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

On March 29th the Internal Revenue Service (?Ç£IRS?Ç¥) 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?ÇÖs 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;?á 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

?áfederal judge in Washington D.C. became the third district court judge to uphold the constitutionality of the health reform law?ÇÖs 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. ?Ç£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,?Ç¥ 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?ÇÖs 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?ÇÖs 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

Application of Nondiscrimination Rules to Fully Insured Health Plans Delayed

Under healthcare reform, as originally enacted, non-grandfathered fully-insured group health plans are subject to the nondiscrimination requirements of the Internal Revenue Code, effective for the first plan year beginning on or after September 23, 2010. In order to provide fully-insured group health plan sponsors with time to implement the required changes, the Departments of Treasury, Labor and Health and Human Services have delayed the effective date of compliance until after more specific guidance is issued. The announcement of the delayed effective date is available here.

September 2021