Category Archives: Uncategorized

Catholic Organization’s Leadership is Seriously Flawed

Politically I am an Independent.  At any moment I see good solutions from either of the two major camps and more often than not from the not- so-major camps.  But every day of the week, every week of the month, and every month of every year, I consider myself 100% American.

For those that know me, I was not terribly pleased with the form of Health Care Reform that was passed a few years ago, but I do appreciate how inadequate the system is for a good number of Americans.  And a good point from HCR is that I view the requirement that benefit plans cover oral contraception to be reasonable and sensible.

I am not sure it makes sense to have businesses and organizations be in the business of providing health benefits to people in the US, but they are.  Given that, the powerful and loud people in the Catholic Church “leadership” this past week have done a disservice to their members and to us other citizens.  The organization should shut up and treat their employees as well as the businesses and organizations next door are treating theirs.  Consider that the number one problem on our planet, which outweighs all other concerns in total, (by 50X from one estimate I know about) is overpopulation.  This tiny requirement of HCR may do little to change any of that, but it will help avoid needless and unwanted births to women and men who have little interest or capacity to raise a child.

There is nothing in this tiny requirement of HCR that compels employees or their dependents of Catholic owned organizations to use oral contraceptives so the leadership of Catholic organizations operating in the US should have not the least of concerns with the oral contraceptive provision.  I understand the Catholic Church, and its leadership, is a foreign entity to the US and is not an American institution and accordingly their preferences and beliefs will not necessarily align with those of us who consider ourselves American.  We welcome them with open arms but I would sure appreciate their respect of what we have built here in America.  We have become a great nation of different people and different cultures by working hard, keeping our noses to the grindstone, and by constantly moving forward, not allowing minor biases and differences to knock us off track.

The Catholic organizations of the world have long been known for the significant good they provide to nations, communities, and families that face true suffering across the world as well as here in America, in large part due to significant contributions and work of its members.  I see no reason why the leadership of any church or religious organization should have any argument with America, particularly during one of our most trying times in our last 50 years.

I would love to know how other Americans feel.

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Heatth Care Reform 2012, 2013. The Individual Mandate, The Missing Severability Clause, and The Supreme Court

Changes brought about by Heath Care Reform look like a lop-sided barbell. There was an immediate bubble with several smaller items, then a few years with very little happening, followed by the Big Tamale that is scheduled to happen in 2014. The Big Tamale being the Individual Mandate.

There is not a whole lot going on in HCR that will affect your business over the coming months, but I wanted to give you an update on what is upcoming, the status on a few other provisions, and to make you aware on a likely Supreme Court Decision, which could come as early as next summer.

Let’s look at some recent and upcoming items:

1. CLASS Act – it has been all but officially killed. This is the Federal Government Long Term Care insurance plan that your employees were going to be able to buy using their own money but it would be billed through your business.

The LTC plan did not have stated benefits or certain premium costs, which would have kept almost everyone from enrolling, and was to have started in 2011, but it did not come to pass. The Government had not allocated sufficient resources to its development and has, or shortly will have, reassigned the staff to other positions. I do not expect this provision to be resurrected any time soon, or at all, for that matter.

2. Employer Reporting of Medical Insurance Premiums on Employee W-2’s – This is moving forward but on a delayed basis.
• For employers who issue 250 or morer W-2’s, they will have to report the premiums (Employer + Employee cost) on the W-2’s for their tax years that begin in 2012.
• For employers who issue fewer than 250 W-2’s, they will have to report the premiums (Employer + Employee cost) on the W-2’s for their tax years that begin in 2013.
3. Uniform Benefit Summaries – These will begin with plan years starting after March 2012. Insurance companies will not only be allowed to, but will be required to, provide Benefit Summaries that follow a standard form. There is nothing you will need to do as the insurance companies will change their Benefit Summaries to an industry-wide standardized format. (The quirky thing is that prior to HCR, insurance companies were prohibited from collaborating with each other to make their documents similar).
4. 60 Day Notice on Benefit Changes – this requirement begins with plan years that begin after March 2012 and does not apply to renewal changes. For those very, very few businesses that make benefits changes mid-year (many carriers do not permit this), you will have to give your employee’s 60 days of advance notice.
5. FSA Limit on Contributions to $2,500 – this begins with plan years beginning on or after January 1, 2013. Believe it or not, there is not currently a legislated cap on the maximum FSA contribution allowed to employees. That cap is determined by the Employer. This will all change in 2013. No FSA will be permitted to allow contributions in excess of $2,500 per employee. (I have never worked with a client that permitted a higher maximum and so this should go in relatively unnoticed).
6. Health Benefit/Insurance Exchanges – these will likely start rolling out in 2013. In certain circumstances some employees may opt to enroll in them if the employer’s premium is considered unaffordable. I do not foresee this impacting many, if any clients. (I will keep you up to date on this).
7. Mandatory Purchase of Health Insurance By All People in the US aka the Individual Mandate – this is of course the Big Tamale. In 2014, with the exact date yet to be announced, all people in the US will have to own a health insurance policy. Many will continue to get their insurance through good businesses like yours, but if people are not employed, or self-employed, or do not get benefits at work, they will have to buy health insurance or will pay a Federal Penalty.
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The Individual Mandate , The Missing Severability Clause, and The Supreme Court

Let me take a minute to expand on this. This provision is part of the HCR legislation (which is more than one bill), but I want you to look at it unemotionally, detached from its particular legislation. (Let’s me get out front and get this aspect behind us before we start: Every single reasonable minded person I’ve spoken to, or even heard of, in the last 5 years believes that the US Health Care system needs serious help in several key areas – I fully support fixing those areas. I just don’t care for the solution Congress came up with. If I am wrong, I apologize in advance).
The Meat of It
Many states are suing the Federal Government over the Individual Mandate provision because it is a provision never before put into law by the US Congress. It dictates that every single person must purchase a specific type of product regardless of any activity. Remember, people who are required to purchase car insurance are only required to if they own and drive a car. If the car is sitting in their garage, they are not required to have insurance. This is a big difference.

The concern that most everyone I’ve spoken to about this is that such a law is unconstitutional. I read the Constitution several times a year (yes, I am that kind of history nerd), and I agree the provision is unconstitutional. But the issue is much bigger than simply buying health insurance. If the Supreme Court upholds the Mandate, will the Government then use it as a precedent to impel people to purchase other products? That is a very valid concern.

However you feel, this is a Constitutional Challenge as big as Roe v. Wade or Brown v. Board of Education and these were decisions with enormous impacts.

The Severability Clause
Severability Clause. Most Federal and state, but particularly Federal, legislation covers much, much more than the title of the bill may imply. For example there may be a bill that is mostly about interstate water regulation but it may have an amendment that deals with wiretapping (this is a fictitious example). Because of this, in most Federal and State Legislation, the last clause in the bill is called a Severability Clause. These clauses say that if any one part of the bill is found to be illegal or unconstitutional, then the rest of the bill is okay and can stand.

But guess what? The HCR legislation did not contain such a clause. So the big fear is that if the Individual Mandate is struck down, will the rest of the bill fall as well? The 6th Circuit Court says “yes, the Individual Mandate clause is illegal and the rest of the bill must fall” but the 11th Circuit Court of Appeals says not. It said, just this August in Atlanta, “yes, the Individual Mandate clause is illegal, but in spite of the absence of a Severability Clause, the rest of the bill can stand.”

Why did Congress not include the Severability Clause? I am not certain but it is for sure not a mistake. I believe the reason is one of two things:

1. They wanted to add pressure to any judge who might strike down the Individual Mandate clause not to do so because he or she would have to throw away the entire bill; or
2. The insurance companies insisted upon it in exchange for their support. Without the Individual Mandate in the bill, as the bill stands now, most all health insurance companies would be insolvent within 2-3 years. (So if the insurance companies did support the missing clause, it was a good thing for all of us).

What The Supreme Court May Do
Many legal experts believe the Individual Mandate suit could be argued in front of the Supreme Court as early as March 2012 with a decision as early as June 2012, just 8 months away. And for those a little rusty on our Constitutional Law processes, consider this:

• The Supreme Court can decide not to hear the case. There are no laws or rules which state which cases the Supreme Court hears. Generally though, they tend to hear issues on which there are inconsistent lower court decisions and/or would have great impact on the country;

• The Supreme Court could hear the case, and rule that the Individual Mandate is unconstitutional and that the rest of the law is therefore thrown out;

• The Supreme Court could hear the case, and rule that the Individual Mandate is unconstitutional and that the rest of the law is not thrown out even though there is no Severability clause;

• The Supreme Court could rule that the Individual Mandate is Constitutional and leave the balance of the law intact as well; and

• The Supreme Court could hear the case and remand it back to a lower court to make the decision.

Very few people believe the Supreme Court will not hear the bill and very few believe that if they do they will send it back to a lower court. Many believe the court is evenly divided, 4 yes, 4 no, and one undecided. Whatever plays out, please keep a watch and encourage your schools civic teachers to discuss the issue. Whatever the decision will be, it is history in the making.

Thank you for listening.

Health Care Reform Update – Good News – Delay of 2011 Premium Reporting To 2012

This is from a Section 125 TPA we work with (FlexPlan Services, Inc.) and it is well stated. In short, the info you will be interested in is:

1. Beginning with your 2011 Tax Years, employers were going to have to report the full cost of medical insurance premiums to the IRS for each of its employees. THIS HAS BEEN DELAYED UNTIL 2012 TAX YEARS.

By the way, many employers have been misunderstanding this reporting. The reporting of the premiums does not mean they are taxable compensation; the IRS is gathering the info for analytical reasons, we assume, but also as a means to determine who does or does not have health insurance, which will be required in 2014.

2. FSA, HSA, HRAs, beginning 2011, cannot reimburse over the counter medicines, such as aspirin, cold formulas, and sleep aids, etc., without a doctor’s prescriptions. This has not changed and is being restated for convenience.

(By the way, please do not encourage your employees to go to their doctor to get such prescriptions–there needs to be a level of personal financial responsibility of assuming the cost of each person’s health care by that person. In addition, going to the doctor to get such a prescription does what? You guessed it. It increases the benefit plan’s cost because it created a doctor’s visit that otherwise would not have been there.)
Here is FlexPlan’s announcement:
IRS Announces Delay of Health Care Reporting on W-2s
Link to IRS Notice 2010-69 here
Link to draft form W-2 (for informational purposes only—subject to change) here

Link to IRS New Release here

Today The IRS announced that it will delay the requirement for employers to report the cost of health care on employees’ W-2s.

As background Section 9002 of Patient Protection and Affordable Care (“PPACA”) amended section 6051(a) of the Internal Revenue Code to include a new W-2 reporting requirement. That reporting requirement was set to be effective for the 2011 taxable year, meaning that W-2s issued in January of 2012 would need to include the aggregate cost of employer sponsored coverage. This reporting is now optional for 2011 W-2s.

Employer sponsored coverage includes your fully insured group health plan; however, it is unclear what other benefits must be reported. The law appears to exclude FSAs and the reconciliation bill excluded dental and vision plans from the “Cadillac” excise tax—therefore dental and vision benefits may also be excluded. Additional guidance is welcomed as the amount to report is also ambiguous for certain benefits like HRAs. The IRS continues to stress that the amounts reportable are not taxable.

IRS Announces Guidance on Over-the-Counter Medicines and Drugs

For a link to Notice 2010-59 click here http://www.irs.gov/pub/irs-drop/n-10-59.pdf

For a link to the IRS youtube video click here http://www.youtube.com/watch?v=wWN4XF5NuVg

IRS Notice 2010-59 provides guidance on § 9003 of the PPACA, which revises the definition of medical expenses as it relates to over-the-counter (“OTC”) medicines and drugs. As background Section 9003 of PPACA adds new § 106(f) of the Internal Revenue Code, which revised the definition of medical expense for employer-provided accident and health plans, including health flexible spending arrangements (“FSAs”), health reimbursement arrangements (“HRAs”), and health savings accounts (“HSAs”).

OTC Medicines and Drugs Require a Prescription after December 31, 2010

The guidance provides that OTC medicines or drugs purchased after December 31, 2010, may be reimbursed through an FSA only if such OTC medicine or drug is prescribed. This new rule excludes insulin. OTC medicines or drugs purchased without a prescription before January 1, 2011, may be reimbursed pursuant to the terms of the employer’s plan.

The guidance also provides that a “prescription“ is a written or electronic order for a medicine or drug that meets the legal requirements of a prescription in the state in which the medical expense is incurred and that is issued by an individual who is legally authorized to issue a prescription in that state.

Consequently, participants must submit a copy of the prescription (or other document certifying that a prescription was issued) along with their claim information to receive reimbursement for OTC medicines and drugs purchased after December 31, 2010. Flex-Plan will honor the prescription for one year from the date the prescription was issued. If no date is provided we will honor the prescription for one year beginning on the date received by Flex-Plan.

To assist participants, we have updated our Letter-of-Medical Necessity (“LMN”) to include options for health care providers to certify that a prescription has been issued. The updated LMN is now available on our Participant Form Page. Participants should know that they will not be permitted to make election changes due this change in the law.

BennyTM Card Changes

The benefits industry is gearing up for this significant change effective January 1, 2011. The list of eligible expenses, provided to merchants by the non-profit group SIGIS, has been updated and will be released on December 15, 2010. IRS guidance gives merchants until January 15, 2011, to update their systems to comply with the new rules. If your plan provides access to the BennyTM Card, card functionality will change. Employers and participants should anticipate that cards will not function when purchasing OTC medicines and drugs as of January 1, 2011.

What Items are Medicines or Drugs?

Medicines and drugs include the items listed below. Keep in mind that OTC medicines and drugs purchased after December 31, 2010, are still reimbursable; however, new rules require an additional step by participants before reimbursement will be made—participants must submit or have on file with Flex-Plan a prescription for the OTC item or an LMN certifying the prescription exists.

Items Requiring a Prescription after January 1, 2011

• Acid Controllers
• Allergy & Sinus medicine Antibiotics
• Anti-Gas Products
• Anti-Parasitic Treatments
• Cold Sore Remedies
• Digestive Aids
• Hemorrhoidal Preps
• Motion Sickness
• Respiratory Treatments
• Stomach Remedies
• Anti-Diarrheals
• Anti-Itch & Insect Bite
• Baby Rash Ointments/Creams
• Cough, Cold & Flu
• Feminine Anti-Fungal/Anti-Itch
• Laxatives
• Pain Relievers
• Sleep Aids & Sedatives

Keep in mind that these rules do not apply to items that are not OTC medicines or drugs, including equipment such as crutches, or supplies such as bandages, saline solution, reading glasses and diagnostic devices such as blood sugar test kits.

Changes to the Tax Treatment of Adult Children Permits Reimbursement of Adult Children Expenses

Link to IRS Notice 2010-38 here

Health care reform expanded the definition of “dependent” for purposes of tax-free health coverage. This change means that participants can immediately receive reimbursement for expenses incurred by Adult Children from their Health Care Flexible Spending Arrangement (“FSA”) or Health Reimbursement Arrangement (“HRA”) for expenses incurred on or after March 30, 2010.

Adult Child includes children, stepchildren, adopted children and eligible foster children who do not reach age 27 within the relevant taxable year. Under prior law expenses of an Adult Child could not be reimbursed from a parent’s FSA unless that person met the definition of “qualifying child” or “qualifying relative” (see IRS Publication 501).

Keep in mind that the restrictions are limited—yet tricky. Participants may not be reimbursed expenses incurred by the child in the year in which the child turns 27. For example, assume the adult child is 26 today and will turn 27 on November 13, 2010. Your employee cannot be reimbursed expenses incurred by that child during the entire 2010 taxable year (unless they otherwise meet the definitions in publication 501).

We will be communicating this information to participants contemporaneous with the OTC communications listed above.

Health Care Reform Limits Health FSA to $2500 effective January 1, 2013

Now is the time to increase your FSA maximum! Section 9005 of the Patient Protection and Affordable Care Act (“PPACA”) limits the amount employees can set aside in their Health Care FSA. In the past employers could set any Health Care FSA maximum—limits were self imposed with origins in nondiscrimination testing or reducing risk of loss. Effective January 1, 2013, PPACA will limit the amount participants can allocate toward their Health Care FSAs to $2500.

This rule sounds similar to the Day Care FSA but functions in a very different way. The new rule only limits employee contributions, therefore employers can “seed” or “fund” above the $2500 employee contribution limit. For example, an employer could match employee’s contributions of $2500 ($2500 from the employer and $2500 from the employee with a maximum total benefit of $5000).

Although the employer and employee could each contribute $2500 for a maximum benefit of $5000, Flex-Plan recommends that employers simply reduce their total Plan maximum to $2500 to avoid confusion and ensure that no employee exceeds the maximum as the penalties of exceeding the maximum are significant.

The new law states that, “such benefit shall not be treated as a qualified benefit unless the cafeteria plan provides that an employee may not elect for any taxable year to have salary reduction contributions in excess of $2,500 made to such arrangement.’’ Translation: if any employee contributes more than the $2500 threshold the entire plan could lose its pre-tax status. Of course, more guidance is welcomed.

Tell Us What You Think
Tell us what you think. Is this good news to your company or simply one more tidbit of info that you need to digest, implement, and then file?
CAREY Benefit Associates and Chase Carey has been helping people and employers for more than 20 years to reduce the cost of employee benefits. Please give us a call at 770.751.6460. You want your benefits to operate seamlessly in the background, providing good value but no distraction. And we want the same thing for you and your business.

We help businesses and individuals save significantly on their insurance and benefit costs. Have you gotten a recent rate increase or would like to see if you can save on your health and life insurance costs? Businesses can contact us at Info@CareyBenefits.com and individuals can run rates using our industry leading Rate Shopping Cart at http://www.careybenefits.com/apply.php.

Grandfathering – Don’t Let it Confuse You To Death!

Health Care Reform over the next two years will be taking “baby steps”, at least for now. The major changes are scheduled for 2013 and 2014.

One of the provisions/option points was on September 23, 2010. There is an option to Grandfather or not to Grandfather your plans. The short story is, don’t worry about it and there is nothing you need to do. The insurance companies will be making this decision for you and the decision will be to not Grandfather. And that is a good thing.

What is Grandfathering?

1. First off, it only applies to very large groups for the most part (those that can customize their plans and provisions), which usually means groups with 500 or more employees.

2. For groups choosing Grandfathering, it allows them to bypass a few relatively minor adjustments to their plans for about a year or two. If a group has a choice and chooses Grandfathering they will delay when certain improvements to their medical benefits are made. These are improvements you and your employees both want (better payment for preventive services and removal of dollar caps for many benefit classes, now grouped together as “Essential Benefits”). These improvements might add about 1%, +/- to your premium.

3. For groups choosing Grandfathering, they will be subject to increased reporting and documentation requirements, and if your business is like most businesses these days, you and your employees have enough to do already.

Tell Us What You Think
Tell us what you think. Is your company trying to get Grand Fathered status or are they moving on and making the change?

CAREY Benefit Associates and Chase Carey has been helping people and employers for more than 20 years to reduce the cost and the persistence of illness. Please give us a call Just give us a call at 770.751.6460. You want your benefits to operate seamlessly in the background, providing good value but no distraction. And we want the same thing for you and your business.

We help businesses and individuals save up to 60% on their insurance and benefit costs. Have you gotten a recent rate increase or would like to see if you can save on your health and life insurance costs? Businesses can contact us at Info@CareyBenefits.com and individuals can run rates using our industry leading Rate Shopping Cart at http://www.careybenefits.com/apply.php.

Agencies Publish Guidance Regarding “Grandfathered” Health Plans (Fisher & Phillips, 6/23/2010)

On June 17, 2010, the Internal Revenue Service (IRS), Department of Labor (DOL) and Department of Health and Human Services (HHS) jointly issued interim final regulations regarding a group health plan’s status as a “grandfathered health plan” (i.e., one in existence on March 23, 2010) under provisions of the recent healthcare reform legislation. This legislation creates a multitude of new requirements for group health plans ranging from the minimum level of benefits that must be provided to dictating which individuals must be offered coverage under a plan.
However, various provisions of the new laws either do not apply at all or have extended compliance deadlines for grandfathered plans. The interim regulations help explain what changes a group health plan that was in existence on March 23, 2010 may make to its plan terms without losing its status as a grandfathered plan.
The regulations are designed to take into account reasonable changes routinely made by plans or insurance issuers without the plan or health insurance coverage losing its grandfathered status, so that individuals may retain the ability to remain enrolled in the coverage they had on March 23, 2010. As such, plans and issuers are generally permitted to make voluntary changes to increase benefits, to conform to required legal changes and to voluntarily adopt other provisions of the new healthcare reform laws that the plans, as grandfathered plans, would not otherwise be required to adopt. A group health plan’s status as a grandfathered health plan also is not affected by new enrollees enrolling in the plan after March 23, 2010.
Changes That Will Cause A Plan To Lose Grandfathered Status
A plan will lose its grandfathered plan status if changes are made to the plan’s coverage that significantly decrease the benefits, materially increase cost sharing by participants in ways that might discourage covered individuals from seeking needed treatment, or substantially increase the cost of coverage paid by participants. Specifically, the following changes will cause a health plan to lose its grandfathered status:
• increasing non-fixed amount cost sharing requirements (such as increasing an employee’s portion of all costs from 20% to 25%);
• increasing fixed-amount co-payments by an amount that exceeds the greater of (i) a percentage that is more than 15% plus the amount of medical inflation above the levels in effect on March 23, 2010 or (ii) $5 increased by medical inflation above the levels in effect on March 23, 2010;
• increasing fixed-amount cost sharing payments other than copayments (such as deductibles and out-of-pocket limits) by a percentage that is more than 15% plus the amount of medical inflation (set by the DOL using the overall medical care component of the Consumer Price Index for All Urban Consumers, unadjusted) above the copayment levels in effect on March 23, 2010; or
• decreasing the employer contribution rate by more than 5% below the contribution rate in effect on March 23, 2010. The “contribution rate” for this purpose is defined as the amount of contributions made by an employer compared to the total cost of coverage, expressed as a percentage. This rule applies to all tiers of coverage.
In addition, changing policies (or insurance carriers) will cause a plan to lose grandfathered status, and the elimination of all or substantially all benefits to diagnose or treat a particular condition will cause a plan to cease to be grandfathered. The elimination of benefits for any necessary element to diagnose or treat a condition is considered the elimination of all or substantially all benefits to diagnose or treat a particular condition.
The regulations provide that if the principal purpose of a corporate merger, acquisition or similar business restructuring is to cover new individuals under a recipient grandfathered health plan or if a recipient plan is different enough from a transferor plan to be considered a change that would cause the transferor plan to lose its grandfathered status if the recipient plan terms were considered to be an amendment to the transferor plan, then the recipient plan will cease to be a grandfathered health plan.
Disclosure Of Grandfather Status Required
In order to maintain grandfathered status, a plan must include a statement in any plan materials provided to participants and beneficiaries describing the benefits provided under the plan (such as a summary plan description, or SPD) that the plan believes it is a grandfathered health plan. This statement must include contact information for questions and complaints. The new regulations provide model language for this disclosure statement.
The regulations also require that a plan maintain records documenting the plan or policy terms in connection with the coverage in effect on March 23, 2010 to verify the plan’s continued status as a grandfathered health plan. Such records must be made available for examination upon request.
The Importance Of Grandfather Status
Every plan, eventually, whether it is fully-insured or self-insured, will lose its grandfathered status. Something as basic as changing insurance carriers will cause a fully-insured plan to lose its grandfathered status. Paying fewer claims during a plan year could cause an unfunded self-insured plan to lose its grandfathered status. Since most plans will lose their grandfather status eventually, it is useful to focus on why a plan sponsor might want to retain grandfathered status at all. Why not just embrace non-grandfathered status and its requirements now to gain the most flexibility for ongoing plan design?
One healthcare reform change – the extension of coverage to children under age 26 – provides for an extended compliance date for grandfathered plans. Non-grandfathered plans must extend coverage to dependents under age 26 (regardless of student, marital or financial status) as of the first day of the first plan year that begins on or after September 23, 1010. Grandfathered plans must fully comply with this rule beginning in 2014. But before 2014 grandfathered plans do not have to extend coverage to a dependent if the dependent has access to medical coverage under the dependent’s employer’s group health plan.
Many employers may find this exception difficult to administer and therefore decide to offer coverage to all dependents under age 26 at the beginning of their next plan year even though they could take advantage of the exception for grandfathered plans. For plans that do want to take advantage of the exception, maintaining grandfathered status is important. For those that do not, maintaining grandfathered status may be less important.
Healthcare reform changes that will never apply to grandfathered plans include some of the changes with near-term effective dates: 1) the requirement to install an external review process; 2) mandatory 100% coverage of preventive care services (to be defined, but will most likely include immunizations, mammograms, pap smears, etc.); 3) greater access to emergency services (removal of increased cost sharing for out-of-network emergency services); 4) participants’ freedom to choose any network doctor as their primary care provider (such as a pediatrician or OB/GYN); and 5) most significantly, the application of the nondiscrimination rules of Internal Revenue Code section 105(h) to fully-insured plans (these rules already apply to self-insured plans).
Many plans already provide some of these new coverage mandates, such as 100% coverage of most preventive services. Accordingly, it could be that for most employers that sponsor fully-insured plans, the importance of maintaining grandfathered status will come down to the impact of having to apply the 105(h) nondiscrimination rules to their plans. These rules require that a plan not discriminate in favor of “highly-compensated individuals” with regard to both contributions and benefits. For purposes of these rules, a “highly-compensated individual” is an employee who 1) is one of the 5 highest-paid officers, 2) owns more than 10% of the value of the employer’s stock or 3) is among the highest 25% of employees ranked by pay. Accordingly, roughly 25% of employees (including most closely-related domestic affiliates) will be classified as “highly compensated” under this definition, regardless of how much compensation they earn.
Having different waiting periods for different classes of employees or contributing different amounts of employer subsidies towards premiums for different classes of employees could cause a plan to fail its annual 105(h) nondiscrimination test. Also, a plan with two or more benefit options that do not have substantially the same benefits could fail nondiscrimination testing if the highly-compensated individuals tend to elect the benefit option with the better benefit and the non-highly-compensated individuals elect the other option. If any of these circumstances apply to a plan, compliance with the 105(h) nondiscrimination rules could have a significant impact.
Summary
Before getting overwhelmed with the restrictions on maintaining grandfathered plan status, it’s important to take a step back and evaluate the relative benefits of such status. In many cases, the only significant upside to grandfathered status may be the ability to avoid the 105(h) nondiscrimination rules. If this is not important to you, then the restrictions of maintaining grandfathered status may be more hassle than they are worth. But if you wish to avoid the 105(h) nondiscrimination rules or any of the other rules that apply to non-grandfathered plans, then it will be important to ensure that any future changes to your plan are within the parameters set by the new interim regulations.
If you need assistance in evaluating the grandfathered plan issue or any other aspect of healthcare reform, please contact one of the attorneys in the Employee Benefits Practice Group at Fisher & Phillips.
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This Legal Alert presents an overview of complex new regulations. It is not intended to be, and should not be construed as, legal advice for any specific fact situation.

Early Retiree Reinsurance Program Application Now Available (from BCBSGA)

As many of you know, the health care legislation enacted by Congress and signed into law by President Barack Obama on March 23, 2010, requires the U.S. Department of Health and Human Services (HHS) to establish an early retiree reinsurance program (ERRP), which must be operational within 90 days after enactment.

Recently, HHS released interim final rules relating to the Early Retiree Reinsurance Program and called for a 30-day public comment. This week, HHS published the official ERRP application, official application instructions and application submission “dos and don’ts” (including the address for submitting an application). All of these documents may be accessed through the following link: http://www.hhs.gov/ociio/regulations/index.html#early_retiree

In general, the program provides $5 billion in financial assistance to employers to offset a portion of the costs of providing health coverage for early retirees, ages 55-64, who are not yet eligible for Medicare and their spouses, surviving spouses and dependents.

The interim final rule was effective on June 1, 2010. Applications are expected to be accepted and processed by HHS on a first-come, first-served basis. The program will end on January 1, 2014, or when the $5 billion Congress allocated through the legislation is exhausted.

Carey Benefits Earns Green Certification

Chase Carey is a cut above more insurance agents in many ways. He is pro-active, a community leader, and an absolute professional. Chase is the owner.operator of Caery Benefits, and he recently worked with Damon Sgrignoli to earn a Green business certification from the Green Business League.
Chase Carey has taken steps to be a quality business as well as a Green business. It started with changing the old ways of pesticides, cleaning products, and recycling the trash. The office has switched to energy efficient lights, placed timers on certain appliances, and added insulation to cut energy costs.
Water use is being cut, paper use is transferred to paperless systems, and ink and toner purchase are from recycled ink services.
CAREY Benefit Associates believes that Benefits and Insurance are important factors in Employees choosing which Employer and in Individuals protecting their families’ health and income. Because of that, we offer a broad variety of Benefits and Insurance from the top carriers. Why the top carriers? Because they have the depth to stay the course, which you and your family deserves.
This company also believes in the betterment of the community. Going Green is only a token effort for many businesses, but all members of the Green Business League undergo a thorough audit every year to continually improve their Green practices and reduce their carbon footprint.
The Green Business League is pleased to grant the Chase Carey Benefits office the silver level Green Business Certification.
Please check out this link:
http://greenbusinessleague.com/blog/carey-benefits