Tis the season . . . for ERISA disclosure requirements, of course!  Between open enrollment and the calendar year end, the list of documents, notices and updates required under ERISA looms large and annoying.

In these trying months of increased administrative hassle, many employer turn to electronic distribution in order to be environmentally forward, administratively efficient, and cost effective, and respond to wishes of employees who, let’s face it, don’t want (and won’t read) a big pile of paper.  But while electronic distribution is sound business practice, employers should keep in mind that there are rules to follow, at least with respect to ERISA notices.

This article contains a helpful guide to these rules, as well as some helpful steps employers can take to comply.  Note that the article was written shortly before the last presidential election, and while the rules have not changed, some of the author’s predictions about the proliferation of Affordable Care Act audits were based on incorrect assumptions about the election outcome and haven’t exactly come to pass.  Ahem.

On October 13th, President Trump signed an Executive Order directing various federal agencies to consider how to achieve three administration health reform objectives: (1) expand access to Association Health Plans (AHPs); (2) increase the current limits on short-term health insurance; and (3) allow wider use of employer health reimbursement arrangements so employees can buy coverage on their own in the individual market. This post considers what regulatory actions are necessary to accomplish the first objective—expanded access to AHPs.

Continue Reading Expanding Association Health Plans—Which Agencies Need to do What

In recent weeks, the Trump Administration has been considering allowing health insurance to be purchased across state lines and expanding access to “Association Health Plans” (AHPs) that could take economic advantage of cross-border purchasing. President Trump is expected to issue an executive order this week to make that happen without legislation.

This post addresses the key issue of whether the administration has the authority under existing law to act on its own initiative, and in doing so, it will address the seminal legal issues affecting AHPs under federal and state law.  As explained below, we conclude that the administration has some—and perhaps even ample—authority to act without Congress, and that any legal constraints will depend on how the AHPs are structured.

Continue Reading Association Health Plans—Can The Trump Administration Expand Access Without Congress?

Mull v. Motion Picture Ind. Health Plan educates employers on the basics of the requirements of the Employee Retirement Income Security Act (ERISA) governing plan documents and summary plan descriptions. The lessons are sobering, particularly as they relate to group health plans. Although compliance with these requirements is neither difficult nor expensive, many employers nevertheless ignore them. The decision in this case might—and, in our view, should—encourage them to reconsider.

Continue Reading The Ninth Circuit Weighs in on ERISA’s Plan Document and Summary Plan Description Requirements: Mull v. Motion Picture Ind. Health Plan

With its “employer mandate”—i.e., the requirement that applicable large employers make an offer of group health coverage to substantially all full-time employees or face the prospect of a penalty—the Affordable Care Act (ACA) opened a fault line in the previously monolithic market for group health insurance. There is large cohort of American workers who, before the ACA, were not offered major medical coverage under an employer-sponsored group health plan. These employees are sometimes referred to as the “contingent” workforce. They include part-time, seasonal and temporary employees, as well as employees whose work schedules are generally irregular or intermittent. Found predominantly though not exclusively in industries such as staffing, restaurants, media and advertising, transportation and hospitality, among others, these workers tend to be on the lower end of the pay scale. They also often have significant “deferred” health issues (a euphemism for undiagnosed conditions owing to lack of previous access to health care). The ACA provided “applicable large employers” (those with 50 or more full-time and full-time equivalent employees) with an incentive to cover these workers.

Continue Reading The Rise of the Group Health Insurance Captive

In an effort to make up for a funding shortfall in the Commonwealth of Massachusetts’ Medicaid program, state policymakers have proposed solutions that include a “play-or-pay” option under which employers who fail to offer major medical coverage, or who offer coverage but have low take-up rates, would be required to pay an additional “employer contribution” to the Commonwealth based on multiple factors and complex computations. Another option would make up the shortfall with an across-the-board increase, similar to a payroll tax increase, in the Employer Medical Assistance Contribution (or “EMAC”), which helps defray Medicaid financing.

This post argues in favor of the latter option. We are of the view that an across-the-board increase in EMAC payments, would be vastly preferable because of its simplicity and ease of administration. The “play-or-pay” option would not only be extremely complicated to comply with and enforce, but, as we explain below, it may be preempted by federal law, i.e., the Employee Retirement Income Security Act of 1974 (ERISA).

Continue Reading Efforts to Shore up MassHealth Should Favor Simplicity and Avoid Potential Conflict with Federal Law

The recent Republican election victories appear to ensure that the Affordable Care Act’s (ACA) days are numbered. But with nearly a fifth of the U.S. economy, and the health care coverage for some tens of millions of U.S. citizens, at stake, the law will not simply be repealed. Something will be enacted to take its place. And some popular features of the law (e.g., protection for those with pre-existing conditions) are likely to survive.

Our previous posts have attempted to outline the alternatives and to handicap their odds. Last week we looked that the Trump/Pence transition plan, “Healthcare Reform to Make America Great Again.” This week we turn our attention to particulars of the program offered by House Speaker Paul Ryan entitled A Better Way. In the next two weeks, we will look at legislative proposals offered by Representative Tom Price (R-Georgia), who is President-elect Trump’s nominee to head the Department of Health and Human Services, and by Senator Orrin Hatch (R-Utah). In future posts, we will speculate on the process by which the various policy prescriptions might become law—including whether the repeal of the ACA will be done quickly (we expect it will), whether there will be a transition period (we expect that the answer is “yes”), and if so how long (anywhere from two to four years).

Unlike the Trump/Pence plan, which consists of a series of high-level bullet points, the Ryan plan is a fairly detailed policy proposal. Hence, while not in actual legislative form, it provides a good sense of some of the likely features of the ACA’s replacement.

Continue Reading The Future of the ACA Week 4: The Ryan Plan, “A Better Way”

In April of this year, the Department of Labor issued a suite of rules (i) expanding the class of persons and entities who are fiduciaries for purposes of ERISA and the Internal Revenue Code; (ii) providing two new prohibited transaction exemptions (or PTEs); and (iii) amending a handful of existing PTEs to conform to the new regulatory regime. (For a list of, and links to, the suite of final rules, please see our post of April 11, 2016.) The fiduciary definition, exemptions and amendments, and their respective preambles, occupy in total almost 1,000 pages of the Federal Register. Collectively, these items enact a sea-change in the regulation of investment advice provided to ERISA-covered retirement plans and Individual Retirement Accounts (IRAs). When the Department promulgated these rules, it promised to provide subsequent guidance—including Frequently Asked Questions (FAQs)—in response to questions that would inevitably arise.

Speaking at a trade association meeting in Boston at the end of October, a senior Department of Labor official reported that the Department was hard at work on its first set of FAQs. He said that the FAQs would reinforce some of the rule’s basic concepts that questioners seemed to struggle with and add some gloss to particular aspects of the rule that the Department felt needed additional attention. His predictions proved accurate. In this post we provide a sampling of some of the highlights of the recently issued FAQs. We have chosen three topics that fall under the heading of “basic concepts,” and three topics that elucidate particular aspects of these rules. There is, of course, a measure of editorial discretion at work in our selection to topics. Other practitioners might choose differently based on their particular needs and interests. For anyone who works with or needs to comply with these rules, we recommend reading the FAQs in their entirety.

Continue Reading Labor Department Issues FAQs Explaining Aspects of the 2016 Final Fiduciary Rule

The Department of Labor’s new overtime rules take effect December 1, 2016, and employers across the country are carefully reviewing and modifying their compensation and payroll practices in anticipation.  As part of this preparation, employers must consider whether and how any changes to their compensation structures will affect their employee benefit plans. This post examines some of the employee benefits issues that employers should be considering as the December 1 deadline approaches.

Continue Reading Employee Benefits and the New Overtime Rules

This post continues our examination of the Department of Labor’s suite of final fiduciary and conflict of interest regulations. Our previous posts discussed the newly expanded definition of “investment advice fiduciary”; the “best interest contract” (or BIC) exemption; and the new class exemption for principal transactions. Collectively, these rules vastly expand the definition of an “investment advice fiduciary” while at the same time providing new prohibited transaction class exemptions intended to preserve many of the commission-based compensation arrangements that would otherwise be imperiled under the new fiduciary standard. In this and the next three posts, we will examine how the Department has amended certain existing Prohibited Transaction Exemptions to come into alignment with its new fiduciary and conflict of interest standards.

This post explains the changes to Prohibited Transaction Exemption (PTE) 84-24 relating to insurance agents and brokers.

Continue Reading The Department of Labor’s 2016 Final Fiduciary and Conflict of Interest Regulations: Amendments to Prohibited Transaction Exemption 84-24 for Transactions Involving Insurance Agents and Brokers (and Others)