Court Finds Breach of Fiduciary Duty Against Broker for Failure to Explain Interaction of Stop-Loss and Self-Funded Health Plan Coverage
In Express Oil Change, LLC v. ANB Insurance Services, Inc., the sponsor of an employee health plan (the “Employer”) decided to convert its funding for the plan from a fully-insured to a self-funded basis. In preparation for the conversion, the Employer sought the advice and expertise of ANB Insurance Services, Inc. (the “Broker”) with implementation of the self-funded plan (the “Plan”) and procurement of the associated stop-loss insurance coverage. Apart from providing benefit consulting services to the Employer, the Broker had a long-standing and close relationship with the Employer as its agent for various other types of insurance coverage. The terms of the newly self-funded Plan provided for a $1 million lifetime maximum per participant on out-of-network benefits, but no such limit on in-network benefits. The Employer erroneously thought that the lifetime maximum applied to both in-network and out-of-network benefits and purchased a stop-loss policy with a deductible of $75,000… Continue Reading
The U.S. Department of Labor (the “DOL”) recently released Technical Release 2013-2, which contains temporary guidance regarding notices required by the Patient Protection and Affordable Care Act (“PPACA”) that employers must provide to their employees concerning coverage options available in the new health insurance marketplaces, or “exchanges.” Generally, PPACA requires that any employer subject to the Fair Labor Standards Act (“FLSA”) must provide its employees with written notice of the existence of an exchange, contact information for the exchange, and the services provided by an exchange; that the employee may be eligible for a premium tax credit if the employee purchases coverage through an exchange; and that the employee may lose any employer contribution to a health benefit plan, if offered by that employer, which contribution may have been excludible from the employee’s taxable income. Effective October 1, 2013, employers must provide such notices to all current employees and to… Continue Reading
IRS Proposed Regulations Regarding Minimum Value of Employer Plans and the Health Insurance Premium Tax Credit
On May 3, 2013, the IRS issued proposed regulations (the “Regulations”) regarding the health insurance premium tax credit (“Credit”) enacted under PPACA and the determination of the minimum value of health coverage (“MV”) provided by an eligible employer-sponsored plan (“Plan”). Under PPACA, individuals generally cannot receive a Credit if they are eligible for coverage under a Plan that is “affordable” and provides MV. Certain large employers may be subject to a penalty under PPACA’s “play or pay rule” if a full-time employee receives a Credit. A Plan fails to provide MV if the Plan’s percentage share of the total allowed costs of benefits provided is less than 60 percent. The Regulations address the treatment of various benefit arrangements, including integrated health reimbursement arrangements and nondiscriminatory wellness programs, in the determination of a Plan’s percentage cost share for MV purposes and the affordability of the Plan’s coverage. Notably, with respect to… Continue Reading
On May 2, 2013, the Internal Revenue Service (the “IRS”) issued Revenue Procedure 2013-25, which set the annual limit on deductions permitted in 2014 for health savings accounts at $3,300 for individuals with self-only coverage under a high-deductible health plan and at $6,550 for individuals with family coverage under a high-deductible health plan. A high-deductible health plan for calendar year 2014 is a plan that has an annual deductible of at least $1,250 for self-only coverage or $2,500 for family coverage. Revenue Procedure 2013-25 can be found here.
New FAQs Address Annual Limit Waivers, Provider Nondiscrimination, and Transparency Reporting under PPACA
The Departments of Labor, Health and Human Services, and Treasury (collectively, the “Departments”) recently released frequently asked questions (“FAQs”) addressing the implementation of the annual limit waivers, provider nondiscrimination, and transparency reporting requirements under the Patient Protection and Affordable Care Act (“PPACA”). In the FAQs, the Departments first clarified that a change to a health plan or insurance policy year will not affect the expiration date of an annual limit waiver. For instance, if a waiver was granted for an April 1, 2013 plan or policy year, the waiver will expire on March 31, 2014, regardless of whether the plan or issuer later amends its plan or policy year. Next, the Departments announced that no regulations are forthcoming to address PPACA’s provisions related to nondiscrimination against providers or coverage for individuals participating in approved clinical trials because the Departments considered such provisions to be self-implementing. Accordingly, non-grandfathered group health plans… Continue Reading
On March 29, 2013, the Centers for Medicare & Medicaid Services (“CMS”) released a set of Frequently Asked Questions (“FAQs”) regarding the use of health care reform exchanges (“Exchanges”) to offer ancillary insurance products, such as stand-alone vision, disability, and life insurance coverage. The FAQs clarify that an Exchange may offer only “qualified health plans” (“QHPs”), which include stand-alone dental plans, to qualified individuals and qualified employers, but that ancillary insurance products may be offered by separate state programs that share resources and infrastructure with a state-based Exchange. In addition, Exchanges are permitted to provide information about ancillary products, such as explanations of the coverage the ancillary products provide, but must also caveat that enrollment in an ancillary product does not qualify as enrollment in a QHP. A copy of the FAQs is available here.
The federal Departments of Health and Human Services, Treasury, and Labor (collectively, the “Departments”) recently issued proposed regulations (the “Proposed Regulations”) implementing the 90-day waiting period limitation (the “90-Day Limit”) under the Patient Protection and Affordable Care Act (“PPACA”) and also proposing amendments to existing portability regulations under the Health Insurance Portability and Accountability Act of 1996 (the “HIPAA Regulations”) to conform those regulations to PPACA’s requirements. PPACA provides that, effective for plan years beginning on or after January 1, 2014, grandfathered and non-grandfathered group health plans (both insured and self-funded) and health insurance issuers are prohibited from applying a waiting period for coverage that exceeds the 90-Day Limit. The definition of “waiting period,” as currently in effect under the HIPAA Regulations and adopted by the Proposed Regulations, is the timeframe imposed by a plan or insurance policy that must pass before coverage for an eligible employee or dependent becomes… Continue Reading
Temporary Standards for State-Administered External Review Processes under PPACA Extended until 2016
The Departments recently issued Technical Release 2013-01, which extended transitional relief that was set to expire on January 1, 2014, permitting the use of temporary standards for state-administered external review processes required under PPACA. Until January 1, 2016, the Departments will consider non-grandfathered group health plans and health insurance issuers, in both the group and individual markets, to be compliant with PPACA’s state external review process standards, even if the external review process does not include all of the consumer protection standards required by PPACA, if the plans or issuers comply with a state-administered external review process that otherwise complies with the temporary standards established in Technical Release No. 2011-02. Technical Release 2013-01 can be found here. Technical Release 2011-02 can be found here.
On March 12, the Centers for Medicare and Medicaid Services released a Technical Fact Sheet summarizing provisions of the Notice of Benefit and Payment Parameters final rule (the “Payment Rule”) recently issued by the Department of Health and Human Services (“HHS”). Among other things, the Payment Rule (1) expanded on standards defined in prior rules regarding certain risk-shifting programs under PPACA and (2) set standards and provided additional information regarding PPACA’s medical loss ratios. See our previous blog post on the Payment Rule, available here. A copy of the Technical Fact Sheet is available here
In an FAQ released jointly by the Departments of Labor, Treasury, and Health and Human Services (collectively, the “Departments”), expatriate health plans are granted temporary transitional relief from compliance with the requirements of subtitles A and C of Title I of the Patient Protection and Affordable Care Act (“PPACA”), including the group health mandates and market reforms such as coverage of preventive care and the restrictions on lifetime and annual limits, for plan years ending on or before December 31, 2015. For purposes of this transitional relief, an “expatriate health plan” is an insured group health plan with respect to which enrollment is limited to primary-insured individuals who reside outside of their home country for at least six months of the plan year and any covered dependents of such expatriates. In order to qualify for the transitional relief, expatriate health plans must comply with the pre-PPACA version of Title XXVII… Continue Reading