Health & Welfare Plans Newsletter

April 4, 2017

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Webcasts and Conferences

How to Properly De-Risk Your Pension Plan: A Rainbow of Options
RECORDED
Findley Davies, Inc.

ERISA Benefit Plan Investment Management Agreements: Selecting 3(38) Investment Managers, Structuring the IMA
April 18, 2017 WEBCAST
Strafford

Specialty Pharmacy Use, Health Plan Type, and Worker Productivity
April 19, 2017 WEBCAST
Midwest Business Group on Health

What’s Next for ACA? Impact of the New Administration on Benefits
April 27, 2017 in IL
Worldwide Employee Benefits Network [WEB] - Chicago West Chapter

Fundamentals of 401(k) and Other Qualified Plans
June 5, 2017 in NC
FIS Relius Education

8th Annual Executive Compensation Summit
June 12, 2017 in IL
Equilar

Impacts of Pay Ratio Disclosure Rule on CEOs and Companies
June 16, 2017 WEBCAST
Knowledge Group

Stretch IRAs 101
July 12, 2017 WEBCAST
National Business Institute

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[Guidance Overview]

City of Los Angeles Updates Paid Sick Leave Rules and FAQs
"[T]he revised FAQs specify that employers can use different sick leave methods for different employee classes ... [At] the end of each year, employers -- at their discretion -- can pay out accrued but unused sick leave that exceeds the 72-hour overall cap.... [R]evised regulations address frontloading by small employers, calculating an employee's regular rate when sick leave is used, and using existing paid time off benefits to comply with the law."
Society for Human Resource Management [SHRM]

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[Guidance Overview]

Where Do We Stand with Health Care?
"Knowing the difference between ['full-time' and 'full-time equivalent'] and what the ACA requires is why a company, who may have 80 full-time equivalents, has to offer health care to only its subset of 40 full-timers.... [R]elated companies are generally grouped together as one ALE under ACA controlled group rules.... Since the enactment of ACA, there has been a rise in claims from employees who were denied health care because employers reduced their hours, under what ostensibly could have looked like a viable business solution."
Jackson Lewis P.C.

Including COBRA Coverage in a Severance Package May Be Too Much of a Good Thing
"[A]lthough losing a job IS a qualifying event, losing a COBRA subsidy from your former employer IS NOT. Therefore, by paying the individual's COBRA for a month or two the employer may actually be hurting the terminated employee, as the following month when the COBRA subsidy from the severance is no longer being paid he/she will no longer be able to purchase coverage through the exchange."
Frenkel Benefits

New Jersey Bill Seeks to Increase Family Leave Insurance Benefits
"If passed, Senate Bill No. 3085 would increase the weekly amount of FLI benefits from 6 to 12 weeks per year. In cases of intermittent leave, the maximum amount of FLI benefits would be increased from 42 days to 84 days. The bill would also increase the weekly amount of FLI benefits from two-thirds of a worker's average weekly wage to 80 percent of his or her average weekly wage. However, the maximum weekly payment would still be capped at of 53 percent of the statewide average weekly wage for all workers."
Ogletree Deakins

Health Care Providers Should Review Assignment of Benefit Forms After Ninth Circuit Decision
"The opinion from the U.S. Court of Appeals for the Ninth Circuit should remind providers that they must have well-crafted patient assignment clauses to give them standing to bring a broad range of ERISA claims. Although the plan participants had signed assignment of benefit forms, the court found that the providers lacked standing to bring suit in federal court under the Act's civil enforcement provisions." [DB Healthcare, LLC v. Blue Cross Blue Shield of Ariz., Inc., No. 14-16518 (9th Cir. Mar. 22, 2017)]
Pepper Hamilton LLP

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Half of Americans Are Responsible for Only 3 Percent of Health Care Costs
"The top 1 percent of health-care spenders use more resources, collectively, than the bottom 75 percent ... [T]he bottom half of spenders all together rack up only about 3 percent of overall health care spending -- a pattern that hasn't budged for decades. This creates a fundamental inequality in the country's health spending that is the crux of the challenge policymakers face: They need a system that works for people who are ill, but is attractive to those who are healthy and spend little on health care."
The Washington Post; subscription may be required

High Risk Pools and Risk Adjustment (PDF)
"[The authors] modeled the impact of excluding enrollees with high cost chronic conditions (those that could be expected to be part of a high risk pool) from the risk pool for the individual market.... [D]ifferences in measurable risk across issuers decreases considerably, but significant differences still exist.... [R]emoving risk adjustment would create significant incentives for risk selection through marketing and plan design."
Wakely Consulting Group

HHS to Continue Obamacare Payments to Insurers with Lawsuit Pending
"The precedent that the cost-sharing subdues would be funded while the lawsuit is being litigated remains the policy of the current administration, according to the official ... The statement could provide some clarity for insurers as they decide whether to offer plans next year on the Obamacare exchanges."
Morning Consult

Iowa's Largest Insurer to Withdraw from Obamacare Exchanges
"Wellmark Blue Cross and Blue Shield ... blamed its decision to withdraw in 2018 on what it said was the high cost of covering people under the [ACA].... The company said it had lost $90 million over the past three years of providing coverage on the exchanges and individually, despite aggressively raising its rates."
The New York Times; subscription may be required

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Rand Paul Says New Obamacare Repeal Talk 'Helpful,' But Needs More Time
"Multiple reports surfaced Monday that the White House and conservatives are discussing a compromise to grant [HHS] Secretary Tom Price more authority to allow states to waive certain Obamacare regulations that conservatives want repealed. [Sen. Rand Paul (R-Ky.)], leaving a meeting with House Freedom Caucus members in his office, confirmed that such discussions are in the works, and he indicated he had a conversation along those lines on Sunday, when he golfed with President Trump."
The Hill

[Opinion]

Propping Up Obamacare: CMS Proposes Market Stabilization Rules
"The proposed rule addresses the Obamacare death spiral through a number of fixes in the areas of open enrollment period, special enrollment period, nonpayment of premiums, network adequacy and actuarial value.... While the rule moves in the right direction, CMS should consider strengthening it with [certain additional] changes[.]"
National Center for Policy Analysis Health Policy Blog

[Opinion]

A Four-Step Plan for Bipartisan Health Reform
"In four broad steps, each component of which -- by themselves -- would constitute solid improvements, we have an opportunity to move past partisan bickering and put our health care system on stronger footing. Step 1: Enhance the Individual Market ... Step 2: Rationalize the Employer Market ... Step 3: Embrace Medicaid ... Step 4: Don't Forget the Big Picture."
Billy Wynne, in Health Affairs

Benefits in General

Halo Looms Over New Decision That Adds to ERISA Risks for Claims Administrators
"The latest decision to rely on the influential Halo v. Yale Health Plan decision from the 2nd Circuit adds to a worrisome pattern of courts applying the strictest possible review to lawsuits brought by aggrieved plan participants.... The court concluded that 'together, the violations ... are sufficient under Halo to trigger de novo review of the defendants' determination that [the plaintiff] did not meet the "reasonable occupation" test.' One is left to wonder if the court would have held that de novo review was appropriate if Aetna had committed only one of the sins [described]." [Schuman v. Aetna Life Ins. Co., No. 15-1006 (D. Conn. Mar. 20, 2017)]
Thompson Coburn

Quiz: Do You Get the Most Out of Your Benefits?
"If you scored a 9 or higher, congratulations! Chances are that you see your employee benefits as an integral part of your overall compensation. If you scored an 8 or lower, you may be leaving money on the table by not taking full advantage of everything your employer offers. If you have access to financial coaching via your workplace financial wellness program, consider setting up a time to talk to a planner about how you can fully maximize the value of your employee benefits."
Financial Finesse

Executive Compensation and Nonqualified Plans

409A and the Reverse Haircut
"At what point would the potential diminution in compensation be so insufficient that its loss would not be material and therefore there would fail to exist a substantial risk of forfeiture? Or put differently, at what point would enough hair be returning to our hero's head that its loss would leave him wondering how he could go through the rest of his life so improperly coiffed? ... [B]ased on all of the facts and circumstances of this particular situation, [Chief Counsel Memorandum 201645012 said] that the 25% reverse haircut was a material incentive and that such materiality did create a substantial risk of forfeiture."
Benefits and Compensation with John Lowell

Nonqualified Benefit Plans: One Size Does Not Fit All
"When consultants design SERPs solely for retirement income, because the decision-makers are concerned about retirement, they often make the mistake of designing a plan that fails its primary goal -- attracting, retaining and rewarding key talent.... Nonqualified benefit plans can be designed to pay out benefits at certain pre-set dates or life events while still employed. Benefits can be paid to accomplish goals other than retirement."
Advisor Magazine

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BenefitsLink Health & Welfare Plans Newsletter, ISSN no. 1536-9595. Copyright 2017 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 those materials. You may not alter or remove any trademark, copyright or other notices from copies of the content.

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