Health & Welfare Plans Newsletter

July 10, 2018

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[Guidance Overview]

Association Health Plans: Federal Rule Broadens Opportunities But Some States Clamp Down

"The final rule recognizes that the DOL and many States regulate MEWAs ... The final rule, however, cautions that exceptions to ERISA's preemption provisions, at ERISA Section 514(b)(6), provide a potential future mechanism for preempting State insurance laws that the DOL deems go too far in regulating self-funded AHPs in ways that interfere with the goals of the final rule."
Epstein Becker Green

[Advert.]

SALGBA Regional Conference for public sector benefit professionals

Sponsored by SALGBA [State and Local Government Benefits Association]

SALGBA is holding a Regional Conference August 20-21 in Huntsville, AL. The conference is being hosted by the City of Huntsville. More information please visit www.salgba.org.


Three Things About the ACA Employers Need to Focus on Now

"[1] The IRS is currently assessing employer penalties using '226-J' Letters ... [2] ACA reporting requirements still apply ... [3] The 'Cadillac Tax' is still looming."
Hanson Bridgett LLP

DC Requires People to Buy Health Insurance or Risk Property Seizure

"[T]he District of Columbia City Council [recently] approved a requirement for all DC residents to purchase health insurance. The mandate would take effect in January, right when the federal mandate penalty drops to $0 ... .. [If] a district resident won't buy 'government-approved' health insurance, and won't (or can't) pay the tax for not doing so, the district has the right to seize, and sell, that person's property."
The Federalist

Specialty Drug Coverage Varies Across Commercial Health Plans

"Across 3,417 decisions, 16 percent of the 302 drug-indication pairs were covered the same way by all of the health plans, and 48 percent were covered the same way by 75 percent of the plans.... Health plans restricted coverage of drugs indicated for cancer less often than they did coverage of drugs indicated for other diseases.... Variations in coverage have implications for patients' access to treatment and health system costs."
Health Affairs

HHS Secretary Says Changes Are Coming in Bid to Get a Handle on Drug Prices

"[HHS] Secretary Alex Azar promised a hospital industry group ... that changes are coming to the popular drug discount program known as 340B.... In particular, he said, further oversight is needed to improve transparency to ensure the program benefits patients, not hospitals. But Azar offered few details on what specific changes the agency is considering for the 340B program."
FierceHealthcare

CMS Summary Report on Permanent Risk Adjustment Transfers for the 2017 Benefit Year (PDF)

36 pages. "A total of 654 issuers participated in the risk adjustment program for the 2017 benefit year, of which 628 received a risk adjustment transfer, and 27 received a default risk adjustment charge in at least one risk pool.... Risk adjustment transfers as a percent of premiums slightly decreased compared to the 2016 benefit year.... Amount of paid claims is strongly correlated with risk adjustment transfers.... Risk scores overall declined by approximately 5 percent in the individual non-catastrophic risk pool and 6 percent in the small group risk pool."
Centers for Medicare & Medicaid Services [CMS], U.S. Department of Health and Human Services [HHS]

Frozen ACA Risk Adjustments Would Hit Some Insurers Harder Than Others

"In the event that the delay in 2017 risk-adjustments becomes permanent, Kaiser Pemanente stands to gain the most ... [The] company was expected to owe $928 million for 2017 ACA risk adjustments. Molina Healthcare came in second, owing $853 million. Centene and Fidelis ranked third, owing $689 million.... On the opposite end of the spectrum, the biggest losers would be Anthem, which expects to receive $522 million; Blue Cross Blue Shield of Florida, which expected to receive $618 million; Health Care Service Corp., which expected to receive $640 million; and Blue Shield of California, which expected a $696 million payout."
HealthLeaders Media

'Pawternity' Leave Acknowledges Pet Owners' Needs

"Millennials are the primary pet-owning generation, slightly edging out Baby Boomers (35 percent and 32 percent, respectively ... Organizations that don't allow pets in the workplace may still offer pet-supportive benefits -- pet health insurance, pet bereavement leave, time off to take a pet to the vet ... That can translate into engagement and retention."
Society for Human Resource Management [SHRM]

[Opinion]

The Health Insurance Marketplaces Likely Will Survive

"[P]remiums in every state have increased since 2015, but in about half of states, enrollment has also increased, and there is no apparent relationship between premium increases and enrollment changes. Overall, enrollment has not declined substantially, so it does not appear that large numbers of healthy people are exiting the Marketplaces, and the concern that self-sustaining premium increases will lead to discontinuation of the Marketplaces is not warranted."
The JAMA Network

Benefits in General

[Official Guidance]

Text of IRS Disaster Relief Notice TX-2018-05, for Victims of Severe Storms and Flooding in Texas

"Victims of severe storms and flooding that began on June 19, 2018 in parts of Texas may qualify for tax relief from the [IRS].... Individuals who reside or have a business in Cameron and Hidalgo counties may qualify for tax relief.... certain deadlines falling on or after June 19, 2018 and before Oct. 31, 2018, are granted additional time to file through Oct. 31, 2018."
Internal Revenue Service [IRS]

Executive Compensation
and Nonqualified Plans

A Key Threshold Is Increased for Private Company Equity Compensation

"Many private companies restrict their equity compensation grants so as to stay within [the SEC Rule 701] $5 million limit and thereby avoid the requirement to disclose confidential financial and other information about the company, even if that means offering less equity to employees than the owners might otherwise like to provide.... Section 507 of the [Economic Growth, Regulatory Relief, and Consumer Protection Act, signed into law on May 24,] directs the SEC to revise Rule 701(e) within 60 days of enactment to increase this amount to $10 million and thereafter to index it for inflation every five years[.]"
Willis Towers Watson

How Do I Report Non-Qualified Plan or Severance Payments to a Former Employee?

"[If] the employer makes any non-qualified or severance payments to a person that are connected with or result from employee status, then such payments should be reported on Form W-2. That requirement applies regardless of when those payments are made (whether at termination or many years after).... [S]uch payments only belong on a Form 1099-MISC if the individual earned or became entitled to those amounts as a result of non-employee status, such as service as a non-employee director or independent contractor."
Foley & Lardner LLP

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BenefitsLink Health & Welfare Plans Newsletter, ISSN no. 1536-9595. Copyright 2018 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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