Benefits Blog

Legal Alert: Senate Republicans Release Healthcare Bill; Largely Mirroring House Bill but with Some Key Differences

On Thursday, June 22, 2017, Senate Majority Leader Mitch McConnell of Kentucky released a 142-page healthcare “Discussion Draft” of legislation, called the Better Care Reconciliation Act of 2017 (BCRA), which is the Senate version of the Affordable Care Act (ACA) “repeal-and-replace” legislation American Health Care Act (AHCA) passed by the U.S. House of Representatives last month.  An updated “Discussion Draft” of the BRCA was released on June 26, 2017.  A summary of the updated June 26 draft of the BCRA by the U.S. Senate Committee on the Budget is available here and a section-by-section summary of the June 26th version is available here.

The major substantive change in the updated Discussion Draft released on June 26 was to add a new Section 206, beginning in 2019, that would subject an individual who has a break in continuous “creditable coverage” for 63 days or more in the prior year to a six-month waiting period (in the individual market) before coverage begins.  This provision is intended to provide an incentive for young and healthier individuals to maintain health insurance since the bill would eliminate the individual mandate.  The AHCA proposed imposing a 30% surcharge on those without continuous creditable coverage, but there were concerns over whether that provision could pass Senate parliamentary rules.

The unveiling of the Senate bill comes after weeks of drafting by a small group of Senate Republican leadership behind closed doors that has frustrated Democrats and left out many Republicans from the drafting process.  The Congressional Budget Office released its score of the legislation on June 26, 2017, finding that the updated Discussion Draft of the BCRA would leave 22 million more uninsured by 2026 than under the ACA (versus 23 […]

By |June 28th, 2017|Employee Benefits, Health Care Reform, Human Resources, Medical|Comments Off on Legal Alert: Senate Republicans Release Healthcare Bill; Largely Mirroring House Bill but with Some Key Differences

Draft ACA Replacement Bill Released by Senate

On June 22, 2017, Republicans in the U.S. Senate released their proposal to repeal and replace the Affordable Care Act (ACA), called the Better Care Reconciliation Act (BCRA). The Senate bill closely mirrors the proposal passed in the House of Representatives—the American Health Care Act (AHCA)—with some differences. For example, unlike the AHCA, the BCRA:

  • Would enhance the ACA’s Section 1332 State Innovation Waiver program; and
  • Would not allow issuers to impose a surcharge for individuals who do not maintain continuous coverage.

Impact On Employers

The Senate has not taken a vote on any ACA repeal or replacement proposal at this time. The proposal would need a simple majority vote in the Senate to pass. However, amendments may be made before a Senate vote is taken.

Senate Republicans indicated that they would like to take a vote prior to the Senate’s July 4 recess. If the BCRA passes the Senate, it would need to go back to the House for approval before being signed into law by President Donald Trump. […]

By |June 25th, 2017|Health Care Reform, Legislation|Comments Off on Draft ACA Replacement Bill Released by Senate

Coordination of Benefits- Which plan pays the Bill?

Coordination of Benefits

Your employee is covered under your companies benefits and also under their spouses.  So which plan pays first? That’s the question that arises when a plan participant or beneficiary is entitled to coverage under more than one plan or insurance policy. Coordination of Benefit (COB) rules, as specified in plan documents or insurance policies, will answer these questions and that’s why it is important to make certain those plan documents address coordination of benefits. However, if those rules are unclear and therefore a dispute arises that isn’t resolved then the issue will be decided in court.

Often the way the courts resolve these disputes differs based on the kind of plan or insurance policies involved. To provide more information, some of the COB issues that self-funded Employee Retirement Income Security Act (ERISA) plans face are highlighted below. […]

By |June 20th, 2017|Compliance, Employee Benefits|Comments Off on Coordination of Benefits- Which plan pays the Bill?

Church-affiliated Plans Are Exempt from ERISA- Supreme Court Ruling

The U.S. Supreme Court issued a decision on June 5. 2017 holding that an employee benefit plan may be exempt from the Employee Retirement Income Security Act (ERISA) as a “church plan” even if a church did not establish it. The court held that the ERISA exemption for church plans applies to certain organizations that are affiliated with churches, regardless of how their benefit plans were established.

Because this is consistent with how federal agencies currently interpret and enforce ERISA, the ruling does not change any obligations for most employers. The decision does, however, settle and resolve a recent wave of litigation involving employers with religious affiliations, such as hospitals.

Action Steps

Employers with church affiliations should be aware of the specific criteria an employee benefit plan must meet to qualify for ERISA’s church-plan exemption. All employers that sponsor employee benefit plans should ensure that their plans either meet the criteria for an ERISA exemption or comply with all applicable ERISA requirements.  […]

By |June 15th, 2017|Uncategorized|Comments Off on Church-affiliated Plans Are Exempt from ERISA- Supreme Court Ruling

Legal Alert: REMINDER: PCORI Fees Due by July 31, 2017

Employers that sponsor self-insured group health plans, including health reimbursement arrangements (HRAs) should keep in mind the upcoming July 31, 2017 deadline for paying fees that fund the Patient-Centered Outcomes Research Institute (PCORI).  As background, the PCORI was established as part of the Affordable Care Act (ACA) to conduct research to evaluate the effectiveness of medical treatments, procedures and strategies that treat, manage, diagnose or prevent illness or injury.  Under the ACA, most employer sponsors and insurers will be required to pay PCORI fees until 2019.

The amount of PCORI fees due by employer sponsors and insurers is based upon the number of covered lives under each “applicable self-insured health plan” and “specified health insurance policy” (as defined by regulations) and the plan or policy year end date.

  • For plan years that ended between January 1, 2016 and September 30, 2016, the fee is $2.17 per covered life and is due by July 31, 2017.
  • For plan years that ended between October 1, 2016 and December 31, 2016, the fee is $2.26 per covered life and is due by July 31, 2017.

For example, a plan year that ran from October 1, 2015 through September 30, 2016 will pay a fee of $2.17 per covered life.  Calendar year 2016 plans will pay a fee of $2.26 per covered life.

NOTE: The insurance carrier is responsible for paying the PCORI fee on behalf of a fully insured plan.  The employer is responsible for paying the fee on behalf of a self-insured plan, including an HRA.  In general, health FSAs are not subject to the PCORI fee.

Employers that sponsor self-insured group health plans must report and pay PCORI fees using IRS Form 720, Quarterly Federal Excise Tax Return.

Note […]

By |May 31st, 2017|Compliance, Employee Benefits, Employee Benefits Adviser, Employee Communications, Health Care Reform|Comments Off on Legal Alert: REMINDER: PCORI Fees Due by July 31, 2017

Legal Alert: House Republicans Pass American Health Care Act; Bill Heads to Senate for Further Consideration

On Thursday, May 4, by a vote of 217 to 213 (with 20 Republicans voting against the bill), the U.S. House of Representatives passed an amended version of the American Health Care Act (AHCA), which repeals and replaces significant portions of the Affordable Care Act (ACA).

This bill comes several weeks after U.S. House of Representatives’ Speaker Paul Ryan pulled the AHCA […]

By |May 9th, 2017|Compliance, Employee Benefits, Employee Benefits Adviser, Employee Communications, Health Care Reform|Comments Off on Legal Alert: House Republicans Pass American Health Care Act; Bill Heads to Senate for Further Consideration

House Votes 217-213 to pass the American Health Care Act (AHCA)

Members of the U.S. House of Representatives voted 217-213 to pass the American Health Care Act (AHCA).  The AHCA is the proposed legislation to repeal and replace the Affordable Care Act (ACA).

The AHCA needed 216 votes to pass in the House. Ultimately, it passed on a party-line vote, with 217 Republicans and no Democrats voting in favor of the legislation. The AHCA will only need a simple majority vote in the Senate to pass.

If it passes both the House and the Senate, the AHCA would then go to President Donald Trump to be signed into law.

Impact on Employers

The AHCA will now move on to be considered by the Senate. It is likely that the Senate will make changes to the proposed legislation before taking a vote. The AHCA would only need a simple majority vote in the Senate to pass.

However, unless the AHCA is passed by the Senate and signed by President Trump, the ACA will remain intact.

Legislative Process

The AHCA is budget reconciliation legislation, so it cannot fully repeal the ACA. Instead it is limited to addressing ACA provisions that directly relate to budgetary issues—specifically, federal spending and taxation. A full repeal of the ACA must be introduced as a separate bill that would require 60 votes in the Senate to pass.

Since the AHCA was introduced, it has been amended several times. To address concerns raised by both Democrats and fellow Republicans, the House Republican leadership released amendments to the legislation on March 20, 2017, followed by a second set of amendments on March 23, 2017. On March 23, 2017, House leadership withdrew the AHCA before taking a vote. After the withdrawal, Republicans made additional amendments (the MacArthur amendments) to […]

By |May 5th, 2017|Compliance, Health Care Reform, Legislation|Comments Off on House Votes 217-213 to pass the American Health Care Act (AHCA)

Legal Alert: HHS Issues Final Rule on Market Stabilization

On April 13, 2017, the Department of Health and Human Services (HHS) released its final market stabilization rule, the first regulatory act of the Trump administration. The final version is largely unchanged from the proposed rule released on February 10, 2017. Unless otherwise specified, the rule is effective 60 days after publication and will apply to plan years beginning on […]

By |April 21st, 2017|Compliance, Health Care Reform, Human Resources|Comments Off on Legal Alert: HHS Issues Final Rule on Market Stabilization

Legal Alert: House Republicans Withdraw the AHCA

On Friday, March 24, 2017, the U.S. House of Representatives’ Speaker Paul Ryan pulled from the floor the American Health Care Act (AHCA), the proposed legislation to repeal and replace the Affordable Care Act (ACA), once it was clear that the bill was short on votes to pass. Effectively, this means the AHCA will not survive to become law and, at this time, any future efforts to repeal and replace the ACA are uncertain. This may mean, as Speaker Ryan said shortly after the announcement that the bill was […]

By |March 30th, 2017|Employee Benefits, Health Care Reform, Human Resources, Long-Term Care, Medical|Comments Off on Legal Alert: House Republicans Withdraw the AHCA

Cafeteria Plans: Allowing Midyear Election Changes

If you work in human resources the following scenario should sound familiar: An employee wanders in and starts to complain bitterly that they can no longer afford the medical or dental coverage they signed up for and demand you let them drop the coverage immediately (midyear).  Good luck explaining that it’s not you who won’t let them drop their coverage.  It’s those pesky rules in place within the IRS Section 125 plan you have in place.

Internal Revenue Code Section 125 cafeteria plans state that participant elections must be made before the first day of the plan year or the date taxable benefits would currently be available, whichever comes first. These elections are generally irrevocable until the beginning of the next plan year. This means that participants cannot make changes to their cafeteria plan elections during a plan year just because they no longer want the coverage.

IRS regulations do permit employers to design their cafeteria plans to allow employees to change their elections during the plan year if certain conditions are met. The IRS clearly lists permitted or qualifying events that allow participants to change his or her election midyear as long as the change is consistent with the event.  Some examples are an employee has a spouse who loses or gains employment, birth of a child, marriage and divorce.  Also, the IRS did expand the midyear election change rules in response to certain Affordable Care Act (ACA) provisions.

Download our Compliance Overview Brief, Cafeteria Plans: Midyear Election Changes, for all the details on permitted election changes:

Cafeteria Plans Midyear Election Changes 06 28 16

By |March 28th, 2017|Uncategorized|Comments Off on Cafeteria Plans: Allowing Midyear Election Changes