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The Transitional Reinsurance Fee: Mitigating Risk Could Be Pricey

The Transitional Reinsurance Fee: Mitigating Risk Could Be Pricey

August 29, 2012

Authored by: benefitsbclp

Employers sponsoring self-funded group health care plans are likely familiar with the Patient-Centered Outcomes Research Fees which will be imposed beginning in July 2014 as a result of the health care reform bill.  The fees — $1 per covered life for the first year, and $2 per covered life thereafter — can add up for plans.  These fees may be dwarfed, however, by another health care reform fee-the Transitional Reinsurance Fee.

What The Transitional Reinsurance Fee, which applies to both insured and self-funded group health plans, has been somewhat of a sleeper in benefits news.  Although final regulations were issued March 23, 2012, the annual amount of this per capita fee is still unknown.  However, preliminary projections indicate that the annual fee could be at least $60, and perhaps as high as $105, per covered life (covered employees and their dependents), making the Patient-Centered Outcomes Research Fee seem

Considering Whether to Play or Pay: Taking Into Account PPACA’s New Research Fees

Now that the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act (“PPACA”) has been upheld by the U.S. Supreme Court, employers need to consider whether to “play or pay”.  Among the many factors an employer should consider in making its determination are (1) the transitional reinsurance fee (which we will discuss in an upcoming post) and (2) the new annual fee intended to fund clinical effectiveness research.

Employers with fully insured plans should note that even though responsibility for reporting and paying the annual fee rests with the health insurance issuers, such expense will likely be passed along by the issuer to policyholders in the form of increased premiums.

Covered Plans

Employers who sponsor one or more of the following health plans on a self-funded basis will be subject to the annual fee based on the average number

Wellness is Alive & Well in the 11th Circuit

Wellness is Alive & Well in the 11th Circuit

August 23, 2012

Authored by: benefitsbclp

On Monday, the Eleventh Circuit Court of Appeals ruled in Seff v. Broward County that Broward County, Florida’s wellness program qualified for the Americans with Disabilities Act (ADA) bona fide benefit plan safe harbor and therefore was not discriminatory under the ADA.  This is a helpful ruling for employers maintaining or looking to implement wellness programs.

Background.  The ADA generally provides that an employer can only require medical examinations of its employees if they are job-related and consistent with business necessity.  However, the ADA also says that it is not intended to prohibit an employer “from establishing, sponsoring, observing or administering the terms of a bona fide benefit plan that are based on underwriting risks, classifying risks, or administering such risks that are based on or not inconsistent with State law.”

The Case. In the case, Broward had a wellness program with biometric screening and an online health

DoL Clarifies Fee Disclosures for Brokerage Windows

DoL Clarifies Fee Disclosures for Brokerage Windows

August 21, 2012

Authored by: benefitsbclp

On May 7, 2012 the DOL issued Field Assistance Bulletin 2012-02, consisting of 38 questions and answers intended to clarify some of the issues raised since the issuance on October 20, 2010 of the final participant fee disclosure regulations (as discussed in our prior post here).  Q&A 30 included language that would have required plan administrators to treat a brokerage window or a broad-based platform of funds as a designated investment alternative, subject to the fee disclosure requirements if a “significant number” of participants invested in the same alternative.  This position took plan sponsors and practitioners by surprise because it was not consistent with prior interpretations of the regulations.  In addition, many commentators noted that the DOL should have announced this position, which was viewed as a significant change, in proposed rules with the opportunity for review and comment, rather than in a Field Assistance Bulletin.

Massachusetts Tries to Bend the Cost Curve: A Model for PPACA 2?

Massachusetts Tries to Bend the Cost Curve: A Model for PPACA 2?

August 16, 2012

Authored by: benefitsbclp

While the Patient Protection and Affordable Care Act is not a carbon copy of the original Massachusetts health care reform law, there are many similarities.  One similarity is that critics of both laws have argued at different times that they don’t  do enough to “bend the cost curve” on health care.

(As an aside, we always thought the term “health care reform” was a bit of a misnomer for PPACA, as it is really a health insurance reform and tax bill.  Interestingly, the President agrees.  On the day he signed the law, he said, “today…health insurance reform becomes the law in the United States of America.”)

To address this issue, Massachusetts recently passed Bill S. 2400, which is designed to reign in the cost of health care in the Commonwealth.  As you might expect, the bill is a long, complicated piece of

Single-Employer Defined Benefit Pension Plans: Minimum Funding Requirements Revised Again

Among many other things, the MOVING AHEAD FOR PROGRESS IN THE TWENTY-FIRST CENTURY ACT (“MAP – 21”), which became law last month, changes the minimum funding rules for single-employer defined benefit pension plans. Your actuary can help to determine the effect of  these changes on your company in the short and long run.

Background. Since 2001, the IRS has published rates for determining minimum contributions for each month.  These rates are based on the prior month’s current short-, medium- and long-term corporate bond yields.  Until enactment of MAP-21, a plan could either apply the current month’s full yield curve or use a smoothing technique that blends the rates published over the prior 24 months. In the current low interest rate environment, these rules require very high minimum contributions. This has been mitigated so far by means of short-term patches.

What MAP-21 does. MAP-21 gives longer-term relief

COBRA and STD/FMLA – The Appeal

COBRA and STD/FMLA – The Appeal

August 9, 2012

Authored by: benefitsbclp

As we near the first anniversary of benefitsbclp.com, it is a good time to reflect on the past, such as one of our first posts on the importance of clear eligibility terms in a self-funded health plan.  This is a particularly timely reflection because the case discussed on that post was just upheld by the Sixth Circuit Court of Appeals in an unpublished opinion.

For those unfamiliar, in the case, an employee who was participating in a self-funded medical plan went out on FMLA leave.  When that leave expired, she did not return to work and the employer put her on short-term disability, but continued to allow her to be eligible for the medical plan.  After her short-term disability period expired, the employer offered her COBRA, which she elected.

However, the terms of the medical plan provided that eligible employees were those regularly scheduled to work a

Eighth Circuit Finds No Abuse of Discretion in Administrator’s Termination of Benefits and Raises Questions Concerning Proper Standard of Review Upon Allegations of “Procedural Irregularities”

 In a decision released July 24, 2012, the Eight Circuit affirmed a lower court judgment that a plan administrator committed no abuse of discretion when it terminated an employee’s long-term disability benefits. The case, styled Wade v. Aetna Life Ins. Co., No. 11-3295 (8th Cir. July 24, 2012), involved a Quest Diagnostics, Inc. employee’s challenge to Aetna’s termination of her benefits despite a previous, contrary decision from the Social Security Administration (SSA), coupled with allegations of “serious procedural irregularities.” 

In its decision, the 8th Circuit began by concluding that the district court had reviewed the termination decision under the correct “abuse-of-discretion” standard. Under ERISA, a court’s review of a plan administrator’s denial of benefits considers whether the benefit plan gives the administrator the discretion to determine eligibility for benefits. Here, the plan unequivocally granted Aetna this discretionary authority. Nevertheless, Wade sought de novo review of Aetna’s termination decision by alleging

The True Cost of Paying Instead of Playing

The True Cost of Paying Instead of Playing

August 2, 2012

Authored by: benefitsbclp

A recent study by Truven Health Analytics attempts to model the employer and employee cost impact of various strategies for dealing with PPACA’s “play or pay” employer mandates/penalties.  The study is notable primarily for two reasons. First, it attempts to take into account the employee, as well as the employer, cost associated with each strategy.

The report essentially concludes that any cost savings an employer may receive will result in a precipitous increase in costs to employees.  In effect, Truven is saying that the balance between employer and employee is a zero-sum game (or nearly so): there is no way for an employer to save money that does not result in a precipitous increase in employees’ cost.  Furthermore, if an employer attempts to make employees whole for the cost, then it will actually end up costing the employer more than providing health coverage, Truven concludes.

Perhaps

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