Peo Blog

By Ric Joyner

I have received several calls in the last month from clients and past clients. They all had the same story. The DOL was in auditing, and was looking for several items such as plan documents, corporate resolutions, amendments, SPDs, communication pieces for employees, and many other documents. We were able to provide these, but now I am hearing stories from agents regarding other DOL audits that are not going as well because vendors are not cooperating with documentation.

Here are examples of several emails received from concerned brokers:

“I too went through an audit with a client a few months ago but although grueling, I found the DOL to be very helpful in the matter. I did find some of the areas of concern you had with the providers of services not maintaining or sending copies of the proper notices. But after time and much effort we were able to get some of these issues resolved favorably.

Just as a heads up, I was advised by DOL that they are and plan on conducting an extensive amount of audits of all size groups. You are definitely not alone…

Agent in California”

—————————————————————————————————————–

Subject: Dept. of Labor Audit

Hi all!

I’m not sure how many of you have actually had one of your clients subjected to a "Field Audit" by the DOL, but I assure you, they DO happen, and they are grueling! One of my accounts with 20-25 employees received notice about 4 weeks ago and completed the audit this morning.

Interesting findings were as follows:

(Large Insurer) did not seem to be able to produce the documents they asked for. They were very attentive and responsive, I’m just not sure they send out all of the notifications the DOL seems to think they should be.

My office started contacting (Large Payroll and COBRA provider) immediately after our client was notified of the audit. XXXXXXX as of today DID NOT provide copies of letters sent to employees. Including initial notification and qualifying event notices. They did send a spreadsheet listing who they had sent notices to, but clearly, the documentation I always expected did not seem readily available! I was shocked! So was my client. They had hired XXXXXXX on my advice when they became obligated to comply with COBRA, when I moved the group to (Large Insurer), they started picking up the tab for the service.

I am posting this information for 2 reasons:

First, because I was curious if others had experienced similar problems when clients were subjected to these audits.

Second, to warn my fellow B2B members/participants this CAN happen to your clients. If it happens to be one that has not embraced the responsibility of administering COBRA, you as the agent will have fingers pointing at you!

Agent in LA

My advice is to take the DOL seriously and “get your ducks in a row”.

Tuesday, August 19, 2008 12:00 PM - 1:00 PM CDT

Webinar Registration 

Thinking about an HSA for your organization? Wondering where to go for banking, billing, investments, and debit cards for your HSA? Want to offer an HSA, FSA, and HRA, but haven’t found a source? Look no further! eflexgroup, in our partnership with Lighthouse1 (our software provider) and HealthCare Bank, have created a seamless solution to match any of your needs.

We have created a new seminar how simple HSAs can truly be with our integrated and seamless solution.

To register follow the link:

https://www1.gotomeeting.com/register/227219811

Our solution-based seminar will include:

How does the program work?
What are the costs?
How do you implement, enroll, and set up banking?
How do the investments work with Schwab?
How to get started?

Your speakers will be Nancy Dantzman and Tom Jacobs, JD

Feel free to pass this on to your staff, clients, and colleagues.

(used with permission 8-6-08)

CDHealthWire Consumer Driven Market Report© newsletter

August 6, 2008

Americans will never save money towards retirement in an HSA until they reach age 55, according to a new report by the Employee Benefits Research Institute (EBRI) sent to news media today. Also, there is never interest paid on HSA checking accounts, no investment return on HSA investments, no statutory increase in the maximum contribution to HSAs year-to-year, and no increase in the over-55 catch-up contribution under the HSA statute.

Sound wrong? Well it must be time for another EBRI report on HSAs. This time the supposedly “independent” research institute purports to use actual numbers, but instead gets caught red-handed again playing games.

EBRI: “This research shows that while HSAs can be used to save for health care expenses in retirement, the maximum savings that can be accumulated in an HSA will be far from sufficient to fully cover the savings needed in retirement for insurance premiums and out-of-pocket expenses.” That is of course unless you start saving before age 55 – like HSA owners actually do.

Here is a list of the main screw-ups we found:

n EBRI prepares a lengthy analysis showing why HSAs will never be a good way of saving for retiree health. The goal is described as a bare minimum of $132,00 for males and $181,000 for females. Only problem: the supposed shortfall is caused by an assumption that nobody saves money in an HSA until age 55 and all other ages are irrelevant. That’s a funny assumption since the average age of new HSA account holders is 42 and has been falling for five years. No retirement plan works at age 55 including IRAs or 401ks.

We were forced to do our own spreadsheet to see how big a mess-up this is. We immediately started coming across more and more errors. If you do a totally accurate assumption on 55-year-olds, for example, HSAs hit $152,947 by age 65 – 98% of EBRI’s own minimum goal for an average of men and women with median drug expenses.

The most shocking cover-up by EBRI: if you run accurate numbers on 45-year-olds, which is obviously the correct age to use, HSA asset accumulation reaches $340,884 at age 65 – more than double the EBRI stated minimum goal. In fact, that’s way over the $312,500 maximum needed under the EBRI estimate for a couple.

n EBRI fails to use publicly-available updates to the statutory and regulatory formulas for HSA contributions. The big one is an average 2.93% cost-of-living increase in HSA maximum contributions over the past five years – EBRI uses zero. There is also a little thing called the catch-up contribution for 55-year-olds that rises by $100 per year and just hit $1,000 for 2009. The EBRI report falsely states the age is 65, then uses the 2008 number for 55-year-olds without any increase, shaving thousands off the accumulation of HSA retirement funds.

n Money earns interest. Most retirement financial planners ask about this first. Not EBRI. It ignores an average 3% interest paid on HSA accounts over the past five years, and an average 6% on invested funds in HSAs (they are less than 5% of total assets). We used a conservative 3.3% overall asset yield over time and it makes a huge difference in how much Americans can save in an HSA.

Questions? Send emails to the Publisher at healthmarkets@starpower.net

IRS Increases Mileage Rates through Dec. 31, 2008

IR-2008-82, June 23, 2008

WASHINGTON — The Internal Revenue Service today announced an increase in the optional standard mileage rates for the final six months of 2008. Taxpayers may use the optional standard rates to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

The rate will increase to 58.5 cents a mile for all business miles driven from July 1, 2008, through Dec. 31, 2008. This is an increase of eight (8) cents from the 50.5 cent rate in effect for the first six months of 2008, as set forth in Rev. Proc. 2007-70.

In recognition of recent gasoline price increases, the IRS made this special adjustment for the final months of 2008. The IRS normally updates the mileage rates once a year in the fall for the next calendar year.

"Rising gas prices are having a major impact on individual Americans. Given the increase in prices, the IRS is adjusting the standard mileage rates to better reflect the real cost of operating an automobile," said IRS Commissioner Doug Shulman. "We want the reimbursement rate to be fair to taxpayers."

While gasoline is a significant factor in the mileage figure, other items enter into the calculation of mileage rates, such as depreciation and insurance and other fixed and variable costs.

The optional business standard mileage rate is used to compute the deductible costs of operating an automobile for business use in lieu of tracking actual costs. This rate is also used as a benchmark by the federal government and many businesses to reimburse their employees for mileage.

The new six-month rate for computing deductible medical or moving expenses will also increase by eight (8) cents to 27 cents a mile, up from 19 cents for the first six months of 2008. The rate for providing services for charitable organizations is set by statute, not the IRS, and remains at 14 cents a mile.

The new rates are contained in Announcement 2008-63 on the optional standard mileage rates.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

By Ric Joyner, CEBS, GBA, CFCI

LiveJournal Tags: COBRA,Health Insurance,Brokers,Insurance

You won’t want to miss this seminar. We have developed a seminar that will focus on the Landmines of COBRA and the pitfalls that brokers, employers, and employees can experience if not aware.

Stay out of Court!

This seminar is part of eflex’s continuing education seminar for clients.

The time allotted for this seminar is 1.5 hours.

Who should attend:

Employers, Brokers, and Broker Clients.

What you will learn. The Agenda is as follows:

COBRA and Employer responsibilities

• COBRA and Employee Responsibilities
• COBRA and Broker Responsibilities
• Checklist for each group to cover with their constituency
• Case Law and How the Courts view COBRA
• Should you outsource? Pros and Cons

Bring your clients and your staff.

Seminar information:

Registration Link: https://www1.gotomeeting.com/register/548457286

By Ric Joyner

Kevin Knopf of the Treasury, speaking last Friday at the NAPBA.org Owners Conference, indicated to attendees that the Treasury has recently said publicly that the implementation of the New Cafeteria Final Regulations will be 2010. "The new regulations will likely appear toward the end of 2008 versus mid-summer which won’t give much time for implementation and document changes until 2010".

NAPBA is in full review of other comments made on some of the issues related to non-discrimination testing, penalties for non compliance, and HSAs. We are  hoping to have a pod cast on www.benefitblog.com within 2 weeks.

Used with permission 6-3-08 (please do not forward outside of your organization)

CDHealthWire June 3, 2008

[Consumer Driven Market Report] A new EBRI analysis of the required savings to meet retiree health costs shows that many older workers can save enough in an HSA to cover post-65 health costs even if starting as late as age 55. The median savings needed is $102,000 for a man and $137,00 for a woman, assuming no employer retiree coverage. If the employer provides some coverage it’s $64,000 and $86,000.

The maximum HSA contribution for over-55 individuals with family coverage this year is $6,700. If that contribution is made every year with 5% in account income the HSA reaches over $84,000 by age 65, a good portion of retiree health needs based on the new estimate.

All available studies including the GAO report to Congress show that HSA contributions are exceeding HSA distributions by a large amount, even in early populations. This paves the way for the argument that HSAs are a valid retiree health model for a portion of U.S. workers.

The new numbers are important though because many benefits consultants, banks, and carriers are seeing fast-rising demand from employers for some form of defined contribution combined with HSAs for pre-retirees to try and capitalize future retiree health spending.

For example, an employer wanting to provide retiree health benefits but not a full defined benefit plan can simple make maximum HSA contributions to 55-year-old workers for 10 years and reach the savings needed to cover most out-of-pocket costs for the employee during retirement. If HSAs are started all workers by an employer with the average workforce age of 42, all out-of-pocket costs can be covered.

This model is already catching on with employers using VEBAs, a form of pre-retiree funding based on HRAs that roll over and accumulate. So far HSAs have not been as broadly discussed as an employer solution, but with HSAs now reaching 10 million some employer RFPs for next year are citing HSAs and VEBAs as something insurers must offer.

Law Professor Larry Grudzien outlined the key elements of WELLNESS programs for brokers and employers.

The seminar is available at this link for your review: Wellness Webinar

The DOL Checklist is available at this link: DOL ERISA Compliance, DOL HIPAA Compliance

By Ric Joyner, CEBS, GBA, CFCI

The IRS released today the indexing amounts for HSAs. The body of the indexing language:

Administrative, Procedural, and Miscellaneous

26 CFR 601.602: Tax forms and instructions. (Also: Part 1, §§ 1, 223.) Rev. Proc. 2008-29

SECTION 1. PURPOSE
This revenue procedure provides the 2009 inflation adjusted amounts determined
under § 223(g) of the Internal Revenue Code for Health Savings Accounts (HSAs).

SECTION 2. 2009 INFLATION ADJUSTED ITEMS
Annual contribution limitation. For calendar year 2009, the annual limitation on deductions under § 223(b)(2)(A) for an individual with self-only coverage under a high deductible health plan is $3,000.

For calendar year 2009, the annual limitation on deductions under § 223(b)(2)(B) for an individual with family coverage under a high deductible health plan is $5,950. High deductible health plan. For calendar year 2009, a “high deductible health plan” is defined under § 223(c)(2)(A) as a health plan with an annual deductible that is
2.
not less than $1,150 for self-only coverage or $2,300 for family coverage, and the annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) do not exceed $5,800 for self-only coverage or $11,600 for family coverage.

SECTION 3. EFFECTIVE DATE
This revenue procedure is effective for calendar year 2009.

SECTION 4. DRAFTING INFORMATION
The principal author of this revenue procedure is Marnette M. Myers of the Office
of Associate Chief Counsel (Income Tax & Accounting). For further information
regarding § 223 and HSAs, contact Elizabeth Purcell at (202) 622-6080 (not a toll free
call). For further information regarding the calculation of the inflation adjustments in this
revenue procedure contact Ms. Myers at (202) 622-4920 (not a toll free call).

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Wellness Seminar!

This is a free seminar for eflexgroup clients. We are pleased to bring Larry Grudzien, Professor of Law to share with you the pitfalls, benefits, and compliance issues regarding wellness programs.

The seminar is May 29th at 2.00pm CST.

If you are a client of eflexgroup, click to register for the free seminar.

The cost for non-clients is $85.

Fill out this pdf then register here for the seminar.

We encourage you to send this to your friends and colleagues.

More about the seminar

Consumer Driven Health Care is the new foundation of our employee benefit programs. Wellness promises to reduce costs for future benefit premiums and as the milk commercial used to say, "Does a Body Good."

Does your firm currently have a wellness program? What are the legal issues? Are you in compliance? What are the ERISA, IRS, State Laws, and the Dept. of Labor saying?

Contemplating a wellness program? This seminar will be invaluable in your proactive planning. You can’t afford to miss it! Besides, it’s free….

Wellness is part of our ongoing free educational series for our clients. If you are not an eflexgroup or ecobradmin customer, the cost is $85.