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In this CONEXIS Comment edition, we share the 2013 mileage rates increase associated with business and medical expenses, and then discuss the results of federal HIPAA audits that reinforce the importance of having the right privacy and security measures in place. Also in Compliance Corner, you’ll find a court decision concerning "privileged communications" between insurers and their ERISA fiduciaries. This ruling could change ERISA fiduciaries’ attorney-client privilege going forward.

Check out News & Trends to learn more about private exchanges and defined contribution plan trends. And while you’re there, keep reading and see how CONEXIS Retiree Services can be the potential defined-contribution solution for costly retiree benefits programs.

Lastly, in the spirit of the season, Behind the Scenes focuses on two notable charities CONEXIS employees donated their time, talents, and dollars toward this year. Plus, we profile our team member who complements her decade of loyal service to CONEXIS with an unwavering commitment to helping those who are less fortunate.

Until next time, thanks for reading.

Jason Culp
Assistant Vice President of Marketing and Sales Operations

IRS Sets 2013 Standard Mileage Rates

The IRS released IR-2012-95 that announced the increase of optional standard mileage rates by one cent. The new rates noted below become effective on January 1, 2013.

As a reminder, the use of a personal automobile to obtain medical care may be a deductible medical expense if primarily for, and essential to, medical care. This mileage is an eligible expense under health flexible spending accounts (FSAs) and health savings accounts (HSAs), and employers may include mileage as an eligible expense under their health reimbursement arrangements (HRAs).

For additional information regarding standard mileage rates, visit the IRS website.

HIPAA Audits Expected in 2013

The Office for Civil Rights (OCR) within the U.S. Department of Health and Human Services is wrapping up its pilot program of 115 HIPAA compliance audits. The OCR plans to use findings from 2012 audits to clarify goals and possibly change the HIPAA audit protocol for 2013. The original audit protocol included 165 performance evaluation categories, some of which were altered after results from the first 20 audits revealed some serious issues.

Initial Audit Results

The OCR released a summary of the results, which included:

• Security compliance issues were more common (65 percent) than privacy compliance issues (26 percent).
• The two most common security issues were non-compliance with the HIPAA Security Rule (42 percent) and technical security (41 percent).
• Small covered entities tend to have more compliance issues overall.
• Health care providers made up exactly half of the first 20 audit subjects but were responsible for 81 percent of the issues.

Recent HIPAA Fines

A number of recent HIPAA violations across the country further illustrate the need for closer attention to compliance. Massachusetts Eye and Ear Infirmary and Massachusetts Eye and Ear Associates paid a $1.5 million fine for HIPAA security violations due to an unencrypted laptop. In addition, the Alaska Department of Health and Human Services paid a $1.7 million fine after the theft of a USB drive belonging to an employee may have resulted in a HIPAA breach.

Taking Action

The OCR pilot program did just what it was intended to do: uncover problem areas in HIPAA compliance. Organizations that have avoided audits so far now have the opportunity to learn from initial results, identify any areas of concern and deficiency, and make the necessary improvements.

CONEXIS Security Measures

The OCR has repeatedly stressed security measures as one of the main culprits in HIPAA violations. CONEXIS makes every effort to ensure compliance with a powerful commitment to security and privacy, including:

• A dedicated, on-site staff of full-time compliance specialists and security officials.
• Administrative, technical and physical security safeguards including IT technical design that fully conforms to, or exceeds, industry standard encryption guidelines.
• Advanced software that adds an extra layer of security through user-based access controls.
• Regular system security assessments and audits.
• Annual HIPAA Privacy and Security training and certification for all team members.

When is Communication Privileged?

A recent decision from the Ninth Circuit Court of Appeals could have a dramatic effect on how insurers interact with their fiduciaries. In Stephan v. Unum Life Ins. Co. of America, an ERISA disability plan insurer was ordered to turn over communications regarding a plan benefit denial that were between its in-house attorney and claims analysts.

Attorney-client Privilege

The insurer had used attorney-client privilege as grounds to refuse to disclose communications. However, the court found that these communications were relevant to whether the insurer had a conflict of interest related to its administrative authority over claims and financial responsibility and had unduly influenced the insurer’s decision making. The court decided that the ERISA fiduciary exception to the privilege applied to the insurer because it had acted as an ERISA fiduciary with respect to the claim.

Avoiding a Lawsuit

What this means is that communications between attorneys and plan fiduciaries may not always be considered privileged when litigation is involved. Insurers are encouraged to take the proper steps to protect themselves during communications with plan attorneys. You can read the full court document on the U.S. Courts website.

The Potential of Private Exchanges

Now that the presidential election is over and any question of the Affordable Care Act (ACA) being repealed has been answered, exchanges are the future of health care. A recent brief issued by Employee Benefit Research Institute (EBRI) examined private exchanges, with a particular focus on their structure. EBRI concluded that defined contribution plans of the past were never fully embraced despite many employers showing early interest.

Today, the combination of health care reform and the open-market idea that’s central to private exchanges may offer the right delivery system for defined contribution plans. With the cost-saving advantages offered to both employers and employees, private exchanges have the potential to be a popular health care solution.

For more information, read the full EBRI brief on the EBRI website.

Keeping Promised Retiree Benefits

Many retirees are now dealing with suspended benefits plans as employers do away with their retiree group health coverage in response to shrinking budgets and rising health care costs. In 1997, 20 percent of employers provided retiree group health insurance, according to the Employee Benefits Research Institute (EBRI). By 2010, that number dipped to 16 percent and the decline continues today.

A Shift to Defined Contributions

Thankfully, Medicare supplemental plans can help soften the blow for retirees age 65 and older. In addition, the CONEXIS Retiree Services program offers employers a solution by providing retirees with individual coverage assistance while reducing the amount spent on group health insurance premiums.

The CONEXIS Retiree Services program combines the CONEXIS retiree HRA plan with the proven group-to-individual conversion services of Joppel, a leading Medicare decision support provider. Together, these services form a powerful program that allows employers to keep their coverage promise to their retirees while greatly reducing retiree-related health care costs.

Under the program, retirees are converted from the employer’s group retiree health plan to individual Medicare plans. To ease this transition, the employer funds an HRA to help each retiree cover the cost of premiums or other eligible health care expenses. This change from a defined benefit approach to a defined contribution model leads to immediate cost savings as well as reduced long-term liabilities. While actual savings will vary for each employer, the program can reduce annual and long-term costs by millions of dollars.

Conversion Assistance

CONEXIS Retiree Services is the only retiree HRA program that includes an integrated process for proactively converting retirees from group coverage to individual Medicare plans. Our consumer-facing website is CMS approved and allows retirees to quickly and easily identify the plans that best meet their needs. For retirees who prefer to speak with a representative, we offer a team of licensed benefits advisors who can help compare premiums, deductibles, and benefits to ensure retirees choose the best option. Advisors can even help retirees determine if certain doctors participate in the plans under consideration and which plans cover the retiree’s prescription drugs.

Learn More

Are you interested in getting more details? If so, give us a call at 877-CONEXIS or send an email to sales@conexis.com.

Operation Drumstick: Our Annual Charitable Event

An important part of the CONEXIS experience is giving back, and when it comes to supporting charities, our employees have the opportunity to contribute their efforts, their funds, and their ideas.

Wounded Warrior Project^®

Through our recent annual Operation Drumstick event, CONEXIS raised more than $6,700 for the Wounded Warrior Project, an organization that helps injured soldiers. "The Operation Drumstick committee chooses a different charity each year and coordinates fundraisers throughout the year that lead to our big event just before Thanksgiving," said Dawn Aydelott, our senior HR specialist. "We have many team members here at CONEXIS who have either served or who have a family member serving in a branch of the military today. This charity has really brought out an enormous reaction from our CONEXIS family. We’ve had a very successful fundraising year and raised $4,000 before our big November event!"

A year’s worth of events was planned to raise money for the Wounded Warrior Project, including: a company chili cook-off, a spirit chain event, a Mardi Gras potluck, a Fourth of July picnic, as well as a CONEXIS pancake breakfast. In addition, during the company’s annual Fun Day event, a company executive kissed a baby pig, which also raised money for this worthy cause.

Heart Walk^®

Wounded Warrior Project is just one of the charitable organizations with which CONEXIS is involved. Earlier this year, the company sponsored several teams comprised of employees in the Dallas Heart Walk, which benefited the American Heart Association. CONEXIS raised more than $12,500, which was far above the company goal of $10,000. Money was raised through a combination of vendor sponsorships and team fundraising events, including bake sales and a silent auction.

"I was approached by one of our preferred broker partners about participating in this year’s Heart Walk," said Craig Martin, regional vice president of sales at CONEXIS. "I initially thought we might be able to put together one team. After discussing the opportunity with other CONEXIS employees, the idea of one team developed into a company-wide event. Our participation and fundraising results exceeded expectations. What a great response from our generous employees!"

Kimberly Mack Gives Back

As a member of the CONEXIS team since 2002 and a Service of Unequalled Excellence Award winner, Kimberly Mack has made a name for herself as a loyal and dedicated team player. But as busy as Kim is, both with her responsibilities as a client services manager and as the proud grandmother of five-year-old Chloe Ann and 18-month-old Brody, Kim always finds time to give back in her free time.

A longtime advocate for the homeless community, Kim has regularly spent her Saturdays feeding the homeless, and has also travelled out of the country for humanitarian efforts. Most recently, Kim has become involved with charitable efforts through Kingdom Life Christian Center in Frisco, Texas, an organization which opens its doors to assist people with food and clothing every Wednesday. Kim has organized outreach initiatives that include providing school supplies, haircuts, medical assistance, food, and clothing to those in need. CONEXIS team members have contributed to these efforts with food as well as participation.

"During the summer, we collected enough food to feed 100 families, and (CONEXIS senior vice president and chief compliance officer) Eva Boucher volunteered and spent four hours on a Saturday helping with haircuts," said Kim. "We really don’t realize how fortunate we are. It’s both a rewarding and humbling experience to help someone in need."

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©2012 CONEXIS Benefits Administrators, LP. All Rights Reserved. CONEXIS is a Word & Brown Company.

CONEXIS uses reasonable efforts to ensure that the information provided in the CONEXIS Comment Newsletter is accurate as of the date of publication. However, information of this nature can change at any time. You should confirm the accuracy of any such information prior to taking any action.

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