Health & Welfare Plans Newsletter

March 16, 2016

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Webcasts and Conferences

Voluntary Fiduciary Correction Program
March 17, 2016 WEBCAST
(Employee Benefits Security Administration [EBSA], U.S. Department of Labor)

Applicable Large Employers Information Return Requirements (IRC 6056) for Tax Year 2015
March 30, 2016 WEBCAST
(IRS [Internal Revenue Service])

Affordable Care Act: Employer Shared Responsibility Provisions (IRC 4980H)
April 6, 2016 WEBCAST
(IRS [Internal Revenue Service])

Latest in Compensation and Benefits Accounting: Navigating the FASB's Proposed Pension Changes
April 13, 2016 WEBCAST
(PricewaterhouseCoopers LLP)

ASPPA Chicago Regional Conference
June 16, 2016 in IL
(ASPPA [American Society of Pension Professionals & Actuaries])

Western Benefits Conference
July 19, 2016 in WA
(ASPPA [American Society of Pension Professionals & Actuaries])

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[Official Guidance]

Text of Revised CMS EDGE Server Data Bulletin: Evaluation of EDGE Data Submissions for 2015 Benefit Year for Interim Reinsurance Payments and Interim Risk Adjustment Summary Report (PDF)
Revised March 16, 2016. "This revised bulletin makes clear that if an issuer of a risk adjustment covered plan (or set of issuers) exceeds 0.5% of the market share, CMS will not issue a risk adjustment interim summary report for that State and market for the 2015 benefit year as this State and market would not be deemed credible. In the bulletin published January 20, 2016 there was a typographical error stating that this percentage was 0.05%. This is the only modification from the January 20, 2016 bulletin." (Centers for Medicare & Medicaid Services [CMS], U.S. Department of Health and Human Services [HHS])  


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[Guidance Overview]

Nondiscrimination in Health Programs and Activities Under the ACA
"Section 1557 of the [ACA] prohibits discrimination on the basis of race, color, national origin, sex, age, or disability in certain health programs and activities.... [HHS has] issued proposed regulations ... [which] include broad nondiscrimination requirements under which insurers that participate in the ACA health exchanges ... would need to comply with the regulations for all of their health plans, including when the insurer acts as a third-party administrator (TPA) for an employer-sponsored health plan. It is possible that some self-insured health plans, too, may be subject to Section 1557." [Article includes a detailed outline of the proposed regs.] (Practical Law Company)  

[Guidance Overview]

Vermont Becomes Fifth State to Require Paid Sick Leave
"Most employers will need to comply with the law starting on January 1, 2017. However, employers may elect to establish a waiting period of up to one year, during which employees who are employed as of January 1, 2017 will accrue sick leave, but will not be permitted to use it. Small businesses will not be required to comply until January 1, 2018.... The law applies to all private employers doing business or operating in Vermont.... The Vermont law requires that employees be permitted to use paid sick leave for several reasons in addition to caring for their own illnesses or injuries." (Ogletree Deakins)  

[Guidance Overview]

IRS Health Care Tax Tip 2016-31: Do You Have Minimum Essential Coverage?
"[S]ome examples of coverage that qualify as minimum essential coverage: [1] Employer-sponsored coverage; [2] Group health insurance coverage for employees under a governmental plan such as the Federal Employees Health Benefit program; [3] a plan or coverage offered in the small or large group market within a state; [4] a grandfathered health plan offered in a group market[ [5] Self-insured group health plan for employees; [6] COBRA coverage; [7] Retiree coverage." (Internal Revenue Service [IRS])  

Employer Provided Health Insurance Plans: When is Unilateral Change Not Unilateral Change for Collectively Bargained Plans?
"The 'sound arguable basis' standard means that changes to health insurance plans as well as other benefit plans will be found unlawful only if an employer cannot plausibly assert that its actions are permissible under the parties' collective bargaining agreement. In practical terms, this means that when negotiating agreements employers should: [1] seek language that affords flexibility and allows modifications to benefit plans; [2] avoid provisions that require union approval for any changes or only after bargaining with the union or that state that any changes to be 'equal or better' than those presently offered; [3] attempt to limit the employer's obligation to one of notification only." (National Law Review)  


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Could Value Pricing Rein in Medicare Drug Costs?
"Aetna and Cigna inked deals last month with drug maker Novartis that offer the insurers rebates tied to how well a pricey new heart failure drug works to cut hospitalizations and deaths. If the $4,500-a-year drug meets targets, the rebate goes down. Doesn't work so well? The insurers get a bigger payment. In another approach, pharmacy benefit firm Express Scripts this year began paying drug makers a special negotiated rate for some cancer drugs. The goal is to reward the use of medicines that are most effective for certain cancers. Dubbed 'value-based pricing,' these are the kind of private-sector efforts the Obama administration hopes to borrow to rein in drug prices for Medicare." (National Public Radio)  

Etsy Is Latest Tech Company to Offer Over 20 Weeks of Paid Parental Leave
"One possible explanation is that this is just an extension of luxe tech-employee perks -- laundry service, travel stipends, haircuts, etc. -- into parent territory as Millennial workers start to have kids, but there are a number of other potential reasons too.... For one thing, it's a way for companies to compete for talent.... Further, as tech companies become international entities, they have to catch up with other countries' policies." (The Atlantic)  

25% Dumped Their Obamacare Plans Last Year, White House Admits
"[E]nrollment in the ObamaCare exchanges fell to 8.8 million by the end of the year, from 11.7 million who'd initially signed up. That's a 25% decline.... There's little reason to think ObamaCare will fare any better this year -- particularly since premiums and deductibles shot up -- which means the 12.7 million signups the White House cheered about last month will probably dwindle to less than 10 million by the end of 2016. When you consider that there were 15 million people who were buying insurance on their own before ObamaCare, that's a paltry number." (Investor's Business Daily)  

Benefits in General

[Guidance Overview]

Accounting Standards Update 2015-12: Simplifying Employee Benefit Plan Financial Statement Disclosures
"ASU 2015-12 removes the requirement to report fully benefit-responsive investment contracts at fair value and to show the adjustment from fair value to contract value on the face of the financial statements.... ASU 2015-12 removes the requirement to report investments that represent 5 percent or more of net assets available for benefits and, although it still requires disclosures of the net appreciation or depreciation of investments, it does not require disaggregation by investment type.... For plans whose fiscal year-end does not coincide with a month-end, the plan may measure investments and investment related accounts (e.g., a liability for a pending trade with a broker) using the month-end closest to the plan's fiscal year-end." (Belfint Lyons & Shuman, CPAs)  

Gobeille v. Liberty Mutual Insurance Company: The Interesting Things Are in the Concurrences and the Dissent
"[T]hree justices -- Thomas, Ginsburg and Sotomayor -- in two different opinions (one concurring and one dissenting) wrote independently to suggest that ERISA preemption has gone off the rails and either may not be (in Thomas' view) or is not (in the view of the other two justices) as broad as the majority opinion insists, or as broad and sweeping as most ERISA litigators argue. Both opinions, in fact, give guideposts to litigators for arguing in the future against preemption, with Thomas, in fact, seemingly inviting someone, somewhere to attack the very constitutional foundation of applying ERISA preemption to the extent that it has been traditionally applied." [Gobeille v. Liberty Mutual Ins. Co., No. 14-181 (U.S. Mar. 1, 2016)] (Stephen Rosenberg, The Wagner Law Group)  

Executive Compensation and Nonqualified Plans

Is Your Executive Plan Top-Hat?
"Looking at a history of case law and DOL opinion on the topic, one might consider these elements: [1] The percentage of the workforce in the top-hat group; [2] The relative pay of the top-hat group as compared to the pay of those people not in the top-hat group; [3] Whether the top-hat group was selected by the Board as compared to being, for example, any employee with the title Vice President or higher; [4] Whether individuals in the top-hat group, especially those among the lower-paid in the group, have significant management responsibilities; [5] Whether individuals in the group need the protection of ERISA." (Benefits and Compensation with John Lowell)  

Some Executive Rewards Decline, Other Perks Hold Steady
"As shareholders and advisory groups continue to scrutinize executive compensation, the number of executives entitled to tax gross-ups and other financial rewards triggered by a change in control of management is declining.... A major trend impacting change-in-control arrangements is the move toward performance-based long-term incentives ... Among other notable findings: Decline in tax gross-up payments ... Decrease in severance multiples.... Conditions on cash severance payment." (Society for Human Resource Management [SHRM])  

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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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