employers may still need to address storm-related issues as they prepare to resume normal operations.... [I]f an employer's business is closed for a week or more because of the storm, the days the business is closed would not count against an employee's FMLA leave allotment. If the business is closed for less than a week, the FMLA's regulation pertaining to holidays likely would apply." (Ford & Harrison LLP)  

Health Savings Accounts and Health Reimbursement Arrangements: Assets, Account Balances, and Rollovers, 2006-2014 (PDF)
"The average account balance was $2,077 in 2014, up from $1,356 in 2008. An increasing number of individuals have held their account for three or more years. One-quarter (27 percent) had held their account for three to four years, up from 19 percent in 2008. Thirteen percent had held their account five or more years, up from 4 percent in 2008." (Employee Benefit Research Institute [EBRI])  

White House Plans to Shift Medicare Away from Fee-for-Service; 50% of Payments Tied to Quality by 2018
"Currently, just 20 percent of payments from the Medicare health insurance program for the elderly are paid via alternative payment models like bundled payments, patient-centered medical homes and accountable care organizations, a rapidly emerging care delivery system that rewards doctors and hospitals for working together to improve quality and rein in costs." (Forbes)  

An Uncertain Outlook for Medicare Spending
"[CBO] projects that net Medicare expenditures will increase from 2.9 percent of GDP in 2015 to 3.6 percent of GDP by 2025 -- an almost 25 percent increase in the share of GDP allocated to Medicare. But all of this increase can be accounted for by the aging of the baby boom generation: the total number of Medicare beneficiaries is projected to climb about 35 percent in the next 10 years.... [A]fter adjusting for inflation, Medicare spending per beneficiary is projected to rise only 1.2 percent per year over the next ten years ... Although some of this slowdown is well understood -- reflecting payment cuts under the [ACA] and the expiration of patents of a number of blockbuster drugs -- much of the slowdown in Medicare spending is not understood by analysts." (The Brookings Institution)  

HHS Sets Goals and Timeline for Shifting Medicare Reimbursements from Volume to Value
"HHS has set a goal of tying 30 percent of traditional, or fee-for-service, Medicare payments to quality or value through alternative payment models, such as Accountable Care Organizations (ACOs) or bundled payment arrangements by the end of 2016, and tying 50 percent of payments to these models by the end of 2018. HHS also set a goal of tying 85 percent of all traditional Medicare payments to quality or value by 2016 and 90 percent by 2018 through programs such as the Hospital Value Based Purchasing and the Hospital Readmissions Reduction Programs. This is the first time in the history of the Medicare program that HHS has set explicit goals for alternative payment models and value-based payments." (U.S. Department of Health and Human Services [HHS])  

Insurance Coverage Provisions of the Affordable Care Act: CBO's January 2015 Baseline (PDF)
Four data tables: [1] Direct Spending and Revenue Effects of the Insurance Coverage Provisions of the Affordable Care Act; [2] Effects of the Affordable Care Act on Health Insurance Coverage; [3] Enrollment in, and Budgetary Effects of, Health Insurance Exchanges; [4] Comparison of CBO and JCT's Current and Previous Estimates of the Effects of the Insurance Coverage Provisions of the Affordable Care Act. (Congressional Budget Office [CBO])  

Health Care Reform Developments in 2014, and What the ACA Will Bring in 2015 (PDF)
15 pages. Article titles: [1] Technology at Forefront of ACA-Driven Innovation; [2] Why Medicaid, HIX Plans Matter to Employers; [3] Well-being 2.0: Employers Sharpen Focus on Workforce Health; [4] The Eye of the Beholder; [5] If the ACA Is Broken, Can the GOP -- and Employers -- Fix It? [6] Health Reform Shaking Up the Market -- But Not as Expected; [7] Competitive Benefits, Consumerism Drive Change; [8] Key Differences in DB to DC Shift Seen on Health Side; [9] ACA's Spirit Can Be Seen Unfolding Across the Globe; [10] Health Benefits Still Far From a Steady State. (Mercer)  

[Opinion]

Ending Subsidies in Marketplace States Would Hurt Diverse Group
"Of those losing subsidies and becoming uninsured: 81 percent are full- or part-time workers; 62 percent live in the South; 61 percent are white, non-Hispanic; and 60 percent have incomes below twice the poverty line.... One reason why many of the people losing tax credits would end up uninsured is that they don't have an offer of employer coverage." (Center on Budget and Policy Priorities)  

Benefits in General; Executive Compensation

SEC Has Yet to Set Rule on Tricky Ratio of CEO Pay to Worker Pay
"The prevailing wisdom among experts following the debate is that the S.E.C. is preparing the rule so that companies don't have to determine the exact pay median for their workers. Instead, to make it easier to comply, the agency may allow companies to conduct a statistical sampling of the pay of its employees to divine the median. That could leave companies a remarkable amount of room to play with the number.... With all the wiggle room that is expected to be allowed, companies may devise ratio numbers that are largely irrelevant." (The New York Times; subscription may be required)  

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