Information Every Business Needs to Know
HR & Benefits Advisor
December 2010
Brought to you by: Fiduciary Intermediary LTD
In this Issue
Change Health Insurance
Issuers without Losing
Grandfather Status
Online Poster Advisor
Independent Contractors
versus Employees
Employee Safety and Your
Company
Medical Loss Ratio
Requirements
Clarification of GINA Title II
Provisions
Updated Model CHIP Notice
Group Health Plans May Change Health Insurance
Issuers without Losing
Grandfather Status
Employers can offer the same
level of coverage through a new
issuer and remain grandfathered
but be sure to adhere to the other
grandfather rules.
The Departments of Health and
Human Services (HHS), Labor, and
the Treasury have issued an
amendment to the interim final
regulations on grandfathered plans
(health coverage in place on March
23, 2010), which include rules for
determining when changes to a health plan cause the plan to lose its
grandfathered status.
Medical Loss Ratio
The amendment permits a group health plan to change health insurance
Requirements under the coverage (that is, to enter into a new policy, certificate, or contract of
insurance) without losing the grandfathered status of the health plan, so
Affordable Care Act
long as it has not made any other changes that would revoke its status
under paragraph (g)(1) of the interim final regulations.
What does the amendment change?
Previously, one of the ways a group health plan could lose its grandfather
status was if the employer changed issuers – switching from one insurance
company to another. The original interim final regulations only allowed selffunded plans to change third-party administrators without necessarily losing
their grandfathered plan status. The amendment allows employers to offer
the same level of coverage through a new issuer and remain grandfathered,
as long as the change in issuer does not result in:



Significant cost increases,
A reduction in benefits, or
Other changes described in the original grandfather rule.
New regulations issued by the
U.S. Department of Health and
Human Services (HHS) require What types of plans does this affect?
health insurers to spend 80 to
85 percent of consumers’
 The amendment affects insured group health plans.
premiums (depending on the
 A change of issuers in the individual market would still result in the
size of the insurance market)
loss of grandfathered status.
on direct care for patients and
efforts to improve care quality.
This regulation, known as the
"medical loss ratio" provision of
the Affordable Care Act, will
make the insurance
marketplace more transparent
and make it easier for
consumers to purchase plans
that provide better value for
their money, according to HHS.
- Beginning in 2011, the law
requires that insurance
companies publicly report how
they spend premium dollars,
providing meaningful
information to consumers.
- Also beginning in 2011,
insurers are required to spend
at least 80 percent (generally,
85 percent in the large group
market and 80 percent in the
small group or individual
market) of the premium dollars
they collect on medical care
and quality improvement
activities, rather than on
administrative costs.
What documentation does the amendment require for a change in
coverage?
To maintain status as a grandfathered health plan, a group health plan that
enters into a new policy, certificate, or contract of insurance must provide to
the new health insurance issuer (and the new health insurance issuer must
require) documentation of plan terms (including benefits, cost sharing,
employer contributions, and annual limits) under the prior health coverage
sufficient to determine whether any change described in paragraph (g)(1) of
the original interim final rules is being made. This documentation may
include a copy of the policy or summary plan description.
What is the effective date of the amendment?
The amendment to the interim final regulations is effective on November 15,
2010.
Does the amendment apply retroactively?
The amendment applies to such changes to group health insurance
coverage that are effective on or after November 15, 2010; the amendment
does not apply retroactively to such changes to group health insurance
coverage that were effective before this date. For this purpose, the date the
new coverage becomes effective is the operative date, not the date a
contract for a new policy, certificate or contract of insurance is entered into.


For example, if a plan enters into an agreement with an issuer on
September 28, 2010 for a new policy to be effective on January 1,
2011, then January 1, 2011 is the date the new policy is effective
and, therefore, the relevant date for purposes of determining the
application of the amendment to the interim final regulations.
If, however, the plan entered into an agreement with an issuer on
July 1, 2010 for a new policy to be effective on September 1, 2010,
then the amendment would not apply and the plan would cease to
be a grandfathered health plan.
- Insurance companies that are
not meeting the medical loss
ratio standard will be required
to provide rebates to their
Why did HHS, Labor and Treasury make this change?
consumers.
The Departments adopted this amendment in response to comments
received concerning the section of the interim final rules that provides that a
- Insurers will be required to
group health plan will relinquish grandfather status if it changes issuers or
make the first round of rebates policies. Those concerns included the following:
to consumers in 2012.

The medical loss ratio
regulation outlines:
- disclosure and reporting
requirements,
- how insurance companies will
calculate their medical loss
ratio and provide rebates, and
- how adjustments could be

There are circumstances where a group health plan may need to
make administrative changes that don’t affect the benefits or costs
of a plan. For example, an insurer may stop offering coverage in a
market. Or a company may change hands. In those cases, the
employer can maintain grandfathered status for their employee’s
plan under this amendment.
Comments expressed concern that the original provision could have
the inadvertent effect of interfering with health care cost
containment. If an employer has to stay with the same insurance
company to keep the benefits of having a grandfathered plan, the
insurance company has undue and unfair leverage in negotiating
the price of coverage renewals. Allowing employers to shop around
can help keep costs down while ensuring individuals can keep the
made to the medical loss ratio
standard to guard against
market destabilization.

The interim final regulation is
effective January 1, 2011.
For more information regarding
the medical loss ratio, please
click here. To view the interim
final regulations, please click
here. You may also read the
press release by clicking here.
coverage they have.
Some employers buy coverage from insurance companies; others
“self-insure,” meaning that they pay claims themselves but usually
hire a third-party administrator (TPA) to handle the paperwork.
Usually only large companies can self-insure. Before this
amendment, self-insured plans could change the company hired to
handle the paperwork without losing grandfathered status as long
as the benefits and costs of the plan stayed the same, while an
employer that just changed insurance companies while maintaining
the same benefits under their plan could not do so. Under this
amendment, all employers have the flexibility to keep their
grandfathered plan but change insurance company or third-party
administrator.
Where can I find more information on this amendment?
Final Regulations
Provide Clarification of
GINA Title II Provisions


For more information on the amendment, please see this Fact
Sheet.
To read the amendment in its entirety, please click here.
Poster Advisor Helps Employers Comply with
DOL Poster
Requirements
Whether your company is small or
large, the U.S. Department of Labor
(DOL) requires that you display a
number of different posters at your
workplace. The DOL administers a
number of different laws, which
require employers to display official
DOL posters where employees can
easily observe them.
The Equal Employment
Opportunity Commission
(EEOC) has issued a final rule
to implement Title II of the
Genetic Information
Nondiscrimination Act of 2008
(GINA).
Title II of GINA, which took
effect on November 21, 2009,
prohibits the use of genetic
information in the employment
context, restricts employers
and other entities covered by
Title II from requesting,
requiring, or purchasing genetic
information, and strictly limits
such entities from disclosing
genetic information. According
Online Poster Advisor Will Guide
You
The DOL provides an online,
interactive tool called Poster Advisor
to help you though the process of
identifying the required posters for
your business. The Poster Advisor
provides short descriptions of DOL poster requirements, as well as links to
printable posters, at no cost to employers.
The Poster Advisor only provides information relating to federal DOL poster
requirements. Employers are encouraged to contact their State Department
of Labor to identify other applicable state law requirements. For
downloadable state posters, please go to the HR & Benefits Essentials
State Employment Laws section, select your state and click on “Posters” in
the left-hand navigation.
To access the Poster Advisor, please click here.
to the EEOC, the purpose of
the final regulations is to
implement the various
provisions of Title II consistent
with Congress's intent, to
provide some additional
clarification of those provisions,
and to explain more fully those
sections where Congress
incorporated by reference
provisions from other statutes.
The final rule is effective
January 10, 2011. To view the
regulations, please click here.
FAQs for small businesses
related to Title II of GINA and
the EEOC’s final rule can be
found by clicking here.
Additional information on GINA
is available on the HR &
Benefits Essentials website
here.
Tips for Classifying Independent Contractors
versus Employees from
the IRS
As we are approaching a new year, it
is a good time to review important
tips for classifying employees. The
IRS has provided some very useful
guidelines for determining the
difference between an independent
contractor versus an employee. This
will affect how much you pay in
taxes, whether you need to withhold
from your workers' paychecks and
what tax documents you need to file.
The IRS has provided information on
seven key issues every business
should know about concerning hiring
people as independent contractors
versus hiring them as employees.
1. The IRS uses three characteristics to determine the relationship
Updated Model CHIP
Notice Now Available
2.
3.
4.
5.
6.
The U.S. Department of
Labor’s Employee Benefits
Security Administration (EBSA)
has posted on its website an
updated version of the Model
Employer Children’s Health
7.
between businesses and workers:
o Behavioral Control covers facts that show whether the
business has a right to direct or control how the work is
done through instructions, training or other means.
o Financial Control covers facts that show whether the
business has a right to direct or control the financial and
business aspects of the worker's job.
o Type of Relationship relates to how the workers and the
business owner perceive their relationship.
If you have the right to control or direct not only what is to be done,
but also how it is to be done, then your workers are most likely
employees.
If you can direct or control only the result of the work done -- and
not the means and methods of accomplishing the result -- then your
workers are probably independent contractors.
Employers who misclassify workers as independent contractors can
end up with substantial tax bills. Additionally, they can face
penalties for failing to pay employment taxes and for failing to file
required tax forms.
Workers can avoid higher tax bills and lost benefits if they know
their proper status.
Both employers and workers can ask the IRS to make a
determination on whether a specific individual is an independent
contractor or an employee by filing a Form SS-8, Determination of
Worker Status for Purposes of Federal Employment Taxes and
Income Tax Withholding, with the IRS.
You can learn more about the critical determination of a worker’s
status as an Independent Contractor or Employee at IRS.gov by
selecting the Small Business link. Additional resources are listed
Insurance Program (CHIP)
Notice, which employers may
use to inform employees of
their potential eligibility for
premium assistance under
state Medicaid or a CHIP.
The Children's Health
Insurance Program
Reauthorization Act of 2009
(CHIPRA) requires that an
employer maintaining a group
health plan in a state that
provides premium assistance
for the purchase of coverage
under Medicaid or a state CHIP
notify each employee of the
opportunity for the assistance
of employees and dependents.
The Model Notice includes
information on how employees
can contact their state for
additional information and how
to apply for premium
assistance.
- To view the Model Notice in
English, please click here.
- To view the Spanish version
of the Model Notice, please
click here.
To view the HR & Benefits
Essentials CHIPRA page,
please click here.
below and are available on the IRS website or by calling the IRS at
800-829-3676 (800-TAX-FORM).
For Additional Information:




Publication 15-A, Employer's Supplemental Tax Guide
Publication 1779, Independent Contractor or Employee
Publication 1976, Do You Qualify for Relief under Section 530
Form SS-8, Determination of Worker Status for Purposes of Federal
Employment Taxes and Income Tax Withholding
Employee Safety and
Your Company
With the Occupational Safety and
Health Act of 1970, Congress
created the Occupational Safety and
Health Administration (OSHA) to
ensure safe and healthful working
conditions for working men and
women by setting and enforcing
standards and by providing training,
outreach, education and assistance. Under OSHA, employers have the
responsibility to provide a safe workplace. Employers must provide their
employees with a workplace that does not have serious hazards and follow
all OSHA safety and health standards.
OSHA Coverage
Most employees in the nation come under OSHA's jurisdiction. OSHA
covers private sector employers and employees in all 50 states, the District
of Columbia, and other U.S. jurisdictions either directly through Federal
OSHA or through an OSHA-approved state program. State run health and
safety programs must be at least as effective as the Federal OSHA
program. To find the contact information for the OSHA Federal or State
Program office nearest you, see the Regional and Area Offices map.
OSHA Resources for Small Business
OSHA’s On-site Consultation Program offers free and confidential advice to
small and medium-sized businesses in all states across the country, with
priority given to high-hazard worksites. On-site consultation services are
separate from enforcement and do not result in penalties or citations.
Consultants from state agencies or universities work with employers to
identify workplace hazards, provide advice on compliance with OSHA
standards, and assist in establishing safety and health management
systems. Read more about OSHA’s free On-site Consultation Program.
Compliance Assistance Specialists
Each OSHA Area Office in states under federal jurisdiction has a
Compliance Assistance Specialist. These staffers respond to requests for
help from a variety of groups, including small businesses. Compliance
Assistance Specialists put on seminars and workshops for small businesses
and other groups. They promote OSHA’s cooperative programs, OSHA’s
training resources, and the OSHA web site. To read more about
Compliance Assistance Specialists and find a directory in your area, click
here.
OSHA Publications & Posters
The following are a number of resources, posters and guides that will
provide important OSHA-related requirements and programs.





All About OSHA English Spanish
This OSHA handbook provides an overview of the Agency, its
regulatory responsibilities, policies, procedures and programs
Employee Workplace Rights
Employer Rights and Responsibilities Following an OSHA
Inspection
It's The Law - Job Safety and Health Poster English Spanish
This poster informs employers and employees of their rights and
responsibilities for a safe and healthful workplace.
OSHA Small Business Handbook
Newsletter provided by:
HR and Benefits Essentials
400 Main Street, Suite 410, Stamford, CT 06901
(203) 977-8100
www.HRandBenefits.com