Carter's Benefits

eNewsletter Volume 5, Issue 06 June 2012

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IRS Gives Cobra Audit Guidance

COBRA is a law with a double bite: both the DOL and the IRS routinely conduct COBRA audits and issue penalties. The IRS recently published a checklist of what it examines in these audits.

The IRS document is officially called “Audit Techniques and Tax Law to Examine COBRA Cases (Continuation of Employee Health Care Coverage).” This audit technique guide describes the IRS’ examination procedures, how it calculates the excise tax for noncompliance, the major requirements for COBRA and some key definitions like the terms group health plan, qualified beneficiary, and qualifying event.

Highlights from the guidance include:

  • A list of documents that the IRS typically reviews, including a procedures manual, COBRA form letters, audit procedures, data related to qualifying events, elections and payments, federal and state employment tax returns and documentation related to any gross misconduct determinations
  • A notice that the excise tax ($100 per day, per qualified beneficiary, $200 per day family maximum) can be applied for a period of up to six months beyond the maximum coverage period (i.e., 18, 29 or 36 months) for failures to offer COBRA
  • A description how election waivers work
  • Confirmation that COBRA coverage is required for the following non-employees if they were actually covered under a group health plan by virtue of their performance of services for an employer maintaining the plan:
    • o Self-employed individuals
    • o Agents and independent contractors
    • o Corporate directors
    • o Partners in a partnership

Infinisource, of course, has been providing full COBRA services for more than two decades and has a specially design COBRA audit kit for just this purpose. In addition, we have developed a separate audit checklist, available to clients and non-clients, based on our years of experience in handling these types of audits. We recommend that you read through the audit technique guide yourself to see how prepared you would be for a COBRA audit by the IRS.

What preparations have you made for a possible COBRA audit? Are there any documents on the checklist that would be challenging to provide at a moment’s notice? Please comment below.

expenses or expenses in retirement years.

Recent News

  1. CDC Report Addresses Several Components Of American Health.
  2. Employment-Based Health Coverage Declining Due To High Costs.
  3. Experts Say Healthcare Transformation To Continue Regardless Of Supreme Court Ruling.
  4. This Fall, Many Americans To Get Easy-To-Understand Health Plan Benefit Summaries.
  5. Kaiser Permanente, Unions Try Novel Approach To Rein In Rising Health Costs.
  6. Lazarus: Patients Deserve Itemized Invoices.
  7. Analysis: Health Insurance Tax Credit For Small Businesses A "Disappointment."
  8. Number Of People Covered By HSA Plans Rises By 18 Percent.
  9. Report: US Healthcare Cost Increases May Be Slowing.
  10. Consumer Reports Article Looks At Healthcare Price Variation.

CDC Report Addresses Several Components Of American Health.
The Time Share to FacebookShare to Twitter (5/17, Sifferlin) "Healthland" blog reports on "Health, United States, 2011," which is "the government's 35th annual comprehensive health report from the CDC's National Center for Health Statistics (NCHS)."

        The Huffington Post Share to FacebookShare to Twitter (5/17, Chan) reports, "In terms of medical testing, the researchers found that the rate of mammograms among women ages 40 and older has remained about the same (between 67 percent and 70 percent) between 2000 and 2010." Additionally, "the data showed that more people are getting colorectal tests, with the percentage of 50- to 75-year-olds getting the test rising from 34 percent in 2000 to 59 percent in 2010."

        Bloomberg BusinessWeek Share to FacebookShare to Twitter (5/17, Lopatto) reports, "Obesity, which leads to chronic ailments, such as diabetes and heart disease, was twice as high among boys and three times as high for girls in families whose head of household lacked a degree compared with more educated households."

        The report also found, according to Modern Healthcare Share to FacebookShare to Twitter (5/17, McKinney, Subscription Publication), that "children living below the poverty line watched more television, were less likely to have visited a dentist during the past year and were more likely to receive a diagnosis of attention-deficit/hyperactivity disorder."

        According to the Minneapolis Star Tribune Share to FacebookShare to Twitter (5/17, Stoxen) "Health Check" blog, "The report found that more-educated people with higher incomes suffer from fewer chronic diseases and live longer than the less educated poor." According to report co-author Amy Bernstein, a project director in the division of analysis and epidemiology at the Centers for Disease Control and Prevention's National Center for Health Statistics, "Not having education and being poor is detrimental to your health," in part "because people with fewer advantages often have health habits that include worse diet, less exercise and smoking, she explained. In addition, they are likely to be uninsured or have limited access to health care -- disparities that haven't changed much in the decade covered by the report, Bernstein said."

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Employment-Based Health Coverage Declining Due To High Costs.
The Wall Street Journal Share to FacebookShare to Twitter (5/23, Greene) reports that employer-based health coverage is declining after having experienced a brief uptick immediately after the recession. According to the Journal, the percentage of workers with health coverage in their own name fell from 60.4% to 56% between December 2007 and June 2009. After rising by about one percentage point at the end of 2009, health coverage among workers fell to 55.8% by April 2011. The blog post notes that the report Share to FacebookShare to Twitter found that the biggest reason workers were uninsured was the cost of coverage. Modern Healthcare Share to FacebookShare to Twitter (5/23, Evans, Subscription Publication) also covers this story.

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Experts Say Healthcare Transformation To Continue Regardless Of Supreme Court Ruling.
The New York Times Share to FacebookShare to Twitter (5/23, A12, Pear, Subscription Publication) reports on comments by Sen. Sheldon Whitehouse (D-RI) and Dr. Richard J. Gilfillan, director of the federal Center for Medicare and Medicaid Innovation, who said that "the new health care law is already transforming the way care is delivered, and the changes will continue regardless of how the Supreme Court rules on the mandate for most Americans to carry health insurance." Speaking at a forum held by the Center for American Progress, Whitehouse remarked, "The delivery system reforms will survive, and we should not be stalling and dawdling because we are anxious about what the court will do." Gilfillan added, "We are confident that the law will be upheld," but either way, he said, "the marketplace is boiling with new ideas, new

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This Fall, Many Americans To Get Easy-To-Understand Health Plan Benefit Summaries.
CQ Share to FacebookShare to Twitter (5/25, Reichard, Subscription Publication) reports that beginning this September, "173 million Americans will get an easy-to-understand summary of the benefits and out-of-pocket costs of their health plans, says a report Families USA released Thursday." CQ writes, "Mandated under a summary of benefits requirement in the healthcare law (PL 111-148, PL 111-152), the summaries may give the controversial law a bit of a boost in the eyes of a skeptical public." What's more, "the summary requirement is likely to survive if the Supreme Court ruling on the constitutionality of the 2010 law stops short of fully striking it down."

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Kaiser Permanente, Unions Try Novel Approach To Rein In Rising Health Costs.
In an editorial, the Los Angeles Times Share to FacebookShare to Twitter (5/29) writes that the "giant healthcare provider Kaiser Permanente and a coalition of unions led by the United Healthcare Workers [UHW]" have "recently signed a contract that creates a novel incentive for [healthcare] workers to get in better shape, testing the notion that peer pressure may be a more effective way to promote healthy lifestyles than individual rewards or penalties." After pointing out that "the incentive is unusual because it's based on the group's progress, not each employee's," the Times concludes, "But as UHW-West President Dave Regan recently told The Times, the current fitness of healthcare workers makes them a poor advertisement for the benefits of a healthy lifestyle. The union's contract with Kaiser shows that it's ready to start rectifying that."

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Lazarus: Patients Deserve Itemized Invoices.
In his column in the Los Angeles Times Share to FacebookShare to Twitter (5/11), David Lazarus observes, "It's tough enough to be without health insurance. But do healthcare providers have to make it even worse by treating you like a moron?" Whereas some insurance companies require detailed bills with charges fully broken down from clinicians, Lazarus questions why uninsured patients in Los Angeles County are not provided with itemized statements after visiting county-run clinics. Lazarus concludes that "patients deserve a full accounting of what treatment was provided and at what price" and maintains that itemized invoices should be "standard for everyone."

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Analysis: Health Insurance Tax Credit For Small Businesses A "Disappointment."
The AP Share to FacebookShare to Twitter (5/31, Alonso-Zaldivar) reports, "Many small businesses struggle to afford health insurance for their workers, but a new tax credit meant to help them seems to be turning into a disappointment," and this has "put the Obama administration in the awkward position of asking Congress to help fix the problems by allowing more businesses to qualify and making it simpler to apply. But Republicans who run the House say they want to repeal what they deride as 'Obamacare,' not fix its flaws." Furthermore, "It doesn't help the administration's plea that the biggest small-business lobbying group," the National Federation of Independent Business, "is a lead plaintiff asking the Supreme Court to overturn the Affordable Care Act


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Number Of People Covered By HSA Plans Rises By 18 Percent.
CQ Share to FacebookShare to Twitter (5/31, Norman, Subscription Publication) reports, "The number of consumers signed up for high-deductible health plans rose by 18 percent in 2011, the health insurance industry's trade group reported Wednesday." As CQ notes, "America's Health Insurance Plans' annual census of health savings account (HSA) insurance plans found that 13.5 million people are covered by them as of January 2012, up from 11.4 million the previous January and 6.1 million in 2008."

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Report: US Healthcare Cost Increases May Be Slowing.

Bloomberg News Share to FacebookShare to Twitter (5/31, Wayne) reports, "Cheap walk-up health clinics, lower costs for drugs and medical supplies, and state laws requiring hospitals to publish prices may be helping to reduce the increase in US health costs," according to the PricewaterhouseCoopers annual report on trends in US medical costs. "Health-care costs are expected to rise 7.5 percent in 2013, or 5.5 percent when accounting for changes in insurance benefits, such as higher deductibles and co-payments," the report found. This "is the fourth year in a row the annual cost increase is less than eight percent." Reuters Share to FacebookShare to Twitter (5/31, Morgan) also covers the story.

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Consumer Reports Article Looks At Healthcare Price Variation.
The National Journal Share to FacebookShare to Twitter (6/1, Sanger-Katz, Subscription Publication) reports, "A new story from Consumer Reports highlights how extreme price variation and sketchy transparency can mean that even insured patients often end up on the hook for huge, unanticipated bills." The article Share to FacebookShare to Twitter "homes in on two big themes: The broad range of prices that various providers charge for the same procedures, even if they are all considered in the network of a particular insurer; and changes in how plans calculate 'usual and customary charges' mean that out-of-network reimbursements frequently cover a much smaller percentage of costs than patients typically realize."

        The CNN Share to FacebookShare to Twitter (6/1, Young) "The Chart" blog reports, "Nancy Metcalf, the magazine's senior program editor and author of the article," said, "What we found was there's no such thing as a price for a health care service. Prices are all over the map and vary depending on where you have the service, and it's much more likely to be more expensive if you have it in a hospital versus a doctor's office." According to Metcalf, "The most consumer unfriendly thing is that it's often impossible to find out what the service will cost ahead of time."


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How does Carter's Benefits help ?
We continue to stay on top of changes in this industry. In a consultative role, Eddie Carter has begun hosting live seminars to update employers and Human Resource Managers on these changes. If you would like to host a meeting with your local community or civic organization, please contact me for details.

Eddie Carter, Consultant Eddie Carter,
Benefit Consultant
If you have questions or would like more information please give us a call or send us an email.  Our email address is Questions@CartersBenefits.Com

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