IRS Issues Additional Guidance on Form W-2 Health Care Coverage Reporting Requirement

Posted by admin on January 20, 2012  |   No Comments »

The U.S. Internal Revenue Service (IRS) has issued Notice 2012-9 to provide additional guidance on the informational reporting to employees of the cost of their employer-sponsored group health plan coverage on Form W-2. This informational reporting is required under Section 6051(a)(14) of the Internal Revenue Code, enacted as part of the Affordable Care Act of 2010. The IRS requested public comments on the W-2 reporting requirement in Notice 2011-28. Notice 2012-9 responds to these comments and amends, restates and supersedes Notice 2011-28. Specifically, the new notice includes guidance on the W-2 reporting as it relates to small employers, flexible spending accounts, dental and vision plans, COBRA and health reimbursement arrangements.

U.S. Supreme Court Will Hear Arguments Over Constitutionality of Health Care Reform Law

Posted by admin on January 20, 2012  |   No Comments »

The U.S. Supreme Court has announced that it will hear more than five hours of oral arguments on the constitutionality of select provisions of the health care reform law (Affordable Care Act or PPACA). The arguments are expected to take place in late February or early March, with a ruling by the Court in June.

The following four issues will be addressed on appeal:

  • Constitutionality of the Individual Mandate. The Court set aside two hours to hear oral arguments on whether Congress had the constitutional authority to enact the minimum coverage provision of the Affordable Care Act, which requires non-exempted individuals to maintain a minimum level of health insurance or pay a tax penalty beginning in 2014.
  • “Severability” of the Individual Mandate from the Entire Law. Ninety minutes have been allotted for arguments on whether the individual mandate, if found to be unconstitutional, can be severed from the remaining provisions of the Affordable Care Act or whether some or all of the remaining law must also be invalidated.
  • Whether the Individual Mandate May Be Challenged Prior to Enforcement. The Court will hear one hour of oral arguments on the question of whether federal law (specifically, the Anti-Injunction Act) prohibits the Court from hearing challenges to the individual mandate before the requirement becomes effective in 2014 and a taxpayer actually incurs a penalty tax for non-compliance.
  • Constitutionality of the Expansion of Medicaid. Finally, one hour has been allotted by the Court to hear arguments on whether the Affordable Care Act’s expansion of the eligibility and coverage thresholds that states must adopt to remain eligible to participate in Medicaid is a valid exercise of constitutional authority by Congress.

You can read more about these challenges to the health care reform law in the Patient Protection and Affordable Care Act Briefs, posted on the Docket page of the U.S. Supreme Court website. For more information on other provisions of the Affordable Care Act, visit our section on Health Care Reform.

Compliance Date for Summary of Benefits and Coverage Will Likely Be Extended

Posted by admin on January 12, 2012  |   No Comments »

Compliance Date for Summary of Benefits and Coverage Will Likely Be Extended

The U.S. Department of Labor (DOL) has released a new set of Frequently Asked Questions (FAQs) which addresses the timing of the Affordable Care Act’s requirement that group health plans provide participants and beneficiaries with certain information about their health plan benefits and coverage. The FAQs make clear that compliance will not be required until final rules are issued and effective.

Background
Proposed rules issued in August established the standards for group health plans to provide participants and beneficiaries a summary of benefits and coverage (SBC), as well as a uniform glossary of terms commonly used in health insurance coverage, as required under the Affordable Care Act. Both documents must comply with certain appearance and format requirements and must utilize terminology understandable by the average plan enrollee.

Under the proposed rules, the new requirement would be applicable beginning March 23, 2012.

Compliance Not Required Before Final Rules Become Effective
According to the FAQs, final regulations regarding the SBC and uniform glossary are expected to be issued as soon as possible, taking into account comments and feedback on the proposed rules and the proposed templatesto satisfy these requirements that were issued simultaneously. Until those final regulations are issued, group health plans are not required to comply with the requirement to provide the SBC and uniform glossary. It is anticipated that the final regulations, once issued, will include an applicability date that gives group health plans sufficient time to comply.

To view the FAQs, please click here. For more on the Affordable Care Act, please visit the Health Care Reform section.

Previously Released Questions:

What to watch for in health care case? As Supreme Court takes up challenges to Affordable Care Act, here’s what you need to know

Posted by admin on November 16, 2011  |   No Comments »

By Tony Mauro

The game is on. As expected, the Supreme Court on Monday agreed to decide whether the intensely controversial Obama administration health care reform program is constitutional.

The dispute will be argued before the court in March, with a decision by June, plunk in the middle of the presidential campaign. It is a case well worth following. Here are the key issues and watchwords to track:

Individual mandate. Politically and legally, the most controversial part of the law is the requirement that everyone buy a minimum level of health insurance. This “individual mandate” provision infuriates people who think the government has no business requiring people to buy a commercial product. Next, some fear, government will force you to buy broccoli or solar panels.

The legal argument against this part of the law is that requiring the purchase of health insurance goes far beyond the specific powers that the Constitution gives to Congress — including the power to regulate interstate commerce.

Proponents counter that if you decide not to buy health insurance, you are, in fact, affecting interstate commerce, because someday you’ll end up in the emergency room — and the costs you can’t pay for will end up being paid by others.

Farmer Filburn. The Supreme Court often looks to its past decisions for guidance in new cases. And the most important precedent in the health care case is Wickard v. Filburn, a decision from 1942. It involved, oddly enough, a Montgomery County, Ohio, farmer named Roscoe Filburn. He was minding his own business, growing wheat for his own family consumption. But in 1941, he was penalized for growing too much wheat, under a law passed by Congress to control wheat supply and prices. Filburn challenged the law, asserting that Congress overstepped its powers because his wheat had nothing to do with interstate commerce.

The court said Congress acted properly in clamping down on Filburn, in part because his decision to grow his own wheat kept him out of the market for wheat elsewhere and could affect prices nationwide, even if slightly. If Congress can penalize Filburn for not buying wheat from others, the theory goes, Congress can penalize people for not buying health insurance.

Severability. This is a legal term that asks whether a big law such as the health care act can survive if one of its major parts — in this case, the individual mandate — is struck down. Opponents of the law who want to take down the entire law say it all rises or falls together. But the Obama administration asserts that most of the program can take effect even without the money generated by the mandate.

Tax or penalty? This seems like an eye-glazing issue, but bear with me. It has emerged as an important question in some of the lower court decisions, and the court on Monday specifically asked that both sides weigh in. Long ago, Congress passed a law preventing people from going to court to stop enforcement of a tax law before they actually pay the tax. It makes sense. If they could, imagine how many people would file lawsuits to postpone paying taxes and keep the IRS at bay.

What does this have to do with the health care law? The law states that individuals above a certain income level who refuse to buy health insurance will have to pay a penalty at tax time starting in 2015. That penalty is really a tax, in the view of some judges, so they say the old law against premature tax lawsuits should kick in. If the Supreme Court agreed, the political impact would be enormous. Challenges to the individual mandate would have to wait until 2015.

What will happen? When Congress first passed the law in 2010, few legal experts thought it could be successfully challenged in court. Congress had spoken in a massive, if controversial, piece of legislation that the courts would be reluctant to second-guess. Then the flurry of lawsuits and rulings that ensued exposed its vulnerability, especially on the individual mandate. But now that several judges, including respected conservatives such as Laurence Silberman and Jeffrey Sutton, have upheld its constitutionality, the law is looking harder to beat. Two of the three federal appeals courts that have ruled say it is constitutional.

For more information. The Supreme Court has posted the main legal briefs in the pending cases on its website here: supremecourt.gov/docket/PPAACA.aspx. It’s a helpful step the court usually does not take. Even better would be if the court would allow the broadcast of the five-and-a-half hours of arguments when they take place next year. This newspaper and I have argued for cameras in the court many times, with absolutely no success. Unlike almost every other government institution — even the CIA has a YouTube channel — the Supreme Court keeps cameras out.

The intense interest in the health care case would be a great reason for the court to finally open the doors to broadcast news media. It probably won’t, but hope springs eternal.

Tony Mauro, Supreme Court correspondent for The National Law Journal, is a member of USA TODAY’s Board of Contributors.

Expanded Preventive Services for Women Under the Affordable Care Act

Posted by admin on October 7, 2011  |   No Comments »

The U.S. Department of Health and Human Services (HHS) has adopted additional Guidelines for Women’s Preventive Services requiring new health insurance plans to cover women’s preventive services such as well-woman visits, breastfeeding support, domestic violence screening, and contraception without charging a co-payment, co-insurance or a deductible starting in August 2012. The guidelines were recommended by the independent Institute of Medicine (IOM).
Coverage of Recommended Preventive Services Under the Affordable Care Act
Last summer, HHS released new rules under the Affordable Care Act requiring all new private health plans to cover several evidence-based preventive services like mammograms, colonoscopies, blood pressure checks, and childhood immunizations without charging a copayment, deductible or coinsurance. Note that these required preventive services do not apply tograndfathered plans.

New Guidelines Expand Required Preventive Services for Women
As a result of the new guidelines, additional women’s preventive services that must be covered without cost sharing requirements include:

- Well-woman visits;
- Screening for gestational diabetes;
- Human papillomavirus (HPV) DNA testing for women 30 years and older;
- Sexually-transmitted infection counseling;
- Human immunodeficiency virus (HIV) screening and counseling;
- FDA-approved contraception methods and contraceptive counseling;
- Breastfeeding support, supplies, and counseling; and
- Domestic violence screening and counseling.

New health plans will need to include these services without cost sharing for insurance policies with plan years beginning on or after August 1, 2012.

Affordable Care Act’s Annual Limit Restrictions Do Not Apply to Stand-Alone HRAs in Effect Prior to Sept. 23, 2010

Posted by admin on September 27, 2011  |   No Comments »

The Center for Consumer Information & Insurance Oversight has issued guidancethat exempts stand-alone Health Reimbursement Arrangements (HRAs) in effect prior to Sept. 23, 2010 from having to comply with the Affordable Care Act’sannual limit requirements for plan years beginning before Jan. 1, 2014.
Background
The Affordable Care Actgenerally prohibits group health plans from imposing lifetime or annual limits on the dollar value of health benefits, but allows “restricted annual limits” with respect to essential health benefits for plan years beginning before January 1, 2014. Restricted annual limits may be waived if compliance with the rules would result in a significant decrease in access to benefits or a significant increase in premiums.

Exemption for Stand-Alone HRAs
An HRA is a self-insured medical reimbursement plan funded solely by employer contributions and not through salary reduction that:

- Reimburses some or all of the medical care expenses of participating employees, spouses and dependents up to a maximum dollar amount for a coverage period; and
- Allows participants to carry forward unused amounts remaining at the end of the coverage period for use in subsequent coverage periods.

According to the guidance, all HRAs set limits on the amount that can be spent and those limits would always be less than the applicable restricted annual limit amounts, so applying the annual limit restrictions would result in a significant decrease in access to HRA benefits.

As a result, the guidanceexempts all stand-alone HRAs that were in effect prior to Sept. 23, 2010 from having to apply individually for an annual limit waiver for plan years beginning on or after Sept. 23, 2010 but before Jan. 1, 2014. If an employer that maintains an HRA also maintains other coverage, whether or not that coverage is integrated with the HRA, that other coverage must comply with the annual limit restrictions or obtain a waiver.

Record and Notice
Requirements Still Apply
An HRA that is exempt from applying for an annual limit waiver still must comply with the record retention and annual notice requirements to participants and subscribers included in previous guidance.

Amendment to Interim Final Rules Regarding Claims and Review Processes Under the Affordable Care Act

Posted by admin on August 24, 2011  |   No Comments »

The Departments of Health and Human Services, Labor, and the Treasury (the Departments) have issued an amendment to the interim final regulations implementing the requirements regarding internal claims and appeals and external review processes for group health plans and health insurance coverage under the Affordable Care Act.

The Departments have been issuing regulations and technical guidance in several phases to implement the standards for plans and issuers regarding both internal claims and appeals process and external review. According to the amendment to the interim final regulations, the revised rules are intended to respond to feedback from a wide range of stakeholders on the original interim final regulations and to assist plans and issuers in coming into full compliance with the law through an orderly and expeditious implementation process.

For more information on internal claims and appeals and external review processes, please click on the links below or visit HR360. To read more about the Affordable Care Act, please visit the HR360 section on Health Care Reform.

Health Care Reform Update: Application Process for Annual Limit Waivers to Conclude September 22nd

Posted by admin on August 5, 2011  |   No Comments »

The Centers for Medicare and Medicaid Services (CMS) has announced that, after September 22, 2011, no new applications or requests for extensions of waivers from the Affordable Care Act’s annual limit restrictions will be considered. The announcement includes guidance to allow limited benefit, or “mini-med” plans, to apply for or renew a temporary waiver from annual limit restrictions through 2013.
Background
The Affordable Care Act generally prohibits group health plans and health insurance issuers offering group or individual health insurance coverage from imposing lifetime or annual limits on the dollar value of health benefits, but allows “restricted annual limits” with respect to essential health benefits for plan years (in the individual market, policy years) beginning before January 1, 2014. No annual dollar limits on essential health benefits are permitted with respect to plan or policy years beginning on or after January 1, 2014 (except in the case of grandfathered individual market policies).

Extension of Existing Waivers and New Applications Accepted Through September 22nd
A group health plan or health insurance issuer that has received a waiver of the restricted annual limit of $750,000 for a plan or policy year beginning on or after September 23, 2010, but before September 23, 2011, may elect to extend its existing waiver until January 1, 2014 by following the procedures set forth in the new guidance. Additionally, a group health plan or health insurance issuer eligible to apply for a new waiver may apply for a waiver approval that will be effective until January 1, 2014 by following the procedures explained in the guidance.

The deadline for receipt of waiver extension forms and new waiver applications is September 22, 2011. Elections for a waiver extension or waiver applications received after September 22, 2011 will not be accepted. Plans or issuers that do not elect a waiver extension or that do not receive a waiver approval will be required to come into compliance with the annual limit restrictions.

Additional Requirements Imposed for Waiver Recipients
The newly published guidance also imposes new, more stringent disclosure requirements. Under the guidance:

  • Health plans with waivers are required to tell consumers that their health care coverage is subject to an annual dollar limit lower than what is allowed under the law.
  • Insurers must include the dollar amount of the annual limit along with a description of the plan benefits to which the limit applies.
  • Plans also must show how the annual limit would affect a consumer who was hospitalized to help people understand how far their coverage will reach if they become seriously ill.
  • Plans with waivers must attest annually to their compliance with the consumer disclosure requirement.

The guidance provides the exact language waiver recipients must use and the required font specifications. Written permission must be obtained from the Center for Consumer Information & Insurance Oversight (CCIIO) to use different language.

For More Information
To read the newly published guidance in its entirety, please click here. You may also view the press release here. More information about the annual limit waiver process is available on the CCIIO website. For additional requirements under the Affordable Care Act, please visit the HR360 section on Health Care Reform.

Comments Requested on Shared Responsibility Requirements for Employers Regarding Health Coverage

Posted by admin on July 20, 2011  |   No Comments »

The Internal Revenue Service (IRS) has released the 2012 inflation adjusted amounts forHealth Savings Accounts(HSAs) as determined under the Internal Revenue Code.

Background on HSAs
An HSA is a health savings account (a tax-exempt trust or custodial account) set up exclusively for paying qualified medical expenses. To be eligible to have contributions made to an HSA, an individual must be covered under a high deductible health plan (HDHP) and meet certain other eligibility requirements.

An HSA may receive contributions from an eligible individual or any other person, including an employer or a family member, on behalf of an eligible individual. Contributions, other than employer contributions, are deductible on the eligible individual’s return whether or not the individual itemizes deductions. Employer contributions are not included in income. Distributions from an HSA that are used to pay qualified medical expenses are not taxed.*

Annual Contribution Limitation
For calendar year 2012, the annual limitation on HSA deductions for an individual with self-only coverage under a high deductible health plan is $3,100. The annual limitation on HSA deductions for an individual with family coverage under a high deductible health plan is $6,250for calendar year 2012.

High Deductible Health Plan
For calendar year 2012, a “high deductible health plan” is defined as a health plan with an annual deductible that is not less than $1,200 (no change from calendar year 2011) for self-only coverage or $2,400 (no change from calendar year 2011) for family coverage, and the annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) do not exceed $6,050 for self-only coverage or $12,100 for family coverage.

To view Revenue Procedure 2011-32, please click here. You can learn more about HSAs in the HR360 section on Health Savings Accounts.

*Note that, under the new Affordable Care Act requirements, only medicines or drugs that are prescribed (including over-the-counter medicines or drugs obtained with a prescription) or insulin are considered qualified medical expenses for HSA purposes for amounts paid after 2010. Additionally, for HSA distributions after 2010, the additional tax on distributions not used for qualified medical expenses is increased to 20%.

Extension of Enforcement Grace Period for Select Internal Claims and Appeals Rules

Posted by admin on May 11, 2011  |   No Comments »

Extension of Enforcement Grace Period for Select Internal Claims and Appeals Rules Until Plan Years Beginning On or After Jan. 1, 2012

The Affordable Care Act generally requires group health plans (except for grandfathered plans) and health insurance issuers in the group market to implement an effective internal appeals process for coverage determinations and claims, beginning with plan years starting on or after September 23, 2010. Interim final regulations released in July 2010 by the Departments of Labor (DOL), Health and Human Services (HHS), and the Treasury describe the new procedures, including seven new standards required for internal claims and appeals.

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