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Benefit Changes Tied to
Financial Rescue Bill
Two of the sweeteners tied to the financial rescue package will impact
some employee benefit plans with new coverage requirements:
Mental Health Parity
The financial rescue legislation signed into law by President Bush on
October 3, 2008 (HR
1424) includes a provision that requires group health plans with 51
or more employees to cover mental illness and substance abuse treatment
at the same level as medical treatments.
Known as the
Paul Wellstone and Pete Domenici Mental Health Parity and Addiction
Equity Act of 2008, the legislation amends the Employee Retirement
Income Security Act of 1974 (ERISA), the public Health Service Act and
the Internal Revenue Code to require group health plans that provide
both medical and mental health benefits to do so at the same levels. The
law bans employers and insurers from imposing stricter limits on mental
health conditions than it does for other health conditions. The new law
expands parity to include deductibles, copayments, coinsurance and other
out-of-pocket expenses. Additionally, the law requires plans with
out-of-network medical benefits to cover out-of-network mental health
treatments.
The legislation does not impose specific requirements as to what
conditions must be covered, nor does it require a plan to provide a
mental health benefit at all. Rather, it requires plans that do provide
mental health coverage to provide it at the same level as other
benefits.
It is important to note that the Parity Bill applies to both self-funded
plans and traditionally insured plans. The law also preempts any state
mandate to the extent that the state mandate fails to meet the new
federal requirement.
The new regulations are set to go into effect for plan years beginning
after October 3, 2009.
Bicycle Commuter Benefit
Also included is a provision that allows for a bicycle commuter benefit. The legislation amends IRS Section 132(f) to allow employer reimbursement for certain expenses incurred as a result of commuting by bicycle.
For an employee to take advantage of this benefit the employer
must offer a Section 132 plan, but the law does not require an
employer to offer a Section 132 plan. Rather, it expands the
types of expenses eligible for reimbursement to include those
associated with commuting by bicycle. The
plan will allow employers to reimburse
employees up to $20 per month, tax free, for reasonable
expenses related to their bike commute. Expenses can include bicycle equipment
purchases, repairs, and storage if the bicycle is used for a substantial
portion of travel between an employee's home and their place of
employment. It is important to note that if an employee already receives
another commuter tax-free fringe benefit, such as a commuter check, they
will not qualify. Additionally, the law does not specifically define
what constitutes a "substantial" portion of an employee's commute, nor
does it clarify what specific expenses are eligible for reimbursement.
The changes take effect January 1, 2009.
This document is not intended to provide any legal advice or analysis. Please
consult your own legal counsel for further information on the topics discussed in this
issue of Insight.
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