Health & Welfare Plans Newsletter

June 17, 2016

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[Guidance Overview]

ACA Audits Can Help Employers Avoid Steep Reporting Penalties
"Are you offering employees who change employment status coverage at the right time? ... If you have adopted the Look Back Safe Harbor, are you including paid leave when determining Hours of Service? ... Are you including contributions to an HRA account or flex contributions to a Section 125 cafeteria plan in your affordability calculations? ... Are you properly reporting your seasonal employees? ... Are you properly accounting for full-time employees who return to work after extended absences?" (Liebert Cassidy Whitmore)  


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[Guidance Overview]

EEOC Final Regs Under ADA and GINA Increase Compliance Burden for Wellness Programs
"[D]ifferences between [the HIPAA/ACA] rules and the ADA and GINA rules [include] ... [1] New limit for ACA participatory (and non-ACA) programs that include disability-related inquiries.... [2] ACA health contingent (non-tobacco) programs that include disability-related inquiries generally must use lowest cost employee only coverage (even if employee is enrolled in another option).... [3] Reduced limit for ACA health contingent tobacco programs that include disability-related inquiries.... [4] Reasonable accommodations.... [5] Reasonable design." (Troutman Sanders)  

[Guidance Overview]

EEOC Releases Sample ADA Notice for Employee Wellness Programs
"Although the sample notice focuses on the ADA rules, it also references both [HIPAA] and [GINA]. An employer may thus use this single notice to address the wellness program notification requirements under all three statutes.... The sample notice will require some tailoring to fit an employer's specific wellness program." (Spencer Fane)  

[Guidance Overview]

Los Angeles Requires Employers to Provide 48 Hours of Paid Sick Leave
"Under the Ordinance, an 'employer' is 'any person ... including a corporate officer or executive, who directly or indirectly or through an agent or any other person, including through the services of a temporary service or staffing agency or similar entity, employs or exercises control over the wages, hours or working conditions of the Employee.' This potentially may make corporate officers and executives individually responsible for providing sick leave." (Jackson Lewis P.C.)  

Key Takeaways from Cigna v. Humble for Employers Who Sponsor Self-Funded Medical Plans
"This decision creates a roadmap of 'to do's' that sponsors of self-funded medical plans administered by any TPA (not just CIGNA) should follow to avoid having their plan be a victim of similar litigation. This is particularly important in light of a follow-up federal lawsuit filed last week in Houston by a separate group of stand-alone surgical clinics ... against plan sponsors and plan administrators of self-funded plans that use CIGNA as their TPA. This lawsuit alleges a litany of fiduciary and co-fiduciary violations, and may serve as a basis for copycat cases[.]" [Connecticut General Life Ins. Co. v. Humble Surgical Hospital, No. 4:13-cv-3291 (S.D. Tex. June 1, 2016)] (Wilkins Finston Friedman Law Group LLP)  


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You Must Be More Than Good at Math to Count Employees
"[A recent] article spells out 12 different legislatively prescribed methods for counting employees.... And with each count comes a fine, penalty, or other potential exposure for the employer. Since small employers are closer to the threshold, these laws affect them harder and consequently, greater care must be taken to ensure counts are accurate.... It is important to note that many states have their own set of counting rules." (Frenkel Benefits)  

California Insurance Commissioner Letter to U.S. Justice Department Regarding Anthem/Cigna Merger (PDF)
22 pages."[T]he enhanced market power of the merged companies will permit them to increase premiums, decrease the quality of care provided to their California members in a number of the state's regions, and reduce access to crucially needed insurance products. In addition, the merger will likely result in coordinated actions among them and other California health insurers, generating the same effects. Finally, the merger would increase the monopsony power of the combined entities in purchasing the services of healthcare providers, thus likely decreasing the quality of services and increasing the price of health insurance." (California Department of Insurance)  

California Insurance Commissioner Urges Feds to Block $54 Billion Anthem-Cigna Deal
"The U.S. Department of Justice is investigating the merger, and federal officials could seek divestitures to reduce market power or try to block it entirely on antitrust grounds. Anthem said it has received approval from 12 states thus far, but other reviews are pending.... California's other insurance regulator, the Department of Managed Health Care, is still examining the merger as is Connecticut, which plays a critical role since Cigna is based there." (Kaiser Health News)  

Health Insurers on ACA Exchanges Request Double-Digit Hikes for 2017
"For 2017 the average premium for benchmark plans on which federal subsidies are based in 14 metropolitan markets where complete data is available is 10 percent higher than 2016 rates ... That's higher than changes requested in 2015 and 2016. If the rates are approved by state insurance regulators the average premium for a single, 40-year-old non-smoker in those markets would rise to about $313 a month." (Bloomberg BNA)  

Upton, Brady to Treasury Secretary Lew: 'Your Department Is Obstructing Our Investigation'
"The committees' ongoing investigation has revealed that high-level administration officials knowingly circumvented appropriations law and the Constitution to pay insurance companies under the CSR program.... [T]he Treasury Department still refuses to cooperate fully with the committees' oversight efforts.... Chairmen Brady and Upton call on Secretary Lew to provide information on who at the Treasury Department has been preventing the committees from fulfilling their constitutional obligation to oversee the Obama administration's use of taxpayer money." (Energy & Commerce Committee and Ways & Means Committee, U.S. House of Representatives)  

Identification of Four Unique Spending Patterns Among Older Adults in the Last Year of Life Challenges Standard Assumptions
"[The authors] identified four unique spending trajectories among decedents: 48.7 percent had high persistent spending, 29.0 percent had moderate persistent spending, 10.2 percent had progressive spending, and 12.1 percent had late rise spending. High spending throughout the full year before death (approximately half of all decedents) was associated with having multiple chronic conditions but not any specific diseases. These findings suggest that spending at the end of life is a marker of general spending patterns often set in motion long before death." (Health Affairs)  

[Opinion]

Proposed 'World's Greatest Health Care Plan' Would Provide Sound Incentives for Fundamental Healthcare Choices
"Of 12 bold ideas in the legislation, fully half have never appeared in any previous bill or in any previous proposal -- Republican or Democrat. [T]he bill corrects the major ways in which federal policies create perverse incentives and removes the federal government as a source of some of our most important health policy problems.... [T]he legislation makes good on what many regard as the three broken promises of the [ACA]: universal coverage, cost control, and real protection for people with pre-existing conditions.... [T]he bill paves the way for a medical marketplace in which empowered patients can make more of their own choices, while enjoying protection against the cost of catastrophic illness -- both the financial cost and the cost of rationing by waiting." (John Goodman, in Health Affairs Blog)  

Benefits in General

IRS to Contact Taxpayers in Writing in Audit Cases -- No More Phone Calls
"The IRS announced on May 20, 2016 that as of that date, all initial contacts with taxpayers to commence an audit examination must be made by mail, instead of the telephone, using official IRS initial contact letters. Until recently, making initial contact by telephone to schedule an appointment to initiate a field examination had been a long-standing policy and practice. The IRS has implemented the change in practice in response to the continuing threat of phone scams, phishing, and identity theft." (Schneider Downs)  

Executive Compensation and Nonqualified Plans

[Guidance Overview]

Major Changes Proposed for Incentive Compensation at Financial Institutions -- Are Other Types of Employers Next?
"The proposed regulations would require deferral of a significant portion of incentive compensation after the end of the performance period before the award is 'vested' and would also require the vested amount to be subject to substantial forfeiture and clawback risks.... The concepts in the proposals are likely to be extended to publicly traded employers, tax exempt entities, federal contractors, and other employers either by mandate or as emerging best practices." (Vorys, Sater, Seymour and Pease LLP)  

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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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