Health & Welfare Plans Newsletter

September 23, 2016

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Recent Updates in Employee Benefits Law
September 28, 2016 in IL
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Trends in Provider Sponsored Health Plans
October 5, 2016 WEBCAST
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January 11, 2017 in DC
National Business Group on Health

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Wisconsin Court Rejects Employer's Argument That Wellness Programs Are Insulated from Disability Law
"The court concluded that EEOC's recently issued regulations on the ADA's safe harbor provision were within EEOC's authority, and further held that the safe harbor provision did not apply even without regard to the new regulations. However, the court found that the wellness plan was lawful under the ADA because it concluded that the employee's decision whether to participate was voluntary under that statute." [EEOC v. Orion Energy Systems, Inc., No. 14-1019 (E.D. Wis. Sept. 19, 2016)]
U.S. Equal Employment Opportunity Commission [EEOC]

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Employer Groups See Mixed Bag in EEOC Wellness Plan Ruling
"Orion won on the voluntary standard issue, but there should be a concern about the court's application of the safe harbor provision in the Americans with Disabilities Act ... Employers have taken a position that the safe harbor applies and the court essentially ruled that out in this case, she said. The deference the court is giving to the safe harbor provision isn't what employers were hoping for[.] ... Some employer groups see this as a win for their side. The Orion decision is a 'very strong rebuttal' to the EEOC's final regulation that the limited incentives that employers can provide to participants in wellness plans can't go over 30 percent, Mark Wilson, chief economist at the HR Policy Association in Washington, told Bloomberg BNA[.]"
Bloomberg BNA

Court Finds Employer, Not Group Life Insurer, Liable for $314,000 Death Benefit
"The court ultimately ruled in favor of the plaintiffs, finding that the employer had breached its fiduciary duty by administering the plan in a way that allowed the employee to believe incorrectly that a certain level of life insurance coverage was in place. As a result, the court ordered the employer, and not the insurer, to pay $314,000, the amount of the supplemental coverage." [Van Loo v. Cajun Operating Co. dba Church's Chicken, No. 14-10604 (E.D. Mich June 6, 2016)]
The Wagner Law Group

More Cities Enact Paid Sick Leave Laws
"Over the last 10 years, more than 30 state and local laws have been enacted mandating that employers provide paid sick leave. In response to this trend, 14 states have enacted statewide bans on paid sick leave mandates. Varying requirements from jurisdiction to jurisdiction are making administration of leave programs increasingly complex for multistate employers."
Willis Towers Watson

Medicare Advantage Premiums Remain Stable in 2017; Beneficiaries Have Saved Over $23.5 Billion on Prescription Drugs
"CMS estimates that the average Medicare Advantage monthly premium will decrease by $1.19 (about 4 percent) in 2017, from $32.59 on average in 2016 to $31.40. This would be 13 percent lower than the average Medicare Advantage premium prior to passage of the [ACA].... Since the enactment of the [ACA] ... more than 11 million seniors and people with disabilities have received savings and discounts in the coverage gap of over $23.5 billion on prescription drugs, an average of $2,127 per beneficiary[.]"
Centers for Medicare & Medicaid Services [CMS], U.S. Department of Health and Human Services [HHS]

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September 29 webinar. We will attempt to reconcile differences in the regulations under the ADA, GINA and HIPAA, with the goal of identifying changes that should be implemented no later than plan years beginning on January 1, 2017.


House v. Burwell and Qualified Health Plan Insurers for 2017
"If the House ultimately prevails in this litigation, funding for reimbursing insurers for reducing cost sharing for their eligible enrollees could be terminated. A House victory would not, however, terminate the obligation of QHP insurers to reduce cost sharing, which would leave the insurers with substantial obligations not covered by their premiums."
Timothy Jost, in Health Affairs

[Opinion]

American Academy of Actuaries Letter to Congress on Adverse Consequences of Weakening the ACA's Individual Mandate (PDF)
"The individual mandate is an integral component of the law, especially given its provisions that prohibit insurers from denying coverage or charging higher premiums based on pre-existing health conditions. Weakening the mandate, by lowering financial penalties or exempting particular categories of individuals from its requirements, would likely have significant implications for health insurance coverage and costs both to consumers and the federal government."
American Academy of Actuaries

Benefits in General

ERISA: How Do You Spell (Equitable) Relief?
"In an ERISA case, what does it take to assert a claim for equitable relief? If the complaint does not assert an alleged breach of fiduciary duty, the claim for equitable relief should be dismissed." [Owens v. Liberty Life Assurance Co. of Boston, No. 15-00071 (W.D. Ky. Sept. 12, 2016)]
Lane Powell PC

Executive Compensation and Nonqualified Plans

Hold on to Your (Top) Hat: ERISA Section 502(a)(3) May Be Used to Enforce the Terms of a 'Top-Hat' Benefits Plan
"The court acknowledged that ERISA exempted the administrator of a top-hat plan from certain fiduciary duties, and the higher standard of care typically imposed on an ERISA fiduciary. However, agreeing with the decisions in other cases, the court found those exemptions did not immunize the top-hat plan administrator from all equitable remedies. Rather, 'equitable remedies ... are available for a breach of the general good faith standard of contract law by the plan administrator' of a top-hat plan." [Buster v. Compensation Comm. of the Bd. of Directors of Mechanics Bank, No. 16-01146 (N.D. Cal. Aug. 26, 2016)]
Zuckerman Spaeder LLP

Preparing for the 2017 Proxy Season, Part 2
"[T]ips and reminders for 2017 proxy season[:] [1] Determine whether any special reporting rules or exceptions apply to the company.... [2] Address non-employee director compensation best practices.... [3] Determine whether the company needs to amend its LTIP/Stock or Cash Incentive Plans to satisfy the periodic shareholder approval requirements (generally, every five years) of Code Section 162(m) or to add shares to the authorized share pool.... [4] Review ISS/Glass Lewis report and [Shareholder Say on Pay (SSOP)] voting results from 2016; ... [5]  Depending on SSOP frequency (every one, two, or three years), include SSOP proposal in 2017 ... Disclose in the CD&A the extent to which the Compensation Committee considered the results of previous SSOP votes." [Article includes 9 more.]
Winston & Strawn LLP

Press Releases

DOL Sues Exton Electrical Equipment Installation Company to Restore $166K to Employeesí 401(k) Retirement Plan
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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