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IRS Amends Determination Letter Program

The Internal Revenue Service (IRS) announced that it will change several aspects of its employee plans determination letter program, which will take effect for determination letter applications filed on or after February 1, 2012 (for plans assigned to a five-year remedial amendment cycle) or May 1, 2012 (for plans assigned to a six-year remedial amendment cycle). Among the changes made, the IRS has eliminated elective demonstrations regarding coverage and nondiscrimination requirements. Furthermore, only plans that have made limited modifications to a pre-approved volume submitter plan may file the shorter Form 5307. These changes to the determination letter filing procedures will be reflected in Revenue Procedure 2012-6, which will be published on January 3, 2012. This announcement is available here.

IRS Issues 2011 Cumulative List of Changes for Cycle B Plans

The Internal Revenue Service (IRS) issued Notice 2011-97, which includes the 2011 Cumulative List, the list of statutory, regulatory, and guidance changes that the IRS will look for when reviewing individually designed plans submitted for determination letters during the Cycle B submission period, which begins February 1, 2012 and ends January 31, 2013. Notice 2011-97 is available here.

IRS Extends Transition Relief for Puerto Rico Plans

The Internal Revenue Service (IRS) issued Notice 2012-6 which extends until December 31, 2012, the transition relief in Rev. Rul. 2011-1 for transfers from a dually qualified Puerto Rico retirement plan trust to a trust for a plan that is intended to satisfy only the qualification requirements of the Puerto Rico Code. This relief also gives plan sponsors additional time to consider the effect of the changes to the Puerto Rico Code enacted earlier this year. Additionally, the IRS intends to issue guidance in response to comments it received regarding Rev. Rul. 2011-1. This guidance is available here.

Definition of Essential Health Benefits Left to States

The Department of Health and Human Services (HHS) outlined its proposal for defining ?Ç£essential health benefits?Ç¥ 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

December 2011