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Health & Welfare Plans Newsletter

April 9, 2010

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HIPAA covered entities, including health plans, health care clearinghouses, and covered health care providers, must comply with the HIPAA Security Rule. This regulation also requires compliance from business associates. Covered entities must create and document compliance with a HIPAA Security manual. This course will outline the security rules, safeguards and what is required for the manual.

[Guidance Overview]
2010 ERISA Guide to Reporting & Disclosure
Excerpt: "The Guide is useful in: Identifying forms to be filed and distributed annually; Developing controls for compliance, including an internal calendar for reporting and disclosure; Determining and coordinating reporting and disclosure items for actuaries, attorneys and accountants to prepare; Identifying special reporting and disclosure requirements for plan installation, amendment, termination, etc.; Evaluating administrative considerations in establishing a new or supplemental plan; Advising on responsibility for compliance with the reporting and disclosure rules."

[Guidance Overview]
Court Finds Retiree Health Plan Amendment Violates Anti-Cutback Rule
Excerpt: "In Battoni v. IBEW Local Union No. 102 Employee Pension Plan, the 3rd U.S. Circuit Court of Appeals held that an amendment to a collectively bargained welfare plan illegally reduced plan participants' pension benefits. Under the amendment, participants who elected to receive their pension benefits in a lump sum became ineligible for retiree health benefits. The court found the plan amendment violated the anti-cutback rule -- even though the rules do not apply to health and welfare plans. According to the court, the violation occurred because the amendment 'constructively amended' the pension plan by conditioning receipt of the lump-sum benefit on surrendering health care benefits provided by the welfare plan."
(Towers Watson)

[Guidance Overview]
Health Care Reform from the Employer's Perspective: Tax Credit for Small Businesses
Excerpt: "[T]his communique addresses the small business tax credit for 'eligible small employers,' available for taxable years beginning on or after December 31, 2009. This means if you operate on a calendar-year basis, you may be entitled to claim a credit for this year's tax return if you contribute toward the cost of your employees' health care coverage. If you are a tax-exempt organization [2] and otherwise meet the criteria for an eligible small employer, you may be eligible to receive the tax credit by applying it against your payroll taxes."
(Thorp Reed & Armstrong, LLP)

[Guidance Overview]
Health Care Reform Law Augments HIPAA Transaction Standards
Excerpt: "The massive health reform law enacted March 23 includes amendments to HIPAA's electronic data interchange (EDI) provisions that require greater uniformity of HIPAA-standard transactions, including governmental adoption of 'operating rules.' The HIPAA changes in Section 1104 of the Patient Protection and Affordable Care Act (PPACA; Pub. L. 111-148) also add an 'electronic funds transfer' (EFT) transaction. In addition, this section seeks to jumpstart the U.S. Department of Health and Human Services' (HHS) long-delayed rules on unique health plan identifiers, which HHS is directed to finalize by Oct. 1, 2012, and standard claims attachments, which are now due Jan. 1, 2016. The EFT rules must be issued by Jan. 1, 2014."
(Thompson Publishing Group Inc.)

[Guidance Overview]
An Employer's First Years Under Health Reform (PDF)
4 pages. Excerpt: "In effect now. Until now, there was a federal tax cost to a parent who covers an older non-dependent child on an employer health plan. The IRS required that the value of the child's coverage be "imputed" as non-cash taxable income and reported on the W-2 as wages. The Federal Health Care Act removes that requirement, effective for April payrolls, provided the child has not reached age 27 in the calendar year. The transition in 2010 is a little tricky. W-2s for the 2010 year will reflect three months of imputed income (January through March) and nine months of tax-free income. After that, there is no federal tax cost for such coverage. Note that the requirement to impute federal income for coverage of other non-dependents (such as ex-spouses and same.-sex spouses that do not qualify as dependents under the Internal Revenue Code) is not changed."
(Davis, Malm & D'Agostine, P.C.)

[Guidance Overview]
Chart: Effective Dates of Key Provisions of the Patient Protection and Affordable Care Act (PDF)
5 pages. Excerpt: "The numerous new requirements under the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act of 2010, have various effective dates, many of which were changed during the legislative process. A few of these provisions are effective immediately, the majority are effective in 2011 and 2014, and the effective date for the 'Cadillac Tax' has been delayed to 2018. The . . . chart sets forth the effective dates for key provisions that impact employers, insurers, administrators and individuals."
(Groom Law Group)

[Guidance Overview]
CMS's 2011 Medicare Part D Benefit Parameters (PDF)
Excerpt: "Plan sponsors that want to remain qualified for the employer retiree drug subsidy will need to determine if their 2011 prescription drug coverage is at least actuarially equivalent to the 2011 standard Medicare Part D coverage. The actuarial equivalence testing will not reflect the new benefits provided in the donut hole. Those plan sponsors who provide coverage directly or indirectly through a Part D plan may want to review the impact of these new parameters and provisions on their plans. In any event, plan sponsors may want to evaluate whether to move Medicare retirees into other options for medical and/or drug coverage for 2011. The changes made under the health care reform law make a review of various options particularly important this year."
(Buck Consultants)

[Guidance Overview]
Elimination of Tax Deduction Related to Medicare Part D Subsidy: Accounting for the Impact Under U.S. GAAP and IFRS
Excerpt: "Under U.S. GAAP, ASC 740, Income Taxes, requires the impact of the change in tax law to be immediately recognized in continuing operations in the income statement in the period that includes the enactment date (i.e., the date the change is signed into law). Companies affected by the change in tax treatment will need to identify the impact of the change. That amount would reduce the deferred tax asset on the balance sheet with an offsetting charge to the income statement in the period that includes the enactment date (e.g., a calendar year-end public company would record the charge in the quarter ended March 31, 2010). Different accounting for the change in tax treatment is required under IFRS."

Federal Office of Personnel Management Letter to Health Insurance Companies Calls on Health Insurers to Focus on Illness Prevention
Excerpt: "OPM sends 'carrier' or 'call letters' to FEHBP insurance plans each year. The letters tell the companies what OPM would like to see in the offerings made to employees during the fall open season, when they can shop among a broad variety of plans. This year's call letter provided no big changes or surprises. But it did place even greater emphasis on illness prevention. 'We expect you to provide benefits for preventive care, immunizations, and screenings with no enrollee cost sharing,' the letter said. 'We expect you to offer comprehensive smoking cessation benefits that include coverage for counseling, medications, multiple quit attempts, no annual or lifetime limitations and no enrollee cost sharing.'"
(The Washington Post; free registration required)

The Future of Workplace Wellness Incentives
Excerpt: "Although one potential improvement in preventive medicine coverage will not take effect until 2014, it could be worth a few thousand dollars to you and your family when it happens. Beginning that year, the new law will let employers offer wellness incentives to their workers of up to 30 percent (raised from 20 percent currently) of a plan's total premium -- both the employer's and worker's portions. That would be up from the current limit of 20 percent of the total premium."
(The New York Times; free registration required)

Health Care Reform from the Employer's Perspective: The Impact
Excerpt: "The impact of the Reform Act on your business and on your employees will depend, in part, on whether you maintained a health care plan on March 23, 2010, the date the Health Care Act was signed into law. If you sponsored a plan on that date, it is considered a 'grandfathered plan' and you may not be subject to all of the Health Care Act's provisions. In addition, some Reform Act provisions impact fully-insured plans differently than self-insured plans. For example, many employers have provided fully-insured health care arrangements to select or specific groups of employees. Up to now, fully-insured arrangements did not have to comply with the Tax Code's prohibition on discrimination in favor of highly-compensated employees. This will change in 2011 for fully-insured arrangements."
(Thorp Reed & Armstrong, LLP)

The Group Employed Model as a Foundation for Health Care Delivery Reform
Excerpt: "With a focus on delivering low-cost, high-quality care, several organizations using the group employed model -- with physician groups whose primary and specialty care physicians are salaried or under contract -- have been recognized for creating a culture of patient-centeredness and accountability."
(The Commonwealth Fund)

Health Care Reform Implementation Timeline
Excerpt: "This advisory provides a timeline of many of the key changes that will take place from now through 2020 as a result of the Patient Protection and Affordable Care Act (Pub. Law. No. 111-148) and the Health Care and Education Reconciliation Act (H.R. 4872)."
(Mintz, Levin, Cohn, Ferris, Glovsky and Popeo P.C.)

Historic Health Care Reform Becomes Law (PDF)
5 pages. Excerpt: "To highlight the immediate changes of the health care reform law, this client letter only includes a summary of the provisions that are effective now or will be effective by January 1, 2011."
(Kelly, Hannaford & Battles P.A.)

Health Care Reform Bill Passes Without HRA Tax Parity Provision
Excerpt: "The health care reform bill recently passed by the House and Senate (H.R. 3590) does not include provisions to extend tax-free employer-paid coverage to nonspouse or nondependent beneficiaries. This would have provided tax parity to non-spouse/non-dependent individuals who qualify for and receive employer-provided health plan benefits."

Health Care Reform: What You Need to Do Now and in the Future
Excerpt: "This alert summarizes the major provisions of the Patient Protection and Affordable Care Act . . . and the Health Care and Education Reconciliation Act of 2010 . . . that will impact employers and their group health plans . . . . The Act, among other changes, increases health insurance coverage through shared responsibility by placing responsibilities on individuals to maintain coverage or pay a tax penalty, and on employers to offer coverage or pay a tax penalty. Employers who fail to offer coverage will pay one penalty, and those that have employees who fail to take the coverage offered and instead seek subsidized coverage through the new purchasing 'Exchanges' will pay a different reduced penalty."
(Haynes and Boone, LLP)

HHS to Offset Some Health Costs of Early Retirees in Employer Plans
Excerpt: "By June 21, a new program will offer employers partial reimbursement of group health plans' costs for Medicare-ineligible early retirees and their dependents. Authorized by the recent health care reform law, the program will end once its $5 billion funding runs out. Only health plans with cost-saving procedures targeting expensive and chronic conditions can receive reimbursements, which will cover 80 percent of each early retiree's health care costs between $15,000 and $90,000 in 2010. All payments must go toward lowering plan costs. Interested employers should prepare now for participation."
(Mercer LLC)

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Webcasts and Conferences

Cafeteria Plan Election Changes: A Seminar Based on Your Scenarios!
Nationwide on April 1, 2010
presented by EBIA / Thomson Reuters

The New HSA Landscape
Nationwide on April 29, 2010
presented by Convergent Retirement Plan Solutions, LLC

Voluntary Fiduciary Correction Program Workshop
in Oregon on May 18, 2010
presented by U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

Voluntary Fiduciary Correction Program Workshop
in New York on May 26, 2010
presented by U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

Press Releases

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