Benefits Update – May 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 Tulay.Turan@wolterskluwer.com.

 

Hot Topics in Employee Benefits Management:

Health care reform turns one year old, Employee Benefits Management Directions newsletter, Issue No. 489, April 4, 2011 – On March 23, 2010, President Obama signed into law a historic piece of legislation aimed at expanding health care access and coverage. Since then, there’s been a plethora of health reform-related activities. This article provides an overview of those activities.

Experts elucidate new internal claims and appeals, external review standards under ACA, Employee Benefits Management Directions newsletter, Issue No. 490, April 19, 2011 – Group health plans that have lost their grandfathered status must comply with the Patient Protection and Affordable Care Act’s (ACA) revised and potentially onerous internal claims rules, plus new binding external review procedures of coverage determinations. For some practical advice on what the new rules mean for plan administrators, and what to expect from the Labor Department next, CCH interviewed Edward Fensholt, JD, and Mark Holloway, JD, Directors of Compliance Services, Lockton Benefit Group of Lockton Companies, LLC.  

EBSA provides additional grace period for health reform’s claims appeals regulations, Employee Benefits Management Directions newsletter, Issue No. 489, April 4, 2011 — EBSA has extended and modified an enforcement grace period for some of the new standards required under the Patient Protection and Affordable Care Act (ACA) for health care internal claims and appeals and external review. The new grace period, included in EBSA Technical Release 2011-1, extends the enforcement grace period until plan years beginning on or after January 1, 2012.

CMS will stop accepting Early Retiree Reinsurance Program applications, Employee Benefits Management Directions newsletter, Issue No. 490, April 19, 2011 – The Centers for Medicare & Medicaid Services (CMS) will stop accepting applications for the Early Retiree Reinsurance Program (ERRP), effective May 6, 2011, due to funding concerns. 

What’s New in Employee Benefits Management:

Health care coverage reporting — The IRS has issued guidance on the information reporting of health coverage on Form W-2. IRS Notice 2011-28 is discussed at ¶10,240.

Grandfathered plans — A sixth set of FAQs, focusing on grandfathered plans, has been released. The guidance is discussed at ¶10,140.

Claims appeals regulations — EBSA Technical Release 2011-1 (see story above) is discussed at ¶10,425.

Free choice vouchers — The rules requiring employers to provide free choice vouchers to qualified employees who do not participate in employer-offered health plans and excluding the amount of any free choice voucher from the employee’s gross income have been repealed by the Department of Defense and Full-Year Continuing Appropriations Act, 2011 (P.L. 112-10). The discussion at ¶10,505 has been updated.

SIFL rates The Standard Industry Fare Level (SIFL) rates for the first six months of 2011 are at ¶150,086.

SPD’s limitation provision — The Tenth Circuit’s decision in Young v. United Parcel Services, which upheld an SPD’s six-month limitation period for filing suit, is discussed at ¶132,450.

2012 Medicare Part D amounts The Centers for Medicare & Medicaid Services (CMS) have announced the adjusted cost threshold and cost limit amounts for plan sponsors with qualified prescription drug plans that end in 2012, as well as the adjusted parameters (e.g., deductible and out-of-pocket threshold) for Medicare Part D plans in 2012. For the amounts, see ¶10,360.

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

DOL, HHS, Treasury answer more questions on grandfathered plans. In April, the Department of Labor’s Employee Benefits Security Administration (EBSA), the Department of Health and Human Services (HHS), and the Treasury Department released the sixth set of frequently asked questions (FAQs) about the Patient Protection and Affordable Care Act (ACA), which address additional issues concerning grandfathered plans. The April FAQs address these issues: bona fide reasons; increasing drug cost-sharing; value-based designs; timing of changes; and retiree cost increases. To learn more about grandfathered plans, see the discussion at ¶20,053.

CMS will stop accepting Early Retiree Reinsurance Program applications. The Centers for Medicare and Medicaid Services (CMS) will stop accepting applications for the Early Retiree Reinsurance Program (ERRP), effective May 6, 2011, due to funding concerns. CMS has projected the availability of program funding based on the rate at which appropriated funds are currently being used to reimburse plan sponsors, and the agency has concluded that a sufficient number of applications have been approved to exhaust the program funding. Applications were first accepted by the ERRP on June 29, 2010, and therefore, plan sponsors have had nine months to submit applications if desired. More information about the ERRP can be found at ¶22,875.

EBSA provides additional grace period for health reform’s claims appeals regulations. The Department of Labor’s Employee Benefits Security Administration (EBSA) has extended and modified an enforcement grace period for some of the new standards required under the ACA for health care internal claims and appeals and external review. The original grace period extended until July 1, 2011. The new grace period, included in EBSA Technical Release 2011-1, extends the enforcement grace period until plan years beginning on or after Jan. 1, 2012. See the discussion at ¶20,057 for more information about the claims appeals regulations.

IRS issues guidance on informational reporting of health coverage. The IRS has issued interim guidance to employers on informational reporting on each employee’s annual Form W-2 of the cost of the health insurance coverage they sponsor for employees. The IRS emphasized that this new reporting to employees is for their information only, to inform them of the cost of their health coverage, and does not cause excludable employer-provided health coverage to become taxable; employer-provided health coverage continues to be excludable from an employee’s income, and is not taxable. To find out more about the W-2 reporting requirement, see ¶20,025.

Ex-husband’s waiver of claim to benefits is irrelevant where plan documents name him as beneficiary. A life insurance plan administrator did not violate ERISA when it granted benefits to the ex-husband of a deceased participant, because, despite the ex-husband’s waiver of any claim to benefits, the plan documents on file designated him as the primary beneficiary, according to the U.S. Court of Appeals for the Fourth Circuit. The participant’s mother and son, as well as her ex-husband, all had filed claims for benefits after the participant’s death. Find out more about group term life insurance at ¶73,410.