Health & Welfare Plans Newsletter

June 16, 2015

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Webcasts and Conferences

IRA Excess Contributions and Recharacterizations
September 15, 2015 WEBCAST
(Ascensus)

Executive Benefits: Choices and Concerns from the Practical to the Prudent
November 11, 2015 WEBCAST
(Conference of Consulting Actuaries)

View All Webcasts and Conferences



[Official Guidance]

Text of CCIIO Instructions for Self-Insured Non-Federal Governmental Health Plans and Health Insurance Issuers: How to Elect a Federal External Review Process (PDF)
"This technical guidance sets forth instructions regarding the election of a Federally-administered external review process using the Health Insurance Oversight System (HIOS). This technical guidance applies to health insurance issuers offering group and individual health coverage that are using a Federally-administered external review process ... To begin this process, applicants will need to register for access to HIOS, request access to the External Review Election Module, and choose the Submitter role for their submission.... After completing the online request for the appropriate role, users will receive an email notification once access to the module has been approved.... A copy of the HIOS External Review Election module User Manual is available for download once you access the External Review Election module in HIOS." (Center for Consumer Information and Insurance Oversight [CCIIO], Centers for Medicare & Medicaid Services [CMS], U.S. Department of Health and Human Services [HHS])  


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[Guidance Overview]

Final SBC Rules Apply Beginning in Fall 2015
"One rule addresses situations where a plan or other entity required to provide an SBC to an individual has entered into a binding contract with another party (for example, a service provider) to provide SBCs on its behalf to the individual. Under this rule, the plan or other entity is deemed to have provided the SBC if it monitors the service provider's performance under the contract. (The Departments note in this regard that selecting and monitoring service providers for a group health plan is a fiduciary function.) In addition, if the plan or other entity knows that SBCs are not being provided in compliance with the SBC rules and has all the information needed to correct the noncompliance, it must do so as soon as practicable." (Practical Law Company)  

[Guidance Overview]

State Exchange Approvals and Discontinuance or Modification of Insurance Products
"[Pennsylvania, Delaware and Arkansas] are the only states that have met the 6.5 month regulatory notice requirement for switching from an FFM to a state-operated exchange for 2016. Any other states that wish to move from the FFM to a state-operated exchange in the wake of a loss for the government in King would have to wait until 2017 to do so.... CMS [has] issued further guidance to insurers on the discontinuance or uniform modification of insurance products ... [which] clarifies that if a product is merely modified and not discontinued it is subject to the rate-review requirements of the ACA as a continuation of the earlier product. [The guidance also] provides that if a product is merely modified and not discontinued, it should retain the same federal Health Insurance Oversight System (HIOS) identification number[.]" (Health Affairs)  

[Guidance Overview]

Oregon Becomes Fourth State to Pass Paid Sick Leave Law
"[M]ost employers with 10 or more employees in Oregon [will be required] to provide employees with up to 40 hours per year of paid sick leave.... Oregon employers with fewer than 10 employees (or six in Portland) will be required to provide up to 40 hours per year of unpaid sick leave. The new sick leave law applies to virtually all people working in the state: full-time and part-time hourly, salaried, commissioned and piece-rate employees, as well as home care employees who provide hourly or live-in care to the elderly or disabled and who receive money from the Oregon Department of Human Services. Only independent contractors, employees who receive paid sick leave under federal law, participants in certain work-training or work-study programs, and children employed by their parents, are excluded from coverage." (Littler)  

[Guidance Overview]

California Adopts ACA's FT/FTE Counting Method to Determine Small Group Market Eligibility
"In 2016, when California's small group insurance market expands to include employers of up to 100 employees, employers in the state will use the same method of counting full time and full-time equivalent employees towards that threshold, as is required under the ACA's employer shared responsibility rules. This will be the effect of Senate Bill 125, which has been enrolled and sent to Governor Brown for signature. It is expected that he will sign the bill into law, and the bill is effective upon enactment." (E is for ERISA)  

HHS Inspector General Report: CMS's Internal Controls Did Not Effectively Ensure the Accuracy of Aggregate Financial Assistance Payments Made to Qualified Health Plan Issuers Under the ACA
"CMS's internal controls did not effectively ensure the accuracy of nearly $2.8 billion in aggregate financial assistance payments made to insurance companies under the Affordable Care Act during the first 4 months that these payments were made.... We recommended that CMS correct these internal control deficiencies by requiring its Office of the Actuary to review and validate QHP issuers' actuarial support for index rates that CMS identifies as outliers, implementing computerized systems to maintain confirmed enrollee and payment information so that CMS does not have to rely on QHP issuers' attestations in calculating payments, implementing a computerized system so State marketplaces can submit enrollee eligibility data, following its guidance for calculating estimated advance CSR payments, and developing interim reconciliation procedures to address potentially inappropriate CSR payments." (Office of Inspector General [OIG], U.S. Department of Health and Human Services [HHS])  

DOL Offers Funding Opportunity: $1.25 Million to Study Expansion of Paid Leave in U.S.
"The [DOL] announced ... that $1.25 million will be made available to research and analyze how paid leave programs can be developed and implemented across the country. The department's Women's Bureau will administer the funding opportunity.... A number of state and local governments have adopted or are now considering paid leave legislation. This grant program will enable similar actions in other jurisdictions. The Funding Opportunity Announcement outlines the grant priorities, evaluation factors, and application guidance for up to 10 competitive grants." (Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL])  

Large Majority Says Prescription Drug Prices Are Unreasonable, Many Point to Drug Company Prices
"[N]early three-quarters of the public (73 percent) think that the cost of prescription drugs is unreasonable. This sentiment is held both by those who are currently taking prescription drugs and those who are not (74 percent and 72 percent). About three-quarters (76 percent) of those who say costs are unreasonable say that it is more because pharmaceutical companies set the drug prices too high, while just 10 percent say it is more because the health insurance companies require people to pay too much of the cost for drugs." (Henry J. Kaiser Family Foundation)  

Wellness Program Didn't Help Employees Lose Weight
"The employees [at a large health system in Philadelphia] were given the goal of losing 5 percent of their body weight and randomized into a control or one of three interventions. One was a standard where they received $550 off the next year's premiums for meeting the goal, another was an 'immediate gratification' intervention where they received $550 as soon as they met the goal, and another was a lottery, where each employee had an 18 percent chance of winning $10 and a 1 percent chance of winning $100 for each day that their weight was in decline to the 5 percent goal over the course of 12 months. Despite these incentives -- including enough money for a short vacation -- no real progress was made among the participants[.]" (Healthcare Payer News)  

Health Care Cost-Sharing Prompts Consumers to Make Big Cuts in Medical Spending
"[The authors] studied the medical claims and medical spending of more than 150,000 employees and dependents from one large firm that moved everyone from an insurance plan that provided completely free health care to a high-deductible plan covering 78% of medical spending on average. During the switch, the in-network providers that consumers could access and the services covered remained the same.... Age- and inflation-adjusted medical spending dropped by 19% ... when employees switched to high-deductible coverage. Strikingly, many of the spending reductions come from the sickest employees. The sickest 25% ... reduced spending by one-quarter after shifting coverage." (The Conversation)  

Deductibles Do Not Foster Price Shopping
"Medical prices did not go down after the switch [to a high deductible health plan] was made. These health care consumers did not shop prices. What went down was the quantity of health care provided. In fact, the sickest employees reduced their use of health care services even more -- by about 25%. The reductions in utilization were across the board -- inpatient services, outpatient services, emergency room services, mental health care, drug purchases, imaging, and preventive health services. Most of these are beneficial services." (Physicians for a National Health Program [PNHP])  

The ERIC Telehealth Initiative
"As a part of this telehealth initiative, ERIC is directing a national effort to go state by state and ensure that state legislatures, regulators, medical boards, and others do not impose barriers to telehealth services that reduce the availability or effectiveness of the service, or increase its cost. Consistent state rules are important to the ability of large employers to offer this service to employees living and working across the country." (The ERISA Industry Committee [ERIC])  

Overview of the Potential Effects of a Supreme Court Finding for the Plaintiffs in King v. Burwell
"At stake is whether or not the federal government can continue to provide premium tax credits and cost-sharing reductions to residents of states that have not established their own health insurance marketplaces ... In 34 states, such a finding would mean an increase of 8.2 million people uninsured, significantly higher nongroup insurance premiums, health care spending reductions for those becoming uninsured of at least 35 percent, and large amounts of foregone federal funding." (Urban Institute)  

Three States Get Conditional CMS Approval for Health Insurance Marketplaces
"Delaware officials ... have made no final decision on whether to move entirely to a state-based marketplace or leave some functions to the federal government.... Pennsylvania is also looking at a model that would leave some functions to the federal government, such as using the federal web portal healthcare.gov to enroll people. Delaware and Pennsylvania received conditional approval to run marketplaces for individual and small business coverage plans beginning in 2016. Arkansas received the conditional approval to run the small business marketplace in 2016 and the individual marketplace in 2017." (Associated Press)  

UnitedHealth Has Approached Aetna About a Takeover
"UnitedHealth Group Inc. has approached Aetna Inc. about a takeover deal that would likely be valued at more than $40 billion, ... the latest move in a frenzy of merger talks in the health-insurance industry ... The approach comes as Anthem Inc., No. 2 after UnitedHealth, recently approached Cigna Corp. with a roughly $45 billion buyout offer that was rebuffed ... Meanwhile, Aetna and others are considering buying Humana Inc., which is looking at strategic alternatives including a sale after fielding takeover interest[.]" (The Wall Street Journal; subscription may be required)  

CVS Will Buy Target's 1,600 Pharmacies, Clinics for $1.9 Billion
"CVS Health said ... it would buy the pharmacy and clinic business of retail giant Target for $1.9 billion in a bold move to expand the CVS brand across the country.... Target's nearly 80 retail clinics staffed by nurse practitioners and other providers will be rebranded under CVS' MinuteClinic name. If CVS completes the transaction, it will be the largest retail pharmacy chain in the U.S. CVS now operates 7,800 retail drugstores while Walgreens Boots Alliance (WBA) has more than 8,200 drugstores." (Forbes)  

Benefits in General; Executive Compensation

[Official Guidance]

Text of EBSA Request for Nominations: Advisory Council on Employee Welfare and Pension Benefit Plans
"The terms of five members of the Council expire at the end of this year. The groups or fields they represent are ... [1] employee organizations; [2] employers; [3] investment counseling; [4] actuarial counseling; and [5] the general public.... [A]ny person or organization desiring to nominate one or more individuals for appointment to the Advisory Council on Employee Welfare and Pension Benefit Plans to represent any of the groups or fields specified ... may submit nominations to Larry Good, Council Executive Secretary, Frances Perkins Building, U.S. Department of Labor, 200 Constitution Avenue, NW., Suite N-5623, Washington, DC 20210, or as e-mail attachments to good.larry@dol.gov. Nominations (including supporting nominations) must be received on or before July 31, 2015." (Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL])  

FASB Proposes Accounting Standards Update to Improve and Simplify Accounting for Stock Compensation (PDF)
"The proposed ASU amends Topic 718 in the following eight areas ... [1] Stock-for-tax withholding ... [2] Presentation of stock-for-tax withholding on statement of cash flow ... [3] Accounting for award forfeiture ... [4] Accounting for excess tax benefits and deficiencies ... [5] Presentation of excess tax benefits and deficiencies on statement of cash flows ... [6] Classification of awards with contingent repurchase feature ... [7] Estimating expected term of stock option award for nonpublic companies ... [8] Using intrinsic value rather than fair value for liability awards for nonpublic companies." (Frederic W. Cook & Co., Inc.)  

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