In May, 2007, the IRS informed all employers that any qualified retirement plans that had a normal retirement age (NRA) earlier than age 55 (with the exception of public safety officers, where an age of 50 was permitted) were automatically deemed as not meeting the requirements in the Tax Code.  If a plan had an NRA between 55 and 62 it had to prove that such an age met an “industry standard,” a very high burden of proof in most industries and even in the public sector.

This created two problems for many governmental employers.  First, many had normal retirement age provisions less than age 62.  Second, many such employers also often had a years-of-service provision that enabled participants to retire long prior to age 62.  For example, you could often find a 25-and-out provision with full benefits in many governmental (and private sector) plans.

Later in 2007, nongovernmental employers were told in IRS Notice 2007-69 that they had to have updated NRA provisions in their plan for any plan year beginning on or after July 1, 2008.  For most plans, that meant for plan years beginning on January 1, 2009 (calendar year plans).  Governmental employers were given an additional two years to comply (plan years beginning January 1, 2011).

However, with yesterday’s new IRS Notice, governmental employers now have another additional two years until January 1, 2013 to fix both of these problems.

If only nongovernmental employers had the same relaxed provisions…

The lobbying group American Health Insurance Plans commissioned a study earlier this year by PriceWaterhouseCoopers to determine the cost impact of various health care proposals ultimately to be paid by employers and participants of insured plans.  Their study stated that “the overall impact of these provisions will be to increase the cost of private insurance coverage for individuals, families, and businesses above what these costs would be in the absence of reform.”

However, despite what some in the media and on Capitol Hill have (over)stated, the PWC study only examined four elements of the health care reforms currently being considered in the Senate and House, and ignored many other elements of reform that would reduce health care costs long-term, such as electronic public exchanges and administrative simplification (for example, one common claim form for all providers).  In fact, the study even says that “”the reform packages under consideration have other provisions that we have not included in this analysis,” yet claim overall cost increases that ignore these savings.

Health care reform is a complex and difficult business without misinformation masquerading as a complete analysis.

Under the new federal regulations for the Genetic Information Nondiscrimination Act (GINA), many health risk appraisals (HRA) will need to be overhauled, particularly those that focus on items such as family history.  Under the regs, many items typically asked on an HRA are now illegal.

Congress enacted GINA in response to a concern that employers, insurers, and benefit plans might begin to collect and then misuse genetic information.  While initially some thought the ban on the use of genetic information was limited, under the new regs it has been much more broadly defined to include family medical histories.  Because health risk appraisals often request information on family medical history, most HRAs are subject to GINA’s new rules.

At a minimum, employers should carefully review their HRAs, whether performed internally or much more commonly by an outside vendor, and ensure that none of the items pose an issue under GINA.

GINA is effective November 21, 2009.