The U.S. Department of Labor and Employee Benefits Security Administration recently published additional FAQs regarding updated model COBRA notices, the health FSA carryover's impact on excepted benefits, and continuation of transition relief applicable to the Summary of Benefits and Coverage (SBC).
The FAQs remind employers that DOL recently released updated model COBRA notice informing qualified beneficiaries of health coverage alternatives to COBRA continuation coverage, including coverage available through Covered CA. See COBRA article, page 18.
The FAQs also address the treatment of health FSA carryover amounts as excepted benefits. Excepted benefits provided under a group health plan are generally exempt from HIPAA, ERISA, the Labor Code, and ACA market reforms. Health FSAs generally constitute excepted benefits if:
The employer also makes annual group health coverage available (that is not limited to excepted benefits) to the class of participants; and
The employer's maximum benefit payable to any employee participant in the class cannot exceed:
Two times the employee's salary reduction election for the arrangement for the year; or
If greater, cannot exceed $500 plus the amount of the participant's salary reduction election.
As LCW previously reported, the IRS modified the "use-or-lose" rule for health FSAs to permit plan amendments allowing employees to carry over up to $500 of unused amounts remaining at the end of a plan year to the next plan year. See http://www.lcwlegal.com/85909.
The FAQs clarify that unused carry over amounts remaining at the end of a plan year in a health FSA that satisfy the modified "use-or-lose" rule should not be taken into account when determining whether the health FSA satisfies the maximum benefit payable limit prong under the excepted benefits regulations. More information on the guidelines governing health FSA carryovers can be found at http://www.irs.gov/pub/irs-drop/n-13-71.pdf.
The FAQs also state that employers and insurers may continue to use the Summary of Benefits and Coverage ("SBC") template and sample completed SBC available at http://cciio.cms.gov andhttp://www.dol.gov/ebsa/healthreform until further notice, and previously-issued enforcement and transition relief guidance will continue to apply until further guidance is issued. The Department of Labor and Employee Benefits Security Administration FAQs are available at:http://www.dol.gov/ebsa/faqs/faq-aca19.html.