Health & Welfare Plans Newsletter

September 29, 2016

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Employee Benefits Jobs

Sr Compliance Specialist / Manager -- ERISA Compliance
Simpkins & Associates
in TX

Jr. Account Manager / Loan and Distribution Processor
National Retirement Services, Inc.
in CA

Retirement Plan Specialist
Arnold & Porter LLP
in DC

Customer Service Representative (Temporary)
University of California Office of the President
in CA

Human Resources Technician (Benefits)
Kern Community College District
in CA

Senior DC Compliance Administrator
Simpkins & Associates
in TX, Telecommute

401(k) Plan Administrator
Mann Associates
in IL

Conversion Consultant (Retirement Plans)
Aspire Financial Services LLC
in FL

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Webcasts and Conferences

ACA 1094/1095 Employer Reporting Year 2
October 27, 2016 WEBCAST
Frenkel Benefits, LLC

2016 Plan Sponsor Basics: Plan Audit Issues
November 16, 2016 WEBCAST
Morgan Lewis & Bockius LLP

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[Official Guidance]

Text of IRS Publication 5165: Guide for Electronically Filing ACA Information Returns for Software Developers and Transmitters, Processing Year 2017 (PDF)
60 pages, dated Sept. 2016. "[This Publication] outlines the communication procedures, transmission formats, business rules and validation procedures for information returns transmitted electronically through the AIR System.... The procedures in this publication should be used when the following information returns are transmitted electronically for TY2015 and TY2016 in PY2017: [1] Form 1094-B, Transmittal of Health Coverage Information Returns; [2] Form 1095-B, Health Coverage; [3] Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns; [4] Form 1095-C, Employer-Provided Health Insurance Offer and Coverage.... This publication does not contain information or procedures for filing Forms 1095-A."
Internal Revenue Service [IRS]

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[Official Guidance]

Text of DOL Final Regs Establishing Paid Sick Leave for Federal Contractors
466 pages. "This Final Rule issues regulations to implement Executive Order 13706, Establishing Paid Sick Leave for Federal Contractors, signed by President Barack Obama on September 7, 2015.... This Final Rule defines terms used in the regulatory text, describes the categories of contracts and employees the Order covers and excludes from coverage, sets forth requirements and restrictions governing the accrual and use of paid sick leave, and prohibits interference with or discrimination for the exercise of rights under the Executive Order. It also describes the obligations of contracting agencies, the [DOL], and contractors under the Executive Order, and it establishes the standards and procedures for complaints, investigations, remedies, and administrative enforcement proceedings related to alleged violations of the Order."
U.S. Department of Labor [DOL]

[Guidance Overview]

DOL Announces Final Rule Requiring Federal Contractors to Provide Workers Access to Paid Sick Leave
"When fully implemented, the final rule: [1] Provides up to 56 hours of paid sick leave per year to an estimated 1.15 million employees of federal contractors ... [2] Ensures that employers have choices in how to best adapt the paid sick leave requirement to their businesses.... [3] Includes flexibilities related to integration with employers' existing paid time off policies and leave provisions in existing collective bargaining agreements.... [4] [B]rings benefits packages offered by those federal contractors in line with leading firms, ensuring they remain competitive in the search for dedicated and talented employees. [5] Protects the public health by ensuring that covered federal contractors' employees, customers and clients are able to stay home when they are sick."
Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]

[Guidance Overview]

IRS Issues Draft Forms for 2016 ACA Reporting (PDF)
"The IRS expects to release final 2016 forms and instructions by the end of the year -- in time for the next reporting cycle in early 2017.... The IRS has made only minor changes to the forms, including adding two new 'Offer of Coverage' codes for use on Form 1095-C. The draft instructions also included some helpful clarifications."
EPIC

Paid Sick Day Executive Order Could Help One Million Families
"[B]etween 694,000 and 1,053,000 employees of federal contractors may directly benefit from additional paid sick leave, including an estimated 450,000 to 775,000 who currently receive no paid sick leave. According to the latest data, 36 percent of private sector workers do not have access to paid sick leave."
Economic Policy Institute

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Investment Advantages of Health Savings Accounts
"You don't have to use the HSA provider associated with your employer's health insurance company.... You can choose from many different types of investments within an HSA.... An HSA is portable.... You can reimburse yourself anytime.... After age 65, you can use HSA funds for any purpose, and you just have to pay ordinary income tax, without an early-withdrawal penalty."
nerdwallet

Warning for Employment, Severance, and Change in Control Agreements and Plans
"Employers that pay for all or a part of a terminated employee's COBRA coverage should consider providing notice to terminating employees that electing to receive subsidized COBRA coverage could affect their ability to elect coverage under the public health exchange or 'Marketplace' established under the [ACA]."
Winston & Strawn LLP

Allstate Can't Nix Retiree Lawsuit Over Lifetime Benefits
"The retirees sufficiently alleged that Allstate violated [ERISA] by failing to provide life insurance at no cost for the rest of their lives, Watkins said. In addition, the retirees adequately alleged that Allstate breached its fiduciary duties by failing to communicate truthfully about the terms of the company's employee group life insurance plan." [Turner v. Allstate Ins. Co., No. 13-00685 (M.D. Ala. Sept. 27, 2016; additional injunctive relief granted to plaintiffs)]
Bloomberg BNA

Specialty Drug Costs Soar 30% for CalPERS
"Specialty drug costs jumped 30 percent last year to $587 million for [CalPERS], one of the nation's largest health care purchasers. Though they amount to less than 1 percent of all prescriptions, specialty drugs accounted for more than a quarter of the state agency's $2.1 billion in total pharmacy costs. Those overall drug costs have climbed 40 percent since 2010."
Kaiser Health News

Double-Digit Rx Benefit Cost Trends Projected for 2017 (PDF)
15 pages. "Medical cost trend projections for actives and early retirees [are] relatively flat ... Medical trend projections for retirees are low but rising ... Prescription drug trend projections are high, approaching 20 percent for specialty drugs ... Cost trend rates continue to outpace increases in prices and wages ... Price inflation continues to be the leading driver of cost trend projections ... A range of cost-management strategies are being used."
Segal Consulting

Fewer Prescription Drugs Covered by ACA Marketplace Plans in 2017
"In 2017, 200 drugs may be taken off pharmacy's formularies.... CVS Health will leave 154 prescriptions off of its formularies and Express Scripts will keep 85 drugs off of its formularies next year. Drugs that are not covered will include some treatments for diabetes and hepatitis."
eHealth

Federal Employees Will Pay 6.2 Percent More Toward Health Care Premiums in 2017
"Federal Employees Health Benefits Program [FEHBP] enrollees with self-only coverage will contribute an average of $5.27 more per paycheck, while those with family coverage will pay about $12.97 more.... Federal employees and retirees' share of their health care premiums will go up by a higher percentage than the government contribution, which will rise 3.7 percent. OPM pays about 70 percent of FEHBP participants' premiums."
Government Executive

How Can Employees Help Victims of Louisiana Storms Using an Employer Leave Donation Program or Leave Sharing Program?
"Cash that an employer contributes because an employee has foregone vacation, sick, or personal leave, as described above, is done through a 'Leave Donation' Program. This program is distinguishable from a 'Leave Sharing' Program, where employees share their vacation, sick, or personal leave with co-workers who are in need of additional leave to tend to those co-workers' own personal medical needs or major disasters."
Jackson Lewis P.C.

When Employers Don't Recognize an Employee's Notice of the Need for FMLA Leave, They Pay the Price
"How do we know when the employee has provided information sufficient enough for us to realize they are asking for leave that may be covered by the FMLA? There is no magic formula to get it right. Yet, when we don't get it right, the liability can be tremendous."
FMLA Insights

ACA Has Led to Historic, Widespread Increase in Health Insurance Coverage
"In this brief, [the authors] use new and previously published estimates from the National Health Interview Survey to examine gains in health insurance coverage for non-elderly adults from 2010 to 2015. [The brief provides] estimates of the uninsured rate over time by income, race, state Medicaid expansion status, age, and urban and rural residence."
Assistant Secretary for Planning and Evaluation [ASPE], U.S. Department of Health and Human Services [HHS]

[Opinion]

Designing a Medicare Buy-in and a Public Plan Marketplace Option: Policy Options and Considerations (PDF)
12 pages. "A Medicare-related proposal could provide more plan choice for those eligible, which would have a significant effect where few or even only one insurer offers coverage in the nongroup insurance market. Depending upon how the proposal is structured, it could reduce costs for younger adults in the private insurance market as older adults leave the risk pool. However, designing such programs raises myriad issues, each with specific implications for costs and benefits to different age groups."
Urban Institute

[Opinion]

Did Landmark Laws From Congress Enable High Drug Prices?
"In the last 13 years, Congress passed major legislation that expanded taxpayer-financed coverage for prescription drugs but lacked explicit mechanisms for dealing with costs, instead relying mainly on market forces.... Government-sponsored coverage injected more dollars into the market for medications, and new consumer protections curtailed some blunt instruments insurers used to control costs, such as annual and lifetime limits on the dollar value of coverage."
InsuranceNewsNet.com

Executive Compensation and Nonqualified Plans

[Guidance Overview]

The Proposed 457(f) and 409A Regulations: A Closer Look
"When IRC section 409A and its related regulations came into being, it was thought that this might be the beginning of the end for the use of so-called 'rolling risks' for forfeiture in 457(f) plans.... The proposed 457(f) regulations make it clear that rolling risks of forfeiture continue to be permitted, but that substantial future services must generally be performed for at least two years (among other restrictions), and that the present value of the deferred compensation must be at least 125% of the compensation that the employee would have received had the agreement not been extended."
Cammack Retirement Group

Press Releases

DOL Files Complaint to Recover More Than $29K in Losses to the Weinhagen Tire Co. Inc. 401(k) 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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