American Benefits Council
Benefits Byte

2014-018

March 10, 2014

The Benefits Byte is the American Benefits Council’s regular e-mail and online newsletter for members only, providing timely reports on legislative, regulatory and judicial developments, along with updates on the Council’s activities in support of employer-sponsored benefit plans.

The Benefits Byte is published by the American Benefits Council, based on staff reports and edited by Jason Hammersla, Council director of communications. Contact information for Council staff related to specific topics can be found at the end of each story.

Click here to read past issues on the Benefits Byte Archive page.

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Responding to Comments, CMS Announces it will Not Finalize Certain Medicare Rules

The Centers for Medicare and Medicaid Services (CMS) of the U.S. Department of Health and Human Services announced on March 10 that it will not finalize certain elements of proposed regulations addressing the Medicare Advantage (Part C, which covers Medicare-eligible seniors through private insurance) and Part D prescription drug program. The proposed regulations, issued January 10, offer changes to current law and implement certain provisions of the Patient Protection and Affordable Care Act (PPACA).

Specifically, the agency will not finalize proposals to lift the “protected class” definition on three drug classes, to set standards on Medicare Part D plans’ requirements to participate in preferred pharmacy networks, to reduce the number of Part D plans a sponsor may offer, and clarifications to the non-interference provisions.

In describing the reason for the announcement, CMS cited numerous concerns about those proposals from members of Congress and stakeholders, stating that “Given the complexities of these issues and stakeholder input, we do not plan to finalize these proposals at this time. We will engage in further stakeholder input before advancing some or all of the changes in these areas in future years.”

Among the comments considered by CMS was the Council’s March 7 letter, in which we expressed concern about the potentially harmful effect on retiree coverage that would stem from the proposed changes, particularly regarding:

  • Access to cost-effective mail order pharmacy benefits;
  • Exceptions that allow Part D sponsors to exclude certain Part D drugs in drug categories or class from their formularies;
  • Clarifications related to the Medicare Coverage Gap Discount Program and employer group waiver plans (EGWPs);
  • Requirements for “any willing” pharmacy; and
  • Restrictions on the use of preferred networks and cost sharing.

The Council’s letter noted that “many Council member companies sponsor retiree health benefits that rely on Medicare Advantage and Part D Prescription Drug Plans to provide affordable, high quality prescription drug coverage to retirees. ... We are concerned about the potential for the Proposed Rules to reduce choice and impose higher costs that ultimately would be borne by employers who provide retiree coverage and beneficiaries.” The CMS announcement at least partially addresses these concerns, although we will continue to engage policymakers on remaining issues.

CMS noted that it will finalize proposals related to consumer protections (e.g., ensuring access to care during natural disasters), anti-fraud provisions that have bipartisan support (e.g., strengthening standards for prescribers of prescription drugs), and transparency (e.g., broadening the release of privacy-protected Part D data) after taking into consideration the comments received during the public comment period.

For more information, contact Kathryn Wilber, senior counsel, health policy at (202) 289-6700.



Council, Other Employer Groups Send Letter Opposing Proposed Cuts to Medicare Advantage Program

In related news, the Council recently joined with five other employer groups on a letter to the Centers for Medicare and Medicaid Services (CMS) urging the agency to avoid proposed cuts to the Medicare Advantage (MA) program.

As we reported in the February 6 Benefits Byte, proposed 2015 rates for the MA program will be announced soon, with final rates to be set in April. PPACA and subsequent payment changes resulted in a 6.7 percent rate reduction in 2014 and there is concern that additional cuts could be on the horizon.

“These drastic cuts to MA will increase premiums for participants and increase costs to employers. … In order to prevent further damage to the program and disruption to seniors, we urge CMS to eliminate the proposed cuts, providing flat funding from 2014 to 2015,” the letter said. The Council filed its own letter expressing similar concerns on February 3. For more information, contact Kathryn Wilber, senior counsel, health policy at (202) 289-6700.



Now Available: Summary of Employee Benefit Proposals in 'Tax Reform Act of 2014'

A new chartavailable on the Council website, provided courtesy of Davis & Harman LLP, describes the various employee benefit proposals in the Tax Reform Act of 2014, the comprehensive tax reform proposal released February 26 by House of Representatives Ways and Means Committee Chairman Dave Camp (R-MI).

As we reported in the February 26 Benefits Byte, Camp’s so-called “discussion draft” aims to lower overall individual and corporate tax rates by reducing tax expenditures attributable to targeted exclusions, deductions and deferrals. In so doing, the proposal would affect numerous tax incentives supporting employer-sponsored health and retirement benefits. Statutory text of the proposal is available in addition to a detailed explanatory document and a section-by-section summary.

The newly available chart provides information on provisions addressing retirement plan contribution limits, the indexing of retirement plan limits, contributions to Individual Retirement Arrangements (IRAs), nonqualified deferred compensation plans, contributions to 403(b) and 457(b) plans, early distribution tax and 457(b) plans, SEPs and SIMPLEs, small employer pension plan startup credits, stretch IRAs, net unrealized appreciation (NUA), hardship distributions, in-service distributions, early distributions for first home purchase or higher education, rollover rules and loans and re-characterizing Roth IRA contributions.

In addition, the graph describes provisions affecting health plans, such as the medical device tax, allowing over-the-counter drugs in FSAs, small employer health insurance credits, deductions for medical expenses and medical savings accounts.

The Council continues to engage in conversations with policymakers on tax reform and the potential ramifications of dramatic changes in the health and retirement plan tax incentives. We welcome your input as we refine our talking points on these matters. A Benefits Briefing webinar on the Camp tax proposal is being scheduled and will be announced soon.

For more information, contact Lynn Dudley, senior vice president, retirement and international benefits policy, or Diann Howland, vice president, legislative affairs, at (202) 289-6700.



The American Benefits Council is the national trade association for companies concerned about federal legislation and regulations affecting all aspects of the employee benefits system. The Council's members represent the entire spectrum of the private employee benefits community and either sponsor directly or administer retirement and health plans covering more than 100 million Americans.

Notice: the information contained herein is general in nature. It is not, and should not be construed as, accounting, consulting, legal or tax advice or opinion provided by the American Benefits Council or any of its employees. As required by the IRS, we inform you that any information contained herein was not intended or written to be used or referred to, and cannot be used or referred to (i) for the purpose of avoiding penalties under the Internal Revenue Code, or (ii) in promoting, marketing or recommending to another party any transaction or matter addressed herein (and any attachment).