Stoel Rives Presents Webinar On Employer Group Health Plans After U.S. Supreme Court Decision Upholding "Obamacare"

As everyone who was not on Mars this summer knows, the U.S. Supreme Court issued a surprising and historic decision upholding key provisions of President Obama's Affordable Care Act ("ACA").  To help employers navigate the requirements of the law now that it has the stamp of approval of the Supreme Court, and to provide other updates on developments in federal health care reform, members of the Stoel Rives employee benefit and employment groups have been touring the region with a 90-minute presentation entitled "Health Care Reform After the Supreme Court’s Decision: Group Health Plan Update 2012."  The seminars were presented by Stoel Rives attorneys Howard Bye-Torre, Melanie Curtice, Bethany Bacci, Steve Woodland, Matthew Durham, Carolyn Walker, James Dale, Renae Saade, and Tony DeCristoforo in Portland, Seattle, Salt Lake City, Boise, and Anchorage during September and October.

Shameless Plug Alert!  Webinar Presentation on October 25, 2012

If you missed the show when it came to your town or are just interested in learning about this complex and evolving area of employee benefits law, there is one more opportunity to attend the seminar via a webinar which will be conducted on Thursday, October 25 at noon, Pacific Time. To RSVP for the webinar and get instructions for attending, please click here.

What's Covered

The seminars reviewed the Supreme Court decision upholding the constitutionality of the Affordable Care Act (ACA), and also some of the ACA's impacts which have already been felt by group health plans and employers, such as the requirement to cover children through age 26.  Regulatory developments planned for 2013 are also discussed, including:

  • the requirement to report the cost of health care coverage on W-2s;
  • the new disclosure document required by the ACA, the Summary of Benefits and Coverage (SBCs);
  • required 100% coverage for FDA-approved contraceptive methods for women; and
  • the reduction to $2,500 of the maximum amount that an employee can contribute to a health care flexible spending account. 

The seminars also discussed the new two federal fees on group health plans for 2013-2018, the Patient-Centered Outcomes Research Institute fee and the transitional reinsurance program fee. The seminars concluded with a discussion of the ACA requirements for 2014, including

  • the mandate for individuals to have health insurance coverage;
  • employer pay-or-play penalties, including new IRS guidance on the definition of “full-time” employees for purposes of the penalties;
  • recent IRS guidance on the 90-day maximum waiting period for health plans. 

We look forward to seeing you online for the webinar on October 25.

 

 

How Does the Heath Care Reform Package Impact Employers?

The health care reform legislation passed by Congress places significant new responsibilities on employers, group health plans, insurers, and individuals. The Stoel Rives Employee Benefits team has developed the following overview of the most significant issues affecting employers and group health plans, in order of effective date. (click on CONTINUE READING" for the full text of the overview).

Effective Immediately

  • Qualifying small businesses that have fewer than 25 full-time employees and whose employees have average annual wages less than $50,000 may be eligible for tax credits to purchase health insurance for their employees.
  • Coverage for dependent children may qualify for tax-free status through the taxable year in which the child turns age 26.

Effective Date Dependent upon Issuance of Regulations

  • Employers with more than 200 employees must automatically enroll employees into health insurance plans offered by the employer.

Effective June 20, 2010

  • A temporary reinsurance program will reimburse participating employment-based plans for a portion of the cost of providing health coverage to early retirees and eligible dependents (ending January 1, 2014).

Effective for Plan Years Starting October 1, 2010 or Later

  • Plans cannot place lifetime dollar limits on coverage.
  • Adult children must be covered until age 26 (for grandfathered plans*, adult children must only be covered if they do not have access to their own employer-sponsored coverage).
  • Annual dollar limits on coverage must comply with guidance from the Secretary of Health and Human Services. The Secretary must issue such guidance on annual limits by June 20, 2010.
  • Plans cannot have pre-existing condition exclusions for children under age 19.
  • New plans** must provide preventive services and immunizations without any cost sharing.
  • New plans must meet internal and external review procedure standards for claim determinations.
  • Nondiscrimination rules formerly applicable only to self-funded group health plans are now applicable to new insured group health plans.

Effective January 1, 2011

  • Employers must report the value of employer-provided health coverage on each employee’s W-2 form.
  • Nonprescription drugs cannot be reimbursed tax-free through a health savings account (HSA).
  • Nonprescription drugs cannot be reimbursed through health reimbursement arrangements or health flexible spending accounts (FSA).
  • The tax on HSA distributions not used for qualified medical expenses will increase to 20 percent.

Effective 24 months after enactment (March 2012)

  • Plans must provide participants with a four-page summary of benefits, in accordance with regulations that must be issued within 12 months of enactment (March 2011).
  • Plans must provide notice 60 days before plan changes.

Effective January 1, 2013

  • The Medicare Part A (hospital insurance) tax rate on earnings over $200,000 ($250,000 for married couples filing jointly) will increase from 1.45 percent to 2.35 percent (only the employee portion is increased, not the employer portion), and there will be a 3.8 percent tax on unearned income for high-income taxpayers.
  • There will no longer be a tax deduction for employers who receive Medicare Part D retiree drug subsidy payments.
  • Health FSA contributions will be limited to $2,500 annually.

Effective January 1, 2014

  • Plans cannot have pre-existing condition exclusions for adults (age 19 and over).
  • Plans cannot have annual dollar limits.
  • Employers will be required to separately report the value of an employee’s health benefits to the federal government (in a form to be developed).
  • Waiting periods for coverage will be limited to 90 days.
  • Employers can offer employees rewards of up to 30 percent of the value of coverage for participating in wellness programs and meeting certain health-related standards.
  • Children must be covered until age 26 even if they have access to their own employer-sponsored coverage.
  • Employers that have more than 50 employees and do not offer coverage must pay a $2,000 fee per full-time employee (excluding the first 30) if any of their full-time employees receive a premium tax credit.
  • Employers that have more than 50 employees and offer coverage but have at least one full-time employee receiving a premium tax credit must pay a $2,000 fee per full-time employee or $3,000 fee per employee receiving the tax credit (whichever is less).
  • Employers that offer coverage must offer low-income employees a “free choice voucher” that the employee can use to apply the value of the employer-provided coverage to the cost of enrolling in a state-based Health Benefit Exchange.

Effective January 1, 2018

  • An excise tax will be imposed on health insurance issuers and plan administrators of employer-sponsored health plans with aggregate values that exceed $10,200 for individual coverage and $27,500 for family coverage. The tax will be equivalent to 40 percent of the value of the plan that exceeds the threshold amounts. Vision and dental coverage will not be counted as part of value of employer-sponsored coverage if it is provided under a separate policy, certificate, or contract of insurance.

For more information on how the new federal health care reform legislation will affect you, please contact your Stoel Rives attorney or a member of the Stoel Rives Employee Benefits team.

* A grandfathered plan is a plan in effect on the date of the enactment of the health care reform bills. Certain provisions of the law do not apply to grandfathered plans, and other provisions of the law have delayed effective dates for grandfathered plans.

** New plans are plans that are not grandfathered.

President Obama to Sign Jobs Bill Today

President Obama is today expected to sign the Hiring Incentives to Restore Employment (HIRE) Act, which in its final form passed The House of Representatives 217-201 on March 4 and the Senate 68-29  on March 17.  Click here to download the final version of the HIRE Act.

Key provisions of the HIRE Act include:

  • An exemption from Social Security payroll taxes for private employers for each worker hired in 2010 who previously had been unemployed for at least 60 days;
  • A $1,000 income tax credit, or a credit of 6.2% of total wages paid, for private employers for each new employee hired in 2010 and retained for at least 52 weeks and claimed on the employer's 2011 income tax return;
  • An extension of the small business “expensing” tax break for one year, allowing small businesses to continue writing off up to $250,000 of certain capital expenditures instead of depreciating them over time;
  • A $4.6 billion Build America Bonds program, which would provide an optional direct subsidy payment in lieu of a tax credit for tax credit bonds issued for certain school and energy projects; and
  • Expanded federal aid for highway programs estimated to save or create 1 million jobs.

As previously reported in the Stoel Rives World of Employment, a slightly different version of the HIRE Act passed through the Senate on February 24.  While the bill was in the House, several changes were to the Act, including increased funding to the Build America Bonds program and greater flexibility to the hiring tax credit program.

COBRA Subsidy Extended Through February 28, 2010

As originally enacted as part of the 2009 stimulus package, the COBRA subsidy provided up to nine months of health insurance premium assistance for covered workers who were involuntarily terminated on or before December 31, 2009.  Last week, President Obama signed a bill that extends the COBRA subsidy for involuntarily terminated employees in two ways:  First, it extends the eligibility period to provide assistance to workers who were involuntarily terminated on or before February 28, 2010; second, it provides up to 15 months of insurance premium assistance. 

Employers should, as soon as possible but in any case no later than February 21, 2010, provide notices to all former employees who may be affected by the extension informing them of their rights.  Employers should also update the COBRA subsidy information they are currently providing to employees upon termination to ensure that it accurately reflects the eligibility period.  

Want to know more?  For more information on the COBRA subsidy in general, read Stoel Rives' COBRA Subsidy Alert from earlier this year (but ignore the out-of-date eligibility dates).  You can also click here to read the IRS' COBRA subsidy information page, with answers to frequently asked questions.   

Washington Domestic Partnership Law Impacts Employee Benefits and Family Leave

Washington voters recently approved Referendum 71, giving registered domestic partners all of the rights and responsibilities of married couples under Washington state law.   Prior domestic partnership laws gave registered domestic partners limited rights and responsibilities such as hospital visitation, health care decision making, inheritance and community property rights.  The new law includes all of the rights and responsibilities granted to married couples under state law. 

Notably, the Washington State Insurance Commissioner has given notice that all insurance policies that include spouses will also be required to cover registered domestic partners.  Washington employers and insurance providers should review the new law and existing policies and procedures to ensure compliance when the law takes effect on December 3, 2009.  More information, including verification of registered domestic partnerships, is available at the Secretary of State’s website.  Additional information on how R 71 may affect employee benefits and family leave laws is available as part of a recent Stoel Rives LLP Client Alert.

Oregon Supreme Court Allows Workers' Comp Coverage for Gastric Bypass

This morning, in SAIF Corp. v. Sprague, the Oregon Supreme Court upheld the workers' compensation claim of an employee who sought coverage for gastric bypass surgery, on the grounds that the surgery was necessary to treat a decades-old on-the-job knee injury. 

Sprague injured his knee on the job in 1976, filed a workers' comp claim, and sought treatment.  In 1999, he reinjured his knee and filed a new workers' comp claim with a new employer.  He also was successful in expanding his original claim to include a new condition, consequential arthritis in the knee.  In 2000, his knee had deteriorated and his doctor recommended a knee replacement.  However, plaintiff (who weighed over 300 pounds) needed to lose weight to be eligible for the knee surgery and to relieve pressure on the injured knee.  His doctor recommended gastric bypass surgery, but both workers' comp insurers (for his new and old employers) refused to pay for it.  The insurers argued that the gastric bypass was not covered because it was directed at Sprague's obesity, which had existed before the original 1976 injury. 

The Oregon Supreme Court disagreed.  The insurers did not dispute that the current knee problems were compensable, because they were related to the original on the job injuries.  The only relevant issue was whether the gastric bypass surgery was "directed to" the knee injury.  The court ruled that it was, because the medical evidence was undisputed that the weight loss was necessary to the success of the surgery.  It was irrelevant that the Sprague would also obtain free surgery that had substantial cosmetic benefits (as Al Roker, John Popper, Roseanne Barr, Star Jones, Randy Jackson, and others can attest).

As Stoel Rives World of Employment pointed out earlier, this doesn't mean that all gastric bypasses will now be covered by workers' comp.  However, the statute that mandated this decision just doesn't strike the balance that the workers' comp system promised.  The system was created as a compromise between employers and employees.  Employees received a defined benefit for any on-the-job injury regardless of fault.  Employers received protection from high punitive damage awards and the knowledge that their costs would be controlled.  While the system often works well, decisions like this show that it doesn't always.  According to some experts, gastric bypass surgery costs between $20,000-and $25,000.  That's a cost that these employers might not have had to pay absent the workers' comp system.

How Employers Can Reduce Litigation Costs

Employment litigation dominates court dockets around the country. And the swing to the left in the political arena is not likely to put a damper on the number of filings. Everyone knows that litigation is expensive. So . . . what can the employer do to reduce its expenses if it finds itself on the receiving end of an administrative charge or a lawsuit? 

1. Early Case Assessment

 

            Ask your attorney to provide you with an early comprehensive analysis of the case after he or she has interviewed key witnesses, reviewed key documents and researched legal issues. Doing so will give you important information about whether an early settlement is likely to save you money in the long run and give you a good idea of what you are in for if you don’t settle.

 

2. Manage your documents

 

            Use your in-house IT staff to image hard drives to save the cost of outsourcing. Do a thorough job of collecting documents from all relevant players so that your attorneys and their paralegals don’t have to charge you to do this work.

 

3. Decipher your documents

 

            Provide your attorney up front with a descriptive list of key players, identify key documents and provide a written narrative of the events in question. Anything you can do to compile information at the outset will save your attorney time.  Saving attorney time saves you money.

 

4. Consider early resolution

 

            Leave your pride and your principles at the door and consider an early, cheaper resolution. Yes, employers often say, “I’d rather pay my attorneys than the plaintiff,” but that sense of outrage wears off as litigation wears on.

 

5. Be open to technology

 

            Good attorneys use document management systems and other tools to help manage cases internally. Ask if you can be included in such systems to reduce the attorney’s need to communicate with you. For example, can you receive docketing notices automatically so that your attorney doesn’t have to send them to you?

 

6. Check your insurance

 

            Some employers carry employment practices liability coverage. It won’t cover all types of claims you might face (for example, a wage claim wouldn’t be covered and intentional conduct is typically excluded), and you may lose your right to select your own attorney, but, if you have it, you should notify your broker or carrier immediately by providing a copy of the charge or complaint. Other coverage (D&O, GCL) might also be in play.

 

7. Ask how you can save attorney time!

 

            Don’t hesitate to ask your attorney if there are tasks you can perform in-house to reduce attorney time.

New Legislation Aims to End Taxation of Domestic Partner Health Benefits

Under the current tax code, employer-provided health care benefits for employees, their spouses and dependent children are exempt from federal income and payroll taxes; however, health care benefits provided to unmarried domestic partners are subject to both payroll tax (for the employee) and to income tax (for the domestic partner beneficiary).  But if passed, the proposed Tax Equity for Health Plan Beneficiaries Act introduced last month in Congress would end the taxation of health care benefits of both same- and opposite-sex domestic partners. 

The Act was introduced in the House of Representatives by Rep. Jim McDermott (D-Wash.) and in the Senate by Sen. Charles Schumer (D-N.Y.)  A similar bill was introduced last year, but failed to gain enough traction to make it out of committee.  The bill might have more potential this time around, with a friendlier climate in both Congress and the White House.

To learn more about the tax laws the Act may impact, check out this article on the taxation of domestic partner benefits from the Human Rights Campaign.  The Stoel Rives World of Employment will pay attention to this and other important Labor and Employment legislation, so check back for updates!

Ninth Circuit Declines to Reconsider Ruling on SF Health Care Ordinance

Back in October 2008, the Ninth Circuit Court of Appeals upheld a San Francisco city ordinance that requires many employers to either contribute a specified amount toward their employees' health care costs on a regular basis or pay into a city health care fund for San Francisco residents.  Earlier this week, the Ninth Circuit denied a petition for rehearing en banc, meaning that the law will continue to be in effect--until or unless the Supreme Court decides to hear an appeal. 

The San Francisco Health Care Security Ordinance went into effect on January 9, 2008.  It is a "pay or play" health care plan, as it requires employers either to "pay" for health care or "play" by the rules of the city health care fund.  The ordinance applies to for-profit employers with at least 20 employees and non-profit employers with at least 50 employees.  For more information on the ordinance, including compliance information, click here

In the underlying lawsuit, Golden Gate Restaurant Association v. San Francisco, a group of employers brought a lawsuit seeking the federal court to declare that the San Francisco ordinance is preempted by the federal Employee Retirement Income Security Act of 1974 (ERISA).  The Ninth Circuit disagreed, and the ordinance will continue to be in effect.  This decision may pave the way for other state and local governments to pass similar "pay or play" health care laws, knowing that they will likely withstand a legal challenge. 

Ninth Circuit Upholds San Francisco Health Care Ordinance

The Ninth Circuit Court of Appeals recently upheld a San Francisco city ordinance that requires many employers to either contribute a specified amount toward their employees' health care costs on a regular basis or pay into a city health care fund for San Francisco residents. 

The San Francisco Health Care Security Ordinance went into effect on January 9, 2008.  It is a "pay or play" health care plan, as it requires employers either to "pay" for health care or "play" by the rules of the city health care fund.  The ordinance applies to for-profit employers with at least 20 employees and non-profit employers with at least 50 employees.  For more information on the ordinance, including compliance information, click here

In Golden Gate Restaurant Association v. San Francisco, a group of employers brought a lawsuit seeking the federal court to declare that the San Francisco ordinance is preempted by the federal Employee Retirement Income Security Act of 1974 (ERISA).  The Ninth Circuit disagreed, and the ordinance will continue to be in effect.  This decision may pave the way for other state and local governments to pass similar "pay or play" health care laws, knowing that they will likely withstand a legal challenge.