In the recently released Notice 2013-71, the Internal Revenue Service (IRS) modified the rules for flexible spending accounts (FSAs). As previously applied, the rules did not allow for carryover of employee salary reduction contributions, otherwise known as the “use-or-lose” rule. The Notice permits cafeteria plans to be amended to allow for a carryover of up to $500 remaining at plan year end into the next plan year to pay or reimburse plan participants for qualified medical expenses, provided that certain requirements are met. The Notice also clarifies the scope of transition relief that allows for greater flexibility for individuals who desire changes in salary reduction elections for accident and health plans for non-cafeteria plan years beginning in 2013. These changes and clarifications were prompted by questions that arose under the Affordable Care Act (ACA).
Articles about the Employee Retirement Income Security Act (ERISA) and other issues relating to employee benefit topics
The Departments of Labor, Treasury, and Health and Human Services have released final rules implementing the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA), which requires parity between mental health or substance use disorder benefits and medical/surgical benefits with respect to financial requirements and treatment limitations under group health plans and group and individual health insurance coverage.
Executive Summary: Earlier this year, the Obama Administration delayed implementation of the employer mandate, a major provision of the 2010 health care reform law (the Affordable Care Act or “ACA”). The delay of the employer mandate, however, did not impact other provisions of the ACA, many of which are going forward as scheduled. Additionally the reprieve may be short-lived because, unless additional guidance is issued, January 1, 2014, will start the clock on determining an employer’s size for purposes of the employer mandate, and for determining which employees will be considered full- and part-time for purposes of offering health care coverage.
The Internal Revenue Service has released a detailed list of pension plan and other retirement-related contribution limitations for Tax Year 2014 that were triggered by an increase in the cost-of-living index. As stated in the release, “[s]ome pension limitations such as those governing 401(k) plans and IRAs will remain unchanged because the increase in the Consumer Price Index did not meet the statutory thresholds for their adjustment. However, other pension plan limitations will increase for 2014.”
On November 1, key House lawmakers sent a letter to the Secretary of the U.S. Department of Health and Human Services, requesting information on Affordable Care Act funding of so-called “worker centers.” Worker centers, also known as Union Front Organizations (UFOs), are typically non-profit organizations that offer a variety of services to their members, including education, training, employment services and legal advice.
Summary: On October 31, 2013, the Internal Revenue Service (IRS) issued Notice 2013 -71 (the “Notice”), which made two significant changes affecting the administration of cafeteria plans under section 125 of the Internal Revenue Code. First, the Notice modifies the proposed regulations under section 125 to add a limited exception to the “use it or lose it” rule for health flexible spending arrangements (“FSAs”). Next, the Notice clarifies the “transition relief” that was provided in the preamble to those regulations allowing certain participants in non-calendar-year plans to make mid-year elections that are necessitated by the Affordable Care Act, even though there may not be a “change in status.”
Over the course of a hearing lasting more than three hours, U.S. Department of Health and Human Services Secretary Kathleen Sebelius fielded questions, complaints, and some praise from members of the House Energy and Commerce Committee about the Affordable Care Act’s implementation. Sebelius readily admitted to the failures in the Marketplace website, but promised to have the site “fully functional” by the end of November.
While the federal government remained on shutdown mode, the House Small Business Committee, Subcommittee on Health and Technology held a hearing on Wednesday to discuss how the Affordable Care Act’s (ACA) definition of “full-time employee” will impact small businesses. Under the healthcare law’s employer responsibility requirements – commonly known as the “pay-or-play” provisions – an employer with 50 or more full-time or full-time equivalent employees will be required to provide health insurance that meets certain ACA standards to at least 95% of their full-time employees starting in 2015, or pay a penalty. The ACA considers a worker “full time” if he or she works 30 hours or more per week, as opposed to the customary 40 hours used in other employment statutes and regulations.
Until the United States Supreme Court decision in United States v. Windsor, 570 U.S. ___ (2013), the Defense of Marriage Act (DOMA) required employers providing subsidized benefits to same-sex spouses and domestic partners/civil union partners (whether same-sex or opposite sex) to impute income on the subsidy relating to the spouse/partner benefits, and to pay Federal Insurance Contributions Act (FICA) taxes on that imputed income. If the employee paid an extra premium for the spouse/partner coverage under a cafeteria (section 125) plan, the extra premium amount attributable to the spouse/partner’s coverage had to be paid on an after-tax basis.
Executive Summary: As promised, the Internal Revenue Service has prescribed special procedures that employers may use in order to retroactively correct FICA withholding and payment following the Supreme Court’s decision earlier this year in United States v. Windsor, and last month’s Revenue Ruling 2013-17 (the “Ruling”), under which same-sex couples are treated as married for all federal tax purposes if they were legally married, regardless of residence. For background, see our previous Legal Alert: IRS Answers Residence Question for Same Sex Spouses, at http://www.fordharrison.com/9568, and the article linked therein.
In Scarangella v. Group Health, Inc., the U.S. Court of Appeals for the Second Circuit recently applied the Supreme Court’s decision in Hardt v. Reliance Std, Life Ins. Co., requiring a party to show that they achieved “some degree of success on the merits” before recovering attorney’s fees in an action under the Employee Retirement Income Security Act (ERISA) to a situation involving voluntary settlement between parties. The decision provides some additional guidance as to how courts may make the determination on whether or not they will award attorney’s fees in ERISA cases where there is no clear winner at the end of litigation.
The U.S. Department of Health and Human Services (HHS) has made available a series of model Notices of Privacy Practices for health care providers and health plans. Changes to privacy regulations known as the HIPAA/HITECH Omnibus Final Rule went into effect in late March 2013. The safe harbor compliance period ends on September 23, 2013. Among other changes, the Omnibus Rule requires that health plans and healthcare providers notify individuals about their privacy rights regarding their personal health information. In addition, individuals have a right to be informed about their health plans’ and healthcare providers’ privacy practices.
The Department of Labor has issued guidance to employee benefit plans, plan sponsors, plan fiduciaries, and plan participants and beneficiaries as to the impact the U.S. Supreme Court case United States v. Windsor has on benefit plans governed by the Employee Retirement Income Security Act of 1974 (ERISA). In Windsor, the Court addressed the Defense of Marriage Act (DOMA) and held as unconstitutional the section requiring federal laws to ignore same-sex marriages legally entered into under an applicable state law.
On September 18, 2013, the Department of Labor’s Employee Benefits Security Administration (EBSA) issued Technical Release 2013-04 (the “Release”), adopting the treatment of same-sex marriages for purposes of ERISA (and for purposes of the Federal Employees’ Retirement System) that was recently prescribed for tax purposes by the IRS. See our previous Alert dated September 3, 2013, IRS Answers Residence Question for Same-Sex Spouses, at http://www.fordharrison.com/9568.
Although the Affordable Care Act’s (ACA) “employer mandate” has been delayed until 2015, health insurance exchanges are still scheduled to start offering health coverage to individuals and employees of small businesses starting January 1, 2014. Open enrollment in these Health Insurance Marketplaces will begin on October 1, 2013. The ACA requires employers to send a Notice to their current employees advising them about the Health Insurance Marketplaces by October 1, 2013. With this Marketplace Notice deadline fast approaching, employers may have a number of questions about the scope of their obligations. This ASAP addresses some of the most frequently asked questions surrounding this Notice requirement.