Health & Welfare Plans Newsletter

July 26, 2016

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Webcasts and Conferences

Its Time for Your Check Up: The Affordable Care Act and Other Employee Healthcare Topics
October 18, 2016 WEBCAST
Andrews Kurth

Is an ESOP Right for You? An In-Depth Look at Employee Stock Ownership Plans
October 19, 2016 in RI
National Center for Employee Ownership [NCEO]

Health Plan Claims and Service Operations Conference
October 26, 2016 in FL
Strategic Solutions Network

Member Experience Across the Health Plan Continuum
October 27, 2016 in TN
Strategic Solutions Network

State Roundtable
November 3, 2016 in OK
State and Local Government Benefits Association [SALGBA]

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[Guidance Overview]

The New Schedule J for Form 5500: Big Changes for Small Group Health Plans
"Approximately 6,200 small group health plans currently file a Form 5500, at an aggregate cost of $4.1 million, but under the proposed changes that number would increase to an estimated 2,158,000 small group health plans at an estimated aggregate cost of $227.9 million.... Schedule J alone is estimated to affect an estimated 2,205,900 group health plans of all sizes and will increase Form 5500 filing costs by $202.6 million, while the total increased burden from all proposed Form 5500 changes for group health plans is estimated to be a 2.2 million hours and $241.6 million."  Stinson Leonard Street


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[Guidance Overview]

Mental Health Parity and Addiction Equity Act Enforcement Is a Priority for Federal Agencies
"The federal government is stepping up its enforcement of the MHPAEA.... The MHPAEA regulations require plan sponsors to follow a complex evidence-based process to support the application of certain medical-management tools to MH/SUD care. Evidence and documentation supporting the application of these tools must be provided to participants and their health care providers."  Segal Consulting

[Guidance Overview]

The Beautiful, Rhythmic Beat of Seasonal Employees Under the ACA
"A seasonal employee placed in an initial measurement period will be in what is referred to as a limited non-assessment period. This is significant because the instructions to the Form 1095-C make it clear that an employee in a limited non-assessment period is not considered a full-time employee for purposes of Form 1095-C reporting. Therefore, if an employer properly sets up its look back measurement method (which should be documented) for a 12 month period, seasonal employees will soon create a perfect ACA rhythmic beat."  Ryan Moulder, Esq., via Accord Systems, LLC

[Guidance Overview]

Final ACA Nondiscrimination Rules Under Section 1557 Now Effective
"For many employer-sponsored plans, Section 1557 will be triggered by receipt of a Medicare Part D subsidy, the HHS subsidy provided to plans covering Medicare-equivalent prescription drug coverage. Because the final rules apply to 'an entity that operates a health program', it is unclear whether the rules allow disaggregation of health plans offered by an employer."  Seyfarth Shaw LLP

One Court Case That Could Really Hurt Obamacare Insurers
"It's a little unclear what will happen if the House succeeds in its lawsuit, but the general wisdom among analysts is that insurers will still be required by law to continuing giving consumers the cost-sharing reductions. Thus, the GOP has argued in hearings, it's not consumers who will suffer if federal money stops going to the program.... But that cost must be made up elsewhere, probably in monthly premiums. In January, the Urban Institute predicted that a House win in the case would cause silver plan premiums to increase $1,040 per person in 2016, and this number would increase over time. Marketplace enrollment would decrease by 1 million people, and federal government costs would increase by $3.6 billion in 2016."  Morning Consult


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CMS Proposes Mandatory Cardiac Bundled-Payment Pilot
"A new mandatory program [proposed by CMS] would make hospitals in 98 markets financially accountable for the cost and quality of all care associated with bypass surgery and heart attacks.... n 2014, hospitalizations for heart attacks for more than 200,000 beneficiaries cost Medicare over $6 billion ... Yet for every treatment, the cost could vary by as much as 50%, the agency said.... The CMS also plans to expand its first and mandatory bundled-payment model -- which took effect in January and covers total hip and knee replacements -- to include surgeries repairing hip and femur fractures."  Modern Healthcare Online; free registration required

ACA Health Plan Subsidies to Become Easier to Get for 2017
"Additional verification of eligibility will only be required if the difference between stated income and [IRS] or Social Security data is at least 25 percent, or $6,000 ... Currently, additional verification is required if the discrepancy is only 10 percent or greater.... The new data-matching standards 'will allow more consumers to get their household income immediately verified by the Marketplace when they submit an application,' the CMS said."  Bloomberg BNA

Health Insurance Coverage in California in 2013 and 2014, After Implementation of the ACA (PDF)
"From 2013 to 2014, health insurance coverage expanded among individuals under age 65 in California, and the uninsured rate fell.... The 2013-2014 reductions in the uninsured rate were primarily due to expanded individual health insurance and Medicaid coverage, as there was very little increase in employment-based coverage.... [W]orkers in small firms had the highest uninsured rate in 2013, but workers in firms with more than 50 employees (particularly those in the 50-99 employee group) experienced the greatest reductions in uninsured rates."  Employee Benefit Research Institute [EBRI]

[Opinion]

Because Healthcare Costs Are Too High, California Decides to Increase Insurers' Administration -- and Costs
"The law requires health plans to let large groups know whether a proposed rate change is higher or lower than the average rate increase for individual plans available through Covered California, and is higher or lower than the average rate increase for individual plans negotiated by [CalPERS]. This notice requirement is effective for groups renewing June 1, 2016, and after, as specified by regulatory guidance from the California Department of Managed Health Care.... Clearly, insurers are going to have to invest more time, energy, expertise and money into the creation of these new notices. And ... the vast majority of policyholders will push them aside or give them a cursory glance."  Benefit Revolution

Benefits in General

[Guidance Overview]

DOL Proposes Major Overhaul to Form 5500 Reporting
"The proposed revisions will improve data mining by including searchable data fields ... Easier access to data from these forms, however, means there will be more scrutiny moving forward. More minable data means that government agencies and plaintiffs' lawyers will be looking at this information. The agencies are also asking for more specific information about service provider fees, which have been the subject of government scrutiny and litigation[.]"  Society for Human Resource Management [SHRM]

ING's Penalty for ERISA Claims Procedure Violations Partly Tossed by Ninth Circuit
"[T]he Ninth Circuit held that a benefit plan governed by [ERISA] can't be liable for statutory penalties for failing to follow appropriate claims procedures, because those penalties can be assessed only against plan administrators and not plans themselves. This clarified prior precedent and adopted the views of seven other federal appellate courts. The decision turned on the fact that ERISA plans and the administrators of those plans are distinct legal entities under the statute." [Lee v. ING Groep, N.V., No. 14-15848 (9th Cir. July 25, 2016]  Bloomberg BNA

Will Long Term Care Ruin Retirement Plans?
13 pages. "[R]oughly 85% of couples will utilize long term care prior to death. Long term care expenses impact financial plan sustainability at a declining rate as wealth increases from $1 million to $10 million. At a portfolio value of $1 million, adding long term care expenses to the simulation results in ruin, defined as depleting the portfolio entirely prior to the death of both members of the couple, about 30% of the time."  Michael W. Crook and Ronald Sutedja via SSRN

Executive Compensation and Nonqualified Plans

Industry Slams Exec Pay Proposal, Others Call for More
"A coalition of industry groups slammed the proposal, arguing the regulators exceeded their Dodd-Frank mandates in an attempt to impose a 'one-size-fits-all approach' to the issue rather than a principles-based approach. They also faulted the proposal for its definitions of 'risk-takers' subject to the restrictions, the wait time and the record-keeping costs it would impose."  Bloomberg BNA

Does Your Severance Plan Trigger ERISA? Why You Should Care and What You Should Do
"[T]he court focused on whether the severance payable under the employment agreement involved a 'separate and ongoing administrative scheme.' It highlighted several facts that demonstrated the existence of such an ongoing administrative scheme that caused ERISA to apply. For example, the employer had the discretion to decide whether a termination was with or without cause, the payments and provision of benefits continued over five years (rather than being paid in a lump sum), and the employer had the ongoing duty to monitor the non-compete, non-solicitation, and medical coverage provisions." [Zgrablich v. Cardone Industries Inc., No. 14-4665 (E.D. Penn. Feb. 3, 2016)]  Foley & Lardner, via Lexology

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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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