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An Important Reminder to Plan Fiduciaries: Hi-Lex v. Blue Cross

ADVISORY
Hi-Lex v. Blue Cross: An Important Reminder to Plan Fiduciaries

For at least the last generation plan sponsors, and particularly plan fiduciaries, have devoted (or should have been devoting) significant time and energy monitoring the fees charged to participants in their 401(k) plans and ensuring appropriate disclosures. The Hi-Lex Controls, et. al. v. Blue Cross Blue Shield of Michigan case should serve as an important reminder to group health plan fiduciaries that under the Employee Retirement Income Security Act of 1974 (“ERISA”) monitoring plan fees is equally important in both their retirement and group health plans.

The Case
Hi-Lex Controls, Inc., an automotive parts supplier with approximately 1,300 employees, maintained a self-insured group health plan. Blue Cross and Blue Shield of Michigan (“BCBSM”) served as the plan’s third-party administrator. BCBSM’s services were provided pursuant to an “administrative services only” (“ASO”) agreement. Under the terms of the ASO agreement, BCBSM administered claims for the Hi-Lex self-insured group health plan (the “Plan”). BCBSM negotiated fees and established access within its provider networks to Plan participants. BCBSM was paid a monthly administrative fee based on the number of employees per month (“PEPM”) enrolled in the Plan. …

By |November 6th, 2015|Compliance, Employee Benefits|Comments Off on An Important Reminder to Plan Fiduciaries: Hi-Lex v. Blue Cross
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2015 ACA Health Reimbursement Arrangement (HRA) Reporting- IRS Reverses Course!

The IRS has reversed its earlier guidance regarding 2015 ACA reporting regarding HRAs.

An employer that has an insured major medical plan and an HRA in place, for which an individual can only enroll in if they are in the major medical plan, is not required to report the HRA coverage for an individual covered by both arrangements. If the employee has an HRA through one employer and medical coverage through another employer (such as spousal coverage) then each employer must report separately.

This relief by the IRS is great news for employers as separate reporting for the HRA will not be required. Contact any of the Broad Reach Benefits staff for complete details.

By |September 18th, 2015|Health Care Reform, Legislation|Comments Off on 2015 ACA Health Reimbursement Arrangement (HRA) Reporting- IRS Reverses Course!
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Increase in Penalties for Reporting Violations- Section 6055 and Section 6056

Penalties for violations of Section 6055 or Section 6056 reporting have been significantly increased for returns and statements filed in 2016.

The Affordable Care Act (ACA) created new reporting requirements under Internal Revenue Code (Code) Section 6055 and 6056. These new reporting rules require certain employers to report information to the Internal Revenue Service (IRS) on the health coverage offered during the year. Related statements must also be provided to individuals.

On June 29, 2015, President Barack Obama signed the Trade Preferences Extension Act of 2015 into law, which increases penalties for the failure to file correct information returns or to provide individual statements under either Section 6055 or Section 6056. These changes are effective for information returns and individual statements required to be filed or provided after Dec. 31, 2015. …

By |July 21st, 2015|Compliance, Employee Benefits, Legislation|Comments Off on Increase in Penalties for Reporting Violations- Section 6055 and Section 6056
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ACA Subsidies in Federal Exchanges Upheld by the U.S. Supreme Court

The U.S. Supreme Court today issued a final ruling in King v. Burwell. This is the case that challenged the availability of health insurance Exchange subsidies in states with Exchanges run by the federal government.

In a 6-3 decision, the Court held that, in drafting the Affordable Care Act (ACA), Congress intended for the federal government to provide subsidies in all states—those that established their own Exchanges and those that have federally facilitated Exchanges, or FFEs.

According to the Supreme Court, without the availability of these subsidies in all states, several other key ACA provisions would not operate as intended (including the individual mandate and the employer shared responsibility rules). The Court’s ruling means that subsidies are available in all states, including those with FFEs. …

By |June 25th, 2015|Uncategorized|Comments Off on ACA Subsidies in Federal Exchanges Upheld by the U.S. Supreme Court
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Summer 2015- Minimum Wage Rate Increases

Most employers in the United States are subject to the minimum wage provisions of the Federal Labor Standards Act (FLSA). These employers are required to pay their employees a wage rate of at least $7.25 per hour. However, many states have adopted minimum wage rates higher than the federal rate. When the state rate and the federal rate are different, employers must pay their employees the higher rate.

As of April 2015, 29 states and the District of Columbia have already adopted a minimum wage rate higher than the federal minimum wage rate.

During the summer of 2015, four jurisdictions will see an increase in their minimum wage rate. Affected employers should review their employees’ pay rates and update their minimum wage poster notices as necessary to ensure their compliance with wage and hour regulations. …

By |June 5th, 2015|Uncategorized|Comments Off on Summer 2015- Minimum Wage Rate Increases
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Medical Plans Must Embed Out-of-pocket Limits in 2016 for Family Plans

Non-grandfathered health plans are required under The Affordable Care Act (ACA) to limit an enrollee’s out-of-pocket costs for essential health benefits each year. This annual limit is often referred to as the “out-of-pocket (OOP) maximum.”

Recent guidance will require the self-only OOP maximum to be embedded family coverage when the plan’s OOP maximum for family coverage exceeds the ACA’s limits for individual coverage. This requirement will take effect beginning with the 2016 plan year, when the OOP maximum for self-only coverage will be $6,850.

This guidance applies to all non-grandfathered group health plans, including self-funded plans and insured plans of all sizes.

High Deductible Health Plans

While this change will have a significant impact on many employer-sponsored health care plans, high deductible health plans are likely to be affected the most. This is due to the fact that high-deductible family plans have higher cost-sharing limits. They are also typically designed to administer a single OOP limit on all family coverage with no underlying OOP maximum for each individual enrolled in the family plan.

Under the new guidance, many high-deductible family health plans will need to be modified so that a single individual’s OOP costs do not exceed the specified maximum. For instance, currently, a plan could have an $8,000 OOP limit for family coverage and require that limit to be satisfied before it covers expenses at 100 percent, even if one individual incurs all of the expenses.

According to the guidance, this type of plan design will no longer be permitted for non-grandfathered plans, and the plan would have to be amended so that each individual would not be required to pay more than the OOP maximum for individual coverage for essential health benefits.

By |June 2nd, 2015|Health Care Reform|Comments Off on Medical Plans Must Embed Out-of-pocket Limits in 2016 for Family Plans
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Employee Benefits Agent, Broker, Advisor or Consultant- Who are you entrusting to oversee one of your largest expenses?

Your employee benefits budget is one of your businesses largest expenses.  So who do you entrust to manage and control this large, complex and growing expense?  An insurance agent that takes you out to play golf a couple of times a year?    Some broker from a regional employee benefits firm who only pays attention to you and your needs at renewal time?  Better yet, some new online software company that promises to streamline and automate your employee benefits process while keeping you in compliance and your employees happy by using an 800 call in number for HR support?

Whether evaluating your current insurance relationships, shopping for a new employee benefits broker or dealing with the daily marketing and sales barrage your company is subject to, some pretty specific knowledge is required on your part to cut through the background noise and hire the right people to assist you and your company.

First, what’s the difference between an agent, broker, employee benefits advisor or consultant?  With the advent of Health Care Reform, politicians, major publications and of course the talking heads on Cable are always lumping agents, brokers, employee benefits advisors and consultants together as interchangeable and merely middlemen making commission connecting employers with insurance carriers. Clearly there is a significant lack of knowledge about what an employee benefits professional should be doing for the employers they represent. …

By |January 2nd, 2015|Employee Benefits|Comments Off on Employee Benefits Agent, Broker, Advisor or Consultant- Who are you entrusting to oversee one of your largest expenses?
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Challenge to ACA Subsidies in Federal Exchanges to be heard by U.S. Supreme Court

When does plan language not mean what it says?  Apparently when it is a poorly written law.  As a result, the United States Supreme Court has agreed to review a lawsuit that challenges the ability of the federal government to provide subsidies under the Affordable Care Act (ACA) to individuals in states that did not establish their own Exchange (that is, states with federally-facilitated Exchanges, or FFEs).

This case, King v. Burwell, is one of several cases filed in response to an Internal Revenue Service (IRS) rule authorizing subsidies in all states, including those with FFEs. The Supreme Court will review this case following a unanimous ruling from the 4th U.S. Circuit Court upholding the availability of the ACA’s subsidies in states with their own Exchanges and in states with FFEs.

A ruling from the Supreme Court is not expected until the end of the current Term, in late June or early July 2015. The 2015 Exchange open enrollment period begins Nov. 15, 2014.

Health Insurance Exchanges

The ACA requires each state to have an Exchange for individuals and small businesses to purchase private health insurance. The ACA delegated primary responsibility for establishing the Exchanges to individual states. However, HHS will operate the FFE in any state that refuses or is unable to set up an Exchange. For 2014, only 16 states and the District of Columbia established their own Exchanges. HHS operates FFEs in the remaining 34 states (with state assistance in some cases, but in most cases, with no state assistance). …

By |November 10th, 2014|Compliance, Health Care Reform|Comments Off on Challenge to ACA Subsidies in Federal Exchanges to be heard by U.S. Supreme Court
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Human Resource Professionals: Are Your Employees Thinking or Just Signing up for the Benefits They Had Last Year?

One of the most important decisions your employees make each year is choosing which of the benefit options you offer they are going to enroll in.  These decisions can have a direct impact on their family’s finances.  With the advent of Private Exchanges, High Deductible Health Plans with an HSA or HRA, choice of dental programs, supplemental life insurance and so on, employees have a lot of important decisions to make.   The scary part is that employees spend a remarkably small amount of time researching their options.

A recent study showed that more than 40 percent of employees spent less than 15 minutes researching available benefits during the 2013 open enrollment period. About 25 percent of the people surveyed spent less than five minutes researching benefits.  In comparison, look at the survey results below to see how much time people spent on other purchases:

– 10 hours researching a new vehicle purchase.
– 4 hours shopping for a new computer.
– 5 hours planning vacations.
– 2 hours deciding which television to buy. …

By |September 18th, 2014|Uncategorized|Comments Off on Human Resource Professionals: Are Your Employees Thinking or Just Signing up for the Benefits They Had Last Year?
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The High Cost of Unhappy Employees from an Employee Benefits Perspective

The cost of having unhappy employees might just be higher than you think. See our infographic that breaks down those costs and feel free to link to it and/or embed it on your website.

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By |September 2nd, 2014|Employee Benefits|Comments Off on The High Cost of Unhappy Employees from an Employee Benefits Perspective
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