Contemplating a Severance Plan? Consider ERISA

A severance plan may be subject to the requirements of ERISA as an employee welfare benefit plan. The determination of whether a severance plan is subject to ERISA depends in large part on whether the plan is part of an “ongoing administrative scheme.”

Severance plans subject to ERISA have certain requirements, such as the obligation to file annual Forms 5500, to follow ERISA’s formal claims procedure, and to provide a summary plan description (“SPD”), a summary annual report (“SAR”), and any required summaries of material modification (“SMM”) to participants.

For a severance plan subject to ERISA, failure to comply with these requirements can carry a hefty fee – up to $110 per day for failure to provide required documents to participants on request and up to $1,100 per day for failure to file a Form 5500. Read More ›

Posted in Employee Benefits, Executive Compensation, Qualified Retirement Plans | Tagged , , , , ,

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Departments Finally Publish Updated SBC Template and Instructions

On April 6, 2016, the Departments of Health and Human Services, Labor and Treasury (the “Departments”) issued an updated Summary of Benefits and Coverage (“SBC”) template.  The latest template represents an effort by the Departments to enhance consumer access to information regarding their health care options.

Although the new template is shorter than the prior version, it includes more detailed information about cost-sharing, deductibles and out-of-pocket limits.  Moreover, the template adds a new example describing coverage for an in-network emergency room visit.  The Departments intend that these additions will provide consumers with more meaningful information as they select their medical coverage.           Read More ›

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

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When Anything Less than 95% is a Failing Grade: An Update on the Employer Shared Responsibility Penalties

As a reminder, effective January 1, 2016, employers must offer minimum essential coverage to 95% or more (up from 70% or more for 2015) of their full-time employees and their dependents each month or pay a very steep penalty.  Missing the mark even slightly, for example coming in at 94%, will require the employer to pay a $2,000 annual penalty for each full-time employee (minus the first 30 full-time employees).

The rules are explained in more detail in our Health Care Reform’s Employer Shared Responsibility Penalties: A Checklist for Employers, which I have updated to reflect certain recent guidance.  Most importantly the revised Checklist:

  •  now reflects how the penalties are adjusted each year (see footnote 7 of the Checklist for more information);
    • the $2,000 subsection (a) penalty is $2,080 for 2015 and $2,160 for 2016.
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Posted in Employee Benefits, Health & Welfare Plans, Health Care Reform | Tagged , , , , , , ,

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