Employee Benefits Law Report

Archives: Health and Welfare Plans

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Implementing $2,500 FSA Limits for Non-Calendar Year Plans – Start Now

Beginning January 1, 2013, the Patient Protection and Affordable Care Act (“PPACA”) requires plan sponsors to limit pre-tax health flexible spending account (“FSA”) contributions to no more than $2,500 per calendar year. There are currently no limits on health FSA contributions. Thus, many employers have plan-imposed contribution limits in excess of the new $2,500 limit.  This change is anticipated to be a revenue-raiser.  Because the new limit is lower than most existing plan-imposed pre-tax FSA contribution limits, affected employees will pay taxes on more of their salary.

Given the January 1, 2013 effective date, many employers think they can wait …

The Early Retiree Reinsurance Program — Go Forth and Spend

The Patient Protection and Affordable Care Act (“PPACA”) contained a provision that established the Early Retiree Reinsurance Program (“ERRP”), the goal of which was to encourage plan sponsors to retain health care coverage for retirees through at least 2013. The ERRP was designed to provide reimbursement to eligible sponsors of employment-based plans for a portion of the costs of providing health coverage to early retirees (and eligible spouses, surviving spouses and dependents of such retirees) during the period beginning on the date on which the program is established and ending on January 1, 2014. Under PPACA, $5 billion was appropriated …

Health Care Plan Summary of Benefits and Coverage Distribution Deadline Quickly Approaching for Employers

Employers who maintain health plans may recall from our prior blogs (see “Health Care Plan Annual Enrollment Triage: The Summary of Benefits and Coverage Standards Have Not Been Issued Yet and May Just Have to Wait” and “Health Care Plan Summary of Benefits and Coverage: Still No Final Model, But Substantial Excise Taxes are Looming Anyway“) that they would soon need to address the new Summary of Benefits and Coverage (“SBC”), although urgent action would need to wait until the issuance of final guidance. Well, the wait is over. The Departments of Treasury, Labor, and Health …

Independent Contractor Misclassification

On our sister blog – Employer Law Report – Sara Hutchins Jodka discusses the IRS Voluntary Compliance Settlement Program. This program was designed to provide eligible employers partial relief from the federal employment taxes and penalties that typically result from misclassifying workers as independent contractors. Given the amount of attention that federal and state agencies are paying to this issue, it is important to consider whether your independent contractor arrangements are likely to survive scrutiny. Being required to reclassify individuals as employees can have costly tax and employee benefit ramifications, particularly as we approach the prospect of “large” employer health …

Hiring Unpaid Summer Interns? Keep These Important Tips In Mind

On our sister blog – Employer Law Report – Leigh Anne Benedic discusses important considerations for employers who are considering hiring unpaid summer interns.  Being required to retroactively reclassify interns from unpaid to paid can cause a number of problems in employee benefit plans, and is one more reason to make sure you are certain before adding interns in an unpaid capacity.  Read Leigh’s blog post here.…

New York’s Same Sex Marriage Law Has Broad Implications for Employee Benefit Plans

In a recent blog, we discussed a case that challenges the constitutionality of the Defense of Marriage Act (“DOMA”), which defines marriage for federal law purposes as a legal union between a man and a woman. DOMA was enacted during the administration of President Bill Clinton. Presuming DOMA is deemed constitutional by the courts and is not repealed by Congress (a possibility that appears remote at this point in time), employers theoretically could comply with federal employee benefits laws contained in ERISA by adopting (or maintaining) the DOMA definition of spouse. In turn, the broad preemption doctrine contained in ERISA …

HIPAA Audit Program Launched by HHS

The United States Department of Health and Human Services (“HHS”) recently posted on its website a formal announcement about a new audit program under the Health Insurance Portability and Accountability Act (“HIPAA”) that it was launching. The audits will be run under the Office for Civil Rights (“OCR”), which is the division within HHS that is responsible for enforcing HIPAA’s Privacy and Security Rules. According to the announcement on the HHS website, OCR will use the audit program to assess HIPAA compliance efforts by a range of covered entities, identify best practices and discover previously unknown risks and vulnerabilities. OCR …

Health Care Shared Responsibility’s Missing Link – Reconciliation With The Employer

The Patient Protection and Affordable Care Act (PPACA) shared responsibility provisions require speculation about whether health care coverage will be affordable for an individual. Whether affordable coverage was available, whether an individual was eligible for a premium credit, and whether an employer was subject to penalties, cannot be determined until after the individual files a personal tax return. PPACA shared responsibility provisions address reconciliation of the speculation between the individual and federal agencies. Proposed regulations regarding premium tax credits and Notices 2011-36 and 2011-73 regarding shared responsibility for employers spotlight a missing linking: reconciliation with the employer.

PPACA Penalty for

Health Care Plan Summary of Benefits and Coverage: Still No Final Model, But Substantial Excise Taxes Are Looming Anyway

In our prior blog, we explained that under principles of triage, employers may need to focus on the current annual enrollment and wait to take care of the Summary of Benefits and Coverage (“SBC”). Although the SBC does not need immediate attention, we caution employers not to wait too long or take the SBC responsibilities too lightly. The penalties for failing to satisfy the SBC requirements are severe. This blog will explain what those penalties are and the steps to take to avoid them. In a subsequent blog, we will provide more details regarding specific content requirements and the …

CLASS Dismissed – No Actuarially Sound Federal Long-Term Care Program Developed

The Patient Protection and Affordable Care Act gave the Secretary of Health and Human Services, Kathleen Sebelius, a hefty to-do list. One of those tasks was to develop at least three actuarially sound long-term care benefit plans that met specified criteria and would remain solvent for 75 years. This was to pave the way for the Community Living Assistance Services and Support (“CLASS”) program. CLASS was a key aspect of health care reform, intended to help elderly and disabled individuals maintain independence, and according to the Congressional Budget Office, to help pay for health care reform by reducing the federal …

Join Us in Cleveland or Columbus for One of Our Upcoming Seminars

Would you like to spend a morning outside of the office, enjoying free breakfast and continuing education credit? Here’s your chance! This month, Porter Wright is sponsoring Employment Relations Seminars in both Cleveland and Columbus. I will be speaking about employee benefits developments and best practices at both session, and would love to see you there. Details follow, and we hope you can join us in one of these locations.

“Emerging Issues for Employers” Seminar to Be Held In Cleveland on October 20, 2011

Porter Wright is presenting a seminar on Thursday, October 20, 2011 from 8:30 – 11:45 a.m. …

Health Care Plan Annual Enrollment Triage: The Summary of Benefits and Coverage Standards Have Not Been Issued Yet and May Just Have to Wait

M*A*S*H* taught us how to do triage, and MacGyver taught us to creatively think our way out of an impossible situation. Both are skills that may come in handy for the many employers who maintain calendar year health plans and who were in the process of preparing for annual enrollment when the Summary of Benefit and Coverage (SBC) proposed regulations were recently announced.

The SBC requirements do not apply to this year’s enrollment process, and, as a practical matter, this proposed guidance is probably too late and incomplete for many employers to address right now. Further, for an insured plan, …

Curtiss-Wright Corp. v. Schoonejongen Comes Back to Haunt Us — Follow Your Plan Amendment Procedures

We often are asked why plan amendment procedures vary from plan to plan, and why it is important to follow those procedures—however written. Sometimes there are unique reasons for the specified procedures, but very possibly the answer goes back to the 1990’s and a case called Curtiss-Wright Corp. v. Schoonejongen, which took us on an amendment procedure roller coaster ride. First, the district court in Curtiss-Wright invalidated a plan amendment to cease post retirement health care coverage on the basis that the plan failed to specify a valid “procedure for amending [the] plan, and for identifying the persons who …

Being Culturally and Linguistically Appropriate in Health Claims and Appeals

Most everyone wants to be culturally appropriate. But just what does that mean? The answer to that question became a little clearer for non-grandfathered group health plans in the context of notices to be provided for internal health claims and appeals. Plan sponsors will need to pay attention, as compliance with new guidance is required for plan years beginning on or after January 1, 2012.

After Earlier Grace, Departments Now Relax Certain Health Claims Procedure Requirements

Fresh off an extension this past spring of an enforcement grace period with respect to internal health claims and appeals requirements, sponsors of non-grandfathered group health plans received some more welcome news recently with the relaxation of certain group health claims procedure requirements first announced in interim final rules issued in July 2010. Although plan sponsors have been challenged to keep up with the various pieces of claims procedure guidance issued by the regulatory agencies over the past year, they may find these recent changes to be, in many ways, worth the wait and effort.…

Department of Labor Extends More Grace on Internal Health Claims and Appeals

In Technical Release 2011-01, the Department of Labor has extended the enforcement grace period with respect to certain internal claims and appeals requirements applicable to non-grandfathered health plans under the Patient Protection and Affordable Care Act (PPACA) and its implementing regulations. The internal health claims and appeals requirements generally apply to non-grandfathered plans as of the first plan year beginning on or after September 23, 2010. The requirements do not apply to grandfathered plans.…

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