Final Regulations on Excise Taxes for Group Health Plans Released

Group health plans are responsible for compliance with a number of federal laws governing issues such as continuation coverage and portability of health coverage. If a group health plan does not comply with applicable group health plan requirements, the employer maintaining the plan is subject to an excise tax. Employers are also subject to an excise tax if they do not satisfy comparable contribution rules for health savings accounts (“HSAs”) and Archer medical savings accounts (“MSAs”). The Internal Revenue Service (IRS) has issued final regulations on reporting and paying the applicable excise tax, which are effective January 1, 2010. 

Group Health Plan Rules Subject to Excise Tax

Generally, an excise tax of $100 per individual per day will apply to violations of the following rules (“Group Health Plan Requirements”):

• Continuation coverage (COBRA);
• Portability and nondiscrimination for health coverage (HIPAA);
• Genetic information nondiscrimination (GINA);
• Parity between mental health benefits and medical/surgical benefits (Mental Health Parity and Addiction Equity Act);
• Minimum hospital lengths of stay in connection with childbirth (Newborns’ and Mothers’ Health Protection Act); and
• Continued coverage for post-secondary students with a serious medical condition (Michelle’s Law).

For violations of the comparable contribution rules for HSAs and Archer MSAs, the excise tax will generally be 35 percent of the amount contributed by the employer to the Archer MSAs or the HSAs of all employees within the applicable calendar year.

For more information got to the IRS Regs

Congress Introduces COBRA Subsidy Expansion Bills

Two separate bills have been introduced, one which is more expansive than the other. The smaller of the two bills is HR 3966, which would only extend the ARRA subsidy for involuntary terminations and loss of coverage occurring through June 30, 2010.  However, the larger bill is HR 3930, and includes the following provisions:

Qualifying events with the 18-month COBRA period would be extended to 24 months for any termination of employment (voluntary or involuntary) or reduction of hours that occurred during the 21-month period starting on April 1, 2008, and ending on December 31, 2009. Further, if an individual’s COBRA coverage already expired before the law is passed, affected qualified beneficiaries would have a second election right to obtain the additional six months of coverage.

The ARRA subsidy would be extended for involuntary terminations and loss of coverage occurring through June 30, 2010. Further, all ARRA subsidies would continue for up to 15 months (current 9 months plus an additional 6 months under the proposal), but all subsidies would end by December 31, 2010 regardless of the new 15-month rule.

These bills have been introduced in the House and are currently in committee; however, they have not reached the House floor for a full vote.  The Senators Brown and Casey have introduced S.2730 in the Senate, a bill which extends COBRA as would HR 3930, but would also increae the subsidy from 65% TO 75%.  Stay tuned to the Health and Wellness as a Business Strategy blog for updates on these bills.

Updated information provided by Joanne Flora.

Governor Paterson Signs Legislation to Make Health Insurance More Affordable and Improve Access to Health Care

Governor David A. Paterson signed into law three Governor’s Program bills that will make health insurance more affordable and improve access to health care for New Yorkers. The first extends the period of time for COBRA coverage from 18 to 36 months; the second permits families to cover their young adult dependents through age 29 under their job-based insurance; and the third enacts a series of managed care reforms to make health insurance work better for consumers and permit timely access to necessary health services. The effective date of these changes is September 1, 2009.

Summary of New York Dependent Extension to Age 29

DOL creates website on COBRA coverage under the American Recovery and Reinvestment Act of 2009

All employers and employees now have a site that answers questions about the COBRA coverage under ARRA. Individuals who request treatment as an assistance eligible individual and are denied such treatment by their group health plan may have the right to appeal to the DOL. The DOL is currently developing a process and an official application form that will be required to be completed for appeals. According to the website, The DOL is actively working to issue additional guidance regarding the COBRA premium reductions.  I expect to see the DOL’s final notices regarding changes under ARRA next week.  Important IRS forms are also available in spanish and english at this site.  Stay tuned for more information.

Go to DOL COBRA ARRA site

The Women’s Health and Cancer Rights Act of 1998 (WHCRA)

A notice summarizing WHCRA must be provided to each employee when he or she is first covered by the plan, and annually to all employees (as well as COBRA beneficiaries and spouses and dependents not residing at the employee’s address) covered by the plan. For your convenience, a copy of a sample language for WHCRA is included with this summary. For more information on WHCRA, please visit Department of Labor’s Web site on WHCRA

ADA Amendments Act of 2008

 

On September 25, 2008, the ADA Amendments Act of 2008 (the “Act”) was signed into law by President Bush. The Act, which is effective January 1, 2009, expands the scope of disabilities covered under the Americans with Disabilities Act of 1990 (the “ADA”). In part, the Act broadens the scope of protection available to employees by rejecting two Supreme Court decisions which had narrowly construed the definition of “disability” under the ADA.

Comparison between the ADA Restoration Act and the ADA Amendments Act

The Family and Medical Leave Act and National Defense Authorization Act for FY 2008

On January 28, 2008, President Bush signed into law H.R. 4986, the National Defense Authorization Act for FY 2008 (NDAA), Pub. L. 110-181. Among other things, section 585 of the NDAA amends the Family and Medical Leave Act of 1993 (FMLA) to permit a “spouse, son, daughter, parent, or next of kin” to take up to 26 workweeks of leave to care for a “member of the Armed Forces, including a member of the National Guard or Reserves, who is undergoing medical treatment, recuperation, or therapy, is otherwise in outpatient status, or is otherwise on the temporary disability retired list, for a serious. The DOL issued an insert employer’s should post with their current FMLA poster. Employers should be sure to post this insert as any employer who willfully violates this requirement may be assessed a civil monetary penalty not to exceed $100 for each separate offense. This law applies to both large and small group health plans, including self-funded, fully insured and governmental plans. It goes into effect on the first day of the plan year beginning one year after the date the Act was enacted. 

Michelle’s Law

On October 9, 2008, President Bush signed into law “Michell’s Law.” Michelle’s Law is a very short law that did not provide a lot of guidance to plan administrators on how to administer this law. This law amends the Employee Retirement Income Security Act of 1974 (ERISA) and the Internal Revenue Code of 1986 to prohibit a group health plan or health insurance coverage offered in connection with such a plan from terminating the coverage of a dependent child due to a medically necessary leave of absence from a postsecondary educational institution that causes the child to lose full-time status before the date that is the earlier of: (1) one year after the first day of the leave of absence; or (2) the date on which such coverage would otherwise terminate under the terms of the plan. Requires documentation and a certification by a physician.