Benefits Update - October 2010

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 me at Tulay.Turan@wolterskluwer.com.

Guidance issued for federal external claims review under health care reform, Employee Benefits Management Directions newsletter, Issue No. 475, September 14, 2010 – Guidance on the federal external health claims review – and model notices both for internal claims and appeals and for external review processes – have been announced by the IRS, DOL, and HHS. This guidance is provided for provisions in PHSA Sec. 2719, as added by the Patient Protection and Affordable Care Act, which amend the health care claims appeals process.

IRS issues guidance on 2011 changes to FSAs, Employee Benefits Management Directions newsletter, Issue No. 475, September 14, 2010 – The IRS has issued guidance reflecting the use of certain tax-favored arrangements, such as flexible spending arrangements (FSAs), to pay for over-the-counter (OTC) medicines and drugs. The Patient Protection and Affordable Care Act established a new uniform standard that, effective January 1, 2011, applies to FSAs and health reimbursement arrangements (HRAs). Under the new standard, the cost of an OTC medicine cannot be reimbursed from the account unless a prescription is obtained.

Expert gives pointers for new health legislation claims, appeals rules, Employee Benefits Management Directions newsletter, Issue No. 476, September 28, 2010 – Six new internal claims and appeals rules, published on July 23, 2010, that represent changes from existing Department of Labor (DOL) claims and appeals regulations were discussed by Mark C. Nielsen, Principal, Groom Law Group, Chartered, of Washington, D.C., speaking at a recent teleweb for the International Foundation of Employee Benefit Plans (IFEBP).

HHS issues guidance on waiver process for annual limits requirements, Employee Benefits Management Directions newsletter, Issue No. 476, September 28, 2010 – The Department of Health and Human Services (HHS) has issued guidance on the process for obtaining waivers of the annual limits requirements of PHSA Sec. 2711, as added by the Patient Protection and Affordable Care Act (PPACA).

Guidance on federal external review – The guidance on federal external claims review (see story above) is discussed at ¶10,425.

Model notices – The model notices for internal claims and appeals and for external review processes are at ¶226,115, ¶226,116 and ¶226,117.

SIFL rates – The Department of Transportation has released the applicable terminal charge and standard industry fare level (SIFL) mileage rates for July 1, 2010, through December 31, 2010. For the rates, see ¶150,086.

2011 FSA changes – The IRS guidance on the 2011 FSA changes (see story above) is discussed at ¶38,030, ¶38,060, and ¶39,115. Rev. Rul. 2010-23, which implements the health reform law’s change to the definition of medical expenses, is at ¶450,125.

Waiver of annual limits requirements – The waiver process for the annual limits requirements under PHSA Sec. 2711 is discussed at ¶10,310.

PSCA annual survey – Results of the 53rd Annual Survey of Profit Sharing and 401(k) Plans are reflected at ¶84,015 and ¶152,219.

Guidance issued for federal external claims review under health care reform. Guidance on the federal external health claims review process --and model notices both for internal claims and appeals and for external review processes --have been announced by the Internal Revenue Service, the Department of Labor's (DOL) Employee Benefits Security Administration (EBSA), and the Department of Health and Human Services' Office of Consumer Information and Insurance Oversight (OCIIO). The new guidance provides that plans and issuers in states without an applicable state external review process must implement an effective external review process. See the discussion at ¶20,057 for more information about the internal and external claims review requirements under the Patient Protection and Affordable Care Act (ACA).

IRS issues guidance on 2011 changes to FSAs. The IRS has issued guidance reflecting statutory changes regarding the use of certain tax-favored arrangements, such as flexible spending arrangements (FSAs), to pay for over-the-counter (OTC) medicines and drugs. The ACA established a new uniform standard that, effective Jan. 1, 2011, applies to FSAs and health reimbursement arrangements (HRAs). Under the new standard, the cost of an OTC medicine or drug cannot be reimbursed from the account unless a prescription is obtained. The change does not affect insulin, even if purchased without a prescription, or other health care expenses such as medical devices, eye glasses, contact lenses, co-pays and deductibles. To find out more about this change in OTC substantiation, see ¶23,615, ¶73,100, and ¶73,160.

Employer is not liable for interference with FMLA rights if termination would have occurred anyway. An employer who improperly assessed absence points to an employee for a period that may have been protected under the Family and Medical Leave Act (FMLA) and then terminated her was not liable because it would have terminated the employee even if she had not exercised her rights under the FMLA, according to the U.S. Court of Appeals for the Eighth Circuit. To learn more about how employees on FMLA can be legally terminated, see the discussion at ¶31,200.

HHS launches website for Early Retiree Reinsurance Program. The U.S. Department of Health and Human Services (HHS) has launched of the first phase of the Early Retiree Reinsurance Program (ERRP) Secure Website. Plan sponsors whose application(s) have been approved will be able to use this new secure website to view and change application information; submit summary cost data, claims line-item data, and other information; and request ERRP reimbursement for a portion of the costs of health benefits for early retirees and their spouses, surviving spouses, and dependents. More information about the ERRP can be found at ¶22,875.