Health & Welfare Plans Newsletter

May 19, 2016

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Webcasts and Conferences

Compensation Planning for Tax-Exempt Entities: Navigating IRC Section 457(f)
June 8, 2016 WEBCAST
(Trucker Huss)

Health Benefits Laws Compliance Assistance Seminar
June 28, 2016 in NJ
(Employee Benefits Security Administration [EBSA], U.S. Department of Labor)

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[Guidance Overview]

GASB 74/75: Calculation Specifics on Individual Entry Age Normal (PDF)
"The individual entry age cost method is specifically identified in the new standards as the only appropriate method for determining a plan's Total OPEB Liability (TOL) ... Entry age allocates the present value of benefits of a member over the active service of that member, from his or her 'entry age,' or date of membership, through his or her assumed age(s) of exit from active service.... There are also entry age variations related to how plan changes are reflected in the allocation process, and to whether allocation calculations are performed on an individual member basis or aggregated across groups of members. These variations may not comply with the specific individual entry age variation prescribed in GASB 74/75." (Milliman)  


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[Guidance Overview]

EEOC Releases Final Wellness Regs Under the ADA and GINA
"Certain portions of these final EEOC regulations (namely provisions relating to a notice requirement, the 30 percent limit on incentives for participation in a wellness plan, and the GINA rules that apply to spousal Health Risk Assessments (HRAs)) are effective for plan years beginning on and after January 1, 2017. However, the EEOC's position is that the remainder of these final regulations merely clarify and reinforce existing statutory obligations under the ADA and GINA, and apply both before and after May 17, 2016. Thus, these regulations require immediate attention." (Vedder Price)  

[Guidance Overview]

EEOC Releases Wellness Regs Under ADA and GINA
"The biggest change under the regulations is a reduction in the value of incentives that employers can offer under a wellness arrangement subject to the ADA or GINA, and that such limits apply to all types of wellness programs, not just health outcome-based. This is a narrowing of the limits set forth under [HIPAA].... [T]he ADA limits do not apply if there is no disability inquiry or medical examination under the wellness program. Similarly, the GINA limits would not apply if there is no request for genetic information[.]" (Michael Best & Friedrich LLP)  

[Guidance Overview]

EEOC Issues Final Rules on Wellness Programs
"The preamble states that because the ADA's prohibitions on discrimination apply only to employees, not their spouses and other dependents, the ADA rules do not address the incentives that wellness programs may offer in connection with dependent or spousal participation. Therefore, sponsors are left with the incentive limits for spouses that would apply under HIPAA or GINA.... The EEOC goes to great lengths in the final rules to justify their position that the ADA benefit plan safe harbor does not apply to wellness programs. Note that court decisions are to the contrary, and place in jeopardy the legality of the final rules." (Seyfarth Shaw LLP)  

EEOC: Wellness Plans Must Improve Health or Prevent Disease
"Unchanged from the proposed rules, both final rules specify that participation in an incentive program must be completely voluntary and under GINA that the participating employee's spouse must provide a plan with prior, knowing, voluntary and written participation authorization. According to the final ADA rules, a wellness program is considered voluntary if it doesn't require employees to participate, doesn't deny coverage for non-participation, doesn't coerce employees to participate and provides employees with a notice concerning information collected." (Bloomberg BNA)  


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United Healthcare Not Required to Give Time Limits Notice
"ERISA regulations only require initial denial letters to include time limits applicable to an administrator's internal review procedures, the court said. Under the regulations, there is no requirement to include time limits for review procedures in final denial letters, the court said. Nonetheless, both letters must inform participants of their right to bring a lawsuit under ERISA, the court noted. By informing Michael C.D. of his right to file a lawsuit, United complied with its ERISA requirements, the court concluded." [Michael C.D. v. United Healthcare, No. 2:15-CV-306 (D. Utah May 17, 2016)] (Bloomberg BNA)  

2016 Employer-Sponsored Health Care: ACA's Impact (PDF)
58 pages. "Topics addressed include employer concerns about plan design and funding, methods for communicating with employees, reactions to health insurance exchanges and the upcoming 2020 excise tax, cost-management initiatives, the potential impact on health care benefit costs, reactions to reporting and disclosure requirements and opinions about the law and its future.... Surveyed employers range in size from fewer than 50 employees to more than 10,000." (International Foundation of Employee Benefit Plans [IFEBP])  

Even If ACA Were to Be Repealed, Employers Would Keep Some Provisions
"78% of employers would keep in place at least some of the provisions they have already implemented in their health plans. Employers also report a wide-range of provisions they would like to see reinstated in new legislation if the ACA is repealed, with the top being elimination of preexisting condition exclusions (38%), coverage of adult children to age 26 (31%) and increased wellness incentives (31%)." (PLANSPONSOR)  

Cost Control Strategies in an ACA World: Strategies vs. Tactics
"A strategic approach to cost control is effective because it addresses the underlying problems in health plan design that lead to cost increases, rather than simply treating the symptoms by cutting benefits or increasing employee contributions.... The majority of employers are using tactics -- not a deliberate, well-thought-out strategy. As a result of not having a strategy, cost control becomes a haphazard paper-pushing exercise rather than a management objective." (Marsh Consulting Group)  

Mental Disorders Top the List of the Most Costly Conditions in the United States
"Estimates of annual health spending for a comprehensive set of medical conditions are presented for the entire US population and with totals benchmarked to the National Health Expenditure Accounts. In 2013 mental disorders topped the list of most costly conditions, with spending at $201 billion." (Health Affairs)  

Summary of 2017 Requested Rate Actions for New York State Individual and Small Group Insured Health Plans
Chart shows requested premium rate changes for 2017 plans in the individual and small group markets. The weighted average requested rate change for the individual market is 17.3%; proposed increases vary from 6.1% to 89.1%. The weighted average requested rate change for the small group market is 12.0%; proposed increases vary from 5.0% to 66.6%. (New York Department of Financial Services)  

Oscar Among Insurers Seeking Steep Premium Increases
"Health insurance startup Oscar is asking for premium increases as high as 30 percent in New York ... another sign the [ACA] exchanges are headed for a market correction ... Last year, New York regulators approved Oscar's request for an average rate hike of just 4.54 percent." (FierceHealthPayer)  

[Opinion]

The Cadillac Tax: How It's Threatening Health Care Consumerism
"[A]lmost 19 percent of large companies have already curtailed or canceled their FSA programs and 13 percent have dealt similarly with their HSAs. It is obvious that the tax is already having an impact, despite the two-year delay.... This number of companies dropping consumer-directed accounts will likely grow over time because after 2020, the limits will be adjusted for future changes in the consumer price index. While employers plan for these long-term changes, many are also considering imposing additional fees to cover employees' spouses or even exclude them from coverage completely." (Martin Trussell, Executive Director of ECFC, via The Institute for HealthCare Consumerism [IHCC])  

Benefits in General

[Guidance Overview]

Treasury Regs Clarify That Partners Providing Services to a Disregarded Entity Owned by the Partnership Are Treated as Self-Employed
"In response to certain practitioners interpreting the regulation to permit partners to be treated as employees of the disregarded entity and allowing such partners to participate in a disregarded entity's tax-favored employee benefit plans, the Treasury Department issued these regulations to clarify that if a partnership is the owner of a disregarded entity, the partners of such partnership are subject to the same self-employment tax rules as if they directly owned the disregarded entity. As a result, such partners cannot be employees of the disregarded entity and should not be eligible to participate in certain tax-favored employee benefit plans of the disregarded entity." (Haynes and Boone, LLP)  

Executive Compensation and Nonqualified Plans

[Guidance Overview]

New Proposed Rules for Financial Institutions' Incentive Compensation (PDF)
"[F]or certain larger covered financial institutions (based on average total consolidated net assets), the re-proposed rules mandate a clawback period of up to 7 years as well as hold-backs (mandatory deferrals) of up to 60% of incentive-based compensation for up to 4 years. These provisions may eventually be viewed as appropriate for non-financial companies, as was done with TARP companies' vote on pay that ended up forming the basis for Dodd-Frank's 'say-on-pay vote.' " (ExeQuity)  

Press Releases

CalPERS Picks OptumRx as New Pharmacy Benefits Manager
CalPERS [California Public Employees' Retirement System]

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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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