Health and Welfare Plans

President Trump signed an executive order last year directing the Secretaries of Labor, Treasury and Health and Human Services to consider proposing regulations to “increase the usability of HRAs.” This month, the collective departments issued proposed regulations containing changes to the prohibition on pairing HRAs with individual health policies, as well as other changes to the current HRA rules.

Proposed effective date January 1, 2020; comments due December 28, 2018.

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During the Tax in the City event held in Dallas, Erin Turley and Allison Wilkerson gave an overview of benefit plan audits and the IRS examination process. They discussed various areas of focus, including, required minimum distributions, investment issues, benefit calculations and appropriate tax reporting. They provided attendees with best practices before an audit, as well as helpful resources from the IRS and DOL.

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On October 10, 2018 President Trump signed two bills that ban “gag clauses” in pharmacy contracts. Congress passed the two bills—one for Medicare prescription drug plans (“Know the Lowest Price Act”) that will go into effect in January 2020, and another for commercial employer-based and individual policies (“Patient Right to Know Drug Prices Act”) effective immediately—by almost unanimous vote in September 2018.

While many states have already prohibited the use of these clauses, this is the first such action on a federal level.

Gag clauses are sometimes found in contracts between pharmacies and insurance companies, pharmacy benefit managers or group health plans and bar pharmacists from telling customers that they could save money by paying cash for their prescriptions rather than using their health insurance. If pharmacists violate the gag rule, they risk penalties and/or contract termination. Under the new legislation, pharmacists are not required to tell patients about the lower cost option, but they also cannot be contractually prohibited from engaging in the cost conversation.

The legislation is consistent with the position of the Centers for Medicare & Medicaid Services (CMS), which, in May of this year, issued guidance stating that “gag clauses” are unacceptable in the Medicare Part D program.

Originally published in the Health & Life Sciences News blog.

The Internal Revenue Service and the Security Summit partners recently issued a news release outlining the “Security Six,” a list of essential steps to protect stored employee information on networks and computers. Employee benefits professionals, including those who administer welfare and retirement plans for employees and beneficiaries, should review and implement the “Security Six” in order to protect sensitive data from cyberattacks.

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We would also like to thank law clerk Charnae Supplee for contributing to this article.

During our Tax in the City roundtable event in Dallas, Erin Turley and Judith Wethall presented on the hidden costs in benefit contracts. They provided attendees with a checklist of what to look out for in contracts, including services, protection and pricing terms. When negotiating contracts, Erin and Judith recommended establishing a list of needs and objectives, as well as seeking referrals from other similarly situated employers.

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The Medicare Modernization Act of 2003 requires employers who offer prescription drug coverage to provide an annual notice to all Medicare Part D eligible individuals who are participants in, or eligible for, the employer’s prescription drug coverage indicating whether such coverage is creditable before October 15th of each year. “Creditable coverage” means that the prescription drug coverage offered by an employer plan is expected to pay, on average for all plan participants, as much as the standard Medicare prescription drug coverage pays. Prescription drug coverage is “non-creditable” when it is not expected to pay, on average for all plan participants, as much as the standard Medicare prescription drug coverage pays.

The notice must be furnished regardless of whether the employer plan pays primary or secondary to Medicare, and must be sent to all Part D eligible individuals including retirees, actives, COBRA beneficiaries and dependents of such individuals. The Centers for Medicare and Medicaid Services (CMS) provides Model Disclosure Notices for creditable and non-creditable coverage.

If you would like additional information about this requirement, or if you have any questions, please contact your McDermott lawyer or one of our Benefits attorneys.

Charnae Supplee, a law clerk in the Firm’s Washington, DC office, also contributed to this article.

During the most recent Tax in the City event in Dallas, Partners Erin Turley and Judith Wethall, presented on the rise of consumer driven health care. Some popular programs they discussed include wellness, smoking cessation, high deductible health plans and HSAs, telemedicine, direct contracting and affordable care organizations. They also discussed the compliance complexities associated with these programs, including ERISA, FLSA and HIPAA privacy concerns.

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When passed in 2010, the Affordable Care Act (ACA), often called “Obamacare,” had three basic goals: increase access to health insurance, reduce costs and spending, and offer patients stability with respect to their insurance coverage. By offering a subsidy for low- and middle-income Americans to purchase private insurance plans, the ACA was successful in expanding coverage for about 14 million previously uninsured individuals, including those with pre-existing medical conditions.

Gary Scott Davis authored this bylined article about the future of the ACA. “We need to learn from both the strengths and weaknesses of the ACA to build a long-term sustainable approach that promotes access to care, brings insurance coverage within the reach of the many, contains costs, and aligns economic incentives among payors, providers and patients, while improving the nation’s overall level of health,” he wrote.

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