Full Steam Ahead: IRS Moves Forward to Collect Affordable Care Act Penalties

As efforts to reform the Affordable Care Act (the “ACA”) stall in Congress, a recent government report suggests that the Internal Revenue Service is preparing to identify and collect employer shared responsibility penalties.

The Treasury Inspector General for Tax Administration issued the report, Affordable Care Act: Assessment of Efforts to Implement the Employer Shared Responsibility Provision, two weeks after House leadership retracted a bid to repeal and replace the ACA.

The report indicates that the IRS processed over 400,000 Forms 1094-C (Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns) and nearly 110 million Forms 1095-C (Employer-Provided Health Insurance Offer and Coverage) as of last October.  Read More ›

Posted in Employee Benefits, Health & Welfare Plans, Health Care Reform | Tagged , , , , , ,

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The Official Delay of the Fiduciary Rule: A Compromise

On April 7, 2017, the DOL published a final rule, officially delaying the applicability of the Fiduciary Rule for 60 days, until June 9, 2017.

The DOL noted that a full review of the Fiduciary Rule and its impact is likely to take longer than 60 days. However, the DOL expressed reservations about providing a more extended delay of the application of the Rule, given the Department’s prior findings of harm to retirement investors.  Consequently, the final rule on the delay results in somewhat of a compromise.

Specifically, the DOL extended the applicability date for the Fiduciary Rule, the BIC Exemption, and the Principal Transactions Exemption for 60 days. Read More ›

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IRS Warns Employers of Dangerous Email Scam

The IRS has recently warned employers of another scam targeting employee information. The IRS has learned that scammers are posing as internal executives and are requesting Forms W-2 and Social Security Numbers from payroll or human resources departments.  The scammers may even initiate contact with a “Hi, are you in today” message before requesting the Forms W-2 and Social Security numbers.  It appears that scammers are using this information to file fraudulent tax returns and claim tax refunds in the names of the victims.

The target for the most recent scam is employers, including tax exempt entities, universities and schools, government and private sector businesses. Read More ›

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Public Companies Should Consider Shareholder Reapproval of Section 162(m) Performance Compensation Plans Approved in 2012

As public companies continue to prepare for the 2017 proxy season, we wanted to provide a final reminder of an executive compensation related item that might require shareholder approval in 2017.  As reported in Part 1 of our End of Year Plan Sponsor “To Do” Lists, Section 162(m) of the Internal Revenue Code limits the deduction a public company may take for compensation payable to “covered employees” to $1,000,000 per year. “Performance-based compensation” that meets the requirements of Section 162(m) is not subject to this limitation. The Section 162(m) regulations require that, if the Compensation Committee has the discretion to select among a variety of performance goals, those goals must be reapproved by shareholders every five years.  Read More ›

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Update – A Rule Deferred: Department of Labor Delays Implementation of Fiduciary Rule

As we previously reported in our February 16, 2017 blog post, “A Rule Deferred: Department of Labor Delays Implementation of Fiduciary Rule,” the DOL anticipated delaying the effective date of the fiduciary rule by 180 days.  However, on March 1, 2017, the DOL proposed to delay the fiduciary rule by 60 days, citing the potentially high costs of further delay.

The fiduciary rule was originally scheduled to become effective April 10, 2017. The new proposal would delay the rule’s applicability until June 9, 2017.

The DOL will accept public comments on the proposal to extend the applicability date for a period of 15 days, through March 17, 2017. Read More ›

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HIPAA Checkup – How Good Are Your Policies and Procedures?

Although it is not a new requirement, it is important and therefore worth a reminder:  HIPAA requires covered entities to establish and implement written policies and procedures that are consistent with its Privacy and Security Rules.

As discussed in an earlier blog, the U.S. Department of Health and Human Services, Office for Civil Rights (“OCR”) has begun its Phase 2 HIPAA Audit Program.  The Program will focus on the policies and procedures adopted and employed by covered entities and their business associates to meet the requirements of the Privacy, Security, and Breach Notification Rules.  Furthermore, if a group health plan is selected for an audit, it would have a very short time to produce its policies and procedures (i.e., 10 business days).  Read More ›

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Did Hardship Distributions Just Get Easier?

In a previous blog, we addressed an issue of Employee Plans News in which the IRS took the position that 401(k) plan administrators must maintain hardship distribution records and should not rely on electronic participant self-certification for hardship distributions.

On February 23, 2017, the IRS issued a memorandum to its Employee Plans Examiners that sets forth substantiation guidelines for the examination of 401(k) hardship distributions.  The memorandum provides that a plan administrator may maintain either of the following to establish a participant’s need for a hardship distribution: (1) source documents that support the need for the hardship distribution or (2) a summary of the information contained in the source documents. Read More ›

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Curing What Ails You – Relief for Small Employer HRAs

The impact of the Affordable Care Act (“ACA”) on health reimbursement arrangements (“HRAs”) has not been favorable.  Many employers got rid of their HRAs or integrated them with a major medical plan in order to avoid significant penalties under ACA.  These rules imposed a significant burden on small employers, because many small employers used HRAs to reimburse employees for the cost of individual health insurance policies they purchased rather than sponsor a group health plan.

In IRS Notice 2015-17, Q&A1, the IRS granted limited relief for small employer HRAs through June 30, 2015.  However, at the end of last year, small employers received greater relief in the form of the 21st Century Cures Act (the “Cures Act”). Read More ›

Posted in Health & Welfare Plans, Health Care Reform | Tagged , , , ,

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A Rule Deferred: Department of Labor Delays Implementation of Fiduciary Rule

As we previously discussed in our May 19, 2016 SW Benefits Update, the Department of Labor (the “Department”) previously issued final regulations on fiduciary conflicts of interest in retirement programs.  The rules, which focus on curbing self-interested advice to retirement plan and IRA participants, were slated to become effective April 10, 2017.

However, the Department has proposed a delay to the rules of at least 180 days beyond the original effective date and will seek public comment on the rules.  The proposed deferral arises from an executive memorandum dated February 3, 2017, in which President Trump instructs the Department to conduct an “updated economic and legal analysis concerning the likely impact of the fiduciary rule.”  That memorandum signals that the fiduciary rule “may not be consistent with the policies of [the Trump] Administration.”  Accordingly, the fate of the rules in their present form remain uncertain. Read More ›

Posted in Employee Benefits

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Trumping the Affordable Care Act? Not So Fast – Impact of Executive Order on Employers Unclear

On January 20, 2017, President Trump signed an Executive Order (“Minimizing the Economic Burden of the Patient Protection and Affordable Care Act Pending Repeal,” hereinafter referred to as the “Order”) relating to the future of the Affordable Care Act (“ACA”).  The stated goal is to direct the agencies (IRS, HHS, and DOL) to waive or defer provisions of the ACA that would “impose a fiscal burden on any State or a cost, fee, tax, penalty, or regulatory burden on individuals, families, healthcare providers, health insurers, patients, recipients of healthcare services, purchasers of health insurance, or makers of medical devices, products or medications.”  Notoriously absent from this list is any mention of employers or plans.  Read More ›

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