With the Federal Trade Commission’s Final Rule that would ban noncompetes nationwide set to go into effect on September 4, 2024, assuming pending litigation doesn’t cause any delays, employers should begin planning now to address any potential compliance concerns. Legal and human resources teams will need to consider the impact of the Final Rule on current noncompete agreements, requirements for providing notice to impacted employees under the rule, and strategies for implementing pending and future agreements if the rule is upheld.
California’s SB 553, which went into effect July 1, 2024, creates a new layer to California employers’ existing injury and illness prevention programs. Under SB 553, all California employers are now required to implement a workplace violence prevention plan (WVPP), provide training to employees regarding the WVPP and keep records of workplace violence incidents. As of January 1, 2025, the law also expands employers’ and employee representatives’ rights to obtain restraining orders on behalf of employees affected by threats of workplace violence.
During this recent webinar, McDermott Partners Andrew Liazos, Brian Mead and Heidi Steele discussed what employers should consider in the evolving landscape of noncompete agreements. With the Federal Trade Commission’s Final Rule that would ban noncompetes nationwide set to go into effect on September 4, 2024, assuming pending litigation doesn’t cause any delays, employers will want to develop a game plan to navigate these issues both in the short and long term.
To adapt to the evolving healthcare landscape, health systems are seeking to identify alternatives to their traditional hospital-centric models and shift towards patient-centered care delivery. As a result, provider-sponsored health plans (PSHPs) are gaining traction as a potential framework for health systems to curate care delivery in the newly decentralized model of healthcare.
In this article, Brad Dennis and Gary Scott Davis explore the challenges facing the hospital-centric model, the reemergence of PSHPs and the advantages of integrating healthcare delivery and insurance functions in a PSHP-based model.
A question in response to last week’s post on self-funding of employer group health plans assumed that stop-loss coverage under a level-funded plan could be provided under a group captive medical captive. However, it cannot (at least not without first obtaining a prohibited transaction exemption from the US Department of Labor (DOL)). While group medical stop-loss coverage can be structured to avoid the Employee Retirement Income Security Act (ERISA) prohibited transaction rules by scrupulously avoiding contact with ERISA plan assets in the plan’s stop-loss layer, it is not possible to prevent such contact in level-funded products.
The early years of group captives saw no shortage of handwringing over fundamental compliance issues. For example: Are group captives multiple employer welfare arrangements (MEWAs) (and should they be regulated as such)? To what extent are states free to constrain or restrain their operation? And which state insurance licensing laws apply?
For the most part, these and other compliance-related questions have been answered, if not completely, then at least substantially so. There is now broad agreement that the group medical stop-loss captive rests on a sound legal and regulatory foundation, which we explained at length in our Special Report. When properly structured, they are not MEWAs; states are free to regulate the stop-loss policy, and the fronting carrier must be licensed in each state in which the captive operates (i.e., where plan participants reside). Critical to their operation, however, is that the group medical stop-loss captive itself does not traffic in plan assets. This means that participant contributions, which are always plan assets, must never be applied to the purchase of stop-loss coverage.
The treatment of stop loss premiums, and their status as plan assets, are set out in two DOL Advisory Opinions:
Advisory Opinion 92-02
A stop-loss insurance policy purchased by an employer sponsoring a self-insured welfare benefit plan to which employees did not contribute is not an asset of the plan if certain conditions are satisfied. These conditions include that the insurance proceeds from the policies are payable only to the plan sponsor, which is the named insured under the policy, and no representations are made that the policy will be used to pay benefits.
Advisory Opinion 2015-02A
Where a stop-loss policy is purchased by a plan that includes participant contributions, the stop-loss policy would not be a plan asset if the facts surrounding the purchase of the stop-loss policy satisfies Advisory Opinion 92-02 and if the employer puts in place an accounting system that ensures that the payment of premiums for the stop-loss policy includes no employee contributions. Also, the stop-loss policy must reimburse the plan sponsor only if the plan sponsor pays claims under the plans from its own assets so that the plan sponsor will never receive any reimbursement from the insurer for claim amounts paid with participant contributions.
In the above-cited Special Report, we provided the following example of how an employer might comply where, as is typically the case, the [...]
A nonqualified deferred compensation (NQDC) plan is a powerful employee benefits tool. However, NQDC plans can create complications for plan administrators and participants. In this PLANADVISER article, Brian Tiemann and Lisa Loesel highlight several potential NQDC plan pitfalls and offer strategies to mitigate these hazards.
In a recent article in Managed Healthcare Executive, Peter Wehrwein examines the trend of self-funding of group health benefits by smaller employers who used to depend mainly or entirely on fully insured programs.
The shift to self-funding, the article explains, is grounded in the Employee Retirement Income Security (ERISA), which exempts self-funded plans from state health insurance mandates, and in the Affordable Care Act, which strictly regulates small group and individual health insurance policies. Wehrwein presents the issues from the perspective of state and federal policymakers and regulators, which the article characterizes as “worrisome.” But what of the perspective of small employers?
Healthcare costs are rising at rates that are well in excess of the growth of real gross domestic product. This appears unsustainable, but these costs nevertheless keep climbing inexorably. For employers, the pressure to do something is compelling.
The article claims that self-funding is more expensive than fully insured coverage. But compared to what fully insured coverage, exactly? By definition, many small employers can only purchase coverage in the small-group market. This is, however, the very market these same employers are fleeing, and they are doing so precisely because it is too expensive. Indeed, the prohibitive cost of small-group market coverage is why individual coverage Health Reimbursement Arrangements have failed to gain widespread acceptance, particularly in large urban environments.
Wehrwein correctly identifies two options for self-funding: group medical captives and level funding, both of which he views as problematic. Small employers appear to disagree, however, based on their actions. In their view, these options instead represent viable options in their quest to provide competitive group health coverage to their employees. The two options for self-funding identified in the article are fundamentally different solutions that are appropriate for different cohorts of small employers.
Group Medical Captives (50 – 200 Covered Lives)
The term “captive” insurer traditionally referred to a “single parent” captive, which is a subsidiary of an operating company/parent that insures the risks of the operating company/parent and in some instances its affiliates. Historically, single-parent captives insured property and casualty risks and workers’ compensation, but they have more recently been pressed into service to cover employee welfare plan risks.
A group captive allows a group of unrelated employers to form a collective insurance company to manage some portions of their risks. Where, as is the case here, the risk is most often medical stop-loss coverage, the arrangement is referred to colloquially as a “medical stop-loss group captive.” For an extended discussion of medical stop-loss group captive funding arrangements and their accompanying legal and regulatory issues, please see our Special Report.
There is some debate over what size employer might most benefit from participation in a medical stop-loss group captive. While the conventional wisdom is that 200 covered lives is the sweet spot, credible estimates go as low as 50 covered lives. Whatever the appropriate number, medical stop-loss captives can in the right circumstances offer substantial savings when compared to fully insured coverage. [...]
In this webinar recorded for the National Center for Employee Ownership (NCEO), Ted Becker and Julian André discuss the changing landscape of employee stock ownership plan (ESOP) litigation. The program covers trends in recent significant court decisions relating to ESOPs as well as the latest theories advanced by plaintiff’s counsel and the US Department of Labor.
May 11, 2024, marked one year since the end of the COVID-19 public health emergency (PHE), and not much has changed in Medicare telehealth policy. We are still operating under temporary waivers and flexibilities and, as a result, many pandemic-era virtual care policies are facing a cliff on December 31, 2024. This looms large during a contentious election year in which legislating has grown increasingly difficult.
This +Insight explores the virtual care policy landscape one year after the end of the PHE, and describes the actions Congress and federal agencies must take for such pandemic-era policies to continue.
Section 1557 of the Affordable Care Act (ACA) prohibits discrimination on the basis of race, color, national origin, sex, age or disability, or any combination thereof, in a health program or activity, any part of which is receiving federal financial assistance. On May 6, 2024, the US Department of Health and Human Services Office for Civil Rights (OCR) issued final regulations under Section 1557. For an overview of these regulations, please see our post available here.
In a recent post, we reported that the final regulations unambiguously prohibit categorical coverage exclusions or limitations for health services related to gender transition or other gender-affirming care. This, we predicted, is likely to result in a showdown involving the two dozen or so state laws that, among other things, limit gender-affirming care access. In this post, we take up the final regulations’ treatment of pregnancy and abortion. While a similar showdown over abortion is possible, it is (for the reasons set out below) less likely.
Rather than establish protected characteristics, Section 1557 instead cross-references four other civil rights statutes to define what discrimination is prohibited. These include Title VI of the Civil Rights Act of 1964, Title IX of the Education Amendments of 1972 (Title IX), the Age Discrimination Act of 1975 and Section 504 of the Rehabilitation Act. Notably, three of the cross-references (including Title IX) also contain the abbreviation “et seq.,” which captures the balance of the provisions constituting a given law.
An ongoing source of friction involving ACA Section 1557 is the cross-reference to the “religious exemption” in Title IX. This exemption permits conduct by a religiously controlled educational institution that might otherwise violate the statute’s requirements when the institution acts for a religious reason and compliance with the statute would conflict with a religious tenet. A subsequent amendment clarified that Title IX must be construed to neither require nor prohibit any person or entity to provide abortion-related benefits or services. This is referred to as “abortion neutrality.” The final regulations do not incorporate Title IX’s religious exemption or its abortion neutrality provision.
The final regulations define discrimination “on the basis of sex” to include pregnancy or related conditions. How this squares with abortion is addressed at some length in the preamble and the regulation itself:
The decision not to import the Title IX religious exception does not compel any individual provider or covered entity with religious- or conscience-based objections to provide abortion or any other care to the extent doing so would conflict with a sincerely held belief.
The ACA’s respect for federal laws applies. That law includes robust protections regarding conscience protection, willingness or refusal to provide abortion, and discrimination on the basis of the willingness or refusal “to provide, pay for, cover, or refer for abortion or to provide or participate in training to provide abortion.’’ In addition, “[i]nsofar as the application of any requirement under this part would violate applicable Federal protections for religious [...]
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