Soon, it'll likely be easier to know calorie counts for items in vending machines and at chain restaurants and other retail food establishments. The U.S. Food and Drug Administration (FDA) has issued two proposed regulations regarding calorie labeling on menus and menu boards in chain restaurants, retail food establishments, and vending machines. The proposals were issued in light of 2010 federal health reform legislation, the Patient Protection and Affordable Care Act, which requires the disclosure of calorie and other nutrition information in certain food establishments and for certain foods sold in vending machines.
Restaurants subject to proposals, movie theaters exempted. The proposed menu labeling rule would apply to chain restaurants and similar retail food establishments. Specifically, consumers would see calories listed in restaurants and similar retail food establishments that are part of a chain with 20 or more locations doing business under the same name and offering for sale substantially the same menu items. Examples of these establishments include fast food establishments, bakeries, coffee shops and certain grocery and convenience stores. Movie theaters, airplanes, bowling alleys, and other establishments whose primary purpose is not to sell food would not be subject to this proposed regulation.
“Americans now consume about one-third of their total calories on foods prepared outside the home,” said FDA Commissioner Margaret A. Hamburg, M.D. “While consumers can find calorie and other nutrition information on most packaged foods, it's not generally available in restaurants or similar retail establishments. This proposal is aimed at giving consumers consistent and easy-to-understand nutrition information.”
Other statements required. Additionally, on menus and menu boards, statements would be posted concerning suggested daily calorie intake and indicating that additional nutrition information is available on request. Under the proposal, this information would be displayed clearly and prominently on menus and menu boards, including menu boards in drive-through locations; and for individual foods on display. Consistent with the law, the FDA is proposing that the following statement on daily caloric intake be on menus and menu boards to help consumers understand the significance of the calorie information in the context of a total daily diet: “A 2,000 calorie diet is used as the basis for general nutrition advice; however, individual calorie needs may vary.”
Vending machine rules. Under the proposed rules, operators who own or operate 20 or more vending machines would be required to post calorie information for food sold in a vending machine, unless certain nutrition information is already visible on individual packages of food inside the machine.
Federal law trumps state laws. State and local governments could not impose any different nutrition labeling requirements for food sold in restaurants, similar retail food establishments, and vending machines covered by the federal requirements. Restaurants, similar retail food establishments, and vending machine operators that are not covered by the federal rules could voluntarily register to be covered under the federal nutrition labeling regulations.
For more information. For a comprehensive analysis of the Patient Protection and Affordable Care Act, including the full text of the law and additional information on health reform implementation and other recent developments in employee benefits, just click here.
Wednesday, April 6, 2011
Monday, April 4, 2011
IRS issues guidance on informational reporting of health coverage under ACA
The IRS has issued interim guidance to employers on informational reporting on each employee's annual Form W-2 of the cost of the health insurance coverage they sponsor for employees.
According to the IRS, this new reporting to employees is for their information only, to inform them of the cost of their health coverage. It does not cause excludable employer-provided health coverage to become taxable. Employer-provided health coverage continues to be excludable from an employee's income, and is not taxable.
The Affordable Care Act (i.e., 2010 health reform legislation) provides that employers are required to report the cost of employer-provided health care coverage on the Form W-2. Notice 2010-69, issued last fall, made this requirement optional for all employers for the 2011 Forms W-2 (generally furnished to employees in January 2012). This guidance, Notice 2011-28, provides further relief for smaller employers (those filing fewer than 250 W-2 forms) by making this requirement optional for them at least for 2012 (i.e., for 2012 Forms W-2 that generally would be furnished to employees in January 2013) and continuing this optional treatment for smaller employers until further guidance is issued.
Using a question-and-answer format, Notice 2011-28 also provides guidance for employers that are subject to this requirement for the 2012 Forms W-2 and those that choose to voluntarily comply with it for either 2011 or 2012. The notice includes information on how to report, what coverage to include and how to determine the cost of the coverage.
Employers subject to reporting requirement. All employers that provide applicable employer-sponsored coverage are subject to the reporting requirement. This includes federal, state, and local government entities, churches and other religious organizations, and employers that are not subject to COBRA to the extent such employers provide applicable employer-sponsored coverage under a group health plan. Federally recognized Indian tribal governments are not subject to the reporting requirement until the 2012 Forms W-2 (i.e., the forms required for the calendar year 2012 that employers generally are required to furnish to employees in January 2013).
Applicable employer-sponsored coverage. "Applicable employer-sponsored coverage" means, with respect to any employee, coverage under any group health plan made available to the employee by the employer which is excludable from the employee's gross income under Code Sec. 106 or would be so excludable if it were considered employer-provided coverage under Code Sec. 106. Coverage is treated as applicable employer-sponsored coverage regardless of whether the employer or employee pays for the coverage.
Applicable employer-sponsored coverage does not include coverage for long-term care, accidents, or disability income insurance. Nor does it include coverage that applies to only a specified disease or illness, hospital indemnity, or other fixed indemnity insurance, the payment for which is not excludable from gross income and deductible under Code Sec. 162(l). Applicable employer-sponsored coverage does not include any salary reduction contributions to a flexible spending arrangement (FSA) under a cafeteria plan or contributions to an Archer medical savings account (MSA) or health savings account of the employee or the employee's spouse.
Methods of calculating the cost of coverage. An employer may calculate the reportable cost under a plan using the COBRA applicable premium method. Alternatively, (1) an employer that is determining the cost of coverage for an employee covered by the employer's insured plan may calculate the reportable cost using the premium charged method; and (2) an employer that subsidizes the cost of coverage or that determines the cost of coverage for a year by applying the cost of coverage in a prior year may calculate the reportable cost using the modified COBRA premium method. The reportable cost for an employee receiving coverage under the plan is the sum of the reportable costs for each period (such as a month) during the year as determined under the method used by the employer. An employer is not required to use the same method for every plan, but must use the same method with respect to a plan for every employee receiving coverage under that plan.
COBRA applicable premium method. Under the COBRA applicable premium method, the reportable cost for a period equals the COBRA applicable premium for that coverage for that period. If the employer applies this method, the employer must calculate the COBRA applicable premium in a manner that satisfies the requirements under Code Sec. 4980B(f)(4).
Premium charged method. The premium charged method may be used to determine the reportable cost only for an employee covered by an employer's insured group health plan. If the employer applies this method, the employer must use the premium charged by the insurer for that employee's coverage (for example, for single-only coverage or for family coverage, as applicable to the employee) for each period as the reportable cost for that period.
Modified COBRA premium method. An employer may use the modified COBRA premium method with respect to a plan only where it subsidizes the cost of COBRA or where the actual premium charged by the employer to COBRA qualified beneficiaries for each period in the current year is equal to the COBRA applicable premium for each period in a prior year. If the employer subsidizes the cost of COBRA, the employer may determine the reportable cost for a period based upon a reasonable good faith estimate of the COBRA applicable premium for that period.
Small employer exception. In the case of 2012 Forms W-2 and until the issuance of further guidance, an employer is not subject to the reporting requirement for any calendar year if the employer was required to file fewer than 250 Forms W-2 for the preceding calendar year. Therefore, if an employer files fewer than 250 2011 Forms W-2 (meaning the Forms W-2 for the 2011 calendar year that employers generally furnish to employees in January 2012 and then file with SSA), the employer would not be subject to the reporting requirement for Forms W-2 for the 2012 calendar year.
For a comprehensive analysis of the Patient Protection and Affordable Care Act, including the full text of the law and additional information on health reform implementation and other recent developments in employee benefits, just click here.
According to the IRS, this new reporting to employees is for their information only, to inform them of the cost of their health coverage. It does not cause excludable employer-provided health coverage to become taxable. Employer-provided health coverage continues to be excludable from an employee's income, and is not taxable.
The Affordable Care Act (i.e., 2010 health reform legislation) provides that employers are required to report the cost of employer-provided health care coverage on the Form W-2. Notice 2010-69, issued last fall, made this requirement optional for all employers for the 2011 Forms W-2 (generally furnished to employees in January 2012). This guidance, Notice 2011-28, provides further relief for smaller employers (those filing fewer than 250 W-2 forms) by making this requirement optional for them at least for 2012 (i.e., for 2012 Forms W-2 that generally would be furnished to employees in January 2013) and continuing this optional treatment for smaller employers until further guidance is issued.
Using a question-and-answer format, Notice 2011-28 also provides guidance for employers that are subject to this requirement for the 2012 Forms W-2 and those that choose to voluntarily comply with it for either 2011 or 2012. The notice includes information on how to report, what coverage to include and how to determine the cost of the coverage.
Employers subject to reporting requirement. All employers that provide applicable employer-sponsored coverage are subject to the reporting requirement. This includes federal, state, and local government entities, churches and other religious organizations, and employers that are not subject to COBRA to the extent such employers provide applicable employer-sponsored coverage under a group health plan. Federally recognized Indian tribal governments are not subject to the reporting requirement until the 2012 Forms W-2 (i.e., the forms required for the calendar year 2012 that employers generally are required to furnish to employees in January 2013).
Applicable employer-sponsored coverage. "Applicable employer-sponsored coverage" means, with respect to any employee, coverage under any group health plan made available to the employee by the employer which is excludable from the employee's gross income under Code Sec. 106 or would be so excludable if it were considered employer-provided coverage under Code Sec. 106. Coverage is treated as applicable employer-sponsored coverage regardless of whether the employer or employee pays for the coverage.
Applicable employer-sponsored coverage does not include coverage for long-term care, accidents, or disability income insurance. Nor does it include coverage that applies to only a specified disease or illness, hospital indemnity, or other fixed indemnity insurance, the payment for which is not excludable from gross income and deductible under Code Sec. 162(l). Applicable employer-sponsored coverage does not include any salary reduction contributions to a flexible spending arrangement (FSA) under a cafeteria plan or contributions to an Archer medical savings account (MSA) or health savings account of the employee or the employee's spouse.
Methods of calculating the cost of coverage. An employer may calculate the reportable cost under a plan using the COBRA applicable premium method. Alternatively, (1) an employer that is determining the cost of coverage for an employee covered by the employer's insured plan may calculate the reportable cost using the premium charged method; and (2) an employer that subsidizes the cost of coverage or that determines the cost of coverage for a year by applying the cost of coverage in a prior year may calculate the reportable cost using the modified COBRA premium method. The reportable cost for an employee receiving coverage under the plan is the sum of the reportable costs for each period (such as a month) during the year as determined under the method used by the employer. An employer is not required to use the same method for every plan, but must use the same method with respect to a plan for every employee receiving coverage under that plan.
COBRA applicable premium method. Under the COBRA applicable premium method, the reportable cost for a period equals the COBRA applicable premium for that coverage for that period. If the employer applies this method, the employer must calculate the COBRA applicable premium in a manner that satisfies the requirements under Code Sec. 4980B(f)(4).
Premium charged method. The premium charged method may be used to determine the reportable cost only for an employee covered by an employer's insured group health plan. If the employer applies this method, the employer must use the premium charged by the insurer for that employee's coverage (for example, for single-only coverage or for family coverage, as applicable to the employee) for each period as the reportable cost for that period.
Modified COBRA premium method. An employer may use the modified COBRA premium method with respect to a plan only where it subsidizes the cost of COBRA or where the actual premium charged by the employer to COBRA qualified beneficiaries for each period in the current year is equal to the COBRA applicable premium for each period in a prior year. If the employer subsidizes the cost of COBRA, the employer may determine the reportable cost for a period based upon a reasonable good faith estimate of the COBRA applicable premium for that period.
Small employer exception. In the case of 2012 Forms W-2 and until the issuance of further guidance, an employer is not subject to the reporting requirement for any calendar year if the employer was required to file fewer than 250 Forms W-2 for the preceding calendar year. Therefore, if an employer files fewer than 250 2011 Forms W-2 (meaning the Forms W-2 for the 2011 calendar year that employers generally furnish to employees in January 2012 and then file with SSA), the employer would not be subject to the reporting requirement for Forms W-2 for the 2012 calendar year.
For a comprehensive analysis of the Patient Protection and Affordable Care Act, including the full text of the law and additional information on health reform implementation and other recent developments in employee benefits, just click here.
Friday, April 1, 2011
Availability Of Early Retiree Reinsurance Program Ends In May 2011
Hidden in a mini-tsunami of recent regulatory guidance on health reform (see Regulation Alert below), is a notice scheduled to be published in the April 5 Federal Register that acknowledges the clear success of the Early Retiree Reinsurance Program (ERRP):
The Centers for Medicare & Medicaid Services (CMS) will stop accepting applications for the ERRP on May 5, 2011. CMS has projected the availability of program funding based on the rate at which appropriated funds are currently being used to reimburse plan sponsors, and the agency has concluded that a sufficient number of applications have been approved to exhaust the program funding. Critics of health reform likely will point to the end of the program as another signal of failure, despite the following:
As of March 17, 2011, approximately 5,850 applications, submitted by nearly 5,400 plan sponsors, have been approved for the program. These applications represent a variety of for-profit companies, schools and other educational institutions, unions, State and local governments, religious organizations, and other non-profits.
So far, program reimbursements provided to more than 1,300 participating organizations total nearly $1.8 billion. ERRP funds disbursed so far have been used to reimburse expenses of covering over 100,000 individuals who have each incurred health plan costs that exceed the program’s $15,000 threshold.
Some sponsors have already applied ERRP funds to reduce costs for plan participants. For example, CalPERS, the California Public Employees’ Retirement System, requested reimbursement for claims incurred by 5,302 early retirees, spouses, surviving spouses, and dependents in 2010. In anticipation of ERRP reimbursement CalPERS worked with its benefits carriers to mitigate 2011 premium increases by three percent – a savings of up to $200 million. According to CalPERS officials, the ERRP funding will directly benefit 1.1 million public employees, retirees, and their dependents including 115,000 ERRP eligible early retirees, many of whom have been subject to declining wages due to state furloughs imposed to address budget shortfalls.
What Now
Applications were first accepted for the ERRP on June 29, 2010, and therefore, plan sponsors have so far had nine months to submit applications. As a result of CMS notice, any program applications that CMS receives after May 5 will not be accepted for processing.
Any final applications to the ERRP must be received in the program’s Intake Center
Although applications will be accepted, the ERRP Secure Website (SWS) will be unavailable due to system updates from 7:00 PM ET on Thursday, March 31 through approximately 8:00 PM ET on Sunday, April 17. See News, Apr. 1, 2011, Claims Lists Required For Each Reimbursement Request Under Early Retiree Program)
CMS has not closed the door completely on ERRP. The decision to no longer accept applications is based on the actual availability of remaining appropriated ERRP funds and the rate at which CMS has been disbursing reimbursement, as opposed to the projected amounts of ERRP reimbursements that applicants listed in their ERRP applications. According to CMS, “Should circumstances related to the availability of ERRP funding change, CMS may decide it is appropriate to resume accepting ERRP applications.”
Health Reform Regulation Alert
For a comprehensive analysis of the Patient Protection and Affordable Care Act, including the full text of the law and additional information on health reform implementation and other recent developments in employee benefits, just click here.
