Health & Welfare Plans Newsletter

April 6, 2016

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Webcasts and Conferences

Recent Retirement Plan Developments
April 19, 2016 in CA
(Western Pension & Benefits Council - San Diego Chapter)

Final Fiduciary Regulations are Here! What You Need to Know and Do
May 19, 2016 in NY
(Worldwide Employee Benefits Network [WEB] - New York Chapter)

2016 Vendor Showcase for Employee Financial Wellness Resources
May 19, 2016 in MA
(New England Employee Benefits Council)

401(k) Plan Workshop - Cincinnati
May 26, 2016 in OH
(FIS Relius Education)

Form 5500 Workshop - Cincinnati
May 27, 2016 in OH
(FIS Relius Education)

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[Guidance Overview]

Correcting Mistakes on ACA Reporting Forms
"For Forms 1094-C, ALEs must be sure to correct errors that involve: [1] the name and/or EIN of the ALE; [2] the total number of Forms 1095-C filed by or for the ALE; [3] whether the ALE is a member of an aggregated ALE group; [4] certifications of eligibility; [5] the Minimum Essential Coverage Indicator; [6] full-time employee count for an ALE member; [7] the Aggregated Group Indicator; and [8] the Section 4098H Transition Relief Indicator. For Forms 1095-C, ALEs must be sure to correct errors regarding: [1] the employees' or enrollees' names and Social Security Numbers; [2] the ALE's name and/or EIN; [3] specifications regarding the offer of coverage; and [4] the premium amount of the least expensive option for self-only coverage." (The Wagner Law Group)  


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[Guidance Overview]

ACA Provision Raises Litigation Concerns for Plan Sponsors Under the Fair Labor Standards Act and ERISA Section 510 (PDF)
"The [ACA] anti-retaliation provisions have been in effect for several years, but have so far largely gone unnoticed. Now that employees can get financial assistance through the Health Insurance Marketplace, employers should revisit these provisions and carefully structure their actions to limit potential exposure. In addition, a recent lawsuit brought by employees under ERISA suggests employers should use care when taking employment action that might impact health benefits." (Alston & Bird LLP)  

[Guidance Overview]

San Francisco on the Verge of Imposing Employer-Funded Paid Parental Leave: FAQs on the Groundbreaking Ordinance
"The ordinance bases eligibility on whether the employee works in San Francisco, not on whether the employee lives in San Francisco.... Employers must pay 'Supplemental Compensation' that bridges the differential between the amount the state is paying and 100 percent of the employee's normal gross weekly wage.... Employers may require that employees use up to two weeks of accrued unused vacation at the start of the leave. If an employee refuses, the employer is relieved of the obligation to pay Supplemental Compensation." (Ogletree Deakins)  

[Guidance Overview]

New York State Enacts Paid Family Leave Law
"Beginning on January 1, 2018, the new program will require employers to provide all full- and part-time employees who have been working for the employer for at least 6 months with up to 8 weeks of paid leave at a rate of 50 percent of the individual's average weekly wage ... Over the following two years the paid leave period will increase to 10 weeks and rates of 55 percent (in 2019) and 60 percent (in 2020) of the employee's average weekly wage. The phase-in will culminate in 2021 with a requirement to provide up to 12 weeks of paid leave at a rate of 67 percent of the individual's average weekly wage (once again capped at 67 percent of the statewide average weekly wage)." (Proskauer's Law and the Workplace)  

San Francisco Approves Fully Paid Parental Leave
"San Francisco ... became the first city in the United States to approve six weeks of fully paid leave for new parents -- mothers and fathers, including same-sex couples, who either bear or adopt a child. California is already one of only a few states that offer paid parental leave, with workers receiving 55 percent of their pay for six weeks, paid for by employee-financed public disability insurance. The new law in San Francisco ... mandates full pay, with the 45 percent difference being paid by employers." (The New York Times; subscription may be required)  


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Chicago Task Force Proposes Five Days of Paid Sick Leave for Employees
"Poised to join the increasing number of cities that require paid sick leave, the Working Families Task Force (commissioned by Chicago Mayor Rahm Emanuel) recently recommended that employees in Chicago be allowed to earn at least 5 paid sick days each year.... [T]his proposal stems from a non-binding February 2015 referendum where nearly 82% of Chicago voters voiced support for paid sick leave." (Proskauer's Law and the Workplace)  

Managers and Supervisors Can Be Sued Individually by Employees for FMLA Violations, Court Rules
"The court looks at least four factors when determining if a manager or supervisor can be individually liable for FMLA violations. [1] Whether the manager or supervisor had the power to hire and fire the employees; [2] Whether the manager or supervisor supervised and controlled employee work schedules or conditions of employment; [3] Whether the manager or supervisor determined the rate and method of payment; and [4] Whether the manager or supervisor maintained employment records." [Graziadio v. Culinary Institute of America, No. 15-888 (2d Cir. Mar. 17, 2016)] (LegalNewsLine.com)  

Why Is HHS Regulating Health Savings Accounts Out of Existence?
"Almost six years to the day after the [ACA] was enacted, the [HHS] has taken steps to kill health savings accounts (HSAs) in the state health-insurance exchanges. [F]inal regulations published on March 8 will make it impossible to offer HSA-qualified plans in the future.... Buried in the details of the final rule are the two main reasons why HSA-qualified plans will not survive: [1] Plans must apply specific deductibles and out-of-pocket limits that are outside the requirements for HSA-qualified plans. [2] Plans must cover services below the deductible that are not considered 'preventive care.' " (National Review)  

American Academy of Actuaries Risk Sharing Subcommittee Presentation to NAIC Health Actuarial Task Force (PDF)
9 presentation slides. "In general, risk adjustment payers had lower loss ratios before risk adjustment and receivers had higher loss ratios before risk adjustment.... The temporary reinsurance program also contributed to equalizing loss ratios across issuers.... Risk adjustment transfers as a percent of premium were more variable and more likely to be higher for issuers with a smaller market share." (American Academy of Actuaries)  

Innovations in the Setting for Health Care Delivery: Will Expanding Care Options Increase or Decrease Costs?
"Historically, there were two options if you needed health care: your doctor or the emergency room. As demand for primary care increased and costs for emergency care soared, a third option appeared: urgent care. Recently, there has been an explosion of options to improve access to health care, including retail clinics at drug stores and telemedicine. In theory, these new options could reduce overall health care costs by treating conditions earlier and preventing more expensive care. The concern is, however, that people may increase their utilization of health care, thereby leading to higher overall costs." (Marsh Consulting Group)  

Recent Trends in Prescription Drug Costs
6 presentation slides. "After several years of modest growth, prescription drug spending rose sharply in 2014 ... Costly new specialty drugs are a major driver of increased health spending ... Most people taking Rx drugs say they can afford their treatment, but about 1 in 4 have a difficult time affording their medicine." (Henry J. Kaiser Family Foundation)  

Recent Telemedicine Surveys Make for Interesting Reading
"Telemedicine has made great recent strides in terms of greater acceptance and deployment. That said, a lot of work still needs to be done. Two recent surveys, one of tech savvy consumers and another of health care stakeholders make that case." (Epstein Becker Green)  

Can Telemedicine Help Address Concerns with Network Adequacy? Opportunities and Challenges in Six States
12 pages. "This paper explores how private insurers are currently using telemedicine to address network adequacy concerns, particularly in areas where building an adequate provider network has been challenging. In addition, as insurance regulators have begun to engage in more robust oversight of plan networks, we have sought to understand how they will assess insurers' use of telemedicine to meet new network adequacy standards." (The Urban Institute and Robert Wood Johnson Foundation)  

Chief Actuary Cost Estimates for Proposed Changes to Social Security Disability Insurance (PDF)
"[This information is provided] in response to the request for estimates of the financial effects on Social Security of a number of potential proposals that may be considered for addressing financial shortfalls of the Social Security Disability Insurance (DI) program. All estimates provided in the enclosed table are based on the intermediate assumptions of the 2015 Trustees report.... [M]any of these estimates represent preliminary estimates that, given more time and careful focus, would be done in more detail with possibly somewhat different results. However, for the purpose of gaining an understanding of the order of magnitude of the effects of these proposals, we believe this table will be useful to you and the readers of the SSDI Solutions Initiative report." (U.S. Social Security Administration [SSA])  

Colorado Bill Targets Large Companies Without Health Insurance Plans
"[Proposed legislation] would impose fees on large employers that pay low wages and provide no health insurance. The money would go into a fund to support the state's growing Medicaid costs.... The bill would charge applicable employers a fee ranging from 25 cents to a dollar for each hour worked by employees under the $12 wage cap. A state board would set the actual assessment. Supporters estimate that the fees, with federal matching funds, could generate $80 million to $130 million yearly toward medical care costs." (The Denver Post)  

Benefits in General

ERISA Preemption Is Alive and Well
"Although prior Supreme Court decisions had suggested as much, [Gobeille v. Liberty Mutual Ins. Co.] makes clear that reporting, disclosure, and recordkeeping are fundamental ERISA plan administration activities, and that ERISA will preempt state laws that purport to directly regulate employee benefit plans in these areas regardless of whether they 'conflict' with any requirements imposed by ERISA." (Steptoe & Johnson LLP)  

The High Court's Preemption Tango and the Future of ERISA
"The majority opinion in [Gobeille v. Liberty Mutual Ins. Co.], and the strongly worded dissent authored by Supreme Court Justice Ruth Bader Ginsberg (joined by Supreme Court Justice Sonia Sotomayor) are evidence of the push and pull in the tango over the scope of ERISA preemption. This case may also have practical implications for ERISA practitioners who are trying to keep in step with state laws that are out of step with ERISA's preemptive sweep." (Alston & Bird LLP)  

Executive Compensation and Nonqualified Plans

Stock Options and Tax Returns: Mistakes To Avoid
"[1] With a cashless exercise/same-day sale, the spread is reported on your W-2 and on your tax return as ordinary income.... [2] With nonqualified stock options (NQSOs), for employees the spread at exercise is reported to the IRS on Form W-2 ... [3] You will also mistakenly double-report income if you do not realize that your W-2 income in Box 1 already includes stock compensation income.... [4] With incentive stock options (ISOs), when you exercise and hold through the calendar year of exercise, remember that you need to complete an AMT return (Form 6251) to see whether you owe AMT.... [5] When you have paid AMT because of your ISO exercise and hold, you get a tax credit." (myStockOptions.com)  

New FASB Accounting Rules: Share-Based Withholding on Equity Awards at the Maximum Federal Tax Rate Permitted
"One item of particular interest is a change in how federal income taxes can be 'netted' against the number of shares delivered upon exercise of a stock option, or upon vesting of restricted stock or settlement of restricted stock units. Under prior guidance, only the 'minimum required' tax withholding amount could be netted against the shares delivered. If this limit were exceeded, the grant would be considered a 'liability' award with coincident adverse accounting treatment." (Wilkins Finston Friedman Law Group LLP)  

Press Releases

DOL Files Suit to Appoint Independent Fiduciary to Distribute Assets of Abandoned Bronx 401(k) Plan
Employee Benefits Security Administration [EBSA], U.S. Department of Labor

DOL Files Suit to Appoint Independent Fiduciary to Distribute Assets of Abandoned Staten Island Savings Plan
Employee Benefits Security Administration [EBSA], U.S. Department of Labor

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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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