April 2009

From the editors of CCH's BENE and BAN products, here are hot topics from recent Employee Benefits Management Directions newsletters as well as recent explanatory updates in Employee Benefits Management. Also included are recent explanatory updates to the Benefits Answers Now product.

If you have any comments/suggestions concerning the information provided or the format used, we'd like to hear from you. Please contact me at tulay.turan@wolterskluwer.com.

Hot Topics in Employee Benefits Management:

New law will require changes to business associate agreements, company privacy policies, expert warns, Employee Benefits Management Directions newsletter, Issue No. 439, March 10, 2009 – Business associate agreements will probably have to be modified to incorporate provisions of the American Recovery and Reinvestment Act of 2009 (ARRA), which modifies HIPAA rules, especially with regard to the security of protected health information (PHI), according to John L. Barlament, partner, Michael Best & Friedrich, LLP in Milwaukee, WI, speaking at a teleweb conference conducted by the International Foundation of Employee Benefit Plans (IFEBP).

IRS releases information to help employers claim COBRA coverage credit on payroll tax form, Employee Benefits Management Directions newsletter, Issue No. 439, March 10, 2009 – The IRS has released detailed information that will help employers claim credit for the COBRA medical premiums they pay for their former employees. The IRS unveiled new information on the IRS Web site, IRS.gov, that includes an extensive set of questions and answers for employers. In addition, the Web site contains a revised version of the quarterly payroll tax return that employers will use to claim credit for the COBRA medical premiums they pay for their former employees.

Ninth Circuit denies rehearing in San Francisco health care case, Employee Benefits Management Directions newsletter, Issue No. 440, March 24, 2009 – The Ninth Circuit Court of Appeals (CA-9) has denied an en banc rehearing of its three-judge panel’s decision in Golden Gate Restaurant Association v. City and County of San Francisco. On September 30, 2008, the three-judge panel had ruled that San Francisco’s Health Care Security Ordinance, which requires covered employers to make minimum health care expenditures for their employees, was not preempted by ERISA. Golden Gate Restaurant Association states on its website that it will “now finalize the plan to move forward to the U.S. Supreme Court.”

President Obama holds health care summit, focuses on cost cutting measures, Employee Benefits Management Directions newsletter, Issue No. 440, March 24, 2009 – President Obama on March 5 warned that the greatest threat to the U.S. economy is the soaring cost of health care and called on Congress to enact a comprehensive health reform bill by the end of the year. Obama, at a White House forum on health care, brought together approximately 120 lawmakers, health care providers, pharmaceuticals, insurance, consumer, labor and business groups to discuss measures to lower health care costs, improve the quality of health care and expand coverage.

What's New in Employee Benefits Management:

HIPAA rules – As mentioned above, the American Recovery and Reinvestment Act of 2009 made changes to the HIPAA rules. The changes are discussed at ¶10,085 and ¶10,095.

New group health plan notice requirement – The Children’s Health Insurance Program Reauthorization Act of 2009 (P.L. 111-3) added a notice requirement for group health plans. This provision is discussed at ¶10,210.

COBRA subsidy – The American Recovery and Reinvestment Act of 2009 provides a COBRA premium subsidy for assistance eligible individuals. The law also adds notice and election requirements. These new provisions are discussed at ¶14,040, ¶14,060 and ¶14,070.

GINA regulations – The Equal Employment Opportunity Commission has issued proposed regulations to implement Title II of the Genetic Nondiscrimination Act of 2008 (GINA), which protects job applicants, current and former employees, labor union members, and apprentices and trainees from discrimination based on their genetic information. For the proposed regulations, see ¶700,060.

Final regulations on automatic contribution arrangements – The IRS has issued final regulations concerning automatic contribution arrangements in 401(k) plans and other eligible plans that reflect provisions of the Pension Protection Act of 2006 and the Worker, Retiree, and Employer Recovery Act of 2008. The regulations start at ¶400,519A.

What's New in Benefits Answers Now (BAN):

President signs stimulus bill with COBRA provisions
On February 17, President Obama signed the American Recovery and Reinvestment Act of 2009 (H.R. 1) into law. Both the House and Senate had approved the measure on February 13. The law includes, among other provisions, a temporary COBRA premium subsidy and a transit provision. The measure provides a temporary 65% subsidy for COBRA continuation premiums for up to nine months for workers (and their families) who fall within certain income thresholds and were involuntarily terminated on or after September 1, 2008 and before January 1, 2010. The federal government will reimburse employers for the amount of the subsidy. The provision is generally effective for premiums for months of coverage beginning on or after the date of enactment. Find out more about the temporary COBRA subsidy at ¶22,390 and ¶22,515.

New law will require changes to business associate agreements, company privacy policies, expert warns
Business associate agreements will probably have to be modified to incorporate provisions of the American Recovery and Reinvestment Act of 2009 (ARRA), which modifies HIPAA rules, especially with regard to the security of protected health information (PHI), according to John L. Barlament, partner, Michael Best & Friedrich, LLP in Milwaukee, WI. Barlament warned of significantly increased penalties for violations of ARRA privacy rules and of an increasing number of audits by the Department of Health and Human Services (HHS). See the discussion at ¶22,087 for more information about the changes to the PHI provisions in HIPAA.

EBSA releases guidance on defined benefit annual funding notice requirements under PPA
The Employee Benefits Security Administration (EBSA) has issued a Field Assistance Bulletin clarifying defined benefit plan disclosure requirement changes mandated by the Pension Protection Act of 2006 (PPA; P.L. 109-280). The FAB addresses a need for interim guidance pending the adoption of regulations or other guidance under ERISA §101(f) by announcing a "good faith" enforcement policy. The FAB also includes technical assistance in the form of questions and answers and several model annual funding notices. According to the Labor Department, an estimated 1,500 multiemployer plans covering approximately 10 million participants and beneficiaries plus 29,000 single-employer plans covering approximately 33.8 million participants and beneficiaries are subject to the new disclosure requirements. Many of these plans must furnish their first annual funding notice under the PPA no later than April 30, 2009. More information about the annual funding notices can be found at ¶14,220.

Quasi-marital relationship provides evidence of marital property rights sufficient for QDRO
A woman who lived for thirty years with someone in a quasi-marital relationship was entitled to 50% of the pension benefits payable to her co-habitant from a collectively bargained multi-employer plan, as per a qualified domestic relations order (QDRO) issued by a Washington county court, because the QDRO related to marital property rights and because she qualified as an alternate payee, according to the U.S. Court of Appeals for the Ninth Circuit (CA-9). She was qualified as an alternate payee, said the court, because she was a dependent according to the definition found in ERISA. To learn more about the case, see the discussion at ¶12,920.

Defined contribution retirement plans increasingly seen as primary type for employees
Workers increasingly see defined contribution plans (401(k)-type) as their primary retirement plan type, with about two-thirds of workers identifying these as their most important plan, according to research released on February 9 by the nonpartisan Employee Benefit Research Institute (EBRI). Overall, 67.1 percent of participants in a retirement plan had a defined contribution (401(k)-type) plan as their primary plan in 2006; this is more than double the level found in 1988. As defined contribution plans have become more important --and as defined benefit (pension plans continue to fade in the private sector --it is likely that workers' contributions to these plans will need to grow even faster if they expect to be able to afford to maintain their current lifestyle in retirement, writes Craig Copeland, EBRI senior research associate and author of the study, which appears in the February 2009 EBRI Notes. To find out more about 401(k) plans, see ¶10,650.