A Holiday Surprise – IRS Extends Certain ACA Reporting Deadlines and Transition Relief

The IRS delivered welcome news to employers preparing to meet the Affordable Care Act’s (“ACA”) information reporting deadlines in early 2019 for the 2018 calendar year. In Notice 2018-94 (the “Notice”), the IRS extended the employer’s deadline to furnish Forms 1095-B and 1095-C to employees. The new deadlines are provided below.

Original Distribution Deadline Extended Distribution Deadline
Form 1095-B (to employees) January 31, 2019 March 4, 2019
Form 1095-C (to employees) January 31, 2019 March 4, 2019

It is important to note that the Notice does not extend the deadline for filing Forms with the IRS. The deadline to file with the IRS remains February 28, 2019 (for paper filings) and April 1, 2019 (for electronic filings). Read More ›

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

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Reminder for SBCs – Yes, Please!

The Affordable Care Act’s requirement that group health plans provide summaries of benefits and coverage (“SBCs”) to applicants and enrollees at various times is not new.  Nevertheless, because of the steep penalties for noncompliance (i.e., $1,000 per failure with respect to each participant or beneficiary and an excise tax of $100 per day with respect to each individual to whom such failure relates) we think it’s worthy of another blog post.  See our July 19, 2012 Newsletter Summary of Benefits and Coverage for Group Health Plans and follow-up August 11, 2016 blog post Departments Finally Publish Updated SBC Template and Instructions for additional background information. Read More ›

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Making Limits Greater Again – IRS Issues Guidance on Cost of Living Adjustments

The IRS recently announced cost-of-living adjustments for 2019 in Notice 2018-83 and related guidance.  The key dollar limits for qualified retirement plans and health and welfare plans are noted below.

Qualified Retirement Plan Dollar Limits

  2018 2019
Limit on Section 401(k) deferrals (Section 402(g)) $18,500 $19,000
Dollar limitation for catch-up contributions (Section 414(v)(2)(B)(i)) $6,000 $6,000
Limit on deferrals for government and tax-exempt organization deferred compensation plans (Section 457(e)(15)) $18,500 $19,000
Annual benefit limitation for a defined benefit plan (Section 415(b)(1)(A)) $220,000 $225,000
Limitation on annual contributions to a defined contribution plan (Section 415(c)(1)(A)) $55,000 $56,000
Limitation on compensation that may be considered by qualified retirement plans (Section 401(a)(17)) $275,000 $280,000
Dollar amount for the definition of highly compensated employee (Section 414(q)(1)(B)) $120,000 $125,000
Dollar amount for the definition of a key employee in a top-heavy plan (Section 416(i)(1)(A)(i)) $175,000 $180,000
Dollar amount for determining the maximum account balance in an ESOP subject to a five-year distribution period (Section 409(o)(1)(C)(ii)) $1,105,000 $1,130,000
SIMPLE retirement account limitation (Section 408(p)(2)(E)) $12,500 $13,000
Social Security Taxable Wage Base $128,700 $132,900

Health and Welfare Plan Dollar Limits

  2018 2018
Annual Cost Sharing Limit (self-only coverage) $7,350 $7,900
Annual Cost Sharing Limit (other than self-only coverage) $14,700 $15,800
HDHP Out-of-Pocket Maximum (self-only coverage) $6,650 $6,750
HDHP Out-of-Pocket Maximum (family coverage) $13,300 $13,500
Annual HDHP Deductible (self-only coverage) Not less than $1,350 Not less than $1,350
Annual HDHP Deductible (family coverage) Not less than $2,700 Not less than $2,700
Maximum Annual HSA Contributions (self-only coverage) $3,450 $3,500
Maximum Annual HSA Contributions (family coverage) $6,900 $7,000
Maximum HSA Catch-Up Contribution $1,000 $1,000
Health Flexible Spending Account Maximum $2,650 $2,700
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Zombie Benefits – Are Health Reimbursements Arrangements (“HRAs”) Back From the Dead?

The Affordable Care Act (“ACA”) has not been kind to health reimbursement arrangements (“HRAs”).  Many employers got rid of HRAs, or integrated them with a major medical plan, in order to avoid significant penalties under the ACA.  At one point it appeared that after-tax HRAs did not have to comply with the ACA.  However, as noted in our March 11, 2015 SW Benefits Blog, “IRS Issues More Guidance On Employers That Pay For Individual Health Insurance Policies for Employees – Gives Limited Relief to Small Employers,” the IRS clarified that even after-tax HRAs are also subject to the ACA rules.

The proposed regulations that were published in the Federal Register on October 29, 2018 breathe new life into HRAs.  Read More ›

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IRS Issues Updated Tax Notice for Qualified Retirement Plan Distributions

The Internal Revenue Service (“IRS”) recently released guidance that contains two updated safe harbor notices that retirement plans may use to satisfy the requirements of the Internal Revenue Code (the “Code”) to provide an advance notice to a participant prior to the date on which the participant receives a distribution that meets the requirements for an eligible rollover distribution.  This notice is commonly referred to as the “402(f) Notice” after the relevant section of the Code that requires the notice to be provided.

The IRS guidance contains two model notices, one that may be used when distributions are not from a Roth account and a second model notice that may be used for distributions that are from a Roth account. Read More ›

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IRS Updates Retirement Plan Correction Procedures

On September 28, 2018, the IRS released Revenue Procedure 2018-52. The Revenue Procedure makes changes to the IRS Employee Plans Compliance Resolution System (“EPCRS”), which is the IRS’ comprehensive correction program for qualified retirement plans.  The primary purpose of the Revenue Procedure is establishing the process for filing correction applications and paying the applicable user fee through the www.pay.gov website.

Beginning April 1, 2019, the IRS will no longer accept paper applications meaning that plan sponsors are required to use pay.gov to submit their application and pay their user fees.  During a transition period running from January 1 – March 31, 2019, plan sponsors may, but are not required to, file their EPCRS applications online. Read More ›

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A New Perspective on Student Loan Repayment Benefits

On August 17, 2018, the Internal Revenue Service (the “Service”) published a Private Letter Ruling (the “PLR”) describing a unique student loan repayment program in the context of a qualified retirement plan.

Proposed Student Loan Repayment Program

As described in the PLR, an Employer sponsors a Section 401(k) defined contribution plan that permits elective deferrals. The plan requires the Employer to make a matching contribution equal to 5% of an eligible employee’s compensation for a given pay period if such employee makes an elective contribution of at least 2% of his or her compensation during the same period.

The Employer proposed to amend the plan to incorporate a student loan repayment program (the “Program”). Read More ›

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New Plan Year, New Wellness Program – Some Things to Keep in Mind

As a follow-up to our recent blog Count Down to Open Enrollment – Some Quick Thoughts, below is a little more detail on how seemingly simple wellness program design changes can have significant legal consequences.

  • HIPAA – Employers feeling extra generous this plan year may want to increase their wellness program’s financial incentive.  It is important that such employers remain mindful of the limitations under HIPAA, i.e., 30% of the total cost of health plan coverage, or 50% for programs designed to prevent or reduce tobacco use.  As noted in our previous blog “Wellness Rules Under the ADA – Will There Ever Be Certainty?
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Count Down to Open Enrollment – Some Quick Thoughts

As open enrollment approaches for the 2019 calendar year, below are some items employers may want to consider:

  • Wellness program changes – Many employers change their wellness programs during open enrollment.  This is a reminder that even small changes to a wellness program may have significant consequences.  For example, if an employer increases wellness rewards, it may impact not only whether a program complies with the 30% test under HIPAA but it may also impact affordability under Code Section 4980H.  Making changes to a wellness program structure may also create problems.  For example, employers with tobacco surcharges might allow people to avoid surcharges by attesting that they do not use tobacco. 
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The 162(m) Transition Rule Guidance Has Arrived

On August 21, 2018, the IRS released Notice 2018-68 providing its initial guidance on the Tax Cuts and Jobs Act (Act) transition rule for changes under 162(m).  Before the Act, 162(m) limited a public company’s tax deduction to $1,000,000 for annual compensation paid to its “covered employees” (i.e., the CEO and the other three most highly compensated executives (excluding the CFO)).  Important pre-Act limitations/exceptions to this rule included (i) a more narrow definition of covered employee, and (ii) an exclusion for performance-based compensation.

The Act substantially broadened the definition of covered employee and eliminated the performance-based compensation exception. However, the Act offered a transition rule for compensation paid under a written binding contract that was in effect on November 2, 2017 and that is not materially modified after that date. Read More ›

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