Log In Box

Syndicate content
News Center
Updated: 10 min 20 sec ago

Spencer’s Benefits Reports NetNews – January 13, 2017

Mon, 01/16/2017 - 15:13
About this Newsletter

The Spencer’s Benefits Reports is a summary of the week’s news items posted
in the WHAT’S NEW pages of Spencer’s Benefits Reports
Online
.
For questions regarding this email service, contact Customer Service at (800)449-9525.

NetNews Subscription

Want to receive these Newsletters via E-mail?

hr.cch.com Resources About Links in this Newsletter

To access the IntelliConnect™ full text documents you must be a subscriber
to the Spencer’s Benefits Reports IntelliConnect product
(depending on the link*).

Links within news stories display full text documents including legislation, regulations,
court decisions, rulings and government reports.

The first time you click on a link you will be taken to the IntelliConnect login page, where you will need to enter your ID and password. Subsequent links will take you directly to the desired document.

IntelliConnect

If you aren’t a subscriber call 800-449-9525, or let us contact you about,

Email Us

Contact us by sending an e-mail to

NetNews@cch.com

Featured This Week

 

New Reports

 

 

News

January 13, 2017

 

ERIC cheers bill to repeal Cadillac Tax

The ERISA Industry Committee (ERIC) has applauded the recently-introduced “Middle Class Health Benefits Tax Repeal Act of 2017” (H.R. 173), which would repeal the Patient Protection and Affordable Care Act’s 40 percent excise tax on certain health benefits, better known as the Cadillac tax. In a January 5, 2017 letter to Senators Dean Heller (R-NV) and Martin Heinrich (D-NM), along with House Representatives Mike Kelly (R-PA) and Joe Courtney (D-CT), ERIC’s Senior Vice President for Health Policy James Gelfand said that repeal of the Cadillac tax would eliminate crushing financial burdens on employers and employees, along with time-consuming and expensive administrative tax compliance burdens….

(Read Intelliconnect) »

Obama warns about dangers of ‘irresponsible’ ACA repeal without replacement

President Obama criticized Congressional Republicans’ plans to “repeal first and replace later,” calling their intention to repeal the Patient Protection and Affordable Care Act (ACA) without first creating a replacement plan “irresponsible.” In a New England Journal of Medicine perspective piece, Obama took pen to paper for the second time in six months to publicize the benefits of the ACA. He emphasized the careful planning that went into passing the bill—“more than a year of public debate”—and warned that, without a replacement plan, “the health care system will be standing on the edge of a cliff” as stakeholders potentially remain inactive while waiting for what comes next….

(Read Intelliconnect) »

January 12, 2017

 

Current accommodation for employers objecting to contraception coverage will remain unchanged

In FAQs about Affordable Care Act Implementation Part 36, the Departments of Labor, Health and Human Services, and the Treasury (the Departments) have decided not to modify the current accommodation for employers that object to contraceptive coverage on religious grounds. No feasible approach was identified that would resolve the concerns of religious objectors, while still ensuring that women enrolled in the organizations’ health plans have access to coverage of the full range of FDA-approved contraceptives without cost sharing….

(Read Intelliconnect) »

IRS expands user fee exemption for small employer plan determination letter applications

The IRS has indicated that it will treat an application for a small employer retirement plan’s determination letter as being filed within a qualifying open remedial amendment period if the plan was first in existence no earlier than January 1 of the tenth calendar year preceding the year in which the application is filed (ten-year rule)….

(Read Intelliconnect) »

January 11, 2017

Some ACA provisions could continue temporarily post-repeal

Repeal of the Patient Protection and Affordable Care Act (ACA) and its associated taxes could come quickly but changes, possibly including changes to the ACA’s tax provisions, may not be in place until 2018 or later, a Republican member of Congress said on January 5. At the same time, Democrats in Congress continue to urge reforms and improvements to the ACA….

(Read Intelliconnect) »

ACA policy reforms improved coverage, health care access

Between 2013 and 2015, uninsured rates for adults under 65 declined in all states, and fewer adults reported forgoing necessary medical care due to costs. An issue brief from the Commonwealth Fund titled, “A Long Way in a Short Time: States’ Progress on Health Care Coverage and Access, 2013–2015,” attributed these drastic changes to the policy reforms of the Patient Protection and Affordable Care Act (ACA). The brief analyzed publicly available data from the U.S. Census Bureau and the Behavioral Risk Factor Surveillance System to examine the impact of the ACA and to provide a focal point for assessments of future policy changes by providing a baseline against which results can be measured….

(Read Intelliconnect) »

Res judicata bars belated constitutional challenge to withdrawal liability assessment

Under the doctrine of res judicata, a company that signed a consent judgment to pay withdrawal liability may not file suit three years later claiming that ERISA’s withdrawal liability provision is unconstitutional, the Sixth Circuit U.S. Court of Appeals has ruled….

(Read Intelliconnect) »

January 10, 2017

 

ACA repeal bill introduced

Rep. Phil Roe, R-Tenn., has introduced a bill (H.R. 277) in the House to repeal the Patient Protection and Affordable Care Act (ACA) and the health-care related provisions of the Health Care and Education Reconciliation Act of 2010. The bill, the American Health Care Reform Act of 2017 (AHCRA), includes an effective date of January 1, 2018….

(Read Intelliconnect) »

States and faith-based providers granted preliminary injunction against HHS nondiscrimination rule

Eight states and three faith-based private health care providers were entitled to preliminary injunctive relief from enforcement of an HHS regulation implementing a section of the Patient Protection and Affordable Care Act (ACA), a federal district court in Texas has ruled. The regulation violated the Administrative Procedures Act (APA) by contradicting existing law and exceeding statutory authority, and likely violated the Religious Freedom Restoration Act (RFRA) (42 U.S.C. § 2000bb)….

(Read Intelliconnect) »

January 9, 2017

 

Bipartisan bill introduced to repeal Cadillac tax

Rep. Mike Kelly (R-PA) and Rep. Joe Courtney (D-CT) have introduced H.R. 173, the Middle Class Health Benefits Tax Repeal Act of 2017, which would repeal the Patient Protection and Affordable Care Act’s (ACA) excise tax on high cost health plans….

(Read Intelliconnect) »

Failure to notify employee that proper medical release needed to return to work constituted FMLA interference

A hospital interfered with a nurse’s FMLA rights as a matter of law by failing to notify him that he wouldn’t be restored to his position without a doctor’s return-to-work release, and triable issues existed as to when he was entitled to restoration and if his subsequent discharge for purported performance issues was pretextual, a divided Sixth Circuit panel ruled in an unpublished opinion, reviving his FMLA interference and retaliation claims, which had been dismissed on summary judgment. Dissenting in part, Circuit Judge Rogers agreed with the dismissal of his retaliation claim and believed he wasn’t entitled to judgment as a matter of law on the interference issue….

(Read Intelliconnect) »

 

Nearly three-quarters of U.S. employees would like a customized benefits package

Thu, 01/12/2017 - 19:43

Seventy three percent of U.S. employees across all age groups would like the ability to customize their workplace benefits to suit their individual needs, according to a LIMRA Secure Retirement study.
“Consistently, our surveys have shown recruiting and retaining the best employees is a top priority for employers,” said Michael Ericson, LIMRA Secure Retirement Institute analyst. “With four generations in the workplace, designing an attractive benefits package for all employees is challenging. As a result, employers are considering offering their employees the ability to control how they allocate their allotted money across their benefits.”

This strategy, often called ‘benefits wallet,’ offers flexibility to the employee but could also undermine some key features that have increased retirement savings within the workplace retirement savings plans. A benefits wallet architecture gives each employee a certain amount of money annually to allocate toward the benefits they want.

The LIMRA Secure Retirement Institute study, Employee Benefits Face Off: Worker Positioning of Retirement Plans in a Benefits Wallet, asked workers to rank the importance of each benefit and how they would allocate hypothetical dollars across those benefits.

The study found that only half of workers are satisfied with their current employer benefits. Married workers are more satisfied than non-married workers (55 percent vs. 45 percent) and workers who use a financial advisor are more likely to be satisfied with their benefits (62 percent vs. 46 percent). Recent research from Aflac finds that 4 in 10 employees say they are more likely to remain with their current employer if they are satisfied with their benefits package.

According to the Institute’s findings, employees with higher household incomes were more likely to be satisfied with their benefits. Lower-income workers are less likely to be full-time employees and are less likely to have generous benefits available to them. In addition, more than half of workers (54 percent) agree that their non-salary benefits play a large role in their financial security. Men were more likely to say this than women; and older employees were more likely to value benefits over salary.

Employees ranked health care coverage, retirement savings accounts and vacation as the three most popular workplace benefits. Almost 90 percent of workers ranked health care coverage and retirement savings plans in their top five most important benefits. This suggests if a benefits wallet approach is adopted, employees – especially younger ones – might ignore life insurance, disability insurance, and other valuable benefits. LIMRA research finds that 37 percent of U.S. households rely solely on employee-sponsored life insurance.

A worker’s life stage also influences the types of benefits most valued by the employee. The Institute found:

Millennial workers favor education benefits and paid parental leave. These benefits reflect their life stage as well as the substantial amounts of student loan debt they hold.

Generation X workers ranked financial planning/wellness programs higher than Millennials and Baby Boomers. This is the first generation relying primarily on a defined contribution plan to fund their retirement and have many competing financial priorities, making access to financial advice essential.

Baby Boomers ranked disability insurance significantly higher than Millennials and Gen Xers. This benefit typically gains importance to workers as they age and the likelihood of becoming disabled increases.

“As competition for top employees increases and benefits resources tightens, employers will have to ensure their benefits program is balanced and competitive,” noted Ericson. “While offering a benefits wallet approach might seem the easiest way to accommodate the different needs of employees, it may have the unintended consequence of weakening established retirement savings programs like auto-features and employer-matching contributions that promote retirement savings.”

Prior Institute research shows half of U.S. workers who have access to an employer-sponsored retirement savings plan expect to primarily rely on that savings to meet their eventual financial needs in retirement.

SOURCE: www.limra.com

Visit our News Library to read more news stories.

Guidance describes premium age curves and state reporting

Thu, 01/12/2017 - 19:39

The premium rate charged by health insurance issuers in the individual or small group market (in or outside of an exchange) may only vary by age within a 3:1 ratio as defined by uniform age bands set by 45 C.F.R. 147.102(a)(1)(iii), according to a Center for Consumer Information and Insurance Oversight (CCIIO) guidance document. Issuers must use a uniform age rating curve established by the state. If such a rate is not applied, issuers must use a uniform age rating curve established by HHS. Additionally, states are obligated to submit to CMS certain rating information regarding the scope and establishment of rating curves

Premium rate. Under 45 C.F.R. 147.102(a)(1)(iii), the premium rate charged by a health insurance issuer for non-grandfathered health insurance coverage in the individual or small group market may vary by age, except that such rate may not vary by more than 3:1 for adults. That variation is then further defined by uniform age bands, which were amended by the HHS Notice of Benefit and Payment Parameters for 2018 Final Rule. The CMS guidance sets out the federal default standard age curve, which is to be used if an age curve is not established by the state. The age curve establishes the ratios by which premiums can deviate according to age.

State reporting. States are also obligated by Section 147.102 to submit to CMS state-specific rating information. That information includes:

• the use of a narrower age rating ratio than 3:1 for adults age 21 and older,

• the use of a narrower tobacco rating ratio than 1.5:1 for individuals who legally use tobacco,

• state-established or proposed geographic rating areas,

• state-established age rating curves,

• in states that do not permit rating based on age or tobacco use, the use of uniform family tiers and corresponding multipliers, and

• whether premiums in the small group market must be based on average enrollee premium amounts (composite premiums).

The state reporting obligations also include the requirement to provide CMS with information on whether the individual and small group markets in the state are merged into a single risk pool under section 1312(c) of the Patient Protection and Affordable Care Act.

SOURCE: CCIIO Guidance, December 16, 2016.

Visit our News Library to read more news stories.

IRS reminds employers of important health care reporting dates

Thu, 01/12/2017 - 19:37

In the IRS’s latest tax tip, the agency has provided employers with some important health care reporting information. Under the Patient Protection and Affordable Care Act (ACA), insurance companies, self-insured companies, and large businesses and businesses that provide health insurance to their employees must submit information returns to the IRS and individuals reporting on health coverage.

Taxpayers can use the information on these forms when they file their tax returns to verify the months that they had minimum essential coverage and determine if they satisfied the ACA’s individual shared responsibility provision. The IRS will use the information on the statements to verify the months of the individual’s coverage.

The IRS has provided the following information about the types of forms, the purpose of each, and noteworthy dates:

• Form 1095-C, Employer Provided Health Insurance Offer and Coverage

o This form is filed by applicable large employers, which generally are employers (ALEs) with 50 or more full-time employees, including full-time equivalents.

o ALEs send this form to certain employees, with information about what coverage the employer offered.

o Employers that offer health coverage referred to as “self-insured coverage” send this form to individuals they cover, with information about who was covered and when.

o This form is submitted to the IRS with Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns.

o The deadline for filing this form with the IRS is February 28, 2017, or March 31, 2017 if filing electronically.

o The deadline for furnishing this form to the employee is March 2, 2017, which is a 30-day extension from the original due date of January 31.

• Form 1095-B, Health Coverage Information Return

o This form is filed by providers of minimum essential coverage, including employers that are not applicable large employers, but who offer employer-sponsored self-insured health coverage.

o It is used to report information to covered individuals about each person enrolled in coverage—this form is sent to the person identified as the responsible individual on the form.

o This form is submitted to the IRS with Form 1094-B, Transmittal of Health Coverage Information Returns.

o The deadline for filing this form with the IRS is February 28, 2017, or March 31, 2017 if filing electronically.

o The deadline for furnishing this form to the covered individual is March 2, 2017, which is a 30-day extension from the original due date of January 31.

SOURCE: IRS Health Care Tax Tip 2016-82, December 28, 2016.

Visit our News Library to read more news stories.

EEOC’s ADA, GINA wellness regs survive AARP’s attempt to thwart them

Thu, 01/12/2017 - 19:35

Refusing to preliminarily enjoin the EEOC’s regulations under the ADA and GINA that say the use of a penalty or incentive of up to 30 percent of the cost of self-only coverage does not render “involuntary” a wellness program (either a participatory or health-contingent program) that seeks the disclosure of ADA- or GINA-protected information, the federal district court in the District of Columbia found that AARP had associational standing—bringing suit on behalf of its members—to challenge the regs, but it did not establish irreparable injury. Specifically, the potential disclosure of health information required by the regs is not public disclosure, and employers are statutorily forbidden from using it to discriminate against employees. Further, paying higher premiums is economic harm, which is not irreparable. The court also found the EEOC entitled to some deference given that “voluntary” is not defined in either the ADA or GINA, and that on this limited record (resulting from AARP’s delay in challenging the regs), the EEOC had offered an apparently reasonable explanation for its change of course to allow the use of penalties or incentives.

Wellness programs and the ADA, GINA, and HIPAA. Per the court’s analysis, the litigation concerns the intersection of the ADA, GINA, the Health Insurance Portability and Accountability Act (HIPAA), the Patient Protection and Affordable Care Act (ACA), and their various implementing regulations, as applied to employer-sponsored wellness programs. In short, the ADA and GINA allow “voluntary” collection of otherwise protected health information if it is collected as part of an “employee health program” (ADA) or where it offers “health or genetic services, including wellness programs” (GINA). HIPAA bars discrimination on the basis of “any health status related factor,” but employers may offer “premium discounts or rebates modifying otherwise applicable copayments or deductibles in return for adherence to [wellness] programs.”

EEOC regs under ADA and GINA. In May 2016, the EEOC issued regulations under the ADA and GINA to address the incentives that employers may offer employees for participating in healthcare wellness programs, which may require employees to reveal information protected under either the ADA or GINA. These EEOC regs essentially would permit employers to increase premiums for employee self-only coverage by up to 30 percent if employees choose not to participate in employer-sponsored wellness programs that solicit ADA- or GINA-protected information. AARP challenged the regs in October 2016, asserting that they are arbitrary and capricious under the Administrative Procedure Act (APA) because the incentives render the disclosure of GINA- and ADA-protected information “involuntary” and permit coerced disclosure in violation of the law.

How we got here. To facilitate an understanding of the litigation, the court addressed the regulatory history surrounding wellness programs. HIPAA regs issued in 2006 capped the size of the reward that could be offered for participation in a wellness program at 20 percent of the cost of employee-only coverage; they defined “reward” to mean a discount or a penalty. These regulations divided wellness programs into two categories: “participatory” and “health-contingent,” and the 20 percent cap applied only to health-contingent wellness programs. In 2010, the ACA amended the HIPAA nondiscrimination provisions to allow for rewards of up to 30 percent of the cost of coverage in exchange for participation in a health-contingent wellness program; the HIPAA regs were amended accordingly in 2013.

EEOC changing positions. The EEOC first issued ADA enforcement guidelines in 2000 stating that employers could collect ADA-protected information as part of a wellness program as long as providing the information was not a condition of obtaining any offered reward or incentive. In 2009, EEOC signaled it was waving, first implying by letter that it would be consistent with the 2006 HIPAA regs and allow employers to provide incentives—and then it rescinded that portion of the letter. In its 2010 GINA regs, the EEOC said that providing genetic information to a wellness program must be voluntary—it could not be required, nor could an employer penalize those who chose not to provide it.

ACA confusion. But the changes made by the ACA to HIPAA regarding wellness programs explicitly permitted the use of incentives in wellness programs. Then, in 2012 the Eleventh Circuit held in Seff v. Broward County, Florida that wellness programs that are part of a bona fide group plan fell under the “safe harbor” provision of the ADA as a term of the health plan, an interpretation that the court noted “would appear to have allowed employers to impose unlimited penalties or incentives on employees to induce them to participate in wellness programs, including those programs that required the disclosure of ADA-protected information.”

Finally, in 2016, the EEOC issued final rules applying to both participatory and health-contingent wellness programs: The final ADA rule provides that the use of a penalty or incentive of up to 30 percent of the cost of self-only coverage does not render “involuntary” a wellness program that seeks the disclosure of ADA-protected information. The final GINA rule permits employers to offer incentives, again up to 30 percent of the cost of self-only coverage, to employees to disclose information about a spouse’s (and only a spouse’s) manifestation of disease or disorder (which constitutes genetic information of the employee under GINA) as part of a health risk assessment in connection with a wellness program.

Associational standing. The court spent a good bit of time addressing the EEOC’s challenge to AARP’s standing, because the regulations that AARP challenges apply to employers, not to AARP or its members directly, and harm to the AARP from the regulations depends on the actions of third-party employers. However, where an organization itself has not suffered an injury but its members have, the organization may bring suit on behalf of its members under an associational standing theory. The court found that it had done so here, although the EEOC quibbled over the finer points of whether AARP failed to present any evidence of “traditional indicia of membership.” It also found that at least one of AARP’s members would have standing to sue in his or her own right regarding the ADA rule and the GINA rule. Finally, the court found that AARP had amply demonstrated that this suit is germane to its purpose—advocating for the rights of older individuals, who certainly have an interest in avoiding discrimination on the basis of disability or genetic information.

Irreparable harm lacking. AARP claimed that its members will suffer irreparable harm because many of them will be unable to afford the premium increase permitted under both the ADA and GINA rules, and instead will be forced to disclose confidential medical information. But the court pointed out that the disclosure here is not public disclosure; both the statutes and regulations limit the permissible disclosure of health information obtained through wellness programs in order to prevent employers from being able to use information disclosed as part of wellness programs to discriminate against employees.

More importantly, none of the declarations from members that AARP submitted indicated that irreparable harm from this disclosure was likely. Being required to pay a higher premium constitutes harm, but it is an economic harm, which typically does not constitute irreparable harm. And although one declarant alleged the coerced disclosure of ADA-protected information, the disclosure apparently had already occurred, so a preliminary injunction would serve little purpose. Also, AARP’s unexplained delay in bringing suit weighed against a finding of irreparable harm, undermining its argument that an injunction was urgently needed.

Success on the merits. AARP raised two principal arguments as to both rules: first, that EEOC’s interpretation of the term “voluntary” to permit the use of 30 percent incentives is contrary to both the ADA and GINA; second, that EEOC did not adequately explain its reversal from its previous position that incentives were not permitted under either statute. Peeved because of AARP’s delay in bringing suit and its request for expedited review, which meant the administrative record could not be prepared in time for the court to review it for the preliminary injunction, the court gave deference to the EEOC and concluded that AARP was not likely to succeed on the merits.

“Voluntary.” Neither the ADA nor GINA defines the term “voluntary” or explains what it means to conduct a “voluntary” medical examination or to voluntarily provide medical information. But nothing in either statute directly prohibits the use of incentives in connection with wellness programs either; neither statute speaks to the level of permissible incentives at all, noted the court, finding the statutes to be ambiguous on this point, leaving it to defer to the EEOC to determine the exact contours of this provision.

AARP only objected to the specific level of incentives EEOC had adopted, which it said allowed coercion: 30 percent of the cost of self-only coverage under both the ADA and GINA rules, or 60 percent of the cost of self-only coverage if the incentives/penalties are stacked. But there is nothing in either the ADA or GINA to indicate that the particular incentive level EEOC selected is not permitted, making EEOC’s choice of the permissible incentive level not irrational. “The new regulations may permit employers to offer a strong incentive to their employees to disclose health information, but ‘[a] hard choice is not the same as no choice’” concluded the court.

Reasoned explanation. As for whether AARP could succeed in arguing that EEOC failed to give a reasoned explanation as to why it reversed a long-held position that incentives were not permitted under the ADA or GINA, the court again noted the difficulty presented by the lack of a full administrative record. But based on the record it had, the court found the EEOC offered a seemingly reasonable explanation: The agency’s former interpretation prohibiting incentives undermined provisions in HIPAA and the ACA that permitted employers to offer incentives in order to promote the use of wellness programs. Employers and industry groups were concerned and confused, so EEOC chose to harmonize its regulations with HIPAA regulations that implemented the ACA’s 30 percent incentive cap in order to provide clarity to employers and to promote the ADA’s and GINA’s goal of preventing employment discrimination and effectuating the wellness provisions of the ADA, HIPAA, and GINA.

Public interest. Finally, the public interest weighed against granting injunctive relief, the court said, given AARP’s somewhat weak showing of harm, the late date for proposed injunctive relief, and the “considerable disruption for employers and insurers who designed their 2017 health plans” around the January 1 applicability date. Enjoining the rules now would cause uncertainty for employers and employees, which AARP had not shown to be warranted.

SOURCE: AARP v. EEOC, (D.D.C.) No. 16-2113(JDB), December 29, 2016.

Visit our News Library to read more news stories.

Retirees of auto parts manufacturer not entitled to vested lifetime health care benefits

Mon, 01/09/2017 - 15:42

In view of the fundamental shift in the analytical framework for determining the vesting (or not) of lifetime, inalterable retiree health care benefits under a CBA brought by the U.S. Supreme Court’s ruling in M & G Polymers USA, LLC v. Tackett, and the recognition of that change by the Sixth Circuit in Gallo v. Moen Inc., a federal district court in Michigan granted summary judgment for an employer, finding its unilateral change in retiree health care benefits was not unlawful. Here, applying ordinary principles of contract interpretation required the conclusion that no vesting occurred.

Vested retiree lifetime health care benefits. A class of approximately 1,750 retirees and surviving spouses of retirees, who retired from one of BorgWarner’s plant locations between October 27, 1989 and February 23, 2009, filed suit against the employer alleging that it acted unlawfully by unilaterally modifying their health care benefits. The retirees and their spouses claimed a contractual right to lifetime inalterable health care benefits. On February 27, 2014, the district court issued an order permitting the retirees whose health care benefits were unilaterally modified by the employer to proceed to trial on the question of whether those benefits were vested for a lifetime. However, on August 7, 2015, in light of the Supreme Court’s ruling in Tackett, which abrogated long-standing Sixth Circuit precedent regarding claims for vested lifetime health care benefits, the court vacated the February 2014 order.

The court gave the parties the option to file new summary judgment motions under the new interpretative standards decreed by Tackett, or agree to revisit the possibility of a settlement in light of the Tackett ruling. The parties declined to return to the settlement table, but BorgWarner filed a motion seeking summary judgment under the mandate of Tackett.

Retiree benefit liabilities. This dispute began with the negotiation of the parties’1989 collective bargaining agreement. The dispute was driven largely by disagreements related to rising health care costs. BorgWarner sought to reduce its retiree benefit liabilities because of a new set of accounting standards that required, for the first time, that publicly traded companies report their unfunded contractual benefit commitments as a liability. The new standards threatened BorgWarner’s ability to attract new business and to obtain financing. From 1989 to 2009, the parties operated under a series of CBAs that contained similar language relevant to the vesting issue, and eligibility for retiree health care benefits. Additionally, language in each iteration of the parties’ Health Insurance Agreements (HIAs) contained similar language.

Modification of retiree health insurance coverage. In 2006, BorgWarner modified its health insurance coverage and filed an action seeking a declaration that it was permitted to unilaterally alter its health insurance plan prior to expiration of the term of the operative HIA. The court held that the 2005 HIA prevented BorgWarner from unilaterally altering retiree benefits during the contract period, and also denied the company’s request for a finding on the issue of lifetime vesting. On February 26, 2009, when the 2005 HIA expired, the parties executed a plant shutdown agreement. On May 1, 2009, BorgWarner modified health care benefits for all persons who retired from the plant.

New analytical framework. In response to BorgWarner’s renewed motion for summary judgment, the retirees argued that its motion was based on “an over-broad misreading” of Tackett. However, the court rejected the retirees’ reliance on Justice Ginsburg’s concurrence, and disagreed with their interpretation of Tackett as applied here. Rather, the court concluded that Tackett, as recognized by the Sixth Circuit’s ruling in Gallo, represented a fundamental shift in the analytical paradigm for determining the vesting (or not) of lifetime, inalterable retiree health care benefits under a time-limited CBA. When applied to the facts of this case, that new analytical framework required the entry of summary judgment in favor of BorgWarner.

“Ordinary principles of contract law.” Tackett eliminated the use of inferences and implications not grounded in “ordinary principles of contract law.” As a result, the Sixth Circuit in Gallo rejected the argument pressed by the retirees here that the inferences that favored vesting and that governed health care vesting cases in the circuit became part of the fabric of the collective bargaining environment, and therefore would have been assumed by the parties to have applied to these CBAs and HIAs. Ultimately, the Sixth Circuit concluded in Gallo that no vesting occurred.

Guided by Gallo and the similarity of the contract language at issue there to the provisions of the CBAs and HIAs under review in this case, the court was compelled to find that no vesting occurred. Stripped of the now-repudiated Yard-Man inferences, and applying instead ordinary principles of contract interpretation, it was clear that the CBAs and HIAs did not unambiguously promise to provide retirees with lifetime, inalterable health care benefits. Moreover, in this instance, the HIAs did contain a termination of coverage provision that related expressly to the duration of the health care benefits provided under these agreements which purported to limit health care benefits to the duration of each individual HIA.

Accordingly, the court granted BorgWarner’s motion for summary judgment and dismissed the retirees’ complaint.

SOURCE: Sloan v. BorgWarner, Inc., E.D. Mich., No. 09-cv-10918, December 5, 2016.

Visit our News Library to read more news stories.

How to meet Millennials’ unique benefits needs

Mon, 01/09/2017 - 15:19

Human resource professionals can strengthen employee recruitment and retention by reimagining workplace benefits through the lens of Millennials, according to a new white paper, “Millennials Come of Age,” recently released by Colonial Life. In the white paper, Colonial Life points out that, even though they’re the youngest generation in the workforce, Millennials value benefits as much as other generations, (citing LIMRA’s MarketFacts Quarterly, Number 1, 2016).

More specifically, about 94% of Millennials say having health insurance through the workplace is important or very important, and they rate dental insurance and vision care similarly, at 91% and 89%, respectively. Colonial Life points out that the value Millennials place on these benefits doesn’t change based on whether they pay for it or it’s paid by their employer (“Millennials A New Mindset for Financial Products, LIMRA’s MarketFacts Quarterly, Number 1, 2016).

Start by flipping the lens. The first step in reimaging the 21st century workplace with Millennials at the center may be to alter how benefits are positioned in the first place, says Colonial Life, which recommends that, moving forward, benefits including insurance are best cast as an important piece of overall physical, emotional and financial health.

For example, rather than considering dental insurance as a way to protect themselves against tooth decay and high-priced dentist bills, Millennials may be more willing to consider dental insurance as a way to stay healthy, according to the report. Rather than considering life insurance as a way to prevent their families from being left with burial costs, Millennials may want to consider it a way to ensure their children’s college education is covered if a household income-earner dies.

“Our thinking needs to evolve,” said Stephen Bygott, vice president for marketing at Colonial Life. “For Millennials, being healthy doesn’t just mean not feeling sick. It’s a commitment to an ongoing healthy approach to life, including eating habits, exercise and avoiding activities that can be viewed as damaging.”

Millennials are economically fragile Millennials make up the most-concerned generation about building emergency funds, saving for large purchases, paying off education loans, maintaining a good credit score and following a monthly budget (U.S. Consumers Today: The Generations, LIMRA, 2014). Paradoxically, though, nearly one-third of Millennials report having no savings set aside for emergencies or to cover their expenses if they are forced to miss work. In comparison, just 23 percent of Gen Xers and 18 percent of Baby Boomers have no savings (Colonial Life, 2014 Benefits Environment: The Employee Perspective).

Colonial Life theorizes that this lack of savings may be driving a delay in marriage, starting a family and home ownership. In 2010, 23 percent of Americans 18-31 were married and living in their own household, down from 43 percent in 1981 and 56 percent in 1968, the white paper says (quoting from “A Rising Share of Young Adults Live in Their Parents’ Home,” Pew Research Center, August 2013).

“These life events are traditionally seen as drivers for insurance purchasing decisions,” Bygott said. “When people get married, have a child or buy a home, they have more to protect or worry about.”

Today’s higher-deductible health plans may be attractive to Millennials because premiums are lower. However, these plans can leave employees vulnerable to considerable financial risk. Products such as disability insurance, critical illness insurance and accident insurance are built to allay those concerns. To make benefits communication efforts for this audience as effective as possible, HR professionals should consider adopting tactics to better communicate to Millennial employees using technology and multiple touchpoints through using a variety of different methods to reach employees at work, at home, and on the road.

Colonial Life also advises giving them someone to talk to, since it can be difficult to communicate complicated benefits information effectively without human interaction. Colonial Life adds that, while Millennials are tech savvy and embrace digital technology and social media, a recent LIMRA survey of life insurance buying preferences showed that Generation X and Generation Y consumers want information and service online, but they also want the option to talk to someone by telephone (LIMRA, “Seeking the Ideal Experience: How Gen Y and X Want to Buy Life Insurance,” 2013). Colonial Life further advises employers to use technology to supplement, not replace, face-to-face, ongoing communication with this group.

SOURCE: Colonial Life press release and white paper, November 21, 2016

Visit our News Library to read more news stories.

2017 standard mileage rates released

Mon, 01/09/2017 - 15:16

The IRS has released the 2017 optional standard mileage rates that employees, self-employed individuals, and other taxpayers can use to compute deductible costs of operating automobiles (including vans, pickups and panel trucks) for business, medical, moving and charitable purposes.

The 2017 standard mileage rate has decreased to 53.5 cents per mile for business uses and 17 cents per mile for medical and moving uses. It remains at 14 cents per mile for charitable uses. For purposes of computing the allowance under an FAVR plan, the standard automobile cost may not exceed $27,900 ($31,300 for trucks and vans).

The updated rates are effective for deductible transportation expenses paid or incurred on or after January 1, 2017, and for mileage allowances or reimbursements paid to, or transportation expenses paid or incurred by, an employee or a charitable volunteer on or after January 1, 2017.

SOURCE: IRS News release IR-2016-169, December 13, 2016.

Visit our News Library to read more news stories.

IRS releases proposed regs on Health Insurance Provider Fee and risk adjustments

Mon, 01/09/2017 - 15:14

The IRS has issued proposed regulations regarding the Health Insurance Provider Fee under Section 9010 of the Patient Protection and Affordable Care Act (P.L. 111-148). One set would require electronic filing of Form 8963, Report of Health Insurance Provider Information. These amendments are proposed to apply to any covered entity reporting more than $25 million in net premiums written on any Form 8963 filed after December 31, 2017. The other set of proposed regulations would modify the current definition of “net premiums written,” and are proposed to apply with respect to any fee that is due on or after September 30, 2018.

Electronic Filing. ACA Sec. 9010(a) imposes an annual fee on each covered entity engaged in the business of providing health insurance. The total aggregate “applicable” amount of the fee for all covered entities is determined by statute. A covered entity (including a controlled group) with no more than $25 million in net premiums written does not have any premiums taken into account and is not liable for a fee.

The Secretary must calculate the fee every years, and, to facilitate these calculations, each covered entity must report to the Secretary the covered entity’s net premiums written for health insurance for any United States health risk for the preceding calendar year by the date and in the manner prescribed by the Secretary. Information is reported to the IRS on Form 8963, ‘‘Report of Health Insurance Provider Information,’’ which must be filed in accordance with the form instructions by April 15 of the year following the calendar year for which data is being reported.

Under the proposed rule, a covered entity (including a controlled group) reporting more than $25 million in net premiums written on a Form 8963 or corrected Form 8963 must file these forms electronically, not on paper, after December 31, 2017. Forms 8963 reporting $25 million or less in net premiums written are not required to be electronically filed. If a Form 8963 or corrected Form 8963 is required to be filed electronically, any subsequently filed Form 8963 filed for the same fee year must also be filed electronically, even if such subsequently filed Form 8963 reports $25 million or less in net premiums written. Failure to electronically file will be treated as a failure to file.

Net Premiums Written. The proposed regulations would modify the current definition of net premiums written to account for premium adjustments related to retrospectively rated contracts, computed on an accrual basis. These amounts are received from and paid to policyholders annually based on experience. Retrospectively rated contract receipts and payments do not include changes to funds or accounts that remain under the control of the covered entity, such as changes to premium stabilization reserves.

Risk adjustments. ACA Sec. 1343 provides a permanent risk adjustment program for certain plans in the individual and small group markets, that transfers risk adjustment funds from health insurance plans with relatively lower-risk enrollees to issuers that disproportionately attract high-risk populations, such as individuals with chronic conditions. Each state or the HHS acting on a state’s behalf, must assess a charge on health plans and health insurance issuers in these markets if the actuarial risk of the enrollees of such plans or coverage for a year is less than the average actuarial risk of all enrollees in all plans that are not self-insured group health plans.

Also, each state, or the HHS acting a state’s behalf, must make a payment to health plans and health insurance issuers in the individual or small group markets if the actuarial risk of the enrollees of such plans or coverage for a year is greater than the average actuarial risk of all enrollees in all plans that are not self- insured group health plans.

The proposed regulations clarify that net premiums written include risk adjustment payments received and are reduced for risk adjustment charges paid. If a covered entity did not include risk adjustment payments received as direct premiums written on its Supplemental Health Care Exhibit (SHCE) or did not file an SHCE, these amounts are still part of net premiums written and must be reported as such on Form 8963. For this purpose, risk adjustment payments received and charges paid are computed on an accrual basis.

Comments sought. The Treasury Department and the IRS request comments on all aspects of the proposed rules. A public hearing will be scheduled if requested in writing by any person that timely submits written comments. If a public hearing is scheduled, notice of the date, time and place for the public hearing will be published in the Federal Register. Submissions should be sent to: CC:PA:LPD:PR (REG-123829-16 or REG-134438-15), room 5205, Internal Revenue Service, PO Box 7604, Ben Franklin Station, Washington, D.C. 20044. Submissions may be also hand delivered Monday through Friday between the hours of 8:00 a.m. and 4:00 p.m. to CC:PA:LPD:PR (REG-123829-16), Courier’s Desk, Internal Revenue Service, 1111 Constitution Avenue, NW., Washington, D.C., or sent electronically via the Federal eRulemaking Portal at http://www.regulations.gov (indicate IRS REG-123829-16 or REG-134438-15), room 5203, Internal Revenue Service, PO Box 7604, Ben Franklin Station, Washington, D.C. 20044.

SOURCE: 81 FR 89017 and 89020, December 9, 2016.

Visit our News Library to read more news stories.

ERISA and other claims against noncompliant group health plan for ACA violations dismissed

Mon, 01/09/2017 - 15:07

Participants in a group health plan whose terms violated both ERISA and the Patient Protection and Affordable Care Act (ACA) lacked constitutional standing to sue the plan, the Sixth Circuit ruled. The mere fact that the participants paid money into a noncompliant plan did not satisfy the injury-in-fact requirement of constitutional harm necessary to establish standing, the appeals court held, finding the court below had properly dismissed their complaint.

An Ohio dairy company contracted with an employee benefits plan to provide medical coverage for its employees. The terms of coverage were recited in a participation agreement signed in 2014. The company, its president, and an employee filed suit on their own behalf and on behalf of a class of similarly situated employees alleging that prior to entering into the agreement, they received assurances from individual plan trustees that the plan would comply in all respects with federal law including ERISA and the ACA. However, notwithstanding the ACA’s statutory mandate that group health plans eliminate per-participant and per-beneficiary pecuniary caps for annual and lifetime benefits, the plan maintained such restrictions, the plaintiffs alleged. Consequently, the company purchased supplemental health insurance benefits to fully cover its employees. The plan trustees did not dispute that the plan had benefit caps, but argued that the plan was exempt from the requirement that such caps were to be eliminated.

The plaintiffs filed a seven-count complaint against the plan alleging violations of ERISA, ACA, the LMRA, and breach of contract claims. The district court dismissed the complaint for failure to state a claim and for lack of standing. The Sixth Circuit affirmed.

ERISA claim. The plaintiffs alleged that by failing to comply with ACA provisions enjoining annual and lifetime limitations on benefits, the plan violated their rights under ERISA. They filed suit for monetary and injunctive relief under ERISA, which permits a civil action to be brought in federal court by a participant or beneficiary of a benefits plan in order to recover benefits due under the terms of the plan, and to enforce rights under the terms of the plan, or to clarify rights to future benefits under the terms of the plan.

No injury-in-fact. The district court correctly dismissed the first two claims for lack of standing. To have Article III standing, the participants were required to show that they possessed a sufficient personal stake in the outcome of the controversy as to warrant the exercise of a federal court’s remedial powers. The element of injury-in-fact was required to be pleaded as a de facto injury, the appeals court noted, and merely alleging a violation of their ERISA rights did not satisfy that obligation. Even assuming that an injury was sufficiently particularized in the complaint, the participants still needed to show that the deprivation of a statutory right was accompanied by some concrete interest.

Class action does not confer standing. The participants argued that certain class members suffered from conditions that previously required medical expenses in excess of the plans’ benefit caps. They also claimed that some employees will in the future choose to delay important medical procedures in order to avoid exceeding the cap. However, notwithstanding the class allegations, the participants had to demonstrate individual standing with regard to the plan—the requisite standing cannot be acquired merely by virtue of bringing a class action. The individual participants never showed precisely what concrete harm they suffered as a result of the violations of their ERISA rights. By merely arguing that the plan imposed pecuniary benefits limitations, without alleging anything further, the plaintiffs did not satisfy the concreteness prong of the injury-in-fact requirement of Article III.

Payments not an injury. The participants also cited their remitting of funds into the noncompliant plan as a constitutional injury. However, the appeals court said, the mere fact of paying into a noncompliant plan, if an injury at all, was conjectural and hypothetical. Because the alleged injury was neither concrete nor particularized, it did not satisfy the injury-in-fact requirement.

Prospective liability no injury. Although ERISA imposes on plan fiduciaries a duty to act in accordance with the documents and instruments governing the plan, it was not sufficient to merely allege the plan’s deficiency. Rather, the participants needed to show that a specific fiduciary duty or right owed to them was infringed. Although misconduct by the administrators of a benefit plan can create an injury if the misconduct creates or enhances a risk of default by the entire plan, the participants in this case made no showing of actual or imminent injury to the plan itself. The complaint alleged that the actions of the plan fiduciaries exposed the plan to prospective liability in the amount of $15 million, asserting that the risk of an enforcement action was itself sufficient to constitute an injury. However, in the absence of any evidence that penalties had been levied, paid, or even contemplated, the risk-based theories of standing were unpersuasive.

False representations. Finally, the plaintiffs alleged that plan representatives knowingly made false statements by promising that the plan would comply in all respects with ERISA and welfare benefit laws, including the ACA. However, their complaint merely referred to a promise that the plan would comply in all respects with ERISA and welfare benefit laws, including without limitation the ACA. At no point did the complaint identify specific statements from particular trustees at specific times which constituted the purportedly false promises and assurances which the participants claimed to have relied upon. Citing the heightened pleading standard required to state a fraud claim, and noting that the ‘time, place, and content’ of the alleged misrepresentations were not pleaded, the court dismissed the false representation claims.

SOURCE: Soehnlen v. Fleet Owners Insurance Fund, (CA-6), No. 16-3124, December 21, 2016, per curiam.

Visit our News Library to read more news stories.

No rapid crossover yet of “narrow provider networks” from health exchanges to employer plans

Mon, 01/09/2017 - 15:03

So-called “narrow provider networks,” which limit covered health providers in health plans, do not appear to be crossing over rapidly from the Affordable Care Act’s health exchanges into employment-based health plans, according to a new analysis by the nonpartisan Employee Benefit Research Institute (EBRI) and Mark A. Hall, J.D., Wake Forest University, with support from the Robert Wood Johnson Foundation’s (RWJF) Changes in Health Care Financing & Organization (HCFO) Initiative.

“Narrow networks,” which have grown in the individual market exchanges under the Affordable Care Act (ACA), are characterized by offering considerably fewer health providers than is typical in the group market and in which providers are included primarily based on price discounting.

“Narrow networks are receiving renewed attention, because of their increasing prominence in the ACA’s individual marketplace health exchanges,” said Paul Fronstin, director of EBRI’s Health Education and Research Program, and co-author of the report.

“So far, this has not translated strongly to private-sector employers. But there are signs that employers’ interest in narrow networks may grow in the near future.”

To measure what is happening with narrow networks in employer health plans, the researchers conducted a literature review, interviews with HR directors at 11 large employers, and field research by health policy experts in 11 states. Among the major findings:

• Despite the increasing prominence of narrow networks in the ACA individual (nongroup) marketplace exchanges, this renewed interest so far has not translated strongly to employers. For example, in 2016, only 7 percent of employers with health plans offered a narrow network. Also, in 2014, employers ranked narrow networks the least effective among several strategies to manage health insurance costs.

• Reasons employers give for their subdued interest include absence of track record showing sustained (year-over-year) savings; concern about antagonizing workers; spotty availability of narrow networks, especially in rural areas; greater interest currently in other cost-savings strategies; and reluctance to adopt substantial changes in benefit structures until the future of the ACA’s so-called “Cadillac tax” is resolved.

• There are signs that employers’ interest in narrow networks may grow in the near future.

• More than a third of employers with 5,000 or more workers now offer some type of alternative network, including tiered or “high-performance” networks. Field reports indicate increasing adoption of narrow networks by both large and small employers,particularly in urban markets around the country.

• Where narrow networks are offered, their adoption could be increased by giving workers stronger financial incentives to consider them. Offering workers a fixed (“defined”) contribution that does not vary by choice of plan is one way to confer such incentives, and private exchanges are a way to offer workers a broader range of choice. Currently, however, neither defined contributions nor private exchanges are widely used by employers.

The full report, “Narrow Provider Networks for Employer Plans,” is being published in the Dec. 14 EBRI Issue Brief, online at www.ebri.org and it is also posted at http://www.hcfo.org.

SOURCE: EBRI press release, December 14, 2016.

Visit our News Library to read more news stories.

Final rule updates ACA risk adjustment, cost sharing, and consumer choice

Mon, 01/09/2017 - 15:01

Updates to payment parameters and other provisions of the risk adjustment program of the Patient Protection and Affordable Care Act (ACA) are designed to improve the ability of risk models to estimate risk for qualified health plan (QHP) issuers. In addition to taking steps to improve the risk adjustment program of the ACA, a HHS final rule makes adjustments to ACA cost-sharing parameters and makes amendments intended to increase consumer choice in the QHPs offered on ACA exchanges. The regulations are effective January 17, 2017.

Risk. In order to stabilize premiums for the small group and individual markets, the final rule makes several updates to the risk adjustment methodology. Specifically, for the 2017 benefit year, the final rule alters how HHS estimates the actuarial risk associated with enrollees who are not enrolled for a full 12 months. HHS identified situations where plans with partial-year enrollment were experiencing higher than expected claims costs—risk that were not captured by the current risk adjustment. After reviewing actuarial risk for adults with shorter enrollment periods, HHS found that the risk tended to be slightly under-predicted. Thus, for 2017, HHS updated the risk adjustment model to include adjustment factors for partial year enrollees in risk adjustment covered plans. Additionally, beginning with the 2018 benefit year, the final rule establishes new methodology to use prescription drug data to update the predictive ability of risk adjustment models.

Cost sharing. Adjustments to the cost sharing parameters under the final rule include a finalization of the premium adjustment percentage for 2018, under Section 1302(c)(4) of the ACA. That adjustment is 16.17303196 percent. The final rule also sets the maximum annual limitations on cost sharing for the 2018 benefit year for cost-sharing reduction plan variations. The maximum annual limitation on cost sharing is $7,350 for self-only coverage and $14,700 for other than self-only coverage. Those figures represent a 2.8 percent increase above the 2017 parameters.

Consumer choice. The final rule’s provisions dedicated to improving consumer choice in QHP plan selection include a mandate that QHP issuers offer at least one QHP at the silver coverage level and at least one QHP at the gold coverage level throughout the service area in which a QHP issuer offers coverage. The new regulations require QHP issuers to make their QHPs available through the exchange for a full plan year, as a condition of QHP certification. The new regulations also include several updates to enhance the shopping experience on exchanges and to improve exchange oversight and security.

SOURCE: 81 FR 94058, December 22, 2016.

Visit our News Library to read more news stories.

EBSA guidance includes clarification of effect of CURES Act on HRAs

Mon, 01/09/2017 - 14:58

The EBSA has issued frequently asked questions (FAQs) addressing special enrollment for group health plans, coverage of preventive services, and health reimbursement arrangements (HRAs), as impacted by the implementation of the ACA, HIPAA, and the recently-enacted 21st Century Cures Act (Cures Act; P.L. 114-255). The FAQs were prepared jointly by the Departments of Labor, Treasury, and Health and Human Services.

Special enrollment period eligibility. A special enrollment period must generally be offered when employees or their dependents lose eligibility for any group health plan or health insurance coverage in which any of them were previously enrolled, or in certain circumstances when an employer terminates contributions towards coverage. The special enrollment period also must be offered upon certain life events, such as birth, marriage, or adoption, and for new eligibility or loss of coverage under the Children’s Health Insurance Program (CHIP). A notice of this special enrollment period is required at or before the time an employee is first offered the opportunity to enroll in a group health plan.

The EBSA is now clarifying that, if an individual is enrolled in individual market coverage, and this includes coverage purchased through a state Exchange, and the individual loses eligibility for that coverage, he or she is entitled to a special enrollment period in any employer-sponsored group health plan that he or she is eligible for, and had previously declined to enroll in. This does not include instances in which someone loses coverage for their failure to pay premiums. The eligibility for a special enrollment period in a group health plan exists regardless of whether or not an individual may enroll in any other individual market coverage, including coverage in a state Exchange.

Coverage of preventive services. Under Public Health Service Act (PHSA) Sec. 2713, non-grandfathered group health plans and health insurance coverage offered in the individual or group market must not impose cost-sharing requirements on certain preventive services. The Health Resources and Services Administration (HRSA) updated its Women’s Preventive Services Guidelines on December 20, 2016, and the EBSA is reminding the public that women’s preventive services must be covered in accordance with these updated guidelines, without cost-sharing, for plan years beginning on or after December 20, 2017. Until then, non-grandfathered group health plans and health insurance issuers must abide by the previous HRSA guidelines and PHSA Sec. 2713. The update is available at www.hrsa.gov/womensguidelines2016.

HRAs for small employers. HRAs and employer payment plans (EPPs) generally fail to comply with the ACA’s group market reforms because they reimburse or pay employees’ medical expenses only up to a certain yearly dollar amount. Technical Release 2013-03 provided that an HRA will not fail to satisfy the group market reform provisions when integrated with a group health plan in accordance with guidance in the technical release. Final regulations issued November 18, 2015 (80 FR 72192) reiterated that neither an HRA nor an EPP may be integrated with individual market policies to satisfy market reforms.

The Cures Act introduced the qualified small employer health reimbursement arrangement (QSEHRA), which is a tax-preferred arrangement for small employers to use to help employees pay for medical expenses. The Cures Act states that a QSEHRA is not a group health plan. The FAQs contain detailed information on QSEHRAs.

More specifically, the FAQs provide that QSEHRAs must be funded solely by eligible employers, and may include no salary reduction contributions, and they must provide for payment to or reimbursement of medical care expenses incurred by an employee or the employee’s family members (as set forth in Code Sec. 213(d)). Eligible employers do not include applicable large employers (those with at least 50 full-time employees), or those employers offering group health plans to any employees. Payments and reimbursements for any year may not exceed $4,950 ($10,000 for QSEHRAs that include an employee’s family members), and QSEHRAs must be provided on the same terms to all of an employer’s eligible employees, except that certain variations are permitted in accordance with the variation in the price of an insurance policy based on age or number of family members.

The FAQ advises that, because QSEHRAs are statutorily excluded from the definition of a group health plan, group market reform requirements do not apply, effective for plan years beginning after December 31, 2016. The FAQ also states that, in accordance with an extension provided under the Cures Act, for plan years beginning on or before December 31, 2016, the excise tax under Code Sec. 4980D for failure to satisfy market reforms will not be applied for EPPs that pay, or reimburse employees for, individual health policy premiums or Medicare Part B or Part D premiums, on employers otherwise eligible for the same relief that was previously provided under Q&A 1 of Notice 2015-17, and the filing of IRS Form 8928 is not required solely for having such an arrangement. The relief as it was previously provided under Q&A 1 of Notice 2015-17 was limited to periods before July 1, 2015. This relief does not extend to stand-alone HRAs or other arrangements reimbursing employees for medical expenses other than insurance premiums.

Also, an HRA or EPP that is not a QSEHRA, but that is eligible for the extended relief date under the Cures Act, would provide employer-provided group health coverage, and would be considered minimum essential coverage. Therefore, an individual with that coverage would not be eligible for a premium tax credit for coverage through his or her state Exchange.

SOURCE: FAQs about Affordable Care Act Implementation (Part 35), December 20, 2016.

Visit our News Library to read more news stories.

Spencer’s Benefits Report NetNews – January 6, 2017

Fri, 01/06/2017 - 21:24
About this Newsletter

The Spencer’s Benefits Reports is a summary of the week’s news items posted
in the WHAT’S NEW pages of Spencer’s Benefits Reports
Online
.
For questions regarding this email service, contact Customer Service at (800)449-9525.

NetNews Subscription

Want to receive these Newsletters via E-mail?

hr.cch.com Resources About Links in this Newsletter

To access the IntelliConnect™ full text documents you must be a subscriber
to the Spencer’s Benefits Reports IntelliConnect product
(depending on the link*).

Links within news stories display full text documents including legislation, regulations,
court decisions, rulings and government reports.

The first time you click on a link you will be taken to the IntelliConnect login page, where you will need to enter your ID and password. Subsequent links will take you directly to the desired document.

IntelliConnect

If you aren’t a subscriber call 800-449-9525, or let us contact you about,

Email Us

Contact us by sending an e-mail to

NetNews@cch.com

Featured This Week

 

New Reports

 

 

News

January 6, 2017

 

Senate introduces budget resolution to begin debate on ACA repeal

The Senate took initial steps towards repeal of the Patient Protection and Affordable Care Act (ACA) with its release of a budget resolution containing reconciliation instructions, which could serve as the foundation for the passage of future health legislation through the budget reconciliation process. The technique is designed to allow Senate Republicans to pass legislation with a simple majority, in a process where the bill could not be filibustered. Although the instructions are vague, the 52-Republican majority is sufficient to effectuate at least a partial repeal….

(Read Intelliconnect) »

GAO undercover operation revealed possible ACA fraud loophole

In an effort to test whether federal and state-based Patient Protection and Affordable Care Act (ACA) marketplaces were requiring application information during Special Enrollment Periods (SAPs), which allow applicants to obtain subsidized coverage outside of the general enrollment period, a GAO undercover operation discovered information collection practices that could make the ACA vulnerable to fraud. Information collection for SAPs is believed to be needed to prevent individuals who otherwise refused to sign up from improperly gaining access to subsidized insurance coverage only when they became sick….

(Read Intelliconnect) »

January 5, 2017

 

EEOC’s ADA, GINA wellness regs survive AARP’s attempt to thwart them

Refusing to preliminarily enjoin the EEOC’s regulations under the ADA and GINA that say the use of a penalty or incentive of up to 30 percent of the cost of self-only coverage does not render “involuntary” a wellness program (either a participatory or health-contingent program) that seeks the disclosure of ADA- or GINA-protected information, the federal district court in the District of Columbia found that AARP had associational standing—bringing suit on behalf of its members—to challenge the regs, but it did not establish irreparable injury. Specifically, the potential disclosure of health information required by the regs is not public disclosure, and employers are statutorily forbidden from using it to discriminate against employees. Further, paying higher premiums is economic harm, which is not irreparable. The court also found the EEOC entitled to some deference given that “voluntary” is not defined in either the ADA or GINA, and that on this limited record (resulting from AARP’s delay in challenging the regs), the EEOC had offered an apparently reasonable explanation for its change of course to allow the use of penalties or incentives….

(Read Intelliconnect) »

IRS reminds employers of important health care reporting dates

In the IRS’s latest tax tip, the agency has provided employers with some important health care reporting information. Under the Patient Protection and Affordable Care Act (ACA), insurance companies, self-insured companies, and large businesses and businesses that provide health insurance to their employees must submit information returns to the IRS and individuals reporting on health coverage….

(Read Intelliconnect) »

January 4, 2017

Guidance describes premium age curves and state reporting

The premium rate charged by health insurance issuers in the individual or small group market (in or outside of an exchange) may only vary by age within a 3:1 ratio as defined by uniform age bands set by 45 C.F.R. 147.102(a)(1)(iii), according to a Center for Consumer Information and Insurance Oversight (CCIIO) guidance document. Issuers must use a uniform age rating curve established by the state. If such a rate is not applied, issuers must use a uniform age rating curve established by HHS. Additionally, states are obligated to submit to CMS certain rating information regarding the scope and establishment of rating curves….

(Read Intelliconnect) »

New EBSA guidance includes clarification of effect of CURES Act on HRAs

The EBSA has issued frequently asked questions (FAQs) addressing special enrollment for group health plans, coverage of preventive services, and health reimbursement arrangements (HRAs), as impacted by the implementation of the ACA, HIPAA, and the recently-enacted 21st Century Cures Act (Cures Act; P.L. 114-255). The FAQs were prepared jointly by the Departments of Labor, Treasury, and Health and Human Services….

(Read Intelliconnect) »

Service credit denial barred under equitable estoppel, fiduciary duty rules

An employer’s refusal to recognize a participant’s 10 years of service at a Canadian facility when calculating his pension credits violated the principle of equitable estoppel as well as ERISA fiduciary duty and anti-cutback rules, the Sixth Circuit U.S. Court of Appeals has ruled….

(Read Intelliconnect) »

January 3, 2017

 

Text: HHS, final regulation, notice of benefit and payment parameters for 2018

(Read Intelliconnect) »

Nearly three-quarters of U.S. employees would like a customized benefits package

Seventy three percent of U.S. employees across all age groups would like the ability to customize their workplace benefits to suit their individual needs, according to a LIMRA Secure Retirement study….

(Read Intelliconnect) »

Final rule updates ACA risk adjustment, cost sharing, and consumer choice

Updates to payment parameters and other provisions of the risk adjustment program of the Patient Protection and Affordable Care Act (ACA) are designed to improve the ability of risk models to estimate risk for qualified health plan (QHP) issuers. In addition to taking steps to improve the risk adjustment program of the ACA, a HHS final rule makes adjustments to ACA cost-sharing parameters and makes amendments intended to increase consumer choice in the QHPs offered on ACA exchanges. The regulations are effective January 17, 2017….

(Read Intelliconnect) »

First open enrollment period provided only coverage option for millions

Analysis of insurance coverage rates before and after the first Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) open enrollment period shows that ACA coverage options account for about 76 percent of the decline in the uninsured rate during this time frame. The Commonwealth Fund reviewed factors that could have played into the increase in the percentage of insured Americans and concluded that the majority of those enrolling from fall 2013 through spring 2014 would not have had coverage without the ACA’s provisions….

(Read Intelliconnect) »

ERISA and other claims against noncompliant group health plan for ACA violations dismissed

Participants in a group health plan whose terms violated both ERISA and the Patient Protection and Affordable Care Act (ACA) lacked constitutional standing to sue the plan, the Sixth Circuit ruled. The mere fact that the participants paid money into a noncompliant plan did not satisfy the injury-in-fact requirement of constitutional harm necessary to establish standing, the appeals court held, finding the court below had properly dismissed their complaint….

(Read Intelliconnect) »

 

Pension & Benefits NetNews – January 3, 2017

Tue, 01/03/2017 - 22:26

NetNews Subscription

Want to receive these Newsletters via E-mail?

hr.cch.com Resources About Links in this Newsletter

To access the IntelliConnect™ full text documents you must be a subscriber to the Pension Plan Guide or Employment Benefits Management.

Links within news stories display full text documents including legislation, regulations,
court decisions, rulings and government reports.

The first time you click on a link you will be taken to the IntelliConnect login page, where you will need to enter your ID and password. Subsequent links will take you directly to the desired document.

IntelliConnect

If you aren’t a subscriber call 800-449-9525, or let us contact you about,

Email Us

Contact us by sending an e-mail to

NetNews@cch.com

Featured This Week

 

Employee Benefits Management News

 

  • 2017 standard mileage rates released
  • IRS issues final regs on disregard for facts exception for premium tax credit safe harbor
  • Final rules on claims procedures for disability benefits parallel ACA rules
  • New EBSA guidance includes clarification of effect of CURES Act on HRAs

Pension Plan Guide News

 

  • PBGC issues 2017 table showing present value of maximum benefit guarantee
  • IRS issues 2016 required amendments list for individually designed plans
  • DOL appoints new members for 2017 ERISA Advisory Council

 

Employee Benefits Management News

 

2017 standard mileage rates released

The IRS has released the 2017 optional standard mileage rates that employees, self-employed individuals, and other taxpayers can use to compute deductible costs of operating automobiles (including vans, pickups and panel trucks) for business, medical, moving and charitable purposes. For more information, see ¶2102F.

(Read Intelliconnect) »

IRS issues final regs on disregard for facts exception for premium tax credit safe harbor

The IRS has issued final regulations adopting an intentional or reckless disregard for the facts exception to the Code Sec. 36B eligibility safe harbors for household income below 100 percent of the Federal Poverty Level (FPL), government programs such as Medicaid, and employer-sponsored coverage. For more information, see ¶2102H.

(Read Intelliconnect) »

Final rules on claims procedures for disability benefits parallel ACA rules

The Employee Benefit Security Administration (EBSA) has issued final regulations revising the claims procedures for employee benefit plans providing disability benefits. For more information, see ¶2102I.

(Read Intelliconnect) »

New EBSA guidance includes clarification of effect of CURES Act on HRAs

The EBSA has issued Frequently Asked Questions (FAQs) addressing special enrollment for group health plans, coverage of preventive services, and health reimbursement arrangements (HRAs), as impacted by the implementation of the ACA, HIPAA, and the recently-enacted 21st Century Cures Act (P.L. 114-255). For more information see ¶2102L.

(Read Intelliconnect) »

Pension Plan Guide News

 

PBGC issues 2017 table showing present value of maximum benefit guarantee

The Pension Benefit Guaranty Corporation (PBGC) has issued a table showing the present value of the PBGC’s maximum benefit guarantee for 2017. The present value of the maximum guarantee for purposes of Code Sec. 436(d)(3)(A)(ii) and ERISA §206(g)(3)(C)(i)(II) is changing for 2017. The table is based upon methodology that is set out in PBGC Technical Update 07-4. For more information, see ¶19981z57.

(Read Intelliconnect) »

IRS issues 2016 required amendments list for individually designed plans

The IRS has released the 2016 Required Amendments List for individually designed qualified retirement plans. The list identifies certain changes in qualification requirements that became effective in 2016 that may require a retirement plan to be amended in order to remain qualified. For more information, see ¶17160h.

(Read Intelliconnect) »

DOL appoints new members for 2017 ERISA Advisory Council

Secretary of Labor Thomas E. Perez has announced the appointment of five new members to the 2017 Advisory Council on Employee Welfare and Pension Benefit Plans, also known as the ERISA Advisory Council. The 15-member council provides advice on policies and regulations affecting employee benefit plans governed by ERISA. Members serve for staggered three-year terms. The newly appointed members and the expertise they represent are: Douglas L. Greenfield, Employee organizations; Robert A. Lavenberg, Accounting; Marjorie F. Mann, Employers; Colleen E. Medill, General public; and Srinivas Dharam Reddy, Insurance. For more information, see ¶146w.

(Read Intelliconnect) »

 

For more information, visit http://www.wolterskluwerlb.com/rbcs.

 

Short-term disability plan was ERISA-exempt ‘payroll practice’

Tue, 12/27/2016 - 07:23

SunTrust’s short-term disability (STD) plan—which paid normal wages from general assets on account of work missed due to medical reasons—was an ERISA-exempt “payroll practice” under Department of Labor regulations, the D.C. Circuit ruled. Further, the court below appropriately applied a deferential standard of review in assessing the plan administrator’s denial of benefits to a SunTrust employee under the bank’s long-term disability (LTD) plan, the appeals court held, affirming both the lower court’s grant of summary judgment against her ERISA claim and the denial of her motion for reconsideration.

After missing work due to a variety of ailments, the mortgage loan closer submitted claims for STD benefits, which were denied by Sedgwick, SunTrust’s plan administrator. SunTrust then terminated the employee based on her absences. Her subsequent claim for LTD benefits was also denied by Sedgwick.

Lower court proceedings. The employee then sued SunTrust and Sedgwick under ERISA Section 1132(a) to enforce her rights under both the STD and LTD plans. On summary judgment, she conceded, and the district court independently determined, that the STD plan was an ERISA-exempt payroll practice. Accordingly, the court granted summary judgment as to the STD plan. It then found that the LTD plan vested Sedgwick with broad discretionary authority, triggering a deferential standard of review under the Supreme Court’s decision in Firestone Tire & Rubber Co. v. Bruch. Applying that standard, the court found Sedgwick had not abused its discretion nor acted arbitrarily or capriciously in denying the employee’s claim for LTD given her failure to submit sufficient objective medical documentation. Finally, the court also denied the employee’s motion for reconsideration, in which she argued that in spite of her concession, the court erred in finding that the STD plan was ERISA-exempt.

Exempt payroll practice. There is no dispute, the appeals court began, that without the DOL’s regulatory exemption, SunTrust’s STD plan would be an “employee welfare benefit plan” under ERISA. But, pursuant to 29 C.F.R. Sec. 2510.3-1(b(2), the DOL exempts certain “payroll practices,” including “[p]ayment of an employee’s normal compensation, out of the employer’s general assets, on account of periods of time during which the employee is physically or mentally unable to perform his or her duties, or is otherwise absent for medical reasons.” Not only did SunTrust’s STD plan clearly fit within this regulatory definition, the court found it appeared as if the bank drafted its plan to match the regulatory exemption.

Nonetheless, the employee argued that the relationship between SunTrust and Sedgwick and the administration of the STD benefits established an on-going administrative scheme that subjected the Plan to ERISA. This argument, however, was not properly raised and preserved before the lower court and, further, said the appeals court, it rested on a flawed assumption. Although the employee cited the Supreme Court’s decision in Fort Halifax Packing Co., Inc. v. Coyne in support of her contention, the Court in that case did not address plans that were exempt from ERISA pursuant to DOL regulations. Moreover, in Fort Halifax the issue was whether the provision of a certain type of benefit should be construed as a plan that was within the compass of ERISA while the question here was whether a benefit program that clearly fell within the compass of ERISA was nevertheless exempt pursuant to DOL regulations. “The answer here is yes,” said the court, finding SunTrust’s STD disability benefit plan fell squarely within the exemption and affirming summary judgment against that claim.

Deference due to plan administrator. The appeals court next found that the district court appropriately applied a deferential standard of review to Sedgwick’s denial of benefits under the LTD plan because the terms of the plan unambiguously granted the administrator alone the power to construe critical plan terms and to decide an employee’s eligibility for benefits. In reaching this conclusion, the court looked for guidance from Supreme Court cases including Firestone and later decisions confirming that, in assessing a claim under Section 1132(a)(1)(B), a court must consider “trust law, the terms of the plan at issue, and the principles of ERISA.”

Looking to trust law, courts “analogize a plan administrator to the trustee of a common-law trust; and . . . consider a benefit determination to be fiduciary act.” Further, observed the court, the Restatement (Third) of Trusts recognizes that a trustee’s powers may be express or implied. Likewise, an ERISA plan document may show that the employer intended for the administrator to have discretionary powers to construe terms or determine eligibility if the terms of the plan direct the administrator to obtain specified objectives of the plan without specifying the means by which to achieve them.

Turning to the terms of SunTrust’s LTD plan, the court found it clear that Sedgwick alone had the power to construe disputed plan terms and determine benefits eligibility. Moreover, when exercising the authority to deny a claim, Sedgwick had to interpret and apply the plan terms. Further, any appeal of the administrator’s denial of benefits was to the administrator and no one but the administrator determines whether an employee is eligible for benefits, said the court, noting that “there is no detailed rubric by which the administrator is constrained in determining whether the definition of disability is met.” These unambiguous grants of discretion to Sedgwick compelled deferential review of its assessments of benefits claims, the court concluded.

Turning finally to the principles of ERISA, the court found that while Firestone instructs that when discretion is not clearly granted to the administrator, de novo review is appropriate, the Court was equally clear in saying that “[n]either general principles of trust law nor a concern for impartial decisionmaking . . . forecloses parties from agreeing upon a narrower standard of review.” Here, said the court, SunTrust unambiguously gave Sedgwick the power to interpret material plan terms and determine eligibility for benefits. Thus, the district court did not err in reviewing Sedgwick’s benefits determination under a deferential standard of review and in concluding that Sedgwick had not abused its discretion or acted in an arbitrary or capricious way in denying the employee’s claim for LTD benefits.

SOURCE: Foster v. Sedgwick Claims Management Services, Inc., (D.C. Cir.), No. 15-7150, November 29, 2016.

Visit our News Library to read more news stories.

Use of PTO plans continues to increase

Tue, 12/27/2016 - 07:18

Employers continue to migrate from traditional vacation/sick plans to paid time off (PTO) plans, according to a recent survey from Mercer. The Absence and Disability Management Survey found that PTO plans are now in place in 63 percent of organizations (up from 50 percent in 2013 and 38 percent in 2010). PTO plans provide employees with more flexibility and reduce the need to determine (and track) what type of day off is being taken.

However, despite focusing on time off, employers report that many employees do not use all of the days available to them: 44 percent report that their employees take less than 80 percent of their allotted PTO time. And for the growing number of employees who work remotely, time off may not truly be time away from work. Employers are rethinking time-off program design to take into account all of these dynamics and help employees to achieve a healthier work/life balance.

Some employers –more than one in 10 respondents—have taken the step of offering unlimited vacation, at least to executives. However, most employers that have implemented unlimited vacation have found that employees take about the same time off as they were allotted previously under a standard plan.

Other types of paid leave, such as parental leave, are increasingly important as well. Generous parental leave policies implemented by a number of companies, particularly in the tech industry, were covered widely in the press and drew national attention. While for most employers, disability benefits are still the only official company-sponsored paid leave for new moms that are provided, 24 percent of employers provide paid parental leave for bonding to the birth parent.

In addition, 25 percent of employers reported providing a paid parental leave benefit to the non-birth parent. Whereas parental leave for the birth parent begins when the disability ends, parental leave for the non-birth parent usually begins upon the birth of the child. For those providing a paid parental leave benefit, the median number of weeks offered is six weeks for the birth parent and four weeks for the non-birth parent. In the vast majority of cases, the paid parental leave benefit covers 100 percent of the employee’s pay.

The survey also found the following about FMLA administration:

• More employers are choosing to outsource FMLA administration. In 2015, 40 percent of respondents outsource or co-source FMLA, up from 38 percent in 2013.
• Improving FMLA administration and reducing the impact of absence on operations are respondents’ top priorities for their absence and disability programs (cited by 44 percent and 42 percent, respectively).
• Nearly two-thirds of respondents (65 percent) have experienced an increase in leave requests over the past two to three years, and about a third reported an increase in the number of ADAAA leave accommodation requests (32 percent).

SOURCE: Mercer press release, November 28, 2016.

Visit our News Library to read more news stories.

Spencer’s Benefits Reports NetNews – December 16, 2016

Fri, 12/16/2016 - 21:25
About this Newsletter

The Spencer’s Benefits Reports is a summary of the week’s news items posted
in the WHAT’S NEW pages of Spencer’s Benefits Reports
Online
.
For questions regarding this email service, contact Customer Service at (800)449-9525.

NetNews Subscription

Want to receive these Newsletters via E-mail?

hr.cch.com Resources About Links in this Newsletter

To access the IntelliConnect™ full text documents you must be a subscriber
to the Spencer’s Benefits Reports IntelliConnect product
(depending on the link*).

Links within news stories display full text documents including legislation, regulations,
court decisions, rulings and government reports.

The first time you click on a link you will be taken to the IntelliConnect login page, where you will need to enter your ID and password. Subsequent links will take you directly to the desired document.

IntelliConnect

If you aren’t a subscriber call 800-449-9525, or let us contact you about,

Email Us

Contact us by sending an e-mail to

NetNews@cch.com

Featured This Week

 

New Reports

 

 

News

December 16, 2016

 

No rapid crossover yet of “narrow provider networks” from health exchanges to employer plans

So-called “narrow provider networks,” which limit covered health providers in health plans, do not appear to be crossing over rapidly from the Affordable Care Act’s health exchanges into employment-based health plans, according to a new analysis by the nonpartisan Employee Benefit Research Institute (EBRI) and Mark A. Hall, J.D., Wake Forest University, with support from the Robert Wood Johnson Foundation’s (RWJF) Changes in Health Care Financing & Organization (HCFO) Initiative….

(Read Intelliconnect) »

IRS proposed regs update minimum present value rules applicable to DB plans

The IRS has issued proposed regulations that would update the current final regulations regarding the minimum present value requirements of Code Sec. 417(e)(3) that are applicable to certain defined benefit (DB) plans for changes made by the Pension Protection Act of 2006 (PPA, P.L. 109-280) and to eliminate certain obsolete provisions. In addition, the proposed regulations would provide other clarifying changes. The changes are proposed to apply to distributions with annuity starting dates in plan years beginning on or after the date that final regulations are published in the Federal Register….

(Read Intelliconnect) »

December 15, 2016

 

2017 standard mileage rates released

The IRS has released the 2017 optional standard mileage rates that employees, self-employed individuals, and other taxpayers can use to compute deductible costs of operating automobiles (including vans, pickups and panel trucks) for business, medical, moving and charitable purposes….

(Read Intelliconnect) »

Federal interest rates announced for pensions

The following interest rates have been announced for use in the operation and administration of qualified pension plans…

(Read Intelliconnect) »

Engineer’s ADA claims revived because employer may have been on notice he had a disability

An engineer may have put his employer on notice of his disabling back condition and sufficiently requested an accommodation, held the Sixth Circuit in an unpublished decision, vacating a summary judgment ruling and remanding for further proceedings. Contrary to the trial court’s findings, a reasonable jury could determine that the employer was on notice the engineer had a disability because he had informed it of recent doctor’s visits, MRI results, and past back surgeries, and that he adequately requested an accommodation by asking permission to “mix up” his tasks to avoid exacerbating his back pain….

(Read Intelliconnect) »

December 14, 2016

Retirees of auto parts manufacturer not entitled to vested lifetime health care benefits

In view of the fundamental shift in the analytical framework for determining the vesting (or not) of lifetime, inalterable retiree health care benefits under a CBA brought by the U.S. Supreme Court’s ruling in M & G Polymers USA, LLC v. Tackett, and the recognition of that change by the Sixth Circuit in Gallo v. Moen Inc., a federal district court in Michigan granted summary judgment for an employer, finding its unilateral change in retiree health care benefits was not unlawful. Here, applying ordinary principles of contract interpretation required the conclusion that no vesting occurred….

(Read Intelliconnect) »

ACA provided $32.8B in tax credits in 2016, benefited 9.4M enrollees

The 9.4 million Americans who purchased health insurance through the Patient Protection and Affordable Care Act (ACA) will receive a total of over $32.8 billion in premium tax credits in 2016—assistance that will be eliminated if the ACA is repealed….

(Read Intelliconnect) »

Five new members appointed to ERISA Advisory Council

Five new members have been appointed to the 2017 Advisory Council on Employee Welfare and Pension Benefit Plans (also known as the ERISA Advisory Council) by Secretary of Labor Thomas E. Perez. Current members Jennifer Kamp Tretheway and Beth A. Almeida will serve as the chair and vice chair, respectively, of the council….

(Read Intelliconnect) »

December 13, 2016

 

Changes to Form 5500 open employers up to litigation, ERIC says

The ERISA Industry Committee (ERIC) has submitted comments on the proposed amendments to the annual reporting and disclosure requirements for plan sponsors via Form 5500 to the Department of Labor (DOL), the Internal Revenue Service (IRS), and the Pension Benefit Guaranty Corporation (PBGC)….

(Read Intelliconnect) »

ACA opinions remain split amidst election aftermath

Americans continue to be split on their views of the Patient Protection and Affordable Care Act (ACA), although some aspects of the law, such as the provision allowing young adults to stay on their parents’ insurance plans until age 26, are popular across party lines. According to the Kaiser Family Foundation (KFF) November health tracking poll, 49 percent of Americans want to either expand the ACA or move forward with the existing law, while 43 percent want to either repeal the entire law or scale back what it does. However, 63 percent of Americans unfavorably view the individual mandate. The incoming Trump administration has vowed to repeal and replace the ACA….

(Read Intelliconnect) »

December 12, 2016

 

Text: IRS, proposed regulation, health insurance providers fee

(Read Intelliconnect) »

Text: IRS, proposed regulation, electronic filing of the report of health insurance provider information

(Read Intelliconnect) »

IRS releases proposed regs on Health Insurance Provider Fee and risk adjustments

The IRS has issued proposed regulations regarding the Health Insurance Provider Fee under Section 9010 of the Patient Protection and Affordable Care Act (P.L. 111-148). One set would require electronic filing of Form 8963, Report of Health Insurance Provider Information. These amendments are proposed to apply to any covered entity reporting more than $25 million in net premiums written on any Form 8963 filed after December 31, 2017. The other set of proposed regulations would modify the current definition of “net premiums written,” and are proposed to apply with respect to any fee that is due on or after September 30, 2018….

(Read Intelliconnect) »

Court puts cost-sharing appeal on hold, awaits possible Trump policy

The U.S. Court of Appeals for the District of Columbia granted the U.S. House of Representatives’ motion to hold the appeal over cost-sharing reduction funding in abeyance until February 21, 2017. By that time, the parties must file motions to direct the rest of the proceedings, which the House believes may look very different from the current state of the litigation….

(Read Intelliconnect) »

 

Robust benefits package essential in war for talent, SHRM survey finds

Wed, 12/14/2016 - 20:06

In today’s competitive war for talent, employers are turning to and bolstering their benefits packages to give them an edge over competitors, a Society for Human Resource Management (SHRM) survey report showed. According to the report, 95 percent of HR professionals rated health care as one of the three most important benefits to employees. Other top rated employee benefits included retirement savings and planning (71 percent) and leave (50 percent).

Nearly 1 in 5 HR professionals (19 percent) said their organizations had altered their benefits program to aid in the retention of employees at all levels of the company over the past 12 months. HR professionals at high tech companies were more likely to indicate their organizations altered their benefits program to aid in retention than those in other industries (25 percent vs. 17 percent).
About one-third (30 percent) indicated that controlling health care costs was their organization’s main strategic focus for its employee benefits package; just over one-quarter (27 percent) indicated their focus was ensuring employees understood the value of their benefits package.

“As the war for talent wages on, employers will need not only to ensure that they are strategically utilizing benefits to secure talent, but that employees understand the value of their benefits package,” said Evren Esen, SHRM’s director of workforce analytics.

“Health care, retirement and leave benefits are all highly valued by employees, so bolstering these benefits could go a long way in recruiting new employees and retaining existing ones,” Esen explained. “But the rising cost of health care adds complexity to the strategy. Employers are going to have to continue to articulate their choices.”

Assessment and communication of benefits. Just 14 percent of HR professionals indicated that employees are “very knowledgeable” about employer-sponsored benefits; about two-thirds (69 percent) said employees are “somewhat knowledgeable.”

Health care. About three-quarters (74 percent) of companies have not considered providing subsidies to purchase health care insurance through a private exchange. In addition, nearly three-quarters (73 percent) of organizations anticipated an increase in their company’s total health care costs between the 2015 and 2016 plan years; one-third anticipated an increase of over 10 percent.

Flexible work arrangements. Over one-half (56 percent) of organizations provided employees with the option to use flexible work arrangements. HR professionals at high-tech companies were more likely to indicate their organizations provide employees with the option to use flexible work arrangements than those in other industries (76 percent vs. 46 percent).

Wellness. About three-fourths of organizations that had wellness initiatives in place indicated they were “somewhat” or “very effective” in improving overall engagement of employees (74 percent). Almost one-half (48 percent) of companies indicated their wellness initiatives decreased their health care costs; 42 percent noted a decrease in unplanned absences and 30 percent an increase in work productivity.

About the survey. SHRM surveyed 738 HR professionals from a randomly selected sample of its members throughout the United States.

SOURCE: https://shrm.org/.

Visit our News Library to read more news stories.

HSA balances post significant growth in 2015

Wed, 12/14/2016 - 20:03

Balances in health savings accounts (HSAs) grew by more than a third in 2015, according to the most recent (third annual) results from the EBRI HSA Database. Furthermore, at year-end 2015 (the latest data available), the average HSA balance was $1,844, up from $1,332 at the beginning of the year. Average account balances increased with the age of the owner of the account. Account balances averaged $759 for owners under age 25 and $3,623 for owners ages 65 and older.

“Nearly 30 percent of employers offered an HSA-eligible health plan in 2015, and that percentage is expected to increase in the future both as a health plan option and as the only health plan option,” said Paul Fronstin, director of EBRI’s Health Education and Research Program and author of the study. “This database is one of the very few sources of administrative information on HSAs themselves and how owners use them.”

A health savings account is a tax-exempt trust or custodial account that is funded with contributions and assets that an individual can use to pay for health care expenses. Individuals can contribute to an HSA only if they are enrolled in an HSA-eligible health plan.

Contributions to the account are deductible from taxable income, an employer’s contributions to the account are excludable from the employee’s gross income, and distributions for qualified medical expenses from the HSA are excluded from taxable income to the employee. Tax-free distributions are also allowed for certain premium payments. Any interest or other capital earnings on assets in the account build up tax free.

The EBRI HSA database collects anonymous data from various HSA recordkeepers, and includes four million accounts with total assets of $7.4 billion as of Dec. 31, 2015. It examines account balances, individual and employer contributions, distributions, invested assets and account-owner demographics in 2015.

Among the key findings:

• Over 4 in 5 HSAs (85 percent) have been opened since the beginning of 2011. Four-fifths of HSAs with a 2015 contribution also had a distribution during 2015. Of the HSAs with distributions, the average amount distributed was $1,748.
• About 3 percent of HSAs had invested assets (beyond cash). Thirty-six percent of HSAs with investments ended 2015 with a balance of $10,000 or more, whereas only 4 percent of HSAs without investments had such a balance.
• Among HSAs with investments, accounts opened in 2015 ended the year with an average balance of $4,907 whereas those opened in 2005 had an average balance of $27,903 at the end of 2015.
• On average, individuals who made contributions in 2015 contributed $1,864 to their account in 2015. HSAs receiving employer contributions in 2015 received $948, on average.
• Distributions increased as HSA owners’ ages increased. For example, 2015 distributions averaged $634 for HSA owners under age 25; $2,319 for owners ages 55–64; and $2,365 for owners ages 65 and older.
• Distributions were higher for HSAs that were older. However, the likelihood of taking a distribution was higher among HSAs opened more recently, other than those opened in 2015.
The full report, “Health Savings Account Balances, Contributions, Distributions, and Other Vital Statistics, 2015: Estimates from the EBRI HSA Database,” is published in the Nov. 29 EBRI Issue Brief, online at www.ebri.org

SOURCE: EBRI press release, November 29, 2016.

Visit our News Library to read more news stories.

Free Email Newsletter

 

The CCH® NetNews™ Newsletter has long been the leading authority on legal and compliance information. Now you can get a weekly summary of court decisions, government news and much more delivered to your inbox.

Learn More | Sign Up

Testimonials

United Benefit Pensions

"The TAG website contains many useful forms, examples, spreadsheets and other tools used in the administration of qualified plans. The TAG conference consisted of the most influential and knowledgeable speakers I have heard in this field. They presented the material in a practical and useful manner, not just a pure academic environment."