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Health plan admin - misc

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[Guidance Overview] IRS Begins Enforcement of the ACA's Employer Penalty (PDF)
"The IRS recently announced how it will enforce the employer shared responsibility penalty for 2015. The IRS will send Letter 226J to any large employer that the IRS believes owes a penalty for one or more months of 2015. In light of the 30-day deadline to respond to Letter 226J, employers will need to take immediate action as soon as they receive it." (Segal Consulting)
[Guidance Overview] Massachusetts Issues Proposed Regs Implementing Employer Medical Assistance Contribution (EMAC) Supplemental Contribution
"Beginning with the first calendar quarter of 2018, any employer who employs six or more employees in any quarter is subject to the EMAC Supplement for each such quarter.... An EMAC supplement payment is required for each quarter commencing in 2018 if one or more of an employer's employees received health insurance coverage either through the MassHealth agency or through ConnectorCare for a continuous period of at least fourteen days." (Mintz Levin)
[Official Guidance] Text of DOL FAQs for Participants and Beneficiaries Following Hurricanes Harvey, Irma, and the California Wildfires (PDF)
22 Q&As. "My employer's place of business is closed. I cannot locate my plan administrator. Who do I contact to file a claim for benefits, or to obtain replacement identification documents? ... I think I may be losing my health coverage as a result of the events of one of the hurricanes or the California Wildfires. What can I do to obtain other health coverage? ... My employer's place of business is closed due to the events of one of the hurricanes or the California Wildfires. Who should I contact to file a claim for retirement benefits or make sure that I will continue to receive my pension payments on time? ... How can I make changes in the way my 401(k) plan account is invested if it was affected by the events of one of the hurricanes or the California Wildfires? ... If my employer faces economic difficulties as a result of the events of one of the hurricanes or the California Wildfires, can my employer terminate my retirement plan, and if so, what happens to my benefits? ... All of the records concerning my employment with the retirement plan sponsor and my participation in the retirement plan were destroyed as a result of the events of one of the hurricanes or the California Wildfires. What do I do?" [Editor's note: this document seems to supercede the FAQs for Participants and Beneficiaries Following Hurricane Harvey issued Aug. 29, 2017. It seems to contain few new provisions with respect to such persons, if any.] (Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL])
[Official Guidance] Text of DOL FAQs for Participants and Beneficiaries Following Hurricane Maria (PDF)
23 Q&As. "The Department is issuing these FAQs to assist employee benefit plans, plan sponsors, employers and employees who were impacted by the devastation caused by Hurricane Maria to better understand their rights and responsibilities under ERISA with respect to their ERISA covered employee benefit plans. In addition to providing this general guidance, the Department has also provided an extension of time for certain notices required to be provided under ERISA for those impacted by these disasters." (Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL])
[Official Guidance] Text of IRS and DOL 'Extension of Time Frames' for Employee Benefit Plans, Participants and Beneficiaries Affected by Hurricane Maria
12 pages. "With respect to plan participants, beneficiaries, qualified beneficiaries, or claimants directly affected by Hurricane Maria ... group health plans, disability and other welfare plans, pension plans, and health insurance issuers offering coverage in connection with a group health plan must disregard the period from September 17, 2017 through March 16, 2018 for such plan participants, beneficiaries, qualified beneficiaries, or claimants located in Puerto Rico, and must disregard the period from September 16, 2017 through March 15, 2018 for such plan participants, beneficiaries, qualified beneficiaries, or claimants located in the United States Virgin Islands, when determining any of the following time periods and dates:
  • The 30-day period (or 60-day period, if applicable) to request special enrollment under ERISA section 701(f) and Code section 9801(f);
  • The 60-day election period for COBRA continuation coverage under ERISA section 605 and Code section 4980B(f)(5);
  • The date for making COBRA premium payments pursuant to ERISA section 602(2)(C) and (3) and Code section 4980B(f)(2)(B)(iii) and (C);
  • The date for individuals to notify the plan of a qualifying event or determination of disability under ERISA section 606(a)(3) and Code section 4980B(f)(6)(C);
  • The date within which individuals may file a benefit claim under the plan's claims procedure pursuant to 29 CFR 2560.503-1;
  • The date within which claimants may file an appeal of an adverse benefit determination under the plan's claims procedure pursuant to 29 CFR 2560.503-1(h);
  • The date within which claimants may file a request for an external review after receipt of an adverse benefit determination or final internal adverse benefit determination pursuant to 29 CFR 2590.715-2719(d)(2)(i) and 26 CFR 54.9815-2719(d)(2)(i), and
  • The date within which a claimant may file information to perfect a request for external review upon a finding that the request was not complete pursuant to 29 CFR 2590.715-2719(d)(2)(ii) and 26 CFR 54.9815-2719(d)(2)(ii)....
"With respect to group health plans, and their sponsors and administrators, that are directly affected by Hurricane Maria ... the period from September 17, 2017 through March 16, 2018 for those located in Puerto Rico, and the period from September 16, 2017 through March 15, 2018 for those located in the United States Virgin Islands, shall be disregarded when determining the date for providing a COBRA election notice under ERISA section 606(c) and Code section 4980B(f)(6)(D)." (Employee Benefits Security Administration [EBSA], Department of Labor [DOL]; Internal Revenue Service [IRS], Department of the Treasury)
[Official Guidance] Text of DOL Additional Relief for Employee Benefit Plans, Participants and Beneficiaries Impacted by Hurricane Maria and October 2017 California Wildfires
"The [DOL] will not treat any person as having violated the provisions of Title I of ERISA solely because they complied with the verification procedures of IRS Announcement 2017-15.... [The DOL] will not -- solely on the basis of a failure attributable to Hurricane Maria -- seek to enforce the provisions of Title I with respect to a temporary delay in the forwarding of such payments or contributions to an employee pension benefit plan to the extent that affected employers, and service providers, act reasonably, prudently and in the interest of employees to comply as soon as practical under the circumstances.... With respect to blackout periods related to Hurricane Maria, the [DOL] will not allege a violation of the blackout notice requirements solely on the basis that a fiduciary did not make the required written determination....

"The Department recognizes that [group health] plan participants and beneficiaries may encounter an array of problems due to Hurricane Maria and the California Wildfires. The guiding principle for plans must be to act reasonably, prudently, and in the interest of the workers and their families who rely on their health plans for their physical and economic well-being. Plan fiduciaries should make reasonable accommodations to prevent the loss of benefits in such cases and should take steps to minimize the possibility of individuals losing benefits because of a failure to comply with pre-established time frames." (Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL])

[Guidance Overview] In Brief: The Individual Mandate for Health Insurance Coverage (PDF)
11 pages. "This report provides an overview of the individual mandate, its associated penalty, and the exemptions from the mandate. It discusses the ACA reporting requirements designed, in part, to assist individuals in providing evidence of having met the mandate. The report includes some national- and state-level data on the application of the mandate's penalty in tax year (TY) 2014 and TY2015." [Report R44438, Nov. 16, 2017] (Congressional Research Service)
[Official Guidance] Advance Information Copies of 2017 Form 5500 Series
(Internal Revenue Service [IRS]; Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]; Pension Benefit Guaranty Corporation [PBGC])
[Official Guidance] Agencies Release Advance Copies of Form 5500 Annual Return/Report for 2017
"[EBSA], the IRS, and the [PBGC] today released advance informational copies of the 2017 Form 5500 annual return/report and related instructions. The 'Changes to Note' section of the 2017 instructions highlight important modifications to the Form 5500 and Form 5500-SF and their schedules and instructions. Modifications are as follows ...
  • IRS-only questions that filers were not required to complete on the 2016 Form 5500 have been removed from the Form 5500, Form 5500-SF and Schedules ...
  • The instructions for authorized service provider signatures have been updated to reflect the ability for service providers to sign electronic filings on the plan sponsor and Direct Filing Entity (DFE) lines ... in addition to signing on behalf of plan administrators.
  • The instructions have been updated to reflect an increase in the maximum civil penalty amount assessable under [ERISA] section 502(c)(2) ...
  • Line 4 of the Form 5500 and Form 5500-SF have been changed to provide a field for filers to indicate the name of the plan has changed....
  • The instructions for line 6c have been updated to add mortality codes for several variants of the RP-2014 mortality table and to add a description of the mortality projection technique and scale to the Schedule MB, line 6 -- Statement of Actuarial Assumptions/Methods.
  • Line 6c has been modified to add a new question for defined benefit plans that answer 'Yes' to the existing question about whether the plan is covered under the PBGC insurance program."
(Internal Revenue Service [IRS]; Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]; Pension Benefit Guaranty Corporation [PBGC])
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[Guidance Overview] Coal in Your Christmas Stocking? The Pay or Play Penalty Assessment
"[T]he IRS only intends to send a Letter 226J to ALEs on behalf of full-time employees who received a premium tax credit, and for which the ALE did not report either an affordability safe harbor (or other form of relief) in all boxes in row 16 of the employee's 2015 Form 1095-C. In other words, if none of an ALE's 2015 Forms 1095-C contained any blanks in row 16, the ALE should not expect to receive a Letter 226J." (Miller Johnson)
[Official Guidance] Text of IRS Q&As on Employer Shared Responsibility Provisions Under the ACA
"The [ACA] added the employer shared responsibility provisions under section 4980H of the Internal Revenue Code. The following provide answers to frequently asked questions about the employer shared responsibility provisions.: [1] Basics of the Employer Shared Responsibility Provisions: Questions 1-4 ; [2] Employers Subject to the Employer Shared Responsibility Provisions: Questions 5-17; [3] Identification of Full-Time Employees: Questions 18-27; [4] Offers of Coverage: Questions 28-37; [5] Affordability and Minimum Value: Questions 38-41; [6] Liability for the Employer Shared Responsibility Payment: Questions 42-51 [7] Calculation of the Employer Shared Responsibility Payment: Questions 52-54 [8] Making an Employer Shared Responsibility Payment: Questions 55-58; [9] Limited Transition Relief in 2016: Questions 59-63; [10] Related Provisions: Questions 64-65." (Internal Revenue Service [IRS])
[Guidance Overview] ACA Section 1557 Notice and Taglines Required to Tagalong on Other Documents
"Employers who are subject to the ACA Section 1557 notice and language taglines requirement should make sure to provide the notice and language taglines any time they provide the [HIPAA[ Privacy Notice or an SBC. Typically all three items are included with enrollment materials, but given the specific guidance on providing an addendum to the SBC, affected employers should consider providing the notice and language taglines as an addendum to the SBC in addition to providing it separately with other communications." (HUB International)
[Guidance Overview] IRS Releases Guidance on QSEHRAs
"The IRS recently released almost 60 pages of guidance on Qualified Small Employer Health Reimbursement Arrangements (QSEHRAs) ... [IRS Notice 2017-67 covers] topics such as who is an eligible employer, substantiation requirements, and the notice requirement. The Notice underscores the complexity associated with operating a QSEHRA and some traps for the unwary." (HUB International)
Insurer Participation in the 2018 Individual Marketplace (PPT)
6 slides. "48% of exchange enrollees have a choice of three or more insurers in 2018, down from 58% in 2017 and 85% in 2016.... 1,623 counties have only one exchange insurer in 2018 compared to 1,036 counties in 2017 ... 52% of counties will have one exchange insurer in 2018, compared to 33% of counties with one exchange insurer in 2017." (Henry J. Kaiser Family Foundation)
IRS Updates Q&A Guidance to Address ACA Employer Mandate Penalties
"The updated Q&As describe notification procedures for the employer mandate penalty and how to dispute or pay the penalty. The IRS has yet to assess any penalties for noncompliance, but the process is expected to begin by year-end. Employers should be prepared to respond upon being notified of a potential employer mandate penalty." (Willis Towers Watson)
[Official Guidance] Text of IRS Form 14764: ESRP Response (PDF)
April 2017; pub. Nov. 17, 2017. Form to be used for employer response to IRS Letter 226J, Preliminary Calculation of the Employer Shared Responsibility Payment. [Benefitslink note: This is a fillable PDF form, which may not display properly in your web browser. If your browser displays a page so stating, right-click on the link and select "save"; you should then be able to open it with the latest version of the free Adobe Reader application.] (Internal Revenue Service [IRS])
[Official Guidance] Text of IRS Form 14765: Employee Premium Tax Credit (PTC) Listing (PDF)
April 2017; pub. Nov. 17, 2017. A list of the ALE member's assessable full-time employees for the year in question, to be included with IRS Letter 226J, Preliminary Calculation of the Employer Shared Responsibility Payment. (Internal Revenue Service [IRS])
[Guidance Overview] Unwanted Holiday Gifts from the IRS: IRS to Issue Employer Mandate Penalty Notices in Late 2017
"[T]he potential employer mandate penalties for calendar year 2015 are ... $2,080 for every full-time employee (for employers who did not offer coverage to a sufficient percentage of its full-time employees); or $3,120 for full-time employees who received an exchange subsidy (for employers who offered coverage to full-time employees, but the coverage was either unaffordable or did not provide minimum value and at least one full-time employee received an exchange subsidy).... [T]he penalties are actually assessed on a monthly basis for penalties of $173.33 and $260 per month, respectively." (Maynard Cooper & Gale)
ACA Assessment Letters Are Coming
"Your response will generally be due 30 days from the date of the letter. Given processing and mail time, you will likely have less than 30 days in which to respond. If the IRS does not receive a timely response, it will assess the full amount of the proposed payment in a demand letter. If you agree with the proposed payment, payment can be included with your response, using the enclosed response form (Form 14764). If you do not agree with the proposed payment, a response with a signed statement is required." (Mercer)
[Guidance Overview] ACA Employer Mandate Assessments Coming
"Because transition relief during the 2015 plan year exempted employers with less than 100 full-time employees from the penalty in Code Section 4980H(a) and reduced the penalty threshold to 70% for larger employers, [the authors] anticipate that assessments this year will primarily be based on the smaller, individualized penalty set forth in Code Section 4980(b)." (Proskauer's ERISA Practice Center)
California Fines Anthem $5 Million for Failing to Address Consumer Grievances
"The state Department of Managed Health Care criticized Anthem, the nation's second-largest health insurer, for systemic violations and a long history of flouting the law in regard to consumer complaints.... Before this latest action, California had already fined Anthem more than $6 million collectively for grievance-system violations since 2002." (Kaiser Health News)
[Guidance Overview] San Francisco Issues New Health Care Security Ordinance Waiver Form
"The new rules require that all of the following conditions be satisfied for the waiver to be valid: [1] The exact Employee Voluntary Waiver Form must be used. Employers may not change the form in any way, and no other form qualifies.... [2] The employee must voluntarily complete the form without any pressure or coercion from the employee's coworkers or the employer (including supervisor, manager, agents, etc.). [3] The employee must complete the section of the form stating how the employee is covered under another employer-sponsored group health plan (e.g., spouse, domestic partner, parent)." (ABD Insurance & Financial Services)
Fourth Circuit Affirms Health Care Fraud Convictions for Billing Insurers for Medically Unnecessary Services
"Generally, where patients were uninsured, the defendants would use the cheaper test, but where patients were insured, the defendants would use the more expensive test.... Defendants impliedly argued that because they billed for services actually rendered, and told the payors which services were rendered, no fraud occurred. The Fourth Circuit rejected defendants' arguments ... Although this case involved a criminal conviction for fraudulently billing private insurers, the facts potentially apply equally to civil actions and disputes involving other payors, including ERISA Plans." [U.S. v. Palin, No. 16-4522 (4th Cir. Oct. 30, 2017)] (Seyfarth Shaw LLP)
[Guidance Overview] Massachusetts Proposes Regs for Employer Tax Assessments to Help Offset State Costs
"Beginning with the first quarter of 2018, employer medical assistance contributions (EMAC) included in unemployment insurance payments will increase from a maximum of $51 per employee to $77 per employee. In addition, a new $750 supplemental employer assessment will apply for each non-disabled employee who declines employer-sponsored health insurance and instead enrolls in MassHealth or buys coverage on Massachusetts' health insurance marketplace for a continuous period of at least 14 days." (Lockton)
[Guidance Overview] The (Unintended) Impact of the ACA on Divorce
"Historically, a divorce could have a dramatic impact on health care coverage, particularly for people who relied on an employed spouse for health insurance. The reality of losing health insurance prevented some spouses from pursuing divorce, and in other cases a divorce would result in a loss of coverage, often for years.... ACA and its health insurance exchanges have had an impact on the divorce dynamic. Spouses may no longer be dependent upon breadwinner spouses' employer-provided health insurance coverage. And, in some cases, given ACA-provided subsidies, combined insurance costs may be lower if a couple divorces. Here are five ways in which ACA might change divorce." (Fox Rothschild LLP)
[Guidance Overview] Healthcare Reform: Questions and Answers for Employers
165-page compilation of Q&As covering all aspects of the ACA. Updated through Nov. 14, 2017. (Arthur J. Gallagher & Co.)
Deadlines Loom for Retirement, Health & Welfare Plans
"If it is true that change is the only constant in life, it is equally true that knowledge is the great equalizer. Irrespective of the uncertainty relating to potential Income Tax Reform legislation, employers should be aware of important year-end deadlines and considerations related to their retirement and health and welfare plans." (Husch Blackwell)
[Guidance Overview] A Prepper's Guide to ACA Employer Mandate Penalty Assessment
"[D]espite the fact that the 2015 Form 1095 instructions and other IRS guidance clearly instructed employers to leave line 16 blank in some circumstances, if the employer did so and the employee got subsidized coverage on one of the exchanges, the employer will very likely receive a penalty assessment notice.... IRS systems have been coded such that if the employer left Form 1094, Part III, column (a) (Minimum Essential Coverage Offer Indicator) blank ... it is presumed to be 'No.' ... Penalty assessments will be purely computer-driven ... Even if transition relief applies, and even if there's a perfectly acceptable reason for line 16 of Form 1095 to be blank, IRS is going to make the employer mount a defense." (LeFevre Law PC)
OPM Withdraws Proposed Rule on Health Care Premiums for Some Feds
"On the eve of open enrollment for 2018, the Office of Personnel Management announced that it is withdrawing a proposed rule that would have required some federal employees to keep paying their health insurance premiums when they are on unpaid leave.... Currently, agencies generally pay for the entirety of FEHBP premiums for employees on leave without pay. Employees then repay their portion of the insurance contribution when they return to work." (Government Executive)
[Guidance Overview] Massachusetts Issues Draft Regs for Employer Medical Assistance Contributions
"In 2018 and 2019, the [Employer Medical Assistance Contribution (EMAC)] contribution per employee will increase to 0.51% of the employee's wages each year from the current rate of 0.34%, up to the annual wage cap of $15,000 per employee. This increases the potential maximum cost to $77 per employee per year from the current $51 per employee per year." (ML Strategies)
AICPA's Progress Toward Improving Employee Benefit Plan Audits
"An enhanced peer review program was created with subject matter experts specific to employee benefit plan audits to review these engagements. The enhanced peer review program identified the following two trends: [1] 20% of engagements had material nonconformity related to improper utilization of SOC reports and certifications; and [2] More than 50% of engagements had material nonconformity related to inadequate or no documentation." (Schneider Downs)
IRS Prepares to Issue ACA Employer Responsibility Penalties
"The guidance indicates that notices will start going out in 'late 2017,' so you should be on the alert for these notices. Because the IRS had well-documented problems processing the 2015 forms, [the authors] expect numerous errors with the assessments. Moreover, while 30 days sounds like plenty of time to respond, the actual timeframe may be significantly shorter by the time your organization receives and routes the letter to the right people. It may also take you some time to research your records as you prepare your response." (Warner Norcross & Judd LLP)
How Employees Can Make Themselves Ineligible for HSA Contributions
"In 2004, the [IRS] confirmed that an employer only has three responsibilities regarding HSA eligibility and communicating this to the HSA custodian: [1] Ensure the employee is covered by an HSA-eligible high-deductible health plan (HDHP) sponsored by the employer; [2] Confirm that the employee is not covered by any non-HDHP coverage sponsored by the employer; and [3] Provide the employee's age (for purposes of the catch-up contribution). So why should employers care about HSA disqualification if it is primarily an employee concern?" (HR Daily Advisor)
[Guidance Overview] IRS Letter 226J: What About the Constitutional Due Process Hurdles to Collecting Employer Shared Responsibility Excise Taxes?
"Years ago, the IRS created substitutes for MAGI to allow employers who chose to use the substitutes to determine whether they should reduce the cost of coverage to make it affordable for particular employees.... The substitutes may be substantially lower than actual MAGI. These are not really safe harbors in the context of assessing excise taxes, because they may subject employers to greater excise taxes than authorized by PPACA.... PPACA Section 1411 requires certifications to inform employers that employees have been conditionally approved for premium tax credits, and to give employers an appeal process. In most states, those notices were never sent, or were sent late. This was an important part of the procedural due process establish by PPACA, and the failure is not inconsequential." (Tucker Ellis LLP)
[Guidance Overview] IRS Releases Sample Letter 226J, Sheds More Light on Employer Mandate Penalty Enforcement
"The package containing Letter 226J will include ... Form 14764 [which] is the vehicle ALE members will use to respond to the Letter 226J regardless of whether the ALE member agrees or disagrees with the proposed penalty amount. Additionally, the IRS package will include Form 14765 which will contain a list of the ALE member's assessable full-time employees for the year in question." (Accord)
What Could the End of DACA Mean for Your Employees' Health and Welfare Benefits?
"[E]mployers need to be aware of some benefit issues, should the rescission remain unchanged. For instance, do the normal rules for continuation of health care coverage under COBRA apply to DACA-covered employees when their work permits expire? That's just the tip of the iceberg.... It may be difficult to aim an approach solely at DACA-covered employees, given that employers cannot ask employees whether their work permits are due to DACA or some other work visa program, and most employers may not want non-DACA-covered employees to be inadvertently included in the approach." (Willis Towers Watson)
The 2018 Open Enrollment Period Extensions
"[M]any states have extended their Open Enrollment Period, which means that anyone living in these states will have additional time to enroll.... California: November 1, 2017-January 31, 2018; Colorado: November 1, 2017-January 12, 2018; Connecticut: November 1, 2017-December 22, 2017; District of Columbia: November 1, 2017-January 31, 2018; Massachusetts: November 1, 2017-January 23, 2018; Minnesota: November 1, 2017-January 14, 2018; New York: November 1, 2017-January 31, 2018; Rhode Island: November 1, 2017-December 31, 2017; Washington: November 1, 2017-January 15, 2018." (eHealth)
Text of Ninth Circuit Opinion: Attorney Fee Award Considers Entire Litigation, Not Limited to Specific Issue on Appeal (PDF)
"[In] analyzing a party's request for appellate attorney's fees under the Hummell test, a court must consider the entire course of the litigation, rather than focusing exclusively on the prior appeal. Weighing the five Hummell factors in light of all of a defendant's conduct, from its wrongful denial of the plaintiff's claim for ERISA benefits to its filing of a petition for a writ of certiorari, the panel held that the moving party was entitled to attorney's fees for the prior appeal, in which the panel had affirmed an award of litigation attorney's fees." [Micha v. Sun Life Assurance of Canada, Inc., No. 16-55053 (9th Cir. Oct. 31, 2017)] (U.S. Court of Appeals for the Ninth Circuit)
ACA Penalties Are About to Hit Employers
"2015 was a phase-in year and an Applicable Large Employer was required to offer minimum essential coverage which also met the minimum value standard to at least 70% of full-time employees and their eligible dependents as defined under the rules. Those employers who [didn't] will need to add up their full-time employees in each non-compliant month and subtract 80 (there is an exempt amount), then multiply by $173.33. The total for all 12 months will be the non-deductible excise that the IRS will seek to collect." (Frenkel Benefits)
DOL Gives Kiss of Death to MEWA Fiduciaries in 'Healthcare Madoff' Scheme
"At its height, the MEWA covered approximately 14,000 participants and beneficiaries. These participants worked for more than 560 employers in 36 different states. However the increased backlog of unpaid claims created significant problems for many members as doctors refused treatments because of unpaid bills and many members were sent to collections accounts, according to the DOL." (AVYM Healthcare Revenue Consultants)
2018 Inflation-Adjusted Limits Affect Many Employee Benefit Plans
"[Rev. Proc. 2017-58] sets out the 2018 inflation adjustments for ... health flexible spending arrangements (FSAs), qualified transportation fringe benefits, qualified adoption assistance programs, penalties related to the [ACA] individual mandate and qualified long-term care (LTC) premiums. The limits also include ... the qualified retirement plan limits released in Notice 2017-64 and the recently announced Social Security taxable wage base. The 2018 tax limits may affect design, administration, communication and tax reporting for these benefits." (Willis Towers Watson)
ERISA Fiduciary Update (PDF)
45 pages. Topics: [1] DOL Fiduciary Rule: Arbitration agreements and prohibition on waiving right to participate in class action; [2] Tibble v. Edison Int'l: The tab for choosing retail over institutional shares of mutual funds; [3] Health Plan TPAs as Fiduciaries: Fee disputes; [4] Cross-plan offsetting in health plans; [5] Attacks on arrangements between Financial Engines and recordkeepers; [6] The 'Vanguard' of fee, and other investment, litigation; [7] Surprise! Defendants win in Tatum v. R.J. Reynolds Tobacco Co.; [8] Proof of causation and burden-shifting in fiduciary breach cases; and [9] Standing: Defined benefit plan fiduciary claims. (Utz & Lattan, LLC)
The New Contraception Coverage Rules: Four Things to Know
"[1] The rules offer new exemptions.... [2] Multiple types of employers can quality for exemptions.... [3] Not very many employers are expected to take advantage of the new rulings.... [4] Preparing now will ease headaches later." (Managed Healthcare Executive)
[Opinion] Koskinen's Parting Gift from the IRS
"IRS Commissioner John Koskinen has made no secret of his contempt for Republicans who tried to hold his agency to account for Tea Party targeting. His payback as he walks out the door is a major hit on employers. The IRS confirmed Tuesday that it is now for the first time beginning to enforce the ObamaCare employer mandate, issuing thousands of penalty letters to noncompliant companies.... The letters reach back to 2015, setting up companies for years of penalties.... Nobody knows how many businesses will be hit, but by some estimates it will be tens of thousands." (The Wall Street Journal; subscription may be required)
[Guidance Overview] IRS and DOL Provide Disaster Relief Guidance for Health Plans
"The DOL guidance advises plan fiduciaries to make reasonable accommodations to prevent plan participants who miss deadlines for filing benefit claims and COBRA elections from losing benefits. The DOL also recognizes that full compliance by group health plans may not be possible in a disaster situation. Employers should prioritize helping participants, even if that means temporarily relaxing certain rules." (Trucker Huss)
[Guidance Overview] Updated IRS Guidance for Assessment of Employer Shared Responsibility Payments Under the ACA
"Given the relatively short time period that an ALE will have to respond in the event it receives Letter 226J from the IRS regarding potential ESRP liability for 2015, ALEs should ensure that the information that was filed on Forms 1094-C and 1095-C for 2015 is readily accessible (either internally or through their ACA reporting vendors)." (Troutman Sanders)
[Official Guidance] Text of IRS Letter 226J: Preliminary Calculation of the Employer Shared Responsibility Payment (ESRP) (PDF)
8-page form letter for IRS use in notifying an employer of its liability, showing how the amount was calculated. "Our records show that you filed one or more Forms 1095-C ... and one or more Forms 1094-C ... with the IRS. Our records also show that for one or more months of the year at least one of the full -time employees you identified on Form 1095-C was allowed the premium tax credit (PTC) on his or her individual income tax return filed with the IRS. Based on this information, we are proposing that you owe an ESRP for one or more months of the year." (Internal Revenue Service [IRS])
[Guidance Overview] ACA Pay or Play Penalty Letters Coming 'Late 2017'
"The ACA employer mandate pay or play rules first took effect in 2015. The IRS Letters 226J at issue here will relate only to potential penalties in that first year, and therefore they will be relevant only to employers that were applicable large employers (ALEs) in 2015.... [A] special 2015 transition rule provided that certain 'mid-sized' employers between 50 and 100 full-time employees could have reported an exemption from potential pay or play penalties." (ABD Insurance & Financial Services)
[Guidance Overview] Goodbye to the Transitional Reinsurance Fee (Almost): Final Scheduled Payment Due Nov. 15
"For employers who chose to pay the 2016 fee in two installments, the second installment of the fee is coming due.... [T]he only way to make the TRF payment is through the Federal Reserve's automated clearinghouse service. This is sometimes referred to as a 'pull' transaction, meaning [CMS] will collect the TRF by debiting the employer's designated bank account on the date selected." (Lockton)
[Guidance Overview] IRS (Quietly) Announces Procedures for Excise Taxes on Failure to Comply with ACA Employer Mandate
"Q&A 58 telegraphs the IRS' intention to begin notifying employers very soon.... [Indications are that] notices will be issued within the next 7 weeks or so ... What is not clear is whether the IRS will publish guidance in the Internal Revenue Bulletin or elsewhere that fleshes out the notification and collection procedures or whether these new Q&As fulfill that role." (Mintz Levin)
[Guidance Overview] IRS Provides 2017 ACA Employer Reporting Forms and Instructions (PDF)
8 pages. "Applicable Large Employers (ALEs) must complete the 1094-C and 1095-C forms ... 2017 forms will be due as follows: Forms to employees -- January 31, 2018; Forms to IRS -- February 28, 2018, (on paper) or April 2, 2018, (electronically)... The forms can be mailed or hand-delivered to employees.... [E]mployees must specifically consent to receive this form electronically under the same rules that apply to providing the W-2 electronically." (Marsh & McLennan Agency LLC)
Employee Benefit Provisions in the Proposed House Tax Bill
"The [proposed] rules raise many issues. For example, how do you tax nonqualified deferred compensation that has vested, but whose value is wholly contingent on future events? Will there be a reconciliation of the taxes that are paid when deferred compensation vests with the amount (including earnings) that is eventually paid? Special complications apply to existing awards granted before 2018 but that will not vest until after 2017." (Nixon Peabody LLP)
[Guidance Overview] At Last, Employer Mandate Tax Assessment Guidance
"[T]he ALE Member's response to Letter 226J will be 'due' on the due date stated on Letter 226J, which probably will be only 30 days from the issuance date appearing on Letter 226J. Subtract mailing time and internal routing time and you may have just two or three weeks to deliver to IRS your well-considered, written, well-documented, objection to a substantial employer mandate tax assessment. If you lack ready access to well-organized data about your 2015 group health plan enrollment, employee affordability, eligibility and IRS reporting of your coverage offers (including 2015 Forms 1094-C and 1095-C), you may find this a daunting task." (Balch & Bingham LLP)
[Official Guidance] Text of CMS Memo: Evaluation of EDGE Data Submissions for the 2017 Benefit Year (PDF)
13 pages. "In this bulletin, [CMS describes] the operational processes and metrics for when and how CMS intends to evaluate the sufficiency of data in terms of the 'quantity' and 'quality' of an issuer's EDGE server data submissions for the 2017 benefit year. CMS will use this evaluation to determine which States will receive interim risk adjustment summary reports in March 2018 and which issuers will be included in final risk adjustment transfer calculations or be assessed a default risk adjustment charge in a risk pool market within a State following the final data submission deadline of April 30, 2018, for the 2017 benefit year." [Unnumbered document, Nov. 3, 2017] (Centers for Medicare & Medicaid Services [CMS], U.S. Department of Health and Human Services [HHS])
Timing Is Everything: Tenth Circuit Overturns Insurer's Disability Decision as Arbitrary and Capricious
"The more unexpected result is the Court's finding that a claimant's last day worked and date of disability may be the same. This defies the typical interpretation many administrators use where the date of disability follows the last day worked.... Further, the Court found it was unreasonable for the administrator to rely on the employer's assertions alone. This case thus serves as a reminder to conduct an independent investigation." [Owings v. United of Omaha Life Ins. Co., No. 16-3128 (10th Cir. Oct. 17, 2017)] (Seyfarth Shaw LLP)
[Guidance Overview] IRS Updates Q&A on Procedures for Enforcement of Employer Mandate
"The procedures which were updated on November 2, 2017 are the IRS' strongest signal that the employer mandate penalties are imminent. This article describes the details the IRS has provided regarding the enforcement of the employer mandate penalties and the corresponding appeals procedures." (Accord)
New York Anti-Subrogation Law Prohibits Offsets for Settlements; Choice-of-Law Provisions May Not Govern Offset and Subrogation Rights
"The U.S. Court of Appeals for the Second Circuit has ruled that New York's anti-subrogation statute ... applies both to 'offsets' for prospective benefit payments and to reimbursements for prior benefit disbursements. In so holding, the Second Circuit ruled that a Plan's choice-of-law provisions may not be dispositive of which jurisdiction's anti-subrogation statute will apply to govern disbursement and/or recovery of that Plan's assets." [Arnone v. Aetna Life Ins. Co., No. 15-2322 (2d Cir. June 22, 2017)] (Robinson & Cole LLP)
Defunding CSRs: Challenges and Options in the Reconciliation Process (PDF)
"Issuers should anticipate that reconciliations will take place for 2017 since there were advance payments paid for the benefit year, although no specific timing -- either periodicity or dates -- are noted. This implies that CMS could change the timing of the reconciliations to be different than the historical timelines, or potentially put it off indefinitely. The regulations note that issuers must submit the information to HHS when required, so issuers should proactively anticipate that there will be a reconciliation at some point of the advance payments that have been paid in 2017." (Wakely Consulting Group)
[Guidance Overview] Implementing State Flexibility on MLRs
"HHS's proposed payment rule would encourage states to apply again to reduce their individual market MLRs below 80 percent beginning with 2019, allowing insurers as needed to stabilize their individual insurance markets. CMS is, therefore, proposing to reinstate and streamline a collection of information to allow states to request reductions in the minimum MLR in their individual market. To request an adjustment to its MLR, a State will have to submit information regarding insurers selling coverage in its individual market, including earned premium and incurred claims, number of enrollees, commissions, and net underwriting gain, as well as each insurer's risk-based capital level." (Timothy Jost, in Health Affairs)

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