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September 2012

From the editors of CCH's BENE and BAN 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.

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Hot Topics in Employee Benefits Management:

Employers need to “quickly and aggressively” plan for ACA compliance, due to Supreme Court’s ruling on health reform, experts advise, Employee Benefits Management Directions, Issue No. 521, August 7, 2012 — On June 28, the Supreme Court upheld the constitutionality of the Patient Protection and Affordable Care Act (ACA). Employers that sponsor group health plans must act quickly to ensure their plans are in compliance with the ACA – and will be going forward – as many of the provisions of the ACA become effective in 2013 and 2014. To provide an overview of the Court’s decision and the implications on employers, CCH interviewed Edward C. Fensholt, JD, and Mark C. Holloway, JD, Senior Vice Presidents and Directors of Compliance Services, Lockton Companies, LLC.

Summary of benefits and coverage deadline is approaching for some plans, Employee Benefits Management Directions, Issue No. 521, August 7, 2012 – After the Supreme Court’s historic upholding of the Affordable Care Act (ACA), U.S. employers are looking at the next set of milestone regulations and seeking the most efficient way to comply. A major requirement is the summary of benefits and coverage (SBC), required to be in effect for open enrollment periods beginning on or after September 23, 2012.

Health care costs expected to rise 7% in 2013, National Business Group on Health survey finds, Employee Benefits Management Directions, Issue No. 522,  August 21, 2012 – Large employers expect health care costs to increase an average 7 percent in 2013, according to research from the National Business Group on Health (NBGH). The survey, Large Employers’ 2013 Health Plan Design Survey, noted that this is the same increase that was projected for 2012, but a smaller increase than employers experienced the previous three years.

EBSA issues new FAQ on ACA’s SBC requirements, Employee Benefits Management Directions, Issue No. 522, August 21, 2012 — The Employee Benefits Security Administration (EBSA) has released a Frequently Asked Question (FAQ) on implementation of provisions of the Patient Protection and Affordable Care Act (ACA) that addresses summaries of benefits and coverage (SBC). The FAQ advises that SBCs do not have to be provided by group health plans for Medicare Advantage benefit packages, since Medicare Advantage benefits are Medicare benefits, as opposed to health insurance coverage. 


What's New in Employee Benefits Management:

MLR rebate notice — The Center for Consumer Information & Insurance Oversight (CCIIO) has issued additional guidance on the medical loss ratio (MLR) reporting and rebate requirements. For a discussion of the guidance, see ¶10,097.

Fiduciary duty — A plan administrator did not have a fiduciary duty to inform a terminated employee of his right to continue his life insurance by converting his group policy to an individual one, the Sixth Circuit has ruled. The decision in Walker v. Federal Express is discussed at ¶130,015.

SBC — The new EBSA FAQ (see story above) is discussed at ¶10,240.

New pension law — The Moving Ahead for Progress in the 21st Century Act (MAP-21) (P.L. 112-141), which President Obama signed recently, contains provisions to stabilize pension interest rates and raise PBGC premiums. The law also extends the ability of employers to transfer excess pension assets to fund retiree health benefits and expands the provision to allow transfers for retiree life insurance. For the changes that MAP-21 made to ERISA, see ERISA Secs. 101, 205, 303, 4002, 4005, 4006, 4010, and 4402.

Plan documents — A welfare plan’s delegation of its discretionary authority to approve and deny disability benefits could be further sub-delegated to another entity absent written provisions allowing it to do so by the plan documentation, according to the Seventh Circuit Court of Appeals (CA-7). The court’s decision in Aschermann v. Aetna Life Insurance Company is discussed at ¶130,090.


What's New in Benefits Answers Now (BAN):
CCIIO issues additional guidance on MLR rebate notice. The Center for Consumer Information and Insurance Oversight (CCIIO) has issued additional guidance on the medical loss ratio (MLR) reporting and rebate requirements. CCIIO Technical Guidance 2012-0005 provides MLR guidance on the notice of rebate, notice of MLR information, and the definition of plan document. Find out more about the MLR rules at ¶20,059.

EBSA modifies fee disclosure FAQs, clarifies provision on brokerage windows. The Employee Benefits Security Administration (EBSA) has modified its field assistance bulletin providing guidance on the fee disclosure regulations in order to clarify provisions relating to "designated investment alternatives" and brokerage windows. In the updated guidance, EBSA states that, "Whether an investment alternative is a "designated investment alternative" (DIA) for purposes of the regulation depends on whether it is specifically identified as available under the plan. The regulation does not require that a plan have a particular number of DIAs, and nothing in this Bulletin prohibits the use of a platform or a brokerage window, self-directed brokerage account, or similar plan arrangement in an individual account plan." More information about the fee disclosure guidance can be found at ¶10,935.

HHS issues final rule on data collection to support standards for essential health benefits. The Department of Health and Human Services (HHS) has issued a final rule that would establish data collection standards necessary to implement aspects of the Patient Protection and Affordable Care Act (ACA), which directs HHS to define essential health benefits (EHB). The final rule outlines the data on applicable plans to be collected from certain issuers to support the definition of EHB. Also, the final rule establishes a process to recognize accrediting entities to certify qualified health plans (QHP). See the discussion at ¶20,052 to read about the essential health benefits provisions in the ACA.

Survey shows use of incentives grows as U.S. employers look to improve workforce health and productivity. U.S. employers are increasingly relying on incentives to drive participation in health programs and encouraging employees and their families to take better care of themselves, according to survey findings from Aon Hewitt. The survey found that 84 percent now offer employees incentives for participating in a health risk questionnaire (HRQ) and almost two-thirds (64 percent) offer an incentive for participation in biometric screenings. To find out more about the use of incentives in wellness programs, see ¶23,105.

Employers with DB plans remain committed to them. A significant number of U.S. employers that still offer defined benefit (DB) pension plans say they remain committed to providing those benefits to new salaried employees, according to a survey by Towers Watson. The survey also found that employers are adding features to their defined contribution (DC) plans that mirror DB plan design to help close possible savings gaps created by the shift from DB to DC plans. See the discussion at ¶10,010 for more information about defined benefit and defined contribution plans.


What's New in Spencer’s Benefits Reports:
Health Reform: Medical Loss Ratio Rules. Regulations implementing medical loss ratio (MLR) provisions in the health reform law, along with recently issued guidance, are reviewed in this report (Report 533.-5).

Sec. 401(k) Automatic Enrollment. Employers implementing IRC Sec. 401(k) automatic enrollment features must comply with IRS regulations for implementation, which are reviewed in this report (Report 222.-1).

Health Care Benefits: Self-Funding. This report summarizes current forms of funding, describes the extent of self-funding in the United States, and details many of the questions that an employer should ask when considering some degree of self-funding (Report 331.1.-1).

Sec. 125 Claims Reimbursement Rules. Claims substantiation and reimbursement rules for Sec. 125 plans, updated for Patient Protection and Affordable Care Act provisions, are reviewed in this report (Report 351.-27).

USERRA: Court Cases On Violations. This report reviews appellate court rulings in cases alleging violations of the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA) of employees who return from active military duty (Report 403.-19).


New Pension/Benefits Titles Added:
401(k) Advisor (September 2012 issue)
Employee Benefit Plan Review (September 2012 issue)
Employee Benefits in Mergers and Acquisitions (2012-2013 Edition)
Employment Law Answer Book (2013 Cumulative Supplement to 7th Edition)*
ERISA Law Answer Book (2013 Supplement to 7th Edition)
Insider’s Guide to DOL Audits (2013 Supplement) (online only)
Journal of Deferred Compensation (Fall 2012 issue)
Multistate Guide to Benefits Law (2013 Edition)
Pension Benefits (September 2012 issue)