IRS PROVIDES EMPLOYER REQUIREMENTS ON WEBSITE
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The IRS updated its website
with a description of certain tax provisions that will take effect this year
and in coming years with regard to health reform. The website includes the
requirement that employers report the value of the health benefits they provide
employees on each worker's annual Form W-2 beginning in tax year 2011.
According to the IRS, the new W-2 reporting item is intended to make employees
better informed consumers by showing them the value of their health care
benefits. The amount reported does not affect tax liability, as the value of
the employer contribution to health coverage continues to be excludible from an
employee's income and is not taxable. There are also links to information on
the small business health care tax credit and health coverage for older
children.
Click here to view the IRS website.
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BREACH NOTIFICATION FINAL RULES DELAYED
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In May 2010, the Department of
Health and Human Services (HHS) submitted a draft copy of the final rule
regarding breach notifications for unsecured protected health information. The
final rule was submitted to the Office of Management and Budget for regulatory
review. However, HHS recently withdrew the previously submitted rule. This
means that the interim final regulations released in August 2009 (effective
Sept. 23, 2009) remain in effect.
Click here to view the Final Rule update.
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IRS ISSUES TWO INFORMATION LETTERS
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The IRS issued two information
letters that provide clarification for permissible medical reimbursements. The
first letter is a response to a Health Flexible Spending Account (FSA)
participant taking physician prescribed herbs to treat her migraine headaches.
The letter addressed whether the herb is a medical care expense that is
reimbursable from the health FSA. The IRS states there must be objective
factors to show that the non-traditional expense is actually for medical care.
Five factors to consider are included in the letter such as the individual's
purpose and a written recommendation by a physician that clearly demonstrates
medical necessity. The patient must show that she would not have incurred the
expense "but for" the disease or illness.
The cost of buying, training,
and maintaining a service animal to help people with mental health disabilities
is addressed in the second letter. This letter also states that the expenses
may qualify as medical care if the individual can show that he/she has the service
animal primarily as part of a medical treatment to alleviate a mental defect or
illness and that he/she would not have these expenses "but for" that
defect or illness.
In both letters, the "but
for" test is important to consider and the individual needs to show
definitively that an expense that appears personal is really a legitimate
medical care cost. The letters also educate administrators about the need to
get adequate documentation before reimbursing expenses that would otherwise be
personal items.
Click here to view IRS Information Letter 2010-0080.
Click here to view IRS Information Letter 2010-0129.
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Arkansas
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Beginning Aug. 1, 2010,
Arkansas residents who have been uninsured for at least six months and denied
coverage for pre-existing conditions are able to apply for the new
Pre-Existing Condition Insurance Plan (PCIP). This plan was created as part
of the Patient Protection and Affordable Care Act (PPACA). Arkansas is one of
30 states that elected to administer its own pool, doing so through the
Arkansas Comprehensive Health Insurance Pool, which already provides similar
risk pool plans to Arkansas residents. The PCIP will operate until 2014.
Coverage will commence on Sept. 1, 2010 for qualifying applicants.
Click here to view the press release.
Click here to view the Arkansas PCIP Application.
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California
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In Perry v. Schwarzenegger,
2010 WL 3025614 (N.D. Cal. 2010), a federal district judge in California held
that Proposition 8, a California state constitutional prohibition on same-sex
marriage, was unconstitutional because it violated the Due Process and Equal
Protection Clauses of the Fourteenth Amendment. In the ruling, the federal
judge entered an order permanently enjoining the enforcement of Proposition
8. The judge later entered a temporary stay of the ruling, ordering that
same-sex couples would be able to obtain marriage licenses beginning Aug. 18,
2010, at 5 p.m.; however, on Aug. 16, 2010, the Ninth Circuit Court of Appeals
issued a stay of the ruling, meaning that Proposition 8 will stay in effect
pending an appeal of the decision to the Ninth Circuit Court of Appeals.
Click here to learn more.
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Connecticut
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Final regulations
implementing Public Act 09-49 were released June 3, 2010. The regulations
implement the external appeals program. The new external appeal requirements
provide additional provisions for expedited appeals in life threatening and
emergency situations. Importantly, an expedited external appeal in certain
situations may be appropriate immediately following the initial adverse
determination and the member would not have to exhaust his internal appeals
before applying. The regulations provide additional standards for selection
of external review entities, such as ability to meet time frames and
confidentiality standards. Finally, the regulations clarify situations when a
provider may initiate an appeal on behalf of an enrollee.
Click here to learn more.
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Delaware
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HB 85 amends the code
relating to small employer health insurance. It compresses rate variations
between high risk and low risk groups; reduces rating factors from seven to
three; limits annual increases and decreases due to changes in health status
to 15 percent; and prohibits the sale of "stop-loss" coverage in
the small group market. This act takes effect on July 1, 2010.
Click here to learn more.
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Illinois
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SB 3818, effective Jan. 1,
2011, amends the Illinois Family Military Leave Act by adding a child and a
grandparent of a person called to military service to the employees who may
request family military leave. Under existing law, an employee is defined as someone
who has been employed by the same employer for at least 12 months and 1,250
hours during the preceding 12-month period. The employer will maintain all
benefits, including group life insurance, health insurance, disability
insurance and retirement for an employee who is qualified to take leave due
to the military service of a family member. The employer is not required to
continue an employee's salary or wages during the leave. Finally, leave may
be requested due to a spouse, parent, child or grandparent of a person called
to military service lasting longer than 30 days.
Click here to learn more.
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Iowa
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Beginning Aug. 10, 2010,
Iowa residents with pre-existing conditions are encouraged to apply for the
Health Insurance Plan of Iowa, the Federal High Risk Pool (HIPIOWA-FED,
LLC). This plan is authorized under the PPACA as a temporary high risk pool
and will operate until 2014.
Click here to view the application.
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Kentucky
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Effective July 15, 2010, HB
165 amends existing Kentucky state law to permit employers to offer
incentives or benefits to employees participating in smoking cessation
programs, and also permits employer-sponsored health plans to have different
contribution rates for smokers and nonsmokers. Existing law still prohibits
employers from discriminating against or denying employment opportunities
based on employees' status as a smoker or nonsmoker, provided the employees
comply with any workplace policies related to smoking.
Click here to learn more.
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Mississippi
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Bulletin No. 2010-02 was
released June 1, 2010, to serve as a reminder to Mississippi employers that
the PPACA established a temporary Early Retiree Reinsurance Program (ERRP)
that became effective June 1, 2010, and will end on Jan. 1, 2014. It
encourages employers that are eligible for the EERP to timely apply to
participate .
Click here to learn more.
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New Hampshire
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Under existing law,
employers are permitted to make deductions from an employee's paycheck for
certain expenses as long as the employee provides written authorization.
Examples of such permissible deductions include health and welfare
contributions, union dues and charitable contributions. HB 1137, effective
Aug. 15, 2010, permits employers to make deductions for two additional
expenses: legal plans and identify theft plans that do not provide financial
advantages for the employer.
Click here to learn more.
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North Carolina
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HB 144 prohibits health
benefit plans and insurers from limiting or fixing the fee a dentist may
charge patients for services unless the services are covered for
reimbursement under the plan or insurer contract with the dentist. This act
takes effect on July 21, 2010.
Click here to learn more.
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Virginia
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A federal district judge in
Virginia declined to dismiss a challenge to the PPACA, thereby allowing the
lawsuit to proceed. This is one of two federal legal challenges to the health
care reform legislation mandate that requires individuals to buy insurance or
face a penalty. The other challenge, brought by a group of state attorneys
general, is pending in the Northern District of Florida. A hearing on the
summary judgment motion is scheduled for Oct. 18, 2010.
Click here to learn more
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D|A FINANCIAL GROUP3470
Mt. Diablo Boulevard, Suite A100 Lafayette,
CA 94549 (925) 254-7100 D|A Century Insurance Services, Inc. License No. 0606857 AXIA Employee Benefits Insurance Services, Inc. License No. 0C79854 Named one
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Circular 230 Disclosure: To comply with regulations issued by the IRS concerning the
provision of written advice regarding issues that concern or relate to federal
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Unless otherwise expressly reflected herein, any advice contained in this
document (or any attachment to this document) that concerns federal tax issues
is not written, offered or intended to be used, and cannot be used, by anyone
for the purpose of avoiding federal tax penalties that may be imposed by the
IRS or promoting, marketing or recommending to another party any matters
addressed in this document or any attachment. |
This material was created by NFP, its subsidiaries, or affiliates for distribution by their Registered Representatives, Investment Advisor Representatives, and/or Agents. This material was created to provide accurate and reliable information on the subjects covered. It is not intended to provide specific legal, tax or other professional advice. The services of an appropriate professional should be sought regarding your individual situation. Neither NFP Securities, Inc. nor NFP Benefits Partners offer legal or tax services. The information contained in this edition is issued for informational purposes only and has been collected from regulations, statutes, laws, court decisions and administrative rulings and should not be viewed as interpretation or relied upon as legal or tax advice. This information is known to be current as of the initial date of distribution. Please note that changes to the legislation, regulations, statutes, policies, etc., may have occurred and are not reflected herein.
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