Health & Welfare Plans Newsletter

October 7, 2019

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[Guidance Overview]

Proposed Regs Provide Affordability Safe Harbors for Individual Coverage HRAs

"An ALE may determine an employee's required HRA contribution for a calendar month based on the cost of the applicable lowest cost silver plan for the location of the employee's primary site of employment.... [An] ALE may choose to apply the safe harbors for any class of employees ... provided the ALE does so on a uniform and consistent basis for all employees in the class."
Wolters Kluwer; free registration required

[Guidance Overview]

New York Paid Family Leave Benefits and Employee Contributions Set to Increase January 1, 2020

"[T]he employee payroll contribution toward [New York Paid Family Leave] will be adjusted on January 1 to 0.270% of an employee's gross wages each pay period, capped at a maximum annual contribution of $196.72.... [B]eginning January 1, 2021 ... the maximum length of leave will increase to 12 weeks in a 52-consecutive week period and benefits will be payable based on 67% of an employee's AWW, up to a cap set at 67% of the SAWW."
Epstein Becker & Green, P.C.

Plan with VEBA and MEWA Status Required to Pay ACA's Annual Health Insurance Provider Fee

"[T]he plan claimed that it represents a single employer that is self-insured against its employees' health risks.... IRS regulations state that, while VEBAs fall under a 'covered entity' exclusion [to the PCORI fee requirement] ... The court agreed that the [IRS] language was ambiguous, and it ruled that the plan was a covered entity subject to the annual fees under ACA. Finally, the court ruled that the plan's ... interpretation of ERISA's definition of 'employer' was incorrect. The plan and participants did not constitute a single employer under ERISA." [Iowa Bankers Benefit Plan v. U.S., No. 17-842T (Fed. Cl. May 2, 2019)]
Hall Benefits Law

Editor's Pick Self-Insured Employers Are Using Price Transparency To Improve Contracting With Health Care Providers: The Indiana Experience

"[A]cross 120 Indiana hospitals, prices negotiated for employers in Indiana averaged 272 percent of what Medicare would have paid for the exact same services at the same hospitals over the period 2013-16.... Equipped with useful pricing information, ... employers were able to quantify their overpayments for medical services and recognize inefficiencies in the contracting arrangements between insurance carriers and providers. Employers' demand for real changes followed."
Health Affairs

How Does Provider Network Size Influence Health Care Utilization?

"First, increasing network size leads to relatively more [fee for service] and less capitation payment. The authors claim that with a large network, capitation contracts become too expensive.... The authors also find that with private contracts -- i.e., individual insurer-provider contract terms are not revealed to other providers or consumers -- providers make positive profits. Third, insurers with broad provider networks have higher health care costs and more utilization."
Healthcare Economist

Editor's Pick Everything You Always Wanted to Know About Medicare, in a Nutshell

"Although the list of covered medical expenses is substantial, Medicare does not cover everything.... Some Medicare Advantage Plans cover things that are not covered by Part A or Part B, like vision, hearing, dental and other health and wellness programs. Most also include prescription drug coverage under Part D ... Medicare Supplement Insurance policies, sold by private insurance companies, can help pay for the remaining costs (like copayments, coinsurance, and deductibles."
Bronfman Rothschild

Extent of Health Coverage Gains from California Gig Worker Law Uncertain

"A new California law that reclassifies some independent contractors as employees, requiring they be offered a range of benefits and worker protections, will likely expand health insurance coverage in the state ... While inducing many employers to extend health insurance to newly reclassified employees, it might prompt others to shift some workers from full-time to part-time status to avoid offering them health coverage, or -- in the case of some small firms -- to drop such benefits altogether."
Kaiser Health News

Benefits in General

ERISA Arbitration Looks Safer; Ninth Circuit Reverses District Court, Sends Fiduciary Dispute to Arbitration

"From Munro and Dorman, taken together, one can glean that the Federal Arbitration Act's support for arbitration agreements is alive and well ... While the defendants failed to compel arbitration in Munro, their defeat was technical rather than substantive.... The Ninth Circuit's opinion notably eschewed the anti-arbitration effusions of the court below and instead concentrated on the question of what party's consent was needed to create an enforceable arbitration agreement. The obvious lesson is that arbitration clauses are most effective when included in the terms of the plan rather than left to individual participants' employment agreements."
Morgan Lewis via Mondaq

Selected Discussions
on the BenefitsLink Message Boards

Tax Treatment of Group Legal Coverage Under a VEBA Providing Life Insurance and Other Tax-Free Benefits

A client maintains a VEBA which provides the following coverages: dental, life insurance, critical illness and accident benefits, vision coverage and group legal services coverage. All coverages except group legal coverage are excludable from the participants' gross income. How should the employer determine the value of the group legal coverage for tax purposes? Should it be completely removed from the VEBA because it is taxable?
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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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