2013 is not over yet. Employers and HR and benefits professionals must address these 14 compliance issues before the New Year begins. Timothy F. Kennedy is a partner in Montgomery McCracken Walker & Rhoads’s Employee Benefits and Executive Compensation Practice, concisely outlines retirement and health care issues that plan sponsors must consider in the following days.

 

Qualified retirement plans

 

Code Section 436:  Defined benefit plans must be amended to provide for restrictions on benefit payments and pension accruals by the last day of the plan year that begins in 2013.  For calendar year plans, this amendment must be adopted by December 31, 2013. 

Defense of Marriage Act (“DOMA”):  In U.S. v. Windsor, the U.S. Supreme Court held that, effective September 16, 2013, same-sex spouses married in states recognizing such marriages must be treated as “married” for federal tax purposes.  Plan sponsors should review and update all plan provisions and forms that relate to spousal rights (e.g., QJSA/QPSA benefits, QDROs, distribution forms, etc.). 

Elective (Discretionary) Amendments:  Any plan amendments that are elective (i.e., not required by new law and/or regulations) must generally be adopted no later than the end of the plan year in which they become effective.  For calendar year plans, this means elective amendments that take effect during 2013 must be adopted by December 31, 2013.  

 

Group health and cafeteria plans

 

Summary of Benefits Coverage (“SBC”):  This summary describes the health coverage that a plan sponsor intends to provide starting on or after January 1, 2014.  The SBC must be provided to participants during the open enrollment period that occurs before the plan year beginning in 2014. 

Notice of Exchange:  This notice describes the insurance exchanges created under the Affordable Care Act.  After October 1, 2013, new employees must be given this notice within 14 days of being hired. 

Annual Dollar Limits:  Annual dollar limits on “essential health benefits” were phased out starting in 2011 and are completely prohibited starting in 2014.  For plans that obtained a waiver from this restriction in 2013, a final update to Health & Human Services is due by December 31, 2013. 

Preexisting Condition Exclusions:  Plans and summary plan descriptions (“SPDs”) must be updated to remove any preexisting condition exclusions effective January 1, 2014. 

90-Day Waiting Period:  Plans and SPDs must be updated to ensure that any waiting period for coverage does not exceed 90 days.  This is effective January 1, 2014.

Dependent Coverage:  For plans that still may be “grandfathered” under the Affordable Care Act, dependents up to the age of 26 must be covered effective January 1, 2014.  Non-grandfathered plans should already cover dependents up to age 26. 

Out-of-Pocket Maximums:  A participant’s in-network, out-of-pocket expenses under a health plan cannot exceed the 2014 limits ($6,350 per person or $12,700 per family).  This is effective January 1, 2014.   

DOMA:  In U.S. v. Windsor, the U.S. Supreme Court held that, effective September 16, 2013, same-sex spouses married in states recognizing such marriages must be treated as “married” for federal tax purposes.  As a result, plans that cover spouses must also cover same-sex spouses.  Health plans, cafeteria plans, forms and policies should be updated to reflect this ruling (e.g., employers must stop imputing income to a same-sex spouse). 

Health Flexible Spending Accounts (“HFSA”):  HFSAs that wish to allow up to $500 of unused 2013 contributions to be carried over into 2014 must be amended before December 31, 2013. 

Health Reimbursement Arrangements (“HRA”):  HRAs that are not “integrated” with a group health plan will violate the Affordable Care Act’s prohibition against imposing annual dollar limits and therefore must be terminated or converted to retiree-only coverage effective January 1, 2014. 

Business Associate Agreements:  Business associate agreements that were executed before January 25, 2013 must be updated no later than September 23, 2014 to comply with the new final HIPAA regulations.

Timothy F. Kennedy is a partner in Montgomery McCracken Walker & Rhoads’s Employee Benefits and Executive Compensation Practice in Philadelphia. He represents private, public, for-profit, tax-exempt, and government employers with respect to both retirement and health and welfare matters and related taxation issues. He may be reached at tkennedy@mmwr.com.

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