The Company You Trust

E-News

First Quarter 2006

Volume 3, Number 1

BELIEVE AND SUCCEED

Courage does not always roar. Sometimes, it is the quiet voice at the end of the day saying, “I will try again tomorrow.”

“It is one of the most beautiful compensations of this life that no man can sincerely try to help another without helping himself.”

RALPH WALDO EMERSON

TODAY

“Today, I will be too calm to worry, too noble for anger and too strong for defeat. Today, I will believe anything is possible…I will walk through fear without hesitation. Today, I will stand for something. Today, I will make a difference.”

“Someone’s sitting in the shade today because someone planted a tree a long time ago.”

WARREN BUFFET

“No one can predict to what heights you can soar. Even you will not know until you spread your wings.”

“To think is easy. To act is hard. But the hardest thing in the world is to act in accordance with your thinking.”

GOETHE

“We live in deeds, not years; In thoughts not breaths; In feelings, not in figures on a dial. We should count time by heartthrobs. He most lives who thinks most, feels the noblest, acts the best.”

DAVID BAILEY

EXCELLENCE

“Many times the difference between failures and success is doing something nearly right…or doing it exactly right.”

CUSTOMER SERVICE CONTACTS

AFLAC
1-800-462-3522
www.aflac.com

Allstate (AHL)
1-800-521-3535
www.ahlcorp.com

American Funds
1-800-421-0180
www.americanfunds.com

Ameritas
1-800-527-0043
www.ameritasgroup.com

Blue Cross Blue Shield
1-888-232-0942
www.bcbsne.com

Jefferson Pilot
1-800-423-2765
www.jpfinancial.com

Met Life
1-800-686-9311
www.metlife.com

OneAmerica (AUL)
1-800-261-9618
www.eretirement.aul.com
Enrollment Fax:
1-317-285-1728

Principal Financial
1-800-547-7754
www.principal.com

Regional Care, Inc.
1-800-795-7772
www.regionalcare.com

UNUM Provident
1-800-255-6148
www.unumprovident.com

THE OLSON GROUP

20214 Veterans Drive
Suite 200
P.O. Box 543
Elkhorn, NE 68022

PHONE:
(402) 289-1046

TOLL FREE:
1-866-289-1046

FAX:
(402) 289-1012

EMAIL:
tolson@theolsongroup.net

WATKO BENEFIT GROUP

7201 West 129th Street
Suite 120
Overland Park, KS 66213

PHONE:
(913) 685-0000

TOLL FREE:
1-877-685-0000

FAX:
(913) 685-0068

EMAIL:
gwatkins@watkobenefit.com

SECURITIES OFFERED THROUGH
SUNSET FINANCIAL SERVICES, INC.
3520 BROADWAY
KANSAS CITY, MO 64111
(816) 753-7000 (OSJ)
MEMBER NASD/SIPC

SUNSET FINANCIAL IS NOT AFFILIATED WITH THE OLSON GROUP.

FROM THE OFFICE OF TIM OLSON, CEBS, CMFC

New 403(b) Regulations
(Our take—These proposed regulations will change!)

If you offer 403(b) Tax Deferred Annuity plans, most of you are aware the IRS came out with proposed regulations during the fall of 2004. The regulations are just that, proposed, and in our opinion, the IRS may or may not have them finalized by January 1, 2007.

These regulations primarily impact Non-ERISA complying programs where employees are entering into a salary deferral agreement with the employer, and saving voluntary money into a 403(b) contract. Most organizations do not file a 5500 form with the IRS because of reasonable choice, and they offer multiple vendors.

Do you offer a variety of 403(b) vendors with different rules, provisions, investment choices, etc.?

The biggest controversy centers around the plan document requirement which means eligibility, benefits, contribution limits, loan procedures, hardship distributions, and other conditions must include all material provisions in the form of a written plan instrument. The big question is whether one set of administrative procedures could adequately cover the varying practice of multiple vendors? Our sources believe the IRS will be backing down on the plan document rules; however, everything is speculative at this point, and we must wait and see.

HIPAA Update

This issue includes sound tips on HIPAA, and why you should perform a HIPAA check-up with respect to the privacy and security provisions.

FSA, HRA, and HSA Review

In addition we have included a spread sheet which gives an excellent review of FSA, HRA, and HSA rules. We are seeing employers implementing all of these plans in one form or another in an effort to maximize tax savings and utilize consumer driven concepts within their health insurance programs.

Do not hesitate to contact The Olson Group with any of your employee benefit questions.

HIPAA’s IMPACT ON EMPLOYERS

Group health plans are considered covered entities under HIPAA’s Privacy Rule and as such, must comply with the requirements of the regulation in the same way health insurers and providers must comply. Use the information below as a quick reference to ensure your company is in compliance.

NOTE: Under HIPAA, there are two components of an employer group: (1) the group health plan and (2) the plan sponsor. Compliance may vary for your company depending on which component wishes to receive Protected Health Information (PHI).

RULES FOR GROUP HEALTH PLANS (Staff who administer health plan benefits on behalf of Employer)
TYPE OF FUNDING	RECEIVE Personal Health Info (PHI)?	RECEIVE Summary Plan Health Info (SHI)?	PRIVACY REQUIREMENTS
INSURED	√ No	√ Yes	Refrain from interfering with employees exercising their rights under the Privacy Rule (e.g., requesting access to or a copy of their health information, filing a privacy complaint); and Refrain from requiring any person to waive rights under the Privacy Rule as a condition of receiving payment, enrolling in a health plan or being eligible for benefits.
INSURED OR SELF-INSURED	√ Yes	√ Yes	Refrain from interfering with employees exercising their rights under the Privacy Rule (e.g., requesting access to or a copy of their health information, filing a privacy complaint); and Refrain from requiring any person to waive rights under the Privacy Rule as a condition of receiving payment, enrolling in a health plan or being eligible for benefits. Designate a privacy official who is responsible for the development and implementation of the health plan’s policies and procedures; Designate a contact person (or office) who is responsible for receiving complaints filed under the Privacy Rule; Establish policies and procedures concerning PHI that comply with the Privacy Rule; Train all members of the workforce on the health plan’s PHI policies and procedures; Establish appropriate administrative, technical, and physical safeguards to protect the privacy of PHI from intentional or unintentional use or disclosure that violates the Privacy Rule; Provide a process for individuals to make complaints concerning the group health plan’s policies and procedures, or its compliance with its policies and procedures or the Privacy Rule; Establish and apply appropriate disciplinary measures against members of its workforce for violations of the group health plan’s policies and procedures, or the Privacy Rule; and Act promptly to correct a violation or otherwise lessen the harmful effects resulting from a violation of its policies and procedures about which it has knowledge.
RULES FOR PLAN SPONSORS (Employers)
TYPE OF FUNDING	RECEIVE Personal Health Info (PHI)?	RECEIVE Summary Plan Health Info (SHI)?	PRIVACY REQUIREMENTS
INSURED OR SELF-INSURED	√ No	√ No	The plan sponsor has no compliance obligations.
INSURED OR SELF-INSURED	√ No	√ Yes	SHI may be released to a plan sponsor if the plan sponsor agrees to only use the information to obtain premium bids for providing health insurance coverage to the group health plan, or to modify, amend or terminate the group health plan.
INSURED OR SELF-INSURED	√ Yes	√ Yes	Plan documents must be amended to incorporate the following provisions. The plan sponsor must: Only disclose PHI as permitted by the plan documents or as required by law; Not use or disclose the PHI for employment-related actions or decisions, or in connection with any other benefit or employee benefit plan of the sponsor; Ensure “adequate separation” of records and employees is established and maintained between the group health plan and the plan sponsor; Ensure agents and subcontractors (e.g., benefits consultants) agree to abide by the same restrictions and conditions as the plan sponsor in regard to the use of PHI received from the group health plan; Report any improper use or disclosure of PHI to the group health plan; Allow individuals to inspect and obtain copies of PHI about themselves; Allow individuals to request to amend PHI about themselves; Provide individuals with an accounting of disclosures of PHI made within the six years prior to the request for such accounting; and Make its internal practices, books and records relating to the use and disclosure of PHI available to the Dept. of Health and Human Services (HHS) for purposes of auditing the group health plan’s compliance with the Privacy Rule.

These guidelines are provided as an information source only. This is not intended to replace or serve as legal counsel. To ensure that you and/or your company are taking the necessary steps to comply with HIPAA, you should consult your attorney or other adviser.

UNDERSTANDING YOUR OPTIONS – FLEX, HRA and HSA

DESCRIPTION	FLEXIBLE BENEFIT PLAN HEALTH CARE SPENDING ACCOUNT	HEALTH REIMBURSEMENT ARRANGEMENT (HRA)	HEALTH SAVINGS ACCOUNT (HSA)
History	IRS Code 125 (Passed in 1918)	IRA Code 105(h) (Passed in 2002)	IRS Code 223 (Passed in 2003)
Eligible Entities	Employee, Spouse & Dependents	Employee, former Employee, Spouse & Dependents	Non-Medicare Eligible-Individuals, Business Owners, Spouse & Dependents
Excluded Entities	S-Corp, LLC, LLP, Partnership Owners & their Spouses Sole Proprietors (Employee-spouse may be eligible) Non-dependent Domestic Partners Can exclude part-time, temporary, seasonal and union employees, and non-resident aliens	S-Corp, LLC, LLP, Partnership Owners & their Spouses Sole Proprietors (Employee-spouse may be eligible) Non-dependent Domestic Partners (Special rules) Can exclude part-time, temporary, seasonal and union employees, and non-resident aliens	Excludes Medicare eligible persons (cannot fund HSA but can continue to claim money already set aside in the HSA Trust Account) Non-dependent Domestic Partners
Eligible Medical Expenses	All Eligible Code 213 Medical Expenses	All Eligible Code 213 Medical Expenses (EXCLUDES Long Term Care services)	All Eligible Code 213 Medical Expenses (INCLUDES Long Term Care services)
Eligible Premiums	Cannot reimburse any Health Related Premiums from the Health Care Spending Account	Can reimburse all Health Related Premiums, and INCLUDES Long Term Care Insurance premiums	EXCLUDES all Health Related Premiums INCLUDES Long Term Care Insurance and certain health insurance premiums while unemployed
Who Sets the Rules	Employer designs Plan No special insurance coverage required	Employer designs Plan No special insurance coverage required	IRS mandates HSA must be offered with a HDHP and cannot have other insurance coverage (except as allowed)
Allowed Insurance	All Insurances – No Conflicts	All Insurances – No Conflicts	Must own HDHP Can also own Long Term Care Insurance, Dental, Vision, Accident, Specific Illness Hospital Income & Critical Illness EXCLUDES Prescription Drug Plans
Who Can Fund Plan	Employer and/or Employee	Employer Only	Individual, Employer and/or Employee
Funding Requirements	No Pre-Funding Required	No Pre-Funding Required	Must be funded into a Trust Account – Limited to value of HDHP each tax year – Or $2,600 for single and $5,150 for family (whichever is less) - 55 years and older can add $500 more per year
Can Plan be Funded with Salary Reduction?	Yes	No	Yes, if employer contributes, must make comparable contributions
How are the Dollars Paid?	Available anytime during the Plan Year	Available anytime or as earned (accrual), based on Plan Design	Paid from HSA Trust Account as dollars are available in the Trust Account
Third-Party Claims Adjudication	Always required – Some electronic adjudication allowed with Debit Card	Always required – Some electronic adjudication allowed with Debit Card	Self-adjudication only
Can Dollars Be Carried Forward?	No, unused dollars are retained by employer	Carry forward can be allowed based on Plan Design	Carry forward always allowed; dollars belong to the Account Holder
Can Dollars Be Used for Other than Medical?	No	No	Yes, prior to age 65, 10% penalty and taxes; after age 65 taxation only
Can Dollars Be Paid Out in Future Years?	No	Yes, based on Plan Design	Yes, belongs to the Account Holder
Is COBRA Required?	Yes, generally only when Positive Balance in the Health Care Spending Account at termination (exceptions do apply)	Yes	No, HSA Trust Account dollars owned by Account Holder However, HDHP will be COBRA eligible when a group health plan
Are There Discrimination Rules?	Yes, nine tests in all, most based on Plan Design and others based on pre-tax dollars paid	Yes, must be non-discriminatory in design, not in utilization	Yes, if employer contribution made, must be comparable for similar persons (i.e., single vs. family coverage)
ERISA 5500 Forms	5500 Form required for groups with 100 or more Health Care Spending Account participants	5500 Form required for groups with 100 or more participants	May apply if there are employer contributions (not currently clear)
ERISA SPD Required	Required	Required
Portability of Funds	No	No	Yes
Catch Up Funding Allowed	No	No
Are There Ordering Rules That Apply?	Yes, Health FSAs must be payers of last resort and can’t reimburse expenses that have been reimbursed elsewhere. But employer can draft HRA and health FSA plan documents so HRA pays only after health FSA amounts are exhausted.	Yes, HRA calculations are generally done first and FSA plan reimburses any amounts not paid by the HRA. Employer, however, can draft HRA and health FSA plan documents so HRA pays only after health FSA amounts are exhausted.	No, HSA eligible individual can’t have non-HDHP coverage. An HRA or health FSA would be impermissible, unless restricted to pay only permitted coverage benefits (i.e., dental, vision) or to pay benefits only after HDHP deductible is met. Cannot reimburse expenses that are reimbursed elsewhere.
Are Account Earnings Taxable?	If reimbursements made directly out of the general assets of the employer, no earnings to tax.	If reimbursements made directly out of the general assets of the employer, no earnings to tax.	No
Do Participants Need to Do Anything Differently on Their Personal Tax Return?	No	No	Yes, IRS Form 8889 must be filed with personal income tax return.
Does Privacy Provisions of HIPAA Apply?	Yes	Yes	Yes, DOL guidance regarding whether an HSA is an ERISA plan will be relevant to privacy provision.

ANNUAL CREDITABLE COVERAGE NOTICE TO CMS

The CMS Creditable Coverage Disclosure Notice must be filed annually at the Centers for Medicare & Medicaid Services. For plan years ending in 2007, it is due within 60 days after the start of that plan year. Therefore, if your plan year begins February 1, 2006, you must file another Creditable Coverage Disclosure Notice for the 2007 plan year on the website no later than 60 days after February 1, 2006 or April 1, 2006. Plan years beginning in March 1, 2006 must file within 60 days or May 1, 2006; April 1, 2006 must file within 60 days or May 30, 2006, and so one for each month. Plan years beginning January 1, 2007 must file within 60 days or March 1, 2007.
You will file your yearly Creditable Coverage Disclosure Notice (2008, 2009, etc.) by the same deadline in subsequent years unless the beginning of your plan year changes. If your plan year should change then you will file within 60 days of the beginning date of the new plan year. The filing is to be done by the Plan Administrator (employer) and can only be done electronically through the CMS website. The form is short and simple but does ask for an estimate of plan participants who may be eligible for Part D coverage.

STATE OF NEBRASKA WITHHOLDING

The State of Nebraska has issued a notice that a mandatory 5% state withholding will apply on all distributions for people living in the state of Nebraska on pension plans whenever Federal Income tax is withheld.

If a Nebraska participant requests a regular cash distribution, there will be 20% withheld for Federal Income tax and an additional 5% withheld for State Income tax.

IT’S TIME TO PICK A MEDICARE DRUG PLAN

The deadline to join a plan offering drug coverage for 2006 is May 15. If your needs change, you can change plans one time without penalty and choose a new plan between November 15 and December 31 for the following year.

When selecting a plan, factor in co-payments and premiums. Make sure your drugs are in the plan’s formulary. If a drug is not included but your doctor can show that it is necessary, you can appeal for an exception – but there are no guarantees.

If you are not yet eligible for Medicare, keep in mind that the 1%-of-the-monthly-premium penalty will apply if you enroll more than 3 months after your 65th birthday, when you become eligible for Medicare.

IF YOU NEED ASSISTANCE WITH ANY OF YOUR BENEFIT QUESTIONS OR PROBLEMS, PLEASE CALL OUR TOLL FREE NUMBER 1-(866) 289-1046. IF A CARRIER DOES NOT RESPOND TO YOUR INQUIRIES, PLEASE CALL US. WE ARE HERE TO MAKE THINGS EASIER FOR YOU.