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5500 Preparer's Manual for 2012 Plan Years
The premier resource in the field of Form 5500 preparation, 5500 Preparer's Manual will help you handle the required annual Form 5500 filings for both pension benefits and welfare benefit plans.
from Spencer’s Benefits Reports: On December 22, the Department of Labor’s Employee Benefit Security Administration (EBSA), the Department of Health and Human Services (HHS), and the Treasury Department (the Departments) released the fifth set of frequently asked questions about the Patient Protection and Affordable Care Act (ACA). The FAQs also addressed some issues related to the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act (MHPAEA).
Preventive Care Benefits. The ACA generally requires group health plans and health insurance issuers that are not grandfathered to provide coverage for recommended preventive services without cost-sharing. In the FAQs, the Departments indicated that they plan to develop guidelines to permit health insurance plans or issuers to utilize value-based insurance designs (VBIDs). VBIDs are health plan designs that provide incentives for enrollees to utilize higher value and/or higher quality services or venues of care.
For example, under the ACA, a group health plan is permitted to provide a free colorectal cancer preventive service at an in-network ambulatory surgery center, while requiring a $250 copayment for the same preventive service at an in-network outpatient hospital setting. The Departments noted that the ACA allows plans to use reasonable medical management techniques to control costs and to use VBID. By using the described plan design, the health plan is using reasonable medical managed techniques to steer patients toward a particular high-value setting.
Dependent Coverage. The Departments noted that under the ACA, a plan is allowed to charge a copayment for physician office visits that do not constitute preventive services to individuals age 19 and older, including employees, spouses, and dependent children, but waives the copayment for those under age 19. Under the ACA, the terms of a group health plan or health insurance coverage providing dependent coverage of children cannot vary based on age (except for children who are age 26 or older). While this generally prohibits distinctions based upon age in dependent coverage of children, the ACA does not prohibit distinctions based upon age that apply to all coverage under the plan, including coverage for employees and spouses as well as dependent children.
Grandfathered Plans. A health plan that includes out-of-pocket spending limits that are based on a formula (e.g., a fixed percentage of an employee’s prior year compensation) will not lose its grandfathered status if the formula remains the same as that which was effect on March 23, 2010. In this scenario, an individual who experienced a change in earnings could experience a change to the out-of-pocket limits that exceed the thresholds allowed under the ACA to remain a grandfathered plan. However, this cost-sharing arrangement will not cause a plan to relinquish grandfathered status unless the formula is changed.
Mental Health Parity
The MHPAEA requires that the financial requirements and treatment limitations imposed on mental health and substance use disorder benefits cannot be more restrictive than the predominant financial requirements and treatment limitations that apply to substantially all medical and surgical benefits. For group health plans, the MHPAEA is effective for plan years beginning after Oct. 3, 2009.
Small Employer. In the FAQs, the Departments noted that while changes were made to the definition of “small employer” under the ACA, both ERISA and the Internal Revenue Code continue to define a small employer as one that has 50 or fewer employees. Therefore, this definition still applies, and group health plans with 50 or fewer employees continue to be exempt from the MHPAEA requirements. The ACA defines a small employers as one that has 100 or fewer employees.
Cost Exemption. The Departments clarified that the MHPAEA contains an increased cost exemption that is available for plans that make changes to comply with the law and incur an increased cost of at least 2% in the first year that MHPAEA applies to the plan or at least 1% in any subsequent plan year. This exemption generally applies to plan years beginning after Oct. 3, 2010. If such a cost is incurred, the plan is exempt for the plan year following the year the cost was incurred. Thus, the exemption lasts one year. After that, the plan is required to comply again; however, if the plan incurs an increased cost of at least 1% in that plan year, the plan could claim the exemption for the following plan year. The Departments noted that plans applying for an exemption must demonstrate that increases in cost are attributable directly to implementation of MHPAEA and not otherwise to occurring trends in utilization and prices, a random claims experience that is unlikely to persist, or seasonal variation typically experienced in claims submission and payment patterns.
For more information, visit http://www.dol.gov/ebsa/faqs/faq-aca5.html.
For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.
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