Traps for the Unwary: Is your Company’s Severance Arrangement Subject to ERISA?

Severance arrangements generally provide for cash payments to an employee whose employment is involuntarily terminated and may include certain benefits, such as subsidized medical coverage and outplacement assistance.

Severance arrangements take a variety of forms. Formal severance plans often are used as a retention tool for employees across the board with no individual negotiations. In our experience, companies with formal severance plans typically treat them as ERISA plans.

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ERISA at 45: Health & Welfare Plan Compliance

In our third installment of ERISA at 45, Los Angeles partner Summer Conley speaks with Sarah Bassler Millar, Chicago partner and Chair of Drinker Biddle’s Employee Benefits and Executive Compensation Group, about the evolving landscape of health and welfare plan compliance, the impact these changes have on employers, and what will require their careful attention in the coming years.

Visitors can also download the podcast.

ERISA at 45: Health & Welfare Plan Litigation

In our next installment of ERISA at 45, Chicago partners Kim Jones, an ERISA litigator, and Sarah Bassler Millar, Chair of DBR’s Employee Benefits and Executive Compensation Group, discuss how the landscape of health and welfare plan litigation has changed over the past 45 years, and identify new trends in litigation involving excessive fees, mental health parity, cross-plan offsetting, and pharmacy benefit managers.

Visitors can also download the podcast.

IRS Notice Expands Preventive Care Available under HDHPs

In Notice 2019-45 (the Notice) the IRS expands the definition of preventive care available under a high deductible health plan (HDHP) to include additional medical services and items for an individual with certain chronic conditions. This Notice was issued in response to President Trump’s June 2019 Executive Order on “Improving Price and Quality Transparency in American Healthcare to Put Patients First.” This Order directed regulatory agencies to issue guidance on a number of initiatives as a means to promote health care price transparency and enhance consumer-driven health care, such as health savings accounts (HSAs). The Notice responds to the Order’s directive that the IRS provide guidance expanding the definition of preventive care for participants with chronic conditions.

Individuals may contribute to a HSA if they are covered by a HDHP and have no disqualifying health coverage. To qualify as a HDHP, a health plan generally may not provide benefits, except for preventive care services, for any year until the participant satisfies the minimum deductible for that year. The Notice specifically expands the definition of preventive care that may be covered by a HDHP to include certain medical care services and items for chronic conditions. Based on the guidance, plan sponsors may amend their HDHPs to cover additional medical services and items for an individual with certain chronic conditions before the individual meets the HDHP deductible. Note that this expanded definition only applies for purposes of HDHPs and does not affect the definition of preventive care as used under the Affordable Care Act (ACA) rule prohibiting cost-sharing for network preventive care.

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Enforcement Delay: Agencies to Reconsider Impact of Rule Applying Drug Manufacturer Coupons to ACA Cost-Sharing Limits

On August 26, 2019, the Internal Revenue Service (IRS), Department of Labor (DOL), and Department of Health and Human Services (HHS), collectively the “Agencies,” issued a joint FAQ announcing their intent to delay enforcement of a recent HHS final rule that would require group health plans and issuers of health insurance coverage to count certain drug manufacturer coupons toward the maximum annual out-of-pocket cost-sharing limit under the Affordable Care Act (the maximum out-of-pocket or MOOP limit). For plan years beginning in 2020, the MOOP limit on cost sharing is $8,150 for self-only coverage and $16,300 for other than self-only coverage. Drug manufacturers’ “coupons” are a form of cost-sharing assistance that offsets the amount of a participant’s copayment or coinsurance for a brand name drug.

The MOOP limit under ERISA and the Internal Revenue Code incorporates the HHS rule, thereby applying it to all non-grandfathered group health plans, self-funded or insured. The HHS rule states that plans and issuers are permitted to exclude the value of such coupons for specific prescription brand drugs from counting toward MOOP limits when a medically appropriate generic equivalent is available. However, based on language in the preamble to the HHS rule, health plans would have to count coupons toward MOOP limits when a medically appropriate generic drug is not available.

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Benefits and Breakfast: Latest Developments in Welfare Plans

Missed last month’s Benefits & Breakfast meeting on the latest developments in welfare plans in Chicago, Los Angeles and Philadelphia? We have you covered!

Listen to recordings for each meeting, where we covered the following topics:

  • New Health Reimbursement Account (HRA) Regulations – Will a standalone HRA work for you?
  • Recent Welfare Plan Litigation – Are you prepared to defend a lawsuit based on your current plan documentation and procedures?
  • Privacy – Are changes to the HIPAA Privacy Rule in the future? Will new California privacy rules affect you?
  • Health Plan Executive Order – What is coming for HSAs, FSAs, and health care price transparency initiatives?

Recordings: Chicago | Los Angeles | Philadelphia