67. Our plan currently provides coverage for preventive services but we apply copays and deductibles to those services. I’ve heard we will have to eliminate these cost-sharing provisions. Is that true?

The Act does require new plans to provide first dollar coverage to certain specified preventive services and immunizations for plan years beginning on or after September 23, 2010, but this requirement does not apply to grandfathered plans.

68. We may have one plan option that is not grandfathered. What are the preventive services that the plan will have to cover without cost-sharing?

• Evidence-based items or services that have a rating of A or B in the current recommendations of the United States Preventive Services Task Force;

• Immunizations for routine use in children, adolescents, and adults as recommended by the Advisory Committee on Immunization Practices of the Centers for Disease Control;

• With respect to infants, children, and adolescents, evidence-informed preventive care and screenings provided for in comprehensive guidelines supported by the Health Resources and Services Administration; and

• With respect to women, evidence-informed preventive care and screenings provided for in comprehensive guidelines supported by the Health Resources and Services Administration.

A list of the required services can be found on the HHS website at: http://www.healthcare.gov/law/about/provisions/services/lists.html

69. Does our non-grandfathered option have to provide 100% coverage for both in-network and out-of network services on the list?

No. You are only required to eliminate cost sharing provisions on in-network providers. You are permitted to impose cost-sharing on covered preventive services that are delivered by out-of-network providers.

70. Our non-grandfathered option has a limit on well baby visits per year. Can we keep that or other limits on the applicable preventive services?

Yes. Nothing in the regulations prevents you from using reasonable methods to determine the frequency, method, treatment, or setting for an item or service on the list as long as it doesn’t conflict with specific recommendations in the guidelines.

71. What if an employee goes to their doctor for an office visit but also gets one of the recommended preventive services at the same time. Can we still apply a copay to the office visit charge?

It will depend on the situation:

• If a preventive service is billed separately from the office visit and the primary purpose of the visit is not for preventive purposes, then you may impose cost-sharing requirements with respect to the office visit.

• If a preventive service is not billed separately from the office visit and the primary purpose of the office visit is for preventive services, then you may not impose cost-sharing requirements with respect to the office visit.

• If a preventive service is not billed separate from the office visit and the primary purpose of the office visit is not for preventive purposes, then you may impose cost-sharing requirements with respect to the office visit.

72. What happens when there are changes to the recommendations or guidelines for covered preventive services?

If something new is added to the recommendations or guidelines, your plan will not have to cover it until the plan year that begins on or after one year after the date the recommendation or guideline is issued.

If a recommendation or guideline is dropped, your plan will not be required to provide coverage after the recommendation or guideline is dropped.

73. What are the new claims and appeals processes and how will they apply?

Starting with the first plan year beginning on or after September 23, 2010, both insured and self-funded plans that are not grandfathered must implement new claims and appeal procedures and an external review process. Nongrandfathered plans (and insurers) will have to incorporate the current ERISA claims and appeals requirements and update them based on additional changes in PPACA. In addition, adverse benefit determinations will be subject to an external review process.

74. Our plan is a governmental plan that is not subject to ERISA and does not follow the current ERISA guidelines. Will we have to update our internal claim and appeal process?

Yes, if your plan loses its grandfathered status. Because PPACA applies to all group health plans, you would have to incorporate the current ERISA claims and appeals processes as updated by PPACA for your plan.

This same rule will apply for church plans that are not currently subject to the ERISA claims and appeals process.

75. What changes did PPACA make to ERISA’s current claims and appeals rules?

There were really six changes made:

1. An adverse benefit determination now includes any rescission of coverage;

2. Urgent care benefit determinations must be made as soon as possible, but not later than 24 hours (reduced from 72 hours) after the receipt of the claim by the plan;

3. The plan must provide, free of charge, any new or additional evidence or rationale used by the plan in connection with the claim determination. This evidence must be provided in advance to give the participant a reasonable opportunity to respond prior to the review date;

4. The plan must ensure that all claims and appeals are reviewed in a manner designed to ensure the independence and impartiality of the persons involved in making the decision;

5. The plan must provide notices of adverse benefit determinations to enrollees in a culturally and linguistically appropriate manner. Moreover, additional content requirements apply for these notices to identify the claim involved, including, for example, the diagnosis, treatment, and denial codes and contact information for any office of health insurance consumer assistance;

6. The regulations emphasize completely following a full and fair process of review. Accordingly, failure to strictly adhere to the review requirements will allow the participant to initiate an external review and pursue any available remedies under applicable law, such as judicial review.

76. If my plan is insured, will I have to do anything?

No. The claims and appeals regulations also apply to insurers and it will be up to the insurer to provide claims and appeals processes that comply with the requirements.

77. How will the external review process apply to my plan?

Your plan will have to comply with either a State external review process or a new Federal external review process.

If your plan is insured, a State external review process will apply, if the State has a process that complies with minimum standards established under PPACA. If no process exists or the State process does not meet the minimum standards, then the Federal external review process will apply.

For self funded plans, the Federal process will apply in most cases. However, the State process will apply to self funded plans in states where the state’s own external review process is binding on plans such as MEWAs or plans that are not subject to ERISA such as church and governmental plans.

Disclaimer: Staff One, with its ESAC accredited Professional Employer Organization (PEO) business offering, serves as a human resources department for small and medium-sized businesses. By entering into a co-employment relationship with a PEO, companies have access to experienced specialists who can help with many time-consuming activities in areas such as Human Resources Management, Payroll Management (including 940 and 941 filings), Employer Liability Management, Risk and Safety Management and Benefits Management. We share this information, from our partner GBS, with our clients and friends for general informational purposes only. It does not necessarily address all of your specific issues. It should not be construed as, nor is it intended to provide, legal advice. Questions regarding specific issues and application of these rules to your plans should be addressed by your legal counsel.

57. Our plan has no lifetime maximum but it has an annual maximum of $500,000. Will we have to change or eliminate the annual maximum?

Yes. Starting in 2014, plans cannot have annual maximums on essential benefits. For plan years beginning before 1/1/14, you can have an annual maximum on essential benefits provided the limit is no less than:

• $750,000 for a plan year beginning on or after September 23, 2010, but before September 23, 2011,

• $1,125,000 for a plan year beginning on or after September 23, 2011, but before September 23, 2012, and

• $2,000,000 for plan years beginning on or after September 23, 2012, but before January 1, 2014.

58. Our plan has an annual maximum of $10,000 for chiropractic care. Do we have to remove the limit?

Until HHS has provided more guidance on the specifics of what is an essential benefit and whether chiropractic care would fall under one of the categories of essential benefits, it’s not possible to answer this question. Until these regulations are issued, the agencies enforcing PPACA have said they will take into account good faith efforts to comply with a reasonable interpretation of the term “essential health benefits”.

An alternative to having annual dollar maximums might be to replace them with day or visit limits, which are not limited or restricted for chiropractic care at this time.

59. We offer our employees a high deductible health plan combined with a Health Reimbursement Arrangement (HRA). We contribute $1,000 annually to each employee’s HRA. Does the elimination of annual limits mean we have to change our HRA?

No. When HRAs are integrated with other coverage under a group health plan (e.g. with a high deductible plan), and the other coverage is in compliance with all the applicable health insurance reform provisions, the fact that the benefits are limited under the HRA does not cause it to violate PPACA.

60. We have a lot of minimum wage employees who can’t afford our health plan so we offer them a “mini-med” plan that has a $75,000 annual maximum. Will we have to raise that maximum?

Maybe not. The agencies enforcing PPACA have indicated that they are working on a waiver program for certain mini-med plans if complying with this rule would result in a significant decrease in access to benefits or a significant increase in premiums. Stay tuned for more details on this issue.

61. PPACA prohibits “rescissions”. What does this mean and how will it affect our plan?

Rescissions are defined as a cancellation of coverage that has a retroactive effect. Rescissions are prohibited unless the termination is due to fraud, or an intentional misrepresentation of a material fact, and are permitted by the written terms of the plan. Therefore, effective for plan years starting on or after September 23, 2010, your group health plan will not be permitted to terminate coverage retroactively under any circumstances unless the employee performs an act of fraud, or the employee intentionally misrepresents a material fact and the plan has been drafted or amended to provide that such misrepresentations will result in a termination of coverage.

Retroactive cancellation of coverage due to a failure to pay premiums is not considered a rescission.

62. We have several locations and sometimes we are not immediately notified by supervisors or managers when an employee loses eligibility for plan coverage when they are reassigned to a part time position. We can still terminate coverage retroactively in those cases, right?

Yes, as long as you did not continue withholding contributions from the employee’s paycheck and paying claims. If you continued to withhold contributions and provide coverage, then the coverage can only be terminated prospectively.

Example. Joe has coverage under the plan as a full-time employee. The employer reassigns Joe to a part-time position and Joe is no longer eligible for coverage. The plan mistakenly continues to provide health coverage, collecting premiums from Joe’s paycheck and paying claims submitted by Joe. After a routine audit, the plan discovers that Joe is no longer eligible. The plan rescinds Joe’s coverage effective as of the date he changed from a full-time employee to a part-time employee.

Conclusion. The plan cannot rescind Joe’s coverage because there was no fraud or an intentional misrepresentation of material fact. The plan may only cancel coverage for Joe prospectively.

63. What are the special rules that will apply to our HMO option regarding the choice of primary care physicians (PCP)?

The new rules on PCPs are effective for plan years starting on or after September 23, 2010 but only apply to nongrandfathered plans. If your HMO option is not grandfathered, you must allow participants or beneficiaries to elect a PCP including:

• Designating any participating primary care physician who is available to accept the individual; and

• Designating any participating physician who specializes in pediatrics who is available as a child’s PCP.

64. We read that HMOs cannot require females to get authorization for OB/GYN services. How does that work?

This new rule applies only to nongrandfathered plans. If your HMO option is not grandfathered, it cannot require an authorization or a referral from the HMO or a PCP for a female seeking OB/GYN services from a participating health care professional (i.e. physician, physician assistant, midwife, etc.) who specializes in OB/GYN care.

65. Do we have to notify the employees enrolled in or enrolling in the HMO of these new rules?

Yes. If your nongrandfathered HMO plan requires the designation of a PCP, you must provide a notice informing each employee of the following:

• The plan requirements for electing a PCP;

• That any participating primary care physician who is available to accept the participant can be designated as a PCP;

• That any participating physician who specializes in pediatrics can be designated as a PCP for a child;

• The plan may not require authorization or referral for OB/GYN services provided by a participating professional who specializes in OB/GYN care.

This notice must be included in the plan’s SPD or any other similar description of the benefits under the plan. The DOL has issued a model notice for this purpose which can be downloaded in Word format from their website at:

http://www.dol.gov/ebsa/healthreform/

66. There are new rules for emergency room services. How will they affect our plan?

These rules apply only to non-grandfathered plans. If your plan is not grandfathered, it must provide coverage for emergency room services in the following manner:

• Without the need for any prior authorization determination, even if the emergency services are provided on an out-of-network basis;

• Without regard to whether the health care provider furnishing the emergency services is a participating network provider with respect to the services; and

• If the emergency services are provided out of network, without imposing any administrative requirement or limitation on coverage that is more restrictive than the requirements or limitations that apply to emergency services received from in-network providers.

Also, if the emergency services are provided out of network, the copays or coinsurance amounts imposed cannot exceed the amounts imposed for in network emergency room services.

Disclaimer: Staff One, with its ESAC accredited Professional Employer Organization (PEO) business offering, serves as a human resources department for small and medium-sized businesses. By entering into a co-employment relationship with a PEO, companies have access to experienced specialists who can help with many time-consuming activities in areas such as Human Resources Management, Payroll Management (including 940 and 941 filings), Employer Liability Management, Risk and Safety Management and Benefits Management. We share this information, from our partner GBS, with our clients and friends for general informational purposes only. It does not necessarily address all of your specific issues. It should not be construed as, nor is it intended to provide, legal advice. Questions regarding specific issues and application of these rules to your plans should be addressed by your legal counsel.

45. If the adult child is married are they still allowed to have the coverage?

Yes. Eligibility for coverage of children up to age 26 cannot be based on factors such as financial dependence, student status, residence, or marital status.

46. Do I have to cover the spouse or child (the grandchild of the employee) of the adult child too?

No. Plans that provide dependent coverage are only required to provide coverage to the employee’s children (i.e. natural or adopted children) until the age of 26. The plan is not required to provide coverage to the employee’s son-in-law or daughter-in-law or grandchildren.

47. Our plan covers step children and in some cases grandchildren if they meet specific criteria. Will we now have to cover them to age 26 as well?

PPACA does not require plans to cover step or grandchildren but if they are covered under a plan, they must be covered until they turn age 26 and eligibility cannot be based on factors such as financial dependence, student status, residence, or marital status.

48. We have an employee whose child is 25 but is not a full time student, does this mean we will have to calculate imputed income for that employee?

No. The definition of a tax dependent for group health plan purposes was amended as part of the health care reform package to include children until the end of the year they turn age 26. This change will also apply to children to age 26 who are covered under a plan that currently extends coverage to children to age 26 (or older).

The IRS has now issued Notice 2010-38 that offers guidance on the tax exclusion for these adult children. It clarifies several items including:

• Child is defined as son/daughter, step son/daughter, adopted child or eligible foster child, without regard to whether the child is financially supported by the employee or resides with the employee or is a full time student

• Coverage for these adult children can be paid for on a pretax basis under a §125 cafeteria plan

• The change in status regulations will be amended so that employees can add coverage under a §125 plan for a newly-eligible adult child where the plan has been amended mid-year to add the adult child coverage.

49. Our plan has a preexisting condition limitation. Will we have to change it or eliminate it?

Yes. Starting with your first plan year beginning on or after 9/23/10, a preexisting condition limitation cannot be applied to any enrollee who is under age 19. This includes employees and spouses under age 19 and dependents under age 19.

Starting with your first plan year beginning on or after 1/1/14, preexisting condition limitations will be prohibited for all plans and all covered individuals so you will have to eliminate it altogether by that date.

50. We have a plan provision that excludes coverage for services that are the result of an injury that occurred before the effective date of the employee’s coverage. Is this still permissible?

Because this provision operates to exclude benefits for a condition that was present before the effective date of coverage, it is considered a preexisting condition exclusion. Therefore, it will be subject to the same rules described above. Starting with your next plan year beginning on or after 9/23/10, it cannot be applied to enrollees under age 19, and then starting in 2014, it will have to be eliminated.

51. We have two plan options. One has a $1 million lifetime maximum and the other has a $2 million lifetime maximum. How will these maximums be affected?

Effective with your first plan year starting on or after 9/23/10, lifetime maximums that apply to essential benefits will have to be eliminated regardless of whether or not your plan is grandfathered.

52. How do we know what benefits are “essential benefits”?

The Act defines “essential benefits” to include the following categories of coverage:

• Ambulatory patient services

• Emergency services

• Hospitalization

• Maternity and newborn care

• Mental health and substance use disorder services, including behavioral health treatment

• Prescription drugs

• Rehabilitative and habilitative services and devices

• Laboratory services

• Preventive and wellness services and chronic disease management

• Pediatric services, including oral and vision care

At this time there is no guidance on the specifics of these benefit categories but it is expected that regulations defining “essential benefits” will be published in the future. Until these regulations are issued, the agencies enforcing PPACA have said they will take into account good faith efforts to comply with a reasonable interpretation of the term “essential health benefits”.

53. Can we still keep our lifetime limit for benefits that are not considered “essential benefits”?

Yes. Lifetime limits on benefits that are deemed not to be essential benefits are permitted.

54. We have an employee who dropped coverage at our last open enrollment because her daughter’s claims exceeded the lifetime maximum and no further claims were going to be paid. Do we have to let her back on the plan?

Yes. If she is eligible for coverage, you must inform the employee in writing that the plan’s lifetime maximum no longer applies and she and her daughter are allowed to enroll in the plan and the daughter is eligible for benefits again.

55. Do we have to notify employees who exceeded the lifetime limit that they can return to the plan? How long can they have to reenroll?

Yes, you must provide them with at least 30 days to enroll and the enrollment opportunity must be provided no later than the first day of the first plan year starting on or after 9/23/10. If they enroll, the coverage must start no later than the first day of that plan year.

The DOL has issued a model notice for this purpose which can be downloaded in Word format from their website at: http://www.dol.gov/ebsa/healthreform/

56. Can we require her to enroll in the plan option she was enrolled in when her daughter’s claims exceeded the lifetime maximum?

No. She must be offered all the benefit options available to similarly situated employees.

Disclaimer: Staff One, with its ESAC accredited Professional Employer Organization (PEO) business offering, serves as a human resources department for small and medium-sized businesses. By entering into a co-employment relationship with a PEO, companies have access to experienced specialists who can help with many time-consuming activities in areas such as Human Resources Management, Payroll Management (including 940 and 941 filings), Employer Liability Management, Risk and Safety Management and Benefits Management. We share this information, from our partner GBS, with our clients and friends for general informational purposes only. It does not necessarily address all of your specific issues. It should not be construed as, nor is it intended to provide, legal advice. Questions regarding specific issues and application of these rules to your plans should be addressed by your legal counsel.

34. We have to make changes due to Mental Health Parity for our next plan year starting on August 1, 2010. Will these changes cause our plan to lose grandfathered status?

No. Plan changes made to comply with Federal or State legal requirements cannot cause a loss of grandfathered status.

35. If we lose our grandfathered status, what are the other health care reform requirements that will apply?

In addition to the changes required for grandfathered plans, any new plan or any plan that loses its grandfathered status will have to comply with the additional requirements listed below effective for plan years starting on or after September 23, 2010:

• Provide coverage to children to age 26 regardless of whether they are eligible for other employer-sponsored coverage;

• Coverage for recommended preventive services, without cost sharing

• For emergency room care: o No pre-authorization permitted – in or out of network

o Identical coverage in and out of network

• For Primary Care Physician Designations: o Participants may designate any available participating primary care provider

o Parents may select pediatrician for child(ren)

o May not require authorization or referral for OBGYN care from participating obstetrician or gynecologist

• New claims appeal rules including both internal and external review

• Nondiscrimination rules for fully insured health plans under Code §105(h)

For plan years starting on or after January 1, 2014, new plans or plans that have lost grandfathered status will have to comply with additional requirements including:

• No discrimination against individuals participating in clinical trials (insured plans only);

• No discrimination based on health status

• Provide essential benefits and prohibit cost sharing in excess of the limits for qualified high deductible health plans (insured plans only)

36. We intend to keep our plan grandfathered as long as possible. Is there anything we have to do to verify we have not made any changes that would result in the loss of grandfathered status?

Yes. You will be required to maintain records of your plan’s grandfathered status for as long as the plan takes the position that it is grandfathered. This means you must maintain records documenting the terms of the plan in effect on March 23, 2010, and any other documents necessary to verify, explain, or clarify your plan’s status as a grandfathered health plan. This should include intervening and current plan documents, health insurance policies, certificates or contracts of insurance, summary plan descriptions, documentation of premiums or the cost of coverage, and documentation of required employee contribution rates.

In addition, you must make these records available for inspection to participants or State or Federal agencies upon request.

37. Will we have to tell our employees about our plan’s grandfathered status?

Yes. To maintain status as a grandfathered plan, you must disclose, in any plan materials provided to participants, that your plan believes it is a grandfathered plan under PPACA. The disclosure must also provide contact information for questions and complaints. The following model language can be used to satisfy the grandfathered plan disclosure requirement:

This [group health plan or health insurance issuer] believes this [plan or coverage] is a “grandfathered health plan” under the Patient Protection and Affordable Care Act (the Affordable Care Act). As permitted by the Affordable Care Act, a grandfathered health plan can preserve certain basic health coverage that was already in effect when that law was enacted. Being a grandfathered health plan means that your [plan or policy] may not include certain consumer protections of the Affordable Care Act that apply to other plans, for example, the requirement for the provision of preventive health services without any cost sharing. However, grandfathered health plans must comply with certain other consumer protections in the Affordable Care Act, for example, the elimination of lifetime limits on benefits.

Questions regarding which protections apply and which protections do not apply to a grandfathered health plan and what might cause a plan to change from grandfathered health plan status can be directed to the plan administrator at [insert contact information]. [For ERISA plans, insert: You may also contact the Employee Benefits Security Administration, U.S. Department of Labor at 1-866-444-3272 or www.dol.gov/ebsa/healthreform. This website has a table summarizing which protections do and do not apply to grandfathered health plans.] [For nonfederal governmental plans, insert: You may also contact the U.S. Department of Health and Human Services at www.healthcare.gov.]

38. Our plan currently covers children to age 23, so we’ll have to extend that to age 26. When do we have to do that? Can we do it now?

For grandfathered plans, the change must be made by the first day of the first plan year that starts on or after September 23, 2010. For example, a calendar year plan would have to comply by January 1, 2011. However, the change can be made sooner. You should make sure the insurer or stop loss carrier approves the change if you intend to implement it prior to the required effective date.

For insured plans, many insurers are implementing this change ahead of the actual effective date. You can contact your insurer for more information on how this change will affect your plan.

39. Do we have to offer coverage to adult children even if the “child” already has coverage through their own employer’s plan?

Not for plan years starting prior to 2014, if your plan is grandfathered. Until then, you must provide coverage to dependent children until they turn age 26, unless they are eligible for any other employer provided coverage that is not a group health plan of a parent. However, for non-grandfathered plans and all plans starting in 2014 and later, coverage must be available regardless of whether the child has any other coverage (but COB rules may still apply).

40. Can I just continue the children already on my plan, or do I have to go back and offer the coverage to those who have already aged out?

If the child’s coverage under your plan was ended (or if the child was not eligible for coverage) because, under the terms of the plan, coverage was not available to age 26, you are required to give children under age 26 a special enrollment opportunity of at least 30 days. This special enrollment opportunity must be provided beginning no later than the first day of the first plan year beginning on or after September 23, 2010.

41. Am I required to tell employees about this opportunity? How do I do that and by when?

Yes. You must provide a written notice to employees describing the special enrollment opportunity. You can give or send the notice to the employee or it can be included with other enrollment materials, provided the statement describing the special enrollment opportunity is highlighted. This notice must be provided no later than the first day of the first plan year starting on or after September 23, 2010. For example, a calendar year plan would have to provide the notice and the 30-day special enrollment opportunity no later than January 1, 2011.

The DOL has issued a model notice for this purpose which can be downloaded in Word format from their website at:

http://www.dol.gov/ebsa/healthreform/

42. Do I have to offer the coverage to an adult child who has aged out, but is currently on COBRA?

Yes. If the child who aged out has elected COBRA, the plan must allow the child to be enrolled as a dependent of an active employee. In addition, if the child subsequently loses eligibility due to a qualifying event, the child would have another opportunity to elect COBRA.

43. Can I charge more for these adult children?

In most cases, no. The employee cannot be required to pay more for a child’s coverage based on their age (e.g. adding a surcharge for children over age 18 or over age 23). However, an additional surcharge for adult children could be applied if that surcharge is applied for every new child added to the plan regardless of age.

44. Can I offer a more limited benefit to these adult children?

No. The benefits or coverage cannot vary based on the child’s age. It must be identical to the coverage that is provided to similarly situated children who are not adult children.

Disclaimer: Staff One, with its ESAC accredited Professional Employer Organization (PEO) business offering, serves as a human resources department for small and medium-sized businesses. By entering into a co-employment relationship with a PEO, companies have access to experienced specialists who can help with many time-consuming activities in areas such as Human Resources Management, Payroll Management (including 940 and 941 filings), Employer Liability Management, Risk and Safety Management and Benefits Management. We share this information, from our partner GBS, with our clients and friends for general informational purposes only. It does not necessarily address all of your specific issues. It should not be construed as, nor is it intended to provide, legal advice. Questions regarding specific issues and application of these rules to your plans should be addressed by your legal counsel.

by MHA

The Internal Revenue Service (IRS) recently completed two examinations under its Learn, Educate, Self-Correct, and Enforce (LESE) initiative to test and measure the compliance levels of defined contribution retirement plans. Using randomly selected Form 5500 returns, the projects produced findings in two major areas: small plans with assets from $100,000 to $250,000 and top-heavy plan errors.

One of the top errors found for small plans was the failure to secure adequate bonding of plan fiduciaries who handle retirement plan assets. Under ERISA, the amount of bonding should not be less than 10 percent of the amount of funds handled (not less than $1,000 or more than $500,000) with exceptions. Other top errors included failing to amend plans on a timely basis to comply with statutory and regulatory changes, failure to timely submit Form 1099-R, failure to timely deposit elective deferrals, top-heavy failures, joint and survivor waiver failures, impermissible distributions, and failure to include into income “deemed distributions” relating to defaulted loans from the plan.

The second project examined approximately 50 plans with between three and eight participants which were expected to have top heavy plan errors. In general, a 401(k) plan is top heavy when more than 60 percent of the present value of benefits goes to key employees. If a plan is deemed top-heavy, it must apply certain accelerated vesting and contributions to all eligible non-key employees. The most common errors the IRS found were failure to test for top heaviness, improper exclusion of eligible employees, and allocation errors related to compensation and contributions.

In all of the errors found, the IRS has addressed correction procedures within the 401(k) “Fix-it Guide.” Additionally, the LESE project report also contains tips on avoiding the common errors found by the IRS.

Click here to view the project report.

Click here to view the “Fix-it Guide.”

http://www.dol.gov/opa/media/press/ebsa/EBSA20100056.htm

The federal Department of Labor’s Employee Benefits Security Administration establishes a final rule, effective Jan. 14, 2010, giving employers that have employee benefit plans with fewer than 100 participants a seven business day safe harbor period to deposit employee contributions to plans. Employers with retirement or welfare benefit plans subject to the federal Employee Retirement Income Security Act of 1974 must deposit employee contributions to plans on the earliest date that contributions reasonably can be separated from other employer assets. The safe harbor rule does not change ERISA’s requirement that employee contributions to welfare benefit plans must be made no later than 90 days after receipt, and employee contributions to retirement plans must be made by the 15th business day of the month following the month in which contributions are received.

On October 9, 2008, President Bush signed “Michelle’s Law” (H.R. 2851) designed to ensure that dependent college students who take a medically necessary leave of absence do not lose health insurance coverage.

The law was named after Michelle Morse, a college student who suffered from cancer and continued her course load, against the advice of doctors, in order to remain covered by health insurance.

Michelle’s law provides that a group health plan may not terminate a college student’s health coverage simply because the child takes a medically necessary leave of absence from school or changes to part-time status. The leave of absence must:

• Be medically necessary;
• Commence while the child is suffering from a serious illness or injury; and
• Cause the child to lose coverage under the plan.

To take advantage of the extension, the child must have been enrolled in the group health plan on the basis of being a student at a post-secondary educational institution immediately before the first day of the leave. Coverage must extend for one year after the first day of the leave (or, if earlier, the date coverage would otherwise terminate under the plan). The student on leave is entitled to the same benefits as if they had not taken a leave. If coverage changes during the student’s leave, then this new law applies in the same manner as the prior coverage.

Physician’s Certification and Notice

The group health plan must receive written certification by the child’s treating physician stating the child is suffering from a serious illness or injury, and the leave (or change of enrollment) is medically necessary. In addition, when sending any notice describing the plan’s student certification requirements for coverage, the plan also must include a description of the terms for continued coverage under this law.

Michelle’s Law is effective for plan years beginning on or after October 9, 2009.

Learn more at http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=110_cong_bills&docid=f:h2851enr.txt.pdf