Health & Welfare Plans Newsletter

May 31, 2017

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[Guidance Overview]

IRS Issues Warning on Tax Treatment of Wellness Program Rewards
"[W]hile benefits received from a proper medical plan may be tax-free (under IRC Sections 104-106) and certain wellness program rewards such as reduced premiums can be tax-free under IRC Section 105, when an arrangement is structured so that there is no risk of premiums exceeding the value of benefits, then the arrangement is not the type of 'insurance' that can provide tax free benefits."
Carlton Fields

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Paternity Leave Stigma at Law Firms Lifting, Ever So Slowly
"Although research has suggested that the implied message inside many firms is for men to cut short their paternity leave -- or face a stigma -- some dads ... say they're seeing more support from their colleagues to take time off. They're also benefiting from an increasing base of other dads at their firms who have forged a path to make paternity leave more mainstream."
The Legal Intelligencer; subscription may be required

Fourth Circuit: Filling Employee's Position During Leave and Re-Assigning Employee to a Different But Equivalent Position After Leave Is Okay Under the FMLA
"In upholding the trial court's ruling, the Fourth Circuit noted that, under the FMLA, the employer can restore an employee either to his original position or to an equivalent position. The FMLA does not indicate a preference for one option over the other ... The Fourth Circuit also agreed with the trial court that the plaintiff's new position was 'equivalent' to his pre-leave position because the plaintiff continued to receive his same salary ... and was still eligible for bonuses; continued to enjoy the same health benefits; had the same worksite; held the same job title ... still reported to a Vice President; and had the same primary duty of business development in both roles." [Waag v. Sotera Defense Solutions, Inc., No. 15-2521 (4th Cir. May 16, 2017)]
Seyfarth Shaw LLP

FMLA: How to Verify That Employees Are Truly 'Caring For' Family Members
"You should ask what the primary purpose for the employee's leave is. Merely visiting a sick family member doesn't satisfy the 'care for' standard. Inquire about whom the employee is caring for so you can determine if that individual is a covered family member under the FMLA. You should also ask how the employee will be providing care to the family member. That will help you understand whether the employee is providing physical or psychological care or both."
HRDailyAdvisor

Maryland Governor Vetoes Paid Sick Leave Law
"[H]ad the Act been approved by Governor Hogan, it would have required employers with 15 or more employees to provide their employees with 40 hours of paid sick and safe leave annually beginning on January 1, 2018. Smaller employers (those employers with 14 or fewer employees) would have been required to provide their employees with 40 hours of unpaid sick and safe leave annually."
Proskauer's Law and the Workplace

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Telemedicine: Proceed With Caution
"Employers who adopt a telemedicine program alongside a high-deductible health plan (HDHP) need to be sure they do not inadvertently disqualify their covered employees from HSA eligibility.... Employers offering access to a telemedicine program to all employees regardless of group health plan enrollment could inadvertently create a separate ERISA group health plan."
Fisher Phillips

Prescription Drug Price Rebates May Raise Out-of-Pocket and Federal Spending
"Proponents argue that rebates result from vigorous negotiations that help lower overall drug costs. Critics argue that rebates have perversely increased the costs patients pay out of pocket, as well as the costs for Medicare as a whole. This [article] discusses how the availability of rebates for drugs covered by the Medicare Part D program may raise costs for patients and Medicare while increasing the profits of Part D plan sponsors and pharmaceutical manufacturers. Two policy alternatives are herein proposed that would reconfigure cost sharing to lower patient out-of-pocket costs and reduce cost shifting to Medicare."
The JAMA Network

Insurers Digging Through the Numbers on Oncology Treatments
"Based on a Cigna study, less than 1/2 of the oncology drugs approved from 2009-2014 have a known survival benefit. There are numerous examples. One is a regime of 5-FU + Leucovorin at a cost of $5,000 per treatment with an estimated survival outcome of 12 months versus the drug Xeloda which costs $30,000 and estimates survival at 13.2 months."
Frenkel Benefits

Issues for Employers as Health Care Legislation Moves to the Senate
"The repeal of the employer mandate, the replacement of the individual mandate with a continuous coverage requirement, the delay of the Cadillac tax, and changes to requirements for individual market coverage will affect the choices available to private sector employers. Now that the Senate is drafting its own bill, employers will want to understand their stake in the legislation."
Jones Day

CRS Report on H.R. 1628: The American Health Care Act (AHCA) (PDF)
72 pages. "This report contains three tables that, together, provide an overview of the AHCA provisions, as amended by the five manager's amendments and the amendment referenced in H.Res. 254. Table 1 includes provisions that apply to the private health insurance market, Table 2 includes provisions that affect the Medicaid program, and Table 3 includes provisions related to public health and taxes. Each table contains a column identifying whether the AHCA provision is related to an ACA provision (e.g., whether the AHCA provision repeals an ACA-related provision).... [T]he report [also] includes more detailed summaries of each AHCA provision and two graphics showing the effective dates of AHCA provisions." [Report R44785, updated May 26, 2017]
Congressional Research Service

Growing Profits from America's Largest Health Insurers
"Aetna, Anthem, Cigna, Humana, and UnitedHealth Group -- the big five for-profit insurers -- cumulatively collected $4.5 billion in net earnings in the first three months of 2017. Despite all the noise that they were losing money in the ACA marketplaces, the was by far the biggest first-quarter haul for the group since the exchanges went live in 2014."
WellNet

Humana, Aetna Not Viewed Less Favorably for Exiting ACA Exchanges
"Many insurers -- bracing for the possibility the Trump administration may end cost-sharing reduction payments that they are owed under the ACA -- are planning steep premium increases next year or have chosen to exit some state exchanges. But Aetna and Humana are viewed more favorably than several of their major rivals, which still plan to continue offering health plans on the Obamacare exchanges next year[.]"
Morning Consult

California's New Single-Payer Proposal Embraces Some Costly Old Ways
"[T]he $400 billion single-payer proposal that's advancing in the California legislature would restore fee-for-service to its once-dominant perch in California. A state Senate analysis released last week warned that fee-for-service and other provisions in the legislation would 'strongly limit the state's ability to control costs.' Cost containment will be key in persuading lawmakers and the public to support the increased taxes that would be necessary to finance this ambitious, universal health care system for 39 million Californians."
Kaiser Health News

Benefits in General

Court Supports Plans' Freedom to Craft Own Process for Beneficiary Designations
"The problem with the doctrine of substantial compliance is that it undermines the preference for straightforward administrative rules favored by the Supreme Court ... because it leaves the lower court to decide issues such as what level of compliance is 'good enough' to express the plan participant's intent to change a beneficiary.... [One recent case] stated that under the federal common law equitable doctrine of substantial compliance developed in the absence of specific ERISA statutory provisions on beneficiaries, a beneficiary designation should be honored if there is evidence that a participant intended to make a change and the participant takes action similar to the action required by the plan." [Ruiz v. Publix Super Markets, Inc., No. 17-135 (M.D. Fla. March 30, 2017)]
Compensation.BLR.com

Press Releases

Fiduciary Benchmarks Corporate Expansion
Fiduciary Benchmarks, Inc.

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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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