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Michelle's Law Amendments: HRA Plans and Cafeteria Plans with Health Care Reimbursement Accounts

Excerpt: Tax/COBRA Treatment[:] Because Michelle's Law did not amend Code section 152, reimbursements for eligible expenses of dependents covered under Michelle's law that do not meet the definition of dependent under Code section 152 may be subject to tax. In addition, it is unclear whether COBRA coverage for 'Michelle's Law' dependents is measured from the loss of student status or the loss of extended coverage provided by Michelle's law.

New 5500 E-Signature Option

Excerpt: The form preparer must register for signing credentials at the DOL EFAST2 registration website. (For detailed instructions on how to obtain signing credentials, [go to: http://www.ftwilliam.com/djKIumIZlvmjgBE599Eo3NuoAelU5LAzbx2Xs/help/Instructions/SigningCredentialsDOL.html.]

Opportunities and Issues During the PPA Restatement Process (PDF)

"The Pension Protection Act of 2006 [PPA] restatement process for pre-approved defined contribution, 401(a) plans, which began May 1, 2014, will run until April 30, 2016.... This article addresses frequently asked questions about the restatement process and suggests some broad considerations to bear in mind as plans are restated.... This challenge also brings business opportunities and an opportunity to help employers keep plans in compliance, make plans easier for employers to understand and help employers reach the goals they have for their plans in the first place."

New Guidance Permits HRAs to Offer Dental and Vision Coverage as Excepted Benefits; New Wraparound Excepted Benefit Option Announced

"Plans that offer only excepted benefits are not subject to most health care reform rules (including the prohibition on annual limits, prohibition on waiting periods over 90 days, minimum cost-sharing requirements, the requirement to distribute an SBC, etc.). Three changes were proposed: [1] The requirements to provide limited-scope dental and limited-scope vision benefits were modified so that a premium is no longer required for the benefits to be excepted.... [2] A new type of excepted benefit is permitted, called 'wraparound coverage', meant to wrap around non-grandfathered individual health coverage.... [3] Employee assistance programs were also specifically added as a type of excepted benefit."

Account-Based Health Reimbursement Plans and IRS Notice 2013-54

"The Notice ... does not address employer-funded individual health plans.... Employers should be extremely cautious before pursuing this method of funding health insurance plans for their employees. Finally, the notice does not explain its position in Q&A 7: 'Because a health FSA that is not excepted benefits is not integrated with a group health plan, it will fail to meet the preventive services requirements.' ... Presumably the Departments have taken the position that an annual limit on claims in the health FSA is simply incompatible with the rule that no cost-sharing can occur on preventive care."

IRS/Treasury and DOL Issue DOMA Guidance

"The IRS has not yet provided guidance on the application of Windsor with respect to qualified retirement plans before September 16, 2013 or if a same-sex spouse has any causes of action under ERISA for events occurring before September 16, 2013.... It is expected that future guidance will address plan amendment requirements (including the timing of any required amendments), and any necessary corrections relating to plan operations for periods before future guidance is issued."

403(b) Plan Pre-approval Program: Some Issues and Answers

"It is very hard to predict when pre-approved plans will be available in the marketplace. We expect it will be at least a few years until plans are approved by IRS (all mass submitter plans are typically approved on the same day). That approval opens the window for restatements. The applications for pre-approval currently open June 28, 2013 and are due April 30, 2014.... Once documents are approved, the restatement window will be 'in excess of one year'."

HRA Plans and the Prohibition on Annual Limits

"This set of FAQs clarifies the certain 'integrated' Health Reimbursement Arrangements (HRAs) are not subject to the health care reform prohibition on annual limits -- HRAs that are 'integrated' with other coverage as part of a group health plan. An HRA that is not integrated with group health plan coverage is subject to the health care reform prohibition on annual limits unless certain exemptions apply. The guidance, however, does not discuss these other exemptions available to HRAs (small carve out of HRAs that are not subject to HIPAA Portability and the exemption for FSAs)."

Limited Time to Fix 403(b) Written Plan Failure for Reduced Fee

"Revenue Procedure 2013-12 provides a relatively short window to take advantage of a reduced fee to fix 403(b) written plan document failures (the reduced fee expires after December 31, 2013). [This article] will discuss the background and details of the written plan requirement and the fees and due dates under the new EPCRS for correcting written plan requirement failures. Most plans are still waiting for the opportunity to fix written plan failures that occurred on or after January 1, 2010 as will be explained in more detail below. Finally, the last section of the article will address some frequently asked questions about the EPCRS process."

Governmental Individually Designed Retirement Plans Given More Time to Restate Documents

"If a plan is individually designed, the five year cycle generally applies according to the sponsor's EIN. Governmental plans are one of the exceptions to this rule. If a governmental plan is individually designed, it would normally fall into cycle C and current plans would need to be restated during the one-year window ending on January 31, 2014.... Under Revenue Procedure 2012-50, the deadline for governmental individually designed plans to restate is extended to January 31, 2016."