Will the "CLASS" Program Succeed? Is It Sustainable?
Both the House and Senate health care reform bills currently being debated would establish a new voluntary long-term care insurance program. Called CLASS, the new program would be offered to all workers through the Department of Health and Human Services (DHHS). CLASS is significant for at least three reasons. [December 2009]Health Care Reform Bills Have Important Implications for Retiree Health Plans
The Affordable Health Care for America Act (H.R. 3962) approved by the House on Nov. 7 and the Patient Protection and Affordable Care Act (H.R. 3590) now under debate in the Senate would affect retiree health plans significantly. Some of the changes — such as taxing the retiree drug subsidy (RDS) provided to employers and prohibiting employers from reducing benefits after employees retire — could have a chilling effect on the sponsorship of retiree health benefits. On the other hand, a proposed reinsurance program for early retirees would (temporarily) reward sponsors of employment-based plans. [December 2009] Legislation to Extend, Expand
COBRA Subsidy Introduced
The Consolidated Omnibus Budget Reconciliation Act (COBRA) subsidy enacted as part of the American Recovery and Reinvestment Act (ARRA) in February (see Watson Wyatt Insider, March 2009) will begin to phase out at year's end. ARRA provides a 65 percent premium subsidy for qualified beneficiaries who lose their health coverage and become eligible for COBRA following an involuntary termination of employment by Dec. 31, 2009. The premium subsidy is available for the first nine months of COBRA coverage, so the subsidy has already ended for those who began receiving it immediately after enactment. Others will continue receiving the subsidy into 2010. [December 2009] Legislation Introduced to Mandate
Paid Sick Leave
On Nov. 3, House Education and Labor Committee chair George Miller (D-Calif.) introduced the Emergency Influenza Containment Act to ensure that employees sent home by their employers because of a contagious illness receive paid sick leave. On Nov. 17, Senator Chris Dodd (D-Conn.) and Representative Rosa DeLauro (D-Conn.) introduced the Pandemic Protection for Workers, Families and Businesses Act, which shares many of the same goals, although there are important differences between the two bills as well. Paid sick leave has been receiving more attention from lawmakers recently, and legislative action is possible. [December 2009] House Approves Health Care Reform; Senate Begins Debate
On Nov. 7, in a rare Saturday vote, the House of Representatives approved the Affordable Health Care for America Act (H.R. 3962) by a tally of 220 to 215. While the vote represents an important step forward in the health care reform debate, lawmakers still have a long and difficult battle ahead. [December 2009] IRS Releases Regulations on Employer Comparable Contributions to HSAs
The IRS has released final regulations on employer comparable contributions to health savings accounts (HSAs). The regulations also provide guidance on the method and timing of reporting and paying excise taxes due under the Consolidated Omnibus Budget Reconciliation Act (COBRA), the Health Insurance Portability and Accountability Act (HIPAA) and the HSA (and Archer medical savings account) comparable contribution rules. [December 2009] New Law Expands Military FMLA Leave Rights
The National Defense Authorization Act for Fiscal Year 2010 (H.R. 2647) expands eligibility for certain rights under the Family and Medical Leave Act (FMLA). The new law will increase the number of employees who qualify for leave on account of a family member's deployment and will broaden the circumstances in which employees may take leave to tend to a family member with a service-related injury or illness. The provisions took effect when President Obama signed the legislation on Oct. 28, 2009. [December 2009] Mental Health Parity: What Employers Need to Know
After more than a decade of discussion, Congress finally enacted legislation mandating full parity for mental health and substance abuse benefits. The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act (MHPAEA) became law on Oct. 3, 2008, as part of the Emergency Economic Stabilization Act. The law, which generally becomes effective in 2010, affects insured and self-insured group health plans provided by employers. [November 2009] Health Care Reform Bill Would Restrict Health Insurers' Compensation
A provision in America’s Healthy Future Act, passed by the Senate Finance Committee on Oct. 13, would limit deductible compensation for health insurers. If the provision makes it into the final legislation, it will establish a special rule under section 162(m) to cut the deductible compensation limit in half — from $1 million to $500,000 — for “covered health insurance providers.” The provision is targeted at the health insurance industry — employers with self- insured plans are excluded. [November 2009] Health Care Reform:
The Potentially Steep Price for Doing It Wrong
In late summer 2009, health care reform seems almost within reach. President Barack Obama is urging the Congress to pass bills, and both the House and Senate are trying to deliver. There is relatively widespread agreement on the necessity of reform, but the devil is in the details. [September 2009] Health Care Reform Debate to Continue During August Recess
As Congress enters its August recess, health care reform legislation remains in flux. In July, four of the congressional committees responsible for moving the legislation approved proposals. Despite this progress, however, obstacles threaten to block the legislative path to reform, including escalating concern about costs — now and in the future — and dissent among House Democrats. Lawmakers plan to discuss the proposals with their constituents over the August recess, and constituents’ views will affect the negotiations when they return. [August 2009] EEOC Proposes Procedural and Administrative Regulations on
Genetic Information
The Equal Employment Opportunity Commission (EEOC) has released proposed regulations on procedural and administrative issues under the Genetic Information Nondiscrimination Act of 2008 (GINA). The proposal would amend existing regulations to reflect GINA and update the language in the regulations. [July 2009] Health Care Reform Advances, Obstacles Loom
Health care reform took important steps forward in mid-July, when three of the congressional committees responsible for moving the legislation approved proposals. President Obama and lawmakers and stakeholders who support the reform efforts hailed the committee votes. Despite the progress, however, obstacles threaten to block the legislative path to reform, including escalating concern about the proposals’ costs, dissent among House Democrats and the pending August recess. Lawmakers must forge consensus before any legislation can be presented for President Obama’s signature. [July 2009] Crunch Time for Health Care Reform Debate
Back from its Independence Day recess, Congress now faces an intense schedule of health care reform activity, growing controversy about emerging proposals and a tight timeline. The debate so far has been marked by progress and setbacks. The Senate Health, Education, Labor and Pensions (HELP) Committee is debating the health care reform proposal released on June 9. A discussion draft of the House tri-committee proposal was released on June 19, and the three committees with jurisdiction – Ways and Means, Education and Labor, and Energy and Commerce – held hearings in late June. However, the Senate Finance Committee delayed its proposal and debate when the Congressional Budget Office (CBO) estimated the cost at more than $1.5 billion. [July 2009] Expanded HIPAA Requirements and HHS Guidance on Securing PHI
The push for health information technology (IT) has prompted concerns about keeping health information private, and the American Recovery and Reinvestment Act of 2009 (ARRA) expands the privacy protections under the Health Insurance Portability and Accountability Act (HIPAA). The 2009 act imposes new notification requirements for breaches of unsecured protected health information (PHI), establishes new disclosure requirements for electronic health records, and strengthens enforcement and penalties for violations. It also includes provisions aimed at encouraging greater use of health IT. [June 2009] Emergency Retiree Health Benefits Protection Act Reintroduced
Representative John Tierney (D-Mass.) has reintroduced the Emergency Retiree Health Benefits Protection Act (H.R. 1322), which would prevent employers from reducing or eliminating health benefits for retirees or their dependents. The bill has been around for years but has attracted more attention since it appeared in a pension bill last year. [June 2009] Healthy Families Act Would Mandate Paid Sick Leave
Representative Rosa DeLauro (D-Conn.) has reintroduced the Healthy Families Act (H.R. 2460), which would require employers with more than 15 employees to provide paid sick leave to employees who work more than 30 hours per week. Senator Edward Kennedy (D-Mass.) is sponsoring the legislation in the Senate (S. 1152). Senator Kennedy had considered an earlier version of the legislation a top priority at the start of the 2007-2008 legislative session, but the act stalled. Supporters hope the recent flu outbreak will bolster support for legislation that could encourage sick workers to stay home. [June 2009] EEOC Releases Informal Guidance on Health Risk Assessments and the ADA
The Equal Employment Opportunity Commission (EEOC) has released an opinion letter saying an employer’s health risk assessment program violates the Americans with Disabilities Act (ADA). While many employers have moved forward with health risk assessments and other mandated wellness arrangements, the EEOC’s letter is a reminder of the importance of considering ADA implications before instituting a wellness program. [June 2009] Health Care Reform Takes Shape
Congress is in a flurry of decision making and debate as it scrambles to get health care reform bills ready before the August recess. The next few months will be critical as lawmakers try to work out important and contentious issues — including individual and employer mandates, a health insurance exchange, a public plan option and subsidies to help individuals and families purchase coverage. President Obama has asked Congress to present a bill for his signature by Oct. 1 — which would be an impressive feat, given the upcoming Independence Day and August recesses. [June 2009] Health Care Reform Debate Heats Up
The health care reform debate began taking shape in March and intensified in April. In early March, President Obama convened a forum at the White House, which was followed by regional forums across the country. Lawmakers hope to move legislation through the House and Senate during the summer and to pass final legislation this year. It is an ambitious agenda — and one with important cost, design, compliance and other implications for employer-sponsored health plans. [May 2009] Health Care Disclosure Bill Passes House
The Health Insurance Restrictions and Limitations Clarification Act of 2009 passed the House on March 31 with overwhelming support. The bill aims to provide more transparency about benefit exclusions in group health plans to health care consumers. [April 2009] President Obama Signs SCHIP Legislation Into Law
On Feb. 4, President Obama signed the Children’s Health Insurance Program Reauthorization Act (H.R. 2) into law, just hours after it was cleared for his signature. The act extends and expands the State Children’s Health Insurance Program (SCHIP). Several of its provisions affect employer-sponsored group health plans by adding special enrollment rights and imposing new reporting and disclosure requirements. [March 2009] Stimulus Bill Expands TAA Benefits
President Obama signed the American Recovery and Reinvestment Act of 2009 (H.R. 1) into law on Feb. 17. Otherwise known as the stimulus bill, the act makes numerous changes to the Trade Adjustment Assistance (TAA) program. In addition to expanding TAA eligibility, the act increases the health coverage tax credit (HCTC) and extends COBRA eligibility periods for TAA-eligible individuals and Pension Benefit Guaranty Corporation (PBGC) pension recipients. [March 2009] President Obama’s Budget Includes Health And Retirement Proposals
President Obama’s budget proposal for fiscal year 2010 would establish a reserve fund and guiding principles for health care reform. The retirement proposals emerged during the president’s campaign: to establish automatic workplace pensions and expand the Saver’s tax credit. To bring in revenue, the president proposes to means-test Medicare Part D premiums, tax carried interest as ordinary income and "reform deferrals and other tax reform policies." [March 2009] COBRA Subsidy: What Employers Need to Know
On Feb. 17, President Obama signed the American Recovery and Reinvestment Act of 2009 (ARRA) into law. The massive stimulus package of government spending and tax cuts will have direct and immediate effects on employer-sponsored health care plans. Under the act, the government will subsidize Consolidated Omnibus Budget Reconciliation Act (COBRA) continuing health care coverage for certain individuals who lose their jobs between Sept. 1, 2008, and Dec. 31, 2009, through a payroll tax offset arrangement with employers. Individuals involuntarily terminated between Sept. 1, 2008, and Feb. 16, 2009, who do not currently have a COBRA election in place must be given a second chance to enroll. [March 2009] DOL Issues Final FMLA Regulations on Military Family Leave
The Department of Labor (DOL) recently issued final Family and Medical Leave Act (FMLA) regulations addressing the new military family leave entitlements under the National Defense Authorization Act (NDAA) for fiscal year 2008. There are two new types of military leave: (1) qualifying exigency and (2) military caregiver. The regulations took effect Jan. 16. [March 2009] Congress Wraps Up Busy 2007-2008 Term, More Benefit Activity Ahead
The 2009-2010 congressional term promises to be another busy session for benefit- and compensation-related issues. During the 2007-2008 term, Congress enacted important laws affecting health care, retirement, executive compensation, and the Family and Medical Leave Act (FMLA), and considered new issues such as the investment of pension fund assets. Some of the legislation had been debated for years and received a final push from new Democratic majorities in the House and Senate. Other bills and efforts represent attempts to deal with trouble in the broader economy — such as the financial crisis and rising food and energy costs. [February 2009] Stimulus Bill Provides Subsidized COBRA Coverage
On February 17, 2009, President Obama signed the American Recovery and Reinvestment Act (H.R. 1) into law. The massive stimulus package will subsidize COBRA coverage for some eligible qualified beneficiaries. The COBRA provisions will take effect soon after enactment and so require prompt attention and action from plan sponsors and administrators. Among other actions, employers must issue updated COBRA notices, provide new enrollment options and implement subsidy procedures. [February 2009] Review of ‘Critical: What We Can Do About The Health-Care Crisis’ by Tom Daschle
In his book, “Critical,” published in 2008, Tom Daschle, former Senate majority leader, describes his views on the problems of the U.S. health care system and how they can be fixed. One of the co-authors of the book is Jeanne Lambrew, deputy director of the White House Office of Health Reform. The incoming Obama administration and the Democratic leadership in Congress have indicated strongly that health care reform is one of their top legislative priorities in the next year or so. The book sets out key analytical conclusions and proposals that might emerge during the upcoming health care reform debates. [February 2009] Early Start to 2009 Health Care Reform Debate
In the weeks following the Nov. 4 elections, some of the lawmakers hoping to steer health care reform legislation through the Senate this year got a head start. On Nov. 12, 2008, Senate Finance Committee Chairman Max Baucus (D-Mont.) released a policy paper outlining his vision for comprehensive health care reform. In addition, some members of the Senate Finance Committee and the Senate Health, Education, Labor and Pensions (HELP) Committee met to discuss health care reform. These endeavors capped a year in which Congress set the stage for a major health care reform debate and suggest that lawmakers plan to get to work on the issue early in 2009. [February 2009] Claims Denial Faces Stricter Review Because Sponsor Failed to Meet DOL Electronic Delivery Requirements
A ruling by the 9th U.S. Circuit Court of Appeals emphasizes the importance of compliance with the U.S. Department of Labor’s regulations on delivering plan documents electronically. In Gertjejansen v. Kemper Insurance Companies, Inc., the court applied a stricter standard of review to a claims denial because the employer’s delivery of the summary plan description (SPD) did not meet DOL requirements. [November 2008] Mental Health Parity Law Passes on Coattails Of Economic Stabilization Act
After more than a decade of discussion, Congress has finally enacted legislation to mandate full parity for mental health and substance abuse benefits. The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act became law on October 3 when President Bush signed the Emergency Economic Stabilization Act, a broad bill aimed at stabilizing U.S. financial markets. [November 2008] Appeals Court Rules ERISA Does Not Preempt San Francisco’s Health Care Mandate
On Sept. 30, the U.S. Court of Appeals for the 9th Circuit ruled that ERISA does not preempt San Francisco’s Health Care Security Ordinance, which requires employers to help pay for the city’s universal health care program. The Golden Gate Restaurant Association (GGRA) challenged the employer spending requirement, claiming ERISA preemption. The appeals court disagreed. [November 2008] New Law Helps Sick Students Keep Health Coverage
President Bush signed “Michelle’s Law” on Oct. 9. Under the new law, health plans must allow college students who take a leave of absence or reduce their class load because of illness to retain their dependent status under their parents’ health plan for up to one year. The act takes effect for medically necessary leaves of absence that begin in plan years beginning on or after Oct. 9, 2009 (Jan. 1, 2010, for calendar-year plans). [October 2008] Adoption Act Amends Tax Code Definition of Qualifying Child
On Oct. 7, President Bush signed the Fostering Connections to Success and Increasing Adoptions Act of 2008 (H.R.6893). The act focuses primarily on promoting adoption, but it also amends the definition of a qualifying child in the Internal Revenue Code. The definition is used to determine eligibility for certain tax benefits, such as the dependency exemption, the child tax credit, the earned income tax credit and the dependent care tax credit. In addition, it is referenced by many employer-sponsored health care and dependent care plans. [October 2008] IRS Addresses Tax-Dependent Status of Children of Divorced Parents
In Revenue Procedure 2008-48, the IRS announces some exceptions to its usual policy regarding children of divorced or separated parents. [October 2008] Onsite Health Facilities: Watch Out for Regulatory Pitfalls
By 2009, roughly 30 percent of large employers will have an onsite health care facility, according to research performed jointly by Watson Wyatt and the National Business Group on Health. While these employer-provided onsite facilities serve a useful purpose, many employers and vendors are unaware of the welfare benefit implications they entail. [October 2008] Congressional Hearings Set Stage for 2009 Health Care Debate
Congress and policy and industry experts are gearing up for next year’s health care reform debate. On Capitol Hill, lawmakers and key committees are holding hearings and listening to experts. A recent hearing conducted by the Senate Finance Committee focused on the tax treatment of health care benefits. Other recent hearings have looked at state reform — especially how ERISA preemption might be impeding reforms. [October 2008] Presidential Campaign Proposals Suggest Changes Ahead for Employer Health Plans
During their months on the presidential campaign trail, Sens. Barack Obama (D-Ill.) and John McCain (R-Ariz.) have outlined competing visions for a reformed U.S. health care system. Both candidates aim to increase the number of Americans with health coverage, reduce costs and improve quality, but they take different approaches. Sen. Obama would create a new national plan, expand existing public programs and impose mandates. Sen. McCain opposes mandates and instead proposes tax changes and market reforms. [October 2008] IRS Releases HSA Comparability Guidance
The IRS has proposed regulations on the health savings account (HSA) comparability requirements under the Tax Relief and Health Care Act of 2006. The regulations also explain the penalties for making contributions that are not comparable, which include a 35 percent excise tax. [September 2008] House Approves ADA Amendments Act
On June 25, the House passed the ADA Amendments Act of 2008 by a vote of 402-17. The act would overturn U.S. Supreme Court decisions that have narrowed the range of disabilities that qualify for protection under the Americans with Disabilities Act (ADA). It would also establish that mitigating measures — such as hearing aids — do not affect the determination of disability. If the act passes, it will increase the number of workers who qualify for ADA protection. [August 2008] IRS Clarifies “Counting Nights” Rule for Dependent Deduction
The IRS has issued final regulations clarifying the “counting nights” rule used to identify which parent can claim a child as a dependent after a divorce or separation. The regulations took effect July 2, 2008. [August 2008] IRS Provides Guidance on HSA Contribution Limits
In Notice 2008-52, the IRS provides guidance on changes to the contribution limits for health savings accounts (HSAs) enacted by the Health Opportunity Patient Empowerment Act of 2006. [August 2008] IRS Provides Guidance on Transfers From IRAs to HSAs
Employees may now make a one-time, tax-free transfer from their individual retirement account (IRA) to their health savings account (HSA). As long as the transfer complies with the new rules, the distribution from the IRA will neither be included in the employee’s gross income nor subject to the 10 percent penalty tax. Transferred amounts may not exceed the employee’s annual HSA contribution limit. The new rules take effect for taxable years beginning after Dec. 31, 2006. [August 2008] House Bill Would Allow Students on Medical Leave to Keep Coverage
On July 30, 2008, the House passed “Michelle’s Law” (H.R.2851), which would enable full-time students on a medically necessary leave of absence to keep their health insurance for up to one year. Under most health plans, college-age dependent students who are not enrolled in school full-time are no longer eligible for coverage under their family’s health insurance plan. If the bill becomes law during this legislative session, it would apply to medically necessary leaves of absence beginning on or after Jan. 1, 2010. [August 2008] IRS Releases Question-and-Answer Guidance on HSAs
In Notice 2008-59, the IRS provides much-anticipated guidance on health savings accounts (HSAs). The guidance clarifies which onsite health clinic services cancel out HSA eligibility and when employers can recoup HSA contributions, as well as addressing other eligibility issues, high-deductible health plans (HDHPs), contributions, distributions and prohibited transactions. While some of the information restates earlier guidance, the notice fills in some gaps and provides new guidance as well. [August 2008] New Medicare Law Delays Physician Payment Cuts; Includes Reductions to Medicare Advantage
Congress overrode President Bush’s veto to enact the Medicare Improvements for Patients and Providers Act (H.R.6331) on July 15, 2008. The act delays scheduled reductions in physician reimbursements, establishes incentives to encourage physician quality reporting and electronic prescribing, improves coverage for preventive services, expands low-income health programs and enhances pharmacy access. [August 2008] Genetic Information Nondiscrimination Act
Will Affect Health Plan Practices
The Genetic Information Nondiscrimination Act (GINA) has important implications for group health plans. The act’s restrictions on the collection and use of genetic information and privacy protections will affect many aspects of plan operations, including health risk assessments and vendor relations among others. To prepare, plan sponsors should review the new requirements, identify all practices that involve genetic information and determine whether changes will be necessary. [July 2008] House Approves the Airline Flight Crew Technical Corrections Act
On May 20, the House approved the Airline Flight Crew Technical Corrections Act (H.R. 2744) by a vote of 402-9. The act would enable more flight attendants and crew members to qualify for leave under the Family and Medical Leave Act (FMLA). These employees would qualify for unpaid leave after working at least 60 percent of the employer’s full-time schedule or the equivalent during the 12 months preceding the leave. [June 2008] The Effects of Rising Health Costs on Salaries and Income Inequality
Can the widely noted recent stagnant salary growth for the average U.S. worker and increased income inequality be explained, in significant part, by the rapidly rising costs of health care benefits? This article argues that they can. [May 2008] President Signs Genetic Information Nondiscrimination Act Into Law
President Bush signed the Genetic Information Nondiscrimination Act (H.R.493) into law on May 21, 2008. The Senate approved the act by a vote of 95-0 on April 24, and the legislation cleared the House by a vote of 414-1 on May 1. The legislative goal is to ensure that people do not avoid genetic testing or counseling because they fear later health or employment discrimination. [May 2008] House Approves Bill to Require Substantiation of HSA Amounts
Under the Taxpayer Assistance and Simplification Act (H.R.5719), health savings account (HSA) trustees — typically banks — would be required to substantiate that HSA distributions were for health care-related expenses. Unsubstantiated withdrawals would be included in the account holder’s gross income and subject to a 10 percent penalty. The new rules would take effect for HSA distributions after December 31, 2010. [May 2008] San Francisco Health Care Mandate Goes Into Effect While Court Considers ERISA Preemption Appeal
On January 9, 2008, a federal appeals court ruled that San Francisco’s health care ordinance could get under way while the court considers the ERISA preemption challenge. The mandate requires employers to spend specific amounts on health care for or on behalf of their employees. [April 2008] Health Care on the Campaign Trail
Health care reform is a hot topic right now. The presidential candidates have made speeches, debated and discussed health care at voter forums. All three major party candidates have issued proposals aimed at increasing access or coverage, reducing costs and improving quality. [April 2008] House Passes Mental Health Parity Bill
Mental health parity reform moved another step closer to enactment when the House approved the Paul Wellstone Mental Health and Addiction Equity Act (H.R.1424) on March 5. The Senate approved the Mental Health Parity Act (S.558) – a version supported by the business community and mental health advocates – by unanimous consent in September 2007. [April 2008] DOL Proposes New FMLA Regulations
The U.S. Department of Labor (DOL) has proposed new regulations for the Family and Medical Leave Act (FMLA). Although employers were hoping for significant guidance, these proposed regulations provide mostly clarifications and minor changes. [April 2008] President Bush Releases Fiscal 2009 Budget Proposal
President Bush has proposed a budget for fiscal year 2009. Many of the budget’s health care and retirement proposals appeared in earlier budget submissions, such as replacing the tax exclusion for employer-provided health insurance with a standard tax deduction, and establishing a new retirement savings plan to replace existing defined contribution plans. These proposals failed to gain legislative traction in earlier years and are unlikely to do so this year either. [March 2008] DOL Addresses Exemption From HIPAA Portability Rules
In a recent Field Assistance Bulletin (FAB), the U.S. Department of Labor (DOL) differentiates exempt from nonexempt supplemental health coverage under the Health Insurance Portability and Accountability Act (HIPAA). The DOL is responding to concerns about some insurance products being improperly marketed as HIPAA-exempt supplemental plans. [February 2008] IRS Relaxes Restrictions on Payments for Cafeteria Plan Coverage
The IRS recently modified its position on the permissibility of pretax payments for health coverage under a cafeteria plan for domestic partners and others who are not tax dependents. Formerly, employees had to pay taxable health benefits with after-tax dollars. Now, employees may pay for both nontaxable and taxable health benefits with pretax dollars, and the cost of the taxable benefits will be imputed to employees’ gross incomes. [February 2008] Major Expansion of FMLA Allows Six-Month Leave to Care for Injured Servicemembers
Employees may take up to six months of job- and benefit-protected leave to care for family members injured in the line of active military duty. In certain other circumstances, workers may take up to 12 weeks of leave when a family member is on active duty or has been notified of an impending call to active duty. [February 2008] Much Talk, Little Action During 2007 Legislative Session
Mental health parity. 401(k) fees. Deferred compensation. COBRA. Carried interest. Medicare. Expatriate taxation. These are just some of the benefit and compensation issues Congress discussed last year. During 2007, lawmakers evinced a continuing desire to enact legislation that would affect employer-sponsored health, retirement and compensation programs – yet very little of that legislation passed. The year also marked the emergence of new issues that would affect plan investments. [January 2008] House Approves New COBRA Entitlements and Tax Credits for Displaced Workers
The House has approved legislation that could extend continuing health care coverage to trade-displaced workers for 10 years or more. The act also would increase the tax credits available to help such workers pay for COBRA continuation coverage or other health care coverage. [November 2007] House Ready to Vote on Mental Health Parity
Mental health parity reform has passed the three House committees with jurisdiction, and the House is likely to approve the Paul Wellstone Mental Health and Addiction Equity Act (H.R.1424) within weeks. [November 2007] Mental Health Parity Legislation Advances
Legislation to expand the mental health parity requirements continues to move forward. In the House, the Energy and Commerce Committee approved the Paul Wellstone Mental Health and Addiction Equity Act (H.R.1424) on October 16, which cleared the bill for a vote by the full House. [October 2007] SCHIP Vetoed
As expected, President Bush vetoed legislation to reauthorize and expand the State Children’s Health Insurance Program (SCHIP). [October 2007] Mental Health Parity Reform Nears Passage
There are two bills pending in the House and Senate to reform the Mental Health Parity Act of 1996. Under the bills, health plans could not impose different treatment limitations and financial requirements on mental health/substance abuse benefits than on medical/surgical benefits. The parity requirements would apply to all plans that offer mental health and substance abuse benefits. Debate has been focused on three broad issues: ERISA preemption, mandated benefits and medical management practices. [September 2007] House, Senate SCHIP Bills Include Medicare, FMLA Provisions
The House and Senate approved separate bills to reauthorize and expand the State Children’s Health Insurance Program (SCHIP), setting the stage for conference negotiations in September. The bills also would make changes to Medicare and the Family and Medical Leave Act (FMLA) – with implications for employers. [September 2007] Tying Health Benefits to Health Status: A Few Words of Caution
With health costs still rising at twice the rate of inflation, employers are looking for ways to get more from their health care dollars. To encourage workers to improve their health, some new insurance products provide supplemental benefits to members who meet specific health thresholds, such as a low body-mass index or cholesterol level, or practice certain healthy behaviors, such as not smoking. [September 2007] House SCHIP Provision Would Impose Fee on Health Plans
The Children’s Health and Medicare Protection Act of 2007 (CHAMP Act, H.R. 3162) would reauthorize and expand the State Children’s Health Insurance Program (SCHIP) for five years. It also would impose an annual fee on insured and self-insured health plans to fund a new research center to study health care services and procedures. [September 2007] Court Upholds EEOC’s Regulation Allowing Plans to Coordinate Retiree Health Benefits With Medicare
The U.S. Court of Appeals for the Third Circuit recently upheld the Equal Employment Opportunity Commission’s (EEOC’s) proposed regulation to allow employers to coordinate retiree health benefits with Medicare benefits. Finding that the regulation was “reasonable” and “necessary and proper in the public interest,” the appeals court upheld a lower court’s decision to lift an injunction, permitting the regulation to stand. The EEOC is now free to finalize its rule, thereby giving employers license to coordinate retiree medical benefits with Medicare. [August 2007] Massachusetts Universal Health Care Goes Live
In a first for the nation, all residents of Massachusetts were required to obtain health insurance by July 1, 2007, under a law passed last year. By May 2007, more than 100,000 residents who had been uninsured had acquired coverage. To make universal coverage possible, the law makes new demands on employers in Massachusetts, which must make a “fair and reasonable” contribution to the cost of their employees’ health insurance or else pay a fair-share contribution to the state. [August 2007] Senate Approves Drug Importation Provisions
In May, the Senate approved a provision to allow the importation of prescription drugs from Canada and other industrialized countries, but a separate provision requiring the secretary of Health and Human Services to certify the safety of imported drugs would likely prevent the measure from taking effect. The developments constitute yet another point-counterpoint in the years-long legislative wrangling over prescription drug importation. Supporters vow to continue their push to legalize drug importation. [July 2007] Genetic Nondiscrimination Legislation Moves Forward
In a 420-3 vote on April 25, the House approved the Genetic Information Nondiscrimination Act (H.R.493), which would prohibit health insurers and employers from discriminating against employees based on their (or their family members’) genetic information. [May 2007] Congress Considers Mental Health Parity Legislation
The House and Senate are considering bills that would expand the mental health parity requirements in current law. The existing Mental Health Parity Act of 1996 prevents group health plans from imposing lower annual or lifetime dollar limits on mental health benefits than on medical/surgical benefits. [April 2007] President and Others Propose Big Changes for Health Care
President Bush has proposed a new budget for fiscal year 2008. Some of the administration’s proposals are continuations of past initiatives, such as expanding health savings accounts (HSAs), while others represent new directions, such as eliminating the income tax exclusion for employer-provided health coverage. [March 2007] Genetic Nondiscrimination Legislation Getting Attention
The Senate Health, Education, Labor and Pensions (HELP) Committee approved the Genetic Nondiscrimination Act (S.358) on January 31, 2007. The act would prohibit health insurers and employers from discriminating against employees based on their (or family members’) genetic information. [February 2007] President Proposes New Tax Treatment for Health Care Benefits
A few days before his State of the Union address, President Bush unveiled a proposal to change the tax treatment of health care coverage. The proposal would make employer-sponsored coverage taxable and establish a new standard deduction for private health coverage. [February 2007] House Approves Legislation to Require Negotiation of Part D Drug Prices
On January 12, the House approved the Medicare Prescription Drug Price Negotiation Act of 2007 (H.R.4) by a vote of 255-170. The legislation would require the secretary of Health and Human Services (HHS) to try to negotiate lower drug prices – including discounts, rebates and other price concessions – for sponsors of Part D prescription drug or Medicare Advantage plans. The secretary would have to report the results of these negotiations to Congress twice a year. [February 2007] U.S. Appeals Court Upholds Dismissal of Maryland’s Health Insurance Law
On January 17, 2007, the United States Court of Appeals for the Fourth Circuit affirmed a lower-court
decision that ERISA preempts the Maryland Fair Share Health Care Fund Act, which would have
required nongovernmental employers with 10,000 or more workers to spend at least 8 percent of their
payroll on health care or pay the difference in taxes.
[February 2007] DOL Requests Comments on FMLA
The U.S. Department of Labor (DOL) is seeking information and comments from the public on the Family and Medical Leave Act (FMLA) and its implementing regulations. [January 2007] Important HSA Changes Signed Into Law
As health savings accounts (HSAs) and the high-deductible health plans (HDHPs) that go with them are being more widely used, employers and employees have run into some obstacles. Over recent months, lawmakers have been discussing legislation to simplify and improve these plans. During the 11th hour of the 2006 legislative session, Congress passed the Tax Relief and Health Care Act (H.R.6111), which President Bush signed into law December 20. [January 2007] Court Rules ERISA Preempts Maryland Health Insurance Law
In Retail Indus. Leaders Association v. Fielder, a federal judge in Maryland ruled that ERISA preempts the Maryland Fair Share Health Care Fund Act, which was slated to become effective January 1, 2007. [December 2006] Court Rules ERISA Preempts Maryland Health Insurance Law
In Retail Indus. Leaders Association v. Fielder, a federal judge in Maryland ruled that ERISA preempts the Maryland Fair Share Health Care Fund Act, which was slated to become effective January 1, 2007. [December 2006] IRS Issues Guidance on Debit Cards
In Notice 2006-69, the IRS simplifies the use of debit cards for health flexible spending arrangements (FSAs) and health reimbursement arrangements (HRAs). The notice also expands allowable expenses, adds a new substantiation method and clarifies acceptable substantiation practices, and permits the use of debit cards in dependent care plans. The guidance generally takes effect immediately. [November 2006] House Ways and Means Committee Clears HSA Improvement Bill
As health savings accounts (HSAs) have become more popular, employers, participants and policymakers have become aware of some of their shortcomings. Over the past year, lawmakers have shown growing interest in fixing some of these problems (see Watson Wyatt Insider, July 2006). On September 27, the House Ways and Means Committee approved a bill to allow rollovers from health flexible spending accounts (FSAs), health reimbursement arrangements (HRAs) and individual retirement accounts (IRAs). The bill would also increase the deductible contribution limit and make other changes. [November 2006] IRS Issues Final Regulations on Comparable Contributions to HSAs
On July 31, the IRS issued much-anticipated final regulations on how employer contributions to health savings accounts can satisfy the comparability rules. The final regulations are substantially similar to the proposed rules (see Watson Wyatt Insider, October 2005). [September 2006] Legislation Aims to Make HSAs More Attractive
A recent Government Accountability Office (GAO) study concluded that consumer-directed health plans (CDHPs) — both health reimbursement arrangements (HRAs) and health savings accounts (HSAs) that are coupled with high-deductible health plans (HDHPs) — account for a small but growing share of private health care coverage in the United States. [July 2006] Citizens’ Health Care Group Issues Interim Recommendations
The Citizens’ Health Care Working Group, established by the Medicare Prescription Drug, Modernization and Improvement Act of 2003, released its interim recommendations on June 1. The group recommends making affordable health care coverage for all Americans a matter of official U.S. public policy. The coverage should include a package of core services and financial assistance as necessary. The group suggests having an independent, nonpartisan group identify and periodically update the core benefit package. [July 2006] Some Employers Finding Relief From Rising Health Care Costs, According to NBGH/Watson Wyatt Survey
Escalating increases in health care costs in recent years have wreaked havoc on companies’ compensation budgets, often holding pay and other perks hostage. Health care costs continue to rise, but at least the rate of increase has slowed. And some employers are finding ways to regain control over these costs, according to the latest National Business Group on Health/Watson Wyatt Employer Survey on Purchasing Value in Health Care. [May 2006] 2007 Budget Would Expand HSAs, Calls for Pension Reform
President Bush sent Congress his budget proposal for fiscal year 2007 on February 6, 2006. The
budget puts renewed emphasis on health care initiatives, proposing to expand health savings
accounts (HSAs), encourage greater transparency about health care cost and quality, authorize
association health plans (AHPs) and improve health information technology. [February 2006] Flex HSA Act Aims to Improve Health Savings Accounts
Representative Eric Cantor (R-Virginia) introduced the Flex HSA Act (H.R.4511) on
December 13, 2005. The act aims to promote health savings accounts (HSAs) by raising the
limit on HSA contributions and permitting individuals covered by flexible spending accounts
(FSAs) and health reimbursement arrangements (HRAs) to contribute to HSAs. [January 2006] HSA/FSA Grace Period Guidance Restricts Employer Options but Provides Limited Transition Relief
In Notice 2005-86, the IRS clarifies the effect of a health flexible spending account (FSA) grace period on health savings accounts (HSAs). Employees who participate in a health FSA with a grace period may not participate in an HSA until the first day of the first month after the grace period ends. [December 2005] Medicare Part D: Employer Options and Key Considerations
Since the Medicare Modernization Act passed in December 2003, employers, health plans and
other affected entities have been busy preparing for January 1, 2006, when Medicare begins
financing a standard prescription drug benefit. [July 2005] IRS Allows Grace Period for Flex Plans
Employers that provide cafeteria plans may now establish a two-and-one-half-month grace period for participant claims, under a new rule released by the IRS last month. [June 2005] Court Enjoins EEOC Rule Allowing Coordination of Retiree Health Benefits With Medicare
Prompted by a lawsuit filed by AARP, a federal court in Pennsylvania has prohibited
the Equal Employment Opportunity Commission (EEOC) from issuing its final rule
on coordinating retiree medical benefits with Medicare. [June 2005] IRS Issues New Guidance on HRA Contributions and Distributions
In Revenue Ruling 2005–24, the IRS authorizes tax-free employer contributions of accumulated unused vacation and sick leave to health reimbursement arrangements
(HRAs) for retirees. [June 2005] IRS Clarifies Application of HSA Rules for Married Couples
In Revenue Ruling 2005-25, the IRS clarifies the health savings account (HSA) eligibility
rules and contribution limits for married individuals. [June 2005] Supreme Court Permits Disparate Impact Claims Under ADEA
In Smith v. City of Jackson, the U.S. Supreme Court resolved a split in the circuits, ruling that the Age Discrimination in Employment Act (ADEA) permits disparate impact claims. [June 2005] News in Brief
Budget Resolution Affects PBGC Premiums, President Signs Bankruptcy Reform Act, DOL Revises Voluntary Fiduciary Correction Program, PBGC Takes Over United Airlines’ Pension Plans [June 2005] President's Budget Proposal Also Addresses Hybrid Pension Plans,
Other Issues
In addition to proposing reforms to the defined benefit funding rules, President Bush's budget
proposal for fiscal 2006 would change the rules governing hybrid pension plans, health care plans
and retirement savings plans. [March 2005] AARP Blocks EEOC From Ruling on Retiree Medical Benefits and Medicare
On February 4, a federal court in Pennsylvania blocked the Equal Employment Opportunity
Commission from issuing its final rule on coordinating retiree medical benefits with Medicare. [March 2005] Final and Proposed Regulations for HIPAA
Last month, the U.S. Departments of Labor, Treasury, and Health and Human Services issued final
and proposed regulations on the portability provisions of the Health Insurance Portability and
Accountability Act. [February 2005] News in Brief
Treasury Won't Change FSA Use-It-Or-Lose-It Rule, President Bush Appoints Tax
Reform Panel, PBGC to Assume United Airlines Pilots' Plan, PBGC Proposes Changes to ERISA [February 2005] 2004 Legislative Session Saw Active Benefits-Related Discussions
The 2004 session of Congress continued into December, but benefits-related discussions were wrapped
up in November. The 108th Congress had a busy legislative agenda, enacting legislation on hybrid
pension plans, defined benefit funding and nonqualified deferred compensation. [December 2004] California Voters Repeal Employer-Sponsored Health Coverage Law
On November 2, voters failed to uphold California's Pay or Play Employer Mandate, Proposition 72/SB2. [November 2004] President Signs Working Families Tax Relief Act
On October 4, President Bush signed the Working Families Tax Relief Act. The act extends the
Mental Health Parity Act and changes the interest rate provisions of the Jobs Creation and Worker
Assistance Act. [November 2004] New Definitions in Working Families Tax Relief Act Will Have Broad Effects
The Working Families Tax Relief Act of 2004 changed the Code section 152 definition of "tax dependent,"
which is often used to determine health and group plan eligibility and benefits’ tax status. [November 2004] DOL Proposes Veterans’ Rights Regulations for Health Care, Pension Plans
The U.S. Department of Labor has proposed regulations to clarify the implementation of the
Uniformed Services Employment and Reemployment Rights Act of 1994. [November 2004] Election 2004: What's Ahead for Health Care and Retirement Issues?
Election Day is approaching, and President Bush and Senator Kerry are entering the final stages
of their presidential campaigns. Health care reform has been a popular campaign topic. Both
candidates have plans for increasing access to health care coverage, controlling prescription
drug costs, improving health information technology and otherwise reforming the U.S. health
care system. [October 2004] Senator Urges Treasury Department to Repeal FSA Use-It-or-Lose-It Rule
The move to repeal the use-it-or-lose-it rule for health care flexible spending accounts (FSAs)
has shifted its focus from Capitol Hill to the U.S. Department of the Treasury. In August, Senate
Finance Committee chair Charles Grassley (R-Iowa) wrote a letter urging Treasury Secretary
John Snow to repeal the use-it-or-lose-it rule administratively. [October 2004] Health Care Spending and Savings Accounts: A Way Out of Our Health Care Crisis?
The 2003 Medicare Prescription Drug, Improvement and Modernization Act (MMA) created tax-favored
health savings accounts (HSAs), which are used in conjunction with high-deductible health
plans (HDHPs). The idea is that consumers use the money in their HSA to pay their out-of-pocket
health costs and rely on the HDHP mostly for medical catastrophes. [September 2004] HSA Guidance Summary
The Medicare Prescription Drug, Improvement and Modernization Act of 2003 created a new health savings vehicle, Health Savings Accounts (HSAs), that employers may provide in conjunction with high-deductible health plans (HDHPs). [August 2004] Supreme Court Rules That ERISA Preempts State Patients' Rights Laws
The U.S. Supreme Court has ruled that ERISA preempts state laws that allow health plan participants to sue their health plans for denying coverage. [August 2004] DOL Issues Final COBRA Regulations on Notice and Disclosure
The U.S. Department of Labor (DOL) has issued final COBRA regulations addressing notice
and disclosure. [August 2004] News in Brief
Prescription Drug Importation Activities Continue, House Approves Stock Option Accounting Legislation [August 2004] House Approves Legislation to Allow FSA Rollovers
The House of Representatives approved legislation to allow up to $500 of unused money in a flexible spending account to be carried forward or rolled over into a health savings account. [June 2004] IRS Clarifies Interaction Among FSAs, HRAs and HSAs
In Revenue Rule 2004-45, the IRS explains when having either a health flexible spending
account or a health reimbursement arrangement disqualifies an individual from making tax-free contributions to a health savings account. [June 2004] Lawmakers Look at Drug Importation — Again
Amid double-digit increases in the cost of health care benefits and mounting concerns about prescription drug costs, drug importation is attracting renewed attention. [May 2004] IRS Issues Additional Guidance on HSAs
The IRS recently issued its second round of guidance regarding health savings accounts (HSAs), which answers employers’ most pressing questions and concerns about these new accounts. [May 2004] Most HSAs Will Not Be Covered by ERISA
The 2003 Medicare Prescription Drug Modernization Act allows employers to establish Health Savings Accounts (HSAs) in conjunction with high-deductible health plans (HDHPs) to pay for medical expenses not covered by the HDHP. [May 2004] President's Budget Proposal Includes Benefits Provisions
President Bush submitted his Fiscal Year 2005 budget proposal to Congress on February 2, 2004.
It proposes new savings vehicles and expanded access to health insurance and long-term care
insurance, and addresses other employment-related issues. [February 2004] Medicare Reform: What Will It Mean?
Congress has enacted the most sweeping changes ever made to Medicare by passing the Medicare
Prescription Drug, Improvement and Modernization Act, which was signed into law December 8,
2003. The act provides a prescription drug benefit for Medicare beneficiaries and enacts reforms
intended to encourage more private health plans to offer integrated benefits to seniors. [December 2003] Importing Prescription Drugs from Canada: What Employers Need to Know
Some Americans are saving large amounts of money by purchasing their prescription drugs from
Canada. Although health plan sponsors may find the potential savings attractive, there are good
reasons to steer clear of importing prescription drugs from Canada. [December 2003] Health Savings Accounts Could Promote Consumer-driven Health Care
In addition to its focus on prescription drug benefits and other reforms to Medicare, the Medicare
Prescription Drug, Improvement and Modernization Act creates Health Savings Accounts. These
accounts could promote consumer-driven health care by making high-deductible health plans
more attractive to both employers and individuals. [December 2003] IRS Ruling Could Relieve Headaches
In Revenue Ruling 2003-102, the IRS clarifies that insured and self-insured health plans, including health flexible spending accounts (FSAs), health reimbursement arrangements (HRAs) and consumer-driven health plans (CDHPs), may allow participants to pay for over-the-counter (OTC) drugs with pretax dollars. [October 2003] The Next Phase of HIPAA: Security
Many health plans, providers and health plan sponsors just recently managed compliance with the
Health Insurance Portability and Accountability Act’s privacy requirements, which became effective in
April of this year. Now, these same plans and covered entities must begin planning for the next phase of
HIPAA — the Security Rule — which becomes effective in April 2005 (April 2006 for small plans). [October 2003] Medicare Drug Bills: Key Considerations for Employers
The differences between the Senate-approved Prescription Drug and Medicare Improvement Act (S.1) and the House-approved Medicare Prescription Drug and Modernization Act (H.R.1) will be negotiated by a House-Senate conference committee that convenes in July. [August 2003] EEOC Proposes ADEA Exemption for Coordinating Retiree Health Plans With Medicare
The EEOC has issued a proposed exemption to the ADEA that would allow employers to alter, reduce or eliminate employer-sponsored retiree health benefits when retirees become eligible for Medicare or a state-sponsored retiree health benefits program. [August 2003] DOL Issues Proposed COBRA Notice Regulations
The DOL is proposing new rules to improve the consistency and clarity of four COBRA notices furnished by employers, plan administrators, employees and their families. [August 2003] How will employers respond?
A typical employer-provided retiree drug plan today — involving employer payments, retiree contributions and retiree out-of-pocket amounts — might be funded as follows. [July 2003] Congress Debates Medicare Reform
As this issue of the Watson Wyatt Insider went to press, the House and Senate had approved
separate bills to reform Medicare and provide prescription drug coverage for seniors. There are some important differences between the Senate’s Prescription Drug and Medicare Improvement Act and the House-approved Medicare Prescription Drug and Modernization Act. [July 2003] Health Care Issues Hit Legislative Agenda
A range of health care issues — Medicare, drugs for seniors, genetic discrimination, generic drugs and health savings accounts — has been the focus of recent congressional attention. The Medicare and prescription drug debates are in full swing, and Congress is discussing legislation to ban
discrimination based on genetic information, to speed generic drugs to the marketplace and to authorize Health Savings Accounts. [July 2003] IRS Issues Guidance on Debit/Credit Cards for Health FSAs and HRAs
In a long-awaited revenue ruling, the IRS has approved the use of debit or credit cards to
reimburse qualified medical expenses from health Flexible Spending Accounts and Health Reimbursement Arrangements.
[June 2003] IRS Publishes Second White Paper on Determination Letter Program
The IRS recently published its second white paper on the determination letter program for qualified retirement plans. [June 2003] IRS Clarifies Treatment of Certain Medical Expenses
The IRS has released two revenue rulings that clarify which types of cosmetic-type treatments and over-the-counter treatments and supplies are “qualified medical expenses” and thus eligible to be paid or reimbursed under a medical plan. [June 2003] Bigger Than a Breadbox: The Impact of HIPAA on American Employers
The passage of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) was hailed as one way to make health benefits more portable for American workers. Title II of the Act, Preventing Fraud and Abuse, received relatively little attention back then. [April 2003] Defined Benefit Funding Under Active Discussion
Issues surrounding defined benefit plan funding and the demise of the 30-year Treasury bond are being discussed in Washington, D.C. [April 2003] New Medicare Framework Faces Tough Fight in Congress
When President Bush proposed his fiscal year 2004 budget, he included $400 billion over 10 years for prescription drug coverage and other reforms to Medicare. [April 2003] Budget Proposal Addresses Employee Benefits and Compensation
In early February, President Bush sent Congress his budget proposal for fiscal year 2004. It includes benefit and compensation provisions, Medicare reform and proposals to help the uninsured gain health care coverage. [March 2003] 108th Congress to Address Benefits Issues
The 108th Congress is underway, with the new Republican majority bringing significant changes — the most important being Republican control of the Senate and the House. [January 2003] Health Plan Vendor Compliance With HIPAA Electronic Data Interchange Rules
Only 6 percent of the health plan vendors responding to a Watson Wyatt survey met the
October 16, 2002, deadline for complying with the Electronic Data Interchange (EDI) rules issued under the Health Insurance Portability and Accountability Act of 1996 (HIPAA). The remaining 94 percent applied for an extension from the Department of Health and Human Services (DHHS). [November 2002] Congress Struggles with Prescription Drugs
Once again, Congress is struggling over prescription drug issues, including price increases and coverage for Medicare beneficiaries. [September 2002] Retiree Health Benefits: Time to Resuscitate?
Today’s trend away from employer-provided retiree health benefits is certain to continue, thanks to rising health care costs, growing retiree populations, uncertain business profitability and federal regulations that discourage employers from prefunding retiree medical benefits. [September 2002] IRS Changes the Rules for Transfers of Surplus Assets from Terminated DB Plans to DC Plans
The IRS has changed its position on transfers of surplus assets from terminated defined benefit plans to qualified defined contribution replacement plans. [September 2002] HHS Releases Final HIPAA Privacy Regulations
The Department of Health and Human Services (HHS) recently published final regulations that clarify the Health Insurance Portability and Accountability Act (HIPAA) standards due to become effective April 2003. [September 2002] IRS Issues Guidance for New Health Reimbursement Arrangements
On June 26, the IRS issued a Notice and a Revenue Ruling on the tax treatment of Health Reimbursement Arrangements (HRAs). [August 2002] Supreme Court Rules Against ERISA Preemption of State Law
In Rush Prudential HMO, Inc. v. Moran, the Supreme Court recently ruled that a state statute allowing for an independent review of certain denials of benefits is not preempted by ERISA for an insured group health plan. [August 2002] Privacy Legislation May Affect Benefits Administration
The easy flow of information between individuals, businesses and governments has legislators and consumers worried about the security and confidentiality of personal information, especially
medical records, financial information, Social Security numbers and other sensitive data. Congress and the states have been busy enacting privacy protections. [July 2002] IRS Allows Automatic Enrollment in Cafeteria Plans
In a recent revenue ruling, the IRS has confirmed that employers may automatically enroll employees for health coverage in a cafeteria plan as long as employees have an opportunity to decline coverage each plan year. [July 2002] IRS Issues Guidance on Health FSA in Asset Sale
The IRS recently issued guidance on dealing with a health Flexible Spending Arrangement (FSA) in an asset sale, confirming that employees transferred to the buyer may continue coverage under the health FSA without interruption. [July 2002] Lose Weight on the IRS
The IRS has ruled that participation in a weight-loss program as treatment for a disease or diseases diagnosed by a physician - including obesity - is a deductible medical expense, and thus reimbursable under a health flexible spending account [May 2002] Protecting Patient Information: A Whole New Ball Game
In 1996, Congress passed the Health Insurance Portability and Accountability Act (HIPAA). This far-reaching legislation affects employers, health plans and others, and provides numerous safeguards and procedures for maintaining and administering group health plans. When employers or plan administrators hear "HIPAA," they typically think - certificates of creditable coverage, special enrollment rights or nondiscrimination rules. [March 2002] Supreme Court Rules on Health Plan Recovery Provisions
The Supreme Court recently handed down a decision that effectively prevents ERISA welfare benefit plans from recovering money paid out in health care benefits to participants, even when the participant later receives tort damages from a third party responsible for his or her injuries. [February 2002] Benefits Issues on 2002 Agenda
The 2002 legislative session is underway, and a variety of benefits-related issues are on the table. The approaching elections will affect discussions of key issues — patients’ rights, Medicare reform and other health care areas that are particularly sensitive during campaign season. [February 2002] Too Much of a Good Thing: An Invalid Health Care Arrangement
The IRS recently issued a revenue ruling addressing the validity of a health care arrangement under which certain health care payments were excluded from an employee’s gross income. [February 2002] Employers Shifting More Health Care Costs to Employees
Faced with a new round of double-digit health care benefit cost increases in 2002, more than half (56 percent) of employers say they will raise employee contributions by as much as or more than their expected cost increases. In addition, more than 70 percent of employers are considering benefit reductions or an increase in employee copays over the next 12 months, according to Watson Wyatt's Health Care Costs 2002 Survey. [November 2001] Defined Contribution Health Care: The Next Big Idea?
Every decade or so, employer-sponsored health care benefits seem to undergo a sea change. In the 1970s, we faced ERISA; in the early 1980s, flex emerged; late in the 1980s and into the 1990s, managed care moved into the mainstream. [October 2001] Bill Pending in Congress on Genetic Discrimination
The mapping of the human genome and related scientific developments have prompted concerns about the potential abuse of genetic information, including discrimination by health insurers and employers on the basis of such information. [October 2001] Patients' Rights Moves Forward
The patients’ rights debate took another step forward in August when the House approved a revised version of the Bipartisan Patient Protection Act (H.R.2563). [September 2001] Mental Health Parity Returns to Agenda
The Mental Health Parity Act of 1996 is scheduled to expire September 30, but parity supporters are hoping new, broader legislation will be enacted before then. [September 2001] EEOC to Rethink ADEA's Application to Retirees
The Equal Employment Opportunity Commission (EEOC) has backed off from its previous position that reducing or eliminating retiree medical benefits on the basis of age or Medicare-eligibility violates the Age Discrimination in Employment Act (ADEA). [September 2001] Senate Approves Patient Protection Legislation
When the Democrats took control of the Senate in June, the patients' bill of rights moved straight to the top of the legislative agenda. Most observers expected a lengthy debate with numerous amendments, but the Senate approved the Bipartisan Patient Protection Act (S.1052) by a vote of 59-36 on June 29.
[August 2001] IRS Finalizes Cost Maintenance Requirements for Excess Asset Transfers for Retiree Health Accounts
The IRS has released final regulations dealing with the requirement that employers that transfer excess assets from their defined benefit plan to a §401(h) account pursuant to §420 must provide retiree health benefits that satisfy a minimum cost standard for five years after the transfer. [August 2001] Court Rules That Not Covering Prescription Contraceptives Violates the PDA
In a case of first impression, a federal district court in Seattle ruled in Erickson v. Bartell Co. that an employer violated the Pregnancy Discrimination Act (PDA) by not covering prescription contraceptives under the group health plan. This ruling specifically affects employers in the western district of Seattle—but may reveal a trend in cases to come. [July 2001] Court Ruling Threatens Employer-Sponsored Retiree Medical Benefits
Without much fanfare—but with potentially significant implications for retiree medical plans—the District Court for the Western District of Pennsylvania ruled in Erie County Retirees Assoc. v. County of Erie, Pennsylvania, that the county's retiree medical plan failed the equal benefit/equal cost safe harbor under the Age Discrimination in Employment Act (ADEA). This is the first court to apply the equal benefit/equal cost safe harbor under the ADEA. [June 2001] Liability Remains the Sticking Point on Patients' Bill of Rights
Congress is discussing the Patients' Bill of Rights again, and expanded liability is still the most contentious issue. Liability provisions, which allow patients to sue their health plan if delayed or denied care causes injury or death, have appeared in many recent patients' rights bills, including the one that passed the House in 1999. [May 2001] eHR/Benefits Offers Web Tools to Manage Health and Welfare Benefits
Watson Wyatt recently launched eHR/Benefits, a new service that includes a customizable web portal to facilitate the administration and management of health and welfare benefits. eHR/Benefits brings together our benefits, communication and technology expertise to offer clients strategic consulting services in the areas of plan design and pricing, vendor management and employee communications - all in one seamless service. [May 2001] Facing the Music on Medicare Reform
President Bush and Congress are under tremendous pressure to create a prescription drug benefit for Medicare beneficiaries. Escalating drug prices, Medicare+Choice withdrawals and other factors have stepped up demand for a drug benefit. [May 2001] ERISA Preempts State Laws That Automatically Revoke Ex-Spouse Beneficiary Designations
The Supreme Court has ruled that ERISA preempts state laws that automatically revoke spousal beneficiary designations after a divorce. The ruling applies to all ERISA-covered plans, such as life insurance, retirement and most types of executive deferred compensation plans. [May 2001] No Relief from the Supreme Court on the ADEA and Retiree Health Plans
Last August, in Erie County Retirees Assoc. v. County of Erie, Pennsylvania, the Third Circuit Court of Appeals held that the Age Discrimination in Employment Act (ADEA) applies to retirees and retiree health plans. As long as that ruling stands, employers in Pennsylvania, New Jersey, Delaware and the Virgin Islands who offer their over-65 retirees less coverage than their under-65 retirees may be violating the ADEA (unless their plan meets the safe harbor test). [April 2001] President Offers ''Helping Hand'' with Prescription Drugs
Figuring out the best way to provide affordable prescription drugs to America's seniors has been hotly debated for several years, and recent escalating drug costs have focused even more attention on the issue. [March 2001] HHS Releases Final Privacy Rules
HHS issued regulations governing the use and disclosure of personal medical information. These complex and controversial regulations constitute the first comprehensive federal standards for protecting the privacy of health information. [February 2001] Cafeteria Plans: IRS Issues One Final Change of Election Regulation
On January 10, 2001, the IRS issued final regulations relating to the circumstances under which employees may change elections under a cafeteria plan. [February 2001] Prescription Contraceptives and the Pregnancy Discrimination Act
The EEOC recently expressed an opinion in a "Commission Decision" that could affect many employers' health plans. [February 2001] Interim Final Regulations on HIPAA Nondiscrimination Provisions
Under HIPAA, group health plans and issuers may not discriminate against participants or beneficiaries based on health status. [February 2001] Bona Fide Wellness Programs Finally Defined
HIPAA requires portability and continuity of health coverage, and prohibits discrimination in health coverage based on health status. [February 2001] IRS Proposes Cost Maintenance Requirements for Excess Asset Transfers for Retiree Health Accounts
The IRS released proposed regulations dealing with the requirement that employers that transfer defined benefit excess assets to a §401(h) account pursuant to §420 must provide retiree health benefits that satisfy the minimum cost requirement for a five-year period after the transfer. [February 2001] New Political Environment Will Affect Benefits Legislation
Despite an end-of-the-session push, the 106th Congress failed to enact benefits-related legislation. So bipartisan pension reform, patients' rights, Medicare reform, stock options and other benefits-related issues are all waiting for the 107th Congress. The new Congress was sworn in on January 3, ushering in a new political environment that could significantly affect benefits-related legislation. [January 2001] Court Rules that Failure to Cover Infertility Treatments Does Not Violate the ADA
On October 2, 2000, in Saks v. Franklin Covey, a district court in New York dismissed Rochelle Saks' claims against her employer, Franklin Covey, for failure to cover specific infertility treatments. Saks sued Franklin Covey when its self-insured plan failed to cover costs for her intrauterine insemination and in vitro fertilization.
[December 2000] DOL Issues Final Regulations on Claims Procedures
The Department of Labor (DOL) recently issued final regulations on claims procedures for employee benefit plans governed by ERISA. Although these regulations focus mainly on group health and disability benefit plans, some changes apply to pension plans and other welfare benefit plans. [December 2000] Participant in Health FSA Wins Denied Claim
In Grande v. Allison Engine Co., an employee successfully sued his employer and health plan for denying a claim he submitted to his health flexible spending account (FSA). [November 2000] Staying@Work 2000: Improving Workforce Productivity
The challenge of attracting and retaining employees in today's environment of record low unemployment and an overall labor shortage has figured prominently in recent news. But an equally important issue that gets much less press is workforce health and productivity—ensuring that employees are able and willing to work to their full potential.
[November 2000] Appeals Court Holds That ADEA Applies to Retiree Health Plan
In Erie County Retirees Assoc. v. County of Erie, Pennsylvania, the Third Circuit Court of Appeals held that the Age Discrimination in Employment Act applies to retirees and retiree health plans. This holding is contrary to the view of most employers, and if the decision stands, many of them could find themselves in violation of the ADEA. [October 2000] Prescription Drug Debate Moves to Forefront
The Medicare prescription drug debate shot to the top of the legislative agenda earlier this summer, when both the House and Senate debated prescription drug legislation. The House approved a bill in June. Senate Democrats forced a floor vote on a competing prescription drug proposal, and members of the Senate Finance Committee met behind closed doors to discuss prescription drugs and other Medicare reform issues. In addition, President Clinton unveiled estimates of a much bigger budget surplus than was formerly projected and now wants to set aside $250 billion for prescription drugs [August 2000] Health Care Costs: Where Will They Be in 2001?
Watson Wyatt and the Washington Business Group on Health recently conducted a mini-online survey to capture an early picture of how health care costs are shaping up for the year 2001. Sixty-one large employers representing more than 1.7 million full-time employees responded to the survey. [August 2000] Debate Rages over Prescription Drug Coverage
Adding prescription drug benefits to Medicare has been the central issue in the recent Medicare reform debate [June 2000] Best Practices in Health Plan Vendor Management: Achieving Employee Satisfaction
Although benefit managers are concerned about how much their health plans cost, they are even more concerned about employee satisfaction. [June 2000] Retiree Medical Accounts: New Interest in an Old Idea
Although the account approach has been around since the 1980s, relatively few employers have adopted it. [May 2000] Health Plan Liability Still in the Spotlight
Whether patients should be allowed to sue their health plans has been a key issue in recent debates in Congress, state legislatures and the courts. Last year, the House approved a health care reform bill allowing patients to sue their health plans in state court; at least 35 states debated laws that would permit such suits; and lawsuits were filed in courts across the country. [April 2000] Retiree Medical and Medicare+Choice Plans: Planning for an Uncertain Future
Three years have passed since the Balanced Budget Act (BBA) of 1997 launched the Medicare+Choice experiment. For those employers who have not already done so, now is a good time to take a hard look at the advantages and disadvantages of incorporating Medicare+Choice plan options within their retiree medical program. [April 2000] Delivery System Alignment: A Health Care Benefits Strategy for the Next Five Years
We know that tomorrow's health care picture—including treatments, costs and benefits—will be quite different from the one we see today. Gene therapy and DNA libraries may change the way we think about diseases. New medical technologies will introduce new possibilities. [March 2000] Putting Employees in Charge
Results from the Fifth Annual Watson Wyatt/Washington Business Group on Health/Healthcare Financial Management Association Survey Report on Purchasing Value in Health Care [March 2000] Looking to Improve HR Outcomes? Try Internal Benchmarking
Your firm has completed the cost management basics: managed care, carve-outs, flex benefits and a paid time off (PTO) plan. What’s your next step for further improving benefit costs, absenteeism, workers’ compensation experience and employee health? [January 2000] Participate in Watson Wyatt’s Mini-Survey on 1999 Enrollment Season
1999 benefits enrollment is over! Time to breathe a sigh of relief and tell us about your experiences. [January 2000] Medical Privacy Regulations May Renew Debate
When Congress missed its August 21, 1999, deadline for enacting medical privacy legislation, that gave the Department of Health and Human Services (HHS) the green light to issue rules protecting the privacy of electronic health information [December 1999] Retiree Health Care: Looking Ahead
Employers' retiree health programs are somewhat successful in meeting their number one objective—supporting employees' financial needs in retirement—according to Retiree Health Care Strategies, a new survey conducted by Watson Wyatt and the Washington Business Group on Health (WBGH). [December 1999] New Research in Human Capital, Health & Productivity and Pay Practices
This article discusses four recent studies conducted by Watson Wyatt Worldwide in the areas of human resources practices, disability management, executive pay and the effective use of strategic rewards. [November 1999] House Approves Managed Care Reform Bill
Although House approval is significant, managed care reform is far from being a done deal. [November 1999] Stop and Go on Health Care Reform
The Senate passed the Patients’ Bill of Rights Plus Act (S.1344) on July15, 1999. The vote on the Republican-sponsored bill capped off months of political posturing and negotiations between Democratic and Republican leaders. Predictably enough, the debate highlighted contentious policy divisions: patient protection versus cost-containment, state versus federal regulation of health insurance, and access to health care versus quality standards. [September 1999] Supreme Court Narrows Application of ADA
On June 22, 1999, the Supreme Court ruled in three cases dealing with the effect of the Americans with Disabilities Act (ADA) on employees who can correct or compensate for their impairments. Ruling that the ADA was not intended to protect workers with treatable impairments or medical conditions such as bad eyesight or hypertension, the Court narrowed the application of the ADA. [August 1999] President Releases Medicare Reform Plan
President Clinton has released a Medicare reform proposal aimed at safeguarding the program’s financial solvency until 2025. The proposal would devote 15 percent of budget surpluses over the next 15 years — almost $800 billion — to Medicare. [August 1999] Health Care Reform Rx: A Dose of the Market
The Senate recently completed debate over the delicate balancing act between the role of regulation and the market in the U.S. health care system. Senate Republicans ultimately voted to impose a limited set of new regulations on certain managed health care plans. [August 1999] Smoking Cessation Programs: Not Just for Your Good Health Anymore!
Citing reports from the Surgeon General on the dangers of smoking, the IRS has revoked a 20-year old revenue ruling, for the first time allowing taxpayers to deduct their costs for smoking cessation programs as medical expenses. [August 1999] Privacy Legislation Deadline Looming on Capitol Hill
As the August 21 deadline for enacting privacy legislation approaches, medical records privacy is increasingly playing center stage on Capitol Hill. It's going to be a tough debate to resolve in such a narrow time frame—medical records privacy is a complicated and contentious issue [July 1999] Crisis in Yugoslavia Raises USERRA Issues for Employers
As the conflict in Yugoslavia continues, questions regarding employment and benefits rights for returning veterans may arise. The Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA) governs many of the reemployment, health care, defined contribution and other employment issues for these workers. [July 1999] Advanced Medicine for Aging Populations
Population aging poses health care challenges, given that consumption of medical goods and services increases with age. [July 1999] Germany, the Netherlands and Japan: The Elder Statesmen of Long-Term Care
After more than a year of work, the National Bipartisan Commission on the failed to achieve consensus on a reform plan and threw in the towel in mid-March [June 1999] Health Care Costs:Up, Down and Around the World
Among the most welcome news to employers over the past several years has certainly been the dramatic slowdown in the growth rate of health care spending [May 1999] Where in the World Is Health Care Reform?
U.S. interest in other nations' health care systems peaked during the national health care reform debate at the start of the decade, as analysts looked to Canada's single-payer system, and to Germany and Japan's mandated social insurance systems as potential reform models [April 1999] Health Care Quality: Déjà Vu
When the 106th Congress convened in early January, the health care quality debate got off to a quick start, picking up almost where it left off last year. Key figures from last year's debate are back—and their bills remain largely the same as well [March 1999] NMHPA Notice Requirements
The Newborns’ and Mothers’ Health Protection Act of 1996 (NMHPA) was enacted to provide minimum hospital stays for mothers and newborn children following childbirth. The NMHPA amended the Internal Revenue Code, ERISA and the Public Health Service Act (PHSA). The IRS, Department of Labor (DOL) and Department of Health and Human Services (HHS) share oversight and enforcement. On September 9, the DOL issued an interim rule amending the summary plan description (SPD) requirements for ERISA-covered group health plans regarding the NMHPA. [December 1998] Health Care Debate: Heading for Consensus or Standoff?
Health care quality has ranked high on the legislative agenda since the 105th Congress convened in early 1997. And interest in health care quality legislation isn't likely to waver, with Election Day approaching and polls showing that many Americans support reforms (as long as they don't significantly increase costs). [July 1998] Market-Based Restructuring: Employers' Health Care Strategies
This article is the second of a two-part series. Part one, in last month's Insider, examined the health care market's lessons for policymakers, looking at the separate influences of private and public forces. It concluded that in the near future, market forces would continue to dominate change in the health care market, and that large employers and purchasing coalitions are the engines driving that change. [July 1998] Unmanaged Competition: A Vehicle for Health Care Market Reform?
This article is the first of a two-part series. Part one recaps the successes and limitations of market-based restructuring. Part two, in next month's Insider, will look at the implications for employers. [June 1998] Democrats Introduce Their Own Patients' Bill of Rights
Key House and Senate Democrats have introduced their own health care quality bill. The Patients' Bill of Rights Act (S.1890,1891/H.R.3605) is based on recommendations by President Clinton's Advisory Commission on Quality and Consumer Protection in the Health Care Industry. [May 1998] Physician Preferences and Health Plan Selection
In recent years, Watson Wyatt has developed the Value Creation ProcessTM, which helps employers identify health plans that offer the greatest value to all interested parties. [April 1998] Benefits-Related Legislation in 1998: All Talk?
Debates on health care, Social Security and retirement income are expected to continue when the 1998 congressional session opens in late January, but will it be all talk and no action? [January 1998] Quality Commission Releases Patient Bill of Rights
In November, President Clinton''s Advisory Commission on Quality and Consumer Protection in the Health Care Industry released a bill of rights, which outlines seven patient rights along with a list of patient responsibilities. [January 1998]
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