Health & Welfare Plans Newsletter

April 7, 2016

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[Official Guidance]

Text of Final Template and Accompanying Materials for Summary of Benefits and Coverage, for Use on and After April 1, 2017
From the CMS press release: "Changes have also been made to the SBC to improve readability for consumers. The new templates include more information about cost sharing, such as enhanced language to explain deductibles and a requirement that plans address individual and overall out-of-pocket limits in the SBC. These improvements reflect input from consumer groups, the National Association of Insurance Commissioners, and other stakeholders. Health plans and issuers will use this final SBC template beginning on the first day of the first open enrollment period that begins on or after April 1, 2017."

Includes:

(Centers for Medicare & Medicaid Services [CMS], U.S. Department of Health and Human Services [HHS]; and Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL])  


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[Official Guidance]

Text of OPM Final Regs: Family and Medical Leave Act for Federal Employees; Definition of Spouse
"[OPM] is revising the definition of spouse in its regulations on the [FMLA] ... The new definition replaces the existing definition, which contains language from DOMA that refers to 'a legal union between one man and one woman.' " (U.S. Office of Personnel Management [OPM])  

[Guidance Overview]

CMS Releases Final Summary of Benefits and Coverage Template, Accompanying Materials
"The biggest innovation of the final SBC is that terms used in an electronic SBC can be fully hyperlinked to the uniform glossary. The current glossary is a single pdf file, but each term of the new glossary can be linked independently to the SBC. The terms used on each definition in the glossary are also hyperlinked to their definitions in the glossary. Insurers can also link to the glossary by hovering over a term. The final SBC template is essentially unchanged from the proposed version. The only perceptible difference is that the coverage examples now accommodate both plans that use coinsurance and plans that use copayments for the services listed. The uniform glossary is also essentially unchanged except that several definitions have been edited for readability. There are more changes between the proposed and final instructions, but these are quite technical." (Timothy Jost, in Health Affairs)  

[Guidance Overview]

CMS Addresses Process for Exchange Eligibility Appeals, Including Decisions Affecting Employers
"Although notification from the Exchange does not establish Code Section 4980H liability (only the IRS can assess those penalties), it serves as an early indication that an employer may be subject to penalties if it failed to offer affordable, minimum value coverage to full-time employees. Under the appeals regulations, employers receiving a notification may appeal the Exchange's determination by submitting an appeal request by telephone, mail, or Internet (or in person, if the entity handling the appeal is capable of receiving in-person requests). This guidance allows entities conducting appeals to delay accepting employers' appeal requests via the Internet until January 1, 2017." (Thomson Reuters / EBIA)  

[Guidance Overview]

IRS Health Care Tax Tip 2016-41: Have Fewer Than 50 Employees? Here's How ACA Affects You
"Calculating the number of employees is especially important for employers that have close to 50 employees or whose workforce fluctuates throughout the year. To determine its workforce size for a year an employer adds its total number of full-time employees for each month of the prior calendar year to the total number of full-time equivalent employees for each calendar month of the prior calendar year, and divides that total number by 12." (Internal Revenue Service [IRS])  

[Guidance Overview]

Overview of Private Health Insurance Provisions in the ACA (PDF)
18 pages. "The [ACA] builds on and modifies existing sources of private health insurance coverage -- the non-group (individual), small-group, and large-group markets. The ACA provisions follow a federalist model in which they establish federal minimum requirements and give states the authority to enforce and expand those federal standards.... This report provides a broad overview of some of the private health insurance provisions in the ACA and directs readers to more in-depth CRS reports." [Report No. R43854, dated Apr. 5, 2016.] (Congressional Research Service [CRS])  

[Guidance Overview]

New York Enacts Paid Family Leave Law
"New York private-sector employers, regardless of size, must provide family leave to their employees after 26 consecutive weeks of employment. Employees may take paid family leave in order to: Care for an infant; Care for a family member with a serious health condition (but not an employee's own serious health condition); [or] Relieve family pressures when someone is called to active military service. The benefits will be phased into implementation between 2018 and 2021[.]" (Fox Rothschild LLP)  

ADA, FMLA and Medical Marijuana, How Do They Mix?
"The fact that I might be using medical marijuana during my FMLA time off is irrelevant. Indeed, if my condition requires me to take time off from work to use medical marijuana, that time off would also be covered by the FMLA. One can only imagine the possibilities.... What if the employer has a zero tolerance drug policy, must the employer take the employee back when he/she tests positive for marijuana use after an FMLA covered absence to smoke marijuana as a medical treatment? Generally, an employer can enforce its drug free workplace against off duty marijuana use, because marijuana use is still illegal under federal law." (The Blunt Truth, a blog by Seyfarth Shaw LLP)  

Winning with Wellness (PDF)
40 pages. "This publication delineates the attributes of successful and effective workplace wellness programs, discusses how workplace wellness can be a win-win for employers and employees, and outlines the legal and regulatory parameters associated with such programs. Significant converging financial, political, and cultural trends drive the importance and the urgent need for more pervasive employer-driven, evidence-based workplace wellness initiatives." (U.S. Chamber of Commerce)  

DOL Extends Notice and Comment Period a Second Time for Proposed Rule Requiring Federal Contractors to Provide Employees Paid Sick Leave
"On March 13, 2015, the DOL extended the notice and comment period for the proposed rule to April 12, 2016.... [T]he DOL [has now] extended the notice and comment period again. Interested parties now have until April 26, 2016 to submit comments to the proposed rule." (Proskauer Rose LLP)  

Can an Employee Drop a DCAP Election Midyear If No-Cost Child Care Becomes Available?
"Yes, provided that your plan document has been drafted as expansively as IRS rules allow regarding midyear election changes due to changes in cost or coverage. The rules apply broadly to dependent care assistance programs (DCAPs), permitting midyear election changes in a variety of circumstances involving changes in care providers or in the cost of care." (Thomson Reuters / EBIA)  

Prescription Drug Price Hikes: Searching for that Elusive Cure
"The high cost of prescription drugs has employers and a leading health insurance provider taking action to try and rein in drug prices. Health insurer Anthem Inc. filed a complaint against its pharmacy benefit manager, Express Scripts Holding Co. in March.... 20 large companies that provide health care benefits for about four million people are forming a coalition to combat the rising costs of health care, including prescription drug costs.... Prescription drug spending rose from 1.6 percent in 2013 to 11.4 percent in 2014, in sharp contrast with the increase of total health spending from 2.1 percent in 2013 to 4.5 percent in 2014." (Bloomberg BNA)  

OCR Releases Phase 2 Audit Protocol and Other Tools
"The updated protocol identifies approximately 180 areas for potential audit inquiry: 89 from the Privacy Rule (addressing notice of privacy practices, rights to request privacy protection, access, administrative requirements, uses and disclosures, amendment, and accounting of disclosures), 72 from the Security Rule (administrative, physical, and technical safeguards), and 19 from the Breach Notification Rule. Areas of inquiry will vary among auditees ... The OCR's notification letter will inform the auditee of the areas of inquiry." (Ice Miller LLP)  

So You Heard About HIPAA Phase 2 Audits. What Should You Do Now? (PDF)
"OCR will request a list of your business associates and their contact information with the pre-audit questionnaire.... [I]gnoring HHS's request will not exempt you from audit. HHS has said that even those that do not respond might be audited.... OCR has specifically advised covered entities and business associates to check their spam folders to ensure that all emails are received. Ironically, electronic contact letters and desk audits create an opportunity for phishing attacks by hackers who might try to obtain access to sensitive documents by sending similar emails with fake contact letters and creating their own sites for information uploads." (Alston & Bird LLP)  

Executive Compensation and Nonqualified Plans

[Guidance Overview]

FASB Issues Accounting Standards Update on Employee Share-Based Payment Accounting Improvements (PDF)
"[E]arly adoption of ASU 2016-09 is permitted in any interim or annual period for which financial statements have not been issued, but companies must adopt all of the guidance in the same period. For example, if a company wishes to early adopt to take advantage of the more favorable stock-for-tax withholding provisions, it must also early adopt all other provisions of the ASU including the potentially volatile income tax provisions[.]" (Frederic W. Cook & Co., Inc.)  

[Guidance Overview]

FASB Changes the Accounting Rules for Equity Compensation
"ASC 718 will now allow companies to withhold shares for taxes up to the maximum individual tax rate in the applicable jurisdiction rather than the minimum statutory withholding amount.... [C]urrently, to avoid triggering liability accounting treatment, any shares withheld to cover the taxes due at settlement of an option or award must be limited to the minimum required statutory withholding of the award holder. Most companies and their counsel have hardwired the minimum required statutory tax-withholding requirement into their stock plan documents." (Winston & Strawn LLP)  

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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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