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IRS Requests Comments on “Shared Responsibility” Provisions of Health Reform

The Internal Revenue Service released Notice 2011-36 (the “Notice”) addressing the shared responsibility provisions of health reform that will go into effect after December 31, 2013. The Notice includes a request for comments on the process of developing regulatory guidance regarding the shared employer responsibility provisions in the Internal Revenue Code. Added by the Patient Protection and Affordable Care Act of 2010, the shared responsibility provisions will, after 2013, impose a penalty on applicable large employers that fail to meet certain standards for providing affordable health coverage to their full-time employees. The Notice describes potential approaches which could be incorporated into future regulations, such as who is a full-time employee for purposes of Section 4980H. Any comments must be submitted by June 17, 2011. The Notice is available here.

Supreme Court Will Not Rush Review of Virginia Case Challenging the Health Reform’s Constitutionality

The U.S. Supreme Court denied the Virginia Attorney General’s request for an expedited review of the earlier ruling made by a Virginia federal district court that the individual mandate under the Patient Protection and Affordable Care Act was unconstitutional. The district court’s decision has been appealed to the federal court of appeals and is currently awaiting a mid-May hearing. The Virginia Attorney General had asked the Supreme Court for an immediate review of this decision but the Supreme Court denied such request without comment.

Appropriations Bill Repeals Free Choice Voucher Requirement Under Health Reform

The Department of Defense and Full-Year Continuing Appropriations Act, 2011 (the “Act”), signed into law on April 15, 2011, repealed the health reform mandate requiring certain employers to provide “free choice vouchers” to lower income employees for whom the cost of the employer’s health plan coverage exceeded a certain level. The repealed provision, which was to become effective January 1, 2014, impacted employers who offered minimum essential coverage to employees and paid any portion of the cost of coverage. As a result of the repeal, and conforming changes made elsewhere in the Act, employers who will be subject to a penalty when employees elect to purchase coverage through the exchange will no longer benefit from the exception that previously applied to employees who were given free choice vouchers. Employers who had calculated the pay or play costs for 2014 may find that this change impacts those numbers. Other provisions in… Continue Reading

HHS to Stop Accepting ERRP Applications

The HHS announced that it will no longer accept applications for the Early Retiree Reinsurance Program (ERRP) after May 5, 2011. PPACA created ERRP as a temporary program to provide reimbursement for a portion of the costs of providing health coverage to early retirees and their eligible dependents. HHS announced that because the funding appropriated to ERRP is expected to be depleted, HHS will not process ERRP applications received after May 5, 2011. The guidance clarifies that the application must be received by the ERRP’s intake program by the deadline; an application postmarked by the May 5 deadline is not sufficient. A copy of the guidance is available here.

EBSA Issues Additional FAQs for Affordable Care Act Implementation

The Employee Benefits Security Administration (“EBSA”) on April 4th released a set of six frequently asked questions (“FAQs”) regarding issues for grandfathered plans under the Patient Protection and Affordable Care Act (“PPACA”). The FAQs were prepared jointly by the Department of Health and Human Services (“HHS”), Department of Labor and Department of the Treasury, and are the sixth set of FAQs issued to help stakeholders implement provisions of PPACA. The new FAQs cover topics such as the anti-abuse rules under the Interim Final Grandfather Regulations and whether certain scenarios would cause a plan to relinquish grandfathered status. This set of FAQs can be found here. Previously issued FAQs are available here.

IRS Issues Interim Guidance to Employers on W-2 Reporting of Health Coverage Costs

On March 29th the Internal Revenue Service (“IRS”) issued Notice 2011-28 to provide interim guidance to employers with respect to reporting the cost of group health insurance provided to employees. By way of background, the new health care reform law added Section 6015(a)(14) to the Internal Revenue Code, which generally provides that the aggregate cost of employer-sponsored health insurance coverage must be reported on each covered employee’s Form W-2. However, this reporting requirement is only for informational purposes and does not cause employer-provided health care coverage to become taxable income to employees. Previously, in Notice 2010-69, the IRS made this new reporting requirement optional for all employers for the 2011 Forms W-2 (which would generally be distributed to employees in January 2012). Notice 2011-28 only applies beginning with the 2012 Forms W-2 (which employers will furnish to employees in January 2013). Additionally, Notice 2011-28 provides that this Form W-2 reporting… Continue Reading

Compliance with Certain Claims and External Review Requirements Delayed

The Departments of Labor, Health and Human Services, and Treasury have extended the deadline for non-grandfathered health plans to comply with certain requirements of health reform’s claims and external review provisions. Specifically, compliance with the following requirements has been extended until the first day of the plan year beginning on or after January 1, 2012 (i.e. January 1, 2012 for calendar year plans): Notification of determinations of urgent care claims must be provided within 24 hours;  Notices of benefit determinations must be culturally and linguistically appropriate; and Notices of benefit determinations must include the specific diagnostic code and treatment code and the meaning of the codes. Further, the effective date of the provision allowing a participant to immediately bring a lawsuit or request external review if the plan does not strictly adhere to the requirements of the claims procedures has also been delayed until the first day of the plan… Continue Reading

Third Federal Judge Upholds Health-Care Law

 federal judge in Washington D.C. became the third district court judge to uphold the constitutionality of the health reform law’s requirement that individuals maintain health coverage or pay a penalty. In her opinion, U.S. District Court Judge Gladys Kessler said Congress was within its constitutional authority to regulate interstate commerce when it chose to penalize people who choose not to have health insurance. “Congress had a rational basis for its conclusion that the aggregate of individual decisions not to purchase health insurance substantially affects the national health insurance market,” Judge Kessler wrote in her opinion. Two other district court judges have recently ruled that the same provision is unconstitutional. Thus, to date there have been three district court judges ruling in favor of the constitutionality of the individual mandate and two district court judges ruling against the constitutionality of this mandate. It is expected that the United States Supreme Court… Continue Reading

Second District Court Holds Health Care Reform Unconstitutional

A federal district court in Florida has held that the individual insurance coverage mandate under the federal health care reform law is unconstitutional. Further, the court concluded that the insurance mandate could not be severed from the broader health reform law and that it therefore rendered the entire law unconstitutional. Texas was among 26 states that brought the action challenging the constitutionality of the individual coverage mandate, which is not scheduled to take effect until 2014. This is the second district court to hold the individual coverage mandate unconstitutional, while two other district courts held it constitutional. Florida vs. U.S. Dept. of Health and Human Services, Case No.: 3:10-cv-91-RV/EMT (N.D. Fla. January 31, 2011).

Department of Labor Posts New Health Reform FAQs

New FAQs clarify that employers do not have to comply with the automatic enrollment rules of healthcare reform until regulations are issued. In addition, the 60-day prior notice requirement for material modifications to group health plans is not effective until March 23, 2012, when plans are required to provide the new summary of benefits and coverage explanation. The FAQs also provide that if a plan has a deductible or out-of-pocket limit that is based on a formula using a percentage of the employee’s compensation formula, that arrangement will not cause the plan to lose its grandfathered status as long as the formula remains the same (even if the employee’s compensation increases). Finally, although healthcare reform generally requires non-grandfathered group health plans to provide coverage for recommended preventive services without cost sharing, it is permissible for a group health plan to impose a copayment on a preventive service performed at an… Continue Reading

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