Health & Welfare Plans Newsletter

August 7, 2018

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[Guidance Overview]

DOL Releases Final Association Health Plan Rule

"The final rule does not supplant the Department's prior guidance ... regarding the establishment of AHPs, but instead provides an additional basis for meeting the definition of 'employer' under ERISA. Both existing and new employer groups or associations that meet the criteria in the prior guidance can sponsor an AHP. This means there will be two ways in which an association or group can sponsor an AHP[.]"
Trucker Huss

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GM Aligns with Henry Ford Health System in Attempt to Cut Coverage Costs and Improve Quality of Care

"The auto maker's agreement with Henry Ford Health System covers everything from doctor visits to surgical procedures. By signing a contract directly with one health-care provider ... GM says it can offer a plan that costs employees less than other options while also promising special customer-service perks and quality standards."
The Wall Street Journal; subscription may be required

Do Drug Discounts Contribute to Rising Prices?

"The National Academy of Sciences noted that pharmaceutical manufacturers offer rebates to PBMs, but that we don't reliably know the amount of those rebates, and what part of the rebate contributes to lower cost for patients versus higher profits for PBMs."
Managed Healthcare

Editor's Pick Large U.S. Employers Eye Changes to Health Care Delivery System as Cost to Provide Health Benefits Nears $15,000 per Employee

"[E]mployers project the total cost of providing medical and pharmacy benefits will rise 5% for the sixth consecutive year in 2019. Including premiums and out-of-pocket costs for employees and dependents, the total cost of health care is estimated to be $14,099 per employee this year, and projected to rise to an average of $14,800 in 2019. Employers will cover roughly 70% of those costs; employees will bear about 30%. Employers cited high cost claims, specialty pharmacy, and specific diseases as key drivers of cost increases."
National Business Group on Health [NBGH]

Reducing Healthcare Spending with Payment and Benefits Innovation

"With close to 20% of healthcare spend that could be saved by deploying a combination of payment and benefits innovation, what's stopping more employers from aggressively pursuing these strategies? ... First, limited scope programs generally fail to produce enough savings to justify the effort.... Second, there is the unwillingness or inability of many third-party payers to implement bundled payment programs[.]"
Employee Benefit News

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Expanding Multiemployer Health Plan Coverage to Non-Bargaining Unit Employees

"Employers that contribute to multiemployer health plans on behalf of unionized employees often find it difficult to offer competitive health coverage to their nonunion employees. This is particularly true where an employer's nonunion workforce is small compared to its union workforce.... [A] large multiemployer health plan can typically offer competitive coverage because of the size of the covered group. And as long as some basic requirements are met, a multiemployer plan can extend the plan's coverage to (or create an entirely different tier of coverage for) employees who are not performing bargaining unit work."
Morgan Lewis

Is Level Funding a Viable Alternative to Small Group Insurance?

"[A] self-insured plan with no risk corridor looks a lot like a fully insured plan with insurance that is not subject to the laws governing health insurance companies.... [N]early half the states have laws or regulations that prohibit stop loss carriers from issuing policies that do not include a minimum risk corridor ... [O]ne of the more attractive features of level funding is the prospect that an employer may receive a refund at the end of the year if claims are lower than expected.... If the plan is considered funded, then the entire amount of the refund will be deemed to be a plan asset [and] must be used to provide ERISA-type benefits."
Compliance Dashboard

Editor's Pick A View into the Future of Employer-Provided Retiree Healthcare Benefits

"Employers can reasonably expect that, in this environment, their employees will be reluctant to leave behind active-employee coverage... [It] may simply be easier for employers to consider a retiree healthcare plan as the most expedient means to achieve corporate goals. [To] the extent a traditional retiree healthcare program remains too unpalatable, then employers may consider alternatives, such as Retiree-Only Health Reimbursement Accounts."
Trucker Huss

ACA Marketplace Premiums Grew More Rapidly in Areas with Monopoly Insurers Than in Areas with More Competition

"In 2018, Marketplace premiums were 50 percent ($180) higher, on average, in rating areas with monopolist insurers, compared to those with more than two insurers. This was driven by large premium increases for the monopolist insurers' lowest-cost plans."
Health Affairs

Benefits in General

Court Provides Tips on Effective Use of Video Surveillance in Disability Claim Decisions

"For the video surveillance to be meaningful, inconsistencies between the plaintiff's assessment and the actual level of activity 'must be more than minor.' ... The video in this case was helpful because it 'showed Plaintiff partaking in activities for hours at a time.' ... An independent reviewing physician's opinion may be given greater weight when relying on a medical record review and video surveillance." [Eaton v. Reliance Standard Life Ins. Co., No. 16-2764 (W.D. Tenn. July 31, 2018)]
Lane Powell PC

Ninth Circuit: ERISA Section 502(a)(2) Claims Beyond Scope of Employees' Arbitration Agreements

"[T]he district court denied USC's motion to compel arbitration, holding that the arbitration agreements were unenforceable as to the plaintiffs' ERISA claims because the USC Plans were the real parties in interest to Section 502(a)(2) claims, and the USC Plans had not consented to arbitration.... The Ninth Circuit [held] that the plaintiffs' ERISA Section 502(a)(2) claims asserted on behalf of the USC Plans did not fall within the scope of the plaintiffs' individual arbitration agreements." [Munro v. Univ. of Southern Calif., No. 17-55550 (9th Cir. July 24, 2018)]
Morgan Lewis

Ninth Circuit Affirms Denial of Motion to Compel Arbitration of ERISA Action

"[E]mployers should revisit their employment contracts and consider broadening the arbitration clauses and class action waivers in them to apply specifically to instances where an employee is asserting claims on behalf of an ERISA plan and its participants, and to apply specifically to breach of fiduciary claims asserted by an employee in any capacity against the employer as a plan administrator." [Munro v. Univ. of Southern Calif., No. 17-55550 (9th Cir. July 24, 2018)]
Bradley

Selected Discussions
on the BenefitsLink Message Boards

Married Child is Age 24; Eligible for Parent's FSA?

If a 24-year-old gets married, are they still eligible for a parent's FSA? Even if they are no longer a tax dependent?
BenefitsLink Message Boards

Plan Document Signed Months after Effective Date

A health plan under ERISA is supposed to go into effect 01/01/18. The Plan Document isn't finalized or signed by the Plan until 07/15/18, yet it claims to be "retroactively" effective back to 01/01/18. In the meantime, claims have been paid and denied based on a Plan Document that was never signed or distributed to Claimants until after it was signed. Is this on the up-and-up, or not?
BenefitsLink Message Boards

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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 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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