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BenefitsLink Health & Welfare Plans Newsletter
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[Guidance Overview]
What the Supreme Court Decision Means for Employers and Plan Sponsors
"In the near term, employers and plan sponsors must continue implementing the Act's various reforms and coverage mandates. The Act's various reforms and mandates in effect or coming into effect in 2013 include: [1] Form W-2 reporting requirement (for the 2012 tax year); [2] $2,500 limit on employee contributions to health flexible spending accounts (FSAs) (for plan years beginning in 2013); [3] Summary of Benefits and Coverage requirements (for open enrollment periods starting on or after September 23, 2012); [4] Requirement for employers to notify employees of the availability of health insur.ance exchanges (March 2013); [5] Expansion of FICA to include an additional 3.8% tax on the unearned income of high income individuals (for the 2013 tax year); and [6] 0.9% Medicare payroll tax increase on high income individuals (for the 2013 tax year)."
(Proskauer Rose LLP)
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Supreme Court Decision on Health Care [Advert.]
Supreme Court decision on health care. Now that the Supreme Court has issued its decision on the Patient Protection and Affordable Care Act (PPACA), what's next for plan sponsors? Visit our resource center for an article and short video for insights.
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Action Steps for Employers After the Supreme Court's Decision
"In the coming weeks and months, employers should do the following: [1] Determine whether they are appropriately aggregating group health plan valuation data in order to support 2012 Form W-2 reporting. [2] Prepare to receive, and properly distribute or apply, any Medical Loss Ratio rebates associated with 2011 insured health coverage. [3] Finalize Summary of Benefits and Coverage material for inclusion in the 2013 Open Enrollment package. [4] Complete updates to Summary Plan Descriptions and plan documents to capture and describe the 2011 and 2012 ACA changes to their plan design. [5] Reflect the 2013 plan year $2,500 cap on salary deferral contributions into healthcare spending accounts in 2013 Open Enrollment material, payroll processes, and administration systems. [6] Understand and begin to determine the patient-centered outcomes trust fund fees due in July 2013. [7] Begin to identify whether their group health plans are both affordable and available to full-time employees in order to avoid any shared responsibility penalty in 2014. [8] Prepare for audits associated with their participation in the Early Retiree Reinsurance Program, if applicable. [9] Review possible design changes to retiree drug programs to reflect the change in Medicare Part D subsidy taxation rules. [10] Review future plan design changes to blunt the balance sheet impact of the 2018 Cadillac Tax."
(Morgan, Lewis & Bockius LLP)
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Ten Strategic Considerations of the Supreme Court Upholding PPACA
"The change to Medicaid expansion could also complicate matters for employers. Under PPACA, employers with over 50 employees may be subject to additional plan affordability penalties for employees under 133% FPL—unless these individuals are Medicaid eligible. If a state does not expand Medicaid, employers above 50 lives may be subject to more plan affordability penalties than they would be were their state to pursue Medicaid expansion. In this sense, a state's decision to expand Medicaid may have cost implications for employers. How will the anticipated healthplan costs for employers change now that low-income employees may not be able to qualify for Medicaid in certain states?"
(Milliman)
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Health Reform and the Impact of Extending Dependent Coverage to Age 26
"Advocates of the Affordable Care Act (ACA) proudly point out the millions of previously uninsured Americans who will be able to gain coverage with the law's implementation. However, recent research shows that in accomplishing this policy objective, the massive health care reform law may have a number of unintended consequences that could lead to higher premiums ... In the case of insuring more young people, recent analysis shows that the ACA encourages young adults to enroll in dependent coverage and drop their own coverage, causes employers to stop offering coverage, and will likely increase premiums."
(National Center for Policy Analysis)
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Providers, Payers Largely Favor Supreme Court Decision
"Most of the many-faceted segments of the healthcare industry appeared pleased with Thursday's majority Supreme Court decision to uphold most provisions of the Patient Protection and Affordable Care Act, even as they vowed to work toward the repeal of pieces they still find objectionable. 'Today's ruling does give clarity to hospitals as they move forward to transform the way they provide care and work with patients and communities as well,' American Hospital Association president and CEO Rich Umbdenstock said ... But the ruling 'opens up new questions as well[.]'"
(HealthLeaders Media)
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Supreme Court Ruling Means IRS Gets More Authority, More Employees
"IRS officials on background tell FOX Business the U.S. Supreme Court ruling on health reform gives the IRS even more powers than previously understood. The IRS now gets to know about a small business's entire payroll, the level of their insur.ance coverage—and it gets to know the income of not just the primary breadwinner in your house, but your entire family's income, in order to assess/collect the mandated tax. Plus, it gets to share your personal info with all sorts of government agencies, insur.ance companies and employers."
(Reuters via FoxBusiness.com)
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Health Care Reform Stands; Employers Now Must Take Action
"[W]ith the November presidential and congressional elections nearing, the political debate over the future of health care reform is far from over. Meanwhile, employers face a renewed urgency to understand and implement the statute and its voluminous regulations. Employers must make critical decisions about their health care coverage as key provisions of the ACA become effective." [Linked article includes an extensive discussion of the background of the ACA, the litigation, the Court's decision, and what it means for employers.]
(Littler Mendelson P.C.)
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COBRA: A Little of Everything [Advert.]
This audio conference will cover the basics as well as the most misinterpreted portions of the regulations—who has the compliance responsibilities and what an employer must do every day to be in compliance. Discounted price for BenefitsLink readers.
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Skin in the Game: How Consumer-Directed Plans Affect the Cost and Use of Health Care
"[C]onsumer-directed health plans ... combine a high deductible with a tax-advantaged personal health account whose funds roll over from year to year. In exchange for the high deductible, monthly premiums are reduced.... In 2011, about 17 percent of Americans with employer-sponsored health coverage were enrolled in a consumer-directed plan. A 2012 survey found that 59 percent of large employers offered at least one such plan.... [This report describes the results of] a series of studies to examine the effects of high-deductible plans—particularly consumer-directed plans—on the costs and use of care."
(RAND Corporation)
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ACA Is Here to Stay; What Do Business Leaders Do Now?
"Some small businesses even love the so-called individual mandate—the one the [National Federation of Independent Business] warned in a statement after the ruling will lead to 'an onslaught of taxes and mandates, resulting in job loss and closed businesses.' The reason: It frees them from the shackles of having to compete in a world that revolves around employer-based coverage. (Does innovation really thrive in an environment where job applicants aspire to be coffee baristas mainly so they can get health-care coverage?)"
(Bloomberg Businessweek)
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Supreme Court's ACA Decision Answered One Question But Leads to More Questions for Employers
"[E]mployers that historically employ a mix of full-time and part-time employees now find they have a powerful financial incentive to restructure their workforce to limit the number of full-time employees they have and thus limit their overall labor costs. In addition, those that employ large numbers of unskilled workers will discover it is more cost effective to pay overtime, increase the number of part-time employees, or have certain jobs performed off-shore (such as call centers), rather than have more full-time employees who must be offered coverage under the mandate."
(Human Resource Executive Online)
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CFOs React to Health Care Ruling
"Now is also time to begin considering a more profound implication of the PPACA, the 'pay or play' decision. Companies with more than 50 employees that decide to forgo offering health insur.ance will pay a penalty, in most cases $2,000 per employee per year. But health-care costs are higher than that for almost all companies, so based strictly on the math and costs, it would be an easy decision to nix health benefits.... Of course, though, there is more to the decision than math and costs; competition for labor is a weighty concern."
(CFO.com)
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Supreme Court Decision Means ACA's Other Tax Provisions Will Go Forward
"In addition to making sweeping changes to the U.S. health care system, the health care reform legislation added a number of new taxes and made various other revenue-increasing changes to the Code to help finance health care reform. The legislation also made several health care-related changes to the Code to benefit certain taxpayers, including a credit to offset part of the costs of health insur.ance for low- to middle-income individuals and families and a credit to offset part of the costs to small businesses of providing health insur.ance for their employees. [At the link] is a list of tax-related items from the health care reform legislation—in addition to the Sec. 5000A individual health care mandate—that were upheld as a result of the Court's decision[.]"
(Journal of Accountancy)
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[Opinion]
Supreme Court's ACA Decision Reaffirms Need for Flexible Benefit Plans for Healthcare Solutions (PDF)
"The Supreme Court's decision upholding the Affordable Care Act (ACA) reaffirms the need for employer-based plans to operate efficiently and effectively to provide the most valuable coverage possible to employees through flexible benefit and individual account plans, and the Employers Council on Flexible Compensation remains committed to advocating for these tax-advantaged accounts. ECFC believes the ACA creates an environment in which the Administration should exercise its authority to dispense with some archaic benefit regulations, such as the flexible spending account (FSA) 'use it or lose it' rule."
(Employers Council on Flexible Compensation)
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[Opinion]
American Academy of Actuaries Statement on Supreme Court ACA Ruling
"The American Academy of Actuaries today called the U.S. Supreme Court's ruling to keep the Affordable Care Act largely intact a step toward ensuring that health insur.ance markets attract a broad cross section of risk, a cornerstone to any viable health insur.ance market. 'Given the provisions in the law that prohibit insurers from denying coverage or charging higher premiums to people in poor health, the individual mandate can now be an important component of the law to help reduce adverse selection,' said Academy Senior Health Fellow Cori Uccello."
(American Academy of Actuaries)
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[Opinion]
Statement by IFEBP on Supreme Court Ruling: Upheld ACA Improves America's Health Care Safety Net
"'Today's ruling marks a milestone in the discussion of health care in America, but the Affordable Care Act is just the beginning of the process,' said Michael Wilson, International Foundation CEO. 'Even with the ACA being upheld, many of our members are still in a wait-and-see mode until after this fall's presidential election.' According to [a] survey conducted in April, 52.1 percent of single-employers and corporations who were in a wait-and-see mode for health care reform planning and implementation are also awaiting the outcome of the 2012 presidential and congressional elections."
(International Foundation of Employee Benefit Plans)
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Benefits in General; Executive Compensation
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New Reporting Requirement for Compensation Consultants Under Final SEC Rules for Compensation Committees
"With respect to the new requirement in Item 407(e)(3)(iv) to disclose compensation consultant conflicts of interest, the SEC uses the 'any role' disclosure trigger rather than the 'obtained or retained the advice' trigger included in Section 10C. Thus, the new requirement will apply to any compensation consultant whose work must be disclosed pursuant to Item 407(e)(3)(iii), regardless of whether the compensation consultant was retained by management or the compensation committee or any other board committee."
(Winston & Strawn LLP)
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2012 Q&As: Treasury and IRS Meeting with ABA Joint Committee on Employee Benefits, May 11, 2012 (PDF)
Some questions concern flexible spending accounts, HSAs and executive benefits, but most of the questions address 401(k) plan operation and distributions from tax-qualified retirement plans. "The statements contained herein cannot be relied on even though they are printed as statements of the IRS. The questions were submitted by ABA members, and the responses were given [orally at a meeting on May 11, 2012] after explicit statements that their responses reflect the unofficial, individual views of the government participants as of the time of the discussion, and do not necessarily represent agency policy."
(American Bar Association)
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DOL's New Employee Guide to the FMLA Issued: What's the Impact on Employers?
"[T]he U.S. Department of Labor issued a 16-page FMLA guide that the DOL says is 'designed to answer common FMLA questions and clarify who can take FMLA leave and what protections the FMLA provides.' Entitled 'Need Time? The Employee's Guide to the Family and Medical Leave Act,' the Guide apparently was created out of DOL's belief that 'too many workers don't know about their rights under the FMLA and fail to take advantage of its protections' ... [T]he Guide primarily is meant to answer 'common' questions about the FMLA, so it leaves unanswered all of the issues that continue to frustrate employers in their administration of the FMLA. However,... in a fairly plain-spoken manner, it impresses upon employees the obligations they have under the FMLA to cooperate with their employer when they need FMLA leave and what will be expected of them during this process."
(FMLA Insights)
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Stockton, Calif., Files Bankrup.tcy Petition
"Stockton, California, became the largest city to file for bankrup.tcy in U.S. history on Thursday, after years of fiscal mismanagement and a housing market crash left it unable to pay its workers, pensioners and bondholders.... Stockton, which officially declared insolvency and its desire to restructure its debt, also filed a separate list of its major unsecured creditors. The California Public Employees' Retirement System, which manages Stockton's pension plan, tops the list. The retirement system has a $147.5 mil.lion claim for unfunded pension costs."
(Reuters)
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