Health & Welfare Plans Newsletter

August 26, 2016

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Higher Education Institutions Beware: New ERISA Class Action Lawsuits on the Rise
September 8, 2016 WEBCAST
Jackson Lewis LLP

Navigating the Fiduciary Landscape
September 15, 2016 in GA
Mazursky Constantine LLC

401(k) BB 06: The Average Benefit Test
September 22, 2016 WEBCAST
FIS Relius Education

ACA and Benefits Compliance Update
September 22, 2016 WEBCAST
Frenkel Benefits, LLC

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[Guidance Overview]

Changes to the 2016 IRS Form 1094-C According to the Draft Instructions
"First, and most importantly, the deadline for the Form 1094-C will be three or four months earlier in 2016 compared to 2015....[T]he penalty for the failure to file a correct information return (in this case the Form 1094-C) generally is $260 for each return for which a failure occurs.... [E]mployers no longer have the protection of the good faith effort standard in 2016.... One area that caused particular confusion in 2015 and is reemphasized in the instructions is the need for each applicable large employer member to file its own Form 1094-C."
Accord Systems, LLC

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[Guidance Overview]

DOL Makes FMLA Poster More 'Reader Friendly'
"In April 2016, the DOL quietly issued a new 'Employee Rights Under the Family and Medical Leave Act' poster.... The new poster ... eliminates some information and instead presents certain other information in what can be described as a much more 'reader friendly' format. Specifically, the new poster no longer refers to the 'employee's responsibilities' under the FMLA and instead focuses on employers' responsibilities."
Ogletree Deakins

[Guidance Overview]

GASB 74/75: Impact on Small Government Employers (PDF)
"An employer is qualified to use the [Alternative Measurement Method (AMM)] if fewer than 100 employees (active and inactive) are eligible for OPEB through the plan as of the beginning of the measurement period. The AMM includes the same broad steps as an actuarial valuation, including projecting benefit payments, discounting those payments to a present value, and attributing the present value of projected benefit payments to time periods using an actuarial cost method. However, the AMM permits some simplified methods for setting the assumptions to be used in the calculation."
Milliman

[Guidance Overview]

What Does Illinois' New Employee Sick Leave Act Mean to Employers?
"[The Employee Sick Leave Act], which takes effect on January 1, 2017, provides... that an employee may use 'personal sick leave benefits' provided by the employer for absences due to an illness, injury or medical appointment of the employee's child, spouse, sibling, parent, mother-in-law, father-in-law, grandchild, grandparent or stepparent ... If the employee is permitted to use certain benefits for their own illness or injury, the employer may be required to allow an employee to use those benefits for family care purposes."
Faegre Baker Daniels LLP

The Future of Hospital and Fixed Indemnity Policies Under New Proposed Regs and the Central United Life Decision
"While the regulation in issue in Central United Life governed the individual market, the case's reasoning could inform the final regulations governing hospital and fixed Indemnity policies in the group market.... [In] the absence of some significant changes to the proposed regulations, the market for hospital and fixed Indemnity policies is headed for some upheaval."
Mintz Levin

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Court Dismisses Claims in Premera Data Breach Class Action But Allows Re-Filing
"The court identified a number of procedural problems with the complaint and its alleged causes of action. For example, the complaint alleged fraud but did not clearly articulate the actions Premera should have taken, specific affirmative misrepresentations by Premera, or the information that Premera should have disclosed to affected individuals.... Conversely, the court ruled that the claim for unjust enrichment was adequately pled, based on allegations that it was unjust for Premera to retain fees for health insurance without securing sensitive data." [In re Premera Blue Cross Customer Data Security Breach Litigation, No. 15-2633 (D. Or. Aug. 1, 2016)]
Thomson Reuters / EBIA

Taking the Pulse of Texans on Telemedicine
"70% of Texans favor the use of telemedicine to diagnose common medical conditions. 25% of Texans have used an emergency room to treat such common conditions -- a much more costly and time-consuming alternative to telemedicine.... 24% of rural Texans have to drive 30 minutes or more to get to the doctor's office. 23% of Texans have to wait 14 or more days to see their doctor."
Texas Association of Business

Speak Now or Forever Hold Your Peace on Third-Party Payment of Marketplace Insurance Premiums
"CMS is concerned that the private plans issuing the QHPs offer higher rates than Medicare or Medicaid, and that hospitals (or other third-party payors) are attempting to make more money (rather than just attempting to be paid at all).... The CMS request for information contains many detailed questions, including descriptions of whether the practice is happening now, how enrollees are affected, what remedies could deter this practice, whether this practice tends to be associated with bad care, and whether CMS should require providers to report this practice."
Quarles & Brady LLP

Payments for Cost Sharing Increasing Rapidly Over Time
"From 2004 to 2014, the average payments by enrollees towards deductibles rose 256% from $99 to $353, and the average payments towards coinsurance rose 107%, from $117 to $242 ... Overall, patient cost-sharing rose by 77%, from an average of $422 in 2004 to $747 in 2014. During that period, average payments by health plans rose 58%, from $2,748 to $4,354."
Kaiser Family Foundation

As Rates Soar, Tennessee Insurers and Regulators Say Obamacare Proving Too Risky, Costly
"The price of individual health insurance coverage will increase next year by a record amount in Tennessee after state regulators agreed to the full amount of the rate increases requested by the three health insurers still offering exchange plans under Obamacare. But even with a 62 percent rate hike in 2016, the state's biggest health insurer is still evaluating whether to stay in the program ... Even with the state allowing [BlueCross BlueShield of Tennessee] to more than double its rates in three years, BlueCross officials said they are still studying whether it makes sense to keep offering Obamacare coverage in 2017 or abandon the program and leave much of Tennessee without any coverage under the marketplace exchanges."
Chattanooga Times Free Press

[Opinion]

Uwe Reinhardt Says Obamacare's Marketplaces Are Doomed
"Princeton University health economist Uwe Reinhardt offered the most dire and pessimistic assessment of the marketplaces' future. Namely, he believes they've already entered a death spiral and are heading toward total collapse.... [Mr. Reinhardt said:] 'If you got a bunch of Princeton undergrads to design a health care system, maybe they would come up with an arrangement like the marketplaces. The natural business model of a private commercial insurer is to price on health status and have the flexibility to raise prices year after year. What we've tried to do, instead, is do community rating [where insurers can't price on how sick or healthy an enrollee is] and couple it with a mandate.' "
Vox

[Opinion]

Big Obamacare Rate Increases Don't Reflect What People Actually Pay? Wrong!
"85% of those getting subsidies could get their rate increases eliminated or blunted by the subsidies. It is worth pointing out that the consumer only avoids the big increase if they are in, or move to, the lowest or second lowest cost Silver Plan. Staying with a higher priced plan they might now be in will not avoid the increases. And, once again, the administration doesn't tell us that moving to a lower price plan may require higher deductibles and co-pays and more limited provider networks."
Bob Laszewski's Health Care Policy and Marketplace Review

[Opinion]

Coloradocare: A New Healthcare Path Brings Different Issues
"Colorado would become the country's highest taxed state from an income tax standpoint. 10% payroll tax would be necessary to finance the plan (doubling the state's $25 billion budget), and this could potentially destroy an already healthy economy. An August 2016 study released by the non-partisan Colorado Health Institute projects that proposed tax increases would fall short of funding required because of flawed assumptions. It also points out that significant start-up costs are not provided for."
Frenkel Benefits

Benefits in General

Ninth Circuit Joins Others in Concluding Penalties Don't Apply to Requests for Claims-Related Documents
"The Ninth Circuit joins several other circuits ... as well as a number of trial courts in the Ninth Circuit, that have held that penalties are not available for failure to provide requested benefit claims documents pursuant to ERISA's claims procedure regulations... [F]ailure to follow the claims procedure rules can have consequences other than penalties, such as a court applying a stricter standard of review when evaluating benefit decisions." [Lee v. ING Groep, N.V., No. 14-15848 (9th Cir. July 25, 2016)]
Thomson Reuters / EBIA

Using 401(h) Assets to Pay Retiree HRA Claims
"This type of arrangement must comply with the requirements for both HRAs and 401(h) accounts. The interaction of these two sets of rules creates a number of technical uncertainties, which were favorably resolved in [PLR 201611003]. Unfortunately, the IRS did not provide a detailed rationale for its conclusion."
Willis Towers Watson

Executive Compensation and Nonqualified Plans

[Guidance Overview]

More on How New Section 409A Rules Impact Nonqualified Deferred Compensation Plans
"The new proposed regulations clarify that in order to correct a possible Section 409A violation by changing the time and form of payment of an amount that is unvested as of the applicable year-end: [1] There must be a reasonable, good faith basis to conclude that an actual Section 409A violation was present ... [2] The correction to change the payment or form of timing is necessary for the arrangement to comply with Section 409A; [3] Consideration should be given to whether, and how, similar Section 409A failures were dealt with in the past, and how similar failures will be avoided in the future; and [4] Procedures under any existing current IRS correction programs (e.g., those set forth in IRS Notice 2010-6) must be followed, if applicable."
Fulcrum Partners, LLC

SEC Cracks Down on Anti-Whistleblower Severance Agreements
"By levying over $600,000 in fines in the span of two weeks, the SEC is sending a strong message to corporate America that severance agreements cannot unduly limit workers from reporting possible whistleblower tips. This surge in enforcement may require you to revise your current template settlement agreements to remove offending language, and might also encourage you to revisit past agreements and make retroactive amends."
Fisher Phillips

Press Releases

DOL Sues Florida Outsource Company, Fiduciaries, Service Providers to Restore $1.5M to Health, Welfare Arrangement
Employee Benefits Security Administration [EBSA], U.S. Department of Labor

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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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