Health & Welfare Plans Newsletter

January 23, 2018

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[Guidance Overview]

How Tax Reform Will Change the Treatment of Fringe Benefits
"Several employer deductions will be reduced or eliminated, including the cost of business-related entertainment expenses and qualified transportation fringe benefits, but employers may be able to claim a credit for a percentage of wages paid to qualifying employees on family and medical leave.... [E]mployees can no longer exclude moving expense reimbursements they receive from employers or deduct moving expenses they pay themselves."
Morgan Lewis

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[Guidance Overview]

Transportation Fringe Benefits after the Tax Cuts and Jobs Act
"If the tax-exempt organization wants to avoid the [application of the Unrelated Business Income Tax rules to certain fringe benefits provided to employees], either [1] it can provide the benefits as taxable items to the employees (and include the cost of the benefits in the employees' Forms W-2) or [2] it can stop providing these benefits. If the organization chooses to treat these benefits as taxable wages, it will be subject to higher FICA and Medicare payroll taxes and the employees will have increased personal income taxes."
Schneider Downs

Health Care 'Cadillac Tax' Delayed Until 2022
"With the new delay, the excise tax will be imposed beginning in 2022 on the cost of health plan coverage that is more than these pre-determined annual limits: $10,200 for individual coverage ($11,850 for qualified retirees and those in high-risk professions); $27,500 for family coverage ($30,950 for qualified retirees and those in high-risk professions).... While the tax was originally not deductible as a business expense, the December 2015 changes make it tax deductible for employers who pay it."
Society for Human Resource Management [SHRM]

Trends in Paid Parental Leave Come to Law Firms
"As more companies offer their employees attractive leave benefits, law firms are following suit by offering their attorneys robust parental leave benefits. Here are some cutting-edge questions for companies promoting a work-life balance to consider in terms of their parental leave allowances, and trends in the promotion and advancement of women in law, including the Mansfield Rule and how it can positively impact the legal profession."
Ogletree Deakins

Squash Health Plan 'Buyer's Remorse' Before It Starts
"If you offer a High Deductible Health Plan (HDHP) with a Health Savings Account (HSA), your employees are starting to use the plan now. But an HDHP can be tough to navigate -- especially for newcomers -- and your employees can become instantly confused and frustrated by their new plan.... Human Resources needs to get out in front of employees with thoughtful, comprehensive and explicit communications materials."
Frenkel Benefits

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Growing Number of Employers Offer Fertility Benefits
Infographic. "53% of employers are putting more emphasis on maternity/fertility as a specific clinical area to improve member health and reduce costs.... 66% of employers expect to offer fertility benefits by 2019, up from 55% in 2017 ... 84% of employers offer a maternity care management program, with the overwhelming majority doing so through a health plan."
Willis Towers Watson

Employers Expanding Health and Wellness Program Offerings
"Employees cited food at office celebrations (30 percent) and snacks brought in by colleagues (22 percent) as the biggest obstacles to meeting health and wellness goals. More than two in five professionals (44 percent) said they eat healthier when they work from home.... Three in five professionals (60 percent) bring their lunch to the office."
Wolters Kluwer Law & Business

Best Practices: On-Site Health Clinic
"Success of a clinic is dependent upon volume, so consideration of an on-site clinic should start with your population size and, more importantly, your population location.... While the cost of operating a clinic on a 40 hour per week basis increases, so does the utilization, which is key to the success of the clinic.... A $0 obligation for the employee will help drive utilization, which is the main factor in operating a cost-effective clinic.... The staff at the clinic has to be likable and trusted."
Findley Davies | BPS&M

How the ACA Individual Mandate Repeal Can Impact Reporting and Plan Design Requirements
"[1] Employers must continue to meet ACA information reporting requirements.... [2] Consider auditing past reporting.... Risk for potential penalties still looms and should be addressed.... [3] Employers must monitor impact to ... program costs which are predicted to rise, [and] re-evaluate COBRA coordination issues as communicated in Marketplace notices, [along with] any impact to opt-out programs."
Employee Benefit Adviser

Out-of-Pocket Spending and Premium Contributions After the ACA
"[M]ean out-of-pocket spending decreased by 11.9% in the first 2 years after the insurance expansions, driven by reductions among persons eligible for the Medicaid expansion and those eligible for cost-sharing and premium subsidies on health insurance exchanges. Premium contributions increased by 12.1% ... whereas total health spending by households decreased in the Medicaid-eligible (lowest-income) group by 16.0%."
The JAMA Network

2016 Health Care Cost and Utilization Report
"Total spending per person is now growing at faster rates than prior years, with 4.6% growth in 2016 compared to 4.1% growth in 2015 ... Spending growth in each year from 2012 to 2016 was almost entirely due to price increases.... Utilization of most health care services remained unchanged or declined, both year-over-year and over the 2012-2016 period. Consumer out-of-pocket (OOP) spending per person increased, but grew more slowly than total spending."
Health Care Cost Institute

[Opinion]

How to Increase Health Insurance Coverage by Reducing ACA Crowd-Out (PDF)
16 pages. "40% of the entitlement funds disbursed under the [ACA] ... have gone to individuals who already had private coverage. This displacement of private-sector spending by public-sector activity is called 'crowd-out.' ... This paper reviews estimates of ACA crowd-out and examines the potential for block grants to allow states to target assistance at individuals otherwise lacking coverage. Under such a reform, the same level of federal funding could do more to expand access to care and to provide protection from catastrophic medical costs for those who need help the most."
Manhattan Institute

Benefits in General

[Opinion]

American Benefits Council Submits Recommendations for Standardized and Automatic Disaster Relief
"[We] encourage the Agencies to work together to develop their own standardized and automatic inter-agency disaster relief system for employer-provided benefits that can be triggered by a single announcement. For example, ... PBGC could agree to automatically make available certain relief, like extended premium deadlines, to employers already covered by the IRS's automatic disaster tax relief press release system. Similarly, DOL could agree to not treat any person as having violated Title I of ERISA solely for utilizing disaster tax relief offered by the IRS or PBGC." [Similar letters also sent to IRS and PBGC .]
American Benefits Council

Executive Compensationand Nonqualified Plans

Impact of Compensation-Related Litigation on Public Companies
"[C]ompanies must analyze the applicable facts and circumstances in order to determine whether a benefit is a perquisite, and significant gray areas remain.... Companies should review their award agreements and resolutions relating to net share settlement or share tax withholding provisions to ensure compliance with the Section 16 rules."
Skadden

Executive Compensation Performance Metrics Will Change Under Tax Reform
"To shareholders and compensation committees, it makes sense to shield financial performance measures from the tax change. However, the tax deductibility of executive compensation -- and/or the accounting for executive compensation -- could negatively affect the company."
Financial Executives International Daily

Press Releases

ECFC Welcomes New Board Members ECFC [Employers Council on Flexible Compensation]

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BenefitsLink Health & Welfare Plans Newsletter, ISSN no. 1536-9595. Copyright 2018 BenefitsLink.com, Inc. All materials contained in this newsletter are protected by United States copyright law and may not be reproduced, distributed, transmitted, displayed, published or broadcast without the prior written permission of BenefitsLink.com, Inc., or in the case of third party materials, the owner of those materials. You may not alter or remove any trademark, copyright or other notices from copies of the content.

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