You may have heard of them, but may not fully appreciate or understand how an Employee Stock Ownership Plan or “ESOP” could help you meet your business planning goals.
Articles about the Employee Retirement Income Security Act (ERISA) and other issues relating to employee benefit topics
Various federal agencies, including the DOL’s Employee Benefits Security Administration (EBSA), have issued a proposal to amend regulations governing excepted benefits to permit health plan sponsors to provide coverage for limited scope vision, dental, wraparound, and employee assistance programs (EAPs) consistent with the qualifications for excepted benefits. Generally, HIPAA excepted benefits are exempt from certain statutory requirements, including those insurance market reforms recently enacted by the Affordable Care Act (ACA). According to the proposal, these amendments “would help employees by continuing to maintain their access to health coverage that new requirements could constrain.”
The U.S. Supreme Court in Heimeshoff v. Hartford Life & Accident Insurance Co. et al. resolved a split among the circuits when it held that a contractual limitations clause in an ERISA-governed long-term disability benefits plan is enforceable even where it causes the limitations period on a claim for benefits to commence before the participant’s cause of action accrues. In this case, the plan-based limitations period in which to file a disability claim lawsuit under ERISA Section 502(a)(1)(B) started to run when “proof of loss” was due under the plan, even though the participant’s cause of action did not accrue, and a lawsuit could not be filed, until the plan’s internal claim review process had been exhausted. Citing ERISA’s important policy of enforcing plan terms as written, the Court held that the clause was enforceable.
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.
The Department of Health and Human Services (HHS) recently announced that it will delay online enrollment in the federal Small Business Health Options Program (SHOP) Exchange for one year, until the open enrollment period for 2015, which begins November 2014. Administration officials stated that the decision was necessary as they prioritized fixes to the individual health exchange. The delay will apply to the nearly three-dozen states that declined to establish a SHOP Exchange and are relying on the federally established Exchange.
With much of the focus on the federal healthcare law, the Patient Protection and Affordable Care Act, and other federal initiatives (or the lack thereof due to political constraints in Congress), it is often all too easy for employers operating in multiple states to overlook the need to familiarize themselves with the many state laws to which they are subject. Alternatively, multistate employers may very well know they need to keep their eye on state laws throughout the country – but quickly become overwhelmed by the sheer number of rules and regulations coming out of the states in which they operate. Understanding how those laws may interact with or alter the effect of federal law may be as equally complicated. Littler attorney Erin Reid-Eriksen was recently interviewed by XpertHR and noted the following current and pressing issues weighing upon multistate employers:
On September 18, 2013, the Securities Exchange Commission approved proposed rules (“Proposed Rules”) on calculating the ratio of the chief executive officer’s total annual compensation to the median total annual compensation of all employees, as mandated by section 953(b) of the Dodd-Frank law. Specifically, the Proposed Rules, which span 47 pages of the Federal Register, require proxy disclosure of the median annual total compensation of all employees other than the CEO, and the ratio of that median employee compensation to the CEO’s annual total compensation. The Proposed Rules also request comments from the public on no less than 60 different issues in calculating the CEO pay ratio. While there is significant interest in repealing the CEO pay ratio disclosure requirement, it could become effective for calendar year companies in the 2016 proxy (or sooner for some fiscal year companies). This makes it relevant for pay decisions in 2015 (or sooner, depending on the fiscal year).
Senators John Thune (R-SD), Lamar Alexander (R-TN) and Orrin Hatch (R- UT) introduced a bill (S. 1724) yesterday that would prevent the administration from exempting multi-employer health plans from a $63 reinsurance fee the Affordable Care Act (ACA) will impose on each enrollee in self-funded and fully-insured health plans beginning in 2014 through 2016. Unions – whose members typically rely on multi-employer health insurance plans – have been vocal in their criticism of provisions of the ACA.
On November 15, 2013, the Internal Revenue Service issued final regulations on mid-year reductions or suspensions of “safe harbor” contributions made to 401(k) plans under Internal Revenue Code (“Code”) Section 401(m)(13). The final regulations revised the proposed regulations, issued May 8, 2009.
On November 13, 2013, Governor Andrew Cuomo signed New York’s Anti-Subrogation Bill into law. The new law eliminates federal preemption of New York’s General Obligations Law §§ 5-101; 5-335 (GOL) that prevents health insurers from seeking reimbursement from the victims for settlements reached in tort cases. The law was passed in response to a recent federal court decision in Wurtz v. Rawlings Co., LLC, 2013 WL1248631 (E.D.N.Y. Mar. 28, 2013). The law is effective immediately and applies to all settlements entered into on or after November 12, 2009.
Executive Summary: On November 14, 2013, the Obama Administration announced a transitional policy, whereby insurers may, but are not required to, renew existing health plans in the individual and small-group markets in 2014, even if those plans do not meet the market reforms and plan design requirements of the Affordable Care Act.
In the wake of a political firestorm brewing around cancelations of individual health insurance policies, last week President Obama announced a rule change that would potentially allow some individuals to remain on their current health insurance policy for an additional year. The White House “fix” announced last Thursday would permit insurance companies to continue to offer such policies to individuals for another year, even though the policies do not meet the minimum standards required by the Affordable Care Act (ACA). The announcement came amidst sharp criticism of the President’s pledge that people would keep their existing coverage if they liked it and the day before the House voted on a broader measure.
We previously described and analyzed the U.S. Court of Appeals for the Tenth Circuit’s en banc decision in Hobby Lobby Stores, Inc. et al. v. Sebelius, No. 12-6294 (10th Cir. June 27, 2013), which held that for-profit religious employers possessed standing under the Religious Freedom and Restoration Act (RFRA) to challenge certain birth control mandates contained in the Patient Protection and Affordable Care Act (ACA). The mandates generally require employers to provide some methods of birth control—such as Plan B and intrauterine devices—that arguably prevent implantation of a fertilized egg. As we noted, the RFRA provides, as a general rule, that the federal government “shall not substantially burden a person’s exercise of religion.” Since the Hobby Lobby decision was issued, four federal appellate courts have also addressed whether the RFRA or the First Amendment’s Free Exercise Clause allows for-profit employers to challenge the birth control mandates contained in the ACA, and the U.S. Supreme Court looks likely to take up the issue soon.
The First Circuit recently issued a decision in Bonneau v. Plumbers & Pipefitters Local 51 Pension Trust Fund, No. 13-1515 (1st Cir. Nov. 15, 2013). This interesting case addresses an open question – when a pension plan is amended to enhance benefits based on prior service, are those benefit enhancements protected accrued benefits that cannot be reduced by a future amendment, or are they gratuitous benefits that can be taken back? The First Circuit decided that if the benefit enhancement is adopted while the employees are still employed, the resulting benefits are protected, but if they are adopted after retirement or termination of employment, they are not protected by ERISA.
On November 14, 2013, the Internal Revenue Service issued final regulations modifying some of the conditions for making mid-year changes to employer matching or nonelective contributions under plans that utilize the nondiscrimination safe harbors under sections 401(k) and/or 401(m) of the Internal Revenue Code. These new regulations make some changes to the existing regulations, and to the proposed regulations that had been issued in 2009.