Health & Welfare Plans Newsletter

February 15, 2016

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[Official Guidance]

Text of CMS Announcement: The Transitional Reinsurance Program's Contribution Collections for the 2015 Benefit Year (PDF)
"Based on submissions from contributing entities for the 2015 benefit year as of February 3, 2016, HHS estimates that it will collect a total of $6.5 billion. Of this amount: [1] Approximately $5.5 billion has already been collected, all of which will be used for reinsurance payments for the 2015 benefit year; and [2] An approximately additional $1.0 billion is scheduled to be collected by November 15, 2016, of which $500 million will be used for reinsurance payments for the 2015 benefit year, and $500 million will be allocated on a pro rata basis for program administration and to the General Fund of the U.S. Treasury." (Centers for Medicare & Medicaid Services [CMS], U.S. Department of Health and Human Services [HHS])  


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[Guidance Overview]

Under the ACA, Do Employers Need to Offer Health Plan Coverage to Individuals Receiving Short-Term or Long-Term Disability?
"An employee is entitled to an hour of service for any hour in which they are paid or entitled to be paid. Payment includes STD and LTD pay, unless it is a STD or LTD arrangement paid for by the employee on an after tax basis. In other words, an employee who is credited with hours of service resulting from STD or LTD benefits will not be considered to be on an unpaid leave of absence." (Graydon Head & Ritchey LLP)  

[Guidance Overview]

Staffing Firms, Educational Organizations, and Breaks-In-Service Under the ACA Employer Shared Responsibility Rules: Proposed Changes Under Notice 2015-87
"The changes announced in Notice 2015-87, Q&A 15 affect only staffing firms and other third-party vendors that provide workers to educational organizations. And even in the case of firms affected by the rule, the changes as applied to employees placed with educational organizations will be limited ... While the proposed changes will not affect the initial determination of an employee's status as variable hour, the need to impute additional hours under the averaging requirement could affect the determination of whether a variable hour employee is full-time." (Mintz Levin)  

[Guidance Overview]

Transition Relief for Student Health Plans and Other ACA Issues Impacting Student Employees
"Generally, a student who is working at his or her college or university as part of a federal or state work study program is not considered an employee of the institution, at least with respect to his or her work through the program. Likewise, a student who participates in an unpaid internship and externship is generally not treated as an employee of his or her college or university due to his or her work as an unpaid intern or extern. However, students who work outside of a qualified work study program or through a paid intern or externship may be considered an employee of their colleges or universities, in which case the general hours counting rules under ACA would apply[.]" (Seyfarth Shaw LLP)  

[Guidance Overview]

IRS Sets 2016 Maximums for Valuing an Employer-Provided Vehicle's Personal Use
"For employer-provided vehicles that are first made available to employees for personal use in calendar year 2016, the maximum values for which the cents-per-mile rule may be used are $15,900 for passenger automobiles (a decrease of $100) and $17,700 for trucks or vans (an increase of $200). The maximum values for which the fleet-average rule may be used are $21,200 for passenger automobiles (a decrease of $100) and $23,100 for trucks or vans (an increase of $200)." (Thomson Reuters / EBIA)  


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[Guidance Overview]

IRS Publication 5185: Making Shared Responsibility Payments (PDF)
Rev. Feb. 2016. "Most people have minimum essential coverage for the entire year and will simply need to check a box on their tax return. Others may qualify for an exemption for months they do not have coverage. If your income is below the filing requirement threshold for your filing status, you are exempt for the entire year and should not make a payment. You do not need to file a return solely to claim this exemption." (Internal Revenue Service [IRS])  

Sixth Circuit Reverses Lower Court Decision That Retirees Were Vested in Lifetime Medical Benefits
"In reversing the District Court's granting of summary judgment in favor of the retirees, the Sixth Circuit Court of Appeals found that the former Moen CBAs did not evidence a commitment to provide health care benefits for the life of the retirees. The Court reviewed the language in the applicable CBAs and determined that despite the uses of the phrases 'continued' and 'will be covered' and 'will be provided,' the CBAs did not indicate an intention to vest their retiree medical benefits for the life of the participants." [Gallo v. Moen, No. 14-3918 (6th Cir. Feb. 8, 2016)] (McDonald Hopkins)  

Supreme Court Limits Reach of a Plan's Subrogation Clause Under ERISA When Participant Has Spent the Proceeds (PDF)
"It may ... be possible to add language to the plan and subrogation agreement that requires the injured party (participant/beneficiary) and the attorney to sign an agreement that makes the unpaid monies subject to subrogation to the plan into 'plan assets' and the injured party and the personal injury attorney into 'fiduciaries' (much like unpaid employer contributions can become plan assets depending on the language of the collective bargaining agreement). In such a case, it seems the plan could bring an action under ERISA Section 502(a)(2) for breach of fiduciary duty against the injured party and the attorney." (United Actuarial Services, Inc.)  

Equity Aids the Vigilant: The Supreme Court's Montanile Decision and Its Lessons for ERISA Plans' Efforts to Recover Medical Payment (PDF)
"[T]he Montanile ruling demonstrates that the Supreme Court remains reluctant to expand the scope of Section 502(a)(3).... At the same time, the Court stressed the limited nature of its holding and emphasized that the ERISA-covered plans should have sufficient safeguards to ensure recovery of the paid-out medical benefits." (Paul Hastings LLP)  

Liability Under ERISA for Reducing Work Schedules?
"[T]he Southern District of New York [has] denied a motion to dismiss a case against Dave & Buster's, Inc.... [E]mployees allege that the employer stated that they were reducing the number of full-time employees due to the cost of complying with the [ACA]. The court states that the crucial element is the employer's intent, and that the 'complaint states a plausible and legally sufficient claim for relief, including... lost wages and salary incidental to the reinstatement of benefits.' " [Marin v. Dave & Buster's, Inc., No. 15-3608 (S.D.N.Y. Feb. 9, 2016)] (Kilpatrick Townsend)  

The ACA's Reporting Electronic Backbone: The AIR System
"[This article] provides a primer on the electronic filing system -- referred to as the Affordable Care Act Information Return System (AIR) -- that the IRS has developed and deployed to facilitate the submission of reporting data to the government." (Mintz Levin)  

Employers Accelerate Focus on Specialty Drugs and Other Pharmacy Benefits
Infographic. "A surge in specialty pharmacy requires companies to employ a host of approaches, emphasizing specialty pharmacy utilization in order to be a best performer." (Willis Towers Watson)  

Payment Reform: How Does Telehealth Fit Into a High-Value Purchasing Strategy?
"For employers and other purchasers, the direct advantages of telehealth include: [1] improved access to care, particularly for employees in rural areas where there are fewer providers; [2] increased employee presenteeism and productivity, as employees miss less work for appointments; and, [3] a reduction in inappropriate utilization of health care services, such as visiting the emergency room due to a lack of access to primary care. Telehealth could also support other high-value purchasing strategies employers may be using." (Health Affairs)  

HHS Assesses Second Civil Penalty for HIPAA Privacy Rule Violations
"Because penalty assessments by OCR are relatively rare, this case provides a valuable learning opportunity for covered entities and business associates.... [It] is important for covered entities to keep track of PHI so that they can account for it at all times.... [P]olicies and procedures must be tailored to the specific operating environment -- in this case, where it was essential for employees to remove PHI from the office, the policies and procedures needed to address risks associated with that practice." (Thomson Reuters / EBIA)  

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