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.
Articles about the Employee Retirement Income Security Act (ERISA) and other issues relating to employee benefit topics
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.
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.
Proposed Regulations Would Expand Definition of Excepted Benefits to Cover Certain Types of Limited Wraparound Coverage
On December 19, 2014, the U.S. Departments of Labor, Health and Human Services, and Treasury published proposed regulations that would treat certain limited health coverage that wraps around eligible individual health insurance or multi-state plan coverage offered by the U.S. Office of Personnel Management (OPM) as an “excepted benefit.” Excepted benefits are exempt from numerous requirements generally applicable to group health plans, including the requirements of HIPAA and the insurance market reforms of the Affordable Care Act (ACA).
The Affordable Care Act and Staffing: One Size Does Not Fit All
Since its enactment in 2010, the Affordable Care Act (ACA) has generated debate and questions about the law’s impact on third-party staffing arrangements. With the effective date of the ACA’s “pay-or-play” employer mandate just weeks away for many employers, confusion still exists about how “staffing firms” and their clients should prepare. This task is complicated by the fact that numerous staffing operational models exist and call for different approaches. The lack of clear definitions regarding staffing relationships in the IRS final rule1 implementing the employer mandate under Section 4980H of the Code2 (Final Rule) further complicates the issue. Synchronizing the vague definitions in the Final Rule with the varying models for staffing firms is needed to provide a better understanding of how staffing companies and their clients should respond.
Ninth Circuit Reverses Course in ERISA Case
In a previous ASAP article, we discussed the Ninth Circuit’s June 6, 2014 decision in Gabriel v. Alaska Elec. Pension Fund, 755 F.3d 647 (9th Cir. 2014). In the initial opinion issued by the court, the panel split 2-1 in affirming a district court’s ruling that the appellant was not entitled to ongoing retirement benefits, even though the relevant pension fund had provided those benefits for three years prior to the parties becoming involved in litigation. The court initially held that the remedy sought by the appellant—called equitable surcharge—was unavailable to him under ERISA. See 11 U.S.C. § 1132(a)(3); ERISA § 502(a)(3). Pursuing that relief, the initial opinion stated, was contrary to the limited equitable relief regime set forth in the remedial provisions in the statute. In a strenuous partial dissent, Judge Marsha Berzon wrote that the panel had misconstrued the Supreme Court’s decision in CIGNA Corp. v. Amara, 131 S. Ct. 1866 (2011), misread the Ninth Circuit’s earlier cases, and in fact had triggered a circuit split on the issue of equitable surcharge.
ACA Outlook: What Will 2015 Hold for the Affordable Care Act and Employers?
For many employers, the effective date of the Affordable Care Act’s “play-or-pay” mandate is only weeks away. The impending deadline comes amid questions about the future—and perhaps viability—of the law itself. Entering 2015, the ACA faces challenges both in a new Republican-controlled Congress and in the Supreme Court. Yet, the political and legal uncertainty surrounding the ACA should not deter employers from ensuring they are prepared for the “play-or-pay” mandate and other upcoming requirements.
“CRomnibus” Spending Bill Makes Significant Changes to Law Governing Multiemployer Pension Plans
The Multiemployer Pension Reform Act of 2014, part of the trillion-dollar government funding legislation (the so-called “CRomnibus” bill) approved by the House of Representatives on December 11, the Senate on December 13, and signed by President Obama on December 16, makes significant changes to the law governing multiemployer pension plans. Some of the most important changes are summarized below.
Ninth Circuit Rules Assignee Health Care Providers May Sue Health Plans Under ERISA for Payment of Benefits
In an opinion with mixed implications for both insurers and health care providers, the U.S. Court of Appeals for the Ninth Circuit recently ruled that when plan beneficiaries assign their claims for payment of benefits to their health care provider, the provider has standing to sue the health plan under ERISA. Importantly, however, the court also held in Spinedex Physical Therapy v. United Healthcare of Arizona, Inc. No. 12-17604, 2014 U.S. App. LEXIS 21132 (9th Cir. Nov. 5, 2014) that anti-assignment provisions in health plans are enforceable. Additionally, the court held that, as written, the assignments only encompassed claims for benefits, not for breach of fiduciary duty.
Getting Blood From a Stone: When a Contributing Employer Is in Bankruptcy
December 1, 2014
John C. Kilgannon and Leonard P. Goldberger
Benefits Magazine
When contributing employers fail to satisfy their multiemployer pension obligations, it is not uncommon for those companies to also be in default of payment to other creditors. In such instances, employers may seek bankruptcy protection in an effort
Supreme Court to Determine Validity of Federal Subsidies of Health Insurance Purchased on Federally Established Exchanges
The U.S. Supreme Court has agreed to weigh in on the issue of whether the IRS has the authority, under the Affordable Care Act (ACA), to extend tax credits to consumers shopping on the federal Marketplaces.
Affordable Care Act Update: Hospitalization Services Required for Plan to Meet Minimum Value
On November 4, 2014, the Internal Revenue Service (IRS) released guidance (Notice 2014-69) clarifying that certain group health plans that do not provide for hospitalization services or physician services or both will fail to satisfy the minimum value requirements for purposes of the employer mandate of the Affordable Care Act (ACA). This means employers that do not qualify for transition relief and offer such health plans will not be considered to meet the requirements of the employer mandate and may be subject to a penalty.
CMS Announces Last-Minute Enforcement Delay for HPID Requirement
Sponsors of large, self-funded health plans struggling with the new Health Plan ID (HPID) requirement received a last-minute reprieve from the Centers for Medicare & Medicaid Services (CMS). On Friday, the CMS announced an enforcement “delay” with respect to the health plan enumeration and HPID regulations. The announcement comes on the heels of clarifying guidance from the CMS explaining how the HPID application process affects ERISA “wrap” plans.
Getting Blood From a Stone: When Contributing Employers Are Insolvent
November 1, 2014
John C. Kilgannon and Leonard P. Goldberger
Benefits Magazine
It is no secret that multiemployer pension funds are facing a multitude of threats, many of which are beyond the control of plan administrators. Over the past decade, many multiemployer pension plans suffered dramatic underfunding caused by investment
IRS Releases 2015 Pension Plan Limits
The Internal Revenue Service recently released a detailed list of pension plan and other retirement-related contribution and compensation limitations for tax year 2015 that were triggered by an increase in the cost-of-living index. As stated in the release, “[m]any of the pension limitations will change because the increase in the cost-of-living index met the statutory thresholds that trigger their adjustment. However, other limitations will remain unchanged for 2015.”