The Departments of Treasury, Labor, and Health and Human Services (collectively, the “Departments”) recently issued a set of Frequently Asked Questions (Part XV) (the “FAQs”), which provide that, starting in 2014, employers and health insurance issuers must implement two new requirements under ACA that apply to non-grandfathered group health plans:

(1) a prohibition on discriminating against health care providers that are licensed or certified under state law; and

(2) a mandate to cover routine patient costs or services for participation in certain clinical trials for life-threatening diseases.

The FAQs state that the Departments do not intend to issue regulations implementing these two requirements in the near future and therefore employers and health insurance issuers must implement the requirements based on a good-faith, reasonable interpretation of the statutory provisions.  The FAQs also delay, until at least 2015, implementation of requirements to disclose publicly certain information regarding group health plans, such as financial information, cost-sharing requirements, and data on claim denials and enrollment.
Continue Reading New FAQs Issued on Nondiscrimination, Clinical Trial, and Reporting Requirements under the Affordable Care Act

In its recent decision in U.S. Airways v. McCutchen, all nine justices of the Supreme Court agreed that equitable principles do not override the clear terms of an ERISA plan.  Although a majority of the Court went on to find that the plan at issue was ambiguous, the decision makes clear that plan documents—when clear—may fill in gaps in areas that ERISA does not prescribe.  Employers may wish to address several of these areas in plan documents.  The McCutchen case shows that identifying these areas and drafting clear plan language can help achieve the plan sponsor’s objectives.
Continue Reading Supreme Court’s McCutchen Decision Highlights Plan Drafting Opportunity

On April 23, 2013, the Departments of Labor, Health and Human Services and the Treasury (the “Departments”) issued an updated template and sample completed template for summaries of benefits and coverage (“SBCs”) that must be provided for coverage beginning in 2014.  The Departments also released Frequently Asked Questions that include the following guidance:

  • The only change to the existing SBC template is the addition of statements regarding whether a group health plan offers minimum essential coverage that meets the requirements for providing minimum value.  (See ACA’s Cost-Sharing Limitations on Employer Health Coverage for an explanation of the minimum essential coverage and minimum value requirements.)  If an employer or issuer is unable to modify the SBC template to include this additional information and continues to use the template provided for 2013, the new information for 2014 may be disclosed in a separate document that is provided with the SBC.  No other changes have been made to the SBC template, including to the examples that must be included, to the instructions for providing SBCs, or to the uniform glossary.
  • The Departments have extended for another year enforcement relief that they issued last year.  Pursuant to this relief, the Departments will not impose penalties on plans and issuers that are working diligently and in good faith to provide the required SBC content in a format that is consistent with the final regulations.  In addition, the Departments have also extended the safe harbor for providing SBCs electronically to participants and beneficiaries in connection with their online enrollment or online renewal of coverage under the plan.
  • Because annual limits on essential health benefits will no longer be permissible starting in 2014, a plan may, at its option, delete the following row that appears on the first page of the SBC template:  “Is there an overall limit on what the plan pays?”.  Otherwise, the plan should answer “no” to this question.
  • If an educational institution, such as an institution of higher education, maintains insured health coverage for its students, the institution will have met its requirements for providing SBCs if another party, such as the health insurance issuer, timely provides completed SBCs to the students.
    Continue Reading Departments Publish Updated SBC Template, Making Few Changes for 2014

Employees and retirees frequently receive information relating to benefits – eligibility to participate, coverage for certain medical treatment, enrollment status, anticipated benefits at retirement, and so forth.  Sometimes that information appears in formal documents published by named plan fiduciaries.  Other times it comes in response to one-off inquiries made to persons working in the HR department or employed by a third-party administrator.  A recent Fifth Circuit decision highlights the risk posed by erroneous information:  fiduciaries’ possible liability for extra-contractual relief that will make a misinformed plaintiff “whole.”
Continue Reading Providing Erroneous Information to Participants May Expose Plan Fiduciaries to Liability for “Make Whole” Relief

As we have previously discussed, companies face a growing threat that trade secrets and other critical business information will be taken by employees and other insiders.  Protecting business critical information is not simple.  Companies need a holistic approach that implicates multiple areas of the law, including data security, privacy,…
Continue Reading 5 Privacy and Data Security Measures That Can Protect Your Company Against Trade Secret Theft by Employees

The Internal Revenue Service issued Revenue Procedure 2013-22 yesterday (March 28, 2013).  The Revenue Procedure describes the Service’s new procedure for issuing opinion letters and advisory letters for prototype and volume-submitter § 403(b) plans; it revises the proposed procedure that was released four years ago in Announcement 2009-34.  As…
Continue Reading IRS Announces § 403(b) Plan Document Review Procedure for Prototype and Volume-Submitter Plans

If the Supreme Court holds that the Defense of Marriage Act (“DOMA”) is unconstitutional, those involved with the administration of employee benefits plans will be very busy.  Under DOMA, a benefit plan is not required to recognize same-sex marriage and, in many cases, must treat same-sex spouses differently than opposite-sex spouses.  If DOMA is struck down, employers might need to amend their benefit plans, and plan administration will necessarily change.  Many changes will need to be implemented quickly.
Continue Reading While the Supreme Court considers DOMA’s fate, what’s an in-house benefits lawyer or HR professional to do?

The Affordable Care Act has numerous provisions that restrict the amounts that employer-sponsored health plans may require employees to pay for health care.  These provisions include prohibitions on annual and lifetime dollar limits on essential health benefits, restrictions on out-of-pocket maximums, and requirements to provide preventive care services and items at no cost to participants.  The rules apply to insured and self-insured plans and some, but not all, apply to grandfathered plans as well as non-grandfathered plans.  This article summarizes ACA’s cost-sharing requirements for employer-sponsored group health plans and guidance that the Departments of Labor, Health and Human Services, and Treasury (the “Departments”) have recently released implementing these requirements. 
Continue Reading ACA’s Cost-Sharing Limitations on Employer Health Coverage

At a recent forum in New York, a team of Covington & Burling LLP lawyers addressed the growing concern among companies that their most valuable assets might just walk out the front door on a thumb drive in an employee’s pocket or otherwise be taken by company insiders.  Although much of the discussion in this country is focused on securing systems from cyber-attacks, Michael Chertoff (former Secretary of Homeland Security and now Senior Of Counsel at Covington) noted that focusing only on attacks from outside a company is like locking a door but leaving a window open. The threat from insiders is substantial, and addressing this threat involves many disciplines, including employee benefits and executive compensation.

Protecting business critical information is not simple.  It involves identifying which information is critical, designating that information confidential, establishing practices, procedures, and policies to maintain confidentiality, and being prepared to address immediately breaches that occur.  Each step implicates several areas of the law, including data security, privacy, intellectual property, white collar crime, employment, employee benefits and executive compensation, corporate and securities, insurance coverage, and crisis management.  For example, the recent White House initiative to combat trade secret theft identified human resources policies as a key area of focus in developing best practices to protect trade secrets. 
Continue Reading Why Is a Benefits Lawyer Talking about Trade Secret Theft?

A § 403(b) plan that failed to adopt a plan document by December 31, 2009 is not entitled to favorable tax treatment.  However, under new guidance, a plan may regain its favorable tax treatment if it adopts a written plan document and requests a compliance statement through the Voluntary Compliance Program (“VCP”).

The IRS recently released a Voluntary Correction Program Submission Kit to assist sponsors of § 403(b) retirement plans who failed to adopt a written plan document before January 1, 2010.  The Submission Kit includes the forms a plan sponsor must submit to request a compliance statement as well as completed sample forms.

Plan sponsors of § 403(b) plans who failed to timely adopt a written plan document should consider completing a VCP submission before the end of 2013.  Correction fees have been temporarily reduced; fees are 50 percent of the normal amount for plan sponsors who submit a VCP request before December 31, 2013 if the only failure is the failure of a § 403(b) plan to timely adopt a written plan document.  
Continue Reading IRS Releases VCP Kit to Help 403(b) Plan Sponsors Who Failed to Timely Adopt a Plan Document