Health & Welfare Plans Newsletter

August 17, 2018

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DB / DC Administrator
Karel-Gordon & Associates
in IL, Telecommute

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Pentegra
in NC

ERISA Attorney
Illinois Law Firm / TPA Firm
Telecommute

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Prime Pensions, Inc.
in NJ

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[Official Guidance]

Text of IRS PLR 201833014: Amendment of Welfare Benefit Trust to Provide Benefits for Active as Well as Retired Employees Does Not Cause Disallowance of Deduction for Prior Contributions (PDF)

"Taxpayer took deductions in previous years for contributions to Trust ... The amendment of Trust will require amounts that were originally contributed to provide for the payment of postretirement health benefits to collectively bargained retirees to be used instead to provide for the payment of health benefits to active collectively bargained employees. The amendment of Trust to transfer assets to a separate subaccount to provide for the payment of health benefits to active collectively bargained employees is not fundamentally inconsistent with the premise on which the Taxpayer's earlier deduction was based because Trust continues to be a separate welfare benefit fund under a collective bargaining agreement within the meaning of section 419A(f)(5) of the Code. Therefore, the tax benefit rule does not apply." [Issued May 10, 2018, released Aug. 17, 2018.]
Internal Revenue Service [IRS]

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[Guidance Overview]

Agencies Issue Final Rule Expanding Duration of Short-Term Limited-Duration Health Insurance

"[T]he Final Regulations permit renewals and extensions with the same carrier for a period of up to thirty-six months in total.... [T]he preamble to the final regulations specifically provides that an individual may utilize short-term limited-duration insurance for more than thirty-six months so long as no one carrier provides coverage for longer than a consecutive thirty-six month period in total."
Joint Committee on Employee Benefits [JCEB], American Bar Association

Parity Determination Requires Discovery to Detail Claim Adjudication Process, District Court Rules

"The [court] denied a motion to dismiss by Harvard Pilgrim Health Care Insurance Company, finding that the process and factors by which a nonquantitative treatment limitation could be applied to both mental health benefits and medical/surgical benefits need to be evaluated after discovery to determine whether a violation of mental health parity requirements existed. The court, however, dismissed claims under the [ACA] where a private right of action was not permitted." [Vorpahl v. Harvard Pilgrim Health Ins. Co., No. 17-10844 (D. Mass. July 20, 2018)]
Wolters Kluwer Law & Business

San Antonio City Council Passes Paid Sick Leave Ordinance

"The San Antonio paid sick leave ordinance will require all employers except government entities to provide employees with one hour of earned leave -- to be used for an illness or to care for a sick family member -- for every 34 hours worked. Employers will have to comply with the ordinance starting Aug. 1, 2019, unless they have fewer than five employees, in which case the compliance date is Aug. 1, 2021."
Bloomberg BNA

Ohio Cracks Down on PBM Contracts After Auditors Find $225 Million Spread Pricing in Medicaid

"Spread pricing models allow PBMs to generate revenue for themselves by charging Medicaid (and thus, taxpayers) more than the amount they reimburse pharmacies.... [Ohio] Auditor of State Dave Yost released findings that PBMs charged Medicaid not only a nearly 9% spread across all drugs but also a 31% spread among generic drug prescriptions filled between April 1, 2017 and March 31, 2018.... PBMs collected more than $2.5 billion from plans during that period, including $662.7 million from generic drugs and almost $1.25 billion from brand-name drugs. Of the $2.5 billion, nearly $225 million was generated through spread pricing, including $208 million from prescriptions for generics."
FierceHealthcare

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Why Investigating a Health Plan's Grandfathered Status Matters to Providers

"This article explores the ACA's reimbursement scheme, the effect that grandfathering has and has had on reimbursement to providers, and the circumstances under which a plan may lose its grandfathered status.... In certain instances where an insurer is exempt from such cost-sharing protections, a provider's recovery could be effectively eliminated, as the burden of payment would be shifted to patients who are often unable to pay."
Bloomberg Law

CMS Administrator Calls on Insurers to Use APIs

"[CMS] Administrator Seema Verma called on insurers to follow the agency's lead and jump on board the open standards train.... In April, shortly after unveiling Blue Button 2.0, CMS said it is considering a mandate that would require payers to use data platforms that 'meet or exceed the capabilities of CMS's Blue Button 2.0. Verma's warning shot on Monday indicated those requirements may be on the way."
FierceHealthcare

Benefits in General

Benefits Considerations for Seasonal Employees Transitioning to Ongoing Positions

"Here are several things to keep in mind when hiring or rehiring a seasonal employee into a year-round, benefits-eligible role. [1] Age of participation.... [2] Credit for retirement plan eligibility service.... [3] Health plan measurement periods.... [4] Disclosures."
Morgan Lewis

Using Social Media for Employee Benefits Communication

"[1] Survey your employees.... [2] Select the platform(s) that make the most sense for your employees and create a strategy for how you'll use it, including a communications plan for rolling it out.... [3] Craft a company social media policy that defines appropriate content and conduct.... [4] Consult with your legal team to draft a terms of agreement and privacy policy ... [5] [A]ssign a human resources staff member or marketing employee to monitor and respond to employee questions and concerns in a timely manner.... [6] Develop a monthly communication calendar to keep your content organized and build in dates to ensure you don't miss key opportunities to post timely content."
Willis Towers Watson

Tips to Enliven Your Open Enrollment Communication (PDF)

"[1] [I]nterject some humor ... [2] Freshness can be inviting and says 'Read me!' to your employees.... [3] Have a goal to work toward and to be specific about what you want to achieve ... [4] Is your current enrollment guide a little bit like the old phone book? Too many pages? In a format few people value? Every year? ... [5] [Develop] a narrative that links the employee experience to the organization's purpose and position in the market."
Willis Towers Watson

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David Rhett Baker, J.D., Editor and Publisher
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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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