HEALTH CARE REFORM: 2015 SURVIVAL BOOT CAMP

May 12, 2005 HEALTH CARE REFORM: 2015 SURVIVAL BOOT CAMP October 1, 2015 Presentation To The Dallas Estate Planning Concil by Cynthia Marcotte Stamer, Esq. Managing Shareholder Cynthia Marcotte Stamer, PC, A Member of STAMER CHADWICK SOEFJE PLLC Main Office: 5851 Legacy Circle, 6th Floor, Plano, Texas 75024 Mail Room: 3948 Legacy Drive, Site 106, Box 397, Plano, Texas 75023 24 Hor Direct Dial: (469) 767-8872 Main Switchboard: (469) 626-5180 cstamer@soltionslawyer.net www.stamerchadwicksoefje.com www.cynthiastamer.com 2015 Cynthia Marcotte Stamer. All Rights Reserved. 1 2015 Cynthia Marcotte Stamer. All rights reserved. 1

Abot Cynthia Marcotte Stamer, Esq. A noted Texas-based management lawyer and consltant, athor, lectrer and policy advocate, Stamer Chadwick Soefje PLLC attorney Cynthia Marcotte Stamer is a management lawyer best known for her more than 27 years of pragmatic, leading edge, soltions oriented work and thoght leadership on health and other employee benefit concerns, A Fellow in the American College of Employee Benefit Consel, the American Bar Association and the Texas Bar Association, recognized by DMagazine as among the Best Lawyers In Dallas for her work in the field of Tax: ERISA & Employee Benefits, among the Top Rated Labor & Employment Lawyers in Texas in the 2014 LexisNexis Martindale-Hbbell list of Top Rated Lawyers, Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization,, Vice Chair of the American Bar Association (ABA) TIPS Employee Benefits Committee, Immediate Past Chair and the crrent Welfare Committee Co-Chair of the ABA RPTE Employee Benefit & Other Compensation Grop, a Concil Member of the ABA Joint Committee on Employee Benefits, Past Chair of the ABA Health Law Section Managed Care & Insrance Section and Board Certified in Labor and Employment Law, Ms. Stamer helps management manage. Her clients appreciate her ability to draw pon her expansive knowledge of the complex tapestry of federal and state jdicial precedent and stattory, reglatory, contracting, other laws and indstry operations to help clients defensibly prse their bsiness operations, corporate compliance, internal controls and risk management and other goals. While her work extends to a broad range of hman resorces and performance management, Ms. Stamer continosly advises and represents health and other employee benefit plans, their fidciaries, insrers, sponsors, administrators and other vendors abot the design, docmentation, administration and defense of employee benefit and insrance programs, ethics, compliance and management processes and tools for administering these and other processes, and ERISA and other employee benefit, insrance, tax, licensing, privacy and data secrity, hman resorces, contracting, technology, risk management and other legal compliance and operational concerns. She designs and writes insred and self-insred health, 24-hor and other occpational injry benefit and risk management, disability management, corporate health and wellness, disease management, tilization, adit, patient empowerment, deferred compensation and pension and other employee benefit, insrance and retirement programs. Her work incldes leading edge development and se of 24-hor coverage and other occpational injry, ex-pat and other medical torism prodcts, min-med and other limited benefit plans, fraternal benefit and association plans, hidedctible health plans and dedctible reimbrsement programs. Ms. Stamer also designs and advises clients abot fidciary process and risk management, claims and appeals administration. She consels and defends clients abot reglatory compliance; defends clients in ERISA, contract, and other disptes by private plaintiffs, as well as litigation, adits, licensing board and other enforcement actions by state insrance departments, the Department of Labor, the Internal Revene Service, the Office of Civil Rights, the Centers for Medicare & Medicaid Services, the Department of Jstice, State Attorneys General and other federal and state reglators. She also has extensive experience conseling third party administrators, insrers, self-insred employee benefit plans and their sponsors, medical bill adit, tilization management, cafeteria plan administrators and sponsors, reinsrers, fidciary liability and other E&0 carriers, conslting firms, brokers, and others abot prodct design and defense; licensre; contract review, drafting, interpretation and enforcement; corporate and broker ethics, reglatory compliance and risk management programs; managed care contracting and compliance; electronic and paper claims and appeals administration nder ERISA, clean claims and prompt pay, workers compensation, and other laws; coordination of benefits with Medicare, Medicaid, CHIP, TRICARE, and other third party liability sorces; sbrogation and assignment; federal and state health care, insrance, tax, labor, licensing and other matters. The athor of Claim s Processing Under the New World Order" "The Health Care Eligibility Toolkit, and A Plan Sponsor s HIPAA Privacy & Compliance Toolkit, and many other implementation processes and aids, she reglarly advises, develops processes and procedres, and condcts training for insrers, plan fidciaries and administrators, third party administrators and other service providers, employers, their professional associations and others. Her clients inclde employers, contractors and their employee benefit plans, their sponsors, management, administrators, insrers, fidciaries and advisors, technology and data service providers, health care, managed care and insrance, financial services, government contractors and government entities, governments and law makers, and others A poplar lectrer and widely pblished athor of thosands of pblications on health, disability, and other employee benefits, insrance, health care and hman resorces matters. Ms. Stamer pblishes the HR & Benefits Update. Her insights on health care, health insrance, hman resorces and related matters appear in the Atlantic Information Service, Brea of National Affairs, World At Work, The Wall Street Jornal, Bsiness Insrance, the Dallas Morning News, Managed Healthcare, Health Leaders, and a many other national and local pblications. To register to receive the HR & Benefit Update, arrange for training or for additional information abot Ms. Stamer, her experience, involvements, see www.cynthiastamer.com or contact Ms. Stamer by telephone at (469) 767-8872, by e-mail to cstamer@soltionslawyer.net or by mail to Cynthia Marcotte Stamer, P.C., 3948 Legacy Drive, Site 106, Box 397, Plano, Texas 75023, 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 2 2015 Cynthia Marcotte Stamer. All rights reserved. 2

THE FINE PRINT This presentation and any materials and/or comments are training and edcational in natre only. They do not establish an attorney-client relationship, are not legal advice, and do not serve as a sbstitte for legal advice. No comment or statement in this presentation or the accompanying materials is to be constred as an admission. The presenter reserves the right to qalify or retract any of these statements at any time. Likewise, the content is not tailored to any particlar sitation and does not necessarily address all relevant isses. Becase the law is rapidly evolving and this presentation provides an overview, this program and its materials also may not be flly pdated to reflect the crrent state of law in any particlar jrisdiction or circmstance as of the time of the presentation. Frthermore, the rapidly evolving rles also makes it highly likely that sbseqent developments may impact the crrency and completeness of this discssion. The presenter and the program sponsor disclaim, and have no responsibility to provide any pdate or otherwise notify any participant of any sch change, limitation, or other condition that might affect the sitability of reliance pon these materials or information otherwise conveyed in connection with this program. Parties participating in the presentation or accessing of these materials are solely responsible for and are rged to engage competent legal consel for consltation and representation in light of the specific facts and circmstances presented in their niqe circmstance. 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 3 2015 Cynthia Marcotte Stamer. All rights reserved. 3

THE FINE PRINT Circlar 230 Compliance. The following disclaimer is inclded to ensre that we comply with U.S. Treasry Department Reglations. Any statements contained herein are not intended or written by the writer to be sed, and nothing contained herein can be sed by yo or any other person, for the prpose of (1) avoiding penalties that may be imposed nder federal tax law, or (2) promoting, marketing or recommending to another party any tax-related transaction or matter addressed herein.* 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 4 2015 Cynthia Marcotte Stamer. All rights reserved. 4

Continosly Evolving Federal Health Plan Rles - ERISA - Internal Revene Code - 20+ Years of Sbseqently Enacted Federal Eligibility, Benefit & Other Mandates COBRA, FMLA, USERRA, HIPAA, GINA Mental Health Parity, OBRA 93, Newborn & Mothers Medicare Prescription Drg Bill ARRA Many Others - Affordable Care Act Reqirements - More 2015 Cynthia Marcotte Stamer. All rights reserved. 5

Offering Health Plan Coverage = Costly, Risky Bsiness Health Plan Coverage Is Expensive 2015 Average Employer-Sponsored Health Plan Premims* Single Coverage = $6,251, of which workers on average pay $1,071 Family Premim = $17,545, with workers on average contribting $4,955. 2016 Costs Projected To Rise Premims Don t Show Hidden Compliance & Liability Costs * Kaiser Family Fondation/Health Research & Edcational Trst (HRET) 2015 Employer Health Benefits Srvey 2015 Cynthia Marcotte Stamer. All rights reserved. 6

Obama Reads SCOTUS King v. Brwell As ACA Enforcement Go Ahead Obama Administration Moving To Fll ACA Implementation IRS, DOL, HHS Adits & Enforcement Private Litigation Little Realistic Prospect For Legislative Relief In Near Ftre 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 7 2015 Cynthia Marcotte Stamer. All rights reserved. 7

Mst Employer Offer Coverage? No, Bt ACA & Other Federal Laws Generally Not Mandate Employers Offer Any Grop Health Coverage Unless Contractal Obligation, E.G.: - Collective Bargaining Agreement - Certain Government Contractors - M&A Or Other Contractal Promises Certain Recordkeeping, Tax Reporting & Notice Reqirements Apply Whether Or Not Employer Sponsors Grop Health Plan Employer Payment Arrangements (Pay/Reimbrse Individal Policies) In Lie of Traditional Plan Sponsorship Generally Prohibited Applicable Large Employer Not Offering Qalifying Grop Health Plan Coverage To Some Or All FTEs & Dependents Generally Incrs Pay or Play Penalty Under IRC 4980H(a) If Cover Some, Not All: - Applicable Large Employer Not Offering Qalifying Grop Health Plan Coverage To Some Or All FTEs & Dependents Generally Incrs Pay or Play Penalty Under IRC 4980H(a) - Prohibited Discrimination Traps For Eligibility Under Code 125, 105(h) & HCE nondiscrimination, ERISA, HIPAA, GINA, Social Secrity Act & Other Laws *Grandfathered Plan Stats, Plan Size & Benefit Design May Impact Applicability 2013 Cynthia Marcotte Stamer. All Rights Reserved. Page 8 2015 Cynthia Marcotte Stamer. All rights reserved. 8

What Health Insrance Coverage, If Any Mst/Shold Employer Offer? Rle Small Employer < 25 FTEs Medim Employer FTEs Large Employer 50-99 FTEs Large Employer > 100 FTEs IRC 162 Employer Premim Dedction Yes Yes Yes Yes IRC 46R Tax Credit Yes No No No IRC 4980H Pay or Play (Transition Relief Delays Enforcement to 2015 For Employer of >100 FTEs and 2016 If 50-99 FTEs) No No Yes beginning 1/1/2016 Yes beginning 1/1/2015 IRC 105(h) Self-Insred Health Plan HCE Nondiscrimination Yes if selfinsred Yes if selfinsred Yes if selfinsred Yes if self insred PHS 2716 Insred Non-Grandfathered HCE Nondiscrimination Excise Tax $100 per day per non-highly compensated individal discriminated against (delayed by Notice 2011-1 ntil frther notice, pls a possible civil action to enjoin the discriminatory practice Code 125 Taxability of Contribtions Discriminating In Favor of HCE or Key Employees Contractal Obligations When Union, Government Contractor, M&A or Other Obligation Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Page 9 2015 Cynthia Marcotte Stamer. All rights reserved 2015 Cynthia Marcotte Stamer. All rights reserved. 9

Mst Employer Offer Coverage? No, Bt If Does If Employer Offers Grop Health Coverage, Employer, Fidciaries, & Others Mst Comply With All Applicable Mandates* *Grandfathered Plan Stats, Plan Size & Benefit Design May Impact Applicability 2013 Cynthia Marcotte Stamer. All Rights Reserved. Page 10 2015 Cynthia Marcotte Stamer. All rights reserved. 10

For Health Plan Compliance & Conseqences Size Matters For Some (Bt Not All) Things, e.g. IRC 4980H Pay or Play Only Applies To Large Employers Not Offering Minimm Essential Coverage (MEC) Providing Minimm Vale (MV) That Is Affordable Small Bsiness Health Care Tax Credit Applicable Only To Small Employers Some Notice, Reporting & Disclosre, Plan Design & Other Mandates Vary By Size Different Rles Cont Employees Differently Some Violations Riskier Than Others 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 11 2015 Cynthia Marcotte Stamer. All rights reserved. 11

For Health Plan Compliance & Conseqences Mst Accrately Know Who Are Employees Accrate Understanding & Records Of Who Conts As Employee When M&A, Joint Ventres, Management Services Organizations, Alternative Workforce, Leased Employees & Other Special Workforce Rles Create Special Challenges & Risks - Necessary To Manage Risks & Compliance - Dty To Provide Benefits - Plan & Insrance Coverage - Discrimination - Benefit & Fidciary Liability - MEWA - Other 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 12 2015 Cynthia Marcotte Stamer. All rights reserved. 12

Grop Health Plan Compliance & Risks Employers, Fidciaries, Administrators, Insrers, Brokers & Consltants If Yo Can t Take The Heat, Stay Ot Of The Health Plan Kitchen 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 13 2015 Cynthia Marcotte Stamer. All rights reserved. 13

Big Pictre Employer/Plan Sponsor Risks Any Offered Grop Health Plan Mst Comply With Applicable Federal Mandates & Other Laws* ERISA Fidciary Responsibility Risks For The Employer, Management Involved In Plan Administration or Selection or Oversight Of Plan Fidciaries & Service Providers Employer/Plan Sponsor Vs. Fidciary Privacy Matters: HIPAA, IRC, ADA & Other Privacy Mandates Wide Range of Federal Rles, Inclding ERISA, ACA & Many Other Federal Laws* Wide Range Of New & Growing Plan Docment, Notice, Reporting, Recordkeeping, Disclosre & Other Mandates If Large Employer, Mst Pay Applicable Pay Or Play Penalty Under IRC 4980H Unless Offer Affordable Grop Health Plan That Provides Minimm Essential Coverage (MEC) Providing Minimm Vale (MV) In addition to otherwise applicable legal sanctions, Form 8928 Sox For Health Plan Reporting & Excise Tax Apply If Violate Any Of Listed Provisions *Grandfathered Plan Stats, Plan Size & Benefit Design May Impact Applicability 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 14 2015 Cynthia Marcotte Stamer. All rights reserved. 14

Employer/Plan Sponsor IRC 6039D/Form 8928 Sox Self- Reporting & Excise Tax Penalties Discrimination As Employer Plan Fnding Of Unanticipated Benefits Potential Fidciary Liability For Matters Over Discretion Indemnification of Defense Costs & Liabilities Of Vendor/Service Providers, Exectives Per Contractal Obligations Reporting/Disclosre Penalties Tax Liabilities - Withholding - Dedctions - Form 8928 Sox Style Self Reporting Other Risks Inclde 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 15 Fidciary/Plan Administrator Personal Liability For Own, Co- Fidciary Breach 502(l) Fidciary Breach Penalties Administrative Penalties Other Broker/Advisor/Service Provider Risks If Fidciary Discretion, Personal Liability For Own, Co-Fidciary Breach & 502(l) Fidciary Breach Penalties If Plan Administrator, Payroll Agent, Administrative Penalties Circlar 230 or Other Professional Ethics Breach Risks Malpractice/E&C Contractal Breach of Fidciary Dty DPTA or Other Bad Faith Other 2015 Cynthia Marcotte Stamer. All rights reserved. 15

Big Pictre Employer/Plan Sponsor Risks Heightened Enforcement Of Fidciary & Other Reqirements Pls Expanding Rles, Reporting, Penalties & Enforcement Make Health Plan Compliance & Risk Management Particlarly Critical Now Certain Rles/Risks Apply To All Grop Health Plans Other Rles, Risks Vary Based On: Grandfathered Vs. Non-Grandfathered Plan Under ACA Size of Employer Benefits Offered Insred Vs. Self-Insred - If Insred, State Mandates, ACA Essential Benefits & Other Market Reforms Benefits Offered Plan Design Other Compliance & Risk Management Make Docmented Plan Design, Docmentation, Vendor Selection, Credentialing & Contracting; & Oversight Critical 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 16 2015 Cynthia Marcotte Stamer. All rights reserved. 16

IRC 6039D/IRS Form 8928 Health Plan's "SOX Ups The Ante For Employers Beginning with 2014 Tax Year Employers and plan sponsors mst report on Form 8928 to report excise taxes de for certain health plan violations for post-2013 Tax Years Employer Srprise, Discontent When Learn Of Potential 2014 Liability Creates Liability For Insrers, Administrators, Consltants, Brokers & Other Advisors Recognize & Plan To Deal With Potential Exposres, Fallot For Yor Clients & Yor Plan Related Services 2015 Cynthia Marcotte Stamer. All rights reserved. Page # 2015 Cynthia Marcotte Stamer. All rights reserved. 17

ERISA Fidciary Responsibility Which Hat Do Yo/Yor Firm Wear? Plan Sponsor, Fidciary, Consltant, Service Provider, Other? Named or Fnctional Discretion Triggers Fidciary Stats. Often Incldes: - Bsinesses Sponsoring Plans - Officers, Directors & Management Employees Engaged In Discretionary Acts or With Power or Responsibility Over Fnding, Select/Retain Fidciaries & Service Providers/Commnicating, Other Activities - Insrers & Administrators Disclaimers/Exclpatory Provisions Void Otsorcing & Delegation May Not Shift Risk/Responsibility Unless Proper Selection & Oversight, Written Appointment & Acceptance Of Fidciary Stats, No Fnctional Exercise Of Discretion, Other Safegards 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 18 2015 Cynthia Marcotte Stamer. All rights reserved. 18

Fidciary Responsibility The Qacking Dck Principle If It Walks Like A Fidciary, & Talks Like A Fidciary. If Fnctions Don t Match Up In Operational Reality, Liability Spreads 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 19 2015 Cynthia Marcotte Stamer. All rights reserved. 19

Persons Qalified To Serve As Fidciaries Disqalified Persons Can t Serve - Get & Retain FCRA Reporting Act Consent - Condct Backgrond Check & Retain Proof ERISA Bonding Reqired For Fidciaries, Certain Others Delegation Not Transfer Fidciary Stats Unless Written Appointment & Acceptance, Prdently Selected & Overseen Select, Monitor & Contract With Care 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 20 2015 Cynthia Marcotte Stamer. All rights reserved. 20

Core Fidciary Dties Mst Discharge Dties With Respect To The Plan & Its Administration, Assets: Solely In The Interest Of Participants And Beneficiaries For Exclsive Prpose Of Providing Benefits With Care, Skill, Prdence, And Diligence That A Prdent Person Wold Use Under Like Capacity And Circmstances In Accordance With Written Plan Docments; And In Accordance With ERISA And Any Other Applicable Federal Or State Law No Prohibited Transactions Assets Held In Trst Unless Exception Applies 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 21 2015 Cynthia Marcotte Stamer. All rights reserved. 21

Selection, Retention & Oversight Of Fidciaries & Service Providers Selection & Oversight Of Plan Fidciaries * Service Providers Commonly Considered Fidciary Act Prdent Selection & Oversight Prohibited Transaction Prohibited Qalification & Bonding Reasonable Fees & Fee Disclosres DOL New Reglations Will Reqire Greater Care In Selection, Contracting, Adit & Compensation 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 22 2015 Cynthia Marcotte Stamer. All rights reserved. 22

Fidciary Liability For: Personal Civil Liability For - Own Breach Of ERISA Fidciary Responsibilities - Co-fidciary s Breach Of ERISA Fidciary Responsibility If: Participated By Own Breach Knew Or Shold Have Known Imprdent Selection Oversight ERISA 502(l) Penalty 20% Amont Recovered From Fidciary Breach Settlement Or Cort Order (Redced by ERISA 502(i) & IRC 4975 Penalties Paid ERISA 502(i) Prohibited Transaction Administrative Penalty If Not Corrected Within 90 Days After Notice From DOL Up To 100 % Amont Involved 5% Amont Involved In Each Sch Transaction Each Year/ Partial Year Prohibited Transaction Contines 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 23 2015 Cynthia Marcotte Stamer. All rights reserved. 23

ERISA Civil Liability Stattory Awards For Noncompliance Fail To Provide Plan, SPD, SBC, COBRA, HIPAA Certificate, Claims or Appeals Notice, Certain Other Docments Reqired Time - ERISA 502(c) Discretionary Award To Participants/Beneficiaries $125 Per Day + Attorneys Fees And Eqitable Relief - $1000 Per Day To DOL For Failre To Timely Or Appropriately File Form 5500 Annal Report, Provide Information In Response To Reqest For Information, SBC, File Form M-1, Failing To Provide Certain Reqired Notices Of Underfnding, Defined Contribtion Plan Blackot Notice And Other Violations Under ERISA - Varios New Affordable Care Act Penalties - Internal Revene Code Penalties 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 24 2015 Cynthia Marcotte Stamer. All rights reserved. 24

ERISA Criminal Exposres Inclde: Theft or Embezzlement from Employee Benefit Plan False Statements or Concealment of Facts in Relation to Docments Reqired by the Employee Retirement Income Secrity Act of 1974 Offer, Acceptance, or Solicitation to Inflence Operations of Employee Benefit Plan Prohibition Against Certain Persons Holding Certain Positions ERISA 411 Willfl Violation of Title I, Part 1 ERISA 501 Coercive Interference. Persons convicted of violations enmerated in section 411 are sbject to a bar from holding plan positions or providing services to plans for p to 13 years nder ERISA 511 HIPAA Criminal Liability For Making Fradlent Claims Under Federal Health Plan HIPAA Health Plan Violation of HIPAA Privacy Reqirements Federal Tax Shelter & Other Tax Frad Liability Under Internal Revene Code Other (Inclde In Federal Sentencing Gideline Organizational Gideline Compliance Plan) 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 25 2015 Cynthia Marcotte Stamer. All rights reserved. 25

Plan Docment Reqirement Dty To Have & Administer in Accordance With Plan Docment Plan Docment Reqired Plan Docments Defined; SPD or Insrance Contract Alone Rarely Sfficient Content & Langage Precision Matters Name Fidciaries, Scope of Athority & Discretion Other Mandatory Content Exploding Advisable Langage Failre To Update Terms For Law Enhances Risks For Plan Violations, Forces Fidciary Discretion Sloppy Drafting Expands Fidciary Risk, Undermines Enforceability - Proper Adoption & Amendment - Availability for Inspection & Copying Upon Reqest 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 26 2015 Cynthia Marcotte Stamer. All rights reserved. 26

Written Plan Terms Matter At Least One Named Fidciary Updated To Clearly Comply With Law - Enron: Fidciary Mst Investigate Legality Of Terms And Constre And Administer In Accord With Law. Administration In Accordance With Illegal Plan Terms May = Fidciary Breach All Mandated Terms All Material Terms Other Advisable Terms Minimize Ambigities To Protect Fidciaries, Enhance Enforceability 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 27 2015 Cynthia Marcotte Stamer. All rights reserved. 27

Plan Langage Impacts Potential Degree of Deference To Fidciary Decision-Making Loose Drafting Is A Fidciary s Enemy If plan written to give the plan administrator discretion in constring the terms of the plan and the plan administrator complies with fidciary dties in constring and administering the plan, administrator s decision may be entitled to some measre of deference if claimant ses. See Firestone v. Brch (1990) Degree of deference varies depending on reviewer s financial interest or other conflict of interest in otcome and possible conflicts. See MetLife Ins. Co. v. Glenn, 128 S. Ct. 2343 (2009) 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 28 2015 Cynthia Marcotte Stamer. All rights reserved. 28

Plan Term Risk Management Tips Avoid Naming The Plan Sponsor, Corporate Officers Or Board Members As A Fidciary; Consider, When Possible Naming Service Provider Responsible For Activities Or Committee Careflly Craft Written Delegation Athority Then Prdently Credential, Oversee, Compensate And Review Appointed Parties Define The Roles Of Plan Sponsor And Fidciaries Then Stick To Allocations Inclde Reasonable Time Limits Within Which Claims Mst Be Filed Or They Will Be Denied As Untimely Plans Shold Be Created Or Amended To Give The Claims Fidciary Discretion To Constre The Terms Of The Plan, Make Benefit Eligibility Determinations, And Make Factal Findings Plans Shold Warn Participants That Their Failre To Exhast The Internal Claims Procedres Will Reslt In A Motion To Dismiss For Failre To Exhast Those Procedres In The Event A Participant Or Beneficiary Files A Lawsit When Allowed By Law Draft Plan To Provide Plan Has The Right To Correct And Recop Any Overpayments. Draft Plan To Reqire Participants And Beneficiaries To Attest To Eligibility Facts, Other Matters That Cold Be Basis Of Frad 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 29 2015 Cynthia Marcotte Stamer. All rights reserved. 29

Plan Assets, Plan Expenditres & Plan Investments Big Responsibilities Growing Bigger Plan Assets Held In Trst By Trstee Unless Meet Reqirements For Exception Cafeteria Plan Interface Insolvency, Other Failres to Fnd Who Holds The Money and How? Dedctibility Taxability of Income Earned Prdent Investment & Expenditre Emerging Reqirements Regarding Prdent Vendor Selection & Services Pricing Adit Prdence of Aditor Selection & Oversight New Welfare Plan Fee Disclosre Reqirements Likely To Prompt New Scrtiny Of Client Services Other 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 30 2015 Cynthia Marcotte Stamer. All rights reserved. 30

ERISA Claims & Appeals ERISA Reasonable Claims & Appeals Procedre Reqirements Apply To All Plans ACA Adds Independent Review & Other Reqirements For Non- Grandfathered Grop Health Plans Plan Docment/SPD/EOB Content, Compliance With DOL Reglations, Fidciary Discretion & Condct Matter Prompt Pay, Other State Law Liability To Providers For Non- Derivative Claims Coordination of Benefits Risks False Claims Act, Social Secrity Act 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 31 2015 Cynthia Marcotte Stamer. All rights reserved. 31

ACA Grandfathered Plans Coverage Provided By A Grop Health Plan Or A Health Insrance Isser Only If: Plan/Policy Continosly Existed On 3/23/10 Plan/Policy Continosly Exist For As Long As Grandfathered Stats Is Claimed At Least 1 Individal Was Enrolled On 3/23/10 For As Long As It Maintains Grandfathered Plan Stats Plan/Policy Not Experienced Disqalifying Material Change Reqired Grandfathered Stats Disclosres Provided Reqired Docmentation Maintained Cationary Note: Review & Reconfirmation Of Stats Of Plans Presmed To Qalify As Grandfathered As Market Forces & Reqirements To Collect & Maintain All Plan Docmentation Since 3/23/10 Inclding Plan Docment, SPD, Vendor Contracts, Etc. & Other Restrictions Raise Challenges In Maintaining Grandfathered Plan Qalifications 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 32 2015 Cynthia Marcotte Stamer. All rights reserved. 32

Key Federal Plan Design Rles* Federally Reqired Plan Terms Inclde Federal Employment Discrimination Laws Inclding ADEA, ADA, Title VII & Pregnancy Act, GINA, Religion Obergefell v. Hodges Same-Sex Marriage Rling Implications Medicare, Medicaid, SCHIP, TRICARE & Other DOD, ACA PIP Plan Federal Nondiscrimination, Eligibility, COB & Reporting Reqirements Children Affected By Divorce/Medicaid-QMCSOs Child Adopted or Placed For Adoption Mst Be Child IRC 105(h)/ACA Insred Plan Nondiscrimination In Favor Of HCE & Associated IRC 125 Cafeteria Plan Rles FMLA, USERRA Military Leave, COBRA, Michelle s Law Coverage Contination *Grandfathered Plan Stats, Plan Size & Benefit Design May Impact Applicability 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 33 2015 Cynthia Marcotte Stamer. All rights reserved. 33

Key Federal Plan Design Rles* Federally Reqired Plan Terms Inclde HIPAA Creditable Coverage & Special Enrollment Mandates HIPAA Pre-Existing Condition Limits Restricted To 12 Months (18 Late Enrollment) Less Creditable Coverage On All Plan Benefits HIPAA/GINA Nondiscrimination On Health Stats & Genetic Information GINA Prohibition Of Genetic Information Collection Inclding Family History Note: HIPAA Nondiscrimination & GINA Present Special Reqirements & Risks For Wellness & Disease Management Programs. See New Final HIPAA Wellness Reglations *Grandfathered Plan Stats, Plan Size & Benefit Design May Impact Applicability 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 34 2015 Cynthia Marcotte Stamer. All rights reserved. 34

Key Federal Plan Design Rles* Benefit Design Mandates Insred Grop Health Plans Provide Essential Health Benefits Becase ACA Generally Reqires Policies Offered By Insrers In Large or Small Grop or Individal Market To Meet Essential Health Benefit, Market Reform & Other Reqirements Unless Grandfathered Plan, Or Otherwise Exempt Grandfathered Plan & Excepted Benefit Plan Reglations & Rles Limit Availability Of These Reqirements. Applicability Often Oversold 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 35 2015 Cynthia Marcotte Stamer. All rights reserved. 35

Key Federal Plan Design Rles* Bona Fide Wellness Programs New Rles Wellness & Disease Management Violate HIPAA/GINA Nondiscrimination Unless Meet Final ACA/HIPAA Wellness Reglations Allowable Reward Limited To 30% Of Cost Of Medical Coverage (50% With Respect To Smoking) New Final Reglations Set Forth Detailed Rles Based On If Program: - Participatory - Health Stats Based All Programs Mst Be Available To All Similarly Sitated Participants Health Stats Based Reqirements Inclde Many Conditions, Inclding: - Opportnity To Qalify At Least Annally - Reasonably Likely To Improve Wellness - Generally Mst Provide Reasonable Alternative Method Of Obtaining Reward To Participants If Unable Or Health Makes Unadvisable To Participate - Specific Notifications & Other Safegards Other laws impact wellness programs (GINA, ADA, HIPAA Privacy, ERISA, IRC) *Grandfathered Plan Stats, Plan Size & Benefit Design May Impact Applicability 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 36 2015 Cynthia Marcotte Stamer. All rights reserved. 36

Key Federal Plan Design Rles* Bona Fide Wellness Programs New Rles Other laws impact wellness programs (GINA, ADA, HIPAA Privacy, ERISA, IRC) EEOC Interpretation of Americans With Disabilities Act Reqires That Employers & Plans Consider & Manage Disability Discrimination Risks *Grandfathered Plan Stats, Plan Size & Benefit Design May Impact Applicability 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 37 2015 Cynthia Marcotte Stamer. All rights reserved. 37

Key Federal Plan Design Rles* Federally Reqired Plan Terms Inclde Contined Coverage For Pediatric Vaccines Covered On 5/1/93 Maternity Stay Mental Health Parity Post-Mastectomy Reconstrctive Srgery nder Women s Health & Cancer Rights Act *Grandfathered Plan Stats, Plan Size & Benefit Design May Impact Applicability 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 38 2015 Cynthia Marcotte Stamer. All rights reserved. 38

Key Federal Plan Design Rles* ACA Federally Reqired Plan Terms Inclde Child Dependent To Age 26 Preexisting Conditions Exclsions Banned On Essential Health Benefits Coverage Rescissions Prohibited Except Frad or Misrepresentation Waiting Periods Over 90 Days Prohibited Mandatory Defalt Enrollment In Lowest Cost Option For Employers With > 200 Fll-Time Employees No Annal/Lifetime Caps On Essential Health Benefits Cation Abot HRAs/Defined Contribtion Health Plans 100% Preventive Care Coverage Mandate With No Cost-Sharing Except Vale Based Design Ot-Of-Pocket Match 2014 Transitional Relief Allows To Apply Separately to Prescription Drg Benefits From Other Benefits *Grandfathered Plan Stats, Plan Size & Benefit Design May Impact Applicability 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 39 2015 Cynthia Marcotte Stamer. All rights reserved. 39

Affordable Care Act Lifetime & Annal Maximms Post 9/22/10 Plan Years Implications On HRAs & Other Defined Contribtion Strategies Integrated Non-Integrated Other Challenges 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 40 2015 Cynthia Marcotte Stamer. All rights reserved. 40

Key Federal Plan Design Rles* ACA Federally Reqired Plan Terms Inclde Coverage for Rotine Costs For Participation In Clinical Trials Plan Reqiring PCP Designation Mst Allow Designation of Any Available Primary Care Provider OBGYN Treated As PCP For Women s OBGYN Services Plan Reqiring PCP Designation mst Allow Designate Pediatrician In Network As PCP Provider No Pre-Athorization Reqirement For Emergency Services & Mst Coverage Emergency Care Of Ot-Of Network Provides Like In-Network Care Claims & Appeals Procedres Inclding Extensive Additional ACA Reqirements For Internal & External Claims Review Cltrally & Lingistically Appropriate Commnications *Grandfathered Plan Stats, Plan Size & Benefit Design May Impact Applicability 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 41 2015 Cynthia Marcotte Stamer. All rights reserved. 41

Essential Health Benefits Insred Individal & Grop Coverage, Association Plans, Government Plans Market Reform Mandate For Insred Individal & Grop Health Coverage Other Than Excepted Plans Very Rich Benefit Package Set By States Within HHS Parameters For Insred Plans Minimm Essential Coverage Distingished - Relevant To: Self-Insred Plan Compliance With ACA Annal & Lifetime Limit Rle Small Employer Plan Tax Credit Eligibility Large Employer Pay or Play Penalty 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 42 2015 Cynthia Marcotte Stamer. All rights reserved. 42

Key Federal Plan Design Rles* ACA Grop & Individal Insrers Mst Provide ACA- Compliant Essential Health Benefits Design ACA Federally Reqired Plan Terms Inclde Mst Cover Essential Health Benefits As Defined By HHS Reglations Within Following Reqired Categories - Amblatory Patient Services - Emergency Services - Hospitalization - Maternity And Newborn Care - Mental Health And Sbstance Use Disorder Services, Inclding Behavioral Health Treatment - Prescription Drgs - Rehabilitative And Habilitative Services And Devices - Laboratory Services - Preventive And Wellness Services And Chronic Disease Management - Pediatric Services, Inclding Oral And Vision Care. - Other Services Typically Covered By Employers *Grandfathered Plan Stats, Plan Size & Benefit Design May Impact Applicability 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 43 2015 Cynthia Marcotte Stamer. All rights reserved. 43

Key Federal Plan Design Rles* ACA Grop & Individal Insrers Mst Provide ACA- Compliant Essential Health Benefits Design ACA Federally Reqired Plan Terms Inclde Mst Cover Provide Benefits Actarially Eqivalent To Applicable % Fll Actarial Benefits Provided By Plan - Bronze Level: 60% - Silver Level: 70% - Gold Level: 80% - Platinm Level: 90% - Catastrophic Plan Cost Sharing Restrictions For Self-Only Or Other Coverage Can t Exceed High Dedctible Limits Under IRC 223(c)(2)(a)(ii) For Self-Only And Family Coverage Respectively *Grandfathered Plan Stats, Plan Size & Benefit Design May Impact Applicability 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 44 2015 Cynthia Marcotte Stamer. All rights reserved. 44

IRC 6039D/IRS Form 8928 Health Plan's "SOX Employers and plan sponsors mst report on Form 8928 to report excise taxes de for certain health plan violations for post-2013 Tax Years Prepare For Employer Srprise, Discontent When Learn Of Potential 2014 Liability Recognize & Plan To Deal With Potential Exposres, Fallot For Yor Firm 2015 Cynthia Marcotte Stamer. All rights reserved. Page # 2015 Cynthia Marcotte Stamer. All rights reserved. 45

Form 8928 4980D ACA Grop Health Plan Violation Excise Tax Amont Plan sponsor generally mst self-assess and pay $100 per day, per individal, per violation, excise tax for specified health plan violations, sbject to the following minimms and maximms: If IRS discovers on adit, minimm excise tax is: - $2,500 or - If not de minims, p to $15,000. For single employer plans, maximm excise tax for nintentional failres = lesser of: - 10 percent of the aggregate amont paid by the employer dring the preceding tax year for grop health plan coverage, or - $500,000 Page 46 2015 Cynthia Marcotte Stamer. All rights reserved 2015 Cynthia Marcotte Stamer. All rights reserved. 46

Form 8928 4980D ACA Grop Health Plan Violation Excise Tax Amont For mltiple employer health plan, maximm tax limited to lesser of: 10% amont paid or incrred by sch trst dring sch taxable year to provide medical care w/in meaning of IRC 9832 (d)(3) directly or throgh insrance, reimbrsement, or otherwise, or $500,000 All plans of part of same trst forms treated as one plan. Page 47 2015 Cynthia Marcotte Stamer. All rights reserved 2015 Cynthia Marcotte Stamer. All rights reserved. 47

Form 8928 Used To Report Health Plan Violation Excise Taxes For: 4980B: COBRA Violations (ER* Pays $100 Per QB Per Day Noncompliance Period, Sbject To Min. & Max Fine Rles) 4980D Code Chapter 100 Grop Health Plan Violations (ER**Pays $100 Per Day Per Victim) 4980E/ Employer W/HDC Contribting To Any Employee s Archer MSA Failre To Make Comparable MSA Contribtions For All Participating Employees (35% aggregate ER s Contribtions) 4980G - Failre Of Employer To Make Comparable Health Savings Accont Contribtions For All Participating Employees (35% aggregate ER s Contribtions) *Plan If Mltiemployer Plan ** N/A To Certain Violations Of Certain Flly Insred Small Employer Plans Page 48 2015 Cynthia Marcotte Stamer. All rights reserved 2015 Cynthia Marcotte Stamer. All rights reserved. 48

Form 8928 Excise Taxes: Health Plan Violations Page 49 2015 Cynthia Marcotte Stamer. All rights reserved 2015 Cynthia Marcotte Stamer. All rights reserved. 49

Form 8928 Excise Taxes 4980D ACA Health Plan Violations Dty To Report & Pay Noncompliance Period Means The Period Beginning on the date sch failre first occrs, and Ending on the date sch failre is corrected. Page 50 2015 Cynthia Marcotte Stamer. All rights reserved 2015 Cynthia Marcotte Stamer. All rights reserved. 50

Form 8928 Excise Taxes Deadlines To Report & Pay Generally mst file Form 8928 & pay the excise tax by the de date of the employer s federal income tax retrn, withot taking into accont any extensions Atomatic six-month extension of time for filing Form 8928 available Extension does not extend the time to pay the excise taxes de Page 51 2015 Cynthia Marcotte Stamer. All rights reserved 2015 Cynthia Marcotte Stamer. All rights reserved. 51

Form 8928 4980D ACA Grop Health Plan Violation Excise Tax Exception No Excise Tax If: Failre de to reasonable case and not to willfl neglect For plan other than a chrch plan, failre corrected dring the 30-day period beginning on the first date the person otherwise liable for sch tax knew, or exercising reasonable diligence wold have known, that sch failre existed; and For chrch plan, failre corrected before the close of the correction period nder the IRC 414(c)(4)(C) Brden of Proof Considerations Important Page 52 2015 Cynthia Marcotte Stamer. All rights reserved 2015 Cynthia Marcotte Stamer. All rights reserved. 52

Form 8928 4980D ACA Grop Health Plan Violation Excise Tax Exception Failre Corrected If Retroactively Undone To The Extent Possible, And Person To Whom The Failre Relates Is Placed In A Financial Position Which Is As Good As Sch Person Wold Have Been If Failre Not Occrred. Page 53 2015 Cynthia Marcotte Stamer. All rights reserved 2015 Cynthia Marcotte Stamer. All rights reserved. 53

Form 8928 Excise Taxes 4980D ACA Health Plan Violations Dty To Report & Pay N/A To Small Employer Plans If: Provide Health Insrance Coverage Solely Throgh A Contract With A Health Insrance Isser FailreSolelyBecaseHealthInsranceCoverageOffered By The Insrer Small Employer = (On Controlled Grop Basis) Secretary can waive all or part of tax for failre de to reasonable case and not to willfl neglect to the extent Secretary finds payment of tax wold be excessive relative to the failre involved. Page 54 2015 Cynthia Marcotte Stamer. All rights reserved 2015 Cynthia Marcotte Stamer. All rights reserved. 54

NOTICE 2015-17 Code 4980D & Form 8928 penalty relief for small employers and certain S-Corporations who have illegal employer payment plans (e.g., premim reimbrsement programs) throgh 6/30/15 Clarifies mere increase in an employee s compensation, withot conditioning the payment of the additional compensation on the prchase of health coverage (or otherwise endorsing a particlar policy, form, or isser of health insrance) is not a violation of the ACA. 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 55 2015 Cynthia Marcotte Stamer. All rights reserved. 55

Health Plan Privacy & Data Secrity HIPAA Applies To Grop Health Plans & Their Bsiness Associates Prohibits Use, Access, Disclosre Of Protected Health Information (PHI) Except As Expressly Allowed By Rle General Dty To Protect PHI Pls Detailed Mandates For Secrity Of Electronic PHI Bsiness Associate Agreement, Employer Certification, & Workforce Designation Reqirements Breach Notification Mandates Recordkeeping & Acconting For Disclosres Personal Rights Compliance Plan Other 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 56 2015 Cynthia Marcotte Stamer. All rights reserved. 56

HIPAA Privacy & Secrity Heath Plan HIPAA Breaches May Create Fidciary Obligations For Health Plan Fidciaries the fidciary obligations of ERISA also may reqire a prdent investigation and other action Brokers, insrers, third party administrators, preferred provider organizations or other managed care providers and others doing bsiness with the health plan also may have specific responsibilities nder state insrance, health care, data breach and identity theft or other laws. 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 57 2015 Cynthia Marcotte Stamer. All rights reserved. 57

INTERNAL REVENUE CODE Confidentiality of Tax Retrn Information 26 U.S.C. 6103 nlawfl for any person to willflly disclose to any other person, except as athorized in this title, any retrn or retrn information acqired by he or she on another person. Any violation of this paragraph shall be a felony pnishable by a fine in any amont not exceeding $5,000, or imprisonment of not more than 5 years or both, together with the costs of prosection. Retrn information incldes taxpayer s identity; natre, sorce or amont of his income; payments and receipts; dedctions and exemptions; credits, assets, and net worth; tax or other liabilities, tax liability, tax withheld, and tax payments, sbject to an investigation or adit 9/22/2015 Copyright 58 2005 Cynthia Marcotte Stamer. All rights reserved. 2015 Cynthia Marcotte Stamer. All rights reserved. 58

Brokers, CPAs Other Advisors Also May Owe Other Specific Confidentiality Obligations Texas Insrance Code Mandates For Brokers & Insrers Texas Identity Theft Statte AICPA Confidentiality Or Other Ethical Rles Internal Revene Code Privacy, Confidentiality FACTA Cybercrime Other 9/22/2015 Copyright 59 2005 Cynthia Marcotte Stamer. All rights reserved. 2015 Cynthia Marcotte Stamer. All rights reserved. 59

HIPAA & Other Privacy & Secrity Risk Management & Compliance Plan Amendments Bsiness Associate Agreements Employer Policies & Representations Docmented Operationalization & Enforcement Of Processes & Procedres Compliance Plans Breach Monitoring Proper Encryption, Training & Disposal Up The Ladder Reporting Yo/Yor Plan Can Be Liable For What Yor Bsiness Associate Does Breach Preparedness & Response Plan Indemnification & Liability Coverage Other 2012 Cynthia Marcotte Stamer. All Rights Reserved. Page 60 2015 Cynthia Marcotte Stamer. All rights reserved. 60

EVOLVING NOTICE, REPORTING & DISCLOSURE REQUIREMENTS Note: That New ACA Grop Health Notice Reqirements Ct Short Deadlines For Finalizing Health Plan Terms & Contracts 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 61 2015 Cynthia Marcotte Stamer. All rights reserved. 61

Smmary Plan Descriptions (SPDs), Other Reqired Commnications Separate SPD & Plan Docment Reqirements Content Mandates Defined By Reglations All Material Terms Pls Others New Laws, Reglations Implementing New Mandates Increasingly Impose Specific Reqirements To Add Langage To SPD, e.g.: - 2002 SPD Reglations - 2000 Claims Reglations - Medicare Part D Notice - Electronic SPDs - Investment Gidance - Pension Protection Act - Affordable Care Act - Other Conflicts Between Plan Docments, Cigna v. Amara Certificates of Coverage/Other Vendor Docments Commonly Inadeqate DOL, IRS Model/Sample Forms Often Reqire Spplementation/Tailoring To Meet Other Reg. Reqirements, Fit Plan, Other 2012 Cynthia Marcotte Stamer. All Rights Reserved. Page 62 2015 Cynthia Marcotte Stamer. All rights reserved. 62

Plan Notice & Commnications What Yo Say Can & Will Be Used Against Yo - Dty Of Prdence Applies - ERISA, Code, Social Secrity Act, HIPAA Notice, Affordable Care Act, COBRA, ARRA, Claims & Appeals & Other Commnication & Reporting Reqirements - List of Reqired Notices Expanding - Employer That Speaks As Fidciary FMC v. Halliday, In Re Enron - Conflicts Between Plan Docment, SPD Or Other Commnications Fidciary Concern, Cigna v. Amara - Content Concerns - Procedral Concerns - Affordable Care Act Cltrally & Lingistically Appropriate & EEOC Comments - Affordable Care Act SBC & Other Reqired Notifications - Electronic Commnications - Employer Speaking Abot Plan Acts As Fidciary Varity v. Howe 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 63 2015 Cynthia Marcotte Stamer. All rights reserved. 63

ACA Imposes New Notice Mandates Inclding: FLSA 18B Exchange Notice Smmary of Benefits & Commnications (SBC) 60-Day Advance Notice of Material Changes Reqirement Notifications In ACA Internal Claims & Appeals Mandates For Non- Grandfathered Plans Cltrally & Lingistically Appropriate Mandate For SPDs & Other Plan Written & Oral Commnications 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 64 2015 Cynthia Marcotte Stamer. All rights reserved. 64

Key Federal Plan Design Rles* Federal Law Mandates Many Other Grop Health Plan Notifications & Disclosres Inclding 5500 Annal Retrn, $1000 per day DOL penalty for failre to file; DOL & IRS Late Filer Amnesty Program W-2 & Other Affordable Care Act Reporting Reqirements Wage Reporting & Withholding Form 8928 Dty To Self Report, Pay 5% Excise Tax For Health Plan Not Compliance With Long List of Grop Health Plan Mandates Form 1094B, F0rm 1095B and C Employer Minimm Essential Coverage Reporting Information Retrns Annal Form M-1 For MEWAS and Mltiemployer Plans Medicare Data Bank Report For Terminated Providers Many Others *Grandfathered Plan Stats, Plan Size & Benefit Design May Impact Applicability 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 65 2015 Cynthia Marcotte Stamer. All rights reserved. 65

Miranda Warning Health Plan Notices & Other Commnications Spreme Cort In Varity: What Yo Say Can & Will Be Used Against Yo Plan Commnications Generally Are Fidciary Actions Unless Ministerial ERISA Fidciary Dty of Prdence ERISA Option To Allocate Fidciary Responsibility, Have Distinction Between Employer & Plan Fidciaries Named Fidciary Shold Commnicate On Matters Within Its Responsibility/Athority Under Plan Sloppy Commnication Can Blr Fidciary Allocations Ensre Plan Terms All Accrately Written Into Plan Docment & Notice & Other Commnications Flly Match Plan ACA Mandates & Model Notices Often Blr Fidciary & Employer Roles 2015 Cynthia Marcotte Stamer, PC 66 2015 Cynthia Marcotte Stamer. All rights reserved. 66

Optional Langage May Help Manage Risk, Promote Enforceability Plan Sponsor Reserves The Right To Amend Or Terminate The Plan At Anytime Limited By ACA 60 Day Notice Mandate Rights Under The Plan Are Determined By The Written Terms Of The Plan As In Effect At The Time As Interpreted By The Named Fidciary Under The Plan In Its Exclsive Discretion. Read The Plan Docments For A Complete Understanding Of Yor Rights And Write To The Named Fidciary For An Answer To Any Qestions The Applicable Named Fidciary Has The Exclsive Right To Interpret The Plan And Make Determinations Clear Identity Of Who The Named Fidciaries Are Inclding Disclosre Of Separate Roles When Applicable 2015 Cynthia Marcotte Stamer, PC 67 2015 Cynthia Marcotte Stamer. All rights reserved. 67

FLSA 18B Exchange Notice Reqirement All Fair Labor Standards Act (FLSA)-covered employers generally mst deliver a notice (Exchange Notice) to employees abot the new option beginning Janary 1, 2014 to get health care coverage throgh a health care exchange (now rebranded by the Obama Administration as a Marketplace )(Marketplace) created by ACA that meets the reqirements of new FLSA Section 18B, enacted by Section 1512 of ACA 2015 Cynthia Marcotte Stamer, PC 68 2015 Cynthia Marcotte Stamer. All rights reserved. 68

Exchange Notice Reqirement Prpose Since 1/1/2014, ACA Mandate For Employers To Notify Each Employee Of Heath insrance Choices Available To The Employee On Date Of Hire Notice Reqired Regardless Of Plan Enrollment Stats (If Applicable) Or Of Part-time Or Fll-time Stats Mst Tell Employee: Abot The Marketplace Option; Whether The Employee Has Option To Get Employee Or Dependent Coverage From The Employer; If Employer Option: Information To Weigh Choices Of Coverage; And Information To Know Impact Of Employer Coverage On Marketplace Sbsidy Eligibility 2015 Cynthia Marcotte Stamer, PC 69 2015 Cynthia Marcotte Stamer. All rights reserved. 69

FLSA 18B Notice & Fidciary Responsibility FAQs abot the Affordable Care Act Implementation Part XVI (FAQ XVI) Pblished 9/4/13 confirms DOL expects employers, fidciaries & service providers to tailor Exchange Notice to accrately commnicate relevant information inclding roles of parties & plan terms. 2015 Cynthia Marcotte Stamer, PC 70 2015 Cynthia Marcotte Stamer. All rights reserved. 70

ACA Smmary of Benefits & Coverage (SBC) Health Plans/Insrers mst provide SBC and a Uniform Glossary that accrately describes the benefits and coverage nder the applicable plan or coverage in a way that meets the format, content and other detailed SBC standards by first day of offer of any coverage and following any material change Mst se reqired template for providing the SBC and accompanying glossary SBC Mst Inclde MEC and Minimm Vale Disclosres In SBC Look For Agencies To Finalize Proposed Changes to SBC Regs., Template For Implementation In 2016 &/Or 2017 2015 Cynthia Marcotte Stamer, PC 71 2015 Cynthia Marcotte Stamer. All rights reserved. 71

ACA 60-Day Advance Notice of Material Changes Reqirement 60-Day Advance Notice of Material Changes Reqirement Grop health plans and their plan administrators also mst ensre that participants and beneficiaries are given at least 60 days prior notice before the effective date of any material redction in covered services or benefits. Grop health plan issers or sponsors that willflly (intentionally) fail to provide the notice of material modification can face a fine of p to $1,000 for each failre. Each covered individal eqates to a separate offense for prposes of these penalties. 2015 Cynthia Marcotte Stamer, PC 72 2015 Cynthia Marcotte Stamer. All rights reserved. 72

Reporting Minimm Essential Coverage Forms 1094-B, 1095-B & 1095-C Every person that provides minimm essential coverage to an individal dring a calendar year mst file an information retrn and a transmittal. 2015 Cynthia Marcotte Stamer. All rights reserved. 73

Reporting Minimm Essential Coverage Page 74 2015 Cynthia Marcotte Stamer. All rights reserved 2015 Cynthia Marcotte Stamer. All rights reserved. 74

MEC Reporting Reqired For Entities Providing MEC Form 1095B & 1095B Transmittal Or Form 1095C Health insrance issers or carriers Exective department or agency of a governmental nit providing coverage nder government-sponsored program Plan sponsors of self-insred grop health plan coverage* Sponsors of coverage HHS designated as MEC * 2015 Cynthia Marcotte Stamer. All rights reserved. Page # 2015 Cynthia Marcotte Stamer. All rights reserved. 75

Forms 1094-B, 1095-B Entities That Provide MEC Mst Not Applicable Large Employer Providing Self-insred Coverage : Report That Coverage To The IRS, Form 1094-B, Transmittal of Health Coverage Information Retrns Give The Covered Individals Information Abot The Coverage To Help Them When Filing Their Federal Tax Retrn, Form 1095-B 2015 Cynthia Marcotte Stamer. All rights reserved. Page # 2015 Cynthia Marcotte Stamer. All rights reserved. 76

Form 1095-C Applicable Large Employer Providing MEC Applicable Large Employer Providing Self-insred Coverage Report on Form 1095-C instead of Form 1095B as Form 1095-C combines reporting for two provisions of the Affordable Care Act for these employers 2015 Cynthia Marcotte Stamer. All rights reserved. Page # 2015 Cynthia Marcotte Stamer. All rights reserved. 77

Employer Pay or Play Mandate IRC 4980H 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 78 2015 Cynthia Marcotte Stamer. All rights reserved. 78

When Is Bsiness A Large Employer For Prposes of Determining If Code 4980H Shared Responsibility Payment Rles Apply? 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 79 2015 Cynthia Marcotte Stamer. All rights reserved. 79

Code 4980H Employer Pay Or Play Only Applies To Large Employers Post-2014 Large Employer Generally Means Fll-Time Employees + Fll-Time Eqivalent Employees > 50 Bt Per Enforcement Delays: N/A < 50 FTEs < 100 FTEs, 1/1/2016 < 50 FTE Delayed To 2015 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 80 2015 Cynthia Marcotte Stamer. All rights reserved. 80

Large Employer Steps For Determining Applicability of Code 4980H 1. Accrately Identify All Common Law Employees Regardless Hors Worked Inclding Seasonal Employees 2. Cont Nmber of Fll-Time Employees* Who Work On Average > 30 Hors Per Week Per Month 3. Calclate Nmber of Fll-Time Eqivalent Employees * Total Hors Worked By All Non-Fll-Time Employees 120 4. Calclate (Step 2 Reslt + Step 3 Reslt) x 1/12. Is Reslt > 100 in 2015 or 50 in 2016? - If yes, go to step 5 - If no, stop. Code 4980 Does Not Apply 5. Does Seasonal Employee Exception Apply? - Employer s Workforce Exceed 50 Fll-Time Employees For No More Than 120 Continos Days Or 4 Continos Calendar Months Dring The Calendar Year; and - Employees In Excess of 50 Who Were Employed Dring That Period Were Seasonal Employees - If both Yes, Not Large Employer/Code 4980 Does Not Apply -. Otherwise, employer is Large Employer For Prposes of IRC 4980H 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 81 2015 Cynthia Marcotte Stamer. All rights reserved. 81

4980H Large Employer Employee = An Individal Who Is An Employee Under The Common-law Standard Under 26 CFR 31.3401(c)- 1(b) Income Tax Definition Of Employee, No Section 530 Relief Does not inclde: - A leased employee (as defined in section 414(n)(2)) - A sole proprietor - A partner in a partnership or - A 2-percent S corporation shareholder 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 82 2015 Cynthia Marcotte Stamer. All rights reserved. 82

4980H Large Employer Employer = The Person That Is The Employer Of An Employee Under The Common-Law Standard Under 26 CFR 31.3121(d)-1(c) Employer = The Person That Is The Common Law Employer - Commonly Controlled & Affiliated Bsinesses Treated As Single Employer - Common Law Test Decides Who Employer of Leased/Staffing Company Workers 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 83 2015 Cynthia Marcotte Stamer. All rights reserved. 83

Large Employer 4080H Applicability Generally determined based on prior year employment Employer not existing in preceding calendar year = large employer for the crrent calendar year if reasonably expected to employ an average of at least 50 Fll-Time employees (taking into accont FTEs) on bsiness days dring the crrent calendar year and it actally employs an average of at least 50 Fll-Time employees (taking into accont FTEs) on bsiness days dring the calendar year IRS may provide special rles for government entities, chrches, and conventions and associations of chrches in ftre 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 84 2015 Cynthia Marcotte Stamer. All rights reserved. 84

Large Employer Determining Applicability of 4980H Fll-Time Employee = Average At Least 30 hors Of Service Per Week Per Month Fll-Time Eqivalent Employees or FTEs * = Total Hors Worked By All Non-Fll-Time Employees 120 Extensive Rles For Conting Hors Inclding Option To Use Eqivalencies 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 85 2015 Cynthia Marcotte Stamer. All rights reserved. 85

4980H -Who Are Fll-Time Employees Generally = Common Law Employee Employed On Average At Least 30 Hors Of Service Per Week Per Month 130 Hors Of Service In A Calendar Month Is Treated As The Monthly Eqivalent Of At Least 30 Hors Of Service Per Week, Provided The Employer Applies This Eqivalency Rle On A Reasonable And Consistent Basis An Hor Of Service For One Applicable Large Employer Member Is Treated As An Hor Of Service For All Other Applicable Large Employer Members For All Periods Dring Which The Applicable Large Employer Members Are Part Of The Same Grop Of Employers Forming An Applicable Large Employer Fll-Time Eqivalent Employee Or FTE, Means A Combination Of Employees, Each Of Whom Individally Is Not Treated As A Fll-Time Employee Becase He Or She Is Not Employed On Average At Least 30 Hors Of Service Per Week With An Employer, Who, In Combination, Are Conted As The Eqivalent Of A Fll-Time Employee Solely For Prposes Of Determining Whether The Employer Is An Applicable Large Employer. Look-back Measrement Method Applies For Prposes Of Determining And Compting Liability Under 4980H Bt Not For The Prpose Of Determining Stats As An Applicable Large Employer, See 54.4980H-3. 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 86 2015 Cynthia Marcotte Stamer. All rights reserved. 86

4880H Fll-Time Employees Hors of Service Inclde Each Hor Of Service For Which Employee: Is Paid or Entitled To Payment Even When No Work Performed; and Paid or Entitled To Payment For Paid Leave Of Absence E.G. Vacation, Holiday, Illness, Incapacity, Layoff, Jry Dty, Leave of Absence Foreign Sorce Income Earned By Employees Working Otside U.S. Not Cont For Large Employer Stats Or Calclating Penalty 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 87 2015 Cynthia Marcotte Stamer. All rights reserved. 87

Determining Large Employer Stats 4980H Seasonal Employee/Worker Seasonal Employee Hors Cont To Determine If Large Employer Bt Not For Prposes Of Calclating Penalty Seasonal Employee Not Yet Defined Seasonal Worker = A Worker Who Performs Labor Or Services On A Seasonal Basis As Defined By The Secretary Of Labor, Inclding (Bt Not Limited To) Workers Covered By 29 CFR 500.20(s)(1), And Retail Workers Employed Exclsively Dring Holiday Seasons Employers May Apply A Reasonable, Good Faith Interpretation Of The Term Seasonal Worker And A Reasonable Good Faith Interpretation Of 29 CFR 500.20(s)(1) (Inclding As Applied By Analogy To Workers And Employment Positions Not Otherwise Covered Under 29 CFR 500.20(s)(1)) 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 88 2015 Cynthia Marcotte Stamer. All rights reserved. 88

Figring The Code 4980H Tax Penalty What Amont Of Shared Responsibility Payment Will Covered Large Employer Owe If Any? 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 89 2015 Cynthia Marcotte Stamer. All rights reserved. 89

4980H-Who Are Fll-Time Employees When Determining Payment Amont When Determining Hors Of Service And Stats As A Fll-Time Employee For All Prposes Of Section 4980H, The Look-back Measrement To Cont Fll-Time Employees: Applies To Calclate 4980H Penalty Does Not Apply To Determine Stats As An Applicable Large Employer 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 90 2015 Cynthia Marcotte Stamer. All rights reserved. 90

4980H Identifying Fll-Time Employees Look Back Rles For Payment Calclation Measrement, Stability and Administrative Periods 12/31 12/31 Oct 14 Oct 14 Oct 14 12-Month Measrement 12-Month Measrement 12-Month Measrement 12-Month Stability 12-Month Stability 12-Month Stability Administrative Period This provides an example of how FTE stats for ongoing employees may be determined sing measrement, stability and administrative periods. 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 91 2015 Cynthia Marcotte Stamer. All rights reserved. 91

4980H-Who Are Fll-Time Employees Hors of Service When Determining Payment Amont Horly Employees -Employer Mst Calclate Actal Hors Of Service From Records Of Hors Worked And Hors For Which Payment Is Made Or De. Salaried/Other Non-horly Employees - An Employer Mst Calclate Hors Of Service By Using One Of The Following Methods: Actal Hors Of Service From Records Days-worked Eqivalency Weeks-worked Eqivalency May Apply Different Methods For Different Classifications Of Non-horly Employees, Provided The Classifications Are Reasonable And Consistently Applied From Permitted Classifications Not Reqired To Apply The Same Methods As Other Applicable Large Employer Members Of The Same Applicable Large Employer For The Same Or Different Classifications Of Non-horly Employees, Provided That In Each Case The Classifications Are Reasonable And Consistently Applied By The Applicable Large Employer Member Permitted Employee Categories Collectively Bargained Employees And Non-collectively Bargained Employees. Each Grop Of Collectively Bargained Employees Covered By A Separate Collective Bargaining Agreement. Salaried Employees And Horly Employees. Employees Whose Primary Places Of Employment Are In Different States. Prohibited Eqivalencies The Nmber Of Hors Of Service Calclated Using Eqivalency Mst Reflect Generally The Hors Actally Worked And The Hors For Which Payment De; Can t Sbstantially Understate An Employee s Hors Of Service In A Manner That Wold Case That Employee Not To Be Treated As Fll- Time. 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 92 2015 Cynthia Marcotte Stamer. All rights reserved. 92

Who Are Fll-Time Employees Look-Back Measrement Period To Calclate 4980H Payment Amont Fll-Time Stats Determined Based On Hors Worked Dring Preceding Measrement Period Of 3 To 12 Months Selected By Employer Standard Measrement Period For Ongoing Employees Initial Measrement Period For New Employees New Non-variable Hor & Non-Seasonal Employees New Variable Hor & Seasonal Employees Once Employed For Entire Standard Measrement Period, Mst Test The Employee For Fll-Time Employee Stats, Beginning With That Standard Measrement Period, At The Same Time And Under The Same Conditions As Apply To Other Ongoing Employees Employer Mst Treat New Employee Determined Fll-Time Employee For Measrement Period As A Fll-Time Employee For The Entire Associated Stability Period 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 93 2015 Cynthia Marcotte Stamer. All rights reserved. 93

Who Are Fll-Time Employees To Calclate 4980H Payment Amont Optional Administrative Period May apply an administrative period in connection with an initial measrement period and before the start of the stability period of p to 90 days provided: Administrative period incldes all periods between the start date of a new variable hor employee or new seasonal employee and the date the employee first offered coverage other than the initial measrement period Initial measrement period mst not exceed 12 month Administrative period mst not exceed 90 days Combined length of the initial measrement period and the administrative period applicable to a new variable hor employee or new seasonal employee together cannot extend beyond the last day of the first calendar month beginning on or after the first anniversary of the employee s start date. 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 94 2015 Cynthia Marcotte Stamer. All rights reserved. 94

Who Are Fll-Time Employees To Calclate 4980H Payment Amont Measrement Periods For Determining 30 Hors/Week Can Range From 3 To 12 Months; Stability Periods For Treating Employees As Fll-Time Or Part-time Can Range From 6 To 12 Months Administrative Periods Up To 90 Days If Coordinate With 90-day Waiting Period Special Rles For Conting Hors, Changes In Positions, Etc. Employers With Calendar Year Plans Mst Act Now To Be Ready To Determine FTEs In Time For October-November Open Enrollments. 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 95 95 2015 Cynthia Marcotte Stamer. All rights reserved. 95

Who Are Fll-Time Employees To Calclate 4980H Payment Amont Althogh the 50 FTE test is performed on a controlled grop basis, the penalties are applied separately for each member of the controlled grop A controlled grop member employer that covers its employees does not atomatically face the 4980H penalty merely becase other members do not cover their employees and incr penalties Planning Point: Clients may be able to redce 4980H penalties by placing employees not intended to be covered into separate sbsidiaries (need to be carefl) bt may still face nondiscrimination, ERISA 510, COBRA, FMLA, and other implications 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 96 96 2015 Cynthia Marcotte Stamer. All rights reserved. 96

Will Large Employer Owe 4980H Shared Responsibility Payment? 2015 Cynthia Marcotte Stamer. All rights reserved. 97

IRC 4980H Employer Shared Responsibility Payment Employer Generally Incrs Employer Shared Responsibility Payment If: Large Employer On Controlled Grop Basis >1 Fll-Time Employee In ER Grop Certified As Enrolled In Qalified Health Plan & Receiving Applicable Premim Tax Credit Or Cost-sharing Redction ( Sbsidized Employee ); And Either: 1. Doesn t Offer >95%* Of Fll-Time Employees (And Their Dependents) Opportnity To Enroll In Plan Providing Minimm Essential Coverage (MEC) or 2. Offers MEC To >95%* of Fll-Time Employees & Dependents Bt MEC Not Affordable To The Premim Tax Eligible Employee 3. Offers MEC To >95%* of Fll-Time Employees Bt Coverage Does Not Provide Minimm Vale *70% in 2015 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 98 2015 Cynthia Marcotte Stamer. All rights reserved. 98

IRC 4980H Employer Shared Responsibility Payment Mst Offer Employee & Dependent Coverage* Dependent = Means A Child (As Defined In IRC 152(f)(1)) Of An Employee Who Has Not Attained Age 26 Spose Dependent For IRC 4980H *Dependent Coverage Transitional Relief Rle May Offer Forgiveness For Some Employers Not Offering Dependent Coverage To Certain Dependents In 2015 Plan Year If Reqirements Of Rle Met 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 99 2015 Cynthia Marcotte Stamer. All rights reserved. 99

IRC 4980H Payment Amont Depends On Which Test Large Employer Fails 4980H(a) Penalty ($165/month) Not Offer Fll-Time Employees (And Their Dependents) Opportnity To Enroll In Plan Providing Minimm Essential Coverage (MEC) 4980H(b) Penalty ($250/month) Offer MEC To Fll-Time Employees & Dependents Bt MEC Plan Either: Not Affordable To The Premim Tax Eligible Employee; or Not Provide Minimm Vale 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 100 2015 Cynthia Marcotte Stamer. All rights reserved. 100

Minimm Essential Coverage 4980H Large Employer Pay Or Play Coverage offered by employee to employer nder any of the following arrangements that is either: Governmental plan Other [insred] plan or coverage offered in the small or large grop market Grandfathered health plan offered in a grop market or Self-insred grop health plan; and Does not consist solely of excepted benefits 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 101 2015 Cynthia Marcotte Stamer. All rights reserved. 101

Skinny Plans As "Minimm Essential Coverage 4980H Large Employer Pay Or Play Skinny Plan Offers Very Limited Coverage, Usally Only Mandatory Preventive Benefits & Other Mandated Benefits Often Offered In Conjnction With Excepted Benefit Option Often Offered In Conjnction With Option To Enroll In More Expensive Bronze Or Higher MEC/MV Plan Coverage Idea To Get Past 4980H(a) Penalty Possible Negatives Not Option if Insred Plan Becase Essential Health Benefit Mandate IRS Officials Unofficially Say Fate Undecided Code 125, 105(h) Nondiscrimination Isses Likely If Offered As Alternative To MEC/MV Plan If Not Offer Sbsidy Eligible Employees Alternative To Enroll In MEC/MV Affordable Option, Cold Still Pay 4980H(b) Penalty For Sbsidy Eligible Employee Enrolling In Exchange Coverage 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 102 2015 Cynthia Marcotte Stamer. All rights reserved. 102

Minimm Essential Coverage 4980H Large Employer Pay Or Play IRS Pay or Play Minimm essential coverage incldes any plan or arrangement recognized by the Secretary of Health and Hman Services as minimm essential coverage for prposes of section 5000A nder PHSA Reg.. 156.600 and the following sections other than plan providing only exempted benefits nder IRC 9832(c) Minimm Vale & Affordability Separate Concepts For Prposes of IRC 4980H and 5000A. 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 103 2015 Cynthia Marcotte Stamer. All rights reserved. 103

Minimm Essential Coverage What Is Minimm Benefits Allowed For Minimm Essential Coverage? Insred, Government, Association/MEWA Plan = Essential Health Benefits Becase of Market Reform Mandates Self-Insred Plan = Grop Health Benefits Beyond More Than Excepted Only Benefits Tri-Agencies Warning To Expect Frther Gidance Impacting Skinny Plan Designs, Other Special Arrangements 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 104 2015 Cynthia Marcotte Stamer. All rights reserved. 104

IRC 4980H Employer Shared Responsibility Payment Plan Providing Exempted Benefits nder IRC 9832(c), PHSA 2791(HIPAA Portability Rles): - Accident or disability income insrance only - Limited scope dental, vision, long-term care, nrsing care or commnity based care coverage provided nder a separate policy, certificate, or contract of insrance - Coverage offering independent, non-coordinated benefits providing coverage only for a specified disease or illness or hospital indemnity or other fixed indemnity insrance - Medicare Spplement Coverage offered nder a separate insrance policy 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 105 2015 Cynthia Marcotte Stamer. All rights reserved. 105

4980H(a) Monthly Penalty Amont (Not Offer MEC Plan) $2000 (Total FTEs 30*) 12 Applicable Large Employer Member s Nmber Of Fll-Time Employees Is Redced By That Member s Allocable Share Of 30 The Applicable Large Employer Member s Allocation = 30 Allocated Ratably Among All Commonly Controlled & Affiliated Grop Members Of Large Employer On Based On # Fll-Time Employees Of Each Member Employer Member Dring Calendar Year. If Member s Total Allocation Is Fractional Nmber Less Than One, Rond Up To 1 Ronding Rle May Reslt In The Aggregate Redction For The Entire Grop Of Applicable Large Employer Members Exceeding 30 95% Safe Harbor (70% In 2015) 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 106 2015 Cynthia Marcotte Stamer. All rights reserved. 106

4980H(a) Penalty (Not Offer MEC To All) ER Grop Member Mst Separately Assess 4980H (a) Penalty For Each Month If: Any Member Fails To Offer To Its Fll-Time Employees And Their Dependents Opportnity To Enroll In MEC Under Eligible Employer-Sponsored Plan On Each Day Of Calendar Month; And Employer Received 1411 Certification > 1 Fll-Time Employee A Sbsidized Employee 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 107 2015 Cynthia Marcotte Stamer. All rights reserved. 107

4980H(a) Penalty Offer Coverage Employer Mst Offer Effective Opportnity To Elect Or Decline To Enroll In Employee And Dependent MEC On Each Day Of The Calendar Month To > Of: > 95%* Of Its Fll-Time Employees And Their Dependents; or 5 Of Its Fll-Time Employees *70% in 2015 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 108 2015 Cynthia Marcotte Stamer. All rights reserved. 108

4980H(a) Penalty Offer Coverage Employee Effective Opportnity To Elect (Or Decline) To Enroll In MEC Coverage At Least Once A Plan Year Taking Into Accont All Relevant Facts And Circmstance, Inclding Adeqacy Of Notice Of The Availability Of The Offer Of Coverage, The Period Of Time Dring Which Acceptance Of The Offer Of Coverage May Be Made, And Any Other Conditions On The Offer Employee Not Offered Coverage For Month Unless Offered Coverage On Each Day Of Calendar Month Partial Month OK In Month Employee Terminated If Wold Have Been Offered Coverage For The Entire Month Absent Termination 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 109 2015 Cynthia Marcotte Stamer. All rights reserved. 109

4980H(b) Penalty Amont (Employer Offer MEC Bt Not Affordable Or Not Provide Minimm Essential Vale) 4980H(b) Penalty =$250/Month The Lesser of - Reslt of: $3000 x Sbsidized Fll-Time Employees 12-4980H(a) Penalty Amont Redced By: - New Fll-Time Employees In 1st Three Months of Employment - New Variable Hor Or New Seasonal Employees In Their Initial Measrement Period (And Associated Administrative Period) Under 54.4980H-3(c)(3) - Were offered the opportnity to enroll in minimm essential coverage nder an eligible employer-sponsored plan that satisfied minimm vale and met one or more of the affordability safe harbors and the section 4980H(b) applicable payment amont - Other 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 110 2015 Cynthia Marcotte Stamer. All rights reserved. 110

4980H(b) Penalty Applies If: > 1 Fll-Time Employee = Sbsidized Employee Employer Offers Plan Providing MEC and MEC Plan Either: - Not Affordable By Any Fll-Time Employee Becase Employee Premim > 9.5%* Of Applicable Employee s Hosehold Income or - Not Provide Minimm Vale Becase The Plan s Share Of The Total Allowed Costs Of Benefits Provided Under The Plan Is Less Than 60 Percent Of Sch Costs. * Revene Procedre 2014-37 Increases To 9.56% For 2015; Debate If Increase Applicable To Safe Harbor Amonts 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 111 2015 Cynthia Marcotte Stamer. All rights reserved. 111

4980H(b) Minimm Vale Minimm Vale - Vale Of Benefits Paid By Employer Plan (Rather Than By Co-pays, Dedctibles, Etc.) Mst Be At Least 60% Of Vale Of Benefits Covered By A Benchmark Plan With Essential Health Benefit Package HHS Has Provided Online Calclator Based On Actarial Model For Employers To Make This Determination Good News -- Most Existing Employer Plans Exceed This Standard (A Typical PPO Design Might Be Abot 80% Or More) Preventive Only Or Other Skinny Plan Cation - Qestions remain abot allowability - If Sbsidy Eligible Employee Accepts Offer of MEC Plan That Not Provide Minimm Vale, Proposed Treasry Reglations Say Employee Forfeits Eligibility For Exchange Sbsidy Bt Remains Eligible To Enroll In Exchange Coverage W/O Sbsidy - If Sbsidy Eligible Employee Rejects Skinny Plan Offer & Gets Sbsidy For Enrolling In Exchange, Employer s 4980H Penalty Is $3000 Per Sbsidized Employee 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 112 2015 Cynthia Marcotte Stamer. All rights reserved. 112

4980H(b) Affordability Unaffordable - Lowest Cost Self-Only Coverage Option Providing Minimm Essential Coverage & Minimm Vale Does Not Exceeds 9.5%* Of Employee s Safe Harbor Amont Determine Affordability Amont Either By Actally Collecting Family Income Data Or Use One Of Affordability Safe Harbors: - Employee s W-2 Comp - Employee s Wage Rate - Single Person Poverty Level * Revene Procedre 2014-37 Increases To 9.56% For 2015; Debate If Increase Applicable To Safe Harbor Amonts 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 113 2015 Cynthia Marcotte Stamer. All rights reserved. 113

Affordability Safe Harbors Max Affordable Premims for Self-Only Coverage W-2 Safe Harbor Wage Rate Safe Harbor Federal Poverty Level Safe Harbor Annal W-2 Comp Annal EE Premim (9.5%) Eqivalent Horly Wage Rate (at 130 hrs/month) 2014 Single Individal Poverty Level (For the 48 Contigos States) $ 10,000 $ 950 $ 6.41 $ 11,490.00 $ 15,000 $ 1,425 $ 9.62 Maximm annal premim at 9.5% $ 20,000 $ 1,900 $ 12.82 $ 1,091.55 $ 25,000 $ 2,375 $ 16.03 $ 30,000 $ 2,850 $ 19.23 If state expands Medicaid, then there $ 35,000 $ 3,325 $ 22.44 can be no $3,000 penalty for those $ 40,000 $ 3,800 $ 25.64 below 138% of FPL $ 45,000 $ 4,275 $ 28.85 $ 15,856 $ 50,000 $ 4,750 $ 32.05 Affordability at that level: $ 55,000 $ 5,225 $ 35.26 $ 1,506 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 114 2015 Cynthia Marcotte Stamer. All rights reserved. 114

2014 Poverty Level Annal Income For the 48 Contigos States and the District of Colmbia (Adapted From HHS Federal Poverty Gidelines at http://aspe.hhs.gov/poverty/14poverty.cfm) Persons In Family/hosehold 100 % Poverty Gideline 400% Poverty Gideline 1 $11,670 $46,680 2 15,730 62,920 3 19,790 79,160 4 23,850 95,400 5 27,910 111,640 6 31,970 127,880 7 36,030 144,120 8 40,090 160,360 For families/hoseholds with more than 8 persons, add $4,060 for each additional person. Special nmbers apply in Alaska, Hawaii. 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 115 2015 Cynthia Marcotte Stamer. All rights reserved. 115

Sbsidized Employees Individals Eligible For Sbsidized Exchange Coverage Via A Tax Credit If Hosehold Adjsted Gross Income (HAGI) Between 100% And 400% Of The Federal Poverty Level And: Enrolled In A Qalified Health Plan Throgh An Exchange, Not Eligible For Minimm Essential Coverage And, For Employersponsored Coverage, Not Eligible For Coverage That Provides Minimm Vale Or That Is Affordable Individals Need Not Wait Until End Of Year And May Claim The Fll Amont Even If Little Or No Federal Tax Owed (Advanceable And Refndable) Reconcile; Employee Safe Harbor Married Individals Mst File A Joint Retrn To Claim Credit 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 116 2015 Cynthia Marcotte Stamer. All rights reserved. 116

ACA Individal Pay Or Play Mandate Individals Mst Maintain "Minimm Essential Coverage" Or Pay IRC 5000A Penalty Eqal The Greater Of: - 1% Modified Adjsted Gross Income (AGI) Or $95 Per Person In 2014-2% Of AGI Or $325 Per Person In 2015-2.5% Of AGI Or $695 Per Person In 2016, Indexed For Inflation In Later Years "Minimm Essential Coverage = Coverage Under - A Qalifying Or Grandfathered Insrance Company Or Employer-Sponsored Plan - Government-Sponsored Program Sch As Medicare Or Medicaid - State-based Exchange That Meets HHS Standards Penalty Caps - The Penalty For Dependents Under The Age Of 18 Will Be Capped At 50 Percent Of The Adlt Individal's Penalty. - The Penalty For Each Family Will Be Capped At 300 Percent Of The Adlt Individal's Penalty. - Maximm Penalty Will Also Be Capped At An Amont Eqal To The Average National Premim For Exchange Coverage Mandate Not Apply If Lacks Access To Affordable Minimm Essential Coverage, Meaning Reqired Contribtion For The Lowest-cost, Self-only Coverage Exceeds 8% (8.05 For 2015) Of Adjsted Hosehold Income 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 117 2015 Cynthia Marcotte Stamer. All rights reserved. 117

ACA Individal Premim Tax Credit Sbsidized Individals IRC 36B Generally Allows A Refndable Premim Tax Credit For Taxable Years Ending After December 31, 2014 For Any Month That: Taxpayer &/Or Taxpayer s Family Member Enrolled In Qalified Health Plans Throgh An Exchange Is Not Eligible For Minimm Essential Coverage Other Than Individal Market Coverage Described In IRC 5000a(f)(1)(c) Is Taxpayer Whose Hosehold Income Is >100% Bt < 400 Percent Of Federal Poverty Line Married Taxpayers Mst File Joint Retrn Another Taxpayer Cannot Claim A Dedction For The Individal As A Dependent Under IRC 151 Sbject To Certain Exceptions, Is Not Disqalified Becase Either Not Lawflly Present In U.S. Or Incarcerated Health Insrance Premim Tax Credit Final Reglations Pblished At Http://Www.Gpo.Gov/Fdsys/Pkg/FR-2012-05-23/Pdf/2012-12421.Pdf King v. Brwell Upholds Constittionality Of Providing Individal Premim Tax Credits To Individals Enrolling In Coverage Throgh Healthcare.gov Marketplace Becase Their State Did Not Establish Its Own Exchange. 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 118 2015 Cynthia Marcotte Stamer. All rights reserved. 118

ACA Individal Premim Tax Credit Kaiser Federal Individal Premim Sbsidy Calclator At http://kff.org/interactive/sbsidy-calclator/ 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 119 2015 Cynthia Marcotte Stamer. All rights reserved. 119

4980H Shared Responsibility Payment Commonly Discssed Planning Options 2015 Cynthia Marcotte Stamer. All rights reserved. 120

Employer Considerations in Providing or Dropping Coverage Factors To Consider Inclde: Cost Of Employer Coverage Vs. Cost Of Penalty Availability And Cost Of Exchange Coverage (With Credits And Sbsidies) Vale Of Tax Exclsion For Employer Coverage Labor Market Competition / Cost Of Making Employees Flly Or Partially Whole Size And Composition Of Workforce, Inclding Part-time Employees Crrent Coverages Provided And Grops Covered 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 121 2015 Cynthia Marcotte Stamer. All rights reserved. 121

Selected Employer Alternatives Monitor Hors To Be Sre That Employees Intended To Be Part-time Are Actally Part-time -- Cold Help Under Both The $2,000 And $3,000 Penalties Do Not Provide Any Coverage -- Let Employees Obtain It On Exchanges And Pay The $2,000 Penalty Per Fll-Time Employee - Beware 105(h)/2702 HCE Nondiscrimination Risk If Offer Plan To Grop With HCE Bt Not Same Option To Non-HCE Employees - Similar Risk If Leased Employees With Skinny Or Lessor Benefits Reclassified As Common Law Employees Of Recipient Offer Minimal Minimm Essential Coverage (I.E., Minimm Essential Coverage Which Is Unaffordable Or Falls Below Minimm Vale) -- Pay $3,000 Per Fll-Time Employee Who Obtains Sbsidized Coverage From Exchange 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 122 2015 Cynthia Marcotte Stamer. All rights reserved. 122

Selected Employer Alternatives Wall Street Jornal Article On Preventive Only Or Other Skinny Plan Option: - Toted As Way For Employers To Avoid 4980H(a) Penalty - Ambigos Gidance Raises Qestion When & If Constittes MEC - Assming Is MEC, Depends On Sbsidy-Eligible Employee Actally Electing Skinny Plan Rather Than Richer Exchange Coverage After Getting Notification - If Sbsidized Employee Enrolls In Exchange Rather Than Accepting Skinny Plan, Employer Pays $3000 Penalty Under 4980H(b) Rather Than $2000 Penalty Under 4980H(a) - Mitigate Risk By Offering As Alternative To MEC, MV Affordable Plan? 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 123 2015 Cynthia Marcotte Stamer. All rights reserved. 123

Selected Employer Alternatives Offer Minimm Essential Coverage Plan Providing Minimm Vale That Is Affordable, Along With Non-Minimm Vale Plan - Since most crrent employer plans have more than a 60% vale, there may be room to redce vale of an option by increasing employee cost sharing - Cold scale premims by pay level, to stay below 9.5% Workforce Restrctring, Limiting Hors, Otsorcing - Be Carefl Of Reclassification, ERISA 510 Liability, & Other Exposres - Mst Trly Be Common Law Employees Of The Separate Entity For This To Work; - Worker Reclassification & Nondiscrimination Rles May Also Impact This Approach Other 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 124 2015 Cynthia Marcotte Stamer. All rights reserved. 124

Selected Employer Alternatives Use Self-Insred Plan Rather Than Bying Grop Health Insrance Market Reform/Essential Health Benefit & HCE Nondiscrimination Rles Feling Growth In Self Insred Plans Understand Potential Benefits, Disadvantages, & Other Implications Cation: Risk MEWA & Accidental Grop Insrance Liability If Improperly Pool Employees Of Two Or More Bsinesses If Not At Least 80% Commonly Owned 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 125 2015 Cynthia Marcotte Stamer. All rights reserved. 125

Selected Employer Alternatives Use Self-Insred Plan Rather Than Bying Grop Health Insrance Selected Pros Greater Flexibility To Design Benefits: Insred Plan Will Provide Essential Health Benefits De To Market Reform Self Insred Plan Provides MEC Avoid Certain ERISA & ACA Costs & Mandates 105(h) HCE Discrimination Liability Less Exposre Than ACA HCE Nondiscrimination for Grop Health Insrance Plans Captive Market Interest Expanding, Reaching Smaller Sizes Other Selected Cons Fidciary Responsibility & Greater Responsibilities Smaller Employers Often Face Challenges - Stop Loss Or Reinsrance Coverage Availability Problem For Small Employers - Often Face Challenges In Getting Qality Docmentation, Services, Vendors - Small Size Makes Set Up & Risk Management Expense Too High If Can t Get Good Vendor, Contracts & Services Mst Arrange For Broader Range of Responsibilities Than If Insred No ACA Market Reform Protection States And Feds Revisiting What Level Of Stoploss Shold Be Permitted Withot Constitting Insrance Other 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 126 2015 Cynthia Marcotte Stamer. All rights reserved. 126

Selected Employer Alternatives SHOP Exchanges in 2014 Small Bsiness Health Options Program (SHOP) Partial Delay For Federal Exchanges - Employers Will Pick Both The Metal Level And Insrer In 2014 - In 2015, Employees May Be Able To Pick Insrer Within The Metal Level Their Employers Select 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 127 2015 Cynthia Marcotte Stamer. All rights reserved. 127

Health Plan & Cafeteria Plan Non-Discrimination Rles Don t Let The Screen Door Hit Yo When Doing 4980H Shared Responsibility Planning 2015 Cynthia Marcotte Stamer. All rights reserved. 128

Skinny Plans As "Minimm Essential Coverage 4980H Large Employer Pay Or Play Skinny Plan Offers Very Limited Coverage, Usally Only Mandatory Preventive Benefits & Other Mandated Benefits Often Offered In Conjnction With Excepted Benefit Option Often Offered In Conjnction With Option To Enroll In More Expensive Bronze Or Higher MEC/MV Plan Coverage Idea To Get Past 4980H(a) Penalty Possible Negatives Not Option if Insred Plan Becase Essential Health Benefit Mandate IRS Officials Unofficially Say Fate Undecided Code 125, 105(h) Nondiscrimination Isses Likely If Offered As Alternative To MEC/MV Plan If Not Offer Sbsidy Eligible Employees Alternative To Enroll In MEC/MV Affordable Option, Cold Still Pay 4980H(b) Penalty For Sbsidy Eligible Employee Enrolling In Exchange Coverage 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 129 2015 Cynthia Marcotte Stamer. All rights reserved. 129

Exchanges & Other Market Reforms Intended To Help Small & Other Employers Obtain Affordable Coverage 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 130 2015 Cynthia Marcotte Stamer. All rights reserved. 130

Market Reform For Insred Non- Grandfathered Grop Coverage Grop Health Isser Offering Grop Coverage In Small Grop* Market Generally Mst: Accept Any Employer (Regardless of Size*) That Applies Except Can Establish Special Annal Enrollment Period for Small Employers That Don t Maintain Minimm Garanteed Renewability Renew Small Employer Except For Premim Nonpayment, Frad, Violation of Participation or Contribtion Rates, Termination of Coverage, Movement Ot of Service Area, Association Membership Ends Offer Essential Health Benefits Package Meeting Cost-Sharing & Other Reqirements Fair Premims Minimm Loss Ratio - Watch ERISA Plan Asset Rles If Employees Contribted Other Market Reforms 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 131 2015 Cynthia Marcotte Stamer. All rights reserved. 131

Patient Centered Otcome Research Institte Fee (PCORI Fee) PCORI fees fnd comparative clinical effectiveness research. Fees apply to plan years ending on or after Oct. 1, 2012 bt before Oct. 1, 2019 Plan sponsors sbmit IRS Form 720 by Jly 31 of each year 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 132 2015 Cynthia Marcotte Stamer. All rights reserved. 132

Transitional Reinsrance Program Projected to Raise $25 Billion From 2014-2016 Per Participant Fee: $44-per-participant fee for 2015 $27-per-participant fee for 2016 Health insrance issers and certain self-insred grop health plans offering major medical coverage that is part of a commercial book of bsiness are contribting entities. A contribting entity mst make reinsrance contribtions on behalf of its enrollees in plans that provide major medical coverage, as defined nder 45 CFR 153.20, nless one of the exceptions provided nder 45 CFR 153.400 applies to sch coverage. Self-Insred Plan Sponsors Allowed To Pay In One payment (de Jan. 15, 2015) or two installment payments ($52.50 per covered life, de Jan. 15, 2015; and $10.50 per covered life, de Nov. 15, 2015) Althogh a contribting entity is responsible for the reinsrance contribtions, it may elect to se a third party administrator or administrative services-only contractor for sbmission of enrollment data and the transfer of the reinsrance contribtions. 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 133 2015 Cynthia Marcotte Stamer. All rights reserved. 133

ACA Health Care Financing & Other Selected Miscellaneos Rles Limits HSA, Health FSA Contribtions To $3,300 (Annally Indexed For Inflation Beginning This Year From Original $2,500 Additional Tax on Non-Qalified Health Accont Distribtions HSAs in 2011 10% Excise Tax On Indoor Tanning 5% Excise Tax On Elective Cosmetic Procedres Beginning In 2010 Prohibits HSAs, Archer MSAs, Fasts, HRAs And Other Reimbrsement Programs From Covering Non-Prescription Drgs (Other Than Inslin) Beginning In 2011 Prohibits Payment Of Exchange Coverage From Cafeteria Plan Beginning In 2014 Limit Itemized Dedctions By Increasing Itemized Dedction Threshold From 7.5% To 10% In 2013 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 134 2015 Cynthia Marcotte Stamer. All rights reserved. 134

Cadillac Plan Tax Calls For Reform "Cadillac Plan" Excise Tax 40% Excise Tax On Cost Of Coverage Beginning In 2018 - >$10,200 For Individals And - >$27,500 For Families - Higher Thresholds Based On Age And Gender And High Risk Occpations - Stand-alone Dental And Vision Plans Exclded From Tax 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 135 2015 Cynthia Marcotte Stamer. All rights reserved. 135

2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 136 2015 Cynthia Marcotte Stamer. All rights reserved. 136

Raise Yor Health Plan Defenses 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 137 2015 Cynthia Marcotte Stamer. All rights reserved. 137

Plan & Implement For Sccess 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 138 2015 Cynthia Marcotte Stamer. All rights reserved. 138

THE SAVVY PLAN SPONSOR S GUIDE TO PLAN DESIGN & ADMINISTRATION Compliant, Docmented Compliant Plan Design Administration & Enforcement The Details In The Docments Fidciary Stats & Discretion Plan Amendment & Termination Claims & Appeals Process Commnication 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 139 Risk Management Strategy 2015 Cynthia Marcotte Stamer. All rights reserved. 139

2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 140 2015 Cynthia Marcotte Stamer. All rights reserved. 140

Prdent Fidciary Checklist Does the Plan operate in accordance with the Plan and Trst Docments? Is there a prdent fidciary decision making process and is there sfficient docmentation to spport their decisions? Do yo exercise de diligence in the selection and retention of service providers? Do yo properly docment meetings and decisions inclding role, research and options, why yo made a particlar decision? Do yor plan vendors? Is this docmentation available & retained by yo? 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 141 2015 Cynthia Marcotte Stamer. All rights reserved. 141

2015 Cynthia Marcotte Stamer. All rights reserved. 142

Learn From Other s Mistakes 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 143 2015 Cynthia Marcotte Stamer. All rights reserved. 143

COMPLIANCE REVIEW Fidciary Stats Plan Docments Contents & Langage Initial Notifications Smmary Plan Description, SBC & Other Reqired Notices Contents & Langage Administrative Procedres & Forms Bonding Recordkeeping 2015 Cynthia Marcotte Stamer. All rights reserved. 144

COMPLIANCE REVIEW Plan, SPD, Insrance Contracts & Langage Reqired Retrns & Filings Vendor Practices and Agreements HIPAA Provisions, BA Agreements, Employer Certifications, Workforce Designations, Adit Docmentation & Other Operational Compliance Errors & Omissions Insrance 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 145 2015 Cynthia Marcotte Stamer. All rights reserved. 145

Gilt by Association. Yo can t choose yor relatives BUT yo CAN choose yor vendors - Prdent Selection - Prdent Oversight - Contractal Accontability Contracting with Care 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 146 2015 Cynthia Marcotte Stamer. All rights reserved. 146

VENDOR CONTRACTING: Fidciary Stats Performance Standards Bsiness Associate Agreements & Compliance Plan ERISA Trst & Prohibited Transaction Reqirements Indemnification Errors & Omissions Termination Federal Sentencing Gidelines Safegards 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 147 2015 Cynthia Marcotte Stamer. All rights reserved. 147

Identify the nearest Emergency Exit 2015 Cynthia Marcotte Stamer. All rights reserved. Page 148 2015 Cynthia Marcotte Stamer. All rights reserved. 148

When Servicing Clients, Adopt & Enforce Policies, Processes To Meet Circlar 230 & Tax Preparer Dties Tax Shelter Opinions Covered Opinions Advising on positions, preparing, & signing tax retrn Best Practices 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 149 2015 Cynthia Marcotte Stamer. All rights reserved. 149

Qestions, Resorces & Thank Yo www.cynthiastamer.com www.soltionslawpress.com Updates & Training LinkedIn Health Plan Compliance Grop Office of Civil Rights http://www.hhs.gov/ocr/privacy /index.html Health & Hman Services Health Care Reform Generally http://www.healthcare.gov/ Health Care Reform Reglations At Healthcare.gov http://www.healthcare.gov/law/ resorces/reglations/index.html 2015 Cynthia Marcotte Stamer. All Rights Reserved. Page 150 2015 Cynthia Marcotte Stamer. All rights reserved. 150

Self-Compliance Tool for Part 7 of ERISA: Health Care-Related Provisions INTRODUCTION This self-compliance tool is intended to help grop health plans, plan sponsors, plan administrators, health insrance issers, and other parties determine whether a grop health plan is in compliance with some of the provisions of Part 7 of ERISA. The reqirements described in this Part 7 tool generally apply to grop health plans and grop health insrance issers. However, references in this tool generally are limited to grop health plans or plans for convenience. In addition, these provisions generally do not apply to retiree-only or excepted benefits plans (See 29 CFR 2590.732). This self-compliance tool is not meant to be considered legal advice. Rather, it is intended to give the ser a basic nderstanding of Part 7 of ERISA to better carry ot plan-related responsibilities. It provides a smmary of the statte, recent reglations and other gidance issed by the Department. In addition, some of the provisions discssed involve isses for which rles have not yet been finalized. Proposed rles, interim final rles, and transition periods generally are noted. Periodically check the Department of Labor s Website (dol.gov/ebsa) nder Laws & Reglations for pblication of final rles. Cmlative List of Self-Compliance Tool Qestions for Health Care-Related Stattes Added to Part 7 of ERISA I. Determining Compliance with the HIPAA Provisions in Part 7 of ERISA If yo answer No to any of the qestions below, the grop health plan is in violation of the HIPAA provisions in Part 7 of ERISA. YES NO N/A The Health Insrance Portability and Accontability Act (HIPAA) incldes provisions of Federal law governing health coverage portability, health information privacy, administrative simplification, medical savings acconts, and long-term care insrance. The Department of Labor is responsible for the law s portability and nondiscrimination reqirements. HIPAA s portability provisions affect grop health plan coverage in the following ways: Provide certain individals special enrollment rights in grop health coverage when specific events occr, e.g., birth of a child (regardless of any open season) (see Section A), and Prohibit discrimination in grop health plan eligibility, benefits, and premims based on specific health factors (see Sections B-C). 62

YES NO N/A While HIPAA previosly provided for limits with respect to preexisting condition exclsions, new protections nder the Affordable Care Act now prohibit the imposition of preexisting condition exclsions for plan years beginning on or after Janary 1, 2014. For plan years beginning on or after Janary 1, 2014, plans are no longer reqired to isse the general notice of preexisting condition exclsion or individal notice of period of preexisting condition exclsion. HIPAA certificates of creditable coverage mst be provided throgh the end of 2014 (December 31, 2014) so that individals who may need to offset a preexisting condition exclsion nder a non-calendar year plan wold still have access to a certificate of creditable coverage throgh the end of 2014. See 29 CFR 2590.701-3, 5; 29 CFR 2590.715-2704 (a). SECTION A Compliance with the Special Enrollment Provisions Grop health plans mst allow individals (who are otherwise eligible) to enroll pon certain specified events, regardless of any late enrollment provisions, if enrollment is reqested within 30 days (or 60 days in the case of the special enrollment rights added by the Children s Health Insrance Program Reathorization Act of 2009 (CHIPRA), discssed in Qestion 3) of the event. The plan mst provide for special enrollment, as follows: Qestion 1 Special enrollment pon loss of other coverage Does the plan provide fll special enrollment rights pon loss of other coverage?... A plan mst permit loss-of-coverage special enrollment pon: (1) loss of eligibility for grop health plan coverage or health insrance coverage; and (2) termination of employer contribtions toward grop health plan coverage. See ERISA section 701(f)(1); 29 CFR 2590.701-6(a). When a crrent employee loses eligibility for coverage, the plan mst permit the employee and any dependents to special enroll. See 29 CFR 2590.701-6(a)(2)(i). When a dependent of a crrent employee loses eligibility for coverage, the plan mst permit the dependent and the employee to special enroll. See 29 CFR 2590.701-6(a)(2)(ii). Examples: Examples of reasons for loss of eligibility inclde: legal separation, divorce, death of an employee, termination or redction in the nmber of hors of employment - volntary or involntary (with or withot electing COBRA), exhastion of COBRA, redction in hors, aging ot nder other parent s coverage, or moving ot of an HMO s service area. Loss of eligibility for coverage does not inclde loss de to the individal s failre to pay premims or termination of coverage for case - sch as for frad. See 29 CFR 2590.701-6(a) (3)(i). When employer contribtions toward an employee s or dependent s coverage terminates, the plan mst permit special enrollment, even if the employee or 63

YES NO N/A dependent did not lose eligibility for coverage. See 29 CFR 2590.701-6(a) (3)(ii). Plans mst allow an employee a period of at least 30 days to reqest enrollment. See 29 CFR 2590.701-6(a)(4)(i). Coverage mst become effective no later than the first day of the first month following a completed reqest for enrollment. See 29 CFR 2590.701-6(a)(4)(ii). Tip: Ensre that the plan permits special enrollment pon all of the loss of coverage events described above. Qestion 2 Dependent special enrollment Does the plan provide fll special enrollment rights to individals pon marriage, birth, adoption, and placement for adoption?... Plans mst generally permit crrent employees to enroll pon marriage and pon birth, adoption, or placement for adoption of a dependent child. See ERISA section 701(f)(2); 29 CFR 2590.701-6(b)(2). Plans mst generally permit a participant s spose and new dependents to enroll pon marriage, birth, adoption, and placement for adoption. See ERISA section 701(f)(2); 29 CFR 2590.701-6(b)(2). Plans mst allow an individal a period of at least 30 days to reqest enrollment. See 29 CFR 2590.701-6(b)(3)(i). In the case of marriage, coverage mst become effective no later than the first day of the month following a completed reqest for enrollment. See 29 CFR 2590.701-6(b)(3)(iii)(A). In the case of birth, adoption, or placement for adoption, coverage mst become effective as of the date of the birth, adoption, or placement for adoption. See 29 CFR 2590.701-6(b)(3)(iii)(B). Tips: Remember to allow all eligible employees, sposes, and new dependents to enroll pon these events. Also, ensre that the effective date of coverage complies with HIPAA, keeping in mind that some effective dates of coverage are retroactive. Qestion 3 Special enrollment rights provided throgh CHIPRA Does the plan provide fll special enrollment rights as reqired nder CHIPRA?... Under the following conditions a grop health plan mst allow an employee or dependent (who is otherwise eligible) to enroll, regardless of any late enrollment provisions, if enrollment is reqested within 60 days: 64

YES NO N/A When an employee or dependent s Medicaid or CHIP coverage is terminated. When an employee or dependent is covered nder a Medicaid plan nder title XIX of the Social Secrity Act or nder a State Children s Health Insrance Plan (CHIP) nder title XXI of the Social Secrity Act and coverage of the employee or dependent is terminated as a reslt of loss of eligibility, a grop health plan mst allow special enrollment. The employee or dependent mst reqest special enrollment within 60 days after the date of termination of Medicaid or CHIP coverage. See ERISA section 701(f)(3). Upon Eligibility for Employment Assistance nder Medicaid or CHIP. When an employee or dependent becomes eligible for premim assistance, with respect to coverage nder the grop health plan or health insrance coverage nder a Medicaid plan or State CHIP plan, the grop health plan mst allow special enrollment. The employee or dependent mst reqest special enrollment within 60 days after the employee or dependent is determined to be eligible for assistance. See ERISA section 701(f)(3). Note: In addition, employers that maintain a grop health plan in a state with a CHIP or Medicaid program that provides for premim assistance for grop health plan coverage mst provide a written notice (referred to as the Employer CHIP Notice) to each employee to inform them of possible opportnities available in the state in which they reside for premim assistance for health coverage of employees or dependents. A model notice is available at dol.gov/ebsa/newsroom/ fschip.html. Qestion 4 Treatment of special enrollees Does the plan treat special enrollees the same as individals who enroll when first eligible, for prposes of eligibility for benefit packages and premims? If an individal reqests enrollment while the individal is entitled to special enrollment, the individal is a special enrollee, even if the reqest for enrollment coincides with a late enrollment opportnity nder the plan. See 29 CFR 2590.701-6(d)(1). Special enrollees mst be offered the same benefit packages available to similarly sitated individals who enroll when first eligible. (Any difference in benefits or cost-sharing reqirements for different individals constittes a different benefit package.) In addition, a special enrollee cannot be reqired to pay more for coverage than a similarly sitated individal who enrolls in the same coverage when first eligible. See 29 CFR 2590.701-6(d)(2). Qestion 5 Notice of special enrollment rights Does the plan provide timely and adeqate notices of special enrollment rights?... On or before the time an employee is offered the opportnity to enroll in the plan, the plan mst provide the employee with a description of special enrollment rights. 65

YES NO N/A Tip: Ensre that the special enrollment notice is provided at or before the time an employee is initially offered the opportnity to enroll in the plan. This may mean breaking it off from the SPD. The plan can inclde its special enrollment notice in the SPD if the SPD is provided at or before the initial enrollment opportnity (for example, as part of the application materials). If not, the special enrollment notice mst be provided separately to be timely. A model notice is provided in the Model Disclosres on page 138. SECTION B Compliance with the HIPAA Nondiscrimination Provisions Overview. HIPAA prohibits grop health plans and health insrance issers from discriminating against individals in eligibility and contined eligibility for benefits and in individal premim or contribtion rates based on health factors. These health factors inclde: health stats, medical condition (inclding both physical and mental illnesses), claims experience, receipt of health care, medical history, genetic information, evidence of insrability (inclding conditions arising ot of acts of domestic violence and participation in activities sch as motorcycling, snowmobiling, all-terrain vehicle riding, horseback riding, skiing, and other similar activities), and disability. See ERISA section 702; 29 CFR 2590.702. Similarly Sitated Individals. It is important to recognize that the nondiscrimination rles prohibit discrimination within a grop of similarly sitated individals. Under 29 CFR 2590.702(d), plans may treat distinct grops of similarly sitated individals differently, if the distinctions between or among the grops are not based on a health factor. If distingishing among grops of participants, plans and issers mst base distinctions on bona fide employment-based classifications consistent with the employer s sal bsiness practice. Whether an employment-based classification is bona fide is based on relevant facts and circmstances, sch as whether the employer ses the classification for prposes independent of qalification for health coverage. Bona fide employment-based classifications might inclde: fll-time verss part-time employee stats; different geographic location; membership in a collective bargaining nit; date of hire or length of service; or differing occpations. In addition, plans may treat participants and beneficiaries as two separate grops of similarly sitated individals. Plans may also distingish among beneficiaries. Distinctions among grops of beneficiaries may be based on bona fide employment-based classifications of the participant throgh whom the beneficiary is receiving coverage, relationship to the participant (sch as spose or dependent), marital stats, age of dependent children, or any other factor that is not a health factor. However, see section 2714 of the PHS Act, as amended by the Affordable Care Act and incorporated into section 715 of ERISA, for rles on defining dependents nder the plan. (For information regarding the Affordable Care Act, please visit or Website at dol.gov/ebsa/healthreform). Exception for benign discrimination: The nondiscrimination rles do not prohibit a plan from establishing more favorable rles for eligibility or premim rates for individals with an adverse health factor, sch as a disability. See 29 CFR 2590.702(g). 66

YES NO N/A Check to see that the plan complies with HIPAA s nondiscrimination provisions as follows: Qestion 6 Nondiscrimination in eligibility Does the plan allow individals eligibility and contined eligibility nder the plan regardless of any adverse health factor?... Examples of plan provisions that violate ERISA section 702(a) becase they discriminate in eligibility based on a health factor inclde: v Plan provisions that reqire evidence of insrability, sch as passing a physical exam, providing a certification of good health, or demonstrating good health throgh answers to a health care qestionnaire in order to enroll. See 29 CFR 2590.702(b)(1). Also, note that it may be permissible for plans to reqire individals to complete physical exams or health care qestionnaires for prposes other than for determining eligibility to enroll in the plan, sch as for determining an appropriate blended, aggregate grop rate for providing coverage to the plan as a whole. See 29 CFR 2590.702(b)(1)(iii) Example 1. Tip: Eliminate plan provisions that deny individals eligibility or contined eligibility nder the plan based on a health factor, even if sch provisions apply only to late enrollees. Qestion 7 Nondiscrimination in benefits Does the plan niformly provide benefits to participants and beneficiaries, withot directing any benefit restrictions at individal participants and beneficiaries based on a health factor?... Benefits provided mst be niformly available and any benefit restrictions mst be applied niformly to all similarly sitated individals and cannot be directed at any individal participants or beneficiaries based on a health factor. If benefit exclsions or limitations are applied only to certain individals based on a health factor, this wold violate ERISA section 702(a) and 29 CFR 2590.702(b)(2). Examples of plan provisions that may be permissible nder ERISA section 702(a) inclde: v Limits or exclsions for certain types of treatments or drgs, v Limitations based on medical necessity or experimental treatment, and v Cost-sharing, if the limit applies niformly to all similarly sitated individals and is not directed at individal participants or beneficiaries based on a health factor. However, other provisions of law, sch as the Affordable Care Act, may prohibit some of these limitations (sch as PHS Act section 2713, reqiring plans and issers to provide coverage for, and not impose cost-sharing reqirements with 67

YES NO N/A respect to, certain recommended preventive services. (For information regarding the Affordable Care Act, please visit or Website at dol.gov/ebsa/healthreform). Qestion 8 Sorce-of-injry restrictions If the plan imposes a sorce-of-injry restriction, does it comply with the HIPAA nondiscrimination provisions?... Plans may exclde benefits for the treatment of certain injries based on the sorce of that injry, except that plans may not exclde benefits otherwise provided for treatment of an injry if the injry reslts from an act of domestic violence or a medical condition. See 29 CFR 2590.702(b)(2)(iii). An example of a permissible sorce-of-injry exclsion wold inclde: v A plan provision that provides benefits for head injries generally, bt excldes benefits for head injries sstained while participating in bngee jmping. An impermissible sorce-of-injry exclsion wold inclde: v A plan provision that generally provides coverage for medical/srgical benefits, inclding hospital stays that are medically necessary, bt excldes benefits for self-inflicted injries or attempted sicide. This is impermissible becase the plan provision excldes benefits for treatment of injries that may reslt from a medical condition (depression). If the plan does not impose a sorce-of-injry restriction, check N/A and skip to Qestion 9. Qestion 9 Nondiscrimination in premims or contribtions Does the plan comply with HIPAA s nondiscrimination rles regarding individal premim or contribtion rates?... Under ERISA section 702(b) and 29 CFR 2590.702(c), plans may not reqire an individal to pay a premim or contribtion that is greater than a premim or contribtion for a similarly sitated individal enrolled in the plan on the basis of any health factor. For example, it wold be impermissible for a plan to reqire certain fll-time employees to pay a higher premim than other fll-time employees based on their prior claims experience. Nonetheless, the nondiscrimination rles do not prohibit a plan from providing a reward based on adherence to a wellness program. See ERISA section 702(b)(2)(B); PHS Act section 2705. Final rles for wellness programs were pblished on Jne 6, 2013 at 29 CFR 2590.702 and 29 CFR 2590.715-2705. (These rles were issed throgh athority nder the Affordable Care Act (PHS section 2705) and nder the HIPAA nondiscrimination provisions. These rles apply to both grandfathered and nongrandfathered grop health plans.) 68

YES NO N/A To help evalate whether this exception is available, refer to Section C on page 70. Once yo have completed Section C, retrn to this page to contine with Qestion 10, below. Qestion 10 List billing Is there compliance with the list billing provisions?... Under 29 CFR 2590.702(c)(2)(ii), plans and issers may not charge or qote an employer a different premim for an individal in a grop of similarly sitated individals based on a health factor. This practice is commonly referred to as list billing. If an isser is list billing an employer and the plan is passing the separate and different rates on to the individal participants and beneficiaries, both the plan and the isser are violating the prohibition against discrimination in premim rates. This does not prevent plans and issers from taking the health factors of each individal into accont in establishing a blended/aggregate rate for providing coverage to the plan. Note: Plans and issers are not permitted to adjst premim or contribtion rates based on genetic information of one or more individals in the grop. For more information on discrimination based on genetic information, refer to Section V. Note also that, nder the Affordable Care Act, certain premim rating reqirements apply to health insrance coverage in the small grop market. Visit HealthCare.gov for more information. Qestion 11 Nonconfinement clases Is the plan free of any nonconfinement clases?... Typically, a nonconfinement clase will deny or delay eligibility for some or all benefits if an individal is confined to a hospital or other health care instittion. Sometimes nonconfinement clases also deny or delay eligibility if an individal cannot perform ordinary life activities. Often a nonconfinement clase is imposed only with respect to dependents, bt they sometimes are also imposed with respect to employees. 29 CFR 2590.702(e) (1) explains that these nonconfinement clases violate ERISA sections 702(a) (if the clase delays or denies eligibility) and 702(b) (if the clase raises individal premims). Tip: Delete all nonconfinement clases. Qestion 12 Actively-at-work clases Is the plan free of any impermissible actively-at-work clases?... Typically, actively-at-work provisions delay eligibility for benefits based on an individal being absent from work. 29 CFR 2590.702(e)(2) explains that actively-at-work provisions generally violate ERISA sections 702(a) (if the clase delays or denies eligibility) and 702(b) (if the clase raises individal premims or contribtions), nless absence from work de to a health factor is treated, for prposes of the plan, as if the individal is at work. 69

YES NO N/A Nonetheless, an exception provides that a plan may establish a rle for eligibility that reqires an individal to begin work for the employer sponsoring the plan before eligibility commences. Frther, plans may establish rles for eligibility or set any individal s premim or contribtion rate in accordance with the rles relating to similarly sitated individals in 29 CFR 2590.702(d). For example, a plan that treats fll-time and parttime employees differently for other employment-based prposes, sch as eligibility for other employee benefits, may distingish in rles for eligibility nder the plan between fll-time and part-time employees. Tip: Careflly examine any actively-at-work provision to ensre consistency with HIPAA. SECTION C Compliance with the Wellness Program Provisions Use the following qestions to help determine whether the plan offers a program of health promotion or disease prevention that is reqired to comply with the Department s final wellness program reglations and, if so, whether the program is in compliance with the reglations. See final reglations issed by the Departments on Jne 6, 2013 at 29 CFR 2590.702 and 29 CFR 2590.715-2705. These reglations se joint athority nder HIPAA and the ACA and apply for plan years beginning on or after Janary 1, 2014, however reglations nder HIPAA s nondiscrimination provisions relating to wellness programs were applicable for plan years prior to the applicability of these final wellness program rles. The reqirements relating to wellness programs apply to both grandfathered and non-grandfathered grop health plans (See frther discssion of grandfather stats nder the ACA section VII, A of this tool). Qestion 13 Does the plan have a wellness program?... A wide range of wellness programs exist to promote health and prevent disease. However, these programs are not always labeled wellness programs. Examples inclde: a program that redces individals costsharing for complying with a preventive care plan; a diagnostic testing program for health problems; and rewards for attending edcational classes, following healthy lifestyle recommendations, or meeting certain biometric targets (sch as weight, cholesterol, nicotine se, or blood pressre targets). Tip: Ignore the labels wellness programs can be called many things. Other common names inclde: disease management programs, smoking cessation programs, and case management programs. Qestion 14 Is the wellness program part of a grop health plan?... The wellness program is only sbject to Part 7 of ERISA if it is part of a grop health plan. If the employer operates the wellness program separate from the grop health plan, the program may be reglated by other laws, bt it is not sbject to the grop health plan rles discssed here. 70

YES NO N/A Example: An employer instittes a policy that any employee who smokes will be fired. Here, the anti-smoking policy is not part of the grop health plan, so the wellness program rles do not apply. (Bt see 29 CFR 2590.702, which clarifies that compliance with the HIPAA nondiscrimination rles, inclding the wellness program rles, is not determinative of compliance with any other provision of ERISA or any other State or Federal law, sch as the Americans with Disabilities Act.) Qestion 15 Does the program discriminate based on a health factor (i.e., is it a health-contingent program)?... A program discriminates based on a health factor if it reqires an individal to meet a standard related to a health factor in order to obtain a reward (or reqires an individal to ndertake more than a similarly sitated individal based on a health factor in order to obtain the same reward). A reward can be in the form of a discont or rebate of a premim or contribtion, a waiver of all or part of a cost-sharing mechanism (sch as dedctibles, copayments, or coinsrance), an additional benefit, or any other financial or other incentive. A reward can also be the avoidance of a penalty (sch as the absence of a srcharge, or other financial or nonfinancial disincentive). If none of the conditions for obtaining a reward is based on an individal satisfying a standard that is related to a health factor (or if a wellness program does not provide a reward), the wellness program is a participatory wellness program. See 29 CFR 2590.702 (f)(1)(ii). Example 1: Plan participants who have a cholesterol level nder 200 will receive a premim redction of 30 percent. In this Example 1, the plan reqires individals to meet a standard related to a health factor in order to obtain a reward. Example 2: A plan reqires all eligible employees to complete a health risk assessment to enroll in the plan. Employee answers are fed into a compter that identifies risk factors and sends edcational information to the employee s home address. In this Example 2, the reqirement to complete the assessment does not, itself, discriminate based on a health factor. However, if the plan sed individals specific health information to discriminate in individal eligibility, benefits, or premims, there wold be discrimination based on a health factor. Tip: Participatory wellness programs are permissible, provided the program is made available to all similarly sitated individals, regardless of health stats. If yo answered No to ANY of the above qestions 13-15, STOP. The plan is not sbject to the HIPAA wellness rles. If yo are completing this section as part of a review of yor plan, please contine to Section D. 71

YES NO N/A Qestion 16 If the program discriminates based on a health factor, is the program saved by the benign discrimination provisions?... The Department s reglations at 29 CFR 2590.702(g) permit discrimination in favor of an individal based on a health factor. Example: A plan grants participants who have diabetes a waiver of the plan s annal dedctible if they enroll in a disease management program that consists of attending edcational classes and following their doctor s recommendations regarding exercise and medication. This is benign discrimination becase the program is offering a reward to individals based on an adverse health factor. Tip: The benign discrimination exception is NOT available if the plan asks diabetics to meet a standard related to a health factor (sch as maintaining a certain body mass index (BMI)) in order to get a reward. In this case, an intervening discrimination is introdced and the plan cannot rely solely on the benign discrimination exception. If yo answered Yes to this qestion, STOP. There does not appear to be a violation of the wellness program rles. If yo are completing this section as part of a review of yor plan, please contine to Section D. If yo answered No to this qestion, proceed to Qestions 17 and 18. The health-contingent wellness program mst meet the 5 criteria. Qestion 17 Within the health-contingent wellness program category, is the program an activity-only program?... An activity-only wellness program is a type of health-contingent wellness program that reqires an individal to perform or complete an activity related to a health factor in order to obtain a reward bt does not reqire the individal to attain or maintain a specific health otcome. See 29 CFR 2590.702 (f)(1)(iv). v Examples inclde walking, diet or exercise programs. If yo answered Yes to this qestion, proceed to Qestion 19. If yo answered No to this qestion, proceed to Qestion 18. Qestion 18 Within the health-contingent wellness program category, is the program an otcome-based program?... An otcome-based wellness program is a type of health-contingent wellness program that reqires an individal to attain or maintain a specific health otcome (sch as not smoking or attaining certain reslts on biometric screenings) in order to obtain a reward. See 29 CFR 2590.702 (f)(1)(iv). 72

YES NO N/A Qestion 19 Is the health-contingent program in compliance with the five reqirements?... A. Is the amont of the reward offered nder the plan limited to 30 percent (or 50 percent for programs designed to prevent or redce tobacco se) of the applicable cost of coverage? (29 CFR 2590.702 (f)(3)(ii) and 29 CFR 2590.702(f)(4)(ii))... If only employees are eligible to participate, the amont of the reward mst not exceed 30 percent (or 50 percent) of the cost of employee-only coverage nder the plan. If employees and any class of dependents are eligible to participate, the reward mst not exceed 30 percent of the cost of coverage in which an employee and any dependents are enrolled. The 30 percent (or 50 percent) limitation on the amont of the reward applies to all of a plan s wellness programs that reqire individals to meet a standard related to a health factor. Example: If the plan has two wellness programs with standards related to a health factor, a 20 percent reward for meeting a BMI target and a 10 percent reward for meeting a cholesterol target, it wold meet the maximm limit on the total reward available, which is 30 percent. If instead, the program offered a 20 percent reward for meeting a body mass index target, a 10 percent reward for meeting a cholesterol target, and a 10 percent reward for completing a health risk assessment (regardless of any individal s specific health information), the rewards wold not need to be adjsted becase the 10 percent reward for completing the health risk assessment does not reqire individals to meet a standard related to a health factor. B. Is the plan reasonably designed to promote health or prevent disease? (29 CFR 2590.702(f)(2)(iii) and 29 CFR 2590.702(f)(4)(iii))... The program mst be reasonably designed to promote health or prevent disease. The program shold have a reasonable chance of improving the health of or preventing disease in participating individals, not be overly brdensome, not be a sbterfge for discriminating based on a health factor, and not be highly sspect in the method chosen to promote health or prevent disease. This determination is based on all the relevant facts and circmstances. C. Are individals who are eligible to participate given a chance to qalify at least once per year? (29 CFR 2590.702(f)(3)(i) and 29 CFR 2590.702(f) (4)(i))... 73

YES NO N/A D. Is the reward available to all similarly sitated individals? Does the program offer a reasonable alternative standard? (29 CFR 2590.702(f) (3)(iv) and 29 CFR 2590.702(f)(4)(iv))... The wellness program rles reqire that the reward be available to all similarly sitated individals. A component of meeting this criterion is that the program mst have a reasonable alternative standard (or waiver of the otherwise applicable standard) that is frnished by the plan pon a participant s reqest. Activity-only programs A reasonable alternative standard mst be available for obtaining the reward for any individal for whom, for that period, it is nreasonably difficlt de to a medical condition to satisfy the otherwise applicable standard or medically inadvisable to attempt to satisfy the otherwise applicable standard. See 29 CFR 2590.702(f)(3)(iv)(A)(1) If reasonable nder the circmstances, a plan or isser may seek verification, sch as a statement from an individal s personal physician, that a health factor makes it nreasonably difficlt for the individal to satisfy, or medically inadvisable for the individal to attempt to satisfy, the otherwise applicable standard. See 29 CFR 2590.702(f)(3)(iv)(A)(2) Otcome-based wellness programs The reasonable alternative standard mst be available to any individal who does not meet the initial standard based on the measrement, test, or screening. See 29 CFR 2590.702(f)(4)(iv)(A) Plans may not seek verification, sch as a statement from an individal s personal physician, that a health factor makes it nreasonably difficlt for the individal to satisfy, or medically inadvisable for the individal to attempt to satisfy the standard. See 29 CFR 2590.702(f)(4)(iv)(E) E. Does the plan disclose the availability of a reasonable alternative standard in all plan materials describing the program? (29 CFR 2590.702(f)(3)(v))... The plan or isser mst disclose the availability of a reasonable alternative standard in all plan materials describing the program and in any disclosre that an individal did not satisfy an initial otcome-based standard. If plan materials merely mention that the program is available, withot describing its terms, this disclosre is not reqired. Tip: The disclosre does not have to say what the reasonable alternative standard is in advance. The plan can individally tailor the standard for each individal, on a case-by-case basis. 74

YES NO N/A The following sample langage can be sed to satisfy this reqirement: If it is nreasonably difficlt de to a medical condition for yo to achieve the standards for the reward nder this program, or if it is medically inadvisable for yo to attempt to achieve the standards for the reward nder this program, call s at [insert telephone nmber] and we will work with yo to develop another way to qalify for the reward. Note: This section highlights the five reqirements for a health-contingent program and briefly describes the separate reqirements for an activity-only program and an otcome-based program. For more information on the five reqirements and differences between the activity-only and otcome-based programs, please visit or Website at dol.gov/ebsa/healthreform. Taking into consideration whether the health-contingent wellness program is activity-only or otcome-based: If yo answered Yes to all of the 5 qestions on wellness program criteria, there does not appear to be a violation of the HIPAA wellness program rles. If yo answered No to any of the 5 qestions on wellness program criteria, the plan has a wellness program compliance isse. Specifically, Violation of the general benefit discrimination rle (29 CFR 2590.702(b)(2)(i), 29 CFR 2590.715-2705(a)) If the wellness program varies benefits, inclding cost-sharing mechanisms (sch as dedctible, copayment, or coinsrance) based on whether an individal meets a standard related to a health factor and the program does not satisfy the reqirements of 29 CFR 2590.702(f), the plan is impermissibly discriminating in benefits based on a health factor. The wellness program exception at 29 CFR 2590.702(b)(2)(ii) is not satisfied and the plan is in violation of 29 CFR 2590.702(b)(2)(i) and 29 CFR 2590.715-2705(a). Violation of general premim discrimination rle (29 CFR 2590.702(c)(1), 29 CFR 2590.715-2705(a)) If the wellness program varies the amont of premim or contribtion it reqires similarly sitated individals to pay based on whether an individal meets a standard related to a health factor and the program does not satisfy the reqirements of 29 CFR 2590.702(f), the plan is impermissibly discriminating in premims based on a health factor. The wellness program exception at 29 CFR 2590.702(c)(3) is not satisfied and the plan is in violation of 29 CFR 2590.702(c)(1) and 29 CFR 2590.715.2705(a). 75

YES NO N/A SECTION D Compliance with the MEWA or Mltiemployer Plan Garanteed Renewability Provisions If the plan is a mltiple employer welfare arrangement (MEWA) or a mltiemployer plan, it is reqired to provide garanteed renewability of coverage in accordance with ERISA section 703. If the plan is a MEWA or mltiemployer plan, it mst meet the criteria described in Qestion 20. If the plan is not a MEWA or mltiemployer plan, check N/A and go to Part II of this self-compliance tool.... Qestion 20 Mltiemployer plan and MEWA garanteed renewability If the plan is a mltiemployer plan, or a MEWA, does the plan provide garanteed renewability?... Grop health plans that are mltiemployer plans or MEWAs may not deny an employer contined access to the same or different coverage, other than: v For nonpayment of contribtions; v For frad or other intentional misrepresentation by the employer; v For noncompliance with material plan provisions; v Becase the plan is ceasing to offer coverage in a geographic area; v In the case of a plan that offers benefits throgh a network plan, there is no longer any individal enrolled throgh the employer who lives, resides, or works in the service area of the network plan and the plan applies this paragraph niformly withot regard to the claims experience of employers or any health-related factor in relation to sch individals or dependents; or v For failre to meet the terms of an applicable collective bargaining agreement, to renew a collective bargaining or other agreement reqiring or athorizing contribtions to the plan, or to employ employees covered by sch agreement. See ERISA section 703. **Note: The Pblic Health Service (PHS) Act contains garanteed renewability reqirements for issers. 76

II. Determining Compliance with the Mental Health Parity Act (MHPA) and Mental Health Parity and Addiction Eqity Act (MHPAEA) Provisions in Part 7 of ERISA (together, the mental health parity provisions) If yo answer No to any of the qestions below, the grop health plan is in violation of the mental health parity provisions in Part 7 of ERISA. Introdction If the plan provides either mental health or sbstance se disorder benefits, in addition to medical/srgical benefits, the plan may be sbject to the mental health parity provisions in Part 7 of ERISA. Retiree-only plans, and those offering excepted benefits, are generally not sbject to the mental health parity provisions nder part 7 of ERISA. See 29 CFR 2590.732 for frther discssion. (Note: if nder an arrangement(s) to provide medical care by an employer or employee organization, any participant or beneficiary can simltaneosly receive coverage for medical/srgical benefits and mental health or sbstance se disorder benefits, the mental health parity reqirements apply separately with respect to each combination of medical/srgical benefits and mental health/sbstance se disorder benefits and all sch combinations are considered to be a single grop health plan. See 29 CFR 2590.712(e).) If this is the case, answer Qestions 21-28. If the plan does not provide mental health or sbstance se disorder benefits, check N/A here and skip to Part III of this checklist. Also, the plan may be exempt from the mental health parity provisions nder the small employer (50 employees or fewer) exception or the increased cost exception. (To be eligible for the increased cost exception, the plan mst have filed a notice with EBSA and notified participants and beneficiaries.) Unless a plan is exempt as previosly described, the reqirements of MHPAEA generally apply to both grandfathered and non-grandfathered grop health plans 13, as defined nder the Affordable Care Act. Note that the Department of Health and Hman Services final rle regarding essential health benefits (EHB) reqires health insrance issers offering non-grandfathered health insrance coverage in the small grop market throgh an Affordable Health Insrance Exchange (Marketplace) or otside of a Marketplace to comply with MHPAEA in order to satisfy the reqirement to provide EHB. In addition, nder MHPAEA, if a plan or isser provides mental health or sbstance se disorder benefits in any classification described in the MHPAEA final reglation, mental health or sbstance se disorder benefits mst be provided in every classification in which medical/srgical benefits are provided. Under the Affordable Care Act, PHSA section 2713, non-grandfathered grop health plans are reqired to provide certain preventive services with no cost-sharing, which incldes, among YES NO N/A 13 Mental health and sbstance se disorder benefits are defined nder the terms of the plan, in accordance with applicable Federal and State law. Any condition or disorder defined by the plan as being or as not being a mental health condition or sbstance se disorder mst be defined in a manner consistent with generally recognized independent standards of crrent medical practice (e.g., the most crrent version of the DSM or ICD or State gidelines). 77

YES NO N/A other things, alcohol misse screening and conseling, depression screening, and tobacco se screening. However, the Departments clarified that nothing in MHPAEA reqires a grop health plan that provides mental health or sbstance se disorder benefits only to the extent reqired nder PHSA section 2713, to provide additional mental health or sbstance se disorder benefits in any classification. 14 If the plan is exempt, check N/A here and skip to Part III of this checklist.... SECTION A. Lifetime and Annal Limits Qestion 21 Does the plan comply with the mental health parity reqirements regarding lifetime dollar limits on mental health/sbstance se disorder benefits?... A plan generally may not impose a lifetime dollar limit on mental health/ sbstance se disorder benefits that is lower than the lifetime dollar limit imposed on medical/ srgical benefits. See 29 CFR 2590.712(b). (Only limits on what the plan wold pay are taken into accont, as contrasted with limits on what an individal may be charged.) Note: These provisions are affected by section 2711 of the Pblic Health Service Act, as amended by the Patient Protection and Affordable Care Act. Specifically, PHS Act section 2711 generally prohibits lifetime and annal dollar limits on essential health benefits (EHB), which incldes mental health and sbstance se disorder services. Accordingly, for mental health and sbstance se disorder benefits that are EHB, plans cannot impose lifetime limits. For mental health and sbstance se disorder benefits that are not EHB, parity reqirements regarding aggregate lifetime dollar limits apply. (For information regarding the Affordable Care Act, please visit or Website at dol.gov/ebsa/healthreform). Qestion 22 Does the plan comply with the mental health parity reqirements regarding annal dollar limits on mental health/sbstance se disorder benefits?... A plan generally may not impose an annal dollar limit on mental health/ sbstance se disorder benefits that is lower than the annal dollar limit imposed on medical/srgical benefits. See 29 CFR 2590.712(b). (Again, only limits on what the plan wold pay are taken into accont, as contrasted with limits on what an individal may be charged.) Tip: There is a different rle for cmlative limits other than aggregate lifetime or annal dollar limits discssed later in this checklist at Qestion 26. A plan may impose annal ot-of-pocket dollar limits on participants and beneficiaries if done in accordance with the rle regarding cmlative limits. 14 See 29 CFR 2590.712(e)(3)(i) 78

YES NO N/A Note: These provisions are affected by section 2711 of the Pblic Health Service Act, as amended by the Patient Protection and Affordable Care Act. Specifically, PHS Act section 2711 generally prohibits annal dollar limits on essential health benefits, which incldes mental health and sbstance se disorder services. Accordingly, the parity reqirements regarding annal dollar limits only apply to the provision of mental health and sbstance se disorder benefits that are not Essential Health Benefits. Note also that for plan years beginning in 2015, the annal limitation on an individal s maximm ot-of-pocket (MOOP) costs in effect nder ACA is $6,600 for self-only coverage and $13,200 for coverage other than self-only coverage. See ACA Implementation FAQ Part XXI at dol.gov/ebsa/faqs/faq-aca21. html. (For information regarding the Affordable Care Act, please visit or Website at dol.gov/ebsa/healthreform). SECTION B. Financial Reqirements and Qantitative Treatment Limitations Qestion 23 Does the plan comply with the mental health parity reqirements for parity in financial reqirements and qantitative treatment limitations?... A plan may not impose a financial reqirement or qantitative treatment limitation applicable to mental health/sbstance se disorder benefits in any classification that is more restrictive than the predominant financial reqirement or qantitative treatment limitation of that type that is applied to sbstantially all medical/srgical benefits in the same classification. See 29 CFR 2590.712(c)(2). v v Types of financial reqirements inclde dedctibles, copayments, coinsrance, and ot-of-pocket maximms. See 29 CFR 2590.712(c)(1)(ii). Types of qantitative treatment limitations inclde annal, episode, and lifetime day and visit limits, for example, nmber of treatments, visits, or days of coverage. See 29 CFR 2590.712(c)(1)(ii). The six classifications* of benefits are: 1) inpatient, in-network; 2) inpatient, ot-of-network; 3) otpatient, in-network; 4) otpatient, ot-of-network; 5) emergency care; and 6) prescription drgs. See 29 CFR 2590.712(c)(2)(ii). Under the plan, any financial reqirement or qantitative treatment limitation that applies to mental health/sbstance se disorder benefits within a particlar classification cannot be more restrictive than the predominant reqirement or limitation that applies to sbstantially all medical/srgical benefits within the same classification. See 29 CFR 2590.712(c)(2). *See page 81 for special rles related to classifications. 79

YES NO N/A Detailed steps for applying these rles are set forth below: To determine compliance, each type of financial reqirement or qantitative treatment limitation within a coverage nit 15 mst be analyzed separately within each classification. See 29 CFR 2590.712(c)(2)(i). If a plan applies different levels of a financial reqirement or qantitative treatment limitation to different coverage nits in a classification of medical/srgical benefits (for example, a $15 copayment for self-only and a $20 copayment for family coverage), the predominant level is determined separately for each coverage nit. See 29 CFR 2590.712(c)(3)(ii). Step One: First determine if a particlar type of financial reqirement or qantitative treatment limitation applies to sbstantially all medical/srgical benefits in the relevant classification of benefits. v Generally, a financial reqirement or qantitative treatment limitation is considered to apply to sbstantially all medical/srgical benefits if it applies to at least two-thirds of the medical/srgical benefits in the classification. See 29 CFR 2590.712(c)(3)(i)(A). This two-thirds calclation is generally based on the dollar amont of plan payments expected to be paid for the plan year. See 29 CFR 2590.712(c)(3)(i)(C). (Any reasonable method can be sed for this calclation. See 29 CFR 2590.712(c)(3)(i)(E).) Step Two: If the type of financial reqirement or qantitative treatment limitation applies to at least two-thirds of medical/srgical benefits in that classification, then determine the predominant level of that type of financial reqirement or qantitative treatment limitation that applies to medical/ srgical benefits sbject to that type of financial reqirement or qantitative treatment limitation in that classification of benefits. (Note: If the type of financial reqirement or qantitative treatment limitation does not apply to at least two-thirds of medical/srgical benefits in that classification, it cannot apply to mental health/sbstance se disorder benefits in that classification.) v Generally, the predominant level will apply to more than one-half of the medical/srgical benefits in that classification sbject to the financial reqirement or qantitative treatment limitation. See 29 CFR 2590.712(c)(3)(i)(B)(1). If there is no single level that applies to more than one-half of medical/srgical benefits in the classification, the plan can combine levels ntil the combination of levels applies to more than one-half of medical/srgical benefits sbject to the financial reqirement or qantitative treatment limitation in the classification. The least restrictive level within the combination is considered the predominant level. 16 See 29 CFR 2590.712(c)(3)(i)(B)(2). 15 Coverage nit refers to the way in which a plan grops individals for prposes of determining benefits, or premims or contribtions, for example, self-only, family, and employee pls spose. See 29 CFR 2590.712(c)(1)(iv). 16 For a simpler method of compliance, a plan may treat the least restrictive level of financial reqirement or treatment limitation applied to medical/srgical benefits as predominant. 80

YES NO N/A *Note: Special rles related to classifications 1. Special rle for otpatient sb-classifications: For prposes of determining parity for otpatient benefits (in-network and ot-of network), a plan or isser may divide its benefits frnished on an otpatient basis into two sb-classifications: (1) office visits and (2) all other otpatient items and services, for prposes of applying the financial reqirement and treatment limitation rles. After the sb-classifications are established, the plan or isser may not impose any financial reqirement or qantitative treatment limitation on mental health/sbstance se disorder benefits in any sb-classification (i.e., office visits or non-office visits) that is more restrictive than the predominant financial reqirement or treatment limitation that applies to sbstantially all medical/srgical benefits in the sb-classification sing the methodology set forth in the final rles. Other than as explicitly permitted nder the final rles, sb-classifications are not permitted when applying the financial reqirement and treatment limitation rles nder MHPAEA. Accordingly, separate sb-classifications for generalists and specialists are not permitted. (See Qestion 24 for more information regarding specialists and generalists.) 2. Special rle for prescription drg benefits: There is a special rle for mlti-tiered prescription drg benefits. A plan complies with the mental health parity provisions if the plan applies different levels of financial reqirements to different tiers of prescription drg benefits based on reasonable factors and withot regard to whether a drg is generally prescribed for medical/srgical or mental health/sbstance se disorder benefits. Reasonable factors inclde cost, efficacy, generic verss brand name, and mail order verss pharmacy pick-p. See 29 CFR 2590.712(c)(3) (iii). 3. Special rle for mltiple network tiers: There is a special rle for mltiple network tiers. If a plan provides benefits throgh mltiple tiers of in-network providers (sch as in-network preferred and in-network participating providers), the plan may divide its benefits frnished on an in-network basis into sb-classifications that reflect network tiers, if the tiering is based on reasonable factors (sch as qality, performance, and market standards) and withot regard to whether a provider provides services with respect to medical/srgical benefits or mental health or sbstance se disorder benefits. After the sb-classifications are established, the plan or isser may not impose any financial reqirement or treatment limitation on mental health or sbstance se disorder benefits in any sb-classification that is more restrictive than the predominant financial reqirement or treatment limitation that applies to sbstantially all medical/ srgical benefits in the sb-classification. 81

YES NO N/A Tips: Ensre that the plan does not impose cost-sharing reqirements or qantitative treatment limitations that are applicable only to mental health/ sbstance se disorder benefits. Ensre that with respect to condcting the predominant/sbstantially all test, the analysis mst be done with respect to the dollar amont of all plan payments expected to be paid for the relevant plan year. Basing the analysis on an insrer s entire overall book of bsiness for the year or book of bsiness in a specific region or State is not a permissible analysis for demonstrating compliance with MHPAEA. Qestion 24 If the plan imposes a higher, specialist financial reqirement, sch as a copay, on mental health/sbstance se disorder benefits, can the plan demonstrate that the specialist level of the financial reqirement is the predominant level that applies to sbstantially all medical/srgical benefits within the classification?... The six classifications otlined in Qestion 23 are the only classifications that may be sed when determining the predominant financial reqirements or qantitative treatment limitations that apply to sbstantially all medical/ srgical benefits. See 29 CFR 2590.712(c)(2)(ii). A plan may not se a separate sb-classification nder these classifications for generalists and specialists. See preamble langage at 75 FR 5413. Tip: A plan may still be able to impose the specialist level of a financial reqirement or qantitative treatment limitation if it is the predominant level that applies to sbstantially all medical/srgical benefits within a classification. For example, if the specialist level of copay is the predominant level of copay that applies to sbstantially all medical/srgical benefits in the otpatient, in-network classification, the plan may apply the specialist level copay to mental health/ sbstance se disorder benefits in the otpatient, in-network classification. See 29 CFR 2590.712(c)(3). SECTION C. Coverage in all Classifications Qestion 25 Does the plan comply with the mental health parity reqirements for coverage in all classifications?... If a plan provides mental health/sbstance se disorder benefits in any classification of benefits (the classifications are listed in Qestion 23), mental health/sbstance se disorder benefits mst be provided in every classification in which medical/srgical benefits are provided. See 29 CFR 2590.712(c)(2)(ii)(A). v In determining the classification in which a particlar benefit belongs, a plan mst apply the same standards to medical/srgical benefits and to mental health/sbstance se disorder benefits. See 29 CFR 2590.712(c) (2)(ii)(A). This rle also applies to intermediate services provided nder the plan or coverage. Plans mst assign covered intermediate mental health and sbstance se disorder benefits (sch as residential treatment, partial hospitalization and intensive otpatient treatment) to the 82

YES NO N/A existing six classifications in the same way that they assign comparable intermediate medical/srgical benefits to these classifications. For example, if a plan classifies skilled nrsing and rehabilitation hospitals for medical/srgical benefits as inpatient benefits, it mst classify residential treatment facilities for mental health and sbstance se disorder benefits as inpatient benefits. If a plan treats home health care as an otpatient benefit, then any covered intensive otpatient mental health/sbstance se disorder services and partial hospitalization mst be considered otpatient benefits as well. A plan mst also comply with MHPAEA s NQTL rles, discssed in the following section, in assigning any benefits to a particlar classification. See 29 CFR 2590.712(c)(4). Tips: If the plan does not contract with a network of providers, all benefits are otof-network. If a plan that has no network imposes a financial reqirement or treatment limitation on inpatient or otpatient benefits, the plan is imposing the reqirement or limitation within classifications (inpatient, ot-of-network or otpatient, ot-of-network), and the rles for parity will be applied separately for the different classifications. See 29 CFR 2590.712(c)(2)(ii)(C), Example 1. If a plan covers the fll range of medical/srgical benefits (in all classifications, both in-network and ot-of-network), beware of exclsions on ot-of-network mental health and sbstance se disorder benefits. The plan mst ensre that all combinations of benefits comport with parity. Note: As explained in the Introdction to this section, nothing in MHPAEA reqires a non-grandfathered grop health plan that provides mental health or sbstance se disorder benefits only to the extent reqired nder PHSA section 2713, to provide additional mental health or sbstance se disorder benefits in any classification. SECTION D. Cmlative Financial Reqirements and Treatment Limitations Qestion 26 Does the plan comply with the mental health parity provisions on cmlative financial reqirements or cmlative qantitative treatment limitations?... A plan may not apply any cmlative financial reqirement or cmlative qantitative treatment limitation for mental health/sbstance se disorder benefits in a classification that accmlates separately from any established for medical/srgical benefits in the same classification. See 29 CFR 2590.712(c)(3)(v). v Cmlative financial reqirements are financial reqirements that determine whether or to what extent benefits are provided based on accmlated amonts and inclde dedctibles and ot-of-pocket maximms (bt do not inclde aggregate lifetime or annal dollar limits becase these two terms are exclded from the meaning of financial 83

YES NO N/A v reqirements). See 29 CFR 2590.712(a). Cmlative qantitative treatment limitations are treatment limitations that determine whether or to what extent benefits are provided based on accmlated amonts, sch as annal or lifetime day or visit limits. See 29 CFR 2590.712(a). For example, a plan may not impose an annal $250 dedctible on all medical/srgical benefits and a separate $250 dedctible on all mental health/ sbstance se disorder benefits. SECTION E. Nonqantitative Treatment Limitations Qestion 27 Does the plan comply with the mental health parity provisions for parity within nonqantitative treatment limitations?... Nonqantitative treatment limitations (NQTLs) inclde: v Medical management standards limiting or exclding benefits based on medical necessity or medical appropriateness, or based on whether the treatment is experimental or investigative; v Formlary design for prescription drgs; v For plans with mltiple network tiers (sch as preferred providers and participating providers), network tier design; v Standards for provider admission to participate in a network, inclding reimbrsement rates; v Plan methods for determining sal, cstomary, and reasonable charges; v Refsal to pay for higher-cost therapies ntil it can be shown that a lower-cost therapy is not effective (also known as fail-first policies or step therapy protocols); v Exclsions based on failre to complete a corse of treatment; and v Restrictions based on geographic location, facility type, provider specialty, and other criteria that limit the scope or dration of benefits for services provided nder the plan or coverage. This is an illstrative, nonexhastive list. See 29 CFR 2590.712(c)(4)(ii). General rles: A plan may not impose an NQTL with respect to mental health/sbstance se disorder benefits in any classification (sch as inpatient, ot-ofnetwork) nless, nder the terms of the plan (as written and in operation), any processes, strategies, evidentiary standards, or other factors sed in applying the NQTL to mental health/sbstance se disorder benefits in the classification are comparable to and applied no more stringently than the processes, strategies, evidentiary standards or other factors sed in applying the NQTL with respect to medical/srgical benefits in the classification. See 29 CFR 2590.712(c)(4)(i). A grop health plan may consider a wide array of factors in designing medical management techniqes for both mental health/sbstance se disorder benefits and medical/srgical benefits, sch as cost of treatment; 84

YES NO N/A high cost growth; variability in cost and qality; elasticity of demand; provider discretion in determining diagnosis, or type or length of treatment; clinical efficacy of any proposed treatment or service; licensing and accreditation of providers; and claim types with a high percentage of frad. Based on application of these or other factors in a comparable fashion, an NQTL, sch as prior athorization, may be reqired for some (bt not all) mental health/sbstance se disorder benefits, as well as for some medical/ srgical benefits, bt not for others. See 29 CFR 2590.712(c)(4), Example 8. Examples: The Departments have pblished several examples that help illstrate how the MHPAEA reglations apply to some common plan NQTLs, inclding: 1) The penalty for failre to obtain preathorization is more pnitive with respect to mental health/sbstance se disorder benefits than with respect to medical/srgical benefits. See 2590.712(c)(4)(iii), Example 3. 2) The plan ses an employee assistance program as a gatekeeper to obtaining mental health or sbstance se disorder benefits. See 2590.712(c)(4)(iii), Example 6. 3) Utilization management practices that differ among different plan benefits. See 29 CFR 2590.712(c)(4)(iii), Example 8. Tips: Do not focs on reslts. Look at the nderlying processes and strategies sed in applying NQTLs (sch as tilization review (UR) and standards for network admission). Are there arbitrary or discriminatory differences in how the plan is applying those processes and strategies to medical/ srgical benefits verss mental health/sbstance se disorder benefits? A plan or isser that limits eligibility for mental health and sbstance se disorder benefits ntil after benefits nder an EAP are exhasted has established an NQTL sbject to the parity reqirements. If no comparable reqirement applies to medical/srgical benefits sch a reqirement cold not be applied to mental health or sbstance se disorder benefits. Qestions Yo Might Ask: 1) What classification of benefits is being analyzed? Does the plan clearly define which benefits are treated as medical/srgical and which benefits are treated as mental health/sbstance se disorder nder the plan. Are benefits (sch as non-hospital inpatient and partial hospitalization) assigned to classifications sing a comparable methodology across medical/srgical benefits and mental health/sbstance se disorder benefits? 2) What is the type and description of any NQTL being applied and is it applied in parity? 3) Overall explanation of how each NQTL is applied with respect to medical/srgical benefits and mental health and sbstance se disorder benefits. (Note: this incldes reqirements that both the participant and provider may be sbject to prsant to the NQTL). If only certain benefits are sbject to an NQTL, sch as meeting a fail first protocol or reqiring preathorization, how were the specific medical/srgical and 85

YES NO N/A mental health or sbstance se disorder benefits sbject to the NQTL determined? To the extent medical gidelines are relied pon, is there a process for determining variation/application of the gidelines that is comparable with respect to both medical/srgical and mental health or sbstance se disorder benefits? 4) Even if benefits are sbject to the same NQTL, does the plan impose stricter penalties for noncompliance with respect to mental health and sbstance se disorder benefits (for example, redcing benefits to 50% of eligible expenses for failre to obtain prior athorization for mental health and sbstance se disorder benefits, vs. 20% for medical/srgical benefits)? 5) If tilization review is condcted by different entities/individals for medical/srgical and mental health or sbstance se disorder benefits provided nder the plan, what processes are in place to ensre comparability in the standards sed for UR and comparability in the independence and qalifications of the individals performing UR? 6) Has the plan docmented its analysis that its NQTL processes and strategies (sch as UR) are comparable across medical/srgical and mental health/sbstance se disorder benefits? Tip: Plans shold keep records docmenting NQTL processes and how they are being applied to both medical/srgical as well as mental health and sbstance se disorder benefits to ensre they can demonstrate compliance with the law. Sch records may also be helpfl to plans in responding to inqiries from participants and beneficiaries regarding benefits nder the plan. See a more detailed discssion of disclosre reqirements in the following section. Illstrations. Set forth below are additional illstrations of how a plan may have differences in nonqantitative treatment limitations: NQTLs bt may still comply with the Departments reglations, based on the facts and circmstances involved: Plan X covers neropsychological testing bt only for certain conditions. In sch sitations, look to see whether the exclsion is based on evidence addressing for example, clinical efficacy of sch testing for different conditions and the degree to which sch testing is sed for edcational prposes with regard to different conditions. Does the plan rely on criteria and evidence from comparable sorces with respect to medical/ srgical and mental health conditions? Does the plan have docmentation indicating the criteria sed and evidence spporting the plan s determination of the diagnoses for which they will cover this service and the rationale for exclding certain diagnoses? The reslt may be that the plan covers neropsychological testing for some medical/srgical or mental health conditions, bt not for all. This otcome may be permissible to the extent the plan has based the exclsion on clinical efficacy and/or other factors if done in a comparable manner and applies the NQTL in a comparable manner. 86

YES NO N/A Plan Y ses diagnosis related grop (DRG) codes in their standard tilization review process to actively manage hospitalization tilization. For all non-drg hospitalizations (whether de to an nderlying medical/srgical condition or a mental health or sbstance se disorder condition), the plan reqires precertification for hospital admission and incremental concrrent review. The precertification and concrrent review processes review niqe clinical presentation, condition severity, expected corse of recovery, qality and efficiency. The evidentiary standards and other factors sed in the development of the concrrent review process are comparable across medical/srgical benefits and mental health/sbstance se disorder benefits, and are well docmented. These evidentiary standards and other factors are available to participants and beneficiaries free of charge pon reqest. In this example, it appears that, nder the terms of the plan as written and in practice, the processes, strategies, evidentiary standards, and other factors considered by the plan in implementing its precertification and concrrent review of hospitalizations is comparable and applied no more stringently with respect to mental health and sbstance se disorder benefits than those applied with respect to medical/srgical benefits. Plan Z classifies care in skilled nrsing facilities or rehabilitation hospitals as inpatient benefits and likewise treats any covered care in residential treatment facilities for mental health or sbstance se disorders as an inpatient benefit. In addition, the plan treats home health care as an otpatient benefit and, likewise treats intensive otpatient and partial hospitalization for mental health or sbstance se disorder services as otpatient benefits. In this example, the plan assigns covered intermediate mental health and sbstance se disorder benefits to the six classifications in the same way that it assigns comparable intermediate medical/srgical benefits. Master s degree training and state licensing reqirements often vary among provider types. Plan Z consistently applies its standard that any provider mst meet whatever is the most stringent licensing reqirement standard related to spervised clinical experience reqirements in order to participate in the network. Therefore, Plan Z reqires master s-level therapists to have postdegree, spervised clinical experience in order to join their provider network. There is no parallel reqirement for master s-level general medical providers becase their licensing does reqire spervised clinical experience. In addition, the plan does not reqire post-degree, spervised clinical experience for psychiatrists or PhD level psychologists since their licensing already reqires spervised training. The reqirement that master s-level therapists mst have spervised clinical experience to join the network is permissible, as the plan consistently applies the same standard to all providers even thogh it may have a disparate impact on certain mental health providers. 87

YES NO N/A SECTION F. Disclosre Reqirements Qestion 28 Does the plan comply with the mental health parity disclosre reqirements?... The plan administrator (or the health insrance isser) mst make available the criteria for medical necessity determinations made nder a grop health plan with respect to mental health/sbstance se disorder benefits (or health insrance coverage offered in connection with the plan with respect to sch benefits) to any crrent or potential participant, beneficiary, or contracting provider pon reqest. See 29 CFR 2590.712(d)(1). The plan administrator (or health insrance isser) mst make available the reason for any denial nder a grop health plan (or health insrance coverage) of reimbrsement or payment for services with respect to mental health/sbstance se disorder benefits to any participant or beneficiary in a form and manner consistent with the rles in 29 CFR 2560.503-1 (the DOL claims procedre rle) and 29 CFR 2590.715-2719. (internal claims and appeals and external review processes). Prsant to the internal claims and appeals and external review rles nder the Affordable Care Act, applicable to all non-grandfathered grop health plans, claims related to medical jdgment (inclding mental health/sbstance se disorder) are eligible for external review. The internal claims and appeals rles inclde the right of claimants (or their athorized representative) to be provided pon reqest and free of charge, reasonable access to and copies of all docments, records, and other information relevant to the claimant s claim for benefits. This incldes docments with information abot the processes, strategies, evidentiary standards, and other factors sed to apply an NQTL with respect to medical/srgical benefits and mental health/sbstance se disorder benefits nder the plan. See 29 CFR 2590.712(d)(3). If coverage is denied based on medical necessity, medical necessity criteria for the mental health/sbstance se disorder benefits at isse and for medical/ srgical benefits in the same classification mst be provided within 30 days of the reqest to the participant, beneficiary, or provider or other individal if acting as an athorized representative of the beneficiary or participant. See 29 CFR 2520.104b-1; 29 CFR 2590.712(d)(1). Make Showing Compliance Simple! Docments or Plan Instrments Participants and Beneficiaries or DOL may reqest: Participants and beneficiaries may reqest docments and plan instrments regarding whether the plan is providing benefits in accordance with MHPAEA and copies mst be frnished within 30 days of reqest. This may inclde docmentation that illstrates how the health plan has determined that any financial reqirement, qantitative treatment limitation, or nonqantitative treatment limitation is in compliance with MHPAEA. For example, participants and beneficiaries may ask for: 88

YES NO N/A An analysis showing that the plan meets the predominant/sbstantially all test. The plan may need to provide information regarding the amont of medical/srgical claims sbject to a certain type of QTL, sch as a copayment, in the prior year in a classification or its basis for calclating claims expected to be sbject to a certain type of QTL in the crrent plan year in a classification, for prposes of determining the plan s compliance with the predominant/sbstantially all test. A description of an applicable reqirement or limitation, sch as preathorization or concrrent review, that the plan has athorized for mental health/sbstance se disorder services and medical/srgical benefits within the relevant classification (in- or ot-of-network, in- or otpatient). These might inclde references to specific plan docments, for example provisions as stated on specified pages of the SPD, or other nderlying gidelines or criteria not inclded in the SPD that the Plan has conslted or relied pon; Information regarding factors, sch as cost or recommended standards of care, that are relied pon by a plan for determining which medical/srgical or mental health or sbstance se disorder benefits are sbject to a specific reqirement or limitation. These might inclde references to specific related factors or gidelines, sch as applicable tilization review criteria; A description of the applicable reqirement or limitation that the plan believes have been sed in any given mental health/sbstance se disorder service adverse benefit determination (ABD) within the relevant classification; Medical necessity gidelines relied pon for in and ot-of-network medical/ srgical and mental health and sbstance se disorder benefits. Tips: Participants, beneficiaries and contracting providers may reqest information to determine whether benefits nder a plan are being provided in parity even in the absence of any specific adverse benefit determination. Plans may need to work with insrance carriers providing coverage on behalf of an insred grop health plan or with third party administrators administering the plan to ensre that sch service providers either directly or in coordination with the plan are providing participants and beneficiaries any docments or information to which they are entitled. If a plan ses mental health and sbstance se disorder vendors and carveot service providers, the plan mst ensre that all combinations of benefits comport with parity, therefore vendors and carve ot providers shold provide docmentation of the necessary information to the Plan to ensre that all combination of benefits comport with parity. Note: Compliance with the disclosre reqirements of MHPAEA is not determinative of compliance with any other provision or other applicable Federal or State law. Be sre that the Plan, in addition to these disclosre reqirements, is disclosing information relevant to medical/srgical, mental health, and sbstance se disorder benefits as reqired prsant to other applicable provisions of law. 89

III. Determining Compliance with the Newborns Act Provisions in Part 7 of ERISA If yo answer No to any of the qestions below, the grop health plan is in violation of the Newborns Act provisions in Part 7 of ERISA. YES NO N/A SECTION A Newborns Act Sbstantive Provisions The sbstantive provisions of the Newborns Act apply only to certain plans, as follows: If the plan does not provide benefits for hospital stays in connection with childbirth, check N/A and go to Part IV of this self-compliance tool. (Note: Under the Pregnancy Discrimination Act, most plans are reqired to cover maternity benefits.) Special applicability rle for insred coverage that provides benefits for hospital stays in connection with childbirth: If the plan provides benefits for hospital stays in connection with childbirth, the plan is insred, and the coverage is in Wisconsin and several U.S. territories, it appears that the Federal Newborns Act applies to the plan. If this is the case, answer the qestions in SECTION A and SECTION B. If the plan provides benefits for hospital stays in connection with childbirth and is insred, whether the plan is sbject to the Newborns Act depends on State law. Based on a recent preliminary review of State laws, if the coverage is in any other state or the District of Colmbia, it appears that State law applies in lie of the Federal Newborns Act. If this is the case, check N/A and skip to SECTION B. Self-insred coverage that provides benefits for hospital stays in connection with childbirth: If the plan provides benefits for hospital stays in connection with childbirth and is self-insred, the Federal Newborns Act applies. Answer the qestions in SECTION A and SECTION B. Qestion 29 General 48/96-hor stay rle Does the plan comply with the general 48/96-hor rle?... Plans generally may not restrict benefits for a hospital length of stay in connection with childbirth to less than 48 hors in the case of a vaginal delivery (See ERISA section 711(a)(1)(A)(i)), or less than 96 hors in the case of a cesarean section (See ERISA section 711(a)(1)(A)(ii)). Therefore, a plan cannot deny a mother or her newborn benefits within a 48/96- hor stay based on medical necessity. (A plan may reqire a mother to notify the plan of a pregnancy to obtain more favorable cost-sharing for the hospital stay. This second type of plan provision is permissible nder the Newborns Act if the cost-sharing is consistent throghot the 48/96-hor stay.) 90

YES NO N/A An attending provider may, however, decide, in consltation with the mother, to discharge the mother or newborn earlier. Qestion 30 Provider mst not be reqired to obtain athorization from plan Plans may not reqire providers to obtain athorization from the plan to prescribe a 48/96-hor stay. Does the plan comply with this rle?... Plans may not reqire that a provider (sch as a doctor) obtain athorization from the plan to prescribe a 48/96-hor stay. See ERISA section 711(a)(1)(B); 29 CFR 2590.711(a)(4). Tips: Watch for plan preathorization reqirements that are too broad. For example, a plan may have a provision reqiring preathorization for all hospital stays. Providers cannot be reqired to obtain preathorization from the plan in order for the plan to cover a 48-hor (or 96-hor) stay in connection with childbirth. Therefore, in this example, the plan mst add clarifying langage to indicate that the general preathorization reqirement does not apply to 48/96- hor hospital stays in connection with childbirth. (Conversely, plans generally may reqire participants or beneficiaries to give notice of a pregnancy or hospital admission in connection with childbirth in order to obtain, for example, more favorable cost-sharing.) Nonetheless, the Newborns Act does not prevent plans and issers from reqiring providers to obtain athorization for any portion of a hospital stay that exceeds 48 (or 96) hors. Qestion 31 Incentives/penalties to mothers or providers Does the plan comply with the Newborns Act by avoiding impermissible incentives or penalties with respect to mothers or attending providers?... Penalties to attending providers to discorage 48/96-hor stays violate ERISA section 711(b)(3) and 29 CFR 2590.711(b)(3)(i). Incentives to attending providers to encorage early discharges violate ERISA section 711(b)(4) and 29 CFR 2590.711(b)(3)(ii). Penalties imposed on mothers to discorage 48/96-hor stays violate ERISA section 711(b)(1) and 29 CFR 2590.711(b)(1)(i)(A). Incentives to mothers to encorage early discharges violate ERISA section 711(b)(2) and 29 CFR 2590.711(b)(1)(i)(B). v An example of this wold be if the plan waived the mother s copayment or dedctible if the mother or newborn leaves within 24 hors. Benefits and cost-sharing may not be less favorable for the latter portion of any 48/96-hor hospital stay. In this case less favorable benefits wold violate ERISA section 711(b)(5) and 29 CFR 2590.711(b)(2) and less favorable costsharing wold violate ERISA section 711(c)(3) and 29 CFR 2590.711(c)(3). 91

YES NO N/A SECTION B Disclosre Provisions Grop health plans that provide benefits for hospital stays in connection with childbirth are reqired to make certain disclosres, as follows: Qestion 32 Disclosre with respect to hospital lengths of stay in connection with childbirth Does the plan comply with the notice provisions relating to hospital stays in connection with childbirth?... Grop health plans that provide benefits for hospital stays in connection with childbirth are reqired to make certain disclosres. Specifically, the grop health plan s SPD mst inclde a statement describing any reqirements nder Federal or State law applicable to the plan, and any health insrance coverage offered nder the plan, relating to hospital length of stay in connection with childbirth for the mother or newborn child. See the SPD content reglations at 29 CFR 2520.102-3(). Tip: Whether the plan is insred or self-insred, and whether the Federal Newborns Act provisions or State law provisions apply to the coverage, the plan mst provide a notice describing any reqirements relating to hospital length of stays in connection with childbirth. A model notice is provided in the Model Disclosres on page 140. 92

IV. Determining Compliance with the WHCRA Provisions in Part 7 of ERISA If yo answer No to any of the qestions below, the grop health plan is in violation of the WHCRA provisions in Part 7 of ERISA. YES NO N/A WHCRA applies only to plans that offer benefits with respect to a mastectomy. If the plan does not offer these benefits, check N/A and go to Part V of this selfcompliance tool... If the plan does offer benefits with respect to a mastectomy, answer Qestions 33-36. Qestion 33 For reqired coverages nder WHCRA Does the plan provide the for coverages reqired by WHCRA?... In the case of a participant or beneficiary who is receiving benefits in connection with a mastectomy, the plan shall provide coverage for the following benefits for individals who elect them: v v v v All stages of reconstrction of the breast on which the mastectomy has been performed; Srgery and reconstrction of the other breast to prodce a symmetrical appearance; Prostheses; and Treatment of physical complications of mastectomy, inclding lymphedema, in a manner determined in consltation with the attending provider and the patient. See ERISA section 713(a). These reqired coverages can be sbject to annal dedctibles and coinsrance provisions if consistent with those established for other medical/srgical benefits nder the plan or coverage. Tip: Plans that cover benefits for mastectomies cannot categorically exclde benefits for reconstrctive srgery or certain post-mastectomy services. In addition, time limits for seeking treatment may rn afol of the general reqirement to provide the for reqired coverages. Qestion 34 Incentive provisions Does the plan comply with WHCRA by not providing impermissible incentives or penalties with respect to patients or attending providers?... A plan may not deny a patient eligibility to enroll or renew coverage solely to avoid WHCRA s reqirements nder ERISA section 713(c)(1). In addition, nder ERISA section 713(c)(2), a plan may not penalize or offer incentives to an attending provider to indce the provider to frnish care in a manner inconsistent with WHCRA. 93

YES NO N/A Qestion 35 Enrollment notice Does the plan provide adeqate and timely enrollment notices as reqired by WHCRA?... Upon enrollment, a plan mst provide a notice describing the benefits reqired nder WHCRA. See ERISA section 713(a). The enrollment notice mst describe the benefits that WHCRA reqires the grop health plan to cover, specifically: v All stages of reconstrction of the breast on which the mastectomy was performed, v Srgery and reconstrction of the other breast to prodce a symmetrical appearance, v Prostheses, and v Physical complications reslting from mastectomy (inclding lymphedema). The enrollment notice mst describe any dedctibles and coinsrance limitations applicable to sch coverage. (Note: Under WHCRA, coverage of the reqired benefits may be sbject only to dedctibles and coinsrance limitations consistent with those established for other medical/srgical benefits nder the plan or coverage.) Tip: A model notice is provided in the Model Disclosres on page 141. Qestion 36 Annal notice Does the plan provide adeqate and timely annal notices as reqired by WHCRA?... Plans mst provide notices describing the benefits reqired nder WHCRA once each year. See ERISA section 713(a). To satisfy this reqirement, the plan may redistribte the WHCRA enrollment notice or the plan may se a simplified disclosre that: v Provides notice of the availability of benefits nder the plan for reconstrctive srgery, srgery to achieve symmetry between the breasts, prostheses, and physical complications reslting from mastectomy (inclding lymphedema); and v Contact information (e.g., telephone nmber) for obtaining a detailed description of WHCRA benefits available nder the plan. Tip: The WHCRA annal notice can be provided in the SPD if the plan distribtes SPDs annally. If not, the plan shold break off the annal notice into a separate disclosre. A model notice is provided in the Model Disclosres on page 142. 94

V. Determining Compliance with the GINA Provisions in Part 7 of ERISA If yo answer No to any of the qestions below, the grop health plan is in violation of the GINA provisions in Part 7 of ERISA. YES NO N/A Unlike HIPAA, the GINA provisions generally do apply to very small health plans (plans with less than two participants who are crrent employees), inclding retireeonly health plans. Definitions (for all defined terms nder GINA, see 29 CFR 2590.702-1(a)): Genetic information means, with respect to an individal, information abot the individal s genetic tests, the genetic tests of family members of the individal, the manifestation (see definition below) of a disease or disorder in family members of the individal or any reqest for or receipt of genetic services or participation in clinical research which incldes genetic services by the individal or any family member of the individal. Genetic information incldes, with respect to a pregnant woman or family member of the pregnant woman, genetic information of any fets carried by the pregnant woman. Genetic information incldes, with respect to an individal who is tilizing an assisted reprodctive technology, genetic information of any embryo legally held by the individal or family member. Genetic information does NOT inclde information abot the sex or age of any individal. Family member means, with respect to an individal, a dependent of the individal or any person who is a first-degree, second-degree, third-degree, or forth-degree relative of the individal or a dependent of the individal. Relatives of affinity (sch as by marriage or adoption) are treated the same as relatives by consanginity (that is, relatives who share a common biological ancestor). Relatives by less than fll consanginity (sch as half-siblings, who share only one parent) are treated the same as relatives by fll consanginity (sch as siblings who share both parents). Therefore, family members inclde parents, sposes, siblings, children, grandparents, grandchildren, ants, ncles, nephews, nieces, great-grandparents, great-grandchildren, great ants, great ncles, first cosins, great-great grandparents, great-great grandchildren, and children of first cosins. Manifestation means, with respect to a disease, disorder, or pathological condition, that an individal has been or cold reasonably be diagnosed with the disease, disorder, or pathological condition by a health care professional with appropriate training and expertise in the field of medicine involved. A disease, disorder, or pathological condition is not manifested if a diagnosis is based principally on genetic information. 95

YES NO N/A Genetic services means a genetic test, genetic conseling (inclding obtaining, interpreting, or assessing genetic information) or genetic edcation. Genetic test means an analysis of hman DNA, RNA, chromosomes, proteins, or metabolites, if the analysis detects genotypes, mtations, or chromosomal changes. A genetic test does NOT inclde an analysis of proteins or metabolites that is directly related to a manifested disease, disorder, or pathological condition. For example, a test to determine whether an individal has a BRCA1 or BRCA2, genetic variants associated with a significantly increased risk for breast cancer, is a genetic test. An HIV test, complete blood cont, cholesterol test, liver fnction test, or test for the presence of alcohol or drgs is not a genetic test. Qestion 37 Does the plan comply with GINA s prohibition against gropbased discrimination based on genetic information?... A grop health plan cannot adjst premim or contribtion amonts for the plan, or any similarly sitated individals nder the plan, on the basis of genetic information. See 29 CFR 2590.702-1(b)(1). Nothing limits a plan from increasing the premim for the grop health plan or for a grop of similarly sitated individals nder the plan based on the manifestation of a disease or disorder of an individal enrolled in the plan. However, the manifestation of the disease in one individal cannot be sed as genetic information abot other grop members to frther increase the premim for a grop health plan or a grop of similarly sitated individals nder the plan. See 29 CFR 2590.702-1(b)(2). Qestion 38 Does the plan comply with GINA s limitation on reqesting or reqiring genetic testing?... A grop health plan generally mst not reqest or reqire an individal or family member of the individal to ndergo a genetic test. See 29 CFR 2590.702-1(c)(1). Exceptions: v A health care professional who is providing health care services to an individal can reqest that the individal ndergo a genetic test. See 29 CFR 2590.702-1(c)(2). v A plan can obtain and se the reslts of a genetic test for making a determination regarding payment. However, the plan is permitted to reqest only the minimm amont of information necessary to make the determination. See 29 CFR 2590.702-1(c)(4). v Exception for research: a plan or isser may reqest, bt not reqire, that a participant or beneficiary ndergo a genetic test if the reqest is prsant to research and several conditions are met. See 29 CFR 2590.702-1(c)(5). 96

YES NO N/A Qestion 39 Does the plan comply with GINA s prohibition on collection of genetic information, prior to or in connection with enrollment?... A plan cannot collect genetic information prior to an individal s effective date of coverage nder that plan or coverage, nor in connection with the rles for eligibility that apply to that individal. See 29 CFR 2590.702-1(d)(2)(i). Whether or not an individal s information is collected prior to that individal s effective date of coverage is determined at the time of collection. Exception for incidental collection: v If a plan obtains genetic information incidental to the collection of other information concerning any individal, the collection is not a violation, as long as the collection is not for nderwriting prposes. See 29 CFR 2590.702-1(d)(2)(ii)(A). v However, the incidental collection exception does not apply in connection with any collection where it is reasonable to anticipate that health information wold be received, nless the collection explicitly states that genetic information shold not be provided. See 29 CFR 2590.702-1(d)(2)(ii)(B). Qestion 40 Does the plan comply with GINA s prohibition on collection of genetic information, for nderwriting prposes?... A plan cannot reqest, reqire, or prchase ( collect ) genetic information for nderwriting prposes. See 29 CFR 2590.702-1(d)(1)(i). Underwriting prposes means, with respect to any grop health plan: v Rles for determination of eligibility (inclding enrollment and contined eligibility) for benefits nder the plan or coverage (inclding changes in dedctibles or other cost-sharing mechanisms in retrn for activities sch as completing a health risk assessment or participating in a wellness program); v The comptation of premim or contribtion amonts nder the plan or coverage (inclding disconts, rebates, payments in kind, or other premim differential mechanisms in retrn for activities sch as completing a health risk assessment or participating in a wellness program); v The application of any preexisting condition exclsion nder the plan or coverage; and v Other activities related to the creation, renewal, or replacement of a contract of health insrance or health benefits. See 29 CFR 2590.702-1(d)(1)(ii). Exception for medical appropriateness (only if an individal seeks a benefit nder the plan): v If an individal seeks a benefit nder a plan, the plan may limit or exclde the benefit based on whether the benefit is medically appropriate and the determination of whether the benefit is medically appropriate is not for nderwriting prposes. 97

YES NO N/A v If a plan conditions a benefit on medical appropriateness, and medical appropriateness depends on the genetic information of an individal, the plan can condition the benefit on genetic information. A plan or isser is permitted to reqest only the minimm amont of genetic information necessary to determine medical appropriateness. See 29 CFR 2590.702-1(d) (1)(iii) and (e). If yo answered Yes to ALL of the above qestions, there does not appear to be a violation of the GINA reglations. 98

VI. Compliance with Michelle s Law If yo answer No to any of the qestions below, the grop health plan is in violation of the Michelle s Law provisions in Part 7 of ERISA. **Note: Under the Affordable Care Act grop health plans and issers are generally reqired to provide dependent coverage to age 26 regardless of stdent stats of the dependent. Nonetheless, nder some circmstances, sch as a plan that provides dependent coverage beyond age 26, Michelle s Law provisions may apply. Qestion 41 Does the plan comply with the Michelle s Law reqirement not to terminate coverage of dependent stdents on medically necessary leave of absence?... Medically necessary leave of absence means with respect to a dependent child in connection with a grop health plan or health insrance coverage offered in connection with a grop health plan, a leave of absence from or other change in enrollment stats in a postsecondary edcational instittion that begins while the child is sffering from a serios illness or injry; is medically necessary; and cases the child to lose stdent stats for prposes of coverage nder the terms of the plan or coverage. A dependent child is a beneficiary who is a dependent child nder the terms of the plan or coverage, of a participant or beneficiary nder the plan or coverage and who was enrolled in the plan or coverage on the basis of being a stdent at a postsecondary edcational instittion immediately before the first day of the medically necessary leave of absence involved. YES NO N/A A grop health plan or isser shall not terminate coverage of a dependent child de to a medically necessary leave of absence that cases the child to lose stdent stats before the date that is the earlier of: v the date that is one year after the first day of the medically necessary leave of absence; or v the date on which sch coverage wold otherwise terminate nder the terms of the plan or health insrance coverage. See ERISA section 714(b). Tip: The grop health plan or isser can reqire receipt of written certification by a treating physician of the dependent child which states that the dependent child is sffering from a serios illness or injry and that the leave of absence (or other change of enrollment) is medically necessary. 99

YES NO N/A Qestion 42 Does the plan comply with Michelle s Law s notice reqirement?... A grop health plan or isser mst inclde with any notice regarding a reqirement for certification of stdent stats for coverage, a description of the Michelle s law provision for contined coverage dring medically necessary leaves of absence. See ERISA section 714(c). 100

VII. Determining Compliance with the Affordable Care Act Provisions in Part 7 of ERISA The Affordable Care Act was signed into law by the President on March 23, 2010. Amendments to the Affordable Care Act made throgh the Health Care Edcation and Reconciliation Act (Reconciliation Act) were signed into law on March 30, 2010. Generally, the Affordable Care Act s market reform provisions amend title XXVII of the Pblic Health Service Act (PHS Act), which is administered by the Department of Health and Hman Services. The Affordable Care Act also creates section 715 of the Employee Retirement Income Secrity Act (ERISA), administered by the Department of Labor, Employee Benefits Secrity Administration, and section 9815 of the Internal Revene Code, administered by the Department of Treasry (the Treasry) and the Internal Revene Service (IRS), to incorporate the market reform provisions of the PHS Act into ERISA and the Code, and make them applicable to grop health plans and health insrance issers providing grop health insrance coverage. Under section 1251 of the Affordable Care Act, grandfathered health plans are reqired to comply with some, bt not all, of the market reform provisions. In addition, these provisions do not apply to retiree-only or excepted benefits plans (See ERISA Section 732). The Departments of Labor, HHS, and the Treasry have been issing gidance on an ongoing basis since May 2010. Note, that the Affordable Care Act, PHSA Section 2705 inclded reqirements relating to wellness programs. The Departments issed final reglations Jne 6, 2013 at 29 CFR 2590.702 and 29 CFR 2590.715-2705 sing joint athority nder HIPAA and the ACA. These reqirements relating to wellness programs are discssed in the HIPAA section of this tool at I (C). See EBSA s Website: dol.gov/ebsa/healthreform/ for the most p-to-date gidance. This compliance aid will be pdated in the ftre to frther address additional reqirements as they become applicable, as enforcement grace periods expire, or as the Departments isse additional gidance. 101

YES NO N/A Section A. Determining Grandfather Stats Under the Affordable Care Act Provisions in Part 7 of ERISA Note: The grandfathered stats of a plan will affect whether a plan mst comply with certain provisions of the Affordable Care Act (ACA). There are also special rles for collectively bargained plans. See also the rles at 29 CFR 2590.715-1251(f). Grandfathered stats is intended to allow people to keep their coverage as it existed on March 23, 2010, while giving plans some flexibility to make normal changes while retaining grandfathered stats. Restrictions and reqirements on grandfathered health plan coverage provides individals protection from significant redctions in coverage, provides for coverage to inclde nmeros protections implemented throgh the Affordable Care Act, and allows employers the flexibility to manage costs. The analysis for determining grandfathered stats applies separately to each benefit package or option. Accordingly, grandfathered stats might be retained for some benefit packages or options and relinqished for others. By contrast, if an employer relinqished grandfathered stats for self-only, family, or any other tier within a benefits package, it wold relinqish grandfathered stats for the entire package. See 29 CFR 2590.715-1251(a)(1)(i). If the plan is not claiming grandfathered stats, proceed to Section B. If the answer is yes to qestions 43 and 44 below the grop health plan may be a grandfathered health plan. Qestion 43 Did the plan exist with at least one individal enrolled on March 23, 2010?... A grandfathered grop health plan mst have been in existence with an enrolled individal on March 23, 2010. Any plan that does not meet this reqirement is not in grandfathered stats. See 29 CFR 2590.715-1251(a)(1) (i). Qestion 44 Has the plan continosly covered someone (not necessarily the same person) since March 23, 2010?... A grop health plan will not relinqish its grandfathered stats merely becase one or more (or all) individals enrolled on March 23, 2010, cease to be covered. However, a grandfathered health plan mst continosly cover someone (not necessarily the same person) since March 23, 2010, to maintain its stats. See 29 CFR 2590.715-1251(a)(1)(i). If the answers to qestions 43 and 44 were yes, complete qestions 45-53. If the answer is no to either qestion 43 or 44, the grop health plan cannot claim grandfathered stats; proceed to Section B. 102

YES NO N/A Tip: Provided changes are made withot exceeding the other standards that case a plan to relinqish grandfathered stats, changes that generally will not case plans to relinqish grandfathered stats inclde changes to: premims; to comply with Federal or State legal reqirements; to volntarily comply with provisions of the Affordable Care Act; third party administrators; network plan s provider network; and to a prescription drg formlary. Qestion 45 Has the plan eliminated all or sbstantially all benefits to diagnose or treat a particlar condition?... For the prpose of determining grandfathered stats, the elimination of benefits for any necessary element to diagnose or treat a condition is considered the elimination of all or sbstantially all benefits to diagnose or treat a particlar condition. See 29 CFR 2590.715-1251(g)(1)(i). Qestion 46 Has the plan increased a percentage cost-sharing reqirement (sch as an individal s coinsrance)?... Any increase measred from March 23, 2010, in a percentage cost-sharing reqirement cases a plan to relinqish grandfathered stats. See 29 CFR 2590.715-1251(g)(1)(ii). Qestion 47 Has the plan increased a fixed-amont cost-sharing reqirement other than a copayment (sch as a dedctible or ot-of-pocket limit) sch that the total percentage increase measred from March 23, 2010 exceeds the maximm percentage increase?... The maximm percentage increase is medical inflation, expressed as a percentage, pls 15 percentage points. See 29 CFR 2590.715-1251(g)(3)(ii). Medical inflation is the increase since March 2010, in the overall medical care component of the Consmer Price Index for All Urban Consmers (CPI-U) (nadjsted) pblished by the Department of Labor sing the 1982-1984 base of 100. See 29 CFR 2590.715-1251(g)(3)(i). Qestion 48 Has the plan increased a fixed-amont copayment sch that the increase measred from March 23, 2010 exceeds the greater of: the maximm percentage increase, or an amont eqal to $5 pls medical inflation?... The maximm percentage increase is medical inflation, expressed as a percentage, pls 15 percentage points. See 29 CFR 2590.715-1251(g)(3)(ii). Medical inflation is the increase since March 2010 in the overall medical care component of the Consmer Price Index for All Urban Consmers (CPI-U) (nadjsted) pblished by the Department of Labor sing the 1982-1984 base of 100. See 29 CFR 2590.715-1251(g)(3)(i). 103

YES NO N/A Qestion 49 Has there been a decrease in the contribtion rate by the employer (or employee organization) towards the cost of any tier of coverage for any class of similarly sitated individals by more than 5 percentage points below the contribtion rate for the coverage period that incldes March 23, 2010?... If the contribtion rate is based on a formla, was there a decrease in the contribtion rate by more than 5 percentage points below the contribtion rate for the coverage period that incldes March 23, 2010? See 29 CFR 2590.715-1251(g)(1)(v)(B). Tip: If a grop health plan modifies the tiers of coverage it had on March 23, 2010 (for example, from self-only and family to a mlti-tiered strctre of selfonly, self-pls-one, self-pls-two, and self-pls-three-or-more), the employer contribtion for any new tier wold be tested by comparison to the contribtion rate for the corresponding tier on March 23, 2010. If the plan adds one or more new coverage tiers withot eliminating or modifying any previos tiers and those new coverage tiers cover classes of individals that were not covered previosly nder the plan, the new tiers wold not be analyzed nder the standards of paragraph (g)(1). See DOL FAQs Abot the Affordable Care Act Implementation Part II, qestion 3 at dol.gov/ebsa/faqs/faq-aca2.html. In cases of a mltiemployer plan that has either a fixed-dollar employee contribtion or no employee contribtion towards the cost of coverage, if the employer s contribtion rate changes, provided any changes in the coverage terms wold not otherwise case the plan to cease to be grandfathered and there contines to be no employee contribtion or no increase in the fixeddollar employee contribtion towards the cost of coverage, the change of the employer s contribtion rate will not, in and of itself, case a plan that is otherwise a grandfathered health plan to relinqish grandfathered stats. See DOL FAQs Abot the Affordable Care Act Implementation Part I, qestion 4 at dol.gov/ebsa/faqs/faq-aca.html. Qestion 50 Has the plan added or decreased an overall annal limit on benefits?... A plan will relinqish its grandfathered stats if it: v Adds an overall annal limit on the dollar vale of all benefits when it did not previosly impose an overall annal limit (See 29 CFR 2590.715-1251(g)(1)(vi)(A)); v v Previosly imposed an overall lifetime limit on the dollar vale of benefits (bt no overall annal limit) and adopts an overall annal limit at a dollar vale that is lower than the dollar vale of the lifetime limit on March 23, 2010 (See 29 CFR 2590.715-1251(g)(1)(vi)(B)); or Decreases the dollar vale of the overall annal limit that was in place on March 23, 2010 (See 29 CFR 2590.715-1251(g)(1)(vi)(C)). 104

YES NO N/A Note: For plan years beginning on or after Janary 1, 2014, a plan may not establish, for any individal, an annal limit on the dollar amont of benefits that are essential health benefits. See 29 CFR 2590.715-2711(b)(1). If the answer to any of qestions 45-50 was yes, the plan is NOT a grandfathered plan, proceed to Section B. Qestion 51 Did the plan change issers after March 23, 2010?... If the answer to qestion 51 is yes, if the grop health plan changed issers after March 23, 2010, and the change in isser was effective on or after November 15, 2010, the plan will contine to be a grandfathered plan provided no other changes that wold relinqish grandfathered stats are made. See 29 CFR 2590.715-1251(a)(1)(ii), as amended. Proceed to qestion 53. If a grop health plan changed issers after March 23, 2010, and the change was effective prior to November 15, 2010, the plan will have relinqished grandfather stats. The plan is not a grandfathered plan; proceed to Section B. Tip: The operative date is the effective date of the new contract, not the date the new contract was entered into. Special rles apply for collectively bargained plans. See 29 CFR 2590.715-1251(f) for collectively bargained plans. Qestion 52 Did the plan change from self-insred to flly-insred after March 23, 2010?... If the grop health plan was self-insred and changed to flly insred after March 23, 2010, and the change was effective on or after November 15, 2010, the plan will contine to be a grandfathered plan provided no other changes are made that wold relinqish grandfathered stats. See 29 CFR 2590.715-1251(a)(1)(ii), as amended. Proceed to qestion 53. If a grop health plan was self-insred and changed to flly-insred after March 23, 2010, and the change was effective prior to November 15, 2010, the plan will have relinqished grandfathered stats. The plan is not a grandfathered plan; proceed to Section B. If Qestions 51 and 52 are not applicable to the grop health plan, contine to Qestion 54 to contine the grandfather stats analysis. 105

YES NO N/A Qestion 53 If the grop health plan changed issers (inclding a plan that was self-insred and changed to flly insred) and has maintained grandfathered stats, did the plan provide docmentation to the new isser of the plan terms nder the prior health coverage sfficient to determine whether any other change was made that wold relinqish grandfathered stats?... To maintain stats as a grandfathered health plan, the plan mst provide to the new isser (and the new isser mst reqire) docmentation of plan terms (inclding benefits, cost sharing, employer contribtions, and annal limits) nder the prior health coverage sfficient to determine whether any other change is being made that wold relinqish grandfathered stats. See 29 CFR 2590.715-1251(a)(3)(ii), as amended. Qestion 54 Does the plan inclde a statement that it believes it is a grandfathered health plan in any plan materials provided to participants and beneficiaries that describe the benefits provided nder the plan?... To maintain stats as a grandfathered grop health plan, the plan mst inclde a statement, in any plan materials provided to a participant or beneficiary describing the benefits nder the plan, that the plan believes it is a grandfathered health plan within the meaning of section 1251 of the Affordable Care Act and mst provide contact information for qestions and complaints. Model langage is available. See 29 CFR 2590.715-1251(a)(2). For all plans that, based on qestions 43 throgh 54, have not relinqished grandfathered stats, complete qestion 55. Qestion 55 Is the plan maintaining records docmenting the terms of the plan in connection with the coverage in effect on March 23, 2010, and are these records made available pon reqest?... To maintain stats as a grandfathered grop health plan the plan mst maintain records docmenting the terms of the plan in connection with the coverage that was in effect on March 23, 2010, and any other docments necessary to verify, explain, or clarify its stats as a grandfathered health plan. These records mst be maintained for as long as the plan takes the position that it is grandfathered, and mst be available for examination pon reqest. See 29 CFR 2590.715-1251(a)(3)(i)(A) & (i)(b), as amended. 106

YES NO N/A Section B. Determining Compliance with the Affordable Care Act Extension of Dependent Coverage of Children to Age 26 Provisions in Part 7 of ERISA Note: This provision is applicable for plan years beginning on or after Sept. 23, 2010. This provision applies to both grandfathered and non-grandfathered grop health plans. Qestion 56 Does the plan provide coverage for dependent children?... If the answer to this qestion is no, proceed to Section C. These provisions are only applicable to grop health plans that provide coverage to dependent children. If the answer is yes, proceed to qestion 57. If the answer to the qestion below is yes, the plan is in compliance with the rles regarding Dependent Coverage to Age 26. Qestion 57 Does the plan make dependent coverage available for children to age 26?... Plans and issers cannot deny or restrict dependent coverage for a child who is nder age 26 other than in terms of a relationship between a child and the participant. Ths, plans and issers cannot deny or restrict dependent coverage for a child who is nder age 26 based on the presence or absence of financial dependency pon or residency with the participant or any other person, stdent stats, employment or any combination of these factors. In addition, plans and issers cannot limit dependent coverage based on whether the child nder age 26 is married. The Affordable Care Act and implementing reglations do not reqire plans to cover children of children. See 29 CFR 2590.715-2714(b) & (c). The terms of the plan or coverage cannot vary based on age, except for children who are age 26 or older. See 29 CFR 2590.715-2714(d). Tip: A plan or isser does not fail to satisfy the reqirements regarding Dependent Coverage to Age 26 becase the plan limits health coverage for children ntil the child trns 26 to only those children who are described in section 152(f)(1) of the Code (That section of the Code defines children to inclde only sons, daghters, stepchildren, adopted children (inclding children placed for adoption), and foster children.). For an individal not described in Code section 152(f)(1), sch as a grandchild or niece, a plan may impose additional conditions on eligibility for health coverage, sch as a condition that the individal be a dependent for income tax prposes. See DOL FAQs Abot the Affordable Care Act Implementation Part I, qestion 14 at dol.gov/ebsa/faqs/faqaca.html. 107

YES NO N/A Section C. Determining Compliance with the Affordable Care Act Rescission Provisions in Part 7 of ERISA Note: This provision is applicable for plan years beginning on or after Sept. 23, 2010. This provision applies to both grandfathered and non-grandfathered grop health plans. A rescission is a cancellation or discontinance of coverage that has retroactive effect; this incldes a cancellation that treats a policy as void from the time of the grop s enrollment or a cancellation that voids benefits paid p to one year before the cancellation. A rescission is not the cancellation or discontinance of coverage that has only a prospective effect; or the cancellation or discontinance of coverage if effective retroactively to the extent it is based on a failre to timely pay reqired premims or contribtions towards the cost of coverage. See 29 CFR 2590.715-2712(a)(2). If the answer to the qestion below is yes the plan is in compliance with the rles regarding rescission of coverage. Qestion 58 Does the plan only rescind coverage for instances where an act, practice, or omission that constittes frad, or an intentional misrepresentation of material fact has occrred?... A grop health plan, or health insrance isser offering grop health insrance coverage, mst not rescind coverage with respect to an individal (inclding a grop to which the individal belongs, or family coverage in which the individal is inclded) once the individal is covered nder the plan or coverage, nless the individal (or a person seeking coverage on behalf of the individal) performs an act, practice, or omission that constittes frad, or makes an intentional misrepresentation of material fact, as prohibited by the terms of the plan or coverage. See 29 CFR 2590.715-2712(a)(1). Tip: Some employers hman resorce departments may reconcile lists of eligible individals with their plan or isser via data feed only once per month. If a plan covers only active employees (sbject to the COBRA contination coverage provisions) and an employee pays no premims for coverage after termination of employment, the Departments do not consider the retroactive elimination of coverage back to the date of termination of employment, de to delay in administrative record-keeping, to be a rescission. Similarly, if a plan does not cover ex-sposes (sbject to the COBRA contination coverage provisions) and the plan is not notified of a divorce and the fll COBRA premim is not paid by the employee or ex-spose for coverage, the Departments do not consider a plan s termination of coverage retroactive to the divorce to be a rescission of coverage. (Of corse, in sch sitations COBRA may reqire coverage to be offered for p to 36 months if the COBRA applicable premim is paid by the qalified beneficiary.) See DOL FAQs Abot the Affordable Care Act Implementation Part II, qestion 7 at dol.gov/ebsa/faqs/faq-aca2.html. 108

YES NO N/A Section D. Determining Compliance with the Affordable Care Act Prohibitions on Lifetime Limits and Restrictions on Annal Limits in Part 7 of ERISA Note: This provision is applicable for plan years beginning on or after Sept. 23, 2010. This provision applies to both grandfathered and non-grandfathered grop health plans. The restrictions on annal limits do not apply to health flexible spending arrangements (FSAs), medical savings acconts (MSAs), or health savings acconts (HSAs). In the case of health reimbrsement acconts (HRAs) that are integrated with other grop health plan coverage which complies with the prohibitions on lifetime and annal limits, the fact that benefits nder the HRA by itself are limited does not violate these rles. Stand-alone HRAs limited to retirees only are not sbject to these rles. (For more information abot the application of the market reforms and other provisions of the Affordable Care Act to HRAs, health FSAs, and certain other employer healthcare arrangements, see Technical Release 2013-03, available at dol.gov/ebsa/newsroom/tr13-03.html. 1. Lifetime Limits If the answer to the qestion below is yes the plan is in compliance with the rles regarding prohibitions on lifetime limits. Qestion 59 Does the plan comply with the Affordable Care Act s prohibition on lifetime limits?... A grop health plan or isser may not establish any lifetime limit on the dollar amont of benefits for any individal. This prohibition applies for plan years beginning on or after September 23, 2010. See 29 CFR 2590.715-2711(a)(1). Tip: These rles do not prevent a plan or isser from placing lifetime dollar limits with respect to any individal on specific covered benefits that are not essential health benefits (to the extent this is permissible nder applicable Federal and State law). See 29 CFR 2590.715-2711(b)(1). Note: Essential health benefits refers to essential benefits nder Section 1302(b) of the Affordable Care Act and applicable reglations (issed by HHS) inclding the Freqently Asked Qestion on Essential Health Benefits Blletin. For plan years beginning before the issance of reglations defining essential health benefits, for prposes of enforcement, the Departments will take into accont good faith efforts to comply with a reasonable interpretation of the term essential health benefits. For this prpose, a plan or isser mst apply the definition of essential health benefits consistently. See Preamble to Interim Final Reglations, at 75 FR 37188, 37191. 109

YES NO N/A 2. Annal Limits If the answer to the qestion below is yes the plan is in compliance with the rles regarding prohibitions/restrictions on annal limits. Qestion 60 Does the plan comply with the Affordable Care Act s prohibition on annal limits?... For plan years beginning on or after Janary 1, 2014, a plan may not establish, for any individal, an annal limit on the dollar amont of benefits that are essential health benefits. Tip: These rles do not prevent a plan or isser from placing annal dollar limits with respect to any individal on specific covered benefits that are not essential health benefits (to the extent this is permissible nder applicable Federal and State law). See 29 CFR 2590.715-2711(b)(1). Section E. Determining Compliance with the Affordable Care Act Prohibition on Preexisting Condition Exclsions This provision applies to both grandfathered and non-grandfathered grop health plans. The definition of preexisting condition exclsion incldes any limitation or exclsion of benefits (inclding a denial of coverage) applicable to an individal as a reslt of information relating to an individal s health stats before the individal s effective date of coverage (or if coverage is denied, the date of denial), sch as a condition identified as a reslt of a pre-enrollment qestionnaire or a physical examination given to the individal, or a review of medical records relating to the pre-enrollment period. See 29 CFR 2590.701-2. If the answer to the following qestion is yes the plan is in compliance with the prohibition on preexisting condition exclsions. Qestion 61 Does the plan comply with the Affordable Care Act by not imposing a preexisting condition exclsion?... For plan years beginning on or after Janary 1, 2014, grop health plans may not impose any preexisting condition exclsions. See 29 CFR 2590.715-2704(a)(1). Tip: Some preexisting condition exclsions are clearly designated as sch in the plan docments. Others are not. Check for hidden preexisting condition exclsion provisions. A hidden preexisting condition exclsion is not designated as a preexisting condition exclsion, bt restricts benefits based on when a condition arose in relation to the effective date of coverage. 110

YES NO N/A Example: A plan excldes coverage for cosmetic srgery nless the srgery is reqired by reason of an accidental injry occrring after the effective date of coverage. This plan provision operates as a preexisting condition exclsion becase only people who were injred while covered nder the plan receive benefits for treatment. People who were injred while they had no coverage (or while they had prior coverage) do not receive benefits for treatment. Accordingly, this plan provision limits benefits relating to a condition becase the condition was present before the effective date of coverage, and is considered a preexisting condition exclsion. SECTION F- Compliance with the 90-day Waiting Period Limitation Provision Use the following qestions to help determine whether the grop health plan complies with the Departments 90-day waiting period limitation reglations. See final reglations issed by the Departments on Febrary 24, 2014 at 29 CFR 2590.715-2708. Note: PHS Act section 2708, as added by the Affordable Care Act and incorporated into section 715 of ERISA, prohibits the application of any waiting period that exceeds 90 days. Plans are not reqired to have a waiting period, and the provision does not reqire plan sponsors to offer coverage to any particlar employee or class of employees. This provision applies to grandfathered health plans and non-grandfathered plans. Qestion 62- Does the plan apply a waiting period that exceeds 90-days?... A waiting period is defined as the period that mst pass before coverage for an individal who is otherwise eligible to enroll nder the terms of a grop health plan can become effective. See ERISA section 701(b)(4); 29 CFR 2590.715-2708(b) Being eligible for coverage nder the terms of the plan generally means having met the plan s sbstantive eligibility conditions (sch as, for example, being in an eligible job classification, achieving job-related licensre reqirements specified in the plan s terms, or satisfying a reasonable and bona fide employment-based orientation period). See 29 CFR 2590-715.2708(c)(1). Variable Hor Employees: If a plan conditions eligibility on an employee reglarly having a specified nmber of hors of service per period (or working fll-time), and it cannot be determined that a newly hired employee is reasonably expected to reglarly work that nmber of hors per period (or work fll-time), the plan may take a reasonable period of time, not to exceed 12 months and beginning on any date between the employee s start date and the first day of the first calendar month following the employee s start date, to determine whether the employee meets the plan s eligibility condition. See 29 CFR 2590.715-2708(c)(3)(i). 111

YES NO N/A Tip: Except in cases in which a waiting period that exceeds 90 days is imposed in addition to a measrement period, the time period for determining whether an employee meets the plan s eligibility condition will not be considered to be designed to avoid compliance with the 90-day waiting period limitation if the coverage is made effective no later than 13 months from the employee s start date, pls any time remaining ntil the first day of the next calendar month. Cmlative Hors of Service Reqirements: If a plan conditions eligibility on an employee having completed a nmber of cmlative hors of service, the eligibility condition is not considered to be designed to avoid compliance with the 90-day waiting period limitation if the cmlative hors-of-service reqirement does not exceed 1,200 hors. The plan s waiting period mst begin once the new employee satisfies the plan s cmlative hors-of-service reqirement. See 29 CFR 2590.715-2708(c)(3) (ii). Limitation on Orientation Periods To the extent that an orientation period is not sed as a sbterfge for the passage of time, or designed to avoid compliance with the 90-day waiting period limitation, an orientation period is permitted only if it does not exceed one month. One month is determined by adding one calendar month and sbtracting one calendar day, measred from an employee s start date in a position that is otherwise eligible for coverage. See 29 CFR 2590.715-2708 (c)(3)(iii). Tip: It is not permissible nder the 90-day rle to delay coverage ntil the first day of the month following completion of a 90-day waiting period. See 29 CFR 2590.715-2708 (e). If yo answered Yes to the above qestion nder Section F, the plan violates PHS Act Section 2708. Section G. Determining Compliance with the Affordable Care Act Provisions Regarding the provision of the Smmary of Benefits and Coverage (SBC) and Uniform Glossary Note: These provisions do apply to grandfathered health plans. The Affordable Care Act provides for new disclosre tools, the Smmary of Benefits and Coverage (SBC) and Uniform Glossary, to help consmers better compare coverage options available to them in both the individal and grop health insrance coverage markets. Generally, grop health plans and health insrance issers are reqired to provide the SBC and Uniform Glossary free of charge. The Departments pblished a final rle setting forth the reqirements for who mst provide and who is entitled to receive an SBC and Uniform Glossary, when these docments mst be provided, the content reqired in the docments, and the form and manner of how the docments can be provided. In addition, the Departments pblished a notice that sets forth the reqired template for the SBC and Uniform Glossary docments along with instrctions and sample 112

YES NO N/A langage for completing the template. These docments are available on the EBSA Website at: dol.gov/ebsa/healthreform/. The SBC and Uniform Glossary mst be provided in a cltrally and lingistically appropriate manner. The rles for determining whether a langage other than English mst be made available are the same as the rles for Internal Claims and Appeals and External Review, discssed in Section J of this compliance aid. HHS has made available translated versions of the template and glossary in the potentially reqired langages at: cciio.cms.gov/ resorces/other/index.html. Transitional Relief Providing Flexibility and Emphasizing Good Faith Progress Towards Compliance The Department is working together with employers and issers to assist them in coming into compliance with these reqirements. Specifically, in the instrctions for completing the SBC, the Department stated that to the extent a plan s terms do not reasonably correspond to the template and instrctions, the template shold be completed in a manner that is as consistent with the instrctions as reasonably as possible, while still accrately reflecting the plan s terms. See Instrctions Gide for Grop Coverage, page 1 General Instrctions. In addition, compliance assistance is a high priority for the Departments. Implementation will be marked by an emphasis on assisting (rather than imposing penalties on) plans and issers that are working diligently and in good faith to nderstand and come into compliance with the new law. Dring the first year of applicability, 17 the Departments did not impose penalties on plans and issers that were working diligently and in good faith to comply. The Departments are extending the previosly-issed enforcement and transition relief ntil frther gidance is issed. The Departments will contine to work with stakeholders over time to achieve maximm niformity for consmers and certainty for the reglated commnity. See ACA Implementation FAQ Part XIX, Q8. The qestions below focs on provision of the SBC by grop health plans to participants and beneficiaries. The final reglations also reqire health insrance issers to provide the SBC to grop health plan sponsors and participants and beneficiaries. More information on these reqirements can be fond at dol.gov/ebsa/healthreform. The following qestions have been developed to assist in determining compliance with the rles regarding the Smmary of Benefits and Coverage and Uniform Glossary. 17 The term first year of applicability refers to SBCs and niform glossaries provided with respect to coverage beginning before Janary 1, 2014. 113

YES NO N/A Qestion 63 Does the plan provide an SBC, as reqired?... In Connection with Enrollment When providing the SBC to participants and beneficiaries, grop health plans and issers mst provide the SBC with respect to each benefit package offered for which they are eligible (See 29 CFR 2590.715-2715(a)(1)(ii) (A)) as part of any written application materials distribted by the plan or isser for enrollment. If no written application materials are distribted for enrollment, the SBC mst be provided no later than the first date a participant is eligible to enroll in coverage for themselves or any beneficiaries. See 29 CFR 2590.715-2715(a)(1)(ii)(B). For this prpose, written application materials inclde any forms or reqests for information, in paper form or throgh a Website or email, that mst be completed for enrollment. See ACA Implementation FAQ Part VIII, Q9. Tips: The reqirement to provide an SBC by both a health insrance isser and a grop health plan to participants and beneficiaries can be satisfied for both entities as long as one entity provides the reqired SBC within the reqired timeframes. See 29 CFR 2590.715-2715(a)(1)(iii)(A). If a participant and any beneficiaries are known to reside at the same address, a single SBC provided to that address will satisfy the obligation to provide for all individals at the address. Under this circmstance, the obligation will also be satisfied if the SBC is frnished to the participant in electronic form. However if a beneficiary s last known address is different than the participant s address, a separate SBC mst be mailed to the beneficiary s address. See 29 CFR 2590.715-2715(a)(1)(iii)(B) and ACA Implementation FAQ Part VIII, Q10. Grop health plans are permitted to integrate the SBC with other smmary materials, sch as the SPD, as long as the SBC is intact and prominently displayed at the beginning of the materials (for example, immediately after the table of contents in an SPD) and all of the timing reqirements are met. See 77 FR 8707. The Departments generally allow electronic delivery of the SBC and Uniform Glossary where appropriate. For participants and beneficiaries who are already enrolled in coverage nder a grop health plan, an SBC may be provided electronically if the reqirements of the Department of Labor s electronic safe harbor are met. See ACA Implementation FAQ Part VIII, Q10 citing the Department of Labor s disclosre reglation at 29 CFR 2520.104b-1. For participants and beneficiaries who are eligible bt not enrolled for coverage, the SBC may be provided electronically if the format is readily accessible; the SBC is provided in paper form pon reqest; and if the electronic form is an Internet posting, the plan or isser timely notifies the individal that the docments are available in paper form pon reqest. See 29 CFR 2590.715-2715(a)(3). An SBC may be provided electronically to participants and beneficiaries in connection with their online enrollment or online renewal of coverage nder the plan. SBCs 114

YES NO N/A may also be provided electronically to participants and beneficiaries who reqest an SBC online. In either instance, a paper copy mst be provided pon reqest. See ACA Implementation FAQ Part IX, Q1. Qestion 64 Does the plan make available the Uniform Glossary, as reqired?... The Uniform Glossary incldes stattorily reqired terms, as well as mltiple additional terms recommended by the NAIC. The Uniform Glossary is available on the DOL Website at dol.gov/ebsa/healthreform/. The Uniform Glossary may not be modified by plans or issers. See 29 CFR 2590.715-2715(c)(3); 77 FR 8708. The final rle reqires grop health plans and issers to make the Uniform Glossary available pon reqest, in either paper or electronic form (as reqested), within seven bsiness days. See 29 CFR 2590.715-2715(c)(4). This reqirement may be satisfied by providing an internet address where an individal may review and obtain the Uniform Glossary as well as a contact phone nmber to obtain a paper copy of the Uniform Glossary. See 29 CFR 2590.715-2715(a)(2)(i)(L). If yo are completing this section as part of a review of a grandfathered health plan, STOP here. The following sections address provisions that do not apply to grandfathered health plans. Section H. Determining Compliance with the Patient Protection Provisions of the Affordable Care Act in Part 7 of ERISA Note: This provision is applicable for plan years beginning on or after Sept. 23, 2010. This provision does not apply to grandfathered health plans. 1. Choice of Healthcare Professional A plan or isser that reqires or provides for a participant or beneficiary to designate a participating primary care provider mst permit each participant or beneficiary to designate any participating primary care provider who is available to accept the participant or beneficiary. With respect to a child, the plan or isser mst permit the designation of a physician who specializes in pediatrics as a child s primary care provider, if the provider participates in the network of the plan or isser and is available to accept the child. See 29 CFR 2590.715-2719A(a)(1) & (a)(2). A grop health plan or isser that provides obstetrical or gynecological (OB/ GYN) care and reqires the designation of an in-network primary care provider, may not reqire athorization or referral by the plan, isser, or any person (inclding a primary care provider) for a female participant or beneficiary who seeks coverage for OB/GYN care provided by a participating health care professional who specializes in obstetrics and gynecology. (This incldes any individal athorized nder State law to provide OB/GYN care, inclding a person other than a physician). See 29 CFR 2590.715-2719A(a)(3). 115

YES NO N/A Qestion 65 Does the plan reqire or provide for designation of a participating primary care provider by any participant or beneficiary?... If the answer is no, enter N/A for the following qestions and proceed to Qestion 72. If the answer to ALL of the qestions below is yes the plan is in compliance with the choice of healthcare professional provisions of the rles regarding patient protections. Qestion 66 Does the plan permit each participant or beneficiary to designate any participating primary care provider who is available to accept the participant or beneficiary?... If a grop health plan, or a health insrance isser offering grop health insrance coverage, reqires or provides for designation by a participant or beneficiary of a participating primary care provider, then the plan or isser mst permit each participant or beneficiary to designate any participating primary care provider who is available to accept the participant or beneficiary. See 29 CFR 2590.715-2719A(a)(1)(i). Qestion 67 Does the plan provide a notice informing each participant of the terms of the plan or health insrance coverage regarding designation of a primary care provider?... If a grop health plan or health insrance isser reqires the designation by a participant or beneficiary of a primary care provider, the plan or isser mst provide a notice informing each participant of the terms of the plan or health insrance coverage regarding designation of a primary care provider that any participating primary care provider who is available to accept the participant or beneficiary can be designated. See 29 CFR 2590.715-2719A(a)(4)(i)(A). Tip: This notice mst be provided any time the plan provides a participant with an SPD or other similar description of benefits nder the plan. See 29 CFR 2590.715-2719A(a)(4)(ii). Qestion 68 With respect to a child, does the plan permit the participant or beneficiary to designate a physician who specializes in pediatrics as the child s primary care provider if the provider participates in the network of the plan or isser and is available to accept the child?... If a grop health plan, or a health insrance isser offering grop health insrance coverage, reqires or provides for the designation of a participating primary care provider for a child by a participant or beneficiary, the plan or isser mst permit the participant or beneficiary to designate a physician (allopathic or osteopathic) who specializes in pediatrics as the child s primary care provider if the provider participates in the network of the plan or isser and is available to accept the child. See 29 CFR 2590.715-2719A(a)(2)(i). 116

YES NO N/A Qestion 69 With respect to a child, does the plan provide a notice informing each participant of the terms of the plan or health insrance coverage regarding designation of a primary care provider and the right to designate any participating physician who specializes in pediatrics as the primary care provider?... If a grop health plan or health insrance isser reqires the designation by a participant or beneficiary of a primary care provider, the plan or isser mst provide a notice informing each participant of the terms of the plan or health insrance coverage regarding designation of a primary care provider with respect to a child, that any participating physician who specializes in pediatrics can be designated as the primary care provider. See 29 CFR 2590.715-2719A(a)(4)(i)(B). Tip: This notice mst be provided any time the plan provides a participant with an SPD or other similar description of benefits nder the plan. See 29 CFR 2590.715-2719A(a)(4)(ii). Qestion 70 Does the plan provide coverage for OB/GYN care provided by a participating health care professional who specializes in obstetrics or gynecology for a female participant or beneficiary withot reqiring athorization or referral by the plan, isser, or any person (inclding a primary care provider)?... For prposes of this provision, a health care professional who specializes in obstetrics or gynecology is any individal (inclding a person other than a physician) who is athorized nder applicable State law to provide obstetrical or gynecological care. The plan or isser may reqire sch a professional to agree to otherwise adhere to the plan s or isser s policies and procedres, inclding procedres regarding referrals and obtaining prior athorization and providing services prsant to a treatment plan (if any) approved by the plan or isser. See 29 CFR 2590.715-2719A(a)(3)(i)(A). A plan or isser mst treat the provision of OB/GYN care, and the ordering of related OB/ GYN items and services, by a participating health care professional who specializes in obstetrics or gynecology as the athorization of the primary care provider. See 29 CFR 2590.715-2719A(a)(3)(i)(B). Qestion 71 Does the plan provide a notice informing each participant of the terms of the plan or coverage regarding designation of a primary care provider and that the plan may not reqire athorization or referral for obstetrical or gynecological care by a participating health care professional who specializes in obstetrics or gynecology?... If a grop health plan or health insrance isser reqires the designation by a participant or beneficiary of a primary care provider, the plan or isser mst provide a notice informing each participant of the terms of the plan or health insrance coverage regarding designation of a primary care provider that the plan may not reqire athorization or referral for obstetrical or gynecological 117

YES NO N/A care by a participating health care professional who specializes in obstetrics or gynecology. See 29 CFR 2590.715-2719A(a)(4)(i)(C). Tip: This notice mst be provided anytime the plan provides a participant with an SPD or other similar description of benefits nder the plan. See 29 CFR 2590.715-2719A(a)(4)(ii). 2. Coverage of Emergency Services Qestion 72 Does the plan provide any benefits with respect to services in an emergency department of a hospital?... If the answer is no, enter N/A for the following qestions and proceed to Section I. Note: Small grop insred plans are reqired to cover essential health benefits, which inclde emergency services. If the answer to ALL of the qestions below is yes the plan is in compliance with the coverage of emergency services provisions of the rles regarding patient protections. Qestion 73 Does the plan provide coverage of emergency services withot the need for any prior athorization determination, even if the emergency services are provided on an ot-of-network basis?... A plan or isser sbject to the reqirements of this section mst provide coverage for emergency services withot the need for any prior athorization determination, even if the emergency services are provided on an ot-ofnetwork basis. See 29 CFR 2590.715-2719A(b)(2)(i). Qestion 74 Does the plan provide coverage of emergency services withot regard to whether the health care provider frnishing the emergency services is a participating network provider with respect to the services?... A plan or isser sbject to the reqirements of this section mst provide coverage for emergency services withot regard to whether the health care provider frnishing the emergency services is a participating network provider with respect to the services. See 29 CFR 2590.715-2719A(b)(2)(ii). Qestion 75 Does the plan provide coverage of emergency services provided ot-of-network withot imposing any administrative reqirement or limitation on coverage that is more restrictive than the reqirements that apply to emergency services provided in-network?... If the emergency services are provided ot-of-network, the plan mst provide the emergency services withot imposing any administrative reqirement or limitation on coverage that is more restrictive than the reqirements 118

YES NO N/A or limitations that apply to emergency services received from in-network providers. See 29 CFR 2590.715-2719A(b)(2)(iii). Qestion 76 When providing emergency services ot-of-network, does the plan impose cost-sharing reqirements that comply with the reqirements of the interim final reglations?... Any cost-sharing reqirement expressed as a copayment amont or coinsrance rate imposed with respect to a participant or beneficiary for otof-network emergency services cannot exceed the cost-sharing reqirement imposed with respect to a participant or beneficiary if the services were provided in-network. However, a participant or beneficiary may be reqired to pay, in addition to the in-network cost sharing, the excess of the amont the ot-of-network provider charges over the amont the plan or isser is reqired to pay nder this section. See 29 CFR 2590.715-2719A(b)(3)(i). A plan or isser complies with the reqirements if it provides benefits with respect to an emergency service in an amont eqal to the greatest of the following three amonts (which are adjsted for in-network cost-sharing reqirements): (A) The amont negotiated with in-network providers for the emergency service frnished, exclding any in-network copayment or coinsrance imposed. (See 29 CFR 2590.715-2719A(b)(3)(i)(A) for more detailed information, inclding how to determine this amont if there is more than one amont negotiated with in-network providers for the emergency service.) (B) The amont for the emergency service calclated sing the same method the plan generally ses to determine payments for ot-ofnetwork services (sch as the sal, cstomary, and reasonable amont), exclding any in-network copayment or coinsrance imposed. See 29 CFR 2590.715-2719A(b)(3)(i)(B). (C) The amont that wold be paid nder Medicare for the emergency service, exclding any in-network copayment or coinsrance imposed. See 29 CFR 2590.715-2719A(b)(3)(i)(C). Tip: Any other cost-sharing reqirement, sch as a dedctible or ot-of-pocket maximm, may be imposed with respect to ot-of-network emergency services only if the cost-sharing reqirement generally applies to ot-of-network benefits. See 29 CFR 2590.715-2719A(b)(3)(ii). 119

YES NO N/A Qestion 77 Does the plan provide coverage of emergency services withot regard to any other term or condition of the coverage, other than the exclsion or coordination of benefits, a permissible affiliation or waiting period, or applicable cost-sharing reqirements?... A plan or isser sbject to the reqirements of this section mst provide coverage for emergency services withot regard to any other term or condition of the coverage, other than the exclsion or coordination of benefits, an affiliation or waiting period permitted nder part 7 of ERISA, part A of title XXVII of the PHS Act, or chapter 100 of the Internal Revene Code, or applicable cost sharing. See 29 CFR 2590.715-2719A(b)(2)(v). Section I. Determining Compliance with the Affordable Care Act Coverage of Preventive Services Provisions in Part 7 of ERISA Note: This provision is applicable for plan years beginning on or after Sept. 23, 2010. This provision does not apply to grandfathered health plans. Grop health plans and health insrance issers mst provide coverage for, and mst not impose cost-sharing reqirements with respect to, certain recommended preventive services. Nothing prevents plans or issers from providing coverage for preventive items and services in addition to the recommended preventive services reqired nder these reglations. See 29 CFR 2590.715-2713(a)(1) & (a) (5). A complete list of recommendations and gidelines that inclde services that are reqired to be covered nder these interim final reglations can be fond at HealthCare.gov/center/reglations/prevention.html. Any changes to or new recommendations and gidelines will be noted at this site. Plans mst cover any new recommended service within one year after the date the recommendation or gidance is issed. Therefore, by visiting the site once per year, plans and issers will have straightforward access to all the information necessary to determine any additional items and services that mst be covered withot cost-sharing and any items or services that are no longer reqired to be covered. If the answer to ALL of the qestions below is yes the plan is in compliance with the rles regarding preventive services. Qestion 78 Does the plan provide coverage withot imposing any costsharing reqirements for evidence-based items or services that have in effect a rating of A or B in the crrent recommendations of the United States Preventive Services Task Force?... Plans and issers mst provide coverage for evidence-based items or services that have in effect a rating of A or B in the crrent recommendations of the United States Preventive Services Task Force. See 29 CFR 2590.715-2713(a) (1)(i). 120

YES NO N/A Note: Recommendations of the United States Preventive Services Task Force regarding breast cancer screening, mammography, and prevention issed in or arond November 2009 are not considered to be crrent. Qestion 79 Does the plan provide coverage withot imposing any cost-sharing reqirements for immnizations for rotine se in children, adolescents, and adlts that have in effect a recommendation from the Advisory Committee on Immnization Practices of the Centers for Disease Control and Prevention?... For the prpose of this section, a recommendation from the Advisory Committee on Immnization Practices of the Centers for Disease Control and Prevention is considered in effect after it has been adopted by the Director of the Centers for Disease Control and Prevention, and a recommendation is considered to be for rotine se if it is listed on the Immnization Schedles of the Centers for Disease Control and Prevention. See 29 CFR 2590.715-2713(a)(1)(ii). Qestion 80 With respect to infants, children, and adolescents, does the plan provide coverage withot imposing any cost-sharing reqirements for evidence-informed preventive care and screenings provided for in comprehensive gidelines spported by the Health Resorces and Services Administration?... With respect to infants, children, and adolescents, a plan or isser mst provide coverage for evidence-informed preventive care and screenings provided for in comprehensive gidelines spported by the Health Resorces and Services Administration. See 29 CFR 2590.715-2713(a)(1)(iii). Qestion 81 With respect to women, does the plan provide coverage withot imposing any cost-sharing reqirements for evidence-informed preventive care and screenings provided for in comprehensive gidelines spported by the Health Resorces and Services Administration?... A complete list of gidelines that are reqired to be covered can be fond at: hrsa.gov/womensgidelines/. (Note: there is a limited exception for certain employers regarding coverage for certain women s preventive services; see dol.gov/ebsa/healthreform for pdated gidance). With respect to women, a plan or isser mst provide coverage for evidenceinformed preventive care and screenings provided for in comprehensive gidelines spported by the Health Resorces and Services Administration. See 29 CFR 2590.715-2713(a)(1)(iv). 121

YES NO N/A Qestion 82 Does the plan provide coverage for office visits withot imposing cost sharing reqirements when recommended preventive services are not billed separately from an office visit and is the primary prpose of the office visit?... If a recommended preventive service or item is not billed separately (or is not tracked as individal enconter data separately) from an office visit and the primary prpose of the office visit is the delivery of sch a service or item, then a plan or isser may not impose cost-sharing reqirements with respect to the office visit. See 29 CFR 2590.715-2713(a)(2)(ii). Tip: If a recommended preventive service is billed separately from an office visit, or if the recommended preventive service is not billed separately and the primary prpose of the office visit is not delivery of the recommended preventive service, then a plan or isser may impose cost-sharing with respect to the office visit. See 29 CFR 2590.715-2713(a)(2)(i) & (iii). Additional tips: Plans and issers that have a network of providers are not reqired to provide coverage for and may impose cost-sharing reqirements for recommended preventive services delivered by an ot-of-network provider. See 29 CFR 2590.715-2713(a)(3). Plans and issers may se reasonable medical management techniqes to determine the freqency, method, treatment, or setting for the recommended preventive services to the extent these are not specified in the recommendations or gidelines. See 29 CFR 2590.715-2713(a)(4). Plans and issers can impose cost-sharing for a treatment that is not a recommended preventive service nder these reglations, even if the treatment reslted from a recommended preventive service. See 29 CFR 2590.715-2713(a)(5) and ACA Implementation FAQs Part XII Q5. Section J. Determining Compliance with the Affordable Care Act Provisions Regarding Internal Claims and Appeals and External Review in Part 7 of ERISA The internal claims and appeals and external review provisions of Part 7 of ERISA do not apply to grandfathered health plans. Note: There have been several phases of gidance issed regarding the internal claims and appeals and external review provisions nder the Affordable Care Act. More information abot the reqirements regarding internal claims and appeals and external review processes nder ERISA is available at dol.gov/ebsa. 122

YES NO N/A 1. Internal Claims and Appeals Under the Affordable Care Act grop health plans and health insrance issers offering grop health insrance coverage were reqired to implement an effective internal claims and appeals process for plan years beginning on or after September 23, 2010. In general, the interim final reglations reqire plans and issers to comply with the DOL claims procedre rle nder 29 CFR 2560.503-1 and impose specific additional reqirements and inclde some clarifications (referred to as the additional standards for internal claims and appeals). In addition to meeting the following reqirements, the plan is reqired to comply with all of the reqirements of the DOL claims procedre rle nder 29 CFR 2560.503-1. The following qestions have been developed to assist in determining compliance with the additional standards for internal claims and appeals processes and is not intended to determine compliance with the DOL claims procedre rle. Qestion 83 Does the plan provide internal claims and appeals processes with respect to rescissions of coverage?... Under the DOL claims procedre rle, adverse benefit determinations eligible for internal claims and appeals processes generally inclde denial, redction, or termination of, or a failre to provide or make a payment (in whole or in part) for a benefit (inclding a denial, redction, termination, or failre to make a payment based on the imposition of a preexisting condition exclsion, a sorce of injry exclsion, or other limitation on covered benefits). See 29 CFR 2560.503-1(m)(4). The Department s reglations broaden the DOL claims procedre rle s definition of adverse benefit determination to inclde rescissions of coverage. Therefore, rescissions of coverage are also eligible for internal claims and appeals processes, whether or not the rescission has an adverse effect on any particlar benefit at the time of an appeal. See 29 CFR 2590.715-2719(a)(2)(i); 29 CFR 2560.503-1. This provision is applicable for plan years beginning on or after September 23, 2010. See 29 CFR 2590.715-2719(g). Qestion 84 Does the plan provide claimants with any new or additional evidence or rationale considered in connection with a claim?... The Department s reglations clarify that plans or issers mst provide to claimants, free of charge, any new or additional evidence considered, relied pon, or generated by (or at the direction of) the plan or isser in connection with a claim. This evidence mst be provided as soon as possible and sfficiently in advance of the date on which the notice of final internal 123

YES NO N/A adverse benefit determination is reqired to be provided in order to give the claimant a reasonable opportnity to respond prior to that date. Similarly, before a plan or isser can isse a final internal adverse benefit determination based on a new or additional rationale, the claimant mst be provided, free of charge, with the rationale. This rationale mst be provided as soon as possible and sfficiently in advance of the date on which the notice of final internal adverse benefit determination is reqired to be provided in order to give the claimant a reasonable opportnity to respond prior to that date. See 29 CFR 2590.715-2719(b)(2)(ii)(C). This provision is applicable for plan years beginning on or after September 23, 2010. See 29 CFR 2590.715-2719(g). Qestion 85 Does the plan ensre that claims and appeals are adjdicated in a manner that maintains independence and impartiality of decision making?... The Department s reglations clarify that plans or issers mst ensre that all claims and appeals are adjdicated in a manner designed to ensre the independence and impartiality of the persons involved in making the decision. Accordingly, decisions regarding hiring, compensation, termination, promotion, or other similar matters with respect to any individal (sch as a claims adjdicator or medical expert) mst not be made based pon the likelihood or perceived likelihood that the individal will spport or tend to spport a denial of benefits. See 29 CFR 2590.715-2719(b)(2)(ii)(D). This provision is applicable for plan years beginning on or after September 23, 2010. See 29 CFR 2590.715-2719(g). Qestion 86 Complete the following qestions to ensre that the plan complies with the additional content reqirements for any notice of adverse benefit determination or final internal adverse benefit determination: 86a. Does the plan or isser ensre that any notice of adverse benefit determination or final internal adverse benefit determination incldes information sfficient to identify the claim involved?... The Department s reglations provide that plans and issers mst ensre that any notice of adverse benefit determination or final internal adverse benefit determination incldes information sfficient to identify the claim involved inclding the date of service, the health care provider, and the claim amont (if applicable), and a statement describing the availability, pon reqest, of the diagnosis code and its corresponding meaning, and the treatment code, and its corresponding meaning. See 29 CFR 2590.715-2719(b)(2)(ii)(E)(1). This provision is applicable for plan years beginning on or after Jly 1, 2011. See T.R. 2011-01 at dol.gov/ebsa/newsroom/tr11-01.html. 124

YES NO N/A Plans or issers mst also provide to participants and beneficiaries, as soon as practicable, pon reqest, the diagnosis and treatment codes (and their meanings), associated with any adverse benefit determination or final internal adverse benefit determination. The plan or isser mst not consider a reqest for sch diagnosis and treatment information, in itself, to be a reqest for an internal appeal or external review. See 29 CFR 2590.715-2719(b)(2)(ii)(E) (1), as amended. This provision is applicable for plan years beginning on or after Janary 1, 2012. See T.R. 2011-01 at dol.gov/ebsa/newsroom/tr11-01. html. 86b. Does the plan or isser ensre that any notice of adverse benefit determination or final internal adverse benefit determination incldes an adeqate description of the reasons for the adverse benefit determination or final internal adverse benefit determination?... The Department s reglations provide that plans and issers mst ensre that the reasons for the adverse benefit determination or final internal adverse benefit determination incldes the denial code and its corresponding meaning, as well as a description of the standard that was sed in denying the claim. In the case of a notice of final internal adverse benefit determination, this description mst inclde a discssion of the decision. See 29 CFR 2590.715-2719(b)(2)(ii)(E)(3). This provision is applicable for plan years beginning on or after Jly 1, 2011. See T.R. 2011-01 at dol.gov/ebsa/newsroom/tr11-01.html. 86c. Does the plan or isser ensre that any notice of adverse benefit determination or final internal adverse benefit determination incldes a description of available internal appeals and external review processes?... The Department s reglations provide that plans and issers mst provide a description of available internal appeals and external review processes, inclding information regarding how to initiate an appeal. See 29 CFR 2590.715-2719(b)(2)(ii)(E)(4). This provision is applicable for plan years beginning on or after Jly 1, 2011. See T.R. 2011-01 at dol.gov/ebsa/newsroom/tr11-01.html. 86d. Does the plan or isser ensre that any notice of adverse benefit determination or final internal adverse benefit determination disclose the availability of, and contact information for, any applicable office of health insrance consmer assistance or ombdsman established nder PHS Act section 2793?... The Department s reglations provide that plans and issers mst disclose the availability of, and contact information for, any applicable office of health insrance consmer assistance or ombdsman established nder PHS Act section 2793 to assist enrollees with the internal claims and appeals and external review processes. See 29 CFR 2590.715-2719(b)(2)(ii)(E)(5). 125

YES NO N/A An pdated list of the State Consmer Assistance Programs is available on the Department of Labor Website at dol.gov/ebsa/cappdatelist.doc. These provisions are applicable for plan years beginning on or after Jly 1, 2011. See T.R. 2011-01 at dol.gov/ebsa/newsroom/tr11-01.html. Qestion 87 Does the plan defer to the attending provider as to whether a claim involves rgent care and provide notice regarding sch rgent care claim as reqired?... As nder 29 CFR 2560.503-1(f)(2)(i), plans or issers mst notify a claimant of a benefit determination (whether adverse or not) with respect to a claim involving rgent care as soon as possible, taking into accont the medical exigencies, bt not later than 72 hors after the receipt of the claim by the plan or isser. 29 CFR 2590.715-2719(b)(2)(ii)(B), as amended. The determination as to whether a claim involves rgent care is determined by the attending provider and the plan or isser mst defer to sch determination. See 29 CFR 2590.715-2719(b)(2)(ii)(B), as amended. This provision is applicable for plan years beginning on or after Janary 1, 2012. See T.R. 2011-01 at dol.gov/ebsa/newsroom/tr11-01.html. Qestion 88 Does the plan comply with the reqirements regarding deemed exhastion of internal claims and appeals processes?... In the case of a plan or isser that fails to adhere to all the reqirements of the Interim Final Rles relating to the Internal Claims and Appeals process with respect to a claim, the claimant is deemed to have exhasted the internal claims and appeals process. The internal claims and appeals process will not be deemed exhasted as long as the violation was: de minims, does not case, and is not likely to case, prejdice or harm to the claimant, attribtable to good case or de to matters beyond the control of the plan or isser, in the context of an ongoing, good faith exchange of information between the plan and the claimant, and is not reflective of a pattern or practice of noncompliance. See 29 CFR 2590.715-2719(b)(2)(ii)(F), as amended. In the event that the claimant reqests a written explanation of the violation, the plan or isser mst provide sch explanation within 10 days, inclding a specific description of its bases, if any, for asserting that the violation shold not case the internal claims and appeals process to be deemed exhasted. See 29 CFR 2590.715-2719(b)(2)(ii)(F), as amended. In the case that the external review rejects the claimant s immediate review, the plan mst provide the claimant notice of the opportnity to resbmit and prse the internal appeal of the claim. This notice mst be sent within a reasonable time after the external reviewer rejects the claim for immediate review, not later than 10 days. See 29 CFR 2590.715-2719(b)(2)(ii)(F), as amended. 126

YES NO N/A These provisions are applicable for plan years beginning on or after Janary 1, 2012. See T.R. 2011-01 at dol.gov/ebsa/newsroom/tr11-01.html. Qestion 89 Does the plan provide cltrally and lingistically appropriate notices in a conty that meets the applicable threshold?... The Department s reglations provide that plans and issers mst provide relevant notices in a cltrally and lingistically appropriate manner. The Department s reglations establish a single threshold with respect to the percentage of people who are literate only in the same non-english langage for both the grop and individal markets. With respect to plans and issers, the threshold percentage is set at 10 percent or more of the poplation residing in the claimant s conty, as determined based on American Commnity Srvey (ACS) data pblished by the United States Censs Brea. The list of conties determined to meet the threshold is available at cms.gov/cciio/resorces/fact-sheets-and-faqs/downloads/2013-clasdata.pdf. This list will be pdated annally. See 29 CFR 2590.715-2719(e) (3), as amended. If the answer to this qestion is Yes, proceed to qestion 90. If the answer is No, proceed to the next section. Qestion 90 Does the plan provide notices in a cltrally and lingistically appropriate manner with respect to internal claims and appeals processes? To meet this reqirement the plan or isser mst: v inclde a one-sentence statement in the relevant non-english langage abot the availability of langage services on each notice sent to an address in a conty that meets the threshold; v provide, pon reqest, a notice in any applicable non-english langage; and v provide a cstomer assistance process (sch as a telephone hotline) with oral langage services in the non-english langage and provide written notices in the non-english langage pon reqest. See 29 CFR 2590.715-2719(e), as amended. The translated statements are available at dol.gov/ebsa/iabdmodelnotice2. doc. These provisions are applicable for plan years beginning on or after Janary 1, 2012. See T.R. 2011-01 at dol.gov/ebsa/newsroom/tr11-01.html. 127

YES NO N/A 2. External Review Plans and issers mst comply with either a State external review process or the Federal external review process. The external review provisions of Part 7 of ERISA do not apply to grandfathered health plans. The following qestions have been developed to assist in determining compliance with the rles regarding the external review processes. Qestion 91 Is the plan sbject to the reqirements of a State external review process or the HHS-Administered Federal External Review Process?... Non-grandfathered, self-insred grop health plans sbject to ERISA and the Code: v Generally follow reqirements of the private accredited IRO process (established by TR 2010-01, modified by TR 2011-02). Non-grandfathered, insred coverage: v Generally, issers mst follow the State process if the external review process meets either the NAIC-Similar or NAIC-Parallel process as determined by HHS. v However, issers in States withot a conforming State process and selfinsred non-federal governmental plans may either: Utilize the private accredited IRO process (established by TR 2010-01, and modified by TR 2011-02); or Utilize the HHS-Administered Federal External Review Process. Backgrond information regarding external review processes for insred plans: For insred coverage, HHS has determined which State external review processes meet the minimm reqirements to apply to issers in those States. See cms.gov/cciio/resorces/files/external_appeals.html. If yo answered Yes to Qestion 91 above, STOP. The plan is not sbject to the DOL Private Accredited IRO process. If yo answered No to Qestion 91 above, contine to Qestion 92. 128

YES NO N/A Qestion 92 DOL Private Accredited IRO process: Does the plan provide external review for the reqired scope of adverse benefit determinations?... Under the Department s reglations the scope of the Federal external review process applies to: An adverse benefit determination, inclding a final internal adverse benefit determination, by a plan or isser that involves medical jdgment, inclding bt not limited to those based on the plan s or isser s reqirements for medical necessity, appropriateness, health care setting, level of care, or effectiveness of a covered benefit; or its determination that a treatment is experimental or investigational; and A rescission of coverage (regardless of whether or not the rescission has any effect on any particlar benefit at that time). See 29 CFR 2590.715-2719(d) (1)(ii), as amended. An adverse benefit determination that relates to a participant s or beneficiary s failre to meet the reqirements for eligibility nder the terms of a grop health plan (i.e., worker classification or similar isse) is not within the scope of the Federal external review process. See 29 CFR 2590.715-2719(d)(1)(i), as amended. Qestion 93 DOL Private Accredited IRO process: Does the plan provide an effective external review process?... Self-insred coverage sbject to ERISA and the Code may either comply with the standards of the private accredited IRO process or volntarily comply with a State external review process if the State allows access. If the plan is complying with the private accredited IRO process, ensre the plan complies with all of the standards articlated in TR 2011-02 inclding: v Providing effective written notice of external review v Providing limits related to filing fees v Providing claimant at least 4 months to file for external review v Reqiring that IROs mst be accredited v Reqiring that IROs may not have conflicts of interest that inflence independence v Providing that IRO decisions are binding on the insrer and the claimant v Reqiring IROs to maintain written records for at least three years Department of Labor clarified in TR 2011-02 that to be eligible for a safe harbor from enforcement from the Department of Labor and the IRS (as previosly set forth in sb-reglatory gidance issed in ACA FAQs Part 1 on September 20, 2010), self-insred plans will be reqired to contract with at least three IROs by Jly 1, 2012. See TR 2010-01 at dol.gov/ebsa/pdf/acatechnicalrelease2010-01.pdf, and TR- 2011-02 at dol.gov/ebsa/newsroom/tr11-02.html. 129

Jne 26, 2015 Firms Mst Now Clean Up Health Plans Smmary: In the wake of the Spreme Cort decision on Obamacare, firms mst qickly ensre that health plans comply with nmeros mandates. By: Cynthia Marcotte Stamer King v. Brwell decision dashing the hope that the Spreme Cort wold provide relief for bsinesses and their grop health plans from the Patient Protection and Affordable Care Act (ACA) mandates by striking down ACA, U.S. bsinesses that offered health coverage in 2014 and those contining to sponsor health coverage mst swiftly act to review and verify the adeqacy of their 2014 and crrent grop health plan?s compliance with ACA and other federal grop health plan mandates. Bsiness mst also begin finalizing their grop health plan design decisions for the coming year. Prompt action to assess and verify compliance is particlarly critical in light of the mch-overlooked?sox for Health Plans? style rles of Internal Revene Code (Code) Section 6039D. The rles generally reqire grop health plans that violated varios federal grop health plan mandates to self-identify and self-report these violations, as well as self-assess and pay the excise taxes of as mch as $100 a day per violation triggered by ncorrected violations. While the mandates were applicable prior to 2014 for ncorrected violations of a relatively short list of pre-aca federal grop health mandates, ACA broadened the applicability of Code Section 6039D to inclde ACA?s grop health plan mandates beginning in 2014. This means that, in addition to any other liability that the company, its grop health plan and its fidciaries might bear for violating these rles nder the Employee Retirement Income Secrity Act, the code, the Social Secrity Act or otherwise, the sponsoring bsiness also will incr liability for the Code Section 6039D excise tax for ncorrected violations, as well as late or non-filing penalties and interest that can reslt from late or non-filing. Many employers have significant exposre to these Code Section 6039D excise tax liabilities becase many plan sponsors or their vendors have delayed reviewing or pdating their grop health plans for compliance with some or all of ACA?s mandates. In many cases, bsinesses delayed in hopes that the Spreme Cort wold strike down the law, Congress wold amend or repeal it, or both. In other cases, limited or contining changes to the reglatory gidance abot some of ACA?s mandates prompted bsinesses to hold off investing in compliance to minimize compliance costs. Regardless of the past reasons for sch delays, however, bsinesses sponsoring grop health plans after 2013 need to recognize and act to address their ncorrected post-2013 ACA violations exposres. Althogh many

bsinesses, as well as individal Americans, have held off taking long overde steps to comply with ACA?s mandates pending the Spreme Cort?s King v. Brwell decision, the three agencies charged with enforcement? the IRS, Department of Labor and Department of Health and Hman Service -- have been gearing p to enforce those provisions of ACA already in effect and to finalize implementation of others in the expectation of the rling in favor of the Obama administration. As a practical matter, ACA opponents need to recognize that the Spreme Cort?s King decision realistically gives these agencies the go-ahead to move forward with these plans for aggressive implementation and enforcement. Althogh technically only addressing a challenge to the Obama administration?s interpretation of the individal tax credit (?Individal Sbsidy?) that ACA created nder Code Section 36B, the Spreme Cort?s decision eliminates any realistic hope that the Spreme Cort will provide relief to bsinesses or their grop health plans with any meaningfl past or crrent ACA violations by striking down the law itself. Of all of the crrently pending challenges to ACA working their way to throgh the corts, the King case presented the best chance of a Spreme Cort rling that wold wholesale invalidate ACA?s insrance reforms, if not the law itself, becase of the importance of the Individal Sbsidy to the intended workings of those reforms. By pholding the Obama Administration?s interpretation of Code Section 36B as allowing otherwise qalifying individals living in states withot a state-rn ACA health insrance exchange to claim the Individal Sbsidy for bying health care coverage throgh the federal Healthcare.gov health insrance exchange, the Spreme Cort effectively killed the best possibility that the Spreme Cort wold invalidate the insrance reforms or ACA itself. While varios challenges still exist to the law or certain of the Obama administration?s interpretations of its provisions, none of these existing challenges present any significant possibility that the Spreme Cort will strike down ACA. While the Repblicans in Congress have promised to take congressional action to repeal or reform ACA since retaking control of the Senate in last fall?s elections, meaningfl legislative reform also looks nlikely becase the Repblicans do not have the votes to override a presidential veto. In light of these developments, bsinesses mst prepare both to meet their crrent and ftre ACA and other federal health plan compliance obligations and defend potential deficiencies in their previos compliance over the past several years. The importance of these actions takes on particlar rgency given the impending deadlines nder the largely overlooked?sox for Health Plans? rles of Code Section 6039D for bsinesses that sponsored grop health plans after 2013. Under Code Section 6039D, bsinesses sponsoring grop health plans in 2014 mst self-assess the adeqacy of their grop health plan?s compliance with a long list of ACA and other federal mandates in 2014. To the extent that there exist ncorrected violations, bsinesses mst self-report these violations and selfassess on IRS Form 8928 and pay the reqired excise tax penalty of $100 for each day in the noncompliance period with respect to each individal to whom sch failre relates. For ACA violations, the reporting and payment deadline generally is the original de date for the bsiness? tax retrn. Absent frther reglatory or legislative relief, bsinesses providing grop health plan coverage in 2014 or thereafter also shold expect to face similar obligations and exposres. As a reslt, bsinesses that sponsored grop health plans in 2014 or thereafter shold act qickly to verify the adeqacy of their grop health plan?s compliance with all ACA and other grop health plan mandates covered by the Code Section 6039D reporting reqirements. Prompt action to identify and self-correct covered violations may mitigate the penalties a company faces nder Code Section 6039D as well as other potential liabilities

associated with those violations nder the Employee Retirement Income Secrity Act (ERISA), the Social Secrity Act or other federal laws. On the other hand, failing to act promptly to identify and deal with these reqirements and the potential reporting and excise tax penalty self-assessment and payment reqirements imposed by Code Section 6039D can significantly increase the liability the bsiness faces for these violations sbstantially both by triggering additional interest and late payment and filing penalties, as well as forfeiting the potential opportnities that Code Section 6039D otherwise might offer to qalify to redce or avoid penalties throgh good-faith efforts to comply or self-correct. While crrent gidance allows bsinesses the opportnity to extend the deadline for filing of their Form 8928, the payment deadline for the excise taxes cannot be extended. Code Section 6039D provides opportnities for bsinesses to redce their excise tax exposre by self-correction or showing good faith efforts to comply with the ACA and other grop health plan mandates covered by Code Section 6039D. Bsinesses need to recognize, however, that delay in identification and correction of any compliance concerns makes them less likely to qalify for this relief. Accordingly, prompt action to adit compliance and address any compliance concerns is advisable to mitigate these risks as well as other exposres. Bsinesses preparing to condct adits also are rged to consider seeking the advice from qalified legal consel experienced in these and other grop health plan matters before initiating their adit, as well as regarding the evalation of any concerns that might be ncovered. While bsinesses inevitably will need to involve or coordinate with their acconting, broker and other vendors involved with the plans, bsinesses generally will want to preserve the ability to claim attorney-client privilege to protect all or parts of their adit investigation and analysis and certain other matters against discovery. Bsiness will also want assistance with proper evalation of options in light of findings and assistance from consel to docment the investigation and careflly craft any corrective actions for defensibility. Cynthia Marcotte Stamer cstamer@soltionslawyer.net Cynthia Marcotte Stamer is an attorney and health benefit consltant with 25 years experience advising and representing clients on health and other employee-benefit, employment, insrance and related matters. She is a fellow in the American College of Employee Benefits Consel and is board certified in labor and employment law.