Health & Welfare Plans Newsletter

March 28, 2016

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Webcasts and Conferences

Voluntary Fiduciary Correction Program Workshop
April 26, 2016 in WA
(Employee Benefits Security Administration [EBSA], U.S. Department of Labor)

Voluntary Fiduciary Correction Program Workshop
April 27, 2016 WEBCAST
(Employee Benefits Security Administration [EBSA], U.S. Department of Labor)

Audit Trilogy Part III: Retirement Plans – The Audit Process from an Employer and the Accountant’s Perspective
May 24, 2016 WEBCAST
(ABA Joint Committee on Employee Benefits [JCEB])

Flexible Spending Accounts
June 2, 2016 WEBCAST
(Lorman Education Services)

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Text of Federal District Court Opinion: LTD Plan Did Not Need to Be Fully Executed to Confer Discretion (PDF)
"Magistrate Judge Corker found that the arbitrary and capricious standard of review should apply because the submitted plan gave the requisite discretionary authority to Defendant to determine benefit eligibility and because Reliance Standard, not another entity, made the final eligibility determination.... The magistrate judge correctly found that merely because the policy produced does not have one party's signature does not nullify the policy.... To find that the submitted plan is not in fact the plan that governs Plaintiff's claim would require the court ... to 'speculate that the 'actual' plan is lost.' The Court will not so speculate given the record before it." [Justice v. Reliance Standard Life Ins. Co., No. 2:15-cv-00134 (E.D. Tenn. Mar. 24, 2016)] (U.S. District Court for the Eastern District of Tennessee)  


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Sixth Circuit Must Rethink Whether ERISA Preempts Michigan Health Insurance Tax Law
"The U.S. Supreme Court has vacated a federal appellate panel's holding that a Michigan law designed to generate revenue to pay the state's Medicaid obligations was not preempted by ERISA. The High Court granted a petition filed by the Self Insurance Institute of America, Inc. (SIIA) and remanded the case to the U.S. Court of Appeals for the Sixth Circuit for further consideration in light of the Supreme Court's recent opinion in Gobeille v. Liberty Mutual Insurance Co." [Self-Insurance Inst. of Am. v. Snyder, No. 12-2264 (6th Cir. Aug. 4, 2014; cert. granted Mar. 7, 2016)] (Wolters Kluwer Law & Business)  

Supreme Court Weighs Government's Interest in Mandating Contraceptive Coverage for Women vs. 'Hijacking' Religious Organizations' Insurers
"Justice Kennedy, the only potential swing vote for the government, seemed unconvinced that the regulations were adequate.... When questioning Gen. Verrilli, Chief Justice Roberts and Justice Alito left no doubt that they would vote against the government and the accommodation. Chief Justice Roberts said, 'Hijacking is an apt description of what the government wants.' If semantics is any indication of where Justice Kennedy stands, he used the same negative term to describe the accommodation process." [Zubik v. Burwell, Nos. 14-1418 et al. (3d Cir. Feb. 11, 2015; cert. pet. granted Nov. 6, 2015; argued Mar. 23, 2016)] (Wolters Kluwer Law & Business)  

ERISA Beneficiary's Dissipation of Settlement Proceeds Precludes Health Plan Enforcement of Its Reimbursement Rights
"In prohibiting enforcement of equitable liens by agreement against a plan participant's general assets, the Court adopted a minority rule. Plan administrators seeking to preserve plan assets by enforcing their reimbursement rights now must do nationwide what previously was required only in the Eighth and Ninth Circuits: Proactively monitor plan participants' attempts to recover from third parties, and when participants are close to recovering from third parties, immediately seek to have a constructive trust or equitable lien placed over the recovery. When the proceeds are dissipated, the plan will have to attempt to trace the proceeds to specific purchases, such as a car or other hard assets, that can be attached." [Montanile v. Bd. of Trustees of Nat. Elevator Ind. Health Benefit Plan, No. 14-723 (U.S. Jan. 20, 2016)] (Thomson Reuters Legal Solutions Blog)  

Health Savings Accounts: Unloved, But Worthwhile
"Some savers may not have the minimum balance needed to invest, or may need money now to pay for care; some may not like the investment options their HSA offers. But it's frustrating that many people aren't using the accounts to their full potential ... The reasons are likely to include not only a lack of understanding about how the accounts work but also mental or emotional stumbling blocks. While saving for 'retirement' in a 401(k) or an IRA may evoke pleasant images of travel, hobbies and time spent with grandchildren, saving for medical costs might inspire a sense of dread[.]" (The New York Times; subscription may be required)  


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Beyond Words: Engaging Consumers in Changing Health Behaviors (PDF)
"In order to positively impact workforce health and reduce costs, employers must move their health programs beyond words to a state of consumer engagement and action. This article summarizes relevant concepts and findings from the fields of psychology, decision research, and social marketing and identifies best practices in developing consumer engagement. Employers can utilize this information when creating health care programs and tools to control costs and improve workforce health and productivity." (Buck Consultants at Xerox)  

2015 GDP: Health Services Spending Grew More Than Twice as Fast as Non-Health GDP
"When it comes to the annual change from 2014 to 2015, inflation-adjusted health services spending grew by 4.7 percent, versus only 2.1 percent for non-health GDP. Growth in health services spending accounted for over one fifth of GDP growth, 41 percent of services growth, and one quarter of growth in personal consumption expenditures.... Conclusion: There is no health spending slowdown." (National Center for Policy Analysis Health Policy Blog)  

Evolving the Risk-Adjustment Model to Improve Payment Accuracy in the Individual and Small Group Market (PDF)
14 pages. "This paper examines the risk adjustment program used by CMS in the commercial market.... [It] describes the importance of risk adjustment for this market under new rules established by the ACA ... provides an overview of the risk adjustment model used in the commercial market and how it compares to the models used in Medicare and Medicaid ... provides an analysis of the limitations facing the current model and ... suggests potential modifications that could improve the model." (Avalere Health)  

Changes Weighed for ACA Program Covering Sicker Patients
"Among the ideas covered were how to include high-risk patients in risk adjustment payments made by plans that have healthier enrollees, as well as including prescription drug information in the formula used to calculate the payments.... The discussion paper said the CMS is 'investigating whether the risk adjustment methodology appropriately addresses plan differences.' The transfer equation doesn't address network differences, plan efficiency or effective care coordination or disease management, it said." (Bloomberg BNA)  

Latest Battlefront for Closing Health Insurance CO-OPs? The Courts
"While many of the organizations met or exceeded their enrollment targets, most suffered massive losses because of what they claim were premium rates that were too low and claims volumes that were too high. In a pair of recently filed actions, the aftermath of these failures is starting to make its way into the federal courts. Health Republic Insurance, an association of three CO-OPs in New York, New Jersey and Oregon, is involved in both of the suits attempting to deal with the financial fallout of the closing CO-OPs." (Bloomberg BNA)  

Benefits in General

Life Insurance and Retirement Plan Benefits: Are Your Clients Achieving Their Intended Goals?
"Individuals may not rely on many of the traditional rules of construction for probate asset dispositions to conform their designations to their intended goals, particularly as those goals change. This is particularly the case for benefits from ERISA plans ... [It] is advisable for an individual to ... consider beneficiary designations in the context of the disposition of his or her other assets ... [and] consider the extent, if any, it is advisable to make his or her estate or a trust the plan beneficiary in order to provide the desired beneficiaries with the desired benefits, if a plan's designation terms do not permit the desired choices to be made directly." (Albert Feuer, via SSRN)  

Executive Compensation and Nonqualified Plans

Former Executive's Deferred Benefit Claim Nixed
"At issue in the case was the standard of review applicable to a top hat plans ... Noting that the U.S. Court of Appeals for the District of Columbia Circuit hasn't addressed the appropriate standard of review for top hat plans, [Judge Richard J. Leon] applied the deferential standard, following the circuit's directive to review benefit decisions under this standard when discretion is given to the administrator." [Peck v. Selex Systems Integration Inc., No. 13-00073 (D. D.C. Mar. 24, 2016)] (Bloomberg BNA)  

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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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