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Big Increase in 2014 Service Contract Act Health & Welfare Rate Announced

The U.S. Department of Labor (DOL) 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 $4.02 per hour (up from last year’s $3.81 per hour) is required in all government contract bids or other service contracts awarded on or after July 22, 2014. A special rate of $1.66 per hour is set for Hawaii (up from last year’s $1.55 per hour).

Circuits Split Regarding Validity of Federal Subsidies of Health Insurance Purchased on Federally-Established Exchanges

Two federal appeals courts have issued opposing decisions regarding whether the IRS has the authority under the Affordable Care Act (“ACA”) to extend federal tax subsidies to individuals who obtain health insurance coverage through a federal Marketplace (also known as an Exchange).

IRS Issues Draft ACA Reporting Forms

On July 24, 2014, the Internal Revenue Service (IRS) released draft forms that employers will use to report on health coverage that they offer to their employees. In March, the IRS issued final rules implementing the health coverage reporting requirements under the Affordable Care Act (ACA). The information reporting requirements become effective for the 2015 tax year.

Senate Committee Approves Bill Making ERISA Clarifications

On July 23, 2014, the Senate Committee on Health, Education, Labor and Pensions unanimously approved S. 2511, a measure that aims to clarify the definition of "substantial cessation of operations" under Section 4062(e) of ERISA. According to a statement issued by the committee, "this legislation will bring clarity to the pension downsizing liability rules and will ensure that there is a workable mechanism to protect pension benefits when employers show symptoms of financial distress."

Circuits Split Regarding Validity of Federal Subsidies of Health Insurance Purchased on Federally-Established Exchanges

Two federal appeals courts have issued opposing decisions regarding whether the IRS has the authority under the Affordable Care Act (“ACA”) to extend federal tax subsidies to individuals who obtain health insurance coverage through a federal Marketplace (also known as an Exchange).

Big Win for Religious, Closely-Held Corporations Under Obamacare

The U.S. Supreme Court released one of its biggest decisions since it struck down the Defense of Marriage Act one year ago, captioned Burwell v. Hobby Lobby Stores, Inc., 189 L. Ed. 2d 675 (U.S. 2014). In the first decision of its kind, the Court held closely-held corporations can exercise religion, are afforded religious freedom under the law, and are therefore not required to pay for employees’ birth control in the face of religious objections. To understand this, we need to turn back over 200 years.

Federal Courts Issue Conflicting Decisions on Affordable Care Act Subsidies

Executive Summary: On July 22, 2014, two different federal appeals courts issued conflicting decisions on the availability of subsidies for health insurance purchased by individuals on Exchanges established by the federal government under the Affordable Care Act (ACA). A three-member panel of the D.C. Circuit Court of Appeals held that the subsidy is only available for insurance purchased on an Exchange established by one of the 50 states. Accordingly, that court invalidated an IRS regulation that authorizes the subsidy also for insurance purchased on a federal Exchange. Halbig v. Burwell, (D.C. Cir. July 22, 2014). However, Fourth Circuit Court of Appeals reached the opposite conclusion, finding the language of the ACA ambiguous and deferring to the IRS interpretation. Thus the Fourth Circuit upheld the IRS regulation. King v. Burwell (4th Cir. July 22, 2014).

Health Plans That Intend to Drop Contraceptive Coverage Must Notify Plan Participants

In response to the recent U.S. Supreme Court holding in Burwell v. Hobby Lobby that closely held, for-profit entities with religious objections to certain aspects of the Affordable Care Act's (ACA) birth control requirements could avoid the mandate by invoking the Religious Freedom Restoration Act, the Department of Labor has released guidance to address this eventuality. In the latest set of Frequently Asked Questions (FAQs) on the ACA's implementation, the DOL explains that group health plans offered by closely held, for-profit businesses that intend to cease providing all or some contraceptive coverage must notify plan participants within 60 days after the adoption of a modification or change to the plan's coverage.

Supreme Court Returns to ERISA Statutory Basics, Rejects Moench Presumption: Implications for ESOP Trusts Holding Non-Publicly Traded Securities

The U.S. Supreme Court has unanimously decided that the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), does not contain a presumption of prudence for employee stock ownership plan (“ESOP”) fiduciary actions, rejecting the presumption adopted by many U.S. Courts of Appeals and returning to the plain terms of ERISA. Fifth Third Bancorp v. Dudenhoefer, No. 12-751 (June 25, 2014).

Democratic Lawmakers Introduce Measure to Counter Hobby Lobby Decision

As expected, Democratic members of the House and Senate have introduced legislation in response to the U.S. Supreme Court’s recent ruling in Burwell v. Hobby Lobby. The Court in this contentious decision held that closely-held for-profit entities with religious objections to certain aspects of the birth control mandate imposed by the Affordable Care Act could avoid the mandate by invoking the Religious Freedom Restoration Act (RFRA). As discussed in a press release on the new measure, the Protect Women’s Health from Corporate Interference Act of 2014 (H.R. 5051, S. 2578) would: