News

"The guidance set forth in Notice 2024-73 applies to plan years beginning after December 31, 2024 ... [T]he final regulations for LTPT employees in 401(k) plans (which have not yet been issued) will apply no earlier than plan years beginning on or after January 1, 2026.... Treasury and IRS have requested comments by December 20, 2024 on the Notice, including on [1] the application of nondiscrimination testing rules for LTPT employees in 403(b) plans; and [2] any LTPT rules that should apply differently between 401(k) and 403(b) plans."

"Regarding student employees, the Notice explains that this statutory exclusion under Code Section 403(b)(12)(A) continues to be valid because it is based on a classification of employees -- students performing services described in Code Section 3121(b)(10) -- rather than on service or work schedules.... Notice 2024-73 applies for plan years beginning after December 31, 2024[.]"

"Employers that use an incorrect affordability safe harbor code on Line 16 based on the premium they report on Line 15 could be subject to an ESRP. .. [E]mployers should consider reviewing their 2024 ACA data to make sure they are using the appropriate affordability safe harbor."

"Individuals and businesses in six counties that previously did not qualify for relief under either Hurricane Debby or Hurricane Helene will receive disaster tax relief beginning Oct. 5, 2024, and concluding on May 1, 2025. They are Broward, Indian River, Martin, Miami-Dade, Palm Beach and St. Lucie. In addition, individuals and businesses in 20 counties previously receiving relief under Debby, but not Helene will receive disaster tax relief under Hurricane Milton, from Aug. 1, 2024, thru May 1, 2025. They are Baker, Brevard, Clay, DeSoto, Duval, Flagler, Glades, Hardee, Hendry, Highlands, Lake, Nassau, Okeechobee, Orange, Osceola, Polk, Putnam, Seminole, St. Johns and Volusia counties. As a result, affected taxpayers in all of Florida now have until May 1, 2025, to file various federal individual and business tax returns and make tax payments"

"[CMS] issued Final Rules on how and when civil monetary penalties may be imposed when Responsible Reporting Entities (RREs) fail to meet their Medicare Secondary Payer (MSP) reporting obligations.... Generally, a group health plan RRE is the insurer for fully insured plans and the third-party administrator (TPA) for self-funded plans.... Penalties against an RRE are up to $1,000 (as adjusted) per instance of noncompliance for each calendar day that a record is late, with a maximum annual penalty of $365,000 per instance."

"An employer-policyholder who receives a rebate for its insured group health plan will be responsible for determining how to appropriately use the refund, particularly in the context of [ERISA].... Any portion of the rebate that constitutes a plan asset must benefit plan participants and beneficiaries and cannot be retained by the employer. The [DOL] provides guidance to employers on permitted methods of use and distribution of the refund."

"For those subject to the 10-year rule, spreading the distributions equally over 10 years or targeting low-income years with larger withdrawals may result in substantial tax savings compared to withdrawing the entire balance at the end of the 10th year.... For those with multiple, unequal sized IRAs, with different beneficiaries, satisfying RMDs earlier in the year may help to avoid uncomfortable circumstances should you pass during the year."

"A plan with a QSLP matching contribution can choose to test all employees together or separately test employees who receive a QSLP matching contribution for actual deferral percentage (ADP) testing purposes. With respect to safe harbor plans, a QSLP matching contribution may be added as a mid-year change."

"Effective February 21, 2025, Michigan's Earned Sick Time Act (ESTA) will replace the Paid Medical Leave Act (PMLA).... The Michigan [DOL] and Economic Opportunity has published ESTA FAQs, the first administrative guidance interpreting the amendments."

" The longevity of this dispute underscores the importance of ensuring compliance with both MHPAEA and ERISA's disclosure requirements.... Note that while this court concluded that ERISA did not require the disclosure of the InterQual Criteria, MHPAEA regulations state that the ERISA requirements include documents with information on medical necessity criteria, as well as the processes, strategies, evidentiary standards, and other factors used to apply a nonquantitative treatment limitation (such as a medical necessity requirement)." [S. v. Premera Blue Cross, No. 22-4056 (10th Cir. Oct. 1, 2024]

"Although the QSLOB rules offer much-needed relief to employers with diverse businesses, the availability of these rules is dependent on compliance with a series of highly complex and technical requirements and, therefore, should not be undertaken without a careful and thorough analysis The consequences of noncompliance can be severe, as the ability to utilize the QSLOB rules generally is dependent on every line of business satisfying those rules."

"[The Second Circuit joined] the Third, Seventh, and Tenth Circuits in requiring plaintiffs raising a prohibited transaction claim to allege something more than the mere existence of a transaction between a plan and a service provider. In contrast, the Eighth and Ninth Circuits have held that plaintiffs need only allege that a transaction took place and need not allege that the transaction was for more than reasonable compensation. By granting the plaintiffs' petition for writ of certiorari, the Supreme Court has signaled its readiness to resolve this circuit split." [Cunningham v. Cornell Univ., No. 21-0088 (2d Cir. Nov. 14, 2023; cert. pet. granted Oct. 3, 2024)]

"The recent putative class actions target health-contingent, outcome-based wellness programs that are part of self-funded group health plans. These complaints allege that the wellness programs do not meet HIPAA’s regulatory requirements that the programs must satisfy to be considered nondiscriminatory.... The recent complaints generally claim that the plan sponsors and fiduciaries charged tobacco surcharges that violate HIPAA’s nondiscrimination provision."

"The Texas AG is asking the court to declare that the 2000 Privacy Rule and the 2024 Reproductive Privacy Rule violate the Administrative Procedures Act and to vacate, set aside, and enjoin enforcement of the Rules. Did a black cat just walk under a ladder, or is this all a bunch of hocus pocus?" [Texas v. HHS, No. 24-0204 (N.D. Tex. complaint filed Sep. 4, 2024)]

"Additional independent data sources are used -- not just the typical credit reporting agencies, commercial databases and internet searches.... Understand what data points specifically the locator service is updating.... Upon project completion, you are given detailed reporting. Not just a file.... The service aligns with many of the DOL's best practices for finding missing participants.... The service provider makes it easy and has cybersecurity measures in place."

"Some of the thorny issues ... include: [1] Acquired employees were not timely enrolled for 401(k) deferrals.... This can be even more complex if an acquirer's plan features automatic enrollment. [2] Prior service was not counted for eligibility or vesting.... [3] The target company's plan may have illiquid investments that cannot be immediately sold."

"[1] Don't let employees work while on continuous FMLA leave.... [2] If you want to restructure the position of an employee on FMLA leave (or soon after they've taken FMLA leave), be very, very careful.... [3] If you offer a 'work hardening' program, give the employee a reasonable chance to 'harden.' ... [4] If a 'problem employee' goes out on FMLA leave, don't view the leave as your opportunity to show them the door.... [5] Never forget that your disability accommodation obligations are in addition to, not instead of, your FMLA obligations.' [Kelley vs. Jewish Voice Ministries Int"l, No. 23-0353 (D. Ariz. Oct. 4, 2024)]

"[Two recent] cases shed a great deal of light on how courts are looking at health insurance denials.... Insurers that have upheld claim denials are subject to having their decisions overturned unless they can show that they engaged in a meaningful dialogue with claimants and considered the opinions of the treating doctors. Courts are also looking for logical connection between the evidence presented, and the determination reached and are unaccepting of rubber stamps or conclusory denials."

"The breach, which occurred in August, was disclosed in regulatory filings with the attorney generals of Maine, New Hampshire, and Massachusetts. According to its filing submitted to Maine's attorney general on [October 8], Fidelity stated that the breach took place between August 17 and August 19, when an unnamed third party gained access to the data through two customer accounts."

"If you are an ALE, make sure that you give eligible employees an 'effective opportunity' to elect or decline health coverage (or to make changes to elections rolled over from the prior year) for themselves and their qualifying dependent children.... Determine whether any other individuals, such as qualified beneficiaries receiving COBRA continuation coverage or employees out on FMLA leave, are legally entitled to participate in the process and give them an opportunity to do so as if they were active employees."

"According to the survey, 97% of employers, 86% of health systems, and 84% of health plans intend to maintain or increase spending on digital health solutions over the next year. Reasons for increased spending were relatively consistent, with all three purchaser groups reporting increased consumer demand (83%) and improved health outcomes (62%) as primary motivators."

"After steep increases in the Fed funds rate in 2022 and resulting higher expected returns across most asset classes, many public plans now find that their expected return on their current asset-allocation mix exceeds that of the discount rate set by their actuary. As a result of this changed environment, will these two trends now reverse? In other words, will public plans begin to raise their discount rates? Or will they shift back to a more conservative posture?"

"[W]ith the tax advantage to employers remaining intact, the funds continue to go to insurance and not to the workers. The system has ballooned into an inefficient approach that inflates costs and reduces consumer choice. If the tax advantage were transferred from employer to employee, this would expand the usefulness of these funds to pay for medical expenses."

"The percentage of the nonelderly population with employment-based health benefits was at or near 70 percent from 1970 to 1989. By 2023, 60 percent of the nonelderly population had employment-based health coverage.... The erosion in the percentage of employers offering health coverage has been limited to small employers. "

"Based on the increase in the Consumer Price Index (CPI-W) from the third quarter of 2023 through the third quarter of 2024, Social Security and Supplemental Security Income (SSI) beneficiaries will receive a 2.5 percent COLA for 2025.... The Maximum Taxable Earnings [will increase to] $176,100."