Health & Welfare Plans Newsletter

November 2, 2015

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Daily Valuation Client Specialist
Ingham Retirement Group
in FL

Retirement Plan Consultant
Retirement Strategies, LLC
in WI

Enrolled Actuary
Pension Associates Retirement Planning LLC
in CT

HR Benefits Manager
Ameritas
in NE

Plan Design and Taxation Associate
Employee benefits law firm
in DC

Implementation Consultant
Alliance Benefit Group of Houston, Inc.
in TX

Retirement Plan Administrator
Leading Retirement Solutions (LRS)
in ANY STATE, WA

Retirement Plan Account Manager
Benefit Administration, Inc.
in WI

Junior 401(k) Plan Administrator
Alliant Insurance Services, Inc.
in NY

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[Guidance Overview]

EEOC Addresses Genetic Information Safeguards and Wellness Programs
"The EEOC requests comments on a number of related issues, including: ... [1] What safeguards are necessary to avoid wellness programs simply shifting costs to employees or spouses with health conditions? [2] Are additional protections necessary where employers store medical information electronically? [3] Should programs be prohibited from accessing genetic information from other sources such as claims data or medical records? [4] Are GINA regulations necessary to address employer wellness programs offered outside group health insurance plans?" (Health Affairs)  


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[Guidance Overview]

CMS FAQs Address Change in Small Employer Definition
"The FAQs explain that a state's small-employer cutoff will apply for purposes of medical loss ratios, risk corridors, and risk adjustment reporting. However, the legislation does not affect employee counting methods that apply for these purposes." (Thomson Reuters / EBIA)  

[Guidance Overview]

Michigan Public Employer Health Plan Limits for 2016
"Public Act 152 requires public employers in Michigan to adopt a contribution limit to health plans of 80/20%, a hard cap on employer contributions, or elect to opt-out of the contributions ... For 2016, the hard cap limits are as follows (all multiplied by the number of employees with such coverage): Single Coverage: $6,142.11; Dual Coverage: $12,845.04; Family; $16,751.23" (Kushner & Company)  

[Guidance Overview]

Jersey City Expands Paid Sick Leave
"Under the Ordinance as amended, employers with less than 10 employees [in Jersey City, New Jersey] now will be required to provide employees with up to 24 hours of paid sick leave and up to 16 hours of unpaid sick leave per year. Small employers were previously required to provide employees with up to 40 hours of unpaid sick leave per year." (Proskauer's Law and the Workplace)  

Text of Federal District Court Opinion Denying Retiree Lifetime Health Benefits Post-Tackett (PDF)
17 pages. "Upon reconsideration, in light of [M&G Polymers v. Tackett], and with due consideration to the general durational limits in the CBAs, ... the Court maintains the results of its bench trial decision with respect to Subclasses A, C, and D, but reverses its bench trial decision with respect to Subclass B.... In the shadow of Tackett, and given the lack of ambiguity on the face of the relevant Welfare Plans, the Court's bench trial ruling in favor of Plaintiffs becomes untenable. The Court therefore returns to its initial finding and grants summary judgment to Defendants with respect to Subclass B." [Zino v. Whirlpool, No. 5:11CV01676 (N.D. Ohio Oct. 30, 2015)] (U.S. District Court for the Northern District of Ohio)  


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First Circuit Applies Abstention Doctrine to ERISA Preemption Claim
"In [a recent First Circuit case], ERISA preemption met federal abstention, and lost.... The court found that the statute plainly related to an ERISA plan; then observed that a state anti-discrimination law is preempted only to the extent it prohibits more conduct than its federal counterpart, here the ADA. The court rejected the state's argument that an issue of first impression -- which this was -- could never be facially conclusive." [Sirva Relocation, LLC v. Richie, No. 14-1934 (1st Cir. July 20, 2015)] (Begos Brown & Green LLP)  

Cigna-Administered Self-Insured Plan Sued, Embezzlement Alleged
"It has been standard industry practice for self-insured health plans to engage in 'cost control' savings tactics or third party 'repricing agreements' with [out-of-network] medical providers. However, plaintiff's allegations shed light on possible abuses that take place disguised as legitimate practices and those tactics are very familiar to all out-of-network medical providers that have been put in this precarious position by allegedly fabricated PPO or fake 'contractual discounts'." (AVYM Healthcare Revenue Consultants)  

End-of-Life Discussions Will Be Reimbursed by Medicare
"[CMS] will reimburse, starting Jan. 1, health-care providers if they choose to have conversations with Medicare patients about advance care planning -- also known as end-of-life discussions. The decision affects about 50 million beneficiaries and could ripple through the health-care industry. Private insurers often follow payment practices adopted by Medicare, the national insurance program for seniors and the disabled." (The Wall Street Journal; subscription may be required)  

The Carrots and Sticks of Employee Wellness Programs
"While most large employers -- with 500 workers or more -- ask employees to complete some sort of health assessment to identify potential risk factors, nearly 60 percent also ask them to prick their fingers for biometric screening ... And the number of employers offering financial incentives to complete any of these wellness-related tasks has inched higher: About 56 percent of large employers dangled an incentive in front of their workers last year, the most common being a premium reduction." (The New York Times; subscription may be required)  

What Are the Recent and Forecasted Trends in Prescription Drug Spending?
"Prescription drug growth rates have declined from 2000 to 2013, in part due to patent expiries and decreases in generic prices. This downward trend appears to be reversing; spending on prescriptions is estimated to have spiked upwards in 2014 and 2015 with grow rates of 11.6% and 6.8% respectively." (Kaiser Family Foundation)  

Small Businesses Snub SHOP Exchange
"Nationally, about 85,000 people, from 11,000 small businesses, have coverage through the online [SHOP] marketplace ... Those totals do not include employers that began coverage in 2014 and have not yet renewed their coverage through HealthCare.gov for 2015. That's less than 1% of people with coverage in the U.S. small group insurance market that in 2013 had about 16.7 million people enrolled in health plans[.]" (USA TODAY)  

2016 ACA Premiums and Deductibles
"The rate of increase in average deductible for silver plans was more modest than bronze plans. The average 2016 deductible for an individual is 6% higher than what was observed for 2015 while the average family deductible rose by 8% in 2016." (HealthPocket)  

Affordability Top Theme for 2016 ACA Open Enrollment, Burwell Says
"This year's HealthCare.gov also features tools to help people estimate their full health care costs, including premiums as well as out-of-pocket costs such as deductibles and copayments. But tools to allow people to determine if their medical provider is covered by a plan or that show how particular drugs are covered are still in the works. HHS hasn't said yet when they will be available, or if they will be available during this open enrollment." (Bloomberg BNA)  

Health Insurers Struggle to Profit From ACA Plans
"Under the ACA, insurers have seen an influx of new membership in individual plans and in Medicaid plans they administer for the government, expanding the industry's total U.S. revenue to $743 billion in 2014 ... from $641 billion the year before ... But much of that growth has been unprofitable. Health insurers lost a total of $2.5 billion, or on average $163 per consumer enrolled, in the individual market in 2014[.]" (The Wall Street Journal; subscription may be required)  

Arizona's CO-OP Folds
"The state of Arizona on [Oct. 30] announced that its CO-OP would shutter in 2016, bringing the total to 11 out of the original Obamacare 23 CO-OPs that will be out of operation in 2016 at a total cost to taxpayers of $1.1 billion. On Thursday, November 5, 2015, the Subcommittee on Oversight and Investigations will hold a hearing on 'Examining the Costly Failures of Obamacare's CO-OP Insurance Loans.' " (Energy & Commerce Committee, U.S. House of Representatives)  

[Opinion]

Academy of Actuaries Comments on NAIC Exposure Draft on Risk Corridors Collectability (PDF)
"Some implications of the proposed guidance are not immediately clear to us, and we suggest that you might want address the following in the guidance: [1] If a company had previously recorded a 2014 risk corridor asset at less than the 37.8 percent level, are they now allowed under this guidance to recognize 2015 income by writing the asset up to 37.8 percent (and the non-admitting down to 12.6 percent)? [2] If a company had recorded a 2015 risk corridor asset in its second quarter financial statement, does it impair that asset, or non-admit it?" (American Academy of Actuaries)  

[Opinion]

Journal of Health Promotion Touts Wellness Gains But Data Better Interpreted as Admission of Massive Losses
"[W]hile per-employee losses from wellness based purely on added healthcare spending and program expense are 'only' in the three figures, the net reduction in productivity from a (speculative) 1% increase less a (certain) 3.75% decrease due to lost work time amount to a mind-boggling $5210/year. And that is probably an understatement." (Al Lewis and Vik Khanna)  

Benefits in General; Executive Compensation

[Guidance Overview]

Congress Passes Budget Deal Affecting DB and Health Plans (PDF)
"Among the fiscal provisions are several changes to pension and healthcare benefits, which were largely included to generate an estimated $12.4 billion in revenue to help offset the cost of the legislation.... The President is expected to sign the legislation soon. [This article] briefly summarize[s] the current pension-related provisions[.]" (Groom Law Group)  

[Guidance Overview]

Nonqualified Deferred Compensation Plan Update
"In June 2015, the [IRS] released updated audit guidelines for nonqualified deferred compensation plans.... [T]he guidelines identify the following issues: [1] Funding ... [2] Constructive receipt/cash equivalency ... [3] Timing of deductions ... [4] FICA/FUTA taxes ... [5] Rabbi trust funding ... [6] Impermissible coordination with 401(k) plans." (Thompson Coburn)  

Chart: The Status of Dodd-Frank SEC Guidance
"[This article includes] a handy chart that details the current status of the various executive compensation rulemakings." (Benefits Bryan Cave)  

Press Releases

Blackrock Set to Join the S&P 100
S&P Dow Jones Indices

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