Health & Welfare Plans Newsletter

June 8, 2016

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Winning With Wellness
June 10, 2016 WEBCAST
(Mercer)

Accountable Care Organizations: What Have We Learned?
June 16, 2016 in GA
(Worldwide Employee Benefits Network [WEB] - Atlanta Chapter)

Rollovers Between Retirement Plans and IRAs
August 30, 2016 WEBCAST
(Ascensus)

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[Official Guidance]

Text of Agency Proposed Regs: Expatriate Health Plans, Expatriate Health Plan Issuers, and Qualified Expatriates; Excepted Benefits; Lifetime and Annual Limits; and Short-Term, Limited-Duration Insurance
117 pages. "This document contains proposed regulations on the rules for expatriate health plans, expatriate health plan issuers, and qualified expatriates ... [and] proposes standards for travel insurance and supplemental health insurance coverage to be considered excepted benefits and revisions to the definition of short-term, limited-duration insurance for purposes of the exclusion from the definition of individual health insurance coverage.... In addition, this document proposes to amend a reference in the final regulations relating to prohibitions on lifetime and annual dollar limits and proposes to require that a notice be provided in connection with hospital indemnity and other fixed indemnity insurance in the group health insurance market for it to be considered excepted benefits." (Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]; Internal Revenue Service [IRS]; Centers for Medicare & Medicaid Services [CMS], U.S. Department of Health and Human Services [HHS])  


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[Official Guidance]

Text of Q&As from HHS-Operated Risk Adjustment Methodology Meeting on March 31, 2016 (PDF)
"[Q:] How will CMS modify the risk adjustment models in the 2018 Payment Notice? [A:] CMS intends to propose a number of improvements to the HHS risk adjustment methodology in the 2018 Payment Notice.... [1] [Modify] the HHS risk adjustment methodology to account for partial year enrollment.... [2] [Incorporate] a small number of prescription drug classes as predictors in the HHS risk adjustment methodology for the 2018 benefit year to impute missing diagnoses and to indicate severity of illness." (Centers for Medicare & Medicaid Services [CMS], U.S. Department of Health and Human Services [HHS])  

[Guidance Overview]

Text of CMS Fact Sheet: Strengthening the Marketplace -- Actions to Improve the Risk Pool
"During the month of June, HHS will make three announcements regarding our ongoing efforts to: strengthen the risk pool by spreading the costs of care over a diverse mix of enrollees, work with issuers and state Departments of Insurance to improve coverage options, and step up Marketplace outreach ... HHS is announcing a series of actions to strengthen the Marketplace risk pool ... [1] Curbing abuses of short-term plans ... [2] Improving the risk adjustment program... [3] Helping consumers who turn 65 make the transition to Medicare... [4] Beginning full implementation of the Special Enrollment Confirmation Process... [5] Continuing our efforts to reduce data-matching issues." (Centers for Medicare & Medicaid Services [CMS], U.S. Department of Health and Human Services [HHS])  

[Guidance Overview]

Q&As About the Patient-Centered Outcomes/Comparative Effectiveness (PCORI) Fee
"What plans does the PCORI fee apply to? ... Does the fee apply to all medical plans? ... Who must pay this fee? ... When is the PCORI fee due? ... How much is the fee? ... What if the plan terminates? ... What if a plan is new? ... How is the fee calculated? ... May an employer change its calculation method? ... What if the employer sponsors multiple plans? ... How is the fee paid? ... Is the fee tax-deductible?" (Cowden Associates, Inc.)  

Fiduciary Liable Under ERISA For Denied Life Insurance Coverage
"This case illustrates how an employer can end up paying a high price for assuming that an insurance company will take responsibility for providing necessary information to its employees. In this instance, the group life carrier denied coverage for additional benefits due to failure to supply an 'evidence of insurability' form for the increased coverage. The Court was not impressed with the employer's attempt to shift blame[.]" [Loo v. Cajun Operating Co. d/b/a Church's Chicken, No. 14-CV-10604 (E.D. Mich. June 6, 2016)] (Health Plan Law)  


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Cigna Fraud Lawsuit Against Hospital Backfires
"U.S. District Judge Kenneth Hoyt of the Southern District of Texas ... ordered the insurer to pay $11.4 million to cover underpaid claims and an additional $2.3 million in ERISA penalties, in perhaps the first instance where a claims administrator was ordered to pay ERISA penalties to a medical provider.... The decision sheds light on the payor-initiated 'out-of-network fraud' enigma and is one of a series of critical court decisions which address the typical scenario for out-of-network providers: payors refusal to pay claims which leads to 'catch-all' out-of-network lawsuits seeking total overpayment refunds of claims previously paid to providers, all based on broad and vague allegations of fraud." [Connecticut General Life Ins. Co. v. Humble Surgical Hospital, No. 4:13-cv-3291 (S.D. Tex. June 1, 2016)] (AVYM Healthcare Revenue Consultants)  

ERISA's Impact on Data Breach Lawsuits
"If ERISA applies, participants would also be able to bring claims for breach of fiduciary duty. Cyberattacks are typically aimed at health insurers or third party administrators, but in order to make a claim against an insurer or third party administrator, a participant must allege that the party was a plan fiduciary.... [E]mployers may be named as defendants in these lawsuits if it helps make out an ERISA claim. In this context, a participant must allege that the employer breached a duty of loyalty or care owed to the plan by not taking adequate steps to secure plan data, or by not monitoring the actions of the insurer or third party administrator." (Business & Legal Reports, Inc.)  

Five Steps for Surviving a DOL Health and Welfare Plan Investigation
"[1] Consider getting employee benefits counsel involved early.... [2] Confirm the scope of the document request.... [3] Stay organized and document your disclosures.... [4] Prepare your employees for interviews.... [5] Carefully review findings and closing letters." (Snell & Wilmer)  

IRS: Here's How to Handle the Tax Treatment of Wellness Rewards
"According to the IRS, if an employee earns a cash reward under the program, that reward must be included in the employee's gross income under Code Section 61 and is a payment of wages subject to employment taxes. In addition, if an employee earns a cash-equivalent reward that isn't excludible from his or her income -- e.g., the payment of gym membership fees -- the fair market value of that reward will be included in the employee's gross income and is a payment of wages subject to employment taxes." (HR Benefits Alert)  

Uncovering Coverage Gaps: A Review of Addiction Benefits in ACA Plans
"[N]early all of the 2017 EHB benchmark plans were non-compliant with ACA requirements and/or provided inadequate coverage of addiction benefits.... Over two-thirds of the plans contained facial (obvious) violations of the ACA's requirements for coverage of addiction benefits.... None of the plans provided comprehensive coverage for addiction ... Plan documents for 88 percent of state plans lacked sufficient detail to fully evaluate parity compliance and/or the adequacy of addiction benefits." (The National Center on Addiction and Substance Abuse)  

As ACA Enforcement Looms, Some Lessons Learned from Massachusetts
"Earlier this decade, Massachusetts employers were chin-deep in audits under the state's 'Fair Share' law. While not identical to the ACA's employer mandate, the Fair Share law bore many similarities to the ACA.... Given the likelihood of some serious IRS ACA auditing, possibly as early as this fall, employers should be thinking of the practical steps they can take to prepare. Here are some of the lessons [the authors] learned from our Massachusetts Fair Share audits that are likely to be valuable to any employer potentially subject to the IRS's enforcement activities." (Mintz Levin)  

Exchange Enrollment: An Opportunity for Reform (PDF)
17 pages. "[T]he Next Generation Exchange Model consists of four parts.... [1] Private shopping websites that compete directly with public websites for consumers ... [2] A modern subsidy process that allows the federal government to contract with at least one private vendor to set-up a 'PayPal'-like system for subsidies.... [3] Simplified small employer shopping ... [4] A revamped state certification process." (Council for Affordable Health Coverage [CAHC])  

[Opinion]

A Bogus Solution for High Drug Costs
"The benefits of greater price transparency primarily applies to retail markets -- rather than wholesale markets.... Drug plan managers currently have a variety of ways to compete for the business of health plan sponsors, who are their clients (the insurers and employers).... Passing poorly-thought out regulations on drug plans will not lower what Americans pay for drugs, but could increase them by reducing the ways drug plan managers are allowed to compete on health plan costs." (National Center for Policy Analysis Health Policy Blog)  

Executive Compensation and Nonqualified Plans

FASB Stock Compensation Accounting Amendments (ASU 2016-09): Summary of Early Adopters (PDF)
"Of the 44 early-adopters, 16 chose to account for forfeitures as they occur and 7 chose to continue estimating forfeitures under the current guidance. 21 companies did not explicitly disclose their policy election.... Of the 16 companies accounting for forfeitures as they occur, 11 disclosed the cumulative effect resulting from this change in accounting principle." (PricewaterhouseCoopers)  

Press Releases

ECFC Increases Industry Education to Advance Healthcare Consumerism
ECFC [Employers Council on Flexible Compensation]

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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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