Qualified Retirement Plan dollar limits will not change in 2010. Below is a chart of the contributions limits for 2009 and 2010.

1. Employees owning more than 5% of a company, as well as an employee who is a spouse, child, parent or grandparent of an employee owning more than 5% of a company will always be considered highly compensated.
2. Employees who earned more than $110,000 in 2009 will be considered highly compensated for 2010 non-discrimination testing.
3. Employees who earn more than $110,000 in 2010 will be considered highly compensated employees (in most cases) for 2011 non-discrimination testing.

If you have any questions about how these limits will affect your 401(k) plan or employees, please contact the Johnson & Dugan Retirement Services Team at 650-266-9700.

Contribution limits for Health Savings Accounts (HSAs) and deductible and out-of-pocket expense limits for HSA-qualified High Deductible Health Plans (HDHPs) will change effective January 1, 2010.

Contact your Johnson & Dugan Account Executive for details about HSA plans. For additional information about Health Savings Accounts, including answers to frequently asked questions, related IRS forms and publications, technical guidance, and links to other helpful web sites, see the Treasury Department website: http://www.treas.gov/offices/public-affairs/hsa/

For Group-Term Life Insurance and Domestic Partner Benefits

Jody Lee, Compliance Manager, Johnson & Dugan

The first $50,000 of Group-Term Life Insurance is excluded from gross income pursuant to Section 79 of the IRS Code. Any Group-Term Life Insurance coverage in excess of that amount is taxed as imputed income under Table I of the section 79 regulations. The first Table I was published in 1966 and has been subsequently revised in 1983, 1988 and 1999.

Please note that the imputed income tax can be shown annually as additional income on the year-end W-2, or it can be spread out over the affected pay periods if your payroll service offers this enhancement.

Domestic Partner Imputed Income

Imputed income must also be reported for those employees covering a domestic partner. The employee must report any premium cost paid by the employer on behalf of a domestic partner as imputed income for tax purposes.

For example:  If the value of the premium on a monthly basis attributable to a domestic partner is $200, and the company charges its employees $100 per month to enroll a partner on an after-tax basis, then the net income to the employee for the year would be $1,200 ($200-$100 x 12) for the whole year.  This amount would be added to the employee’s W-2 at year-end. 

Avoid Penalties

Under reporting income or under withholding taxes can result in IRS penalties to the employer, plus interest charges. An IRS payroll audit would identify any such reporting errors.

Please contact your Johnson & Dugan Team, for additional information.

Consumer-driven health plans (CDHPs) in the U.S. have surpassed HMO plans in covered employees, according to preliminary results released by United Benefit Advisors (UBA) from its 2009 UBA Health Plan Survey, the nation's largest health plan benchmarking survey, with 17,655 plans from 12,316 employers reporting. CDHPs grew at a rate of 33.9 percent this past year and now cover more employees (15.4 percent) than HMO plans (13.6 percent), according to Bill Stafford, UBA vice president, member services. The Northeast region of the country had the largest concentration of CDHPs (23 percent), followed by the North Central region (20.1 percent). The average cost increase for all CDHPs at 6.3 percent was slightly lower than that of the average of all plan types, which increased 7.3 percent this year.

Employers often offset the higher out-of-pocket costs of CDHPs by offering employees a health reimbursement account (HRA) or a health savings account (HSA) and contributing funds. The 2009 UBA Health Plan Survey found the average employer contribution to an HRA was $1,310 (up from $1,209 in 2008) for a single employee and $2,502 for a family (up from $2,274 in 2008).

"Across the board, we're seeing a trend toward employee empowerment and participation when it comes to health care," said Stafford. "They're taking more control over health care expenditures by increasing participation in CDHPs, and they are also realizing that there are financial benefits -- in addition to health benefits -- of participating in wellness programs."

• PPO plans have nearly two-thirds of all enrolled employees (63.9 percent).
• Fee-for-service plans are all but extinct, with only 0.4 percent of employees enrolled.
• The average monthly employee contribution for plans with contributions for all plan types is $105 for single and $419 for family.
• More than three fourths (78.4 percent) of all wellness plans offered a health risk assessment.

~September 2009 HRinsider Bulletin

Kathleen Dugan, Chief Operating Officer, Johnson & Dugan
Jody Lee, Compliance Manager, Johnson & Dugan

With the end of the year coming quickly, many companies are starting to prepare for Open Enrollment. Invariably, there are employee questions that come up, so we have prepared a list of the most common to assist you during the busy season.

My spouse’s company benefit plan holds open enrollment in October, and our plan has open enrollment in December. Can he drop his plan in October and join our plan, even though it isn’t our company open enrollment yet?

Yes, Open Enrollment under the Employer Plan of your spouse or dependent is a Qualifying Event that will allow you to add coverage to your plan. A spouse or dependent could join the employer plan within 30 days of the Open Enrollment cancellation of coverage for their plan.

Do I have to send out a COBRA notice to employees who are adding dependents to the plan?

Yes, a Notice of COBRA Continuation of Coverage Rights must be provided to all new plan participants, as each covered individual is considered a “qualified beneficiary” with their own rights. The notice should be addressed to “Family of [Employee]” and mailed to the employee’s home address.

Do I have to send out COBRA notices for employees deleting dependents from the plan at Open Enrollment?

No, Open Enrollment is a voluntary removal of a dependent that does not trigger a COBRA event.

Do I have to allow COBRA participants the same Open Enrollment as I do for my active employees?

Yes, COBRA participants are entitled to the same rights as active employees, including Open Enrollment. COBRA participants can switch between medical plans, or add or delete eligible dependents during the Open Enrollment period. Please note, however, that dependents added during a COBRA Open Enrollment period are not considered “qualified beneficiaries”, and do not have their own separate COBRA rights.

Do I have to send an updated EOC and SPD to those newly joining the plan or if there is a plan or carrier change?

Yes, new plan participants must be provided with the SPD within 90 days of enrolling on the plan. If a plan change results in a material reduction in benefits, notice to plan participants (in the form of a Summary of Material Modification) must be provided within 60 days of adoption. If changes are not a material reduction in benefits, notice must be provided within 210 days after the close of the plan year in which the change was adopted.

Do I need to have all my employees complete a new payroll deduction form every year?

Payroll Deduction Forms can be designed so that they are completed only when changes in the contribution amounts occur. The form should be reviewed each year, and if any changes to the form are required, then each employee should sign a new form.

What is the normal Open Enrollment period I should give my employees? Is two weeks plenty of time or should it be more or less?

Two weeks is generally a sufficient amount of time to conduct Open Enrollment. Larger companies with extensive changes or a complex plan of benefits may need more time. At a minimum, employees should have several days from the time of an employee meeting or formal communication, including a weekend. This gives the employee a chance to review the information with family and discuss plan choices.

For additional information, contact your Johnson & Dugan Team.

The latest edition of the Form I-9 was issued on August 7, 2009. Revisions simply extended the expiration date of the document from June 30, 2009 to August 31, 2012 and updated the revision date to 8/7/09. Note: the 2/2/09 revision form is also acceptable.

Important instructions from the U.S. Citizenship and Immigration Services (UCSIC), "Do not file Form I-9 with U.S. Immigrations and Customs Enforcement (ICE) or USCIS. Form I-9 must be kept by the employer either for three years after the date of hire or for one year after employment is terminated, whichever is later. The form must be available for inspection by authorized U.S. Government officials (e.g., Department of Homeland Security, Department of Labor, Office of Special Counsel)."

To download the new form, Click Here.

Contact your Johnson & Dugan team if you have any questions.

As the details of health care reform legislation solidify, a hotly contested topic –- taxes on employer-sponsored benefits -– has come under fire, even from within the Democratic Party.

Several Democratic senators recently spoke out against a tax on employee health insurance benefits that would help foot the bill for health care reform, which has been estimated to reach $1 trillion over 10 years.

Sen. Max Baucus (D-Mont.), chairman of the Senate Finance Committee, is pushing the idea of a benefits tax as a way to pay for reform while controlling future costs. Some Republicans have warmed to the idea as well, but it has been strongly opposed by labor unions.

"It's clearly a very difficult issue. ... You go to the public to ask them what they think and they don't like it," said Sen. Kent Conrad (D-N.D.). Many Democratic senators expressed concern that such a measure would cost more votes from their own party than they would gain from the Republicans, according to a report from the Associated Press.

A compilation of four recent polls revealed that at least 59 percent of the public opposes taxes on health care benefits to pay for reform. Conrad said legislators are “looking at other options” to help pay for the proposed plans.

After a recent bipartisan meeting, a top Republican said it would be tough to pass any health care reform without some sort of benefits tax.

"The extent to which that's not on the table, it leaves a great big hole in what we're trying to do, and to fill that hole is very, very difficult," said Sen. Chuck Grassley (R-Iowa). 

The concept of an employer mandate also has moved to the forefront of the health care debate. Earlier this month, senators released a new draft bill that would require employers to pay 60 percent of the cost of insurance for workers or pay an “annual fee” of $750 per full-time employee. Businesses with fewer than 25 employees would be exempt from the requirement and would receive a subsidy to encourage them to offer benefits.

Separately, a House proposal released in June would call for employers to pay 72.5 percent of the premium for an individual employee (65 percent for family coverage). Failing to do so would cost companies a penalty equal to 8 percent of pay for each worker who was not offered coverage. Small firms, which the draft did not define, would be exempt.

Many employer groups oppose a mandate and a government-run public option because they fear an exodus of healthy employees to a cheap government plan, leaving required employer plans saddled with higher medical costs.

Senators have attempted to address this concern by proposing to prohibit employees from jumping from their employer’s plan to a government-run public option unless premiums were deemed “unaffordable.”

~July 2009 HRinsider Bulletin

USCIS Press Release issued June 30, 2009:

USCIS Issues Guidance on Employment Eligibility Verification Form

WASHINGTON—U.S. Citizenship and Immigration Services (USCIS) announced today that the Employment Eligibility Verification form I-9 (Rev. 02/02/09) currently on the USCIS Web site will continue to be valid for use beyond June 30, 2009. 

USCIS has requested that the Office of Management and Budget (OMB) approve the continued use of the current version of Form I-9. While this request is pending, the Form I-9 (Rev. 02/02/09) will not expire.

USCIS will update Form I-9 when the extension is approved.   Employers will be able to use either the Form I-9 with the new revision date or the Form I-9 with the 02/02/09 revision date at the bottom of the form. 

For more information on USCIS and its programs, visit www.uscis.gov.

~~

Johnson & Dugan will send out a Compliance Alert when the approval from the OMB has been announced. Contact your Johnson & Dugan team with any questions.

David Y. Stevens, Associate, Spencer Fane Britt & Browne LLP

As of January 1, 2009, most group health plans became subject to the Mandatory Medicare Secondary Payer Reporting Program.  On March 16, 2009, the Centers for Medicare and Medicaid Services (“CMS”) issued the latest version (“Version 2.2”) of the Group Health Plan User Guide for use by responsible reporting entities (“RREs”) under this Program.

The recent updates are generally clarifications, but they could be significant for certain RREs.  While FSAs and HSAs are not reportable, HRAs are considered to be reportable group health plans.  CMS has now clarified, however, that RREs need not report HRA coverage information until October 2010.  The reason for this delay is to allow RREs time to gather the information needed to report on HRA coverage. CMS has indicated that it will provide further guidance on reporting HRA coverage at a later date. 

The new User Guide also points out that CMS prefers RREs to use the Medicare “health insurance claim number” of a Medicare enrollee, if available, rather than the individual’s social security number.

RREs should download the latest User Guide from the CMS web page and review any other updates that may be applicable. 

From United Benefit Advisors Benefits and Employment Briefing, Second Quarter 2009

Johnson & Dugan comment: Although MSP Reporting requirements are the responsibility of "an entity serving as an insurer or third party administrator for a group health plan...", employers should be aware of the requirements and be prepared to respond to insurance carrier requests for information.

Kathleen A. Dugan, Chief Operating Officer, Johnson & Dugan

In light of recent concern over the Swine Flu virus and traveling abroad in general, below are two websites that are very good for all travelers to review before leaving the country. The sites will also direct visitors to the CDC, as well as travel alerts for all countries. Additionally we have been getting many requests for travelers who need to purchase travel insurance for themselves or family members. Between the two websites there is a wealth of information that may be useful for your employees.

Travel Health Online: Register at https://www.tripprep.com

This site is for travelers who wish to find out about everything from what immunizations are needed for the Countries being visited, which Countries have possible quarantine restrictions, travel alerts, Visa requirements, Centers for Disease Control (CDC), and links to government websites of importance.

HTH Worldwide: http://www.hthtravelinsurance.com/

This site is designed for travel planning, trip insurance for Students, and Global Travelers for short and long trips with multiple Countries on their itinerary. It also has links to other important travel information for travelers' needs. Additionally, it is very important to check with the insurance carrier to understand how their plan covers treatments and emergencies outside the Country.

If you have any questions please feel free to contact your Johnson & Dugan team. Thank you.