Health & Welfare Plans Newsletter

July 6, 2016

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[Official Guidance]

Text of IRS Proposed Regs: Premium Tax Credit
77 pages. "This document contains proposed regulations relating to the health insurance premium tax credit (premium tax credit) and the individual shared responsibility provision. These proposed regulations affect individuals who enroll in qualified health plans through Health Insurance Exchanges (Exchanges, also called Marketplaces) and claim the premium tax credit, and Exchanges that make qualified health plans available to individuals and employers. These proposed regulations also affect individuals who are eligible for employer-sponsored health coverage and individuals who seek to claim an exemption from the individual shared responsibility provision because of unaffordable coverage. Although employers are not directly affected by rules governing the premium tax credit, these proposed regulations may indirectly affect employers through the employer shared responsibility provisions and the related information reporting provisions." (Internal Revenue Service [IRS])  


[Advert.]

Register for NBCH's 21st Annual Conference, Sept. 26-28 in Orlando

Sponsored by National Business Coalition on Health [NBCH]

This must-attend event convenes employers, health plans, providers, business health coalitions and other key stakeholders focused on the future of health care and benefits. Free admission for employers that are members of an NBCH coalition. Join us.



[Guidance Overview]

PCORI Fee: Long Story for Short Plan Years
"The fee due for a short plan year is based on the average number of plan participants during the short plan year. There are three methods for self-insured plans to choose from when calculating the average number of participants. The per person dollar amount is based on the plan year end date. It appears the dollar amount is not prorated." (International Foundation of Employee Benefit Plans [IFEBP])  

[Guidance Overview]

ACA Health Insurance Marketplace Begins Reaching Out to Employers
"The deadline for appealing the benefits determination is 90 days after the date of the notice. If you receive a notice for a part-time employee who was not offered coverage, it is important to confirm the hours the employee actually worked using the guidance provided by ACA regulations. If you receive a notice for an employee who was offered coverage, you should proceed with an appeal as soon as possible." (Fisher Phillips)  

[Guidance Overview]

HHS Regs: No More Health Plan Discrimination Based on Gender Identity
"[An] employer that is a healthcare provider will be directly subject to the new rules, as will its health plan.... [W]here a non-healthcare provider offers health insurance to its employees under a self-insured plan, HHS may take aim at the TPA if the TPA is otherwise a covered entity (e.g., an insurer that receives federal funds) and its claims administration system causes gender identity discrimination[.]" (Lockton)  

Court Strikes Down HHS Health Care Rule on Insurance Standards
"A federal appeals court has ruled that consumers must be allowed to buy certain types of health insurance that do not meet the stringent standards of the [ACA], deciding that the administration had gone beyond the terms of federal law. The court struck down a rule ... that barred the sale of such insurance as a separate stand-alone product.... At issue is a type of insurance that pays consumers a fixed dollar amount, such as $500 a day for hospital care or $50 for a doctor's visit, regardless of how much is actually owed to the provider." (The New York Times; subscription may be required)  

The Giant Mistake 40-50% of Your HSA-Eligible Employees Make
"The many common distorted perceptions employees subscribe to regarding HSAs and high-deductible plans they're linked to -- The HSA is the same as an FSA or The HDHP is a low-quality plan -- cause some eye-opening results. Case in point: 40-50% of HSA-eligible individuals don't even have an HSA ... Two ways [employers can help]: [1] Match employees HSA contributions (in a manner similar to the 401(k) match), or [2] Offer wellness incentives in the form of HSA contributions." (HR Benefits Alert)  

Do You Have a Proper Cafeteria Plan?
"[A] recent Ninth Circuit decision ... focused on the circumstances under which the value of certain non-cash-wage benefits (such as those provided under 'cash-in-lieu' programs or cafeteria plans) must be included in the determination of FLSA overtime wages.... In order to avoid the risk that the IRS might take the position that your cafeteria plan does not have the required 'written plan' and that, as a result, your employees are taxable on the amounts that they could have received as wages (even if they selected nontaxable benefits), you should have a cafeteria plan document that satisfies [certain specific] requirements[.]" (Chang Ruthenberg & Long PC)  

How Running Its Own Health Plan Helped MGM Resorts Save Big on Narrow Network
"When the health plan began in 2012, it had about 5,000 members. That number has grown to more than 20,000, all of them MGM employees and their dependents. The number of primary care physicians in the narrow network has increased from 18 to more than double that amount." (Healthcare Finance News)  

A Financial Post-Mortem: Transitional Policies and the Financial Implications for the 2014 ACA Individual Market
"[The authors] reviewed individual ACA market experience and risk corridor transfers by Qualified Health Plan (QHP) issuer in each state to determine if there was a correlation between the transitional policy and issuers' 2014 individual market ACA medical loss ratios. [The] analysis indicates that issuers in states that implemented the transitional policy generally have higher medical loss ratios in the individual ACA market." (Milliman)  

Connecticut Insurance Department Puts HealthyCT Under Order of Supervision
"The order prohibits the company from writing any new policies or renewing those that expire after Aug. [1] The move stems from an order ... that the company pay $13.4 million to [CMS] as part of the [ACA] Risk Adjustment Program." (ctpost)  

OCR Enters Into First Settlement with a Business Associate for Alleged HIPAA Violations
"While business associates [BAs] are now directly liable under the Security Rule and many aspects of the Privacy Rule, covered entities [CEs] remain responsible for selecting their BAs, properly vetting their physical, technical, and administrative safeguards, and embodying the parties' agreement in a compliant business associate agreement (BAA).... CEs should consider defining in the [BAA] when and how the BA may use or disclose PHI, with all other uses, disclosures, breaches, or incidents to be reported to the CE." (Ice Miller LLP)  

Benefits in General

[Guidance Overview]

DOL Increases Civil Monetary Penalties, Effective August 1
"[V]iolations occurring on or before November 2, 2015, as well as assessments made before August 1, 2016 whose associated violations occurred after November 2, 2015, continue to be subject to the civil penalty amounts set out in the DOL's prior regulations ... [A chart provides] the statutory cite, a general description of the violation leading to the penalty, and the ultimate amount of the catch-up [civil monetary penalty] that will be due for violations occurring after August 1, 2016." (Practical Law Company)  

ERISA Litigation Continues a Plaintiff-Friendly Trend
"Since the U.S. Supreme Court's 2011 decision in Cigna Corp. v. Amara, ... the clear trend [is now] to allow plaintiffs to pursue various alternative forms of equitable relief side-by-side with a claim for plan benefits.... While the scope and extent of the discovery that may be conducted in benefits claims litigation under Section 502(a)(1)(B) is strictly limited, that is often not so in cases involving claims under Section 502(a)(3). Discovery and depositions are frequently one of the most, if not the most, time-consuming and costly aspects of litigation. Thus, the evolution in the law has a real world impact on the parties to ERISA litigation. Cases are, on the whole, taking longer to resolve and becoming more expensive to defend." (Trucker Huss)  

Executive Compensation and Nonqualified Plans

[Guidance Overview]

New Proposed 409A Regulations May Impact Nonqualified Deferred Compensation Arrangements
"To prevent employers from changing time and form of payment provisions that otherwise comply with 409A, or from creating errors with the intent of using the errors as a pretext to change the time and form of payment provisions, the proposed regulations provide that deferred amounts that are subject to a substantial risk of forfeiture will be treated as not subject to substantial risk of forfeiture when there is a change in a plan provision related to the time and form of payments that is not otherwise permitted under 409A if there is no reasonable, good faith basis to conclude that (a) the original provision failed to satisfy the 409A requirements and (b) the change is necessary to bring the plan into compliance with 409A." (Sherman & Howard)  

[Guidance Overview]

IRS Issues New Section 409A Guidance
"In several instances, ... the proposed regulations curtail practices that many practitioners have thought to be compliant with Section 409A. In what may be a small consolation, practitioners will appreciate the liberalization of the rules regarding payments in the event of the death of a plan participant and payments to beneficiaries." (Skadden, Arps, Slate, Meagher & Flom 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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