Welfare Benefit Plan ERISA News
September 2014

 
"Bailouts" for Health Insurers
ObamaCare contains large "bailouts" for insurance companies offering ObamaCare-compliant coverage in the individual and small group health insurance market. Essentially, there are two types of bailouts--one transfers money from the vast majority of people with health insurance (Reinsurance program), and another transfers money directly from taxpayers (Risk Corridor program).
ObamaCare's Risk Corridor program provides payments when insurers lose money on ObamaCare-compliant plans sold in the individual market. In March 2014, the Administration signaled that this program would be implemented in a budget-neutral manner. However, a recent U.S. House of U.S. House of RepresentativesRepresentatives Oversight Committee report found that almost all insurance companies expect to receive Risk Corridor payments to cover their expected losses on ObamaCare-compliant plans. The Committee projections indicate that the size of the bailout will approach $1 billion this year alone. Read the report, "ObamaCare's Taxpayer Bailout of Health Insurers and the White House's Involvement to Increase Bailout Size."
More Information.
Self-Funded Plans Must Obtain a Health Plan Identifier (HPID) by November 5
The Department of Health and Human Services (DHHS) recently updated the Code Set rules under HIPAA. These rules create uniform electronic standards for common health plan administrative processes with insurance companies, third-party administrators (TPAs), and health care providers. They are intended to simplify certain administrative aspects of providing and paying for health care. Most employers with self-funded plans need to apply for an HPID by November 5, 2014. The HPID will be used to determine employers' compliance with the Code Set Rules. Read more
Happy 40th Birthday, ERISA!
The 1963 closing of the Studebaker automobile manufacturer's plant in South Bend, IN and the company's inability to pay pension benefits created demand for reform that led to the passage of ERISA on September 2, 1974. A new era in the way employers and employees viewed the security of their employer-sponsored welfare benefit plans and retirement plans was born. The goals of ERISA are to provide uniformity and protections to employees.
What Will You Do With Your MLR Rebates?
"Employers sponsoring fully-insured group health plans may be receiving rebates this month pursuant to the Medical Loss Ratio (MLR) rules of Health Care Reform. Employers face certain restrictions as to what they may do with the rebates. ... The rebates may be used in a variety of ways as long as the method is consistent with ERISA fiduciary requirements. For example, rebates may be distributed in cash, used to reduce future premiums (commonly referred to as a premium holiday) or to enhance benefits. However, if participants pay their required contributions on a pre-tax basis under a Section 125 plan, MLR rebates distributed as cash or a reduction in employee premium are taxable in the year of distribution." Read full article here.
These audits are expected to be focused on enforcement (i.e., imposition of civil monetary penalties or resolution agreements). Thus, the importance of getting your HIPAA documents in order sooner rather than later cannot be overstated.
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© 2017 ERISAPros, LLC, All rights reserved. Information on ERISAPros' website, its newsletter, “News & Views,” and its blog, “ERISA Wonk,” is published as a general informational source. Information and articles are general in nature and are not intended to constitute legal or tax advice in any particular matter. Blog posts and comments reflect the personal views of their respective authors - not those of ERISAPros. Transmission of this information does not create an attorney-client relationship. ERISAPros, LLC is not a law firm and is not giving legal or tax advice. It does not warrant and is not responsible for errors or omissions in the content on its website or in its newsletters. ERISA is a complicated and confusing law. Summary Plan Descriptions (SPDs), Wrap Plan Documents, and Form 5500s require review and updating by qualified ERISA compliance professionals.

 

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