In the process of preparing health reform alerts for our clients, we are seldom the bearer of good news, it seems. This is indeed one of those occasions. Employers have just completed the inaugural round of ACA filing requirements with considerable angst. With round one in the cards, hopefully the process will be less intrusive going forward. But bear in mind that while IRS indicated focus on “good faith compliance” for the first year, its expectations will be for clear compliance in round two. Employers will need to have their ducks in line.
With that said about reporting, IRS, the PBGC[1], and Department of Labor joined hands and issued three weeks ago a new proposed regulation on 5500 reporting for qualified retirement plans and welfare benefit plans[2]. These agencies have indicated for several years that more detailed data was needed for retirement plans. Further, §2715A and §2717 of PPACA mandate “transparency” in welfare benefits plans; and to achieve such require that health plan sponsors report to DOL, Treasury, HHS, and states insurance commissioners a host of plan information; thus this new rule effectively is compliance with law passed by Congress. The agencies are taking public comment on the proposed rules and intend that they will become effective for plan years beginning on or after January 1st of 2019. There is thus ample opportunity for details to emerge, but we thought we might offer a feel for what changes are ahead for welfare benefit plans, generally.[3]
The first noticeable change is a repeal of the filing exemption for small plans. According to the proposed rules, plans with less than 100 participants will be required to file 5500’s starting in 2019.
Secondly, a new Schedule J to the 5500 is proposed for welfare benefit plans. There is no draft of this Schedule J as yet, but in reading the proposed regulation, it will be jammed packed; as a plethora of information will be required. Some of the items listed in the proposal for Schedule J include:
- The number of covered participants at plan year-end
- The number offered and number receiving COBRA
- Types of benefits offered (i.e., surgical, pharmacy, wellness, vision, dental, etc.)
- Who is offered coverage: Employees, spouses, dependents, retirees, etc.
- Participant and employee contribution information
- Whether the plan is insured or self-funded
- Stop loss coverage information for self-funded plans; premiums, claim limits, attachment points, etc.
- Whether the plan is an HRA or FSA
- Whether the plan is a high deductible health plan
- They want to know details of any rebates from providers, such as from medical loss ratios
- Claims payment data, including how many claims were submitted, how many approved, and how many were denied; dollar amount of claims paid
- Report any delinquent premium payments to insurance carriers
- Identifying information for service providers; such as TPA’s, claims adjudicators, pharmacy benefit managers, wellness plan managers, etc.
- Whether the plan was compliant with various health plan mandates – HIPAA, Mental Health Parity Act, ACA, Newborn’s and Mother’s Health Protection Act, Women’s Health and Cancer Rights Act, Michelle’s Law, the Genetic Information Nondiscrimination Act, etc.
- And so forth….
It should go without saying that this proposed regulation will ominously increase the reporting responsibilities of employers who sponsor health and welfare benefit plans. Even though the effective date is not until January 2019, there is a relatively short comment period. Comments must be received by DOL no later than October 4, 2016. To submit comments via email, go to e-ORI@dol.gov and reference “RIN 1210-AB63” on the subject line. Written comments should be mailed to:
Employee Benefits Security Administration
Attn: RIN 1210-AB63
Room N-5655
U.S. Department of Labor
200 Constitution Avenue, NW
Washington, DC 20210
We provide the above information as we suspect some employers may wish to make DOL aware of the burden this will place on them; plus many benefit consultants may wish to comment on specific provisions of the proposed rule itself.
[1] Pension Benefit Guarantee Corporation; which insures minimum benefits for defined benefit pension plans
[2] 26 CFR Parts 301; 29 CFR Parts 2520 & 2590… Federal Register July 21, 2016
[3] Significant changes are proposed for qualified retirement plan 5500’s as well.
Not everyone is an expert on health care reform. But the folks at J. Smith Lanier, one of our endorsed services providers, are. For this reason they created a publication called the Health Care Reform Alert. J. Smith Lanier has been providing these to its clients since 2010 when the bill was passed and now offers it to the members of ABA. It is J. Smith Lanier’s intention in the alerts to take the many pages generated by the Centers for Medicare and Medicaid Services, U.S. Department of Labor or Treasury and filter them down into terms that all can understand. For more information on how J. Smith Lanier can help your bank, contact Tom Younger at (256) 890-9027.
