Compliance News
Check this section frequently to stay abreast of the latest compliance news and updates that affect you, including state and federal legislative updates, industry trends, recent surveys, and other topics of interest to HR managers.
National Updates
Reminder: Mental Health Parity & Addiction Equity Act of 2008 is Effective Oct. 3, 2009
Effective for plans years beginning on or after Oct. 3, 2009, plans that offer mental health and/or substance use disorder coverage must offer coverage equal to that offered for medical conditions in terms of co-payments, deductibles and co-insurance. Plans are prohibited from applying separate limitations to the number of visits or the number of inpatient days for expenses related to mental health or substance use disorders. In addition, if out-of-network benefits are provided for medical conditions, then out-of-network benefits must also be provided for mental health and substance use disorder expenses. The law applies to all large employer groups (defined as employers with more than 50 workers), fully insured and self-funded employers. This includes church groups, some state/local plans and Medicaid managed care. Non-federal government employers that provide self-funded group health plan coverage to its employees may elect to opt out from Mental Health Parity requirements.
Click here to view the law.
Reminder: Michelle's Law is Effective Oct. 9, 2009
Effective for plan years beginning on or after Oct. 9, 2009, Michelle's Law prohibits a group or individual health plan from terminating the coverage of a dependent student while on a medically necessary leave of absence, for up to a year or until the coverage would terminate under the regular terms of the plan. Michelle's Law amends ERISA, so it applies to any group health plan subject to ERISA, which includes both fully-insured and self-funded plans.
Click here to view the law.
Reminder: Form 5500 Due Oct. 15, 2009 for Calendar Year Plans on Extension
Plan sponsors of calendar year retirement and certain health and welfare plans that filed a Form 5558, "Application for Extension of Time to File Certain Employee Plan Returns," by July 31, 2009, have until Oct. 15, 2009 to file the Form 5500. The extension allowed for an automatic two-and-a-half month extension for filing the Form 5500. Plans who utilize the extension are also required to distribute the Summary Annual Report (SAR) no later than two months following the extended deadline, which is Dec. 15, 2009, for calendar year plans.
Click here to view Instructions for 2008 Form 5500.
IRS Issues Guidance on 2009 Required Minimum Distribution Waiver
The Worker, Retiree, and Employer Recovery Act of 2008 waived required minimum distributions (RMDs) for 2009 for IRAs and defined contribution plans (such as 401(k)s), and allows certain amounts distributed as 2009 RMDs to be rolled over into an IRA or another retirement plan. IRS Notice 2009-82 provides relief for people who have already received a 2009 RMD this year. Individuals generally have until the later of Nov. 30, 2009, or 60 days after the date the distribution was received, to roll over the distribution. The notice also provides guidance for retirement plan sponsors. It contains two sample plan amendments that plan sponsors may adopt or use to amend their plans to either stop or continue 2009 RMDs. Both sample amendments provide that participants and beneficiaries can choose whether to receive a 2009 RMD. Also, both sample amendments allow the employer to offer direct rollover options of certain 2009 RMDs. Plan sponsors may need to tailor the sample amendment to their plan's particular terms and administration procedures and must adopt the amendment no later than the last day of the first plan year beginning on or after Jan. 1, 2011 (Jan. 1, 2012, for governmental plans).
Click here to view Notice 2009-82.
2009 Form 5500 Electronic Filing Update
The Department of Labor's (DOL) EFAST website now contains 45 FAQs addressing EFAST2, the all-electronic filing system for Form 5500 that is scheduled to be available beginning January 2010. Final DOL regulations issued in 2007 require that all Form 5500s be filed electronically for plan years beginning on or after Jan. 1, 2009. Most calendar year plans will be required to submit the first electronic filing by July 31, 2010, for the plan year ending Dec. 31, 2009, using the new electronic filing system.
Click here for more information.
IRS Issues Fall Edition of Employee Plans News
The latest edition of Employee Plans News, the Internal Revenue Service (IRS), quarterly newsletter for employee retirement plan sponsors, includes the following articles:
- Do's and Don'ts of Hardship Distributions
- When Limits Collide, Which One Wins?
- Loans and Hardships in 401(k) Plans
- A Message from the Advisory Committee on Tax Exempt and Government Entities
- Ways to Avoid Delays: Determination Letter Application Processing Procedures
Click here to view the Fall Edition of Employee Plans News.
Reminder: 9/30/2009 Deadline for ERISA Plans with Calendar-year Plan Years to Distribute the Summary Annual Report
September 30, 2009 is the deadline for ERISA plans with calendar-year plan years to distribute the Summary Annual Report (SAR), unless an extension has been granted. The SAR is a summary of the information that was filed on the annual Form 5500 and must be distributed to the plan's participants and beneficiaries no later than nine months after the end of the plan year. More information and model notices may be found in the regulations at 29 CFR 2520.104b-10.
Click here for more information.
President Obama Discusses Health Care Reform Plan
On September 9, 2009, President Obama addressed a joint session of Congress to discuss his plan for health care reform. His plan would prohibit an insurance carrier from denying coverage or charging higher premium based on pre-existing conditions or gender, terminating existing coverage except in cases of fraud, and implementing an annual or lifetime maximum benefit. The plan would also require employers with 50 or more employees to provide health plan coverage for employees or pay an assessment. Individuals with a certain level of income will be required to maintain health coverage.
Click here for more information.
Final Regulations Regarding HSA Comparable Contributions
On September 8, 2009, the Internal Revenue Service (IRS) published final regulations regarding employer comparable contributions to a Health Savings Account (HSA). The regulations are applicable to HSAs that are outside of a Section 125 cafeteria plan. The regulations are similar to the proposed regulations that were issued in July 2008.
- A non-highly compensated employee (non-HCE) may receive a greater contribution than an HCE, but not vice-versa.
- An employer that does not make comparable HSA contributions would be subject to an excise tax. The tax must be reported to the IRS on Form 8928 by the income tax return filing deadline, without extension.
- An employer may limit the eligibility for an HSA rollover to those individuals covered under the employer's high deductible health plan (HDHP).
- If an employer contributes an amount greater than a pro-rated contribution for a mid-year enrollee, then the employer must contribute similarly for all mid-year enrollees.
The regulations are effective for contributions made on or after January 1, 2010.
Click here for more information.
CMS Issues Revised Model Collection Form for Mandatory CMS 111 Reporting
On August 18, 2009, a new model form was issued by the Centers for Medicare and Medicaid Services (CMS) to collect the Medicare Health Insurance Claim Number (HICN) or Social Security number (SSN) information from employees regarding their or their family members who might have Medicare coverage in addition to their employer's group health plan. This information is necessary since responsible reporting entities (RREs) are required to obtain the HICN or SSN information from Medicare beneficiaries for mandatory reporting purposes so that CMS may determine which plan is to be primary for those who have dual coverage (group and Medicare). The new model notice has two important features: a sample picture of a Medicare ID card, as well as an area for an explanation should an employee refuse to provide the information, and an acknowledgment that by not complying, they may be in violation of the Medicare Secondary Payer (MSP) rules. If an individual refuses to furnish an HICN or SSN, and the RRE has this signed form, the signed form may be used as a safe harbor and the RRE will be compliant for its next file submission to CMS.
Click here for more information.
Section 125 Qualifying Events Chart
The Section 125 Qualifying Events Chart includes descriptions, examples and citations, and shows what coverage is affected upon a mid-year qualifying event. Use this tool as a quick reference document to answer questions about triggering events that occur during the plan year that may permit an employee to make or change coverage elections including major medical, dental, vision, dependent care, and health Flexible Spending Accounts.
Click here to view chart.
IRS Issues Additional Guidance on Tax Consequences of Rollovers to Roth IRAs
On September 8, 2009, the IRS issued Notice 2009-75, in Q&A format, to provide additional guidance on the federal income tax consequences of rolling over an eligible distribution from a qualified plan (including a 401(k) plan) to a Roth IRA.
Click here for more information.
DOL Approves Use of a Summary Prospectus to Comply With ERISA Section 404(c)
On September 8, 2009, the DOL issued Field Assistance Bulletin 2009-03, which eases the requirement in the ERISA 404(c) regulations to distribute a prospectus when participants make their first investment in a registered security. Now plans complying with ERISA 404(c), in an effort to limit their fiduciary liability while administering participant directed investments, may instead provide a "Summary Prospectus" instead of the entire prospectus, as long as it contains information on how to access the more detailed prospectus.
Click here to view FAB 2009-03.
Click here to view DOL news release.
Retirement and Savings Initiatives Announced by White House and IRS
On September 5, 2009, President Obama and Treasury Secretary Timothy Geithner announced a set of new initiatives designed to encourage retirement savings. The new guidance expands opportunities for automatic enrollment in 401(k) and other retirement plans and enables employees to contribute amounts representing unused vacation or similar leave time to retirement plans (including 401(k) plans). The guidance also updates the IRS's model rollover notice. The IRS also issued Special Edition Newsletters of both Employee Plans News and Retirement News for Employers with information about the changes.
Automatic Enrollment
-
Revenue Ruling 2009-30. This ruling addresses automatic enrollment in 401(k) plans that contain a feature under which employee deferrals to the plan automatically increases each year without an affirmative election by the employee. The ruling describes two situations—one involving a basic automatic contribution arrangement and the other involving an arrangement intended to satisfy the requirements for a qualified automatic contribution arrangement (QACA) and an eligible automatic contribution arrangement (EACA).
Click here to view Revenue Ruling 2009-30.
-
Notice 2009-65. This notice contains two sample plan amendments to facilitate the use of automatic enrollment. The pre-approved automatic enrollment language will allow employers to amend their plans to adopt automatic enrollment more quickly—and without the need for case-by-case approval from the IRS. The notice states that plans are not required to adopt either amendment verbatim.
Click here to view Notice 2009-65.
-
Notice 2009-66 and Notice 2009-67. These companion notices provide guidance and a sample amendment, respectively, for including an automatic contribution arrangement in SIMPLE IRA plans.
Click here to view Notice 2009-66.
Click here to view Notice 2009-67.
Unused Vacation or Other Similar Leave
-
Revenue Ruling 2009-31. This guidance illustrates two situations in which the dollar equivalent of unused paid time off (PTO) can be contributed to an employer's profit-sharing plan without adversely affecting the plan's qualified status.
Click here to view Revenue Ruling 2009-31.
-
Revenue Ruling 2009-32. This guidance addresses similar contributions at termination of employment.
Click here to view Revenue Ruling 2009-32.
Updated Model Rollover Notice under Code Section 402(f)
-
Notice 2009-68. This notice simplifies the presentation of an employee's options when receiving an eligible rollover distribution. It provides a rollover roadmap that satisfies the required notice that must be provided to employees taking their retirement assets. The notice also reflects law changes (such as information on a distribution from a designated Roth account under an employer plan) and explains rules that apply in special situations (such as when a distribution is made to a surviving spouse or other beneficiary).
Click here to view Notice 2009-68.
Additional Links
State Updates
Alabama
The Alabama Department of Insurance issued Bulletin 2009-06 on September 1, 2009. The purpose of the Bulletin is to remind filers that any health insurance policy filed for use in the State of Alabama must comply with all federal health insurance requirements and updates the list of federal requirements to include the Genetic Information Nondiscrimination Act of 2008 and the Mental Health Parity and Addiction Equity Act of 2008.
Click here for more information.
Colorado
Insurance Commissioner Morrison issued Bulletin 9-3-2009 on Sept. 3, 2009, urging health insurance carriers to plan for the flu season and the possible H1N1 influenza pandemic by facilitating access to information and covering the cost of the vaccinations and treatment. A new Colorado law, which goes into effect Jan. 1, 2010, mandates coverage for influenza vaccinations as recommended by the Advisory Committee on Immunization Practices. It is recommended that people who want flu shots receive both the seasonal flu and H1N1 flu vaccinations before January in order to be effective this season.
Click here for more information.
Connecticut
Public Law 09-126, which was previously enacted, authorizes employers to terminate an employee's coverage under a group health insurance policy upon termination of employment. In response to inquiries, the Insurance Department has issued Bulletin HC-73, which includes commonly asked questions and answers, as well as the Department's interpretation of the new law. The responses include information regarding who is affected by the law and under what circumstances, what is the responsibility of the insurer or employer and how the law interacts with other laws.
Click here for more information.
Delaware
Recently enacted H.B. 199 requires health insurance carriers to provide coverage for developmental screenings for children at ages nine months, 18 months, and 30 months. The law is effective November 25, 2009.
Click here for more information.
Idaho
Insurance Director William Deal released Bulletin 09-09 on Sept. 16, 2009. The Bulletin clarifies that the following coverage is considered creditable coverage and would reduce an individual's pre-existing condition exclusion period: group health plan, Medicare, Medicaid, group or individual health insurance, TRICARE, Indian Health Services, the Federal Employees Health Benefits Program, a public health plan (U.S. or foreign), Peace Corps and CHIP.
Click here for more information.
Illinois
Governor Quinn approved Senate Bill 1770 to become Public Act 96-0635, effective August 24, 2009, which amends the original Victim's Economic Security and Safety Act ('VESSA') by extending the law's coverage so that more employees are covered by the Act. It expands some definitions, such as 'family or household member' and it now applies to all private employers with 15 or more employees and all public employers. Among other things, the law prohibits discrimination against such employees by requiring employers to provide them with reasonable accommodations and allows them to take up to 12 weeks of protected leave.
Click here for more information.
Massachusetts
Commissioner of Insurance Burnes has released Bulletin B-2009-11, which clarifies the state's mandated benefits for mental health and substance use disorder services. The Bulletin lists services for which group health plans are required to provide coverage such as medically necessary inpatient and day treatment services. The Bulletin also provides a list of services for which plans are not required to provide coverage such as programs that provide primarily custodial care services and tuition based programs offering educational activities.
Click here for more information.
Mississippi
The Mississippi Department of Insurance adopted the National Association of Insurance Commissioners (NAIC) Model Regulation regarding Medicare Supplement Insurance Minimum Standards. For Medicare Supplement policies issued on or after June 1, 2010, the policy shall be guaranteed renewable. The policy cannot have a pre-existing condition exclusion period greater than six months. If a group Medicare supplement policy is terminated, the participants must be offered the opportunity to convert to an individual policy. There are also standardized minimum benefit standards for specific coverages such as hospitalization, outpatient services, skilled nursing facilities and emergency care in a foreign country.
Click here for more information.
Missouri
On Sept. 21, 2009, Insurance Director John Huff released Bulletin 09-03. The Bulletin reminds insurance companies and policyholders that Missouri's state mental health parity laws require group health insurance plans of all sizes to provide coverage for mental health, alcoholism and chemical/substance benefits. With the interaction of the federal Mental Health Parity and Equity Addiction Act of 2008, that coverage must be equal to the coverage provided for medical conditions.
Click here for more information.
H.B. 577, effective August 28, 2009, prohibits a health insurance carrier from charging a co-payment that is greater than 50% of the total cost charged by a chiropractor for a single service. H.B. 577 also requires health insurance carriers to provide coverage for prosthetic devices and services including original and replacement devices. The coverage should be similar to the coverage provided for other medical conditions in terms of limitations, co-payments, co-insurance, and deductibles. The prosthesis coverage is effective for policies issued or renewed on or after January 1, 2010.
Click here for more information.
Director of Insurance Huff has released Insurance Bulletin 2009-02, which explains the expansion of state continuation coverage for small employers under H.B. 231. Effective June 26, 2009, employers with less than 20 employees who sponsor a group health insurance plan must offer continuation coverage similar to the federal COBRA requirements.
Click here for more information.
Montana
Insurance Commissioner Lindeen issued a Memorandum on August 21, 2009, which provides additional guidance on a group health insurance carrier's requirement to disclose the insured's financial responsibility under the policy including deductibles, co-payments, and maximum out-of-pocket limitations. The insurance carrier must also provide, upon request, a detailed summary of coverage when the estimated cost is more than $500.
Click here for more information.
Before the passage of S.B. 141, Montana employers were permitted to purchase individual health insurance policies for employees called franchise disability insurance. Commissioner Lindeen has clarified in in a Memorandum dated August 21, 2009, that such practice is no longer permitted. If an employer is going to pay all or part of the premiums for employee coverage, a group health plan must be issued. Carriers are instructed to cancel any in-force franchise disability insurance and offer a group product replacement.
Click here for more information.
New Jersey
Governor Corzine approved AB 2238 on August 13, 2009 to be effective in February 2010. This bill requires individual and group health insurers to provide certain benefit coverage for medically necessary treatments when prescribed by the individual's physician for Autistic Disorder (autism), Childhood Disintegrative Disorder, Asperger's Disorder, Pervasive Developmental Disorder and Rhett's Syndrome. Covered treatments will include physical, speech and occupational therapy, and evidence-based behavioral interventions.
Click here for more information.
On August 12, 2009, Governor Corzine approved AB 2539 to be effective September 1, 2010. This bill requires insurers for individual and group health plans that include coverage for maternity benefits to reimburse the providers for such maternity services in installment payments during the term of the pregnancy. The current custom is to pay all expenses in one payment after the delivery. This bill considers providers of maternity care to include New Jersey licensed OB/GYN physicians and New Jersey licensed or certified nurse midwives.
Click here for more information.
New Jersey
Governor Corzine approved AB 2238 on August 13, 2009 to be effective in February 2010. This bill requires individual and group health insurers to provide certain benefit coverage for medically necessary treatments when prescribed by the individual's physician for Autistic Disorder (autism), Childhood Disintegrative Disorder, Asperger's Disorder, Pervasive Developmental Disorder and Rhett's Syndrome. Covered treatments will include physical, speech and occupational therapy, and evidence-based behavioral interventions.
Click here for more information.
On August 12, 2009, Governor Corzine approved AB 2539 to be effective September 1, 2010. This bill requires insurers for individual and group health plans that include coverage for maternity benefits to reimburse the providers for such maternity services in installment payments during the term of the pregnancy. The current custom is to pay all expenses in one payment after the delivery. This bill considers providers of maternity care to include New Jersey licensed OB/GYN physicians and New Jersey licensed or certified nurse midwives.
Click here for more information.
New York
On September 10, 2009, the State of New York's Insurance Department issued Circular Letter No. 20 (2009) to all insurers and HMOs who write Accident and Health Insurance in New York State. The Department's intent is to provide guidance to insurers and consumers about the impact of the Paul Wellstone and Pete Dominici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) on the insurance market in NY. There are several differences in the MHPAEA and the current guidelines used in Timothy’s Law (N.Y. Ins. Law §§ 3221(l)(5), 4303(g) & (h)), such as how the number of employees are counted; which copayment is applied to be consistent; and if a deductible is required. Insurers are encouraged to make any necessary submissions for Department approval as soon as possible so the policies will be ready by the MHPAEA effective date of October 3, 2009.
Click here for more information.
North Carolina
S.B. 1029 amends the Insurance Statute regarding an employee benefit plan sponsored by a professional employer organization (PEO). The new rules, effective October 1, 2009, clarify that either a client company or a PEO may sponsor and maintain an employee benefit plan for assigned employees. If the PEO sponsors a self-funded plan for employees, certain requirements must be met. The requirements include using a licensed or registered third-party administrator, holding participant contributions and plan assets in trust, maintaining certain stop loss insurance, and filing the Summary Plan Description (SPD) with the Insurance Commissioner. Additionally, the plan must issue a SPD to all participants that contains a statement that the plan is self-funded and benefits may not be equal to state mandated benefits.
Click here for more information.
Ohio
The recently enacted state budget in Ohio, H.B. 1, included several provisions that may affect employer-sponsored plans. The Department of Insurance issued FAQs on the new requirements, helping uninsured adults obtain health care coverage.
- Continuation of Coverage for Unmarried Adult Children: Under the new law, insurers, public employee benefit plans and HMOs will be required to offer parents whose employer-sponsored health insurance has an age limit the option of covering their dependent children up to age 28. The new law does not require employers to pay the additional premium cost for any continued coverage to age 28. To qualify for extended coverage as a dependent, a child must be unmarried, a natural, step or adopted child of the employee, and either a resident of Ohio or a full-time student. Children do not have to be financially dependent on their parents to be eligible, but they cannot be eligible for other coverage. The new law applies to all group insurance policies, issued or renewed, and plans established or modified on or after July 1, 2010.
- Section 125 Cafeteria Plan Requirement: Under the new law, certain private and public sector Ohio employers with 10 or more full-time employees (working 25 or more hours per week) will be required to offer employees the opportunity to purchase health insurance coverage, including individual policies, on a pre-tax basis through a Section 125 cafeteria plan. Employers with more than 500 employees must have a plan in place by Jan. 1, 2011, or six months after implementing and enforcement regulations are adopted, whichever date is later. Employers with 150 to 500 employees will have until the later of July 1, 2011, or 12 months after regulations are adopted to have a plan in place. If employers with 10 to 149 employees will have until the later of Jan. 1, 2012, or 18 months after regulations are adopted.
- State COBRA extension: In early 2009, Ohio temporarily extended the eligibility period for state continuation coverage from six to 12 months to allow residents to take full advantage of the federal COBRA premium subsidy. The new law makes that extension permanent. To be eligible for coverage, employees must have been involuntarily terminated (other than for gross misconduct). However, entitlement to unemployment compensation is no longer required. Further, if prescription drug coverage is included in the group coverage, it must be included in the continuation coverage. The changes are effective for policies and contracts issued, delivered or renewed on or after April 1, 2009.
Click here to view the business FAQ.
Click here to view the consumer FAQ.
Click here to view H.B. 1.
Oklahoma
The Health Care Authority Board has issued emergency regulations clarifying that the Insure Oklahoma program (Oklahoma Employer/Employee Partnership for Insurance Coverage) excludes coverage for weight loss intervention and treatment services. Coverage is excluded for surgical procedures, drugs, and nutritional services related to weight loss.
Click here for more information.
Oregon
Governor Kulongoski signed House Bill 2116 into law on Aug. 4, 2009 that instituting a one percent assessment on certain Oregon health premiums to mainly fund health insurance for uninsured Oregon children. Beginning Oct. 1, 2009, health insurers may, but are not required to, prospectively increase existing premium rates by up to one percent to cover the assessment. Following the passage of the bill, the Division of Insurance issued Bulletin 2009-9 on Sept. 18, 2009, to further explain the assessments ordered in the Bill. The Bulletin gives information regarding the calculation of the one percent assessment on health insurance policies that are delivered to insure Oregon residents, even when such policies are issued in another state, and on policies issued for delivery in Oregon. If an insurer increases an employer's group policy rates because of the assessment, the carrier must notify the group in writing of the increase. The notice would be included with the group’s billing statement. An example of the notice is provided in the Bulletin.
Click here to view a copy of the Bill.
Click here to view a copy of the Bulletin.
South Carolina
On September 1, 2009, the South Carolina Department of Insurance issued Bulletin 2009-15, to address Autism Spectrum Disorder maximum benefits for behavioral therapy. Currently, the state adjusts the maximum benefit on January 1 of each year based on changes in the Consumer Price Index. The maximum for January 1, 2010 will remain at $50,000 per calendar year.
Click here for more information.
Vermont
The Vermont Department of Banking, Insurance, Securities, and Health Care Administration adopted the National Association of Insurance Commissioners (NAIC) Model Regulation regarding Medicare Supplement Insurance Minimum Standards. For Medicare Supplement policies issued on or after June 1, 2010, the policy shall be guaranteed renewable. The policy cannot have a pre-existing condition exclusion period greater than six months. If a group Medicare supplement policy is terminated, the participants must be offered the opportunity to convert to an individual policy. There are also standardized minimum benefit standards for specific coverages such as hospitalization, outpatient services, skilled nursing facilities and emergency care in a foreign country.
Click here for more information.
West Virginia
The Insurance Commissioner enacted an emergency amendment, effective Sept. 9, 2009, to the state's current mental health parity law in order to provide for parity with respect to treatment limits and financial limitations that meet or exceed the requirements of the Paul Wellstone-Pete Domenici Mental Health Parity and Addiction Equity Act of 2008. The enhanced requirements apply to group health plans that begin after Oct. 3, 2009. In line with the federal requirements, the state law now requires plans that offer mental health and/or substance use disorder coverage to offer coverage equal to that offered for medical conditions in terms of co-payments, deductibles, and co-insurance. Plans are prohibited from applying separate limitations to the number of visits or the number of inpatient days for expenses related to mental health or substance use disorders.
Click here for more information.
The above links are provided for your information only. NFP does not endorse, nor accept any responsibility for the content, products and/or services provided at non-NFP sites. Some information contained in the NFP site is provided by third parties. We do not independently verify this information, nor do we guarantee its accuracy or completeness. Information provided from governmental agencies is subject to change.