Health & Welfare Plans Newsletter

May 5, 2016

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Employee Benefits Jobs

Education Consultant
Milliman
in TX

Retirement Plan Consultant/Administrator
Bronfman E.L. Rothschild
in MN, WI

Manager, 401(k) Compliance
Newport Group
in IL

Supervisor / Manager
Newport Group
in CA

Conversions Consultant
Newport Group
in CA

Regional VP, Sales
Newport Group
in FL, MI, NJ, RI

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Webcasts and Conferences

Savings Fitness: Setting Financial Goals
RECORDED
(Employee Benefits Security Administration [EBSA], U.S. Department of Labor)

Savings Fitness: Determining a Target Retirement Saving Rate
RECORDED
(Employee Benefits Security Administration [EBSA], U.S. Department of Labor)

Retail Wellness Strategies
May 10, 2016 WEBCAST
(InComm Healthcare )

DOL’s Final Regulation and Prohibited Transaction Exemptions: Impact on Distributions and Rollovers
May 12, 2016 WEBCAST
(Drinker Biddle & Reath LLP)

Final DOL Conflict of Interest Rule
May 18, 2016 WEBCAST
(PenServ Plan Services, Inc.)

What to Expect When You’re Requesting: Investment Advisor RFPs and Due Diligence
May 18, 2016 WEBCAST
(University Conference Services)

Kill Inefficiencies, Find Hidden Value in the Service Provider Arrangements for Your Company’s ERISA Plans
May 25, 2016 WEBCAST
(Polsinelli)

Winning Ways with IRAs
October 27, 2016 in NV
(Retirement Industry Trust Association [RITA])

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Discussions


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[Guidance Overview]

DOL Fiduciary Rule Applies to Investments of HSAs, MSAs and Coverdell Education Accounts (PDF)
"[A]sserting its authority to issue guidance pertaining to Internal Revenue Code Sec. 4975, the DOL defined 'IRA' in the final rule by referencing IRC Sec. 4975(e)(1), which includes HSAs, ESAs, and MSAs. Considering that such accounts are subject to the same prohibited transaction rules as IRAs, the DOL believes that HSA, ESA,and MSA owners are entitled to receive the same protections as IRA owners." (Ascensus)  


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[Guidance Overview]

IRS Information Letters Confirm Cafeteria Plan Reimbursement Fundamentals
"The IRS has issued three information letters confirming and calling attention to fundamental principles of cafeteria plan design and administration.... Health FSAs cannot reimburse insurance premiums [2016-001] ... No income exclusion for reimbursement of spouse's pre-tax premiums [2016-009] ... Documentation required before reimbursing expenses [2016-013]." (Thomson Reuters / EBIA)  

Basic-Supplemental Life Insurance Plan Pricing Structure Upheld in ERISA Class Action
"An employee benefit plan that includes an alleged subsidization component for its basic and supplemental options is neither prohibited by [ERISA] nor a violation of the plan sponsor or service provider's fiduciary duties ... Plaintiffs [had] alleged that the Insurer and the Company engaged in a 'cross-subsidization scheme' to overcharge plaintiffs for supplemental life insurance that was higher than called for by the underwriting and actuarial pricing experience for the purpose of lowering the price that the Company incurred for 'non-contributory' basic group life insurance coverage." [Hannan v. Hartford Financial Serv. Inc., No. 3:15-cv-0395 (D. Conn. Mar. 29, 2016)] (Sutherland Asbill & Brennan LLP)  

HIPAA Phase 2 Audits: Actions Not Just Words
"[The HHS OCR] audit protocol provides a road map to evaluate your HIPAA compliance and will be a critical tool when preparing to respond to an OCR audit.... OCR will be asking for copies of the policies and procedures that determine how a key activity is processed and documented within the organization, and then will look at documentation of the activity actually having occurred and whether the activity occurred in a manner consistent with the organization's policies and procedures." (Blank Rome LLP)  

OCR Provides HIPAA Guidance for Mobile Health Developers
"OCR's guidance clarifies that a developer becomes a business associate under HIPAA only when the developer provides goods or services to or on behalf of a covered entity or business associate that involve the use or disclosure of PHI.... [An] interoperability agreement alone is not enough to make the app developer a business associate of the provider since 'the arrangement exists to facilitate access initiated by the consumer.' " (Haynes and Boone, LLP)  


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Control Specialty Drugs' Impact on Your Self-Insured Plan
"[Various apps] allow patients to track down reasonable prices for their meds by simply using their mobile devices.... Self-insured employers should encourage their employees to use these applications by making these technologies available to them.... The PBM is in a position to customize the formulary, and employers can play an active role in controlling their prescription drug cost risk." (Thompson SmartHR Manager)  

Telemedicine and the Long-Tail Problem in Healthcare
"Utilization of telemedicine is significantly higher for the Medicare population compared with commercial ... Telemedicine utilization rates appear to be higher in Alaska and in the Midwest and Southwest regions of the country ... Average charge levels for telemedicine services are approximately 9.4% lower than the equivalent services delivered on-site for Medicare, and 0.9% higher for commercial plans." (Milliman)  

Healthcare and Wellness Benefits Trends for Washington, DC Employers
"Washington, DC employers aren't embracing private exchanges, are still utilizing early adopter wellness strategies and continue to struggle with the administrative and financial burdens of health reform.... Local employers still rely heavily on cost-shifting tactics to manage their annual healthcare plan rate increases.... Local employers are still not leveraging social media as part of their employee benefit communication strategies." (Lockton)  

Humana Might Leave Some ACA Exchanges Next Year
"[Humana], which is being acquired by rival Aetna, said ... that it expects to make a number of changes to its business for 2017, and that may include leaving some markets both on and off the exchanges or changing prices. Humana Inc. sold coverage in 15 states this year." (InsuranceNewsNet.com)  

Health Insurers Propose Dramatic Increase in 2017 ACA Premiums
"In Oregon and Virginia, the first two states to make insurers' premium proposals for 2017 public, several big insurers are showing how those projections bear out. Providence Health Plan, currently the largest insurer for people buying coverage through the Oregon health exchange, is seeking an average increase of 29.6%. In Virginia, where premium increases had been relatively modest to date, Anthem Inc. is asking for an average increase of 15.8%." (The Wall Street Journal; subscription may be required)  

What to Look for in 2017 ACA Marketplace Premium Changes
"One complicating factor is that insurers must estimate costs after risk adjustment, which protects insurers that enrolled a disproportionate share of higher-risk enrollees and penalizes insurers that enrolled healthier than average people.... Adjustments for previous mispricing were an important contributor to premium requests from some companies in 2016 and will be again in 2017.... Insurers have increasingly voiced concerns about how the [special enrollment period (SEP)] process is conducted and the poorer health of those who enroll during these periods[.]" (Henry J. Kaiser Family Foundation)  

House Committees Subpoena Obamacare Documents
"House Republicans are subpoenaing documents related to ObamaCare payments that they say break the law. Two House committees issued the subpoenas on Wednesday, saying the administration has refused to comply with document requests for over a year. The administration counters that the matter is part of an ongoing lawsuit.... At issue are ObamaCare payments known as 'cost-sharing reductions,' which help lower out-of-pocket costs ... Republicans argue the administration is illegally paying out the cost-sharing reductions despite the lack of an appropriation from Congress." (The Hill)  

[Opinion]

How Obamacare Can Fix Employer-Sponsored Health Plans
"The whole value of pooling Americans based upon where they work only functions when the worker base itself is homogeneous and stable. But today, with the average millennial worker's tenure of three years, and declining, that necessary stability is disappearing.... The 'new' individual market, with 22 million Americans, is an unexpected, but refreshing alternative for employers that provides access to the largest and most stable commercial pool in the country." (CNBC)  

Benefits in General

[Guidance Overview]

ERISA Spring Cleaning: Have You Properly Identified All of Your ERISA Benefits?
"What are the general types of plans subject to ERISA? ... Are certain types of plans totally exempt from ERISA? ... What are some of the more common benefit arrangements that are potentially subject to ERISA's Form 5500 annual reporting requirement? ... What should be done once the benefits subject to ERISA have been identified? ... If a required Form 5500 has not been filed for an ERISA benefit, what should be done?" (Bond, Schoeneck & King)  

[Guidance Overview]

Partners Aren't Employees, but IRS May Reconsider
"Partners in a partnership that owns a disregarded entity -- a single-owner business that isn't a corporation -- are subject to self-employment taxes the same way a sole proprietor is.... Partners aren't allowed to participate in tax-favored employee benefit plans, the [IRS] confirmed May 3 in final, temporary rules ... Groups including the American Bar Association Section of Taxation have been pushing the IRS to soften its stance in light of the widespread practice of 'rank-and-file' partners in small service partnerships. The ABA tax section's goal is to allow partnerships and limited liability companies to elect to treat partners, who own small interests, as employees for benefit purposes and to treat their guaranteed payments as W-2 wages." (Bloomberg BNA)  

Executive Compensation and Nonqualified Plans

[Guidance Overview]

Proposed Rules Issued on Dodd-Frank Incentive Compensation Requirements for Financial Institutions
13 pages. "The Proposed Rule would ... for the first time subject investment advisers and broker-dealers to Federal compensation standards.... Level 1 and Level 2 covered institutions should consider whether changes to their equity and other incentive- based compensation plans and arrangements will be necessary in order to comply with the required deferral, forfeiture, downward adjustment, clawback and other incentive-based compensation policies for senior executive officers and significant risk-takers." (Latham & Watkins)  

[Opinion]

2016 Trends and Developments in Executive Compensation
"Approximately 40% of responding companies currently have clawback provisions in place that are compliant with the SEC's proposed rules.... Merit increases were modest for CEOs, executives and non-executives alike (median of approximately 3%) ... Relative to last year, responding companies are considering more factors in the goal-setting process[.]" (Meridian Compensation Partners, LLC)  

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Lois Baker, J.D., President <loisbaker@benefitslink.com>
David Rhett Baker, J.D., Editor and Publisher <davebaker@benefitslink.com>
Holly Horton, Business Manager <hollyhorton@benefitslink.com>

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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