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February 2013

From the editors of CCH's BENE and BAN products, here are hot topics from recent Employee Benefits Management Directions newsletters as well as recent explanatory updates in Employee Benefits Management. Also included are recent explanatory updates to the Benefits Answers Now product.

If you have any comments/suggestions concerning the information provided or the format used, we'd like to hear from you. Please contact Tulay.Turan@wolterskluwer.com.

 

Hot Topics in Employee Benefits Management:
IRS issues proposed regulations on employers’ shared responsibility for health coverage under Affordable Care Act, Employee Benefits Management Directions, Issue No. 531, January 15, 2013 — The IRS has released proposed regulations that provide guidance under Code Sec. 4980H with respect to an employer’s shared responsibility for employee health coverage under the Patient Protection and Affordable Care Act (ACA). Code Sec. 4980H is effective for months beginning after December 31, 2013.

Taxpayer relief law contains benefits provisions, Employee Benefits Management Directions, Issue No. 531, January 15, 2013 — On January 1, Congress passed the American Taxpayer Relief Act of 2012 (HR 8), which is a $3.9 trillion tax-cut measure. President Barack Obama signed the bill on January 2. The law contains several employee benefits provisions.

Department of Health and Human Services issues final rule to strengthen HIPAA provisions, Employee Benefits Management Directions, Issue No. 532, January 29, 2013 — The Department of Health and Human Services’ Office of Civil Rights (OCR) has issued a final rule that amends HIPAA’s Privacy, Security, and Enforcement Rules as mandated by the Health Information Technology for Economic and Clinical Health Act (HITECH Act).   

IRS issues update to EPCRS, Employee Benefits Management Directions, Issue No. 532, January 29, 2013 — The IRS has issued a revenue procedure revising its Employee Plans Compliance Resolution System (EPCRS). The EPCRS permits plan sponsors to correct certain plan qualification failures and thereby continue to provide their employees with retirement benefits on a tax-favored basis.

What's New in Employee Benefits Management:
ACA proposed regulations — The proposed regulations on employers’ shared responsibility for health coverage (see story above) are discussed at ¶10,097.

Repeal of EGTRRA sunset provision — The American Taxpayer Relief Act of 2012 repealed the sunset provision of the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA). Thus, many benefits provisions that were subject to the sunset (i.e., they were set to expire at the end of 2012) have been made permanent. Some of the provisions affected are discussed at ¶54,010 through ¶54,060, ¶54,110, ¶120,080 (education benefits), ¶150,730 (adoption credit), and ¶158,312 (Work Opportunity Credit). 

2013 adoption, transit COLAs — The IRS has issued the 2013 cost-of-living adjustments (COLAs) for adoption assistance and transportation benefits. For the transit amounts, see ¶150,515, ¶150,790 through ¶150,825, ¶151,055, ¶154,200, ¶156,030, ¶156,045 and ¶158,240.        

Roth 401(k) — The American Taxpayer Relief Act of 2012 authorizes in-service rollover distributions of 401(k) funds to Roth 401(k) plans. The provision is effective for transfers occurring after December 31, 2012. For more information, see ¶84,095.

 

What's New in Benefits Answers Now (BAN):
IRS issues proposed regulations and guidance on employer shared responsibility provision under ACA. The IRS has released proposed regulations that provide guidance with respect to an employer’s shared responsibility for employee health coverage under the Patient Protection and Affordable Care Act (ACA). In addition, the IRS has issued guidance on this same provision in the form of 23 questions and answers. Starting in 2014, employers employing at least a certain number of employees (generally 50 full-time employees and full-time equivalents) will be subject to the employer shared responsibility provisions under the ACA. Find out more about this requirement and the IRS guidance at ¶20,030.

ATRA allows for in-service Roth conversions. The American Taxpayer Relief Act attempts to generate immediate revenue for the federal government by authorizing in-service rollover distributions of 401(k) funds to Roth 401(k) plans. The provision is effective for transfers occurring after December 31, 2012. Under current law, rollovers may be made from 401(k) plans to a designated Roth account. However, an account may not be rolled over unless it is an eligible rollover distribution under the terms of the plan. The amendment implemented by the American Taxpayer Relief Act would allow a plan that includes a qualified Roth contribution program to authorize the transfer of “any amount not otherwise distributable under the plan” to a designated Roth account maintained for the individual. See the discussion at ¶10,690 for more information about in-service Roth conversions.

Adoption assistance programs permanently enhanced. The American Taxpayer Relief Act extends permanently enhancements to the adoption credit and the income exclusion for employer-paid or reimbursed adoption expenses up to $10,000 (indexed for inflation). In addition the IRS has released the 2013 amounts: For taxable years beginning in 2013, the amount that can be excluded from an employee's gross income for the amounts paid or expenses incurred by an employer for qualified adoption expenses pursuant to an adoption assistance program is $12,970. For more information about adoption assistance programs, see ¶70,050.

IRS issues transit and parking benefit COLAs. The American Taxpayer Relief Act extends parity in transit benefits through December 31, 2013. For 2013, the monthly limitation for both the fringe benefit exclusion amount for transportation in a commuter highway and any transit pass, which is $245, is the same as the fringe benefit exclusion amount for qualified parking. To find out more about transit and parking benefits, see ¶81,290.

CLASS Program repealed. The Patient Protection and Affordable Care Act (ACA) had provided for a national, voluntary, consumer-funded insurance program, called the Community Living Assistance Services and Supports (CLASS) Program. However, in October 2011, the Department of Health and Human Services stopped the program implementation because it could not meet the ACA’s actuarial soundness requirements. The American Taxpayer Relief Act has repealed the CLASS Program. An overview of the CLASS Program can be found at ¶74,380.

What's New in Spencer’s Benefits Reports:
Protecting Health Information. HIPAA attempts to protect individually identifiable health information through the law’s administrative simplification provisions. This report provides general guidance to employers for complying with HIPAA (Report 502.-15).

Health Reform’s Patient Protections. The ACA prohibits annual or lifetime dollar limits, coverage rescissions, and preexisting coverage exclusions. This report reviews the rules related to these provisions (Report 513.-1).

Temporary Disability. Temporary disability benefits are regulated only in five states and in Puerto Rico. This report describes these plans, with updated information for 2013 (Report 323.-9).

Avoiding 401(k) Errors. The IRS has provided tips on how to avoid compensation-related errors in a 401(k) plan, and fixing such errors if they occur (Report 229.-21).

Loss Ratio Rules. The minimum loss ratio rules in the ACA establish transparency around the expenditures made by health insurers. In addition, in relation to the premiums charged, an insurer’s spending for the benefit of policyholders must meet these minimum standards, and if it does not, the insurer must provide rebates to enrollees (Report 533.-5).

New Pension/Benefits Titles Added:
401(k) Advisor (February 2013 issue)
5500 Preparer’s Manual for 2012 Plan Years
Benefits Law Journal (Spring 2013 issue)
Journal of Pension Planning and Compliance (Spring 2013 issue)
Medical Benefits (February 2013 issue)
Pension Benefits (February 2013 issue)