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Signed into law on February 17, 2009, the bill carried some provisions that are of particular interest to flexible spending account Plan Service Providers (PSPs). Parking and Transit Plans Parking and Transit plans under IRC Section 132 provide an exclusion from income for qualified parking and transportation expenses. Traditionally, the parking monthly limit has been larger than the transit and vanpooling monthly limit. The Recovery Act equalizes the two monthly limits. Starting March 1, 2009, the transit and vanpooling monthly reimbursement limit will be $230. In 2010, the two benefits will be indexed and remain equal to each other. Can an employee increase their election now? Depending on the plan document, an employee may be able to increase their election on a prospective basis. Expenses incurred in one month cannot roll forward to subsequent months, unless the plan document denotes a coverage period of more than one month. "Coverage period" would equate to how often an election can be changed on a prospective basis. For instance, if your plan document allows election changes every month, the coverage period is for one month. Can an employee elect into the parking and transit plan now? Depending on the plan document, an employee could opt into the parking and transit plan during the plan year. However, expenses incurred prior to the election could not be reimbursed from the plan. Check the parking and transportation plan document for an employee’s rights to change their elections, timing of the changes and the period of coverage for elections. COBRA Continuation If an employee were involuntarily terminated between September 1, 2008 and December 31, 2009, a federal subsidy will be provided that covers 65% of the COBRA continuation costs. This assistance is available for nine months, with COBRA coverage ceasing earlier if the employee is covered by another employer’s plan, eligible for Medicare or the employer terminates all group health plans. Employees can not make in excess of $125,000 for singles or $250,000 of family income in order to obtain the subsidy. Right now it looks like the employer will be administering the benefit. The employer will front 65% of the COBRA continuation cost and then receive a credit on their employee payroll tax liability. Not a lot of substance here as far as forms and reporting. More can be expected as the bill is sliced, diced and interpretation provided. Health Information Technology Expect to see more rules and regulations enacted relating to the electronic exchange of health information. Standards for the exchange of health information are to be established by 2010. The bill also expands patient privacy and security requirements. Another Law to Note The Children’s Health Insurance Program Reauthorization Act of 2009 provides a 60-day special enrollment period. Group health plans must allow those that lose eligibility for Medicaid or a State Children’s Health Insurance Program (CHIP) to enroll in their plan. This special 60-day enrollment period also pertains to employees who become eligible for a premium assistance program. Check your plan documents to ensure that proper language exists for this new provision and that administrative practices support this retroactive enrollment stipulation. This provision is to be effective April 1, 2009.
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