Total Articles: 161
IRS Proposes to Bless Longevity Insurance
On February 3, 2012, the U.S. Department of Treasury (“Treasury”) and the Internal Revenue Service (“IRS”) issued proposed regulations that would exempt the purchase of a “Qualified Longevity Annuity Contract” (“QLAC”) from the account balance that would have to be distributed under the minimum distribution rules of Internal Revenue Code Section 401(a)(9).
Employee Benefits Plans Alert: Compliance Deadlines Loom for Fee and Other Disclosures
Employers that sponsor participant-directed individual account plans, such as 401(k) plans, must comply with two new sets of rules governing fee and other disclosures intended to ensure that plan participants can make informed investment decisions. It is imperative that plan sponsors understand and comply with these new disclosure requirements. Although the compliance deadlines have been extended (see http://www.dol.gov/ebsa/newsroom/fs408b2finalreg.html), plan sponsors should take advantage of this extension to ensure that they are in compliance with the new rules.
IRS Mileage Rate Remains Unchanged
The Internal Revenue Service issued the 2012 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business purposes.
IRS Issues Interim Guidance on Health Plan Cost Reporting Requirement
Executive Summary: The IRS has issued Notice 2012-9, which restates and amends its previously issued interim guidance (Notice 2011-28) on the requirement that employers report information regarding the cost of employer-sponsored group health plan coverage.
President Signs Bill Providing Temporary Extension of Expiring Benefits
Ending a political stalemate, both the House and Senate on Friday approved a measure that provides a two-month extension of the payroll tax cut, emergency unemployment insurance benefits, and delay in the planned cut of Medicare reimbursement rates to doctors, commonly known as “doc fix” provisions. President Obama signed the Temporary Payroll Tax Cut Continuation Act of 2011 (H.R. 3765) into law hours later. This bill is similar to legislation (H.R. 3630) the Senate approved last Saturday, but includes provisions allowing businesses to use their current accounting structure to process the temporary payroll tax break, and will require the House and Senate to work together to draft a bill that would extend these provisions for all of 2012.
IRS Standard Mileage Rates for 2012 - Business Rate Unchanged
The IRS announced its 2012 Standard Mileage Rates here. Employers rely on this rate when reimbursing the use of personal vehicles. However, the business rate is unchanged from the mid-2011 adjustment. From the IRS announcement:
Legal Alert: Summary of Benefits and Coverage Requirements Delayed
Executive Summary: Group health plans and health insurance issuers appear to have been granted a reprieve from the March 23, 2012 deadline for complying with the Summary of Benefits and Coverage (SBC) and uniform glossary requirements imposed by the 2010 Patient Protection and Affordable Care Act (PPACA). The federal agencies charged with implementing these requirements recently stated in a series of Frequently Asked Questions (FAQs) that when final regulations are issued, they will "include an applicability date that gives group health plans and health insurance issuers sufficient time to comply." The FAQs also state that until final regulations are issued and applicable, plans and issuers are not required to comply with the SBC and uniform glossary requirements of the PPACA.
EBSA Create Web Page to Assist Benefit Plan Participants
The Department of Labor’s Employee Benefits Security Administration (EBSA) has launched a Consumer Assistance Web Page to answer questions for retirement and health benefit plan participants and beneficiaries, and enable them to submit electronically any complaints regarding their plans. The site includes a link whereby a viewer can request assistance from a benefits advisor.
Compliance Update: What's Required By Year-End?
As 2011 draws to a close and everyone looks forward to winding down and getting ready for the holiday season, we want to make sure that you have taken care of certain regulatory compliance matters with respect to your employee benefit plans between now and December 31, 2011. The information below briefly describes what is required to make sure your plan(s) is set for the new year!
Bill Renewing Trade Adjustment Assistance Program Ready for President's Signature
On October 12 the House by a 307-122 margin approved a measure that temporarily and retroactively extends the Trade Adjustment Assistance (TAA) program that was enacted as part of the 2009 stimulus package and expired in February 2011. The TAA is a federal, state-administered program created to provide benefits and services to individuals who become unemployed as a result of international trade. Such benefits include trade readjustment allowance, training, assistance with healthcare premium costs, alternative trade adjustment assistance, and job search and relocation allowances. The bill that has been approved by both houses of Congress – H.R. 2832 – extends the authorization of appropriations for the TAA through December 31, 2013.
Institute of Medicine Releases Recommendations For Determining Essential Health Benefits
In a report by the Institute of Medicine (IOM) to the U.S. Department of Health and Human Services (HHS), the IOM recommends that in developing the essential health benefits (EHB) that certain insurance plans must offer under the Affordable Care Act, HHS should ensure that such benefits are affordable to consumers, employers, and taxpayers, and that the health gain provided by the benefit is sufficient to justify the additional cost. In addition, the IOM recommends that the initial EHB package be equivalent in scope and design to that provided under a typical small employer plan in today’s market.
The Changing Color of Leaves. . .College Football. . .and Open Enrollment Concerns
Fall is here. Kids are back at school. Leaves are turning red and orange. College football is underway. However, for the HR professional, the arrival of Fall means the start of open enrollment for benefit plans. Below is money- and time-saving regulatory guidance to consider before, during, and after your open enrollment period for your employee benefit plans.
First Decision Issued in Florida Recommending a Defined Contribution Plan for Public Workers in Accordance with City’s Proposal
In the first decision of its kind, a report issued by Public Employees Relations Commission (PERC) Special Magistrate William McGuiness recommended a defined contribution retirement plan for Sarasota police officers nearly identical to the plan proposed by the city of Sarasota. This report, issued on August 23, 2011, is the first time a PERC special magistrate has found in favor of a public employer seeking to implement a defined contribution plan for police officers or firefighters. The special magistrate further recommended changes to a defined benefit plan for those vested in that plan.
How Long to Retain ERISA Plan Records? Forever
My Employment colleague, Robin Shea, writes about when an employer must start saving electronic evidence in her latest blog entry. Her blog post prompted me to comment on the ERISA requirements regarding paper and electronic retention -- along the lines of "Just how long do we need to keep all of this??"
Short, Fast and to the Point – Proposed PPACA Benefit Summary Rules Set Tight Standards
Starting in March 2012, employers would have to provide much more succinct summaries of their health plan benefits (no more than four double-sided pages), much more quickly (often within seven days) and in a much more standardized form than they do now under proposed regulations issued this week by the three agencies responsible for implementing the benefit summary requirements of the 2010 health care reform law.
Preventive Services for Women: New HHS Guidance
On August 1, 2011, the U.S. Department of Health and Human Services (HHS) adopted additional Guidelines for no-cost coverage of women’s preventive services under the Patient Protection and Affordable Care Act (PPACA). Under these Guidelines, the additional preventive services must be covered at no cost by nongrandfathered group health plans in plan years that begin on or after August 1, 2012 (i.e., January 1, 2013 for calendar- year plans).
FREE Contraceptives for Women? No Co-Pay for Women's Preventive Health Care
The Patient Protection and Affordable Care Act of 2010 (PPACA) required health plans to cover services listed in the HHS comprehensive list of preventive services at no cost to patients. Just this past August 1st, as part of an expansion of coverage for women’s preventive care under the PPACA, the U.S. Department of Health and Human Services (HHS) mandates that the following soon to be co-pay free:
Supreme Court Takes On Benefits, Immigration
The U.S. Supreme Court recently issued two decisions that impact employers. In the first case, the justices held that federal immigration law does not preempt or invalidate an Arizona law that subjected employers to sanctions for knowingly or intentionally employing unauthorized aliens. In the second case, the high court ruled that plan participants seeking relief from violations of the notice and disclosure provisions under the Employee Retirement Income Security Act (ERISA) must show "actual" rather than "likely" harm.
Next IRS Target: College and University Retirement Plans
First, it was K-12. Now, it's higher education. It's the IRS's next featured project. In fact, the IRS web page refers to it as that:
Relief Efforts in Japan -- Understand the Insurance Limitations.
Companies planning group relief efforts or permitting individual leave requests to assist with the earthquake/tsunami/nuclear reactor devastations in Japan must consider whether employees who travel outside the United States will have any issues with benefits coverage -- medical, accident, dismemberment, disability, emergency evacuation, or death.
New Rules Require Retirement Plans to Disclose Investment Fees to Participants
The Department of Labor has issued final rules that will require certain retirement plans to disclose plan fee and expense information directly to participants. Plan sponsors and administrators must comply with the disclosure requirements in these final rules in order to fulfill their fiduciary duties under ERISA. From a practical perspective, these rules are intended to provide plan participants with a more complete picture of plan fees and expenses, including indirect fees and expenses under a plan’s investment options.
IRS Replaces Schedule SSA
Section 6057(a) of the Internal Revenue Code of 1986, as amended (the "Code") requires the reporting of certain information regarding plan participants who separate from service with deferred vested benefits. Until 2009, this reporting requirement was satisfied by filing the Schedule SSA as part of the plan's Annual Report on Form 5500.
IRS Announces Breast Pumps Now Deductible
Reversing a long-held position, the IRS announced yesterday that breast pumps and other lactation supplies are now deductible. Employees can now use pre-tax funds from their flexible spending accounts and health savings accounts for these supplies. The ruling is effective immediately and can be used on 2010 returns.
New Rules Require Retirement Plans to Disclose Investment Fees to Participants
The Department of Labor has issued final rules that will require certain retirement plans to disclose plan fee and expense information directly to participants. Plan sponsors and administrators must comply with the disclosure requirements in these final rules in order to fulfill their fiduciary duties under ERISA. From a practical perspective, these rules are intended to provide plan participants with a more complete picture of plan fees and expenses, including indirect fees and expenses under a plan’s investment options.
IRS Issues Guidance on Health FSA and HRA Debit Card Use for Over-the-Counter Drugs
On December 23, 2010, the Internal Revenue Service issued Notice 2011-5, new guidance regarding the use of health FSA and HRA debit cards for purchases of over-the-counter medicines or drugs. Under previously issued IRS guidance (see Ford & Harrison Legal Alert dated 9/8/2010) the IRS indicated that health FSA and HRA debit cards could not be used to purchase over-the-counter medicines or drugs after January 15, 2011, except with respect to "90% pharmacies." Notice 2011-5 modifies this previously issued guidance. Under Notice 2011-5, the health FSA and HRA debit card purchases of over-the-counter medicines or drugs after January 15, 2011 will be considered fully substantiated at the time and point of sale if the conditions set forth below are met.
IRS Temporarily Suspends Compliance With Non-Discrimination Rules.
On December 22, 2010, the Internal Revenue Service, with the agreement of the United States Departments of Treasury, Labor, and Health and Human Services, announced that non-grandfathered, fully-insured group health plans will not be required to comply with the non-discrimination requirements of Internal Revenue Code until after regulations or other administrative guidance has been issued. Until such time, any sanctions for failure to comply do not apply.
IRS Delays Enforcement of Health Care Reform Nondiscrimination Provisions for Insured Group Plans.
The Internal Revenue Service has given a last-minute holiday gift to sponsors of insured group health plans. It announced delayed enforcement for the new nondiscrimination provisions applicable to insured group health plans under the Patient Protection and Affordable Care Act of 2010 (as amended by the Health Care and Education Reconciliation Act of 2010; together the Health Care Reform Law).
Medical Loss Ratio Interim Final Rule Released.
On December 1, 2010, the Department of Health and Human Services (HHS) published its interim final regulation implementing Medical Loss Ratio requirements for health insurance issuers under the health care reform law. The Medical Loss Ratio (MLR) requirements generally provide that beginning January 1, 2011 health insurance companies in the group and individual markets are required to spend at least 80% of premium dollars on medical care and quality improvement activities. Large group health care plans will be required to spend at least 85% of premium dollars on medical care and quality improvement activities. This is referred to as the MLR standard. Insurers offering coverage in a state with a higher MLR standard must meet that state's requirement.
IRS Expands Group Trusts.
Since 1956, tax-qualified plans have been permitted to pool assets with other qualified plans by investing in a vehicle known as a "group trust," which would itself be exempt from tax as if it formed a part of each of the investing plans, provided that certain relatively innocuous requirements were met. In the fifty-plus years since the issuance of Revenue Ruling 56-267, the rules governing those group trusts have been changed, both by IRS Revenue Rulings and by changes to the Internal Revenue Code, to expand the list of plans that may pool their funds by investing in group trusts. For example, IRAs, governmental 457(b) plans and certain other governmental funds have been permitted to invest along with plans qualified under section 401(a) of the Code.
IRS Issues Further Guidance Regarding In-Plan Roth Conversions, but Leaves Questions Unanswered.
Under the Small Business Jobs Act of 2010, since September 27 of this year, plans have been permitted in certain circumstances to allow participants (and beneficiaries who are surviving spouses) to convert their account balances (or portions of their account balances) to "Roth" accounts within the plan, much like conversion of a regular IRA to a Roth IRA. And, like an IRA conversion, the amount converted is taxable to the participant as if it had been rolled over to a Roth IRA, i.e., as if it had been distributed, and converted after-tax amounts, which would not be taxable on distribution, are not taxable on conversion. But, in order to be able to elect a conversion, the participant must be otherwise eligible to receive a distribution that would qualify as an "eligible rollover distribution", which raises certain questions concerning the application of the rules governing "eligible rollover distributions."
IRS Standard Mileage for 2011.
The IRS raised the standard mileage rate for automobile reimbursement to...$0.51. Don't trust me?
Guidance Issued Regarding Grandfathered Status Of Group Health Plans.
On November 17, 2010, the Internal Revenue Service, Department of Labor and Department of Health and Human Services jointly issued an amendment to the interim final regulations regarding a health plan's status as a "grandfathered health plan" under the recent healthcare reform legislation.
Important 2010 Year-End Notices For Qualified Retirement Plan Sponsors
As we approach the end of 2010, we remind you to determine your need to provide certain required year-end notices, as the failure to provide required notices exposes a plan sponsor from $110 to $1000 per day, depending on the notice violation.
Legal Alert: Changes to Grandfathered Plan Rules Announced
The triple threat of federal agencies (Department of Labor, Department of Treasury, and Department of Health and Human Services) first published guidance in the form of interim final regulations on "grandfathered" health plans under the health care reform law (the "Affordable Care Act") on June 17, 2010. Since then the agencies have issued Frequently Asked Questions on September 20, 2010, October 8, 2010, October 12, 2010 and October 28, 2010, each containing responses to questions regarding the implementation of the Affordable Care Act, including clarifications on rules related to grandfathered plans. On November 15, 2010, the agencies released an amendment to the interim final regulations providing some relief to fully insured group health plans.
New Health Care Reform Rule Means Changing Insurance Carriers Won't Cause Group Plan to Lose Grandfather Status
The Departments of Treasury, Labor, and Health and Human Services have bowed to the appeals of employers and others trying to deal with a reality of health care reform by releasing an amendment to the interim final regulations on grandfathered health plans that permits certain changes in insurance policies without loss of grandfathered status. (See Text of Amendment to Interim Final Regs on Status as Grandfathered Health Plan Under the Patient Protection and Affordable Care Act.) The amendment is being published in the Federal Register on November 17, 2010.
IRS Announces Plan Limits for 2011
The Internal Revenue Service has announced the 2011 limits that affect the operation of tax-qualified retirement plans, including 401(k) plans, and certain other types of employee benefit plans. The amount by which the limits are adjusted each year is based on a cost of living index. While that cost of living index increased over the past twelve months, it was still below that index twenty-four months ago. Accordingly, the 2011 limits generally are at the same dollar amounts as the 2010 limits. Please see the accompanying table for the limits that are effective January 1, 2011.
2011 Cost-of-Living Adjustments for Retirement Plans
The Internal Revenue Service has announced its cost-of-living adjustments applicable to dollar limitations for retirement plans and Social Security generally effective for Tax Year 2011 (see IR 2010-108).
Benefit Plans: 2011 COLAs
The Internal Revenue Service has announced the 2011 cost-of-living adjustments (COLAs) for retirement plans.
The Case of the Billion-Dollar Typo
A recent decision by a U.S. Court of Appeals allowed a company to retroactively correct a scrivener's error in their cash balance plan document and avoid having to pay out a whopping $1.67 billion in extra benefits to plan participants. In its decision, the court stated: "People make mistakes. Even administrators of ERISA Plans."
IRS Delays Requirement to Report Cost of Group Health Coverage
The provisions of the Affordable Care Act of 2010 (the ACA) that require employers to report the aggregate cost of employer-sponsored health-care coverage on 2011 Forms W-2 will be optional and not mandatory. According to the IRS, this interim relief is being provided to allow employers to make necessary changes to their payroll systems. The IRS has also announced that it anticipates issuing guidance on this reporting requirement prior to the end of 2010. The ACA requires the aggregate cost is to be determined under rules similar to the rules for determining the applicable premium under COBRA. The aggregate cost will include the portions of the cost paid by both the employer and the employee.
Do Employers Need to Report the Amounts that They Pay for Employees' Health Insurance?
The Patient Protection and Affordable Care Act of 2010 (the "Act") added Section 6051(a)(14) to the Internal Revenue Code of 1954 (the "Code") requiring that the aggregate cost incurred by an employer for employer-sponsored health coverage provided to an employee be reported on the employee's Form W-2, for informational purposes, effective for taxable years beginning after December 31, 2010 (i.e., 2011 Forms W-2 to be filed in early 2012).
New Law Eases Roth Account Conversions
The Small Business Jobs Act of 2010 provides the opportunity to convert pre-tax retirement plan contributions to a Roth Account within that plan. Prior to this change, the only way to convert pre-tax retirement plan money to a Roth Account was to roll it over to a Roth IRA.
Roth Conversions Inside Savings Plans: Option Now Available
On September 27, 2010, President Obama
signed into law the Small Business Jobs Act of
2010. Contained within the new law is a provision
enabling 401(k) and 403(b) plans (collectively,
Savings Plans) to permit participants to convert
some or all of their existing pretax amounts into
Roth accounts within the existing Savings Plan.
This new statutory provision is purely optional
and applies only if a Savings Plan permits
participants to make Roth contributions to it.
Also, the new statute does not expand any
conversion opportunities that currently exist with
respect to transfers to Roth IRAs. However, this
new provision may make Roth conversions easier
to accomplish for existing participants, and thus it
may have some popularity.
Small Business Jobs Act Provisions Affect Employment Benefits
President Barack Obama has signed the Small Business Jobs Act of 2010 (H.R. 5297) into law on September 27, 2010. The bill contains the following benefits-related provisions of interest to employers:
Small Business Jobs Act Relaxes Rules on Employer-Provided Cellphones; Temporarily Expands Certain Tax Benefits
On September 27, President Obama signed into law the Small Business Jobs Act of 2010 (H.R. 5297).
Health Care Reform: Summary of Key Changes in Coverage for Adult Children
How does the Affordable Care Act help young adults?
HHS Issues Guidance on Waiver of Annual Limit Restrictions on Health Plans Under PPACA.
The Patient Protection and Affordable Care Act (PPACA) prohibited all health plans, excluding grandfathered plans, from imposing annual limits on benefits received through the plan. On September 3, the Department of Health and Human Services' Office of Consumer Information and Insurance Oversight (OCIIO) issued guidance for obtaining waivers of the annual limits requirements. The guidance will allow health insurers that sell plans known as "limited benefits" or "mini-med" plans to apply for waivers to a rule that restricts the imposition of limits on annual benefits.
Internal Claims and Appeals and External Review Under PPACA.
On July 23, 2010, the Department of Health and Human Services (HHS), the Department of Labor (DOL), and the Treasury Department issued its next phase of regulations implementing the Patient Protection and Affordable Care Act (PPACA), as amended relating to internal claims and appeals and external review processes under the new Section 2719 of the Public Health Service Act. In addition, on August 23, 2010, the same federal agencies issued regulatory guidance on the availability of interim procedures for federal external review and model notices relating to internal claims and appeals and external review under the PPACA. Plan sponsors of non-grandfathered health plans will need to update their internal claims and appeals processes pursuant to this guidance as well as take into account the new external review processes.
Legal Alert: IRS Issues Additional Guidance on Prohibition of Reimbursement for OTC Drugs and Medications.
On September 3, 2010, the IRS issued Notice 2010-59 addressing changes made by the Patient Protection and Affordable Care Act (Affordable Care Act), to the definition of "medical expenses" as it relates to over-the-counter drugs.
Health Care Reform -- New Claims and Appeals Requirements.
As mentioned in a previous alert, group health plans will be subject to new claims and appeals requirements under the Patient Protection and Affordable Care Act (PPACA), signed into law on March 23, 2010, as modified by the Health Care and Education Affordability Act of 2010 (Reconciliation Bill and combined, Health Care Act). In July and August, the Departments of Treasury, Labor, and Health and Human Services issued interim final regulations and other guidance regarding these new requirements.
Required Cafeteria Plan Amendments.
The changes in the law made as part of healthcare reform require most cafeteria plans to be amended by December 31, 2010. If you have a health flexible spending account (FSA), expenses for over-the-counter drugs cannot be reimbursed after December 31, 2010, unless the drug is insulin or is prescribed by a physician. The definition of dependent for FSA purposes can include a participant's child who is under age 27.
IRS Questionnaire: Failure to Respond Will Incur Enforcement Action.
In May, the Internal Revenue Service's Employee Plans Compliance Unit (EPCU) began issuing questionnaires to employers that sponsor 401(k) plans as a part of its 401(k) Compliance Check Questionnaire Project. Twelve hundred 401(k) plan sponsors who filed a Form 5500 for the 2007 plan year will receive this questionnaire from EPCU. Questionnaire recipients can complete the questionnaire by accessing an easy to use website referenced on the questionnaire.
Interim Final Rules Issued for Grandfathered Health Plans Under PPACA.
On June 17, the Departments of Treasury, Labor, and Health and Human Services issued interim final rules for health plans relating to status as grandfathered health plans under the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (PPACA).
PPACA Guidance on Preventive Care.
As sponsors of non-grandfathered plans race to incorporate the health care reform legislation's new preventive care rules before the 2011 plan year begins, new final interim rules from the Departments of Labor, Treasury, and Health and Human Services have shed light on the issues involved in implementing this new market reform. Though several important questions remain, the rules published in the July 19 Federal Register go a long way toward explaining some of the practical issues associated with complying with new Section 2713 of the Public Health Service Act.
Spotlight on SALT: States Extending Income Tax Reach Over Service Providers
Through recent legislation, a number of states have extended their respective income tax reach over service providers that have no physical presence in the taxing state (i.e., no owned or leased property, no resident employees or representatives, or no employees or representatives regularly traveling into the state to solicit business or maintain a market for services in the state). Examples of such providers are numerous, including testing, businesses which provide laboratory functions, advertising, call center functions, engineering and design, logistics and inventory management, financial planning, web hosting, telecommunications, and even legal, accounting and other professional services.
Health Insurance for Terminating Executives.
Self-insured health plans have long been subject to nondiscrimination rules under Section 105(h) of the Internal Revenue Code. Those rules prohibit the plan from discriminating in favor of highly-compensated employees regarding both eligibility to participate in the plan and the benefits to which a participant is entitled. Failure to comply with these nondiscrimination rules results in taxability of the benefits paid to highly compensated individuals. For example, a self-insured plan covering executives only would be discriminatory, and the benefits that are received by the covered executives would be taxable income to them.
Healthcare Reform Changes Affecting Coverage Of Children.
The recent health care reform legislation made two significant changes regarding health benefits provided to an employee's adult child:
CMS Release Updates HRA Coverage Reporting.
On June 25, 2010, the Centers for Medicare and Medicaid Services (CMS) released an updated Group Health Plan User Guide related to the Medicare Secondary Payer Mandatory Reporting requirements applicable to group health plans. The new rules dictate when a group plan must pay claims as the "primary insured" for an employee or the employee's spouse or eligible dependent if that individual is covered by both the plan and Medicare.
Employers must play or pay under health care reform.
Health care reform is now law, and for most employers, many of the socalled
"insurance market reforms" go into effect January 1, 2011.
However, the portion of the law requiring certain large employers to
offer and contribute to employees' health insurance or pay a penalty are
deferred until 2014.
The Next Wave of PPACA Guidance Hits Shore Interim Final Rules Cover Lifetime/Annual Limits, Rescissions, and Patient Protections.
New interim final rules from the Departments of Treasury, Labor, and Health and Human Services will help employers navigate a series of changes under the Patient Protection and Affordable Care Act (PPACA or the Act) that include standards on lifetime and annual benefit limits, retroactive rescissions of plan coverage, and emergency room services. President Barack Obama dubbed this set of rules the Patients Bill of Rights.
More Health Care Reform Regulations Issued.
On June 28, 2010, the Departments of Health and Human Services, Labor and Treasury, published interim final regulations ("Interim Regulations") pertaining to the preexisting condition exclusions, lifetime and annual dollar limits, rescissions, choice of providers, and coverage of emergency services requirements under the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act (the "Act"). Most of the Interim Regulations are effective for plan years beginning on or after September 23, 2010, which means an effective date of January 1, 2011 for calendar year plans. The prohibition of preexisting condition exclusions for individuals under the age of 19, has the above effective date, but that prohibition is not applicable to all other individuals until January 1, 2014. With the exception of the patient protections (choice of providers and coverage of emergency services requirements), the Interim Regulations apply to both grandfathered and non-grandfathered group health plans.
Health Care Reforms Impact on Employers.
While at present there are no mandates on employers either in or out of the construction industry to provide health coverage to independent contractors or even to employees, those businesses that do provide health coverage are finding that an entire new regulatory world awaits them.
More Health Care Reform Regulations Issued - Agencies Clarify Rules for Preventive Services.
No one can say that the Departments of Health and Human Services, Labor and Treasury have not been diligent in getting us regulations on the first phase of requirements under the health care reform law.[1] Since enactment of the law, the Departments have issued three sets of implementing regulations (they have also issued some other health care reform guidance and requests not included in this tally) and this past week issued their fourth set of regulations which address coverage of preventive care.
Employers Must Play or Pay Under Health-Care Reform.
Health care reform is now law and many of the so called insurance market reforms go into effect for most employers on January 1, 2011. However, the portion of the law that will require certain large employers to offer and contribute to employees health insurance or pay a penalty are deferred until 2014.
New Guidance on "Grandfathered Plans".
The Internal Revenue Service, along with the Departments of Labor and Health and Human Services, have issued interim final regulations that address at what point changes to a group health plan in existence on March 23, 2010, are significant enough to cause the plan to cease to be a grandfathered health plan for purposes of the Patient Protection and Affordable Care Act (the Act). Grandfathered plans are exempt from certain insurance market reform provisions of the Act, including requirements related to preventive care, internal and external review, nondiscrimination based on income, choice of providers, emergency care, clinical trials, cost sharing and deductibles, guaranteed issue/renewal, and rating restrictions. However, grandfathered plans are not exempt from requirements related to annual and lifetime limits, dependent coverage to age 26, rescission, pre-existing condition exclusions, waiting periods, employer mandates, and tax provisions.
Health Care Reform - Grandfathered Health Plan Regulations.
As mentioned in a previous alert, certain new requirements under the Patient Protection and Affordable Care Act (PPACA), signed into law on March 23, 2010, as modified by the Health Care and Education Affordability Act of 2010 ("Reconciliation Bill" and combined, "Health Care Act") will not apply to group health plans that qualify for "grandfathered" status. On June 17, 2010, the Departments of Labor, Health and Human Services, and Treasury issued interim final regulations regarding the requirements for achieving and maintaining grandfathered status under the Health Care Act. These regulations are effective immediately, although the regulations provide a grace period through September 23, 2010, as discussed below.
Regulations Confirm Need for Prompt Employer Action To Prepare for HHS Early Retiree Reinsurance Program.
The Department of Health and Human Services (HHS) has issued interim final regulations
governing the Early Retiree Reinsurance Program (the Program) added by the recent health care
reform legislation. The Program, which is scheduled to begin on June 1, 2010, reimburses plan
sponsors for a portion of large health claims incurred by early retirees (and their spouses and
dependents) in order to encourage employers to maintain health plan coverage for such participants
until other health coverage becomes available through health insurance exchanges in 2014.
Agencies Publish Guidance Regarding "Grandfathered" Health Plans.
On June 17, 2010, the Internal Revenue Service (IRS), Department of Labor (DOL) and Department of Health and Human Services (HHS) jointly issued interim final regulations regarding a group health plan's status as a "grandfathered health plan" (i.e., one in existence on March 23, 2010) under provisions of the recent healthcare reform legislation. This legislation creates a multitude of new requirements for group health plans ranging from the minimum level of benefits that must be provided to dictating which individuals must be offered coverage under a plan.
Anticipated Health Care Reform Grandfathered Plan Regulations Released.
On June 14, 2010, the Departments of Health and Human Services, Labor and Treasury, officially released much-anticipated grandfathered plan regulations under the Patient Protection and Affordable Care Act (the "Act").
The Grandfathered Health Plan Final Rules What Changes Can Your Plan Make?
New interim final rules provide employers important guidance on how health plans can lose grandfathered status under the landmark federal health care reform law (primarily by cutting benefits or increasing cost-sharing), how and when the law applies to collectively bargained plans (in some cases, there is a delayed effective date) and how the law applies to health plans that cover only retirees (it doesnt).
An Employer's Perspective on Health Care Reform: Summary Timeline and Recent Guidance on "Grandfathered" Health Plans.
Health care reform at the federal levelthe result of the Patient Protection and Affordable Care Act (signed into law on March 23, 2010), as amended by the Health Care and Education Reconciliation Act (signed into law on March 30, 2010)will affect U.S. employers and their health plans (whether insured or self-insured) in a phased manner through 2018. The coverage mandates of the new law ("PPACA") become effective at various dates, the earliest of which is the first plan year beginning six months after the March 23, 2010 date of enactment. For a calendar year plan, this will be January 1, 2011.
Health Care Reform: Insurance Coverage Application by Market Segment and Grandfather Status.
Critical to efforts to make insurance coverage accessible and affordable as mandated by the health reform legislation signed into law in March 2010 are a series of reforms to the private insurance system. While the primary focus is the individual and small group insurance markets, elements of the legislation also impact the large group and self-insured markets.
Spotlight on Health Care Reform: IRS Guidance on PPACA's Small Business Tax Credit.
Under the Patient Protection and Affordable Care Act of 2010, a tax credit is available to qualified small employers which meet certain criteria relating to the provision of health insurance for their employees. Both taxable and tax-exempt employers may qualify.
Agencies Issue Interim Final Rules Concerning Dependent Coverage.
On May 10, 2010, the Employee Benefits Security Administration ("EBSA") of the Department of Labor, along with the Departments of the Treasury and Health and Human Services released Interim Final Rules implementing the extension of dependent coverage for children up to age 26, as required by the Patient Protection and Affordable Care Act ("PPACA" or "health care reform"). The EBSA also released a Fact Sheet and Frequently Asked Questions ("FAQs") that describe the extension of dependent coverage. The Interim Final Rules can be viewed at the following website: http://www.dol.gov/ebsa/pdf/dependentcoverage.pdf. The EBSA's Fact Sheet is available at: http://www.dol.gov/ebsa/newsroom/fsdependentcoverage.html, and the FAQs are available at: http://www.dol.gov/ebsa/faqs/faq-dependentcoverage.html.
Insurance Web Portal Guidelines Issued by Health and Human Services.
The Patient Protection and Affordable Care Act requires the establishment of an internet web site through which individuals and small businesses may obtain information about insurance coverage options that are available to them in their state. On May 5, 2010, Health and Human Services issued an interim final rule that provides the timeline for when the web portal will be established and the information that will be contained on the website. The web portal will be rolled out in two phases the first on July 1, 2010, and the second phase on October 1, 2010. Thereafter, the web portal will be updated periodically as changes are implemented with regard to the insurance coverage options. The web portal will contain general educational information regarding insurance terms but also more specific information on health insurance coverage offered by private insurers, Medicaid coverage, children's health insurance programs, state health benefits high risk pool coverage, coverage under the high risk pool created by Health and Human Services and coverage within the small group market for small businesses and their employees.
Health Care Reform Enacted...Now the Learning Curve Begins
This article discusses the Patient Protection Act as modified by the Reconciliation Bill
How Does Health Care Reform Apply To Small Businesses?
Although advocates of the recent federal healthcare reform have emphasized that employers are not mandated to provide coverage for employees, that is only half true. Beginning in January 2014, large employers will be penalized if they do not provide healthcare. What does the new law have in store for small employers?
IRS Releases Further Guidance Regarding the Small-Employer Tax Credit
On Monday, May 17, the Internal Revenue Service issued Notice 2010-44[1], which provides clarification and further guidance for the "small employer tax credit" that was added to the Internal Revenue Code by the Patient Protection and Affordable Care Act (PPACA). Section 45R of the Internal Revenue Code was added to provide a refundable tax credit to small employers that provide health insurance to their employees. According to the IRS the credit is supposed to provide an incentive for small businesses to provide or continue to provide health insurance coverage to their employees, who might otherwise go without coverage.
Health Care Reform Dependent Coverage Regulations.
As mentioned in a previous alert the Patient Protection and Affordable Care Act (PPACA) (signed into law on March 23, 2010) as modified by the Health Care and Education Affordability Act of 2010 (Reconciliation Bill and combined, Health Care Act) extended health care coverage to dependents until age 26. On May 13, 2010, the Department of Health and Human Services (HHS) issued interim final regulations regarding this extended coverage for adult dependents. The dependent coverage rules are effective for the first plan year beginning on or after September 23, 2010. Therefore, calendar plan years must comply with the new rules beginning on January 1, 2011.
Regulations Clarify Adult Child Health Care Coverage Mandate.
The Patient Protection and Affordable Care Act, which was signed into law on March 23, 2010 and amended on March 30, 2010 by the Health Care and Education Reconciliation Act of 2010 (collectively the Act), significantly extended the period of time that children may remain covered under their parents health care plans. The Act requires health plans and issuers that offer coverage to children on their parents' plan to make the coverage available until the adult child reaches the age of 26. Such coverage is available regardless of the childs dependent status for tax purposes. The legislation left unanswered questions regarding this extended coverage.
Health Care Reform Reinsurance Program Regulations.
As mentioned in a previous alert the Patient Protection and Affordable Care Act (PPACA) (signed into law on March 23, 2010) as modified by the Health Care and Education Affordability Act of 2010 (Reconciliation Bill and combined, Health Care Act) mandated the creation of a reimbursement fund in the amount of $5 billion to pay for the Early Retiree Reinsurance Program (Reinsurance Program). Under this program, group health plans will be reimbursed 80% of claims between $15,000 (cost threshold) and $90,000 (cost limit) for pre-Medicare retirees ages 55 to 64. On May 5, 2010, the Department of Health and Human Services (HHS) published interim final regulations for the implementation of this program. The Reinsurance Program is effective June 1, 2010 and ends on January 1, 2014 or earlier, if the $5 billion fund is exhausted prior to that date.
Health Care Dependent Coverage Regulations Issued.
On May 10th, the Departments of Health and
Human Services, Labor and Treasury jointly
issued interim fi nal regulations relating to the
requirement under the Patient Protection and
Affordable Care Act, as amended by the Health
Care and Education Reconciliation Act
(collectively, the Act), that health plans offering
dependent coverage to children offer that
coverage until the children attain age 26.
Tax Credits for Small Employers Under the Affordable Care Act.
The IRS has issued a News Release explaining to small businesses how they can determine whether they qualify for tax credits pursuant to the Affordable Care Act. These credits are granted to small employers who provide health insurance, as well as additional coverage, such as dental and vision, to employees. The IRS also issued Notice 2010-44 (pdf), which provides more detailed information, including how the credit is calculated. The Notice also provides more than a dozen examples demonstrating how the credit will work.
Spotlight on Health Care Reform: Age 26 Requirements.
The health care reform package enacted earlier this year contains a number of provisions that will require various federal agencies to issue guidance on their implementation over the coming months. The first regulations were recently issued and contain guidance regarding the new provisions covering health plan participants' children.
Forever Young: New Adult Children Guidance under Health Care Reform Covers Enrollment, Surcharges.
Employer-sponsored health plans will not be able to tack on special adult children surcharges and will have to offer an enrollment period of at least 30 days to adult children who may previously have lost coverage or been ineligible for coverage before turning 26, under interim final rules issued on May 10, 2010, interpreting one of the most closely watched parts of the landmark health reform legislation.
Small Business Tax Credit For Healthcare Now Available.
As part of the Patient Protection and Affordable Care Act (PPACA) signed into law by President Obama on March 23, 2010, small businesses now have reason to consider offering health insurance coverage for the first time or to continue maintaining existing coverage for their employees. The enticement? A new special tax credit that takes effect immediately.
IRS Issues Guidance on Tax Treatment of Health Care Coverage for Adult Children Under Age 27.
IRS Issues Guidance on Tax Treatment of Health Care Coverage for Adult Children Under Age 27
Health Care Reform is Now Law: Will the Light Come on When Your Employees Open the Fridge?
On March 30, 2010, the President signed the Health Care and Education Reconciliation Act of 2010 into law (the
Reconciliation Act). The Patient Protection and Affordable Care Act, commonly referred to as the Senate bill, was
signed a week earlier. The Reconciliation Act made changes to the Senate bill necessary to achieve passage in the House
while avoiding a Senate filibuster, enabling the enactment of comprehensive health care reform. The combined acts are
referred to in this E*Bulletin as the Act.
White Paper Discussing the Impact of Health Care Reform on Individual and Small Business Taxes.
In addition to significantly changing our health care and health-care delivery systems, and imposing new requirements upon employers and insurers alike, the newly-enacted health care reform laws contain a number of provisions that directly affect individuals by changing their tax situations, or by imposing additional tax liabilities. Furthermore, for owners of small businesses and their workers, the health care reform legislation has some key tax-related provisions, including tax credits, excise taxes and penalties. Ford & Harrison attorney Jeffrey Ashendorf discusses the provisions affecting individuals and small businesses in a white paper that you can access by clicking here or by going to our web site at http://www.fordharrison.com/files/WhitePaper042010.pdf.
HEALTHCARE REFORM PASSED, SO WHATS NEXT?
The recent passage of the Patient Protection and Affordable Care Act (PPACA) and the Health Care and Education Reconciliation Act (HCERA) is old news for just about anyone. No matter what people may think about healthcare reform, virtually all are now left asking one question: What is next?
Ford & Harrison White Paper Discussing Employment-Related Obligations Imposed by Health Care Reform Law.
The Patient Protection and Affordable Care Act (PPACA) and the Health Care and Education Reconciliation Act of 2010 impose numerous requirements on employers, health care providers and health insurance providers. We have previously distributed a chart summarizing the law's primary requirements for large and small employers and their effective dates, which is available on our web site at http://www.fordharrison.com/files/FHHealthCare2010.pdf. We have also prepared a white paper discussing in more detail certain provisions of the law that create additional employment-related obligations, which is available by clicking here or you can go to http://www.fordharrison.com/files/FHEmploymentRelatedProvisionsPPACA.pdf.
Chart Summarizing Health Care Reform Act Requirements.
The Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 impose numerous requirements on employers, health care providers and health insurance providers. Ford & Harrison attorney Daniel Sulton has prepared a chart, available by clicking here, summarizing the law's primary requirements for large and small employers and their effective dates.
Healthcare Reform: Here's What You Need To Know For 2011.
There's a lot of information about the new health care reform acts on the Internet and in the news much of it vague, some of it incorrect, and most of it overwhelming. The acts are very complex, of course, which is reflected in the reports. While several of the changes will be effective in 2011, most of the changes in the law won't take effect until 2014. The provisions with delayed effective dates will be clarified in future regulations and some of the provisions may be changed or repealed before they become effective. We'll report on those aspects of the law in future legal alerts. For now, here's what you need to know.
Health Care Reform Tax Law Changes.
In addition to making fundamental changes in the way health care is delivered, the Patient Protection and Affordable Care Act (P.L. 111-148) and the Health Care and Education Reconciliation Act of 2010 (P.L. 111-152) have made far-reaching changes in the Internal Revenue Code (Code). At present, it remains to be seen whether the Internal Revenue Service (IRS) will be able to handle the many responsibilities which will be imposed on it under these Acts. Some initial estimates are that the IRS will add more than 15,000 Agents to administer the legislation, in addition to untold Health and Human Services (HHS) and other agency additions.
CHIP Notice Deadline Approaching for Plan Years that Begin Between February 4, 2010 through April 30, 2010
As previously discussed in our February 8, 2010 Legal Alert, employers are required by the Children's Health Insurance Program Reauthorization Act of 2009 (CHIPRA) to inform each employee of potential opportunities currently available in the State in which the employee resides for group health plan premium assistance under Medicaid and the Children's Health Insurance Program (CHIP). These notices are referred to as Employer CHIP Notices.
President Signs Final Health Reform Legislation.
A little more than a week after the House of Representatives passed the Patient Protection and Affordable Care Act (the PPACA), President Barack Obama has now signed the Health Care and Education Reconciliation Act of 2010, containing the changes to the Senates health care reform bill requested by the House. This final piece of the health reform legislation is now in place, and employers can better determine how the health reform legislation will affect them in the years to come.
Health Care Reform Enacted.
On March 21, 2010, the U.S. House of Representatives passed two pieces of health care reform legislation. First, the House passed the Patient Protection and Affordable Care Act (the "Act"), which was previously passed by the U.S. Senate on Christmas Eve 2009. The Act was signed into law by President Obama on March 23, 2010, enacting extensive changes to the country's health care system.
Health Reform Briefing Update.
On Sunday, March 21, the House passed the Patient Protection and Affordable Care Act (HR 3590) (PPACA), which was previously passed by the Senate on Christmas Eve. President Obama signed the bill into law yesterday, meaning the reform of the health care system has officially begun.
What The Health Care Legislation Will Mean For You As An Employer.
On Sunday night, the House of Representatives passed the Patient Protection and Affordability Act (H.R. 3590), the Senates health care reform bill. President Barack Obama signed the bill into law today. Highlights of the bill that will be of interest to employers are detailed below. The effective dates of the various provisions are also included.
Health Care Reform Enacted: Reconciliation Continues.
On March 23, 2010, President Obama signed into law the Patient Protection and Affordable Care Act (the
Patient Protection Act or Act). This legislation was originally passed by the U.S. Senate on December 24,
2009 and was approved by the U.S. House on March 21, 2010. On March 21st, the House also passed
and sent to the Senate certain changes to the Patient Protection Act that are embedded in the Health Care
and Education Affordability Reconciliation Act of 2010 (the Reconciliation Bill). The Senate has begun
debate on the Reconciliation Bill, and that debate continues.
Expansion on Availability of Investment Advice.
The Pension Protection Act of 2006 (PPA) created a new statutory exemption from the prohibited transaction rules to expand the availability of investment advice to participants in 401(k)-type plans and individual retirement accounts, as long as certain safeguards and conditions were met. The Department of Labor, in the March 2, 2010 Federal Register, included a proposed rule to implement these provisions, thus making investment advice more accessible to many retirement plan participants.
Is Your Qualified Plan (Adequately) Bonded?
The IRS recently announced the results of two special audit programs it conducted. The first program involved audits of approximately 50 Form 5500 filings for defined contribution plans with asset values greater than $100,000 but less than $250,000. The second program audited 50 401(k) plans covering three to eight participants. Surprisingly (maybe not, given our experience), the most common error revealed by both projects was the failure to have the plan adequately bonded as required by ERISA section 412.
Participant Investment Advice Regulation Resurrected.
On February 26, the Department of Labor issued its long-awaited re-proposal of the Participant Investment Advice regulation that was issued last January, but which never went into effect, and which was eventually withdrawn on November 20, 2009. The new proposal is the result of the Department's reconsideration of a number of legal and policy issues relating to the prior regulation as well as various public comments that were received in response the Department's request.
Does Your Health Plan Violate the New Mental Health Parity Rules?
New regulations are giving employers their first glimpse of the mental health and substance abuse benefit changes that may be needed by 2011 to ensure that their health plans do not violate the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (New Mental Health Parity Act).
Department of Labor Issues Model CHIPRA Notices.
On February 4, 2009, the Childrens Health Insurance Program Reauthorization Act of 2009 (CHIPRA) was signed into law. In order to comply with CHIPRA, employers who offer group health plans must provide notice to their employees of their rights under CHIPRA. On February 4, 2010, the Department of Labor issued a model CHIPRA notice, which can be located on their website - http://www.dol.gov/ebsa/chipmodelnotice.doc. This notice will need to be tailored for your particular plan(s) and must be distributed by the later of the first day of the first plan year beginning after February 4, 2010 or May 1, 2010 (January 1, 2011 for calendar year plans).
DOL Publishes Model CHIP Notices for Eligibility for Premium Assistance Under Medicaid or the Children's Health Insurance Program.
As previously discussed in our February 17, 2009 Legal Alert, President Obama signed into law the Children's Health Insurance Program Reauthorization Act of 2009 (CHIPRA). Among other things, CHIPRA requires that employers inform each employee of potential opportunities currently available in the State in which the employee resides for group health plan premium assistance under Medicaid and the Children's Health Insurance Program (CHIP). These notices are referred to as Employer CHIP Notices.
Interim Final Regulations (Finally) for the Mental Health Parity Act.
Three months ago, we asked: "Where O Where are the Regulations for the Mental Health Parity Act?" (Legal Alert, 10/9/2009) On January 29, 2010, the Departments of Health and Human Services, Labor, and Treasury finally heard our call.
The Senate's Turn at Shaping Health Care Reform - Reconciliation Awaits.
On December 24, 2009, the United States Senate passed its version of Health Care Reform, known as the
Patient Protection and Affordable Care Act (H.R. 3590). Presently, the House and Senate Democratic
leaderships are negotiating a compromise version of Health Care Reform with an articulated goal of
achieving fi nal passage by Congress by the end of January or early February (in time for President Obamas
yet-to-be-scheduled State of the Union address).
Goodies For Labor Tucked Away in Health Bill.
Now that the U.S. House of Representatives has passed its version of a health care reform bill, all eyes turn to the Senate. No matter where you stand in the debate over issues such as the public option, big labor bosses hope you do not notice some lower-profile provisions tucked into the pages of this massive proposal. If they become law, these provisions would give union leaders considerable influence over health care decisions affecting us all.
Health Care Reform Passed by the U.S. House of Representatives - Future Unknown.
On November 7, 2009, the U.S. House of Representatives passed its version of health care reform, known
as the Affordable HealthCare for America Act (H.R. 3962). As the media has noted, this House vote is
merely one step for legislation that may or may not ever be enacted. Similar legislation is pending in the
U.S. Senate, and debate is expected to begin on the Senates version in the near future. Any legislation
that passes the Senate will then need to be reconciled with what the House passed, and then ultimately
passed by both chambers and signed by the President before becoming law.
It's Plan Amendment Time Again.
Plan sponsors should be aware of upcoming deadlines for adoption of amendments to their qualified retirement plans. Certain amendments are required by the end of the 2009 plan year (December 31, 2009 for calendar year plans), while others are required by the plan sponsor's 2009 tax-filing deadline. In some cases, there may also be amendments required to be adopted by January 31, 2010.
IRS Employee Plans Team Audits.
The Internal Revenue Service (IRS) maintains a program known as the Employee Plans Team Audit (EPTA) program, under which random audits are used to discover, and remedy, common plan problems and mistakes, and to assist retirement plan sponsors and administrators in identifying those issues. Recently, the IRS updated its list of "common plan mistakes" that have been found during EPTA audits, as well as a sample of a questionnaire used by EPTA auditors to test the system of internal controls utilized by a plan. The EPTA Program is designed to deal with large retirement plans, i.e., those covering at least 2,500 participants, but having an insight into the EPTA procedures enables administrators of plans of all sizes to avoid most common errors in plan administration. The EPTA materials can also be utilized to develop and conduct self-audits and to correct any mistakes thereby identified.
IRS Announces Plan Limits for 2010.
The Internal Revenue Service has announced the 2010 limits that affect the operation of tax-qualified retirement plans, including 401(k) plans, and certain other types of employee benefit plans. Because the cost-of-living index used to determine the annual adjustments decreased over the past twelve months, there will be no adjustment made to the limits. This means that the 2010 limits remain at the same dollar amounts as the 2009 limits. Please see the accompanying table for the limits that are effective January 1, 2010.
Benefit Plans: 2010 COLAs and Forms Update.
The Internal Revenue Service has announced cost-of-living adjustments (which are few) to certain employee benefit plan dollar limitations for 2010. The 2010 limitations are as follows:
IRS Announces Cost of Living Adjustments to Retirement Plan Dollar Limitations.
The Internal Revenue Service (IRS) has announced cost of living adjustments to the dollar limitations applicable to various retirement plans for 2010. As a result of zero increases (or even decreases) in the applicable cost of living indices, virtually all of the limitation amounts will remain unchanged from their 2009 levels.
Liability for Termination of Group Life Insurance Coverage.
Generally speaking, employers are not familiar with the responsibility and potential liability for failing to notify employees of their right to convert group life insurance coverage to an individual life insurance policy upon termination of employment, or their right to apply for a waiver of premiums if they are disabled and absent from work. Within the past few years, there has been a wave of litigation brought by former employees and their beneficiaries complaining about the loss of group life insurance coverage due to misrepresentations made by employers about their group coverage and the failure of employers to inform terminated employees about their rights under the group life insurance plan documents.
Where 'O Where are the Regulations for the Mental Health Parity Act?
The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (the "Mental Health Parity Act"), passed last year, requires group health plans for businesses with more than 50 employees to provide any mental health or substance use disorder benefits they offer on par with other medical or surgical benefits. That is, the Mental Health Parity Act prohibits such group health plans from being more restrictive with regard to any mental health and substance use disorder benefits offered than the medical and surgical benefits being offered. Employers are not required to offer mental health or substance use disorder benefits. But if they do, parity among these benefits is required in regard to financial requirements and treatment limitations, annual and lifetime dollar maximums, and out-of-network providers.
New IRS Guidance Concerning 2009 RMD Waivers.
Last week, the Internal Revenue Service (IRS) announced guidance concerning qualified plan operations and rollovers that are (or could be) affected by the waiver of a 2009 required minimum distribution (RMD) under the Worker, Retiree, and Employer Recovery Act (WRERA) of 2008 (Pub. L. No. 110-458). Previously, the IRS had issued advice to financial institutions that are required to deal with the reporting aspects of a waiver of RMDs (Notice 2009-9, issued 1/9/09), but there was little if any guidance addressed to plan administrators or sponsors.
Suspension of 2009 Required Minimum Distributions-Relief & Guidance from the IRS.
The Internal Revenue Service (IRS) has issued
guidance regarding the suspension of required
minimum distributions (RMDs) for 2009 from
defi ned contribution plans (for example, 401(k)
plans) under the Worker, Retiree and Employer
Recovery Act of 2008 (WRERA). As discussed in
a previous Vedder Price Employee Benefi ts
Briefi ng (March 2, 2009), WRERA permits plan
sponsors to amend their plans to allow participants
(or benefi ciaries) to forego receiving the RMD for
2009 that would otherwise be required because
they are 70 or older. Alternatively, participants
(or benefi ciaries) may roll over 2009 RMD payments
to another qualifi ed plan or IRA.
New Standards for Breaches of Health Plan PHI.
Federal law will soon require employers to provide notice to their health plan participants, the Department of Health and Human Services (HHS), and potentially even the media, following breaches of participant unsecured protected health information (PHI), under interim final HHS regulations set to be published in the August 24, 2009, Federal Register.
Whats Happening with Health and Welfare Plans? More than You Might Think . . .
Even before Congress began laboring over the potentially biggest health care legislation in years, employers had or should have had plenty of health and welfare plan issues on their agendas for the second half of 2009.
Michelle's Law Takes Effect Later This Year.
Michelle's Law will take effect beginning October 9, 2009 (or January 1, 2010 for calendar year plans). It requires group health plans and group-health-plan-insurance issuers to continue coverage for dependent college students when they are forced to take a medically necessary leave of absence from school. The law was named after Michelle Morse, a college student in New Hampshire who was diagnosed with cancer but continued her studies on a full-time basis in order to avoid losing her health coverage under her parents' plan.
CHIP Requirements Now In Effect.
On February 4, 2009, President Obama signed the Children's Health Insurance Program Reauthorization Act of 2009 (CHIP). CHIP extends and expands the State Children's Health Insurance Program (SCHIP), and it contains several provisions that affect employer-sponsored group health plans.
CHILDRENS HEALTH INSURANCE PROGRAM CREATES NEW SPECIAL ENROLLMENT RIGHTS FOR EMPLOYER GROUP HEALTH PLANS.
Congress recently passed the Children's Health Insurance Program Reauthorization Act of 2009 ("CHIP"). The new law, which expands eligibility for states' existing children's health insurance programs, contains important provisions affecting employer-sponsored group health plans. The law becomes effective April 1, 2009 and includes new special enrollment rights for employees and their dependents, a premium assistance plan for eligible low-income children covered by an employer's group health plan, and new notice and disclosure requirements.
Important Developments (Other Than COBRA).
Despite the economic slowdown, this has been a
busy time for benefi ts administrators. Year-end is
always hectic, and was more so in 2008, with the
need to fi nalize all nonqualifi ed plans and to cope
with increased pension funding requirements. 2009
appears to offer no respite, as employers continue
to respond to depressed conditions with reductions
in force and suspensions of 401(k) plan matching
contributions. In addition to these concerns,
administrators need to be aware of several recent
legislative and judicial developments that will impact
benefi t plan administration. The following is a
summary of some of the more important
developments. The COBRA subsidy provisions in
the economic stimulus legislation were discussed in
a separate Employee Benefi ts Briefi ng, dated
February 17, 2009.
Making Work Pay - A Little.
The Economic Stimulus Bill, enacted as the American Recovery and Reinvestment Act of 2009 (the "Act") created a refundable tax credit called the "Making Work Pay" credit, as described below. For most eligible individuals, the credit is supposed to be made available through decreased income tax withholding. The IRS has now released new withholding tables that take into account the new Making Work Pay credit, which will result in more take-home pay for tens of millions of Americans.
Expansion of CHIP Reauthorization Act Creates New Burdens for Group Health Plans.
The Children's Health Insurance Program ("CHIP") Reauthorization Act of 2009 (the "Act"), signed by President Obama on February 4, 2009, maintains and expands health coverage to low income and uninsured pregnant women and children. The Act, which generally is effective April 1, 2009, affects employers and group health plans in several ways.
Your 2009 Benefits Checklist.
A new year is upon us and, as always, there are new responsibilities for those responsible for employee benefits. Here are some updates, due dates, and mandates in this important area.
Legislation Expands Mental Health Obligations For Employer Plans.
Beginning with 2010 plan years, employer health plans and group health insurers will no longer be able to impose separate financial requirements or treatment limitations on mental health or substance use disorder benefits, under new mental health parity provisions contained in the economic bailout legislation signed into law by President George W. Bush on October 3.
Dual-role Benefit Plan Administrator Conflicts: Proceed With Caution.
The Supreme Courts ruling in Metropolitan Life Ins. Co. v. Glenn increases the likelihood of the courts overturning certain benefits decisions. Understanding the ruling and what steps to take in its wake can help companies limit that risk.
IRS Announces Cost of Living Increases to Dollar Limitations on Pension Plans.
The Internal Revenue Service (IRS) has announced cost of living adjustments applicable to dollar limitations on pension plans as well as other tax items for 2009. Under the Internal Revenue Code, benefits and contributions under qualified retirement plans are subject to dollar limitations. The Code requires the Secretary of the Treasury to adjust these limits for cost of living increases.
Benefit Plans: 2009 COLAs.
The Internal Revenue Service has announced cost-of-living and statutory adjustments to certain employee benefit plan dollar limitations for 2009. The 2009 limitations are as follows:
Bailout legislation expands mental health obligations for employer plans.
Beginning with 2010 plan years, employer health plans and group health insurers will no longer be able to impose separate financial requirements or treatment limitations on mental health or substance use disorder benefits, under new mental health parity provisions contained in the economic bailout legislation signed into law by President George W. Bush on October 3.
End of the Year Challenges for Benefit Plans
Congress and the Departments of Labor and Treasury have had a busy year in 2008. The legislative and regulatory agenda affecting employee benefit plans has been quite broad. Changes in the statutory and regulatory landscape over the last several years have imposed a plethora of requirements on employee benefit plans, their plan sponsors, and administrators. The compliance dates for a number of these requirements are December 31, 2008, and January 1, 2009. The final quarter of calendar year 2008 is upon us, and three months is a very short turnaround time for adopting and implementing some of the measures discussed in this article. The last few months of 2008 present a chance for employers to make sure that, as they ring in the new year, their employee benefit plans dont suffer from a hangover.
New Secondary Payer Reporting Requirements Take Effect January 1, 2009.
The Medicare, Medicaid, and SCHIP Extension Act of 2007 requires health insurers and third-party administrators (TPAs) to submit data to the Centers for Medicare and Medicaid Services (CMS) identifying situations where the group health plan is secondary to Medicare. Effective January 1, 2009, certain data elements must be reported to CMS on a quarterly basis. The penalty for failing to report the required data elements is $1,000 per person per day for which the data should have been submitted.
Practical Insights - Non-Profits: Hidden Insurance Contracts Are a Problem for Your Tax Sheltered Annuities.
Tax-exempt employers have offered tax sheltered annuities to employees for years. Traditionally, the employers would often assume only a nominal role. No formal plan document would be drawn, and the only written instruments would be one or more annuity contracts (or custodial accounts) entered into directly by the employee with an insurance company or bank custodian. The employer would then withhold money from the employees paycheck and deposit it with the insurance company or custodian for the employees account. Until paid out, the money deposited is income tax free and accrues interest tax free.
U.S. Supreme Court Rules In Key Benefit Cases.
In the closing days of its most recent term, the U.S. Supreme Court issued two decisions relating to the design and administration of employee benefit plans. The first, Metropolitan Life Insurance Company v. Glenn, addressed (without giving significant guidance) the question of whether a conflict of interest exists when a plan administrator who decides questions of eligibility for benefits is also the person responsible for paying any benefit claims, and the effect of such a conflict on a reviewing court's analysis. The second, Kentucky Retirement Systems v. EEOC, addressed the question of whether a pension plan's failure to increase benefits to disabled retirees once they reach normal retirement age (but continue working) violates the Age Discrimination in Employment Act (ADEA).
Same-Sex Marriages: What Do They Mean for Your Benefit Plans?
On May 15 of this year, the California Supreme Court held that same-sex couples must be permitted to legally marry in California. According to the decision, the failure to designate the relationship of a same-sex couple as a marriage violates the equal protection clause of the California Constitution. When the decision takes effect on June 14, 2008, California will join Massachusetts as the only states that recognize same-sex marriages.
Supreme Court Rules on Judicial Review of ERISA Benefit Claims.
On June 19, 2008, the Supreme Court
issued a fractured (5112) decision in
MetLife Insurance Co. v. Glenn, ruling
that employee benefi t plan
administrators who both make benefi t
decisions and pay benefi t claims under
a plan covered by the Employee
Retirement Income Security Act of 1974
(ERISA) operate under a confl ict of
interest that must be weighed as a
factor upon judicial review. However,
the Court failed to provide a uniform and
predictable framework for judicial review
of confl icted decisions, holding instead
that the weight given to the confl ict will
vary according to the particular facts
and circumstances of each case. The
ruling has implications for insurers and
sponsors of self-funded plans.
Supreme Court Sides With Employee In Benefits Denial Claim.
The Supreme Court confirmed that a conflict of interest exists where "dual-role" employee benefit plan administrators have the authority to both evaluate and pay claims. More importantly, the Supreme Court also clarified how the conflict of interest should be weighed on review of a plan administrators discretionary benefit denial.
Gearing Up For A Downturn - A Primer On Key Benefits Issues Webinar (Power Point Presentation).
In this webinar, the Employee Benefits and Executive Compensation Practice Group of Ogletree Deakins covers the latest Benefits issues affecting employers.
IRS Says Tax Rebates May be Withdrawn from Tax-Favored Accounts Without Penalty.
The Internal Revenue Service has announced that individuals who had their tax rebates directly deposited into Individual Retirement Accounts (IRA) and other tax-favored accounts may withdraw those rebate amounts without liability for either income tax or penalties.
A Safe Harbor for Small Plans: The DOL Proposes New Regulations Regarding Participant Contributions.
On February 29, 2008, the Department of Labor (DOL) proposed new regulations addressing when participant withholdings would become plan assets.
U.S. Supreme Court to Review Conflict of Interest Standard in ERISA Plan Administrators Benefit Determinations.
In a decision that could significantly impact ERISA plan administrators, the U.S. Supreme Court has granted certiorari in Metlife v. Glenn (U.S., No. 06-923, cert. granted 1/18/08), a case in which the Sixth Circuit reversed the decision of a plan administrator denying benefits under a long term disability plan. In Metlife, the Supreme Court will determine whether the Sixth Circuit erred when it held that the fact that an ERISA plan administrator also funds plan benefits, without more, constitutes a conflict of interest that should be considered by courts in reviewing a plan administrators benefit determination. Additionally, if the Court determines that this situation creates a conflict of interest, it will address how that conflict should be taken into account by a court reviewing a discretionary benefit determination.
New Distribution Alternative Required Under Certain Qualified Plans.
Beginning in 2008, all plans that have annuity distribution provisions (other than pure term-certain annuities) must offer an annuity alternative that provides for a life annuity for the participant with a survivor annuity for the participants spouse equal to either (i) 75 percent of the benefit payable during the participants lifetime if the normal form of annuity is a qualified joint and less than 75 percent survivor annuity or (ii) 50 percent of the benefit payable during the participants lifetime if the normal form of annuity is a qualified joint and 75 percent or greater survivor annuity.
The Final Word on Separation Pay Under Tax Code 409A (pdf).
Separation pay is ubiquitous. It is paid as a post-termination benefit under employment agreements and written severance plans, as well as under unwritten programs, practices and other arrangements. Until 409A was added to the Internal Revenue Code, few thought of it as deferred compensation. But under 409A, if a legally binding right to separation pay is created in one year, and may be paid in another year, it constitutes non-qualified deferred compensation.
Can An Employer Exclude Certain Classes of Employees From Health Plan Coverage? (pdf).
As employer health plan costs continue to increase, many employers are considering not only whether to cutback on health benefits coverage, but also whether to exclude certain employees from the companys plan altogether. In addition to cost, group health benefits are not a significant factor in recruiting or retaining employees in some industries, where increases in wages are the predominant concern.
Benefit Plans: 2007 Cost-Of-Living And Statutory Adjustments.
The Internal Revenue Service has announced cost-of-living and statutory adjustments to certain employee benefit plan dollar limitations for 2007.
Congress Enacts Sweeping Pension Legislation (pdf).
On August 3, 2006, the Senate passed HR 4, which will be known as the Pension Protection Act of 2006 once it is signed into law.
Federal Court Strikes Maryland's Health Care Mandate.
A federal court in Maryland has held that Maryland's recently enacted "Fair Share Act" is pre-empted by federal law and, thus, unenforceable.
IRS Paves Way for Better, Faster Account-Based Health Plans (pdf).
Employers will have the tools to make their plans more efficient.
Deadline for Qualified Plans Seeking IRS Determination Letter.
The Internal Revenue Service (IRS) recently changed its procedures for seeking favorable determination letters for qualified retirement plans. For individually-designed plans, the IRS has created staggered five-year "cycles" for seeking favorable determination letters. For certain plans, the deadline for seeking a favorable determination is January 31, 2007. Click here for a summary of the new determination letter procedures.
PBGC Finalizes Mandatory Electronic Filing.
The Pension Benefit Guaranty Corporation (PBGC) has finalized rules that require defined benefit plans to make premium filings electronically.
Handling Mutual Fund Settlement Proceeds (pdf).
In several enforcement matters brought before the
Securities and Exchange Commission (SEC), the
SEC has awarded settlement funds to mutual fund
investors who have been harmed by alleged late trading
and market timing activities.
Firms Expect Increase in Health Costs (pdf).
Employers are bracing for another 8 percent rise in health benefit
costs in 2006 and 2007, according to a recent survey published
by Watson Wyatt Worldwide and the National Business Group on
Health.
Benefit Plans: 2006 Cost-of-Living And Statutory Adjustments.
The Internal Revenue Service has announced cost-of-living and statutory adjustments to certain employee benefit plan dollar limitations for 2006. The 2006 limitations are as follows:
Hurricane-Related Tax Breaks and Exemptions for Employers (pdf).
As employers in North and South Carolina join the nations effort to help the Gulf
States recover from Hurricane Katrina, employers should be aware that the federal
government has implemented tax breaks and exemptions from various legal requirements
so affected employers can better respond to the disaster.
Impact of New Bankruptcy Act on Employee Benefit Plans (pdf).
The Bankruptcy Abuse Prevention and Consumer
Protection Act of 2005 (the Act), signed by
President Bush on April 26, 2005, includes a number
of provisions relating to employee benefit plans. This
article summarizes the major changes. Except as
otherwise noted, these changes are effective for
bankruptcy filings on or after October 17, 2005.
'Creative' Plan Limits Employer's Obligation To Pay Medical Expenses (pdf).
The federal appellate court with jurisdiction over Illinois recently held that an employees spouses (or secondary) plan was responsible for a majority of her medical bills. Based on
the plain language of the health care plans at issue, the Seventh Circuit Court of Appeals found, the employersponsored plan was only required to pay $1,000 of the $160,000 in medical
expenses incurred by the employee.
Employee Benefits Advisory: Automatic Rollover Requirements Apply Starting March 2005 (pdf).
All qualified plans will be required to comply with new automatic rollover
requirements for distributions made after March 27, 2005. Plan sponsors should
begin planning now in order to be in a position to comply with these requirements
when they become effective.
United Airlines' Pension Problem: Who, Ultimately, Is Going to Pay?
United Airlines' proposal to halt payments to its pension funds suggests serious problems for the nation's pension-guarantee system, according to Wharton faculty and pension experts. The troubled airline, which declared bankruptcy in December 2002, said in July that it would stop funding its pension plans while it struggles to restructure under bankruptcy protection. The question is, how many other companies will renege on their pension obligations? And if the pension system collapses, will taxpayers foot the bill, just as they did for the S&L crisis in 1989?
