YEAR-END
REMINDERS FOR BENEFIT PLAN MANAGERS
This edition of Insight
provides information on 2010 plan limits for various benefit and
compensation plans, as well as a summary of recent and upcoming legislative changes
and compliance deadlines under Federal law. In addition,
it lists helpful reminders of year-end benefit tasks and employee
notifications.
2010
Plan Limits
| Item |
2009
Limit
|
2010
Limit
|
| Social
Security Wage Base |
| FICA Tax |
7.65% employer/employee |
7.65% * employer/employee |
Social
Security OASDI
Taxable Wage Base |
$106,800 |
$106,800 * |
| Medicare
Tax |
1.45% *
employer/employee |
1.45% *
employer/employee |
| Retirement
Plans |
| 401(k)
Contribution Limit |
$16,500 |
$16,500
* |
401(k)
Age 50 and Older
Catch-Up Contribution Limit |
$5,500
$2,500 for SIMPLE Plans |
$5,500 *
$2,500 for SIMPLE Plans * |
| Section
457 Contribution Limit |
$16,500 |
$16,500
* |
| SIMPLE
Plan Limit |
$11,500 |
$11,500
* |
Highly
Compensated Employees
Income Limit |
$110,000 |
$110,000
* |
| Maximum
Annual Compensation Limit |
$245,000 |
$245,000
* |
| Defined
Contribution Limit |
$49,000 |
$49,000
* |
| Defined
Benefit Dollar Limit |
$195,000 |
$195,000
* |
| HSA
and High Deductible Health Plans |
High
Deductible Health Plan
Minimum Deductible |
$1,150
single coverage
$2,300
family coverage |
$1,200
single coverage
$2,400 family coverage |
High
Deductible Health Plan
Maximum Out-of-Pocket |
$5,800
single coverage
$11,600 family coverage |
$5,950
single coverage
$11,900 family coverage |
| HSA
Contribution Limit |
$3,000
single coverage
$5,950 family coverage |
$3,050
single coverage
$6,150 family coverage |
HSA
Age 55 and Older
Catch-Up Contribution Limit |
$1,000 |
$1,000 * |
| IRS
Transportation Benefits Limits |
| Combined
Transit Pass/Vanpooling Limit |
$120
Jan-Mar
$230 Mar-Dec (due to ARRA) |
$230
(scheduled to revert back to pre-ARRA limits after 12/31/10) |
| Qualified
Parking Limit |
$230 |
$230 * |
* No change from 2009 limit
Imputed Income Calculations - Life
Insurance and Domestic Partner Coverage
Confirm that processes are in place to properly report imputed income on both employer-provided life insurance in excess of $50,000 and on the value of any employer paid Domestic Partner coverage. Keep in mind that Domestic Partner coverage which is paid for by the employee with pre-tax income or by the employer is generally taxable for federal income tax purposes but is not considered taxable income in some states, including California for registered domestic partners. Most payroll services can facilitate the calculations required for proper reporting.
Flexible Spending Accounts (FSA)
Communicate to employees the time period required following the close of the plan year to submit receipts for out-of-pocket medical and dependent care expenses.
Beneficiary Designations
Employees who experienced qualified status changes during the year (marriage, divorce, birth/adoption) may need to update beneficiary designations. Advise employees to review their current beneficiary designations for accuracy and update as necessary.
Verification
Verify all payroll records to
ensure that employees did not exceed 2009 plan limits for health care
spending accounts, and IRS limits for dependent care spending accounts
and 401(k) contributions. If plan limits were exceeded, refunds may need to be issued. To prepare for the upcoming calendar year, update payroll setup to account for new plan limits, i.e., 401(k), etc.
Discrimination Testing
If not already completed, prepare for discrimination testing of Section 125 plans.
Early preparation will assist you in expediting the testing process and decrease the chance that your company will face monetary fines for non-compliance.
|
Federal
Legislation
Review |
Several pieces of legislation became effective in 2009 or will take effect
on 1/1/10 for calendar year plans and may require plan sponsors to update their plan documents, summary plan descriptions, enrollment
materials, and other employee communications.
ARRA (American Recovery and Reinvestment Act of 2009)
-
ARRA and COBRA Coverage -
The ARRA coverage period is set to end on 12/31/09. However, there are
currently three different bil
ls
(S.
2730,
HR 3930,
HR 3966)
pending in Congress to extend
the COBRA eligibility period and continuation coverage period for
certain individuals, and increase the percent of the COBRA premium
that is subsidized.
ARRA and HIPAA Privacy and Security -
ARRA impacts HIPAA Privacy and Security Rules effective 2/17/10. ARRA imposes more strict and complex compliance requirements on Plan Sponsors, extends the HIPAA Security Rule to business associates, and increases penalties for non-compliance. The HIPAA Privacy Rule expands individuals’ rights to request restrictions on the use or disclosure of protected health information. Health plan sponsors may need to review and update privacy and security policies and procedures, privacy practice notices, plan documents, and business associate agreements. (For more detailed information, refer to this previous issue of
Insight.)
Michelle's
Law
Effective for plans beginning on and after 10/9/09 (1/1/10 for calendar year plans)
Michelle’s Law specifies that group health plans must permit dependent children who lose their student eligibility due to a medically necessary leave of absence to continue their coverage for up to 12 months. (For more detailed information, refer to this previous issue of
Insight.)
Mental
Health Parity
Effective for plans beginning on and after 10/3/09 (1/1/10 for calendar year plans)
The 2008 financial rescue package included updates to Mental Health Parity requirements. The legislation specifies that for plans that include mental health and substance abuse benefits, those benefits must be materially the same as medical/surgical benefits, and cannot include any separate limits applicable only to mental health and substance abuse (e.g., such as frequency of outpatient visit limits or hospital stay limits). Additionally, mental health/substance abuse deductibles and coinsurance levels must equal to those for medical/surgical treatments, and plans with out-of-network medical benefits must cover out-of-network mental health treatments. (For more detailed information, refer to this previous issue of
Insight.)
Genetic Information Nondiscrimination Act (GINA)
Effective for plan years beginning after 5/21/09 (1/1/10 for calendar year plans)
Group health plans and insurers are prohibited from discriminating against an individual based on genetic information, including using genetic information in connection with enrollment or for underwriting purposes (to calculate premiums or contributions, or to determine eligibility for benefits). Interim final regulations released on 10/9/09 further defined genetic information to include information about an individual’s genetic tests; the genetic tests of family members of the individual; the manifestation of a disease or disorder in family members of the individual; and any request for, or receipt of genetic services by the individual or a family member. For most employers, GINA is prompting a review of the use of family medical history in Health Risk Assessments and their use within wellness programs.
Children's Health
Insurance Program Reauthorization Act (CHIPRA)
Effective 4/1/09, with model notices expected by 2/4/10
Children’s Health Insurance Program Reauthorization Act of 2009
(CHIPRA) allows states to subsidize premiums for employer-provided group health coverage for eligible children. The law requires both fully insured and self-funded group health plans to permit employees and dependents that are eligible but not enrolled for coverage to enroll if they lose Medicaid or CHIP coverage due to loss of eligibility, or become eligible for group health plan premium assistance under a Medicaid or State children’s health insurance program. Plan sponsors were required to notify employees of these special enrollment rights by 4/1/09. In addition, plan sponsors must provide disclosure to their employees and, upon request, provide information to the states about when a plan participant or beneficiary is covered under the company’s group health plan and Medicaid or CHIP. The DOL and HHS are expected to issue model notices by February 2010 which employers may use for these purposes. The notice requirements are not in effect until the first plan year that begins after the date on which the model form is first issued.
CMS Reporting Requirements
On 1/1/09, a new Mandatory Insurer Reporting Law (Section 111 of Public Law 110-173) went into effect requiring group health insurers, TPAs and administrators of self-funded plans to provide Social Security Numbers and Employer ID Numbers (Tax ID) to CMS
(Centers for Medicare and Medicaid Services) for all individuals (not just employees) covered in a group health plan who are: age 45 through age 64; or age 65 and older, who have coverage based on their own or a spouse's current employment status; or receiving kidney dialysis or a kidney transplant; or under age 45, entitled to Medicare, with coverage in the plan based on their own (or family member's) employment status. This law necessitates that insurers/TPAs obtain SSNs from plan sponsors for both employees and dependents and distinguish between active and inactive employees. After the original law went into effect, CMS updated the age requirement to 55 through 64 (not 45 through 64). The requirement will be lowered back to age 45 effective 1/1/11.
The Insight newsletter is not intended to provide legal advice but perspective on recent regulatory issues,
trends and standards affecting employee benefits. Please consult your own legal counsel for further information on the topics discussed in this issue of Insight.
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