Health & Welfare Plans Newsletter

December 7, 2018

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[Official Guidance]

Text of Updated IRS FAQs for Section 45S Employer Credit for Paid Family and Medical Leave

Eleven Q&As have been added to FAQs originally issued in April, including: "[1] What's the general rule for when an employer's written policy must be in place? ... [2] For the first taxable year of an employer beginning after December 31, 2017, what's the transition rule for when the employer's written policy must be in place? ... [3] What must an employer's written leave policy include? ... [4] Is an employer not subject to the FMLA eligible to claim the credit? ... [5] Can paid leave allowed under an employer's short-term disability program be characterized as family and medical leave? ... [6] How does an employer figure whether an employee has been employed for one year or more? ... [7] In figuring the rate of payment under the employer's written policy, is leave paid by a state or local government or required by state or local law considered? ... [8] Are employers aggregated for purposes of calculating the credit?"
Internal Revenue Service [IRS]

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[Guidance Overview]

Washington State Family and Medical Leave Rules Require Action Beginning January 2019

"To comply with the law, nearly all Washington employers must ... [b]egin collecting premiums from employee paychecks beginning Jan. 1, 2019, unless the employer will pay those premiums for its employees.... Benefits are provided through a state-administered program, funded by employer and employee premium payments, but employers have the option to establish an employer-based 'voluntary plan' that meets or exceeds the state-provided benefits. The rules for voluntary plans ... differ slightly from the state-administered program."
Lockton

CMS Office of the Actuary Releases 2017 National Health Expenditures

"Hospital spending (33 percent of total healthcare spending) decelerated in 2017, growing 4.6 percent to $1.1 trillion compared to 5.6 percent growth in 2016.... Physician and clinical services spending (20 percent of total healthcare spending) increased 4.2 percent to $694.3 billion in 2017.... Retail prescription drug spending (10 percent of total healthcare spending) slowed in 2017, increasing 0.4 percent to $333.4 billion.... The 3.9 percent growth in healthcare spending was slightly slower than growth in the overall economy (4.2 percent) in 2017."
Centers for Medicare & Medicaid Services [CMS], U.S. Department of Health and Human Services [HHS]

Sources of Health Care Spending Growth Are Hard to Identify

"[The NHE (National Health Expenditure)] is likely unable to measure true price growth with sufficient accuracy for us to be able to answer this important question: Are prices for health care growing faster or slower than overall inflation? If growth in prices is contributing to growth in the share of GDP devoted to health care, that has far different implications than spending growth resulting from new treatment options that people value and purchase."
Health Affairs

Cost of Employer Insurance a Growing Burden for Middle-Income Families

"After climbing modestly between 2011 and 2016, average premiums for employer health plans rose sharply in 2017. Annual single-person premiums climbed above $7,000 in eight states; family premiums were $20,000 or higher in seven states and D.C.... Average employee premium contributions across single and family plans amounted to 6.9 percent of U.S. median income in 2017, up from 5.1 percent in 2008. In 11 states, premium contributions were 8 percent of median income or more, with a high of 10.2 percent in Louisiana."
The Commonwealth Fund

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Court Finds Health Plan's Denial of Surrogacy Expenses Reasonable Despite Ambiguous Plan Provision

"The court rejected the participant's argument that her expenses should be covered because she was a gestational carrier rather than a surrogate, finding it inconceivable that the drafters of the plan intended to cover one type of expenses but not the other. And the court concluded that the plan administrator's determination that surrogacy expenses means all expenses associated with a pregnancy by means of a surrogate -- including the costs of preparing a surrogacy agreement, in vitro fertilization, pre-natal care, delivery, and post-birth care for the mother and child -- was grounded in the common understanding of surrogacy." [Roibas v. EBPA, LLC, No. 17-020 (D. Me. Sept. 28, 2018)]
Thomson Reuters / EBIA

Scope of ERISA and Occupation-Specific Disability

"The question the court had to resolve was whether McCann's prior employer made 'contributions' to or 'endorsed' the program ... The court concluded that allowing the program to be publicized to employees was not enough, but 'endorsement exists where there is some showing of material employer involvement in the creation or administration of a plan.' ... [T]he court ... found relevant the fact that Henry Ford Hospital had encouraged its residents to enroll in the disability program and recommended the residents purchase the coverage offered by Provident." [McCann v. Unum Provident, No. 16-2014 (3d Cir. Oct. 5, 2018)]
DeBofsky, Sherman & Casciari, PC

Trends That Could Impact Health Plans, Hospitals, and Patients in 2019

"Convergence and collaboration between health systems and health plans will become more important ... Health systems will continue to focus more on the patient rather than the illness: ... Technology could help move patients to the center ... More patients could consider virtual health ... There will be more focus on population health."
Deloitte

Modernizing Part D and Medicare Advantage to Lower Drug Prices and Reduce Out-of-Pocket Expenses: Highlights from the Proposed Rule

"Plan sponsors should review the proposed regulation and consider submitting comments to CMS (the comment deadline is January 25, 2019).... [T]he proposed rule raises operational questions that will need to be addressed by plan sponsors and PBMs. There will be pricing implications in the bids, and other actuarial considerations such as trend and Part D risk corridor projections.... [T]he provisions are likely to necessitate re-negotiation of contracts between plan sponsors and pharmacy benefit managers."
Wakely Consulting Group

Your Voluntary Benefits Plan May Lead to a Tragic Result

"Programs like legal plans, employee purchase programs, critical illness policies and even pet insurance are making inroads and claiming wallet share from employees at the expense of vital insurance like short-term and long-term disability programs."
United Benefit Advisors

[Opinion]

New Report by HHS, DOL and Treasury Department on Healthcare Reform

"The report asserts that educated consumer choice allows for improved quality and lower cost, comparing Lasik surgery costs (down by 25%) and cosmetic procedure costs (which grew at less than half the rate of general inflation) not typically covered by healthcare in contrast to overall healthcare costs (which grew at twice the rate of general inflation). It cites lack of cost transparency and distinguishes 'shoppable' versus 'non-shoppable' costs indicating that only 6% of costs are incurred in an emergency department and therefore more consumerism can be imposed."
Frenkel Benefits

Benefits in General

Is Discovery Allowed When a Breach of Fiduciary Duty Claim Is Asserted?

"[D]iscovery is usually limited in appeals of the denial of ERISA-governed benefits. This is especially true when there is de novo review. But watch out if a breach of fiduciary duty claim is asserted. That same rule (prohibiting discovery) does not apply when a party seeks discovery into purported breaches of fiduciary duty under 29 USC 1132(a)(3)."
Lane Powell PC

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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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