Benefits In Brief

Large employers (those issuing more than 250 W-2s for 2011) must report the value of their employees’ health coverage on the W-2s they issue for 2012 (in January of 2013).  Given the complexities of this process, the time to start preparing is now.  As explained in this article, the IRS has just issued another round of guidance on this reporting requirement.  This is likely to be the last guidance available before the requirement takes effect.

The tide of regulations interpreting the 2010 Patient Protection and Affordable Care Act (“PPACA”) began to ebb in 2011, and portions of the law have even been repealed or put on hold.  Nonetheless, health plan sponsors will still face new compliance burdens in 2012.  This article briefly addresses these aspects of the PPACA.

A federal appeals court has held that the Medicare Secondary Payer (“MSP”) Act authorizes a medical provider to sue an employer health plan for double damages when the plan fails to comply with the MSP Act, thereby forcing the provider to accept the lower level of reimbursement available under Medicare. This Sixth Circuit decision, in Bio-Medical Applications of Tennessee, Inc. v. Central States Southeast and Southwest Areas Health and Welfare Fund, definitely raises the stakes for health plans that fail to comply with the MSP rules.

The Trade Act of 2002 created a health care tax credit (“HCTC”) for certain individuals who become eligible for trade adjustment assistance (“TAA eligible individuals”), as well as for certain retired employees who are receiving pension payments from the Pension Benefit Guaranty Corporation (“PBGC recipients”). Under the original HCTC provisions, eligible individuals could either claim a tax credit or receive advance payment of 65% of the premiums they pay for qualified health insurance, including COBRA continuation coverage. Special COBRA rights, including a second opportunity to elect COBRA coverage, also apply to TAA-eligible individuals and PBGC recipients.

The Affordable Care Act (“ACA”) requires each employer group health plan to provide a 4-page summary of its benefits to all individuals who are eligible for coverage. This requirement takes effect on March 23, 2012 (two years after the enactment of the ACA). The three agencies charged with implementing many of the ACA’s requirements have just issued proposed regulations, along with templates of proposed formats, under which a plan may furnish this new “summary of benefits and coverage” (“SBC”).

The Affordable Care Act (“ACA”) requires group health plans (other than plans that are “grandfathered”) to cover a list of preventive health services.  Earlier this month, the three agencies charged with administering the ACA issued additional rules describing women’s preventive services that must also be covered.  Like the services listed in earlier agency guidance, these women’s preventive services must be covered on a first-dollar basis, with no cost-sharing requirement, by “non-grandfathered” group health plans.  This article briefly summarizes the new rules.

2011 has been a big year for grandfathered and non-grandfathered group health plans alike.  A number of significant changes mandated by the Affordable Care Act (“ACA”) took effect for both types of plans.  Now, 2014 looms as the next big milestone in health care reform.  But losing track of the grandfathering rules is a trap for the unwary.  While there are no major health care reform changes taking effect in 2012, sponsors of grandfathered plans should revisit the rules governing grandfathered status to ensure that they do not inadvertently lose that status in 2012.

As explained in our August 2010 article, “interim final regulations” issued under the Affordable Care Act (“ACA”) require that group health plans (other than those that are “grandfathered”) comply with a number of internal claims and appeals procedures that go beyond those previously required under ERISA. The ACA also requires group health plans to offer a new state or federal external review process to review denied claims.

As explained in our November 2010 article, last year’s Affordable Care Act (“ACA”) restricted the ability of employer health plans, including flexible spending arrangements (“FSAs”) and health reimbursement arrangements (“HRAs”), to reimburse expenses incurred for over-the-counter (“OTC”) medications. With the exception of insulin, expenses for OTC medications may now be reimbursed only if the medications are prescribed by a physician. Sponsors of FSAs face a June 30 deadline for amending their plans to comply with this ACA restriction.

On April 1, 2011, the Centers for Medicare and Medicaid Services ("CMS") issued revised Medicare Part D creditable and non-creditable coverage notices to reflect an amendment made to the Social Security Act by the Affordable Care Act ("ACA"). The amendment accelerated the Medicare Part D annual enrollment period — from November 15 through December 31, to October 15 through December 7. This change is effective for 2012 Part D enrollments, occurring in the fall of 2011.

In our February 2011 article, we provided a “status report” on health care reform nearly a year after enactment of the Affordable Care Act (“ACA”). Much more has happened since that article was written — in all three branches of the federal government.

As explained in our August 2010 article, “interim final regulations” issued under the Affordable Care Act (“ACA”) will require group health plans (other than those that are “grandfathered”) to comply with a number of internal claims and appeals procedures that go beyond those previously required under ERISA. Although these new requirements are generally effective for plan years beginning on or after September 23, 2010, the Department of Labor (“DOL") granted a limited extension of this compliance deadline in late 2010. Then in March of this year, the compliance deadline was further extended for certain of these requirements.

In a recent decision, a Florida federal trial court waded into an area of the law that has generated substantial concern among employers wishing to implement wellness programs that include both a carrot and a stick. The result was surprisingly good news for those employers.

As a part of the recent compromise allowing for passage of a federal budget for the fiscal year ending September 30, 2011, congressional Republicans succeeded in repealing a significant provision of last year’s Affordable Care Act (“ACA”). This provision would have required most employers (regardless of size) to offer “free choice vouchers” to certain of their lower-paid employees who chose not to enroll in the employer’s health plan. The vouchers were to be equal to the amount that the employer would have paid toward their health coverage, had they enrolled in the employer’s plan. The employees could then use those vouchers to purchase health coverage through one of the state-wide “Exchanges” created by the ACA.

The Affordable Care Act requires that employees’ W-2s provide useful and comparable consumer information on the cost of their employer-sponsored health coverage. On March 29, 2011, the IRS issued Notice 2011-28, providing interim guidance on this new reporting requirement.

In an apparent change of position, the IRS has now indicated (in Announcement 2011-14) that breast pumps and supplies that assist lactation qualify as medical care expenses under Code Section 213(d) because they are for the purpose of affecting a structure or function of the lactating woman’s body.

It’s been nearly a year since the passage of the two bills known as “health care reform.” Although significant elements of this reform are already in effect, both the 2010 general elections and vigorous legal challenges have caused some to wonder whether the “meat” of the reform – slated for 2014 – will ever be implemented. Unfortunately, this question may not be answered for many months, or even years.

One of the most common questions we receive from employers sponsoring group health plans is, “Can we offer different health benefits to different employees?” Related questions include, “Can we make our hourly employees pay a greater percentage of the cost of the plan than our higher-paid salaried employees?” or “Can we limit health benefits solely to managers and executive level employees?” And for the last 20 years, the answer has been, “Yes, so long as your plan is fully-insured.”

By now, most people involved in the administration of group health plans are familiar with the requirement that plans offering dependent coverage make that coverage available to adult children until they attain age 26. This new requirement applies to both insured and self-insured plans (regardless of the plan’s status as a “grandfathered” plan), and is effective for plans years beginning on or after September 23, 2010 (January 1, 2011, for calendar-year plans). Many of us, however, are not as familiar with the corresponding change to the Tax Code that allows these benefits to be provided on a tax-free basis.

Inevitably, anything as massive as health care reform will have unanticipated consequences. One of those appears to be a renewed demand for welfare benefit trust funds. This demand arises in a specific context: self-insured, stand-alone retiree health plans. To understand this recent phenomenon, some history is in order.

On December 22, 2010, the Internal Revenue Service announced (in Notice 2011-1) that insured group health plans will not be required to comply with the nondiscrimination requirements under health care reform until some time after the IRS issues regulatory guidance on those requirements.

The passage of comprehensive health care reform legislation under the Affordable Care Act (“ACA”) made 2010 a monumental year for group health plans. As a result, plan sponsors are faced with a dizzying array of action items for 2011.

On October 12, 2010, the IRS released Notice 2010-69, which provides interim relief from the Affordable Care Act ("ACA") requirement that the cost of coverage under employer-sponsored group health plans be reported on Forms W-2 provided to employees. According to the Notice, such W-2 reporting will now be optional for 2011, but will be required for 2012. This interim relief is designed to give employers additional time to adjust their payroll systems and update procedures to comply with the new reporting requirement.

Responding to questions and comments from health plan sponsors and insurers, the agencies charged with enforcing the Affordable Care Act (the “Act”) have answered several frequently asked questions concerning the Act’s implementation. The bulk of these FAQs involve the Act’s more stringent claims and appeals procedures for non-grandfathered health plans. Collectively, these FAQs provide welcome — though still limited — relief to plan sponsors who are scrambling to comply with these new claims and appeals requirements within the next few months.

When the agencies responsible for administering the new claims and appeals procedures mandated under the Affordable Care Act issued their first round of guidance on this subject (as summarized in our August 2010 article), they noted that additional guidance on the Act’s new external review procedures would be coming out soon.

With annual enrollment season fast approaching, now is the time to consider new 2011 disclosure obligations.  In particular, with the enactment of the Affordable Care Act (the “Act”), several new notices must be provided to plan participants.  Many plan sponsors may want to consider including these new notices in the 2011 open enrollment materials that they send to employees.  These notices include:

The health care reform provisions of the Affordable Care Act (the “Act”) will require significant changes in the procedures followed by most employer health plans when processing claims for benefits, as well as appeals from denials of those claims.  The only plans that need not comply with these new claims and appeals procedures are those that are “grandfathered” under pre-Act law (in accordance with the guidance addressed in our June 2010 article).  All non-grandfathered plans must comply with these expanded claims and appeals procedures as of the first plan year beginning on or after September 23, 2010.

Among the many changes made by the Affordable Care Act (“ACA”) is a requirement that group health plans (other than plans that are “grandfathered” under the rules described in our June 2010 article) provide benefits for a comprehensive list of preventive health services.  Moreover, these benefits must be provided on a first-dollar basis (i.e., subject to no deductible or co-payment) and with no other cost-sharing requirement (such as coinsurance).  This requirement applies as of the first plan year beginning on or after September 23, 2010.

As explained in our May 2010 article, the Affordable Care Act imposed a number of benefit mandates on employer health plans, most of which will take effect with the first plan year beginning after September 23, 2010. However, certain plans that were in existence on March 23, 2010 (the Act’s enactment date) enjoy limited “grandfather” protection. Some of the benefit mandates do not apply at all to these grandfathered plans, while others apply only at a later date. Unfortunately, the Act did little to define the scope of this grandfather protection. The three agencies charged with administering the Act have now issued interim final regulations providing useful guidance on this topic

In the weeks and months leading up to the enactment of the Affordable Care Act, one of the oft-repeated “campaign promises” made by promoters of the legislation was, “If you like your current health care coverage, you can keep it.” In keeping with the spirit of that promise, the Act includes provisions that exempt so-called “grandfathered” plans from some, but not all, of the benefit mandates in the Act. Unfortunately, the Act leaves many questions unanswered with respect to the application of these grandfather rules.

While the focus of the Affordable Care Act is clearly on the nation’s health insurance system the Act does include several rifle-shot changes to the Tax Code’s cafeteria plan rules.

Congressional passage of comprehensive health care reform legislation means that employers and other health plan sponsors can no longer take a wait-and-see approach to this subject. Like it or not, change is coming. And while many key provisions do not take effect until 2014, a surprising number of changes will apply to employer-based health coverage well before then. We are therefore devoting this entire issue of our quarterly newsletter to a discussion of several significant short-term changes.

Recognizing that the key provisions of the Affordable Care Act do not take effect until 2014, Congress included a number of short-term incentives for the expansion of health coverage during the intervening period.

Under the Affordable Care Act, group health plans providing coverage to dependent children will soon be required to make coverage available to a covered employee’s adult child until the child’s 26th birthday, even if the child is no longer a full-time student and even if the child can no longer be claimed as the employee’s “dependent” on the employee’s federal income tax return. This requirement to extend group health plan coverage until an adult child’s 26th birthday applies to both insured and self-insured plans (regardless of the plan’s status as a “grandfathered” plan), and is effective for plan years beginning after September 23, 2010 (i.e., January 1, 2011, for calendar-year plans).

Prior to enactment of the Affordable Care Act, employee health benefits provided through an insurance contract (i.e., fully insured benefits) were not subject to any income-based nondiscrimination requirements under the Tax Code. Thus, an employer could provide more generous health insurance benefits to executives or other highly compensated individuals through the purchase of individual or group insurance policies. As a reesult of the Act, that will soon change.

As had been widely anticipated, Congress has extended the 65% COBRA premium subsidy yet again. Under the “Continuing Extension Act of 2010,” the subsidy will now apply to involuntary terminations occurring on or before May 31, 2010 (rather than March 31, 2010).

As widely reported in the news media, the recent extension of unemployment insurance benefits included a one-month extension of the 65% COBRA premium subsidy. Under the “Temporary Extensions Act of 2010,” the subsidy will now apply to involuntary terminations occurring on or before March 31, 2010 (rather than February 28, 2010).

For years, the Department of Labor (“DOL”) has focused much of its enforcement resources on delinquent deposits of participant contributions. Under the general rule set forth in existing regulations, participant contributions to ERISA plans become plan assets “as soon as they can reasonably be segregated” from the employer’s general assets.

A recent decision by an Illinois federal court (Majestic Star Casino, LLC v. Trustmark Insurance Co.) carries two important lessons for sponsors and administrators of self-funded health plans. Unfortunately for the plan sponsor involved in this case, those lessons came at a steep price — in the form of denied stop-loss claims.

Years — and in some cases decades — after the enactment of excise taxes on violations of Tax Code provisions relating to employer health plans, the IRS has finally issued guidance on how those taxes are to be reported and paid. Significantly, the burden is now on employers and plan administrators to self-report these taxes. Failure to do so on a timely basis could lead to substantial filing penalties.

As we reported in our February 2009 article, the Children’s Health Insurance Program Reauthorization Act of 2009 (“CHIPRA”) directed the Department of Labor (“DOL”) to draft model notices by which sponsors of employer group health plans could notify their employees of the premium assistance made available under both CHIP and Medicaid. The DOL has now issued a model notice that may be used for this purpose.

Over a year after the Mental Health Parity And Equity Addiction Act (“MHPAEA”) was enacted (and after the statutory provisions took effect for most group health plans), the Departments of Labor, Health and Human Services, and Treasury have finally issued interim final regulations implementing the provisions of the MHPAEA. The regulations are welcome guidance for many plan sponsors who have thus far been forced to interpret the statutory requirements on their own.

As we reported in our December 2009 article, Congress and the President have extended the 65% COBRA premium subsidy enacted as part of the American Recovery and Reinvestment Act (“ARRA”). The maximum subsidy period is now 15 months (rather than 9), and the subsidy will now apply to COBRA coverage attributable to involuntary terminations occurring on or before February 28, 2010 (rather than December 31, 2009).

The Senate has now joined the House of Representatives in passing legislation to extend the federal government’s 65% COBRA premium subsidy. President Obama signed the bill into law on December 19, 2009. This date will therefore constitute the bill’s “enactment date,” to which many of the deadlines specified in the bill are tied.

As explained in our March 2009 and September 2009 articles, employer health plans and other “covered entities” are required to notify affected individuals and the Department of Health and Human Services (“HHS”) when they breach certain of the privacy requirements imposed by the Health Insurance Portability and Accountability Act (“HIPAA”). HHS has now posted on its website an online form by which such breaches may be reported to HHS.

Unlike pension benefits, ERISA does not ordinarily require any vesting of welfare benefits. Over the years, however, many court decisions have held that an employer can create a vested right to welfare benefits by taking affirmative steps that indicate an intent to provide vested benefits. A recent decision by the Third U. S. Circuit Court of Appeals (Inre Unisys Corp. Retiree Medical Benefits ERISA Litigation) will make it easier for welfare plan participants to prevail on a claim that welfare benefits have vested.

On October 1st, three federal agencies issued a lengthy package of regulations under the Genetic Information Nondiscrimination Act of 2008 (“GINA”). Though it will take some time to digest this entire package, one point is abundantly clear: Health plan sponsors and their insurers should think twice –– if not three or four times –– before including questions concerning an individual’s family medical history in any health risk assessment (“HRA”).

As we reported in our March 2009 article, the Health Information Technology for Economic and Clinical Health (“HITECH”) Act created a new notification requirement in the event of a breach involving protected health information (“PHI”). The Department of Health and Human Services (“HHS”) recently published interim final regulations clarifying when and how such breach notices must be provided.

With annual enrollment season fast approaching, now is the time to consider 2010 welfare plan changes. We have discussed each of these changes in detail in past issues of Benefits in Brief.

Assuming a health savings account (“HSA”) is paired with a high deductible health plan (“HDHP”), an individual’s contributions to the HSA are tax-deductible. Section 223 of the Tax Code specifies a maximum annual HSA contribution, as well as both a minimum annual deductible and a maximum annual out-of-pocket amount for an HDHP. These calendar-year amounts are subject to annual inflation adjustments, based on the increase in the consumer price index (“CPI”) during the 12-month period ending on the prior March 31st.

As we reported last year, the Mandatory Medicare Secondary Payer Reporting Program went into effect as of January 1, 2009.  Since our initial report on this Program, the Centers for Medicare and Medicaid Services (“CMS”) have issued several updated versions of the Group Health Plan User Guide for use by responsible reporting entities (“RREs”).  An RRE is defined as “an entity serving as an insurer or third-party administrator for a group health plan … and, in the case of a group health plan that is self-insured and self-administered, a plan administrator or fiduciary.”

The February 2009 economic stimulus package included a temporary 65% federal premium subsidy for individuals becoming entitled to COBRA coverage due to an employee’s involuntary termination of employment. Congress recognized, however, that the purpose of this subsidy could be undermined if disputes between employers and their former employees as to the subsidy’s availability took months or even years to resolve.

The American Recovery and Reinvestment Act (“ARRA”) gave the Department of Labor (“DOL”) 30 days to draft and issue model notices for use by employers and insurers in complying with the COBRA-related provisions of that economic stimulus package.  This 30-day period ended on March 19, 2009, with the DOL just barely meeting that deadline – by posting on its website four different model notices, along with an additional set of FAQs.

After a few years of relative calm after the “HIPAA storm,” it appears that clouds are on the horizon for employers, plan administrators, and business associates.  In addition to the new COBRA subsidy requirements, another of the items included in the recent economic stimulus package (formally known as the American Recovery and Reinvestment Act, or “ARRA”) was a significant expansion of the HIPAA privacy and security rules.  While Congress has given covered entities and business associates a bit more time than it gave employers to comply with the new COBRA rules, they should still act quickly to review and digest the new HIPAA requirements.

Congress has recently expanded the Children’s Health Insurance Program (“CHIP”) in several significant respects.  Many of these changes will directly affect employer-sponsored health plans by April 1, 2009.

Among the items included in the recent economic stimulus package (formally known as the American Recovery and Reinvestment Act) is a temporary subsidy of COBRA premiums for involuntarily terminated employees. Although the Act omits language from the House bill that would have mandated an extension of COBRA coverage through age 65, it does require employers and other plan sponsors to facilitate this federal subsidy of COBRA premiums. The subsidy will cover 65% of the monthly premium, for a period of up to nine months.

Many group health plans provide that reimbursement of “out-of-network” claims will be based on a percentage of the “reasonable and customary” (R&C) charges. In most cases, the determination of an R&C charge is based on data obtained from third-party sources. A new investigation by the office of the New York Attorney General (NYAG) should prompt plan administrators to take a second look at the source of such data.

Employer-provided family health coverage is generally tax-free to employees so long as the employee’s covered family members can be claimed as dependents on the employee’s federal income tax return. A taxpayer may claim another individual as a “dependent” for federal income tax purposes only if that person is the taxpayer’s “qualifying child” or “qualifying relative” under Section 152 of the Internal Revenue Code.

Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 adds a new mandatory reporting requirement for group health plans. The overall purpose of this program is to make sure that Medicare pays benefits secondary to any applicable private health care coverage. The Centers for Medicare and Medicaid Services (“CMS”) is responsible for this program, and has recently announced information about how the program will be implemented.

Most plan sponsors have become familiar with the provisions of the Mental Health Parity Act of 1996 (“MHPA”). The MHPA required group health plan sponsors to eliminate certain annual caps and lifetime limits on mental health benefits. Notwithstanding the MHPA, however, many plan sponsors continued to impose reduced coinsurance limits and frequency limitations on mental health benefits. Now, as part of the emergency economic stabilization legislation that was signed by President Bush on October 3, 2008, the mental health parity rules have been expanded significantly.

The Medicare Part D regulations issued by the Centers for Medicare and Medicaid Services (“CMS”) require group health plans providing prescription drug coverage to Part D-eligible individuals to disclose to participants whether the coverage is “creditable” — that is, at least as good as Medicare Part D coverage. Plans must send these notices to participants each fall, prior to the beginning of the initial enrollment period for Medicare Part D coverage.

On May 21, 2008, the President signed the Genetic Information Nondiscrimination Act of 2008 (“GINA”). The new law prohibits discrimination on the basis of genetic information in health insurance and employment. The provisions applicable to group health plans and health insurance issuers are effective for plan years beginning on or after May 21, 2009.

Employer wellness programs are often touted as part of the answer to rising health insurance costs. However, a recent federal district court decision suggests that employers must tread carefully when seeking to control health insurance costs by policing employees’ conduct outside of work.

Effective January 1, 2008, the Missouri Insurance Code was amended to require all group health, dental, and vision insurance policies to offer continued coverage to dependents up to age 25, regardless of student status. Though the law is likely preempted by ERISA for any self-funded health plan, employers whose plans are fully insured must comply. For the most part, insurance carriers have already taken the steps necessary to amend their insurance policies issued to Missouri employers.

In last month’s issue of Benefits in Brief, we examined the ERISA preemption issues raised by state health care reform. This month, we continue our survey of state health care reform by examining the universal coverage programs of three New England states – Massachusetts, Vermont, and Maine. Each state’s legislation takes a distinct approach, with quite different implications for employers.

After protracted litigation, the Third U.S. Circuit Court of Appeals has finally upheld regulations issued by the Equal Employment Opportunity Commission (“EEOC”) allowing employers to reduce, change, or even eliminate retiree health coverage when retirees become eligible for Medicare. Unless this decision is reversed by the U.S. Supreme Court (which seems unlikely), employers who coordinate, terminate, or charge different premiums for retiree health coverage upon a retiree’s Medicare eligibility should be able to retain such practices without fear of violating the Age Discrimination in Employment Act (“ADEA”).

To many group health plan sponsors, the distribution of the “Notice of Privacy Practices” required by HIPAA’s privacy regulations (the “Privacy Rule”) may be no more than a distant memory. Well, dust off those HIPAA privacy notices because, according to the Privacy Rule, “No less frequently than once every three years, the health plan must notify individuals then covered by the plan of the availability of the notice and how to obtain the notice.” Thus, those “small plans” that were originally subject to the Privacy Rule as of April 14, 2004, must comply with this “reminder” requirement by April 14, 2007.

Before the 109th Congress rode into the sunset, it gave the benefits world a parting gift: the Tax Relief and Health Care Act of 2006. This law adds substantial new flexibility to health savings accounts (“HSAs”) that many employers may find attractive.

Over five years after regulations were first proposed, the Departments of the Treasury, Labor, and Health and Human Services have finally issued final HIPAA nondiscrimination and wellness program regulations. While the final regulations clarify certain aspects of the 2001 interim and proposed regulations, other questions remain unanswered.

After years of compliance efforts relating to the electronic transaction rules, privacy rules, and security rules under the Health Insurance Portability and Accountability Act (“HIPAA”), yet another requirement looms on the horizon. The National Provider Identifier (“NPI”) was adopted as the standard health identifier for health care providers in order to fulfill a requirement in HIPAA for the adoption of such a standard. The purpose of the NPI is to establish a single, unique identifier for health care providers to use in standard health care transactions.

Under ERISA’s claims and appeals regulations, participants and beneficiaries are entitled to a “full and fair” review process. In St. Joseph’s Hospital of Marshfield Inc. v. Carl Klemm Inc., a federal district court in Connecticut ruled that a plan beneficiary was not given a full and fair review when the plan’s third-party administrator (“TPA”) made both the initial decision to deny benefits and the appeal determination.

The Supreme Court has just made it easier for ERISA welfare plans to recover from participants who refuse to honor their plans’ reimbursement provisions. Resolving a question that has divided the federal circuit courts of appeals, the Court held in Sereboff v. Mid-Atlantic Medical Services that – under the right plan language and the right facts – a welfare plan’s action to recover such funds constitutes “equitable” relief and is therefore permissible under ERISA. And while the subtleties of the Court’s reasoning might not make spellbinding reading, they nonetheless contain an important message for employers who sponsor such plans.

As we reported in our July 2005 issue of Benefits in Brief, the Medicare Part D regulations issued by the Centers for Medicare and Medicaid Services (“CMS”) require group health plans providing prescription drug coverage to Part D-eligible individuals to disclose to participants whether that coverage is “creditable” – that is, at least as good as Medicare Part D coverage. Most plans sent these notices to participants last fall, prior to the beginning of the initial enrollment period for Medicare Part D coverage.

The method of delivering required COBRA notices is always a popular topic among plan administrators. COBRA contains no specific requirements as to the manner in which notice must be given. Generally, however, the plan administrator’s good faith effort to notify the participant, by mailing a notice to the participant’s last known address, is sufficient.

Two recent private letter rulings by the Internal Revenue Service confirm that domestic partners – even when granted the same rights as married couples under state law – cannot be treated as spouses by retirement plans.  The IRS issued the private letter rulings to two governmental deferred compensation plans intended to be eligible under Tax Code Section 457(b). These plans were maintained in a state that grants registered domestic partners the same treatment as married couples.

As we reported in our July 2005 issue of Benefits in Brief, regulations issued by the Centers for Medicare and Medicaid Services (“CMS”) require group health plans providing prescription drug coverage to Medicare Part D-eligible individuals to disclose to participants whether that coverage is “creditable.” Plan sponsors were required to send these notices by November 15, 2005. CMS has now released guidance regarding the plan sponsor’s obligation to disclose information regarding the plan’s creditable coverage status to CMS.

To many plan sponsors, the distribution of the “Notice of Privacy Practices” required by HIPAA’s privacy regulations (the “Privacy Rule”) may be no more than a distant memory. Well, dust off those HIPAA privacy notices because, according to the Privacy Rule, “No less frequently than once every three years, the health plan must notify individuals then covered by the plan of the availability of the notice and how to obtain the notice.” Thus, those plans that were originally subject to the Privacy Rule as of April 14, 2003, must comply with this “reminder” requirement by April 14, 2006.

The travails of ERISA welfare plans seeking to enforce their subrogation and reimbursement provisions are in the news – again. We have already devoted two Benefits in Brief articles to the debacle resulting from the Supreme Court’s 2002 decision in Great-West Life & Annuity Ins. Co. v. Knudson^,1 but relief may be in sight.

Although many health plans completed their HIPAA Security Rule compliance efforts last spring, small health plans were given an additional year in which to comply. A small health plan is defined as a plan with annual receipts of $5 million or less. These small plans now have only three months remaining, or until April 21, 2006, to comply with the HIPAA Security Rule.