Health & Welfare Plans Newsletter

April 28, 2016

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[Guidance Overview]

Confirm Health Plan Coverage Meets Latest FAQ ACA Preventive Care Guidance
"On one hand, failing to design and administer their health benefit programs to comply with these and other rules and interpretations ... can trigger significant liability for insurers as well as group health plans and their sponsoring employers. On the other hand, group health plans and insurers that carefully design and administer their arrangements to comply with the guidance also can take advantage of opportunities to manage utilization and costs using the narrow windows of opportunity offered within the guidance. In either case, careful, well-documented efforts to verify compliance in response to the evolving guidance is important to prevent unanticipated violations and position group health plans, their sponsoring employers and fiduciaries and insurers to mitigate potential exposures in the event of a violation of existing or subsequently published guidance." (Solutions Law Press)  


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IRS Health Care Tax Tip 2016-47: Reminder for Employers and Providers -- File Health Coverage Information Returns
"If you are a self-insured employer, applicable large employer or health coverage provider, remember that the deadlines to file information returns with the IRS are approaching. The deadline to provide information returns to employees or responsible individuals was March 31 but for some the deadline to file them with the IRS [is May 31]." (Internal Revenue Service [IRS])  

IRS Explains That Usual Restrictions on Cash Reimbursement of Transit Expenses Apply to Retroactive Payments
"[IRS TAM-2016-1] clearly rejects the notion that Congress loosened any other aspect of the transit reimbursement rules when it retroactively restored transit parity. Those other rules -- including the readily available test, the substantiation requirements that apply to bona fide reimbursement arrangements, and the dollar limits on reimbursable expenses and compensation reductions -- will effectively preclude many employers from making retroactive cash reimbursements." (Thomson Reuters / EBIA)  

Healthcare Providers Changing Their Approach to Employee Health Plans
"Over 75% of respondents self-insure their employees' healthcare. Of those that do not currently self-insure their employees' health, 25% indicated it is somewhat or very likely that they will switch to a self-insured approach next year. Of those who self-insure their employees, 54% looked to a traditional payor to administer their self-insured plan, while 36% look to an independent third-party administrator (TPA). Those working with independent TPAs were significantly more satisfied[.]" (Valence Health)  

Teleworkers More Likely to Pursue Wellness Options on Their Own Compared to Office-Based Counterparts
"While teleworkers are more likely to pursue wellness options on their own compared to their office-based counterparts, almost half of all full-time U.S. employees do not participate in wellness-related activities no matter where they work.... [A] lack of work life flexibility is not a barrier to wellness since almost all employees indicated they have some form of flexibility. However, training and guidance on how to manage that flexibility does positively influence employee wellness pursuits." (Flex+Strategy Group)  


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Ryan Wants to End Obamacare Cost Protections for Sick Consumers
"U.S. House of Representatives Speaker Paul Ryan called on Wednesday for an end to Obamacare's financial protections for people with serious medical conditions, saying these consumers should be placed in state high-risk pools.... Ryan said existing federal policy that prevents insurers from charging sick people higher rates for health coverage has raised costs for healthy consumers while undermining choice and competition." (Reuters)  

Some States Pay Twice the Price for Health Care
"Compared to the national average, Alaska has the highest average health care prices, followed by Wisconsin, North Dakota, New Hampshire and Minnesota. In New Hampshire and Wisconsin, over 20 percent of health care services are twice the national average price. While in Arizona, Florida, Maryland and Tennessee, over 90 percent of health care services are priced lower than the national average. Prices vary more for some health care services than others." (Health Care Cost Institute)  

Prices for Common Medical Services Vary Substantially Among the Commercially Insured
"Using a national multipayer commercial claims database containing allowed amounts, [this study] examined variations in the prices for 242 common medical services in forty-one states and the District of Columbia. Ratios of average state prices to national prices ranged from a low of 0.79 in Florida to a high of 2.64 in Alaska. Two- to threefold variations in prices were identified within some states and Metropolitan Statistical Areas." (Health Affairs)  

2016 Global Medical Trends Survey report
"Private medical insurance trend continues to rise globally, from 7.5% in 2014 and 8.0% in 2015, to a projected 9.1% (all weighted) in 2016. More than half of health insurers in all regions anticipate higher or significantly higher medical trend over the next three years.... Traditional methods of cost management still dominate globally; however, health promotion and well-being programs continue to grow in availability and prevalence." (Willis Towers Watson)  

[Opinion]

Reports of Obamacare's Demise Are Greatly Exaggerated
"UnitedHealthcare was initially cautious in its participation in the ACA marketplaces, but became more aggressive recently, offering coverage in 34 states in 2016. However, the company's plans were often not competitively priced, with UnitedHealthcare offering 1 of the 2 lowest premium plans in only 35% of the counties where it participated ... The company's inability to compete on price may be because its historical strength has been in the employer-based health insurance market, which values broad networks of doctors and hospitals. In the ACA marketplaces, narrower networks have been a primary way in which insurers keep costs and premiums low." (JAMA Forum)  

Benefits in General

Halo v. Yale, the Second Circuit, Hamilton and Sideways Challenges to the Scope of Discretionary Review
"[A] series of cases [has come] out of major courts that are aggressively pushing back against the unbridled assertion of broad discretion by plan administrators operating under a grant of discretion.... For the most part, these are not direct restrictions on the exercise of discretion itself, but instead consist of challenges to the applicability at all of discretion, such as in the form of decisions holding plan administrators to strict compliance with technical requirements of claims handling upon pain of losing the benefits granted them by discretionary review." (Stephen Rosenberg, The Wagner Law Group)  

What the $100m Uber Settlement Means to All Employers
"Quite simply, this deal is a game-changer. It provides a blueprint for a possible path towards peaceful coexistence with workers without the specter of a class action lawsuit hanging over your heads at all times.... [T]his deal further presages the possible emergence of a new third classification of worker that reflects the reality of working in the gig economy in the 21st century.... Government regulators and elected legislators will take notice of this proposed solution and could see it as a model for developing laws covering gig economy working relationships." (Fisher & Phillips LLP)  

What Constitutes 'Reasonable Efforts' to Inform Plan Participants of a Plan Amendment That Includes a Forum Selection Clause?
"AXA used 'reasonable efforts' to notify Malagoli of the amendment that included a forum selection clause because: (a) they presented the Court with an Excel spreadsheet listing all Participants used to mail notices, and Malagoli's address was on this list; (b) Malagoli concedes his address in this list was accurate; (c) AXA merged the list of 29,125 Participants with the letter announcing the amendment, and assembled them in printed envelopes; (d) a bulk mailing certificate confirms that 29,125 letters were mailed first class on December 27, 2011." [Malagoli v. AXA Equitable Life Insurance Company, No. 14-CV-7180 (S.D.N.Y. Mar. 24, 2016] (Lane Powell PC)  

Executive Compensation and Nonqualified Plans

[Guidance Overview]

Bank Regulators Issue New Proposed Rule on Incentive Compensation
"Every covered institution would be subject to the following requirements: [1] Incentive arrangements cannot encourage inappropriate risk by providing excessive compensation or encourage inappropriate risk that could lead to a material financial loss. [2] Incentives must include both financial and non-financial measures of performance (including risk-based measures), and the non-financial measures must be able to override the financial results.... [3] Incentive arrangements must include effective controls and governance, including oversight by the Board of Directors. [4] Covered financial institutions must create annual records documenting the structure of incentives and compliance with these regulations." (Meridian Compensation Partners, LLC)  

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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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