Welfare Benefit Plan ERISA News
August 2012

 
Fee Disclosure for Welfare Benefit Plans
is on the Way
The DOL is working on fee disclosure regulations for welfare benefit plans similar to those required under §408(b)(2) for retirement plans. All plan fiduciaries (welfare and otherwise) must take into account all direct and indirect compensation realized or likely to be realized by the vendor. Separately, under ERISA section 404, plan fiduciaries must always act prudently when engaging third party vendors on behalf of a plan, taking into account fee and other information.
Your Check is in the Mail!
Health and Human Services (HHS) Secretary Kathleen Sebelius announced that 12.8 million Americans will benefit from $1.1 billion in MLR rebates from insurance companies no later than Aug. 1, 2012, averaging $151 per family. For a good outline of Fiduciary & Tax implications of MLR rebates, click here. Consumers owed a rebate will see their value reflected in one of the following ways (details):
  • a rebate check in the mail;
  • a lump-sum reimbursement to the same account that they used to pay the premium if by credit card or debit card;
  • a reduction in their future premiums; or
  • their employer providing one of the above, or applying the rebate in a manner that benefits its employees.
Be sure that your SPD has a Refund Allocation Policy, which describes how refunds are to be allocated. This is required for an employer to obtain the small Plan (<100 Participants) exception for filing Form 5500.
Careful Plan & SPD Drafting is Crucial
A participant sued after her HMO denied coverage for treatment received from a non-participating provider. The appellate court reversed and sent the case back to the trial court, finding the propriety of the benefit denial unclear because the applicable terms of the Plan Document and SPD were ambiguous. Although the plan contained appropriate language granting the HMO discretionary authority to interpret its terms, the court held that ambiguities in the SPD must be resolved in favor of the participant. Other courts have held that the terms of the SPD cannot be enforced as the terms of the plan. The lesson is - careful SPD drafting remains crucial. Koehler v. Aetna Health Inc.
Near-term Impact of ACA on Employers
- the Highlights
  • Form W-2 reporting (2012 tax year)
  • $2,500 cap on health FSA (plan years beginning in 2013)
  • Summary of Coverage & Benefits (Sept. 23, 2012)
  • Notify employees of availability of health insurance exchanges (March 2013)
  • Additional 3.8% FICA tax on unearned income of high income individuals (2013 tax year)
  • 0.9% Medicare payroll tax increase on high income individuals (2013 tax year)
  • "Pay or play" mandate (2014)
  • Certify to HHS whether providing "minimum essential coverage" (2014)
  • Permitted wellness incentives increase from 20% to 30% (2014)
  • Auto enroll new employees in health plan (200+ employees; effective date unknown)
  • 90 day limit of waiting periods (2014)
  • Coverage for certain approved clinical trials (non-grandfathered plans; 2014)
  • Initial phase of Medicare Part D "doughnut hole" fix (2014)
  • Guaranteed availability and renewability of insured health plans (2014)
  • Prohibition on pre-existing exclusions (2014)
  • Complete prohibition on annual dollar limits (2014)
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© 2017 ERISAPros, LLC, All rights reserved. Information on ERISAPros' website, its newsletter, “News & Views,” and its blog, “ERISA Wonk,” is published as a general informational source. Information and articles are general in nature and are not intended to constitute legal or tax advice in any particular matter. Blog posts and comments reflect the personal views of their respective authors - not those of ERISAPros. Transmission of this information does not create an attorney-client relationship. ERISAPros, LLC is not a law firm and is not giving legal or tax advice. It does not warrant and is not responsible for errors or omissions in the content on its website or in its newsletters. ERISA is a complicated and confusing law. Summary Plan Descriptions (SPDs), Wrap Plan Documents, and Form 5500s require review and updating by qualified ERISA compliance professionals.

 

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