DOL Sues Employer/Plan Sponsor for Approximately $500,000 and Removal of Health Plan Fiduciaries for Failure to Fund Health and COBRA Coverage and Pay Incurred Claims

December 26, 2013 at 11:51 am | Posted in COBRA, Compliance, Department of Labor, Employment Law, Flexible Spending Accounts, Health Care, Medical | Leave a comment
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On December 18th, in Perez v. Home Valu, et al., the DOL sued a self insured health benefit plan, self insured dental plan, flexible benefit plan, COBRA plan, and the individuals responsible for its administration seeking recoupment of approximately $500,000.

On December 24, 2009 the self insured plans stopped paying benefit claims. On January 10, 2010 Home Valu stopped doing business because of financial pressures. All Home Valu benefit plans were formally terminated on January 22, 2010 although they were practically terminated on December 24 when the self insured plans stopped paying claims. Nevertheless, HomeValu continued to deduct approximately $12,000 in insurance premiums from employee paychecks in January 2010 and failed to apply those premiums towards health insurance. The Home Valu benefit plans did not pay approximately $490,000 in claims incurred in November and December 2009 and January 2010.

A copy of the DOL complaint can be found here:
http://www.dol.gov/ebsa/pdf/0-13-cv-03572.pdf

IRS Liberalizes Section 125 Election Change Menu for Non-Calendar Year Plans to Allow “Transition Relief” for Participants to Drop Coverage and Elect Coverage Through an Exchange

November 1, 2013 at 11:28 am | Posted in Affordable Care Act, Cafeteria Plans, Compliance, Federal Laws, Flexible Spending Accounts, Health Care, Health Insurance Exchanges, Health Insurance Marketplace, IRS, Medical, PPACA, Regulations | Leave a comment
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The IRS has announced that it will allow, subject to an employer’s amendment of its non-calendar year cafeteria plan, the decision of an employee to change his/her Section 125 Cafeteria Plan health care election to drop coverage from his/her employer and obtain coverage through a health insurance exchange created under the Affordable Care Act.

According to the IRS: “An employer may amend its § 125 cafeteria plan to allow an employee who elected to salary reduce through the § 125 cafeteria plan to pay for accident and health plan coverage under the § 125 cafeteria plan with a non-calendar plan year beginning in 2013 to prospectively revoke or change his or her election with respect to the accident and health plan once, during a limited period (for example, the first month of 2014 only rather than the entire plan year) without regard to whether the employee experienced a change in status event described in Treas. Reg. § 1.125–4.”

Seminar: New Challenges in Health Care and FMLA

February 14, 2013 at 12:30 pm | Posted in Federal Laws, Flexible Spending Accounts, FMLA, Health Care, Regulations, Seminar | Leave a comment
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With ongoing changes to a number of regulations, interpretations, and guidance, we are pleased invite you to attend a complimentary seminar.
This seminar has been HRCI CE Certified for 1 credit.

New Challenges in Health Care and FMLA

Wednesday, March 20, 2013

Registration & Continental Breakfast: 8:00am.
Program: 8:30a.m.–12:00p.m.
Sheraton – Framingham Hotel & Conference Center
1657 Worcester Road, Framingham, MA 01701
Telephone: 508-879-7200

Speakers:
  • Alden J. Bianchi, Esq., Mintz Levin
  • Ellen McCann, Esq., AVP, Senior Counsel, Unum
  • George M. Thompson, Esq., The Protector Group Insurance Agency
Click here to download the Program Agenda.
Please RSVP to Tina Bisceglia, Executive Assistant, at Protector Group Insurance by Wednesday, March 6, 2013.

New Federal Employee Benefit Requirements for the rest of 2012 and 2013

August 20, 2012 at 10:34 am | Posted in Affordable Care Act, Flexible Spending Accounts, PPACA | Leave a comment
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Now that the Supreme Court has ruled that the Patient Protection Affordable Care Act (PPACA) passes constitutional scrutiny, the following is an outline of new PPACA requirements for the remainder of 2012 and 2013, several of which are still in need of further regulatory guidance.  The major requirements such as the “pay or play” mandates and penalties for employers and individuals, nondiscrimination testing for fully insured plans, and automatic enrollment are deferred until 2014.

Remainder of 2012

September 23, 2012 – Summaries of Benefits & Coverage (SBC)

For plan years commencing on and after Sept. 23, 2012, self insured group health plans and group health plan insurers must provide SBCs in connection with annual enrollment and for new enrollees.

December 31, 2012 – Form W-2 Reporting for 2012 Tax Year

Form W-2s must include the value of group health plan benefits provided to employees.
This applies to employers issuing 250 or more Form W-2s in 2012.  Deadline for issuance of 2012 Form W-2s is Jan. 31, 2013.  This requirement is informational only and does not mean that employer-provided coverage will be subject to income tax.

2013

January 1, 2013 – Flexible Spending Account (FSA) Annual Limit

Maximum dollar limit for an employer’s FSA plan is $2,500 annually for plan years starting on or after January 1, 2013.

March 1, 2013 – Employee Notice of Exchange

Employers must provide a notice to employees of availability of State Health Insurance Exchanges.

July 2013 – Payment of Comparative Clinical Effectiveness Research Fees

For plan years ending on and after Oct. 1, 2012, self-insured group health plans and insurers must pay fees per covered life.  The current, initial fee is $1 per covered life, increasing to $2 per covered life for plan years ending on and after Oct. 1, 2013 (and adjusted for later plan years).  The first possible payments are due July 1 or July 31, 2013, depending on method of calculation.

December 31, 2013 – Form W-2 Reporting for 2013 Tax Year

Form W-2s must include the value of group health plan benefits provided to employees.
This applies to employers issuing less than 250 Form W-2s in 2013.  Deadline for issuance of 2013 Form W-2s is Jan. 31, 2014. This requirement is informational only and does not mean that employer-provided coverage will be subject to income tax.

IRS Issues Guidance on Flexible Spending Arrangements for Plan Years Starting After December 31, 2012

June 5, 2012 at 2:34 pm | Posted in Cafeteria Plans, Flexible Spending Accounts, PPACA | Leave a comment
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This week the Internal Revenue service (“IRS”) issued guidance on Flexible Spending Arrangements (“FSA”) regarding, among other things, when to implement the $2,500 FSA cap legislated under the Patient Protection Affordable Care Act (“PPACA”). The guidance was necessary because of confusion over the FSA reference in PPACA which implemented the $2,500 cap for a “taxable year” which, of course, does not always align with a plan year.
 
The IRS advised that:
 
*The $2,500 limit on health FSA salary reduction contributions in a cafeteria plan applies on a plan year basis and is effective for plan years beginning after December 31, 2012.

  • If a cafeteria plan has a short plan year (that is, fewer than 12 months) that begins after 2012, the $2,500 limit must be prorated based on the number of months in that short plan year.
  • The $2,500 limit applies on an employee by employee basis. Thus two employees who are married can each elect to make salary contributions up to $2,500 each.
  • The $2,500 limit is exclusive of any non-elective flex credit contributions an employer may wish to make to an employee’s health FSA. Accordingly, an employee’s $2,500 health FSA salary contribution limit can be supplemented by, for example, a $1,000 non-elective flex credit to the FSA extended by the employer. 
  • The $2,500 limit does not apply to FSA dependent care or adoption care contributions, health savings accounts, or health reimbursement arrangements.
  • If a plan provides for a grace period (which can be no longer than two months and 15 days) for a plan year, unused salary reductions contributions to the health FSA for the plan year that are carried over into the grace period do not count against the $2,500 limit applicable to the subsequent plan year. The employee may use amounts remaining from the previous plan year to pay for expenses incurred for certain qualified expenses during the grace period.
  • Finally, the IRS invited comments by August 17th on modifying or abolishing the health FSA “use it or lose” rule.

A copy of the complete IRS announcement is here: http://www.irs.gov/pub/irs-drop/n-12-40.pdf

IRS Issues New Guidance on Reporting Health Insurance Aggregate Cost on 2012 W-2s For Large Employers

January 23, 2012 at 2:08 pm | Posted in Flexible Spending Accounts, Health Care | Leave a comment
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In December 2011 the IRS issued new “interim guidance” for employers concerning the new health insurance “aggregate cost” reporting regulation on the W-2s issued to employees. The regulation was part of the national health care legislation signed into law by President Obama in March 2010. 

The new W-2 reporting requirement is effective this year for “large” employers who issue 250 or more W-2s. The requirement provides a “look back” trigger: the 2012 W-2 reporting responsibility is required if they issued 250 or more W-2s in the preceding calendar year (2011). In 2013 the regulation will apply to small employers, i.e. those who issue less than 250 W-2s. 

The IRS reiterated that the reporting of the aggregate cost of health insurance on a W-2 does not make the aggregate cost of health insurance taxable. The purpose of the regulation is to provide useful and comparable consumer information to employees on the cost of their health care coverage. 

General Guidance

1.       A “large” employer must comply with the 2012 W-2 health care reporting requirement if the same employer issued more than 250 W-2s during the preceding calendar year. For example, if an employer issued more than 250 W-2s in 2011, the employer must comply with the regulation. Conversely, if an employer issued fewer than 250 W-2s for calendar year 2011, it does not have to comply with the requirement.  

2.       The aggregate cost of applicable employer sponsored coverage is the total cost of coverage under all applicable employer sponsored coverage provided to the employee. 

3.       The aggregate reportable cost of health care includes (a.) the portion of the cost paid by the employer and (b.) the portion paid by the employee, regardless of whether the employee paid for that cost through pre-tax or after-tax contributions. The aggregate cost will be reported in Box 12 of the W-2. 

4.       The aggregate reportable cost of health care includes the cost of coverage under the employee health plan of the employee and any person covered by the plan because of a relationship of the employee, including any portion of the cost that is includable in an employee’s gross income. Example. An employee has family coverage for himself, his spouse and dependents and an adult child age 28 with a cost of coverage for all of $15,000. The fair market value of the health coverage for the adult child age 28 is included in the income and wages of the employee. It is also a portion of the cost of coverage to be reported in Box 12 of the W-2. 

5.       The aggregate cost of health insurance and reporting requirement does not include coverage under a separate policy, which is substantially for treatment of the mouth, eye, long-term care, coverage for specific diseases (i.e. cancer coverage), or a hospital indemnity or other fixed indemnity insurance. 

6.        The aggregate cost of health insurance and reporting requirement does not apply to an ARCHER MSA, a health reimbursement account, or a health savings account.

7.       The aggregate cost of health insurance and reporting requirement does not generally apply to any amount of salary reduction contributions to a health flexible spending arrangement (“FSA”) funded solely through salary reductions. However, employer flex credit dollars allocated by an employer to an FSA may have to be reported in certain instances. Examples are provided in Notice 2012-9. 

8.       For Terminated Employees: An employer may use “any reasonable method of reporting the cost of coverage provided under a group  health plan” for an employee who terminated employment during the calendar year. An employer is excused from this requirement if the terminated employee requests a W-2 before the end of the calendar year.

A copy of the complete IRS Announcement can be found here: Notice 2012-9

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