Health & Welfare Plans Newsletter

August 24, 2018

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[Guidance Overview]

Editor's Pick New Tax Credit for Paid Leave: What Benefits Professionals Should Know

"For employers who do not provide paid leave, but are considering doing so, modeling the tax savings using the credit at different levels of paid leave (e.g., 50%, 75%, 100% of wages paid) is a logical next step. To implement the credit, employers must have the systems in place to identify and track those employees who have worked at least one year, and who received wages in the prior year equal to or below the 60% limit."
Verrill Dana LLP

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Person-Centered Strategies: Health Savings Accounts

"The HSA tax structure provides a number of opportunities for consumers to save for important health care expenses, to be prepared for medical emergencies, and even to plan for retirement down the road.... While anyone with an eligible HDHP can open and use an HSA, self-employed and business owners may particularly benefit from these types of plans.... HSAs have grown in popularity within the group market, and they remain an area that has a lot of opportunity for growth on the Exchanges and the individual market."
Centers for Medicare & Medicaid Services [CMS], U.S. Department of Health and Human Services [HHS]

Lifestyle Spending Accounts Add an Option to the Benefits Mix

"[Lifetime Spending Accounts (LSAs)] differ from other spending accounts in two key ways: [1] LSAs are funded by employers with money that is taxable as income to employees when they spend it, unlike the tax advantages of HSAs, FSAs and HRAs, for which withdrawn funds are not taxable. [2] Employers decide how employees can spend their LSA funds, and acceptable products and services are managed through the account vendor's system. Many employers see this ability to limit and direct employee spending of employer-provided money as a compelling reason to offer LSAs."
Society for Human Resource Management [SHRM]

IRS Explains Consequences of Employer's Tax Payments for Prior Year Fringe Benefits

"[IRS Chief Counsel Memorandum 2018-15] explains that the employer's satisfaction of its FICA and income tax withholding obligations in 2018 does not create additional compensation or wages for the employee for 2016. The employee receives no credit for the employer's belated payment of its income tax withholding liability, so the payment has no effect on the employee's 2016 income tax liability. The employer must report the employee's additional income for 2016 (the value of the taxable fringe benefit) on Form W-2c, but that form must not report the employer's payment as federal income tax withheld, or increase the employee's wages because of the employer's payment."
Thomson Reuters / EBIA

Shared Savings Programs Require Closer Inspection

"It used to be much easier to analyze the components of an [administrative services only (ASO)] arrangement with a health plan. It was mostly a matter of knowing the per employee per month (PEPM) fee and understanding the services and performance guarantees included. Today, however, an ASO arrangement is likely to include one or more shared savings programs -- and understanding their impact on plan cost and performance is not always a straightforward matter."
Mercer

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Prescription Medications Accounted for One in Four Dollars Spent by This Commercial Health Plan

"[O]verall national pharmaceutical spending ... is considered less relevant for health care cost containment, as it is dwarfed by national spending on hospital care. This may not be the case for commercial payers.... Between 2011 and 2016, spending net of rebates by this commercial health plan on outpatient prescription medications, including those administered in physicians' offices, has increased to a quarter of all health care spending, largely due to increasing prices of specialty medications."
Health Affairs

2018 State Legislation on High and Rising Drug Prices

"Following the passage of California's groundbreaking SB17 last year, Oregon and Connecticut lawmakers have followed suit to pass similar prescription drug price transparency laws. And in Maryland and Illinois, legislators aimed to push the envelope further with bills to set rates for prescription drugs across all payers in the state and to stop prescription drug price gouging, respectively."
Families USA

School-Related Parental Leave Laws

"California's law is most generous, providing up to 40 hours per year ... to participate in children's educational activities. Many of these state laws provide for leave beyond traditional school events or classroom activities including, for example, leave to find or enroll a child in a school or daycare facility or to attend a PTA event. Also, many of the laws also cover not only biological parents, but also those with legal custody, acting as a parent, or otherwise related to the student."
Polsinelli PC

Interaction of COBRA and Medicare: Just How Do Those Rules Work Again?

"COBRA can be affected by entitlement to Medicare and the interactions can be confusing -- that starts with the terminology around Medicare 'entitlement.' The question arises most often around an individual's 65th birthday. There is an expectation that COBRA can end automatically at age 65, but that is not necessarily the case."
Lockton

Typical Premiums and Out of Pocket Costs Before and After Becoming Covered by Medicare (PDF)

"[Results show] a significant decrease in average premiums when people age into Medicare plans at age 65. The average monthly premium for ACA coverage among individuals age 63 and 64 is $857 compared to $148 for Medicare Advantage, $161 for Original Medicare plus Part D, and $302 for Original Medicare plus Part D and Medicare Supplement."
eHealth

Expanded Short-Term Insurance: What Employers Need to Know

"[E]mployers can encourage employees to ask several questions of anyone offering an individual policy to make sure it provides the coverage that they need. Employers can also encourage employees to review the policy carefully."
HUB International

States Suing Over Association Health Plans Seek Quick Win

"Attorneys general from 12 states and the District of Columbia filed a motion for summary judgment Thursday arguing that the Trump administration's final rule on AHPs was an arbitrary and capricious effort to override the market structure established by the Affordable Care Act."
HealthLeaders Media

Two Key Ways to Limit Overbroad Discovery in Disability Cases

"Does an insurer's litigation history dating back 10 years justify overbroad discovery in an ERISA case? It might... Also, in each case you should reassess whether or not to argue for the arbitrary and capricious standard. Consider the adverse effects of pushing for application of the abuse of discretion standard... versus stipulating to the de novo standard. This can help limit discovery." [Black v. Hartford Life Ins. Co., No. 17-1785 (D. Or. Aug. 14, 2018)]
Lane Powell PC

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Lois Baker, J.D., President
David Rhett Baker, J.D., Editor and Publisher
Holly Horton, Business Manager

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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