Sun Capital Partners III, LP v. New England Teamsters and Trucking Industry Pension Fund has been analyzed extensively over the past four years, as it has made its way from the US District Court for the District of Massachusetts to the First Circuit Court of Appeals and back again. With the case once again on appeal, we must wait to see how the latest court decision will further influence the structure of private equity deals. In the meantime, private equity funds should use the most recent District Court and First Circuit Sun Capital decisions as a road map for structuring deals where the target portfolio company has defined benefit pension plan or multiemployer pension plan liabilities.
In the presentation “ACA Repeal/Replace Under the Trump Administration,” Susan Nash discusses the implications of President Trump and the GOP’s immediate vow to “repeal and replace” the Affordable Care Act (ACA), which was enacted in 2010 by the Obama Administration to reform the health care system in the US. A complete repeal is unlikely since many ACA changes will require a filibuster proof majority vote in the Senate. However, some changes can be made unilaterally through Executive action by Republicans through Budget Reconciliation, a special legislative process created by Congress to allow for expedited voting on bills that directly impact reviews and expenditures.
The presentation also highlights several proposals that the GOP has been working on to replace ACA, the non-enforcement of market reform requirements, the possible outcomes for the Trump Executive Order and the immediate ramifications for the insurance markets and millions of Americans.
Patient-Centered Outcomes Research Institute (PCORI) Fee
The Patient-Centered Outcomes Research Institute (PCORI) fee was established under the Affordable Care Act (ACA) to advance comparative clinical effectiveness research. The PCORI fee is assessed on issuers of health insurance policies and sponsors of self-insured health plans. The fees are calculated using the average number of lives covered under the policy or plan, and the applicable dollar amount for that policy or plan year. The past PCORI fees were—
$2 per life, for policy and plan years ending on or after October 1, 2013, and before October 1, 2014
$2.08 per life, for policy and plan years ending on or after October 1, 2014, and before October 1, 2015
$2.17 per life, for policy and plan years ending on or after October 1, 2015, and before October 1, 2016
The new adjusted PCORI fee is –
$2.26 per life, for policy and plan years ending on or after October 1, 2016, and before October 1, 2017
Employers and insurers will need to file Internal Revenue Service (IRS) Form 720 and pay the updated PCORI fee by July 31, 2017.
Transitional Reinsurance Fee
Like the PCORI fee, the transitional reinsurance fee was established under the ACA. It was designed to reinsure the marketplace exchanges. Contributing entities are required to make contributions towards these reinsurance payments. A “contributing entity” is defined as an insurer or third-party administrator on behalf of a self-insured group health plan. The past transitional reinsurance fees were:
$63 per covered life for 2014
$44 per covered life for 2015
$27 per covered life for 2016
The transitional reinsurance fee funds cease after 2016. Although 2016 this is the final year for transitional reinsurance fees, the US Department of Health and Human Services (HHS) requires that entities retain records relating to their contributions for at least 10 years.
HHS recently released a filings manual which identifies key dates for the 2016 fee contributions. Contributing entities must submit the 2016 form and schedule their fee contribution no later than November 15, 2016. As in prior years, entities can elect to pay:
The entire year’s contribution in one payment no later than January 17, 2017, or
Two separate payments for the benefit year, with the first remittance ($21.60 per covered life) due no later than January 17, 2017, and the second payment ($5.40 per covered life) due no later than November 15, 2017.
In the aftermath of the recent election of Donald Trump as president of the United States and the Republicans’ retention of control over both the House and the Senate, many are beginning to assess the impact of a Republican controlled Congress and presidency on the future of the Affordable Care Act (ACA).
On October 11, 2016, the Occupational Safety and Health Administration published a final rule that establishes procedures and time frames for handling whistleblower complaints under the Affordable Care Act (ACA); for hearings before US Department of Labor (DOL) administrative law judges in ACA retaliation cases; review of those decisions by the DOL Administrative Review Board; and judicial review of final decisions.
This year’s Employer Healthcare & Benefits Congress featured a presentation by Susan Nash that addressed the many shapes and sizes of wellness programs today. Programs are typically designed to promote health and to educate employees about prevention, but some are disease management oriented, while others are designed to improve the general overall health of an employee population.
Presentation focal points included:
HIPAA Nondiscrimination Rules
Tri-Agency Guidance under ACA on Wellness Programs
On August 2, the Internal Revenue Service (IRS) released revised draft Forms 1094-C and 1095-C, and draft instructions for completing these forms for the 2016 reporting year (see here). Although these are not final versions, it is important for employers to review the updates and changes from the 2015 forms and instructions as they prepare for the 2016 filings.
The Affordable Care Act (ACA) created new reporting requirements under Sections 6055 and 6056 of the Internal Revenue Code (Code). The new rules require an applicable large employer (ALE) to report, on IRS Forms 1094-C and 1095-C, information about offers of health insurance coverage to full-time employees (FTEs) and the provision of minimum essential coverage (MEC). The Form 1094-C is also referred to as the “authoritative transmittal.” For 2016, an ALE is generally an employer with 50 or more FTE equivalents. Under Code Section 6056, an ALE must annually file with the IRS a report listing the offers of coverage made to its FTEs during the reporting year. In addition, ALEs must furnish a related statement of coverage information to FTEs. Under Code Section 6055, employers (including ALEs) who provide MEC under self-insured plans must also report MEC information for each individual covered under the employer’s self-insured plan. ALE status is determined on a controlled group basis, and each member of the controlled group is an “ALE Member” with an independent responsibility to file a Form 1094-C and Form 1095-Cs. Generally, the reporting is required at the employer identification number (EIN) level.
Under Code Section 6055, employers that are not ALEs must report MEC information on Forms 1094-B and 1095-B. Although these forms were also revised recently, draft instructions for completing these forms have not yet been released.
Read the full article here for the upcoming changes in detail, when to file and next steps to plan for.
On July 11, 2016, the Department of Labor (DOL) and Internal Revenue Service (IRS) announced a proposal to implement significant changes to the forms and regulations that govern annual employee benefit plan reporting on Form 5500. The proposed changes, which were published in the Federal Register on July 21, 2016, would considerably increase the annual reporting obligations for nearly all health and welfare plans. The changes would also have a considerable impact on annual retirement plan reporting obligations. For more information about the effect of the proposed changes on retirement plan sponsors, see Proposed Changes to Form 5500 Reporting Requirements May Have Significant Impact on Retirement Plan Sponsors.
The DOL is seeking written comments on the proposed changes, which must be provided by October 4, 2016. The revised reporting requirements, if adopted, generally would apply for plan years beginning on and after January 1, 2019.
The integration of technology into health care delivery is exploding throughout the health industry landscape. Commentators speculating on the implications of the information revolution’s penetration of the health care industry envision delivery models rivaling those imagined by celebrated science fiction authors, and claim that the integration of information technology into even the most basic health care delivery functions can reduce cost, increase access, improve quality and, in some instances, fundamentally change the way health care is delivered.
These visions are difficult to refute in the abstract; the technology exists or is being developed to achieve what just a few years ago seemed the idle speculation of futurists. But delivering this vision in an industry as regulated as health care is significantly harder than it may seem. While digital health models have existed for many years, the regulatory and reimbursement environment have stifled their evolution into fully integrated components of the health care delivery system.
The US Department of Labor (DOL) has provided guidance on health plan provisions that could trigger a violation of the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA), as amended by the Affordable Care Act. The DOL provided particular examples broken down by categories of plan provisions relating to coverage of mental health (MH)/substance use disorder (SUD) benefits which should trigger careful analysis of coverage for medical (med)/surgical med/surg) benefits to ensure compliance with the MHPAEA’s provisions regarding parity of non-quantitative treatment.
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