Products October 20, 2021

Transamerica Offers Individual Coverage Health Reimbursement Accounts

The benefit offers more flexibility for employees and employers, a survey finds.

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Transamerica has announced the expansion of its workplace-focused benefit solutions with the introduction of individual coverage health reimbursement accounts (ICHRAs).

ICHRAs allow employers to contribute toward premiums and other expenses paid by employees for individual primary medical insurance.

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Transamerica says an ICHRA provides a tax-advantaged platform for employers to provide contributions without the administrative burden of providing medical insurance through their organization. For employees, advantages include choosing the medical coverage that best fits their situation and having more control over their health benefits budget. Also, if the plan allows, employees can make additional pre-tax contributions.

Eligible reimbursable expenses may be customized by the employer to include:

  • health insurance policy premiums;
  • dental services;
  • vision expenses;
  • prescription drugs;
  • over-the-counter medications; and
  • doctor visits or medical procedures.

Transamerica adds that customers can pay for expenses through a Transamerica-issued debit card or by submitting receipts for reimbursement through Transamerica’s website. The website also provides the customer’s current balance and any pending claims.

Under final regulations issued in 2019 by the U.S. departments of Health and Human Services, Labor and the Treasury, starting in January 2020, employers were able to use ICHRAs to provide their workers with tax-preferred funds to pay for the cost of health insurance coverage that workers purchase in the individual market, subject to certain conditions. Interest in the benefit has since been growing.

Willis Towers Watson has found ICHRAs are starting to attract more interest from U.S. employers, particularly wholesale and retail employers and those in education and the public sector.

According to the “Willis Towers Watson 2020 Health Care Delivery Survey,” about one in six employers (15%) is planning to offer or considering offering ICHRAs to at least some portion of its employees in 2022 or later. The survey results showed similar levels of interest regardless of employer size, with 20% of large employers planning to offer or considering offering ICHRAs to at least some portion of their active employees.

Recently, PeopleKeep reported that its 2021 report on ICHRAs found the top reason employers want to offer an ICHRA is because it allows their employees to choose their own health insurance plans. Nearly 70% of employers surveyed said they find that an ICHRA is more flexible than other group health insurance options.

In addition, 90% of employers surveyed already plan to renew their ICHRA benefit in 2022.

To learn more about Transamerica’s ICHRA solution, employers may contact their financial adviser or Transamerica directly at 888-401-5826.

Compliance October 20, 2021

Parties in Church Plan Lawsuit Finally Get Preliminary Approval of Settlement

A judge found the interests of a subclass of terminated, vested participants were adequately protected in a newly proposed settlement.

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On their third try, the parties in a lawsuit claiming that Dignity Health improperly used the Employee Retirement Income Security Act (ERISA)’s “church plan” exemption to evade ERISA funding and reporting requirements for its defined benefit (DB) plan have been granted preliminary approval of a settlement agreement.

According to the terms of the settlement agreement, Dignity Health will contribute $50 million to the plan for the 2020 plan year and will contribute either another $50 million or the amount of the minimum contribution recommendation calculated by the plan’s actuaries for the 2021 plan year, if it’s greater than $50 million. For calendar years 2022, 2023 and 2024, Dignity Health has agreed to make contributions to the plan in the amount of the minimum contribution recommendation calculated by the plan’s actuaries.

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In addition, the settlement calls for a one-time payment to members of what it calls the “vesting subclass” of participants of $950,000 and a one-time payment to members of what it calls the “PEP Plus claimants” of $825,000.

Among other non-monetary settlement terms, Dignity Health has agreed to make available to plan participants and beneficiaries a summary plan description (SPD), a summary annual report (SAR) and pension benefit statements.

Last June, Judge Jon S. Tigar of the U.S. District Court for the Northern District of California denied for the second time preliminary approval of a proposed settlement agreement. Tigar found an underlying conflict between the vesting subclass and the rest of the class and said he could not find that the vesting group’s interests have been adequately protected.

In his order granting preliminary approval of the newly proposed settlement, Tigar noted that the only material changes in the agreement affect the vesting subclass. According to the court document, the changes to the agreement include subclass certification of the vesting subgroup, a $290,000 increase in money paid to the vesting subclass, and the distribution of funds to subclass members proportionate to their previously accrued benefits under the plan. The agreement also establishes eligibility for subsequent plan participation should a vesting subclass member return to employment with Dignity Health.

In the settlement agreement, the Dignity Health defendants deny any and all allegations of wrongdoing made in the complaint.

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