Monthly Benefits Update - September 2013
Health & Welfare Plans
Health Care Reform: FAQ Part XVI Addresses Insurance Exchange Notice and 90-Day Waiting Period Requirement
The Treasury, the Department of Labor and the Department of Health and Human Services have released new FAQs about the implementation of the Affordable Care Act. The FAQs contain information on who can supply the notice of exchanges, providing that the issuer, a multiemployer plan or third-party administrators may (but are not required to) send the notice on behalf of the employers. Further, the FAQs address issues related to compliance with the 90-day waiting period limitation, providing that plans and issuers can rely on the proposed rules throughout 2014. Final regulations will not be enforced before January 1, 2015. The FAQs also clarify that certain multiemployer plans may rely on substantive eligibility requirements based solely on the passage of time when such requirement is not designed to avoid compliance, but to accommodate a unique operating structure. This clarification is helpful for multiemployer plans which may provide that employees become eligible for coverage after working certain number of hours of covered employment across various contributing employers.
Health Care Reform: IRS Issues Proposed Regulations on the Reporting Requirements
The IRS released proposed regulations on the Affordable Care Act’s reporting requirement applicable to insurers and self-insured health plan sponsors that provide “minimum essential coverage,” and the reporting requirement applicable to large employers to report coverage provided to full-time employees. The proposed regulations address the following two mandates:
Under Internal Revenue Code Section 6055, any person who provides “minimum essential coverage” to an individual during a calendar year must report the coverage information to the IRS. The reporting person must also provide a written statement to the covered individual; and
Under Internal Revenue Code Section 6056, employers must report to the IRS whether they offer their full-time employees and their employees' dependents the opportunity to enroll in “minimum essential coverage” under an eligible employer-sponsored plan and to provide certain other information. Reporting employers must also provide a related written statement to their full-time employees.
The first reporting will not be required until early 2016 (for health coverage provided in 2015).
Health Care Reform: IRS Issues Notice on High Deductible Health Plans and Mandated Preventive Care
The IRS issued Notice 2013-57 clarifying that a health plan will not fail to qualify as a high deductible health plan under Code Section 223(c)(2) if the plan provides the preventive health services required by Public Health Service Act Section 2713, without a deductible.
Health Care Reform: DOL, IRS and HHS Issue Guidance on the Affordable Care Act Impact on HRAs, Health Care FSAs and Other Arrangements
The Internal Revenue Service, the Department of Labor and the Department of Health and Human Services (Departments) have released identical guidance (IRS Notice 2013-54, DOL Technical Release 2013-03) addressing the prohibition on annual limits on essential health benefits and the requirement that non-grandfathered plans provide first dollar coverage with respect to certain preventive services. In a separate memorandum, HHS has indicated its concurrence with the IRS and DOL guidance. The new guidance is generally effective for plan years beginning on or after January 1, 2014, and can be relied upon for prior periods.
The guidance discusses (1) Health Reimbursement Arrangements (HRAs) including HRAs integrated with a group health plan; (2) group health plans under which an employer reimburses an employee for some or all of the premiums for an individual policy (employer payment plans); and (3) certain flexible spending arrangements (FSAs).
In previous guidance the Departments had already taken the position that an HRA “integrated” with a primary group medical plan would be deemed to satisfy the annual dollar limit prohibition. They had further stated that an HRA is “not integrated” with a primary group health plan unless the HRA was only available to employees who are covered by the primary plan that meets annual dollar limitations.
The new guidance confirms prior guidance and provides clarification on, among other issues, the following:
An HRA used to purchase coverage on the individual market is not considered integrated with that individual market coverage for purposes of the annual dollar limit prohibition and/or the preventive services requirements.
An HRA that is integrated with a group health plan will comply with the preventive services requirement if the group health plan with which the HRA is integrated complies with the preventive services requirement.
An HRA that is a retiree-only HRA is considered minimum essential coverage for purposes of Code Sections 5000A and 36B. The standalone retiree-HRA would constitute an eligible employer-sponsored plan and therefore the coverage would constitute minimum essential coverage, for a month in which funds are retained in the HRA.
The guidance also indicates that the applicable regulations will be amended to allow EAPs to be considered excepted benefits that are not subject to many of the health care reform mandates, if the EAP does not provide significant benefits in the nature of medical care or treatment.
HIPAA: Business Associate Agreements and Notices of Privacy Practices
The Omnibus HIPAA Final Regulations issued in January required the modification of all existing business associate agreements (entered into after January 25, 2013) and notice of privacy practices to incorporate the items addressed in the final regulations no later than September 23, 2013. Business associate agreements that were entered into prior to January 25, 2013 and were compliant at the time of execution with the Health Information Technology for Economic and Clinical Health (HITECH) need not be revised until September 23, 2014.
The Office for Civil Rights and Office of the National Coordinator for Health Information Technology of the Department of Health and Human Services have collaborated to develop model Notices of Privacy Practices for health care providers and health plans to use to communicate with their patients and plan members. The models reflect the regulatory changes of the Omnibus Rule and can serve as the baseline for covered entities working to come into compliance with the new requirements. However, health care providers and health plans administrators and sponsors should review the models carefully and tailor the models by adding additional information as necessary to accurately describe and address their specific privacy practices.
Defense of Marriage Act
DOL Recognizes Same-Sex Marriages
The Employee Benefits Security Administration (EBSA) issued Technical Release 2013-04 recognizing all legal same-sex marriages for purposes of ERISA and related rulings and regulations. The technical release implements the Supreme Court’s Windsor ruling and follows recent IRS guidance on this issue (see our August Monthly Benefits Update) providing that “spouse” means any individual lawfully married under the law of a jurisdiction having the legal authority to sanction marriages (including U.S. states, territories, and possessions, as well as foreign countries) and that “marriage” includes any same-sex marriage legally recognized as marriage under such law—even if the couple lives in a state that does not recognize same-sex marriage. On the other hand, non-marriage relationships such as domestic partnerships and civil unions are not recognized, even if state law grants those relationships marriage-equivalent rights. The technical release further indicates that EBSA intends to issue additional guidance on potential retroactivity issues and other specific provisions.
IRS Issues Procedures for Employment Tax Adjustments
The IRS has issued simplified procedures that employers may use, if they wish to seek tax reimbursements, to correct employment tax (FICA and federal income tax withholding) overpayments for 2013 and prior years resulting from the change in tax treatment for health and certain other benefits provided to employees’ same-sex spouses. Notice 2013-61 provides detailed rules concerning reporting obligations for employers.