By: Jen McCormick, Esq.

On January 5, 2018, the Department of Labor (DOL) responded with a proposed regulation which would extend the circumstances in which an association may function as an “employer” under ERISA, and would alter the way in which it would be regulated.  The proposed regulations make two important modifications: (1) create a unique dual status for working owners and (2) modifies the interpretation of the commonality of interest requirements.   The “dual status” requirement would permit a working owner or sole proprietor to function as both the employer for purposes of joining the association and as the employee for purposes of being covered by the plan.  The “commonality of interest” requirement would allow formation of an association for the purpose of offering health insurance. The rule does not impose prohibitions on forming new associations (or specify size limitations), but it does provide formal organizational requirements for associations. While it may seem this rule will not have a major impact on self-funding, these two changes will expand the pool of employers who may be eligible to create, join or establish a self-funded.   This could create new opportunities.

By: Chris Aguiar, Esq.

As we saw last week, you cannot add the Patriots’ winning the Super Bowl to the list of absolutes in life (despite what my New England brethren might tell you).  After death and taxes, few things are a given.  Something similar can be said, that success is not a given, in the world of subrogation/reimbursement. 

Last week, I had the pleasure of traveling to Kansas City, Kansas to testify on behalf of a client in a Preliminary Injunction Hearing in Federal District Court as we attempted to obtain a Temporary Restraining Order, a court proceeding to officially freeze the ability of an attorney or his client from spending money to which the Plan asserts an equitable lien by agreement.   We spent weeks preparing, researching, committing facts to memory, and rehearsing examinations so that we could put our client in the best position to succeed.  Unfortunately, the Judge had other Plans.  Despite having witnesses from Kansas and beyond ready to testify – the Judge did not allow any testimony to be heard.

In the end, we were ultimately able to secure everything we needed for our client, but it's notable that something as simple (and typically predicable) as the procedure that a hearing will follow was entirely up to the discretion of the Judge that day.  The Judge seemed to have an agenda, and there would be no deviating from it.  We ended up on the right side of that agenda, but what if the alternative had been true –a significant risk given that Kansas qualifies as an anti-subrogation state.  It’s very important in subrogation cases to consider all options.  In many cases there is no doubt that the Plan’s rights are strong, but enforcement often comes at a significant cost.  Unfortunately, in the world of Health Subrogation where Plan expenses appear to be limitless while tort reform and other factors allow auto policies to be limited to, in many cases, less than $100,000.00, the cost of enforcing the rights of the Plan in full can leave the Plan worse off than it started.   That can even be true when things go exactly right – imagine when a Judge decides to throw a wrench into “the Plan”!

In this episode, our hosts discuss the recent announcement that Amazon, Berkshire Hathaway and JPMorgan are looking to collaborate on “health care.”  Is this just a new way to supply medical goods, deliver care, or handle the entire exchange (including enrollment and payment)?  How can broker/advisors, plan administrators, and other members of the industry benefit from this change?  And who should be most concerned?  This and more await you in “Empowering Plans.”

Click here to check out the podcast!   (Make sure you subscribe to our YouTube and iTunes Channels!)

By: Kelly Dempsey, Esq.

On January 22, 2018 the House and the Senate passed a continuing resolution that impacts three taxes imposed by The Affordable Care Act (ACA). The most notable in the self-funded industry is the ACA’s High Cost Employer-Sponsored Health Coverage Excise Tax (“Cadillac Tax”). The Cadillac Tax was originally set to begin in 2018, but has been delayed (again) for an additional two years putting the start date at January 1, 2022. The Cadillac Tax is a 40% excise tax on employer-sponsored health coverage that provides high-cost benefits.

Similar to the prior legislation passed in December 2015, this new legislation also:

1.    Suspends the ACA Health Insurance Provider Tax for 2019; and
2.    Delays the ACA Medical Device Tax until 2020.

The ACA Health Insurance Provider Tax is applicable for fully-insured plans and is effective for 2018. With this legislation, the tax will pick back up in 2020.

The ACA Medical Device Tax is applicable to medical device manufacturers and importers and imposes a 2.3% levy on the sales of commonly used medical devices (defibrillators, pacemakers, artificial joints, heart stents, etc.).

The three delays together cost an approximate $31 billion.

On a positive note, the continued resolution extends the Children’s Health Insurance Program (CHIP) for an additional six years.

While 2022 seems far away, employers should still be mindful that the Cadillac Tax has not been fully repealed and the possibility still exists that it could one day take effect. This is important because wellness programs and on-site clinics have grown tremendously in popularity over the past several years. Both wellness programs and on-site clinics would be included in the Cadillac Tax calculations – meaning employers would likely be dis-incentivized to continue these programs. For now it is too early to start planning for changes - this is just one more item keep on the back burner (just don’t turn the burner off).
 

Many of you are familiar with the plan drafting conundrum: multiple options are available for plan document verbiage on a given topic, but your client either can’t decide, can’t tell the difference, or simply doesn’t have a preference. In response to Phia Document Management (PDM) user requests, we have simplified the plan document checklist by creating a new template with fewer variables, called the Flagship.

Unlike our traditional major medical template where the user is given ten variables for which workers’ compensation exclusion to choose, the Flagship template incorporates The Phia Group’s “best practices” approach to plan drafting; there must always be variables when drafting a plan document, but far fewer in the Flagship, making the user experience a more streamlined and intuitive one.

Join The Phia Group’s legal team as they explain the Flagship template, differences from the existing template, and why the Flagship may be right for you.

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This week, our hosts discuss Adam’s recent travels and review events.  We are not alone in our attitudes and desires to change the industry for the better, and now we have proof of that fact!  What ideas and concepts were shared with Adam, and how can we add fuel to the fire?

Click here to check out the podcast!   (Make sure you subscribe to our YouTube and iTunes Channels!)

Phone: 781-535-5600 | www.phiagroup.com
The Book of Russo: From the Desk of the CEO About six months ago I decided to start a project at The Phia Group focusing on how we can ensure the future viability of my company. The strategy for doing this was based on focusing on the young professional, also known as the millennial population, and attempting to figure out what makes them tick. How can I attract these folks to join Phia and make them want to stay with us throughout their career? The first thing that we did was survey the many young professionals that we have here at Phia in order to identify their thoughts, and what we found out truly opened my eyes. These workers want to understand why our company exists and not just what it is that we do. Ron Peck, Matt Painten, and I spent months just getting back to the basics. After many focus groups and back-and-forth, I believe that we figured it out. This is the core essence of Phia and how we will attract, obtain, and retain not only employees, but clientele as well. I would love your feedback on what we came up with, so here it is: The Problem Health care costs too much and the price is increasing; employers are forced to offset costs onto employees through higher co-pays and deductibles. The Phia Group’s Purpose To make health benefits affordable for employers and employees Why is this The Phia Group’s Purpose? Hard working Americans deserve access to high quality, affordable health care. What does it mean to “Empower Plans?” To help employers maximize benefits, minimize costs, and take control of their own plans. How do we “Empower Plans?” We start by promoting and educating employers about self-funding. Then, we invent and implement cost containment services while delivering custom solutions to meet specific client needs. I truly hope that 2018 is an amazing year for you and yours.  Happy reading my friends.
Service Focus of the Quarter: Plan Document/Summary Plan Description Risk Assessment Phia Group Case Study Phia Fit to Print From the Blogosphere Webinars Podcasts The Phia Group’s 2017 Charity The Stacks Phia’s Speaking Events Employee of the Quarter Phia News
Service Focus of the Quarter: Plan Document/Summary Plan Description Risk Assessment In case you hadn’t heard, a new tax bill has been signed into law. Amongst other things, it appears the individual mandate ushered in by the ACA (aka ObamaCare) is being eliminated. The initial impact will be on the individual market, but we foresee healthy (low risk) individuals performing a cost benefit analysis and eventually choosing to drop out of their employer’s group health insurance. The first people likely to drop from such plans are likely those who are paying an arm and a leg to be enrolled in expensive, traditional, “fully funded” insurance. Yet, we fear that – soon after – the most desirable lives (healthy, low risk lives) will drop from their employers’ self funded plans… leaving only high risk / high cost lives. No plan – fully funded or self funded – can withstand losing those lives. It therefore behooves every self funded plan sponsor to figure out ways to offer more for less, and thus make plan enrollment attractive for all members – low and high risk, healthy and unhealthy alike. To do this, you must innovate and implement new benefits and cost containment tools. To do that, start with the plan document. One of the benefits of self-funding is that the employer has the freedom and flexibility to design a benefit plan that truly meets the needs of its employees; making it attractive to the low risk healthy lives we need to fund the plan, and to whom we need to make the plan attractive (now that they aren’t “required” to enroll). The employer also has the ability to structure the plan so as to prudently manage the assets of the plan; this can be done, in particular, through innovative plan language meant to proactively tackle potential issues such as risk and cost. Our Plan Document/Summary Plan Description Risk Assessments will identify areas the employer may want to consider for additional review, as well as provide a brief explanation of why certain items are important. Once completed, plan sponsors can implement new measures to make their plans very attractive to even the healthiest folks. Things like new payment methodologies of out of network claims, medical tourism, and more can result in benefit plans offering more for less – and thus remaining a “must have” for those important healthy participants – even when enrollment is optional – but it all starts with the plan document. Contact Tim Callender at tcallender@phiagroup.com or 781-535-5631 to learn more about how a Plan Document/Summary Plan Description Risk Assessment can help you. Protect Your ASA: Update Your Agreements Today! The Phia Group is privileged to work with so many different players in the self-funded industry and health insurance field in general. As a result, we often see issues developing and devise solutions before they have a chance to seriously impact our allies. One such issue that has become a bigger problem of late, negatively impacting third party administrators, plan sponsors, brokers and stop-loss carriers, occurs when a self funded benefit plan or their broker-advisor wishes to utilize a stop-loss carrier that the TPA has neither vetted nor placed. Despite the fact that the TPA played no role in selecting the carrier, that TPA - more often than not - is still targeted by the plan sponsor if and when the carrier subsequently refuses to reimburse the plan or some other conflict arises. For those TPAs utilizing The Phia Group's best-in-class template administrative services agreement (ASA), language is included that generally addresses this issue, but as the problem has escalated - it now requires special attention. With that in mind, The Phia Group has developed a form, which is signed by the plan sponsor and TPA, and is added to existing ASAs as an exhibit. This addendum can be revised to fit with any ASA. Please contact Garrick Hunt at ghunt@phiagroup.com or call him at (781) 535-5644 to learn how you can obtain access to this very important form.      Cutting back on Questionnaires: It is The Phia Group’s mission to reduce the cost of healthcare through the use of innovative legal techniques and the most sophisticated technology. In keeping with this goal The Phia Group is always taking steps to improve all of our services, including our earliest: subrogation. Recent upgrades to The Phia System™ and advancements in our investigational techniques have led to faster identification of third party liability claims and quicker engagement by The Phia Group’s team, without relying upon or otherwise communicating with the plan participants. These new resources allow us to identify opportunities more often and more effectively, while at the same time reducing the volume of accident questionnaires we send to plan participants. While accident questionnaires are still a useful tool when investigating and collecting accident details – they are no longer the only tool. As such, we are pleased to now provide all of our subrogation clients with the ability to increase, decrease, or cease the use of plan participant accident questionnaires. Clients can also opt to utilize their own letters, or have the employer communicate directly with plan participants. The choice is yours! The Phia Group is committed to ensuring you and your clients are provided with nothing but the highest quality service, best-in-class performance, and a member first approach. That is why we are continuously improving our services to provide the best performance (and most options) possible. To discuss these new customization capabilities, or our other services, please contact Trevor Schramn at tschramn@phiagroup.com or call (781) 535-5692.   Phia Group Case Study: Retroactive Plan Amendments A self-funded group’s broker approached The Phia Group’s consulting department (via PGCReferral@phiagroup.com) and asked us to help respond to a provider’s appeal of a large dialysis claim. The provider was out-of-network, so thankfully there were no PPO contract concerns – but at the time the services were rendered, the SPD defined its payment rate as the prevailing charge in the area. One month after receiving the final claims for which the Plan was responsible, the Plan chose to effect an amendment that limited payment for all dialysis claims to 145% of the Medicare rate, and the amendment was back-dated to the beginning of the year (before the member began dialysis treatments). The Plan desired to use its new carve-out amendment to reprice the existing claims, but had received negative feedback on that proposition from its TPA, since the TPA felt that the language in the SPD at the time the claims were incurred is the language that must be adhered to. The broker asked The Phia Group for advice, and our advice was identical to that of the TPA – that a retroactive carve-out is not a valid way to price the already-incurred claims. Regardless, the Plan chose to pay all past claims based on that new amendment, despite the language not being in the SPD when the services were rendered. As expected, the provider pushed back against the lower-than-expected reimbursement, and commenced a lawsuit over the balance of $500,000. The Phia Group provided the Plan assistance with settling the claims to avoid litigation, since litigation almost certainly would have resulted in the Plan paying the prevailing charges in the area…plus interest…plus penalties. The moral of the story is that self-funded plans, their TPAs, and their brokers should be proactive in making sure the SPD contains the proper protections – since once a claim comes in, it is sometimes too late to contain costs. In other words, if you think you may need to carve out high dollar claims (like dialysis) in the future, fix your plan document now! Don’t wait, until it’s too late; (The Phia Group’s Phia Document Management service – including the Flagship Template – can help make sure that SPDs say what you need them to say). Fiduciary Burden of the Quarter: Strictly Following the Plan Document! Plan Administrators owe a fiduciary duty to strictly follow the terms of the governing plan documents. The SPD is the “supreme law of the land” for a health plan, and violating even one minor exclusion is technically a violation of the Plan Administrator’s considerable fiduciary duty. Since we’ve been warning the industry about this for years, it didn’t shock us when we heard that the Department of Labor had filed a lawsuit against a benefit plan for paying claims based on Medicare rates, without having included the proper language within the SPD. We understand that Plan Documents are complex, and amending them is not exactly an enjoyable process. But if the health plan wants to implement procedures to save money, there are some deal-breakers – such as making sure the SPD affords the Plan the right to do what the plan is going to do. ERISA empowers a plan sponsor to put almost any language of its choosing into its SPD. That’s a great thing, and plans that take advantage have experienced novel savings and have had remarkable self-funding experiences. If a benefit plan wants to pay claims differently from what is currently in the SPD, it can certainly do so – but not until the SPD reflects it, and not until the SPD is altered at the appropriate time. Back to top ^   Phia Fit to Print: • Self-Insurers Publishing Corp. – The Future of Self-Funding - An Insider's Take – October 3, 2017 • Money Inc. – Self-funding Amid Obamacare Uncertainty – November 2, 2017 • Self-Insurers Publishing Corp. – Interim Final Rules Update – November 4, 2017 • Self-Insurers Publishing Corp. – Managing Plan Communication During a Time of Legislative Uncertainty – December 1, 2017 • HealthLeaders Magazine – Insurers Facing Impossible Scenario: Cover Everyone, But No Individual Mandate – December 13, 2017 Back to top ^ From the Blogosphere: • An Appealing Option. Facing a final appeal. • Phia Undercover: Two Chargemasters at Addiction Centers. Dealing with a high rate biller. • Welcome to the Fiduciary Jungle! The writing is on the wall; what will you do about it? • Sacrificing the Individual Mandate on the Alter of Tax Reform. The glue holding all of Obamacare together.   To stay up to date on other industry news, please visit our blog. Back to top ^ Webinars Plan on Saving by Saving Your Plan On January 30, 2017, The Phia Group will present “Plan on Saving by Saving Your Plan,” where our legal team will explain the Flagship template, differences from the existing template, and why the Flagship may be right for you. Click HERE to Register! On January 18, 2018, The Phia Group presented “A Taxing Time: The Tax Bill’s Impact on Self-Insurance,” where we discussed the latest tax law. On December 19, 2017, The Phia Group presented “With Great (Cost-Containment) Power Comes Great (Fiduciary) Responsibility,” where we describe various ways to cut costs, what must be done to ensure that fiduciary duties are being met, and what happens if they are not. On November 14, 2017, The Phia Group presented “Living in the Now: Prepare for 2018,” where we discussed where the market is heading and what you need to do to keep up with it. On October 17, 2017, The Phia Group presented “Best Practices for Today's Plan Documents,” where our legal team discussed best and worst plan document practices, provide some creative ideas for plan formation, and suggest some concepts to help perfect plan document drafting. Be sure to check out all of our past webinars! Back to top ^ Podcasts: • On December 21, 2017, The Phia Group presented “Breaking Down the GOP Tax Bill and How It Affects You,” where The Phia Group's CEO Adam Russo and Attorney Brady Bizarro discuss the new GOP tax bill in depth. • On December 18, 2017, The Phia Group presented “Protect Your ASA,” where Adam Russo, Ron Peck, and Jen McCormick discuss the rising trend in stop-loss insurance being placed by entities other than the TPA, yet the TPA is held responsible if things go sour. • On December 6, 2017, The Phia Group presented “Plans and Conspiracy,” where our legal team discussed the recent news regarding CVS purchasing Aetna, as well as a new opportunity to customize plan document reviews to address different levels of need. • On November 21, 2017, The Phia Group presented “The Biggest Threats to Self-Funding: A Lightning Round,” where Adam Russo, Ron Peck, and Brady Bizarro discuss the biggest threats to the self-funded industry. • On November 3, 2017, The Phia Group presented “Planning for Stormy Seas Ahead,” where Adam Russo, Ron Peck, and Jennifer McCormick discuss all of the many issues creating waves as it relates to benefit plan documents, and what steps we can all take to safely navigate those waters – including setting sail on The Phia Group Flagship Template! • On October 19 2017, The Phia Group presented “Trumping Costs and Climbing the Hill,” where Adam Russo, Ron Peck, and Brady Bizarro discussed discuss the wild and crazy happenings in DC. • On October 13, 2017, The Phia Group presented “The Man with the Plan,” where Adam Russo and Ron Peck discuss the often overlooked but – in their opinion – all important plan document. • On September 28, 2017, The Phia Group presented “Responsibility - Beyond the Contract,” where Adam Russo and Ron Peck discuss trends impacting health plans, employers, and employees.   Be sure to check out all of our latest podcasts!   Back to top ^ The Phia Group’s 2017 Charity At The Phia Group, we value our community and everyone in it. As we grow and shape our company, we hope to do the same for the people around us. The Phia Group's 2018 charity is the Boys & Girls Club of Brockton. The mission of The Boys & Girls Club is to nurture strong minds, healthy bodies, and community spirit through youth-driven quality programming in a safe and fun environment. The Boys & Girls Club of Brockton (BGCB) was founded in 1990 to create a positive place for the youth of Brockton, Massachusetts. It immediately met a need in the community; in the first year alone, 500 youths, ages 8-18, signed up as club members. In the 25 years since, the club has expanded its scope exponentially by offering a mix of Boys & Girls Clubs of America (BGCA) nationally developed programs and activities unique to this club. Since their founding, more than 20,000 Brockton youth have been welcomed through their doors. Currently, they serve more than 1,000 boys and girls ages 5-18 annually through academic year and summertime programming.   On Wednesday, December 21st, CEO of The Phia Group, Adam Russo, made a special visit to The Boys & Girls club of Brockton. During his visit, Adam handed out over 200 gifts that were purchased and wrapped by The Phia Group. It is truly a pleasure to see the look on their faces when Santa brings them exactly what they asked for on their wish list.       The Phia Group invites its staff to donate various items for the benefit of The Boys and Girls Club of Brockton. For more information or to get involved, visit www.bgcbrockton.org. Back to top ^ The Stacks Managing Plan Communication During a Time of Legislative Uncertainty By: Corrie Cripps – December 2017 – Self-Insurers Publishing Corp. While the congressional efforts to repeal and replace the Affordable Care Act (ACA) in 2017 have failed, the Trump administration is now taking executive and regulatory action to modify various aspects of the ACA. In addition, other guidance that may affect group health plans in 2018 is still pending. The following is a summary of the recent regulatory actions that will affect self-insured plans in 2018. Click here to read the rest of this article Interim Final Rules Update By: Krista Maschinot, Esq. – November 2017 – Self-Insurers Publishing Corp. On October 6, 2017, the Trump Administration issued two Interim Final Rules (IFR) related to the Affordable Care Act’s (ACA) contraceptive mandate. These rules apply to all employers and create additional considerations for employers sponsoring self-funded plans and their third-party administrators (TPAs). Click here to read the rest of this article. The Future of Self-Funding-An Insider's Take By: Adam V. Russo, Esq. – October 2017 – Self-Insurers Publishing Corp. According to the 2016 Milliman Medical Index, the typical family of four costs $25,826 annually in premium and out of pocket expenses and 57% of costs are borne by the employer. Self-funding the right way can reduce these figures significantly and we as an industry must focus on this. At our company, a single employee pays $127.62 for health insurance a month. This compares to the $554 average in the state of Massachusetts, based on the 2017 UBA survey. Click here to read the rest of this article.   To stay up to date on other industry news, please visit our blog. Back to top ^ Phia’s Q4 Speaking Events: Phia’s Speaking Engagements: Adam Russo’s 2018 Speaking Engagements: • 1/23/18 – Q4 Intelligence Conference – Tampa, FL • 2/2/2018 – Benefit Intelligence School District Conference – Phoenix, AZ • 2/7/2018 – CGI Business Solutions Seminar – Manchester, NH • 3/7/2018 – SIIA Self-Insured Health Plan Executive Forum – Charleston, NC   Ron Peck’s 2017 Speaking Engagements: • 1/25/2018 – HealthFirst TPA Client Conference – Tyler, TX • 3/6/2018 – SIIA National Conference – Charleston, SC • 3/7/2018 – CGI Business Solutions Seminar – Manchester, NH   Back to top ^ Get to Know Our Employee of the Quarter: Brady Bizarro Congratulations to Brady Bizarro, The Phia Group’s Q4 2017 Employee of the Quarter! Brady joined The Phia Group, LLC as an attorney in early 2016. As a member of The Phia Group's in-house legal team, he focuses on contract review, ERISA, ACA, and HIPAA compliance, claim negotiation, and providing general consultative advice on matters involving the health insurance industry and employee benefits law. Congratulations Brady and thank you for your many current and future contributions.   Get to Know Our Employees of the Year: Amanda Grogan & Hemant Dua     Amanda: An attorney’s office sent the following to Amanda’s manager: “I wanted to take a moment to tell you what a professional, courteous, knowledgeable, and helpful employee Amanda Grogan is. Besides her helping me with a very difficult file she understands how her industry and her desk works, including the language we need in order to do these files and that is something that should be applauded.” Hemant: “What more can be said about the man that came to our company and within 3 months deployed a brand new claims system that was in development for 2 years, within 6 months rewrote 75% of the logic code to ensure proper processing of our clients’ claims data in TPS, within 9 months stabilized TPS and pioneered ground breaking performance improvements that were unfathomable with EZD and most recently trained Zach, our new Principal Developer, and on-boarded our new offshore development team, Hitachi. He has been an integral part to this year’s success and his drive to resolve every issue for the TPS users is commendable. He has been a great mentor to many Phia employees that have been with the company for years, showing his business acumen to learn our processes quickly and apply them. His ability to provide solutions, teach the user how the solution was achieved and encourage the user to utilize the newly learned skills in their future endeavors makes Hemant a true sensei. Phia is lucky to have such an amazing individual working to make Phia great again!” Congratulations Amanda & Hemant and thank you for your many current and future contributions. Back to top ^ Phia News • Rock Stars of Health Award o The Phia Group was recently awarded the “Rock Stars of Health GOLD Award” during The Rock Stars of Health Summit held in Missoula, Montana on September 29, 2017. The award recognizes innovation in the implementation of employee health initiatives that unify expertise in wellness, employee health, safety, risk management, and employee benefits. • Year Up at Phia! o The Phia Group has been beyond thrilled with our talented, dedicated members who have come to us through Year Up. Sheyla and Josh have become such essential members of our team – we feel truly blessed to call them a part of the Phia Family. We sat down with them to hear their thoughts and experiences. Find out what they had to say! Job Opportunities: • Consultant I • Health Benefit Plan Administration – Attorney • IT Technologist • Administrative Assistant – Recovery • Case Analyst See the latest job opportunities, here: https://www.phiagroup.com/About-Us/Careers   Promotions • Keith McMahon was promoted from Claim Recovery Specialist IV – WC to Claim Recovery Specialist IV – BI • Casey Balchunas was promoted from Claim Recovery Specialist III to Claim Recovery Specialist IV • Joseph Bacon was promoted from Legal Assistant to Claim Recovery Specialist • Sabrina Centeio was promoted from Case Handler to Claims Recovery Specialist III • Jillian Painten was promoted from Claim Recovery Specialist IV to Team Leader • Cori DeCristoforo was promoted from Customer Service to Case Evaluation • Jiyra Martinez was promoted from a part-time employee to a full-time employee New Hires • Harry Horton was hired as an Attorney • Rea Kostopulos was hired as a Talent Acquisition Specialist • Dixie Hayenga was hired as a Consultant • Kerry Brennan was hired as a Legal Assistant   Fun at Phia: Our Phia Family is so festive! Our “Ugly Sweater Day” was a hit and we thank all those who participated; congratulations to Josh (pictured below sporting a little red number, complete with a reindeer puppy, plus bells and ornaments) for winning “Ugliest Sweater”! How great are these costumes? This year the Phia Halloween Costume Contest was truly a nail-biter. Who would win? The Cowardly Lion? The clown? The fan favorite “Orange Blob,” bravely worn by Sheyla ultimately took home the gold. Thank you to all who participated, you truly made it a stellar Halloween!   Back to top ^
info@phiagroup.com 781-535-5600

Managing Plan Communication During a Time of Legislative Uncertainty
By: Corrie Cripps

For many employer-sponsored group health plans, this is open enrollment season.  This normally busy time of year, coupled with the general public’s uncertainty about potential health care policy changes, has produced a more stressful environment than usual.  

What’s happening at the federal level

While the congressional efforts to repeal and replace the Affordable Care Act (ACA) in 2017 have failed, the Trump administration is now taking executive and regulatory action to modify various aspects of the ACA. In addition, other guidance that may affect group health plans in 2018 is still pending. The following is a summary of the recent regulatory actions that will affect self-insured plans in 2018.

Accommodation/exemption from the ACA’s contraceptive mandate
On October 6, 2017, the Department of Labor (DOL) issued interim final rules (effective immediately) on religious and moral exemptions and accommodations to the ACA’s contraceptive mandate.^1,2

These interim final rules allow a much broader group of employers and insurers to exempt themselves from covering contraceptives such as birth control pills on religious or moral grounds. While the interim final regulations do maintain the existing accommodations process, the process is now optional. In other words, employers could choose not to request an accommodation, or choose to revoke their current accommodation and instead claim exemption status. The key difference in an accommodation versus an exemption essentially impacts the third party administrator (TPA). Under the exemption, the TPA would no longer be responsible for providing the contraceptive coverage. The rules outline the process if an employer now chooses to revoke its current accommodation (which includes notifying the TPA and plan participants).

DOJ memo on gender identity/orientation
In a memorandum issued on October 4, 2017, to agency heads and US attorneys, Attorney General Jeff Sessions issued guidance to agency heads and US attorneys concluding that transgender individuals are not automatically protected from discrimination under Title VII of the Civil Rights Act of 1964.³
 
It is important to note that the Department of Justice’s (DOJ) recent guidance conflicts with the Equal Employment Opportunity Commission’s (EEOC), an independent commission, stance that transgender employees are protected under Title VII.
 
The December 31, 2016, U.S. District Court injunction (applicable nationwide) on certain parts of the ACA Section 1557—the prohibitions against discrimination on the basis of gender identity and termination of pregnancy—is still in effect.⁴  The DOJ’s recent guidance does not specifically address ACA Section 1557. The U.S. Department of Health and Human Services (HHS) is expected to issue a new proposed rule on ACA Section 1557, which will likely include a religious exemption.
 
Disability claims and appeals rules may be delayed until April 1, 2018
Last December the Employee Benefits Security Administration at the DOL issued a final rule on disability benefit plans claims procedures changes, which are slated to become effective on January 1, 2018.⁵  There is now a proposed rule to move the compliance date to April 1, 2018 for these regulations.⁶ 

These regulations are applicable to all Employee Retirement Income Security Act (ERISA) plans that offer disability benefits. The regulations generally align procedures for disability claims with those for group health plans under the ACA.

HIPAA administrative simplification rules
On October 4, 2017, HHS withdrew the January 2, 2014 proposed rule that would have required a controlling health plan (CHP) to submit information certifying compliance with certain Health Insurance Portability and Accountability Act (HIPAA) electronic transaction operating rules and standards.⁷

The withdrawal of this proposed rule does not remove the requirements for covered entities to comply with any of those regulations codified at 45 CFR parts 160 and 162. The other HIPAA Administration Simplification requirement to obtain and use Health Plan Identifiers (HPIDs) has been delayed since October 2014, with no new guidance issued.⁸

ACA emergency room regulations
The American College of Emergency Physicians (ACEP) filed suit in May 2016 against the Departments of Health and Human Services, Labor and the Treasury (the Departments) regarding the ACA regulation for emergency services, applicable to non-grandfathered plans. Specifically, ACEP is concerned with the part of the rule that sets forth how much insurers/plans are required to pay out-of-network physicians for emergency health care services.

On August 31, 2017, a federal court ruled that the Departments acted arbitrarily and capriciously in adopting final regulations under the patient protections provisions for emergency services.⁹  The court stated that the Departments did not "seriously respond" to the transparency and manipulation concerns raised in comments by providers and advocacy groups to the interim final rules. The court’s ruling does not invalidate the final regulations; instead the ruling sends the regulations back to the Departments and requires them to respond to ACEP’s concerns and proposals in a substantive manner.

EEOC wellness regulation review
On August 22, 2017, the U.S. District Court for the District of Columbia concluded that the U.S. Equal Employment Opportunity Commission’s (EEOC) interpretation of a “voluntary” wellness program in its regulations is arbitrary and capricious, and has sent the regulations back to the EEOC for reconsideration.¹⁰ 

In AARP v. EEOC, the AARP filed a lawsuit against the EEOC regarding its wellness program rules, which state that employers can cap incentives to participate in the wellness programs at 30% of an employee’s health insurance costs. The AARP argued that these incentives are so high that they are not truly “voluntary”, which means that older plan participants would have to incur financial penalties if they chose not to participate or divulge sensitive medical information in cases where the incentive requirement is that a health risk assessment be completed.

The court ruled in AARP's favor, determining that the EEOC did not justify its conclusion that the 30% incentive level is a reasonable interpretation of voluntariness. However, instead of vacating the regulations the court remanded them to the EEOC for reconsideration.

The EEOC has stated in its status report to the Court that it will need until August 2018 to reconsider its regulations on employer wellness programs and expects to issue a new final rule by October 2019.¹¹  AARP is expected to respond to the EEOC’s status report and argue that revised regulations should be issued sooner.

Executive order on health care
On October 12, 2017, the President issued an executive order on health care, which directs the Departments of Health and Human Services (HHS), Labor, and Treasury (the Departments) to develop regulations and guidance that could permit new health insurance options for employers and consumers.¹²

The executive order seeks to allow the Departments to look for ways to make it easier for small businesses to join Association Health Plans, expand on the availability and use of Health Reimbursement Arrangements (HRAs), as well as allow the sale of insurance across state lines.

The executive order does not specify a date in which a proposed rule from the Departments will be released.

IRS will reject individual tax returns that are silent on health coverage question
The Internal Revenue Service (IRS) announced it will not accept electronically filed tax returns, and may suspend paper returns, where the individual does not answer the health coverage question.¹³   Employers will need to ensure they are furnishing the Form 1095-B or the Form 1095-C, whichever is applicable, to certain employees by January 31, 2018.

What are the public’s concerns
Two recent studies show that Americans rank health care policy changes as one of their biggest concerns.^14,15 

The Transamerica Center for Health Studies study found that more than two-thirds (67 percent) of Americans reported having at least one chronic health condition, and 42 percent say losing health care because of a pre-existing condition is among their biggest fears.

The uncertain political environment around health care and the rising costs of health care undoubtedly cause stress, which ultimately affects the individual’s health status. In addition, many individuals are not taking advantage of the incentive programs and/or wellness programs offered by their employers, even though more employers are offering such programs.^16,17  

How to communicate plan changes and spread awareness of incentives
In order to neutralize the impact of uncertainty on plan participants, plans will need to engage more authentically with plan participants. For example, if a plan is removing coverage of a benefit, the plan administrator, or representative, should articulate the reason for the change, and be responsive to the plan participants’ feedback. And if new benefits or programs are being added to the plan, those should be communicated as well. As the results from the Transamerica Center study indicate, while employers might believe that their wellness and incentive programs are clear as day to their employees, many employees aren’t even aware that these programs exist in their employer-sponsored health plans.

In addition, there are notice requirements under ERISA and the ACA that plans need to follow when making plan changes. A recent lawsuit from the DOL reiterates the importance of complying with the ERISA documentation requirements. The DOL filed suit against Macy’s and two of its TPAs alleging violations of ERISA’s fiduciary duties.¹⁸   The DOL states that at some point the plan changed the formula to calculate reimbursement of out-of-network claims, but Macy’s did not update its plan documents to notify plan participants of this change. The lawsuit states that this caused plan participants to overpay on certain claims.

This lawsuit shows the continued importance of keeping ERISA plan documentation up-to-date and ensuring that plan administration is consistent with the written terms of the plan.

Conclusion

For plans and TPAs, being well-informed on regulatory developments is always of the upmost importance, but is particularly important for this renewal and open enrollment season due to rapid changes in the regulatory landscape. In addition to keeping plan documents updated, employers and plans should also clearly communicate any changes to help ease the transition for plan participants and avoid liability landmines.

Corrie Cripps is a plan drafter/compliance consultant with The Phia Group.  She specializes in plan document drafting and review, as well as a myriad of compliance matters, notably including those related to the Affordable Care Act.  
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¹Religious Exemptions and Accommodations for Coverage of Certain Preventive Services Under the Affordable Care Act, 26 CFR Part 54, 29 CFR Part 2590, 45 CFR Part 147, October 13, 2017, https://www.gpo.gov/fdsys/pkg/FR-2017-10-13/pdf/2017-21851.pdf, (last visited November 6, 2017).
²Moral Exemptions and Accommodations for Coverage of Certain Preventive Services Under the Affordable Care Act, 26 CFR Part 54, 29 CFR Part 2590, 45 CFR Part 147, October 13, 2017,  https://www.gpo.gov/fdsys/pkg/FR-2017-10-13/pdf/2017-21852.pdf, (last visited November 6, 2017).
³Office of the Attorney General, Revised Treatment of Transgender Employment Discrimination Claims Under Title VII of the Civil Rights Act of 1964, October 4, 2017, https://www.documentcloud.org/documents/4067437-Sessions-memo-reversing-gender-identity-civil.html, (last visited November 6, 2017).
⁴Section 1557 of the Patient Protection and Affordable Care Act, https://www.hhs.gov/civil-rights/for-individuals/section-1557/index.html, (last visited November 6, 2017).
⁵Claims Procedure for Plans Providing Disability Benefits, 29 CFR Part 2560, https://www.gpo.gov/fdsys/pkg/FR-2016-12-19/pdf/2016-30070.pdf, (last visited November 6, 2017).
⁶Claims Procedure for Plans Providing Disability Benefits; Extension of Applicability Date, 29 CFR Part 2560, https://www.gpo.gov/fdsys/pkg/FR-2017-10-12/pdf/2017-22082.pdf, (last visited November 6, 2017).
⁷Administrative Simplification: Certification of Compliance for Health Plans; Withdrawal, 45 CFR Parts 160 and 162, https://www.gpo.gov/fdsys/pkg/FR-2017-10-04/pdf/2017-21424.pdf, (last visited November 6, 2017).
⁸HPID, https://www.cms.gov/Regulations-and-Guidance/Administrative-Simplification/Unique-Identifier/HPID.html, (last visited November 6, 2017).
⁹United States District Court for the District of Columbia, American College of Emergency Physicians v. Thomas E. Price, MD., https://ecf.dcd.uscourts.gov/cgi-bin/show_public_doc?2016cv0913-23, (last visited November 6, 2017).
¹⁰United States District Court for the District of Columbia, AARP v. United States Equal Employment Opportunity Commission, https://ecf.dcd.uscourts.gov/cgi-bin/show_public_doc?2016cv2113-47, (last visited November 6, 2017).
¹¹AARP v. United States Equal Employment Opportunity Commission, Defendant’s Status Report, https://gallery.mailchimp.com/582bc250bf108dcead582e3b8/files/c23461a4-8a49-4bad-b6b4-36e8f9fbb615/2017_09_21.EEOC_wellness_regs_status_report.pdf, (last visited November 6, 2017).
¹²Presidential Executive Order Promoting Healthcare Choice and Competition Across the United States. https://www.whitehouse.gov/the-press-office/2017/10/12/presidential-executive-order-promoting-healthcare-choice-and-competition, October 12, 2017, (last visited November 6, 2017).
¹³ACA Information Center for Tax Professionals, https://www.irs.gov/tax-professionals/aca-information-center-for-tax-professionals, (last visited November 6, 2017).
¹⁴Transamerica Center for Health Studies, Healthcare Consumers in a Time of Uncertainty: Fifth Annual Nationwide TCHS Survey, https://www.transamericacenterforhealthstudies.org/docs/default-source/research/healthcare-consumers-in-a-time-of-uncertainty.pdf?sfvrsn=2, November 1, 2017, (last visited November 6, 2017).
¹⁵American Psychological Association, Stress in America™: The State of Our Nation, http://www.apa.org/news/press/releases/stress/2017/state-nation.pdf, November 2017, (last visited November 6, 2017).
¹⁶Transamerica Center for Health Studies, Healthcare Consumers in a Time of Uncertainty: Fifth Annual Nationwide TCHS Survey, https://www.transamericacenterforhealthstudies.org/docs/default-source/research/healthcare-consumers-in-a-time-of-uncertainty.pdf?sfvrsn=2, (last visited November 6, 2017).
¹⁷Fidelity Investments® and the National Business Group on Health®, Embracing a Broader Definition of Well-Being: Eighth Annual Employer-Sponsored Health and Well-being Survey,
https://workplace.fidelity.com/sites/default/files/NBGH%20Fidelity_2017_WellbeingWebinar_Presentation05022017.pdf, March 2017, (last visited November 6, 2017).
¹⁸Acosta v. Macy’s Inc., S.D. Ohio, No. 1:17-cv-00541
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Interim Final Rules Update
By: Krista Maschinot, Esq.

With the calendar year coming to a close, plan sponsors and plan administrators had been breathing a sigh of relief that renewal season will go smoothly as Congress failed to pass any major legislation affecting the Affordable Care Act this year.  As with years past, however, a last-minute curveball was thrown at them that proves this year will be no different than previous years.  
 
On October 6, 2017, the Trump Administration issued two Interim Final Rules (IFR) related to the Affordable Care Act’s (ACA) contraceptive mandate.  These rules apply to all employers and create additional considerations for employers sponsoring self-funded plans and their third-party administrators (TPAs).  These new Department of Health and Human Services (HHS) regulations, the “Religious Exemptions and Accommodations for Coverage of Certain Preventive Services Under the Affordable Care Act” and the “Moral Exemptions and Accommodations for Coverage of Certain Preventive Services Under the Affordable Care Act,” allow for an exemption to the contraceptive mandate for a broader spectrum of companies and organizations.  Specifically, the rule expands the types of entities that can claim an exemption or an accommodation from the contraceptive mandate on the grounds of religious beliefs or for moral reasons.  

Background
This is not a new discussion.  In 2012, the contraceptive mandate in the ACA required all employers to provide contraceptive coverage to participants on a no cost-sharing basis, in-network.  Religious employers, such as churches, were exempt from the mandate and were not required to file any documentation with the government.  There was also an accommodation process put into place for religious organizations that opposed covering contraceptive services for their employees and students. In 2013, a self-certification form, EBSA Form 700, was created and required for self-funded health plans claiming a religious accommodation from the mandate.  Multiple lawsuits were filed during this time resulting in a split among the circuits as to which entities could claim exemption from the mandate.  

In 2014, the Supreme Court weighed in and, in Burwell v. Hobby Lobby, held that requiring closely-held corporations to abide by the HHS regulations requiring no-cost access to contraceptives being made available to female employees violated the Religious Freedom Restoration Act (RFRA) in situations where the owners’ religious beliefs were contrary to the regulations.¹   In addition to Hobby Lobby, there was another Supreme Court case, Zubik v. Burwell, regarding the accommodation process.  The Supreme Court decided not to issue a decision in the consolidated cases challenging the accommodation process for the contraceptive mandate for employers with religious objections to contraceptives.

Under the Trump Administration’s new rules, the pool of employers that will be able to opt out of the contraceptive mandate is greatly expanded as the rules allow for employers that have a sincerely-held religious or moral objection to the provision of all or a subset of contraceptives or sterilization items, procedures, or services, or related patient education and counseling, to opt out of the women’s preventive care mandate.  The expanded group of entities with religious objections includes:

•    Churches, integrated auxiliaries, and religious orders;
•    Nonprofit organizations;
•    For-profit entities;
•    Non-governmental employers;
•    Institutions of higher education;
•    Individuals with employer sponsored or individual market coverage; and
•    Issuers that provide coverage to plan sponsors or individuals that are exempt.²

As you can see from the list, this change will permit a much larger pool of companies to carve-out certain women’s preventive care benefits under their health plans.

While these interim final rules allow a much broader group of employers and insurers to exempt themselves from covering contraceptives such as birth control pills on religious or moral grounds, they do not alter the rules regarding the TPA’s/insurer’s role once the employer has opted out of providing the contraceptive coverage.  In other words, the regulations still require TPAs who administer the self-funded medical plan for those entities who opt out of the mandate to otherwise arrange for these women’s preventive benefits. While the interim final regulations do maintain the existing accommodations process, the process is now optional. Employers could choose not to request an accommodation, or choose to revoke their current accommodation, which would mean that the TPA would no longer be responsible for providing contraceptive coverage. The rules outline the process if an employer now chooses to revoke its current accommodation (which includes notifying the TPA and plan participants).

Process
Under Burwell, closely-held corporations that chose to opt out of contraceptive coverage could send a letter to HHS stating that they objected to offering contraceptive coverage in their health plans or they could complete EBSA Form 700, if they preferred.  Under the new rules, the accommodation is now an optional process and employers can choose whether or not to provide any sort of notice or self-certification in order to inform the government of their intent to no longer provide coverage under the mandate.  Employers are still responsible for notifying plan participants of any changes in coverage.

Pending Action
Upon issuance, the rules were questioned.  For example, Maura Healey, the Attorney General for the Commonwealth of Massachusetts, filed a lawsuit in federal court on Friday, October 6th, in an attempt to block the new rules from taking effect.  According to the Complaint, the IFR will result in thousands of women in Massachusetts being substantially harmed should the contraception mandate of the ACA be nullified by allowing employers to block contraceptive care and services based upon the employers’ religious and moral objections to contraception.³   The Complaint further states that implementation of the IFR will “jeopardize the health care of women in Massachusetts and nationwide, promote the religious freedom of corporations over the autonomy of women, and leave the states to bear additional health care costs both with regard to contraceptive and prenatal care as well as other services associated with unintended pregnancies and related negative health outcomes for both women and their children.”⁴   As of the date of this article, an Answer has not been issued by HHS.  This creates questions and confusion for how to apply to the IFR.

Next Steps
With plan renewal season just around the corner, the applicability of this rule for self-funded plans and their TPAs needs immediate clarification.  Under Burwell, the regulations required TPAs who administered the self-funded medical plan for those entities who could opt out of the mandate (via an exemption or accommodation, etc.) to otherwise arrange for these women’s preventive benefits.  According to the interim final regulations, the accommodations process is still applicable but is now optional.  TPAs will want to be on the look-out to ensure they have processes and procedures in place to address this accommodation process, or a revocation of a current accommodation, internally.

Should a plan decide to no longer offer contraceptives, the plan must still abide by the reporting and disclosure rules of the Employee Retirement Income Security Act (ERISA).   As this would be a reduction of benefits, the Summary of Material Reduction (SMR) rules would apply. A plan has to disclose a material reduction sixty (60) days after the adoption of the change.  However, this post-change notification may not necessarily align with fiduciary duties and it is best to give as much warning about a change as possible. The Summary of Benefits and Coverage (SBC) rules also include distribution requirements and, in short, if a change to the plan creates the need to change or update the SBC and the change is made mid-plan year, the plan must give sixty (60) days’ advance notice.  When changes are made at plan renewal, the SBC distribution requirement for open enrollment is generally thirty (30) days’ notice before the start of the plan year.   These requirements may create a significant amount of administrative work and potentially be costly for the plan. Plans will need to consider the administrative burdens that will arise if coverage is no longer available, the notification requirements, and how changes could possibly affect their stop loss coverage.

As a result of this regulation, there are many questions that we hope to have resolved with future guidance.  Employers considering the exemption and/or accommodation will need to take into consideration the lack of guidance provided and the potential effect these unanswered questions may have on the plan and the plan participants.  Employers and interested parties can submit their comments to HHS regarding the new rules throughout the comment period, which closes on December 5, 2017.
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¹Burwell v. Hobby Lobby Stores, Inc., 573 U.S. 22 (2014)
²Departments of Health and Human Services, Fact Sheet: Religious and Moral Exemptions and Accommodations for Coverage of Certain Preventive Services Under the Affordable Care Act (2017), https://www.hhs.gov/sites/default/files/fact-sheet-religious-exemptions-and-accommodations-for-coverage.pdf.
³Commonwealth v. U.S Dep’t of Health and Human Services et al., No. 1:2017cv11930 (D. Mass. Filed Oct. 6, 2017). 
⁴Id.
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The Future of Self-Funding - An Insider's Take
By: Adam V. Russo, Esq.

According to the 2016 Milliman Medical Index, the typical family of four costs $25,826 annually in premium and out of pocket expenses and 57% of costs are borne by the employer. Self-funding the right way can reduce these figures significantly and we as an industry must focus on this. At our company, a single employee pays $127.62 for health insurance a month. This compares to the $554 average in the state of Massachusetts, based on the 2017 UBA survey.

Click here to read the rest of this article.

Following a Maryland Senate and House of Delegates vote on January 12, 2018, Maryland became the latest state to mandate paid sick leave for employers with 15 or more employees.

According to Maryland’s Healthy Working Families Act (“the Act”), which will go into effect on February 11, 2018, applicable employers are required to provide one hour of paid (at the employee’s regular wage rate) sick leave for every 30 hours worked. Notably, employers with 14 or fewer employees are required to offer one hour of unpaid sick and safe leave for every 30 hours worked. Employees may begin accruing leave on January 1, 2018 and earn up to 40 hours of sick leave annually.

Permissible uses for earned sick and safe leave include:
•    Caring for or treating an employee’s mental or physical illness, injury, or condition
•    Obtaining preventive medical care for the employee or employee’s family member
•    Caring for a family member with a mental or physical illness, injury, or condition
•    Taking time away from work due to domestic violence, sexual assault, or stalking of employee or employee’s family member
•    Taking maternity or paternity leave

Employers that offer self-funded health plans should take note of the Act’s requirements and review their current policies, including continuation of health coverage, to determine if they are in compliance with this new law.

To be eligible for this leave, employees must regularly work more than 12 hours per week, be at least 18 years of age, and not serve as independent contractors or as-needed employees. Notice is also a significant element of the Act, as employees must notify the employer at least seven days prior to being out of work when requesting a foreseeable leave. Additionally, employers must maintain records of paid sick time accrual and usage.

The Act will preempt any Maryland sick and safe leave laws enacted after to January 1, 2017, but any laws enacted prior will remain intact. Arizona, California, Connecticut, Massachusetts, Oregon, Vermont, Washington, and the District of Columbia have also enacted legislation requiring paid employee sick leave.

See the full Act here.
 

In this episode, Adam, Ron, and regular co-hose – Brady Bizarro – address the new tax law, elimination of the individual mandate, and how it may impact benefit plans of all types.  In particular, they examine the psyche of low risk lives and ask the all-important question – how do we keep them enrolled without the mandate?

Click here to check out the podcast!   (Make sure you subscribe to our YouTube and iTunes Channels!)