Health & Welfare Plans Newsletter

April 29, 2016

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[Official Guidance]

Text of IRS Rev. Proc. 2016-28: 2017 Inflation Adjusted Amounts for Health Savings Accounts (HSAs) (PDF)
"For calendar year 2017, the annual limitation on deductions ... for an individual with self-only coverage under a high deductible health plan is $3,400 ... [and for] family coverage under a high deductible health plan is $6,750.... For calendar year 2017, a 'high deductible health plan' is defined under Section 223(c)(2)(A) as a health plan with an annual deductible that is not less than $1,300 for self-only coverage or $2,600 for family coverage, and the annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) do not exceed $6,550 for self-only coverage or $13,100 for family coverage." (Internal Revenue Service [IRS])  


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Health Insurer's Three-Word Denial Brings Cold Shoulder from 2nd Circuit
"Although the court persuasively rejected the 'substantial compliance' doctrine, this ruling will undoubtedly trigger further litigation as to the meaning of 'inadvertent and harmless' noncompliance. The court could also have gone much further because the harm here is one that is typical (and frustrating) in health care -- summary denials lacking any explanation.... Obtaining a comprehensible explanation for a denial so that it can be effectively challenged is hard enough, but obtaining the so-called administrative record is often impossible." [Halo v. Yale Health Plan, No. 14-4055 (2d Cir. Apr. 12, 2016)] (DeBofsky & Associates, P.C.)  

New HIPAA Phase 2 Audits: Targets Notified by Email Only
"[E]ntities eligible for Phase 2 Audits should take the time now to ensure their systems, policies and implementation procedures are up-to-date and properly documented. Given the short timeline for Phase 2 Audits, once a target receives a notice of audit selection, it will likely be too late to bring its procedures into compliance with HIPAA Privacy, Security and Breach Notification Rules." (Perkins Coie LLP)  

State Options to Control Health Care Costs and Improve Quality
"State-level reforms can be tailored to work best for each state, depending on its size and demographics and the structure of its insurance markets. States also have considerable authority over the regulation of health insurance and the provision of health care within their borders.... [This article provides] a comprehensive summary of options that states can choose from to improve the quality and sustainability of their health care systems. Generally, these options relate to implementing new payment models, increasing accountability and transparency, collecting more data, increasing the use of high-value services and practices, and removing barriers to effective practices." (Health Affairs)  

[Opinion]

Paul Ryan Does Not Seem to Understand High-Risk Pools
"[W]hat about the 10 percent of people who account for two-thirds of our health care costs. Their premiums would have to be about 7 times what the premium would be if everyone were covered under a common risk pool, or about 20 times what everyone else is paying. As Paul Ryan says, they are 'really kind of uninsurable.' So he proposes high-risk pools at the state level, with subsidized premiums. Expecting the states to subsidize two-thirds of our health care costs is a non-starter. Without massive increases in taxes, which are opposed by the Republicans anyway, the states would not be able to fund those pools." (Physicians for a National Health Program [PNHP])  


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[Opinion]

U.S. Chamber of Commerce Statement to House Ways and Means Committee on the Tax Treatment of Health Care (PDF)
"[O]ver 175 million Americans are enrolled in employer-sponsored coverage.... We urge you to protect ERISA and employer-sponsored coverage. Second, we urge you to repeal the [ACA]'s 40% excise tax on high-cost plans and preserve the longstanding tax treatment of employer-sponsored coverage for employers and employees alike. There is no direct evidence that changing the tax treatment of these benefits will result in savings.... Finally, we believe that greater innovations in employer-sponsored coverage may continue to help to reduce health care spending." (U.S. Chamber of Commerce)  

[Opinion]

U.S. Chamber of Commerce Statement for House Subcommittee Hearing: 'Innovations in Health Care -- Exploring Free-Market Solutions for a Healthy Workforce' (PDF)
"[E]mployers have driven recent advancements in health care coverage through the adoption of workplace wellness programs, the implementation of private exchanges, use of the Accountable Care Organization (ACO) model, and the integration of telemedicine into plans. However, providing affordable health insurance coverage is becoming progressively more challenging with new restrictions on plan design and new requirements governing employer-sponsored coverage." (U.S. Chamber of Commerce)  

Benefits in General

Employment Cost Index, March 2016
"Compensation costs for civilian workers increased 1.9 percent for the 12-month period ending in March 2016.... Benefit costs increased 1.7 percent for the 12-month period ending in March 2016. In March 2015, the increase was 2.7 percent.... Compensation costs for private industry workers increased 1.8 percent over the year, lower than the March 2015 increase of 2.8 percent.... The increase in the cost of benefits was 1.2 percent for the 12-month period ending in March 2016, significantly lower than March 2015 when the increase was 2.6 percent." (U.S. Bureau of Labor Statistics [BLS])  

Executive Compensation and Nonqualified Plans

[Official Guidance]

Text of IRS Chief Counsel Memorandum 201618010: Review of Chief Counsel Advice on Application of Section 162(m)(6) to Risk-Bearing Entities Providing Services to Medicaid Recipients (PDF)
"[T]he determination of whether section 162(m)(6) applies to a risk-bearing entity providing services to Medicaid recipients requires application of the definitions of health insurance issuer and health insurance coverage to those arrangements.... Although section 162(m)(6) is a provision that is not part of HIPAA but rather is a provision of the Internal Revenue Code over which the Treasury Department and the IRS have sole jurisdiction, the failure to coordinate the definition [with other agencies] raises significant litigation hazards with respect to enforcement of the application of the deduction limitation to these entities.... Accordingly, we advise that for purposes of section 162(m)(6) the type of organizations identified in the recently issued CCAs not be identified as health insurance issuers and that the arrangements not be treated as providing health insurance coverage until such time as that coordination has been completed, and that any such treatment depend on the result of such coordination." (Internal Revenue Service [IRS])  

[Guidance Overview]

More Definitions on Incentive-Based Compensation for Financial Institutions
"The new proposed rules give a separate definition for each of the following terms: [1] Long-term incentive plan; [2] Incentive-based compensation plan; [3] Incentive-based compensation program; [4] Incentive-based compensation arrangement; [5] Qualifying incentive-based compensation." (Winston & Strawn LLP)  

[Guidance Overview]

The Executive Compensation Provisions of Dodd-Frank: Where We Are Now
"It's been over five years since the signing of the Dodd-Frank Wall Street Reform and Consumer Act and we are still waiting for the [SEC] to finalize rules on several provisions related to executive compensation. [This article provides] a summary of the current landscape of Dodd-Frank as it relates to key executive compensation provisions." (Mintz Levin)  

Press Releases

PSCA Announces 2016 Board and Committee Chairs
PSCA [Plan Sponsor Council of America]

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BenefitsLink Health & Welfare Plans Newsletter, ISSN no. 1536-9595. Copyright 2016 BenefitsLink.com, Inc. 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.

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