Health & Welfare Plans Newsletter

May 12, 2017

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[Official Guidance]

Text of IRS CCM 201719025: Tax Treatment of Benefits Paid by Self-Funded Health Plans (PDF)
10 pages; dated Apr. 24, 2017, released May 12, 2017. "Is a benefit paid under an employer-provided self-funded health plan included in income and wages if the average amounts received by the employees for participating in a health-related activity predictably exceed the after-tax contributions by the employees? ... Yes, the amounts are included in income and wages for reasons including, but not limited to, one or both of the reasons listed ... As a result, the exclusion from gross income under section 104(a)(3) does not apply to the amounts received by the employees."
Internal Revenue Service [IRS]

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Three Approaches to Controlling Rx Costs
"Analyze the data on prescription drug spend in your plan ... Educate employees on what they can do to lower their Rx costs ... [C]onsider working with an expert to conduct a specialty diagnostic of medical and pharmacy plans to assess the current state and identify areas for improved management."
Mercer

Employers Continue to Address Health Benefit Cost and Workplace Programs in Uncertain Times
"There's high priority by 73% of employers to increase engagement in their programs, 51% will offer telemedicine services, 55% of employers are committed to create more effective communications and a culture of health (47%), and 43% see managing specialty drugs as their highest priority. To reduce costs, employers are primarily focused on offering high deductible health plans (HDHP) (69%), targeting wellness programs (58%) and increasing employee cost share (49%)."
Midwest Business Group on Health

How Health Savings Accounts Measure Up
"An HSA is offered in 24.6 percent of plans, a 21.8 percent increase from five years ago. HSA enrollment is at 17 percent, a 25.9 percent increase from 2015, and nearly a 140 percent increase from five years ago. The average employer contribution to an HSA is $474 for a single employee (down 3.5 percent from 2015 and 17.6 percent from five years ago) and $801 for a family (down 9.2 percent from last year and 13.7 percent from five years ago)."
United Benefit Advisors

Cigna Wins Judge's Approval to Walk Away from Anthem Merger
"Delaware Chancery Judge Travis Laster said Anthem didn't deserve a 60-day extension to an earlier order barring Cigna's exit because it was 'incredibly unlikely,' the company could close the deal. However, the judge said there was significant evidence Cigna may have violated the merger agreement by dragging its feet on antitrust concerns, which could entitle Anthem to 'potentially massive damages.' "
Bloomberg

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Online Learning Course: HIPAA Privacy

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No Standing for Union Health Plan Claims Against Sanofi for Free Drug Sample Scheme
"A union health plan lacked standing to bring state unfair trade practices claims against a pharmaceutical company it charged caused monetary damage through a free samples scheme involving the osteoarthritis medication Hyalgan, and a diabetes drug switching scheme, because they failed to specifically allege that the plan or any of its beneficiaries paid, let alone overpaid, for the drug in the relevant states during the relevant time period[.]" [Plumbers' Local Union No. 690 Health Plan v. Sanofi, S.A., No. 15-956 (D.N.J. May 4, 2017)]
Wolters Kluwer

Rising Health Benefit Costs Still Outpace Overall Inflation
"The pace of the rising cost that insurers charge for employee health benefits in the U.S., having slowed a bit last year, looks to be leveling off at about 7.5 percent for 2017. That figure does not take into account benefit plan design changes that are helping keep down the cost increases that employers will actually pay[.]"
Society for Human Resource Management [SHRM]

NHS Hospitals Across England Hit by Large-Scale Cyber-Attack
"The IT systems of NHS sites across the country appear to have been simultaneously hit, with a pop-up message demanding a ransom in exchange for access to the PCs.... Details of patient records and appointment schedules, as well as internal phone lines and emails, have all been rendered inaccessible."
The Guardian

[Opinion]

NCPA Urges Senate to Retain Key Prescription Drug Benefit Provisions of ACA
"[P]harmacist-provided prescription drug therapy is 'incredibly cost effective' in helping improve medication adherence by patients, which in turn 'improves health outcomes and reduces much more expensive interventions, such as emergency room treatment.' ... [Up] to $290 billion in annual health care expenses result from the lack of medication adherence ... [A] leading predictor of adherence is a patient's proximity to and relationship with a pharmacist."
National Community Pharmacists Association [NCPA]

[Opinion]

The Bipartisan 'Single Payer' Solution: Medicare Advantage Premium Support for All
"[T]here are a variety of deep-seated concerns with a single-payer approach that have kept it out of mainstream political discourse so far.... It will necessitate massive tax increases; it will cut reimbursement for services to unsustainably low rates; it will be lower quality than the employer-sponsored coverage most Americans currently have; it will consolidate power into the hands of a small number of bureaucrats; etc., etc.... [A] 'unified', market-driven, federally regulated, privately delivered system need not possess any of these objectionable attributes."
Billy Wynne in Health Affairs

Benefits in General

[Guidance Overview]

Action Required Before Year-End: Disability Plans Claims and Appeals Procedures
"The newly issued final regulations took effect on January 18, 2017 and will apply to all disability benefits claims filed on or after January 1, 2018.... [Employers should] work with their disability plan insurance carriers, third party administrators, and attorneys to ensure that all underlying disability plans and associated documentation (including any ERISA wrap plans, Code section 125 cafeteria plans, and claims denial forms) are reviewed and updated to ensure legal compliance with the requirements for claims filings beginning January 1, 2018. The final regulations are lengthy, comprehensive, and require detailed review and analysis."
Fraser Trebilcock

Recent Developments in U.S. Law Affecting Pension and OPEB Claims in Restructurings
27 pages. "From theory to practice, planning to enforcement, the answers to 42 of the most frequently asked questions can help you prepare, cope or respond to a restructuring.... Understanding the treatment of pension and OPEB obligations in bankruptcy continues to be important in today's business environment and the law relating to the treatment of these obligations continues to evolve."
Latham & Watkins

Executive Compensation
and Nonqualified Plans

SEC Charges CEO With Failing to Disclose Perks to Shareholders
"[T]he SEC's investigation found that without disclosing information to investors as required, MDC Partners paid for [the CEO's] personal use of private airplanes as well as charitable donations in his name, yacht and sports car expenses, cosmetic surgery, and a wide range of other perks ... [totaling] an additional $11.285 million in perks beyond his disclosed benefits and $500,000 annual allowances. He has since resigned and returned $11.285 million to the company."
U.S. Securities and Exchange Commission [SEC]

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Lois Baker, J.D., President  loisbaker@benefitslink.com
David Rhett Baker, J.D., Editor and Publisher  davebaker@benefitslink.com
Holly Horton, Business Manager  hollyhorton@benefitslink.com

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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