Recent Legislation and Other Developments Affecting Health and Welfare Plans

1. Recent Legislation and Other Developments Affecting Health and Welfare Plans Copyright � 2005 Boutwell Fay LLPCopyright � 2005 Boutwell Fay LLP

2. Agenda Continuation Coverage Developments Workers and Families Tax Relief Act of 2004 California Insurance Equality Act (AB 2208) HIPAA Developments USERRA Developments

3. Continuation Coverage Developments New COBRA Regulations Repeal of Senior Cal-COBRA

4. New COBRA Regulations Effective as of the first day of the first plan year on or after November 26, 2004 For calendar year plans this means January 1, 2005

5. New COBRA Regulations(continued) General (Initial) Notice Notice to Plan Administrator of Qualifying Event Election Notice

6. New COBRA Regulations (continued) New Notices Notice of Ineligibility Notice of Termination of COBRA Coverage

7. New COBRA Regulations(continued) Compliance Tasks Update General and Election Notices Review and revise existing COBRA procedures Establish new procedures for notices from covered employees and qualified beneficiaries Update summary plan description Update plan documents if necessary

8. Repeal of Senior Cal-COBRA Repeal effective January 1, 2005 Senior Cal-COBRA must be offered only to those who meet the requirements before that date Age 60 or older on date of termination of employment Worked for employer for the last 5 years Elected COBRA or Cal-COBRA

9. Workers and Families Tax Relief Act of 2004 Uniform Definition of Dependent Effective January 1, 2005 Mental Health Parity Act Extended to December 31, 2005 Archer MSAs Extended to December 31, 2005

10. Uniform Definition of Dependent Old Definition Relationship Financial Support New Definition Must be a �qualifying child� or a �qualifying relative�

11. Uniform Definition of Dependent (continued) Qualifying Child Relationship Age Limit (under age 19, or 24 if full-time student) Residency Limit on Child�s Self-Support Qualifying Relative Relationship Earned Income Limit ($3,200 for 2005) Financial Support Not a Qualifying Child

12. Uniform Definition of Dependent (continued)

13. Uniform Definition of Dependent (continued) Code Section 105 (and 106) incorporate same definition but do not apply the earned income limit for �qualifying relative� Health Plans�taxation issues Flex Plan�reimbursement issues

14. Uniform Definition of Dependent (continued) Compliance Tasks Review plan documents Review health plan eligibility Make sure health FSA incorporates �105 exception for earned income limit Review forms Notify participants Update SPD, employee handbooks, etc.

15. The California Insurance Equality Act (AB 2208) Registered domestic partner coverage provided to same extent spousal coverage provided Applies to HMO or insured health coverage and all insured benefits regulated by the CA Dept. of Insurance (e.g. life and disability)

16. The California Insurance Equity Act (continued) Applies to policies issued, amended, delivered or renewed on or after: January 2, 2005 for health plans January 1, 2005 for all other insurance policies Restrictions on Documentation COBRA Taxation Issues

17. Taxation of Domestic Partner Coverage

18. Imputed Income of Domestic Partner Coverage

19. HIPAA Developments Final and Proposed Portability Regulations Administrative Simplification Deadlines

20. HIPAA Portability Regulations Final Regulations Apply for plan years beginning on or after July 1, 2005 Educational Statement in General Notice Written Procedures for Requesting Certificates Proposed Regulations Comments due to DOL by March 30, 2005 FMLA Tolling of Special Time Periods

21. HIPAA Administrative Simplification Upcoming Deadline Security: April 20, 2005 for most plans Deadlines Past Privacy: April 14, 2003 for most plans Electronic Transaction Standards: October 16, 2002 for most plans

22. USERRA Developments Proposed Regulations Veterans Benefits Improvement Act of 2004

23. USERRA Proposed Regulations Continuation Requirements Reinstatement Requirements Interaction with COBRA

24. Veterans Benefits Improvement Act of 2004 18-month continuation coverage period extended to 24-months Notice of rights and obligations now required DOL to provide model notice by March 10, 2005

25. Action Items Familiarize yourself with the new developments Review and modify your health and welfare plan documents, summaries, procedures, notices, enrollment forms, etc. as necessary Make sure that your insurer or TPA is in compliance with the new rules or will be by the applicable deadlines Communicate changes to employees as appropriate Ask for help when you need it

26. Questions? Kathleen Salas Bass Boutwell ? Fay LLP 1 Park Plaza, Suite 600 Irvine, CA 92614 (949) 660-0486 kathleenbass@boutwellfay.com www.boutwellfay.com