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Safeguards to Defend Against Conflict of Interest Allegations in the Administration of ERISA Welfare Benefit Claims

In cross-motions for summary judgment in Geiger v. Aetna Life Insurance Company, the U.S. Court of Appeals for the Seventh Circuit considered whether Aetna, the designated claims fiduciary and insurer of disability benefits provided under an employer-sponsored ERISA welfare benefit plan, abused its discretion when it terminated the plaintiff’s disability benefits.  The plaintiff was a former employee of the employer-plan sponsor.  The terms of the plan specifically granted discretionary authority to Aetna with respect to determining benefits and construing the terms of the plan. However, the plaintiff alleged that Aetna had operated under a conflict of interest, as the party that both determined eligibility for and paid plan benefits, and thus abused its discretion in denying her claim.  In deciding that Aetna did not abuse its discretion, the Court considered the following four safeguards that Aetna had undertaken to minimize any conflict of interest: (i) Aetna obtained numerous independent physician… Continue Reading

Federal District Court Issues Preliminary Injunction Blocking Enforcement of ACA Section 1557

The U.S. District Court for the Northern District of Texas issued a preliminary nationwide injunction December 31, 2016, blocking HHS from enforcing Section 1557 of the Affordable Care Act in Franciscan Alliance, Inc. et. al. v. Burwell. We previously reported on Section 1557 (which prohibits discrimination in certain healthcare programs and activities for Title IX reasons, e.g., race, color, national origin, sex, age, or disability), the final Section 1557 regulations issued by HHS, and the potential effects on healthcare providers, insurers, and employer-provided health care coverage here. The Franciscan Alliance plaintiffs are three religiously affiliated healthcare providers (later joined by five states) that claimed (i) HHS impermissibly extended Title IX to include gender identity and termination of pregnancy as forms of sex discrimination contrary to Title IX’s history and legislative intent, (ii) Section 1557 requires covered entities to perform and/or provide insurance coverage for abortion and transition-related procedures, and (iii)… Continue Reading

Federal Agencies Release Additional Frequently Asked Questions on Special Enrollment Opportunities, Preventive Services, and Qualified Small Employer HRAs

On December 20, 2016, the federal Departments of Health and Human Services, Labor, and the Treasury issued a set of three frequently asked questions (“FAQs”) addressing issues under the Affordable Care Act (the “ACA”). These FAQs confirm that: (i) an individual who loses eligibility for individual coverage purchased through the public health insurance marketplace is entitled to a HIPAA special enrollment opportunity in employer group health plan coverage, if eligible, even if other coverage in the marketplace or in the individual market remains available; (ii) for non-grandfathered group health plans subject to the ACA, the effective date for the revised Women’s Preventive Services Guidelines released on December 20, 2016, is the first plan year beginning on or after December 20, 2017 (e.g., January 1, 2018 for calendar year plans); and (iii) the Qualified Small Employer Health Reimbursement Arrangement introduced in the 21st Century Cures Act and available to small employers… Continue Reading

ERISA Final Rules for Disability Benefits Claims Procedures

The U.S. Department of Labor issued final regulations revising the ERISA claims procedures that apply to employee benefit plans offering disability benefits. Generally, these final regulations extend certain procedural rules applicable to claims submitted under group health plans to disability benefit claims submitted under ERISA plans that provide disability benefits. The final regulations apply to claims for disability benefits filed on or after January 1, 2018. View the final regulations here.

Small Employers Can Reimburse Premiums and Medical Expenses

The 21st Century Cures Act, which recently passed in Congress and President Obama has stated he will sign, creates a new “qualified small employer health reimbursement arrangement” (“QSEHRA”) effective January 1, 2017. The QSEHRA is a new form of health reimbursement arrangement (“HRA”) that can reimburse substantiated medical care expenses, including premiums, of up to $4,950 per year (as adjusted for inflation) or up to $10,000 per year (as adjusted for inflation) if the QSEHRA reimburses family member expenses. The QSEHRA is available to an employer that (i) is not an “applicable large employer” under the Affordable Care Act (“ACA”) (which generally means having at least 50 full-time or full-time equivalent employees, determined on a controlled group basis) and (ii) does not offer a group health plan to any of its employees in the controlled group. Unlike “regular” HRAs, the QSEHRA generally is not considered a group health plan for… Continue Reading

Civil Monetary Penalties Increased for Violations of HIPAA Privacy and Security Rules

The U.S. Department of Health and Human Services (“HHS”) recently issued an interim final rule (the “HHS Rule”), which sets out inflation adjustments to the civil monetary penalty (“CMP”) amounts that HHS is authorized to assess or enforce, including for violations of the HIPAA privacy and security rules. The HHS Rule was issued for compliance with the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, which was enacted on November 2, 2015 (the “2015 Act”). The 2015 Act requires federal agencies to (i) adjust the level of CMP amounts with an initial “catch up” adjustment and (ii) make subsequent annual adjustments for inflation. The HIPAA CMP amounts had not been adjusted since 2009. Under the HHS Rule, HIPAA CMP amounts are increased by 10.2% for violations of the HIPAA privacy or security rules by a covered entity or a business associate, as follows:       Prior $$… Continue Reading

2016 Health and Welfare Plan Year-End Action Items

There are a number of health and welfare plan action items to address as 2016 closes and 2017 begins. In addition, many employers are wondering how these action items may be affected by the November election results. We have addressed these action items and the possible effects of the election results in our HB Health and Welfare blog here, including: Affordable Care Act (“ACA”) reporting for 2016 (i.e. Forms 1094/1095) and related issues; Issues that may impact plan design and/or written materials, such as the ACA, recent wellness regulations, and federal agency enforcement activity; and Certain other reporting and communication requirements.

Extension of Due Dates for 2016 Individual Statements Under Affordable Care Act Information Reporting

In Notice 2016-70 (the “Notice”), the IRS extended the due date, from January 31, 2017 to March 2, 2017, for employers (including so-called “applicable large employers”), insurers, and other providers of “minimum essential coverage” in 2016 (“Reporting Entities”) to furnish statements to individuals on IRS Forms 1095-B and 1095-C, pursuant to the Affordable Care Act’s information reporting requirements (the “ACA Reporting Requirements”). The Notice also extends the IRS’s transition relief from penalties that Reporting Entities could otherwise incur for incorrect or incomplete information reported on their 2016 information returns. To obtain this relief, a Reporting Entity must show that it made a good faith effort to comply with the ACA Reporting Requirements in furnishing statements to individuals and filing with the IRS. Notably, the Notice does not extend the due date under the ACA Reporting Requirements for Reporting Entities to file their 2016 information returns with the IRS. Accordingly, that… Continue Reading

Reminder: Transitional Reinsurance Program Submission Due November 15

The 2016 enrollment count submission under the Transitional Reinsurance Program is due November 15, 2016. The submission may be completed via www.pay.gov. The U.S. Department of Health and Human Services offers the option to pay the 2016 reinsurance contribution in one payment due by January 17, 2017, or two payments due by January 17, 2017 and November 15, 2017.

Agencies Issue New FAQs Regarding Preventive Services under the ACA and Implementation of the Mental Health Parity and Addiction Equity Act

The federal Departments of Health and Human Services, Labor, and the Treasury (the “Agencies“) recently issued a set of Frequently Asked Questions, Part 34 (the “FAQs“), regarding the coverage of certain preventive services under the ACA and the implementation of requirements under the Mental Health Parity and Addiction Equity Act, as amended by the ACA (the “MHPAEA“). With respect to preventive services, the FAQs (i) highlight updated recommendations issued in 2015 by the U.S. Preventive Services Task Force (which form the basis, in part, of the ACA preventive services requirements) regarding tobacco cessation and (ii) request comments on several questions about items and services that must be provided without cost-sharing by health plans and health insurance issuers for compliance with the updated recommendations. The updated recommendations become effective the first day of the plan/policy year beginning on or after September 22, 2016 (i.e., January 1, 2017 for calendar year plans/policies). The… Continue Reading

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