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Does Your EAP or Wellness Program Need a Summary of Benefits and Coverage?

Even though health reform’s legal status is up in the air, plan sponsors are still taking cautious steps forward to make sure they are ready if it survives the Supreme Court challenge. One of those steps, which is coming soon, is the Summary of Benefits and Coverage requirement, which has to be initially provided for the first open enrollment period beginning on or after September 23, 2012.

Many plan sponsors mistakenly assume that their employee assistance programs (EAPs) or wellness programs are not subject to these requirements. However, as we discussed in our post on W-2 reporting of health coverage, EAPs that provide counseling (even for only a few sessions) and wellness programs that provide medical care are technically group health plans under ERISA. Among other implications, this means they are subject to SBC requirements.

That said, plan sponsors do have some structuring alternatives

Department of Labor Issues Further Fee Disclosure Guidance

Department of Labor Issues Further Fee Disclosure Guidance

May 23, 2012

Authored by: benefitsbclp

On May 7, 2012 (and updated May 17), the Department of Labor issued Field Assistance Bulletin 2012-02, consisting of 38 questions and answers that clarify some of the issues raised since the issuance of the final regulations on participant fee disclosures with respect to designated investment alternatives in individual account plans. The Q&As cover a range of issues, including:

Brokerage Windows. The participant fee disclosure regulations (§2550.404a-5(h)(4)) provide that brokerage windows are not “designated investment alternatives,” but do not provide specific guidance on how the regulation applies to brokerage windows and what disclosures are required. The FAB clarifies that brokerage windows are covered by the regulations, but that they are subject only to plan-related disclosures of administrative fees and expenses under §2550.404a-5(c). The disclosures include (1) a description of the window (how and to whom to give investment directions, account balance requirements, limitations or restrictions on trading, how

Facebook and 409A: When $300 Million Isn’t Enough

Facebook and 409A: When $300 Million Isn’t Enough

May 22, 2012

Authored by: benefitsbclp

On May 18th, two famous, photogenic Olympians found themselves almost $300 million richer. A banner day for anyone, and yet they may have felt at least a twinge of regret. Why? They contend that 409A should have made them much richer, to the tune of as much as $1.2 billion.

At this point, Hollywood has made the story almost old-hat. In December 2002, then Harvard students Tyler and Cameron Winklevoss had an idea. They would develop a web site that connected Harvard students. If successful, they would expand the concept to other campuses. In November of 2003, after several false starts, the Winklevoss twins retained the services of a young, talented programmer to implement their vision. Three months later, without the knowledge of the Winklevoss twins, Mark Zuckerberg gave birth to Facebook. After a successful run at Harvard, the social networking site spread to other campuses, and then took over

IRS Fires Shot Across the Bow on Health Reform Minimum Value and Reporting Guidance – Part 3

As we have posted about previously, the IRS has requested comments on the determination of “minimum value” (discussed here) and reporting on “minimum essential coverage” (discussed here).  In this, our final post of the series, we summarize the IRS’s request for comments regarding reporting by employers subject to “play or pay” penalties in Notice 2012-33.

Beginning in 2014, employers who could be subject to PPACA’s “pay or play” penalties must file returns with the IRS that include the following information:

  • Name and EIN;
  • The date the return is filed;
  • A certification of whether the applicable large employer offers its full-time employees (and their dependents) the opportunity to enroll in minimum essential coverage under an eligible employer-sponsored plan;
  • If so, a certification of:
    • The duration of any waiting period;
    • The months during the calendar year when coverage under the plan was available;
    • The

IRS Fires Shot Across the Bow on Health Reform Minimum Value and Reporting Guidance – Part 2

In addition to requesting comments on the determination of “minimum value” (discussed in our prior post here), the IRS is also asking for comments regarding the information reporting requirements regarding “minimum essential coverage” under PPACA and for reporting by employers subject to “play or pay” penalties.

Minimum Essential Coverage Reporting. Under PPACA, every health insurance issuer, self-funded plan sponsor, governmental agency administering governmental health insurance programs, and any other entity that provides minimum essential coverage is required to file annual returns reporting who is covered under its plan or policy. For insured plans, the IRS intends to require the insurer to report.

The reporting must include, name, address, taxpayer ID number (usually a social security number) of each covered person, dates of coverage during the calendar year, and any other information Treasury may require. Additional reporting is required for policies offered through an exchange.

An employer must also

Recent Guidance on Normal Retirement Age Regulations for Governmental Plans

The IRS and Treasury Department recently issued Notice 2012-29, which provides new guidance for the final “normal retirement age” regulations relating to governmental plans. The Notice provides that the IRS and the Treasury intend to further extend the effective date for governmental plans to comply with the final regulations to annuity starting dates that occur in plan years beginning on or after the later of:

  • January 1, 2015, or
  • the close of the first regular legislative session of the legislative body with the authority to amend the plan that begins on or after the date that is three months after the final regulations are published in the Federal Register.

The Notice also provides that the IRS and Treasury will make two important clarifications in the final regulations:

  • The final regulations will clarify that governmental plans that do not provide for in-service distributions before age 62

Recent CCIIO and IRS Medical Loss Ratio Guidance

Recent CCIIO and IRS Medical Loss Ratio Guidance

May 7, 2012

Authored by: benefitsbclp

Both the Center for Consumer Insurance Information and Oversight (CCIIO – a division of the Centers for Medicare and Medicaid Services) and the IRS have recently issued guidance related to the Medical Loss Ratio requirement under the Patient Protection and Affordable Care Act (“PPACA” or “health reform”). As you may know, the MLR requirements generally mandate that insurers spend a certain percentage of premiums (85% for “large group” plans, 80% for “small group” and individual plans) on (1) claims and (2) healthcare quality improvement activities. If they do not, they must provide rebates to enrollees. Insurers are also required to report on MLR compliance to CCIIO. Employers must properly allocate such rebates between the employer and employees, and satisfy applicable reporting and withholding obligations.

CCIIO FAQs

The FAQs released on April 20, provide very few surprises, but provide some helpful answers. They confirm that self-funded plans, Medicaid MCOs,

IRS Updates COBRA Audit Guidelines

The IRS recently updated its audit guidelines for field agents conducting reviews of employers COBRA programs.

In these updated guidelines, the IRS has advised agents that any COBRA audit should consist of a review of the following minimum level of documentation: (i) the employers procedure manual; (ii) form letters; (iii) internal audit procedures; (iv) the underlying group health plan documents; and (v) details of any past or pending COBRA-related litigation. If any of the foregoing materials appear deficient or problematic, agents are advised to make follow-up inquiries relating to the number of qualifying events, the method of notifying qualified beneficiaries, the method of notifying the plan administrator in connection with qualifying events, qualified beneficiary elections and the amount of premiums paid by COBRA beneficiaries. In performing more comprehensive reviews, the IRS advises agents to request an employer’s federal and state employment tax returns; lists of individuals affected by

IRS Fires Shot Across the Bow on Health Reform Minimum Value and Reporting Guidance – Part 1

On April 26, the IRS released three “requests for comment” on various provisions under the Patient Protection and Affordable Care Act (“PPACA” or “health reform”). While the IRS is soliciting comment, it also gave some indication of how it was leaning on each of the issues it addressed. This first post (of three) discusses the comments on the determination of “minimum value.”

Under PPACA, if an employer plan does not provide “minimum value,” then an employee may be eligible for a premium tax credit through the state-based insurance exchanges, if he or she meets the other applicable requirements. If an employee takes advantage of that tax credit, the employer will be subject to “pay or play” penalties under health reform. Therefore, “minimum value” matters. (It is worth noting that HHS previously found that about 98% of individuals covered by employer-sponsored plans were enrolled in plans providing minimum value

Fourth Circuit Latest To Hold That Remand to Plan Administrator Is Not Immediately Appealable

The Fourth Circuit Court of Appeals recently joined five other judicial circuits in ruling that a district court’s remand of a benefits claim to the plan administrator is not immediately appealable. A copy of the Fourth Circuit’s decision in Dickens v. Aetna Life Ins. Co. (4th Cir. Apr. 20, 2012) can be viewed by clicking here. The ruling comes on the heels on a similar ruling by the Eleventh Circuit in Young v. Prudential Ins. Co. of Am., 671 F.3d 1213 (11th Cir. Feb. 21, 2012), which we summarized earlier.

In Dickens, the plaintiff applied for long-term disability benefits after being diagnosed with clinical depression, anxiety, insomnia, among other conditions. A predecessor plan administrator granted the LTD benefits in 2004. Four years later, the successor plan administrator, Aetna, terminated the benefits on the grounds that the plaintiff no longer suffered from a debilitating illness.

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