Now mandated by the new regulations is the requirement—imposed on various benefits Plans—that certain notices be distributed to employees directly or disclosed to them in written Summary Plan Descriptions (SPDs).  Compliance is even more challenging and confusing because some notices must be distributed only once, and some must be distributed annually. Because the Public Health Service Act (PHSA) amended the Health Insurance Portability and Accountability Act (HIPAA), failure to comply can be quite costly for an employer/Plan Sponsor. For example, failure to comply with these reforms—much like failure to comply with HIPAA portability rules under ERISA—is punishable with a $100/day penalty per employee (for every employee who is affected by the violation)  until said violation is corrected. In addition, such noncompliance also requires self-reporting, and even after the violation is corrected any failure to self-report may result in additional fines/penalties.

Beginning in 2012, all healthcare plans and insurers must create and distribute a document summarizing benefits to plan enrollees and policyholders. To be separate from the SPD, this document must include the following:

• Definitions of standard medical and insurance terms.
• A summary of the coverage provided, including any cost-sharing provisions.
• A description of any exceptions to or limitations on coverage, and the renewability and continuation of the plan/policy coverage terms.
• Examples of common benefits scenarios to illustrate coverage.
• A statement clarifying whether the plan or policy provides minimum essential coverage.
• Contact information for consumer convenience.
• The Act prescribes specific formatting requirements for this summary document.

Who is responsible for ensuring that documentation and notice requirements are met? Per the regulations, health insurers of fully insured plans are responsible for providing notification. But the requirement doesn’t stop there…  As also spelled out in the regulations:  it is the ultimate responsibility of the Employer Plan Sponsor to ensure Participants receive Notices. Yes, that’s right, ultimate responsibility again falls on the employer.

Of course, this comes down to just one question: Where do employers go for assistance? They can look to their broker or agent. They can seek legal counsel. They can resolve to stay on top of this issue—and to avoid the inevitable pitfalls—all by themselves. The healthcare scene is constantly developing and transitioning, and I certainly wouldn’t advise any of those options. Instead, of course, I’d suggest they put their trust in TASC, an administrator which is already all over this! As always, stayed tuned for future updates.

One part of the discussion focused on the impact this legislation continues to have on benefits accounts. For example, over-the-counter drugs not prescribed by a doctor are already excluded from reimbursement through a Flexible Spending Account (FSA), Health Savings Account (HSA), or Health Reimbursement Arrangement (HRA). This exclusion continues to challenge employees who may no longer purchase these necessities tax free.

Coming soon are limits for medical FSA contributions. Effective January 1, 2013, employees will be able to contribute no more than $2,500 to a medical FSA in a Plan Year. Of course, a husband and wife with access to separate FSAs can each max out their Plan and increase their family’s limit to $5,000.

Coming in 2018, an excise tax will be imposed on high-cost insurance plans. This will affect plans with aggregate expenses that exceed $10,200 for individual coverage and $27,500 for family coverage. There are lingering questions regarding this provision…  Will the portion an employee runs through an FSA count toward that total?  Stay tuned for more.

Of particular concern to HR personnel are the administrative actions that need to be taken to comply with the new rules. Again, for example, TASC quickly updated our Plan Documents to accommodate the federally mandated extension of healthcare coverage to dependent children through age 26. Further, while delayed twice already, the new W-2 reporting requirement is now scheduled to take effect in 2014. The formula for determining the amount to report is complicated and employers are well advised to leave this calculation to administrators like TASC.

Of course there are opportunities for gains as well. One that comes to mind is the Small Business Tax Credit. To get the credit, a business must have fewer than 25 full-time workers or the equivalent (for example, two half-time employees equals one full-time employee), must pay an average annual wage of less than $50,000, and must cover at least half the cost of health insurance premiums for their workers. Through 2013, the tax credit covers up to 35% of the amount a qualifying business spends on its health insurance premiums. In 2014, the top tax credit bumps up to 50%. The credit is available for up to six years. Employers should consider how this credit plays against the traditional deduction (Section 162) and choose the most advantageous route for their circumstance.

In the future we will see grants to help small businesses provide wellness programs to their employees. Eligible employers will be those without a workplace wellness program who employ fewer than 100 individuals who work 25 hours or more per week. Other than that, the details of this program have not been worked out. TASC will step in to help facilitate the grant competition process for our participating employers.

Clearly, many of these new provisions are still very much in play. TASC continues to watch these developments to determine the best course of action for our customers.  In my next blog, I will look at the new notice and documentation requirements.

For example, here are some recent PPACA-related updates that we are following:

• The deadline has passed for submitting a waiver request to the annual HRA Plan limits. This provision prohibits health plans from imposing annual “caps” on the reimbursement of essential health benefits. The deadline to submit a waiver request ended on September 22, which means applications are no longer being considered.
• Another provision we are watching is CLASS, the Community Living Assistance Services and Supports program.  According to various sources, the Obama administration is putting a financially troubled part of the 2010 healthcare reform law on hold, leaving in doubt whether the benefit for disabled Americans will ever be implemented.
• The Department of Health and Human Services recently rolled out the initial regulations regarding the establishment of State Health Insurance Exchanges under PPACA. Exchanges are state-based competitive health insurance marketplaces through which individuals and small businesses (with fewer than 100 employees) can purchase private health insurance.
• The Obama administration chose not to ask a federal appeals court for further review of a ruling striking down the centerpiece of the president’s sweeping healthcare overhaul—the mandate that individuals must purchase health insurance if they have none. The decision makes it more likely that the U.S. Supreme Court will hear the case during the court’s current term.

Needless to say, there continues to be a lot of movement with these regulations – and a lot to review, research, and analyze. For that reason, we made the move earlier this year to create a new position on our TASC corporate roster. Designed specifically to help us keep up with the ever-changing governmental landscape, our new Legislative Analyst position is held by Jason Westphal. Jason spends his days reviewing, analyzing, and interpreting Internal Revenue Service rulings and clarifications, governmental and healthcare related blogs, industry opinions, and upcoming trends. His efforts are another example of how TASC makes the investment to ensure we’re offering the most up-to-date and innovative services possible, how TASC strives to leave no stone unturned when it comes to protecting the compliance of our services.

We have made it easy to follow the efforts of our new Legislative Analyst.  Just visit TASC’s Capital Connection website (www.tasccapitalconnection.com). The Capital Connection will keep you updated on all the latest legislative action that affects our Plans. As is our custom, TASC is ready to adapt and capitalize on any change that affects our industry. You can count on it.

We continue in 2011 with an initiative we started last year: to make adapting to change a top priority throughout TASC.  Change is a constant in the business world, no matter the industry.  Those of us involved with the healthcare/employee benefits industry were nearly buried at times by an avalanche of change last year.

Take for example the Patient Protection and Affordable Care Act (PPACA).  Passed into law last year, this Act is the reason behind many of the changes we implemented in late 2010.  And the changes seem to be nowhere near ending.  If you read the papers or watch the news, you know that the lawsuits, repeal efforts, revenue rulings, and government notices are appearing at an astounding rate.  Just last week, Wisconsin’s new Governor asked the state’s Attorney General to join in a lawsuit against the nation’s Healthcare Reform Act.

In a world of uncertainty, one thing is certain: this issue is far from settled.  And that stark reality leaves many business owners feeling very unsettled.  With so much chatter, how do you know who to trust?  How do you know who is simply posturing one way or another because they have a political axe to grind?  It gets harder every day to navigate the information highway, harder to tell the truth from fiction.

Here are three things upon which I will not budge in 2011.  (1) I won’t waste time or energy fighting the Healthcare Reform Act.  There are plenty of people who will rail against every page of this bill.  I won’t be one of them.  (2) I won’t get caught up in the battle of rhetoric playing out right now, and will not allow any squeaky wheel to get me all worked up.  (3) I will spend my time and energy ensuring that we serve our Clients to the best of our ability.  In my estimate, doing so is the best use of my time in the New Year.

While we welcome these new opportunities, have no doubt that we will remain steadfast and true to one of our most vital responsibilities: ensuring that our Clients receive every benefit available to them.  Of course this means preserving the tax deduction and resulting tax savings made possible by AgriPlan and BizPlan.  We understand well the value of these tax free bottom-line dollars to our Clients.  We vow to do everything in our power to ensure that our Plans follow all compliance mandates, and we strive to continue reducing workloads for our Clients, now and well into the future.

This past summer I traveled with my family to Mount Rushmore.  The Park Ranger who guided our group explained well the choice of Presidents carved into the side of the mountain, and explained that each leader represents a separate ideal.    I learned that Washington represents creation.  As our first President and Revolutionary War hero, he was there at the very creation of this country.  Jefferson represents expansion.  During his leadership our country grew dramatically through the Louisiana Purchase and the Lewis and Clark Expedition.  Lincoln represents preservation.  He preserved the union throughout the Civil War.   And Teddy Roosevelt represents development.  This “trustbuster” of business monopolies helped our nation’s economic development by linking east to west with the construction of the Panama Canal.

With appreciation for the four great men immortalized on Mount Rushmore, I pondered the four ideals symbolized on that mountainside.  And I thought about how TASC, in its own way, also embodies each ideal.  As the creator of AgriPlan and BizPlan, TASC has been instrumental in bringing this innovative tax saving service to one hundred thousand small business owners.  Our business never stop evolving in response to customer need.  This means we continuously expand our offerings with better online tools and more flexibility; we continually develop innovations within our existing Plans; and we continue to design new Plans and services to help preserve tax savings for our Clients.

Since 1975 TASC has been around to help Clients navigate the changing healthcare waters.  We’ve been here to deal with the changes imposed by various legislations.  Through the years we’ve worked hard to follow mandates, notices, and rulings.  The new rules and regulations present tremendous opportunity for TASC, opportunity to take even more of the administrative burden from our Clients.

At TASC we remain resolute in our commitment to creating and developing innovative ways to handle changes, to expanding our services to further reduce workload for our Clients, and to preserving (or increasing) savings for each and every Client.  It’s carved in stone.

Through the bill, a 65 percent subsidy of COBRA benefits for those who have lost their jobs is extended through May 31, 2010.  On April 5, tens of thousands of unemployed Americans started to lose their benefits after being out of work for a period of more than 26 weeks.  The new bill works retroactively to April 5, meaning benefits will also be restored for anyone who became unemployed since that date.  Under the new extension, persons who file for unemployment benefits before June 1 will receive the 65 percent subsidy for up to 15 months.

With consumer spending on the rise and unemployment slowing, I think this may well be the final extension of COBRA that we see.  Like many of our leaders, I am cautiously optimistic that most individuals will find work in that time period and no longer need COBRA.

This part of our nation’s healthcare reform has been a long and strange journey, and it’s nearly over…for now.  Once President Obama signs this Bill into law–coupled with the previous Bill already enacted into law by the President–healthcare reform legislation will have transpired.

Three Democrats voted against the Bill–Senators Ben Nelson (Neb.), Mark Pryor (Ark.) and Blanche Lincoln (Ark.)–but it easily prevailed because Reconciliation Bills require only a simple majority to pass, not the 60 votes typically needed to advance Bills in the Senate.  All three Senators voted for the Bill that Obama signed when it passed the Senate in December.  Several Democrats also voted in support of some Republican amendments to the Reconciliation Bill but none were approved.  Senate Democrats promised their House counterparts not to alter the legislation and offered no amendments during the three days of floor consideration.

Passage is expected.  Of note are various successful Republican points-of-order (i.e. technicalities) that forced the deletion of a few provisions within the student-lending legislation that is attached to the Bill.

You can count on TASC to remain vigilant and to review in-depth the evolving legislation.  As various provisions of the Bill are clarified, we know new questions are likely to surface, and we are at the ready.  I have been in this business for 27 years, and have witnessed all the legislation and regulations that have been passed over that time relative to our industry and our customers.  With that experience, I am confident TASC will continue to provide leadership that our Clients can rely on.

Just before midnight Eastern Time the third of the three steps was completed.  First had been the “rules” vote in the afternoon; next came votes in the evening to pass Senate Bill HR 3590; passage of House Reconciliation Bill HR 4872 immediately followed.  At that point healthcare reform was in place for two final steps.  Next, with the Senate Bill passed in the Senate and the House, Reconciliation Bill HR 4872 heads back to the Senate where it needs 51 votes to pass.  While it is not over until it’s over, the likelihood is looking pretty good.  The Senate Bill, with its passage in the Senate and the House, is free to head to the President’s desk for signature.  While HR 4872 will not pass in the Senate without debate, the Reconciliation Bill and thus the legislation as a package heads to the President’s desk where he is expected to sign it into law.

It is very difficult to digest the 2,300+ pages of HR 4872 in a manner that effectively connects/ties it to the language in the 2,000+ pages of HR 3590.  At TASC we strive to keep current with what is shaking out.  To this aim, TASC belongs to organizations that have spent considerable time deciphering the language of the Bills.  Some of the expected results of the Bills as they relate to TASC and our customers have been stated in this Blog previously.  I am still learning… One example: except for insulin purchases, deductions for medicines or drugs will be allowed only when a prescription applies.  This means over-the-counter medicines or drugs will not be deductible.  We had seen this previously in HR 3590.   It appears Reconciliation Bill HR 4872 places language that ensures this is consistently applied to all medical reimbursement vehicles, including Section 105 Medical Reimbursement Plans such as Health Reimbursement Arrangements (HRAs), Health Savings Accounts/Medical Savings Accounts (HSAs/MSAs) and Flexible Spending Accounts (FSAs).

At TASC, much of our attention to healthcare reform has focused on the Group side of the business… Meanwhile, numerous TASC Clients are self-employed, and we’re watching developments that will affect them as well.  We know it’s important that TASC review the language carefully to ensure our understanding of the impact on the self-employed.  So far we’ve seen half a dozen references to the self-employed in both HR 4872 and in the Manager’s Amendment.

Very few Third Party Administrators (TPAs) serve the self-employed and larger employers alike.  At TASC we make it our business to serve businesses of all sizes, and we will be looking out for all our customers.  I invite you to check back to this CEO Blog and watch for other communications from TASC for guidance regarding these sweeping changes.

The process will require the House to enact into law H.R.3590, the Senate health reform measure, before the Senate votes on the changes to H.R.3590 contained in H.R.4872. Thus, anything in H.R.3590 not changed in H.R.4872 would become law as drafted in H.R.3590. An example of this would be the Simple Cafeteria Plan provisions under Section 9022 entitled “establishment of Simple Cafeteria Plans for small businesses.” Changes in the Reconciliation Bill that relate to our customers and TASC include the following:

• High Value Health Insurance Tax Threshold and Timing: The bill delays until 2018 the high value health insurance tax. This tax is a 40 percent tax, payable by the insurer or–where the plan is a self-insurance plan or for purposes of Flexible Spending Accounts (FSAs)–by the plan administrator or employer. The bill includes an increase in the threshold at which the high value health insurance tax is triggered. The new thresholds would be $27,500 for family coverage and $10,200 for individual coverage (higher thresholds—$39,950 and $11,850 respectively—would apply for those in high-risk occupations). The threshold amounts are indexed. Stand-alone dental and vision coverage would not be included in the calculation of the total value of health insurance.
• FSA Limitation: The new $2,500 annual limit (indexed) on FSAs would be delayed by two years, to 2013.

Both the Rules Committee and the House floor vote could take place on Sunday, March 21. President Obama will delay travel and be on hand for the House vote. The tactics used for getting the bill(s) passed does not seem to be public yet. House Democrats are considering using a self-executing rule, also called “deem and pass,” that would deem the underlying Senate healthcare bill passed once the reconciliation package is passed.

TASC and our industry will remain committed to trying to steer legislation that makes sense for its customers. This is a difficult task. In addition, TASC will continue to inform customers through channels like the CEO Blog, Client Alerts, etc., and will make every effort to help customers understand the impact of the changes. TASC will move our organization and services in line with customer need. Overall, the legislation is manageable related to TASC’s relationship and services with and to customers. Disregarding the “politics,” we expect the outcome of these bills to be acceptable to TASC, to our representatives, and to our Clients.

On a separate note, but related to TASC and our customers, the Hiring Incentives to Restore Employment (HIRE) Act was enacted into law on Thursday. This is the “Jobs” Bill. Originally there were provisions for another extension of COBRA in the Bill.  However, at the last moment Senator Harry Reid stripped those provisions because he wanted the bill not to lose its message or intent with respect to jobs.

Then the process of reconciliation between the House and Senate versions of the bill will begin.  Earlier this week there was an expectation that the House and Senate would get together and work out their differences in time for the President’s State of the Union Address.  But recent reports indicate that the timeframe might be slipping.  In fact, it could be February before they complete final action on the bill.   Some observers feel that a number our legislators may be suffering from healthcare fatigue, both within the House and the Senate, as well as in the administration.   The House passed a jobs bill before it left for the holiday break.  The Senate has yet to act on its version of a jobs bill, so there might be a tendency for some to want to talk about something other than healthcare and focus on the economy.  Nonetheless, we are continuing to work under the assumption that the healthcare reform bill could be ready for the President’s signature under the shorter timeframe.

As far as Flexible Spending Accounts (FSA) are concerned, the effective date is the only difference between the House and the Senate versions of the bill.  The House version has an effective date of 2013; the Senate’s is 2011.  While we continue working as an industry to dissuade imposing  any proposed excise tax of FSAs, the more pressing issue at hand is ensuring that the 2013 effective date makes it into the final bill.  Some observers are not optimistic about eliminating the excise tax completely, and many expect the House bill will have to accept some version of the excise tax during the process of reconciliation with the Senate bill.

Yes, things are definitely heating up.  Stay tuned.