Health & Welfare Plans Newsletter

March 29, 2019

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Compliance Tips For Gifts, Awards, & Other Fringe Benefits
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On-Site Employee Health Clinics Congress
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Text of DC District Court Opinion: DOL Regs on Association Health Plans Exceed Statutory Authority (PDF)

"The Final Rule scraps ERISA's careful statutory scheme and its focus on employee benefit plans arising from employment relationships. It purports to extend ERISA to cover what are essentially commercial insurance transactions between unrelated parties. In short, the Final Rule exceeds the statutory authority delegated by Congress in ERISA.... [T]he Final Rule's provisions defining 'employer' to include associations of disparate employers and expanding membership in these associations to include working owners without employees are unlawful and must be set aside." [New York v. U.S. Department of Labor, No. 18-1747 (D.D.C. Mar. 28, 2019)]
U.S. District Court for the District of Columbia

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Judge Strikes Down DOL Regs on Association Health Plans

"U.S. District Judge John Bates ... blocked the Trump administration's new rules regarding 'Association Health Plans,' which would give small businesses the ability to band together to offer their employees cheaper plans that also provide fewer health benefits than the ACA requires.... Bates said the Trump administration's efforts to promote the association health plans violates both the ACA and [ERISA], a 1974 law that helped define modern employer-sponsored health care." [New York v. U.S. Department of Labor, No. 18-1747 (D.D.C. Mar. 28, 2019)]
Courthouse News Service

Federal Judge Blocks DOL Rule on Association Health Plans

"The administration's rule loosened requirements on association health plans, where groups or associations join together and obtain health coverage that is generally lower cost but lack benefits mandated under ACA. The administration has billed the plans as a way to give consumers more options, but Democrats have said they could weaken insurance markets. U.S. District Judge John Bates said in his ruling that the administration's rule on association health plans rule was designed to 'end run' ACA requirements." [New York v. U.S. Department of Labor, No. 18-1747 (D.D.C. Mar. 28, 2019)]
The Wall Street Journal; subscription may be required

Prepare for New Jersey Health Insurance Mandate Reporting

"Beginning January 1, 2019, New Jersey requires its residents to maintain health insurance.... Most basic health coverage satisfies the requirement, including health insurance plans through an employer.... The State expects employers that filed Form 1094-C/Form 1095-C federally in 2018, will use those forms for purposes of reporting in New Jersey.... If the federal government discontinues or substantially alters Forms 1094-B, 1094-C, 1095-B, or 1095-C, New Jersey will deploy similar forms and require that they be sent to the State and to New Jersey taxpayers."
Epstein Becker Green

Must a Health Plan Certify Compliance With HIPAA's Electronic Transaction Standards?

"Without instructions from HHS, plans have no way to comply with the statutory certification requirement ... HHS emphasized that withdrawal of the proposed regulations does not remove the requirement for covered entities to comply with HIPAA's standards and operating rules for electronic transactions. HHS also noted that it would continue to explore options and alternatives to implement the statutory requirement for health plans to certify compliance."
Thomson Reuters / EBIA

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Enrollment in HSA-Eligible Health Plans: Slow But Steady Growth Continues

"By 2018, HSA-eligible health plan deductibles were only twice as large as PPO deductibles. If the gap continues to fall, enrollment in HSA-eligible health plans may begin to accelerate. Several factors -- such as the delay in the Cadillac tax, low insurance premium increases, and low unemployment -- may be holding back growth in HSA-eligible health plan enrollments.... All of the surveys find substantial growth in HSA-eligible health plan enrollment since HSAs were established in 2004."
Employee Benefit Research Institute [EBRI]

Drug Rebates May Soon Be a Thing of the Past

"Drugs will cost less at the point-of-sale and employers who are used to large rebates will have to adjust. This will especially affect high deductible plans where much of the savings will no longer be paid to the plan sponsor.... Overall patient cost-sharing will be reduced which might make a change in premium cost-sharing necessary to keep employer costs in line."
Frenkel Benefits

Medicare and Medicaid Contain Costs Better Than Private Insurers

"[F]rom 2006 to 2017, per-enrollee spending grew 2.4% in Medicare, 1.6% in Medicaid and 4.4% in private plans annually. While the overall spending growth in the two federal programs is higher than in private plans -- Medicare rose 5.2% per year and Medicaid 6.0%, compared to 4.4% in private programs -- the [Urban Institute report] attributes it to faster enrollment growth in public programs. Prescription drug spending was the major driver of growth in Medicare spending per enrollee from 2006 to 2017, while in Medicaid, the major component of growth was spending on physician services."
AISHealth

Paid Family Leave Policies and Population Health

"Research suggests that when leave is paid, take-up rates are higher among low-income and disadvantaged families than when it is unpaid, which enables more families to benefit from it. Studies on PFL in the US and other developed countries indicate short- and long-term health benefits of leave taking for children and mothers ... Research on PFL in Canada and Europe suggests decreasing marginal health benefits from increasing paid leave entitlements beyond 6-12 months."
Health Affairs

[Opinion]

American Benefits Council Response to CMS Request for Information Regarding Grandfathered Group Health Plans and Grandfathered Group Health Insurance

"The challenges reported include restrictions on increases in premiums, copays and deductibles based on allowed percentages over the 2010 levels. The restriction on increases allowed for prescription drug co-payments was most challenging ... The primary reasons [for retaining grandfathered plans] were reduced regulatory burden and savings in claims and administrative costs.... Grandfathered plan status was also preserved where the plans was subject to a collective bargained agreement or acquired in a merger or acquisition."
American Benefits Council

Benefits in General

Attorney-Client Privilege in the Employee Benefit Plan Context

"[A]dvice provided to fiduciaries from lawyers has to be turned over to participants if they want or if they need it in any particular proceeding.... When a fiduciary has to act for participants the ultimate client here is the participant. The fiduciary's acting solely for the interest of the participant.... [W]hile we call it a fiduciary exception, it's not really an exception; what it is, is a way to identify who the client is that holds the privilege and in this case ... the fiduciary's a look-through vehicle to the participant."
Proskauer Rose LLP

Editor's Pick Sharing Plan Expenses with Sponsors/Parties in Interest/Related Parties, and Appropriate Uses for Plan Assets (PDF)

47 presentation slides, from ABA EBC 2019 Midwinter Meeting. "Key issue is how to distinguish the cost of arriving at a settlor decision (not payable from plan assets) from the cost of implementing it (plan may pay). In general, activities leading up to establishment of a plan, adoption of a discretionary amendment or initiation of a plan termination are 'settlor' in nature. Activities after that are 'fiduciary' to the extent that they relate to plan administration or to compliance with ERISA, IRC or other legal requirements applicable to the plan."
Employee Benefits Committee [EBC], American Bar Association

Editor's Pick What ERISA Practitioners Need to Know About Accounting for Benefit Plans (PDF)

38 presentation slides, from ABA EBC 2019 Midwinter Meeting. Topics include: [1] Practice tips. [2] What does a Balance Sheet/ statement of Net Assets look like? [3] What does the Income Statement/Statement of Changes in Net Assets Available for Benefits look like? [4] What does a DB plan's Actuarial Information look like? [5] What does a health plan's Benefit Obligations look like? [6] Uses of financial statements in ERISA practice and litigation. [7] Statutory basis for audit requirement. [8] Questions DOL identified that a fiduciary should ask the plan auditor. [9] Investment valuation: what's required. [10] Investment valuation: issues for fiduciaries. [11] Investment valuation: what should trustees/investment committees do periodically?
Employee Benefits Committee [EBC], American Bar Association

Press Releases

Most Popular Items in the Previous Issue

Arbitration: What's Different About ERISA? (PDF)
Employee Benefits Comittee [EBC], American Bar Association

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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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