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Health Reform News: Final SBC Rule Tries to Eliminate Redundancy with SPD

February 9, 2012 – 5:19 pm | By Todd Leeuwenburgh | 2 comments

The departments implementing health reform can turn around a project when they are under the gun. Responding to concerns that the new “summary of benefits and coverage” (SBC) mandated by the health reform law is redundant, HHS, DOL and Treasury/IRS quickly turned around a final rule that eases some SBC requirements. The final rule and a guidance/overview document are now on the public display page of the Federal Register. They are scheduled for official publication on Feb. 14. Under the rule, plans with plan years that start Sept. 23, 2012 or later will have to supply SBCs in their next open enrollment. The agencies tackled a redundancy issue by not requiring group health plans and insurers to provide an SBC as a stand-alone document. Rather , the SBC can be incorporated into the summary plan description (SPD), provided the SBC information is intact and prominently displayed at the beginning of the SPD, such as just after the table of contents. The SBC may also be a standalone document. The proposed rule would have required them to be separate.  Flexibility for Brevity With the reform law and proposed rule language, major concerns emerged about the whether the SBC-required material could fit in four pages. The agencies embarrassed themselves when they issued their first template on six pages, thereby violating the law.  To address the space issue, the regulators proposed maybe allowing the SBC to be spread on both sides of four pages; in other words, letting it be as many as eight pages. The final rule builds on this, making an allowance for reasonable attempts.  “To the extent a plan’s terms that are required to be described 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 do so in a manner that is still consistent with the instructions and template format as reasonably possible,” the guidance states.  Language Requirements  Plans that have to provide appeals and review documents in a foreign language will also have to provide SBCs in a foreign language. As per the appeals and review rule, 255 U.S. counties (78 of which are in Puerto Rico) have sufficient numbers of foreign language speakers to require plans to put out SBCs and appeals and review documents in foreign languages, principally Spanish.  HHS will provide written translations of the SBC template, sample language and uniform glossary in Spanish, Tagalog, Chinese and Navajo.  The agencies issued the following compliance documents: (1) an SBC template; (2) a sample completed SBC; (3) instructions; (4) a “why this matters” document; (5) coverage examples; and (6) a uniform glossary of terms that may not be modified by plans or insurers.  Templates, Instructions, and Related Materials

• Summary of Benefits and Coverage (SBC) Template | MS Word Format
• Sample Completed SBC | MS Word format
• Instructions for Completing the SBC - Group Health Plan Coverage
• Instructions for Completing the SBC - Individual Health Insurance Coverage
• Why This Matters language for "Yes" Answers
• Why This Matters language for "No" Answers
• HHS Information For Simulating Coverage Examples
• Uniform Glossary of Coverage and Medical Terms

The model form includes only two coverage examples — childbirth (normal delivery) and managing Type 2 diabetes. Breast cancer, the third example in the proposed version, was dropped and the diabetes example was narrowed in response to “many comments asserting that the necessary calculations for the coverage examples would be costly and complicated,” the agencies explained in the preamble.  Changes were made to make the SBC relevant for self-insured coverage, by switching out terms like “policy” and “insurer” and using “coverage” and “plan” instead.  The final rule eliminated premiums from the required content for the SBC document. Therefore, the row for communicating premium information was removed from the SBC template document. Look for more coverage of this issue in the upcoming issue of the Employer’s Guide to Self-Insuring Health Benefits.

EEOC to Hold Feb. 15 Meeting on Pregnancy and Caregiver Issues

February 9, 2012 – 5:07 pm | By Guest Contributor | No comments yet

Why Nonunion Employers Should Give a Hoot About the NLRB’s Ruling in Horton

February 9, 2012 – 1:16 pm | By Harold Datz | No comments yet

Many employers try hard to curtail employee claims against them, or at least to channel such claims away from the courts and into less costly forums. Some have done this by forcing employees to promise not to file a class action suit; others allow class actions, but require that they be resolved through arbitration. The National Labor Relations Board’s recent case against D.R. Horton, a large Houston-based home builder, will require all employers, unionized or not, to rethink both of these strategies. When it comes to policies aimed at reducing the risk of litigation, Horton’s was particularly strict. As a condition of employment, employees had to waive their right to file a class action lawsuit and agree to bring any claims against the company individually through arbitration. Things came to a head at Horton when a group of superintendents at the company wanted to challenge their classification as exempt employees under the Fair Labor Standards Act and found they had no legal channel to do so. If the Horton ruling escaped your notice, you’re probably not alone. Indeed, the vast majority of cases the Board decides apply only to unionized workplaces — or where groups of employees wish to become unionized. Perhaps unbeknownst to most employers, however, the National Labor Relations Act, which the Board enforces, guarantees all employees the right to engage in concerted, i.e., group, activity. In the Board’s view, Horton’s policy prohibiting class actions interfered with this right. And here is why the Board’s decision is so significant. While no employer wants to be at the losing end of an employee dispute, individual employee claims generally do not involve large sums of money. For that reason, individuals oftentimes are unable to find an attorney willing to take their case. (Needless to say, an employee without a lawyer usually lacks the expertise and time to bring the action himself.) By contrast, employees as a group may have a large monetary claim and thus will be able to find a good lawyer. The availability — or nonavailability — of class actions can make the difference between employees bringing a claim or not. The Board’s decision essentially ensures a door stays open to any group of employees that wants to file a class action employment suit. What about the Federal Arbitration Act? Savvy HR professionals — and many employment attorneys — are likely wondering why the Board’s decision doesn’t run counter to the Federal Arbitration Act, a law enacted to ensure that agreements requiring arbitration aren’t treated less favorably than others. In the Board’s view, Horton’s policy of forbidding class litigation would be unlawful even if it contained no provision regarding arbitration; as the Board observed, the Supreme Court has held that even an agreement concerning arbitration cannot take away substantive rights (Gilmer v. Interstate-Johnson, 500 U.S. 20, 26). In the Board’s view, Horton’s requirement took away the substantive NLRA right of employees to engage in concerted activity. It’s worth noting that the Supreme Court’s attitude toward arbitration is a bit unpredictable, as evidenced in its ruling last year in ATT v. Concepcion. That case dealt with a California rule that declared invalid any agreement requiring that claims be pursued only in individual arbitration. The Supreme Court held that such a state rule was preempted by the federal FAA. In distinguishing Horton from Concepcion, the Board noted that the California rule dealt with all disputes, including commercial disputes. But the Board’s ruling only addressed employment disputes between employees and their bosses. While the implications of the Horton ruling are far-reaching, the Board was careful to limit its holding in certain respects. For example, the ruling made it clear that employers could still lawfully prohibit class action arbitration, so long as employees were free to pursue class actions in court. As to the reverse proposition, i.e., an agreement foreclosing class litigation in court but permitting class actions in arbitrations , the Board said that it was not resolving that “more difficult question.” Life After Horton Before lambasting the Board for being anti-business, employers should keep in mind just how restrictive Horton’s policy was. It had foreclosed all court litigation — class and individual— and all class arbitration. It was that blanket prohibition that the Board found particularly egregious. By “requiring employees to waive their right to collectively pursue employment-related claims in all forms, arbitral and judicial,” the Board ruled, Horton violated Sec. 8(a)(1) of the Act — the law’s central tenet guaranteeing concerted and union activity. Horton will likely appeal the Board’s ruling in federal circuit court. However, the Board’s “win” rate in circuit courts traditionally has been very high. Thus, employers should think twice before enforcing policies that require enacted to ensure that agreements requiring arbitration aren’t treated less favorably than others. Finally, employers may consider voluntary agreements by employees. In any event, employers should consult counsel before insisting on, or reaching, any agreements concerning arbitration and class actions. Harold Datz teaches employment and labor law at George Washington University Law School, Georgetown University Law School and at American University’s Washington College of Law. He served as chief counsel at the National Labor Relations Board from 1990-2008. [Check back next week for additional commentary on this important case.]

Retaliation Roulette (a game we don’t want to play)

February 9, 2012 – 12:59 pm | By Liza Casabona | No comments yet

[caption id="attachment_3021" align="alignleft" width="280" caption="image: Wikepedia"][/caption] Most employment laws include provisions protecting employees from vindictive managers who would otherwise punish them for exercising their rights. The Fair Labor Standards Act is no exception. The Labor Department’s Wage and Hour Division takes the anti-retaliation provisions of the FLSA seriously enough that it released a fact sheet (WHD Fact Sheet #77A) in December stressing some of its rules and guidance about retaliating against employees. In a nutshell, according to the agency fact sheet: employers may not discharge or discriminate against an employee who files an FLSA complaint regardless of whether the complaint is filed verbally or in writing; the retaliation provision applies to all employees, regardless of whether their work is covered by the FLSA; and an employee who is dismissed for filing a complaint may either file a retaliation charge with WHD or as a private cause of action. A recent ruling illustrating how crucial some of those specifics can be for employers. At the end of January the U.S. Court of Appeals for the Fourth Circuit ruled that internal complaints are also protected by the FLSA in a case that’s been working its way through the system for several years, Minor v. Bostwick Laboratories. In Minor the defendant, Kathy Minor, alleged she was fired from her job as a medical technologist in 2007 after she and several colleagues filed a complaint claiming that their supervisor changed time sheets so that overtime hours weren’t represented. The initial case was dismissed, but Minor appealed to the U.S. Court of Appeals for the Fourth Circuit. There’s been some debate in the courts over whether or not complaints that are filed orally and whether those only filed internally but not to a government agency are covered by the anti-retaliation protection of the FLSA. The Supreme Court held last year that oral complaints were covered in Kasten v. Saint-Gobain Performance Plastics Corp. The Fourth Circuit found that internal complaints are also covered.

IRS to Answer Your Questions on 401(k) Compliance

February 9, 2012 – 8:42 am | By James Proescholdt | No comments yet

As a follow-up to its “Section 401(k) Compliance Check Questionnaire Interim Report,” the IRS will host a phone forum March 6. The phone forum will be hosted by Monika Templeman, Director of Employee Plans Examinations at the IRS, along with IRS employees Janice Gore and Rhonda Migdail. Submit any questions you have about the Interim Report’s findings, next steps or other current issues about 401(k) audits by Friday, Feb. 17, to ep.phoneforum@irs.gov. The Interim Report was published February 2012, and summarizes responses from more than 1,100 401(k) plan sponsors on compliance issues. Topics included employer contributions, nondiscrimination testing, safe harbor plans, the IRS’ Employee Plans Compliance Resolution System and more. Register through the IRS website or directly on the teleconference website.