Benefits Update – May 2016

From the editors of Wolters Kluwer’s benefits products, here are hot topics from recent Employee Benefits Management Directions newsletters as well as recent explanatory updates in Employee Benefits Management. Also included are recent explanatory updates to the Benefits Answers Now product and Spencer’s Research Reports.

Hot Topics in Employee Benefits Management:

Many employees would prefer higher wages over benefits in the future, survey finds , Employee Benefits Management Directions, Issue No. 609, April 5, 2016 — Although most American workers are satisfied with the health insurance benefits they have now, there is a long-term trend toward wanting more cash and fewer benefits, according to a survey by the Employee Benefit Research Institute (EBRI).

 Sixth Circuit must rethink whether ERISA preempts Michigan health-insurance tax law, Employee Benefits Management Directions, Issue No. 609, April 5, 2016 — The U.S. Supreme Court has vacated a federal appellate panel’s holding that a Michigan law designed to generate revenue to pay the state’s Medicaid obligations was not preempted by the Self Insurance Institute of America, Inc. and remanded the case to the U.S. Court of Appeals for the Sixth Circuit for further consideration in light of the Supreme Court’s recent opinion in Gobeille v. Liberty Mutual Insurance Co.

New versions of summary of benefits and coverage materials are available, Employee Benefits Management Directions, Issue No. 610, April 19, 2016 — The Labor Department, IRS, and HHS have announced the release of final versions of documents that must be provided to individuals with regard to their health plans. HHS has pointed out that key enhancements have been made, especially to the Summary of Benefits and Coverage (SBC) template and to the Uniform Glossary.

Certain arrangements to reimburse medical expenses up to fixed amount violate ACA, IRS says, Employee Benefits Management Directions, Issue No. 610, April 19, 2016 — An agreement by an employer to reimburse medical expenses up to a fixed amount is a group health plan under which there is an annual limit on essential health benefits. Therefore, the plan fails to comply with the prohibition on annual limits under Public Health Service Act (PHSA) Sec. 2711, according to an IRS information letter.

                                                                               

What’s New in Employee Benefits Management:

SBC — The new summary of benefits and coverage and associated documents (see story above) can be found at ¶226,151 through ¶226,155.  Also, the discussion at ¶10,240 has been updated with the new information.

Health exchanges — Recent IRS guidance on health exchanges is discussed at ¶12,130.

Disability benefits — The discussion on state temporary disability laws has been updated at ¶30,100.

2017 Medicare amounts — See ¶10,360 and ¶53,140 for Medicare Part D amounts for 2017.

Travel expenses — The discussion at ¶158,150 and ¶158,155 have been updated regarding travel expenses in 2016.

 

What’s New in Benefits Answers Now (BAN):

DOL again attempts to rein in conflicts of interest by expanding range of investment advisers subject to ERISA. The Department of Labor has issued long-awaited final rules that are intended to protect plan participants from potentially conflicted investment advice by subjecting a broad range of retirement and investment advisers to ERISA’s fiduciary requirements. Under the rules, generally applicable April 2017, parties that provide investment advice for a fee to plans, plan sponsors, fiduciaries, plan participants, beneficiaries and IRAs and IRA owners will need to make prudent investment recommendations, without regard to their own interests. The rules, while making significant exceptions for investment education and marketing practices, reflect the understanding of the DOL that the disclosure of conflicts of interest alone is not sufficient to mitigate the negative impact of conflicted investment advice on the retirement savings of ERISA plan and IRA investors. To find out more about the new rules, see ¶10,025 and ¶13,670.

Certain arrangements to reimburse medical expenses up to fixed amount violate ACA, IRS says. An agreement by an employer to reimburse medical expenses up to a fixed amount is a group health plan under which there is an annual limit on essential health benefits. Therefore, the plan fails to comply with the prohibition on annual limits under Public Health Service Act (PHSA) Sec. 2711, according to an IRS information letter. More information about employer payment plans can be found at ¶20,135.

HSA contributions must be prorated for the year an individual reaches age 65. A recent letter from the IRS Office of the Chief Counsel to Sen. Patty Murray (D-WA) confirms that health savings account (HSA) contributions must be prorated for the year in which an individual reaches age 65 and enrolls in Medicare. Find out more about HSA contributions at ¶23,715.

New versions of summary of benefits and coverage materials are available. The Labor Department, IRS, and HHS have announced the release of final versions of documents that must be provided to individuals with regard to their health plans. HHS has pointed out that key enhancements have been made, especially to the Summary of Benefits and Coverage (SBC) template and to the Uniform Glossary. The improvements include an additional coverage example and language and terms to improve consumers’ understanding of their health coverage. An overview of the SBC requirements can be found at ¶20,060.

 

What’s New in Spencer’s Benefits Reports:

ACA compliance. Large employers looking to manage health care costs and avoid liability under the ACA by restricting formerly full-time employees to less than 30 hours per week should be cautioned by a recent court decision that suggests such “right sizing” strategies may violate ERISA. This report discusses the recent case (Report 552.-1).

Preventive care. The ACA requires that group health plans provide coverage without cost-sharing for certain preventive services. This report summarizes regulations issued on preventive care (Report 514.1.-1).

Employer payment plans. Employer payment plans are no longer allowed because they violate the ACA’s market reforms. This report explains employer payment plans (Report 352.-15).

HSAs. This report summarizes the most important features of health savings accounts (Report 356.-5).

Mortality tables. The Treasury is required to prescribe mortality tables to be used in determining present value or making any required funding computation. This report reviews the mortality table requirements (Report 133.1.-1).