News & Updates

 

10/01/2011 - Update on HRA MSP Reporting: CMS Announces Expanded $5,000 Exception

Context and Background

The Centers for Medicare & Medicaid Services (“CMS”) have announced an update to the Medicare Secondary Payer reporting requirements for HRA plans. As a refresher, the reporting rules became effective 10/1/10 for HRA plans, requiring plan reporting on a quarterly basis for all covered individuals (Employees and covered dependents). The reporting requirements apply to HRAs of all plan designs, including stand-alone HRAs, HRAs with or without carry-over, MERPs, and linked deductible reimbursement plans. Until now, the only recognized exception to the reporting requirement was for HRAs with a maximum annual reimbursement of less than $1,000 (for all levels of coverage). The reporting is the responsibility of the Required Reporting Entity, which is the third-party administrator for outsourced plans or the Employer for self-administered plans.

The New Rule & Analysis

In the new alert, CMS announced an increase in the maximum reimbursement of the exception, from $1,000 to $5,000. The new threshold applies to new and renewing plans for plan years beginning on or after October 3, 2011. As with the previous threshold, the $5,000 threshold applies to any level of coverage. If the Employee can receive $5,000 or more in qualified reimbursements under the plan under any circumstance (including Employee + Dependent or Employee-Family coverage), the exception does not apply.

Based on the new rule, here is our understanding and planned approach:

• Plans with annual maximum of $1,000-$4,999 (currently reporting): These plans should continue to report as required through the end of the current plan year. If at renewal the plan maintains an annual maximum of less than $5,000, the exception will apply and reporting will no longer be required.
• Plans with annual maximum of $5,000+ (currently reporting): These plans should continue to report as required through the end of the current plan year. Unless the plan is amended at renewal to include an annual maximum of less than $5,000, reporting will continue to be required for the new plan year.
• Plans with annual maximum of less than $1,000 (not currently reporting): These plans, currently exempt from reporting, will still be exempt and will not have to be reported (assuming no change at renewal to increase max above $5,000). For any plan with an annual maximum of less than $1,000 that was reporting voluntarily, reporting may be discontinued at plan renewal.
• What about plans previously required to report that have failed to report to date? For any plan that has had a reimbursement maximum of $1,000 or more and has failed to report to date, that plan will need to examine its options. The current reporting process does not allow for past due reports to be submitted. If a plan is going to be under the $5,000 max limit at its next renewal, that plan will likely choose to not report now, take advantage of exception at renewal, and accept any risk of noncompliance for the period that reporting was required. For any plan that has failed to report to date and has an annual max of $5,000 or more (now or at next renewal), that plan should begin reporting immediately.

Final Info

For all ProBenefits clients, ProBenefits is the Required Reporting Entity and handles all plan reporting based on data submitted by the Employer. ProBenefits will be contacting plans that can take advantage of the new exception. Note that there is no additional fee for MSP Reporting, so administrative fees will not be impacted whether or not the plans are required to report going forward.

If you have any questions or wish to discuss how the HRA reporting rules impact any of your clients’ plans, feel free to contact our in-house benefits attorney, Jason Cogdill.

Note: There are some minor additional reporting changes applicable to plans reporting now and those that will not qualify for the $5,000 exception. These changes relate to reporting of coverage terminations for individuals that exhaust their annual benefit limits mid-year. We will not go into detail on those minor changes here, but if you would like more information, let us know.

Copy of CMS Alert: https://www.cms.gov/MandatoryInsRep/Downloads/HRACoverage.pdf

 

09/01/2011 - COBRA Premium Subsidy Officially Ends

The 65% COBRA premium, enacted by ARRA in 2009, officially expired last night at midnight. The premium subsidy had been extended to apply for all involuntary terminations through May 31, 2010, and the subsidy was available for up to 15 months of coverage. As a result, 8/31/11 was the latest date that any subsidy-eligible individual (those with losses of coverage on 5/31/10)could be eligible to receive the subsidy. Any individual previously eligible for the subsidy who continues coverage past yesterday (8/31/11) will be responsible to pay the full COBRA rate.

For questions regarding the COBRA premium subsidy or any other issue relating to COBRA coverage, feel free to contact us.

 

08/30/2011 - ProBenefits Client Webinar Series: HRAs & 105 Plans – September 21

You are invited to participate in a free educational webinar on Wednesday, September 21 at 2:00pm. This webinar will provide plan advisors and interested employers with a detailed look at HRAs and 105 plans (including deductible reimbursement plans and medical expense reimbursement plans). We will discuss recent trends we are seeing in the market and focus on key plan design options. We will also spend time on three hot HRA topics – MSP reporting, HRAs paired with HDHP/HSA plan designs, and HRAs reimbursing individual insurance premiums.

Presenters will be: Jason Cogdill (Benefits Attorney), Jamie Rorrer (Benefits Consultant), and Charles Crabbe (Benefits Consultant).

Title: HRAs and 105 Plans
Date: Wednesday, September 21, 2011
Time: 2:00 PM - 2:45 PM EDT

Reserve your Webinar seat now at:
https://www2.gotomeeting.com/register/347287146

This Webinar is part of the ProBenefits Client Webinar Series. Check back for upcoming webinars on Flexible Spending Accounts (overview for employees), ERISA compliance, and COBRA administration.

 

06/15/2011 - ProBenefits Hosting Webinar on Form 5500 Reporting for Welfare Benefit Plans on Friday, July 1

Anyone is invited to participate in a free educational webinar on Friday, July 1st at 10:00 am. This is a repeat of the webinar from May.  This is a webinar is designed to provide employers and plan advisors with a detailed overview of Form 5500 reporting requirements for welfare benefit plans. We will also cover application of ERISA document considerations (Wrap SPD analysis).

Presenters will be: Jason Cogdill (Benefits Attorney) and Gary Knight (President)

An invitation will come soon by email to those currently subscribed to our newsletters. If you are not on our email list and would like to attend, contact us at Flex@ProBenefits.com or click the link below. Feel free to share the invitation with others that may be interested.

Title: Form 5500s for Welfare Benefit Plans: An Overview
Date: Friday, July 1, 2011
Time: 10:00AM - 10:30 AM EDT

Reserve your Webinar spot now at:Link

 

06/01/2011 - ProBenefits Announces a Suite of Compliance Services for Employers

ProBenefits is offering an updated menu of Compliance Services to assist Employers in complying with the multitude of benefit regulations. Employers will have the option of selecting the specific services which they need. Services include assistance with preparation of Form 5500s for health and welfare plans, various types of testing, document services, and a Benefits HelpLine for Employers.

As a brief word of background: For several years, we have assisted Employers with various compliance issues – primarily Form 5500s and ERISA. In response to the current demands on Employers, we revamped our Compliance Services to supplement existing services and provide quality, cost-effective solutions. These services are available to Employers of all sizes and regardless of whether they are ProBenefits administrative clients.

As Corporate Counsel and Benefits Attorney, Jason Cogdill will coordinate all services, including our new Benefits HelpLine for Employers. For more information, you can visit the link below or contact Jason Cogdill directly at (336) 714-8012 or Jason@ProBenefits.com.

Link:ProBenefits Compliance Services

 

05/15/2011 - ProBenefits Hosting Webinar on Form 5500 Reporting for Welfare Benefit Plans on Thursday, May 26

You are invited to participate in a free educational webinar on Thursday, May 26th at 2:00 pm. This webinar is designed to provide employers and plan advisors with a detailed overview of Form 5500 reporting requirements for welfare benefit plans. We will also cover application of ERISA document considerations (Wrap SPD analysis).

Presenters will be: Jason Cogdill (Benefits Attorney) and Gary Knight (President)

An invitation will come soon by email to those currently subscribed to our newsletters. If you are not on our email list and would like to attend, contact us at Flex@ProBenefits.com. Feel free to share the invitation with others that may be interested.

Title: Form 5500s for Welfare Benefit Plans: An Overview
Date: Thursday, May 26, 2011
Time: 2:00 PM - 2:30 PM EDT

 

03/04/2011 - FSA Eligible Expense Update: Breast Pumps and Lactation Expenses Now Eligible

Last week, the IRS issued Announcement 2011-14, which states that breast pumps and supplies that assist lactation will qualify as medical care expenses under Code Section 213(d) because they are for the purpose of affecting a structure or function of the lactating woman’s body. These items will now qualify for tax-free reimbursement from Health FSAs or HRAs that allow all 213(d) expenses.

This new guidance is a change from previous positions by IRS and Treasury officials about breast pumps and related equipment. In the past, plans may have treated breast pumps as dual-purpose expenses that could only be reimbursed if the participant provided a note from a medical practitioner recommending the breast pump to treat a specific medical condition (e.g. a breast abscess), or as expenses that could not be reimbursed at all. The new guidance allows these items to be reimbursed regardless of the existence of a medical condition.

For FSA and HRA plans administered by ProBenefits, submitted lactation expenses incurred on or after January 1, 2011 will be eligible for reimbursement. If any expense has been previously submitted but not approved because the expense did not meet the standard for reimbursement (i.e., no supporting note from physician), the participant may resubmit the expense for consideration under the new ruling.

If you have any questions about the new guidance regarding lactation expenses, let us know.

 

01/03/2011 - Update on IRS Notice 2011-5 - New Rules for Flex Cards and OTC Drugs After January 15

At the end of December, the IRS issued Notice 2011-5, which clarifies how the new Health Care Reform prescription requirement for OTC medicines and drugs will apply to Flex Cards. Whereas the IRS had previously said that no OTC drugs could be purchased with the Flex Card, the new ruling allows OTC drugs to be purchased with the card provided that: (1) a prescription is presented to a pharmacist; (2) the pharmacist dispenses the drug in accordance with applicable law; (3) an Rx number is assigned; (4) the card system does not work unless an Rx number is assigned; (5) the pharmacist retains certain records regarding the purchase; and (6) the records are accessible by the employer's plan.

While the new rule is intended to be helpful to participants and plans, unfortunately its helpfulness is in doubt since use of the card is entirely dependent on pharmacists and how they categorize the OTC drugs.

Since we do not know right now whether the pharmacists will change their practices in line with the new rule or simply ignore requests for Rx codes for OTC drugs, our plan is to monitor what happens in coming weeks in order to be able to advise participants accordingly. We do not want to advertise this as an important, helpful change when it may turn out to be a non-event for participants. All aspects of the new OTC rule previously communicated to participants remain true.

To confirm, our Flex Cards are already set up to approve any transaction coded as prescription at a retail merchant, so if any participant has an Rx code assigned and makes a purchase with it, that item would be approved by the card.

If you have any questions about this issue, please contact us.

ProBenefits Hosts Client Webinar on December 9th: Details of OTC Drug Rule and Administrative Reporting Tools

ProBenefits is hosting a client webinar on Thursday, December 9th at 2:00 pm. This short session will address details of the new OTC drug rule for 2011 affecting Health FSAs (and HRAs that reimburse OTC items). We will focus on what you as a company administrator need to know about the new rule as you work with your employees. We will also spend a few minutes covering administrative tools, including plan reporting available via ProBenefits.com.

ProBenefits is sponsoring this webinar for our clients as part of the ProBenefits Client Webinar Series. Presenters will be Julie Blink (Vice President for Administration) and Jason Cogdill (Benefits Attorney).

Instructions on how to attend the webinar are included below. Feel free to share the invitation with others in your organization that may be interested. If you have any questions, please contact us.

Title: ProBenefits Client Webinar: Details of New OTC Drug Rule for 2011 & Administrative Reporting Tools
Date: Thursday, December 9, 2010
Time: 2:00 PM - 2:30 PM EST

Clients listed as administrative contacts will automatically receive an invitation to this webinar. If you did not receive an invitation and would like more information, contact us.

New Flex Plan News for Employers - November 2010

Major Topics:

• Details Regarding New OTC Drug Rule for 2011
• Update on ProBenefits COBRA Administration
• New Participant Web Videos Available
• Q&A: Other than the OTC drug rule, are there any other Health Reform changes that will affect our benefit plans in 2011?

View November 2010 Flex Plan News here

New MSP Reporting Rules for HRA Plans Effective October 1 – September 16, 2010

The new Medicare Secondary Payer Reporting Requirements for HRA plans go into effect on October 1. These requirements were originally to take effect in 2009 but were delayed until now. HRA plans with plan years beginning October 1 - December 31 must begin reporting for the 4th Quarter 2010. All other plans will begin reporting for the 1st Quarter 2011.

Note that all HRA plans are required to report, regardless of whether they are limited in nature (such as a deductible reimbursement plan or MERP) or whether the plan has a carry-over feature. The only exemption is for HRA plans with an annual benefit amount of less than $1,000.

For ProBenefits clients, as the plan service provider we are required to report for your plan. We will be collecting the reporting info via an expanded census, since the reporting requires data on employees and covered dependents, including names, social security numbers, and coverage details.

This is just a brief summary of the complex reporting requirements. If you have any questions, please contact us.

Update on ProBenefits COBRA Administration – September 16, 2010

Last year, ProBenefits introduced a new COBRA administration service. This service is designed to complement our FSA, HRA, and POP administration and provide another level of compliance support for employers. We are pleased to be administering COBRA for small and large employers in a variety of locations, and our COBRA administration is going very well.

ProBenefits COBRA is a full-service product that includes administration of COBRA for all group health plans sponsored by the employer. The service features an automated web product, efficient employer reporting, handling of all notices to qualified beneficiaries, premium billing and collection, and dedicated client service and compliance assistance. Jessi Lawson is our COBRA administrator and oversees the day-to-day administration for all COBRA clients. Jason Cogdill, benefits attorney, provides compliance assistance for COBRA clients and plan advisors.

We continue to be excited about our COBRA service, and we are working hard to provide the best full-service COBRA product available. For more information or to have ProBenefits administer COBRA for your group plans, discuss with your benefits advisor or contact us directly.

Update on ProBenefits Webinars and Seminars – September 16, 2010

We have appreciated the excellent participation in our client webinars this year, and we hope that you are finding the topics and relevant and information helpful to you and your company. Our Client Webinar Series continues this fall with webinars on (1) Health Care Reform and Its Impact on Benefit Plans, (2) Helpful Tools for the Benefits Administrator, and (3) ERISA Compliance for Employers. Details and invitations will be coming soon. If there are any specific benefits topics you would like to see covered by an upcoming webinar, let us know.

FSA Reenrollment Webinars Available: Webinars are also excellent tools for FSA renewal meetings. If you would like to consider a webinar for your group, let us know. Webinars and enrollment meetings can be very successful in increasing participation, and increased participation leads to increased tax savings for the company.

Seminars Available: We are leading a number of seminars and webinars for groups and organizations, primarily on compliance topics and Health Reform topics. If you would like to discuss a potential webinar for an organization in which you participate, contact us.

New Flex Plan News for Employers - May 2010

Major Topics:

• New Age 26 Dependent Rule & Impact on Benefit Plans
• New Red Flags Rule Applicable to Cards June 1
• Update on ProBenefits COBRA Administration
• ProBenefits Announces New Form 5500 Preparation Service
• Client Webinar Series Continues
• Flex Card Update
• Q&A: How will the new 2011 OTC drug rule affect my Health FSA?

View May 2010 Flex Plan News here

ProBenefits Client Webinar Series: HRAs & 105 Plans – August 17, 2010

You are invited to participate in a webinar on Tuesday, August 17th at 2:00 pm. This webinar is designed to provide plan advisors with a detailed overview of HRAs and 105 plans (including deductible reimbursement plans). We will discuss trends we are seeing in the market and focus on key plan design options that may assist you as you advise your clients on new and creative ways to manage a medical benefits program.

Presenters will be: Jason Cogdill (Benefits Attorney), Jamie Rorrer (Benefits Consultant), and Charles Crabbe (Benefits Consultant).

Please join us by reserving your seat at the webinar now at:  https://www2.gotomeeting.com/register/749211731

Title: HRAs and 105 Plans – A Closer Look
Date: Tuesday, August 17, 2010
Time: 2:00 PM - 3:00 PM EDT

ProBenefits Client Webinar Series - COBRA Update - May 11, 2010

You are invited to participate in a webinar on Tuesday, May 11th at 2:00 pm.  This webinar is designed to provide employers and advisors with an overview of current COBRA rules, including the COBRA premium subsidy.

Presenters will be:  Jason Cogdill (Benefits Attorney) and Jessi Lawson (COBRA Administrator)

Instructions on how to attend the webinar are below.  Feel free to share the invitation with others that may be interested.  If you have questions, please contact us.

Title:  COBRA Update
Date:  Tuesday, May 11, 2010
Time:  2:00 PM - 3:00 PM EDT

Space is limited.  Reserve your Webinar seat now at:
https://www2.gotomeeting.com/register/636146634

After registering you will receive a confirmation email containing information about joining the Webinar.

September 3, 2009 - ProBenefits Now Offers COBRA Administration

ProBenefits recently introduced a new COBRA administration service. This service is in addition to our existing FSA, HRA, and POP administration and is designed to provide another level of benefit plan compliance and support for employers. ProBenefits COBRA is a full-service product that includes administration of COBRA for all group health plans sponsored by the employer. The service features an automated web product, efficient employer reporting, handling of all notices to qualified beneficiaries, premium billing and collection, and dedicated client service and compliance assistance.

Our goal is to combine an automated COBRA service with the ProBenefits model of client service and compliance support. Jessi Lawson is our dedicated COBRA administrator and oversees the day-to-day administration for all COBRA clients. Our in-house benefits attorney, Jason Cogdill, provides compliance assistance for COBRA clients and plan advisors. We are excited about COBRA as our newest service, and we plan to work hard to provide the best full-service COBRA product available. For more information or to have ProBenefits administer COBRA for your group plans, discuss with your benefits advisor or contact us directly.

August 25, 2009 - New Flex Plan News Available

Major Topics:

• Health Care Reform Update
• ProBenefits Now Offers COBRA Administration
• New Red Flag Rule Regarding Identity Theft
• New Webinar Option for FSA Enrollment Meetings

View August 2009 Flex Plan News here

July 20, 2009 - ProBenefits Hosts Health Care Reform Webinar

ProBenefits hosted a Health Care Reform webinar on Monday, July 20th at 2pm. This session included an update on the health care reform process, including specifics about the recently-introduced Senate and House bills as well as a discussion of key issues and ways you can be heard as the process continues. Presenters from ProBenefits were Gary Knight (President) and Jason Cogdill (Benefits Attorney).

ProBenefits has been very active in the health care reform process both on our own and through coordinated lobbying efforts in Washington. Our goal is to help inform you of current developments as well as arm you with information to participate in the process if you elect to do so.

Download the slides from the webinar here.

June 23, 2009 - ProBenefits Meets With Congressional Representatives Regarding Health Care Reform

On Monday, June 22, Gary Knight, President of ProBenefits, and Jason Cogdill, Corporate Counsel, traveled to Washington to meet with the offices of several Congressional representatives regarding health care reform and specifically the current challenge to the tax status of employer-provided benefits. Gary and Jason met with the Healthcare Legislative Correspondent from the staffs of Senator Richard Burr (R-NC), Senator Kay Hagan (D-NC), Representative Heath Shuler (D-NC), and Representative Bob Etheridge (D-NC). They also met directly with Representative Virginia Foxx (R-NC) and her Healthcare Legislative Correspondent. Jason and Gary stressed the importance of account-based benefit plans (FSAs, HRAs, and HSAs) and the valuable role they play in the current employer-based system. They also emphasized that any cap of the "employer exclusion" would have an adverse effect on account-based plans which would result in a tax increase to many working Americans.

ProBenefits continues its effort to stay involved regarding the health care reform process, as this is a pivotal time for employers and employees. We will do our best to keep you informed, and we encourage you to communicate with your representatives and let them hear from you on the issues.

June 6, 2009 - July 1st is Retail IIAS Deadline

The IRS deadline (IRS Notice 2008-14) for pharmacies and retail merchants to have an IIAS (Inventory Information Approval System) in place is June 30. As of July 1, only retail merchants with IIAS will be able to accept the Flex Card. The Card will be declined at any retail merchant without IIAS in place. Although the vast majority of retail card swipes are already auto-adjudicating with IIAS (meaning participants do not have to submit supporting documentation to ProBenefits), as of July 1st every retail Flex Card transaction should auto-adjudicate. This is good news, because increased auto-adjudication translates to fewer reimbursement claims for participants and reduced "pay and chase" for employers.

As of 7/1/09, over 4,000 national, regional, and local merchants will be utilizing IIAS. For an updated IIAS list, visit: www.ProBenefits.com/Debit/IIAS.html.

PLEASE NOTE: Flex Card use at medical offices, if allowed by your plan, will not be affected by this deadline. Card use at medical offices may still require documentation.

If you have any questions about the Flex Card, please contact us.

June 6, 2009 - New Flex Plan News Available

Major Topics:

• New Health Care Reform Could Impact Employer Plans
• Flex Card Update: New IIAS Deadline For July 1st
• New CHIP Special Enrollment Rights for Health Plans
• ERISA Update: Form 5500 Reporting Reminder

View June 2009 Flex Plan News here

May 22, 2009 - FSAs and HRAs under review? Senate Finance Committee Needs to Hear From You

On May 20, 2009, the Senate Finance Committee released its options for financing health care reform. Included in the proposals for discussion are a number of options relating to employer-provided health care, including FSAs and HRAs.

• One proposal would eliminate entirely the exclusion for FSA and HRA contributions.
• Another proposal under consideration would repeal the exclusion for reimbursement of over-the-counter (OTC) items.

You can read the entire document here.

ProBenefits President, Gary Knight, has already provided feedback to the Senate Finance Committee and the Senators from North Carolina. You can read ProBenefits' response here.

ProBenefits is a member of The Employer's Council on Flexible Compensation (ECFC). The ECFC is a non-profit organization dedicated to the maintenance and expansion of private employee benefit programs on a tax-advantaged basis.

The ECFC has provided its members a sample template that can be used by Employers who share the same desire to preserve and defend the tax-advantaged programs currently available to working families through employer plan sponsors. If you would like to use this template, please click here. Additionally, we have provided a listing of all the members of the Senate Finance Committee, along with their contact information. Click here for this listing. We also highly encourage people to contact their own Congressional Representatives.

April 3, 2009 - ProBenefits Attorney Cogdill Admitted to U.S. Supreme Court Bar

On Monday, ProBenefits attorney Jason Cogdill was admitted to the Bar of the United States Supreme Court. Jason was sworn in by Chief Justice John Roberts during a session of the Court in Washington, DC.

Although the honor is largely ceremonial, attorneys must be admitted in order to appear in a matter before the Supreme Court. Membership allows attorneys access to the Supreme Court Building to attend oral arguments in the Court and to use the Supreme Court Library.

In addition to membership in the Supreme Court Bar, Jason is admitted to practice before the North Carolina Supreme Court, Federal District Courts of North Carolina, and the Fourth Circuit Court of Appeals. Jason is a 2001 graduate of Wake Forest University School of Law.

Jason has been with ProBenefits since 2004 and handles benefits compliance issues for all welfare benefit plans. In addition to his work for clients of ProBenefits, Jason maintains an active ERISA practice assisting employers and benefit advisors with compliance issues. If you would like to contact Jason regarding legal assistance on benefits or ERISA issues, you may do so at (336) 714-8012 or Jason@ProBenefits.com.

March 13, 2009 - HRA Plans: Update on MSP Reporting Requirements - CMS Announces Delay Until 2010

New mandatory Medicare reporting requirements ("MSP Reporting Rules") for third-party administrators and group health insurers went into effect on January 1, 2009. These rules require quarterly reporting for all group health plans to verify health coverage of individuals and ensure compliance with the Medicare Secondary Payer rules. It had been our hope and anticipation that HRA plans would be exempt from these requirements (as Health FSAs are), but it has been confirmed that HRAs are not exempt and must comply with the requirements. The GOOD NEWS and current update is that it was announced by CMS (Center for Medicare and Medicaid Services) last week that the reporting requirements for HRA plans will be delayed until 4th quarter 2010 to allow employers additional time to gather the necessary information to report on HRA coverage. Prior to this announcement, the initial reporting deadline would have been 10/1/09.

This is certainly good news for employers and reporting entities, since reporting by 10/1/09 would have required time and effort this year in data collection (including names and SSN data of all covered spouses and dependents covered by HRA plans). However, the news is not quite as good as we had hoped, because we and members of our industry group believed there was a fighting chance that the reporting rules would be overturned completely for HRAs. CMS reiterated that HRAs are covered by the new rules and will have to report by October 1, 2010. CMS will provide further instructions on HRA reporting at a later date.

Under the MSP Reporting Rules, data must be reported for all "active covered individuals" of group health plans, including any individuals who may be eligible for Medicare but for whom there is other group health coverage that should pay primary to Medicare. The substance of these requirements entails that HRA plan data must be gathered for spouses and dependents of participants in addition to the participant-only data currently collected for plan administration. This requirement will create additional data collection by ProBenefits for employers sponsoring HRA plans of all types (Full HRAs, Deductible Reimbursement Plans, and MERPs) so that we can comply with the new rules.

If the rules remain in effect, ProBenefits will be contacting HRA plan sponsors during 2010 with further information and to gather the necessary data and prepare the reports in compliance with the new rules. If you have any questions, please contact us.

NOTE: While the MSP Reporting Rules apply to all "group health plans," Health FSAs are specifically exempt from the rules and do not have to report in 2009 or beyond.

March 3, 2009 - COBRA: Economic Stimulus Act Includes New COBRA Premium Subsidy

The new federal stimulus act adopted by Congress ("American Recovery and Reinvestment Act") includes a COBRA provision mandating a 65 percent government subsidy to individuals who experienced involuntary terminations on or after September 1, 2008 (and before January 1, 2010). The subsidy is intended to assist these individuals with COBRA premiums for up to 9 months of coverage. With the subsidy, eligible individuals who elect COBRA (either elected since 9/1 or elect retroactively after a new notice of eligibility) will pay only 35% of the applicable COBRA premium. The remaining 65% will be paid by the employer and then credited to the employer by the IRS as a payroll tax credit. The COBRA subsidy provisions apply to all COBRA-eligible coverage (group health, group dental, group vision, HRA plans). The subsidy does NOT apply to Health FSAs.

There is a special 60-day COBRA election window during which anyone who has experienced an involuntary termination since 9/1/08 may elect coverage up to the amount they carried at the time of the termination. Notice of the availability of the subsidy should be provided to individuals who elected COBRA and are currently paying COBRA premiums as well as those who previously declined COBRA coverage after involuntarily terminations 9/1 or later. For those who have declined COBRA coverage but choose now to elect the coverage, coverage will begin 3/1/09 and is not retroactive to the date of the COBRA qualifying event.

Employers should start soon identifying individuals who will receive notice of the subsidy and preparing the substance of those notices. The DOL will make a model notice available by March 17. Notices must be given to eligible individuals no later than April 18 (60 days after date of statute).

The DOL has added a special website with detailed information on the COBRA subsidy, including a Q&A section as well as instructions on how employers should file to claim payroll tax credits for subsidy payments. The website is located at: http://www.dol.gov/ebsa/COBRA.html.

STATE CONTINUATION: As written, the premium subsidy does apply to state continuation laws (like North Carolina) which are designed to mirror COBRA coverage for groups under 20 employees. While most individual states have not released any information regarding compliance with the state continuation elements of the subsidy, it is expected that the notice requirements and related rules will be identical. (It is anticipated that many states will not make available model notices for state continuation premium subsidies, so employers will need to create their own notices).

If you have any questions about the new subsidy rules, feel free to contact ProBenefits attorney Jason Cogdill. Your company's COBRA administrator and/or benefits advisor should have more information as well.

March 3, 2009 - HIPAA: Economic Stimulus Act Broadens Privacy & Security Rules

Although most of the attention in the benefits world has been captured by the new COBRA premium subsidy rules in the new federal economic stimulus act (the American Recovery and Reinvestment Act of 2009), the Act also includes important new HIPAA provisions that expand and broaden HIPAA's privacy and security provisions. The new provisions (1) extend certain privacy and security obligations directly to business associates of group health plans, (2) create new notification requirements for breaches of unsecured PHI, (3) mandate additional disclosure requirements for electronic health records, and (4) strengthen enforcement and penalties for violations of the privacy and security rules.

Most of the new provisions become effective on February 17, 2010.

Highlights of the new HIPAA provisions:

• The Act makes a number of the privacy and security standards (as well as the civil and criminal penalties for violating those standards) applicable to business associates in the same way they apply to covered entities (including health plans). 
• The Act adds new notification requirements, including that business associates that discover a breach of unsecured PHI must notify covered entities, and covered entities that experience a breach must notify affected individuals (without unreasonable delay, generally no later than 60 days after discovery).  Notice must also be given to HHS, and in certain circumstances, to prominent media outlets.  There is a new notification requirement applicable to vendors of personal health records and others to notify individuals and the Federal Trade Commission (which, in turn, would notify HHS) in the event of a breach.  The FTC is directed to issue applicable regulations.
• The Act adds new accounting standards for PHI disclosures made by a covered entity from an Electronic Health Record.  An individual would have a right to receive an accounting of PHI disclosures made through an EHR by a covered entity or its business associate for treatment, payment, and health care operations during the previous three years.  Note: this requirement does not take effect until January 1, 2014 for covered entities that currently have EHRs, and the later of January 1, 2011 or the date the EHR is acquired for covered entities yet to acquire EHRs.
• The Act clarifies that business associate contracts are required when covered entities enter into a relationship with health information exchange organizations for purposes of exchanging electronic health information. This requirement is already effective and is simply a clarification.
• The Act provides guidance on the "Minimum Necessary" standard.  HHS has been directed to issue guidance by August 17, 2010 on what constitutes the "minimum necessary" in connection with the use, disclosure, or request of PHI.  Until that guidance is issued, the Act provides that covered entities and business associates should, to the extent practicable, limit the use, disclosure, or request of PHI to a limited data set or, if needed, to the minimum necessary to accomplish the intended purpose.
• The Act significantly increases civil monetary penalties for violations of the privacy and security standards (e.g., from $100 per violation to $1,000 or more per violation) and clarifies that criminal penalties can apply to employees who wrongfully obtain or disclose PHI maintained by a covered entity.  In addition, state attorneys general are authorized to bring civil actions in federal district courts against individuals who violate privacy and security standards.  These changes took effect immediately upon the law's enactment.  The Act also requires HHS to conduct periodic audits to ensure that covered entities and business associates are complying with the privacy and security rules.

Further details on the new HIPAA provisions are available on the website for the federal Department of Health and Human Services (www.hhs.gov).

If you have any questions about the new subsidy rules, feel free to contact ProBenefits attorney Jason Cogdill.

January 8, 2009 - Flex Card IIAS Update: Deadline Extended for Drug Stores and Pharmacies

IRS Notice 2007-2, originally scheduled to take effect 1/1/09, imposed rules regarding use of Flex Cards at stores with merchant category codes for Drug Stores or Pharmacies. Under these rules, as of 1/1/09 these locations could not accept Flex Cards unless (1) the store utilized an Inventory Information Approval System ("IIAS") meeting IRS requirements, or (2) 90% of the store's gross receipts during the prior year consisted of items that qualify as medical expenses under IRS Code 213(d).

Recently, the IRS issued Notice 2008-12, which extends the deadline for Drug Stores and Pharmacies to meet the requirements Notice 2007-2. Now, Drug Stores and Pharmacies have an additional six months (through June 30th) to implement IIAS to be able to accept the cards. The vast majority of retail card swipes are already being auto-adjudicated with IIAS, but as of July 1st every retail Flex Card transaction should auto-adjudicate. This is good news, because increased auto-adjudication translates to fewer paper claims for participants and reduced "pay and chase" for employers.

As we have previously reported, all of the collective changes in the law and card technology since 2006 have made the Flex Card more efficient and effective than ever for plans and participants. IIAS continues to include additional retail locations where eligible expenses (including prescriptions and over-the-counter items) can be auto-adjudicated. When a participant swipes the Flex Card at a participating merchant, the IIAS system automatically verifies eligible items purchased, and no further documentation is needed from the participant. As of 1/1/09, over 1,000 national, regional, and local merchants are utilizing the IIAS system. For a complete listing of merchants with the IIAS: www.ProBenefits.com/Debit/IIAS.html. Note: cards used at medical offices may still require documentation.