Health & Welfare Plans Newsletter

April 14, 2016

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DB Administrator/Enrolled Actuary
Midwest Pension Actuaries, Inc.
in MI

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Newport Group
in AL

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in IN

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Nyhart
in CA

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Webcasts and Conferences

AIR Working Group: General ACA Information Returns Discussion
April 26, 2016 WEBCAST
(IRS [Internal Revenue Service])

Choosing a Retirement Solution for Your Small Business Workshop
April 27, 2016 in KS
(Employee Benefits Security Administration [EBSA], U.S. Department of Labor)

COBRA Workshop
May 19, 2016 WEBCAST
(Employee Benefits Security Administration [EBSA], U.S. Department of Labor)

Necessary Plan Language in Light of Recent Guidance from the Supreme Court and Lower Courts
May 26, 2016 WEBCAST
(ABA Joint Committee on Employee Benefits [JCEB])

401(k) Plan Workshop - Minneapolis
June 9, 2016 in MN
(FIS Relius Education)

Form 5500 Workshop - Minneapolis
June 10, 2016 in MN
(FIS Relius Education)

ASPPA Boston Regional Conference
July 14, 2016 in MA
(ASPPA [American Society of Pension Professionals & Actuaries])

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Discussions


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[Guidance Overview]

HHS Finalizes 2017 Out-of-Pocket Expense Limits and Other Guidance
"The 2017 limits on cost sharing will be $7,150 for self-only coverage and $14,300 for other-than-self-only coverage. Third-party administrators that assist contributing entities with the transitional reinsurance fee submission process will not be subject to audits. The public exchange will notify employers when an employee enrolls in a qualified health plan, rather than when the employee is eligible to enroll." (Willis Towers Watson)  


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Employer-Paid Healthcare for U.S. Retirees Continues to Decline
"Two-thirds of employers provided retiree health coverage as recently as 1988 ... This was usually supplemental coverage to pay for prescription drugs, cap out-of-pocket expenses or to cover Medicare's deductibles and co-pays. By last year, that number had dwindled to just 23 percent. Among the employers that still cover retirees, a growing number are shifting retirees into insurance exchanges. Similar to a shift from a defined benefit to a defined contribution, the expense risk is shifted from employer to retiree." (The Fiscal Times)  

U.S. Prescription Drug Spending to Hit $400 Billion a Year by 2020
"Those figures, which take into account anticipated discounts, rebates and other price concessions that have become common, represent an annual growth rate of 4 percent to 7 percent through 2020, according to the report. Using wholesale prices, IMS sees U.S. spending rising 46 percent to as high as $640 billion in 2020 ... [S]pending on prescription drugs is expected to grow at a faster rate through 2020 than over the past five years, although slower than for 2014-2015 ... The average net price increase for branded drugs was just 2.8 percent in 2015 ... versus 12.4 percent using wholesale prices." (Reuters)  

Payments for Cost Sharing Increasing Rapidly Over Time
"From 2004 to 2014, the average payments by enrollees towards deductibles rose 256% from $99 to $353, and the average payments towards coinsurance rose 107%, from $117 to $242, while average payments for copays fell by 26%, from $206 to $152. Overall, patient cost-sharing rose by 77%, from an average of $422 in 2004 to $747 in 2014. During that period, average payments by health plans rose 58%, from $2,748 to $4,354. This reflects a modest decline in the average generosity of insurance -- large employer plans covered 86.7% of covered medical expenses on average in 2004, decreasing to 85.3% in 2014. Workers' wages, meanwhile, rose by 32% from 2004 to 2014." (Kaiser Family Foundation)  

Observations on the Supplementary Briefings in Zubik v. Burwell
"The government's position in [Zubik v. Burwell] just got weirder. It is increasingly difficult to understand why the government has been litigating so long and so hard to force the Little Sisters and other religious organizations to perform acts they regard as contrary to their faith, when it now admits (however grudgingly) that it all was unnecessary.... What did the government do in its supplemental brief? It hemmed and it hawed. It complained about the question, then it said no, then it said yes, then it spent pages asking the Court to do certain things if it lost. Meanwhile, the petitioners responded in their first paragraph: 'The answer to that question is clear and simple: Yes.' " (Prof. Michael McConnell, via The Washington Post; subscription may be required)  


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A Generation with Income to Protect (PDF)
"From an employee benefits perspective, generational differences undoubtedly play a big role in not only how to communicate with employees about their benefits but what benefits to offer.... This article discusses the state of Generation X's unique income protection and financial concerns. The author shows how offering income protection to Generation Xers not only helps them deal with today's expenses and prepare for the future but can also help employers meet business objectives such as attracting and retaining top talent." (Benefits Quarterly, published by the International Society of Certified Employee Benefit Specialists [ISCEBS])  

How Will New ACA Continuity of Care Protections Affect Existing State Laws?
"The administration's final rule clarifies that the new continuity of care standards are not intended to preempt existing state laws, and that federal officials will defer to the states' enforcement of such laws, so long as they have 'substantially similar' or 'more stringent' standards.... 39 states and the District of Columbia ... appear to have similar standards to those outlined in the federal rules, although the duration of the protection varies considerably from state to state. Sixteen states arguably have more stringent protections because they extend continuity of care rights to enrollees that have switched to a new health plan." (The Commonwealth Fund)  

Liking Health Reform But Turned Off by Toxic Politics
"[P]ublic opinion about the ACA remains split (45.6 percent unfavorable and 36.2 percent favorable) ... The share of respondents believing that reform had little or no impact on access to health insurance or medical care diminished by 18 percentage points from 2010 to 2014, while those considering reform to have some or a great impact increased by 19 percentage points. Among individuals who held unfavorable views toward the law in 2010, the percentage who supported repeal -- while still high, at 72 percent -- shrank by 9 percentage points from 2010 to 2014." (Health Affairs)  

Benefits in General

[Guidance Overview]

What Is a 'Gig'? Benefits for Unexpected Employees (PDF)
17 pages. "It is unclear to what degree, if any, the DOL Wage and Hour Division's more aggressive position ... on who constitutes an employee, and court decisions concerning who is an employee for purposes of the FLSA, NLRA, or state labor codes, will affect determinations of who is an employee for purposes of retirement plans, health insurance, or other employee benefit programs.... If a gig worker is an independent contractor, rather than an employee, his or her options for accessing retirement, health insurance, and the other benefits of the type employees sometimes enjoy would seem to be the set of options available to self-employed persons." (Utz & Lattan, LLC)  

Second Circuit: No Civil Penalties for Claims Regulation Violations
"[T]he Second Circuit held that a plan's failure to comply with the DOL claims regulations in denying a benefit claim generally results in the claim being reviewed under the less deferential de novo standard in federal court.... The Second Circuit also held that a claimant is not entitled to civil penalties under ERISA for a plan's failure to comply with the claims regulations.... [The Court] noted that: Neither ERISA nor its implementing regulations authorize penalties for violations of the DOL claims regulations. The Supreme Court has been especially reluctant to recognize non-statutory remedies in the ERISA context." [Halo v. Yale Health Plan, No. 14-4055 (2d Cir. Apr. 12, 2016)] (Practical Law Company)  

Executive Compensation and Nonqualified Plans

[Guidance Overview]

FASB Issues Update for Stock-Based Compensation Accounting (PDF)
"[T]wo changes will be most beneficial to plan administration: [1] Tax withholding in shares will now be permitted up to the maximum applicable statutory tax rate (previously, withholding shares above the minimum statutory tax rate threatened liability accounting for equity awards); and [2] With respect to forfeitures, companies will be permitted to elect to either (a) account for forfeitures as they occur, or (b) estimate forfeitures and account for the equity awards that are expected to vest (which previously was the only option)." (ExeQuity)  

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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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