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Welcome to the first
issue of WHA Financial Solutions' Compliance
Corner. We hope you will find this newsletter to
contain valuable information on timely compliance and regulatory issues.
Each newsletter is archived by date at www.whafs.com.
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Important Guidance on HIPAA Portability Rules and
Supplemental Coverage
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In
December, the Department of Labor's Employee Benefits Security
Administration (EBSA) and the Centers for Medicare and Medicaid Services
(CMS) released guidance in Field Assistance Bulletin No. 2007-04
clarifying whether supplemental health insurance coverage is considered
"excepted" under the Health Insurance Portability and
Accountability Act (HIPAA). Typically, if all benefits under a plan or
coverage are "excepted" benefits, then the plan and any health
insurance coverage under the plan does not have to comply with the health
reform requirements, and the coverage may not qualify as creditable
coverage. The Department will now treat coverage as "similar
supplemental coverage provided to coverage under a group health plan"
within the enforcement safe harbor, if it is a separate policy,
certificate, or contract of insurance and if it satisfies all of the
following requirements:
- Independent of Primary Coverage.
- Supplemental for Gaps in Primary
Coverage.
- Supplemental in Value of Coverage.
- Similar to Medicare Supplemental
Coverage.
Click here to view press release
Click here to view bulletin
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Transitional Relief and
Proposed Regulations on Diversification of Employer Securities
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As
required by the Pension Protection Act of 2006 (PPA), defined
contribution plans that hold publicly traded employer securities must
allow participants to diversify the stock after three years of service.
Additionally, the plan must notify participants in writing of their
diversification rights. IRS Notice 2008-7 provides certain relief until
January 1, 2009 for restrictions that were in place December 18, 2006 and
are related to stable value funds and investments available on a limited
basis. On January 3, 2008, the Internal Revenue Service (IRS) issued
Proposed Regulations which are generally effective January 1, 2009. The
regulations would require a plan to offer participants the opportunity to
diversify at least four times per year with at least 3 investment
options.
Click here to view IRS Notice 2008-7
Click here to view Proposed Regulations
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A More-than-2%
Shareholder of Subchapter S-Corp May Deduct Health Insurance Premiums
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On
December 14, 2007, the IRS issued Notice 2008-1 that explains how and
when a more-than-2% shareholder/employee in a Subchapter S-corporation
may deduct health insurance premiums that are paid or reimbursed by the
corporation under Code § 162 for insurance that constitutes medical care,
if the plan that provides the medical care coverage is "established
by the S corporation." The more-than-2% shareholder/employee of an
S-corporation still can not participate in a cafeteria plan.
Click here for more information
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Diagnostic Procedures May
Be Qualified Medical Expenses Even Without Symptoms or Doctors
Recommendation
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Published
on December 10, 2007, Rev. Rul. 2007-72 rules that amounts paid in three
certain diagnostic procedures qualify as Code Section 213(d) medical care
expenses and may be paid for with health-account dollars (HSA, HRA, FSA),
even when incurred by an individual without symptoms of illness or
without a doctor's recommendation. The ruling includes the following
expenses: (1) an annual physical exam (including a doctor's services and
lab tests); (2) a full-body electronic scan, that examines the internal organs
to identify disease or other abnormalities and serves "no
non-medical function;" and (3) a pregnancy test kit.
Click here for more information
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Mental Health Parity
Extended
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Through
House Bill 3997, Congress recently approved a one year extension to the
mental health parity requirements that were set to expire on December 31,
2007. Until the end of 2008, group health plans must not impose a greater
annual or lifetime maximum for mental health conditions than for medical
conditions.
Click here for more information
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Proposed Regulations
Issued on Fee Disclosure Requirements
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On
December 13, 2007, the EBSA issued proposed regulations that would
require service providers to disclose direct and indirect compensation
and fees to plan fiduciaries. Disclosure would need to be made in the
plan contract and upon material changes. A provider would also be
required to disclose any relationships that may be considered a conflict
of interest. Comments will be accepted on the proposed regulations
through February 11, 2008.
Click here for more information
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Failure to Provide Plan
Notices May Result in Fines Up to $1,000 Per Day
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On
December 19, 2007, the EBSA issued proposed regulations regarding civil
penalties up to $1,000 per day that may be assessed against a plan
administrator that fails to provide certain notices including: a single
employer defined benefit pension plan notifying participants of
limitations on benefits and benefit accruals; a multiemployer pension
plan providing certain documents upon request to participants and other
parties; a multiemployer benefit plan notifying employers of potential
withdrawal liability; and a defined contribution plan with an automatic
contribution arrangement notifying participants of their rights and
obligations. The regulations would also require a plan with an automatic
contribution arrangement to provide notice to newly eligible participants
in addition to an annual notice. Comments will be accepted on the
regulations through February 19, 2008.
Click here for more information
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IRS and Department of
Labor have released updated versions of the following forms: IRS Form
990, IRS Form 8889, IRS Publication 503, 2007 MEWA FORM M-1
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IRS
Form 990 -
which nonprofits, including health care organizations, must file
annually.
Click here to view the 2008 tax year form and a summary
of changes
IRS Form 8889 -
which must be filed by all HSA account holders along with the Form 1040.
Click here to view Form 8889
Click here to view the instructions
IRS Publication 503 (Child
and Dependent Care Expenses) - which explains the
provisions of the dependent care tax credit, which are similar to the
requirements for dependent care assistance program expenses.
Click here for more information
2007 MEWA FORM M-1 -
which multiple employer welfare arrangements (MEWAs) that provide health
benefits must file annually
Click here for more information
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State Updates
Wisconsin
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Insurance
Act 36- 2007 AB 280 provides that as of July 1, 2008, all full-time
covered students who must take a medical leave and are not able to
continue as a full-time student, must continue to be covered by their
health plan until certain circumstances occur.
Click here for more information
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WHA Financial
Solutions, Inc.
800-362-7121
or 608-274-1820
The
information included in WHA Financial Solutions' Compliance Corner is
intended for general information purposes only. This information
does not and is not intended to constitute legal advice. Any
decisions whether to implement these ideas should be made by the reader
in consultation with professional financial, tax, and legal counsel.
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