Contracts, Compliance and Research Updates
CMS Issues Revised Model Disclosure Notices for Part D Individuals
Centers for Medicare & Medicaid Services (CMS) posted revised model disclosure notices online that are effective as of April 1, 2011 for Medicare Part D eligible individuals. The revisions reflect the change in the Medicare Part D annual coordinated election period from November 15-December 31 to October 15-December 7. This change was made by health care reform and is reflected in recently issued regulations. It applies beginning with plan year 2012 -- i.e., beginning with the 2011 election period. The revised model creditable and non-creditable coverage notices replace the model notices that were posted in 2009. Plan sponsors are required to provide the updated notice no later than October 15, 2011. This is an earlier date than in prior years.
Click here to view the available model disclosure notices. Both English and Spanish versions are available.
Contributing Editors: EBIA Staff.
© 2011 Thomson Reuters/EBIA
IRS Announces 2012 Cost-of-Living Changes to HSA Contribution Limits and HDHP Out-of-Pocket Maximums
The IRS released the 2012 cost-of-living adjustments affecting health savings accounts (HSAs). The HSA contribution limits and high deductible health plan (HDHP) out-of-pocket maximums will increase slightly, while the HDHP minimum required deductibles remain unchanged. The catch-up contribution limit for HSA-eligible individuals who are age 55 or older, which is set by statute, remains at $1,000 for 2012.
Here are the details:
- HSA Contribution Limits: The 2012 annual HSA contribution limit for individuals with self-only HDHP coverage is $3,100 (a $50 increase from 2011), and the limit for individuals with family HDHP coverage is $6,250 (a $100 increase from 2011).
- HDHP Minimum Required Deductibles: The 2012 minimum annual deductible for self-only HDHP coverage remains $1,200 and for family HDHP coverage remains $2,400.
- HDHP Out-of-Pocket Maximum: The 2012 maximum limit on out-of-pocket expenses (including items such as deductibles, co-payments, and co-insurance, but not premiums) for self-only HDHP coverage is $6,050 (a $100 increase from 2011), and the limit for family HDHP coverage is $12,100 (a $200 increase from 2011).
Click here to read: IRS Revenue Procedure 2011-32.
June 30 Deadline for FSA Amendments
Last year's Affordable Care Act (ACA) restricted the ability of employer health plans, including flexible spending arrangements (FSAs) and health reimbursement arrangements (HRAs), to reimburse expenses incurred for over-the-counter (OTC) medications. With the exception of insulin, expenses for OTC medications may now be reimbursed only if the medications are prescribed by a physician.
Key points for sponsors of FSAs amending their FSA plans to comply with ACA restriction by June 30:
- This restriction became effective as of January 1, 2011.
- Failure to satisfy requirement results in all employee contributions to the FSA becoming taxable.
- Notice 2010-59 granted FSA sponsors an additional six months, expiring June 30, 2011.
- Distribution from an individual's health savings accounts (HSAs) or Archer Medical Savings Accounts (MSAs) for OTC medications that are not prescribed by a physician are treated as "nonqualified" distributions and included in individual's taxable income, which is also subject to a 20% penalty tax.
Key points for employers drafting amendments to their FSAs or HRAs:
- Amendment should be retroactively effective as of January 1, 2011.
- Prescription requirement applies only to OTC medications.
- Any amendment to an FSA or HRA that allows participants to use debit cards to purchase OTC medications should reference the IRS Notice 2011-5 which outlines specific procedures to be followed.
Click here to read the full article.
Source: Spencer Fane Britt & Browne LLP