Health & Welfare Plans Newsletter

April 20, 2017

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[Guidance Overview]

HHS Finalizes Health Insurance Market Stabilization Rules
"The final rules, issued in expedited fashion, generally follow the proposed regulations and include changes such as: [1] Advancing by one year a change that shortens the period for annual enrollment in health insurance exchange coverage ... [2] Requiring all mid-year special enrollment elections in health insurance exchanges to be verified as appropriate. [3] Allowing insurers to collect certain past-due premiums from individuals who terminate coverage and reenroll within one year. [4] Providing for greater flexibility in the rules that establish the metal levels of exchange coverage. [5] Easing certain requirements for network plans."
Ballard Spahr LLP

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[Guidance Overview]

Minneapolis and St. Paul Sick and Safe Time Ordinances
"[P]roposed rules that apply to both the Minneapolis ordinance and the St. Paul ordinance: [1] Employers must keep records and bear the ultimate burden of proving which employees do not qualify for paid sick and safe time. [2] Employers in both cities are not required to offer paid sick and safe time leave to covered employees for hours worked outside of the city.... [3] Employers may satisfy the requirements of both ordinances by adopting a general paid time off policy which lumps sick and safe time with other paid leaves as long as the policy meets the minimum ordinance obligations. [4] Complaints under both ordinances must be filed within one year of the violation."
Gray Plant Mooty

Text of ERISA Advisory Council Issue Statement: Reducing the Burden and Increasing the Effectiveness of Mandated Disclosures for Employer-Based Health Plans in the Private Sector (PDF)
"At the outset [the 2017 ERISA Advisory Council] will ask for responses to three proposals: [1] the elimination of the Summary Annual Report requirement for health benefit plans not already exempt, [2] the consolidation of each of the various annual notices into a single annual notice issued in a standard format, and [3] the modification of the Summary Plan Description requirements to allow a short resource reference tool updated annually."
Advisory Council on Employee Welfare and Pension Benefit Plans, Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]

Health Reimbursement Arrangements: What You Need to Know About Qualified Expenses, Taxes, and More
"[C]ertain types of HRA plan designs can trigger a shift from non-taxable to taxable income. These include plans that: [1] Comply with the 'medical expenses only' requirement, but reimburse employees for some or all of their unused money at the end of the year; [2] Provide a death benefit to employees' dependents from unused funds, and allow the funds to be used for non-medical expenses; [3] Allow unused account dollars to be applied to other company benefits, such as a 401(k) contribution."
DataPath

EEOC Wellness Lawsuit Against Orion Ends in $100,000 Settlement
"A federal challenge to a Wisconsin energy company's employee wellness incentive was resolved April 5 with a $100,000 settlement. A federal court had thrown out the [EEOC] claim that the program violated the Americans with Disabilities Act (ADA), but allowed the EEOC's related ADA retaliation and interference claims to proceed."
HRDailyAdvisor

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Stop-Loss Policies: How Low Can You Go?
"[T]he Self-Insurance Protection Act, in its current form, merely gives an additional argument that stop-loss policies cannot be treated like major medical insurance, no matter how low the attachment point is. This is like the proverbial 'belt and suspenders' since treating stop-loss like major medical insurance has been found to be preempted in some cases. The only additional protection is that the federal government would also be prevented from regulating stop-loss like regular health insurance. However, in its current form, the act does not prevent states from requiring stop loss policies to have a minimum attachment point."
Benefits Bryan Cave

Digital Diabetes Solutions in Action: An Opportunity Study (PDF)
24 pages. "Employers who are considering adding a digital component to their diabetes management tool kit have questions about the value of doing so, how to make it as meaningful as possible and what challenges they might face if they try to implement it.... [This article describes] an organization that has implemented a digital diabetes tool for an employee population, highlighting experiences and lessons that would be valuable to other employers."
Northeast Business Group on Health [NEBGH]

Cycling to Work Can Cut Cancer and Heart Disease
"[D]uring the course of the study, regular cycling cut the risk of death from any cause by 41%, the incidence of cancer by 45% and heart disease by 46%. The cyclists clocked an average of 30 miles per week, but the further they cycled the greater the health boon."
BBC News

Guroo: Taking the Guesswork out of Medical Costs
"While your employees might not be able to save themselves 5 figures, it's worthwhile to encourage them to shop around and compare costs among different hospitals and providers if they're planning to receive costly treatments or procedures ... [One] reliable cost comparison resource ... is guroo.com [which] was created by the Health Care Cost Institute to give health care consumers insight on the costs and quality of health care, encouraging more informed choices about how you spend your health care dollars. It's free to use the Guroo service regardless of your insurance coverage[.]"
Fidelity Health Marketplace

The Fate of the ACA's Cost-Sharing Reduction Subsidies
"Elimination or delay of CSR payments will severely affect insurers that provide Marketplace coverage, leading, potentially, to an exodus from the individual market. If this occurs, costs could be shifted to employers and employees ... Healthy, sustainable Marketplaces provide flexibility in coverage options for part-time and former employees. Employers should expect these individuals to request coverage options in the absence of Marketplace or other individual coverage."
Perkins Coie LLP

Risk Corridor Suit Dismissed as Premature; Supreme Court Ends Challenge to 'Administrative Fix'
"On April 18, 2017, [a] federal court of claims judge ... dismissed ... one of approximately two dozen lawsuits now pending in the federal court of claims brought by insurers who have been denied the full payment they believe is due them under the [ACA's] risk corridor program for 2014 and 2015. Also, on April 17, the Supreme Court denied certiorari [in West Virginia's challenge to HHS'] 2013 'administrative fix,' which had allowed states to permit insurers to continue to offer ACA-noncompliant 'transitional' or 'grandmothered' health plans after December 2013[.]"
Timothy Jost, in Health Affairs

Benefits in General

[Official Guidance]

Text of Exposure Draft on Proposed Statement on Auditing Standards: Forming an Opinion and Reporting on Financial Statements of Employee Benefit Plans Subject to ERISA (PDF)
133 pages. "The proposed [Statement on Auditing Standards (SAS)] includes the form and content of the auditor's report for an unmodified opinion, a new form of opinion when an ERISA-permitted audit scope limitation exists and reporting requirements on findings from procedures performed on specific plan provisions relating to the financial statements (either included in the auditor's report on the ERISA plan financial statements or issued as a separate report). The proposed SAS would apply to audits of single employer, multiple employer, and multiemployer plans subject to ERISA."
American Institute of Certified Public Accountants [AICPA]

Cybersecurity: ERISA Advisory Council Provides Tips for Pension and Welfare Plan Sponsors (PDF)
"Every ERISA-governed employee benefit plan has confidential participant data it is required to protect. From the largest pension plan to the smallest vacation fund, employee benefit plans contain sensitive, personal, participant data which needs to be protected from unauthorized breaches. In developing a robust cybersecurity program, trustees will want to work closely with their IT vendor and other plan professionals."
United Actuarial Services, Inc.

Six Questions to Ask Your Benefits Tech Vendor
"[1] How is your customer support model organized? ... [2] How are upgrades and updates made to the platform? ... [3] Do you offer ongoing training and learning opportunities? ... [4] To what extent do customers have influence over product development? ... [5] How do you measure customer satisfaction? ... [6] Do you have a customer engagement portal?"
Benefitfocus

Executive Compensation
and Nonqualified Plans

[Guidance Overview]

How a 'Substantial Risk of Forfeiture' Operates Under Various Kinds of Nonqualified Plans
"This practice note discusses the concept of substantial risk of forfeiture (SRF) under sections 83, 409A, 457(f), 457A, and 3121(v)(2) of the Internal Revenue Code (I.R.C.) (referred to hereafter as Section 83, Section 409A, etc.) and the different consequences of the failure to achieve a SRF under each such section. SRF is the standard that the I.R.C. and Treasury Regulations apply to determine when an employee's or an independent contractor's deferred compensation (or transfer of compensatory property) vests, and therefore (depending upon the particular I.R.C. section) may be includable in income for the individual (or deductible for the employer or other controlled group member granting the compensation)."
Venable LLP

Unexpected Risks of Early Exercise ISOs
"Companies that permit the grant of early exercise incentive stock options (ISOs) do so primarily to limit the impact of the alternative minimum tax (AMT). However, due to fairly counterintuitive tax regulations, structuring options in this fashion can expose optionees to negative tax consequences in the event of a disqualifying disposition. This [article] reviews the tax effects of early exercise ISOs and compares the tax results to alternate structures."
Dorsey & Whitney LLP

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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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