Health & Welfare Plans Newsletter

May 19, 2020

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View Coronavirus (COVID-19) News and Resources

[Guidance Overview]

CMS Releases Notice of Benefit and Payment Parameters for 2021

"Major takeaways from the new rule include: [1] the finalization of the user fee rates; [2] the adoption of new rules regarding special enrollment; [3] an increased focus on value-based plan designs; [4] clarification regarding the use of drug manufacturer coupons; [5] the application of category limitations for dependents; [6] the treatment of wellness incentives in MLR calculations; and [7] the implementation of MLR reporting requirements for outsourced activities."

Frost Brown Todd LLC

[Guidance Overview]

IRS Guidance Allows Limited Flexibility for Cafeteria Plans

"The practical utility of the extended grace period rules during the COVID-19 crisis seems limited, particularly for calendar year plans. As a result of the coronavirus crisis, many FSA participants may find that their 2020 contributions, not their 2019 contributions, are at risk of forfeiture under the use-it-or-lose-it rule.... Although the IRS guidance is a step forward in providing effective relief, these changes would be most helpful if permitted through December 31, 2021."

Nixon Peabody LLP

[Guidance Overview]

IRS COVID-19 Guidance Provides Optional Flexibility for Cafeteria Plans

"Employers that wish to extend the claims period for health FSA and dependent care assistance programs must amend their cafeteria plans on or before December 31, 2021.... These amendments may be effective retroactively to January 1, 2020, so long as the plan operates in accordance with applicable requirements of Notices 2020-29 and 2020-33 ... and all eligible employees are informed of the changes."

Maynard Cooper & Gale

[Guidance Overview]

Considerations for Cafeteria Plans, FSAs, and HDHPs in Light of New IRS Guidance

"Employers have broad discretion in deciding how to implement these changes -- they can be as flexible as the rule allows, or maintain their current more restrictive set up. In deciding whether and how to implement any changes, employers should consider their employee population's needs and their ability to implement these changes in a way that is organized and compliant with the law. [E]mployers with plans that are already generous with regard to mid-year elections may decide not implement the new provisions relating to health care election changes."

Eversheds Sutherland

Employer Techniques for Reducing Prescription Drug Costs

"Always double-check the contract to make sure you're not narrowing the network so much so that your employees will be left unsatisfied with their options. Make sure you have access to your own data and that you can get it within a reasonable timeframe. Ensure there are guarantees (and penalties for not reaching them) in the contract. Longer-term contracts typically garner much better discounts. Have strong definitions of what a brand medication is and what a medication etc. Trust but verify -- audit your PBM and don't let them pick the auditor."

The Alliance

Large Employer Groups Send Congress Healthcare Recommendations for Pandemic Response

"The employer groups called on Congress to mandate that providers commit to not engaging in M&A activity for 12 months as part of receiving funds through the [CARES] Act. Other recommendations included a ban on 'price gouging on any health care items or services' and the enactment of a 'local, market-based payment rate' to curb surprise billing."

HealthLeaders Media

Proposed Health Care Protection Act Would Extend Benefits Through Pandemic

"[HR 6810, the Health Care Protection Act, would] establish a Health Care Protection Program Fund that would provide grants to employers toward providing premium assistance for COBRA benefits ... provide six months of premium assistance in the amount of what an employer previously provided ... [and] create a 30-day special enrollment period on the [ACA] exchanges for individuals who are eligible for coverage but are not enrolled."

The Ripon Advance

Health Insurance Risk Mitigation Mechanisms and COVID-19 (PDF)

14 pages. "One-sided risk corridors can shield insurers from unusually large losses due to COVID-19; two-sided risk corridors would also protect against unusually high insurer gains. Reinsurance can offset the costs of high-cost enrollees, regardless of whether the insurer faced unexpected losses. Medical loss ratio (MLR) requirements could provide a backstop on unanticipated insurer gains under either one-sided risk corridors or reinsurance."

American Academy of Actuaries

Issues for Health Insurers to Consider Before Implementing a Premium Discount

"With total claims now expected to be lower in 2020 due to the pandemic, health insurers may seek to offer policyholders discounted premiums, such as premium 'holidays' or premium 'credits.' ... Before an insurer implements a premium discount ... it needs to account for several factors ... [1] Medical Loss Ratio (MLR) ... [2] State law ... [3] Coronavirus business relief programs ... [4] On- vs. off-exchange considerations and rate uniformity ... [5] State reinsurance waivers."

Faegre Drinker

Health Insurance Enrollment Changes Due to COVID-19 and the Potential Impact on the ACA Individual Market

"Healthcare coverage options for the newly unemployed and their families ... Premium variation among healthcare coverage options ... Comparison of jobless claims to the enrollment in ACA individual plans by state ... Characteristics of the newly unemployed and expected healthcare costs."

Milliman

Ensuring Compliance During COVID-19: A Focus on Leave Management

"[W]hen COVID-19 restrictions subside, there may be a deluge of PTO requests that threaten to disrupt regular operations.... [Other] employees may forfeit accrued vacation at year end without any real opportunity to use it. And some employers face an increased financial burden if their PTO policies provide for pay out for unused time at year-end, or if the employer is considering a personnel reduction and must pay employees for accrued but unused PTO at termination. There are several different approaches employers can take to help address these issues[.]"

Mintz

Benefits in General

Tenth Circuit Upholds Choice-of-Law Provisions in ERISA Health Benefits Plan

"[T]he panel held that if there were a legitimate connection to the state whose law was chosen by a plan, then that state's law should govern the enforceability of any discretion-granting clauses.... [T]his holding clarified whether [the health benefit] policy was governed by Pennsylvania law -- as it declared in a choice-of-law provision -- or subject to a Colorado statute that forbids insurance policies from giving insurers, plan administrators or claim administrators discretion to interpret the plan's terms to make benefits decisions." [Ellis v. Liberty Life Assurance Co. of Boston, No. 19-1074 (10th Cir. May 13, 2020)]

Troutman Sanders

Press Releases

America is Looking to Safely Get Back to Work
National Alliance of Healthcare Purchaser Coalitions

PSCA Honors Phyllis Borzi With Lifetime Achievement Award
PSCA [Plan Sponsor Council of America]

Most Popular Items in the Previous Issue

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BenefitsLink Health & Welfare Plans Newsletter, ISSN no. 1536-9595. Copyright 2020 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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