The Department of Labor's (DOL) Employee Benefits Security Administration (EBSA) updated its Affordable Care Act Web page on Nov. 1, 2010, adding Patient Protection and Affordable Care Act (PPACA) Frequently Asked Questions (FAQs), Part IV. Two of these three new questions are related to grandfathered status, and one clarifies a scenario regarding imposing a lifetime dollar limit on "essential health benefits."

Click here to view the PPACA FAQs, Part IV.

On Oct. 28, 2010, the Department of Health and Human Services (HHS) released a list of additional employers and unions accepted into its Early Retiree Reinsurance Program (ERRP). Nearly 700 additional large and small businesses, state and local governments, educational institutions, nonprofit organizations and unions have been accepted into the program, which reimburses employers for a portion of the cost of health benefits for early retirees and their families. The announcement brings the total number of participating organizations to nearly 3,600.

Click here to view the HHS announcement.

On Oct. 21, 2010, the National Association of Insurance Commissioners (NAIC) adopted a model regulation concerning the calculation of medical loss ratios (MLR) under the PPACA. The model was submitted to Kathleen Sebelius, secretary of HHS for final review and certification, which Sebelius indicated would be promulgated in the coming weeks.

The model regulation provides that starting Jan. 1, 2011, an MLR of 80 percent is applied to the individual and small group market (100 and under lives) and an MLR of 85 percent is applied to large group plans. Importantly, if health insurance plan issuers do not meet these MLR requirements, they must make a rebate payment to policyholders. Please note that self-insured plans are not subject to the MLR standards.

Click here to view the HHS press release.

Click here to view the Model Regulation Provided by NAIC.

On Nov. 5, 2010, HHS issued supplemental guidance regarding the process that a group health plan or health insurance issuer should follow to apply for a waiver for plans with low annual limits, or "mini-med" plans, from the restrictions on the imposition of annual limits on the dollar value of essential health benefits. The supplemental guidance provides additional information regarding the transparency and disclosure requirements for plans that receive waiver approvals. It also provides that states can apply for a waiver and establishes this process. The guidance describes factors that are considered when considering a waiver application and reiterates the requirement that waiver applicants are subject to record retention and audit requirements.

Importantly, the guidance clarifies that HHS does intend to promulgate special rules for the application of MLR provisions to mini-med policies. In other words, a mini-med plan will be able to seek a waiver if they are not able to spend at least 80 cents of each premium dollar on health benefits and quality improving activities. This amount increases to 85 cents of each premium dollar for the large group market. The special rule for mini-med plans is expected in the near future and would apply for at least the first year.

Click here to learn more.

On Oct. 28, 2010, the Internal Revenue Service (IRS) released Rev. Proc. 2010-40, which announced retirement plan limitations for 2011. In addition, the Social Security Administration (SSA) announced that there will be no cost-of-living increase in 2011. With respect to qualified retirement plans, the following limits remain unchanged: deferral limits, catch-up contributions, defined benefit and defined contribution dollar limits, and highly compensated employee income limits.

• IRS Announcement
• Rev. Proc. 2010-40
• SSA Announcement

In Rev. Proc. 2010-40, the IRS released the 2011 cost-of-living adjustments (COLAs) for adoption assistance programs, Archer medical savings accounts (MSAs) and control employees:

• Adoption Assistance. Adjustments were made to limits under an employer-provided adoption assistance program. In 2010, the maximum amount that can be excluded from an employee's gross income for the adoption of a child will be $13,360.
• Archer MSAs. For self-only coverage under high-deductible health coverage compatible with an Archer medical savings account, the annual deductible must not be less than $2,050 or more than $3,050, with an out-of-pocket maximum of $4,100. For family coverage, the annual deductible must not be less than $4,100 or more than $6,150, with an out-of-pocket maximum of $7,500.
• Control Employees. The 2011 thresholds for determining who is a control employee for purposes of the commuting valuation rule method of determining the value of a company car fringe benefit remain $95,000 for officers and $195,000 for other employees.

The IRS also noted that other 2011 adjustments will be addressed in future guidance, including the qualified transportation fringe benefit limits, tax rate tables, personal exemption amount and standard deduction amount.

Click here to view Rev. Proc. 2010-40.

On Oct. 28, 2010, the DOL announced the availability of a new online toolkit to guide employers through the process for hiring veterans. The free toolkit is designed to assist and educate employers that want to include veterans and wounded warriors in their recruitment and hiring initiatives. The toolkit, created as part of the DOL's "America's Heroes at Work" initiative, also includes steps to assist employers in actively recruiting veterans and in creating an educated and welcoming environment for veteran employees.

Click here to view the DOL Press Release.

In Kasireddy v. Bank of America Corp. Benefits Committee, 2010 WL 4168512 (N.D. Ill. Oct.13, 2010), a federal district court in Illinois held that a plan administrator violated ERISA by failing to provide a plan participant with a summary plan description (SPD) within 30 days of receiving a written request for plan documents. In this case, the employer amended its 2009 plan to add a new coverage option, and a plan participant subsequently requested a copy of the "plan document" that would allow her to review coverage under her medical plan, which the court interpreted as a request for the SPD. In response to this request, the plan administrator provided certain documents, including, among other documents, a handbook, a summary of modifications and an enrollment brochure.

Because these documents did not provide any specific mention of the new coverage option, the court held that such documents did not constitute the SPD. The plan administrator argued that it had 210 days after the end of the plan year to distribute an SPD that reflected the new coverage option; however, the court disagreed, distinguishing the requirement to proactively distribute an updated SPD from the separate ERISA requirement to provide an SPD within 30 days of a request. The court ordered the plan administrator to pay $10,560, representing the maximum fine of $110 per day for the administrator's failure to provide the SPD for the 96-day period from April 3, 2009 to July 9, 2009.

Click here to learn more.

The DOL added two new questions, Questions 28 and 29, to its supplemental frequently asked questions regarding Form 5500, Schedule C. As a general matter, pension plans and certain welfare plans must attach Schedule C to report compensation to plan service providers. While relatively few ERISA plans have individual trustees or plan employees of the sort envisioned by Questions 28 and 29, for those multi-employer plans or large single employer plans that do, the answers clarify Schedule C's broad definition of "compensation" under which reimbursements for properly incurred expenses must be included.

Hence, under Question 28, amounts paid by a plan to a plan trustee for travel, meals or other costs incurred in connection with services as a trustee are treated as "compensation" and must be reported (assuming that the total reportable compensation to the trustee is $5,000 or more). In addition, the DOL notes that cash gifts and personal expenses paid by the plan to or for the plan trustee, as well as non-cash gifts are reportable compensation for Schedule C purposes.

Question 29 deals with the same topic, but in regards to plan employees. In this case, amounts paid by a plan for a plan employee's travel, meals or other costs are also compensation for Schedule C purposes if the reimbursed expenses combined with other compensation received by the employee from the plan equals $25,000 or more during the plan year. The DOL notes that total salary, before taxes and other deductions, should be used to determine whether an employee has received $25,000 during the plan year.

Click here to view the FAQs.

Source: Littler Mendelson

The D.C. Council approved an extension to an amendment to the "Healthy D.C. Program" so that premium subsidies can continue to be offered to residents to allow them to obtain employer-sponsored health coverage. The original amendment was signed as emergency legislation, which meant it would have expired on Nov. 1, 2010. This new extension appears to expire on Jan.17, 2011. In the original "Healthy D.C. Emergency Declaration Resolution of 2010," the Council noted that due to economic circumstances, a number of District residents have lost their health insurance coverage or face uncertainty in their coverage. The incomes of such residents are often too high to qualify them for public health care programs, but not high enough to help residents afford their employers' coverage. As such, the emergency legislation provides a premium subsidy to assist residents in paying for their employer-sponsored health coverage. The related legislation is B18-0937 and B18-1011.

• B18-0937
• B18-1011

Source: Littler Mendelson

The New York State Insurance Department announced that two Health Net companies paid a $1.9 million fine to settle certain allegations, including not providing consumers with the required information on their Explanation of Benefits (EOB) forms and not paying certain claims on time. EOB forms are the forms consumers receive from health insurers reflecting how a health insurance claim was generally handled. The EOB should also include the reasons for any denied or partially reimbursed claims and certain appeals rights to such adverse decisions. The companies also admitted failures to promptly process some claims and failing to pay interest on some claims.

Click here to view the Press Release.

On Oct. 15, 2010, the Utah Insurance Department issued an emergency rule to ensure access to coverage for dependent children, as required by HHS and the PPACA. The emergency rule is necessary due to recent notification by HHS that insurers may limit the enrollment of children if the state defined the terms of an open enrollment period in an individual market. Thus, instead of enrolling children until the terms of an open enrollment period are defined, insurers were denying coverage to all children. The emergency rule therefore defines open enrollment periods to occur between Nov. 1 and Dec. 15 for coverage effective Jan. 1, and between May 1 and June 15 for coverage effective July 1. The emergency rule went on to provide definitions for group health benefit plans, including notice requirements and the statement that HIPAA special enrollment rights continue to be applicable for enrollment outside of the open enrollment opportunities.

Click here to learn more.

On Sept. 30, 2010, the Wisconsin Administrative Register No. 657 promulgated two rules relating to insurance in Wisconsin.

• The first rule relates to independent review procedures and is effective Oct.1, 2010. The regulation amended the existing independent review definition under state law by adding definitions for coverage denial determinations, pre-existing condition exclusion denial and rescission determinations. The act also created two new triggering events for independent review rights and reporting requirements. The two new events include pre-existing condition exclusion denial determinations and rescissions. Thus, persons that have had a policy rescinded or coverage denied as pre-existing now have a new right to a grievance process established by insurers. Finally, the rule parallels changes made on the federal level under the PPACA. Therefore, for eligible pre-existing condition coverage denial and rescission determinations that occur after Jan. 1, 2010, insureds will have four months to request an independent review.
• The second rule creates a new section of the insurance code (Sect. 3.36), relating to autism spectrum disorders and is effective Oct. 1, 2010. This rule implemented an emergency rule that had previously affected policies that were issued or renewed on or after Nov. 1, 2009. The rule applies to fully-insured policies, governmental self-funded plans, group health plans issued in another state if at least 25 percent of the employees covered under the plan reside in Wisconsin, but not private self-funded plans. Health insurers must provide coverage of at least $50,000 for intensive-level services per year for up to four years, as well as $25,000 per year for nonintensive-level services. Intensive level services are required for children between the ages of 2 and 9.

• Administrative Register
• Ins. 3.36 Relating to Autism Spectrum Disorders
• FAQ for Autism Mandate