The Tax Management Transfer Pricing Report ™ provides news and analysis on U.S. and international governments’ tax policies regarding intercompany transfer pricing.
By Mary V. Bauman, Esq., Sara B. Tountas, Esq.
Miller Johnson , Grand Rapids, MI
Several of the provisions of the new Health Care Reform law require group health plans to provide certain notices either to all participants or particular groups of participants for plan years beginning on or after September 23, 2010. The IRS, DOL and HHS have issued model language for some of the required notices. The model language is available on the DOL's website, www.dol.gov/ebsa. Here is a summary of the required notices.
Special Enrollment Notice of Dependent Coverage for Children to Age 26
Health Care Reform requires group health plans that offer dependent coverage to make that coverage available to children of eligible employees to age 26. Notice must be provided to children who become eligible to participate in the plan as a result of this requirement. The notice must provide an eligible adult child an opportunity to enroll in the Plan that continues for at least 30 days. If the notice is provided along with open enrollment materials, this notice should be "prominent." There is no guidance as to what this means, but setting off through placement, font, bolding, etc. is advisable. Further, if the plan is "grandfathered" (as defined under Health Care Reform), an employer may limit enrollment to those adult children who are ineligible for other employer-sponsored coverage (i.e., through their own employer or spouse's) until the 2014 plan year. If an employer intends to impose this limitation, the notice should include a statement to that effect. Model notice language is available on the DOL website.
Special Enrollment Notice for Individuals Who Reached Lifetime Limit
Employers are prohibited from imposing a lifetime dollar limit on "essential health benefits" (as defined under Health Care Reform). Plan sponsors are required to provide a notice to individuals who previously lost coverage due to the plan's existing lifetime limits regarding their right to reenroll in the plan. The notice must be provided no later than the first day of the plan year beginning on or after September 23, 2010 and must give individuals at least 30 days to enroll in the plan. For individuals who reenroll, coverage must be effective no later than the first day of the plan year. Model notice language is available on the DOL website.
Notice Regarding Grandfathered Plan Status
Plans that were in effect prior to the enactment of Health Care Reform are exempt from some of the new insurance market reforms under Health Care Reform so long as they retain "grandfathered plan" status. One of the requirements to retain grandfathered plan status is including certain disclosures in SPDs and other plan materials provided to participants describing the plan's benefits. The notice must state that the plan is grandfathered and must provide contact information for questions and complaints. Model notice language is available on the DOL website.
Notice of Rescission of Coverage
Coverage may only be rescinded (i.e., retroactively revoked) due to fraud or intentional misrepresentation, or due to failure to pay premiums. A 30 day advance notice is now required before coverage can be rescinded. The regulatory agencies have not yet issued model language to be used for coverage rescissions.
Notice of Patient Protections
Plan sponsors of nongrandfathered plans are required to notify participants of their right to chose a primary care provider/pediatrician (where designation is required) and to obtain OB/GYN care without prior authorization. This notice must be included in the SPD or in a separate notice distributed along with the SPD. Model notice language is available on the DOL website.
Notice of Internal Appeal/External Review Procedures
Health Care Reform creates a series of new disclosure requirements related to new internal appeal and external review procedures applicable to nongrandfathered plans. These requirements will require nongrandfathered plans to modify the appeals language in plan documents and SPDs. Model language has not yet been released. However, model notices of adverse benefit determinations, internal appeal determinations, and external appeal determinations are available on the DOL website.
Other notices are scheduled to take effect in 2012 or later, such as an up to four-page summary of plan benefits in a prescribed format, a notice of material changes to that summary and a notice regarding individuals' eligibility for the new state-based exchanges taking effect in 2014.
For more information, in BNA's Tax Management Portfolios, see Kenty, 389 T.M., Medical Plans — COBRA, HIPAA, HRAs, HSAs and Disability, and in Tax Practice Series, see ¶5920, Health & Disability Plans, and ¶5940, Cafeteria Plans.
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