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Health & Welfare Plans Newsletter

June 15, 2010

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[Official Guidance]
HHS Questions and Answers: Keeping the Health Plan You Have: The Affordable Care Act and 'Grandfathered' Health Plans
Excerpt: "Here are answers to key questions about how the Affordable Care Act, and the 'grandfather' rule which implements part of the Act, will affect individuals, employers and insurers."
(U.S. Department of Health and Human Services)

[Official Guidance]
Text of Interim Final Regs Relating to Status as a Grandfathered Health Plan under the Patient Protection and Affordable Care Act

121 pages. (This is a repeat item from yesterday afternoon's bulletin issue of this newsletter.) Filed Monday morning with the Office of the Federal Register; scheduled for publication on June 17. The regs generally are effective as of today (June 14). Excerpt:

[T]hese interim final regulations provide that a group health plan or health insurance coverage no longer will be considered a grandfathered health plan if a plan sponsor or an issuer:

  • Eliminates all or substantially all benefits to diagnose or treat a particular condition. The elimination of benefits for any necessary element to diagnose or treat a condition is considered the elimination of all or substantially all benefits to diagnose or treat a particular condition;

  • Increases a percentage cost-sharing requirement (such as coinsurance) above the level at which it was on March 23, 2010;

  • Increases fixed-amount cost-sharing requirements other than copayments, such as a $500 deductible or a $2,500 out- of-pocket limit, by a total percentage measured from March 23, 2010 that is more than the sum of medical inflation and 15 percentage points.

  • Increases copayments by an amount that exceeds the greater of: a total percentage measured from March 23, 2010 that is more than the sum of medical inflation plus 15 percentage points, or $5 increased by medical inflation measured from March 23, 2010;

  • For a group health plan or group health insurance coverage, an employer or employee organization decreases its contribution rate by more than five percentage points below the contribution rate on March 23, 2010; or

  • With respect to annual limits (1) a group health plan, or group or individual health insurance coverage, that, on March 23, 2010, did not impose an overall annual or lifetime limit on the dollar value of all benefits imposes an overall annual limit on the dollar value of benefits; (2) a group health plan, or group or individual health insurance coverage, that, on March 23, 2010, imposed an overall lifetime limit on the dollar value of all benefits but no overall annual limit on the dollar value of all benefits adopts an overall annual limit at a dollar value that is lower than the dollar value of the lifetime limit on March 23, 2010; or (3) a group health plan, or group or individual health insurance coverage, that, on March 23, 2010, imposed an overall annual limit on the dollar value of all benefits decreases the dollar value of the annual limit (regardless of whether the plan or health insurance coverage also imposes an overall lifetime limit on the dollar value of all benefits).

(Employee Benefits Security Administration; U.S. Department of Health and Human Services; Internal Revenue Service)

[Guidance Overview]
IRS, HHS, and DOL Issue Regulations on Grandfathered Health Plans
Excerpt: "The final regulations describe in detail exactly which changes to a health plan will adversely affect its grandfathered health plan status. Any health plan changes that are not specifically prohibited (e.g., benefit improvements) will not cause a health plan to lose its grandfathered status."
(Ballard Spahr LLP)

[Guidance Overview]
IRS Proposed Assessment of Listed Transaction Penalties Upon Small Businesses
Excerpt: "Many taxpayers adopted 419(e) plans based upon representations of insurance professionals that the plans were legitimate welfare benefit plans and had no idea they were engaging in a listed transaction. Vociferous complaints from these taxpayers caused Congress to impose a moratorium on assessment of section 6707A penalties. The moratorium expired on June 1, 2010 . . . ."
(Fox Rothschild LLP)

[Guidance Overview]
Tax Credit for Small Employers under Health Care Reform
Excerpt: "The tax credit is effective for tax years beginning in 2010 through 2013, and is designed to encourage small employers to begin offering health coverage or continue health coverage already in effect."
(Katten Muchin Rosenman LLP)

Federal Agencies Issue Regulations on Grandfathered Health Plans
Excerpt: "The proposed regulations address at what point changes to a group health plan or health insurance coverage in which an individual was enrolled on March 23, 2010, are significant enough to cause the plan or health insurance coverage to cease to be a grandfathered health plan."
(PLANSPONSOR.com)

The Essentials of Health Care Reform: A Primer for Employers
21 pages. Excerpt: "The collective goal of these articles is to explain the individual mandate, health insurance Exchanges and the employer shared responsibility requirements. Initially we will examine the bigger picture of the basics and the mechanics of this new health care coverage system. After we review how this system operates, we will then cover the requirements specifically that directly apply to the employer/plan sponsor in greater detail."
(Gallagher Benefit Services, Inc.)

Federal Employees Get Time Off to Care for Domestic Partners, But Not Pets
Excerpt: "OPM nixed a suggestion to include pets in the definition of family members, noting, 'while we agree that a person may have a close bond with his or her pet,' employees still must use annual leave or leave without pay to stay home with sick pets."
(GovernmentExecutive.com)

Changes in Federal Workers' Leave Benefits Extended to Heterose.xual Partners and Grandparents
Excerpt: "Federal workers may use sick leave or funeral leave in cases of ailing or deceased domestic partners starting July 14, the Office of Personnel Management said . . . . Unlike other recent changes to federal personnel policies that apply only to same-s.ex partners, the new orders also apply to opposite-sex domestic partners."
(The Washington Post; free registration required)

Small Businesses Hit by Health Plan Hikes While Awaiting Tax Credits
Excerpt: "Insurers that have raised rates for small businesses this year include: Blue Shield of California, which raised rates by 58% to 75% for some plans; Aetna, which imposed a 25% increase for small business health savings account plans; and Anthem Blue Cross, which plans to raise rates by about 13% for small business plans."
(California HealthCare Foundation)

Covering Health Issues, 5th Edition: 2010 Update
Excerpt: "[The Alliance has published] a completely updated online edition of 'Covering Health Issues,' made possible by the Robert Wood Johnson Foundation. Each of the 12 chapters has been revised to reflect the provisions of the Patient Protection and Affordable Coverage Act of 2010."
(Alliance for Health Reform)

New Health Care Rules Could Add Costs, and Benefits, to Some Insurance Plans
Excerpt: "The tempest involves an issue known as 'grandfathering.' Consistent with Obama's promise, the legislation said health plans in existence when the law was enacted are exempt from some of its requirements. But the law left it to the administration to decide how much a health plan can change without forfeiting that exemption."
(The Washington Post; free registration required)

Reactions to New Federal Rules on Changes in Health Benefits
Excerpt: "The rules, released June 14, 2010, spell out when plans would lose their grandfathered status, including if they make major increases in premiums, modest increases in co-payments or significantly cut benefits. The administration estimates that half of all employers, including two-thirds of small employers, could lose their grandfathered status by 2013."
(Henry J. Kaiser Family Foundation)

Health Reform Act Adds to Cost of Large Employer VEBAs (PDF)
Pages 3-4 of 5 pages. Excerpt: "[VEBAs] established by trade associations or through specific legislation or bankrup.tcy orders appear to be excluded from the annual fee imposed upon 'health insurance providers.' But the typical arrangement, whereby a large employer provides its employee health insurance benefits through its own VEBA, appears to be subject to the annual fee."
(Katten Muchin Rosenman LLP)

Medical Tourism Poised on the Brink for at Least the Last Decade, It's Never Really Taken Off
Excerpt: "In 2007, only 750,000 Americans traveled abroad for medical care, according to a 2008 report by Deloitte's Center for Health Solutions in Washington, D.C. That number is projected to increase to just 1.6 million by 2012."
(Employee Benefit News; free registration required)

GAO Proactive Testing of ARRA Tax Credits for COBRA Premium Payments
9 pages. Excerpt: "Employers claiming COBRA credits use quarterly or annual payroll tax returns to report the number of former employees on COBRA and the amount of premiums paid. These returns do not require employers to provide any supporting information about individuals enrolled in COBRA or premiums paid on their behalf, potentially allowing unscrupulous employers to lower their payroll taxes by fraudulently claiming COBRA credits."
(U.S. Government Accountability Office)

Sixty-Six Large Firms Capture Honors for Their Healthy Workplace Policies
Excerpt: "According to the news release, winners were honored in one of three categories: Platinum, for established workplace well-being programs with measurable success and documented outcomes; Gold, for creating cultural and environmental changes that support employees who are committed to long-term behavior changes; and Silver, for employers who have launched programs or services to promote living a healthier lifestyle."
(PLANSPONSOR.com)

Employer Health Costs to Rise 9% in 2011
Excerpt: "Employers can expect medical costs to increase by 9% in 2011, a decrease of 0.5% from 2010, according to a new report from the PricewaterhouseCoopers LLP (PwC) Health Research Institute."
(PLANSPONSOR.com)




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Executive Compensation; Benefits in General

[Guidance Overview]
Court Ruling Endorses SEC's Power to Seek Clawback of Incentive Compensation from CEO not Accused of Wrongdoing
Excerpt: "In a decision of first impression, a federal district court has held that the 'clawback' provision of Sarbanes-Oxley permits the SEC to seek reimbursement of incentive-based compensation from CEOs and CFOs of companies that restate their financial statements as a result of misconduct, even if the CEO and CFO had no personal involvement in such misconduct."
(Haynes and Boone, LLP)

The Choices in Drafting a Compensation Clawback Policy
This discussion covers four specific issues that companies must consider that arise in designing and implementing a compensation clawback policy.
(Michael Melbinger via Winston & Strawn LLP)

California G.ay-Marriage Trial Could Have National Implications
Excerpt: "After a months-long break, a landmark federal trial challenging California's ban on same-s.ex marriage ends Wednesday with closing arguments. The outcome could have wide-ranging implications. . . . If [the judge] strikes down California's ban on g.ay marriage, he could do it in a way that sweeps away anti-g.ay-marriage laws throughout the nation."
(Morning Edition via National Public Radio)

Employers Still 'In the Driver's Seat' on Pay and Benefits
Excerpt: "When and if the economy improves, entrepreneurs might not find as much top-quality talent willing to work under creative compensation arrangements. For now, though, they are capitalizing on one of the few advantages afforded by the recession."
(Chicago Business)


Webcasts and Conferences

"Fundamentals of 401(k) and Other Qualified Plans" - Kansas City
in Kansas on July 14, 2010
presented by SunGard Relius

"Fundamentals of 401(k) and Other Qualified Plans" - Seattle
in Washington on July 14, 2010
presented by SunGard Corbel

Communicating the Valuation Process to Employees
Nationwide on August 3, 2010
presented by National Center for Employee Ownership

ESOP Company Case Studies: Open-Book Management and Incentive Systems
Nationwide on July 14, 2010
presented by National Center for Employee Ownership

ESOP Overview
Nationwide on August 5, 2010
presented by National Center for Employee Ownership

Meet the Innovations Award Winners
Nationwide on July 29, 2010
presented by National Center for Employee Ownership

Revitalizing Your Ownership Culture
Nationwide on August 10, 2010
presented by National Center for Employee Ownership

The Rollout: Introducing a New ESOP to Employees
Nationwide on July 22, 2010
presented by National Center for Employee Ownership

Valuation Challenges for Ongoing ESOPs
Nationwide on July 20, 2010
presented by National Center for Employee Ownership


Press Releases


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