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Total Articles: 212

Can Gig Businesses Offer Benefits To Their Workers? Recent Developments May Shed Light On Answer

There are obvious “benefits” to participating in the gig economy: Gig companies get to use as little or as much labor as they need. Gig workers are able to work at their chosen capacity. And customers get new products and services. But there are other “benefits” that are receiving more attention of late: “employee benefits.”

The Proposed Tax Cuts and Jobs Act Would Make Sweeping Changes to Executive Compensation and Employee Benefits

On November 2, 2017, the U.S. House of Representatives unveiled the Tax Cuts and Jobs Act (H.R. 1) (the “Bill”) as part of proposed tax reform legislation. The Bill is sweeping in scope and provides for significant changes to the U.S. Internal Revenue Code (the “Code”), including in the area of executive compensation and employee benefits.

No Standing!

This is the most recent article in our series which focuses on the impact on employers of the downward spiral and death knell of the multi-employer defined benefit plan.

On-Site Clinics: What Effect on HDHPs and HSAs?

We already know the state of health care in the United States continues to whipsaw, as an October 25th ruling demonstrates: a federal district court confirmed that the Trump Administration need not fund the Affordable Care Act (“ACA”) subsidies that offset insurance copays and deductibles for some ACA shoppers.

5 Employee Benefit Trends HR Should Have on Its Radar

With the current jobseeker-friendly market, employers are facing many challenges when tasked with recruiting, hiring and retaining the best and the brightest employees. With the rising competition for talent, an employer needs to make sure it is in the best position to attract and retain the workforce it wants and needs.

Healthcare Update (No. 4, November 2017)

It is always unpleasant for a healthcare entity or medical practice to have to sever ties with an employed physician, but it is sometimes necessary. Perhaps the physician has committed serious policy violations or lost an insurance contract, creating financial problems for the healthcare entity. Or perhaps other employees have repeatedly complained about the physician’s demeanor and the physician has refused to modify their conduct.

2018 Cost of Living Adjustments for Retirement Plans

The Internal Revenue Service recently announced its cost-of-living adjustments applicable to dollar limitations for retirement plans and Social Security generally effective for Tax Year 2018 (see IRS Notice 2017-64). Most notably, the limitation on annual salary deferrals into a 401(k) plan will increase from $18,000 to $18,500. The dollar limits are as follows:

2018 § 401(k) and Other Retirement Plan Limits Increase, Fringe Benefit Limits Adjusted

The IRS has released the 2018 cost-of-living adjustments (COLAs) to the dollar limitations on benefits and contributions to qualified retirement and deferred contribution plans, such as § 401(k) plans. It has also released the inflation-adjusted fringe benefit limitations. Employers need to know the increases in these amounts so they can reprogram their computers and payroll systems before the first payroll of the upcoming year. This will ensure that they are withholding the correct amount of taxes from the pay of employees who receive the benefits.

IRS Publishes Pension Plan Limitations for 2018

On October 19, 2017, the Internal Revenue Service (“IRS”) announced cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for the 2018 tax year. The list below details some of the key limit increases and those limits which remain unchanged effective January 1, 2018:

2018 Social Security Taxable Wage Base Inches Up, Benefit COLAs Up More

The Social Security Administration has issued inflation-adjusted figures for 2018, including the Social Security taxable wage base, the earnings tests for retirees who return to work, and the Social Security benefits quarter-of-coverage requirement and cost of living adjustment (COLA). Employers should update their payroll systems with these new figures for accurate 2018 withholding.

Recent Cases Shed Light on Retirement Plan Excessive Fee Litigation

As we approach the end of the year, 2017 is turning out to be significant in the ever-evolving world of litigation over 401(k) plan fees. Since 2006, plaintiffs’ firms have brought hundreds of lawsuits across the country on behalf of employees alleging excessive plan fees and breaches of fiduciary duties to maintain proper investments. While these lawsuits initially targeted larger, multi-billion dollar plans, these cases have expanded downward in recent years. Decisions in two recent cases will have significant effect on the retirement plan fee landscape.

Employers Gain Religious Exemption From Providing Contraceptive Benefits

More employers with religious or moral objections to providing birth control may be granted an exemption from Affordable Care Act regulations requiring them to provide coverage after the Trump administration moved to greatly expand employers' rights in this area The Department of Health and Human Services (HHS) will publish two interim final rules in the Federal Register on October 13, 2017, that will loosen the restrictions on religious exemptions put in place by the Obama administration.

To Audit or Not to Audit? A Good Question for Self-Funded Group Health Plans

The rise in insurance premiums for group health plans has prompted many employers to reexamine the decision whether to fund participant health benefits with insurance or self-fund benefits and limit their claims risk by purchasing stop-loss insurance. The increasing number of self-funded health plans in workplaces across the country has caused some confusion among employers and their advisors as to the requirements for Form 5500 reporting and fiduciary audits for these plans.

IRS Issues Optional "High-Low," "Special" Per Diem Rates for 2017-2018

An employer that prefers to use per diem allowances to reimburse employees who travel on business in the Continental US (CONUS) may use the IRS's optional "high-low" rates, which may be more generous than the regular per diem rates. The high-low federal per diem rates that are effective for business travel undertaken on or after October 1, 2017, through September 30, 2018, were issued by the IRS this week in Notice 2017-54.

Major Disruptions Will Soon Shape the Future of Benefits

Major disruptions in the benefits world are about to shape the future of the industry, according to a panel of experts at the 2017 EBN Benefits Forum & Expo in (mostly) sunny Boca Raton, Florida.

Employee Benefits Newsletter – Summer/Fall 2017

Proving Loss Causation in Breach of Fiduciary Claims – The Split Widens. Analysis of recent litigation trends involving loss causation, an important burden-of-proof issue in ERISA fiduciary claims.

Significant Changes Proposed for Employee Benefit Plan Audit Reports

Under ERISA, retirement plans and self-insured welfare plans with 100 or more participants (measured as of the beginning of the plan year) are generally required to conduct annual audits, and to include the audit reports with their annual Form 5500 filings. The American Institute of Certified Public Accountants’ (AICPA) Auditing Standards Board has proposed changes to the reporting standards for annual audits of employee benefit plans that are covered by ERISA. The proposal, which was issued in April 2017, was in response to a request from the U.S. Department of Labor to re-examine the current audit reporting model for employee benefit plans.

Benefits Update (No. 3, September 2017)

A federal appeals court has handed multiemployer pension plans a blank check to assess increased withdrawal liability against employers exiting a plan. The 11th Circuit Court of Appeals’ recent decision in Westrock RKT Company v. PACE Industry Union-Management Pension Fund is bad news for employers already saddled with statutory withdrawal liability costing millions of dollars. This new decision means multiemployer pension plans in “critical” status are free to add their own assessments on top of existing obligations under the Multiemployer Pension Plan Amendments Act of 1980 (MEPPAA)

FORFEITURE FREEDOM

Some of our employer client sponsors of pre-approved 401(k) plans have contacted us regarding plan amendment notices received recently from their prototype or volume submitter plan document sponsors relating to the expanded use of forfeitures in their plans.

Increase in 2017 Service Contract Act Health & Welfare Rate; Lower Rate for Contracts Covered by Federal Paid Sick Leave EO

The U.S. Department of Labor has released its annual memorandum with the rate increase for Service Contract Act (SCA) Health and Welfare (H&W) Fringe Benefits. The new rate of $4.41 per hour (up from the 2015-2016 rate of $4.27 per hour) is required in all government contract bids or other service contracts awarded on or after August 1, 2017.

THE FULL FIFTH CIRCUIT WILL RE-VISIT THE STANDARD OF REVIEW IN DENIAL OF BENEFITS CASES

On July 10, the Fifth Circuit Court of Appeals announced that the full Court would re-hear a recent case concerning the applicable standard of review in an ERISA denial of benefits case – which is often outcome-determinative in favor of insurers and benefit plans.

NPR Report Discusses Growing Interest In Portable Benefits

Late last week, NPR aired a story discussing the governmental efforts to bring portable benefits to gig workers. You can read a transcript of the story or listen to it by clicking here. I was fortunate enough to have been interviewed by Yuki Noguchi for the story, discussing one of the biggest reasons most companies do not offer benefits to their workers benefits: “They don't want to have them categorized as ‘employees.’

Benefits Update (No. 2, June 2017)

One of the hottest benefit trends in 2017 is the adoption of free or low-cost “telemedicine” programs to provide employees easy and affordable access to medical care. However, you need to proceed with caution when introducing such a program to your organization, as it could raise a host of compliance and excise tax issues.

IRS Says Employer's Parking Benefits Are Taxable to Employees

In an information letter, the IRS concludes that benefits an employer provides under its company parking policy are taxable income to the employees that choose to use the benefit.

Federal Bill Seeks to Create Portable Benefits for Gig Economy Workers

Senator Mark Warner (D-VA), a lawmaker known for closely monitoring the changing nature of work, has introduced in the Senate legislation to promote innovative ways to offer portable benefits to workers in the on-demand economy. Rep. Suzan DelBene (D-WA) introduced a companion bill in the House of Representatives. The Portable Benefits for Independent Workers Pilot Program Act would direct the Labor Secretary to provide $20 million in grants to states, local governments, or nonprofit organizations that analyze and/or design the means and methods of delivering employment benefits that independent workers can maintain as they move from job to job.

Are You Computing Your Maximum Participant Loan Amount Correctly (or in the Best Interest of Your Plan Participants)?

In late April 2017, the IRS issued a Memorandum for Employee Plans (EP) Examinations Employees providing two alternatives for computing the maximum participant loan amount when the participant has prior loans. Prior to this Memorandum, the law was not clear concerning how to compute the maximum loan amount where a participant had taken a previous loan during the year.

How Employee Benefits Can Help Promote Mental Health

May is Mental Health Awareness month. With one in five American adults experiencing some type of mental health issue according to MentalHealth.gov, no employer is immune from the need to address the mental well-being of its employees. So what can employers do?

Senate Votes to Revoke Department of Labor Guidance on State-Run Retirement Plans for Private Sector Employees

In yet another move to roll-back regulatory guidance issued during the Obama administration, earlier this month the U.S. Senate voted to revoke a final rule and associated interpretive guidance that the Department of Labor issued in 2016 that would have made it easier for states to set up state-sponsored retirement plans for private sector employees. The House has already passed its own legislation revoking the rule, and President Trump is expected to sign the legislation that the Senate recently passed.

Are Portable Benefits One Step Closer To Reality?

According to a great article by Tyrone Richardson in Bloomberg BNA, it appears that the concept of portable benefits for gig workers is a step closer to reality. Richardson reports that Congress is “seeking ways to fill the void of benefits offered to traditional employees,” especially given that sharing economy companies are often hesitant to offer any sort of benefits package to their workers for fear it will land them on the losing side of a misclassification battle. That has led Senator Mark Warner (D-Virginia) to craft a preliminary concept for a federal law that would assist local governments with funding and development of portable benefits for gig workers.

Employee Benefits Newsletter – Spring 2017

Data Security Safeguards. When ERISA was enacted in 1974, it was not known the extent to which technology would allow us to maintain and transmit employee benefit plan data electronically. Learn how today’s technology and the changing data privacy rules affect employee benefit plans and data security.

SEC Guidance Signals Approval for “Unbundled” Pricing for Mutual Funds

A recent ruling by the Securities and Exchange Commission (SEC) indicates approval for mutual funds to be sold without servicing costs already built into the cost of the fund. In other words, the SEC ruling states that mutual funds can be sold the same way stocks, bonds, and ETFs are currently sold.

DOL Continues Investigating Defined Benefit Plans Regarding Procedures for Locating Participants and Paying Benefits at Mandatory Retirement Age

The U.S. Department of Labor (DOL) publicized last year its stepped up enforcement efforts inquiring about procedures used by larger defined benefit plans for locating, and then beginning payment of benefits to, terminated vested participants who have reached the age when the plan mandates benefits must begin. Those audit activities are continuing.

DEATH OF THE SUBSTANTIAL COMPLIANCE DOCTRINE?

In Halo v. Yale Health Plan, decided in April of 2016, the Second Circuit expressly rejected the “substantial compliance” doctrine with respect to alleged violations of the ERISA Claims Procedure regulation.

Benefits Update (No. 1, March 2017)

A New Employer Healthcare Plan: Qualified Small Employer Health Reimbursement Arrangement (QSEHRA)

Church Plan Cases: Federal Agencies Finally Speak

As many of you know, currently pending before the Supreme Court are consolidated cases from the Third, Seventh, and Ninth Circuits holding that, for religiously affiliated employers, employee benefits plans must initially be established by a church for the plans to be exempt from ERISA as “church plans.”

Employee Benefits Newsletter – Winter 2017

HHS and ACA Enforcement under the Influence of a Trump Administration. A summary of some of the essential facts about enforcement of the Affordable Care Act by the Department of Health and Human Services.

Data Analytics Enables Health Plans to Predict When Employees Need Health Services and For How Long

We know that data analytics is being used to influence a wide range of things such as the pair of shoes one might want to buy or what news is “trending” on Facebook. Similar tools are being applied to employer-sponsored group health plans. According to a recent HealthcareITnews article, vendors such as Advanced Plan for Health (APH) are using predictive modeling functionality to support population health management.

21st Century Cures Act Would Give Small Employers Greater Use of HRAs

Passed swiftly by Congress, the 21st Century Cures Act (H.R. 34) seeks to hasten cures for killer diseases, among other things. President Obama is expected to sign the bill on Tuesday, December 13.

Benefits Update (No. 4, December 2016)

What Employers Need To Know About Mandatory Payroll Deduction Savings Programs

Early Holiday Gift from the IRS – Due Date Extension for Furnishing Forms 1095 and Related Relief

In IRS Notice 2016-70, the IRS announced a 30-day automatic extension for the furnishing of 2016 IRS Forms 1095-B (Health Coverage) and 1095-C (Employer-Provided Health Insurance Offer and Coverage), from January 31, 2017 to March 2, 2017. This extension was made in response to requests by employers, insurers, and other providers of health insurance coverage that additional time be provided to gather and analyze the information required to complete the Forms. Notwithstanding the extension, the IRS encourages employers and other coverage providers to furnish the Forms as soon as possible.

Pension Plan Suffers Cybersecurity Attack, ERISA Advisory Council Offers Cybersecurity Recommendations to DOL

It has been reported that infamous bank robber, Slick Willie Sutton, once said, “I rob banks because that’s where the money is.” Data thieves, understandably, have a similar strategy – go where the data is.

Employee Benefit Issues to Keep You Awake at Night

Last week I made a presentation in the Omaha office of Jackson Lewis with the above title. I thought it might be helpful to outline the basic points of my presentation.

2017 Cost of Living Adjustments for Retirement Plans

The Internal Revenue Service has announced its cost-of-living adjustments applicable to dollar limitations for retirement plans and Social Security generally effective for Tax Year 2017 (see IR-2016-141). Most notably, the limitation on annual salary deferrals into a 401(k) plan (along with the other retirement plan limitations) remains unchanged. The dollar limits are as follows:

Annual Inflation Adjustments for Fringe Benefits and Income Taxes Released by IRS

The IRS has released Revenue Procedure 2016-55, which provides the annual inflation adjustments to the employer-provided fringe benefit limitations and personal income tax-related amounts. Although many of the amounts will increase for tax year 2017, others, such as employer-provided parking and mass transit benefit limits, will remain at 2016 levels.

Employee Benefits Newsletter – Fall 2016

The ‘Missive Gap’ — Employers to Cope Without Updated Plan IRS Determination Letters. For employers that sponsor and maintain individually designed qualified retirement plans (“IDPs”), such as 401(k), profit-sharing, or traditional defined benefit pension plans, beginning January 1, 2017, no IDP determination letter applications will be accepted by the IRS except in certain situations.

With Open Enrollment Season Under Way, What Do Employees Need to Know?

October is a great month for many reasons, but unless you’re a serious health care wonk, open enrollment probably isn’t one of them.

Treasury Makes it Easier for Pension Plans to Pay Partial Annuities

The Department of Treasury has issued final regulations that simplify the rules that allow retiring participants to simultaneously elect a partial lump sum and a partial annuity from a defined benefit pension plan. Under the tax code, the minimum present value of a benefit offered by a pension plan cannot be less than the present value calculated by using a specified mortality table and interest rate. The regulations, which were first proposed in February 2012, are an attempt to balance the need for retirees to insure against unexpected longevity (by promoting partial annuity payments) with the increased liquidity provided by accelerated forms of payment (like lump sums).

The MPRA: One Size Fits No One

This is another in our series addressing the continuing deterioration of multi-employer defined benefit pension plans.

Mandatory Commuter Benefits on the Rise in Major Metro Areas; Will Your Locale Be Next?

The employer requirement to offer employees the option of purchasing commuter transit benefits on a pre-tax basis via payroll deduction took effect this year on January 1 in two major metropolitan cities – New York City and Washington, DC.

Benefits Update (No. 3, September 2016)

Upcoming Benefit Plan Deadlines

IRS Publishes Guidance Allowing Taxpayers to Self-Certify An Excuse from the 60-day Rollover Rule in Specified Hardship Scenarios

If you ask, plan administrators will tell you that for every deadline or specified time limit that is imposed by law upon plan participants for taking action with respect to an employee benefit plan, there are always a significant number of participants who come forward with one or more “excuses” why they could not meet the deadline. Often these “excuses” are legitimate. However, only occasionally is there a legally authorized protocol provided to plan administrators and participants which can remedy the circumstance of the missed deadline. Such an occasion occurred on August 24, 2016.

New IRS Procedure for "Late" Rollovers

In Revenue Procedure 2016-47, which was released by the Internal Revenue Service on August 24, 2016, the IRS prescribes eleven circumstances in which taxpayers may qualify for automatic extension of the 60-day deadline for completing a rollover to an IRA or to an employer’s tax-qualified plan. The procedure described in the Revenue Procedure is effective starting August 24, 2016.

Employer-Sponsored Benefits in the Gig Economy

As the gig economy grows, policymakers are asking, “what happens with employee benefits?” Specifically, if gig workers are not classified as employees, what options should they have for retirement savings and health insurance? And what should gig businesses do?

Employee Benefits Newsletter – Summer 2016

What the New Fiduciary Rule Means for Plan Sponsors and Fiduciaries. On April 8, 2016, the Department of Labor published its final rule on who is a fiduciary as a result of giving investment advice under the Employee Retirement Income Security Act of 1974 (the “New Fiduciary Rule”) as well as related exemptions. Although the New Fiduciary Rule is targeted mainly at the providers of investment advice, it contains a number of provisions that are relevant to sponsors and fiduciaries of qualified retirement plans (e.g., 401(k) plans and traditional pension plans).

Employers Wonder How to Respond to Marketplace Notices

Many employers have begun receiving Health Insurance Marketplace notices – letters stating that a particular employee reported that he or she wasn’t offered affordable minimum value coverage for one or more months during 2016. The letter states that the employee has been determined to be eligible for subsidized Marketplace coverage. This means, if the employer is an “applicable large employer” for purposes of the Affordable Care Act’s employer shared responsibility penalties, the employer may be subject to penalties with respect to that employee.

DETERMINATION LETTER RATIONING: IRS REVEALS THE BRAVE NEW WORLD

Last year’s announcement by the Internal Revenue Service (IRS) of the elimination of the current five-year remedial amendment cycle system for determination letter approval of restated individually-designed qualified plan documents provoked bitter criticism and calls to reverse course. The Service cited budget constraints allowing a median time of only three hours of agent review per plan for the necessity of severely restricting the issuance of letters.

Employee Benefits for the Generations

In her latest video, Sue discusses how to meet the needs of the diverse workforce and different generations, including:

The Central States Rescue Plan Rejection and Next Steps

Like many other multiemployer pension plans, the Central States, Southeast and Southwest Areas Pension Fund was hit very hard by the financial crisis in 2008. In response, the Employee Retirement Income Security Act, or ERISA, was amended to allow Central States and other critically underfunded plans to remain solvent through the approval of a so-called “rescue plan.” On May 6, 2016, Central States’ proposed Rescue Plan was rejected by the IRS. This would have huge implications not just for the employers who contribute to the plan, but also for the Pension Benefit Guarantee Corporation (PBGC) and for participants and retires. Joining the WPI to examine the implications of the rejection of Central State’s plan was Littler shareholder Mike Congiu.

Benefits Update (No. 2, June 2016)

Many Affordable Care Act (ACA) requirements and deadlines are new and difficult to navigate. Below you will find information about Federally Facilitated Marketplace (FFM) Notices, which some employers may receive soon. Additionally, you will find below a reminder about approaching deadlines for health coverage reporting.

Employee Benefit Trends: What's Hot in 2016

Since the beginning of the year, Nexsen Pruet tax and employee benefits attorney Sue Odom has been producing videos about various legal issues that she follows as part of her law practice.

"High Noon" for the Central States Pension Fund?

For the past several months, we have been reporting on the application filed by the Central States Southeast and Southwest Areas Pension Fund (“Central States”) to the Department of Treasury to reduce “core” benefits to participants. This extraordinary remedy is permitted by the Kline-Miller Multiemployer Pension Reform Act of 2014 (“Kline-Miller Act”).

Employee Benefit Plans and Data Security Issues

In recent weeks, much of the discussion around a recent Supreme Court case, Gobeille, has focused on ERISA preemption. But for fiduciaries of benefit plans the case can serve as a reminder of important duties that often go unexplored—protecting the private data of participants.

(Video) Compliance Issues Associated with Section 125 Plans

Nexsen Pruet tax and employment benefits attorney Sue Odom looks a compliance ’soft spot’ for companies. In this new video, Sue discusses what are known as Section 125 Plans, Cafeteria Plans and Premium Conversion Plans.

The Grisly Death of Determination Letters for Individually Designed Plans

The Internal Revenue Service (IRS) announced last year that it would end its staggered five-year remedial amendment cycle system for individually designed retirement plans under the determination letter program due to budgetary constraints and a lack of resources. The remedial amendment cycle system had allowed plan sponsors to have the IRS approve the plan document language of their individually designed plans at regularly scheduled intervals. The cancelled program provided plan sponsors with significant legal protections, encouraged compliance with required changes in the law, and gave sponsors a blueprint for following the terms of the plan in operation. Many problems—and no apparent solutions—have resulted from the loss of this valuable program.

Employee Benefits Newsletter – Spring 2016

Surcharge and Life Insurance Plans: Plugging the Dike against Rising Tide of Employer Fiduciary Liability after Amara. Until the United States Supreme Court decided CIGNA Corp. v. Amara, in 2011, jurists had uniformly interpreted the Court’s earlier guidance under the Employee Retirement Income Security Act (ERISA) as prohibiting, with only minor exceptions, virtually any form of monetary relief for breach of fiduciary duty under the “catch-all” section of ERISA’s civil remedies provisions. That section authorizes “appropriate equitable relief.”

Recent Decision in Colorado Expands Church Plan Exemption Under ERISA While Third Circuit and Other District Courts Uphold Narrow Interpretation

Does a benefit plan, to fall within the so-called “church plan exemption,” have to be directly established by a religious entity? Or is it enough for the benefit plan to be established by an organization, such as a medical institution, that is itself established by a religious entity? That is the question that a number of courts are attempting to answer through their holdings in recent cases.

(VIDEOS) You need an employee benefits lawyer when...

Nexsen Pruet tax and benefits attorney Sue Odom produced two quick videos. The first is about when an employee benefits attorney might be needed and the second about Employee Stock Ownership Plans.

IRS Issues Proposed Rules on Normal Retirement Age for Governmental Plans

The Internal Revenue Service (IRS) has issued proposed regulations relating to the definition of normal retirement age for governmental retirement plans. In 2007, the IRS issued regulations regarding normal retirement age for all qualified retirement plans. The 2007 regulations generally mandated that pension plans define normal retirement age as no younger than the earliest age that is reasonably representative of the typical retirement age for the industry in which participants are employed. The 2007 regulations further provided that a normal retirement age of age 62 or later is automatically deemed to satisfy the “reasonably representative” requirement. Through a series of notices, the IRS delayed the application of the 2007 regulations to governmental plans because of special concerns that applied to governmental plans. The IRS then announced in 2012 that it intended to modify the regulations as they applied to governmental plans. In the newly-issued proposed regulations, the IRS announces modifications to the 2007 normal retirement age regulations for purposes of their application to governmental plans.

Navigating the Rollover as Business Start-ups (ROBS) Strategy

A former executive starts a new chapter in her life and wants to buy a franchise operation and work there. A long-time consultant tires of working for others and wants to start and manage a new stand-alone business for himself. Where can they access money to fund these new operations? From their credit cards? Off their home equity lines? From a new kick-start campaign online?

IRS Notice 2016-03 Modifies the IRS Determination Letter Program

The IRS recently issued Notice 2016-03 (the “Notice”), addressing several items with respect to changes made to the IRS’s determination letter program. The Notice also extends the deadline for sponsors to adopt a pre-approved defined contribution plan in certain instances.

IRS Reduces Voluntary Compliance Program Filing Fees for Most Plans

The IRS recently published its annual update on user fees, Revenue Procedure 2016-8, which now includes fees for Voluntary Compliance Program (“VCP”) applications filed with the IRS pursuant to the Employee Plans Compliance Resolution System set forth in Revenue Procedure 2013-12. As a result, the fee for VCP applications has been reduced for almost all plans eligible to file a VCP application with the IRS.

IRS Issues Guidance on Retroactive Increase in Excludable Transit Benefits

The Protecting Americans From Tax Hikes (PATH) Act of 2015 amended § 132(f)(2) of the Internal Revenue Code (IRC) to equalize the transit benefit exclusion amounts for (i) transportation in a commuter highway vehicle and transit passes, and (ii) the exclusion for qualified parking benefits provided by an employer to an employee for periods after December 31, 2014. As a result, the monthly exclusion amount for transportation in a commuter highway vehicle and transit passes increased from $130 per employee to $250 per employee retroactively for all of 2015, and to $255 for 2016. In addition, the exclusion amount for qualified parking increased from $250 (in 2015) to $255 for 2016. The Act also made this equalization permanent as of January 1, 2016.

Protecting Americans from Tax Hikes Act

Sue looks at how social welfare organizations will be impacted by the Protecting Americans from Tax Hikes Act. Under the new law, there is a new notice requirement and expanded filing.

Late-Breaking Benefits News for 2016

While taxpayers were completing their holiday shopping and preparing to spend time with their families, Congress and the Internal Revenue Service (“IRS”) were busy changing laws governing employee benefit plans and issuing new guidance under the Patient Protection and Affordable Care Act (“ACA”). The results of that year-end governmental activity include the following:

IRS Extends Health Care Information Reporting Due Dates

On December 29, 2015, the IRS issued Notice 2016-4, which extends the time an employer has to provide employees with Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, or Form 1095-B, Health Coverage. The deadline for filing the forms with the IRS has been extended, as well. These extensions apply only to 2015 forms that are filed in 2016. Next year is the first year that an employer is required to report offers of health coverage to employees and the IRS.

Congress Gives Commuters a Christmas Present

On Friday, December 18, 2015, when President Obama signed the Protecting Americans from Tax Hikes (PATH) Act into law, one of the provisions included in the law made the monthly limit on qualified transportation benefits for public transportation equal to the monthly limit applicable to parking benefits. This means that, for 2016, instead of $130 per month as was recently announced by the IRS, the limit on commuting benefits that could be provided tax free will be nearly doubled, to $255 per month. (Technically, the limit for this year increased as well, to $250 per month, but since there's only a week left before the end of the year, that increase is fairly moot.) This increase is permanent – or as permanent as tax reductions are – unlike the temporary increase enacted in 2009.

Employee Benefits for Employers - Winter 2015

A Troubling Expansion of Successor Liability. Under the Employee Retirement Income Security Act (“ERISA”), as amended by the Multiemployer Pension Plan Amendments Act (“MPPAA”), an employer that has assumed an obligation to contribute to and subsequently withdraws from a collectively-bargained and jointly-administered defended benefit pension plan (a “multiemployer plan”) is liable for its allocable share of any underfunding. This “withdrawal liability” has become a significant issue since 2008, due to the economic and investment impact of the recession, historically low interest rates, declining plan participation, and an increase in the number of retirees, among other things.

Employee Benefits Newsletter – Winter 2015

Here in the middle of the holiday season, we’ve been busy putting the finishing touches on the next issue of our practice group’s quarterly newsletter, “Employee Benefits for Employers.” The newsletter is a reimagined version of some earlier efforts to provide this audience with useful information on the rapidly evolving areas of employee benefits and executive compensation. You may have noticed our first issue when it came out in September, but if not, please take a moment to check it out here.

2016 Federal Percentage Method Withholding Tables Released by IRS

The IRS has released advance copies of the federal percentage method withholding tables effective for wages paid in 2016. An employer may use the tables to determine the amount of income tax to withhold from an employee's pay in lieu of the wage bracket method withholding tables.

Premium Reimbursement Arrangements – Part Deux

Last November, Melissa Ostrower wrote an excellent blog on the perils of employers reimbursing employees for health care premiums. (See: http://www.benefitslawadvisor.com/2014/11/articles/health-care-reform-legislation/premium-reimbursement-arrangements-employers-beware/) At the time of her article, the Department of Labor had just published a new FAQ which stated, in general, that where an employer provides cash reimbursements to employees for the purchase of an individual market health care policy or provides cash in lieu of coverage to employees with high claims risks, such action would be considered part of a plan, fund or arrangement governed by the Affordable Care Act (“ACA”). Because these arrangements — by their nature — can never comply with the ACA group health plan provisions, they may subject employers providing such arrangements to penalties.

2016 Retirement Plan Limits Unchanged

The IRS recently announced retirement plan related dollar limits for 2016. The items are unchanged from 2015; some of the key figures are summarized in the chart below:

Benefits Fast Facts

PACE Act: Some Positive News For Employers With 51 To 99 Employees For insurance market reform purposes, the Affordable Care Act (ACA) initially defined “small employers” as those with fewer than 50 employees. This definition was set to change in 2016, with the number increasing to 100. However, the Protecting Affordable Coverage for Employers (PACE) Act recently changed this. Now, each state will determine on its own whether the insurance market reform rules will apply to those employers with 51 to 99 employees.

Key IRS Benefit and Contribution Limits to Remain Unchanged in 2016

On October 21, 2015, the Internal Revenue Service (IRS) announced the cost-of-living adjustments impacting tax-qualified pension plans for 2016. The increase in the cost-of-living index did not meet the statutory thresholds that trigger adjustments. As a result, most of the general pension limitations, including the individual limits on deferrals and catch-up contributions, as well as the limit on annual compensation, will not change for 2016.

2016 Cost of Living Increases are Rare

On October 21, 2015, in Information Release 2015-118, the IRS announced cost-of-living adjustments to various dollar limitations under the Internal Revenue Code (the "Code") for pension plans and other related items for the year 2016. Those limitations and thresholds generally remain unchanged from this year's amounts because the measuring cost-of-living indices did not increase sufficiently to warrant adjustments. So, for example:

2016 Cost of Living Adjustments for Retirement Plans

The Internal Revenue Service recently announced its cost-of-living adjustments applicable to dollar limitations for retirement plans and Social Security generally effective for Tax Year 2016 (see IR-2015-118). Most notably, the limitation on annual salary deferrals into a 401(k) plan (along with the other retirement plan limitations) remains unchanged. The dollar limits are as follows:

IRS Announces 2016 Inflation Adjustments to Fringe Benefits, Increase in Qualified Parking Benefit Amount

The IRS has announced the 2016 annual cost-of-living adjustments made to several employee benefits and taxable amounts, based on changes to the Consumer Price Index. These are the maximum amounts that may be excluded in 2016 from an employee's taxable income for specific benefits.

Open Enrollment: Four Keys to Success

Fall is easily my favorite time of year! With it, comes the start of the football season, crisp, cool weather, pumpkin and apple picking and of course, the beautiful fall foliage. Fall also marks the beginning of one of HR’s busiest times which typically “kicks off” with open enrollment.

Central States Pension Fund Submits 'Rescue Plan' Seeking Approval to Reduce Benefits

On September 25, the Central States Pension Fund (one of the largest multiemployer/union pension funds in the country) submitted to the U.S. Department of Treasury a proposed “rescue plan,” which would allow the fund to reduce participant benefits in order to stave off the fund’s potential insolvency. As discussed in our prior alert, the Multiemployer Pension Reform Act of 2014 (MPRA) permits deeply troubled multiemployer pension plans to voluntarily reduce benefits in order to avoid insolvency. To implement a benefit reduction, a multiemployer fund must first submit its proposed rescue plan to the U.S. Department of Treasury for approval.

Employee Benefits for Employers - Fall 2015

Arbitration of ERISA Claims: Yes, You Can!

PBGC Report Shows Modest Improvements in Agency’s Long-Term Solvency

The Pension Benefit Guaranty Corporation (PBGC) recently released its annual projections report showing that its insurance programs, which back both multiemployer pension plans and single-employer pension plans, have experienced modest financial improvements since last year.

IRS Issues Optional 'High-Low' and Special Per Diem Rates for 2015-2016

The IRS has issued Notice 2015-63 announcing the annual list of "optional high-low" federal per diem rates. Employers may choose to use these optional rates instead of the standard federal rates issued by the General Services Administration (GSA) to reimburse expenses incurred by employees who travel on business to locations within the continental US (CONUS). The rates are effective for travel on or after October 1, 2015.

New IRS Qualified Plan Corrections Guidance

The Internal Revenue Service (IRS) issued two rounds of guidance modifying the Employee Plans Compliance Resolution System (EPCRS). The IRS guidance gives employers greater flexibility in correcting relatively common operational errors such as benefit plan overpayments, missed deferrals, and automatic enrollment failures. Revenue Procedure 2015-27 addresses overpayments, provides new compliance fees for certain plan loan and required minimum distribution failures, extends the period for distributing excess annual additions, and provides other helpful EPCRS improvements. Revenue Procedure 2015-28, issued less than one week later, provides long-awaited new guidance on automatic contribution failures, including errors attributable to automatic escalation and more lenient approaches for missed deferral errors of limited duration.

Employee Benefits Alert - August 2015

As we have written in prior alerts, the Multiemployer Pension Reform Act of 2014 (MPRA) permits trustees of financially troubled multiemployer plans to reduce vested participant benefits in certain circumstances when a plan would be unable to pay them fully. After a plan’s trustees have approved benefit suspensions, and after the suspensions have been approved by the Department of Treasury, in consultation with the Department of Labor (DOL) and the Pension Benefit Guaranty Corporation (PBGC) (collectively, the “Agencies”), the MPRA gives affected participants and beneficiaries the opportunity to vote on the benefit reductions (with some exceptions).

Federal Standard Per Diem Rates for FY 2016 Released

The General Services Administration (GSA) has announced the per diem rates that apply to the lower 48 Continental United States (CONUS) for the federal government's fiscal year (FY) 2016, which begins October 1, 2015. Per diem rates are flat dollar amounts and are the maximum allowances federal employees are reimbursed for expenses incurred while on official travel. However, any employer may use these rates to reimburse an employee who travels away from home overnight, in lieu of reimbursing his or her actual expenses.

IRS Issues Guidance on Tax Treatment of Identity Theft Protection Services

To help combat the growing problem of identity theft in the US, the IRS has issued guidance on the taxability of identity protection services provided by an employer at no cost to employees whose personal information may have been compromised in a data breach. The IRS is also requesting comments from employers on other related issues.

Are Employee Life Insurance Benefit Plans Worth the Risk of Litigation After CIGNA Corp. v. Amara?

Five years ago, Chief Justice Roberts observed: “People make mistakes. Even administrators of ERISA plans.” Conkright v. Frommert, 559 U.S. 506, 509 (2010). Four years ago, searching for a mechanism to provide monetary relief for such mistakes under ERISA, the Supreme Court reached into the desiccated maw of early 19th century trust law and pulled out the make-whole remedy of surcharge. CIGNA Corp. v. Amara, 131 S. Ct. 1866 (2011). While the contours of the surcharge remedy are still being worked out in the lower courts, it currently appears to have only two elements – (1) a breach of fiduciary duty (2) that results in actual harm.

IRS Proposed Rules Ease IRC § 83(b) Election Filing Procedure

The IRS has issued proposed regulations affecting employees (and other service providers) who wish to make an election under Internal Revenue Code (IRC) § 83(b) with respect to property that is transferred in connection with the performance of services (i.e., stock received from an employer as compensation). The proposed rules ease the current election filing procedure for electronic filers.

Employee Benefits Alert - July 2015

Effective January 1, 2017, the staggered five-year determination letter remedial amendment cycles for individually designed plans will be eliminated, the IRS announced in Announcement 2015-19. Additionally, according to the announcement, the scope of the determination letter program will be limited to initial plan qualification and qualification upon plan termination. Effective July 21, 2015, the IRS has stopped accepting off-cycle determination letter applications, with the exception of applications for new plans.

IRS Revises Employee Plans Determination Letter Program

Due to budget cuts and the need to more efficiently direct its limited resources, the IRS has announced important changes to its Employee Plans Determination Letter program for qualified retirement plans. The announcement also provides a transition rule with respect to the remedial amendment period for certain plans currently on the five-year cycle, and requests comments on specific issues relating to the implementation of the changes to the determination letter program.

Access to Employee Benefits Varies Widely by Sector, Wages

The proportion of workers who have access to retirement and medical care benefits differs significantly, depending on whether the workers are in the public or private sector and on how much they are paid.

Monthly Benefits Alert - June 2015

As explained in more detail in separate alerts we issued over the past several days, the Supreme Court decided two major cases involving the Affordable Care Act and same-sex marriage. First, as described in a separate alert available here, the Supreme Court held in King v. Burwell that premium subsidies are available in federally administered health exchanges. This is the second time that the Court has ruled against challenges to the ACA, and it means that employers will need to continue to take steps to comply with the ACA’s employer mandate and various other requirements.

EBSA Releases Plan Audit Quality Report, Recommends Stricter Plan Audit Standards

The DOL’s Employee Benefits Security Administration (EBSA) released a report assessing the quality of audit work performed by certified public accountants with respect to financial statement audits of retirement and welfare plans subject to ERISA. Benefit plans subject to ERISA must conduct annual financial audits as part of their annual Form 5500 filings unless they qualify for an exemption. The EBSA report is based on a sample of 400 plan audit reports filed in the 2011 filing year (according to the report, more than 81,000 audit reports were filed by more than 7,300 licensed CPAs for the 2011 filing year).

Departments Issue FAQs on Cost-Sharing and Restated Enforcement Approach on Provider Nondiscrimination Rules under ACA

The Departments issued FAQs clarifying prior guidance on the ACA’s cost-sharing limitations applicable to non-grandfathered plans, and restating their enforcement approach with respect to the ACA’s provider nondiscrimination rules.

Monthly Benefits Alert - May 2015

As we do every month, we have provided below a comprehensive alert that highlights the most important employee benefits legal developments during May of 2015. We hope that our “Monthly Benefits Updates” continue to be a resource for busy benefits professionals who need to stay on top of developments in the benefits area. Our Updates continue to be focused on the clients we serve—namely, employers and other plan sponsors. We welcome your ongoing feedback and hope you continue to find this format helpful.

Monthly Benefits Alert - April 2015

The Central States Pension Fund has announced that it will adopt a “rescue plan” under which certain participant benefits will be reduced. The Multiemployer Pension Reform Act of 2014 (MPRA), which was signed into law on December 16, 2014, includes a controversial provision allowing deeply troubled multiemployer pension plans to voluntarily reduce benefits.

IRS Traded in Your Chevy for a "Cadillac (ac-ac-ac-ac-ac) Tax": Agency Issues First Guidance on the Implementation Code Section 4980I

On February 23, 2015, the Internal Revenue Service (IRS) issued the first piece of guidance that discusses the excise tax, better known as the “Cadillac Tax,” imposed by Section 4980I of the Internal Revenue Code of 1986, as amended, on employers that offer high-cost health coverage.

Two-Year Preapproved Defined Contribution Plan Window is Still Open

Retirement plan vendors sponsoring defined contribution plan documents approved by the Internal Revenue Service (IRS) have begun issuing packages containing the new IRS-approved version of those documents—reflecting the Pension Protection Act and other required regulatory updates—to employers that use them. The packages generally include (1) the new basic plan document, (2) a corresponding adoption agreement, (3) the IRS opinion or advisory letter, (4) a new administrative service agreement, and (5) an administrative services manual (i.e., plan administration manual, plan operational manual, or set of plan procedures) that highlights how the recordkeeping firm or third-party administrator will operate the plan

Monthly Benefits Alert

Under the IRS’s Employee Plans Compliance Resolution System (EPCRS), retirement plan sponsors may voluntarily request that the IRS approve certain corrections to a variety of plan administration errors before those errors are discovered in an IRS audit. The IRS issued the most recent version of EPCRS in 2013 which sets forth a number of specific corrections and principles that plan sponsors may use when correcting for errors in plan form or operation. Recently, the IRS issued two revenue procedures containing modifications to its EPCRS program that will change a number of the correction principles that exist in its current program.

IRS Provides Temporary Enforcement Relief for Small Employers Offering Employer Payment Plans

The IRS issued guidance providing enforcement relief through June 30, 2015 for small employers who offer employer payment plans to their employees. In the guidance, the IRS reiterated its stance that an employer payment plan—an arrangement where an employer provides pre-tax reimbursements to employees to apply towards the cost of individual health insurance coverage—is considered a group health plan for ACA purposes. According to the IRS, such an arrangement is impermissible, and is subject to excise taxes under Code Section 4980D, unless it complies with the ACA’s market reforms.

Monthly Benefits Alert - February 2015

On January 29, 2015, Anthem Inc., one of the largest managed health care companies in the country, disclosed that the sensitive personal data of almost 80 million current and former participants in its network was breached in a cyber attack. This breach also impacted health plan participant data of plans that use the Blue Cross Blue Shield network of health providers. In some states, Anthem administers certain aspects of Blue Cross’s network. Those states include California, Colorado, Connecticut, Georgia, Indiana, Kentucky, Maine, Missouri, Nevada, New Hampshire, New York, Ohio, Virginia, and Wisconsin. Accordingly, health plans that have participants who received care in those states through the Blue Cross network are likely to be impacted.

Monthly Benefits Update - January 2015

The U.S. Supreme Court ruled in M&G Polymers USA, LLC v. Tackett, 574 U.S. ____ (2015) that ordinary principles of contract law should govern the interpretation of provisions for retiree healthcare benefits under collective bargaining agreements. In so holding, the Supreme Court rejected the “Yard-Man presumption,” pursuant to which the U.S. Court of Appeals for the Sixth Circuit has long presumed that retiree healthcare benefits provided under a collective bargaining agreement vest for life absent specific language to the contrary in the collective bargaining agreement. The Supreme Court remanded the case at hand to the Sixth Circuit to (1) in the first instance, review the agreement and determine whether the parties intended the retiree healthcare benefits to vest and (2) if a determination is made that the agreement itself is ambiguous, review extrinsic evidence to determine the intent of the parties. Our prior alert, which discusses the significant implications of the case for employers, is available here.

Congress Clarifies the Expatriate Health Coverage Exemption

For expatriate health plans issued or renewed on or after July 1, 2015, the Expatriate Health Coverage Clarification Act of 2014 (EHCCA) provides an exemption from various Affordable Care Act (ACA) provisions. Last December, Congress enacted the EHCCA as Division M of the Consolidated and Further Continuing Appropriations Act, 2015. Section 3(a) of the EHCCA clarifies that the ACA and certain titles of the Health Care and Education Reconciliation Act of 2010 do not apply to (1) expatriate health plans, (2) employers that sponsor those plans, and (3) expatriate health insurance issuers (with respect to the expatriate coverage). Notably, the EHCCA does not provide an exemption from the coverage reporting requirements in Internal Revenue Code (IRC) sections 6055 and 6056, and does not exempt sponsors from the excise tax on high cost employer-sponsored coverage in IRC section 4980I.

Traditional Contract Rules Determine Whether Retirees Are Entitled to Lifetime Healthcare Benefits

Today, in a unanimous decision, the U.S. Supreme Court held that courts must apply ordinary rules of contract interpretation when determining whether retiree healthcare benefits vest for life pursuant to the terms of a collective bargaining agreement. Writing for the Court, Justice Thomas wrote a scathing opinion overruling the 6th Circuit’s underlying decision, which had relied on UAW v. Yard-Man and its progeny to try to establish a presumption of lifetime vesting. M&G Polymers USA, LLC v. Tackett.

Feb. 2 Deadline Looming to Implement Retroactive Increase in 2014 Mass Transit Benefit Limits

Affected employers must move quickly to take advantage of a special administrative procedure regarding a retroactive increase in excludable transit benefits enacted on December 19, 2014, under the Tax Increase Prevention Act of 2014 (TIPA). Because affected Internal Revenue Service (IRS) forms—Form 941 and Form W-2—have February 2 deadlines, the IRS issued Notice 2015-2 to explain (1) how the increase applies for 2014; (2) how certain employers can use a special administrative procedure to make Federal Insurance Contributions Act (FICA) tax adjustments for 2014; and (3) what employers need to consider in Form W-2 (and Form W-2(c)) reporting.

Monthly Benefits Update - December 2014

Illinois Becomes the First State to Require Automatic Retirement Savings Program for Workers Without Access to a Workplace Retirement Plan

Monthly Benefits Update - October 2014

The Internal Revenue Service (IRS) announced the 2015 dollar limits applicable to contributions to health flexible spending accounts (health FSAs) and excludable amounts for qualified transportation fringe benefits under Internal Revenue Code (the “Code”) Section 132(f). The health FSA contribution limit is increasing from $2,500 to $2,550 for 2015. The excludable dollar amounts under a transportation fringe benefit arrangement remain unchanged from 2014; the monthly limit remains $130 for transportation in a commuter highway vehicle and any transit pass, and $250 for qualified parking.

Do You Have A Health Plan Identifier?

With great focus on healthcare reform, you may have missed a current requirement for health plans to apply for and obtain a Health Plan Identifier (HPID). This requirement does not come from the Affordable Care Act, but rather the Health Insurance Portability and Accountability Act of 1996 (HIPAA). That’s right, HIPAA is something that continues to need your company’s attention.

Survive The Season With Our Open Enrollment Checklist

It's that time of year again, when fall weather brings with it a host of legal obligations for plan sponsors running open enrollment. Here’s what you need to know to survive the season.

Impact of Supreme Court's Recent Actions on Employee Benefits

On October 6, 2014, the Supreme Court of the United States denied review of seven petitions challenging federal court of appeal rulings in the Fourth, Seventh, and Tenth Circuits that had struck down state bans on same-sex marriage. The Supreme Court’s orders do not legalize same-sex marriage in all states; however, they mean that the lower-court decisions striking down bans in Indiana, Wisconsin, Utah, Oklahoma, and Virginia will go into effect and that same-sex marriages will be allowed in these states. States are reacting quickly. For example, on October 7, 2014, the Colorado Supreme Court followed suit and lifted an injunction against clerks in three counties; the Colorado State Attorney General has ordered county clerks across the state to begin issuing marriage licenses to same-sex couples.

Monthly Benefits Update - September 2014

The Internal Revenue Service (IRS) issued Notice 2014-49, which proposes an approach for dealing with changes to an employee’s look-back measurement method in determining the employee’s full-time status under the Affordable Care Act’s (ACA) “employer mandate.” The new guidance would apply to situations where an employee’s measurement period changes due to the employee’s transfer to a different position or due to the employer’s decision to modify the measurement period for that employee’s classification.

Monthly Benefits Update - August 2014

On August 8, President Obama signed legislation that extends certain “pension smoothing” provisions in the Moving Ahead for Progress in the 21st Century (MAP-21) Act that was signed in 2012. This pension funding relief will continue to allow plan sponsors to make lower contributions to their single-employer defined benefit plans in upcoming years by delaying the phase out of MAP-21 until 2017.

Federal Contractors See Hike in SCA Health & Welfare Rates

Executive Summary: On July 22, 2014, the U.S. Department of Labor (DOL) issued its annual memorandum announcing that, pursuant to 29 C.F.R. Section 4.52, the prevailing hourly health and welfare fringe benefit rates under the McNamara-O'Hara Service Contract Act (SCA) were increasing from $3.81 per hour to $4.02 per hour. The increase took effect immediately, and the new rate is posted on the DOL's Wage Determinations (www.wdol.gov) and Wage and Hour Division (www.dol.gov/whd) websites. A special reduced rate of $1.66 per hour will apply to Hawaii because, under state law, most Hawaii employers are already obligated to provide their employees with health insurance. The new benefit rate was derived from the latest Bureau of Labor Statistics Employment Cost Index, summary of Employer Cost for Employee Compensation.

Are Your Beneficiary Designations Heir Tight?

An often-neglected area in the world of benefit plan administration is the beneficiary designation form. Many participants complete their beneficiary designations incorrectly because they don’t read the instructions carefully or don’t understand the instructions. Beneficiary designation forms are often filed away without review, and mistakes (and headaches for the plan administrator) surface only after the death of the participant. Here are some of the more common beneficiary form mistakes and misconceptions:

IRS Issues Final Regulations On Longevity Annuities

With the goal of providing retirees with more options to manage their retirement income, the IRS issued final regulations on “qualified longevity annuity contracts” (QLACs). A QLAC is a type of deferred annuity that commences at an advanced age and continues for the life of the retiree.

Update For Retirement Plans Post-Windsor

Now that some of the dust has settled on the U.S. Supreme Court’s decision in U.S. v. Windsor, employers who haven’t done so already should take immediate steps to review their retirement plan documents and administrative practices to determine if any changes or amendments are needed.

Monthly Benefits Update - August 4, 2014

Federal Appeals Courts Issue Contradictory Rulings on Federal Marketplace Subsidies under Affordable Care Act

Monthly Benefits Update - July 2, 2014

In Burwell v. Hobby Lobby, the Supreme Court held that regulations under the Affordable Care Act that require employer group health plans to provide contraceptive coverage violate the Religious Freedom Restoration Act (RFRA). The case came to the Court through a challenge to the requirement that employer group health plans provide certain preventive services, including contraception. RFRA generally provides that the government may not substantially burden a person’s right to exercise his or her religion. In the opinion, the Court reasoned that a “person” under RFRA includes closely held, for-profit corporations. Accordingly, the decision means that a privately held company no longer needs to provide contraceptive coverage as part of its group health plan in order to comply with the ACA’s preventive services coverage mandate, provided that the employer’s owner(s) have a religious objection to offering contraceptive coverage under the plan.

Monthly Benefits Update (June 2014)

As we have discussed in many previous alerts, the Affordable Care Act’s employer shared responsibility rules (also referred to as the employer mandate or “pay or play”) go into effect starting January 1, 2015 for employers that have 100 or more employees and a calendar year plan year. These employers will be subject to potentially significant new tax penalties if they fail to offer the right type of coverage to substantially all of their “full-time employees”—generally defined as those employees who work 30 hours or more per week on average. Starting January 1, 2015, these employers will need to have determined which of their employees is a “full-time employee” for this purpose. The vast majority of employers will use a “measurement period” to measure employee hours, and a subsequent “stability period” during which those employees who worked full-time during the preceding measurement period will be offered coverage. And most of those employers will want to maintain a 12-month stability period.

Safe Harbors For Rollover Contributions

Plan administrators of qualified plans are always concerned that amounts they receive as rollovers actually are eligible for rollover treatment, since accepting non-rollover funds will violate the terms of the plan. Administrators are in a quandary because they want to accommodate plan participants, but don’t want to jeopardize their plan’s qualified status. A recent Revenue Ruling helps by giving examples of the kind of evidence administrators can rely upon to determine that a rollover request is valid.

Monthly Benefits Update - April 2014

The Internal Revenue Service (IRS) issued guidance setting the inflation-adjusted amounts applicable to high-deductible health plans with Health Savings Accounts (HSA) for calendar year 2015. The 2015 annual contribution limit on deductions has increased for individuals with self-only coverage to $3,350 (from $3,300 in 2014) and $6,650 for family coverage (from $6,550).

Monthly Benefits Update - March 2014

As expected, the Department of the Treasury and the IRS (the “Agencies”) finalized the employer information reporting requirements under the Affordable Care Act (the “ACA”) earlier this month. The final rules, which are designed to help the IRS enforce the employer shared responsibility provisions and the individual mandate, remain largely unchanged from the proposed rules subject to minor modifications in response to public comment. Originally intended to be effective in 2014, the new rules are effective January 1, 2015 after Treasury delayed the requirements in 2013.

The Waiting is the Hardest Part: Final Regulations on the PPACA’s 90-Day Waiting Period Released

On February 24, 2014, the Internal Revenue Service (IRS), the Employee Benefits Security Administration (EBSA) of the U.S. Department of Labor (DOL), and the U.S. Department of Health and Human Services (HHS) jointly released final regulations implementing the 90-day waiting period limitation required by the Patient Protection and Affordable Care Act (PPACA).

Monthly Benefits Update - February 2014

The IRS issued final regulations regarding the employer shared responsibility provisions under the Affordable Care Act (ACA), also known as the “pay or play” rules. Please see our separate alert, which covers this item in more detail.

Monthly Benefits Update - January 2014

The Departments of Health and Human Services, Labor, and the Treasury (the “Departments”) recently issued their 18th round of Frequently Asked Questions addressing important matters that plan sponsors should consider when implementing the Affordable Care Act (ACA). Certain sections of the FAQ will impact employer-sponsored health plans and thus deserve attention.

Monthly Benefits Update - December 2013

The following are the most significant employee benefits-related legal developments that occurred in December of 2013. At the beginning of 2013, after considering feedback from our clients and contacts who work in the employee benefits area, we decided to change the format and timing of our periodic employee benefits alerts. During 2013, we sent one comprehensive alert at the end of each month that briefly highlighted the most important employee benefits legal developments for that month. We will continue this format in 2014. Based on client feedback, our “Monthly Benefits Updates” have been a very helpful resource for busy benefits and HR professionals. As always, our updates focus on the clients we serve—namely, employers and benefit plans. We will continue to include only those items that our clients would generally consider to be important and that clearly impact our clients’ responsibilities with regard to their benefit arrangements. We continue to welcome your feedback and hope you find our alerts to be helpful in keeping up with the ever-changing employee benefits landscape.

At Year End, IRS Issues Guidance On Cafeteria Plan Transitional Rules For Windsor

Finally, some guidance on mid-year cafeteria plan changes that many employers have already permitted in the wake of United States v. Windsor. On December 16, 2013, the Internal Revenue Service (IRS) released Notice 2014-1, which answers questions regarding the proper treatment of cafeteria plan elections, flexible spending account (FSA) expenses, and health savings account (HSA) and dependent care assistance program (DCAP) contribution limits for same-sex married couples.

Employee Benefits Alert: New Developments Impact Retirement Plans & More

Year-End AmendmentsThe month of December is a bit different in 2013. Typically, we mark this time scrambling to amend 401(k), profit sharing, and money purchase plans in order to maintain their tax-qualified status. This year -- there are no required year-end amendments for this type of plan.

Monthly Benefits Update - November 2013

Health Care Reform: Supreme Court Grants Review to Two Cases Challenging ACA’s Contraception Coverage Mandate

Insured Group Health Plans – Nondiscrimination in Favor of the Highly Compensated is a Ticking Time Bomb

The Patient Protection and Affordable Care Act (“ACA”) has been making big political waves since its enactment in March 2010. Since then, the focus has switched to different provisions depending on effective dates and political winds. One provision which has gained attention and will gain more is the prohibition against insured group health plans (plans where an employer pays a fixed monthly premium for employee coverage) from discriminating in favor of highly compensated individuals (“Nondiscrimination Rule”). Self-insured plans (plans where an employer pays claims as they are incurred rather than a fixed premium) have been subject to a similar rule since 1980. ACA expands most of the substantive rules for self-insured plans to insured group health plans.

IRS Announces COLA Increases for Dollar Limitations on Benefits and Contributions

On October 31, 2013 the Internal Revenue Service (IRS) announced the cost-of-living adjustments impacting tax-qualified pension plans for 2014. Increases were not made to the individual limits on deferrals and catch-up contributions. However, the IRS increased from last year most of the general pension plan limitations, including the limit on annual compensation, as the cost-of-living index increase met the statutory thresholds that trigger adjustments. The following table highlights some of the key limits that affect tax-qualified pension plans.

Monthly Benefits Update - October 2013

The federal health insurance marketplace (also known as the federal “exchange”) began accepting enrollments beginning on October 1. Enrollment has encountered a number of technical difficulties, both on the federal website (www.HealthCare.gov) as well as individual state exchange websites.

IRS Publishes New Cafeteria Plan Rule

The IRS handed healthcare flexible spending account participants an early Christmas present on Halloween when it modified cafeteria plan "use-it-or-lose-it" rules so that $500 can be carried over from one year to the next in FSA accounts. Under Notice 2013-71, these accounts may now be modified so up to $500 can be carried over to defray qualifying medical costs in the next year. The rule change followed sharp criticism of the "use-it-or-lose-it" requirement, and concerns that participants were undergoing unnecessary medical procedures at the end of the year to avoid forfeiting account balances.

Monthly Benefits Update - September 2013

The Treasury, the Department of Labor and the Department of Health and Human Services have released new FAQs about the implementation of the Affordable Care Act. The FAQs contain information on who can supply the notice of exchanges, providing that the issuer, a multiemployer plan or third-party administrators may (but are not required to) send the notice on behalf of the employers. Further, the FAQs address issues related to compliance with the 90-day waiting period limitation, providing that plans and issuers can rely on the proposed rules throughout 2014. Final regulations will not be enforced before January 1, 2015.

SEC Proposes Pay Ratio Disclosure Rule

On September 18, 2013, the SEC proposed a rule to implement the CEO pay ratio disclosure mandated by section 953(b) of the Dodd?Frank Wall Street Reform and Consumer Protection Act. The SEC’s press release also contained a fact sheet summarizing this proposal. The proposed rule would require that an issuer disclose:

Monthly Benefits Update - August 2013

IRS Issues Guidance Recognizing Same-Sex Marriage for Federal Tax Purposes In the wake of the U.S. Supreme Court’s decision in U.S. v. Windsor, which struck down the Defense of Marriage Act, the Internal Revenue Service (IRS) has issued guidance providing that same-sex marriages will now be recognized for federal tax purposes, regardless of the couple’s state of residence, as long as the marriage was performed in a jurisdiction that recognizes same sex marriages, including a foreign country. Married same-sex couples may therefore file their 2013 federal tax return under a married status. The ruling has retroactive effect, meaning that couples who were married prior to the Windsor decision may amend their prior years’ returns to obtain refunds based on their married status going back to the IRS’s limitations period for refunds (generally three tax years).

Employers, Remember Your SBC and New Template!

Employers conducting their annual group health plan open enrollments this fall must remember to include a summary of benefits and coverage (SBC), along with a uniform glossary to that SBC, as required by the Affordable Care Act. For a detailed article on the requirements for the SBC, see our earlier blog post, "New PPACA Benefit Summary Rules Clarified."

Monthly Benefits Update (August 2013)

Health Care Reform: IRS Transitional Relief Delays Pay or Play Reporting and Penalties As we reported in an alert on July 3, the IRS has provided transitional relief to employers that delays pay or play reporting and penalties until 2015. Pay or play reporting obligations (and for many employers, at least some penalties) were set to take effect in 2014 pursuant to the Affordable Care Act. Many employers have struggled with administrative details, recordkeeping, and other tasks necessary to comply with the pay or play rules, and the IRS’s transitional relief is intended to allow the IRS to have time to simplify informational reporting requirements. The delay is also intended to provide employers additional time to adapt their health coverage to comply with the law. The IRS provided additional detail on the delay in Notice 2013-45. The IRS indicated that pay or play will be “fully effective for 2015.” Further, the IRS stated that individual shared responsibility rules and premium tax credits (for taxpayers) will still be effective in 2014.

DOL Provides Fee Disclosure Relief

The U.S. Department of Labor (DOL) released Field Assistance Bulletin (FAB) 2013-02 on July 22, 2013, which provides plan administrators of individual account plans with participant-directed investments (such as 401(k) and 403(b) plans) a one-time opportunity to reset the timing of annual fee disclosures to plan participants. - See more at: http://www.ogletreedeakins.com/publications/2013-07-29/dol-provides-fee-disclosure-relief#sthash.On8BAi63.dpuf

Monthly Benefits Update (June 2013)

Monthly Benefits Update - June 2013

Deadline Approaching For Self-Funded Medical Plan Sponsors

Insurers and plan sponsors of self-funded plans, must soon start paying a fee to support the Patient-Centered Outcomes Research Trust. This was established by the Patient Protection and Affordable Care Act; the trust finances the Patient-Centered Outcomes Research Institute (PCORI).

Monthly Benefits Update - May 2013

Health Care Reform: Agencies Issue Final Regulations on Wellness Programs Under ACA The Internal Revenue Service (IRS), Department of Labor (DOL), and the Department of Health and Human Services (HHS) finalized regulations on wellness program incentives, revising earlier guidance issued in November of 2012. As in the proposed regulations, the final regulations increase the maximum reward that may be offered by a health-contingent wellness program from 20 percent to 30 percent and the maximum reward for reducing tobacco use from 30 to 50 percent.

Monthly Benefits Update - May 2013

Health Care Reform: Guidance on Required Future Modifications to SBC, Other Issues The Internal Revenue Service (IRS), Department of Labor (DOL), and Department of Health and Human Services (HHS) issued new guidance on information which must be included in future Summaries of Benefits and Coverage (SBC) issued for health plans.

Monthly Benefits Update

Health Care Reform: Agencies Issue Proposed Regulations on 90-Day Waiting Period Limitation On March 21, the IRS, DOL, and Department of Health and Human Services issued proposed regulations on the 90-day waiting period limit that applies to employer group health plans beginning in 2014 under the Affordable Care Act. Some important aspects of the proposed rules include: 1) a clarification that 90 days does not equal three calendar months (90 days is 90 days, including non-business days); 2) it is acceptable to impose an eligibility requirement based solely on the lapse of time (e.g., a requirement to simply be employed full-time for a certain time period), as long as long as the time period does not exceed 90 days; 3) it is acceptable to impose other eligibility requirements that are not based on the lapse of time, even if some employees will need more than 90 days to satisfy the eligibility requirement, as long as the requirement is not designed to replicate a time-based standard of more than 90 days; and 4) an eligibility requirement that requires completion of a certain number of hours of service will not be considered a time-based standard as long as (a) the required hours of service are not greater than 1,200 and (b) once an employee reaches the required hours he or she is not required to wait more than 90 days to enroll.

New Tax Law Brings Changes To Certain Benefits

On January 2, 2013, President Obama signed the American Taxpayer Relief Act of 2012 (ATRA) into law. ATRA was passed by Congress to address the combination of tax increases and automatic spending cuts popularly known as the “fiscal cliff.” In addition to the tax and spending-related changes, ATRA also made several important changes affecting certain employee benefits. The changes with respect to in-plan Roth-contribution transfers are discussed in another article in this Benefits Update. Other employer-provided benefits that were affected by ATRA are summarized below:

Tax Relief Bill Brings Changes To In-Plan Roth Conversions

On January 2, 2013, President Obama signed the American Taxpayer Relief Act of 2012 into law, thus ending (for now at least) the crisis created by the so-called “fiscal cliff.” One of the law’s provisions offers more flexibility for retirement planning for participants in 401(k), 403(b) and 457(b) plans.

Monthly Benefits Update

After considering feedback from our clients and contacts who work in the employee benefits area, we have decided to change the format and timing of our periodic employee benefits alerts. Starting with the alert that follows (for January 2013), we will be sending one comprehensive alert at the end of each month that will briefly highlight the most important employee benefits legal developments for that month. It is our hope that these “Monthly Benefits Updates” will be a resource that busy benefits professionals can use to more easily and quickly stay on top of the most critical legal changes and developments (and ensure that none are missed). Perhaps most importantly, our Monthly Benefits Updates will be focused on the clients we serve—namely, employers. We will not include items that employers would generally consider to be low importance or items that do not clearly and directly impact an employer’s responsibility with regard to its benefit arrangements. As a result of this focus, some months will include more items than other months. In any event, we welcome your ongoing feedback and hope you find our new format to be helpful in keeping up with the ever-changing employee benefits landscape.

Legal Alert: The Fiscal-Cliff Tax Relief Affected Benefits, Too

Executive Summary: As most everyone knows by now, Congress adopted, and President Obama signed, legislation – the American Taxpayer Relief Act (the "Act") – that resolves many elements of the so-called "fiscal cliff," i.e., the various tax increases and expiration of tax breaks, along with spending cuts, that were to have become effective with the new year. Much has been written and reported about applying the scheduled tax rate increases only to high-income taxpayers, changing the Alternative Minimum Tax so that it would not penalize the "middle class," increasing estate tax for certain "large" estates, allowing the 2011 payroll tax cut to expire (along with other scheduled payroll tax increases), and other "newsworthy" aspects of the Act. Little has been mentioned, however, about the Act's provisions applicable to benefit plans and programs. So here are a few of those provisions.

A Soft Landing from the Fiscal Cliff for Employee Benefits

Well, Congress in the season of giving has provided plan sponsors and participants with multiple beneficial opportunities to start 2013. Congress passed the American Taxpayer Relief Act of 2012 (H.R. 8), also known as the “Fiscal Cliff” legislation, on January 1, 2013, and President Obama signed the legislation on January 2, 2013. This legislation significantly expands the ability for participants to convert non-Roth accounts within 401(k), 403(b), and 457(b) governmental plans to Roth accounts without withdrawing amounts from the plan. This provision is expected to raise 12.2 billion over 10 years to offset the loss of revenue stemming from the sequestration delay. The Fiscal Cliff legislation also addressed the tax exclusions for employer-provided educational and adoption assistance, which were both scheduled to expire at the end of 2012, re-established the parity between mass transit and parking fringe benefits that expired at the end of 2011, and addressed dependent care assistance benefits. The Fiscal Cliff legislation does not, however, avoid the expiration of the payroll tax cuts that were in effect for 2011 and 2012, or the January 1, 2013 effective date for the new Medicare taxes.

Legal Alert: IRS Provides Temporary Waiver of Certain Eligibility Requirements for the Voluntary Classification Settlement Program

Executive Summary: In Announcements 2012-45 and 2012-46, the IRS has temporarily eased the eligibility requirements for employers to participate in the employment-tax Voluntary Classification Settlement Program ("VCSP") that was begun last year. (See our Legal Alert dated 9/27/2011.) Specifically, employers may participate in a slightly modified version of the program (the "Modified VCSP") even if they haven't filed all required Forms 1099, as is required for the VCSP. In addition, the prohibition against participation by taxpayers under audit and the requirement to extend the limitations period for future assessments were both changed for purposes of the Modified VCSP.

Legal Alert: IRS Provides Disaster Relief for Plan Participants

Executive Summary: In addition to the other various employee benefit plan relief provided as a result of Hurricane Sandy, on November 16 the Internal Revenue Service announced, in Announcement 2012-44, that certain individual account plans, including Section 401(k) plans, Section 403(b) tax-sheltered annuities, and governmental Section 457(b) deferred compensation plans can provide plan loans and hardship withdrawals (including "unforeseeable emergency" distributions under 457(b) plans) to those participants who were (or who have certain family members who were) adversely affected by Hurricane Sandy. In addition, IRA owners may also qualify to receive distributions with reduced administrative procedures.

Are You Using "Culturally Appropriate" Language?

The Patient Protection and Affordable Care Act (PPACA) requires group health plans to distribute four-page plan summaries to enrollees. These Summaries of Benefits and Coverage (SBCs) are subject to a "culturally and linguistically appropriate" standard, meaning that when the SBC is distributed to an enrollee at an address in a county where, according to the federal government, at least 10% of the citizens are fluent only in the same non-English language, the summary must include a prominent offer of language assistance in that non-English language.

Deadline to Correct 409A-Covered Documents Involving Employee Releases Is December 31, 2012

Internal Revenue Code Section 409A governs deferred compensation, which includes, with some exceptions, practically all agreements or plans in which an agreement is made in one year to pay an amount in a later year. Its most common form is a non-qualified deferred compensation plan in which the employer makes an unfunded promise to pay a dollar amount to the employee at a later time (termination of employment, specific age, etc.)

Will You Be Ready For 2013?

2013 will mark not just the start of a new calendar year, but also new compliance obligations for employee benefits professionals. Now is the time to review your employee benefit plans and take the steps necessary to ensure continued compliance in 2013. We have outlined a number of key provisions impacting welfare, benefit, and retirement plans below, including some that may need to be implemented prior to 2013. Will you be prepared?

Legal Alert: IRS Announces 2013 Cost-of-Living Increases to Pension Plan Limits

On October 18, 2012, the Internal Revenue Service announced cost of living adjustments affecting various limitations applicable to pension and other retirement plans (IR 2012-77). Many of the limitations remain unchanged because they are indexed in $1000 or $5000 increments, but several will change for 2013. Some of the better-known limitations are:

Fee Disclosures: Action Needed

July 1st was the deadline for plan service providers to provide their 408(b)(2) fee disclosures to plan sponsors. Did you receive one? Does it contain all the DOL-required elemen

What's Driving Americans to Retire Abroad? Money -- or Lack of It

In the small town of Cotacachi, Ecuador, Dan Prescher is living out his retirement dream. Prescher, a native of Omaha, Neb., lives with his wife in a condo in a gated community overlooking the Andes Mountains.

New Guidance Increases Availability of Lifetime Income Options in Retirement Plans

The Internal Revenue Service and the Treasury Department recently released new guidance that aims to increase the availability of annuities and other lifetime income options as forms of payment under defined contribution and defined benefit retirement plans. The guidance was issued to encourage plan sponsors to offer these lifetime income options in addition to lump sum payments that are particularly prevalent in defined contribution plans. The guidance is also aimed at helping with the issue of many retirees either outliving or underutilizing their retirement savings. This alert briefly describes these changes.

Final Rule on Summary of Benefits and Coverage

Earlier this year, the Departments of Treasury, Labor and Health and Human Services ("HHS") (collectively, the "Departments") issued a final rule regarding the implementation and content requirements of the Summary of Benefits and Coverage ("SBC"), a standardized document that group health plans and health insurance issuers must provide under the Patient Protection and Affordable Care Act ("PPACA") to summarize the benefits and terms of coverage for plan participants and beneficiaries. A separate SBC (and summary plan description) must be prepared for each benefit package offered by the plan or issuer.

New PPACA Benefit Summary Rules Clarified

If their open enrollment periods start before September 23, 2012, health insurers and employers that sponsor health plans will not have to provide new summaries of benefits and coverage, or "SBCs," to new enrollees and existing health plan participants later this year, under new final regulations implementing the 2010 health care reform law.

2011 Decisions of Interest

SRZ successfully represented the International Ladies’ Garment Workers’ Union (“ILGWU”) Death Benefit Fund, the UNITE HERE Staff Retirement Plan, their fiduciaries, Amalgamated Services Corp., Amalgamated Life Insurance Co., Alicare Inc. and individual defendant Michael Hirsch against a claim for more than $1.7 million in attorneys’ fees stemming from an ERISA action.

Compliance Update: What's Required By Year-End?

As 2011 draws to a close and everyone looks forward to winding down and getting ready for the holiday season, we want to make sure that you have taken care of certain regulatory compliance matters with respect to your employee benefit plans between now and December 31, 2011. The information below briefly describes what is required to make sure your plan(s) is set for the new year!

First Decision Issued in Florida Recommending a Defined Contribution Plan for Public Workers in Accordance with City’s Proposal

In the first decision of its kind, a report issued by Public Employees Relations Commission (PERC) Special Magistrate William McGuiness recommended a defined contribution retirement plan for Sarasota police officers nearly identical to the plan proposed by the city of Sarasota. This report, issued on August 23, 2011, is the first time a PERC special magistrate has found in favor of a public employer seeking to implement a defined contribution plan for police officers or firefighters. The special magistrate further recommended changes to a defined benefit plan for those vested in that plan.

Short, Fast and to the Point – Proposed PPACA Benefit Summary Rules Set Tight Standards

Starting in March 2012, employers would have to provide much more succinct summaries of their health plan benefits (no more than four double-sided pages), much more quickly (often within seven days) and in a much more standardized form than they do now under proposed regulations issued this week by the three agencies responsible for implementing the benefit summary requirements of the 2010 health care reform law.

Supreme Court Takes On Benefits, Immigration

The U.S. Supreme Court recently issued two decisions that impact employers. In the first case, the justices held that federal immigration law does not preempt or invalidate an Arizona law that subjected employers to sanctions for knowingly or intentionally employing unauthorized aliens. In the second case, the high court ruled that plan participants seeking relief from violations of the notice and disclosure provisions under the Employee Retirement Income Security Act (ERISA) must show "actual" rather than "likely" harm.

New Rules Require Retirement Plans to Disclose Investment Fees to Participants

The Department of Labor has issued final rules that will require certain retirement plans to disclose plan fee and expense information directly to participants. Plan sponsors and administrators must comply with the disclosure requirements in these final rules in order to fulfill their fiduciary duties under ERISA. From a practical perspective, these rules are intended to provide plan participants with a more complete picture of plan fees and expenses, including indirect fees and expenses under a plan’s investment options.

New Rules Require Retirement Plans to Disclose Investment Fees to Participants

The Department of Labor has issued final rules that will require certain retirement plans to disclose plan fee and expense information directly to participants. Plan sponsors and administrators must comply with the disclosure requirements in these final rules in order to fulfill their fiduciary duties under ERISA. From a practical perspective, these rules are intended to provide plan participants with a more complete picture of plan fees and expenses, including indirect fees and expenses under a plan’s investment options.

IRS Temporarily Suspends Compliance With Non-Discrimination Rules.

On December 22, 2010, the Internal Revenue Service, with the agreement of the United States Departments of Treasury, Labor, and Health and Human Services, announced that non-grandfathered, fully-insured group health plans will not be required to comply with the non-discrimination requirements of Internal Revenue Code until after regulations or other administrative guidance has been issued. Until such time, any sanctions for failure to comply do not apply.

Guidance Issued Regarding Grandfathered Status Of Group Health Plans.

On November 17, 2010, the Internal Revenue Service, Department of Labor and Department of Health and Human Services jointly issued an amendment to the interim final regulations regarding a health plan's status as a "grandfathered health plan" under the recent healthcare reform legislation.

The Case of the Billion-Dollar Typo

A recent decision by a U.S. Court of Appeals allowed a company to retroactively correct a scrivener's error in their cash balance plan document and avoid having to pay out a whopping $1.67 billion in extra benefits to plan participants. In its decision, the court stated: "People make mistakes. Even administrators of ERISA Plans."

New Law Eases Roth Account Conversions

The Small Business Jobs Act of 2010 provides the opportunity to convert pre-tax retirement plan contributions to a Roth Account within that plan. Prior to this change, the only way to convert pre-tax retirement plan money to a Roth Account was to roll it over to a Roth IRA.

Internal Claims and Appeals and External Review Under PPACA.

On July 23, 2010, the Department of Health and Human Services (HHS), the Department of Labor (DOL), and the Treasury Department issued its next phase of regulations implementing the Patient Protection and Affordable Care Act (PPACA), as amended relating to internal claims and appeals and external review processes under the new Section 2719 of the Public Health Service Act. In addition, on August 23, 2010, the same federal agencies issued regulatory guidance on the availability of interim procedures for federal external review and model notices relating to internal claims and appeals and external review under the PPACA. Plan sponsors of non-grandfathered health plans will need to update their internal claims and appeals processes pursuant to this guidance as well as take into account the new external review processes.

Health Care Reform -- New Claims and Appeals Requirements.

As mentioned in a previous alert, group health plans will be subject to new claims and appeals requirements under the Patient Protection and Affordable Care Act (PPACA), signed into law on March 23, 2010, as modified by the Health Care and Education Affordability Act of 2010 (“Reconciliation Bill” and combined, “Health Care Act”). In July and August, the Departments of Treasury, Labor, and Health and Human Services issued interim final regulations and other guidance regarding these new requirements.

Required Cafeteria Plan Amendments.

The changes in the law made as part of healthcare reform require most cafeteria plans to be amended by December 31, 2010. If you have a health flexible spending account (FSA), expenses for over-the-counter drugs cannot be reimbursed after December 31, 2010, unless the drug is insulin or is prescribed by a physician. The definition of dependent for FSA purposes can include a participant's child who is under age 27.

PPACA Guidance on Preventive Care.

As sponsors of non-grandfathered plans race to incorporate the health care reform legislation's new preventive care rules before the 2011 plan year begins, new final interim rules from the Departments of Labor, Treasury, and Health and Human Services have shed light on the issues involved in implementing this new market reform. Though several important questions remain, the rules – published in the July 19 Federal Register – go a long way toward explaining some of the practical issues associated with complying with new Section 2713 of the Public Health Service Act.

Healthcare Reform Changes Affecting Coverage Of Children.

The recent health care reform legislation made two significant changes regarding health benefits provided to an employee's adult child:

CMS Release Updates HRA Coverage Reporting.

On June 25, 2010, the Centers for Medicare and Medicaid Services (CMS) released an updated Group Health Plan User Guide related to the Medicare Secondary Payer Mandatory Reporting requirements applicable to group health plans. The new rules dictate when a group plan must pay claims as the "primary insured" for an employee or the employee's spouse or eligible dependent if that individual is covered by both the plan and Medicare.

The Next Wave of PPACA Guidance Hits Shore – Interim Final Rules Cover Lifetime/Annual Limits, Rescissions, and Patient Protections.

New interim final rules from the Departments of Treasury, Labor, and Health and Human Services will help employers navigate a series of changes under the Patient Protection and Affordable Care Act (PPACA or the Act) that include standards on lifetime and annual benefit limits, retroactive rescissions of plan coverage, and emergency room services. President Barack Obama dubbed this set of rules the “Patient’s Bill of Rights.”

Health Care Reform - Grandfathered Health Plan Regulations.

As mentioned in a previous alert, certain new requirements under the Patient Protection and Affordable Care Act (PPACA), signed into law on March 23, 2010, as modified by the Health Care and Education Affordability Act of 2010 ("Reconciliation Bill" and combined, "Health Care Act") will not apply to group health plans that qualify for "grandfathered" status. On June 17, 2010, the Departments of Labor, Health and Human Services, and Treasury issued interim final regulations regarding the requirements for achieving and maintaining grandfathered status under the Health Care Act. These regulations are effective immediately, although the regulations provide a grace period through September 23, 2010, as discussed below.

Regulations Confirm Need for Prompt Employer Action To Prepare for HHS Early Retiree Reinsurance Program.

The Department of Health and Human Services (“HHS”) has issued interim final regulations governing the Early Retiree Reinsurance Program (the “Program”) added by the recent health care reform legislation. The Program, which is scheduled to begin on June 1, 2010, reimburses plan sponsors for a portion of large health claims incurred by early retirees (and their spouses and dependents) in order to encourage employers to maintain health plan coverage for such participants until other health coverage becomes available through health insurance exchanges in 2014.

Agencies Publish Guidance Regarding "Grandfathered" Health Plans.

On June 17, 2010, the Internal Revenue Service (IRS), Department of Labor (DOL) and Department of Health and Human Services (HHS) jointly issued interim final regulations regarding a group health plan's status as a "grandfathered health plan" (i.e., one in existence on March 23, 2010) under provisions of the recent healthcare reform legislation. This legislation creates a multitude of new requirements for group health plans ranging from the minimum level of benefits that must be provided to dictating which individuals must be offered coverage under a plan.

The Grandfathered Health Plan Final Rules – What Changes Can Your Plan Make?

New interim final rules provide employers important guidance on how health plans can lose “grandfathered” status under the landmark federal health care reform law (primarily by cutting benefits or increasing cost-sharing), how and when the law applies to collectively bargained plans (in some cases, there is a delayed effective date) and how the law applies to health plans that cover only retirees (it doesn’t).

Health Care Reform – Dependent Coverage Regulations.

As mentioned in a previous alert the Patient Protection and Affordable Care Act (PPACA) (signed into law on March 23, 2010) as modified by the Health Care and Education Affordability Act of 2010 (“Reconciliation Bill” and combined, “Health Care Act”) extended health care coverage to dependents until age 26. On May 13, 2010, the Department of Health and Human Services (HHS) issued interim final regulations regarding this extended coverage for adult dependents. The dependent coverage rules are effective for the first plan year beginning on or after September 23, 2010. Therefore, calendar plan years must comply with the new rules beginning on January 1, 2011.

Health Care Reform – Reinsurance Program Regulations.

As mentioned in a previous alert the Patient Protection and Affordable Care Act (PPACA) (signed into law on March 23, 2010) as modified by the Health Care and Education Affordability Act of 2010 (“Reconciliation Bill” and combined, “Health Care Act”) mandated the creation of a reimbursement fund in the amount of $5 billion to pay for the Early Retiree Reinsurance Program (“Reinsurance Program”). Under this program, group health plans will be reimbursed 80% of claims between $15,000 (“cost threshold”) and $90,000 (“cost limit”) for pre-Medicare retirees ages 55 to 64. On May 5, 2010, the Department of Health and Human Services (HHS) published interim final regulations for the implementation of this program. The Reinsurance Program is effective June 1, 2010 and ends on January 1, 2014 or earlier, if the $5 billion fund is exhausted prior to that date.

Forever Young: New “Adult Children” Guidance under Health Care Reform Covers Enrollment, Surcharges.

Employer-sponsored health plans will not be able to tack on special “adult children” surcharges and will have to offer an enrollment period of at least 30 days to adult children who may previously have lost coverage or been ineligible for coverage before turning 26, under interim final rules issued on May 10, 2010, interpreting one of the most closely watched parts of the landmark health reform legislation.

Small Business Tax Credit For Healthcare Now Available.

As part of the Patient Protection and Affordable Care Act (PPACA) signed into law by President Obama on March 23, 2010, small businesses now have reason to consider offering health insurance coverage for the first time or to continue maintaining existing coverage for their employees. The enticement? A new special tax credit that takes effect immediately.

Health Care Reform is Now Law: Will the Light Come on When Your Employees Open the Fridge?

On March 30, 2010, the President signed the Health Care and Education Reconciliation Act of 2010 into law (the “Reconciliation Act”). The Patient Protection and Affordable Care Act, commonly referred to as the Senate bill, was signed a week earlier. The Reconciliation Act made changes to the Senate bill necessary to achieve passage in the House while avoiding a Senate filibuster, enabling the enactment of comprehensive health care reform. The combined acts are referred to in this E*Bulletin as the “Act”.

Healthcare Reform: Here's What You Need To Know For 2011.

There's a lot of information about the new health care reform acts on the Internet and in the news – much of it vague, some of it incorrect, and most of it overwhelming. The acts are very complex, of course, which is reflected in the reports. While several of the changes will be effective in 2011, most of the changes in the law won't take effect until 2014. The provisions with delayed effective dates will be clarified in future regulations and some of the provisions may be changed or repealed before they become effective. We'll report on those aspects of the law in future legal alerts. For now, here's what you need to know.

Does Your Health Plan Violate the New Mental Health Parity Rules?

New regulations are giving employers their first glimpse of the mental health and substance abuse benefit changes that may be needed by 2011 to ensure that their health plans do not violate the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (“New Mental Health Parity Act”).

Goodies For Labor Tucked Away in Health Bill.

Now that the U.S. House of Representatives has passed its version of a health care reform bill, all eyes turn to the Senate. No matter where you stand in the debate over issues such as the public option, big labor bosses hope you do not notice some lower-profile provisions tucked into the pages of this massive proposal. If they become law, these provisions would give union leaders considerable influence over health care decisions affecting us all.

New Standards for Breaches of Health Plan PHI.

Federal law will soon require employers to provide notice to their health plan participants, the Department of Health and Human Services (HHS), and potentially even the media, following breaches of participant unsecured protected health information (PHI), under interim final HHS regulations set to be published in the August 24, 2009, Federal Register.

What’s Happening with Health and Welfare Plans? More than You Might Think . . .

Even before Congress began laboring over the potentially biggest health care legislation in years, employers had – or should have had – plenty of health and welfare plan issues on their agendas for the second half of 2009.

Michelle's Law Takes Effect Later This Year.

Michelle's Law will take effect beginning October 9, 2009 (or January 1, 2010 for calendar year plans). It requires group health plans and group-health-plan-insurance issuers to continue coverage for dependent college students when they are forced to take a medically necessary leave of absence from school. The law was named after Michelle Morse, a college student in New Hampshire who was diagnosed with cancer but continued her studies on a full-time basis in order to avoid losing her health coverage under her parents' plan.

CHIP Requirements Now In Effect.

On February 4, 2009, President Obama signed the Children's Health Insurance Program Reauthorization Act of 2009 (CHIP). CHIP extends and expands the State Children's Health Insurance Program (SCHIP), and it contains several provisions that affect employer-sponsored group health plans.

Your 2009 Benefits Checklist.

A new year is upon us and, as always, there are new responsibilities for those responsible for employee benefits. Here are some updates, due dates, and mandates in this important area.

Legislation Expands Mental Health Obligations For Employer Plans.

Beginning with 2010 plan years, employer health plans and group health insurers will no longer be able to impose separate financial requirements or treatment limitations on mental health or substance use disorder benefits, under new mental health parity provisions contained in the economic bailout legislation signed into law by President George W. Bush on October 3.

Bailout legislation expands mental health obligations for employer plans.

Beginning with 2010 plan years, employer health plans and group health insurers will no longer be able to impose separate financial requirements or treatment limitations on mental health or substance use disorder benefits, under new mental health parity provisions contained in the economic bailout legislation signed into law by President George W. Bush on October 3.

End of the Year Challenges for Benefit Plans

Congress and the Departments of Labor and Treasury have had a busy year in 2008. The legislative and regulatory agenda affecting employee benefit plans has been quite broad. Changes in the statutory and regulatory landscape over the last several years have imposed a plethora of requirements on employee benefit plans, their plan sponsors, and administrators. The compliance dates for a number of these requirements are December 31, 2008, and January 1, 2009. The final quarter of calendar year 2008 is upon us, and three months is a very short turnaround time for adopting and implementing some of the measures discussed in this article. The last few months of 2008 present a chance for employers to make sure that, as they ring in the new year, their employee benefit plans don’t suffer from a hangover.

New Secondary Payer Reporting Requirements Take Effect January 1, 2009.

The Medicare, Medicaid, and SCHIP Extension Act of 2007 requires health insurers and third-party administrators (TPAs) to submit data to the Centers for Medicare and Medicaid Services (CMS) identifying situations where the group health plan is secondary to Medicare. Effective January 1, 2009, certain data elements must be reported to CMS on a quarterly basis. The penalty for failing to report the required data elements is $1,000 per person per day for which the data should have been submitted.

U.S. Supreme Court Rules In Key Benefit Cases.

In the closing days of its most recent term, the U.S. Supreme Court issued two decisions relating to the design and administration of employee benefit plans. The first, Metropolitan Life Insurance Company v. Glenn, addressed (without giving significant guidance) the question of whether a conflict of interest exists when a plan administrator who decides questions of eligibility for benefits is also the person responsible for paying any benefit claims, and the effect of such a conflict on a reviewing court's analysis. The second, Kentucky Retirement Systems v. EEOC, addressed the question of whether a pension plan's failure to increase benefits to disabled retirees once they reach normal retirement age (but continue working) violates the Age Discrimination in Employment Act (ADEA).

Same-Sex Marriages: What Do They Mean for Your Benefit Plans?

On May 15 of this year, the California Supreme Court held that same-sex couples must be permitted to legally marry in California. According to the decision, the failure to designate the relationship of a same-sex couple as a marriage violates the equal protection clause of the California Constitution. When the decision takes effect on June 14, 2008, California will join Massachusetts as the only states that recognize same-sex marriages.

Supreme Court Sides With Employee In Benefits Denial Claim.

The Supreme Court confirmed that a conflict of interest exists where "dual-role" employee benefit plan administrators have the authority to both evaluate and pay claims. More importantly, the Supreme Court also clarified how the conflict of interest should be weighed on review of a plan administrator’s discretionary benefit denial.

Gearing Up For A Downturn - A Primer On Key Benefits Issues Webinar (Power Point Presentation).

In this webinar, the Employee Benefits and Executive Compensation Practice Group of Ogletree Deakins covers the latest Benefits issues affecting employers.
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