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Total Articles: 267

Critical Qualified Plan Fiduciary Issues For Employers To Consider In Light Of Covid-19

With the business disruptions and market turbulence being wrought by COVID-19, many employers sponsoring qualified retirement plans are facing key decisions about their 401(k), profit sharing, defined benefit, and cash balance plans.

Five Things to Consider when Calculating Qualified Health Plan Expenses Under the FFCRA

While most employers are aware of the payroll tax credits available for paid sick and family leave requirements provided under the Families First Coronavirus Response Act (FFCRA), many are unaware credits area also available for “qualified health plan expenses” related to that leave. The IRS issued specific guidance on this point last week. The following summarizes five things all employers should know about calculating payroll tax credits for qualified health plan expenses under the FFCRA:

The IRS Extends Looming Restatement Deadlines

The IRS announced on March 27th via its website the extension of the initial remedial amendment period for Section 403(b) plans from March 31, 2020, to June 30, 2020. It also extended the deadline for the second six-year remedial amendment cycle for pre-approved defined benefit plans from April 30, 2020, to July 31, 2020.

Special COVID-19 Health Insurance Enrollment Windows and Waivers

As a result of the ongoing COVID-19 pandemic, we are observing all sorts of never-before-seen changes in the fully-insured group health plan space. Many insurers are liberally waiving their normal rules to accommodate the continuation of coverage to employers and employees in their time of need. Although the accommodations are welcome, employers need to exercise caution before allowing employees to take full advantage of the changes. There are ERISA and tax law implications to consider that are often left out of the insurer announcements related to coverage enhancements, and employee communications of legal mandates are key.

Employee Benefits Issues to Consider Before Deciding to Furlough or Terminate Employees During the COVID-19 Pandemic

With the combination of our nation’s response to COVID-19 and the resultant economic downturn, employers of all sizes face the moral and financial dilemma of evaluating employee headcounts while businesses are grappling with the reality of the current situation. Many employers are considering furloughs, or other types of approved leaves of absences, to reduce immediate payroll, hoping the downturn lasts for a period of a few weeks instead of months. Other employers are opting to implement systemic reductions in the workforce and let employees go. The focus of this article is to highlight that different employment actions produce different employee benefits consequences that must also be part of any employment decision.

Employee Benefits Issues — Coronavirus

As the coronavirus continues to spread within the United States, employers are dealing with a number of issues with respect to workforce, labor, and employee benefits. The following are common questions regarding employee benefits issues that employers may face sooner rather than later. We will update this list of questions and answers as the situation unfolds.

IRS Issues Proposed Rule on Business Expense Deductions

On February 26, 2020, the IRS published proposed regulations implementing changes made by the Tax Cuts and Jobs Act of 2017 (TCJA) regarding the elimination of deductions for entertainment and the limitation on food and beverage expenses. The regulations largely track prior IRS guidance, Notice 2018-76, on these issues.

Lawmakers Secure Signatures on the SECURE Act

In late December 2019, President Trump signed appropriations bill H.R. 1865, which includes tax and retirement plan provisions from the Setting Every Community Up for Retirement Enhancement Act (SECURE Act, the Act). Most observers felt that the Act had little chance to pass in 2019, but it was attached to a must-pass appropriations bill, which did the trick. A summary of the major changes and a table with effective dates follow.

Health Plan Sponsors – Have You Updated Your Vendor Agreements for Substance Use Disorder (SUD) Confidentiality Regulations?

Employers that sponsor group health plans (medical, dental, vision, HFSA) are used to negotiating detailed administrative services agreements with vendors that provide services to those plans. Many also are familiar with “business associate agreements” required under HIPAA that must be in place with certain vendors, such as third-party claims administrators (TPAs), wellness program vendors, benefits brokers, etc. However, many plan sponsors may not be aware of a contract requirement with respect to the confidentiality of patient records relating to a substance use disorder (SUD). If applicable, these contract provisions must be in place by February 2, 2020.

The SECURE Act, at Last

On December 19, 2019, the Senate passed, as part of the Further Consolidated Appropriations Act 2020 (Public Law No. 116-94), the Setting Every Community Up for Retirement Enhancement (SECURE) Act (Division O pg. H.R. 1865-604). It is touted as the most significant retirement act since the Pension Protection Act of 2006. President Trump signed the bill December 20, 2019.

Employee Benefits for Employers – Winter 2019

Has DOL Put Final Nail In Coffin of ‘Substantial Compliance’ Doctrine for Disability Claims?

Professional Tax Preparers – You Need A Written Information Security Plan, Says the IRS and FTC

Tax season soon will soon be upon us and many not-so-eager taxpayers will share sensitive personal information about themselves, their dependents, their employees, and others with their trusted professional tax preparers for processing.

Benefits Update (No. 4, December 2019)

The Department of Labor (DOL) recently issued proposed regulations updating the safe harbor for the electronic delivery of employee benefit plan notifications for plans subject to the Employee Retirement Income Security Act of 1974 (ERISA). A copy of the proposed rules can be found here.

Benefits Update (No. 3, September 2019)

A Health Savings Account (HSA) is a popular vehicle for paying health care costs. Employees find HSAs attractive because they can control the amount of money contributed, determine when to withdraw money, and enjoy the benefits of what is essentially a tax-favored savings account – money can be contributed, earned, and distributed for qualified expenses on a tax-free basis. Not to mention the fact that HSAs are portable.

The IRS Doesn’t Disappoint...Again

As imagined by plan sponsors of closed defined benefit pension plans, the IRS issued Notice 201-49, the fifth extension for an additional year of the temporary nondiscrimination relief for “closed” defined benefit pension plans originally announced by the IRS during 2014. The extended relief applies to plan years beginning before 2021 for those “closed” plans that satisfy certain conditions in Notice 2014-5. The relief for “closed” defined benefit plans refers to those defined benefit plans amended prior to December 13, 2013, to limit ongoing accruals to some or all employed participants in the plan as of a particular date, thus no longer admitting new participants into the plan.

2020 Drug Coupon Rule Dropped Due to Implementation Concerns

Employer plans will still be able to exclude the value of drug manufacturer coupons from annual out-of-pocket maximums, even when no generic equivalent is available, under new guidance from the Department of Labor, Department of Health and Human Services (HHS), and Department of Treasury. These exclusions, or copay accumulators, are built into many employer plans.

Beginning in 2020, Employers May Reimburse Health Insurance Premiums as an Alternative to a Traditional Group Health Plan (Subject to Several Requirements)

Many employers have contacted us over the years asking whether they may offer an “employer–payment plan” rather than offer a traditional group health insurance plan. An employer-payment plan is a type of account-based plan that provides an employee reimbursement for all or a portion of the premium expense for individual health insurance coverage or other non-employer hospital or medical insurance.

Substance, Not Form, Determines Whether Employee Meals Have Noncompensatory Business Reason, IRS Warns

In a technical advice memorandum (TAM 201903017) released on January 18, 2019, the Internal Revenue Service (IRS) provided guidance on whether employer-provided meals and snacks are includable in employee income and subject to employment tax. The memorandum, which cites a number of IRS rulings on this topic, serves as a forewarning to employers of the limitations of providing free meals to employees.

A Welcome Expansion: IRS Resuscitates Determination Letter Program

Beginning September 1, 2019, employers that sponsor cash balance plans and certain merged plans can sleep easier. Revenue Procedure 2019-20, issued by the Internal Revenue Service (IRS) on May 1, 2019, opens the IRS’s determination letter program for individually designed “statutory hybrid plans” and certain “merged plans.” Plan sponsors will recall that beginning January 1, 2017, the IRS’s determination letter program for individually designed plans was significantly curtailed by Revenue Procedure 2016-37. Revenue Procedure 2016-37 provided that plan sponsors of individually designed plans could seek a determination letter from the IRS only for initial plan qualification, plan terminations, or other circumstances to be provided by the IRS at a later time.

The Battle Lines of Mental Health Parity Litigation: Utah District Court Grants Motion to Dismiss, Finds Conclusory Allegations Insufficient

n June 5, 2019, in the matter Kerry W. v. Anthem Blue Cross and Shield, No. 2:19cv67, Judge Dee Benson of the U.S. District Court for the District of Utah granted Anthem Blue Cross and Shield’s motion to dismiss the plaintiffs’ cause of action for violation of the Mental Health Parity and Addiction Equality Act (MHPAEA). The district court in Utah continues to determine that a denial of a mental health benefit claim based on medical necessity cannot be transformed into a cause of action for violation of the MHPAEA through conclusory allegations.

Benefits Update (No. 2, June 2019)

The Internal Revenue Service recently amended its Employee Plans Compliance Resolution System (EPCRS) to allow more retirement plan qualification failures to be self-corrected, including retroactive plan amendments. This is welcome news for employers. The changes to EPCRS in Revenue Proc. 2019-19 are intended to facilitate plan compliance while reducing associated costs by allowing plan sponsors more opportunities to self-correct. The changes took effect on April 19, 2019, and supersede Revenue Procedure 2018-52.

Required Minimum Distributions

The aging of the baby boomer generation has increased the level of scrutiny with which the Department of Labor, Employee Benefits Security Administration (“EBSA”) will review the efforts of pension plans to locate missing plan participants who did not receive reported benefits. The focus of the EBSA which began with a review of the efforts of defined benefit plans to find and pay benefits to participants has now expanded to include defined contribution plans.

To Withhold or Not to Withhold on Pension Distributions: A New Proposed Regulation Clarifies Obligations

On May 31, the IRS issued a proposed regulation — presented in Q & A format — concerning income tax withholding obligations on non-rollover distributions from employer-sponsored plans — including pension, annuity, profit sharing, stock bonus and any other deferred compensation plan — to destinations outside the U.S. Unlike U.S. payees, non-U.S. payees cannot elect to forego income tax withholding on such distributions.

Changes to Employee Benefit Plans May Create Unforeseen Disclosure Deadlines

Believe it or not, it may be time to distribute a new Summary Plan Description (SPD) to include all changes made since the last issuance or a Summary of Material Modifications (SMM) for any amendments adopted during the 2018 plan year.

The IRS Reopens the Determination Letter Program for Merged Plans and Cash Balance Plans

On May 1, 2019, the IRS issued Revenue Procedure 2019-20, which reopens the determination letter program in a limited manner for individually designed plans that are merged plans or statutory hybrid plans, such as cash balance plans. The new IRS guidance provides that sponsors of merged plans may request determination letters going forward, while sponsors of statutory hybrid plans may request determination letters only during a limited window of time. The effective date of the new guidance is September 1, 2019.

Is Your Employer Worksite Medical Clinic a Group Health Plan?

Worksite medical clinics, some offering round-the-clock access to medical providers via telemedicine, seem to be growing in popularity. Promoters tout cost savings resulting from what would otherwise be lost productivity (employees whiling away afternoons waiting to see their private doctors or having to drive long distances to have blood drawn for routine laboratory work) and expenses otherwise borne by self-insured group health plans at a far higher cost per service. Some worksite clinics have existed for decades for reasons other than cost-savings – for example, to ensure immediate treatment is available to employees if work-related injuries or illnesses occur or as part of a workplace well-being program.

THEY’RE HEEEEERRRREE!! But Have No Fear – Long Awaited Changes to EPCRS Are Good News for Plan Sponsors

Long on the wish list of practitioners and plan sponsors alike, self-correction of certain common plan document issues and loan failures is finally an option under the Internal Revenue Service’s Employee Plans Compliance Resolution System (“EPCRS”), newly minted via Rev. Proc. 2019-19.

IRS Offers Guidance on Applying Test for Deductibility of Parking Expenses

The Tax Cuts and Jobs Act of 2017 (TCJA) generally eliminated employer deductions for expenses incurred to provide employee parking benefits but left intact deductions for expenses associated with parking provided for customers and the general public. Because nondeductible employee parking expenses are often closely intertwined with deductible general public or customer parking expenses, employers may have difficulty distinguishing between the two under the TCJA.

IRS Clarifies Business Meal and Entertainment Deductions Following TCJA

The Tax Cuts and Jobs Act of 2017 (TCJA) eliminated the deduction for entertainment purchased as a business expense but left intact the deduction for business meals. Because entertainment and meals are often closely intertwined when purchased in a business context, taxpayers may have difficulty distinguishing deductible meal expenses from nondeductible entertainment expenses.


On January 15, 2019, the federal Eighth Circuit Court of Appeals issued its decision in Peterson v. UnitedHealth Group, Inc., 913 F.3d, 769 (8th Cir. 2019), in which the Court upheld the federal district court’s holding that UnitedHealth Group, Inc. (“United”) was not authorized to reduce (or “offset”) payments to medical providers under ERISA group health plans for which United was the third-party administrator (or “TPA”) by the amounts United determined had been previously overpaid to the same providers under completely different group health plans also administered by United. This practice is known as “cross-plan offsetting.”

Key Takeaways From an ERISA Fiduciary Breach Ruling on Behavioral Standards of Care After a 10-Day Trial

Behavioral health claims administrators and plan sponsors alike may be looking more closely at their care guidelines—and how they are applied—after a federal court ruled in a California class action that a claims administrator had breached its fiduciary duty under the Employee Retirement Income Security Act of 1974 (ERISA) by applying standards of care that were more restrictive than generally accepted standards and by improperly prioritizing cost savings.


In 2008, the IRS established a voluntary correction program aimed at plan sponsors and administrators to encourage resolution of plan document or operational failures as soon as they are discovered. The Employee Plans Compliance Resolution System, or “EPCRS” as it is most often called, stresses the importance of established administrative practices and procedures to avoid Internal Revenue Code failures that may arise from a lack of such practices and procedures. EPCRS consists of three programs, Self-Correction Program (SCP), Voluntary Correction Program (VCP), and the Audit Closing Agreement Program (Audit CAP). Each of the correction principles and methodologies in EPCRS apply to all three programs.

Plan Sponsors: Don’t Miss These Retirement Plan Deadlines

Given that a variety of qualified retirement deadlines are approaching, we thought a refresher on the subject would be helpful, especially for plans that utilize a calendar plan year. This article is intended to alert plan sponsors about applicable major qualified retirement plan deadlines that fall in the first half of 2019. (Note that we have not included a complete list of all deadlines applicable to qualified plans, but instead focused on the more important ones.)

The PBGC Proposes Simplified Methods for Calculating Withdrawal Liability

The Pension Benefit Guaranty Corporation (PBGC) recently proposed amendments to the regulations that govern how multiemployer plans calculate withdrawal liability. The PBGC has invited comment on these proposed regulations through April 8, 2019.

Benefits Update (No.1, March 2019)

An HR professional wears many hats relative to executive and key employee compensation. This article addresses three primary responsibilities of the HR professional: (1) understanding the core elements of a typical key employee compensation package; (2) understanding the primary duties and roles of the HR professional with respect to the design and administration of incentive packages; and (3) being aware of hot topics impacting the provision of executive compensation.

Interim IRS Guidance Addressing Taxation Impact of Transportation and Parking Fringe Benefits Creates Planning Opportunities for Employers

In Notice 2018-99, the Internal Revenue Service sets forth interim guidance for taxpayers to determine parking expenses for qualified transportation fringes (QTFs) that are nondeductible and for tax-exempt organizations to determine the increase in unrelated business taxable income (UBTI) attributable to nondeductible parking expenses. The Tax Cuts and Jobs Act (Act) amended these tax provisions effective for amounts paid or incurred after December 31, 2017.

Making the Loss of the SALT Deduction Sting a Little Less

As tax time rapidly approaches, taxpayers in states with high state and local income taxes (such as New York) are about to learn, up close and personal, just how much the loss of the deduction for state and local taxes (SALT) will affect their personal tax liability. A little-publicized provision of the New York Tax Law, however, may take away some of the sting of losing the SALT deduction.

IRS Announces New Retirement Plan Guidance for Voluntary Correction Program (VCP) Applications

For HR offices, December is typically a time to recover from open enrollment, tie up loose ends, and look forward to 2019. Lost in the busyness of the last few months may have been some retirement plan guidance from the Internal Revenue Service regarding its Employee Plans Compliance Resolutions System (EPCRS). In Revenue Procedure 2018-52 (September 28, 2018), the IRS has outlined new filing requirements for its Voluntary Correction Program. This guidance essentially amends and restates Rev. Proc. 2016-51, which, as described below, will have limited applicability after December 31, 2018.

Benefits Update (No. 4, December 2018)

Employer-sponsored student loan repayment programs are an effective way to attract highly educated employees with student loan debt. Traditional student loan repayment programs—in which employers give a lump sum or reimburse employees for payments toward their student loans—have grown significantly in popularity over the last decade. However, these programs are often expensive to maintain because the payments are afforded no special treatment under the Tax Code. As a result, benefits paid under the program generally constitute additional taxable income to the employee.

IRS Announces Filing Extension for Furnishing 2018 Forms 1095-B and 1095-C and Continued Good Faith Transition Relief

In IRS Notice 2018-94, the IRS announced an extension for furnishing 2018 IRS Forms 1095-B (Health Coverage) and 1095-C (Employer-Provided Health Insurance Offer and Coverage), from January 31, 2019, to March 4, 2019. The IRS issued this extension 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 and is largely identical to the extension the IRS provided for furnishing the 2016 and 2017 Forms. Despite the extension, the IRS encourages employers and other coverage providers to furnish the Forms as soon as possible.

IRS Proposed Regulations Implementing Changes To Hardship Distribution Rules

Earlier this year we reported on legislative changes that modified the requirements related to hardship distributions from 401(k) plans. Recently, the IRS issued proposed regulations that if finalized will implement those changes.

IRS Publishes Pension Plan Limitations for 2019

On November 1, 2018, the Internal Revenue Service (IRS) announced cost-of-living adjustments affecting dollar limitations for pension plans and other retirement-related items for the 2019 tax year. These limits include both employee and employer contribution limits. The list below details some of the key limit increases and those limits that remain unchanged effective January 1, 2019:

IRS Clarifies Role of Gross-Ups When Taxes Are Assessed on an Earlier Year’s Fringe Benefits

When the Internal Revenue Service (IRS) determines during an examination that a fringe benefit should have been taxed and the employer accordingly has to pay additional taxes in a later year, how is the subsequent payment treated for tax purposes? Recent IRS guidance on this issue serves to clarify when employers will need to “gross up” these payments for the employee.

Notice 2018-76: Taking a Bite Out of the Business Expense Deductions for Meals, Entertainment

On October 3, 2018, the IRS issued transitional guidance in Notice 2018-76 concerning the business expense deductions for meals and entertainment following the changes made by the Tax Cuts and Jobs Act (“TCJA”) — which generally disallowed a deduction for expenses related to entertainment, amusement or recreation, but did not specifically address the deductibility of business meal expense.

Student Loan Repayments or Retirement Savings? Maybe Both . . .

Recent statistics show that approximately 70 percent of college graduates will leave college with an average of at least $30,000 in student loan debt. Cumulatively, the national student loan debt is approximately $1.5 trillion. This burden is causing millennials to wait longer than previous generations to buy houses, start families, and save for retirement. Although student loan indebtedness is not an issue employers can solve alone, a few are finding ways to recruit and retain talent by offering a helping hand to employees dealing with massive debt burdens.

Benefits Update (No. 3, September 2018)

In July 2016, the U.S. Department of Labor (USDOL), the Internal Revenue Service, and the Pension Benefit Guaranty Corporation released proposed revisions to the Form 5500 Annual Return required for certain ERISA-covered employee benefit plans. While the proposed regulations garnered attention when they were released, the agencies have been relatively quiet about the changes to come. However, because the regulations target plan year 2019 and could include sweeping compliance changes for health plans in particular, it’s time to start planning.

The IRS Doesn’t Disappoint

As anticipated by plan sponsors of closed defined benefit pension plans, the IRS issued Notice 2018-69, the fourth extension for an additional year of the temporary nondiscrimination relief for “closed” defined benefit pension plans originally announced by the IRS during 2014. The extended relief applies to plan years beginning before 2020 for those “closed” plans that satisfy certain conditions in Notice 2014-5. The relief for “closed” defined benefit plans refers to those defined benefit plans amended prior to December 13, 2013, to limit ongoing accruals to some or all employed participants in the plan as of a particular date, thus no longer admitting new participants into the plan.

Association Health Plans – Update

As we advised was likely during our June 29, 2019 webinar, Association Health Plans—Are They Really an Option to Consider?, at least two states were likely to challenge the enforceability of the new regulations issued by the Department of Labor that expand the definition of “employer” for groups who are qualifying association health plans (“AHP’s”).

Employee Benefits Newsletter – Summer 2018

New Agency Guidance Makes Mental Health Parity and Addiction Equity Act Enforcement a Priority. A review of the parity compliance issues for plans and insurers providing mental health and substance use disorder benefits.

You’ve Discovered A Mistake in Your Plan Administration – Now What?

Occasionally qualified plan administrators discover that their plans have incurred an operational error. The Internal Revenue Service (“IRS”) recognizes that it needs the help of plan administrators to police the administration of qualified plans and has correspondingly published guidance to help plan administrators take appropriate corrective action where necessary.

Association Health Plans — Are They Really an Option to Consider?

As discussed during our recent webinar, the finalized DOL regulations for qualifying “association health plans” will likely create new opportunities for sole proprietors and other primarily small businesses and other trade groups to band together in a coordinated manner to purchase more affordable health insurance as a “single employer” in 2019 and beyond.

Changes to Retirement Plan Loan Rollover Distribution Rules May Necessitate Updates to Your Special Tax Notices

On January 1, 2018, modifications to the rollover distribution rules for certain retirement plan participants with defaulted plan loans went into effect. As a result of a provision in the Tax Cuts and Jobs Act, the rollover distribution rules are now more relaxed for rollovers of defaulted loans resulting from plan terminations or a participant’s failure to repay a loan upon severance from employment. These changes impact several provisions in the “safe harbor” model tax notices for eligible rollover distributions that were published by the Internal Revenue Service (IRS) in 2009 and updated in 2014.

DOL Finalizes Expansive Association Health Plan Rule

The U.S. Department of Labor (DOL) recently finalized its much-anticipated rule which expands opportunities for small businesses and certain self-employed individuals to band together to obtain more affordable group health coverage under an association health plan (AHP). Published in the Federal Register on June 21, 2018, the final rule (83 Fed. Reg. 28912) is largely the same as the proposed rule, which was published on January 5, 2018, although the DOL made some notable modifications in response to the more than 900 comments received from the public.

Supreme Court Holds Stock Options Are Not Taxable under the RRTA

On June 21, 2018, the Supreme Court held in Wisconsin Central Ltd. v. United States that railroad stock options are not taxable compensation under the Railroad Retirement Tax Act of 1937 (the “RRTA”). This ruling represents a significant win for railroad companies.

Association Health Plans: How Do You Solve a Problem Like a MEWA?

On June 19, 2018, the Department of Labor issued its highly anticipated final rule expanding the availability of association health plans (“AHPs”). The core purpose of an AHP is to allow small employers to band together and obtain coverage in the large group insurance market, which generally imposes fewer coverage requirements. For example, unlike the small group insurance market, policies issued in the large group insurance market are not required to cover “essential health benefits.”

New Association Health Plan Rule Will Help Gig Economy Workers

It’s a small step, but at least it’s progress. Federal regulators made it easier this week for gig workers to obtain health insurance on a more cost-effective basis, which should help to shore up the ranks of gig workers and make freelance work a more attractive option for a larger pool of talent.

Opioid Abuse in America: Can Your Employer Health Plan Be Part of the Solution?

There is an opioid misuse, abuse, and addiction crisis in this country, and it impacts many employees and their family members. A substantial percentage—perhaps as high as 40 percent based on recent reports—of opioid addicts are covered by employer group health plans.

Final Association Health Plan Guidance Released

On June 19, 2018, the U.S. Department of Labor (DOL) released its final rule on association health plans (AHPs). The final rule generally is consistent with the proposed rule published on January 5, 2018, and allows employers and sole proprietors to band together on the basis of geography or industry.

Benefits Update (No. 2, June 2018)

Reference-Based Pricing: Another Self-Insured Option for Employers

New Tax Law May Affect Mileage Reimbursement Policy for Employers

Outside of potential minimum wage issues, there is no federal law requiring employers to reimburse employees who use their personal vehicles for business purposes.

New Mental Health Parity Guidance and Enforcement Efforts May Warrant a Deep Dive Into Plan Administration

The Department of Labor (DOL), the Department of the Treasury, and the Department of Health and Human Services (HHS) are making good on their promise to issue more guidance and to aggressively enforce the federal Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) by recently issuing a slew of new guidance, enforcement statistics, and promises of continued aggressive enforcement.

Excessive Executive Compensation and the Tax Cuts and Jobs Act of 2017: Widening the Net of Negative Tax Consequences for For-Profit and Non-Profit Corporations

With all the national press coverage about tax savings, tax cuts and company bonus payments associated with the Tax Cuts and Jobs Act of 2017 (the “Tax Act”), it is easy to miss the changes in federal tax laws that impose substantial negative tax consequences on employers that pay certain executives an amount of compensation that Congress has deemed “excessive.” In this particular area, the changes brought about by the Tax Act do not cut taxes. Rather, for many for-profit and non-profit corporations, the Tax Act creates new taxes.

IRS Issues Guidance FAQs Regarding the Paid Family Leave Federal Tax Credit

This week, the Internal Revenue Service (IRS) issued FAQ guidance regarding the employer tax credit for paid family and medical leave. As a reminder, the Tax Cuts and Jobs Act of 2017 (the Act) provides a tax credit to employers that voluntarily offer paid family and/or medical leave to employees. The FAQs clarify some of the requirements in Section 45S of the Act that an employer’s paid family and/or medical leave policy must include. The FAQs also clarify other details, such as the basis for the credit and the tax credit’s impact on an employer’s deduction for wages paid to an employee who is on a qualifying leave.

Financial Conflict of Interest in the Eighth Circuit: Trigger of a Less Deferential Standard of Review or Mere Factor in Determining Plan Administrator Abuse of Discretion?

It is well-established under the Employee Retirement Income Security Act of 1974 (“ERISA”) that when an employee benefit plan grants the plan administrator discretion to decide questions of eligibility for benefits or to construe plan terms, judicial review of the plan administrator’s denial of benefits is generally limited to the deferential abuse of discretion standard — pursuant to which a plan administrator’s decision is affirmed if it is reasonable, i.e., a reasonable person could have reached a similar decision given the evidence. Earlier this year, the United States Court of Appeals for the Eighth Circuit, in Boyd v. ConAgra Foods, Inc., 879 F.3d 314 (8th Cir. 2018), clarified when a less deferential standard of review might nonetheless apply in the review of denial of plan benefits under ERISA Section 502(a)(1)(B).

Employee Benefits and the Tax Cuts and Jobs Act

As we move into the second quarter of 2018, now is a good time to remind employers about the significant impact of the Tax Cuts and Jobs Act (TCJA) on employee benefits. While some of these issues may not affect the taxation of employee benefits directly, the new tax treatment of certain employer-provided benefits may limit the provision of those benefits. Like any change in law, the new legislation has brought with it a number of questions.

Employee Benefits Newsletter – Spring 2018

View from Jackson Lewis: The Curious Odyssey of the Multiemployer Defined Benefit Pension Fund. A review of the state of multiemployer funds.

Was Your Employee Benefit Plan Selected For Examination? Don’t Panic!

Each year, hundreds of retirement plans are examined by the Internal Revenue Service (IRS) and Department of Labor (DOL). The agencies also examine other kinds of employee benefit plans for compliance with statutes and regulations with respect to which they have enforcement authority. In particular, the DOL has increased its examinations of group health plans in recent years in connection with the Employee Benefit Security Administration’s Health Benefits Security Project. The agencies are particularly focused on compliance issues that pose the greatest potential risk to the largest numbers of employees.

Fringe Benefits Affected by the Tax Cuts and Jobs Act

The enactment of the Tax Cuts and Jobs Act (TCJA) on December 22, 2017, brought about the most sweeping overhaul of the Internal Revenue Code (IRC) since 1986. Most of the changes took effect on January 1, 2018. This article covers the TCJA’s impact on employer-provided fringe benefits and offers insights, based on conversations with employers across the country, on how the changes may influence employers’ fringe benefit offerings in the years to come.

Cost-Benefit Analysis 101 for Healthcare Providers

Nary a week goes by without news of a data breach by a healthcare provider…while there are certainly a good number of breaches resulting from a breach of cybersecurity defenses or from the wrongful exploitation of system security weaknesses, there is still a risk to healthcare providers resulting from the internal operations of the healthcare provider. There are frequent reports of these “internal” breaches: loss of equipment (e.g., laptops that were not secured and unencrypted USB drives), employee wrongdoing (e.g., theft of records or improper access to records to satisfy personal curiosity), and then those unfortunate “oops” moments (e.g., sending personal health information (“PHI”) to administrative vendors without a proper business associate agreement (“BAA”) in place, or a spontaneous conversation in a waiting room disclosing PHI).

Changes to VCP User Fees: A Holiday Gift That Some Plan Sponsors Would Rather Return

Benefit plan practitioners returned to their desks after the holidays to the surprising news that the Internal Revenue Service issued guidance that made sweeping changes to the user fees for the Internal Revenue Service’s Voluntary Correction Program (“VCP”). (And notably more than one IRS agent has informally indicated they were surprised by the changes, which were almost immediately effective, as well!)

Benefits for the Gig Workforce: Is there a Solution that Won’t Defeat the Business Model?

Offering health, retirement, and workers’ compensation benefits to the varied gig workforce, while maintaining some affordability to the worker while also avoiding the 30 percent cost increase to businesses, has proven to be an extremely tall task. The situation gets even more complicated because gig businesses also need to be concerned that charges of worker misclassification could be supported by the offering of such benefits to their contractor workforce.

Is the New Employer Tax Credit for You?

Under the Internal Revenue Code of 1986, as amended (the “Code”), businesses are entitled to a general business credit which is made up of several component credits, including the Work Opportunity Credit, the Indian Employment Credit, credits for employing and housing employees affected by Hurricane Katrina, and a number of others. The recently-enacted Tax Cuts and Jobs Act (“TCJA” or the “Act”) added a new component credit for businesses that qualify – the Paid Family and Medical Leave Credit (“FML Credit”).

DOL Proposes More Permissive Association Health Plan Rule

Small businesses and self-employed individuals may soon have more options for obtaining affordable group health coverage. As directed by Executive Order 13813, on January 5, 2018, the U.S. Department of Labor (DOL) released proposed regulations (83 Fed. Reg. 614) intended to increase the availability of association health plans (AHPs). The proposed regulations would achieve that aim by broadening the definition of “employer” to make it easier for employers to join together to sponsor an AHP for their employees.

2018 Tax Reform Series: Change to Employer Deduction Rules

This is the sixth article in our series covering the various tax and employee benefits-related changes contained in the Tax Cuts and Jobs Act signed by the President on December 22, 2017.

Labor Department Initiative Could Permit Gig Workers To Obtain Healthcare Benefits

Among my list of “must-read” workplace law summaries is the weekly “Punching In” column put out by Chris Opfer and Ben Penn over at Bloomberg Law’s Labor and Employment Blog every Monday morning. This week’s edition contains two pieces of interesting news for gig businesses. The first is a recap of the little-known provision in the tax reform bill that could provide as much as a 20 percent reduction off the taxable earnings of gig workers, which could funnel even more people into the pool of gig workers (and incentivize those already in the pool to stay there). We discussed this a few weeks ago; you can read about it in more detail here in this December 29 post.

2018 Tax Reform Series: New Excise Tax on “Excess” Executive Compensation Paid by Tax-Exempt Employers

This is the fifth article in our series covering the various employee benefits-related changes contained in the Tax Cuts and Jobs Act signed by the President on December 22, 2017.

2018 Tax Reform Series: Executive Compensation Changes for Publicly Held Entities

This is the fourth article in our series covering the various employee benefits-related changes contained in the Tax Cuts and Jobs Act signed by the President on December 22, 2017.

DOL Issues Proposal Governing Association Health Plans

The Department of Labor has issue a proposed rule providing direction for sole proprietors and businesses to set up Association Health Plans (AHPs). This rulemaking stems from President Trump’s October 12, 2017 Executive Order 13813, “Promoting Healthcare Choice and Competition Across the United States,” which seeks to expand healthcare choice by modifying certain insurance regulations. A key component of this order is the promotion of AHPs, which allow individuals and employers to collectively purchase insurance.

2018 Tax Reform Series: Is Your Company Eligible for a Tax Credit for Paid Leave?

Below is the third article in our series covering the employee benefits-related changes contained in the Tax Cuts and Jobs Act signed by the President on December 22, 2017.

Employers Rejoice – IRS Announces Filing Extension for Furnishing 2017 Forms 1095-B and 1095-C and Continued Good Faith Transition Relief

In IRS Notice 2018-06, the IRS announced a 30-day automatic extension for the furnishing of 2017 IRS Forms 1095-B (Health Coverage) and 1095-C (Employer-Provided Health Insurance Offer and Coverage), from January 31, 2018 to March 2, 2018.

’Tis the Season to Answer Employer Shared Responsibility Payment Letters From the IRS

The deadline to respond is nearing for employers that received the first wave of Letter 226J mailings proposing to assess them with Employer Shared Responsibility Payments (ESRPs) for 2015 under Section 4980H of the Internal Revenue Code of 1986, as added by Section 1511 of the Patient Protection and Affordable Care Act (ACA).

Changes in Previously Announced COLAs

In October, the 2018 FICA taxable wage base (the maximum amount of an employee’s wages with respect to which the Old-Age, Survivor and Disability Income portion of FICA taxes is payable) had been announced as $128,700, up from this year’s $127,200. On November 27, the Social Security Administration announced that it was lowering the previously calculated amount, and that the 2018 taxable wage base would instead be only $128,400.

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.

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:

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:

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.

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.

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)


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.


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.

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.

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.


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:

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.

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.

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.


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.

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:

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.

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: 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:

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.

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).

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.

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.

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 ( and Wage and Hour Division ( 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

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 ( 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:

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

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.

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.

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.

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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