Thursday, December 16, 2010

UHC announces new retail pharmacy network and member engagement program

Beginning January 1, all UnitedHealthcare (UHC) customers will automatically be part of a new retail pharmacy network. UHC projects any member disruption due to a pharmacy not participating in the network to be less than 1% and will not occur until March 1, 2011. Affected members will be sent a letter on February 1, notifying them that their current pharmacy is no longer a network pharmacy and providing a list of three network pharmacies in their area.

UHC is also introducing their At-the-Pharmacy engagement program, which encourages pharmacists to speak with members about lower-cost medications. UHC will provide pharmacies with benefit-specific information on lower-cost options for 22 targeted medications, as well as how much the member can save.

For more information, click to access the full News Release from UHC.

Monday, December 13, 2010

Federal judge rules individual mandate unconstitutional

U.S. District Judge Henry E. Hudson declared a key provision of the Obama administration’s health reform law unconstitutional Monday in Richmond, VA.

Hudson is the first federal judge to strike down the law, siding with the suit brought by Virginia Attorney General Ken Cuccinelli II (R). The lawsuit is one of 25 legal challenges to the law, including one filed by 20 states in Florida, which remains pending. In two other lawsuits, judges in Michigan and Lynchburg, VA, have found the same provision to pass legal muster.

Hudson rejected the argument that the government has the authority under the Commerce Clause to require individuals to buy health insurance, stating “neither the Supreme Court nor any federal circuit court of appeals has extended Commerce Clause powers to compel an individual to involuntarily enter the stream of commerce by purchasing a commodity in the private market.”

Hudson’s ruling will deal a significant political blow to the current legislation, as much of the law’s framework hinges on an individual mandate to purchase health insurance. The mandate is not set to take effect until 2014.

The Virginia lawsuit would ordinarily be heard next by the Fourth Circuit Court of Appeals; however, Cucinelli has indicated he would like to move directly to the U.S. Supreme Court. It is not yet clear whether the White House will agree to this request. Regardless, the case will ultimately be determined by the Supreme Court.

Friday, December 10, 2010

BCBSNC issues member letters regarding FDA withdrawal of propoxyphene

On December 2, BCBSNC mailed letters to approximately 18,300 commercial members who have had a prescription for a medication containing propoxyphene in the past six months.

Medications containing propoxyphene (e.g., Darvon and Darvocet), a narcotic-like pain reliever, were withdrawn from the U.S. market by the U.S. Food and Drug Administration on November 19, 2010. This action was taken because of data from a new study that evaluated the effects that increasing doses of propoxyphene have on the heart. The results of the study showed that propoxyphene, taken at therapeutic doses, resulted in significant changes to the electrical activity of the heart that can increase the risk for serious abnormal heart rhythms.

Patients currently taking Darvon or Darvocet should talk to their doctor right away about possible alternatives to treat their pain.

For more information, click to access the Sample Member Letter and Frequently Asked Questions.

Thursday, December 9, 2010

Health reform allows for simple cafeteria plans for small employers

The Patient Protection and Affordable Care Act (PPACA) modified cafeteria plan regulations to allow “simple cafeteria plans” for employers with 100 employees or less, effective for plan years beginning after December 31, 2010. Prior to passage of PPACA, IRS rules governing cafeteria plans did not include self-employed individuals in the definition of “employee.” As such, sole proprietors, partners, shareholders of 2% or more in S-corporations and members of limited liability companies were unable to participate in cafeteria plans.

With simple cafeteria plans, owners of small businesses may now participate as individuals, making it more likely they will offer these plans to their employees. The new law has created a “safe harbor” for qualified small employers from certain nondiscrimination requirements applicable to cafeteria plans as long as certain eligibility, participation and minimum contribution requirements are met.

Eligibility Requirements
• Employers who averaged 100 or fewer employees in the previous 2 years can qualify for a simple cafeteria plan
• Companies not in existence for the previous 2 years must reasonably expect to average 100 or fewer employees during the current year
• Once an employer meets this eligibility requirement and establishes a simple cafeteria plan for any year, it will continue to be treated as an eligible employer for subsequent years until the year after the first year it averages 200 employees or more
• Aggregation rules are used to prevent the employer from creating additional subsidiaries to avoid the limitation on the number of employees

Participation Requirements
• Employees who worked at least 1,000 hours in the previous year must be eligible to participate
• Every eligible employee must have the ability to elect any benefit available under the plan
• Employees under age 21, employees with less than one year of service with the company, employees covered under a collective bargaining agreement and nonresident aliens working outside the US may be excluded from participating

Contribution Requirements
To establish a cafeteria plan, employers must make a contribution for every qualified employee, whether or not the employee makes a salary deferral to the plan. A “qualified employee” includes any employee who is eligible to participate in the plan and who is not a highly compensated employee or a key employee.

The contribution amount must be determined based on one of the following:
• A uniform percentage that is at least 2% of the employee’s compensation; or
• An amount not less than the lesser of (a) 6% of the employee’s compensation for the plan year, or (b) twice the amount of the salary reduction contributions of each qualified employee.

If the employer relies on the satisfaction of (b), it cannot contribute to highly compensated employees or key employees at a rate greater than the matching contribution it provides to all other employees. The employer must also use the same method to calculate the minimum contribution for all non-highly compensated employees.

Safe Harbor from Nondiscrimination Testing
Once an employer meets the contribution and eligibility requirements above, the plan is treated as meeting the following nondiscrimination tests, as applicable:
• The eligibility test in Code Section 125(b)(1)(A)
• The contributions and benefits test in Code Section 125(b)(1)(B)
• The key employee concentration test in Code Section 125(b)(2)
• The nondiscrimination requirements for group term life insurance in IRS Section 79(d)
• The requirements for self-insured medical expense reimbursement plans in IRS Section 105(h)
• The dependent care assistance requirements in IRS Section 129(d) paragraphs (2), (3), (4) and (8)

Further guidance is needed to determine whether the safe harbor also applies to the health reform requirement that fully insured group health plans must now comply with Code Section 105(h)(2) requirements.

For more information, click to access our Legislative Brief on Simple Cafeteria Plans. We suggest employers consult with their tax advisor before establishing a simple cafeteria plan.

Friday, December 3, 2010

IRS issues final guidance on small employer tax credit

On Thursday, the IRS released final guidance for small employers eligible to claim the new small business tax credit for the 2010 tax year. The release includes a one-page form and instructions small employers will use to claim the credit for 2010.

The following new documents are posted on
• New Form 8941, Credit for Small Employer Health Insurance Premiums
Instructions to Form 8941
Newly revised Form 990-T
Notice 2010-82

The instructions and Notice 2010-82 are designed to help small employers correctly figure and claim the credit.

Thursday, December 2, 2010

Webinar on compliance obligations for 2011

Senn Dunn Insurance invites you to participate in a webinar on January 6th, from 1:00 - 2:00 PM Eastern.
Reserve your seat now at:

2010 was a wild year for employee benefit and human resource managers. While health reform dominated most of the attention, there were a number of other benefit compliance issues employers struggled to deal with. This session will review a variety of compliance issues from 2010, and will provide a preview of potential new compliance obligations in 2011 as we begin the new year.

Topics will include:
• Spousal carve-out and surcharge issues
• Domestic partner coverage
• Children’s Health Insurance Program (CHIP) employer notice requirements
• Health reform issues specific to 2011

Presenter: Bob Radecki, President, Benefit Comply, LLC
Bob Radecki has more than 25 years experience in the HR and employee benefits industry helping employers deal with difficult benefit and compliance matters. Previously, Bob founded and served as President of A.E. Roberts Company, a nationally recognized compliance consulting and training firm. He has served as the principal HIPAA consultant to a number of health insurance companies, and is recognized as a leading expert on a variety of benefit compliance issues including COBRA, FMLA, Health Reform and more. Bob has been the featured speaker at numerous industry events and conferences, and has published a number of articles concerning various compliance issues.

Wednesday, December 1, 2010

Senate rejects repeal of Form 1099 provision from health reform law

The Senate fell six votes short of repealing health reform’s Form 1099 provision yesterday, by a vote of 61-35. According to the Patient Protection and Affordable Care Act (PPACA), businesses will be required to file a Form 1099 for every vendor that sells them more than $600 in goods. The measure was added to the health reform law as a way to collect as much as $19 billion in additional tax revenue to offset the cost of new insurance mandates.

Proponents of repeal have stated that they will introduce the measure again after the 112th Congress convenes in January.