Legislative update. January 2013

Size: px

Start display at page:

Download "Legislative update. January 2013"

Amos Barber
5 years ago
Views:

regarding Medicare Part D coverage Notice of availability of exchange coverage:

1 January 2013 Legislative update In this issue HHS issues final HIPAA privacy and security regulations The American Taxpayer Relief Act of 2012 Disclosure to CMS regarding Medicare Part D coverage Notice of availability of exchange coverage: delayed effective date and other provisions Highlights of state disability benefit laws

2 HHS issues final HIPAA privacy and security regulations On January 17, 2013, the Department of Health and Human Services (HHS) released final regulations under the Health Insurance Portability and Accountability Act (HIPAA). These rules update HIPAA s privacy, security, enforcement, and breach notification requirements. A full analysis of the almost 600-page document is forthcoming, but a brief summary is provided below. Covered entities, including group health plans, should be prepared for changes as a result of these new rules, which will require updates to HIPAA policies and procedures, business associate agreements, privacy notices, and employee training. Some of the key components of the final regulations include: Direct liability for business associates of covered entities to comply with certain of the HIPAA Privacy and Security Rules requirements Increased limitations on the use and disclosure of protected health information for marketing and fundraising purposes, and prohibition on the sale of protected health information without individual authorization Expanded individuals rights to receive electronic copies of their health information and to restrict disclosures to a health plan concerning treatment for which the individual has paid out of pocket in full Modification to the individual authorization and other requirements to facilitate research and disclosure of child immunization proof to schools, and to enable access to decedent information by family members or others Adoption of increased and tiered civil money penalty structure provided by the Health Information Technology for Economic and Clinical Health (HITECH) Act A more objective standard to determine whether a breach is reportable Confirmation that the Genetic Information Nondiscrimination Act (GINA) prohibits most health plans from using or disclosing genetic information for underwriting purposes Covered entities generally must comply with the new rules by September 23, A more comprehensive summary will be included in the next Wells Fargo Insurance Legislative Update. The American Taxpayer Relief Act of 2012 The recently enacted American Taxpayer Relief Act of 2012 (ATRA), which addressed tax increases and automatic spending cuts, made several changes affecting fringe and other benefits. Qualified adoption assistance benefits and educational assistance programs. The income exclusion for employerprovided adoption assistance benefits and the expansion of the adoption tax credit, as well as the exclusion for qualified educational assistance programs, were set to expire at the end of The ATRA made these exclusions permanent. Employer-provided child care. Prior law created a tax credit for certain employers that actually provide child-care services. This law was set to expire, but the ATRA made the tax credit permanent. Dependent care assistance plans (DCAPs). For purposes of the income exclusion for DCAP payments, the deemed earned income of a spouse who is a full-time student or incapable of self-care will remain at $250 per month for one qualifying individual and $500 per month for two or more qualifying individuals. Qualified transportation plans. The transit parity rule makes the combined monthly limit for qualified transit pass and vanpooling benefits equal to the higher monthly limit for qualified parking benefits. The ATRA extends this rule through the end of Before this change, the 2012 combined limit for transit pass and vanpooling benefits was $125 per month, while the 2012 limit for qualified parking benefits was $240. As a result of the ATRA, the combined transit pass and vanpooling limit for 2012 rises to $240. This increase is retroactive and the IRS recently issued Notice to address employers questions regarding the retroactive application of the increased exclusion for Notice includes the following transportation plan provisions. There is a special administrative procedure for employers that treated excess transit benefits as wages and that have not yet filed Form 941 for fourth quarter Employers that intend to use this special administrative procedure must repay or reimburse their employees the over-collected FICA tax on the excess transit benefits for all four quarters of 2012 on or before filing the fourth quarter Form 941. The employer, in reporting amounts on its fourth quarter Form 941, may reduce the fourth quarter wages, tips, and compensation reported on line 2, taxable Social Security wages reported on line 5a, and Medicare wages and tips reported on line 5c by the excess transit benefits for all four quarters of Employers that have filed the fourth quarter Form 941 must use Form 941-X to make an adjustment or claim a refund for any quarter in 2012 for the overpayment of tax on the excess transit benefits after repaying or reimbursing employees. Employers that, on or before filing the fourth quarter Form 941, have not repaid or reimbursed some or all employees who received excess transit benefits in 2012, must also use Form 941-X to make an adjustment or claim for refund for the excess transit benefits provided to those employees and must follow the normal procedures. Employers who have not yet issued Form W-2 should take into account the increased exclusion for transit benefits in calculating the amount of wages reported. Employers that have already filed 2012 Forms W-2 will need to file Forms W-2c, Corrected Wage and Tax Statement, to take into account the increased exclusion for transit benefits. Please note the combined transit pass and vanpooling limit for 2013 increases to $245. Contact your Wells Fargo Insurance Services representative with questions about these changes. 1

3 Disclosure to CMS regarding Medicare Part D coverage Employers with group health plans (whether insured or selfinsured) that provide prescription drug benefits must annually disclose to the Centers for Medicare & Medicaid Services (CMS) whether these benefits are creditable or non-creditable for purposes of Medicare Part D. A creditable prescription drug plan is one with coverage that is expected to pay on average as much as the standard Medicare prescription drug plan (Medicare Part D). This determination is typically made by an actuary employed by the insurance company, administrator, or plan, or by satisfying the safe harbor approach. The disclosure to CMS is in addition to the annual notices that must be provided to Medicare eligible participants (active employees and their dependents, COBRA qualified beneficiaries, and retirees and their dependents) stating whether their prescription drug coverage is creditable coverage or noncreditable. All employers with group health plans are subject to the disclosure obligation, including churches and federal, state, and local governments. The disclosure to CMS regarding the status of Medicare Part D coverage is required: Sixty days after the beginning of the plan year. The plan year can be the Employee Retirement Income Security Act (ERISA) plan year set forth on Form 5500 (if applicable), or the insurance policy year, or the insurance policy renewal year. Whichever definition is used must be followed consistently. For example, if the plan year for ERISA purposes is the calendar year, and the employer decides to adopt the ERISA plan year as the plan year for disclosure purposes, then the deadline for making the disclosure to CMS is March 1 (that is, 60 days after the first day of the plan year). Thirty days after any change in the creditable-coverage status of the prescription drug plan. If the group health plan provides non-creditable prescription drug benefits, and the plan is changed so that prescription drug benefits are now creditable, or vice versa, disclosure of the change must be made within 30 days of the change. Thirty days after termination of prescription drug benefits under the plan. If the group health plan is terminated, or if the plan is changed so that it no longer provides prescription drug benefits, the termination or change must be disclosed to CMS within 30 days. Disclosure is made via the Internet at gov/creditablecoverage/45_ccdisclosureform.asp. Stepby-step instructions, including screen shots, are available at CredCovDisclosureCMSInstructionsScreenShots pdf. Notice of availability of exchange coverage: delayed effective date and other provisions On January 24, 2012, the Department of Labor (DOL), Treasury Department, and Department of Health and Human Services (HHS) (collectively, the Departments ) issued frequently asked questions (FAQs), postponing the deadline for employers subject to the Fair Labor Standards Act (FLSA) to notify employees of their right to access Exchange coverage. The notice was to be issued to all existing employees no later than March 1, 2013, and to new employees as of their hire date. The notice would include the following: Information about Exchanges, the services provided by Exchanges, and the manner in which the employee could contact the Exchange to request assistance If the employer s medical plan does not meet a 60% actuarial value the employee may be eligible for a premium tax credit under an Exchange If the employee purchases qualified health benefits through an Exchange, the employee may lose the employer contribution to health benefits under the employer s plan, or all or a portion of such contribution could be excludable from income for federal income tax purposes According to the FAQ, employers will not be required to issue the notice of Exchange availability until the Secretary of Labor issues regulations on the notification requirement under FLSA section 18. The DOL anticipates that the timing for distribution of notices will be late summer or fall of 2013, which will coordinate with the first open enrollment period for insurance Exchange coverage. The DOL will issue a sample notice for employers use and will also allow employers to use the employer coverage template discussed in the preamble of the proposed rules on Medicaid, Children s Health Insurance Programs, and Exchanges which will be available for download at the Exchange website. The FAQ also addressed other provisions of the ACA such as stand-alone health reimbursement accounts (HRAs), the payment of the Patient Centered Research Outcome Research Fund tax, and what constitutes excepted benefits. These additional topics will be addressed in greater detail in an upcoming Legislative Update. To view the FAQ please visit 2

4 Highlights of state disability benefit laws Type of law Approach used Type of private plans Limitations upon right to establish private plans former automatic if latter not elected by employer or with employer s consent, and by employee like unemployment compensation, but voluntary plans may be substituted Insured and self-insured plans exceeding state fund standards Must not result in substantial adverse selection against state fund - for insured voluntary plans only All private plans (no state fund or plan) Employer must provide benefits - like workers compensation - but employees share cost Insured and self insured plans equal to or exceeding statutory requirements and existing plans (sick leave per collective bargaining) former automatic if latter not elected by employer and, if contributory, by majority of employees - like unemployment compensation - but private plans may be substituted Insured and selfinsured plans equaling or exceeding state fund standards, and other existing plans Private plan cannot exclude any class of employees, determined by age, sex, race, or wages. Plans must be approved by N.J. Department of Labor and Workforce Development employer must choose Employer required to provide benefits - like workers compensation - but employees share cost Insured and selfinsured plans equaling or exceeding statutory requirements and existing plans former automatic if latter not elected by April 30 - to be effective July 1. Contributory plans require majority employee consent - like unemployment compensation - but private plans may be substituted Insured and self-insured plans equal to or exceeding statutory requirements and other existing plans Must agree to pay certain assessments State fund only no private plans allowed in substitution - like unemployment compensation Not applicable 3

5 Highlights of state disability benefit laws continued Employee contributions Employer contributions required Employers covered Employees excluded State or private plan: not more than 1.0% of the first $100,880 of annual wages, with maximum employee contribution of $1, State: Private plan: Balance of cost employees and $100 payroll in any quarter - same as unemployment compensation Certain employees of certain non-profit organizations, railroad and government employees, real estate salespersons, 50% of cost, but not more than 0.5% of weekly wages, to a maximum of $4.61 per week (effective Jan. 1, 2013) Balance of cost All employers Certain domestic servants, non-profit organization employees, 0.36% of maximum subject wages ($30,900 effective Jan. 1, 2013), determined annually, or $2.14 weekly, $9.27 monthly, or $ annually State: For 2013, employers contribute between $30.90 and $ (0.10% to 0.75%) on the first $30,900 earned by each employee during this calendar year Private plan: Balance of cost; also subject to experience rating employees that pay $1,000 or more in total wages same as unemployment compensation Certain farm laborers, domestic servants, railroad employees, real estate salesmen, certain government employees, 0.5% of the employee s first $120 of weekly wages, but not in excess of $0.60 weekly Balance of cost employees on each of at least 30 days in one calendar year Certain elementary and high school day students, casual employees, employees of non-profit organizations, State or private plan: 0.3% of taxable wages (up to $9,000) 0.3% of wages (up to $9,000) Employers covered by approved private plans pay annual assessments for administrative costs ( %) and benefits to the unemployed disabled ( %) employees on any day in current or previous calendar year Certain domestic servants, students employed by school or college, government or non-profit organization employees, 1.2% of first $61,400 wages earned (effective Jan. 1, 2013) Employers of one or more employees - same as unemployment compensation. Also any city or town which elects coverage. Certain domestic servants, students employed by school or college, employees of certain non-profit organizations, government employees, Religious exemptions Members of any sect, etc., which depends for healing upon prayer in the practice of religion upon filing waiver of benefits Members of any sect, etc., which depends for healing upon prayer or other spiritual means upon filing waiver of benefits Members of a religious order which depends for healing upon prayer or other spiritual means upon filing waiver of benefits Members of any sect, etc., which depends for healing upon prayer or other spiritual means upon filing waiver of benefits 4

6 Highlights of state disability benefit laws continued Statutory eligibility requirements How benefits are computed Earnings in base year of not less than $300, from which state disability insurance (SDI) taxes were withheld during a previous period Schedule of benefits same as unemployment compensation -depends on wages in base period Remuneration for at least 20 hours in each of at least 14 weeks, and wages of at least $400 during the 52 weeks immediately preceding disability 58% of average weekly wage of $26 or more to next highest dollar, but will not exceed the annually determine maximum weekly benefit amount ($535 as of Jan. 1, 2013) Minimum weekly benefit $50 $14 or average weekly wage, if lesser amount Maximum weekly benefits $1,067 $535 Maximum duration 52 weeks 26 weeks for any disability or within a benefit year Either 20 weeks of work in covered employment during base year with earnings of at least $145 ($7.25 hourly) in each week, or $7,300 of annual earnings 2/3 average weekly wage subject to a maximum amount of $584 (generally weekly rate is based on earnings in the eight calendar weeks immediately before the week in which disability begins) Generally four consecutive weeks of covered employment, not necessarily with current employer 50% of average weekly wage, subject to maximum of $170 (unchanged since May 1, 1989) $ % of average weekly wage, but not more than the maximum benefit allowed ($170) $ weeks for any one period of disability $170 (unchanged since May 1, 1989) 26 weeks during 52 consecutive weeks Base year earnings of $150 in covered employment 65% of average weekly wage, subject to a maximum of $113 (unchanged since July 1, 1985) Either base year earnings of $9,300, or at least $1,550 in one of the base period quarters and base period wages of at least 1½ times the highest quarter earnings and total base period wages of at least $3, % of highest quarter wages in base period; subject to a maximum of 85% of statewide average of employees covered by Employment Security Act $12 (non-agricultural) $72, plus greater of $10 or 7% of weekly benefit per dependent child to age 18, or over 18 if handicapped (maximum of 5 children) $113 (non-agricultural) There is a death benefit of $4,000 and dismemberment benefits of $2,000 to $4, weeks for any disability or in any 52 week period $736 (in effect as of Jan. 1, 2013), plus greater of $10 or 7% of benefit per dependent child (up to 5) under age 18, or over 18 if handicapped Maximum $736 with 5 dependents 30 weeks 5

7 Highlights of state disability benefit laws continued Waiting period 7 days 7 days 7 days for each disability, but if benefits are payable for 3 consecutive weeks, then benefits become payable for the first 7 days Maternity benefits Effect of continued pay from employer during disability Benefits for disabled unemployed Post employment period of coverage Can still receive disability benefits for each day of disability in amount which, together with wages, does not exceed 1/7 of regular weekly wage immediately prior to disability State fund, which will be credited with a percentage of taxable wages paid to employees for each calendar year No disqualification from benefits, but salary continuance may be used as part of compliance with benefit provisions of the law Special fund created by July 1, 1969, from employer contribution of 0.2% of covered wages. Levy on employers or insurers when balance is below $500,000. Reduces benefits if benefits plus continued employer pay exceeds regular weekly wages State plan, which has custody of unemployment disability account and which provides for employer assessment not to exceed 1/10 of 1% of taxable wages paid in preceding year if account has deficit over $200,000 7 days for each disability 7 days for each disability; if hospitalized during first 7 days, benefits begin on first day of hospitalization Generally, sick pay and benefits may be received simultaneously Assessment on insurance companies, self-insurers, state insurance fund, and existing plans, without limit First 8 weeks: employer paid leave at full salary per Working Mothers Act; regular SINOT benefits thereafter Reduces benefit if combined total would exceed wages. Provision under state plan for benefit payment to employer if full pay continues. Contributions under the Puerto Rico Disability Benefits Act. Private plans to be assessed annually on a basis considered to be an equitable share of cost. 2 weeks 2 weeks 4 weeks 2 weeks No waiting period as of July 1, Must be unemployed for at least 7 days due to non-job related illness. Generally, sick pay and benefits may be received simultaneously State plan This material is provided for informational purposes only based on our understanding of applicable guidance in effect at the time of publication, and should not be construed as being legal advice or as establishing a privileged attorney-client relationship. Customers and other interested parties must consult and rely solely upon their own independent professional advisors regarding their particular situation and the concepts presented here. Although care has been taken in preparing and presenting this material accurately, Wells Fargo Insurance Services disclaims any express or implied warranty as to the accuracy of any material contained herein and any liability with respect to it, and any responsibility to update this material for subsequent developments. To comply with IRS regulations, we are required to notify you that any advice contained in this material that concerns federal tax issues was not intended or written to be used, and cannot be used to avoid tax-related penalties under the Internal Revenue Code, or to promote, market, or recommend to another party any matters addressed herein. Products and services are offered through Wells Fargo Insurance Services USA, Inc. and Wells Fargo Insurance Services of West Virginia, Inc., non-bank insurance agency affiliates of Wells Fargo & Company. Products and services are underwritten by unaffiliated insurance companies except crop and flood insurance, which may be underwritten by an affiliate, Rural Community Insurance Company. Some services require additional fees and may be offered directly through third party providers. Banking and insurance decisions are made independently and do not influence each other Wells Fargo Insurance Services USA, Inc. All rights reserved ab v1

Employee Benefits Compliance Checklist for Large Employers

: Provided by [B_Officialname] Employee Benefits Compliance Checklist for Large Employers Federal law imposes numerous requirements on the group health coverage that employers provide to their employees.