Health & Welfare Plans Newsletter

July 8, 2016

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[Official Guidance]

Text of CMS Q&As: When Must 2017 Edition of SBC Template Be Used? (PDF)
Undated and unnumbered; published online July 8, 2016. "This guidance addresses the applicability date of the Summary of Benefits and Coverage (SBC) template and associated documents that were published on April 6, 2016 ... [1] A group health plan or health insurance issuer offers plans with an annual open enrollment period. When must it use the 2017 SBC? ... [2] A group health plan or health insurance issuer does not maintain an annual open enrollment period. When must it use the 2017 SBC? ... [3] When are issuers required to begin using the 2017 SBC for form review in States in which HHS is doing direct enforcement? ... [4] What value should health plans and issuers enter on the Plans and Benefits template for 'Treatment of a Simple Fracture'?" (Centers for Medicare & Medicaid Services [CMS], U.S. Department of Health and Human Services [HHS])  


[Advert.]

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[Guidance Overview]

IRS Confirms ACA Information Returns May Continue to Be Electronically Filed Without Penalty
"The IRS has also confirmed that filers whose ACA information return transmissions and submissions have been rejected by the AIR system will have 60 days from the date of rejection to submit a replacement without incurring late penalties. In addition, filers that received an 'Accepted with Errors' message may continue to submit corrections after June 30, 2016 without penalties, as long as the corrections are timely made." (The Wagner Law Group)  

[Guidance Overview]

Marketplace Subsidy Notices: What Employers Need to Know
"An employer receiving a FFM subsidy notice is not automatically subject to a shared responsibility penalty. CMS has no authority to make penalty determinations under Code Section 4980H -- any such determination will be made independently by the IRS. The IRS has not yet provided concrete procedures related to penalty assessments under Code Section 4980H, but it has indicated that employers will have the opportunity to appeal assessments. Various circumstances could exist under which an employee is entitled to a premium subsidy without triggering a penalty on the employer." (Proskauer's ERISA Practice Center)  

[Guidance Overview]

Wisconsin Bone Marrow and Organ Donation Leave Law Became Effective on July 1
"Effective as of July 1, 2016, employers in Wisconsin who employ at least 50 individuals are required to provide eligible employees with up to six weeks of unpaid leave in a 12-month period to undergo and recover from bone marrow or organ donation procedures.... [E]mployees are eligible for donor leave if they have worked for a covered employer for 52 consecutive weeks and have worked at least 1,000 hours in the last 52 weeks." (Proskauer's Law and the Workplace)  

The Employer's Guide to Managing ACA Subsidies and Appeals
"If an employee receives a subsidy, you'll receive a notice.... If you offered minimum essential coverage (MEC) to the employee who received a subsidy and it met both the affordability and minimum value requirements, you should consider appealing.... [Y]ou can complete an Employer Appeal Request Form and submit it to the appropriate exchange ... Next, the exchange will review the case and make a decision. In some cases, the exchange may choose to hold a hearing. Once a decision is made, you and your employee will be notified. But it doesn't necessarily end there. Your employee will have an opportunity to appeal[.]" (Benefitfocus)  

PCORI Fees Due Soon
"For self-insured health plans, the fee is calculated using the average number of total lives covered by the plan (both employees and dependents)....[C]alculation of the total fee [can be done using] one of ... three calculation methods ... Plan Sponsors should review all three methods to determine the lowest amount to be paid." (Findley Davies)  

Is Healthcare FSA COBRA Continuation Really Required?
"[T]here are specific circumstances where employers may either have the option to limit the timeframe for coverage, or may even not be required to offer the option at all. For example, if the employee has 'overspent' their FSA account by the time the qualifying event has occurred (in this case, termination of employment), the employer is not required to continue coverage in the Healthcare FSA account." (Frenkel Benefits)  

Plan Administrator Must Pay Over $300,000 for Misrepresenting Level of Life Insurance Coverage
"[T]he beneficiaries pointed out that not only did the employer fail to send an [evidence of insurability form (EIF)] when the employee first elected coverage above the guaranteed-issue threshold, it also indicated (via its enrollment system) that her enrollment was complete and accepted premiums for the elected coverage for five years -- despite the lack of an EIF. The premium amount for the elected coverage was also specified in a letter the plan administrator sent when the employee stopped working due to illness. According to the beneficiaries, these actions amounted to a representation that the elected coverage was in effect[.]" [Loo v. Cajun Operating Co. d/b/a Church's Chicken, No. 14-10604 (E.D. Mich. June 6, 2016)] (Thomson Reuters / EBIA)  

Did the White House Overstep Appropriations Law to Pay Insurers?
"It is generally agreed that the ACA authorized both programs and amended an existing permanent funding law to include the premium tax credits. The administration says this particular provision serves as a congressionally approved appropriation for the cost sharing reduction program as well.... However, the GOP and a district court judge believe there is no legal basis for the administration's claim and that the program has never received a legal appropriation." (Morning Consult)  

Illinois Insurance Department Forbids CO-OP's ACA Payments Until Feds Pay Up
"The acting director of the Illinois Insurance Department is preventing Land of Lincoln Health, the state's troubled Consumer Operated and Oriented Plan (CO-OP) from paying money owed under the [ACA] unless Washington hands over funds the insurer says are due under a separate but similar provision of the law.... Land of Lincoln Health is currently suing the federal government for $73 million it claims it's owed under a similar program known as risk corridors." (The Hill)  

[Opinion]

Millennials: Are You Not Entertained?
"The main complaint among Millennials is the lack of convenience. The age of technology is upon us and with so much information available in an instant there is always somewhere to go, something to do, and more to learn. We don't have time for lunch, let alone an hour phone call with a receptionist, followed by 2 hours in a waiting room filling out forms, before a 3-minute meeting at which time the doctor tells us we're fine, which is then followed by the inevitable $150 bill. Our mind set is simple -- If I'm not sick, I don't need to waste my time and money to see the doctor. I can just go on WebMD and diagnose myself. The problem with this mind set is also simple -- it's wrong." (Xerox HR Insights)  

Executive Compensation and Nonqualified Plans

[Guidance Overview]

The Impact of Recently Proposed Regs on Ineligible Nonqualified Plans Under Sec. 457(f)
"Conspicuously absent from the proposal is any transitional relief.... Code Section 409A might as a practical matter impose some constraints on the ability of sponsors to amend many existing plans.... [T]he proposed regulations signal clearly that the old sheriff has a new, more restrictive agenda. For sponsors of ineligible plans, and particularly for the members of the various executive and compensation committees that negotiate the payment of benefits under ineligible arrangements, things are about to change for the worse." (Mintz Levin)  

[Guidance Overview]

New Proposed Regs Increase Flexibility and Complexity of Deferred Compensation for Employees of Tax-Exempt Entities
"The proposed regulations loosen the handcuffs in many key areas including the following: [1] Pay not considered deferral of compensation.... [2] Payment upon termination for good reason.... [3] Covenant not to compete as a substantial risk of forfeiture.... [4] Rolling risk of forfeiture allowed, but costly and complicated." (Michael Best & Friedrich LLP)  

Sen. Elizabeth Warren Leads Coalition to Cut Back on Executive Compensation Tax Deductions
"[T]he coalition has pledged its support to 'The Stop Subsidizing Multimillion Dollar Corporate Bonuses Act' (H.R. 2103 and S. 1127).... [which] would amend the Internal Revenue Code by: [1] Eliminating the existing Section 162(m) exceptions for commission payments and qualified performance-based compensation; [2] Including all current and former employees (not limited to the chief executive officer and the three other highest compensated officers) within the scope of Section 162(m); and [3] Expanding the scope of Section 162(m) to include public companies subject to periodic reporting under Section 15(d) of the Exchange Act. The practical effect would be to expand the application of Section 162(m) to voluntary filers." (Tax Talks: The Proskauer Tax Blog)  

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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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