Health & Welfare Plans Newsletter

May 3, 2017

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Beyond the BIC What It Means to Be a Fiduciary [Videocast]
April 12, 2017 WEBCAST
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Service Agreements
May 25, 2017 WEBCAST
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[Guidance Overview]

Attendance Policies May Interfere With State and Local Paid Sick Leave Laws in California
"Many employers enforce attendance policies which assign an 'occurrence' for unscheduled, unapproved absences. Although employers generally have discretion to implement attendance policies, such policies should be carefully crafted to avoid running afoul of antidiscrimination and antiretaliation provisions found in certain state and local paid sick leave laws."
Ogletree Deakins

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Ninth Circuit Denies Health Care Providers' ERISA Claims
"Consistent with the Second, Third, Sixth, Seventh, and Eleventh Circuits, the Ninth Circuit held that medical providers were not 'beneficiaries' under Section 502(a) of ERISA and therefore could not bring suit directly under ERISA.... The Court also denied the plaintiffs' derivative claims." [DB Healthcare, LLC v. Blue Cross Blue Shield of Ariz., Inc., No. 14-16518 (9th Cir. Mar. 22, 2017)]
Robinson & Cole LLP

$100k Settles Agency's First Challenge to an Employer Wellness Program
"In the EEOC's first lawsuit directly challenging an employer's wellness program -- filed in 2014 -- Orion Energy Systems has agreed to pay $100,000 and provide other relief to resolve allegations that the Manitowoc, Wisconsin, lighting company's program violated the ADA and the company unlawfully retaliated against an employee who objected to the program by firing her."
Wolters Kluwer Law & Business

Rising Costs for Patented Drugs Drives Growth of Pharmaceutical Spending in the U.S.
"Analysis of a seven-year trend ... shows that prescription drug spending has increased 10 percent annually for Blue Cross and Blue Shield (BCBS) members since 2010, an overall rise of 73 percent. This upward trend is due to a small fraction of emerging, patented drugs with rapid uptake and large year-over-year price increases that are more than offsetting the continued growth in utilization of lower-cost generic drugs.... [W]hile consumer out-of-pocket costs have risen just three percent annually for prescription drugs in total, they have risen 18 percent annually for patented drugs. Current trends suggest that this rapid rise in drug trend costs is likely to continue in future years."
Blue Cross and Blue Shield Association

Moderate Republican Crafts Plan to Boost Stalled Health Care Bill
"Rep. Fred Upton, R-Mich.... said the proposal would provide $8 billion over five years to help some people with pre-existing medical conditions pay costly insurance premiums.... The existing health care measure would let states get federal waivers allowing insurers to charge higher premiums to people with pre-existing illnesses who'd let their coverage lapse.... The money in Upton's plan would help people with pre-existing illnesses pay premiums in states where insurers can charge them more."
InsuranceNewsNet.com

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ACA Didn't Reduce Care Access for Those Already Insured
"Data from the Medical Expenditure Panel Survey from 2008 through 2014 saw no effect on access to care for continuously insured individuals across eight measures, despite the increase in coverage over that period provided by the [ACA] ... The authors note that the study covered a range of scenarios, from years with relatively low increases in insurance coverage to years during which Medicaid expansion and improving job markets drove higher expansion."
FierceHealthcare

Molina, Key Provider Under Obamacare, Ousts CEO and CFO
"Dr. J. Mario Molina, the outspoken chief executive of the California health insurance company founded by his father, was abruptly removed from his position at Molina Healthcare ... His brother, John, was also immediately replaced as the chief financial officer. Dr. Molina ... was one of the foremost critics of the steps taken by the Trump administration and Republicans in Congress to overhaul the federal health care law. Under his leadership, Molina, which specializes in providing care to low-income individuals, had become a mainstay of the individual insurance markets created by the law."
The New York Times; subscription may be required

Texas Department of Insurance Clarifies Position on Medical Stop-Loss Coverage Through Texas Captive Insurers
"The Department has confirmed that Texas captives may write coverage for the employer deductible or self-insured retention portions of a health benefit plan for employees. The coverage may be written as deductible reimbursement coverage payable by the captive to the parent as payor of the deductible benefits. In addition, the Department has confirmed that Texas captives may directly insure stop loss coverage for an ERISA qualified employee health benefit plan."
Mitchell Williams Selig Gates & Woodyard PLLC, via Lexology

[Opinion]

Who Should Pay to Cover Pre-Existing Conditions?
"[T]reating an expensive health condition costs (someone) lots of money. There are four basic approaches that can be taken to this problem. [1] Leave sick people to face the costs of their own treatment, whether out of pocket or through high-cost insurance, no matter how ruinous those costs become. [2] Mandate that other, healthier people overpay for the value of their own health insurance, so that sick people can underpay for the value of theirs. [3] Spread the costs of paying expensive health bills throughout society, for example by having taxpayers pick up the tab. [4] Require a targeted group to shoulder the costs."
Charles Blahous, Manhattan Institute for Policy Research

[Opinion]

Interrogating The Dream: What Does Single Payer Really Mean?
"At the time of the Clinton administration reform efforts of the 1990s, the left wanted a 'Canadian-style' single-payer system, until the reality that Canada has a provincial system finally sank in. Medicare for all is the current paradigm, but it has not been closely examined. Most crucially, the place of Medicaid in the post-repeal environment has not been imagined by single-payer advocates.... If a single-payer solution is to be argued as anything but a pipe dream, advocates must map out a clear and realistic path forward. This includes recognizing and addressing a number of factors that single-payer dreamers have long been loath to acknowledge."
Health Affairs

Benefits in General

Fifth Circuit Maintains Default Deferential Standard of Review in Denial of Benefit Claims, But Suggests It May Soon Be Overruled
"Commenting that '[t]he pillars supporting Pierre may have thus eroded', the Fifth Circuit's concurrence suggests that the tides may be changing, and that Firestone's requirement for discretionary language may soon apply equally to questions of plan interpretation and fact in the Fifth Circuit." [Ariana M. v. Humana Health Plan of Texas Inc., No. 16-20174 (5th Cir. Apr. 21, 2017)]
Robinson & Cole LLP

Addressing the Risks of Related Employer Status for Benefit Plan Purposes (PDF)
"In determining related employer status, there is no 'conservative' approach.... If a group health plan covers the employees of two or more employers who are not in the same controlled group (but who might be in the same affiliated service group), the plan becomes a MEWA. MEWAs are subject to additional reporting requirements and may also be subject to state insurance laws in some situations. And, if a pension plan covers two or more unrelated employers, it requires special language in the plan document applicable to 'multiple employer plans' as well."
Boutwell Fay LLP

Disability: The Underappreciated Risk
"Employers can help their employees by educating them ... and by offering and encouraging participation in group long-term disability insurance. Wellness programs that detect health risks before they become chronic conditions can reduce the risk of disability. And, thanks to regulations issued in 2014, it now may be easier for employers that sponsors DC plans to protect their workers from the short- and long-term financial ruin that often accompanies a disability."
Bryan, Pendleton, Swats and McAllister, LLC

Senate Confirms Jay Clayton as SEC Chairman
"Jay Clayton was approved Tuesday by the Senate to serve as chairman of the Securities and Exchange Commission. Mr. Clayton was approved by a 61-37 vote, with several Democrats supporting him. Commissioner Michael Piwowar has been serving as acting chairman since Mary Jo White departed in January."
Pensions & Investments

Executive Compensation
and Nonqualified Plans

IRS Ruling Underscores Need for NQDC Plans to Diligently Adhere to Special FICA Rules
"In the Chief Counsel Memorandum released earlier this year, the IRS indicated that it will not enter into closing agreements with employers that fail to subject NQDC to FICA taxes as required under the special timing rule in Section 3121(v)(2) of the tax code and the taxable years in which FICA taxation should have occurred are statutorily closed.... The application of the special timing rule in Section 3121(v)(2) is exceedingly complex, and ... it is not uncommon for employers to make mistakes."
Willis Towers Watson

Anatomy of Incentive Compensation (PDF)
"The purpose of any incentive plan is to motivate employees to behave in certain ways. The key to success is to carefully identify the employees to target, the desired behavior, the best way to motivate that behavior and any constraints based on the company's situation." [The article provides a checklist of items for consideration in designing a plan and a chart of various forms of incentive compensation.]
Husch Blackwell

Follow-Up on Incentive Plans and ERISA
"Whether an arrangement gives rise to the 'systematic' deferral of payment to termination or beyond depends on the facts and circumstances of the arrangement. Some of the relevant circumstances for the determination are: [1] Whether [the] arrangement's design results in a high percentage of bonus payouts being made at or near recipients' retirement age; [2] Whether the employer communicates the plan to employees as an arrangement intended to provide retirement or deferred income; [3] Whether the arrangement allows for payments of unvested amounts upon employment termination; [4] The length of the payout period; and [5] Whether the bonus payments, by operation of the plan, are made to another type of retirement account such as an IRA. Federal court decisions have produced different results based on the facts of the particular case."
Winston & Strawn 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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