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Administration Proposes Changes to Regs Governing Insurance Subject to the ACA

"[T]he Proposed Rule contains a variety of key changes to the regulations governing health insurance subject to the ACA that will impact those seeking to obtain health coverage through state and federal insurance marketplaces (the “Marketplace”)."

Guidance Released for Mandatory Automatic Enrollment Requirements for New Retirement Plans

"These requirements: [1] Require automatic enrollment of employees with elective deferral contributions of at least 3% and no more than 10% in the first year of participation ... [2] Permit participants to withdraw their automatic elective deferrals within 90 days of their first elective deferral contributions being made. [3] If no investment election is made, permit the automatic elective deferrals to be invested in qualified default investment alternatives (QDIAs)."

HHS Publishes NPRM to Amend HIPAA Security Rule Requirements; Comments Due March 7

"[T]he proposed modifications signal HHS's commitment to aligning the Security Rule requirements with current cybersecurity standards and addressing areas of non-compliance with more prescriptive measures to enhance ePHI security in the face of evolving cyber threats and technological advancements.... If the proposed Security Rule amendments proceed unchanged, regulated entities and health plan sponsors could incur significant combined costs, which HHS estimates at approximately $9.3 billion in the first year of implementation."

DOL Adopts Self-Correction for Common Retirement Plan Fiduciary Breaches

"For the first time since the DOL adopted its Voluntary Fiduciary Correction Program in 2002, retirement plan sponsors will be able to utilize self-correction as an efficient means to correct their most frequent compliance failures late transmittals of [1] participant retirement plan contributions; and [2] retirement plan loan repayments."

Sixth Circuit Extends Family Member Relationships Covered by FMLA

"Instead of bright lines like age at the time of incapacity or the formation of the caretaker relationship, the critical question for the Court was whether the sibling requesting accommodation had taken on more responsibility for providing care than one would ordinarily expect to provide to a sibling ... [T]he Court remanded the case to the trial court to determine whether Ms. Chapman had intended to form a quasi-parental relationship with her dying sister akin to those relationships held in the past to constitute in loco parentis relationships." [Chapman v. Brentlinger Enterprises, No. 23-3582/3613 (6th Cir. Dec. 13, 2024)]

MHPAEA Final Rules: Plans and Issuers Must Prepare for January 1, 2025 Effective Date

"Although the Final Rules appear less burdensome than the proposed rules, they do impose significant changes to the obligations of group health plans and health insurance issuers with a short time to achieve compliance."

Pennsylvania Federal Court Refuses to Enjoin FTC's Noncompete Rule, Creating Split in Federal Courts

"In a sharp departure from her Texas judicial counterpart, Judge Hodge concluded that a preliminary injunction would be improper because the plaintiffs in the Pennsylvania case had not demonstrated that they would suffer any irreparable harm in the absence of such relief.... Judge Hodge also opined that the plaintiffs in the Pennsylvania proceeding are unlikely to succeed in their substantive challenge to the Final Rule." [ATS Tree Services, LLC v. Federal Trade Commission, No. 24-1743 (E.D. Penn. Jul. 23, 2024)]

Departments Issue Notice of Proposed Rulemaking Related to MHPAEA

"The proposed rules incorporate new and revised definitions of key terms ... The final requirement includes collection of the number and percentage of relevant claims denials, as well as other data relevant to the NQTL as required by State law or private accreditation standards. The rules propose a modified, non-exhaustive list of NQTLs, drawing from NQTLs that have been the subject of comparative analyses reviewed by the Departments."

CMS Plans to Implement Stricter Enforcement Efforts to Boost Hospital Price Transparency Compliance

"Approximately 30% of hospitals remain noncompliant with the PTR.... CMS has shared several changes that are being explored for future implementation: [1] Standardized reporting.... [2] Conspicuous link placement.... [3] Streamlined enforcement efforts."

OCR Joins Chorus of Regulators Warning About Health Data Tracking Technology

"Organizations must conduct a fact-based analysis to determine whether health data collection and tracking technology deployed on their websites and mobile apps complies with the federal Health Insurance Portability and Accountability Act (HIPAA) and other applicable laws and guidance."

Supreme Court Reverses Sixth Circuit on Medicare Secondary Payer Act Anti-Discrimination Rules

"[The Supreme Court] rejected the Sixth Circuit majority's 'disparate-impact' theory because the text of the Act's anti-discrimination provision 'does not ask about 'the effects of non-differentiating plan terms that treat all individuals equally.' ... And the text of the plan, according to the opinion, did not 'differentiate in the benefits provided to individuals with and without end-stage renal disease,' because it provided the same benefits, 'including the same outpatient dialysis benefits, to individuals with and without end-stage renal disease.' " [Marietta Memorial Hospital Employee Health Benefit Plan v. Da Vita Inc., No. 20-1641 (S. Ct. Jun. 21, 2022)]

Target Date Fund Performance Litigation: Advice for Plan Fiduciaries

"[C]arefully consider the glide paths employed by the target date funds, and how the funds will be managed in terms of asset allocation and risk tolerance.... Subsequently, when ... examining the plan's target date fund performance over time, be certain to take into consideration the funds' glide paths, asset allocations and risk tolerances."

Free and Extended COBRA Coverage Under ARPA

"Given that there are tax credits being provided to help offset the employer's costs, and that an employer can be subject to liability for failure to offer free COBRA coverage, ... it would be wise for employers to be cautious when determining that an offer of free COBRA coverage does not have to be made because an employee's termination of employment was voluntary."

Supreme Court Ruling Limits Insurer and Employer Contraceptive Obligations

"Previously, only churches and religious orders were excepted from the contraceptive coverage requirement while nonprofit religious organizations and private for-profit entities that objected to contraception for religious reasons could opt out of the requirement. Now, all are excepted from the federal requirement based on religious or moral objections and insurers are relieved of their obligation, under the accommodation process, to provide contraceptive coverage to employees through an alternative health care plan." [Little Sisters of the Poor Saints Peter and Paul Home v. Pennsylvania, No. 19-431 (S. Ct. Jul. 8, 2020)]

IRS Guidance Allows Employers to Offer Second Open Enrollment Period for the 2020 Plan Year and Provides Greater Flexibility for Making Mid-Year Cafeteria Plan Elections

"Two practical items to note with respect to these relief measures.... [1] Employers may adopt one or all of the election changes.... [2] [T]he ability for an employee to change FSA and DCAP elections was never available under current law. As such, [this option] may provide a tremendous amount of assistance to employees during 2020."

IRS Reverses Course on the Application of Qualified Healthcare Expenses to the Employee Retention Tax Credit

"Q&As 64 and 65 now state that employers can claim the ERTC for qualified healthcare expenses, regardless of whether the employee is paid qualified wages.... The revised Q&As clarify this new interpretation with five examples -- in each example, qualified healthcare expenses paid to furloughed employees are considered qualified wages for purposes of the ERTC."

Employee Benefits Issues in a Slowing Economy (PDF)

"[1] HIPAA and other privacy issues -- sharing COVID-19 information ... [2] Tax-qualified retirement plans -- partial plan termination ... [3] Participant 401(k) loans and hardship distributions ... [4] Termination of employment -- tax-qualified and non-qualified plan distributions ... [5] Health and welfare premiums during leave ... [6] Short-term disability considerations ... [7] Loss of medical coverage -- COBRA notice requirements ... [8] Life insurance -- conversion notice ... [9] Use of Flexible Spending Account (FSA) funds ... [10] Equity incentive plans."

Retirement Savings Reform a Focus for the Trump Administration and Congress

"The [DOL Association Retirement Plan] proposal differs in significant ways from several legislative proposals introduced in Congress. For one thing, the Department's proposal is more limited because it relies solely on the Department's authority to promulgate regulations administering title I of ERISA.... As such, it does not appear that the NPRM -- as currently drafted -- is likely to have much of a substantive impact on ongoing legislative efforts surrounding Open MEPs."

Supreme Court Will Hear Railroad Retirement Tax Act Issue

"[The] narrow, technical question that the Supreme Court will address ... is whether stock received upon the exercise of stock options that railroads award to their employees as part of their compensation package is taxable compensation under the RRTA.... The circuits ... are split on whether income from stock options is covered by the term money remuneration, making it taxable under the RRTA." [Wisconsin Central Ltd. v. U.S., No. 17-530 (7th Cir May 8, 2017; cert. pet. granted Jan. 12, 2018)

U.S. Tax Reform: Death to Nonqualified Deferred Compensation?

"An employee will no longer be permitted to electively defer compensation out of salary or bonus.... [T]axes may be incurred on account of accruals of benefits under an nonqualified 'excess plan' that wraps around a tax-qualified plan. In addition, the new law would extend to stock options and stock appreciation rights, and also would seem to apply to things like profits interests.... This approach to taxation of nonqualified deferred compensation is currently the rule for tax-exempt organizations under Code Section 457(f)."