Health & Welfare Plans Newsletter

July 13, 2016

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Employee Benefits Jobs

Conversion Consultant
Kravitz, Inc.
in CA

Investment Change Specialist
Aspire Financial Services LLC
in FL

Enrolled Actuary
Ascensus
in NJ

Sr. 401(k) Administrator
Guidant Financial
in WA, Telecommute

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Webcasts and Conferences

Fiduciary Focus Collective Investment Trusts Capturing Assets and Attention
July 26, 2016 WEBCAST
(fi360)

Ethical Issues for 403(b) Advisors
July 26, 2016 WEBCAST
(National Tax-Deferred Savings Association [NTSA])

401(k) Plan Excessive Fee Lawsuits - Reducing Your Risk
August 4, 2016 WEBCAST
(Globe Business Media Group)

Employee Plans Determination Letter Program Changes In 2017
August 11, 2016 WEBCAST
(IRS [Internal Revenue Service])

ERISA Basics National Institute
October 26, 2016 in IL
(ABA Joint Committee on Employee Benefits [JCEB])

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[Official Guidance]

Text of OCR Fact Sheet: Ransomware and HIPAA (PDF)
"The HIPAA Security Rule requires implementation of security measures that can help prevent the introduction of malware, including ransomware.... The HIPAA Security Rule requires covered entities and business associates to implement policies and procedures that can assist an entity in responding to and recovering from a ransomware attack.... What should covered entities or business associates do if their computer systems are infected with ransomware? ... Is it a HIPAA breach if ransomware infects a covered entity's or business associate's computer system? ... Is it a reportable breach if the ePHI encrypted by the ransomware was already encrypted to comply with HIPAA?" [Undated and unnumbered document; published online with an HHS press release on July 11, 2016.] (Office of Civil Rights [OCR], U.S. Department of Health and Human Services [HHS])  


[Advert.]

Online Training for Those Helping Consumers Enroll in Health Care

Sponsored by International Foundation of Employee Benefit Plans [IFEBP]

Health care benefits are complex, and your plan participants look to you for answers. If you are on the front line of health care enrollment at your organization, the new Certificate in Health Plan Navigation is the education you need. Learn More.



[Guidance Overview]

DOL, IRS Propose New Health Plan Reporting Requirements
"The new Schedule J would collect information about benefits and plan design characteristics; funding; grandfathered plan status; medical loss ratio rebates and other rebates received by the plan; service provider information; information on any stop loss insurance; claims processing and payment information; wellness program information; and other compliance information.... Group health plans with fewer than 100 participants that are funded using a trust or that are completely or partially unfunded would generally have to file the same information as larger group plans, including the schedule J. Approximately 2.15 million fully insured plans with fewer than 100 participants will also be required to complete and file limited sections of the form 5500 and Schedule J." (Health Affairs)  

Employers Wonder How to Respond to Marketplace Notices
"If the employer's appeal is decided in the employer's favor, this could eliminate reports to the [IRS] that the employee received subsidized Marketplace coverage (thus, potentially avoiding receipt by the employer of an IRS penalty notice with respect to that employee). However, the Marketplace notices issued so far only relate to the first part of 2016. An employer's successful appeal of a determination made about an employee's eligibility for subsidized Marketplace coverage during the first part of the year would not insulate the employer from penalty vulnerability for the whole year." (Jackson Lewis P.C.)  

HIPAA Covered Entity Audits Hit High Gear
"On July 12, 2016, OCR announced that 167 covered entities (health plans, health care providers, and health care clearinghouses) were notified on July 11 that they have been selected for a desk audit. OCR will audit these covered entities for compliance with ... Privacy Rule, Security Rule, and Breach Notification Rule requirements ... OCR states it selected these requirements because the 2011/2012 pilot audits 115 covered entities, as well as OCR's enforcement, highlighted them as areas of noncompliance. The 'risk analysis' requirement has been a particular enforcement focus." (Ice Miller LLP)  

Examining the Evolution of Paid Parental Leave (PDF)
"While the United States continues to be the only developed nation without mandated paid maternity leave, U.S. employers are blazing their own trail for new parents. This article defines parental leave, explains what's driving the increased interest in paid parental leave among employers offering it and discusses how paid parental leave can benefit employers and employees alike. Finally, the author discusses why not all employers are offering these benefits as well as considerations for employers contemplating whether paid parental leave is right for them." (Benefits Quarterly, published by the International Society of Certified Employee Benefit Specialists [ISCEBS])  


[Advert.]

Unique Fringe Benefits to Engage Employees

Sponsored by Lorman and BenefitsLink

July 27 webinar. Employers are working to become more and more creative in offering fringe benefit packages that are non-traditional, that will help them recruit and retain the best employees.



Opportunity Knocking: Education of Human Resources Professionals about Benefits of Private Exchanges
"Forty-four percent of employers would switch to an exchange if it could help control their benefits costs without compromising the quality of plans they offer to employees, according to a new Liazon survey.... When asked to rate their level of familiarity with the private exchange model, nearly half (45 percent) of respondents were not very familiar or not familiar with it at all. Another 36 percent were only somewhat familiar with the exchange model." (Liazon)  

Now on Starbucks' Menu: Less Health Coverage
"Starbucks announced [July 11] that it will give its U.S. workers a raise that will boost compensation by 5% to 15%.... The coffee giant also said it will offer employees more affordable health insurance that will cut costs by being less comprehensive.... Champions of free markets will argue that Starbucks is simply giving workers more choices, and that's true. Why should younger, healthier people pay higher premiums for more extensive health coverage?" (Los Angeles Times)  

Provider Consolidation and Its Effect on Spending and Prices
"Hospital mergers and physician practice acquisitions give physician practices and hospital systems stronger market power to drive up prices for patients. And the larger the market share of the newly formed provider system, the higher the prices are likely to go." (America's Health Insurance Plans [AHIP])  

CMS Data Brief: 2016 Median Marketplace Deductible, Seven Health Services Covered Before the Deductible
"The median individual deductible for HealthCare.gov Marketplace policies in 2016 is $850, down from $900 in 2015. Importantly, these figures account for the fact that many consumers qualify for financial assistance that lowers their deductibles based on their income.... On average, Healthcare.gov Marketplace policies cover seven common health care services (most often generic drugs and primary care visits), in addition to preventive services, with no or low cost-sharing before consumers meet their deductibles." (Centers for Medicare & Medicaid Services [CMS], U.S. Department of Health and Human Services [HHS])  

Sweeping Plan Put Forward to Control Rising Health Care Costs in Connecticut
"The proposal urges the creation of a new super-agency of sorts -- the Connecticut Health Authority -- that would absorb the responsibilities of more than a half-dozen existing state agencies. It also would create a quasi-independent oversight agency -- the Office of Health Reform -- with broad powers to track and limit health care cost increases in the state. Further, the plan calls for incentives to increase networking between providers of health care services, from small-town doctors to the state's largest hospitals, that would allow the state to implement value-based payments in the Medicaid program and state employee benefits program instead of the existing fee-for-service structure. This means health care providers would be paid based on the quality of care they provide rather than flat rates for services." (CTMirror)  

Another Health Insurance CO-OP Bites the Dust
"Illinois moved Tuesday to take control of Land of Lincoln Health to begin an orderly shutdown of the insurance company, meaning about 49,000 people will lose their health coverage in the coming months.... The Department of Insurance said the decision was based on the startup company's deteriorating financial condition. Land of Lincoln is required to pay $31.8 million to other insurers under a complex formula in the [ACA], which aims to keep premiums stable by balancing risks among insurers." (InsuranceNewsNet.com)  

[Opinion]

Testimony to Committee on Ways and Means Hearing on Rising Health Insurance Premiums Under the ACA (PDF)
14 pages. "The ACA made massive changes to health markets ... It created new consumer protections, corrected market imbalances, and reduced the number of uninsured Americans to historic lows. Yet, overreach by the ACA has also contributed to high and growing health insurance premiums, marked by average double digit price increases on exchange plans both this year and next. The result is an unbalanced and expensive market that is driving away many of the healthy consumers the exchanges need to attract in order to hold coverage costs down over the long term." (Joel C. White, President, Council for Affordable Health Coverage [CAHC])  

Benefits in General

Some Initial Thoughts on the Proposed Form 5500 Revisions
"[1] The 5500 overhaul will NOT be effective anytime soon ... [2] Voluntary plan participation rates will be much easier to determine on the new 5500 ... [3] Expect a lot more reporting of fees ... [4] There will be more data present on the 5500 itself rather than in attachments ... [5] Some smaller plan sponsors will need to file more 5500s ... [6] Strangely, the Summary Annual Report (SAR) will remain the same." (Cammack Retirement Group)  

Executive Compensation and Nonqualified Plans

[Guidance Overview]

IRS Issues New Proposed Regs under Code Section 409A
"The proposed regulations provide more guidance (and restrictions) on when employer will be deemed to have a 'pattern or practice' of permitting impermissible changes in the time and form of payment. If there is such a pattern or practice, the employer may not use the correction rule." (Michael Best & Friedrich LLP)  

[Guidance Overview]

IRS Clarifies and Modifies Code Section 409A Guidance
"[T]he IRS also provided helpful guidance regarding the correction of certain non-compliant deferred compensation arrangements. Specifically, to the extent an amount of deferred compensation is not vested (and will not become vested during the current year), an employer or other service recipient may amend a noncompliant term or provision in the written deferred compensation document in a manner permitted under IRS correction guidance that would otherwise apply to vested amounts, even though the noncompliant term or provision may not have been eligible for correction under that guidance." (Bond, Schoeneck & King)  

[Guidance Overview]

Section 409A: IRS Issues Proposed Regs to Address Open Questions
"The 409A Proposed Regs make it clear that a delay of payment beyond the applicable 2-1/2 month period would also be justified if payment would violate federal securities laws or other applicable law, provided the payment is made as soon as reasonably practicable following the first day on which the employee anticipates or reasonably should anticipate that making the payment would not cause a violation.... [The regulations also] clarify that the separation pay plan exception is available for employees whose employment begins and ends in the same taxable year. In that situation the rules look at the annualized compensation from the taxable year in which the employee separates from service." (Davis Wright Tremaine LLP)  

[Guidance Overview]

New 409A Regs, Part 2: On Taking (and Giving) Stock
"Sometimes in a transaction, employees with stock awards are given rights to get paid on the same terms as shareholders. For awards subject to 409A, the rules generally permit this as long as the payments do not go beyond five years from the date of the change in control. However, since options and SARs with fair market value strike prices are exempt from 409A, there was some question as to whether this rule could be used with those awards. These proposed regulations confirm that it can.... [U]nder Section 338 of the Code, parties can elect to treat a stock sale as a deemed asset sale for tax purposes. Does this include 409A, which would then allow them to choose whether a separation from service has occurred? The proposed regulations say it does not. Therefore, employees will not have a separation from service, even if a 338 election is made." (Benefits Bryan Cave)  

Press Releases

IRI Announces New Vice Presidents
Insured Retirement Institute [IRI]

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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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