Health & Welfare Plans Newsletter

February 4, 2019

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[Official Guidance]

Text of Treasury Department General Information Letter 2018-0033: Correcting Mistaken Contributions to HSAs (PDF)

"Outside of the specific situations described in Notice 2008-59, examples of the type of errors which may be corrected ... include.... [1] An amount withheld and deposited in an employee's HSA for a pay period that is greater than the amount shown on the employee's HSA salary reduction election.... [2] An amount that an employee receives as an HSA contribution because it is incorrectly entered by a payroll administrator ... [3] An amount that an employee receives as an HSA contribution because a change in employee payroll elections is not processed timely ... [4] An amount that an employee receives because an HSA contribution amount is calculated incorrectly."
Internal Revenue Service [IRS]

[Advert.]

Snakes and Ladders: Navigate the 2019 Health & Welfare Landscape

Sponsored by Hall Benefits Law

FREE webinar Feb. 7, 2pm ET. The Health & Welfare Benefits legal landscape is shifting. What are 2019's biggest risks and opportunities? Hear from ERISA attorneys working in the trenches to make sense of it all for plan sponsors and service providers!


[Guidance Overview]

Administration Releases Long-Awaited Drug Rebate Proposal

"[T]he proposed rule envisions two new safe harbors: one for rebates which are passed on to the patient at the point of sale, and another for flat service fee payments made to PBMs, which could not be tied to the list prices of drugs."
Rachel Sachs, in Health Affairs

Estimates of the Impact of Eliminating Rebates for Reduced List Prices at Point-of-Sale for the Part D Program (PDF)

10 pages. "[T]he average beneficiary would have a premium increase of about 8%, and average beneficiary cost sharing would be reduced by about 9.5%.... [T]he net effect for beneficiaries is a 2% reduction in out-of-pocket expenses.... [A]pproximately 30% of non-low income beneficiaries will see a net savings ... [T]he other 70% of non-low income beneficiaries will on average experience a net increase in out of pocket expenses.... [T]he drug spend level threshold at which the non-low income beneficiary begins to experience a net savings will occur at an annual spend of $2,200 to $2,500."
Wakely Consulting Group, for Assistant Secretary for Planning and Evaluation [ASPE], U.S. Department of Health and Human Services [HHS]

Impact of Potential Changes to the Treatment of Drug Manufacturer Rebates (PDF)

41 pages. "Members have overall cost savings on average, driven by lower cost sharing, partially offset by higher premiums.... The government could have cost increases ... Manufacturer claim liabilities through the coverage gap discount program (CGDP) would be lower.... [I]ncreased formulary controls, higher price concessions, and lower price trends would all reduce overall program costs, including greater average member savings."
Milliman, for Assistant Secretary for Planning and Evaluation [ASPE], U.S. Department of Health and Human Services [HHS]

Winners and Losers Under HHS Plan to Slash Drug Rebate Deals

"Consumers are unlikely to collect the full benefit of eliminated rebates. At the same time, the change would produce uncertain ricochets, including higher drug-plan premiums for consumers, that would produce new winners and losers across the economy.... Possible Winners: Chronically ill patients who take lots of expensive medicine ... Drug companies ... Possible Losers: Pharmacy benefit managers ... Insurance companies ... Patients without chronic conditions and high drug costs."
Kaiser Health News

[Advert.]

Evaluating Your Employee Health Benefits

Sponsored by Lorman and BenefitsLink

Feb. 27 webinar. Arm yourself with the knowledge to evaluate your plan's funding methods, as well as what ancillary insurance products fit for your company and how best to communicate all of this to the employee population. BenefitsLink discount.


Telemedicine: Managing Expectations of Savings

"While the cost savings that can be achieved through telemedicine are a matter for debate, there are non-financial elements that should be considered in assessing the value of telemedicine ... In making a decision around telemedicine plan sponsors should: [1] Understand your data.... [2] Evaluate the options.... [3] View projected savings critically and budget conservatively.... [4] Increase awareness of the telemedicine benefit, if included in the benefit offering."
Conrad Siegel Actuaries

Transparent Hospital Pricing Exposes Wild Fluctuation, Even Within Miles

"Prices varied widely on some basic procedures, even for basic charges. For instance, the list price on a liter of basic saline solution for intravenous use ranged from $56 to $472.50, nearly seven times as much.... And they varied widely even when comparing nearby hospitals. The new rule mandates that the chargemasters be available on the hospital website in a machine-readable format, but not all hospitals make them easy to find, and understanding them is a bigger obstacle."
Kaiser Health News

Group Life Insurance: Communication Pitfalls

"Several recent court cases have been brought against employers regarding denied claims due to improper communication. In some cases, employers were required to pay the full life insurance benefit out of company funds.... [H]ow does an employer avoid becoming a litigant on a group life insurance case? ... Whether the coverage is paid by the employer or the employee, there are important steps to follow[.]"
Keller Benefit Services

2018 Benefits Strategy and Benchmarking Survey: Manufacturing Industry Addendum (PDF)

"A multi-year strategy for benefits or compensation [is] uncommon for manufacturing employers -- 13% for benefits, and 10% for compensation ... 30% of manufacturers had turnover of 15% or more in 2017, compared with 13% expecting turnover of that level. More than half (52%) view benefits and compensation as tools to attract and retain talent, the success of which relies on a total compensation package that resonates across the entire workforce."
Gallagher

Maryland Cannot Sue Over Administration's Position Not to Defend ACA; Updates in Texas v. Azar

"On February 1, Judge Ellen H. Hollander ... held that Maryland could not ask for a declaration that the [ACA] is constitutional and enforceable. She agreed that Maryland would suffer harm if the Trump administration stopped enforcing all or parts of the ACA but, because it had not yet taken this position, the state had not (yet) been harmed. This post discusses this decision and provides the latest updates on Texas v. Azar, including a request by four additional states to intervene in the lawsuit and a proposed schedule for expedited proceedings in the Fifth Circuit Court of Appeals."
Katie Keith, in Health Affairs

Benefits in General

[Official Guidance]

Text of Corrected IRS Final Regs Under Section 199A: Qualified Business Income Deduction (PDF)

249 pages. The Treasury Department and the IRS on Feb. 1 released the corrected draft final regulations under section 199A (section 199A final regulations) on the new qualified business income (QBI) deduction (section 199A deduction). These corrections include, among other edits, corrections to the definition and computation of excess section 743(b) basis adjustments for purposes of determining the unadjusted basis immediately after an acquisition of qualified property, as well as corrections to the description of an entity disregarded as separate from its owner for purposes of section 199A and Sections 1.199A-1 through 1.199A-6. The corrected draft has been submitted to the Federal Register for publication.
Internal Revenue Service [IRS]

EBSA Enforcement for 2019

"EBSA closed 1,329 civil investigations in 2018 with over 64% of those cases resulting in monetary recovery for the plan or other corrective action. The largest share of these recoveries was on behalf of terminated vested plan participants (recovering over $800 million in total for terminated vested participants)."
Butterfield Schechter LLP

Drivers of U.S. Mortality Improvement (PDF)

13 pages. "Experts from inside and outside the insurance/retirement industry were invited to participate in a daylong Expert Panel Forum discussion to provide input about drivers of U.S. mortality improvement for the short and long term. The issues addressed included: [1] What are going to be the key drivers of U.S. mortality? [2] How will key drivers of mortality interact? [3] How might factors discussed change mortality rates for different age groups, most noticeably below and above age 65?"
Society of Actuaries

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BenefitsLink Health & Welfare Plans Newsletter, ISSN no. 1536-9595. Copyright 2019 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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