House Passes Version of Obamacare Repeal and Replace
Keeping the Republicans’ longstanding campaign promise to repeal and replace the Affordable Care Act aka Obamacare, the House in a close vote with no Democratic support passed legislation which would essentially gut President Obama’s signature legislation.
The proposed bill is extremely unpopular with fewer than 20% of the American people supporting the changes. The next step in the process is for the Senate to come forth with its proposal. The Senate has indicated it is “starting from square one” so it remains to be seen what the Senate will come up with. With all the distractions in Washington it is hard to predict what will happen with health care reform. However, most Republicans ran on the promise to repeal and replace Obamacare so there is tremendous political pressure to pass something. The House’s passage of the American Health Care Act was the first step in that process. Therefore, I am not including a ton of articles on this proposed legislation because it is likely to change and be significantly different from the final legislation.
2018 HSA and HDHP Limits Released
High deductible health plans (HDHPs) and health savings accounts (HSAs) are very popular. As you know, there are limits on the maximum out of pocket amounts under the HDHP and limits on the amounts that can be contributed to an HSA.
Those amounts are indexed each year to account for inflation and the IRS just released the figures for next year.
Is a Single Payer System Right for America?
America spends more on health care than any other nation and yet our results and outcomes are not the best in the world.
Some advocate a single payer system as the answer. Basically, it would be along the lines of Medicare for all. This article talks about how such a system would work. Most people will agree the current system is broken but, at least currently, the majority of Americans are not willing to go to a single payer system at this time.
Disability Plan Claims Procedures Revamped
ERISA imposes detailed claims procedures on all welfare benefit plans but the actual rules vary depending on the type of plan. The Department of Labor issued new procedures for disability plans. The new rules apply to claims incurred on or after January 1, 2018.
The rules are designed to give participants more protection and are somewhat similar to the claim procedures applicable to group health plans. In short, the new procedures are more detailed and provide more safeguards than the current steps.
Cat’s Paw Theory Scratches Employer in FMLA Case
A recent Sixth Circuit Case (Ohio is in the Sixth Circuit) analyzed the process to determine who was the real decisionmaker when it came to an FMLA retaliatory claim lawsuit.
A key component in any employment lawsuit is the decisionmaker’s intent and the motive behind the adverse employment action. Depending on the circumstances the employee can use a “cat’s paw” theory of liability that allows the employee to show that the bias of a subordinate who did not make the employment decision is imputed to the ultimate decisionmaker.
Tiered Networks Gaining in Popularity
Tiered network plans are gaining in popularity with both the carriers and employers. Under this type of arrangement, providers with the lowest costs and best outcomes are treated more favorably under the health plan in the form of lower cost sharing for the participants.
There certainly is no shortage of theories as to how to reduce health care spending. However, when it comes to choosing providers most people still look to their primary care physicians when it comes to treatment. That is, most people will use whatever provider their doctor suggests.
HIPAA Fines Continue
HIPAA was enacted, in main part, to require covered entities and business associates to safeguard the individual’s protected health information or PHI. It is hard to argue against those goals and common sense goes a long way toward achieving that goal.
Most small employers with fully insured health plans need not be overly concerned because they do not receive PHI. However, if you maintain a self-funded health plan or do receive PHI you need to ensure that you and all your business associates are complying with the rules. This case involved a covered entity that used a business associate that was not complying with the rules. The government assessed a penalty against the covered entity because the covered entity has been using the business associate before they had entered into a business associate agreement.
Employer Mandate Penalty
By now we are sure you are aware of the employer mandate or play or pay penalty under the Affordable Care Act or Obamacare. Basically large employers (i.e. those with 50 or more full-time and full-time equivalent employees) must offer quality/affordable coverage or pay a penalty.
Although no penalties have yet to be assessed, these articles talk about the government’s process to assess those penalties. The penalties are unpopular and it is no secret the Trump administration opposes the penalties. So it is questionable how much effort (if any) the government will put into enforcing this provision of the law.
Trump Administration Tries to Stabilize Individual Markets
There has been a tremendous amount of coverage on health care reform and the Republican’s efforts to repeal and replace the current system. Most of the ink devoted to this topic has really been on the individual market (i.e. providing health coverage to individuals) as opposed to employer sponsored group health plans. One of the main components of the current system is the health care exchanges.
Carrier after carrier are pulling out of the exchanges. The government recently issued regulations to help stabilize these exchanges. Although Congress is struggling to pass legislation to revamp the health care system, one should not underestimate the impact the government can impose through regulations. That is, even if new laws are not passed, the Trump administration can still have a major impact by issuing rules and regulations.
PCORI Fee Coming Up
We still have a couple of months to go but I wanted to remind those with self-funded health plans (including HRAs) that they will have to pay the PCORI fee by the end of July.
The PCORI is not a lot of money so the biggest thing is to remember to report it and pay it. It is easy to forget since it is due only once a year.
Employer Settles EEOC Wellness Lawsuit
An employer agreed to pay $100,000 to settle a lawsuit with the EEOC over its wellness program. In 2008, Orion switched from a fully insured health plan to a self-insured plan. In 2009, to reduce costs by improving employee health, it began a wellness initiative with three “incentives” whereby employees who enrolled in Orion’s plan: (1) had to certify they did not smoke or pay a surcharge ($80 per month for single coverage); (2) had to exercise 16 times per month or pay a $50 monthly surcharge; and (3) had to complete a health risk assessment or pay the entire monthly premium, which was $413.43 for single, $744.16 for limited family, and $1,130.83 for family coverage.
The EEOC said the program violated the Americans with Disabilities Act (ADA) and that the company fired an employee for refusing to comply with the wellness program.
ERISA Fidelity Bonds
ERISA requires that anyone who “handles” plan assets be bonded. The bond is designed to protect the plan from fraud and dishonesty. This article talks about misconceptions regarding the bonding requirements.
Some people confuse the bonding requirements (which are required) and fiduciary liability coverage (which is not required). Prudent employers will have both a fidelity bond and fiduciary coverage.
Next to charts, most people like simple short checklists that outline the requirements. This article is a short checklist of items to consider during the health plan’s enrollment process.
My concern is that people rely too much on these simplified tools and fail to realize they are just the starting point for compliance and not the sole source.
This is a pretty long compilation of workplace trends compiled by HR professionals at large employers.
The article covers a broad spectrum of topics and makes for interesting reading for those in human resources. You may pick up a nugget or two from the information.
Failure to Notify Beneficiary of Conversion Right was Fiduciary Breach
Failing to fully explain to the beneficiary the policy’s conversion rights under the group term life insurance plan ended up costing the administrator money.
The plan administrator told the beneficiary that all of her husband’s benefits would remain the same while he was out on disability. The carrier later mailed her a notice saying conversion of life insurance coverage would be required after 36 weeks of leave, but did not include forms or more information about conversion, or the date by which conversion was required. After plaintiff’s husband died, her claim under the plan was denied on the ground that the coverage had lapsed. The Court said the plan administrator breached its fiduciary duty by not disclosing, in detail, the conversion policy rights.
HIPAA Risk Analysis
Chances are IF you are receiving protected health information or PHI you are receiving electronic PHI. That is, electronic transmission of data is almost universal.
This means you are required to perform a risk analysis to ensure the electronic PHI, also referred to as ePHI, is safeguarded. Unfortunately there are not uniform rules governing ePHI since each situation is different. This article talks about a covered entity that did not perform a risk analysis and the article outlines some general principals to consider.
Voluntary Benefits Become Viable Option
As traditional benefits (e.g. employer provided group health plans) become more expensive, more employers are offering voluntary benefits as an alternative.
Most often the voluntary benefits are completely employee paid and, depending on how the program is set up, the benefits may be exempt from ERISA. This article discusses the various options.
Electronic Distribution Rules
Almost everyone uses emails and other forms of electronic communications today. So it is not surprising employers are communicating electronically with employees.
However, it is important to note that there are strict rules under both ERISA and the Internal Revenue Code when it comes to providing electronic communications to employees when we are talking about employee benefits. The rules have been around for awhile, and this article lists those rules.
Paid Leave for Certain Government Contractors
President Obama signed an Executive Order requiring certain government contractors to provide up to 56 hours of paid sick leave each year to some employees. The Executive Order became effective January 1, 2017.
It remains to be seen if the Trump administration will withdraw the Executive Order and/or simply ignore it. However, if you do work for the Federal government you should be aware of the rules.
Retiree Health Coverage Cases
There are no laws that require employers offer retiree health coverage. Essentially such coverage is based on contract theory. That is, the employer enters into a contract (usually through a collective bargaining agreement) to provide retiree coverage. So whether or not the employer can modify or terminate the retiree coverage depends upon the terms of the contract.
Because retiree health coverage is so valuable and expensive, it is easy to see (1) why employers would want to terminate the coverage and (2) why the retirees would resist such a move. Therefore, it is not surprising these matters end up in litigation. This article talks about three recent cases in the Sixth Circuit (Ohio is in the Sixth Circuit) involving retiree health coverage.
Selling Insurance Across State Lines
People are advocating that allowing carriers to sell health insurance across state lines will increase competition, which in turn, will reduce costs.
However, most people in the know say that simply is not the case. It sounds good in theory but the practicality of selling insurance across state lines probably will not result in lower prices.
Protection for Stop Loss Policies
More employers are looking at self-funding their group health plans as a way to save money. Most employers buy stop loss policies to help protect against large claims. ERISA preempts states from regulating self-funded health plans. However, states are trying to regulate self-funded health plans indirectly by imposing restrictions on the stop loss policies.
The House recently passed a bill that would restrict the states’ ability to regulate stop loss policies. This bill is part of health care reform but has been “under the radar” with all the focus on the House’s repeal-and-replace legislation.
IRS Address Tax Scheme
No one likes paying taxes and they can take a large chunk of any employer’s bottom line. On top of that, the tax laws are extremely complex. So it is not surprising people are out there promoting schemes that purport to reduce taxes.
As a result, the old adage “if it sounds too good to be true, chances are it is not.” The IRS released a memo talking about wellness programs that are being marketed as a way to reduce taxes.