Health & Welfare Plans Newsletter

April 19, 2016

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Southwest Airlines Pilots' Association
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Pango Financial
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Abacus Benefit Consultants, Inc.
in RI

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Faegre Baker Daniels LLP
in MN

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Newport Group
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Webcasts and Conferences

Latest in Compensation and Benefits Accounting: Navigating the FASB's Proposed Pension Changes
RECORDED
(PricewaterhouseCoopers LLP)

DOL Fiduciary Definition Regulations are Here...Really They are Finally Here
April 27, 2016 WEBCAST
(Seyfarth Shaw LLP)

2016 Denver Benefits Summit
April 28, 2016 in CO
(Western Pension & Benefits Council - Denver Chapter)

DOL Fiduciary Definition Regulations are Here...Really They are Finally Here
May 3, 2016 in NY
(Seyfarth Shaw LLP)

Assessing the New DOL Fiduciary Rule: Policy and Practical Challenges
May 10, 2016 in DC
(Investment Company Institute)

DOL's Fiduciary Rule is Finalized, What You Should Know
May 11, 2016 WEBCAST
(Regulatory Compliance, LLC )

Employee Benefit Plans - 2015 Plan Sponsor Update
June 2, 2016 WEBCAST
(PricewaterhouseCoopers LLP)

Develop a Strong Parental Leave Policy
June 6, 2016 WEBCAST
(Lorman Education Services)

401(k) Plan Workshop - Syracuse
June 23, 2016 in NY
(FIS Relius Education)

Form 5500 Workshop - Syracuse
June 24, 2016 in NY
(FIS Relius Education)

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[Official Guidance]

Text of CMS Guidance: Extension of State-Based SHOP Direct Enrollment Transition (PDF)
Unnumbered document dated Apr. 18, 2016. "We are extending the option for state-based SHOPs to use direct enrollment as a transitional measure for up to an additional two years -- for plan years beginning in 2017 and 2018. This extension is only for state-based SHOPs that currently utilize direct enrollment.... [S]tate-based SHOPs interested in continuing the direct enrollment option must submit a plan to CMS including a description of how the direct enrollment approach will meet the three criteria described [in this document], along with the state's plan for implementing SHOP beyond the transitional period." (Centers for Medicare & Medicaid Services [CMS], U.S. Department of Health and Human Services [HHS])  


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[Guidance Overview]

New York State Enacts Nation's Most Generous Paid Family Leave Law Effective January 1, 2018
"[T]he law relies on employee payroll deductions to fund the paid family leave benefit, but does not require any similar contribution from employers. The law also provides job protections, entitling an employee who returns from leave to be restored to the same or a comparable position. Additionally, employers must maintain existing health benefits for employees while they are on family leave. While these protections track closely with the family leave provisions of the federal Family and Medical Leave Act, New York's law covers a broader group of employees than the FMLA, albeit only for family leave. It does not provide an employee paid leave to care for his or her own medical condition." (Mintz Levin)  

The Future of Paid Sick Leave
"The [DOL] recently announced a proposed rule to implement Executive Order 13706, Establishing Paid Sick Leave for Federal Contractors....[S]et to go into effect on Jan. 1, 2017, this executive order requires certain parties that enter into contracts with the Federal Government to provide covered employees with 'up to 7 days of paid sick leave annually, including paid leave allowing for family care.' This new rule will be one step closer to paid sick leave for all American workers, says [DOL] Secretary Tomas Perez.... Permissible uses for paid sick leave are so broadly defined in this new rule that federally contracted employers will be expected to accept virtually any excuse an employee gives them for missing work." (Human Resource Executive Online)  

Small Businesses Paying for Employee Health Plans Reminded of Tax Credit
"To qualify for the credit, an employer must have fewer than 25 full-time employees, or a combination of full- and part-time employees that add up to 25 (such as two half-time employees equaling one full-time employee). The average annual wages for 2015 must have been less than $52,000. The employer must have paid at least 50 percent premiums for all enrolled employees, and the amount must have been a uniform percentage. The plan itself must have been a qualified health plan from the Small Business Health Options Program (SHOP) marketplace, with limited exceptions." (Wolters Kluwer Law & Business)  

Why 'Experts' Were Wrong About Employers Dropping Coverage
"The fact that employer-sponsored coverage continues to be a tax protected benefit and individually purchased coverage does not ... explain why employers will continue offering coverage for the foreseeable future.... [T]he fact that any termination of coverage must consider a newly created tax burden that gets placed directly onto employees' backs creates an unsustainable economic picture for the employers.... Employees are mobile and place a huge premium on benefits ... Any employer's consideration in disrupting its labor supply is predicated on its employees finding a comparable benefit on their own. That simply does not exist." (Frenkel Benefits)  


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Nation's Largest Health Insurer to Exit Obamacare Exchanges in All But a 'Handful' of States
"UnitedHealth Group, the nation's largest health insurer, said that in 2017 it will exit most of the 34 states where it offers plans on the [ACA] insurance exchanges ... Stephen J. Hemsley, chief executive officer of UnitedHealth Group, [noted] that the small market size and higher risk profile of doing business in the exchanges led the insurer to make the decision.... The moves have been anticipated since late last year when UnitedHealth executives said the insurer had suffered financial losses and threatened it might leave the health exchanges altogether in 2017. In January, the insurer reported that it expected a loss of $1 billion in the exchanges over 2015 and 2016." (The Washington Post; subscription may be required)  

Analysis of UnitedHealth Group's Premiums and Participation in ACA Marketplaces
"This analysis provides a state by state look at where United is participating in the Marketplaces this year and the extent to which it is offering one of the lower premium plans.... [The study examines] the effect a further withdrawal would have on insurer participation on the exchanges, with a particular focus on areas with limited competition ... [It] also analyzes premium data to identify where United currently offers one of the two lowest-cost silver plans.... If United were to exit from all areas where it currently participates and not be replaced by a new entrant, the effect on insurer competition could be significant in some markets -- particularly in rural areas and southern states." (Henry J. Kaiser Family Foundation)  

Obamacare's Unintended Consequences: People Buy Short-Term Policies
"Sales of these policies have doubled or more since 2014 ... This surely feeds into the problem that Obamacare enrollees are sicker than expected: The healthy candidates are choosing these policies.... Because these policies are underwritten for pre-existing conditions, the healthy can buy them. However, when the term is up, they are underwritten again.... With Obamacare, of course, if these folks fall sick they can apply for Obamacare coverage at the next open enrollment, which starts November 1." (National Center for Policy Analysis Health Policy Blog)  

CMS Administrator, GOP Lawmakers Spar Over Reinsurance Payments
"Rep. Tim Murphy (R-Pa.) took issue with the [CMS] decision to prioritize reinsurance payments to insurance companies rather than the U.S. Treasury.... CMS Acting Administrator Andy Slavitt defended the decision ... arguing that the agency used its standard rulemaking procedure -- including requests for comments -- to implement modifications to the program that were intended to 'maximize the financial effect of the transitional reinsurance program.' " (FierceHealthPayer)  

Benefits in General

Proposal Would Impose Tax on Dividends and Interest Paid to Tax-Exempt Employee Benefit Trusts
"The proposal would require corporations to withhold on dividends and interest at a 35% tax rate and pay that amount to the US Department of the Treasury. Taxable shareholders and bondholders would be able to claim a nonrefundable tax credit on their tax returns equal to the amount withheld, but tax-exempt shareholders and bondholders -- including pension and other tax-exempt employee benefit funds -- would be unable to use the credit. And therein lies the rub: under the proposal, tax exempts would bear one level of tax on dividend and interest income from US corporate stocks and bonds where they currently bear none." (Morgan Lewis)  

Move It or Lose It: Plan Sponsors May Not Have the Right to Recover Funds If They Don't Move Fast
"This case has significant ramifications far beyond group health plans and can also adversely impact disability plans and retirement plans.... Plan sponsors should: [1] Consider monitoring the legal case [which has been sent back to the District Court by the U.S. Supreme Court]; [2] Put the participant on notice (through his attorney) of the plan's expectation of reimbursement and demand that the proceeds be kept segregated; and [3] As soon as the matter is settled, take quick action (through your lawyer if necessary) to make a claim against the recovery." [Montanile v. Bd. of Trustees of Nat. Elevator Ind. Health Benefit Plan, No. 14-723 (U.S. Jan. 20, 2016)] (Warner Norcross & Judd LLP)  

Private Equity Groups on the Hook; What in the World Is a 'Partnership in Fact'?
"With respect to retirement plans, the potential adverse impact ranges from a failure to properly extend participation in the plan to the employees of the deemed controlled group to nondiscrimination testing issues, both as to coverage and contribution testing. Similarly, with respect to welfare benefit plans, such a failure could lead to potential penalties under the [ACA] by a failure to recognize controlled group employees in determining if an employer is subject to the employer mandate." [Sun Capital Partners III, LP, et al. v. New England Teamsters & Trucking Industry Pension Fund, No. 10-10921 (D. Mass. Mar. 28, 2016)] (Wilkins Finston Friedman Law Group LLP)  

Press Releases

NAPA Welcomes Samuel Brandwein as President
National Association of Plan Advisors [NAPA]

CalPERS Approves New Real Assets Strategic Plan
CalPERS [California Public Employees' Retirement System]

Stone Street Advisor Group Wins 401(k) Leadership Award
National Association of Plan Advisors [NAPA]

Federal Court finds City National Corporation Engaged in Self-dealing in its 401(k) Profit-sharing Plan
Employee Benefits Security Administration [EBSA], U.S. Department of Labor

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Lois Baker, J.D., President <loisbaker@benefitslink.com>
David Rhett Baker, J.D., Editor and Publisher <davebaker@benefitslink.com>
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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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