Fasten Your Seatbelt, Turblence Ahead

SBC and Glossary Final Rule

Overview

On August 17, 2011, the Departments of Health and Human Services (HHS), Labor, and Treasury (the “Agencies”) issued a set of proposed rules relating to the Summary of Benefits and Coverage (“SBC”) and Uniform Glossary requirements, copies of the uniform template documents and instructions, and guidance regarding the timing for issuance of summaries of material plan modifications. On February 9, 2012, the Agencies issued a Final Rule setting forth guidance on several topics covered in the August proposed rule..

Key changes

§ Delays effective date for 6 months -- for group plans with open enrollment periods, effective for open enrollment periods on or after 9/23/2012; for group plans without open enrollment period, effective for plan years on or after 9/23/2012; for individuals, effective on 9/23/2012.

§ No exclusion for self-funded groups

§ Eliminates premium from SBC form

§ Provides more flexibility for electronic distribution, including providing SBC via email or through paper notice (e.g., postcard). Notification about how to access SBC, availability of SBC in paper format upon request. Eliminates requirement to acknowledge receipt

§ Provides flexibility on requirement to provide SBC 30 days prior to renewal, by allowing SBC distribution after issuance of policy when renewal decision is not made 30 days prior

§ Eliminate requirement to provide two SBC versions (initial and final) due to elimination of premium and other format changes

§ Provides exception for certain expatriate plans

§ Provides 7 business days (rather than calendar days) to provide SBC upon request

§ Retains state pre-emption of the SBC rules, but urges states to harmonize state benefit summary requirements with federal rule/forms and requires any state modifications to use a separate addendum

§ Allows flexibility in SBC format to accommodate innovative product design

§ Retains Coverage Example format but eliminates breast cancer as example, now limited to maternity and diabetes

A high-level summary of the Final Rule and supplemental guidance issued by the Agencies (“Final Rule”) follows below.

Applicability Date

When originally passed the Affordable Care Act (the “Act”) required the Agencies to develop standards to provide, by 3/23/2012, “applicants, enrollees, and policyholders or certificate holders” an SBC describing the benefits and coverage under each policy or plan. Due to the late issuance of the Final Rule the Agencies modified the effective dates as follows:

• Enrollment during open enrollment period: The requirements to provide an SBC, notice of modification, and uniform glossary apply for disclosures to participants and beneficiaries who enroll or re-enroll in group health coverage through an open enrollment period beginning on the first day of the first open enrollment period that begins on or after September 23, 2012.
• Enrollment other than open enrollment: For SBC distributions to participants and beneficiaries who enroll in group health plan coverage other than through an open enrollment period (e.g., special enrollees), the requirements apply beginning on the first day of the first plan year that begins on or after September 23, 2012.
• Other SBC distributions: For SBC distributions to group health plans by an issuer, and to individuals and dependents in the individual market, these requirements are applicable beginning on September 23, 2012.

When the SBC Must Be Provided

An SBC must be provided under several different circumstances, such as upon application for coverage, by the first day of coverage (if information in the SBC has changed), upon renewal or reissuance, and upon request. The Final Rule also includes guidance to prevent unnecessary duplication in the provision of an SBC. For all scenarios, the Final Rule substitutes a seven business day period for the seven calendar day period noted in the proposed regulation.

Responsibility for Sending the SBC

The Act places the responsibility to provide an SBC on:

A. Insured Plans: "a health insurance issuer (including a group health plan that is not a self-insured plan) offering health insurance coverage within the United States; or

B. Self-insured Plans: in the case of a self-insured group health plan, the plan sponsor or designated administrator of the plan as that term is defined under ERISA. The Federal Rule is consistent with the Act (e.g., holds the plan administrator of a group health plan responsible for providing an SBC). The Final Rule also does not include an exemption for large or self-insured plans as requested.

SBC Provided by Issuer or Plan to Participants and Beneficiaries

The Final Rule retains the requirement that the SBC be provided to both participants and beneficiaries, however it includes an anti-duplication rule under which a single SBC may be provided to a family unless any beneficiaries are known to reside at a different address.

The Final Rule provides that “special enrollees” under HIPAA must be provided the SBC no later than when a summary plan description (SPD) is required to be provided under the timeframe set forth in ERISA, which is 90 days from enrollment.

• Renewal When a Reapplication is Required: The proposed rule required that, if written application materials are required for renewal, the SBC must be provided no later than the date on which the materials are distributed. This requirement has been retained without change in the Final Rule.
• Automatic Renewal: The Final Rule requires that, in general, if renewal or reissuance of coverage is automatic, the SBC must be provided no later than 30 days prior to the first day of the new plan or policy year. With respect to insured coverage, the Final Rule provides flexibility with the 30-day rule only when the terms of coverage are finalized in fewer than 30 days in advance of the new policy year (e.g., negotiation of coverage terms); otherwise, the SBC must be provided upon automatic renewal no later than 30 days prior to the first day of coverage under the new plan or policy year.

SBC Provided by Issuer to a Plan

· The Final Rule requires a health insurance issuer to provide an SBC to a group health plan upon an application by the plan for coverage.

· The SBC must be provided as soon as practicable following receipt of the application, but in no event later than seven business days following receipt of the application.

· If there is any change to the information required to be in the SBC before the first day of coverage, the issuer must update and provide a current SBC to the plan no later than the first day of coverage.

Content Elements NAIC

NAIC Recommendations: The proposed regulations generally mirrored the content elements set forth in the Act, with four additional elements recommended by the NAIC:

1. for plans and issuers with one or more provider networks - an Internet address (or similar contact information) for obtaining a list of the network providers;

2. for plans and issuers with a prescription drug formulary, an Internet address where an individual may find more information about the prescription drug coverage under the plan or coverage;

3. an Internet address where an individual may review and obtain the uniform glossary;

4. premiums (or cost of coverage for self-insured group health plans).

The proposed regulations solicited comments on thesel four content elements, and certain changes were made based upon public feedback as outline below.

Final Rule

· The first two proposed additional content elements noted above were retained without change.

· The third content element was modified to include the requirement that the issuer or plan provide a contact phone number to obtain a paper copy of the uniform glossary, and a disclosure that paper copies of the uniform glossary are available.

· The fourth element, requiring the SBC to include premium or cost of coverage information was eliminated.

Additional Content Elements

• Minimum Essential Coverage and Minimum Value Statement: The Act also required that the SBC include a statement about whether a plan or coverage provides minimum essential coverage, and whether the plan’s share of the total allowed costs of benefits provided under the plan met the applicable minimum value requirements. The Agencies recognize that this content is not relevant until other elements of the Act are implemented, therefore, the Final Rule requires the minimum essential coverage and minimum value statements to be included in SBCs with respect to coverage beginning on or after January 1, 2014

• Coverage Examples: The proposed regulations included three coverage examples relating to having a baby (normal delivery), breast cancer, and diabetes. The Final Rule indicates only two coverage examples -- having a baby (normal delivery) and managing diabetes -- need to be included in the SBC. Future guidance will likely add and modify these coverage examples.

• Best Efforts Provision: To the extent a plan’s terms that are required to be in the SBC template “cannot reasonably be described in a manner consistent with the template and instructions”, the plan or issuer must accurately describe the relevant plan terms while using its “best efforts” to maintain the integrity of the uniform template.

Method of Issuance

· Group Plans: SBCs provided in connection with group health plan coverage may be provided either as a stand-alone document or in combination with other summary materials (e.g., an SPD), if the SBC information is intact and prominently displayed at the beginning of the materials, and in accordance with the timing requirements for providing an SBC.

· Individual Plans: For health insurance coverage offered in the individual market, the SBC must be provided as a stand-alone document, but may be included in the same mailing as other plan materials.

Electronic Transmission of the SBC

• Group Market: The Final Rule makes a distinction between a participant or beneficiary who is already covered under the group health plan, and a participant or beneficiary who is eligible for coverage but not enrolled in a group health plan.

§ For participants and beneficiaries who are already covered under the group health plan, the Final Rule permits distribution of the SBC electronically if the requirements of the Department of Labor’s regulations are met.

§ For participants and beneficiaries who are eligible for but not enrolled in coverage, the Final Rule permits the SBC to be provided electronically if the format is readily accessible and a paper copy is provided free of charge upon request. Additionally, if the electronic form is an Internet posting, the plan or issuer must timely advise the individual in paper form (such as a postcard), or email, that the documents are available on the Internet, provide the Internet address, and notify the individual that the documents are available in paper form upon request.

• Individual Market: The Final Rule substantially retains the safeguards for electronic disclosure in the proposed regulations. Under the Final Rule, an issuer providing the SBC electronically must ensure that:

• Format is readily accessible

§ SBC is placed in a location that is prominent and readily accessible

§ SBC is provided in an electronic form that is consistent with the appearance, content, and language requirements of the Final Rule

§ The issuer notifies the individual or dependent that the SBC is available in paper form without charge upon request.

The Final Rule removes the “acknowledge receipt” requirement.

• Transmission Between Issuer and Plan Sponsor: With respect to an SBC provided by an issuer to a plan sponsor, the SBC may be provided in paper form or electronically (such as email transmittal or an Internet posting on the issuer’s website).

Language

The Final Rule retains the approach of the proposed regulations and provides that, to satisfy the requirement to provide the SBC in a culturally and linguistically appropriate manner, a plan or issuer follows the rules for providing notices with respect to claims and appeals. Under those rules, plans and issuers must provide notices in a culturally and linguistically appropriate manner when 10 percent or more of the population residing in the claimant’s county are literate only in the same non-English language, as determined based on American Community Survey data published by the United States Census Bureau.

Uniform Glossary Changes

The Agencies made several changes that were suggested in the public comments. Some of these changes were made at the request of self-insured plans, which commented that terminology in the SBC template was appropriate only for insured coverage. For example, terms such as “policy” and “insurer” have been changed to “coverage” and “plan”, respectively. The Agencies also revised the disclaimer language at the beginning of the uniform glossary, to make clear that the glossary is intended to be educational in nature and that the definitions contained in the glossary may not be the same as the definitions used by a particular plan or issuer (e.g., in the SPD).

Summaries of Material Modifications

The Act directs that a group health plan or insurance issuers (group or individual) provide notice of a material modification of coverage (as defined under ERISA section 102), at least 60 days in advance, if any of the changes in coverage are not reflected in the most recently provided SBC. In other words, the notice must be provided to enrollees (or, in the individual market, policyholders) no later than 60 days prior to the date on which such change will become effective, if it is not reflected in the most recent SBC provided, and occurs other than in connection with a renewal or reissuance of coverage.

The Final Rule does not change the proposed rules 60-day notice provision. This provision requires that plans and issuers provide at least 60-days advance notice of any material modification that would change the content of the SBC. This applies to mid-year changes only and does not affect changes made in connection with a renewal or reissuance. The notice of modification may consist of a new SBC or a specific notice detailing the change. Unfortunately the Final Rule does not provide clear guidance surrounding the treatment of certain changes customarily made by group health plans within a reasonable amount of time after the renewal date (such as for clerical error or employer-initiated change describing coverage intent), therefore uncertainty remains surrounding the extent of allowed changes made after renewal without a reissuance of an SBC.

Effective Date

These Final Rules are effective 60-days after publication in the Federal Register.

I have not posted any fishing pictures in quite awhile so here are a few for all those who have not made it out on the water in too long.

Peyton's Place

It was never supposed to end this way, Indy is Peyton's town not Eli's. As my Mom used to say "we are not in charge". The Superbowl is in Indianapolis on Sunday and by its conclusion we will have seen as much about Peyton's career being over as Eli Manning going for ring two or Tom Brady for ring number four. And evidently Peyton's career is over or at a minimum his bonus will not be forthcoming.No one really knows but with media day this week opinions will be everywhere. But I digress. For a moment stop and consider all the sickness and injury which occurs everyday throughout the world to employees and family members and consider how everyone has an opinion as to whether the their treatment was appropriate by their employer in a disability context. What happened to their job? Were they paid? Were they treated fairly? Did they have to sue to protect their interests? In the case of an injury arising in the course of employment were they given reasonable accommodation? Was the focus on their impairment or their ability? Did anyone consider what they could do and offer alternative work consistent with their functionality?

A systematic focus on stay at work addresses abilities matching restrictions and limitations with available work while affording the injured and sick to transition in spite of their conditions. Its a lot less expensive to retain talent than to continually replace it. Adjustments in compensation naturally follow most hall of fame quarterbacks who do not end up working for themselves. It is only prudent for employers to have processes in place to accommodate injured and sick employees. In Peyton's case if he cannot play he could most definitely coach. He has been a coach on the field for years. Imagine the insight he can provide divisional opponents into the Colts offense. If you were the Colts would you want him working for the competition?

Peyton manning is a warrior. Not everyone injured or sick is or was(?) as highly compensated but his situation is one that occurs routinely in business. Good organizations have contingency plans to attract and retain top talent. As you are watching Peyton this weekend in the Manning box consider what the stay-at-work and return-to-work plans your organization utilizes would hold up on media day at the Superbowl and how your current approach is either contributing or taxing your bottom line.
As baby boomers age a focus on ability becomes more critical. How would your organization treat Peyton? If you do not like the answer call me next week and I will consult on your organizational redemption by offering a systematic methodology to implement stay-at-work. Enjoy the game.

Failed Risk Transfer Policy

If there is a single lesson I would focus employers on in todays regulatory environment it is your disabilty benefit plan design actually does matter and needs to be integrated with your overall human resources practices to assure ADA exposure is mitigated via a fundamentally sound and well understood claim process that transfers risk.

It is common in this era to see self-funded and ASO Short Term Disability and salary continuance. The risk lends itself to self funding it is wholly predictable and high frequency, low indemnity in nature. But just because you choose to self fund the claim risk does not mean you have adequeately transferred all your exposure.

Consider Maxim Healthcare Services, Inc. who is now under a three year consent decree from the EEOC for enforcing a policy that requires employees to be unrestricted before returning to work. Many employers still take an all or nothing view of restrictions. In other words an employee must have no restrictions before returning to work. Such a policy clearly violates the Federal Law under ADA.

Lets look at the press release from the EEOC emphasis mine;

PRESS RELEASE


9-22-11
Maxim Healthcare Services Settles EEOC Disability Discrimination Suit

Maxim to Pay $160,000 to Estate of Former Employee
MINNEAPOLIS – The Equal Employment Opportunity Commission (EEOC) announced today that a federal court has approved a consent decree between the EEOC and Maxim Healthcare Services, Inc., which resolves the EEOC’s disability discrimination lawsuit against the company. The lawsuit, filed in U.S. District Court for the District of Minnesota, alleged that Maxim had failed to provide reasonable accommodations and ultimately discharged Anne Whitledge, director of clinical services, because she had brain cancer. The lawsuit is captioned, Equal Employment Opportunity Commission and Larry Williams as Trustee and Personal Representative of the Estate of Anne Marie Alderson Whitledge, decedent, v. Maxim Healthcare Services, Inc., Civil No. 10-03998 (JNE/JSM).
Under the decree, Maxim will pay $160,000 to Whitledge’s estate. In addition, Maxim agrees to conduct anti-discrimination training and monitor complaints in the Minneapolis facility, where Whitledge worked, as well as in the five other Maxim facilities that were under some of the same management. Specifically, the three-year decree provides that in those locations:
•Maxim is enjoined from discriminating based upon disability in violation of the ADA by not providing reasonable accommodations to persons desiring to return to work from disability leave.

•Maxim shall not engage in any form of retaliation against any person because such person has opposed any practice made unlawful under ADA, filed a discrimination charge under ADA, testified or participated in any manner in any investigation, proceeding, or hearing under that statute, or asserted any rights under this decree.

•Maxim is enjoined from failing or refusing to engage in the interactive process with applicants or employees who Maxim knows or should know, may require reasonable accommodation to perform the essential functions of the jobs for which they seek to return after medical leave.

•Maxim is enjoined from maintaining any policy that requires an employee with a disability to be free from restrictions before returning to work after a medical leave of absence.

•Maxim shall evaluate whether individuals seeking to return to work after a medical leave pose a direct threat to themselves or others based on objective evidence and information.

•Maxim will train all of its management personnel on the law against disability discrimination and will post a webinar training module on its online training system to train its external employees on their rights as employees to be free from discrimination and retaliation under the ADA. At the beginning of each training session held under this decree, Maxim’s highest-ranking executive-level employee at the facility shall introduce the outside trainer and state that Maxim takes its obligations under all EEO laws and prohibitions seriously. Also at this time, such official shall also state Maxim’s policy of non-retaliation for people who oppose acts made unlawful by federal EEO laws and people who participate in protected activity under federal EEO laws.

•Maxim will maintain a record of its attempts to accommodate all employees with a disability who have been on a disability or medical leave who have notified Maxim that they are released to work with restrictions and will provide the EEOC with a copy of its accommodation reports on a semi-annual basis.

•Maxim shall send a letter of condolences to the children of Anne Whitledge.

“This was a heartbreaking case,” said John Hendrickson, regional attorney for the EEOC’s Chicago District. “Anne Whitledge battled cancer and lost the job she loved because of it. Ultimately, Anne lost her battle to cancer. The EEOC is proud that it helped her wage the battle against the fears and stereotypes that some employers maintain about the ability of people with cancer to perform their job.”
The EEOC’s litigation efforts were led by trial attorneys Laurie Vasichek, Nick Pladson, and Jessica Palmer-Denig of the EEOC’s Minneapolis Area Office, and supervised by Associate Regional Attorney Jean Kamp of the EEOC’s Chicago District Office. The EEOC’s Chicago District office is responsible for processing charges of discrimination, administrative enforcement, and the conduct of agency litigation in North Dakota, Minnesota, South Dakota, Wisconsin, Illinois and Iowa, with Area Offices in Milwaukee and Minneapolis.
The EEOC enforces federal laws prohibiting employment discrimination. Further information about the EEOC is available on its website at www.eeoc.gov.

Eagle Ford Shale

Mayan's had a sick humor which is something operators in South Texas's new Eagle Ford Shale might want to keep in mind as they send forth service workers. Violence is not new in Mexico and as its spreads north through a porous border it serves as a reminder that Back to The Future may also be true as you view the ritual executions now becoming commonplace in Mexico.

Don't show up with a knife at a gunfight. Do have serious security and safety procedures embedded with your personnel. Do have kidnapping and ransom coverage. Have some modicum of historical perspective and know that Texas Rangers are hard men for a reason.

Ugliness A Protected Class

Ahem, offered without comment. http://www.abajournal.com/news/article/do_ugly_people_deserve_legal_protection_economics_prof_offers_reasons_for_a/

Dear Uncle Sam

I absolutely despise big government. I have no respect for the political advocates who espouse the expansion of government. What network will soon air a biggest loser reality show for the elected official who most successfully wields a chain saw to spending on behalf of their constituents? Check the chain saw maybe somebody can borrow some  oridinance from the army to use on their budget one of the tracked vehicles that shoots explosives 1/4 mile to clear lethal minefields of government. My money is on Fox here. But I am hoping its C-SPAN in 2012 and Paul Ryan gets nightly face time. I hope Nancy Pelosi is ordered to fly coach like her constituents.

I started my business the old fashioned way from savings. Nobody gave me anything. At every turn government obstructs small business with regulation and chokes it with economic policy designed to create an uneven playing field for its bankers in big business. Small business is tapped for funding but we are all in reality just slaves fueling the Leviathan and Uncle Sam is always hungry. But know this Big Government today Americans who work for a living are targeting your destruction. We are getting involved politically and we are united in a belief you are rapidly outgrowing our ability to feed you and we are planning firebreaks to contain your growth regardless of the political winds. You will not turn our nation into a balkanized free for all where radical experimentation and social engineering on an unprecedented scale run rampant. Our children will not be saddled with your debt. We are coming for you. Soon. And there is going to be an arse whipping when we arrive.Yours.

Happy Friday

Hayes Carll is what I am kistening to these days.

Happy Mardi Gras

Everyone should see Mardi Gras once when they are young. Get your Mardi Gras on New Orleans.

PPACA:Clear As Mud

Ok the best discussion I have seen yet of the nondiscrimination provisions of PPACA are detailed below compliments of BenefitMall.com. You can read the source materials below or just take my simplified and nevertheless accurate summary that on a party line vote using reconciliation Democrats passed a stupid law that made many employer provided health plans subject to fines of up to $100 per employee per day until shortly before Christmas 2010 when no one was paying attention the IRS suspended enforcement to avoid the embarrasment of scorn by millions of American who would have lost coverage when their employers dropped it to avoid onerous IRS fines January 1 , 2011. It just goes On & On kind of like this video happy Friday Peeps and by the way does REK look like he could use an EAP? Look at those shades.



Section 2716 of the Patient Protection and Affordable Care Act (PPACA) contains a provision that applies the “non-discriminatory” requirements of Section 2716 of the Public Health Services Act (PHSA) [Section 105(h) of the Internal Revenue Code] to all non-grandfathered health plans issued on or after September 23, 2010. This provision prohibits health plans from discriminating in the way benefits or costs are allocated and shared among classes of employees.

The implementation of the nondiscrimination requirements continues to be delayed. On January 10, the Internal Revenue Service (IRS) issued Notice 2011-2, which states that compliance with PPACA is once again delayed for insured group health benefit plans until at least March 11.1

There is significant confusion surrounding the nondiscrimination requirements. The following information details the timeline of the attempts on the part of the federal regulators to clarify these issues.
Provision and Scope

SEC. 2716. PROHIBITION OF DISCRIMINATION BASED ON SALARY.
"(a) IN GENERAL – The plan sponsor of a group health plan (other than a self-insured plan) may not establish rules relating to the health insurance coverage eligibility (including continued eligibility) of any full-time employee under the terms of the plan that are based on the total hourly or annual salary of the employee or otherwise establish eligibility rules that have the effect of discriminating in favor of higher wage employees.2”

Generally, the regulations issued pursuant to Section 105(h) apply to employer-sponsored health benefit plans that cover premiums and expenses for qualified medical and other specialty plans.3 The recent amendments expand the nondiscrimination provisions to health benefit plans irrespective of whether they are fully-insured, self funded or medical reimbursement plans. Some types of plans are excluded from the new requirements, including “grandfathered” plans, government-sponsored health plans and limited benefit plans.
The “benefits” provided under the health plan must not discriminate in favor of highly compensated individuals. The health plan should incorporate several design features in order to be non-discriminatory. For example, plans should:
Establish parity in employee contributions for each benefit level

Preclude offering lower co-pays for highly compensated employees

Not impose different waiting periods

The employer sponsoring the health plan also must not discriminate in favor of highly compensated individuals in actual operation. For example, discrimination in operation could arise if a plan administrator approves certain claims for medical expenses under the utilization management process for highly compensated employees while denying them to lower compensated employees.
As the regulation is developed, the definition of terms such as “benefit” and “highly compensated” will continue to be addressed in the provision development.
Comments and Timelines

Currently, implementation of the anti-discrimination provision continues to be delayed due to several outstanding issues that need to be addressed. The Department of Treasury, along with the Departments of Labor (DOL) and Health and Human Services (HHS), has released a series of public notices to gain guidance on how to best implement this provision.
Notice one: IRS Bulletin 2010-634

The first notice to address Section 2716 was issued on May 17, 2010. “This notice invites public comments concerning the application of rules prohibiting insured group health plans from discriminating in favor of highly compensated individuals. The United States Department of Labor and the United States Department of Health and Human Services have reviewed this notice and have advised the Department of the Treasury and the Internal Revenue Service (IRS) that they agree with it.”
Previous Request for Comments
“The final regulations under section 105(h) of the Code, prohibiting discrimination in favor of highly compensated individuals under self-insured medical expense reimbursement plans, were issued in 1981. The Department of the Treasury and the IRS are considering issuing guidance on the extension, through section 2716 of the PHSA and new section 9815 of the Code, of the requirements of section 105(h)(2) to insured group health plans. The Department of the Treasury and the IRS request comments on what additional guidance relating to the application of section 105(h) (2) would be helpful with respect to insured group health plans.
Comment due: November 4, 2010
Notice two: IRS Bulletin 2011-15

The second notice to address Section 2716 was issued on December 22, 2010. Notice 2011-1 which states compliance with the nondiscrimination provisions of the PPACA are suspended for insured group health benefit plans until an undefined date.
Request for Comments
“Comments submitted in response to Notice 2010-63 maintained that, without regulations or other administrative guidance under Section 2716, plan sponsors are uncertain how to apply the nondiscrimination provisions. In addition to what is meant by rules 'similar to,' comments raised a number of other issues regarding the application of Section 2716. Comments suggested that guidance address the application of Section 2716 before plan years beginning in 2014 (when the State Exchanges, employer responsibility and penalty provisions, and related provisions take effect) and also in and after 2014. The Departments recognize that the guidance under Section 2716 must take into consideration the Exchange operations and individual and plan sponsor requirements that go into effect after 2013.”
Notice three: IRS Bulletin 2011-26

The IRS continued to delay the implementation of Section 2716. The agency reissued Notice 2011-1 on January 10, 2011 to gain additional guidance.
Additional Request for Comments
Notice 2011-1 asks 13 key questions that need to be address to successfully implement Section 2716:
The basis on which the determination of what constitutes non-discriminatory benefits under Section 105(h)(4) should be made and what is included in the term “benefits.” For example, is the rate of employer contributions toward the cost of coverage (or the required percentage or amount of employee contributions) or is the duration of an eligibility waiting period treated as a “benefit” that must be provided on a non-discriminatory basis?

The suggestion made in previous comments that the Departments have the authority to provide for an alternative method of compliance with Section 2716 that would involve only an availability of coverage test.

The application of Section 2716 to insured group health plans beginning in 2014 when the health insurance exchanges become operational and the employer responsibility provisions (Section 4980H of the Code), the premium tax credit (Section 36B of the Code), and the individual responsibility provisions (Section 5000A of the Code) and related Affordable Care Act provisions are effective.

The suggestion in previous comments that the non-discriminatory classification provision in Section 105(h)(3)(A)(iii) could be used as a basis to permit an insured health care plan to use a highly compensated employee definition in Section 414(q) of the Code for purposes of determining the plan’s non-discriminatory classification.

The suggestion in previous comments that the nondiscrimination standards should be applied separately to employers sponsoring insured group health plans in distinct geographic locations and on whether application of the standards on a geographic basis should be permissive or mandatory.

The suggestion in previous comments that the guidance should provide for “safe harbor” plan designs. Specifically, comments are requested on potential safe and unsafe harbor designs that are consistent with the substantive requirements of Section 105(h).

Whether employers should be permitted to aggregate different, but substantially similar, coverage options for purposes of Section 2716 and, if so, the basis upon which a “substantially similar” determination could be made.

The application of the nondiscrimination rules to “expatriate” and “inpatriate” coverage.

The application of the nondiscrimination rules to multiple employer plans.

The suggestion in previous comments that coverage provided to a “highly compensated individual” (as defined in Section 105(h)(5)) on an after-tax basis should be disregarded in applying Section 2716.

The treatment of employees who voluntarily waive employer coverage in favor of other coverage.

Potential transition rules following a merger, acquisition or other corporate transaction.

The application of the sanctions for noncompliance with Section 2716.

Comments due: March 11, 2011

Next Steps

To ensure the smooth implementation of Section 2716, the federal agencies reviewing comments have stated that the request for public comment and guidance is critical. Unfortunately, the anti-discrimination provisions, along with many other PPACA requirements, are difficult to implement due to limited or poor statutory language construction.
Comments are due on March 11, 2011 for Notice 2011-17, and analysis by HHS, DOL and the IRS will take place over the next few months. Karen Levin out of the Office of Division Counsel/Associate Chief Counsel (Tax Exempt and Government Entities) will be the main drafter of the next notice.

Got Surveillance?

Class Warfare

At a time when the long term solvency of Social Security is very much in question it is revealing to shed a little light on one provision of PPACA which is publicized far to Little and that is The CLASS Act (Community Living Assistance Services and Support Act). Yes, it seems Obamacare included a voluntary taxpayer optional long term care program that owes its origins to Ted Kennedy.

Whats wrong with that you might ask? Well for starters the design more or less mirrors the group guaranteed issue approach to LTC which has failed miserably for over 20 years in the private sector to the point where John Hancock has exited the group market along with MetLife and anyone else with a board or stockholders because its simply not profitable. Not only is it not profitable it is financially unsustainable. Imagine a wave of baby boomers faced with financial ruin from outliving their bodies ability to perform acitivities of daily living like bathing, dressing, eating, and transferring. All they have to do is enroll and pay premiums for 5 years and be actively at work for 3 years and they can receive a cash LTC benefit. And hey, the premiums are only expected to be $123 per month! What a deal!  You see the exact benefits costs and program details are all being designed by the Secretary of Health and Human Services at this juncture. think we will see an LTC trust fund established like the SS Trust fund to keep Congress from spending the proceeds sorta like the SS Trust Fund?

But it gets better. Check out this "wisdom" from CBO emphasis mine;

Q: Are there any estimates now of what those premiums might be?


A: During the long course of the CLASS Act plan’s development, a number of estimates were made of the premiums that could be required for a financially sound plan. These estimates vary widely depending on the version of the law (which changed as it went through the legislative process) analyzed, the data and the assumptions used. Many commonly cited estimates reflect studies of much older versions of the CLASS Act. No analysis to date exactly matches the complete details of the CLASS plan that will be implemented, as these details have yet to be determined. As Congress debated the version of the CLASS Act that is now the law, the non-partisan Congressional Budget Office (the official “score-keeper”) provided estimates of average premiums. The Congressional Budget Office (CBO) estimated that average premiums would be $123/month (lower for younger people, higher for older people). Naturally, the CBO estimate included assumptions about some detailed elements of the program that might be different when the final plan is ultimately determined. In addition, the CBO assumed, among other things, that the CLASS Act plan would have relatively low enrollment, such as that found with private long-term care insurance.

To again use a parable from popular culture examine the picture above closely. This time its not a Baby Ruth. It is an actual turd. No amount of chlorine can sanitize a pool contaminated with feces. It must be drained and sanitized every time. Now notice what the CBO said about the CLASS risk pool in the 2nd to last sentence;the CLASS Act plan would have relatively low enrollment, such as that found with private long-term care insurance. I am certain CBO meant relatively low enrollment like group LTC on a guaranteed issue basis of the type that is not even marketed anymore due to adverse selection. Which means the pool will ultimately be a septic tank unfit to dip a toe into much less to swim in and every time the septic is collected the taxpayers get to replenish the pool with tax dollars in order to allow allow Americans to have access to LTC. There is not a reinsurer who would ever insure such a risk but there is on the other hand a Democratic Party in America who did on a party line reconciliation vote sign taxpayers up to insure the risk which is not voluntarily insurable on a guaranteed issue basis. And its means tested, so low income Americans get subsidized until every taxpayer is low income and then what?

I think CLASS is actually an acronym meaning Clueless Liberals Accessorizing Social Security. It is a mind numbing subsection of PPACA stupidity to be implemented by bureaucrats at HHS. This is not even what Pelosi meant when she said we would have to read the bill to know whats in it because the final regulations are not due until October 1. 2012. At a time when we have the President & DNC carefully orchestrating union protests over collective bargaining rights and historic Federal, State & Local deficits we now have a  law created by politicians with a cognitive deficit that will insure all Americans go broke. Tell me this is not the same logic that brought us to a broken Social Security system? Why would we expect a different result this time? Remember that one difinition of insanity is repeating the same behavior and expecting a different result. Yet every time feces goes into the pool its contaminated so just keep Bill Murray in mind and remember this time its not a Baby Ruth.

Federalist View Of Wisconsin & National Politics Instructive

The Federalist No. 10


The Utility of the Union as a Safeguard Against Domestic Faction and Insurrection (continued)

Daily Advertiser

Thursday, November 22, 1787

[James Madison]

To the People of the State of New York:

AMONG the numerous advantages promised by a well constructed Union, none deserves to be more accurately developed than its tendency to break and control the violence of faction. The friend of popular governments never finds himself so much alarmed for their character and fate, as when he contemplates their propensity to this dangerous vice. He will not fail, therefore, to set a due value on any plan which, without violating the principles to which he is attached, provides a proper cure for it. The instability, injustice, and confusion introduced into the public councils, have, in truth, been the mortal diseases under which popular governments have everywhere perished; as they continue to be the favorite and fruitful topics from which the adversaries to liberty derive their most specious declamations. The valuable improvements made by the American constitutions on the popular models, both ancient and modern, cannot certainly be too much admired; but it would be an unwarrantable partiality, to contend that they have as effectually obviated the danger on this side, as was wished and expected. Complaints are everywhere heard from our most considerate and virtuous citizens, equally the friends of public and private faith, and of public and personal liberty, that our governments are too unstable, that the public good is disregarded in the conflicts of rival parties, and that measures are too often decided, not according to the rules of justice and the rights of the minor party, but by the superior force of an interested and overbearing majority. However anxiously we may wish that these complaints had no foundation, the evidence, of known facts will not permit us to deny that they are in some degree true. It will be found, indeed, on a candid review of our situation, that some of the distresses under which we labor have been erroneously charged on the operation of our governments; but it will be found, at the same time, that other causes will not alone account for many of our heaviest misfortunes; and, particularly, for that prevailing and increasing distrust of public engagements, and alarm for private rights, which are echoed from one end of the continent to the other. These must be chiefly, if not wholly, effects of the unsteadiness and injustice with which a factious spirit has tainted our public administrations.



So Let me translate that for those among you who have a problem understanding 18th century English uncorrupted by slang or Ebonics.

• Lets start with the title The Utility of the Union as a Safeguard Against Domestic Faction and Insurrection .  In other words it is the Union, the Federal Government Madison is offering as a structural protection against the danger of Faction.  Today we could call either party  a faction, especially the unique coalition of Unions, Progressives and various assorted left wing nut jobs that control the modern Democratic party.
• Political Parties are a "dangerous vice" causing mortal disease to governments historically. Keep in mind The Federalist Papers were written anonymously under the pseudonym "Publius" so the reference here is Rome where today the food may be great but the government, not so much, but I digress.
• It would be an unforgivable oversight to pretend the Constitution would be expected to stand up in the face of  a partisan majority  imposing their their will on the Nation to the detriment of the common good. Things like passing health care reform by Reconciliation by a party line vote for example. Fairly sure Mr Madison would have considered the Obama care vote to be a modern example of political parties run amuck. The emergence of the tea party and the landslide midterms sweeping Republicans into power are an indication the people have grown weary of party politics.
• The Wisconsin minority Democratic party left the building to allow time for the unions and the democratic party and even the Presidents campaign organization to marshall protesters and bus them in from neighboring states to march for the camera's.Bereft of the intellectual underpinnings to to have an intelligent debate on financial matters other state democratic minorities soon followed. The progressive logic is akin to your Dad saying "do as I say not as I do" when he cannot or will not explain something. Think of Michelle Obama preaching diet while her husband steals a smoke. By the way progressives are in the cannot group which is why they resort to emotion instead of reason and logic or principle.Expedience is the currency of faction.
• The unsteadiness and injustice by which a factious spirit has invaded our government is clear each day in the electronic or print media. In 2009 the 912 Rallies had no coverage except on Fox and among bloggers like me.
• In 2011 Governor Walker in Wisconsin is vilified and the protesters are all over the television,every night. In 2011 Twitter and Facebook play key roles for organizers in Tunisia and Egypt because they do not trust their state run media either.
• Yesterday we were all treated to an announcement that the Obama administration would not enforce the Defense of Marriage Act as it was unconstitutional. Contrast that with the reaction to PPACA being declared unconstitutional when the adminsitration immediately declared implementation would be ongoing. 
• Yesterday President Obama finally commented on the situation in Libya where Qaddafi has been killing thousands of Libyans for over a week to condemn the violence. Qaddafi who ordered PanAm 103 to be destroyed killing 270 people. Qaddafi who financed http://en.wikipedia.org/wiki/Black_September_(group)at the 1972 Olympics and the 1986 Berlin disco bombing that targeted American servicemen. So much for the bully pulpit. Recall that Reagan bombed Tripoli after the linkage to Qadafi but I digress we do not have a war on terror anymore. How could we have a war on terror when the President mobilizes his own campaign organization to protest in battleground 2012 states where Republican Governors and legislatures are trying to solve serious fiscal budget shortfalls that he completely ignored with his 2012 budget. I wonder what James Madison would think of such behavior?

Got EAP?

I was just a normal guy.

Life was just a nine to five.

With bills and pressure,

piled up to the sky.



She never asked,

'cause she knew I'd been,

hangin' with my wilder friends.

Lookin' for some other way to fly.



Three days straight was no big feat,

to get by on no food or sleep.

And crazy,

was becoming my new norm.



I'd pass out on the bedroom floor,

and sleep right through the calm before the storm.



[chorus]

My life was just an old routine.

Every day the same damn thing.

I couldn't even tell I was alive.

I tell you,

the high cost of livin',

ain't nothin' like the cost of livin' high.



That Southern Baptist parkin' lot,

was where I'd go to smoke my pot.

And sit there in my pick-up truck and pray.



Starin' at that giant cross,

just reminded me that I was lost.

And it just never seemed to point the way.



As soon as Jesus turned his back,

I'd find my way across the tracks.

Lookin' just to score another deal.



With my back up against that damn eight-ball,

I didn't have to think, or talk... or feel.



[chorus]



My whole life went through my head.

Layin' in that motel bed.

Watchin' as the cops kicked in the door.



I had a job and a piece of land.

My sweet wife was my best friend,

but I traded that for cocaine and a whore.



With my newfound sobriety,

I've got the time to sit and think...

Of all the things I had,

and threw away.



This prison is much colder than,

the one that I was locked up in...

Just yesterday.



[chorus]



I tell you,

the high cost of livin',

ain't nothin' like the cost of livin' high.



...just leave that stuff alone... (quietly during closing instrumental)

Why Employers Need 3rd Party Adjudication of Disability

Look at the Doctor using privacy laws as a basis for fraud. One doctor even points out this is what he does every day. If you rely on a doctors note as the basis for establishing a legitimate sick day or short term disability claim here is a little window into the culture which is created. For more check this prior post and this brief excerpt from my blog in 2007.

The International Foundation of Employee Benefit Plans recently completed a survey of their membership on Salary Continuation and Short Term Disability (STD) which you can find for free here.
The survey revealed that salary continuation/STD is the black hole of employee benefit plans in terms of quantifying cost and controlling utilization.
Reasons cited for the difficulty of quantifying cost and controlling utilization and effecting changes are;
1.Union Contracts

2.Employee perception of value (Did anyone explain the probability of disability and the impact on employees of a sickness or injury which prevents work?).

3.State Mandates like CA Paid leave (Huh?)

4.FMLA Integration ( the machine is so well oiled and automated it cannot be improved?)

5.Management Buy-in (Did anyone explain the facts and costs?)


6.Entitlement (getting warmer!)

7.A lenient culture that does not enforce return to work (getting hotter!)

8.Most of the plans are payroll matters not ERISA plans (red hot, since employer cannot enforce plan terms and win an ADA challenge since payroll plans are not bonafide employee benefit plans

Some Perspective On Wisconsin

Is it not interesting that the Public sector is the last bastion in America for organized labor? Why is that? Could it be perhaps that several generations have watched all those great paying union jobs in the private sector move overseas where plenty of workers were perfectly willing to do the job for considerably less money? But you cannot really offshore education, law enforcement, fire fighting, etc.

 Yes Governor Walker is busting the union and he is doing so for the simple reason that all over the state of Wisconsin local governments will have the ability to tackle their own fiscal deficits.

Gov. Scott Walker on Friday rejected an offer from the head of the largest state workers union in which workers would give concession on benefits, but keep their collective bargaining rights.
"Doesn't work," Walker told Journal Sentinel reporters in his office Friday afternoon. "And the reason, having been a local government official, is we've got 72 counties, 424 school districts, over a thousand municpalities. And like every other state, or nearly every other state across the country, our budget is going to have cuts in aids to local governments."
Walker mentioned that states such as New York and California have had to cut billions in aid to schools.
"My goal all along has been... to give these folks, and I asked for this in the past, tools to control their own budgets. You've got to give them some flexibility."
Walker said that time and time again, collective bargaining issues "stood in the way of local governments and school districts being able to balance their budget."


Earlier Friday, Marty Beil, head of the Wisconsin State Employees Union, said his group would be willing to give in to Walker's demand for concessions on their benefits if the governor gave in on his bid to repeal nearly all bargaining rights for public worker unions



 The money involved is $360M out of a $4B budget shortfall. Most Americans already contribute double the 12.5% toward health insurance and 5.6% toward pensions that the union employees will wind up paying if Gov. Walker is . Ronald Reagan busted the Air Traffic Controllers union. Gov. Walkers point is a good one to the unions and it is simply that the fiscal problems being faced by the state are bigger than your bargaining agreement. Get over it. The world has changed. Is anyone really surprised that in ultra progressive Madison Wisconsin there would be protests in the streets? How many classes at University of Wisconsin got walks yesterday so they could support the proletariat? A bunch in the College Of Liberal Arts I imagine. I wonder how many of those kids will be able to find a job upon graduation in Wisconsin if they get what they want now.

Yet President Obama and the DNC support the unions. Unions are their constituents you see. They really could give a rats ass about the vast majority of Americans who are actually in the majority that elected a Republican majority in Wisconsin to do exactly what Gov Walker and the Republican legislator's have proposed. But ramming through ObamaCare using reconciliation was the right thing to do according to President Obama, Nancy Pelosi, Harry Reid and all the other progressive nutjobs. They want to use the fiscal crisis to advance cap and trade and immigration reform so they will have a constituency that represents roughly 55% of the US population that will pay no income taxes and be ever so loyal to their democratic masters. John Boehner sounds much more like an adult on the Wisconsin issue;

“I’m disappointed that instead of providing similar leadership from the White House, the president has chosen to attack leaders such as Gov. Walker, who are listening to the people and confronting problems that have been neglected for years at the expense of jobs and economic growth,” Boehner said in a statement. “I urge the president to order the DNC to suspend these tactics.”

Every single state in the U.S. faces similar budget shortfalls and the fight is spreading to Ohio, Michigan, Minnesota and other 2012 Battleground states. Jesse Jackson has even entered the fray. Given the fiscal problems our nation faces at the National, State and local level, the war in Afghanistan, The Middle East imploding why on earth would President Obama fixate on Wisconsin? Because he is a statist and the  Wisconsin crisis has revealed his true character as did his reactions to Egypt's revolution.

I am immensely proud of my children. They work hard at school and are focused on their Academics. When they were younger and they asked for items that were unaffordable I would consistently reply with my own question: What would Mick Jagger say? Invariably they would groan "You can't always get what you want". Hopefully Wisconsin will get what it needs as will other states. 2012 is going to be a brutal viscious election and if progressives continue to vilify good men doing what they were elected to do the map of america will be far redder than today. Progressives still have not figured out that not only do the federal & states not have any money neither do the ordinary people who are being taxxed to death.