Form 5500 Proposed Notices Eliminated

Form 5500 Proposed Notices Eliminated

US Labor Department releases advance copies of 2012 Form 5500 annual report

US Labor Department releases advance copies of 2012 Form 5500 annual report

IRS issues guidance regarding the 3.8% medicare tax on net investment income

IRS issued guidance regarding the 3.8% medicare tax on net investment income.

IRS issues guidance on Additional Medicare Tax

The Additional Medicare Tax applies to individuals’ wages, other compensation, and self-employment income over certain thresholds; employers are responsible for withholding the tax on wages and other compensation in certain circumstances.

The IRS issued guidance on November 30, 2012.

Great health care reform post via Thompson Publishing

Employers Should Eye New Reform Standards for Essential Health Benefits and Actuarial Value

November 21, 2012 – 3:54 pm | By Todd Leeuwenburgh | No comments yet

New reform standards for health plan value and coverage are important for employers, first because they will determine the kind of insured coverage that small employers buy. But grandfathered and self-funded employer health plans also need to know the rules to avoid penalties under health reform.
The proposed rules, which HHS announced on Nov. 20, include standards on how states will define a core set of “essential health benefits” that exchange plans, small group plans and issuers of individual policies must cover.
The June 2010 health reform law requires that all policies sold on the individual market and to small groups (inside or outside the state exchanges): (1) cover the 10 categories of EHBs; (2) meet annual cost-sharing limits when covering EHBs; and (3) meet actuarial value limits for EHB coverage, starting with plan or policy years beginning Jan. 1, 2014.
The law does not require large or self-funded plans either to cover all 10 EHBs, or adhere to cost-sharing rules when covering EHBs. However, EHBs are important for large, self-funded employers because they bear on other reform mandates, such as lifetime limits. For example, if a self-funded plan does cover any EHBs, it may not impose limits on them.
Plan Actuarial Value
Actuarial value is defined as the percentage paid by a health plan of the total allowed costs of benefits. Total allowed benefit costs is defined as the anticipated covered medical spending for EHB coverage paid by a health plan for a standard population, computed based on the health plan’s cost sharing rules.
The actuarial level of coverage must be 60 percent for a bronze plan, 70 percent for a silver plan, 80 percent for a gold plan and 90 percent for a platinum plan.
The proposed rule includes an AV calculator for health plans. The proposed tool allows users to measure the actuarial value of health plans and compliance with actuarial value standards required by health reform. This Nov. 20 memo describes the nine steps insurers and plans will use to calculate AV.
The proposed rules allow for variations in AV of plus or minus 2 percent to be called de minimis.
They also suggest ways of calculating the AV of EHBs that are not generally represented in current policies; namely, pediatric oral and vision, and habilitative services. The lack of these two categories also makes it difficult to select state benchmark plans as models for qualified health plans on exchanges.
State Benchmark Plans
The rules propose an accreditation process for states to follow when certifying “qualified health plans.” New previously unaccredited insurers will be able to sell policies on an exchange starting Jan.1, 2014, if they are scheduled to get reviewed by a recognized accrediting agency. For their second year, insurers will have to have their plans accredited as a precondition to selling on an exchange.
The rule proposes that states select a benchmark plan from among several options, and all plans that cover EHB must offer benefits substantially equal to those offered by the benchmark plan.
A “base-benchmark” plan may be: (1) the largest plan by enrollment in any of the three largest small group insurance products in the state’s small group market; (2) any of the largest three state employee health benefit plans by enrollment; (3) any of the largest three national Federal Employees Health Benefits plans by enrollment; or (4) the largest insured commercial non-Medicaid HMO in the state. Go here for more information on how states may choose their benchmark plan.
If a benchmark plan is missing any of the 10 statutory categories of benefits, the proposed rules would have the state or U.S. Department of Health and Human Services supplement the benchmark plan in that category. The proposed rules also include a number of standards to protect consumers against discrimination and ensure that benchmark plans offer a full array of EHB benefits and services.
If a state does not make a selection, the largest small-group product offered in the state, by enrollment, would be the benchmark. If a “base-benchmark” plan does not cover all 10 categories of EHBs required by the reform law, or failed to meet other requirements, it would have to be augmented.
The proposed rules also would:

• prohibit benefit designs that could discriminate against potential or current enrollees;
• include special standards for benefits not typically covered by individual and small-group policies, such as pediatric oral and vision, and habilitative services; and
• add standards for prescription drug coverage.

The appendix of the proposed rules include the proposed list of state-selected EHB-benchmark plans, as well as the default benchmark plan for a state that does not select a benchmark plan, for public comment. States can make an EHB-benchmark selection until the close of the comment period. Further information on the benchmark plans can be found on the CCIIO website.
The proposed rules are scheduled to be published in the Nov. 26 Federal Register, and public comments must be submitted by Dec. 26.
Background
Essential health benefits are a core set of benefits that includes the following general categories:

• Ambulatory patient services
• Emergency services
• Hospitalization
• Maternity and newborn care
• Mental health and substance abuse
• Prescription drugs
• Rehabilitative and devices
• Laboratory services
• Preventive and wellness services
• Pediatric services, including oral and vision care

The feds say their guiding principle is that the EHBs’ scope will be equal to the scope of benefits provided under a typical employer plan, on a state-by-state basis, as HHS described in this Health Benefits Bulletin on Dec. 16, 2011.

IR-2012-93: Retirement Plans Can Make Loans, Hardship Distributions to Sandy Victims

IR-2012-93: Retirement Plans Can Make Loans, Hardship Distributions to Sandy Victims

Obama Administration Extends Deadline For State Exchanges - Kaiser Health News

Obama Administration Extends Deadline For State Exchanges - Kaiser Health News

Target date funds receiving government attention

Target date funds have emerged as a very popular QDIA.  As a result, the government is taking a closer look.  Read more at http://www.erisadiagnostics.com/current_article.asp

IR-2012-77: IRS Announces 2013 Pension Plan Limitations; Taxpayers May Contribute up to $17,500 to their 401(k) plans in 2013

IR-2012-77: IRS Announces 2013 Pension Plan Limitations; Taxpayers May Contribute up to $17,500 to their 401(k) plans in 2013

Beneficiary designation forms can be problematic

Plan participants frequetnly forget to update beneficiary forms for life events.  Unfortunately, the consequences fall to those left behind.  Read our latest column recently published in the Thompson Publishing Group Pension Plan Fix It Book.

Looking for IRS help to locate lost participants?

You will have to look someplace else for help. In Rev. Proc. 2012-35, the IRS indicated that due to the availability of locator resources, including the internet they were modifying Revenue Procedure 94-22.  The IRS will forward letters only for humane purposes, i.e., to convey an urgent or compelling message or because of an emergency.The new procedure is effective for requests made after 8/31/2012.

DOL video on 401(k) participant disclosures

The DOL has released a two minute video regarding fees which effectively illustrates the impact of fees on account balances.

EBSA Website Update

EBSA Website Update

EBSA helping plan sponsors who do not receive fee disclosures

Covered service providers were required to provide fee disclosures to plan sponsors effective July 1, 2012.  But what should a plan sponsor do if they didn't receive the disclosures?  The plan sponsor should request the information from the covered service provider in writing. If the covered service provider does not provide the information, the plan sponsor must notify the DOL either by paper or electronically.

The DOL has changed the mailing address, provided a sample notice and announced a new website which will enable the plan sponsor to notify the DOL electronically.

Why is this so important? Per the DOL website "If a service provider fails to provide the required information, the contract or arrangement between the plan and the service provider is prohibited by ERISA, and the plan fiduciary will have engaged in a prohibited transaction."  However, there is an exemption if the plan sponsors requests the missing information and if not received notifies EBSA.

IRS issues FAQ regarding new Medicare Tax

IRS issued FAQ regarding the additional Medicare Tax that will go into effect in 2013. If you haven't done so already, make sure your payroll system is set up for the additional tax and affected employees notified.

http://www.irs.gov/businesses/small/article/0,,id=258201,00.html

EBSA adds Mental Health Parity Part II Compliance Tool

EBSA adds Mental Health Parity Part II Compliance Tool and offers two webinars.

The Department of Labor's Employee Benefits Security Administration has updated its website with the following:

• Updated Mental Health Parity Part II of the Self Compliance Tool, available at www.dol.gov/ebsa/pdf/cagappa.pdf
• Upcoming Webcasts:
• Mental Health Parity and Addiction Equity Act Compliance Assistance Webcast, registration and information available at   http://mp163422.cdn.mediaplatform.com/163422/wc/mp/4000/15208/15213/16284/Lobby/default.htm?ref=ProductionTeamEmail
• Apprenticeship Plans and Fiduciary Responsibilities Webcast, registration and information available at http://mp163422.cdn.mediaplatform.com/163422/wc/mp/4000/15208/15213/16705/Lobby/default.htm?ref=ProductionTeamEmail

GAO Study issued April 2012 - includes video illustrating revenue sharing

The General Accounting Office (GAO) released a study regarding 401(k) plans.  One of the recommendations is that DOL develop and implement more proactive approaches to plan sponsor educational outreach especially as it relates to plan fees. The study revealed that plan sponsors faced challenges in understanding the fees they paid and how participants are charged.

Included in the report is a link to a short video illustrating how revenue sharing arrangements can work.  The video is 5 minutes long and it shows how complicated this can be.

IRS issues guidance regarding $2500 FSA Limit

The IRS issued Notice 2012-40 regarding the $2,500 FSA limit enacted by Health Care Reform.

There is a lot of welcome news in the Notice including:

• clarification that the limit applies to plan years beginning after December 31, 2012
• plans may adopt conforming amendment at any time through the end of 2014
• for plans with a grace period, amounts carried over will not apply to the $2,500 limit
• relief may be available for reasonable errors in applying the limit

For more details read our ErisaALERT 2012-10.

Don't forget to budget for the Comparative Effectiveness Research Fee

Health Care Reform imposes $1/$2 fee on insurance companies and plan sponsors.  The IRS recently issued proposed regulations covering how to calculate the fee and where to submit the payment.

Read our ErisaALERT to learn more.

DOL requests stop loss information

In a recent ErisaALERT regarding increased DOL activity, we noted the DOL's interest in stop loss insurance even though the From 5500 filed in this particular situation did not indicate that the plan had stop loss insurance.

Earlier this month, the DOL issued a Request for Information Regarding Stop Loss Insurance. The DOL is primarily interested in stop loss coverage set at low "attachment points".  The DOL is concerned that small employers with healthy workforces could choose to self-insure and potentially worsen the risk pool for the fully insured group market as well as the Small Business Options Program (SHOP) Exchanges that begin in 2014.

Comments must be submitted on or before July 2, 2012.

Judge awards $35 million for breach of fiduciary responsibilities

A recent court case has garnered a lot of attention.  The judge awarded approximately $35 million to the plaintiffs finding that the plan fiduciaries breached their fiduciary duties.  Whether or not the decision stands on appeal remains to be seen but there are lessons to be learned from the case.

Download our latest ErisaALERT to read more.

DOL updates Health Benefits Advisor tool

The DOL announced that Health Benefits Advisor for Employers has been updated.  This tool provides an overview of certain federal laws that can affect group health plans.  It is worth checking out!

Two informative government publications

The DOL published Understanding Retirement Plan Fees and Expenses; a very useful tool as plan sponsors begin to receive their 408(b)(2) disclosures.

The IRS published (on their website) Audit Techniques and Tax Law to Examine COBRA cases.

Both are worth a read.

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A flurry of governmental guidance

The government agencies have been full throttle when it comes to issuing guidance.  We have just posted three ErisaALERTs to our website and still have a few in the works!

ErisaALERT 2012-04 discusses a package of guidance related to securing lifetime income.

ErisaALERT 2012-05 discusses the final Summary of Benefits and Coverage regulations.

ErisaALERT 2012-06 discusses the recently issued FAQs regarding the Summary of Benefits and Coverage requirements.

Stay tuned, there will be more!

IRS chart for W-2 reporting of health care costs

The IRS website contains a chart which is a handy reference regarding what is and what isn't includible in calculating reportable health care costs on W-2s.

DOL issues Technical Release 2012-01 with Health Care Reform FAQ

The DOL issued Technical Release 2012-01 containing 7 FAQs regarding various topics including automatic enrollment (not effective until 2014); intent to issue guidance regarding the coordination of the 90 day waiting period rules of the IRC and the PHS; anticipated "look back" period for determining whether an employee is a full time employee and a discussion regarding whether a newly hired employee is a full time employee.

DOL issues final regulations on the Summary of Benefits and Coverage

The DOL issued final regulations on the Summary of Benefits and Coverage today.

We will prepare an ErisaALERT on this and other recent guidance shortly.

EBSA Issues final 408(b)(2)regulations

EBSA issued final 408(b)(2) regulations and postponed the effective date until July 1, 2012 (see ErisaALERT 2010-11 for a discussion of the proposed rules). The final regulation is effective for both new and existing contracts or arrangements. 

As a result of the extension, the deadline for participant disclosures (see ErisaALERT 2010-12) is extended to August 30, 2012. In addition, the first quarterly participant statement which must reflect fees and expenses deducted from the participant's account is due November 14, 2012 for the quarter ending September 30, 2012.

The EBSA website provides a list of the major changes.

IRS adds more questions to the Form 8955-SSA Q&A

Form 8955-SSA replaced the Schedule SSA attached to the Form 5500.  The deadline for the  first filing of the new form recently passed. Based on the new questions and answers, it appears that people are having trouble obtaining the data to complete the Form 8955-SSA.  Here is an abbreviated version of the latest Q&A:

What should I do if I missed the filing deadline? Answer - submit your form as soon as possible.
Am I required to remit payment for penalties? Answer - no, we will contact you if a penalty is assessed.
Is there a delinquent filer program for late filers? Answer - not at this time.


Let's hope the IRS will be very lenient.

Two interesting bills introduced

The IFEBP noted two interesting bills in its Today's headlines:

Health Freedom for Seniors Act (HR 3819)  would amend the IRC to allow the transfer of required minimum distributions from a retirement plan to a health savings account.

Elder Care Tax Credit Act of 2012 (HR 3820) would modify the dependent care credit to take into account expenses for care of parents and grandparents who do not live with the taxpayer.

HHS extends contraceptive coverage deadline for certain organizations

In a press release issued January 20, 2012, HHS announced that nonprofit employers who, based on religious beliefs, do not currently provide contraceptive coverage in their insurance plan, will have until August 1, 2013 to comply with the new law. Recall that beginning August 1, 2012, most new and renewed health plans will be required to cover all FDA approved forms of contraception.

Employers wishing to take advantage of the additional year must certify that they qualify for delayed implementation and provide notices to their employees stating that contraceptive services are available at sites such as community health centers.

New Year - time to focus on compliance

Employee benefit compliance is often viewed as a necessary evil; it is tedious, boring and complicated but if your plans are selected for audit, the process can be a nightmare if you are not prepared.

A recent Towers Watson Retirement Plan Governance Survey revealed that 73% of respondents indicated regulatory complexity will be among the top governance risks over the next two years.  The survey also revealed that only 26% of plan sponsors conduct regular compliance reviews driven by anticipated new risks and a pending government audit.

We have a number of tools to get you started.  Download our ErisaALERT 2012-01 to learn more.

IRS issues new guidance on W-2 reporting

The Affordable Care Act required informational reporting of the aggregate cost of employer sponsored group health plan coverage beginning with 2012 W-2s issued in January 2013 (ErisaALERT 2011-5 and ErisaALERT 2011-14). The IRS provides new guidance in Notice 2012-9 which restates and supersedes previous guidance. In this latest Notice, the IRS clarifies some of the Q's and A's in Notice 2011-28 and adds new Q's and A's. The changes are summarized in the introduction to the Notice. Read ErisaALERT 2012-02 for more information.

IRS posts FAQ regarding deferred vested benefit statement

The IRS has a long standing requirement to provided a benefit statement to participants who terminated and were reported on the Schedule SSA attached to the Form 5500.  The Schedule SSA has been replaced by Form 8955-SSA which requires plan sponsors to indicate whether or not the statement was provided to the participant (question 8).  There has been a flurry of discussions regarding how plan sponsors should answer that question.  The new FAQ should provide some comfort to plan sponsors and is reproduced below.

What are the requirements for answering “yes” to question 8 on Form 8955-SSA? Question 8 on Form 8955-SSA asks whether the plan administrator provided an individual statement to each participant required to receive a statement. The instructions to the Form add that the plan administrator must, before the expiration of the time for the filing of the Form, furnish to each affected participant a statement setting forth the information required to be contained in the Form. May the plan administrator satisfy this requirement by using other notices such as benefit statements and distribution forms? Also, does this mean that the plan administrator must furnish a notice that includes all of the information on the Form 8955-SSA? A plan administrator may answer “yes” to question 8 if the required information was timely furnished to participants in other documentation such as benefit statements or distribution forms. A separate statement designed specifically to satisfy this requirement is not required.  A plan administrator may answer “yes” to Question 8 if the statements or other documentation issued to the participants include the following information: Name of the plan Name and address of the plan administrator Name of the participant Nature, amount, and form of the deferred vested benefit to which such participant is entitled. Thus, for purposes of completing Form 8955-SSA, the plan administrator’s notice to the plan participant does not need to include the participant’s social security number, the codes on page 2 of the Form 8955-SSA used to identify previously reported participants, or any information regarding any benefits which are forfeitable if the participant dies before a certain date.