In This Issue:
- IRS Releases Additional Guidance to Determine Small Employer Tax Credit
- HHS Issues Interim Regulations Regarding Early Retiree Reinsurance Program
- Debit Card Entity Clarifies Over-the-Counter Changes for 2011
- EBSA Issues Regulations Regarding Dependent Coverage to Age 26
- DOL Revises Model COBRA Notices
- Target Date Retirement Fund Guidance Issued
- DOL Announces New Online Disability Tool for Employers
- IRS Discusses Eligibility of Cord Blood Banking as Deductible Medical Expense
- CMS Issues 2010 Medicare Part D Limits
- Court Case: COBRA Qualified Beneficiary Cannot Skip DOL Expedited Review Process
- State Updates: IL, IN, IA, ME, MD, NY, NC, OK, OR, VA and WI
IRS Releases Additional Guidance to Determine Small Employer Tax Credit
The IRS released Revenue Ruling 2010-13 which includes the average premium for the small group market when determining the Small Business Health Care Tax Credit. The credit was created as part of the Patient Protection and Affordable Care Act ("PPACA"), as amended, which helps small businesses afford the cost of covering their employees. The credit is effective immediately, and applies to organizations with fewer than 25 full-time equivalent employees, including tax-exempt organizations, with certain income limitations. The organizations must make a minimum contribution towards their employees' health insurance premiums. The amount of the contribution toward the premium is based on the lesser of:
- The amount of nonelective contributions paid by the eligible small employer on behalf of employees under the arrangement during the taxable year, and
- The amount of nonelective contributions the employer would have paid under the arrangement if each such employee were enrolled in a plan that had a premium equal to the average premium for the small group market in the State (or in an area in the State) in which the employer is offering health insurance coverage.
The law required the Secretary of Health and Human Services (HHS) to determine the average premiums within a State or area in the State. This is to assist with the average premiums used in Option 2 of the calculation, above. Revenue Ruling 2010-13 contains a chart indicating the average premium rates for the small group market in all 50 states and the District of Columbia for the 2010 taxable year.
Click here to view Revenue Ruling 2010-13.
HHS Issues Interim Regulations Regarding Early Retiree Reinsurance Program
On May 5, 2010, the Department of Health and Human Services (HHS) issued interim final regulations regarding the early retiree reinsurance program. The program was expected to be effective on June 21, 2010, but will be operational earlier than expected on June 1, 2010. Under the program, employers may be eligible for partial reimbursement of claims incurred by early retirees and their dependents. Early retirees are defined as former employees who are aged 55 and older and not yet eligible for Medicare. The claims of the spouse, surviving spouse or dependent children are also eligible for reimbursement regardless of the spouse or dependent's age or Medicare eligibility status. Claims in excess of $15,000 up to $90,000 will be eligible for 80 percent reimbursement. The claims amount is based on actual claims paid and not premiums. The calculation includes amounts paid by the insured including co-payments and deductibles. Only claims incurred after June 1, 2010 are eligible for reimbursement, but claims incurred during the current plan year prior to June 1, 2010 may still be included in the calculation to determine the $15,000 claims minimum. Applications will be considered in order of receipt. Incomplete applications will be returned and the employer would need to begin the application process again by submitting a new application.
Click here to learn more.
Debit Card Entity Clarifies Over-the-Counter Changes for 2011
Within Section 9003 of the PPACA health reform law, IRS Code was amended so that over-the-counter (OTC) drugs will no longer be reimbursable unless they are prescribed by a physician as of Jan. 1, 2011. This prohibition affects health Flexible Spending Accounts (FSAs), Health Reimbursement Arrangements (HRAs), Health Savings Accounts (HSAs) and Archer Medical Savings Accounts (MSAs). Many plans currently allow participants to use electronic payment cards or debit cards when purchasing OTC items. When electronic payment is permitted, existing substantiation rules allow for automatic reimbursement at the point of sale if a merchant uses the Inventory Information Approval System (IIAS).
The entity in charge of the IIAS (Special Interest Group for IIAS Standards, or SIGIS) issued a news release on how it will address the OTC drug prohibition. It indicated that, effective Jan. 1, 2011, OTC drugs will be reclassified, changing from "Eligible" to "Dual Purpose." This means that these items can no longer be auto-substantiated. Beginning Jan. 1, 2011, participants will be able to submit OTC drug purchases for reimbursement if they obtain a letter of medical necessity or prescription from their physician. The press release included a sample of OTC drugs, including acid controllers, allergy/sinus/cold/flu medicines, laxatives, pain relief medicines, sleep aids and sedatives and stomach remedies.
Click here to view the press release.
EBSA Issues Regulations Regarding Dependent Coverage to Age 26
The EBSA has issued regulations, a fact sheet and FAQs regarding the PPACA provision requiring the availability of coverage to dependents up to age 26. The guidance states that employees cannot be charged an additional premium for the dependents coverage nor can they be required to accept coverage under a different benefit plan. Any qualified individual must be offered all of the benefit packages available to children who did not lose coverage because of loss of dependent status and cannot be required to pay more for coverage. The guidance also addressed the somewhat confusing provisions regarding eligibility for coverage and the tax exclusion for coverage.
Q: It seems like plans and insurers can terminate dependent coverage after a child turns 26, but employers are allowed to exclude from the employee's income the value of any employer-provided health coverage through the end of the calendar year in which the child turns age 26. This is confusing.
A: Under the law, the requirement to make adult coverage available applies only until the date that the child turns 26. However, if coverage extends beyond the 26th birthday, the value of the coverage can continue to be excluded from the employee's income for the full tax year (generally the calendar year) in which the child had turned 26.
Click here to view the regulations.
Click here to view the fact sheet.
Click here to view the FAQs.
DOL Revises Model COBRA Notices
The Department of Labor (DOL) has published revised Model COBRA Notices to reflect the latest subsidy extension through the Continuing Extension Act. The notices have been revised to show that individuals who are involuntarily terminated through May 31, 2010 are assistance eligible individuals. The Model Supplemental Information Notice should be sent to employees whose employment terminated from March 1, 2010 through April 14, 2010, are currently enrolled in COBRA, and whose prior notice did not include subsidy information. The Model Notice of Extended Election Period should be sent to employees whose employment terminated from April 1, 2010 through April 14, 2010, are not currently enrolled in COBRA, and whose prior notice did not include subsidy information.
Click here to view the model notice.
Target Date Retirement Fund Guidance Issued
The DOL's Employee Benefits Security Administration (EBSA) and the U.S. Securities and Exchange Commission (SEC) issued guidance on May 6, 2010 on Target Date Retirement Funds. The objective of the guidance is to help investors and plan participants better understand the operations and risks of target date fund investments. The guidance describes some basics features of target date funds, including the investment mix of such funds, the risks associated with the investments, how target date funds operate, and ways to evaluate a target date retirement fund that will help increase awareness of both the value and risks associated with these types of investments.
The guidance advises participants to take appropriate steps before investing in target date funds. Participants should consider their investment style, look at the fund's prospectus to see where money will be invested, understand how the investments will change over time, take into account when the funds may be accessed, and examine the fees of the fund. The guidance is provided as general information as courtesy from the EBSA and SEC. There is currently no requirement that this guidance is distributed to participants in an employer sponsored plan.
Click here to view the press release.
Click here to view guidance from the DOL.
DOL Announces New Online Disability Tool for Employers
The DOL announced the availability of a new tool to help employers ensure their employment policies and practices do not discriminate against qualified individuals with disabilities. The interactive, online Disability Nondiscrimination Law Advisor helps employers quickly determine which federal disability nondiscrimination laws apply to their business or organization and their responsibilities under them. To do this, it asks users to answer a few relevant questions and then generates a customized list of federal disability nondiscrimination laws that likely apply, along with easy-to-understand information about the employers' responsibilities. The Disability Nondiscrimination Advisor is one of a series of elaws (Employment Laws Assistance for Workers and Small Businesses) Advisors developed by DOL to help employers and employees understand federal employment laws. To access it, visit the elaws Web site.
Click here to view the Disability Nondiscrimination Law Advisor.
Click here to view the DOL press release.
Click here to view the eLaws Website.
IRS Discusses Eligibility of Cord Blood Banking as Deductible Medical Expense
The Internal Revenue Service (IRS) has released Information Letter 2010-0017 that addresses whether expenses related to umbilical cord blood banking services are a qualified medical expenses under Section 213 of the Internal Revenue Code. In the letter, the IRS states that if the blood banking expenses are for treatment of an existing or imminently probable disease, the expenses are deducible medical expenses. However, if the expenses are a result of a precaution to treat a disease that might possibly develop in the future, this is not a deductible medical expense. This information is applicable to which expenses are reimbursable under an HRA, health FSA, or HSA.
Click here to learn more.
CMS Issues 2010 Medicare Part D Limits
The Centers for Medicare and Medicaid Services (CMS) has issued the 2011 benefit limits for Medicare Part D. The deductible will remain at $310 and the out-of-pocket threshold will remain at $4,550. These limits are important as they affect whether a group health plan's prescription coverage is creditable or non-creditable for disclosure notification and Retiree Drug Subsidy purposes. The Retiree Drug Subsidy cost limit also remained unchanged at $6,300.
Click here to learn more.
Court Case: COBRA Qualified Beneficiary Cannot Skip DOL Expedited Review Process
In the recently decided case of Dorsey v. Holman, 2010 U.S. Dist. LEXIS 41295 (D.D.C. Apr. 27, 2010) a Washington D.C. law firm terminated their employee, Debra Dorsey, after a year of disability-related leave. The employee elected COBRA in late 2008. Subsequently, the American Recovery and Reinvestment Act of 2008 (ARRA) was passed in February, 2009, and the employee made the request to her employer to be provided the subsidy following a conversation with a DOL official who confirmed her eligibility for the subsidy. The employer denied the request. It viewed the termination as voluntary because the employee failed to return after her FMLA leave expired. Even after a DOL representative called the employer and stated that the COBRA premium should be subsidized, the employer again denied the request.
U.S. District Judge Rosemary M. Collyer of the U.S. District Court for the District of Columbia dismissed the case, ruling that ARRA states that its COBRA-related provisions should be treated as though they are part of the Employee Retirement Income Security Act (ERISA). Collyer pointed out that the DOL has provided guidance on its web site and directs individuals denied the COBRA subsidy to complete an "Application for Review of Denial of COBRA Premium Reduction." The DOL advises that the department will act on any application within 15 days of getting the document. It is significant to note that Debra Dorsey did not follow this process and instead sued her former employer. The conversations with DOL officials did not follow the DOL's expedited review process. The court held that the DOL's review process is required before a Qualified Beneficiary can sue over an ARRA subsidy denial.
Click here to learn more.
| Illinois |
Public Act 96-0888 was enacted on April 13, 2010 and creates the Small Business Job Creation Tax Credit Act and amends the Illinois Income Tax Act. The Act provides for a tax credit to be awarded to small businesses by the Department of Commerce and Economic Opportunity in connection with the hiring of new employees. As part of the Act, a person that is operating a business located within the State that has no more than 50 full-time employees, and that has hired a new employee during the fiscal year 2011 may apply for a certificate of eligibility for a tax credit against payment of taxes withheld under the Illinois Income Tax Act with respect to that position. The tax credit shall not exceed $2,500, and provides that the Department shall limit the monetary amount of credits awarded under the Small Business Job Creation Tax Credit Act to no more than $50,000,000. The Act also imposes requirements on employers in connection with receipt of a tax credit. The Act is effective immediately.
Click here to learn more.
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| Indiana |
Under existing state law, a group health insurance policy must provide coverage for the treatment of pervasive developmental disorder, based on the treatment plan submitted by the treating physician. On April 27, 2010, the Department of Insurance issued Bulletin 179, which clarifies that the treatment plan does not have to be written by a general practitioner; it may be submitted and signed by a psychologist or physician specializing in the treatment of pervasive developmental disorder.
Click here to learn more.
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| Iowa |
Governor Culver has signed S.F. 2215 into law to bring state law in line with federal requirements under the Genetic Information Nondiscrimination Act. Under S.F. 2215, insurance carriers are prohibited from using genetic information for underwriting purposes in both the individual and group health insurance markets. A carrier may not take genetic information into consideration for the purpose of limiting or excluding benefits, establishing rates, or providing coverage. Additionally, a carrier may not disclose an insured’s genetic information without written authorization except in the cases of newborn screening, paternity testing, criminal investigations, and testing for research purposes.
Click here to learn more.
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| Maine |
Public Law, Chapter 635, was signed by the Governor on April 12, 2010. This law requires individual and group health insurers to provide certain benefit coverage for the diagnosis and treatment of Autism Spectrum Disorders when prescribed by the individual's physician. Coverage must be provided for individuals who are 5 years of age or younger. Coverage for applied behavior analysis may be limited to $36,000 per year. Covered treatments will include habilitative or rehabilitative services, counseling services, and therapy services provided by a licensed speech, occupational or physical therapist. The requirements of this Act apply to all policies that are executed, delivered, issued for delivery, continued or renewed in this State on or after Jan. 1, 2011.
Click here to learn more.
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| Maryland |
SB 57 was enacted as an emergency regulation in order to conform Maryland State law to the federal Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) by requiring that large group contracts that offer mental health or substance abuse disorder benefits offer the benefits in parity with medical and surgical benefits. The regulation requires that benefits provided conform with the State's reconstructive breast surgery mandate and are applied no more stringently. In addition, the law makes any changes affected by legislation enacted after Jan. 1, 2010, null and void if those changes prevent a health plan from qualifying as a "grandfathered health plan" as defined by the federal PPACA enacted in March 2010. Finally, the bill authorizes the Insurance Commissioner to enforce certain provisions of the federal PPACA for policies issued or delivered in Maryland. The regulation is effective immediately.
Click here to learn more.
HB 1564 was enacted as an emergency regulation for the purpose of authorizing the Board of Directors for the Maryland Health Insurance Plan to administer a national high risk pool program for the State. This will be done pursuant to the requirements imposed by the federal PPACA. The emergency regulation authorizes the Board to limit enrollment in the national temporary high risk pool program based on the availability of certain funding and permits the eligibility requirements for the Plan to be amended in accordance with regulations established by the Secretary of HHS. The regulation is effective immediately.
Click here to learn more.
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| New York |
In Opinion Number 10-02-02, the Office of General Counsel answered the question "May an insurer issue a group health insurance policy to an employer that makes employees and their spouses ineligible for healthcare benefits, because other sources of healthcare coverage are available to them?" The ruling was "No, an insurer may not issue a group health insurance policy to an employer that makes employees and their spouses ineligible for healthcare benefits, simply because other sources of healthcare coverage are available to them." Thus, an employer with an insured plan issued in New York may not exclude coverage for spouses or employees based on the fact that the individual has coverage available to them under the spouse's employer plan. An employer may classify eligibility based on employment factors such as where an employee works or what an employee's job duties are, but may not base eligibility on whether other coverage is available to the individual.
Click here to learn more.
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| North Carolina |
Effective April 1, 2010, an insurance carrier cannot request information relating to acts of abuse or domestic violence. A carrier cannot deny coverage, terminate coverage, or charge a higher premium on the basis of an applicant or insured's abuse status as a victim of abuse. Additionally, claims coverage cannot be limited based on abuse.
Click here to learn more.
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| Oklahoma |
Senate Bill 2051 was enacted on April 20, 2010. It prohibits dental benefit plans from limiting the amount a dentist may charge a patient for a service that is not covered under the dental benefit plan.
Click here to learn more.
The Insurance Department has released a bulletin regarding anesthesia services provided in connection to dental services. The bulletin clarifies that coverage for anesthesia services should be provided if the insured is aged 8 or younger and the provider feels that the anesthesia is necessary to ensure that the child is not unnecessarily traumatized or physically harmed by the major dental procedure.
Click here to learn more.
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| Oregon |
Under existing state law, an association health plan must retain 95 percent of its participants in order to be exempt from the small employer group rating laws. Effective April 22, 2010 through Oct. 15, 2010, a plan may file for a waiver to be exempt from this rule. A plan wishing to file for an exemption would have to have already dropped below the 95 percent level and are within their 12-month correction period. The plan should file a written request with the Insurance Division Director stating why some employer groups left the association.
Click here to learn more.
Effective Oct. 1, 2009, insurance carriers were required to pay a 1 percent assessment based on gross amount of premiums. Carriers were permitted to pass the assessment on to policyholders by increasing premium rates up to 1 percent. Under the original regulation, the assessment applied to premiums on all Oregon residents, regardless of whether the policy was issued in Oregon. The law has now been amended to apply only to policies issued in Oregon.
Click here to learn more.
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| Virginia |
S.B. 163 was signed into law on April 11, 2010. The law exempts money which is paid into or out of an HSA from creditors. Assets from an HSA are not subject to garnishment or other processes and cannot be seized or applied to pay any debt or liability of the participant or beneficiary of the account. The law is effective immediately.
Click here to learn more.
S.B. 706 was signed into law on April 12, 2010 and requires that group health insurance coverage issued to large employers provide mental health and substance use disorder benefits in parity with the medical and surgical benefits contained in the coverage, in accordance with the Mental Health Parity and Addiction Equity Act of 2008. For this purpose, a large employer is defined as an employer who employed an average of at least 51 employees on business days during the preceding calendar year and who employs at least two employees on the first day of the plan year.
Click here to learn more.
H.B. 1095 was signed into law on April 11, 2010 and for creditable coverage purposes, sets the parameters of the period an individual is not covered by health insurance as beginning the day after an individual's termination of coverage and ending when an application for coverage is submitted. When an application is submitted by mail, the date of the postmark is the date the application is submitted.
Click here to learn more.
H.B. 315 was signed into law on April 11, 2010 and expands the ability of a person who becomes ineligible for coverage under a group health insurance policy to exercise the option to continue coverage under the group policy. The measure (i) extends the maximum length of continued coverage from 90 days to 12 months; (ii) allows premiums to be paid monthly; and (iii) requires the policyholder to inform the persons insured under the group policy of the option. The notice shall be provided within 14 days of the policyholder's knowledge of the covered person's loss of eligibility under the group policy. The measure also retains the policyholder's option to have the issuer issue an individual policy to the covered person who loses eligibility, and the maximum period for applying for such a policy is extended from 31 to 60 days after loss of eligibility.
Click here to learn more.
H.B. 317 was signed into law on April 11, 2010 and requires group health insurance policies, health services plans, and health care plans to offer enrollment opportunities for employees and dependents who are eligible for coverage under, but not enrolled in, such policies or plans upon their (i) losing eligibility for coverage under the Commonwealth's Medicaid or FAMIS program or (ii) becoming eligible for premium assistance under either program. In order to enroll, the employee or dependent must request coverage within 60 days of being terminated from coverage under the state program or 60 days of becoming eligible for premium assistance. Employers providing such policies or group plans are required to notify employees of their potential eligibility for premium assistance under these state programs and to disclose to the Department of Medical Assistance Services, upon request, information to permit the Department to determine the cost-effectiveness of any premium assistance provided. The measure implements certain provisions of the federal Children's Health Insurance Program Reauthorization Act of 2009.
Click here to learn more.
H.B. 1105 was signed into law on April 11, 2010 and provides that a statement of change of a business entity's registered agent, registered office, or both, may be filed electronically with the office of the clerk of the State Corporation Commission. The measure also provides that a registered agent may mail a copy of a statement of change or a statement of resignation to the business entity on or before the business day following the day on which such statement is filed with the clerk's office. Currently, a statement of change or resignation is required to include a statement that it has been mailed to the business entity, which does not accommodate electronic filing. The measure also eliminates variances in terminology in parallel sections that address changes of registered offices and registered agents of stock and nonstock corporations, limited liability companies, business trusts, limited partnerships, and registered limited liability partnerships.
Click here to learn more.
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| Wisconsin |
The State of Wisconsin Office of the Commissioner of Insurance (OCI) issued a bulletin, dated May 3, 2010, addressed to insurers within the State who write individual and group insurance in an effort to communicate changes required under the Patient Protection and Affordable Care Act (PPACA), as amended. The bulletin lists requirements that go into effect for new plans beginning on or after Sept. 23, 2010. The bulletin also separately lists requirements that grandfathered plans will need to comply with as of Sept. 23, 2010.
As part of the bulletin, the OCI reminds insurers that the new federal law does not supersede Wisconsin insurance law, which was effective Jan. 1, 2010 for dependent coverage. The law that requires most fully insured health insurance policies and self-funded governmental health plans of the state to provide coverage to certain adult children up to 27 years of age. Frequently asked questions are available concerning the Wisconsin state requirements for dependent coverage.
Click here to view the bulletin regarding the PPACA.
Click here to view the bulletin regarding Wisconsin Extended Dependent Coverage.
Click here to view FAQs Regarding Wisconsin Dependent Coverage.
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This material was created by NFP, its subsidiaries, or affiliates for distribution by their Registered Representatives, Investment Advisor Representatives, and/or Agents. This material was created to provide accurate and reliable information on the subjects covered. It is not intended to provide specific legal, tax or other professional advice. The services of an appropriate professional should be sought regarding your individual situation. Neither NFP Securities, Inc. nor NFP Benefits Partners offer legal or tax services. The information contained in this edition is issued for informational purposes only and has been collected from regulations, statutes, laws, court decisions and administrative rulings and should not be viewed as interpretation or relied upon as legal or tax advice. This information is known to be current as of the initial date of distribution. Please note that changes to the legislation, regulations, statutes, policies, etc., may have occurred and are not reflected herein.
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