Benefits Update – January 2010

From the editors of CCH’s BENE and BAN products, here are hot topics from recent Employee Benefits Management Directions newsletters as well as recent explanatory updates in Employee Benefits Management. Also included are recent explanatory updates to the Benefits Answers Now product.

If you have any comments/suggestions concerning the information provided or the format used, we’d like to hear from you. Please contact me at tulay.turan@wolterskluwer.com.

Hot Topics in Employee Benefits Management:

Majority of employers with CDH plans prefer HSAs as funding method, Aon finds, Employee Benefits Management Directions newsletter, Issue No. 457, December 1, 2009 – Of employers who offer a consumer-driven health plan, Health Savings Accounts (HSAs) continue to be the preferred funding choice among organizations, according to a survey by Aon Consulting.

ERIC and NBGH urge preservation of ERISA, federal preemption, Employee Benefits Management Directions newsletter, Issue No. 457, December 1, 2009 – The ERISA Industry Committee (ERIC) and the National Business Group on Health (NBGH) have jointly submitted a letter to U.S. Solicitor General Elena Kagan urging that she recommend Supreme Court review of a lower court decision that San Francisco’s ordinance creating a health mandate did not violate ERISA preemption.

IRS announces 2010 standard mileage rates, Employee Benefits Management Directions newsletter, Issue No. 458, December 15, 2009 – The IRS has issued the 2010 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Majority of employers would reduce health benefits to avoid proposed excise tax, survey finds, Employee Benefits Management Directions newsletter, Issue No. 458, December 15, 2009 – Nearly two-thirds (63 percent) of employers in a recent survey by Mercer say they would cut health benefits to avoid paying an excise tax included in the Senate’s Patient Protection and Affordable Care Act (H.R. 3590).

What’s New in Employee Benefits Management:

FMLA military family leave – The changes made by the National Defense Authorization Act for Fiscal Year 2010 (P.L. 111-84) have been reflected at ¶68,054.

HIPAA regulations – HHS has issued an interim final rule to strengthen its enforcement of the rules promulgated under HIPAA. The Health Information Technology for Economic and Clinical Health (HITECH) Act, which was enacted as part of the American Recovery and Reinvestment Act of 2009, modified the HHS Secretary’s authority to impose civil money penalties for violations occurring after February 18, 2009. The rule is at ¶700,075.

2010 COLAs – More cost-of-living adjustments for 2010 have been reflected throughout the explanations, including ¶10,025, ¶10,330, ¶51,010, ¶51,020, ¶51,030 and ¶51,050, among others.

State laws – Wisconsin’s new rule on dependent health care coverage is discussed at ¶10,715.

Pension plan amendments – IRS final regulations provide guidance on the application of ERISA Sec. 204(h) notice requirements to pension plan amendments that are permitted to reduce benefit accruals before the amendment’s applicable amendment date. The regulations are at ¶400,778.

What’s New in Benefits Answers Now (BAN):

IRS issues cash balance plan relief. The IRS has issued an announcement providing relief for sponsors of statutory hybrid plans, such as cash balance plans, that must amend the interest crediting rate in those plans. The IRS expects to issue final and proposed regulations on hybrid plans in the near future. See the discussions at ¶10,040 and ¶10,165 for more information about the cash balance or hybrid plans.

Majority of employers with CDH plans prefer HSAs as funding method. Of employers who offer a consumer-driven health plan, Health Savings Accounts (HSAs) continue to be the preferred funding choice among organizations, according to Aon Consulting, the global human capital consulting organization of Aon Corporation, and the International Society of Certified Employee Benefit Specialists. Of the 370 survey respondents, 44 percent of employers currently offer a consumer-driven health (CDH) plan to employees. Of those offering CDH plans this year, 56 percent are now using the HSA model, 35 percent of organizations are using the Health Reimbursement Arrangements (HRA) model, and 9 percent use both. To learn more about the prevalence of HSAs, see the discussions at ¶23,700 and ¶23,760.

PBGC announces final regs on USERRA benefits. The Pension Benefit Guaranty Corporation (PBGC) has published a final rule that amends PBGC’s benefit payments regulation to implement provisions of the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA). USERRA provides that an individual who leaves a job to serve in the uniformed services is generally entitled to reemployment by the previous employer and, upon reemployment, to receive credit for benefits, including employee pension plan benefits, that would have accrued but for the employee’s absence due to the military service. To find out more about the final rule, see ¶14,400.

Retirees’ cost burden for retiree medical benefits expanding. Large U.S. employers continue to shift significant health coverage costs to retirees or cease sponsoring retiree health benefit programs altogether, according to Towers Perrin’s 2010 Retiree Health Care Cost Survey. At the same time, the survey also revealed that many employers are missing significant opportunities to deliver retiree benefit value while saving money and improving program effectiveness. In 2010, surveyed employers’ total health benefit costs for retirees are projected to increase by 6% for pre-65 retirees, the same as the average cost increase anticipated for active employees and 4% for retirees older than 65, Towers Perrin said. Find out more about the cost of retiree medical care at ¶22,910.

Study finds that family-friendly workplace policies and protections support jobs, enhance competitiveness. A study by researchers at Harvard and McGill Universities finds the United States far behind other economically successful nations in terms of adopting policies that support workers and families. The study finds that 14 of the world’s 15 most competitive countries provide paid sick leave, 13 guarantee paid leave for new mothers, 12 provide paid leave for new fathers, 11 provide paid leave to care for children’s health needs, eight provide paid leave to care for adult family members, and seven guarantee breastfeeding breaks to nursing mothers on the job. At the federal level, the United States offers its workers none of those supports. More information about these work/life benefits can be found at ¶82,000.