The Department of Health and Human Services (HHS) has issued three new Q&As updating its guidance on the medical loss ratio (MLR) rules. Although the guidance is directed primarily at insurance carriers, it provides some helpful information to employers and participants in insured group health plan about new notices they may be receiving in the near future.

• For plans that will be receiving MLR rebates, the carrier must provide a rebate notice to all "subscribers," which includes all current plan participants. Those participants should be receiving notices on or before August 1, 2012.
• For insurers that meet the MLR standard, a notice to that effect must be provided to all plan participants with the first "plan document" distributed on or after July 1, 2012. The guidance clarifies that the notice may be provided separately (i.e., distributed before any plan documents are distributed). The guidance also provides examples of documents that constitute "plan documents" for this purpose.

For our prior coverage of MLR rebates and the important considerations that apply under ERISA if and when a rebate is received, click here.

Now that the dust has settled some on the Supreme Court's decisions regarding health care reform (see our prior coverage here and here), it's time to begin thinking about some of the new mandates that are coming online in the next few weeks and months. First up: coverage of women's preventive-health-care services by non-grandfathered plans, which may be required as soon as August 1, 2012.

Although some of the regulatory guidelines on this mandate were released as recently as February and March of this year, it seems like an eternity ago with all that's happened in the meantime. So here's a refresher.

• For plan years beginning on or after August 1, 2012, non-grandfathered plans are required to cover women's preventive-health-care services without cost sharing, as part of the plan's general coverage of preventive-care services.
• The services required to be covered are based on guidelines issued by the Health Resources and Services Administration (HRSA). They include: (1) well-woman visits; (2) screening for gestational diabetes; (3) breastfeeding support, supplies, and counseling; and (4) all FDA-approved contraceptive methods and sterilization procedures.
• Certain religious employers are exempt from the requirement to cover contraceptive services, but the exemption is a narrow one. For this purpose a religious employer is one that (1) has the inculcation of religious values as its purpose; (2) primarily employs persons who share its religious tenets; (3) primarily serves persons who share its religious tenets; and (4) is a non-profit organization that is exempt from the requirement      Continue Reading...

In its much-anticipated decision yesterday, the Supreme Court upheld the Patient Protection and Affordable Care Act (PPACA), putting an end to the constitutional challenges that have threatened the law since the day it was enacted.

The manner in which the law was upheld came as a surprise to many. Rather than conclude that the law reflected a constitutional exercise of Congress's commerce power, the Court seized upon the government's back-up argument and upheld the law as a valid exercise of Congress's taxing power. And in a further twist, it was Chief Justice John Roberts, generally viewed as a political conservative, who cast the decisive vote, siding with four justices who are generally considered political liberals.

Although the legal underpinnings of the Court’s decision are somewhat complex, the bottom line for employers is clear: Nothing has changed. The law that went into effect March 23, 2010, and has been in effect ever since, remains intact.

In theory, this means employers should not need to do anything more than maintain business as usual, continuing their efforts to implement the law as its provisions become effective.  But in reality many employers will have been sitting on the sidelines, waiting to see how the case would be resolved.  Those employers may now find themselves playing catch-up.

In the short term, employers need to be preparing to comply with new measures that are coming into effect in the next few months—things like the uniform summary of benefits and coverage (SBC), the PCORI trust-fund taxes, W-2 reporting, and the $2,500      Continue Reading...

The U.S. House of Representatives approved a bill late last week that would partially repeal the use-it-or-lose-it rule for flexible spending account plans. The change would allow for a taxable distribution of up to $500 in unspent employee contributions remaining at the end of the plan year. Legislative attention to this somewhat obscure provision of the cafeteria-plan rules comes just days after the IRS separately announced it was evaluating whether the limitation should continue.

The bill would also repeal the PPACA restriction on reimbursement of over-the-counter drugs through health FSAs and HSAs. 

The Senate has yet to vote, but there appears to be some bipartisan support for the bill, primarily among senators -- including Democrat Al Franken of Minnesota -- who favor a separate provision that would repeal a tax on medical-device manufacturers.

The U.S. Department of Labor (DOL) has released a set of FAQs on the obligations of group health plans with respect to mental health and substance abuse benefits. The FAQs specifically discuss changes made by the Mental Health Parity and Addiction Equity Act of 2008.

The FAQs serve as a good reminder about these rules. Among other things, group health plans are prohibited from imposing visit limits on mental health and substance abuse benefits that are more restrictive than visit limits on medical/surgical benefits. Plans also may not use a separate deductible for mental health and substance abuse benefits and may not operate in a way that treats mental health and substance abuse benefits less favorably than other benefits.

The IRS issued Notice 2012-40 yesterday (click here for the notice), providing a number of important clarifications regarding the $2,500 cap on health FSA contributions that applies beginning in 2013.  The most surprising development is the IRS's interpretation that the cap applies on a plan-year basis, rather than a calendar-year basis.  This is important for employers with fiscal-year plans.  They will be able to wait until the first plan year beginning after December 31, 2012, to implement the cap, rather than using the transition rule or early implementation of the cap to ensure contributions during the 2013 calendar year do not exceed the cap, as was previously thought necessary.

Other key guidance points include:

• Clarification that unspent amounts carried over during a grace period will not count against the cap for the plan year in which the grace period occurs.
• Confirmation that the cap only applies to employee salary-reduction contributions to a health FSA.  Employer contributions (e.g., flex credits) and salary-reduction contributions to dependent-care FSAs do not count, nor do amounts credited to HSAs or HRAs.

In addition to interpretive guidance, the Notice provides a limited correction rule that will allow fixing some good-faith mistakes.  If a mistaken election to contribute more than $2,500 to a health FSA in a year is properly corrected, the error will not jeopardize the plan's status as a qualifying cafeteria plan. 

Of academic interest, the Notice also requests comments on the use-it-or-lose-it rule.  The implication is that the $2,500 cap may be low enough that concerns about excessive use of      Continue Reading...

The Department of Labor (DOL) recently posted a new set of FAQs (click to here to read the FAQ) to its website providing additional guidance on the requirement under health care reform to give health plan participants a four page uniform summary of benefits and coverage (SBC).  Some highlights include:

• A new electronic-distribution safe harbor that specifically allows for distribution of the SBC with online enrollment materials.
• A transition rule for arrangements that are partly insured and partly self-funded (e.g., an insured high deductible plan with integrated self-insured HRA) that allows using two or more partial SBCs for the first year of applicability.
• A non-enforcement rule for expatriate coverage during the first year of applicability, effectively suspending the requirement to provide an SBC for expatriate coverage during the first year.
• Assurance that penalties will not be imposed during the first year of applicability on employers "that are working diligently and in good faith to comply" with the rules.

The detailed requirements for preparation and distribution of the SBC are described in final regulations issued by the IRS, DOL, and HHS earlier this year.  (Click here to see the final regulation.)  The requirement to distribute an SBC generally applies to the first open enrollment period beginning on or after September 23, 2012.