Health & Welfare Plans Newsletter

January 29, 2015

BenefitsLink.com logo EmployeeBenefitsJobs.com logo LinkedIn logo Twitter logo Facebook logo
Get Retirement News  |  Advertise  |  Previous Issues  |  Search

Employee Benefits Jobs

ESOP Administrator
Blue Ridge ESOP Associates
in ANY STATE

401k Administrator
Northeast Benefit Services, Inc.
in NY

Sales Consultant
EPIC Advisors, Inc
in ANY STATE

Post Your Job

View All Jobs

RSS feed for jobs RSS Feed: All Jobs


Webcasts and Conferences

A New Webcast Series: Basics of 401(k) Plans
January 29, 2015 WEBCAST
(ASC Institute)

2015 Winter Breakfast Meeting
February 10, 2015 in VA
(ESOP Association)

4th Annual ESOP Chili Cook Off
February 26, 2015 in TX
(ESOP Association)

Avoiding Medicare Mistakes: What Group Health Plan Sponsors and Advisors Need to Know
February 26, 2015 WEBCAST
(Thomson Reuters / EBIA)

401(k) Summit
March 22, 2015 in CA
(National Association of Plan Advisors [NAPA])

Health Care Management Conference
April 13, 2015 in CA
(International Foundation of Employee Benefit Plans [IFEBP])

View All Webcasts and Conferences



[Guidance Overview]

Recent Changes to Ohio Insurance Laws Bring Them Into Line with Federal Rules for Health Plans (PDF)
"Lowers to 26 (from [28] the age to which health insurance coverage must be extended, upon the request of the insured, under certain health policies or plans that provide coverage to an insured's unmarried dependent children ... Increases to 30 (from  25) the minimum number of hours that an eligible employee works in a normal work week for the purposes of the law governing small employer health benefit plans.... Increases the potential length of one-time, limited duration health insurance policies, from policies that are not longer than six months to policies that are less than 12 months." (Ohio Legislative Service Commission)  


[Advert.]

11,000 members rely on our key health news and analysis

Sponsored by Mercer Select

With a user-friendly website, daily emails, and regular web briefings, Mercer Select members stay informed about health, retirement, and other key benefit, comp and HR issues. Contact us for a free demo or guest membership.



Employer Violated COBRA When Hours Reduction Hiked Premiums
"The fact that the reduction in hours resulted in an increase in their premiums constituted a 'loss of coverage' for COBRA purposes. Also, the employer's disclosures were inadequate in explaining this outcome. This resulted in both a COBRA notice failure and a breach of fiduciary duty under ERISA.... Here, the two individuals had to pay 100 percent of premiums once they were suspended -- prior to that, they only paid 5 percent and 18.5 percent of the premium, respectively. This increase of premiums was a loss of coverage for COBRA purposes that was a direct result of their reduction in hours, the court found." (Thompson SmartHR Manager)  

Supreme Court Dispenses with the Yard-Man Inferences
"The Supreme Court's opinion rejects the three rationales most commonly employed in support of claims for lifetime retiree health benefits -- that the benefits are deferred compensation, that to prevent vesting the agreement must explicitly curtail the duration of the benefits, and that the duration of the health benefit is tied to the lifetime payment of pension benefits. This does not mean that employers will always prevail, but it should lessen the concerns by employers about litigating retiree benefit claims in the Sixth Circuit, as well as the inconsistency multi-jurisdictional employers faced by having different outcomes in different circuits." [M&G Polymers v. Tackett, No. 13-1010 (U.S. Jan. 26, 2015)] (Proskauer Rose LLP)  

Maximizing Contributions to an HSA: Findings from the EBRI HSA Database (PDF)
"Overall, 15 percent of health savings accounts (HSAs) received the maximum contribution in 2013. HSAs opened more recently were less likely than older accounts to have received the maximum contribution. Accounts with distributions for claims and higher-level claims were more likely to have received the maximum contribution. Accounts belonging to older HSA owners were more likely than those belonging to younger ones to have received the maximum contribution." (Employee Benefit Research Institute [EBRI])  

Is It Time to Update Your Cafeteria Plan?
"The IRS has recently issued Notice 2014-55 which expands the circumstances under which a participant may make a mid-year revocation of his election to participate in an employer sponsored health plan and elect coverage under a plan offered on the Health Insurance Exchange.... The expansion of the modification rules does not apply to elections under flexible spending accounts.... For plan years beginning in 2015, the cap on salary reduction contributions has increased to $2,550.... All cafeteria plans should be reviewed to reflect the Federal recognition of same sex-marriages.... Finally, employers should consider allowing a $500 carry over for a health FSA for contributions that are not reimbursed in the plan year in which deducted (and any applicable grace period)." (Clifton Budd & DeMaria, LLP)  

Senate Bill: Vets Won't Trigger ACA Employer Mandate
"A Senate committee voted unanimously Wednesday to exclude veterans from the 50-worker threshold that triggers required coverage for employees under [the Affordable Care Act]. The Senate Finance Committee vote was 26-0, a rare show of unity over a program that is usually fraught with intense partisanship.... The Senate bill would let employers exclude from that count veterans who receive health care from the Department of Veterans Affairs or the military." (ABC News)  

One in Three SSA Disability Determinations Involve Mental Disorder Diagnosis
"ERISA plan administrators must consider Social Security Administration (SSA) disability determinations when making the disability benefit decision. ERISA plan administrators are not bound by the SSA's determination. But the benefit denial letter should provide an explanation why the SSA determination was not followed. Failure to provide that explanation raises questions whether the adverse benefits determination was 'the product of a principled and deliberative reasoning process.' So, it is always worthwhile to see the latest trends in disability findings from the Social Security Administration." (Lane Powell PC)  

11 Diverse Organizations File Amicus Briefs Supporting ACA in King v. Burwell
"At least 11 groups representing a diverse set of stakeholders filed briefs ... expressing the shared belief that Congress always intended to bring affordable health insurance to people in every state -- and that the language of the ACA reflects that intent.... Here's a quick look at some of the individuals and groups who filed, along with the constituencies who would suffer if the Supreme Court rules in favor of withdrawing premium tax credits in states with federally facilitated marketplaces." (Families USA)  

Projected Health Spending Has Fallen Since 2010, Despite ACA Coverage Expansions
"The decline in projected spending, which continues a pattern of downward revisions to CBO's projections in recent years, stems from several factors. One is health reform's cuts in payments to Medicare providers and health plans.... But CBO and other experts have also concluded that a substantial part of the health care cost slowdown reflects structural changes in the health care system. Professional associations, hospitals, and doctors are taking steps to curb costly and ineffective procedures and treatments." (Center on Budget and Policy Priorities)  

State Trends in the Cost of Employer-Sponsored Health Insurance Coverage, 2003-2013
"In all but a handful of states, average deductibles more than doubled over the past decade for employees working in large and small firms. Workers are paying more but getting less [financial protection]. Costs are particularly high, compared with median income, in Southern and South Central states, where incomes are below the national average. Based on recent forecasts that predict an uptick in private insurance growth rates starting in 2015, securing slow cost growth for workers, families, and employers will likely require action to address rising costs of medical care services." (The Commonwealth Fund)  

Health CO-OPs under the ACA: Promise and Peril at the 5-Year Mark
"The nongovernmental, state-delimited CO-OP program [created under the ACA] was to 'foster the creation of qualified nonprofit health insurance issuers to offer qualified health plans in the individual and small group markets.' However, the CO-OPs (health insurance providers) should not be confused with accountable care organizations (coordinated health care providers). In this Viewpoint, we review the central tenets of the CO-OP program, assess its current state of implementation, and describe its future challenges." (JAMA)  

Some Seeking Insurance Told They Didn't Qualify, Others Balked At Cost
"Nearly half of Americans lacking health insurance during the first year of the health law's marketplaces appeared to be eligible for government assistance, but two-thirds of them said they found the health plans too expensive or were told they didn't qualify ... Far fewer cited reasons often mentioned in political circles: a philosophical opposition to the 2010 health law or sign-up difficulties cause by the early technical problems experienced by the government's healthcare.gov enrollment website[.]" (Kaiser Health News)  

Text of Amicus Brief to Supreme Court by 52 Economists in Support of Health Insurance Subsidies (PDF)
"Congress well understood the importance of subsidies to the ACA reforms. The basic economic framework undergirding that statute can be analogized to a stool with three legs. All three legs [(namely, non-discrimination rules, individual mandate and premium subsidies)] are necessary to foster stable, functioning insurance markets consistent with Congress' goal of broad, affordable coverage. Economic modeling confirms what Congress understood: without premium subsidies for every eligible person who buys insurance on an Exchange, the ACA cannot achieve its goals." [King v. Burwell, No. 14-1158 (4th Cir. July 22, 2014; cert. pet. granted Nov. 7, 2014)] (Jenner & Block)  

Senator Orrin Hatch Questions IRS Announcement Waiving Certain ACA Tax Penalties
"Senate Finance Committee Chairman Orrin Hatch (R-Utah) sent a letter to [IRS] Commissioner John Koskinen questioning the IRS's announcement that the agency would waive certain tax penalties under the [ACA].... Hatch asks that IRS explain what led to this new waiver program, how many taxpayers are expected to owe tax debt based on excess insurance subsidies, whether the Internal Revenue Service communicated with other agencies in creating the waiver program, and if there are plans for future waiver programs." (U.S. Senate Committee on Finance)  

ACA Users Are No Sicker Than Those on Commercial Exchanges
"First year data showed that newly-insured members were scheduling PCP, women's health and preventive care visits at a much higher percentage than commercially-covered members. Prior to Obamacare, preventive visits were likely a low-priority for the uninsured, but now that these services are free under the new law, more enrollees are taking advantage of their ability to access care.... It's possible that over time, a correlation may emerge between preventive visits and increased referrals for specialty care, so these patterns will need continual monitoring." (William Gallagher Associates)  

Health Insurers May Be Finding New Ways to Discriminate Against Patients
[A]advocates say ... some insurers are placing high-cost medications for chronic conditions into the highest-priced tiers of the drugs they cover, which would force patients to pay potentially thousands of more dollars out of pocket for essential medications.... A new analysis published in the New England Journal of Medicine suggests that is the case. Of 48 exchange health plans Harvard School of Public Health researchers analyzed, they identified 12 plans that appeared to discriminate against HIV patients." (The Washington Post; subscription may be required)  

Geographic Variation in Spending for Certain High-Cost Procedures Driven by Inpatient Prices
"Spending for an episode of care in the private sector varied across metropolitan statistical areas (MSA) for coronary stent placement, laparoscopic appendectomy, and total hip replacement, even after GAO adjusted for geographic differences in the cost of doing business and differences in enrollee demographics and health status. MSAs in the highest-spending quintile had average adjusted episode spending that was 74 to 94 percent higher than MSAs in the lowest-spending quintile, depending on the procedure. MSAs with higher spending on one procedure generally had higher spending on the other two procedures. High- or low-spending MSAs were not concentrated in particular regions of the nation." (U.S. Government Accountability Office [GAO])  

Committee Leaders to HHS: Do You Have a Plan for King v. Burwell Decision?
"House Energy and Commerce Committee Republican leaders [have] sent a letter to the Secretary of [HHS], Sylvia Burwell, seeking information about the administration's contingency planning for the upcoming Supreme Court decision in the case of King v. Burwell. 'Given HHS's responsibilities, [the authors] believe it is prudent that the Department plan for the full range of potential outcomes and consequences of the Court's decision.' " (Energy & Commerce Committee, U.S. House of Representatives)  

Benefits in General; Executive Compensation

Text of Ninth Circuit Opinion: Beneficiary Designation Forms Are Not 'Plan Documents'
From the summary provided by the court: "The plan participant formally designated his wife as his beneficiary. After their divorce, he designated his son as beneficiary over the telephone but did not sign and return beneficiary designation forms. The panel held that the beneficiary designation forms were not 'plan documents' governing the plan administrator's award of benefits ... The panel concluded that there was a triable issue as to whether, under state law, the plan participant strictly or substantially complied with the governing plan documents' requirements for changing his beneficiary designation. The panel remanded the case for further proceedings." [Becker (plaintiff in interpleader) and Mays-Williams v. Williams, No. 13-35069 (9th Cir. Jan. 28, 2015)] (U.S. Court of Appeals for the Ninth Circuit)  

Comparing Nonqualified Stock Options to Awards of Restricted Stock
"[W]hen a company's stock has very little value, the recipient is likely to prefer restricted stock; however, as the value of the stock rises, the recipient may prefer NSOs because of the potential immediate tax (with an 83(b) election) on grant. On the other hand, if the company performs poorly, the stock's value may fall below the NSO's exercise price, rendering the NSO worthless. Restricted stock awards may be more complicated for the company because the recipient becomes a shareholder on the award date, even though some of the shares remain subject to forfeiture." (entreView)  

Analyzing Separations from Service Under Section 409A (PDF)
"Nonqualified plans, including severance and change in control plans subject to Section 409A, are frequently designed to commence benefit payments to an employee after the employee incurs a 'separation from service,' which is a permissible payment trigger. However, the rules surrounding the Section 409A definition of 'separation from service' are complex, and it is not always clear when an employee separates from service -- and consequently, when the employee's deferred compensation should be paid. This article discusses the Section 409A rules relating to the separation from service payment trigger, and how those rules apply in several scenarios commonly faced by companies." (Groom Law Group, via Bloomberg BNA Pension & Benefits Daily)  

Press Releases

Connect   LinkedIn   Twitter   Facebook

Additional useful links:

BenefitsLink.com, Inc.
1298 Minnesota Avenue, Suite H
Winter Park, Florida 32789
Phone (407) 644-4146
Fax (407) 644-2151

Lois Baker, J.D., President
David Rhett Baker, J.D., Editor and Publisher
Holly Horton, Business Manager

Copyright 2015 BenefitsLink.com, Inc. — but feel free to forward this newsletter without further permission from us, if you do not modify the newsletter in any way (including this lower portion).

All materials contained in this newsletter are protected by United States copyright law and may not be reproduced, distributed, transmitted, displayed, published or broadcast without the prior written permission of BenefitsLink.com, Inc., or in the case of third party materials, the owner of that content. You may not alter or remove any trademark, copyright or other notice from copies of the content.

Links to Web sites other than those owned by BenefitsLink.com, Inc. are offered as a service to readers. The editorial staff of BenefitsLink.com, Inc. was not involved in their production and is not responsible for their content.

We are proud of our Privacy Policy.

Thanks for reading this newsletter!