While the current economic crisis has been grabbing all of the headlines recently, Congress also has enacted and the President has signed a number of new laws that impact the health and welfare benefits that employers offer to workers. Here is a quick summary of some new laws that you may want to know more about:
Expanded Mental Health Parity Requirements
Because health plans generally provide less coverage for mental illness and substance abuse than for other medical conditions, Congress has enacted the Paul Wellstone and Pete Domenici Mental Health Parity and Addition Equity Act of 2008. Attached to the Emergency Economic Stabilization Act of 2008, this law states that if a group health plan provides both medical/surgical benefits and mental health or substance use disorder benefits, then the plan must ensure that:
Financial requirements (such as co-pays, co-insurance and out-of-pocket expenses) that apply to mental health or substance abuse benefits are no more restrictive than the most common or frequent limitations that apply to substantially all medical or surgical benefits.
Treatment limitations (such as frequency of treatment, number of visits and days of coverage) that apply to mental health or substance abuse benefits are no more restrictive than the most common or frequent limitations that apply to substantially all medical or surgical benefits.
Criteria for medical necessity determinations and reasons for denying mental health or substance abuse benefits are made available to those covered under the plans.
Out-of-network providers are made available for mental health or substance use disorder benefits if also made available for medical/surgical benefits.
The law provides an exemption for small employers with less than 50 employees during the preceding calendar year (determined on a controlled group basis), and has a cost exemption if a plan can demonstrate (as certified by a qualified actuary) that within the first six months of compliance it results in a 2 percent actual cost increase in the first year and 1 percent increase in subsequent years.
The new mental health parity requirements will go into effect for plan years beginning after October 3, 2009. If your plan is on a calendar year, you will have to be compliant for 2010. The Departments of Labor, Health and Human Services, and Treasury are required to issue regulations within a year that should clarify these requirements.
Extension of Coverage for Seriously Ill College Students
Health plans often extend coverage for dependent children while they are in school, but do not necessarily allow for coverage during a medical leave of absence from studies. "Michelle's Law” — named after a student who attended college full time while undergoing colon cancer treatment in order to not lose coverage under her parents' health insurance — addresses this gap in coverage. The law amends ERISA to require that a group health plan that provides dependent coverage for college students allow such coverage to continue if the student must take a leave of absence from studies because of a serious illness or injury. This coverage must continue for up to one year or, if shorter, until the date the student would age out of or otherwise lose coverage, and must be the same coverage that would otherwise be available to a dependent. In order to continue coverage for the child during the leave of absence, the employee must provide a written certification from the child's treating physician.
This law will go into effect for plan years beginning on or after October 9, 2009.
New Bicycle Commuters Transportation Fringe Benefit
Also attached to the Emergency Economic Stabilization Act of 2008, this new law allows employers to reimburse employees on a monthly, tax-free basis for expenses of a bicycle used regularly for travel between the employee's residence and place of employment — including costs of buying, maintaining and storing the bicycle. Unlike other transportation fringe benefits, this cannot be funded by employee pre-tax salary reductions and must therefore be paid by the employer. The benefit per employee is limited to $20 per month, and does not apply if the employee is receiving another qualified transportation fringe benefit, such as a van pooling or transit pass benefit.
The new law goes into effect for plan years beginning on or after January 1, 2009.
Change in Definition of Dependent Child
Under the Fostering Connections to Success and Increasing Adoptions Act of 2008, the definition of a "dependent child” has been changed to clarify, among other things, that a taxpayer may not claim a child as a dependent if the child is married. This change in definition may have an impact on who may be covered on a pre-tax basis under your group health plan — particularly if your plan does not exclude children who are married.
This change goes into effect beginning on January 1, 2009.
What To Do Now
Before the start of the new year, you should look at your health plans and cafeteria plans to see if the definition of eligible dependents needs to be updated to reflect the clarification made to the law. You can also consider whether to implement the new bicycle transportation fringe benefit for 2009.
During 2009, you should evaluate and make necessary amendments to your health plans to make sure that you will be in compliance with the new mental health parity and student medical leave requirements.
If you have any questions about these new laws, please contact Norbert F. Kugele at 616.752.2186 or email@example.com, or any other member of Warner's Employee Benefits Practice Group.