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IRS Releases Updated 2012 Version of the Employer’s Tax Guide to Fringe Benefits
The IRS recently released the 2012 version of Publication 15-B (Employer’s Tax Guide to Fringe Benefits). Publication 15-B contains information for employers regarding the tax treatment of various fringe benefits that may be provided to employees. The 2012 version is similar to the 2011 version, but includes updated benefit limits for 2012 (including mileage reimbursements and qualified parking and commuter expenses) and a new discussion of the tax rules applicable to employer-provided cell phones. A copy of the new Publication 15-B is available here.
Definition of Essential Health Benefits Left to States
The Department of Health and Human Services (HHS) outlined its proposal for defining “essential health benefits” which must be provided by group health plans beginning in 2014. The Patient Protection and Affordable Care Act directs the Secretary of HHS to define essential health benefits, but provides that it must at least include ambulatory patient services, emergency services, hospitalization, maternity and newborn care, mental health and substance use disorder services (including behavioral health treatment), prescription drugs, rehabilitative and habilitative services and devices, laboratory services, preventive and wellness services and chronic disease management, and pediatric services (including oral and vision care). Under the HHS proposal, essential health benefits will be defined by a benchmark plan selected by each state. States may choose one of four benchmark plans: one of the three largest small group plans in the state by enrollment, one of the three largest state employee health plans by enrollment, one… Continue Reading
Supreme Court to Hear Oral Argument on Health Reform in March of 2012
The U.S. Supreme Court has announced that oral argument in the collection of cases challenging the constitutionality of the Patient Protection and Affordable Care Act has been set for the last week of March 2012.
Early Retiree Reinsurance Program Ending
The Centers for Medicare and Medicaid Services (CMS) announced that, based on the funding available for the Early Retiree Reinsurance Program (ERRP), CMS will be denying any request for reimbursement for claims incurred after December 31, 2011. The ERRP was established by the health care reform law to reimburse plan sponsors for a portion of the cost of providing health coverage to early retirees. This announcement is available here.
DOL Issues Proposed Rules on MEWAs
The Department of Labor’s Employee Benefits Security Administration released two proposed rules regarding multiple employer welfare arrangements (MEWAs). The proposed rules would (1) establish procedures for the Secretary of Labor to issue ex parte cease and desist orders and summary seizure orders to alleged fraudulent or insolvent MEWAs and (2) amend existing reporting obligations of MEWAs. The proposed reporting regulations would require MEWAs that provide medical benefits but are not group health plans to (1) register with the Secretary of Labor prior to operating in a state and (2) annually report compliance with the applicable market reforms of the federal health reform law. The proposed rules on cease and desist orders are available here and the proposed rules on reporting requirements are available here.
HHS Issues Final Rule of Medical Loss Ratios: DOL Issues Related Guidance on Rebates
The Department of Health and Human Services (HHS) recently issued its final rule on medical loss ratios (MLR). Under the Patient Protection and Affordable Care Act, insurance companies are required to spend 80 percent (individual and small group markets) or 85 percent (large group markets) of premium dollars on health care expenses. For insurance companies that do not meet the MLR standards, such issuers are required to provide rebates to their policyholders. Notably, the final rule streamlines the rebate process for group policies, and directs issuers to provide rebates to the group policyholder (generally, the employer). Policyholders must ensure that the rebate is used for the benefit of the subscribers of the group health plan. The Department of Labor (DOL) has issued related guidance on the treatment of rebates paid pursuant to the MLR requirements. For group health plans subject to ERISA, the rebates may constitute “plan assets,” and if… Continue Reading
San Francisco Amends Health Care Security Ordinance
San Francisco has amended its Health Care Security Ordinance which requires employers in San Francisco to pay the health care expenses of employees through contributions to health reimbursement accounts. The amendment extends the time period from one year to two years for which contributions to health reimbursement accounts must be available for use by employees. As a result, effective January 1, 2012, any unused funds in these health reimbursement accounts as of December 31, 2011 will be available for use by employees through December 31, 2012. A copy of the amended law is available here.
Third Circuit Limits Relief Available to Welfare Plan to Appropriate Equitable Relief
The U.S. Court of Appeals for the Third Circuit recently ruled that an employer-sponsored group health plan for employees was not entitled to full reimbursement of medical expenses that it had previously paid on behalf of a participant, even though the plan provided that the participant was required to reimburse the plan for all amounts recovered from a third party. In this case, the plan paid $66,866 in medical expenses to the participant for injuries sustained in an automobile accident. After the participant recovered $110,000 (after attorney’s fees and other costs, a net amount of less than $66,000) from the underinsured driver, the plan filed suit against the participant under Section 502(a)(3) of ERISA for “appropriate equitable relief” in the form of reimbursement of the full $66,866 that it paid. Finding support in the U.S. Supreme Court’s recent ruling in Cigna v. Amara, which authorized equitable reformation under Section 502(a)(3)… Continue Reading
U.S. Supreme Court Will Review Constitutionality of Health Care Reform Law
The U.S. Supreme Court has agreed to review three cases challenging the constitutionality of the Patient Protection and Affordable Care Act (the Health Reform Law). Specifically, the Court has agreed to address the following issues: (1) whether the individual mandate under the Health Reform Law is constitutional; (2) whether the remainder of the Health Reform Law is severable if the individual mandate is ruled unconstitutional; (3) whether the Health Reform Law’s expansion of the Medicaid program is constitutional; and (4) whether the Anti-Injunction Act bars state challenges to the individual mandate. A copy of the Supreme Court’s order can be found here.
IRS Issues Reminder about Filing Multiple Employee Plan Return Extensions
The Internal Revenue Service (IRS) posted a reminder on its website that it will not process any Form 5558, the request for extension of time to file Form 5500, Form 5330 and Form 8955-SSA, if the Form 5558 requests an extension for more than three employee benefit plans. If the IRS receives a Form 5558 that lists more than three plans between now and July 31, 2012, the Form 5558 will be returned to the filer to submit separate Forms 5558 for each plan on the list. After July 31,2012, such Forms 5558 will not be returned, nor will they be processed. A link to this reminder is available here.
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