Viewing posts from: June 2013

DOMA Unconstitutional: What's Next for my Employee Benefit Plans?

Posted June 26, 2013 by PHaynes

Now that the U.S. Supreme Court found section 3 of DOMA to be unconstitutional, employers, plan sponsors and employees are E-mailing and calling with questions.

  • How soon can we amend our tax returns from single and single to married filing jointly? 
  • When will the imputed income stop? 
  • When will my spouse be allowed to enroll?

For a legally married couple who lives in a state* where same-sex marriage is recognized:

  • Federal laws governing employee benefit plans will require employers to treat employees’ same-sex and opposite-sex spouses equally for purposes of the benefits that the employer extends to spouses.
  • Employers with self-insured welfare plans (meaning benefits are paid out of the company’s general assets) will not necessarily be required to extend spousal benefit coverage to same-sex spouses, because federal law does not require spousal welfare benefit coverage and because state insurance law mandates would not apply to a self-insured plan. However, employers that continue to provide benefit coverage only to opposite-sex spouses are almost certain to face legal challenges under federal discrimination law.
  • Employees will no longer have to pay federal income taxes on the income imputed for an employer’s contribution to a same-sex spouse’s medical, dental or vision coverage. And the employee can pay for the same-sex spouse’s coverage on a pre-tax basis under a section 125 plan.
  • COBRA continuation coverage will be required to be offered to same-sex spouses.
  • Employers with pension plans will be required to recognize same-sex spouses for purposes of determining surviving spouse annuities. Same-sex spouses must also consent to payment of the employee’s pension benefits in a form other than a 50% joint and survivor annuity with the same-sex spouse as the beneficiary.
  • Employers with 401(k) plans will be required to recognize same-sex spouses for purposes of determining death benefits. Same-sex spouses must also consent to beneficiary designations.
  • Employees must be permitted to take family and medical leave to care for the illness of a same-sex spouse.

*Same Sex Marriage is possible now in thirteen states: California, Connecticut, Delaware, Iowa, Maine, Maryland, Massachusetts, Minnesota, New Hampshire, New York, Rhode Island, Vermont, and Washington, as well as the District of Columbia and five Native American tribes, have legalized same-sex marriage.  California Governor Jerry Brown has issued a directive to resume same-sex marriage within 30 days.

Wondering how this decisions will change other areas of the law too?  The ACLU’s website and fact-sheets are the most comprehensive that we’ve come across.  They cover many topics:

The Washington Post’s US Map:  Same-Sex Marriage Status in the US.


Top Benefits Consultation & Healthcare Reform Blogs

Posted June 19, 2013 by Megan DiMartino

PPACA updates and rollouts have been coming swiftly for months now, and the impact they will have on businesses around the country in years to come is a complex and crucial concern. Staying informed and being prepared will often make the difference between companies that adapt to the new policies and those that are crushed under the weight of the new legislation. To stay abreast of the latest issues and how they may impact your business, contact us. You can also visit our blog regularly. Here are a few of our most popular recent blog articles:

Update! IRS Rule for PPACA’s “Comparative Effectiveness Research Fee” (CERF/PCORI/IRS Form 720)

Posted June 4, 2013 by PHaynes

Patrick C. Haynes, Jr., Esq., LL.M.

Update (June 4, 2013)IRS Form 720 now includes, at Part II (page 2 of 7) at line 133, a space to include your headcount, multiply it by $1 (for this year) and $2 for all subsequent years (until it sunsets with the 2019 plan year).  Your completed, signed Form 720 is due by July 31, 2013, along with your payment.

Original Article posted June 11, 2012, 7:36 a.m.

Key Dates for Self-Funded Plans to Keep in Mind

  • 07-15-2012   Comments due to the IRS
  • 08-08-2012   Public Hearing
  • 10-01-2012   $1 per life fee assessed for plan years ending on/after 10-01-2012.
  • 07-31-2013   Date upon which a 1/1 Plan must file an IRS Form 720 and pay fee  [I’m not a 1/1 Plan – when is my form due?].

The Affordable Care Act (PPACA) includes a provision imposing an annual assessment on insurers and group health plans to fund a Patient-Centered Outcomes Research Institute (PCORI), which will assist patients, clinicians, purchasers and policy-makers in making informed health decisions by advancing comparative clinical effectiveness research.

The Institute is funded by a trust fund, which, in turn, is partially funded by fees paid by issuers of health insurance policies and sponsors of self-insured health plans. This “comparative effectiveness research fee” applies to policy/plan years ending on or after 10/1/2012.

Proposed regulations were published on April 12 and, although not yet final, this Proposed Rule provides more information on calculation, reporting and payment of the fee.  Read the IRS’ proposed rules here:

The fee applies to fully insured and self-funded medical plans covering U.S. residents; expatriate plans are excluded. It also applies to individual/family plans, voluntary/mini-med plans and retiree-only plans.

Health Reimbursement Accounts (HRAs) linked to a self-insured health plan are exempt; the employer will pay one fee for the medical plan only. But if the HRA is linked to an insured health plan, the employer will pay the fee for the health plan and the carrier will pay for the insured plan – two fees will be collected.

The fee does not apply to Medicare, Health Savings Accounts (HSAs) or ERISA excepted benefits (such as non-bundled dental and vision).

Fees, Payment and Reporting
The initial annual fee is $1 per average covered life.  The fee is not assessed only upon employees, but includes a complicated series of calculations designed to capture the total number of covered lives (including spouses and dependents).  The fee increases to $2 in 2013, then to an amount indexed to national health expenditures until 2019, when it is scheduled to end.

Reporting and payment using IRS Form 720 is required by July 31 of the calendar year immediately following the last day of the policy or plan year. For example, the fee for the policy or plan year ending on December 31, 2012 must be filed by July 31, 2013. Liability for a plan year ending on June 30, 2013 must be filed by July 31, 2014.

Comment Period and Public Hearing
Comments are due on 7/15/2012 (90 days after official publication). There will also be a public hearing on August 8, 2012. Anyone wishing to present oral arguments must submit written or electronic comments, an outline of topics to be discussed and the time to be devoted to each topic by July 30, 2012.

Fee Calculation Methodologies
Employers and health plans may choose one option from the following:

  1. Actual Count Method: Add the total number of covered lives for each day of the policy year and divide by the number of days in the policy year.
  2. Snapshot Method:  Add the totals of lives covered on one date in each quarter of the policy year (or more dates if an equal number of dates is used for each quarter) and divide by number of dates on which a count was made. The date(s) for each quarter must be the same (e.g., 1st day of quarter, last day of quarter, or 1st day of each month).
  3. Member Months Method: The sum of the totals of lives covered on pre-specified days in each month of the reporting period) as reported on the National Association of Insurance Commissioners (NAIC) Supplemental Health Care Exhibit filed for that calendar year. The average number of covered lives under the policies in effect for the calendar year equals the member months divided by 12.
  4. State Form Method:  An insurer not required to file NAIC annual financial statements may calculate covered lives for the calendar year using a form filed with the insurer’s state of domicile and a method similar to the member months method, if the form reports the number of covered lives in the same manner as member months are reported on the NAIC Supplemental Health Care Exhibit.

Supreme Court Decision Looms

The U.S. Supreme Court’s decision on PPACA’s constitutionality (among the other items/issues that were debated) is due by the end of the court’s current term, June 30th.  Assuming PPACA remains the law of the land, the next step for this fee will be the close of the comment period (July 15, 2012), a public hearing August 8, 2012 and then IRS Form 720 completion and payment of the fee in July of 2013 (for 1/1 plans).  Please contact your Account Executive or Account Manager for additional information or assistance.


View article…


Final Wellness Rules Expand Protections and Incentives

Posted June 3, 2013 by PHaynes

For a background on the subject of HIPAA Wellness programs and how PPACA modified their offerings, please see our November 20, 2012 article called “DOL Wellness Program Guidance under PPACA

Recently, HHS, DOL and the IRS (Departments of Health and Human Services, Labor and the Treasury) issued final rules on employment-based wellness programs. The final rules support workplace health promotion and prevention as a means to reduce the burden of chronic illness, improve health and limit growth of health care costs, while ensuring that individuals are protected from “unfair underwriting practices” that could otherwise reduce benefits based on health status.

The final rules continue to support participatory wellness programs, which generally are available without regard to an individual’s health status. These include programs that reimburse for the cost of membership in a fitness center; that provide a reward to employees for attending a monthly, no-cost health education seminar; or that reward employees who complete a health risk assessment, without requiring them to take further action.

HIPAA Wellness

The rules also outline standards for nondiscriminatory health-contingent wellness programs, which generally reward individuals who meet a specific standard related to their health. Examples of health-contingent wellness programs include programs that provide a reward to those who do not use, or decrease their use of, tobacco, or programs that reward those who achieve a specified health-related goal, such as a specified cholesterol level, weight, or body mass index, as well as those who fail to meet such goals but take certain other healthy actions.  (For additional criteria and background see our prior news article).

Today’s final rules ensure flexibility for employers by increasing the maximum reward that may be offered under appropriately designed wellness programs, including outcome-based programs. The final rules also protect consumers by requiring that health-contingent wellness programs be reasonably designed, are uniformly available to all similarly situated individuals and accommodate recommendations made at any time by an individual’s physician, based on medical appropriateness.

The final rules will be effective for plan years beginning on or after Jan. 1, 2014 and will permit,  nondiscriminatory health-contingent wellness programs to provide up to a 30% cost differential (savings or penalty) for participation. 

A note about Affordability testing under PPACA:

a. Today, when you test affordability for 2014, you do it for the non-wellness rate.  That must pass at 9.5% of family income (for the single-tier/EE-only tier).

b.  For 2015, a wellness rate that is for non-smokers, can be tested for 9.5% affordability.

c.  For 2015, a wellness rate that is for not completing an HRA, not doing biometrics, etc. cannot be tested for 9.5% affordability.  For those people you need to pass the affordability test using the non-wellness rate.

For more details on Affordability & Wellness programs, see our May 2, 2013 article.



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