On October 21, 2015, in Information Release 2015-118, the IRS announced cost-of-living adjustments to various dollar limitations under the Internal Revenue Code (the “Code”) for pension plans and other related items for the year 2016. Those limitations and thresholds generally remain unchanged from this year’s amounts because the measuring cost-of-living indices did not increase sufficiently to warrant adjustments. So, for example:
Articles about the Employee Retirement Income Security Act (ERISA) and other issues relating to employee benefit topics
Lamar Odom & HIPAA: A Kardashian Takeaway for Employers
Reality television fans and others were saddened recently when news of a Kardashian family member’s overdose hit the news. Lamar Odom, sometime beau of Khloe Kardashian, was hospitalized after the incident, and his privacy was reportedly violated when staffers at the medical center where he was treated took pictures of him. The staffers were immediately fired due to this conduct. Lamar’s plight contains a teachable lesson for those employers who must comply with the Health Insurance Portability and Accountability Act (HIPAA) Privacy Rule, which protects the privacy of personal health information (PHI).
2016 Cost of Living Adjustments for Retirement Plans
The Internal Revenue Service recently announced its cost-of-living adjustments applicable to dollar limitations for retirement plans and Social Security generally effective for Tax Year 2016 (see IR-2015-118). Most notably, the limitation on annual salary deferrals into a 401(k) plan (along with the other retirement plan limitations) remains unchanged. The dollar limits are as follows:
The PACE Act – Changes to the Definition of Small Group for Purposes of ACA Market Reforms
Executive Summary: On October 7, 2015, the Protecting Affordable Coverage for Employees Act (“PACE Act”) was enacted, and on October 19, 2015, the Department of Health and Human Services released FAQs providing further guidance on the Act’s application to states. The PACE Act gives states the option of continuing to define “small group” for purposes of the ACA market reforms as those with up to 50 employees instead of mandating the expansion of that definition to those with up to 100 employees as originally required by the ACA. This means that in states that choose to continue to define small group as up to 50 employees, mid-sized employers will be able to avoid the potential increase in premiums that could result from being included in the small group market. Importantly, the PACE Act does not affect definitions of large and small employer for purposes of the employer mandate.
Tax and Employee Benefits Alert: Important April 30, 2016 Deadline to Adopt Updated Pre-Approved Defined Contribution Retirement Plans
All employers who are using a pre-approved form for their 401(k), profit sharing, or other defined contribution plan must sign updated documents on or before April 30, 2016 to preserve the tax-qualified status of the plan. Most employers who sponsor retirement plans are subject to this requirement. Read the IRS explanation of why a revised plan is necessary, and what steps employers should take.
HIPAA Phase 2 Audits to Start in Early 2016, OCR States In Response to OIG Recommendations
Responding to a Department of Health and Human Services Office of Inspector General (OIG) report recommending stronger oversight of covered entities’ compliance with the HIPAA Privacy Rule, the Office for Civil Rights (OCR) stated that in early 2016 it will launch Phase 2 of its audit program measuring compliance with HIPAA’s privacy, security and breach notification requirements by covered entities and business associates.
President Obama Signs ACA Change Into Law
While Republican efforts to effectively repeal the Affordable Care Act (ACA) through the budget reconciliation process have garnered attention, Congress’s recent passage of a bipartisan bill making targeted changes to the law has received less fanfare. On October 7, 2015, President Obama signed into law the Protecting Affordable Coverage for Employees (PACE) Act, a measure that maintains the current definition of small group health plans. Senator Tim Scott (R-SC) sponsored the Senate version of the bill (S. 1099), with Congressman Brett Guthrie (R-KY) introducing the House version (H.R. 1624). Although narrow in nature, the PACE Act is on the short list of ACA amendments approved by both Congress and the President.
Employee Benefits for Employers – Fall 2015
Arbitration of ERISA Claims: Yes, You Can!
Asset Purchasers Face Increased Exposure for the Multiemployer Pension Debts of Sellers
Both buyers and sellers in asset sale transactions should be cognizant of the ongoing erosion of the common law rule that the purchaser is not responsible for the seller’s liabilities absent a contractual assumption of such liabilities, as evidenced by a recent Ninth Circuit case finding that the theory of successor liability may be used to hold an asset purchaser liable for the predecessor’s $2.2 million withdrawal liability obligation to a multiemployer pension plan. Federal courts originally applied successor liability in the context of federal labor law where the successor employer had notice of an unfair labor practice and continued, without interruption or substantial change, the seller’s business operations. Over the years, this “successor liability” rule has been expanded to cover various other statutory liabilities under labor and employment law.
HIPAA Audits Maybe, But Audit Preparedness Definitely!
According to a Bloomberg article, the second phase of HIPAA audits by the Office for Civil Rights (OCR), originally set to commence in 2014, may be coming soon. This update came at a HIPAA conference co-hosted by OCR during which OCR Director Jocelyn Samuels said the agency was in the process of confirming contact information of those entities that would be audited. Reason for the delay – budgetary limitations and gaps in personnel.
Extending Form 5500 Deadlines
On July 31, 2015, President Obama signed the “Surface Transportation and Veterans Health Care Choice Improvement Act of 2015” (P.L. 114-41) (the “Act”). The Act primarily served to extend the Highway Trust Fund and various related measures, but it also included a number of unrelated provisions, one of which was a revision in the rules relating to extensions for filing Forms 5500. (There were also changes made to the due dates of various other tax returns, but those changes are beyond the scope of this Alert; you may contact the author if you would like additional information regarding those changes as well.)
Cancer Care Group to Pay $750,000 to Settle HIPAA Breach, as KPMG Finds 81 Percent of Hospitals and Health Insurance Companies had a Breach in the Past Two Years
On September 2, the Office for Civil Rights (OCR) reported that it agreed to settle potential violations of the HIPAA privacy and security regulations with Cancer Care Group, Inc. The dollar amount of the settlement, $750,000, is significant, and the agreement to adopt a robust, multi-year corrective action plan under the watchful eye of the government is likely to be an unwanted strain on the business.
Final Regulations on Contraceptive Coverage under Affordable Care Act – the Religious Exemption
The Departments of Treasury, Labor and Health and Human Services have released Final Regulations providing much-needed guidance with respect to defining a “closely-held corporation.” The Final Regulations, released on July 14, 2015, also provide guidelines for establishing a religious objection for purposes of qualifying for exemption from the Affordable Care Act (“ACA”) mandate to provide contraceptive coverage under an employer health plan in light of the U.S. Supreme Court’s decision in Burwell v. Hobby Lobby Stores, Inc., et al., 134 S. Ct. 2751, 573 U.S. ___ (2014).
ACA Cadillac Tax: Cruising Toward Proposed Regulations
Effective 2018, Section 4980I of the IRC — the so-called “Cadillac Tax,” which was added to the IRC by the ACA — will impose a 40% nondeductible excise tax on the aggregate cost of applicable employer-sponsored health coverage that exceeds an annually-adjusted statutory dollar limit. For 2018, the dollar limits are $10,200 for self-only coverage and $27,500 for other than self-only coverage, subject to any potential upward adjustment based on age and gender characteristics of an employee population or other applicable adjustment factors. The cost of coverage that exceeds the dollar limit is referred to as the “excess benefit.”
New Compensation Disclosures for Public Companies
The Securities and Exchange Commission (SEC) has adopted a final rule requiring publicly traded corporations to disclose, to the SEC and shareholders, the ratio of CEO compensation to the “median compensation” of the corporation’s employees (except the CEO).