Welfare Benefit Plan ERISA News
April 2016

Court Rules Employment Agreement Severance Provisions Can Constitute ERISA Plan
Court Rules Employment Agreement Severance Provisions Can Constitute ERISA Plan"The District Court ultimately agreed with the employer and found that the severance provisions in the executive's individual employment agreement established an ERISA plan. The court's analysis focused on five main points: Intended benefits. ... Class of beneficiaries. ... Source of financing. ... Procedures for receiving benefits ... Ongoing administrative scheme." Zgrablich v. Cardone Industries, Inc., No. 15-4665 (E.D. Penn. Feb. 3, 2016) (Winston & Strawn LLP)
The Generic Drug Cost Problem
The Generic Drug Cost ProblemHistorically, employers have looked at generics as a cost saving strategy because the cost of generic medications has been significantly lower than the cost of brand name medications. Surprisingly, however, over the last couple of years, the trend for some generics has not followed this historical pattern. Between July '13 and July '14, 50% of generic medications increased in price; more than one quarter increased by 10%, and 18% increased by 25%. Some even increased by 100%. (Marsh & McLennan Agency LLC)

Trouble on the Horizon for Employers Who Do Not Document Eligibility Conditions

Trouble on the Horizon for Employers Who Do Not Document Eligibility Conditions"An employer who elects to use the look back measurement method will have to include the details of the initial measurement period and standard measurement period, including dates, in order to satisfy the SPD requirements if the health plan's eligibility conditions are properly synchronized.... There is frequently one set of eligibility standards that applies for the purposes of the look back measurement method and a separate set of standards applied to the actual health plan. Furthermore, sometimes the health plan's SPD is not providing any eligibility conditions. This lack of synchronization is a problem." (Health Care Attorneys P.C.)

The Year of Top Hat Plan Litigation

The Year of Top Hat Plan Litigation"Former employees who terminate employment after having satisfied the minimal vesting requirements of ERISA, but before satisfying the more restrictive vesting requirements of their former employers' non-qualified plans, have figured out (actually, their lawyers have figured out) that challenging a non-qualified plan's status as a top hat plan can be an effective way to collect additional dollars. And some federal courts, including Texas, of all places, have been sympathetic to these challenges. Unfortunately, these types of allegations have become fairly common in recent years." (Winston & Strawn LLP)

Supply Chain Sausage

Supply Chain Sausage"The simple idea that greater purchasing volume lowers producers' per-unit costs thereby permitting price discounting is the foundation of employer health care group purchasing organizations.... You would think that would mean hospitals would contract with specialized group purchasing organizations (GPOs), pay their annual membership fees and obtain savings from the GPOs' negotiated volume discounts on drugs and supplies for inpatients. But ... it doesn't seem to work that way at all ... an] hospital GPO practices may be a root cause for the increasing cost our plans pay for the drugs that are administered to inpatients as well as the chronic shortages of inpatient drugs." (Chelko Consulting Group)
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© 2017 ERISAPros, LLC, All rights reserved. Information on ERISAPros' website, its newsletter, “News & Views,” and its blog, “ERISA Wonk,” is published as a general informational source. Information and articles are general in nature and are not intended to constitute legal or tax advice in any particular matter. Blog posts and comments reflect the personal views of their respective authors - not those of ERISAPros. Transmission of this information does not create an attorney-client relationship. ERISAPros, LLC is not a law firm and is not giving legal or tax advice. It does not warrant and is not responsible for errors or omissions in the content on its website or in its newsletters. ERISA is a complicated and confusing law. Summary Plan Descriptions (SPDs), Wrap Plan Documents, and Form 5500s require review and updating by qualified ERISA compliance professionals.


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