Post-Election: Health Care Reform Here to Stay

Post-Election: Health Care Reform Here to Stay

November 27, 2012

James R. Napoli

[email protected]

© 2012 Proskauer. All Rights Reserved.

2

Welcome and Introduction

• The Political Question

• Impact on Employers/Plan Sponsors

• Tax Provisions under ACA Relevant to Employers

• Employer Reporting Obligations Under ACA

• Litigation Risks

• Questions


3

The Political Question

• Chief Justice Roberts:

• The November election will become a referendum on the Act

“…we possess neither the expertise nor the prerogative to make policy judgments. Those decisions are entrusted to our Nation’s elected leaders, who can be thrown out of office if the people disagree with them. It is not our job to protect the people from the consequences of their political choices.”

4


• President Obama and Democratic Candidates ran on the positive aspects of the Act:Coverage to Age 26 Elimination of Lifetime and Annual LimitsAbolition of pre-existing conditionsAccess for individual and small employers through

Exchanges Subsidies for those who can least afford coverage

5


• Governor Romney and Republican Candidates ran on the negative aspects of the Act: Governor Romney took a “Repeal and Replace” posture Constitutes a tax disproportionately applied to lower- and

middle-income earners Empowers federal regulators to dictate to employers and

individuals and the medical community Increased costs and deficits

66

The Political Question - Exchanges

• Types of Exchanges: State, Federally Facilitated, and Partnership

• All states to establish an Exchange by January 1, 2014

• 2017: States may allow large employers to enter Exchanges

• Exchange plans must offer “essential health benefits” at certain levels; must be community rated

• Federal subsidies will be available to help people buy coverage

• CBO expects 20 Million individuals utilizing exchanges by 2020

7

Exchange Options: As of September 2012

Data Source: Kaiser Family statehealthfacts.org

8

9

Impact on Employers/Plan Sponsors - Preventive Care Rules

• Non-grandfathered plans must provide preventive care without cost-sharing

• Initially applied to services with an "A" or "B" rating from the United States Preventive Services Task Force (immunization, screenings and preventative care for infants, children and adolescents, additional care for women)

• Later expanded by HHS to include all FDA approved contraceptives (effective for plan years starting August 1, 2012)

• HHS will permit employers "who, based on religious beliefs, do not currently provide contraceptive coverage in their insurance plan" until August 1, 2013, to comply

10

Impact on Employers/Plan Sponsors – Other Mandates (2013)

• Form W-2 reporting requirement (for the 2012 tax year)

• $2,500 limit on employee contributions to health FSAs (for plan years beginning in 2013)

• Requirement for employers to notify employees of the availability of health insurance exchanges (March 2013)

• Expansion of FICA in 2013 to include an additional 3.8% tax on the unearned income of high income individuals

• 0.9% Medicare payroll tax increase in 2013 on high income individuals

11


• The “pay-or-play” mandate

• Employer certification to HHS regarding whether its group health plan provides “minimum essential coverage”

• Increase in permitted wellness incentives from 20% to 30% (50% for tobacco cessation programs)

• For large employers (200+ employees), automatic enrollment of new employees in a group health plan (effective date unknown)

• 90 day limit on waiting periods

• Coverage under non-grandfathered plans for certain approved clinical trials

12


• Complete prohibition on annual dollar limits

• Guaranteed availability and renewability of insured group health plans

• Prohibition on preexisting condition exclusions

13

Impact on Employers/Plan Sponsors – Regulatory Uncertainty

• Guidance on nondiscrimination rules for non-grandfathered, insured plans

• Additional guidance and regulations on the preventive care rules Expect rules for women’s preventive services with respect to self-

insured plans of religious employers

• Guidance on “essential health benefits”

• Guidance on the “pay-or-play” mandate Definition of full time employee; Exclusions; Process

• Rules on automatic enrollment provisions

• Clarification regarding limits on cost sharing effective 2014

• Additional guidance on state Exchanges

14

Impact on Employers/Plan Sponsors – Audit Risk

• DOL, IRS and HHS audits will increaseAlready seeing audits of grandfathered status by

DOL under the Act

• DOL efforts focus on increasing employer compliance rather than assessing penalties in early years

15

Insurance Mandates and Market Reforms

• Failure to comply with the Act’s insurance mandates and market reforms (such as coverage of adult children, elimination of lifetime limits, etc.) may subject the employer to an excise tax $100 per day per affected individual

Limited to the lesser of $500,000 or 10% of employer’s healthcare costs for the prior tax year

Exceptions: Failures due to reasonable cause that are corrected within 30 days

after the plan knew or should have known about the failure Employer did not know the failure occurred and could not have known

by exercising reasonable diligence


16

IRS Form 8928 Reporting

• Employers are required to self-report failures to comply with COBRA, HIPAA, GINA, MHPAEA, and other federal laws Effective January 1, 2010 Updated in 2011 to reflect PPACA mandates

• Penalty is $100/day per affected individual

• Penalty will not apply if the failure is timely corrected and was not caused by willful neglect

• Exceptions for small employers: less than 50 employees on business days in prior year


17


• Once a plan is notified of an IRS examination, “reasonable cause” exception is limited

• Penalties can be up to $2,500 per affected individual for de minimis violations, or $15,000 per affected individual for violations that are not de minimis


18


• If required, Form 8928 must be filed no later than the company's income tax return due date for the applicable year (regardless of any extensions) However, an automatic 6-month extension may be obtained by

filing Form 7004 by the regular due date (along with the taxes)

• A late filing may result in a penalty of 5% of the unpaid tax per month (up to 25%) Additional penalties may apply if the tax is not timely paid

(.5% per month, up to 25%), unless failure is due to reasonable cause and not willful neglect


19

Notice of Availability of Insurance Exchange

• Effective March 23, 2013, employers must provide notice of the existence of the health insurance exchange Notifies employees of the potential eligibility for federal

assistance if the employer's health plan is “unaffordable” and the possibility that the employer may not contribute to the cost of coverage purchased through an Exchange


2020

Coming Soon: Transitional Reinsurance Program

• Assessment on carriers and TPAs (on behalf of self-funded plans)• Generally applies to all group health plans – no exceptions for

non-ERISA plans (e.g., governmental or church plans)

• Applies on a per-member basis

• Does not apply to HIPAA-excepted benefits

• Applies to 2014-2016 plan years

• Intended to stabilize premiums in the individual markets

• Additional employer recordkeeping and cost requirements


21

Non-Discrimination Rules

• Delayed until guidance released

• Will apply to non-grandfathered, fully-insured plans after release (already apply to self-insured)

• Prohibits discrimination in favor of “highly compensated employees” with respect to eligibility & benefits Note: Testing Performed on a Controlled Group Basis

• Penalty: up to $500,000 under ACA


22

Comparative Effectiveness Fee

• Effective for plan years ending after September 30, 2012 and before October 1, 2019

• $2 fee per member per year Paid by insurers if insured plan Paid by plan sponsor if self-funded plan

• Fee reduced to $1 for plan years ending before October 1, 2013

• For plan years beginning after September 30, 2014, fee increases based on national health expenditures

• Fee supposed to sunset after 2019


23

Comparative Effectiveness Fee

• Fee applies separately to insurers and plan sponsors An HRA that is integrated with an insured group health plan is

subject to the fee, as is the insurer, even though the HRA and the insured plan are maintained by the same plan sponsor

• Insurers and plan sponsors must pay these fees annually on Form 720, which is due by July 31 of each year

• A return will generally cover policy or plan years that end during the preceding calendar year

• Form 720 may be filed electronically


24

W-2 Reporting of Health Costs

• Beginning with 2012 Forms (i.e., Forms issued in January 2013), employers must report aggregate cost of health coverage

• Small Employer Exception: those issuing less than 250 W-2’s in prior year exempt until further guidance issued

• Reportable cost includes the entire cost of the coverage (without any reduction for employee contributions)

• Cost of coverage is determined under rules similar to those for determining COBRA premiums (excluding 2% administrative charge)


25

W-2 Reporting of Health Costs

• Employers could be subject to significant penalties each year for failing to properly report the cost of employer-sponsored coverage

• Penalty of $100 per Form W-2, capped at $1.5 million per year For failures corrected within 30 days, the penalty is reduced

to $30 per Form W-2, capped at $250,000 for the year For failures corrected after 30 days but on or before August

1, the penalty is $60 per Form W-2, capped at $500,000 for the year


26

W-2 Reporting Tips

• Use a “reasonable method” of valuing coverage for terminated employees Reporting not required if an employer accommodates a former

employee’s request for a W-2 prior to end of the year

• Not necessary to use the same method for every plan, but use the same method with respect to each employee receiving coverage under a plan

• Reportable costs must reflect any increase or decrease in cost for the year If an employee changes coverage during the year, the reportable

cost must account for the change in coverage


27

W-2 Reporting Failures

• Employers could be subject to significant penalties each year for failing to properly report the cost of employer-sponsored coverage

• Penalty of $100 per Form W-2, capped at $1.5 million per year For failures corrected within 30 days, the penalty is reduced

to $30 per Form W-2, capped at $250,000 for the year For failures corrected after 30 days but on or before August

1, the penalty is $60 per Form W-2, capped at $500,000 for the year


28

Summary of Benefits and Coverage

• The Basics

• Final Rule effective September 23, 2012

• SBC cannot exceed four double-sided pages in length and must be “culturally and linguistically appropriate” Special rules for plan designs that do not fit the template

• SBC must be accompanied by the “uniform glossary” Available at www.healthcare.gov and www.dol.gov/ebsa/healthreform/

• HHS forms: http://cciio.cms.gov/resources/other/index.html#sbcug

• Upon renewal, an SBC need only be provided for the benefit option in which a participant is enrolled, unless other SBCs are requested

• SBC is in addition to Summary Plan Description requirement


29


• The Basics (cont.)

• The SBC requirement applies jointly to plans and carriers Carrier responsible for developing SBC for insured plan Employer responsible for developing SBC for self-funded plan

• A plan or carrier that willfully fails to provide an SBC is subject to a fine of up to $1,000 per offense Each failure with respect to a participant is a separate offense

• SBC may be included with other documents (e.g., SPD) as long as it is “prominently displayed”

• Premiums not required to be disclosed on SBC


30


• Timing of Initial Distribution

• Based on participants’ enrollment status

• For participants who are enrolling or reenrolling at open enrollment (including late enrollees), the SBC must be provided before the first day of open enrollment beginning on or after September 23, 2012

• For participants who enroll other than through open enrollment (including newly eligible employees and special enrollees), the SBC must be provided starting on the first day of the plan year beginning on or after September 23, 2012


31


• Methods of Distributing the SBC The SBC requirement is satisfied if a single SBC is provided to an

employee and spouse known to reside at the same address The SBC requirement may be satisfied electronically, provided

the distribution complies with ERISA’s electronic disclosure rules

• Changes to the SBC If a material modification is made mid-year that affects the

content of the SBC, and it’s not reflected in the most recent SBC, the plan or carrier must provide enrollees 60 days’ advance notice of the change

Plans are not required to distribute a new SBC 60 days in advance of changes made in connection with the renewal


32


• Providing the SBC

• SBC must be provided at the following times:Upon request (ASAP, but no later than 7 days)Within 90 days of enrolling under a HIPAA special

enrollmentWith open enrollment materials (or, if no materials are

provided, by the date the participant is eligible to enroll)

If the SBC cannot be timely provided because the plan terms have not been finalized, the SBC must be provided within 7 days of finalizing the plan terms


33


• Content of the SBC Uniform definitions of standard insurance and medical terms Coverage description and cost sharing for certain benefits The exceptions, reductions, and limitations of the coverage The renewability and continuation of coverage provisions Two coverage examples Statement that the SBC is only a summary and to consult the

plan Contact information for questions and obtaining plan documents Web address for obtaining Rx information, a list of network

providers, and the “uniform glossary” Statement as to whether the plan provides “minimum essential

coverage” (2014)


34

$2,500 Health FSA Limit

• Effective for plan years beginning in 2013 Limits annual employee contributions to $2,500 Indexed to the CPI starting in 2014 Does not limit employer contributions that are non-cashable

• To Do: Communication to begin in 2012 (2nd half) Plan amendments recommended by start of 2013 plan year

However, an amendment adopted by the end of 2014 may apply retroactively if the plan has complied with the $2,500 limit

• Reminder: OTC drugs no longer reimbursable under FSA/HRA/HSA without a prescription


35

Additional 0.9% Medicare Payroll Tax

• Effective January 1, 2013Under ACA, the employee portion of the FICA hospital

insurance (HI) payroll tax is increased by 0.9% for employees with wages in excess of $200,000 ($250,000 for married couples filing jointly) Example: the current 1.45 percent HI tax rate applies to wages

up to $200,000/$250,000, and a 2.35 percent tax rate applies to any wages over those amounts

The $200,000 and $250,000 thresholds are not indexed Note: the 0.9% increase is not applicable to the employer’s

portion of the HI tax


36

Additional 0.9% Medicare Payroll Tax

• If the employer fails to withhold the additional 0.9% tax on wages in excess of $200,000, the employer will be liable for the taxes that were not withheld If the employee ultimately pays the tax, the employer

will no longer be responsibleHowever, the employer will be liable for any penalties

that may result from its failure to withhold correctly


37

Elimination of tax deduction for RDS payments

• Retiree Drug Subsidy – federal program that provides tax-free contribution to employers for up to 28% of annual retiree drug costs

• Before ACA, employers could deduct their entire retiree drug expense, including costs they paid using the tax-free government subsidy

• However, starting in 2013, employers can no longer take a tax deduction for the government-subsidized portion of prescription drug expenses Accounting rules may require employers to include the present

value of the future taxes as a current liability prior to 2013


3838

Employer “Pay-or-Play” Mandate

• In 2014, the pay-or-play mandate requires employers of 50 FTE or more to offer quality, affordable health insurance coverage to full time employees (30 hours per week or 130 hours per month) and their families

• Failure to offer such coverage potentially subjects the employer to a tax penalty for a given month if a full time employee receives a federal premium tax credit and is enrolled in coverage through an Exchange


3939

What are the Pay-or-Play Penalties?

• Employers who “opt out” of providing benefits

• Employers who do not provide health coverage to all full time employees (and their dependents) are penalized• If at least one full time employee (30+hrs/wk or 130+ hrs/mo) is

eligible for, or receives, a tax credit and enrolls in exchange coverage, the employer is subject to an annual penalty of $2,000 × all full time employees (except for the first 30)

• Penalty is assessed monthly (i.e., $167.67 per full time employee per month)


4040

What are the Pay-or-Play Penalties?

• Employers who provide “unaffordable” coverage

• Coverage is affordable only if the premium for single coverage under the employer’s lowest cost plan with at least a 60% “actuarial value” does not exceed 9.5% of household income (or W-2 wages)

• Annual penalty is the lesser of $3,000 for each full time employee who receives a tax credit and enrolls in exchange coverage, or $2,000 multiplied by all full time employees (subtracting first 30)• Penalty is assessed monthly (i.e., $250 per subsidy-receiving full

time employee per month)


4141

Determining Full Time Employee Status For Purpose of the Pay or Play Tax

• “Look-back/stability period safe harbor” method

• The employer selects a 3-12 month “measurement” period to determine which employees averaged at least 30 hours per week

• Employee will be treated either as full time or not full time during the subsequent “stability period”, regardless of hours worked

• Stability period is the longer of 6 months or the measurement period


4242

Variable Employees & Full Time Employee Status

• A Variable Employee: On start date, it cannot be determined whether employee is expected work on average at least 30 hours per week

• Initial Measurement Period of Between 3 and 12 months Assess average during Initial Measurement Period Assessment is then used for stability period that is the same as

for ongoing employees

• Use of Administrative Period: can use an “administrative period” but total can not exceed 13 months (plus the remainder of the month if anniversary falls in middle of month)


4343

Coordination with 90-day Waiting Period Limit

• An employer will not be subject to a penalty for the first three months following an employee’s date of hire

• Coordinates with 90-day limit on waiting periods, which is effective for plan years beginning in 2014


44

Other Tax Related Provisions

• Taxes Relevant to Individuals Increased excise tax on non-qualified HSA

distributions Increased itemized deduction limit for medical

expenses3.8% FICA tax on unearned income

• Individual Mandate and Federal Premium Tax Credits


45

Other Tax Related Provisions

• Relevant to Individuals:

• Effective January 1, 2011, the penalty for using HSA funds for non-medical purposes increased from 10% to 20%

• Effective January 1, 2014, the itemized deduction for medical expenses is allowed only to the extent expenses exceed 10% of AGI, increasing the threshold from 7.5% The 10% threshold does not apply to individuals age 65+ until

January 1, 2017


46

3.8% FICA tax on unearned income

• Effective January 1, 2013, FICA taxes are expanded to include a new 3.8% tax on the lesser of (A) net investment income, and (B) the excess of AGI over $200,000 ($250,000 if filing jointly)

• Example 1:

• Individual’s wage income: $200,000

• Investment income: $ 50,000

• Assume modified AGI is: $210,000

• Example 2:

• Individual’s wage income: $350,000

• Investment income: $ 50,000

• Assume modified AGI is: $325,000


no 0.9% wage tax;

3.8% tax paid on $10,000 (excess of AGI >$200K)

0.9% wage tax on $150k;

3.8% tax paid on $50,000 (investment income)

47

Litigation Risk

• Workforce Realignment

• Retiree-Only Plans

• Retiree Medical Exit Strategy

• IROs

• Claims to Mandated Benefits

• Whistleblower Actions

4848

Avoiding the Employer Mandate – Workforce Realignment

• How are employers responding to the Employer Mandate? Possible avoidance by reorganizing workforces

o Penalty determined based on “full-time” employeeso ACA “full-time” employees work at least 30 hrs per weeko Now, “part-time” employees work less than 40 hrs per weeko Employers may reduce employees’ hours below 30 per

week to avoid “full-time” employees under ACA

4949

Avoiding the Employer Mandate – Workforce Realignment (cont’d)

• Risks to workforce reorganization? Discrimination, retaliation as to benefits (ERISA § 510)

o No discrimination or retaliation “against a participant or beneficiary for exercising any right to which he is entitled”

o Or “interference with . . . any right to which [they] may become entitled”o If motivated by a “specific intent” to interfere with benefits

Same, as to a protected class (e.g., ADEA and Title VII)o Need to ensure that “adverse” employment action (i.e., cutback in hours)

does not disparately impact a protected class of employeeso Is there a legitimate business reason other than avoiding penalties?

Whistleblower action under ACAo Cannot take adverse employment action against an employee who

reports a violation of ACA to the employer or a government agency

5050

Avoiding the Employer Mandate – Workforce Realignment (cont’d)

• How to minimize risks?Determine affected employees and current benefit rightsAccomplish cost savings via plan design instead?

o Settlor function v. employment actiono Note: Still need to ensure plan design does not

disparately impact a protected class of employeesDocument legitimate business reasons for

reclassifications

51

Avoiding ACA Coverage Mandates– Retiree Only Plans

• ACA generally does not apply to “retiree-only plans”Retiree-only plans cover fewer than 2 active employees

• What if plan covers both active and retirees? ACA would apply to the entire planWould need to spin off the retirees into a separate

retiree only plan to avoid ACA would continue to apply to active plan, but would

not apply to the new retiree only plan.

52

Avoiding ACA Coverage Mandates– Retiree Only Plans (cont’d)

• Risks of spinning off a retiree-only plan? ERISA § 502(a)(1)(B): authorizes civil actions to recover

benefits due under a plan and enforce plan terms ERISA § 502(a)(3): authorizes civil actions to enjoin any

act or practice which violates ERISA or the terms of the plan or to obtain other “appropriate equitable relief” to redress violations of ERISA or the Plan

LMRA § 301(a): authorizes civil actions to enforce CBA terms

53

Avoiding ACA Coverage Mandates– Retiree Only Plans (cont’d)

• How can these risks be minimized? Thoroughly review the plan documents, etc. to

determine the benefits “promised” to retirees Thoroughly review the plan documents, etc. for valid

reservation of rights clauses Follow the prescribed method for amending the plan(s)

54

Taking Advantage of Exchanges – Retiree Medical Exit Strategy

• According to a recent study, ACA is a catalyst to employers exiting sponsorship of retiree medical plans

• One exit strategy is to use the exchanges as a “soft landing” for retirees who will lose employer-sponsored coverage

• Risks are similar to the retiree medical spin off: ERISA § 502(a)(1)(B): authorizes civil actions to recover benefits due

under a plan and enforce plan terms ERISA § 502(a)(3): authorizes civil actions to enjoin any act or

practice which violates ERISA or the terms of the plan or to obtain other “appropriate equitable relief” to redress violations of ERISA or the Plan

LMRA § 301(a): authorizes civil actions to enforce the terms of a CBA

55

Taking Advantage of Exchanges – Retiree Medical Exit Strategy (cont’d)

• How can these risks be minimized? Thoroughly review the plan document, SPD, CBA, if

applicable, and other plan related materials to determine the what benefits were “promised” to retirees

Thoroughly review the plan document, SPD, CBA, and other plan related materials to determine whether a valid reservation of the right to amend the terms and conditions of plan coverage exists

Consider a court action to bind retirees

56

External Appeals & IROs – Loss of Deferential Review?

Federal external appeals process (does not apply to grandfathered plans)

Group health plans, e.g., self-funded ERISA plans, are required to provide external review processes by Independent Review Organizations (“IROs”)

External review is final and binding

Will IROs be subject to ERISA’s fiduciary duties?

How does this impact the standard of review?

57

External Appeals & IROs – Process

• Contracting with IROs Plan may contract directly with IROs or through its TPAContracting IROs through a TPA does not relieve plan

fiduciaries of their oversight responsibilitieso Perform due diligence with respect to the selection of IROso Continued monitoring of IROs by appropriate plan fiduciaryo Indemnification issues

Keep fiduciary status in mind when contracting with IROs and setting up external appeals procedures

o Is an IRO and ERISA fiduciary?

58

External Appeals & IROs – Regulatory Uncertainty

• Safe harbor until further guidance DOL and IRS will not take enforcement action if external review

procedure meets certain standards Safe harbor allows use of state process or adoption of specific

procedures for the following:o Initiating an external reviewo Procedures for preliminary reviews to determining whether a claim is eligible

for external reviewo Contracting with at least 3 IROs that meet minimum requirements

2 IROs by January 1, 2012 3rd IRO by July 1, 2012

o A process for the random assignment of external reviews to an IROo Standards for IRO decision making (including that it be de novo) o Rules for providing notice of a final external review decisiono Process for expedited external review

59

External Appeals & IROs – Litigation Risk

• Possible litigation involving IROs Plan Administrator vs. IRO

o If IRO is a plan fiduciary ERISA § 502(a)(3): authorizes civil actions to enjoin any act or


ERISA § 502(a)(2): authorizes civil actions to recover liabilities associated with fiduciary breaches

o If IRO is not a plan fiduciary Breach of contract Professional negligence

60

External Appeals & IROs – Litigation Risk

• Possible IRO litigation scenarios: Plan Participant vs. IRO

o If IRO is a plan fiduciary ERISA § 502(a)(3): authorizes civil actions to enjoin any act or practice

which violates ERISA or the terms of the plan or to obtain other “appropriate equitable relief” to redress violations of ERISA or the Plan

o If IRO is not a plan fiduciary ERISA preemption?

Plan Participant vs. Oversight Fiduciaryo ERISA § 502(a)(3): authorizes civil actions to enjoin any act or


61

Claims for Mandated Benefits

• Possible claims for failure to provide mandated benefits:ERISA § 502(a)(1)(B): authorizes civil actions to

recover benefits due under a plan and enforce plan terms

ERISA § 502(a)(3): authorizes civil actions to enjoin any act or practice which violates ERISA or the terms of the plan or to obtain other “appropriate equitable relief” to redress violations of ERISA or the Plan

6262

Claims for Mandated Benefits (cont’d)

• Plan years beginning on or after September 23, 2010

No lifetime limits on essential health benefits

Minimum annual limits on dollar value of essential health benefits

Coverage of children to age 26 (grandfathered plans may exclude children eligible for other coverage)

No rescission except in case of fraud

No preexisting condition exclusions for children under age 19

• Plan years beginning on or after January 1, 2014:

No annual limit on dollar value of essential benefits, without exception

Coverage of children to age 26, regardless of other coverage

No preexisting condition exclusions

Waiting periods limited to 90 days

Changes to wellness plan incentives

• Mandates for grandfathered and non-grandfathered plans

6363

Claims for Mandated Benefits (cont’d)

• Additional mandates for non-grandfathered plans only:

Limits on deductibles and out-of-pocket maximums

Nondiscrimination for insured plans determined under IRC 105(h)

Internal and external appeal process rules

Coverage of in-network preventive services with no cost-sharing

Special rules on choosing primary care provider

No prior authorization for OB/GYN visits

Coverage of out-of-network emergency services using in-network cost-sharing and no prior authorization requirement

Coverage of treatment for those in clinical trials

64

ACA Whistleblower Protections

• ACA prohibits employers from taking adverse action against any employee because the employee: received a premium tax credit or subsidy for a health plan provided information to the employer or the federal or state

government concerning a violation, act or omission the employee reasonably believes to be a violation relating to Title I of the ACA

testified or is about to testify in a proceeding concerning such violation

assisted or participated, or is about to assist or participate, in such a proceeding

objected to, or refused to perform any activity or assigned task the employee reasonably believes to be such a violation

65

ACA Whistleblower Protections (cont’d)

• Standards of Proof Claim – employee must prove by a preponderance of the evidence that the

employee’s protected activity was a contributing factor to the employer’s adverse employment action

Defense – the employer can avoid liability only if it proves by clear and convincing evidence that it would have taken the same action in the absence of the employee engaging in the protected conduct

• Procedure Administrative Process – employee must file a complaint with OSHA within

180 days of the employee becoming aware of the retaliatory action. OSHA will then investigate the complaint and can order preliminary relief. Either party can appeal OSHA’s determination by requesting a hearing before an administrative law judge of the U.S. Department of Labor.

Federal Court – if the Secretary of Labor fails to issue a final decision within 210 days after a complaint is filed, or within 90 days after receiving a written determination from OSHA, the complainant may pursue the claim in federal court and may request a trial by jury

66

ACA Whistleblower Protections (cont’d)

• Remedies include reinstatement, back pay, special damages (including emotional distress damages), and attorneys’ fees

• Whistleblower protections and remedies are in addition to any other rights under federal or state law or under a collective bargaining agreement

• Whistleblower protections cannot be waived

67

Next Steps for Employers/Plan Sponsors

1. Review plan documents and SPDs

2. Address readiness for upcoming requirements

3. Consider all of your compliance options

4. Engage in the regulatory process

68

Questions?

Please type your question in to the Question area in your attendee control panel, OR click the “raise your hand” button in your control panel.

We will verbally read and respond to typed questions. If you select the “raise your hand” button, we will unmute your phone line individually and call you by name to let you know as soon as you are unmuted so that you may ask your question.

69

James R. NapoliSenior Counsel

• James R. Napoli is a Senior Counsel in the Washington, D.C. office of Proskauer Rose LLP, where he chairs the Firm’s Health Care Reform Task Force. He has experience litigating matters involving claims to benefits under pension plans, long-term disability plans, employer sponsored medical plans, and general insurance contracts. He has litigated matters involving claims for breach of fiduciary duty and fiduciary misrepresentation. The defense of actions raising ESOP valuation issues, defined contribution account balance valuation issues, executive compensation issues, ERISA §510 claims, and preemption issues have all been an important part of Jim’s experience. He also has brought claims for breach of contract, breach of fiduciary duty, and reimbursement on behalf of his ERISA party clients. Jim is also experienced in representing clients before the IRS, DOL and PBGC. He recently served as counsel of record on an amicus brief filed with the US Supreme Court on behalf of the American Benefits Council in the pending healthcare reform litigation. He also participated in the settlement of Chrysler’s nearly $10 billion retiree medical obligation with the UAW Retiree Medical Benefits Trust. In addition to his controversy practice, Jim counsels employers on all aspects of their employee benefit programs, including matters affecting tax-qualified retirement plans (such as 401(k) plans, cash balance pension plans, traditional defined benefit plans, and other retirement plan designs); executive compensation plans; and welfare benefit plans (including cafeteria plan, COBRA and other group health plan issues). Mr. Napoli is a frequent speaker on employee benefit matters, including a series of webinars and lectures on Healthcare Reform. He is the managing author of “The New Health Care Reform Law - What Employers Need to Know,” published by Thompson Publishing, and has authored numerous articles and other publications on employee benefit matters.

[email protected]

70

Proskauer’s Global Presence

The information provided in this slide presentation is not, is not intended to be, and shall not be construed to be, either the provision of legal advice or an offer to provide legal services, nor does it necessarily reflect the opinions of the firm, our lawyers or our clients. No client-lawyer relationship between you and the firm is or may be created by your access to or use of this presentation or any information contained on them. Rather, the content is intended as a general overview of the subject matter covered. Proskauer Rose LLP (Proskauer) is not obligated to provide updates on the information presented herein. Those viewing this presentation are encouraged to seek direct counsel on legal questions. © Proskauer Rose LLP. All Rights Reserved.

Post-Election: Health Care Reform Here to Stay

November 27, 2012

James R. Napoli

[email protected]


Post-Election: Health Care Reform Here to Stay

Documents

authorizes civil actions

external appeals

health care reform

group health plans

plan years ending

plan years beginning

adverse employment action

employee benefit matters