Did you know..
Cher Bumps 2009-06-24In the past year, there have been a flood of statutory changes or amendments effecting group health plans, cafeteria plans and COBRA . Are your company’s plans and processes up to date? For a quick check, here is a brief summary of a few of the more pervasive changes you should be ready to handle.
Mental Health Parity and Addiction Equity Act –
This law goes into effect for most plans on January 1, 2010. If your health plan covers mental health and substance abuse services, the financial or treatment limitations on those services can be no more restrictive than the financial or treatment limitations on medical or surgical benefits offered in the same plan. The requirement for parity includes such provisions as annual and lifetime benefit limits, copayments, deductibles, and other limits on the duration of treatment such as number of visits or days covered. Plans can still use managed care techniques, such as utilization review, to limit access to benefits. The law doesn’t require a plan to include mental health or substance abuse benefits, but currently over 90% of employer-sponsored plans do include this coverage and would be held liable to ensure their plan complies. Employers with 50 or fewer employees and individually purchased health plans are exempt.
Michelle’s Law –
This is another law (HB 2851) that goes into effect for most plans on January 1, 2010. It requires plans to provide up to one year of extended coverage to college students who would otherwise lose health coverage when they take a medically necessary leave of absence from their full-time, post-secondary education. It is estimated that fewer than 1 percent of students go on medical leaves of absence annually, but the costs for those who do can be significant.
HEART Act –
The Heroes Earnings Assistance and Relief Tax (HEART) Act of 2008 (HR 6801) allows military reservists who are called to active duty the opportunity not to forfeit the money under the “use it or lose it” rules that generally apply to cafeteria benefit plans. The military reservists can receive distributions from unused funds in their health care flexible spending accounts (FSAs). These “qualified reservist distributions” can be made from an FSA without penalties. The law went into effect June 17, 2008, but it is an optional amendment to your company’s cafeteria plan. The HEART act, among other things, also made permanent a provision in the Internal Revenue Code that permits active duty reservists to withdraw money from their retirement plans without penalties.
By now, I am sure everyone has heard of The American Recovery and Reinvestment Act of 2009 (ARRA) (HR 1), also known as the Stimulus Bill. This Act was intended to aid our faltering economy and includes a 65% federal subsidy for up to 9 months of COBRA for individuals who became eligible for COBRA coverage due to involuntary termination of employment from September 1, 2008 through December 31, 2009. It permits these COBRA individuals to satisfy their COBRA premium by paying only 35% of the premium. Employers are allowed to reduce their payroll taxes to offset the lower premiums paid by the qualified beneficiaries. The act creates a new special election period for those who did not elect COBRA and a new notice requirement to inform individuals about the opportunity to elect COBRA and receive a federal subsidy.
As you can see, changes from our governing sector are coming fast and furious, with no end in sight. Many employers find it difficult not only to keep up with the changes, but more importantly, to decipher the intent and how it will actually affect their companies, their employee and their bottom line.
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