Health & Welfare Plans Newsletter

February 23, 2016

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Webcasts and Conferences

Independent Fiduciary's Role: Mitigating Risk and Creating Opportunities
March 24, 2016 WEBCAST
(Worldwide Employee Benefits Network [WEB])

401(k) Investment Lineup
April 5, 2016 in CA
(Pensions & Investments)

401(k) Investment Lineup
April 7, 2016 in TX
(Pensions & Investments)

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[Guidance Overview]

ACA Information Returns (AIR) Working Group Meeting, February 23, 2016 (PDF)
44 presentation slides. Topics covered: [1] Common Questions; [2] Electronic Correction Process; [3] Forms 1094/5 B&C Schema and Business Rule Guidance for Filing Season 2016; and [4] Service Level Agreement and Response Time. Includes a 3-slide chart of links to tax laws, regulations, forms, the AIR program home page, the AIR Transmission Checklist, and "Technical Artifacts" such as Tax Year 2015 Schemas and Business Rules. (Internal Revenue Service [IRS])  


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[Guidance Overview]

The Health Coverage Tax Credit: In Brief (PDF)
13 pages. "To claim the HCTC, eligible taxpayers must have qualified health insurance (specific categories of coverage, as specified in statute). Several of those categories, known as state-qualified health plans, are available only after being established by state action. The HCTC is refundable, so eligible taxpayers may receive the full credit amount even if they had little or no federal income tax liability. The credit is also advanceable, so taxpayers may receive the credit on a monthly basis to coincide with the payment of premiums. The HCTC has a sunset date of January 1, 2020." [Report No. R44392, Feb. 18, 2016.] (Congressional Research Service [CRS])  

Testimony of IRS Commissioner Koskinen Before the Senate Homeland Security and Governmental Affairs Committee on Implementation of the ACA
"While the operation of these Marketplaces is overseen by the Department of Health and Human Services (HHS), the IRS has the limited role of providing Marketplaces with data and computational services for use in their determinations about eligibility for financial assistance.... The IRS, through this computational service, provides the Marketplace with a single figure: the maximum advance premium tax credit for which the applicant may be eligible based on those data inputs.... During the 2015 open enrollment period, the IRS processed more than 25 million requests for federal tax return data and more than 17 million computational requests, with an average IRS response time of less than five seconds." (Internal Revenue Service [IRS])  

HHS OIG Report on HealthCare.gov: Case Study of CMS Management of the Federal Marketplace (PDF)
92 pages. "HHS and CMS made many missteps throughout development and implementation that led to the poor launch. Most critical was the absence of clear leadership, which caused delays in decisionmaking, lack of clarity in project tasks, and the inability of CMS to recognize the magnitude of problems as the project deteriorated. Additional HHS and CMS missteps included devoting too much time to developing policy, which left too little time for developing the website; making poor technical decisions; and failing to properly manage its key website development contract." (Office of Inspector General [OIG], U.S. Department of Health and Human Services [HHS])  

Financial Analysis of ACA Health Plan Issuers
"The [ACA] includes risk mitigation programs, also known as the 3 Rs, for individual and small group health insurance markets. The 3 Rs include a permanent risk adjustment program, a transitional reinsurance program for the individual market, and a temporary risk corridor program.... While half of the ACA health plan issuers included in our study accrued a $0 net risk adjustment transfer amount, no ACA health plan issuer realized a $0 net transfer amount.... Proration of the risk corridor program caused $2.5 billion in financial losses to ACA health plan issuers in 2014 relative to the actual results with no proration, based on payments made to date.... While the focus of this paper is on industry aggregate results, issuer-specific results vary widely from the industry averages." (Milliman)  


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About Fidelity's Health Care Cost Estimate for Retirees
"Fidelity's estimated $245,000 includes the cost of deductibles and co-pays, premiums for optional coverage for doctor visits and prescription drugs, and out-of-pocket expenses for prescription drugs. It does not include long-term care or most dental care.... Although Fidelity Investments took it on the chin from some readers for an expected cost appearing too low and for not publishing a standard deviation or 95th percentile estimate, their expected value is almost identical to that from the Center for Retirement Research and only 6% below the average of all studies." (The Retirement Cafe)  

52% of Employers Offer High-Deductible Health Insurance Plans
"Even though HMOs and PPOs remain the dominant types of health coverage plans, more employers are now offering low-cost options like high-deductible plans. Additionally, 41 percent of employees are choosing these high-deductible plans instead of more typical health insurance plans like HMOs and PPOs ... Out of the employees who are choosing these high deductible health insurance plans, the majority are younger with millennials taking up the highest portion of the workers." (HealthPayer Intelligence)  

[Opinion]

The Trouble With High Deductible Health Plans Paired With HSAs
"[L]ower-income consumers can't afford to put money aside, and they might struggle with just paying the monthly premium to keep coverage.... So it exposes them to a lot of risk; it doesn't offer a lot of nuance, and ... even for consumers who aren't in a situation where they're delaying care due to cost, but have some unforeseen medical emergency and need a lot of care, being in a HSA high-deductible health plan is going to expose lower-income consumers to burdensome or unaffordable medical bills resulting in medical debt." (American Journal of Managed Care)  

[Opinion]

Of Subrogation, the Supreme Court and Supreme Nonsense
"The plan had decent reimbursement language, and even had a repayment agreement with the insured. Settlement monies were paid over to the insured's lawyers, who then carried on extensive negotiations with the plan. Negotiations broke down, and the attorneys told the plan they were going to distribute the funds to the insured unless the plan objected. Unfortunately -- and here is where the lesson from the case is to be learned -- the plan did not object. Or rather, it waited months to object." [Montanile v. Bd. of Trustees of Nat. Elevator Ind. Health Benefit Plan, No. 14-723 (U.S. Jan. 20, 2016)] (Lockton)  

Benefits in General

Montanile v. Board of Trustees: A New Model for Recovery
"Following the decision in Montanile, plans that are potentially owed money from participants must take a step back and reevaluate the way they investigate potential recovery claims, the language in their plans and the language in any reimbursement agreement.... A plan should immediately seek bank records and other information to determine how the money received from a third party was spent.... Nothing appears to prevent a plan from designating a participant as a fiduciary to the extent that the person receives money owed back to the plan and its insurers." (Wilson Elser)  

What Happens When a 'Procedural Irregularity' Occurs in an Appeal Denial?
"You know that procedural irregularities in an appeal denial of a claim for ERISA-governed benefits can change the standard of review from arbitrary and capricious to de novo review. But not all the time. The claimant should also 'provide meaningful new evidence or raise significant new issues on administrative appeal.' " [Messick v. McKesson Corp., No. 15-4019 (10th Cir. Feb. 17, 2016)] (Lane Powell PC)  

Five Tips to Litigation-Proof Your ERISA Administrative Process
"Examine your process for dealing with participant/beneficiary requests ... Review your procedure for dealing with assignments ... Review statute of limitations issues ... Think through fiduciary responsibility ... Conduct periodic reviews of your administrative process." (Miller & Chevalier, via Corporate Counsel; free registration required)  

Executive Compensation and Nonqualified Plans

Court Rules Employment Agreement Severance Provisions Can Constitute ERISA Plan
"The District Court ultimately agreed with the employer and found that the severance provisions in the executive's individual employment agreement established an ERISA plan. The court's analysis focused on five main points: Intended benefits ... Class of beneficiaries ... Source of financing ... Procedures for receiving benefits ... Ongoing administrative scheme." [Zgrablich v. Cardone Industries, Inc., No. 15-4665 (E.D. Penn. Feb. 3, 2016) (Winston & Strawn LLP)  

Press Releases

Burnham Benefits Welcomes New Vice President
Burnham Benefits Insurance Services Inc.

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BenefitsLink Health & Welfare Plans Newsletter, ISSN no. 1536-9595. Copyright 2016 BenefitsLink.com, Inc. All materials contained in this newsletter are protected by United States copyright law and may not be reproduced, distributed, transmitted, displayed, published or broadcast without the prior written permission of BenefitsLink.com, Inc., or in the case of third party materials, the owner of that content. You may not alter or remove any trademark, copyright or other notice from copies of the content.

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