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Health & Welfare Plans Newsletter

April 12, 2010

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HIPAA covered entities, including health plans, health care clearinghouses, and covered health care providers, must comply with the HIPAA Security Rule. This regulation also requires compliance from business associates. Covered entities must create and document compliance with a HIPAA Security manual. This course will outline the security rules, safeguards and what is required for the manual.

[Guidance Overview]
Key Business and Individual Tax Provisions Included in Recently Enacted Health Care Reform
Excerpt: "New Provision. The Act increases the employee portion of the HI tax (currently 1.45%) by an additional tax of 0.9% on wages received in excess of a threshold amount. The threshold amount is $250,000 for married taxpayers filing jointly, $125,000 for married taxpayers filing separately and $200,000 for other individuals."
(Troutman Sanders LLP)

[Guidance Overview]
First Quarter 2010 Financial Reporting Implications of Elimination of Medicare Part D Subsidy Tax Deduction
Excerpt: "The Acts effectively change the tax treatment of federal subsidies paid to sponsors of retiree health benefit plans that provide a benefit that is at least actuarially equivalent to the benefits under Medicare Part D. The PPACA effectively made these subsidy payments taxable for tax years beginning after December 31, 2010. HCERA delayed the effective date of this provision to tax years beginning after December 31, 2012."

[Guidance Overview]
Health Care Reform's Fraud-Fighting Provisions Increase the Potential for Liability for All in the Health Care Industry
Excerpt: "Because many of the provisions that target fraud, waste, and abuse became effective upon enactment, the health care industry should begin to understand these provisions immediately. This article highlights key provisions, with a particular focus on the impact the legislation will have on enforcement of the Anti-kickback Statute, the False Claims Act, the Stark law, the Civil Monetary Penalties Law, and new provisions mandating reporting and refunding of overpayments."
(Mintz, Levin, Cohn, Ferris, Glovsky and Popeo P.C.)

[Guidance Overview]
The Small Employer Health Insurance Credit under Health Reform
Excerpt: "An eligible small employer may claim a tax credit in tax years beginning after 2009 if it makes nonelective contributions that pay for at least one-half of the cost of health insurance premiums for the coverage of its participating employees. For the purposes of this section, a small employer is defined as having 25 or fewer full-time equivalent employees, the average annual wages of these employees is not greater than twice the applicable dollar amount for the tax year ($25,000 in tax years beginning in 2010 through 2013); and the employer has a qualified health care arrangement in effect."
(Wolters Kluwer)

[Guidance Overview]
IRS Guidance on New Small Employer Tax Credit
Excerpt: "EBIA Comment: Given that this small employer tax credit is already effective -- even calculated based on 2010 premiums paid before the PPACA was enacted -- it is extremely helpful to have the IRS issue this guidance so quickly. The news release indicates that the IRS will use postcards to reach out to millions of small businesses to encourage them to take advantage of this credit."
(Employee Benefits Institute of America)

COBRA Subsidy Extension Senate Vote Expected Today
Excerpt: "The legislation that is set for a Senate vote Monday would extend subsidies through May 5, according to The Washington Post. 'Democrats will need at least one Republican supporter to get the 60 votes necessary to proceed.' But while jobless benefits are traditionally seen as having bipartisan backing, this extension has proved more partisan."
(Henry J. Kaiser Family Foundation)

Health Law Offers a Chance for Preventive Care for Many
Excerpt: "Under the new law, insurers must offer preventive services -- like immunizations, cancer screenings and checkups -- to consumers as part of the insurance policy, at no additional out-of-pocket charge. The idea is that healthy Americans will be less costly Americans."
(The New York Times; free registration required)

Wisconsin Establishes Health Care Reform Agency
Excerpt: "The new office will coordinate 'transparent' access to insurance information so that individuals and businesses can make side-by-side comparisons of health plans, including a state-run Web site that will publicly publish the costs of the plans."
(Workforce Management; free registration required)

Healthcare Reform Law Cuts Medicare Advantage Payments and (Mostly) Increases Prescription Drug Program Payments (PDF)
Excerpt: "While increasing overall expenditures, the Healthcare Reform Law also cuts approximately $16 billion from the Part D program, primarily by reducing Part D premium subsidies for high-income beneficiaries. Companies that offer MA and Part D plans and pharma.ceutical manufacturers will be the most directly affected by these changes."
(Morgan, Lewis & Bockius LLP)

What Will the New Health Reform Law Do in the First Year? (PDF)
4 pages. Excerpt: "In the first year, consumers will gain new protections from insurance company abuses and sky-high premiums, small businesses will get significant subsidies to help with cost of providing coverage to their workers, and people on Medicare will see the first step toward closing the prescription drug coverage gap -- the 'doughnut hole.'"
(Families USA)

Fact Sheet: Early Benefits from Affordable Care Act of 2010 Reinsurance Program for Early Retirees (PDF)
Excerpt: "The historic Affordable Care Act is now law, and many of its important benefits are already beginning to go into effect. Among those benefits is a reinsurance program for early retirees that will be available to businesses around this country no later than June 23 this year. Reinsurance has been successfully used by a number of states to lower premiums for small businesses. It is an idea that was advocated by large businesses, which wanted it to be part of the Affordable Care Act because they believe it will defray the high and often unpredictable cost of early retirees, helping them to maintain retiree benefits at affordable levels."
(The White House)

Many Unknowns for Employers in New Federal Long-Term Care Insurance Program
Excerpt: "Provision In The New health care reform law that would establish a federal long-term care insurance program shine a much-needed light on the issue of financing elder care. But what's not clear, and likely won't be clear until regulations on implementing the program are formulated, is what effects the program will have on employers."
(Business Insurance)

Most Employers Won't Drop Health Care Benefits, According to Poll
Excerpt: "The online survey of nearly 3,700 executives, conducted by Crain Communications Inc. publications Workforce Management and Business Insurance, found that 52.5% strongly disagreed with the statement that it would be better for their organizations to stop offering health care benefits and pay a fine under the new law. Another 15.3% somewhat disagreed with the notion of dropping coverage and paying the fine."
(Business Insurance)

HHS Secretary Addresses Retiree Reinsurance Program (PDF)
2 pages. Excerpt: " Kathleen Sebelius posted a fact sheet to a White House blog on the early retiree reinsurance program included in the Patient Protection and Affordable Care Act (PPACA). This reinsurance program is one of the first significant parts of the health reform law to be implemented, and has already garnered considerable employer interest."
(Buck Consultants)

Lawsuit Challenges Validity of MHPAEA Regulations
Excerpt: "A coalition of managed behavioral healthcare organizations (MBHOs) has filed a lawsuit against the DOL, HHS, and Treasury to block implementation of regulations issued to enforce provisions of the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA). . . . The MHBOs, which contract with managed care organizations or with employers and states to manage behavioral healthcare on behalf of group health plans, challenged the regulations on various grounds. (Though not the focus of this preliminary decision, the coalition has alleged, among other things, that the regulations exceed the scope of what is permitted under the MHPAEA and that the federal agencies did not follow proper procedures in issuing the regulations.)"
(Employee Benefits Institute of America)

DOL Webpage on Health Care Reform Provides Useful Links and Resources for Employees and Employers
Excerpt: "EBIA Comment: For employers, and for those insurers and advisors working with employer-sponsored plans, the various resources that Federal agencies are beginning to make available will help in their efforts to navigate these deep new waters. The at-a-glance items don't provide details or citations, but they are a good starting point for those trying to get their bearings. And this webpage is one to watch, along with the other outside resources it links to. In the months ahead, these and many other repositories will grow and change as additional guidance is issued and more health care reform changes become effective."
(Employee Benefits Institute of America)

New Insurance and Tax Rules for Businesses Under Health Care Reform
Excerpt: "Health insurance coverage. The Acts do not require employers to offer health insurance coverage but do impose a penalty on certain businesses that do not provide coverage for full-time equivalent (FTE) employees (i.e., employees who work 30 or more hours per week). Employers with less than 50 FTE employees are not subject to the penalty. There also is no penalty for an employer that does not provide health insurance coverage if no FTE employees receive a subsidy or tax credit for insurance purchased through a new state insurance exchange created by the Acts."
(Davis Wright Tremaine LLP)

Financial Penalties May Not Be the Best Way to Promote Health-Management, Disease-Management and Wellness Initiatives
Excerpt: "While individuals may succeed in altering health-related behaviors for a limited time, it's difficult for many to create lifetime behavior changes. Employer appeals to reason, fear or penalties may only result in short-term changes. A sense of fun, teamwork or creating an emotional connection may provide more lasting results."
(Human Resource Executive Online)

Where There's Back Pain There's Sure to be Profit
Excerpt: "As the nation begins to implement health care reform it is imperative that we focus early on eliminating treatments and procedures that are not only costly but also ineffective and potentially dangerous. Action is clearly pending on the overuse of MRI for lower back pain -- especially in the context of Medicare reform. This latest JAMA report raises important issues about spinal surgery and ultimately, money-driven medicine in general. It also highlights the unhealthy relationship that has developed between the medical device industry, doctors, and hospitals that ultimately drives over-treatment. It's time to remove the financial incentives and market forces that favor more surgeries and more interventions at the expense of good patient care."
(The Century Foundation)

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Executive Compensation; Benefits in General

Clawback Policies on the Rise
Excerpt: "The trend for clawback provisions has been with us for several years. However, the trend has been accelerated by the clawback provisions included in TARP, the publicity surrounding them, and the resulting similar provisions in much of the recent proposed legislation."
(Michael Melbinger via Winston & Strawn LLP)

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