Health & Welfare Plans Newsletter

October 13, 2017

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Health Services & Benefit Administrators, Inc
in CA

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[Official Guidance]

Text of CMS Notice of Discontinuance of Payments to Issues for Cost-Sharing Reductions (CSRs) (PDF)
"The Attorney General of the United States has provided [HHS] and the U.S. Department of the Treasury with the attached legal opinion regarding CSR payments made to issuers of qualified health plans. In light of that opinion -- and the absence of any other appropriation that could be used to fund CSR payments -- CSR payments to issuers must stop, effective immediately. CSR payments are prohibited unless and until a valid appropriation exists."
Centers for Medicare & Medicaid Services [CMS], U.S. Department of Health and Human Services [HHS]

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[Official Guidance]

IRS to Enforce Individual Coverage Reporting Requirement for 2018 Filing Season
"For the upcoming 2018 filing season, the IRS will not accept electronically filed tax returns where the taxpayer does not address the health coverage requirements of the [ACA]. The IRS will not accept the electronic tax return until the taxpayer indicates whether they had coverage, had an exemption or will make a shared responsibility payment. In addition, returns filed on paper that do not address the health coverage requirements may be suspended pending the receipt of additional information and any refunds may be delayed."
Internal Revenue Service [IRS]

[Guidance Overview]

HHS Issues Updates to Mandated Preventive Health Care Services for 2018
"[1] Coverage is required for a daily supplement containing 0.4 to 0.8 mg of folic acid for all women planning to becoming pregnant, or who are capable of pregnancy. [2] Screening for hearing loss in newborn infants is no longer required. [3] Screening for obesity in children and adolescents, six years of age and older, is mandated ... [4] Screening for preeclampsia in pregnant women with blood pressure measurements throughout pregnancy is mandated. [5] A revised immunization schedule for children and adolescents, age 18 or younger ... [is included, along with a] major overhaul of mandated preventive service requirements[.]"
Ogletree Deakins

[Guidance Overview]

Trump Executive Order Expands Opportunities for Healthier People to Exit ACA
"The fact sheet accompanying the order acknowledges that regulations will proceed through notice and comment rulemaking. This will likely take months. Indeed, rulemaking will likely be proceeded by studies by the affected departments, and any proposed and final rules will likely have to be reviewed by the Office of Management and Budget. Therefore, changes are unlikely to affect plans beginning on January 1 of 2018, although some changes may take effect mid-year."
Timothy Jost, in Health Affairs

[Guidance Overview]

Trump Administration Takes Action to Abide by the Law and Constitution, Discontinue CSR Payments
"After a thorough legal review by HHS, Treasury, OMB, and an opinion from the Attorney General, we believe that the last Administration overstepped the legal boundaries drawn by our Constitution. Congress has not appropriated money for CSRs, and we will discontinue these payments immediately."
U.S. Department of Health and Human Services [HHS]

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[Guidance Overview]

California Will Require Small Businesses to Provide 12 Weeks of Unpaid, Protected Leave for Baby Bonding Purposes
"The Act applies to private, state and municipal employers that directly employ 20 to 49 employees within 75 miles of each other. To be eligible, employees must have more than 12 months of service and at least 1,250 hours of service with the covered employer during the 12-month period prior to commencing leave.... [C]overed employers must provide 12 weeks of unpaid parental leave upon the request of eligible employees to bond with a new child within one year of the child's birth, adoption or foster care placement."
Littler

2017 End of Year Plan Sponsor 'To Do' List
"This List does not address the various health care reform proposals that have been the subject of debate in 2017 or the Executive Order that President Trump signed on October 12, 2017 titled 'Promoting Healthcare Choice and Competition Across the United States.' As of the date of this Employee Benefits Update, no significant changes have been made to the [ACA] since President Trump took office."
Snell & Wilmer

2017 PCORI Fee Announced: 13 Cent Increase
"The fee is reported only once a year on the second quarter Form 720. The payment amount is calculated by multiplying the 'applicable dollar amount' by the 'average number of covered lives' for the plan year. For policy years and plan years that end on or after October 1, 2017 and before October 1, 2018, the applicable dollar amount is $2.39, an increase of 13 cents from the prior period."
Cheiron

What If Employees Could Buy Coverage with Tax-Free HRA Contributions?
"Only about a third of employers -- of any size -- said they would not consider this option.... Would they be allowed to contribute enough so that employees could obtain coverage of comparable value? And would the individual market offer coverage that employees would want at prices they could afford? The majority of respondents to the survey said they would need to know the answers to these question before they could consider using an HRA for this purpose."
Mercer

Health Care Order May Open Options for Employers
"President Donald Trump's new executive order on health care could create new options for employers, including allowing more of them to fund accounts that workers can use to buy insurance. But companies are unlikely to have any new rules to act on this year -- and when they do, it is unclear whether many will offer these tax-favored accounts, known as Health Reimbursement Arrangements, or HRAs. Instead, companies will be in a holding pattern until the Trump administration draws up final rules for HRAs in the coming months."
The Wall Street Journal; subscription may be required

Rhode Island Governor Signs Legislation Guaranteeing Paid Sick Leave
"Starting in 2018, Rhode Island employees will be guaranteed three days of paid sick leave. The mandated paid sick time only applies to businesses with 18 or more employees. The number of guaranteed paid sick days will jump to four days in 2019, and five days in 2020."
Wolters Kluwer Law & Business

Massachusetts Federal Court Decision Highlights Importance of FMLA Training and Compliance
"[T]he court determined that an employer and a supervisor were liable for liquidated damages on an employee's interference claim under the Family and Medical Leave Act (FMLA), essentially doubling the employee's recovery. Employers should be aware of Boadi to avoid not only FMLA liability, but also heightened exposure under its liquidated damages provision." [Boadi v. Center for Human Development, Inc., No. 14-30162 (D. Mass. Sept. 21, 2017)]
Ogletree Deakins

Administration's Ending of Cost-Sharing Reduction Payments Likely to Roil Individual Markets
"The effect of terminating the payments has been well analyzed, including a report from the Congressional Budget Office. It will drive up premiums as insurers attempt to cover the cost of the reductions. As premiums go up, so will premium tax credits. Indeed, the government will probably pay more in premium tax credits than it saves in cost-sharing reduction payments. Individuals who earn too much to receive tax credits will be particularly hard hit by the premium increases. Some of these could decide to pursue new forms of coverage that might be made available under the measures announced in President Trump's October 12 executive order."
Health Affairs

[Opinion]

Actuaries Caution on Potential Risks and Effects of Health Care Executive Order on Consumers, Insurance Markets
"If healthier, lower-cost groups establish [association health plans (AHPs)] that operate under less restrictive regulatory requirements, it could leave higher-cost and less healthy groups in the traditional insurance market, driving up premiums. These adverse consequences could affect the individual market as well if groups are defined to include self-employed individuals. Similarly, short-term plans not subject to ACA requirements could attract lower-cost individuals, driving up premiums for ACA-compliant coverage."
American Academy of Actuaries

[Opinion]

Short-Term Health Plans: Still Bad for Consumers and the Individual Market
"Cost-sharing designs in short-term coverage leave members facing major, unpredictable financial risk.... When considering the deductible, the best-selling plans have out-of-pocket maximums ranging from $7,000 to $20,000 for just three months of coverage. In comparison, the ACA limits out-of-pocket maximums to $7,150 for the entire year."
The Commonwealth Fund

Benefits in General

[Official Guidance]

Text of IRS IR 2017-172: Disaster Relief for Victims of California Wildfires (PDF)
"Currently, the IRS is providing relief to seven California counties: Butte, Lake, Mendocino, Napa, Nevada, Sonoma and Yuba. Individuals and businesses in these localities, as well as firefighters and relief workers who live elsewhere, qualify for the extension. The agency will continue to closely monitor this disaster and may provide other relief to these and other affected localities."
Internal Revenue Service [IRS]

[Guidance Overview]

DOL Publishes Proposed Rule to Delay Implementation of New ERISA Disability Claims Regs
"[Some of the information] the DOL wants to consider ... [1] the number of disability claims that are filed and denial rates for such claims ... [2] how often plans rely on new or additional evidence or rationales during the claims review process ... [3] loss ratios and the breakdown of expenses (claims, sales, claims processing, etc.); [4] aggregate, average, and median benefits paid and ages of claimants; [5] the projected litigation costs associated with the new procedural requirements for disability claims provided in the Final Rule; [6] the number of new claims that will be granted that, but for the provisions in the Final Rule, would have been denied, and the value of those benefits[.]"
Lane Powell PC

President Trump Nominates Preston Rutledge to be an Assistant Secretary of Labor, Employee Benefits Security Administration
"Mr. Rutledge currently serves as senior tax and benefits counsel on the Majority Tax Staff of the U.S. Senate Finance Committee where his responsibilities include employee benefits, retirement issues, tax-exempt organizations, health tax issues, and the tax provisions of the [ACA]."
The White House

Fake Insurance Tax Form Scam Aims at Stealing Data from Tax Pros, Clients
"There may be variations but here's how one scam works: The cybercriminal, impersonating a legitimate cloud-based storage provider, entices a tax professional with a phishing email. The tax professional, thinking they are interacting with the legitimate cloud-based storage provider, provides their email credentials including username and password. With access to the tax professional's account, the cybercriminal steals client email addresses. The cybercriminal then impersonates the tax professional and sends emails to their clients, attaching a fake IRS insurance form and requesting that the form be completed and returned."
Internal Revenue Service [IRS]

IRS Warns Taxpayers, Tax Pros of New E-Services Scam
"The scam email claims to be from 'e-Services Registration' and uses 'Important Update about Your e-Services Account' in the subject line. It states, in part, 'We are rolling out a new user agreement and all registered users must accept its revised terms to have access to e-Services and its products.' It asks the individual to review and accept the agreement but takes them to a fake site instead."
Internal Revenue Service [IRS]

Loose Language Makes Second-Level Appeal a Right, Not an Obligation
"The plan administrator asserted that the lawsuit was premature because the claimant had not completed the plan's required second-level appeal to the appeals committee and thus had not exhausted her administrative remedies ... The claimant's appeal was made to -- and denied by -- a contracted claims administrator, not the committee. The court concluded that the claimant's suit was permitted because nothing in the plan's communications expressly required second-level appeals or an appeal to the committee. The court's analysis focused on the summary plan description (SPD) and the letter denying the claimant's appeal." [Laura B. v. United Health Group Co., No. 16-1639 (N.D. Cal. Aug. 25, 2017)]
Thomson Reuters / EBIA

Federal District Court Holds the Ministers Housing Allowance Unconstitutional (PDF)
"Code section 107(2) provides that a minister may exclude from his or her taxable income 'the rental allowance paid to him as part of his compensation ...' Historically, the IRS has interpreted this to apply to deferred compensation as well, so this could have impact on church retirement plans." [Gaylor v. Mnuchin, No. 16-215 (W.D. Wisc. Oct. 6, 2017)]
Groom Law Group

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"Employer offers HDHP with maximum family deductible and out-of-pocket of $13,100. Employer funds maximum HSA for family coverage of $6,750. Can employer also offer a Medical Expense Reimbursement Plan for the spread?"
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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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