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 95 Percent Test: Gearing up for Another Round of Employer Shared Responsibility Penalties

Late last year, the Internal Revenue Service (the “Service”) began enforcing penalties with respect to failures to comply with the employer shared responsibility provisions of Section 4980H of the Internal Revenue Code.  In the coming months, the Service is expected to begin assessing penalties with respect to such failures occurring in calendar year 2016.  These penalties are of two varieties:

  1. Section 4980H(a) penalties are assessed for any month in which an applicable large employer (“ALE”) does not offer minimum essential coverage to substantially all (95% for 2016 and future years) of its full-time employees and their dependents and at least one full-time employee receives a premium tax credit. 
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Association Health Plans – A New Frontier?

On June 21, 2018, the Department of Labor published the final association health plan (“AHP”) rule, which can be accessed at: https://www.gpo.gov/fdsys/pkg/FR-2018-06-21/pdf/2018-12992.pdf.  83 FR 28912 (June 21, 2018).  The final rule is short, just shy of three pages in length (see page 28961 to 29964), and provides that a bona fide group or association shall be deemed to be able to act in the interest of an employer within the meaning of section 3(5) of ERISA by satisfying the criteria set forth in the final rule.  The requirements are relatively straightforward and are summarized below:

  • Bona fide group or association of employers – There are eight requirements that must be met to satisfy this standard. 
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Wellness Rules Under the ADA – Will There Ever Be Certainty?

We previously blogged about the EEOC’s final rules, published in the Federal Register on May 17, 2016, that explain how the Americans with Disabilities Act (“ADA”) applies to employer sponsored wellness programs. These rules clarified when an employee health program, which includes a disability-related inquiry or medical examination, is considered “voluntary” under the ADA.  The EEOC’s rules stated, amongst other things, that an employer may offer incentives for employees who participate in a wellness program as long as the incentive does not exceed 30% of the total cost of self-only coverage.

We also previously blogged that this incentive provision was under scrutiny by the U.S. Read More ›

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IRS Announces Reduction in Family HSA Contribution Limit for 2018

In Revenue Procedure 2018-18, the Internal Revenue Service announced a reduction in the HSA contribution limit for family coverage in 2018 to $6,850 from $6,900.  The self-only HSA contribution limit for 2018 remains unchanged at $3,450.

This change is a technical result of the Tax Cuts and Jobs Act, which adjusted the method for calculating inflation. Although the reduction may appear somewhat small, it may cause certain employees to inadvertently contribute over the limit.  For instance, an employee who front-loads his or her annual contribution may have already exceeded the new limit.

The IRS has not issued any transition relief for excess contributions made in 2018 by employees relying on the original contribution limit announced in Revenue Procedure 2017-37Read More ›

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Congress Kicks the Can Down the Road Again – Cadillac Tax On High Cost Employer Health Coverage Delayed to 2022

Section 4980I, which was added to the Internal Revenue Code by the Affordable Care Act, was originally supposed to take effect in 2018.  This tax is commonly called the “Cadillac tax” because it imposes a 40% excise tax on high cost employer sponsored health coverage.

The Consolidated Appropriations Act signed into law on December 18, 2015, delayed the effective date of the Cadillac tax to 2020.  And now, in the federal spending bill that was signed into law on January 22, 2018, Congress has again kicked the can down the road with another two-year delay to 2022.  This is welcome news for most employers.  Read More ›

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Approaching Deadlines for Affordable Care Act Reporting

As we recently reported in our “2017 End of the Year Plan Sponsor To Do List,” applicable large employers must continue to submit to the IRS and to employees information regarding offers of health coverage made to full-time employees in 2017.

The IRS recently published Notice 2018-06 (the “Notice”), which contains some relief with respect to the required reporting.  In particular, the Notice extends the deadline to distribute Forms 1095-C to employees and continues the application of good faith transition relief.  The Notice does not extend the deadline for filing Forms 1094-C or 1095-C with the IRS.

Extension of Deadline to Furnish Forms 1095-C to Employees

The Notice extends the deadline for furnishing Forms 1095-C to employees from January 31, 2018 to March 2, 2018 Read More ›

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New Disability Claims Regulations Take Effect for All Plans April 1, 2018

As noted in our previous blog post, The New Disability Claims Regulations: They Don’t Only Apply to Disability Plans, the Department of Labor (“DOL”) issued regulations that revise the ERISA claims procedure regulations for all employee benefit plans that provide disability benefits (the “New Regulations”).  These rules can impact not only short-term and long-term disability plans but also qualified retirement plans (e.g., a 401(k) plan), nonqualified retirement plans, and health and welfare plans.  The New Regulations were published in the Federal Register on December 19, 2016, and are based on the Affordable Care Act’s enhanced claims and appeals regulations for group health plans.  Read More ›

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Making a List, Checking it Twice – 2017

It’s that time of year when boys and girls start making their lists for the holidays, but we in the employee benefits world make a very different kind of list.  In the rapidly changing world of employee benefits and executive compensation law, checklists can be particularly helpful to make sure important issues do not fall through the cracks.  Each year we publish health and welfare, cost-of-living, executive compensation, and qualified retirement plan checklists to help individuals stay apprised of changes in the law, changes that they might need to make to their employee benefits plans, and various notice requirements.  We just published the last of our annual checklists.  Read More ›

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IRS to Begin Enforcing 4980H Penalties on Large Employers Before End of 2017

On November 2, 2017, the IRS issued guidance regarding the enforcement of Employer Shared Responsibility payments, otherwise known as the Section 4980H penalty. Questions 55-58 of the IRS Questions and Answers on Employer Shared Responsibility Provisions Under the Affordable Care Act indicate that the IRS is moving forward with assessing penalties on Applicable Large Employers (“ALEs”) who failed to offer appropriate health care coverage under Section 4980H for the 2015 calendar year.

An ALE is generally an employer who employs at least 50 full-time employees during the calendar year. An ALE will be assessed a penalty for the 2015 year if any full-time employee received a premium tax credit or cost-sharing reduction and either: (a) the employer failed to provide minimum essential health coverage to 95% of its full-time employees; or (b) the employer offered minimum essential health coverage to 95% of its full-time employees, but the coverage was not affordable or did not provide minimum value. Read More ›

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