BPC Breaking News

OTC Changes Effective January 1, 2011

Sat, 8 May 2010 12:00:00 CST

As of January 1, 2011, Health FSAs and HRAs will not be able to reimburse over-the-counter (OTC) medicines or drugs (other than insulin) without a doctor's prescription; similar restrictions will apply to HSAs. Over-the-counter medicine expenses will only be reimbursable if participants have a prescription. Other OTC items such as medical supplies, that are not medicines or drugs, such as contact lens solution and bandages, will still be covered. This change aligns what is currently allowable as an IRS qualified medical expense deduction if you itemize your medical expenses with what will be allowed under an FSA/HSA/HRA plan.

This change is effective January 1, 2011 regardless of when the plan year starts or grace period that may be in effect for 2010 plan years. The change in OTC eligibility is not a change in status that will allow any mid-year changes to participant's elections.

BPC Benefits Card (flex debit card) users will not be able to use their cards to purchase OTC items on or after January 1, 2011. Because OTC medicines are no longer eligible for reimbursement without a prescription, they will not be listed in the IIAS eligible item list and therefore cannot be purchased with the card at IIAS merchants. Starting Jan 1, 2011, the participant will need to get a prescription from their medical provider, submit the prescription with the detailed receipt purchased and a signed claim form to BPC to be reimbursed for OTC medicine or drugs.

This change in eligibility for OTC drugs & medicines will require an amendment to all FSA plans, and any HRA plan that allowed OTC expenses. BPC will produce and send the required amendment(s) to you before the end of 2010.

BPC Implementing Secure Email Solution

Fri, 23 Apr 2010 12:00:00 CST

In order to maintain the confidentiality of private information and ensure compliance with privacy regulations such as HIPAA, HITECH, and Red Flag Rules, we are implementing a new email encryption service through Zix Corporation. The service will enable our organization to protect personal information, such as social security, driver's license, credit card, medical record numbers, and account numbers, from undesirable external parties on the internet.

Beginning Monday, April 26, 2010, electronic communications which contain confidential data sent between BPC and you will be encrypted. You will be able to receive and reply to our encrypted email communications easily, and with the knowledge that others will not be able to access that information.

If you do not currently have a ZixCorp email encryption password then you will be asked to click on a link in the email, which will connect you to our secure message center. There you will register a private password to retrieve and reply to our secure messages. This is a free BPC portal at no cost to you.

To learn more about our email encryption system, please go to: http://userawareness.zixcorp.com/sites/index.php?b=d31cd4752d24961493abf95c85b9c396&type=1&p=2. BPC is committed to protecting your personal and private information, and we're pleased to provide an easy-to-use solution that secures our shared email communications.

Legislative Alert: COBRA Premium Subsidy Extended for Two Months

Fri, 16 Apr 2010 12:00:00 CST

On Thursday afternoon April 15, 2010, the Senate approved H.R. 4851, the Continuing Extension Act of 2010 by a vote of 59 to 38. The House followed that action by passing the bill in the early evening by a vote of 289 to 112. President Obama signed the bill, which provides for a two-month extension of the COBRA premium subsidy (through May 31, 2010). Originally, H.R. 4851 called for a one-month extension (through April 30, 2010) of the COBRA premium subsidy. However, during the debate, the Senate adopted an amendment offered by Finance Chairman Max Baucus, which further extended a number of provisions in the bill, including the COBRA premium subsidy.

It is very likely that Congress will continue this approach – a series of short-term fixes, rather than a longer extension – for the remainder of the year.

COBRA Subsidy Extension Clears Procedural Hurdle in Senate

Tue, 13 Apr 2010 12:00:00 CST

Late yesterday afternoon, the Senate, by a vote of 60 to 34, invoked cloture on the motion to proceed to H.R. 4851, the Continuing Extension Act of 2010. Among other items, H.R. 4851 provides a one-month extension of the COBRA premium subsidy through April 30, 2010. The extension would be retroactive until April 1. The Senate expects to take up the measure on Tuesday with a vote on final passage expected on Thursday. Four Republicans -- Senators Scott Brown (MA), Susan Collins (ME), Olympia Snowe (ME), and George Voinovich (OH) -- voted in favor of cloture on the motion to proceed. We will provide additional information as it becomes available.

Legislative Update

Wed, 31 Mar 2010 12:00:00 CST

Historic Health Care Reform legislation has been enacted. BPC and our industry group worked tirelessly this past year to advocate for Flex plans. While some restrictions on FSAs remain part of the Health Care Reform package, the outcome for FSAs is far better than the changes initially proposed. Both H.R. 3590, the Patient Protection and Affordable Care Act (PPACA) and H.R. 4872, the Health Care and Education Reconciliation Act of 2010 (the Reconciliation Act) have become law.

Below is a brief summary of the parts of these new laws, as we currently understand them, that effect Cafeteria plans, Health FSAs, HRAs and HSAs.

FSA CAP. Health FSA salary reductions are limited to $2,500 each year. The cap is effective for tax years starting on or after January 1, 2013. It is indexed for inflation beginning in 2014.
OVER-THE-COUNTER REIMBURSEMENTS. Over-the-counter medicines or drugs are not eligible for reimbursement under an FSA, HRA or HSA unless prescribed by a doctor. This is effective for tax years beginning on or after January 1, 2011.
HSA DISTRIBUTIONS. The excise tax for nonqualified distributions from HSAs is increased from 10% to 20% for individuals under age 65, effective for distributions on or after January 1, 2011.
SIMPLE CAFETERIA PLANS. A new safe harbor from the nondiscrimination requirements for cafeteria plans of small employers is provided in PPACA. A Simple Cafeteria Plan requires an eligible employer to meet certain contribution, eligibility, and participation requirements. An eligible employer is an employer with 100 or fewer employees during either of the two preceding years. The Safe harbor applies to tax years beginning on or after January 1, 2011.
DEPENDENT COVERAGE FOR ADULT CHILDREN. Group health plans (insured and self- funded) offering dependent coverage for children must continue providing that coverage for adult children (married or unmarried) until age 26. The coverage for such children will be nontaxable. This is effective for plan years beginning 6 months or more after the date of enactment (Sept. 23, 2010). Coverage would not have to be offered by grandfathered group health plans to an adult child eligible for coverage under another employer- sponsored health plan until 2014.

Electronic Statements

Thu, 18 Feb 2010 12:00:00 CST

Beginning March 15, 2010 BPC will be rolling out a new electronic statement system. We are excited to bring this feature to your benefit accounts. We will be automatically creating electronic versions of some of the documentation you previously received at your home address.

Electronic-only documents include:

Explanations of Benefits for Direct Deposit Notifications
Quarterly Account Summary Statements

You will automatically be notified by email whenever a new statement is made available on our website.

As a bonus, this initiative will have the added benefit of making these documents available to you for download for a period of 3 years after they are first issued.

We would encourage you to visit bpcinc.com/paperless for additional details about this initiative.

Contact Senators on Health Care Reform Today!

Wed, 9 Dec 2009 12:00:00 CST

As you know, the Senate is currently debating the Patient Protection and Affordable Care Act. We urge you to contact Senate offices as soon as possible by calling (202) 224-3121, and urge your senators to adopt the Schumer amendment. See below for details:

It is our understanding that Senator Schumer (D-NY) later today plans to file an amendment to apply an inflation index of CPI plus 1 percentage point to the $2,500 cap imposed on flexible spending accounts (FSAs).

We strongly encourage clients to reach out to their Senators and urge them to join in cosponsoring Senator Schumer’s amendment. Senate offices interested in cosponsoring the amendment should contact Jeff Hamond with Senator Schumer’s office.

As we have previously reported, efforts are very much underway to get an FSA inflation index incorporated into the “manager’s amendment.” Senator Ben Nelson (D-NE) has voiced his support for such an action to the Democratic leadership. Getting strong co-sponsorship of the Schumer amendment will help further demonstrate support for the FSA index.

Points to Make

More than 35 million Americans rely on their FSAs to meet their health care needs.
The average annual income for an FSA participant is $55,000.
FSAs are particularly important for patients with chronic illnesses, who even with comprehensive coverage, can face thousands of dollars in total out of pocket costs.
Most insurance plans do not cover the full cost of care for conditions such as autism, or services, such as wheelchair repairs.
The legislation will have a devastating effect on Americans who rely on their FSAs.
First, the cap is much lower than what most states and the federal government allow their employees to set aside. Federal employees currently can set aside $5,000. State employees in more than half of all states can set aside $5,000 or more.
Second, since the cap is not indexed to inflation, the bill effectively eliminates FSAs over time.
That outcome is totally counter to the pledge made by many policy makers and President Obama – that is, if you like what you have you can keep it. And it will have a negative impact on Americans with chronic illnesses and those with middle-class incomes.
I strongly encourage the Senator in joining in co-sponsoring the Schumer amendment.

Decrease of 7.5 Cents in 2010 Mileage Rate for Transportation to Obtain Medical Care or as Part of Deductible Moving Expenses

Fri, 4 Dec 2009 12:00:00 CST

[Rev. Proc. 2009-54 (Dec. 3, 2009)]

For a copy: http://www.irs.gov/pub/irs-drop/rp-09-54.pdf

For a copy of the press release:

http://www.irs.gov/newsroom/article/0,,id=216048,00.html

The IRS has announced that the standard mileage rate for use of an automobile to obtain medical care (which may be deductible under Code Section 213 if it is primarily for, and essential to, medical care) will be 16.5 cents per mile for 2010. This is a 7.5 cent decrease from the 2009 rate of 24 cents. An IRS press release attributes the decrease to a general reduction in transportation costs.

EFAST2 Is Coming

Fri, 4 Dec 2009 12:00:00 CST

What is E-FAST2?

Beginning in 2010, the DOL will require that all Form 5500s be filed electronically through EFAST2. EFAST2 is short for electronic filing acceptance system part 2. It is an online system for submitting Form 5500s to the Department of Labor (DOL).

What changes will this bring for plan sponsors?

BPC will continue to prepare your Form 5500 as usual. However, you will notice the following changes in the forms and in our procedures:

Paper filings will no longer be accepted, except for the Form 5500-EZ used by one participant filers
Many small plans exempt from the audit requirement will now have the option of filing on the Form 5500-SF, which is a shorter form with no schedules
Plan sponsors will need internet access and a valid e-mail address
Individuals responsible for signing the Form 5500 will need to obtain “filing signer” credentials through the DOL website
You will be invited via e-mail to a “signing ceremony” where you will login to our website with your pre-approved credentials in order to electronically sign the forms.
We expect heavy use of the system at filing deadlines. Due to uncertainty of the system’s ability to process the anticipated level of high usage around deadlines, we strongly encourage all forms be filed a minimum of 2-3 weeks prior to your filing deadline
Plans subject to the audit requirements will need to have their audits performed earlier in order to ensure the forms and audit are filed timely
Plan sponsors will be required to retain a paper copy of the forms with a wet signature for their records as they always have in addition to the electronic processing. The paper forms will no longer have a bar code at the bottom.
ERISA 403(b) plans will also be subject to all of the above filing requirements

When will this change happen?

The EFAST2 system is expected to go live on January 1, 2010. All 2009 calendar year plans will be required to file using EFAST2. Any non-calendar year plans that have not filed by December 31, 2009, will need to file using EFAST2.

BPC wants to ensure these changes are as easy as possible for our clients. Over the course of the next few months, we will continue to communicate with you regarding the new filing requirements. We understand for some clients the new technological requirements may seem like a great burden. However, we will strive to make the process as easy as possible and will be available to walk you through the process.

Please watch for future communications from BPC regarding EFAST2.

BPC Launches 2 New Calculators to Illustrate Effects of Healthcare Reform

Fri, 2 Oct 2009 08:40:00 CST

BPC is pleased to announce the release of two new calculators to further enhance employee and employer knowledge regarding proposed legislation for healthcare reform. These calculators are designed to illustrate how the elimination or alteration of existing benefit plans may affect taxable income for individuals and companies.

Employee Effects on FSAs:This calculator demonstrates how employees will be hurt by any reform which hinders the use of health flexible spending accounts as a method for paying for medical expenses pre-tax. Employees can choose from one or more common expenses to illustrate the change in out-of-pocket costs that would result from the elimination of FSAs. [Access the Calculator]
Employer Effects on Health Plans: Employers who do not offer a health plan may be subject to certain penalties under proposed legislation. This calculator illustrates the total dollar value of that penalty and compares the penalty to the tax advantages offered by providing a health plan and gives a bottom line to show whether your company would be better off to provide some health option to all employees. [Access the Calculator]

BPC is committed to informing employees and employers about their options for improved healthcare and is active in lobbying the Federal government for improvements to the healthcare system which don’t restrict options or pile undue or unnecessary costs on individuals and businesses.

Open Letter to President Obama from ECFC: Don't eliminate or curtail Flex Plans

Fri, 7 Aug 2009 12:00:00 CST

The Employers Council on Flexible Compensation (www.ecfc.org) (ECFC) urges the President, in an open letter, to not eliminate or reduce the tax benefits of flexible spending plans. See the attached document for a copy of the letter sent to President Obama yesterday.

Guest Commentary: BPC's CEO urges everyone to act now to save Flex Plans

Thu, 6 Aug 2009 12:00:00 CST

(Reprinted with permission from the News Gazette Sunday, August 2, 2009) [Permalink]

Act now to save your health care flex plans

By HABEEB HABEEB

In its rush to enact health care reform legislation, Congress may abolish or curtail flex plans, also known as FSAs. Your action is needed to tell them you want to keep your flex plan.

It is not that they dislike FSAs, but legislators need to raise revenue to pay for reform. We feel that capping or abolishing FSAs is a punch-in-the-pocket and a slap-in-the-face to the average working American who sets aside money to pay for medical expenses on a pre-tax basis. That saves the average taxpayer 25 percent in payroll taxes on every medical expense.

Should FSAs be eliminated or curtailed, it would mean a tax increase on average Americans already struggling to pay for health care. While health care reform is inevitable, FSAs must be preserved as a critical tool to save and pay for out-of- pocket medical expenses.

Why preserve FSAs? First, they are not a tool for the rich. The average salary of an FSA participant is $55,000.

FSAs help control health care costs by allowing participants to pay for co-pays, co-insurance, prescriptions and deductible expenses. In addition, many families use it to defray the high cost of dental treatments such as root canals and orthodontia and necessary vision expenses such as Lasik surgery, eyeglasses, and contact lenses. The most important use is to pay for chronic conditions such as high blood pressure and diabetes. Participants may forgo treatment if FSAs are unavailable, causing health costs to rise.

FSAs are not misused. Every expense must be verified to be eligible by an independent third party as a necessary medical expense under IRS code.

Most participants run out of money before the end of the year. Data over millions of claims show that there is no rush to spend at year-end as most people had exhausted their balances in the first three quarters. If anything, they wish they had set aside more funds at the beginning of the year.

Even though FSA funds are subject to the use-it-or-lose-it rule, very few participants lose any money and even then, the amounts are small. It would be better if the IRS abolishes the use-it-or-lose-it rule, encouraging more people to set aside money in their FSA account.

Eliminating FSAs would immediately raise the cost of medical expenses by 25 percent for most Americans.

The tax impact of paying for medical expenses with after-tax dollars will be devastating to at least 35 million Americans who rely on FSAs to help them save on three payroll taxes: Federal Income tax, State Income Tax, and FICA (Social Security and Medicare Tax). Federal income tax starts at 10 percent with many households paying 15 percent or more. State income tax is 3 percent, and FICA is 7.65 percent. Therefore most Americans would pay at least 25 percent more for their medical expenses (15 + 3 +7.65 = 25.65 percent) if FSAs are eliminated.

Americans are already struggling in a down economy. They don't need a tax increase on medical expenses.

Congressman Johnson has stated his opposition to capping or eliminating FSAs. Citizens are urged to contact U.S. Sens. Dick Durbin and Roland Burris and President Obama asking them to Preserve FSAs. Urge them not to eliminate nor curtail flex plans.

Habeeb Habeeb is President & CEO of Benefit Planning Consultants, Inc. in Champaign and a certified flexible compensation instructor. He is a member of the board of directors of the Employer's Council on Flexible Compensation, a national organization headquartered in Washington D.C whose goal is to preserve the tax exclusion for various employee benefits.

BPC's CEO Fights for Flex Plans

Tue, 4 Aug 2009 12:00:00 CST

(Reprinted with permission from the News Gazette Saturday, August 1, 2009) [Permalink]

Benefit Planning Consultants, Inc. President and CEO Habeeb Habeeb is profiled regarding his passion for saving Flexible Spending Plans.

See the attached article for more!

New ARRA rules increase the combined transit pass/vanpooling monthly limit to $230 effective March 1, 2009

Sun, 1 Mar 2009 12:00:00 CST