Benefits In Brief

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.

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.

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.

It may be summer now, but sponsors of tax-favored retirement plans should keep in mind the many required amendments for which a year-end deadline is fast approaching.  This article highlights some of the more important changes that sponsors must address before the sun sets on 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 we reported in our September 2008 article, most tax-favored retirement plans must be amended by the end of the 2010 plan year to reflect the mandatory provisions of the Heroes Earnings Assistance and Relief Tax Act (the “HEART Act”).

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.

In June of 2008, the Heroes Earnings Assistance and Relief Tax (“HEART”) Act became law. The Act made a number of significant changes to the treatment of military reservists under employee benefit plans. In an August 2008 article, we summarized those changes as they applied to qualified defined benefit and defined contribution plans, Section 403(b) plans, and Section 457(b) plans. In January of 2010, the IRS issued Notice 2010-15 (the “Notice”), which contains guidance on a number of the Act’s provisions. This article summarizes the most significant and surprising elements of that guidance, which apply to differential wage payments, “in-service” distributions on a reservist’s deemed severance from employment, and the Act’s mandatory death benefit provisions.

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.

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 reported in our August 2009 article, tax-qualified retirement plans must be amended by the end of the 2009 plan year to reflect the mandatory changes enacted as part of the 2006 Pension Protection Act (“PPA”). For calendar-year plans, this PPA amendment deadline is December 31, 2009. (Governmental plans have an additional two years, and certain collectively bargained plans may enjoy an extension, as well.)

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”).

The Pension Protection Act of 2006 (“PPA”) became law on August 17, 2006. It was one of the most sweeping retirement reform bills in recent history, mandating a host of changes for tax-qualified retirement plans. Most of these changes are already in effect – in some cases, for years. Accordingly, most sponsors have long since wrestled with the necessary changes to plan administration and are operating their plans in compliance with PPA’s requirements.

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.”

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.

On January 29^th, President Obama signed into law the Lilly Ledbetter Fair Pay Act of 2009.  The Ledbetter Act was a direct response to the U.S. Supreme Court’s 2007 decision in Ledbetter v. Goodyear Tire & Rubber Co., in which the Court held that Ms. Ledbetter’s Title VII claim against Goodyear was barred by the statute of limitations.  By redefining when a discriminatory act is deemed to occur, the Act will allow additional employment discrimination claims to proceed to trial.  The likely result will be more backpay awards, and also greater liability for compensation-based benefits.

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.

In June, the Heroes Earnings Assistance and Relief Tax (“HEART”) Act became law. The Act makes a number of significant changes to the treatment of military reservists under employee benefit plans. This article summarizes those changes as they apply to qualified defined benefit and defined contribution plans, Section 403(b) plans, and Section 457(b)plans.

The IRS recently issued Notice 2008-30 (the “Notice”), which provides guidance on three distribution-related provisions of the Pension Protection Act of 2006 (“PPA”) that are first effective in 2008, as well as a distribution requirement introduced by final regulations under Section 402(g) of the Internal Revenue Code (the “Code”) that first applies to corrective distributions made during 2008.

Missouri has followed the lead of Massachusetts and a handful of other states in mandating that most employers establish a cafeteria plan through which their employees may pay their health insurance premiums on a “pre-tax” basis. This cafeteria plan mandate is just one aspect of the “Missouri Health Insurance Portability and Accountability Act” (or “Missouri HIPAA”), as enacted by the Legislature during its 2007 session.

In April, the IRS issued final regulations under Section 415 of the Internal Revenue Code (the “Code”). These regulations finalize rules proposed in May of 2005 and represent the first comprehensive overhaul of the Section 415 rules since 1981. For sponsors of defined contribution plans, one of the most newsworthy of the many changes is a revamping of the rules governing deferrals from compensation an employee receives after terminating employment.

The Pension Protection Act of 2006 (“PPA”) contains dozens of changes to multiemployer pension plan funding standards, most of which are effective for plan years beginning in 2008. Many of these provisions are applicable to all multiemployer plans, but Congress also included important relief for the construction industry. Employers, unions, and trustees of multiemployer plans should begin preparing now to meet the new standards.

Effective for plan years beginning on and after January 1, 2007, defined contribution plans must provide such statements at least once each quarter (if they allow participants to direct the investment of their account balances) or at least once each year (if participants are not permitted to direct investments). Sponsors of defined benefit plans must furnish benefit statements at least once every three years.

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.

As you probably already know, President Bush signed the Pension Protection Act of 2006 (the “PPA”) into law on August 17, 2006. Some PPA provisions became effective as of the date of enactment; others preserve existing laws that were set to expire in 2010; and still others are not effective until mid-2007 or 2008. This article summarizes some of the important provisions of the PPA that are effective as of plan years beginning on or after January 1, 2007 – or which apply to distributions, notices, or other events that will occur on or after that date.

Under an automatic enrollment feature, employees accumulate retirement savings through payroll deduction by default – unless they make an affirmative election to opt out of the program. For the past several years, in keeping with the federal government’s efforts to shore up the nation’s retirement savings, government agencies have actively encouraged such arrangements under employer-sponsored defined contribution plans.

As we reported in the November 2004 issue of Benefits in Brief, the Working Families Tax Relief Act (WFTRA) took effect January 1, 2005. The WFTRA changed the definition of dependent found in Section 152 of the Internal Revenue Code (the Code). One key change included the addition of a gross income limitation to the Code’s definition of a qualifying relative. As we reported in the November 2004 issue of Benefits in Brief, the Working Families Tax Relief Act (WFTRA) took effect January 1, 2005. The WFTRA changed the definition of dependent found in Section 152 of the Internal Revenue Code (the Code). One key change included the addition of a gross income limitation to the Code’s definition of a qualifying relative.