Health & Welfare Plans Newsletter

May 21, 2015

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[Guidance Overview]

Applicability of the Embedded Maximum Out-of-Pocket Limit to Large Group and Self-Funded Plans (PDF)
"Despite the lack of clarity on this issue, it appears that the Departments do intend to require large group and self-funded plans to comply with the 'embedded MOOP' requirements implemented in the [2016 Notice of Benefit and Payment Parameters]. The Departments are primarily relying on the cross-reference in section 2707(b) of the Public Health Service Act to extend the embedded MOOP requirement to large group and self-funded plans." (Groom Law Group)  


[Advert.]

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[Guidance Overview]

EEOC Proposes Wellness Program Rule
"While the standard in the Proposed EEOC Rule for determining whether a program is reasonably designed to promote health is similar to the standard articulated in the FAQ guidance, the HIPAA Wellness Rule standard applies only to health-contingent programs while the standard in the Proposed EEOC Rule applies to all wellness programs, including participatory programs.... The Proposed EEOC Rule provides that offering a reasonable alternative standard and giving notice to the employee of that alternative as part of a health-contingent program under the HIPAA Wellness Rule would likely fulfill an employer's obligation to provide a reasonable accommodation under the ADA. The EEOC goes on to note, however, that the ADA requires employers to provide reasonable accommodations for participatory programs even though the HIPAA Wellness Rule does not require participatory programs to provide reasonable alternative standards." (Hodgson Russ LLP)  

Promoting Wellness Takes More Than Incentives
"Employers that did not use incentives reported lower participation rates -- a median of just 20 percent of employees. With the use of incentives, median participation rates increased to 40 percent. Employers offering rewards of more than $100 reported participation rates of 51 percent, compared with 36 percent for those with smaller rewards. Employers offering comprehensive programs reported participation rates of 59 percent, and participation in these programs was less sensitive to the types of incentives provided." (Society for Human Resource Management [SHRM])  

Ten Tips to Comply with California's Upcoming Sick Pay Mandate
"[1] PTO plans might -- or might not -- satisfy the obligation ... [2] Most employers and employees are covered ... [3] Notify employees of their new rights ... [4] Think about offering a lump sum benefit ... [5] Impose caps ... [6] Recognize very broad use rights ... [7] Consider variable pay ... [8] Plan to inform employees of available sick pay each pay period ... [9] Avoid retaliation ... [10] Stay informed." (Ogletree Deakins)  

2016 Will Be Costly Year for ACA Compliance, Employers Say
"Most employers (71 percent) think the costliest years are yet to come, but that doesn't mean they aren't already feeling a financial impact. Eighty-two percent say the law is increasing their organization's costs this year, with most projecting a 1 percent to 6 percent increase in compliance expenses." (Society for Human Resource Management [SHRM])  


[Advert.]

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Exchange-Only Health Plans Average Higher Premiums Than Competitors That Sell Plans Both On and Off-Exchange
"[H]ealth plans that are only sold through exchanges averaged higher premiums than health plans that were sold both on-exchange and off-exchange. The biggest difference in average premiums was for bronze plans, where premiums were approximately 15% more expensive on average for exchange-only plans. Exchange-only silver plans were nearly 7% more expensive than their on/off-exchange competitors and gold plans were approximately 5% more expensive." (HealthPocket)  

31 Million People Were Underinsured in 2014; Many Skipped Needed Health Care and Depleted Savings to Pay Medical Bills
"While people buying coverage on their own are still more likely to be underinsured than those with employer coverage (37% vs. 20%), the share of people with employer insurance who are underinsured has doubled since 2003, when it was 10 percent.... 11 percent of people with employer plans and 24 percent with individual market plans had high deductibles in 2014, up from 2 percent and 7 percent respectively in 2003. People in small firms with insurance through their jobs were more likely to have a high deductible than those in larger firms (20% vs. 8%)." (The Commonwealth Fund)  

Senator Cassidy Introduces King v. Burwell Alternative
"Senator Bill Cassidy (R-LA) has introduced the Patient Freedom Act, in anticipation of the Supreme Court deciding for the plaintiffs in King v. Burwell ... If a state wants to restore the Obamacare tax credits, it would be free to do so by establishing a state-based exchange.... It would be an obvious choice to take Dr. Cassidy's other option: Receive the federal dollars and use them in a way that empowers patients, rather than the federal government. Having made that choice, the state can then take one of two paths. It can either choose individual tax credits deposited in patients' Health Savings Accounts (HSAs) or per capita block grants." (National Center for Policy Analysis Health Policy Blog)  

[Opinion]

Galen Institute Testimony to House Oversight Subcommittee Hearing Examining the Use of Administrative Actions in the Implementation of the ACA
"The Galen Institute has been chronicling changes made to the Affordable Care Act since it was enacted in 2010, and we count at least 50 changes -- 31 of them made by the administration. In addition, there have been 17 changes passed by Congress and signed into law by President Obama, and two changes made by the Supreme Court.... [This testimony] will discuss [1] examples of actions by the administration that are clearly contrary to the statute; [2] failed and successful congressional actions to provide legal authority to changing the law; and [3] additional changes only now being uncovered." (Galen Institute)  

[Opinion]

How This Trio of ACA Taxes and Mandates Falls Squarely on Taxpayers, Not Insurers
"[F]ive years into this law riddled with more than 20 new taxes and fees, the devastating impact on the individual is finally gaining more coverage.... State governments pay insurers for the [Health Insurers] tax. The insurers then pay the tax to the federal government. The federal government then reimburses part of the cost to the states.... The states with the most managed care will be hurt the most.... As [Medicaid] enrollments mount, we can now see that the number of people signing up is blowing past bureaucrats' projections." (Benefit Revolution)  

[Opinion]

Rising Deductibles Will Make Underinsurance Worse
"[S]ince 2003, the category with the most comprehensive coverage -- employer-provided coverage -- has doubled the rate of underinsurance increasing from 10% to 20%. The greatest contributing factor has been the increase in the use of high deductibles." (Physicians for a National Health Program [PNHP])  

Benefits in General; Executive Compensation

Pay for Performance Table and Best Practices for Proxy Disclosure
"[This article] focuses on the new 'pay for performance' table ... and best practices to address the additional requirement of a description of [1] the relationship between executive compensation actually paid versus the company's TSR and [2] the relationship between the company's TSR versus the TSR of its peer group. The proposed rules give flexibility to describe these relationships in either narrative or graph form (or both).... [T]he use of charts will tell a better story and be easier for shareholders to visualize and understand and thus, should be used to help illustrate the narrative description. [The authors] have provided sample charts[.]" (Orrick)  

Incentive Plan Practices: Aligning Executive Pay with Performance
"CEO compensation is overwhelmingly incentive-based. Target compensation is 85% variable and only 15% fixed.... Median annual incentive targets for CEOs equaled approximately 100% of base salary. Typical leverage provides the ability to earn half of the bonus at threshold performance levels and 200% for maximum achievement. 87% of the companies studied used at least one metric related to earnings." (Steven Hall & Partners)  

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