The Reconciliation Bill, HR 4872, signed after the Patient Protection and Affordable Care Act, expands the definition of a dependent for tax free health coverage (cafeteria plan) purposes under Code Section 105(b).

If the dependent is a child (son, daughter, step child, or foster child) of the taxpayer/covered member and will not reach the age of 27 during the year then he may remain covered under his parent(s) plan and his coverage for health care including insurance, FSA, and HRA coverage is not taxable. Also, student status is irrelevant.

The dependent definition expansion is effective immediately, but not mandatory. In other words, a plan may adopt a more restrictive definition of a covered dependent. All DataPath template documents for FSA and HRA plans refer to Code Section 105(b) when defining a dependent for coverage purposes. Therefore, no change is needed to incorporate the expanded dependent definition into your existing plans. However, if the documents have been modified to refer to dependents as defined in Code Section 152 only, then the expanded definition does not apply.

You can see the reference to Code Section 105(b) in Section 1.10 of the FSA Plan Document (FSA Plan Document v6_122005.doc); Q-2 in the FSA SPD (FSA Summary Plan Description v6_032009_schip.doc); Section 1.02 in the HRA Plan Document (hra_plan_doc_rev_3_2009.doc) which refers to the HRA SPD (HRA_SPD_rev_4_2009_schip_card.doc) Section 1.12.

The Department of Labor has created a Web site for resources related to the Patient Protection and Affordable Care Act (PPACA) that became law in March 2010. The site contains an implementation timeline, information on the new small Employer tax credit, and a summary overview of the PPACA that would be beneficial to both Employers and Employees.

Click here to view the site.

Click here to read the new law (H.R. 3590).

Click here to read the reconciliation bill (H.R.4872).

What happens now?

USAToday has created an interactive timeline of when provisions will take effect as well as an article about how the bill could affect "nearly all" Americans. Click here to view.

Kaiser Health News (KHN) has an overall article, “The Immediate Effects of the Health Reform Bill." Click here to view.

The Republicans say: "The Fight Isn't Over!"

The New York Times has written an article "Legal and Political Fights Looms for Democrats" outlining the plans the Republicans have to repeal the measure, challenge its constitutionality and coordinate efforts in statehouses to block its implementation. Click here to view.

History of Health Care Legislation in USA

The Associated Press provided this list of the pivotal moments in American health care history. Click here to view.

The IRS has issued question-and-answer guidance on the recent changes to the Code by the Heroes Earnings Assistance and Relief Tax Act of 2008 (HEART Act). This Act’s changes enhance 401(k) and other benefits for military personnel in qualified military service.

The guidance consists of 20 questions and answers. Some of the areas the Q&As cover are:

• Survivor and Disability Retirement Benefits With Respect to Military Service
• Differential Wage Payments
• In-Service Distributions

Those with plans covering employees on active military duty should review these Q&As very carefully because they make clear some areas that have been gray before.  

Click here for a copy of Notice 2010-15: Miscellaneous HEART Act Changes

Fleet-Average Rule: The fleet-average rule governs employers operating a fleet of 20 or more qualifying vehicles (depending on the average lease value). The IRS has set up the maximum vehicle values to be used in calendar year 2010. The maximum values for which the fleet-average rule may be used are $20,300 for passenger automobiles and $21,000 for trucks or vans (up from $19,900 for both in 2009).

Cents-Per-Mile: The cents-per-mile rule determines the value of an employee's personal use by multiplying the standard mileage rate (50 cents per mile for 2010) by the number of miles driven for personal purposes. The maximum values for the cents-per-mile rule are $15,300 for passenger automobiles and $16,000 for trucks or vans (up from $15,000 and $15,200, respectively, in 2009).

Click here to view Rev. Proc 2010-10, 2010-3 I.R.B. 300 (Jan 14, 2010)

The IRS has released Forms 5498-SA and 1099-SA for the 2010 tax year along with their instructions. Form 5498 must be filed by the trustees and custodians of HSAs, Archer MSAs, and Medicare Advantage MSAs to report contributions to (and the fair market value of) these accounts. They also must file Form 1099-SA to report distributions. These forms are not to be used until 2011 when the 2010 tax year is due.

Click here to view a copy of 5498-SA (2010) (HSA, Archer MSA, or Medicare Advantage MSA Information).

Click here to view a copy of 1099-SA (Distributions from an HSA, Archer MSA, or Medicare Advantage MSA) (2010).

Click here to view the instructions for both forms.

The Department of Labor's Employee Benefits Security Administration has posted a notice of publication of an Employer's model notice regarding eligibility for premium assistance under Medicaid or the Children's Health Insurance Program (CHIP). The Children's Health Insurance Program Reauthorization Act of 2009 (CHIPRA) includes a requirement that the Departments of Labor and Health and Human Services develop a model notice for Employers to use to inform Employees of potential opportunities currently available in the Employee's state of residence for group health plan premium assistance under Medicaid and the CHIP.

Click here to view the Federal Register notice.

Click here to view the model notice.

The Department of Labor's Employee Benefits Security Administration posted a document containing the interim final rules with request for comments for implementing the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act (MHPAEA) of 2008. This Act requires parity between mental health or substance use disorder benefits and medical/surgical benefits with respect to financial requirements and treatment limitations under group health plans and health insurance coverage offered in connection with a group health plan. The regulation is effective on April 5, 2010, and applicable to plan years beginning on or after July 1, 2010.

Click here view the Federal Register.

Click here to view the fact sheet.

Click here to download the latest User Guide.

The IRS has updated Publications 15-B, 502, 503, 521, 969 and Form 8889.