Benefits Update - November 2012

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.

Welfare plans should be ready to demonstrate ACA compliance to prepare for possible audit, Employee Benefits Management Directions, Issue No. 525, October 2, 2012 — The U.S. Department of Labor (DOL) has begun to audit health and welfare plans for compliance with the Patient Protection and Affordable Care Act (ACA). What is the DOL looking for during an audit, and what steps might you have to take to prepare for the possibility that your plan will be subject to one? To answer these questions and more, CCH turned to Peter J. Marathas, Jr., & James R. Napoli, Partner and Senior Counsel, respectively, in the Employee Benefits, Executive Compensation & ERISA Litigation Practice Center at the Proskauer law firm.

Firms with many part-time workers weigh response to ACA coverage requirement, Employee Benefits Management Directions, Issue No. 525, October 2, 2012 – As companies with large populations of part-time employees determine how they will proceed in response to the Patient Protection and Affordable Care Act (ACA) requirement to provide health insurance benefits to employees working at least 30 hours per week, they should consider the effect of their employment decisions not just on human resources costs but also on worker productivity and business results.

IRS/Treasury discuss shared responsibility payment guidance and safe harbors, Employee Benefits Management Directions, Issue No. 526, October 16, 2012 – During the recent ALI-CLE seminar Retirement, Deferred Compensation, and Welfare Plans of Tax-Exempt and Governmental Employers, Stephen Tackney, special counsel in the IRS Office of Division Counsel/Associate Chief Counsel, Tax Exempt and Government Entities (TE/GE), and Rachel Levy, attorney-advisor in the Treasury Office of Benefits Tax Counsel, discussed the latest guidance implementing applicable employers’ shared responsibility payment under the Patient Protection and Affordable Care Act (ACA).

Government may provide transitional relief for determining employee status under PPACA, Employee Benefits Management Directions, Issue No. 526, October 16, 2012 — The government may provide transitional relief to employers who need to determine whether their employees are part-time or full-time under the Patient Protection and Affordable Care Act (ACA), Treasury Office of Benefits Tax Counsel attorney Kevin Knopf said at a recent D.C. Bar program.

Exhaustion of remedies — A district court did not abuse its discretion where it required a claimant to exhaust her administrative remedies even though particular information in a notice of termination of long-term disability benefits was missing, the Seventh Circuit Court of Appeals has ruled. The decision in Schorsch v. Reliance Standard Life Insurance Co. is discussed at ¶73,320.

Interest rates — New ¶6340A provides a historical chart of the IRS 24-month average segment rates adjusted using the applicable percentage of the first, second, and third 25-year average segment rates pursuant to the Moving Ahead for Progress in the 21st Century Act (MAP-21, P.L. 112-141). MAP-21 provides that for purposes of Code Sec. 430(h)(2), the 24-month segment rates are limited by the applicable maximum percentage or the applicable minimum percentage based on the average of segment rates over a 25-year period.

State laws — The state laws on temporary disability at ¶30,100 have been updated.

Medicare Part D — Sponsors of group health plans that provide prescription drug coverage must notify Medicare-eligible individuals enrolled in the coverage whether the coverage is creditable before October 15. The Medicare open enrollment period begins October 15 and runs through December 7. The discussion at ¶10,360 has been updated to reflect the revised enrollment dates.

What's New in Benefits Answers Now (BAN):

IRS announces pension plan limitations for 2013. The IRS has announced the 2013 cost-of-living adjustments (COLAs) to dollar limitations on benefits and contributions, annual compensation limits, the threshold amount for determining excess distributions, compensation amounts for SEPs, and other dollar limitations applicable to retirement plans. More information about the pension plan limits for 2013 can be found at ¶10,080, ¶10,660, ¶10,700, ¶10,760, ¶10,800, ¶11,190, ¶11,220, ¶11,230, ¶11,350, ¶11,930, ¶12,120, ¶12,240, ¶14,860, ¶14,990, and ¶15,100.

IRS issues 2013 LTC, MSA COLAs. The IRS has issued a number of cost-of-living adjustments (COLAs) to various types of benefits, including long-term care insurance contracts and medical savings accounts (MSAs). To find out more about the adjusted limits for 2013, see ¶20,350 and ¶74,330.

IRS/Treasury discuss shared responsibility payment guidance and safe harbors. During a recent ALI-CLE seminar entitled, Retirement, Deferred Compensation, and Welfare Plans of Tax-Exempt and Governmental Employers, Stephen Tackney, special counsel in the IRS Office of Division Counsel/Associate Chief Counsel, Tax Exempt and Government Entities (TE/GE), and Rachel Levy, attorney-advisor in the Treasury Office of Benefits Tax Counsel, discussed the latest guidance implementing applicable employers’ shared responsibility payment under the Patient Protection and Affordable Care Act (ACA). Find out more about the employer shared responsibility provision in the ACA at ¶20,030.

Electronic delivery of employee health plan communications continues to grow. Employers are increasingly using electronic distribution and relying on outside assistance as existing and new federal regulations are requiring stepped up health plan communications, according to a survey from HighRoads. In key findings, interest in—and demand for—electronic distribution is continuing to grow. Currently, 80% of employers report using some form of electronic distribution, with online portals the most popular method. See the discussion at ¶40,265 for more information about the electronic delivery of health plan communications.

Consumer-driven health plans more common than HMOs. Consumer-driven health plans (CDHPs) have surpassed health maintenance organizations (HMOs) to become the second most common plan design offered by U.S. employers, according to a recent survey from Aon Hewitt. The survey found that in 2011 that 58 percent of employers offered a CDHP and 38 percent offered HMO plans. Preferred provider organizations (PPOs) continue to be the most widely offered plans, with 79 percent of employers offering these plans in 2011. For more information about the prevalence of CDHPs, see ¶21,100.

What's New in Spencer’s Benefits Reports:

Health Reform: Determining Full-Time Status. This report details guidance on determining full-time status and the waiting period limitation under the employer shared responsibility provision in the Patient Protection and Affordable Care Act (Report 550.1.-1).

Plan Audits. An audit of an employer’s health plan involves the investigation of a number of plan documents. This report examines the DOL’s audit procedures under HIPAA and the ACA (Report 330.1.-1).

VCP Submissions. Plan sponsors can correct errors in their retirement plans by using the IRS’s Voluntary Correction Program (VCP). This report examines tips from the IRS on how to avoid processing delays for their VCP submissions (Report 179.-35).

Disability Benefits: Court Cases. An employer may reduce the benefits payable under a long term disability plan by the amount of benefits received by the beneficiary under other plans. This report looks at federal appellate court rulings on this issue (Report 323.4.-29).

HIPAA Transaction Standards. HIPAA includes three separate sets of Administrative Simplification provisions. This report summarizes the Administrative Simplification provisions regarding transaction standards (Report 502.-7).

New Pension/Benefits Titles Added:

401(k) Advisor (November 2012)
Benefits Law Journal (Winter 2012)
COBRA Handbook (2013 Edition)
Defined Benefit Answer Book (5th Edition)
Dividing Pensions in Divorce (2013 Supplement to 3rd Edition)
Employee Benefit Plan Review (November 2012)
Employee Stock Ownership Plan Answer Book (4th Edition)
Employer’s Guide to Health Care Reform (2012-2013 Edition)
ERISA: A Comprehensive Guide (2012 Supplement to the 4th Edition)
Handbook on ERISA Litigation (2013 Supplement to the 3rd Edition)
Health Insurance Answer Book (2013 Cumulative Supplement to the 10th Edition)
Individual Retirement Account Answer Book (19th Edition)
Journal of Pension Planning and Compliance (Winter 2013)
Medical Benefits (December 2012)
Nonqualified Deferred Compensation Answer Book (2013 Cumulative Supplement to the 7th Edition)
Pension Benefits (November 2012)
Quick Reference to ERISA Compliance (2013 Edition)
SIMPLE, SEP, and SARSEP Answer Book (18th Edition)