Executive Summary: On July 22, 2014, the U.S. Department of Labor (DOL) issued its annual memorandum announcing that, pursuant to 29 C.F.R. Section 4.52, the prevailing hourly health and welfare fringe benefit rates under the McNamara-O’Hara Service Contract Act (SCA) were increasing from $3.81 per hour to $4.02 per hour. The increase took effect immediately, and the new rate is posted on the DOL’s Wage Determinations (www.wdol.gov) and Wage and Hour Division (www.dol.gov/whd) websites. A special reduced rate of $1.66 per hour will apply to Hawaii because, under state law, most Hawaii employers are already obligated to provide their employees with health insurance. The new benefit rate was derived from the latest Bureau of Labor Statistics Employment Cost Index, summary of Employer Cost for Employee Compensation.
Articles about the Employee Retirement Income Security Act (ERISA) and other issues relating to employee benefit topics
The Affordable Care Act (“ACA”) and its regulations have been incorporated into the Puerto Rico Health Insurance Code, as amended, and guidance has been issued by the Office of the Insurance Commissioner to such effect. The Department of Health & Human Services (“HHS”), however, has recently clarified that the following requirements imposed under the ACA, will not apply to individual or group health insurance in the U.S. territories, including Puerto Rico: (i) guaranteed availability; (ii) community rating; (iii) single risk pool; (iv) rate review; (v) medical loss ratio; and (vii) essential health benefits.
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.
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).
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.”
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).
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.
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:
On June 25, 2014, the U.S. Supreme Court issued a decision that gives comfort to “stock-drop” plaintiffs and may cause shockwaves among employee stock ownership plan (ESOP) fiduciary committees. In Fifth Third Bancorp v. Dudenhoeffer,1 the Court held that ESOP fiduciaries are not entitled to any “presumption of prudence” in lawsuits challenging their decision to invest plan assets in company stock. Instead, ESOP fiduciaries “are subject to the same duty of prudence that applies to ERISA fiduciaries in general, except that they need not diversify the fund’s assets.”
On June 30, 2014, the U.S. Supreme Court ruled that closely held, for-profit entities with religious objections to certain aspects of the birth control mandate imposed by the Patient Protection and Affordable Care Act (“the ACA”) could avoid the mandate by invoking the Religious Freedom Restoration Act (RFRA).1 While the majority expressed intent to limit its holding to the facts of the cases before it, the decision’s language may open the door for a variety of religious objections to generally applicable federal laws. Whether employers should actually raise those objections is discussed later in this article.
In a highly anticipated decision in Burwell v. Hobby Lobby, 573 U.S. ___ (June 30, 2014), the United States Supreme Court ruled that the contraceptive mandate of the Patient Protection and Affordable Care Act (ACA) as applied by the Department of Health and Human Services (HHS) to closely held corporations violates the Religious Freedom and Restoration Act.
Executive Summary: In Burwell v. Hobby Lobby, the Supreme Court ruled 5-4 that closely-held, for-profit corporations have standing under the Religious Freedom Restoration Act of 1993 (RFRA). In addition, the Court held that while the government may have a compelling interest in providing contraceptive coverage to participants at no charge, there are less burdensome ways to provide such coverage other than the Affordable Care Act (ACA)’s Contraceptive Mandate.
The U.S. departments of the Treasury, Labor and Health and Human Services (the “Departments”) recently released final regulations clarifying the maximum allowed employment-based orientation period consistent with the 90-day waiting period limitation set forth in the Affordable Care Act (ACA).
Executive Summary: At the American Bar Association Section of Taxation 2014 May Meeting, an IRS official announced that the IRS has created a compliance initiative project (CIP) for Section 409A of the Internal Revenue Code (IRC). As part of the CIP, the IRS will review the deferred compensation plans of selected employers to evaluate their compliance with Section 409A requirements.
Q: When is a retirement account not a retirement account? A: When it’s an inherited IRA and the owner is bankrupt.