• COBRA premium subsidy issues and the method of imputing income. The issues discussed included (1) what eligibility employees have for other coverage and (2) the taxation of ARRA subsidy versus employer severance for high-income individuals.
• Imputing income. In addition to the discussion of imputing income, you can also read information on informal views of disability leaves and retiree health benefit waivers.

Click here to read a copy of the informal views.

The IRS has released the 2010 cost-of-living adjustments for a variety of tax benefit limits.

For 2010, the monthly limit on the amount that may be excluded from an employee's income for qualified parking benefits will be $230, which remains unchanged from the 2009 limit. The combined limit for transit passes and vanpooling expenses is also unchanged at $230 due to the American Recovery and Reinvestment Tax Act of 2009.

For more information, click here.

A new rule will protect patients' genetic information and will help ensure that genetic information is not used adversely in determining health care coverage was issued Oct. 1 by the U.S. Departments of Health and Human Services, Labor and the Treasury.

The rule proposed modifies the HIPAA Privacy Rule pursuant to Genetic Information Nondiscrimination Act of 2008 (GINA) Title I to clarify that genetic information is health information and to prohibit the use and disclosure of genetic information by covered health plans for eligibility determinations, premium computations, applications of any pre-existing condition exclusions, and any other activities related to the creation, renewal or replacement of a contract of health insurance or health benefits.

For details about the interim final rule of the GINA, click here.

The IRS has published final regulations on the HSA comparability rules and how to report and pay excise taxes for failure to comply with comparability requirements or various group health plan mandates (including COBRA and HIPAA). You will find few differences between these final regulations and the proposed regulations issued in 2008. (These comparability provisions apply to employer contributions made for calendar years beginning on or after Jan. 1, 2010.)

The following are comments on excise tax reporting and the HSA comparability requirements.

Excise Tax Reporting. Persons can be liable for an excise tax for failure to meet the Code's requirements regarding

• COBRA
• HIPAA portability (including GINA mandates)
• Mental health parity, and
• Minimum hospital stays for newborns and mothers or Michelle's Law.

Individuals liable for an excise tax generally must file IRS Form 8928 and pay the tax by the due date for filing their federal income tax returns (without extensions). Take note of this provision eliminating extensions for filing the Form 8928 because it may be a surprise for companies routinely filing extensions.

A Form 8928 must be filed by employers liable for an excise tax for noncomparable HSA or Archer MSA contributions by the April 15th following the calendar year in which the noncomparable contributions were made. (Form 8928 has not been released yet, but a version has been released requesting comments.)

The excise tax reporting provisions apply to any Form 8928 due on or after Jan. 1, 2010.

HSA Comparability Requirements.

The final regulations reflect changes to the HSA comparability rules made by the Tax Relief and Health Care Act of 2008 (TRHCA). Some of the changes result in the following:

• The regulations clarify that comparable contributions are required for all non-HCEs who are within the same group and for all HCEs who are within the same group even if an employer may make larger annual HSA contributions for non-HCEs than for HCEs who are within the same group of comparable participating employees. (This is permitted under TRHCA).
• An employer may make a full year's worth of HSA contributions under TRHCA's full-contribution rule for mid-year eligible individuals, so long as contributions are made on an equal and uniform basis for all comparable mid-year eligible individuals.
• An employer can make a larger HSA contribution for employees in a higher tier of family HDHP coverage than to those in a lower tier even if the employees in the higher tier are all HCEs and the employees in the lower tier are all non-HCEs. (For instance, self-plus-two is a higher tier than self-plus-one.)
• An employer can offer qualified HSA distributions (i.e., direct rollovers to HSAs from health FSAs or HRAs) to any eligible employee covered under any HDHP if the employer offers qualified HSA distributions to all such employees. Alternatively, an employer may limit qualified HSA distributions to eligible employees covered under the employer's HDHP.

Click here to view copy of pertinent regulations. (Treas. Reg. Secs. 54.4980B-2, 54.4980D-1, 54.4980E-1, 54.4980G-1, 54.4980G-3, 54.4980G-4, 54.4980G-6, 54.4980G-7, 54.6011-2, 54.6061-1, 54.6071-1, 54.6091-1, and 54.6151-1, 74 Fed. Reg. 45994 (Sept. 8, 2009)

The rule has been published with an effective date of Sept. 24, 2009. However, FTC has announced it will not enforce any actions for failures to provide the required notifications until Feb. 22, 2010.

This final rule has a few changes from previous discussions. The most notable was an effort to make the requirements agree between the FTC Rule (which applies to entities not covered under HIPAA) and the HHS Rule (which applies to covered entities and business associates). Included in this effort were steps taken to ensure that the FTC Rule does not overlap with the HHS Rule resulting in multiple notifications being sent. (The HHS final interim rule on breach notification for unsecured PHI has been published with an effective date of Sept. 23, 2009).

Click here to read the Health Breach Notification Rule, 16 CFR Part 318, 74 Fed. Reg. 42961 (Aug. 25, 2009)

As of August 25, 2009, the IRS has posted on their website Headliner Volume 274 consisting of a reminder that any COBRA subsidy recipient with other coverage must submit notification of that coverage or face a penalty.

If COBRA subsidy recipients later become eligible for other group health plan cover or Medicare, the recipients must notify their plan in writing that they are no longer eligible for the subsidy. Otherwise, the recipients can be penalized. The penalty for non-notification can be 110% of the subsidy provided after the recipient becomes eligible for the other coverage.

Included in the reminder are instructions for individuals to self-report to the IRS that they are subject to the penalty. Also, the reminder notes that anyone who suspects that someone may be receiving the subsidy after becoming eligible for other coverage may submit Form 3949-A (Information Referral) to report the lack of notification.

Group health plans should include the form recipients are required to submit with the DOL notice advising the individuals of their right to subsidized COBRA premium payments.

To read Headline Volume 274, click here.

The COBRA subsidy is authorized by the American Recovery and Reinvestment Act of 2009 (ARRA). Click here to view section 3001 of the American Recovery and Reinvestment Act of 2009 (ARRA), Public Law 111-5, enacted February 17, 2009, relating to premium assistance for COBRA continuation coverage.