HHS Issues Informational Bulletin Regarding Essential Benefits

On December 16, 2011 HHS issued an Informational Bulletin announcing that it intends to propose that essential health benefits be defined using a benchmark approach. 

HHS may have "punted" defining essential health benefits to the individual states. States can select from four different benchmarks in defining essential health benefits. The Bulletin represents HHS' intended regulatory approach and encourages comments which are due by January 31, 2012.

Read our latest ErisaALERT to learn more.

EBSA Reissues Interim Policy on Electronic Delivery of Required Disclosures

On December 8, 2011 EBSA released Technical Release 2011-03R as well as a News Release. Technical Release 2011-03R is identical to Technical Release 2011-03 except to clarify that:

• continuous access websites are permissible if the plan administrator complies with the conditions in the technical release; and
• Investment-related information under DOL regulation 2550.404a-5(d) of the participant-level fee disclosure regulation may be furnished as part of, or along with, a pension benefit statement, either electronically under the conditions in the technical release or in paper form.

To read more, download our latest ErisaALERT.

Informational Copies of the 2011 Form 5500 Released

Advance informational copies of the 2011 Form 5500 annual return/report and related instructions were released yesterday. Information copies of the forms, schedules and instructions are available online at www.efast.dol.gov. These advance copies of the 2011 Form 5500 are for informational purposes only and cannot be used to file a 2011 Form 5500 annual return/report. Filers should monitor the EFAST website for the availability of the official electronic versions for filing using EFAST-approved software or directly through the EFAST website.

Modifications to the Form 5500 and Form 5500-SF for plan year 2011 are described under "Changes to Note" in the 2011 instructions, including:

• The actuarial schedules (Schedule MB and Schedule SB) have been updated to reflect provisions of the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010 (“PRA 2010”).
• The instructions are updated to include the information in the EFAST2 Frequently Asked Questions explaining when a service provider who manages the filing process for the plan can get EFAST2 signing credentials and submit the electronic Form 5500 for the plan.
• The Schedule C instructions are updated to advise that for a multiemployer or multiple-employer plan, where the “plan sponsor” is the joint board of trustees for the plan, payments by contributing employers, directly or through an employer association, or by participating employee organizations, should be treated the same as payments by a plan sponsor.
• The Schedule I and Form 5500-SF instructions are updated to advise that for plans with fewer than 100 participants at the beginning of the plan year, any amount deposited with or repaid to such plan not later than the 7th business day following the day on which such amount is received by the employer or on which such amount would otherwise have been payable to the participant in cash, shall be deemed to be contributed or repaid to such plan on the earliest date on which such contributions or participant loan repayments can reasonably be segregated from the employer’s general assets.

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DOL and HHS Issue Guidance on Medical Loss Ratio Rebates

On December 2, 2011, the DOL issued Technical Release 2011-04 concurrently with HHS issuance of an Interim Final Rule regarding Medical Loss Ratio (MLR) rebates. The Interim Final Rule appeared in the December 7, 2011 Federal Register and requests comments no later than February 6, 2012.  The HHS guidance is expressed in terms of "subscribers" while the DOL guidance addresses ERISA group health plans.  If you provide health benefits via insurance, it's time to review your plan document language as it relates to rebates.

The TR notes that just because the plan sponsor is the policyholder doesn't automatically mean the plan sponsor is entitled to the rebate. The terms of the governing plan documents are critical in determining who is entitled to the rebate.

If you think you  might receive a rebate next year, check your plan documents!

For more details read our ErisaALERT.

 

DOL Issues Final Rule on Providing Investment Advice

On October 25, 2011 the DOL issued a final rule relating to the provision of investment advice to participants and beneficiaries in individual account plans and beneficiaries of individual retirement accounts (and certain similar plans).

Key takeaways for plan sponsors:

·         The selection of an investment advice arrangement is a fiduciary act.

·         The investment advice arrangement must be authorized by a plan fiduciary.

·       The computer model must be certified by an eligible investment expert. The fiduciary adviser is responsible for selecting the eligible investment expert.

·        Both the level fee and computer based investment arrangement must be audited annually by an auditor who is independent from the investment adviser. The fiduciary adviser is responsible for selecting the independent auditor.

·       The plan fiduciary must receive a copy of the independent auditor's report within 60 days of completion of the audit.

·         The fiduciary adviser must provide certain required disclosures to participants.

Read our latest ALERT for more details.

EBSA posts new FAQs - Summary of Benefits and Coverage effective date posptoned

The first question will be of special interest to many. Click here for the FAQs

Summary of Benefits and Coverage

Q1: On August 22, 2011, the Departments issued proposed regulations and proposed templates in connection with implementation of the Summary of Benefits and Coverage and Uniform Glossary requirements of PHS Act § 2715. An applicability date “beginning March 23, 2012” was proposed. At the same time, the Departments invited comments generally, as well as on a range of discrete issues, including the timing of the application of the SBC requirement.

My plan anticipates that preparation of the summary of benefits and coverage will take several months and require significant resources. In light of the March 23, 2012 proposed applicability date, we are considering moving forward with implementation of the Summary of Benefits and Coverage requirements, using the proposed rules and templates, but are concerned that the final rules and templates will differ from the proposed rules and templates, which would prompt additional implementation costs. What is the timeline for the issuance of future guidance on the summary of benefits and coverage? What actions should my plan be taking now, if any?

The Departments received many comments on the proposed regulations and templates and intend to issue, as soon as possible, final regulations that take into account these comments and other stakeholder feedback.

PHS Act section 2715 provides that group health plans and health insurance issuers shall provide the Summary of Benefits and Coverage and Uniform Glossary pursuant to standards developed by the Departments. Accordingly, until final regulations are issued and applicable, plans and issuers are not required to comply with PHS Act section 2715.

It is anticipated that the Departments’ final regulations, once issued, will include an applicability date that gives group health plans and health insurance issuers sufficient time to comply.

IRS announces only three plans on a Form 5558 - no attachments allowed

The Internal Revenue Service will not process lists of plans attached to a Form 5558, Application for Extension of Time To File Certain Employee Plan Returns, by filers requesting an extension of time to file Form 5500 series return/reports or Form 8955-SSA returns.

If the employer maintains more than one single employer plan and the plan years end on the same date, you may file a single Form 5558 to apply for extensions to file Forms 5500 series and/or Forms 8955-SSA for up to three of these plans. Do not list more than three plans on a single Form 5558. Do not attach lists of plans to a Form 5558, they will not be processed.

Lists attached to the Form 5558 received through July 31, 2012, will be returned to the filer to submit a completed Form 5558 for all plans on the list requiring an extension. Lists received after July 31, 2012 will not be returned and will not be processed.

OCR announces HIPAA Pilot Audit Program

The American Recovery and Reinvestment Act of 2009, in Section 13411 of the HITECH Act, requires HHS to provide for periodic audits to ensure covered entities and business associates are complying with the HIPAA Privacy and Security Rules and Breach Notification standards.  To implement this mandate, OCR is piloting a program to perform up to 150 audits of covered entities to assess privacy and security compliance.   Audits conducted during the pilot phase will begin in November 2011 and conclude by December 2012.

More information regarding OCR’s Pilot Audit Program is available on the OCR website at http://www.hhs.gov/ocr/privacy/hipaa/enforcement/audit/index.html

Revisiting W-2 Reporting of the Cost of Health Care Coverage

On October 31^st, the IRS conducted an informative webinar which should be available shortly on their website.  In addition, the IRS has a Questions and Answers page on their website. 

Here are some highlights:

Who must report the aggregate cost of employer sponsored health plan coverage?

Generally, employers who issue 250 or more W-2s in 2011. The IRS noted that the current guidance (Notice 2011-28) is interim guidance.  Any changes will be prospective and only upon issuance of further IRS guidance providing at least 6 months advance notice.

Are both employee and employer contributions reported?

Yes, the amount reported includes both employee and employer contributions even if employee contributions are pre-tax.  There is a special rule for health care FSAs.

Where is the cost information reported?

The cost is reported in Box 12 of the W-2 with code DD but is not reported on the W-3.

To read more refer to our ErisaALERT 2011-14  and ErisaALERT 2011-5