A business health-care checklist for 2005.

Here is a list of the key health-care issues to address as your business closes 2004 and looks forward to 2005:

Final COBRA regulations: In May 2004, the U.S. Department of Labor released final COBRA regulations addressing required notices, their content and timing for delivery. The final regulations were similar to the proposed regulations released last year. Specifically, the new regulations:

* Specified the content that must be included in General Notice, the COBRA election notice and the COBRA election form.

* Created two new required notices: (1) Termination of COBRA notice; (2) Ineligible for COBRA coverage notice.

* Clarified the timing requirements for the delivery of COBRA notices.

These new regulations are effective for plan years beginning on or after Nov. 26, 2004. If you have not reviewed your notices and COBRA procedures to verify they meet these new regulations, you should make this a priority for year-end.

Group term life insurance: If your business provides company-paid life insurance, you may need to address an imputed income issue for certain life benefit amounts:

* If you provide employer paid life insurance in excess of $50,000 for any individual, you must impute income on the value of the benefit that exceeds $50,000.

* If your life insurance discriminates in favor of highly compensated employees according to Section 79 (for example, you offer three times salary as a benefit for your highly compensated employees and one times earnings for all other employees), you must impute income for the full value of the life insurance benefit for your highly compensated employees.

* If you sponsor an employee-paid voluntary life insurance plan and the rate schedule straddles the IRS table I rates (meaning some of your age bands are higher than Table I and some are lower), you need to impute income on the value of the life benefit for age bands that fall below Table I.

This is a very brief overview of Section 79. For more information, go to the IRS Website at www.irs.gov.

Privacy rule compliance: Small group health plans were required to comply with HIPAA's Privacy Rule effective April 14, 2004. The covered entity is your group health plan. Organizations needed to take a number of steps to secure an individual's PHI (Protected Health Information). Steps included naming a Privacy Officer, creating a policy on how your plan will use and disclose PHI, distributing a Privacy Notice, establishing business associate contracts and so on.

The Privacy Rule is complicated. If you are not familiar with this rule and have not taken steps to comply with it, you should make education and compliance a 2005 priority.

Open enrollment dependent audit: As organizations struggle with health-care cost increases, many are becoming more diligent in their efforts to confirm that their plan is only covering eligible dependents. Year-end is an excellent time to verify your employees are only covering eligible dependents. This can be done by asking your employees to complete a questionnaire with a series of questions to verify in writing that the dependents they cover are eligible under the plan. Your questionnaire language should specify if an individual does not provide accurate information to the organization, the individual will be financially liable for the incorrect data. You should also reserve the right to take disciplinary action against an employee that willingly provides inaccurate information which can include termination of employment.

IRS Table I rates

Age bracket   Cost per $1,000 of coverage

Under 25      $0.05
25 to 29      $0.06
30 to 34      $0.08
35 to 39      $0.09
40 to 44      $0.10
45 to 49      $0.15
50 to 54      $0.23
55 to 59      $0.43
60 to 64      $0.66
65 to 69      $1.27
70 and above  $2.06

Sue Mathiesen is technical services director at McGraw Wentworth in Troy, a member of the Detroit Regional Chamber.

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