Health & Welfare Plans Newsletter

December 12, 2016

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[Official Guidance]

Text of CMS Bulletin: Easing Cash Flow Impact of the 2017 Transition for Issuers on Policy- Based Payments (PDF)
Unnumbered document, dated Dec. 12, 2016. "This bulletin provides guidance on how [CMS] will assist issuers to ensure they have sufficient cash flow during the time lag involved with the transition to the 2017 coverage year as issuers collect premiums and report effectuations to CMS during the 2017 Open Enrollment. The experience of implementing policy-based payments demonstrated that this time lag has the potential to significantly affect issuer advance payments in the January and February 2017 monthly payment cycles."
Centers for Medicare & Medicaid Services [CMS], U.S. Department of Health and Human Services [HHS]

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ECFC is dedicated to maintaining and expanding employee benefit programs on a tax-advantaged basis. Members include employers, TPAs, health plan providers, brokers, payers, providers, payment networks, processors, and financial institutions.


[Guidance Overview]

21st Century Cures Act Would Give Small Employers Greater Use of HRAs
"[T]he IRS had prohibited stand-alone HRAs.... However, the Act would save [qualified small employer health reimbursement arrangement (QSEHRAs)] from that IRS position by removing these arrangements from the definition of 'group health plans.' The Act also would amend the definition of group health plan in ERISA Sections 607 and 733 to exclude these arrangements, which includes an exclusion from the requirements under COBRA."
Jackson Lewis P.C.

[Guidance Overview]

Small Employer Standalone HRA Allowed by New Law
"An employer offering a Qualified HRA must provide each eligible employee a written notice at least 90 days before the beginning of the year including: [1] The amount of the permitted benefit under the Qualified HRA for the year; [2] A statement that if the employee is applying for advance payment of the premium tax credit for health insurance on the Marketplace, the employee must inform the Marketplace of the amount of the permitted benefit under the Qualified HRA; [3] A statement that if the employee is not covered under minimum essential coverage for any month, the employee may be subject to a tax under Code Section 5000A and reimbursements under the Qualified HRA may be taxable income. Under a transition rule, for 2017, the notice must be provided within 90 days after the date of enactment of the new law."
Dickinson Wright PLLC

21st Century Cures Act Offers Tax-Favored Vehicle for Small Employers to Pay Premiums
"[S]mall employers -- employers that have fewer than 50 full-time equivalent employees and therefore are not subject to the large employer mandates ... may pay or reimburse employees through HRAs for premiums for health insurance that qualifies as minimum essential coverage. The HRA must be solely funded by the employer without employee contributions, the payments cannot exceed $4,950 per year ($10,000 for family coverage) ... Most of the provisions of the law become effective as of any plan years following the end of 2016."
Health Affairs

HSA vs FSA: Which is Better?
"The Health Savings Account is like an IRA. You get to fund it with pre-tax dollars and it's typically administered by a financial institution. But unlike an IRA, you get to use the funds when you need them (not just in retirement) towards qualifying medical costs.... The Flexible Spending Account is a pre-tax dollars savings account your company administers where you're allowed to save up a year's worth of health care costs. Most people use it to pay for deductibles, co-pays, and household health care items." [A comparison chart is included.]
PTMoney

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Paid Leave Laws on the Table in Maryland and DC
"In DC, the City Council passed by an 11-2 margin the Universal Paid Leave Amendment Act of 2016, a proposal to provide eight weeks of parental leave, six weeks of family leave and two weeks of medical leave to employees working for private employers in the District, regardless of where they reside.... In Maryland, Governor Hogan has advised of his plan to introduce a proposal in the General Assembly requiring private employers with more than 50 employees to provide up to 40 hours of paid sick leave to employees who work at least 30 hours per week."
Miles & Stockbridge

Improving the Quality of Choices in Health Insurance Markets
"Using data on enrollment and medical claims for school district employees, [the authors] document large choice inconsistencies, with the typical employee foregoing savings of more than $600 in their insurance plan choice.... [I]nterventions to promote more active choice are unlikely to improve choice quality based on existing patterns of plan switching.... [R]estricting the choice set size facing individuals does significantly reduce their foregone saving and total costs. This is not because individuals choose worse with larger choice sets, but rather because larger choice sets feature worse choices on average that are not offset by individual re-optimization."
Jason Abaluck and Jonathan Gruber, for National Bureau of Economic Research [NBER]

Pre-existing Conditions and Medical Underwriting in the Individual Insurance Market Prior to the ACA
"This brief reviews medical underwriting practices by private insurers in the individual health insurance market prior to 2014, and estimates how many American adults could face difficulty obtaining private individual market insurance if the ACA were repealed or amended and such practices resumed."
Henry J. Kaiser Family Foundation

In Antitrust Trial, Justice Department Questions Aetna-Humana Asset Sale Plan
"The [DOJ], which is suing to block the merger, questioned the ability of the proposed asset buyer, California-based Molina Healthcare Inc., to keep the market for private Medicare plans for senior citizens competitive if Aetna and Humana combine.... Justice Department lawyer Ryan Kantor said Molina's own documents showed that its board members had concerns about the wisdom of buying assets from Aetna and Humana."
The Wall Street Journal; subscription may be required

California Retiree Health Care Debt Bigger Than Pensions
"Until recently, [California] state workers have not paid for a remarkably generous retiree health plan that actually pays more of their health care premium when they retire.... The state paid $458 million in 2001 (0.6 percent of the general fund) for state worker retiree health care and this fiscal year is expected to pay $2 billion (1.7 percent of the general fund) ... The state payment for CalPERS pensions is $5.4 billion. Now pay-as-you-go state worker retiree health care, unaided by investment earnings, has created a long-term debt for state worker retiree health care that is larger than the debt for state worker pensions."
Calpensions

Benefits in General

Nearly Three-Quarters of U.S. Employees Would Like a Customized Benefits Package
"73 percent of U.S. employees across all age groups would like the ability to customize their workplace benefits to suit their individual needs.... Employees ranked health care coverage, retirement savings accounts and vacation as the three most popular workplace benefits ... Millennial workers favor education benefits and paid parental leave.... Generation X workers ranked financial planning/wellness programs higher than Millennials and Baby Boomers.... Baby Boomers ranked disability insurance significantly higher than Millennials and Gen Xers."
LIMRA

Canaries in the Coal Mine on Pension Bailouts
"Participants in the United Mine Workers of America 1974 (UMWA) Pension Plan are unlikely to see any significant cuts in their benefits primarily because the average retiree receives about $6,900 annually, far less than the PBGC guarantee ... [It] is those health care benefits that will cease for 22,000 retirees at the end of this year that primarily worries senators like West Virginia's Joe Manchin[.]"
Burypensions

Government Funding Secured with Support for Coal Miners; Comprehensive Health Care Bill Passed (PDF)
"The [Continuing Resolution (CR)] enacted last week to avert a government shutdown also included $45 million for retired coal miners' multiemployer health benefits.... [H]ealth and retiree benefits remain in jeopardy because funding for health benefits is provided only through April 28 (consistent with the duration of the CR) and no funding has been provided for pension benefits.... [L]egislation for so-called 'composite plans' seems to have fallen off the radar."
Xerox HR

Executive Compensation and Nonqualified Plans

[Guidance Overview]

New Portland Ordinance Combats High CEO Pay
"The City Council passed an ordinance ... that requires publicly traded corporations to pay a surtax if they pay their CEO more than 100 times their median worker.... Portland's Revenue Bureau has identified more than 500 publicly-traded firms that do business in the city and therefore will be subject to the tax if their CEO-worker pay ratios are above 100 to [1] The list includes major corporations ... including Wells Fargo, Walmart and General Electric."
City of Portland, Oregon

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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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