Benefits Update – February 2011

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:

President signs tax relief bill containing extensions of benefits-related provisions, Employee Benefits Management Directions newsletter, Issue No. 483, January 11, 2011 – President Obama has signed a multi-billion dollar tax cut package, The Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 (2010 Tax Relief Act) (P.L. 111-312). The 2010 Tax Relief Act extends, among other items, various benefits-related provisions that would have expired at the end of 2010 pursuant to the sunset provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA). The extended provisions include, among others, employer-provided educational assistance, the adoption credit, and the employer-provided child care credit. The law also extends parity among transit benefits.

IRS offers new guidance on FSA and HRA debit cards, Employee Benefits Management Directions newsletter, Issue No. 483, January 11, 2011 – The Internal Revenue Service has issued new guidance allowing the continued use of health flexible spending arrangement (FSA) and health reimbursement arrangement (HRA) debit cards for the purchase of prescribed over-the-counter medicines and drugs.   

DOL, HHS, Treasury answer more questions on health reform, mental health parity, Employee Benefits Management Directions newsletter, Issue No. 484, January 25, 2011 – The Department of Labor’s Employee Benefit Security Administration (EBSA), the Department of Health and Human Services (HHS), and the Treasury Department (the Departments) have released the fifth set of frequently asked questions about the Patient Protection and Affordable Care Act (ACA). The FAQs also addressed some issues related to the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act (MHPAEA).

Labor Department publishes 2010 Form M-1 for multiple employer welfare arrangements, Employee Benefits Management Directions newsletter, Issue No. 484, January 25, 2011 – The U.S. Department of Labor’s Employee Benefits Security Administration has announced the availability of the 2010 Form M-1 annual report for multiple employer welfare arrangements. Plan administrators may use EBSA’s online filing system to expedite processing of the form.

What’s New in Employee Benefits Management:

FSA and HRS debit cards – IRS Notice 2011-5, which allows the continued use of FSA and HRA debit cards, is discussed at ¶39,115.

 

Debit cards for transportation fringe benefits – IRS Notice 2010-94, which is discussed at ¶150,795, delays the effective date of previously-issued guidance on the use of smartcards and debit and credit cards to provide qualified transportation fringe benefits.

 

ACA nondiscrimination provisions – Group health plans do not have to comply with PHSA Sec. 2716 (regarding the nondiscrimination provisions of Code Sec. 105(h)(2)) until after regulations or other administration guidance of general applicability has been issued, according to IRS Notice 2011-1, which is discussed at ¶10,515.

Additional guidance on health care reform, mental health parity – The Department of Labor’s Employee Benefit Security Administration (EBSA), the Department of Health and Human Services (HHS), and the Treasury Department’s fifth set of FAQs is discussed at ¶10,105, ¶10,140 and ¶20,030.

 

ERRP guidance The Department of Health and Human Services’ Early Retiree Reinsurance Program (ERRP) Center has published new and revised questions and answers for plan sponsors. The questions and answers are discussed at ¶53,260.

Insurance rate reviews – The HHS has issued a proposed rule that would establish a rate review program to ensure that all rate increases that meet or exceed an established threshold are reviewed by a state or the HHS to determine whether the rate increases are unreasonable. The rule is at ¶700,050A.

 

Compensation deduction for health care providers  – The IRS has issued initial guidance (IRS Notice 2011-2) related to the limitation on the allowable deduction for amounts paid for services by individuals to certain health insurance providers under Code Sec. 162(m)(6). For details, see ¶100,050.

 

2011 COLAs The 2011 inflation-adjusted amounts for transportation fringe benefits are at ¶154,200 and ¶156,045.

 

Domestic partners – State law on domestic partner benefits in Illinois has been updated at ¶10,110.

 

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

IRS issues additional guidance on small employer health care tax credit. The IRS has released Notice 2010-82, which provides additional eligibility guidance for the small business health care tax credit provided under the Patient Protection and Affordable Care Act (ACA). The notice includes guidance on eligibility of spouses and leased employees, explains the uniformity requirement for 2010 to 2014, and provides links to new Form 8941 (Credit for Small Employer Health Insurance Premiums), and a newly revised Form 990-T (Exempt Organization Business Income Tax Return). To find out more about the small employer health care tax credit, see ¶60,310.

IRS offers new guidance on FSA and HRA debit cards. The Internal Revenue Service has issued new guidance allowing the continued use of health flexible spending arrangement (FSA) and health reimbursement arrangement (HRA) debit cards for the purchase of prescribed over-the-counter medicines and drugs. The new guidance modifies previous guidance to permit taxpayers to continue using FSA and HRA debit cards to purchase over-the-counter medications for which the taxpayer has a prescription. Effective after Jan. 15, 2011, in accordance with the new guidance, this use of debit cards must comply with procedures reflecting those that pharmacies currently follow when selling prescribed medicines or drugs. See the discussions at ¶23,615 and ¶73,160 for more information about using a debit card to reimburse participants from an FSA or HRA.

New rules for mini-med plans require insurers to notify consumers of low annual coverage limits. Two new sets of guidance issued by the Department of Health and Human Services (HHS) require that health insurers offering “mini-med” plans must notify consumers in plain language that their plan offers extremely limited benefits, and restrict the sale of new mini-med plans except under very limited circumstances. Mini-med plan insurers also must direct consumers to http://www.HealthCare.gov where they can get more information about other coverage options. The ACA bans annual dollar limits for coverage of essential benefits such as hospital, physician, and pharmacy, effective with plan years beginning in 2014. To learn more about the requirements of ACA as it relates to mini-med plans, see the discussion at ¶20,056.

Health law cut some costs in retirement, but retirees will still need big savings. Even though the new health reform law will reduce some health costs in retirement for many people, retirees will still need a significant amount of savings to cover their out-of-pocket health expenses when they retire, according to a report released by the nonpartisan Employee Benefit Research Institute (EBRI). For instance, EBRI finds that men retiring in 2010 at age 65 will need anywhere from $65,000 to $109,000 in savings to cover health insurance premiums and out-of-pocket expenses in retirement if they want a 50-50 chance of being able to have enough money. Women retiring this year at 65 will need even more: between $88,000-$146,000 in savings if they are comfortable with a 50 percent chance of having enough money. More information about the amount of money needed for health care in retirement can be found at ¶22,970.

Retirement benefits helping employers attract and retain new workers. Retirement benefits—especially defined benefit (DB) programs—are giving employers an added advantage when it comes to attracting and retaining new employees, according to a survey of U.S. workers conducted by Towers Watson. The survey found that 60 percent of new employees (those with less than two years of service) at employers with DB plans cited the retirement program as an important reason they chose to work for their current employer, a sharp increase from just 27 percent in 2009. Find out more about reasons to offer a retirement plan at ¶10,100.