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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.

Supreme Court Rejects Analysis of Duration of Retiree Benefits As Contrary to Contract Law

On January 26, 2015, the Supreme Court of the United States resolved a long-standing dispute between the Sixth Circuit Court of Appeals and the remainder of the federal judiciary in a case concerning the extent to which retiree health care benefits provided for in a collective bargaining agreement become vested where the agreement is silent on their duration. Justice Thomas, delivering the opinion of a unanimous Court, disagreed with the judgment of the Sixth Circuit, which had ruled in a number of prior instances that silence in a collective bargaining agreement regarding the duration of bargained-for retiree health care benefits should be construed as evidence of the parties’ intention that those benefits vest and continue indefinitely. Despite the Sixth Circuit’s claims to the contrary, the Court concluded that the “Sixth Circuit’s decision rested on principles that are incompatible with ordinary principles of contract law.” M&G Polymers USA, LLC v. Tackett, No. 13-1010, Supreme Court of the United States (January 26, 2015).

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.

Senate Hearing Discusses Affordable Care Act Definition of "Full-Time"

During the first employment-related hearing conducted by the new Senate Committee on Health, Education, Labor and Pensions (HELP), Senators and panelists debated whether the Affordable Care Act's definition of "full-time" employment should be amended. Under the healthcare law’s employer responsibility requirements, employers with at least 100 full-time or full-time equivalent employees are now required to provide health insurance meeting certain ACA standards to their full-time employees or pay a penalty. For employers with 50 to 100 full-time employees, this pay-or-play employer mandate becomes effective in 2016. The ACA considers a worker "full time" if he or she works 30 hours or more per week, instead of the customary 40 per week.

Healthcare Reform: Plan Eligibility Rules Need To Be In Writing

Steven Witt’s article “Healthcare Reform: Plan Eligibility Rules Need To Be In Writing” was featured in Orange County Business Journal magazine on January 19, 2015.

Heads Up – The ACA Employer Mandate Is Now In Effect: Beware of Actions that Could Result in ACA Whistleblower Liability

Executive Summary: Effective January 1, 2015, certain employers became subject to the employer mandate of the Patient Protection and Affordable Care Act (ACA), and thus subject to liability under the ACA Employer Shared Responsibility provisions. Specifically, effective January 1, 2015, employers with at least 100 full-time employees, including full-time equivalents, became subject to a penalty if: 1) they fail to offer minimum essential coverage to substantially all of their full-time employees and their dependents, 2) if they fail to offer coverage that provides minimum value and is affordable to all full-time employees and their dependents, and 3) any full-time employee receives a tax credit or subsidy through a government health care exchange.

House Approves New ACA Amendment

Continuing its efforts to chip away at the Affordable Care Act, the House of Representatives on Monday voted 401-0 to exempt emergency service volunteers from the 50-employee threshold triggering the healthcare law's pay-or-play mandate. Last week, the House unanimously approved a similar measure exempting veterans covered under TRICARE or comparable insurance from being counted as an employee for ACA's shared responsibility purposes. As of January 1 of this year, employers with at least 100 full-time or full-time equivalent employees must provide health insurance that meets certain ACA standards to their full-time employees, or pay a penalty. This floor will be lowered to 50 or more employees on January 1, 2016.

House Passes 40-Hour Workweek Bill, but Enactment Far From Certain

On Thursday, the House of Representatives readily approved by a vote of 252-172 the Save American Workers Act of 2015 (H.R. 30), a bill that would increase from 30 to 40 the number of hours an employee must work per week to be considered "full-time" under the Affordable Care Act (ACA). How many employees are considered full-time under the ACA is important for determining whether the employer meets the 50-employee threshold triggering the law's pay-or-play shared responsibility mandate. Critics of the ACA's 30-hour-per-week definition have claimed it will encourage employers to reduce employee hours and/or hiring in order to remain below the pay-or-play mandate floor. While changing the definition has received some bipartisan support, the bill still must clear a Senate hurdle and the President's veto pen.

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

House Approves Bill Exempting Certain Employees from ACA Threshold

As expected, the 114th Congress began its term by attacking provisions of the Affordable Care Act (ACA). On Tuesday, the House of Representatives voted unanimously in favor of the Hire More Heroes Act of 2015 (H.R. 22), a bill that would exempt employees covered under TRICARE or other health insurance provided by the Veterans Administration from being counted toward the Affordable Care Act's 50-employee employer mandate threshold. Under the healthcare law’s employer responsibility requirements, an employer with at least 100 full-time employees (including full-time equivalent employees) will be required to provide health insurance that meets certain ACA standards to their full-time employees starting in 2015, or pay a penalty. For employers with 50 to 100 full-time employees, this pay-or-play employer mandate becomes effective in 2016. Employees falling under the categories specified in the Hire More Heroes Act would not count toward these thresholds. Given the new composition of the Senate, it is possible this measure will clear that chamber as well.