Health & Welfare Plans Newsletter

September 1, 2017

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[Official Guidance]

Text of Draft Instructions for 2017 IRS Forms 1094-B and 1095-B (PDF)
8 pages, Aug. 22, 2017. "Form 1095-B is used to report certain information to the IRS and to taxpayers about individuals who are covered by minimum essential coverage and therefore aren't liable for the individual shared responsibility payment."
Internal Revenue Service [IRS]

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ACA Reporting Requirements and Lessons Learned

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[Guidance Overview]

Hurricane Harvey Deployment: Issues Surrounding Legally Protected Leave
"Any employer may receive requests for leaves related to Hurricane Harvey and the employer does not need to be in the vicinity of Houston as national guard and other first responders are being called upon to assist and employees may have relatives in the areas hit by Hurricane Harvey.... [E]mployers need to remember there are benefit continuation and benefit resumption requirements under both [FMLA and USERRA] as well as implications for when COBRA continuation coverage must be offered."
Winstead PC

[Guidance Overview]

Guidance Issued on Taxability of Contributions and Benefits Under New York Paid Family Leave Law
"The notice addresses several issues ... [1] Employee contributions to PFL benefit premiums will be deducted from employees' after-tax wages. [2] PFL benefits paid to employees will be taxable non-wage income that must be included in federal gross income. [3] Taxes will not automatically be withheld from benefits, but employees can request voluntary tax withholding from PFL benefits paid."
Proskauer's Law and the Workplace

[Guidance Overview]

New York Releases Paid Family Leave Tax Guidance (PDF)
"On August 25, the New York State Department of Taxation and Finance issued guidance on the tax treatment of family leave contributions and benefits under the state's paid family leave program, which will go into effect on January 1, 2018. The guidance confirms that employee contributions should be made on an after-tax basis, and paid family leave benefits that employees receive will be taxable income. Employers should review their payroll and reporting practices to ensure compliance."
Conduent

[Guidance Overview]

Text of Draft IRS Publication 5223: General Rules and Specifications for ACA Substitute Forms 1095-A, 1094-B, 1095-B, 1094-C and 1095-C (PDF)
24 pages; August 22, 2017. "If you do not use the official IRS form to furnish statements to recipients, you must furnish an acceptable substitute statement. Information presented in substitute statements should be in a point size large enough to be easily read by recipients. To be acceptable, your substitute statement must comply with the rules in this Part. Generally, information returns may be furnished electronically with the consent of the recipient."
Internal Revenue Service [IRS]

[Advert.]

Online Learning Course: COBRA

Sponsored by International Foundation of Employee Benefit Plans [IFEBP]

Even with ACA coverage easier for individuals to obtain, group health plans must continue to offer COBRA coverage. This course explains technicalities of COBRA, including who is entitled and how to administer.


City of Houston Lifts Employee Benefits Restrictions in Wake of Harvey
"The city of Houston made a number of concessions on medical benefits for its employees, reducing barriers to health-care access during the recovery from Hurricane Harvey ... Prior authorization requirements have been waived for acute medical care and behavioral health services ... [E]mployees who utilize mail order pharmacies for generic medicine but have been displaced by flooding and presently have no place for medications to be shipped will be able to refill their prescriptions with no copayment at retailers."
Bloomberg BNA

Deadline Nears for Medicare Part D Creditable/Non-Creditable Coverage Notices (PDF)
"Plan sponsors that offer prescription drug coverage must provide notices of creditable or non-creditable coverage to Medicare-eligible individuals before each year's Medicare Part D annual enrollment period -- this year, by October 14, 2017. The notice obligation is not limited to retirees and their dependents but also includes Medicare-eligible active employees and their dependents and Medicare-eligible COBRA participants and their dependents."
Conduent

When Bad Surgery Results Create New Disabling Conditions: Still Excluded from Disability Plan Coverage by the Pre-Existing Condition Exclusion?
"Pre-existing condition exclusions can be difficult to apply, especially when addressing whether a new disabling condition relates back to a pre-existing condition. But this new case shows how a new disabling condition resulting from a 'bad surgery' may still be excluded under the pre-existing condition exclusion." [Haddad v. SMG Long Term Disability Plan, No. 16-1700 (E.D. Cal. Aug. 22, 2017)]
Lane Powell PC

Less Than Half of Employed Americans Have Workplace Group Life Insurance
"Less than half of employed Americans (45 percent) have voluntary group life insurance provided by their employer. Among those who don't have voluntary group insurance provided by their employer, only a small percentage (9 percent) said they had other obligations or did not see the value in it (14 percent)."
OneAmerica

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CMS Announces Policies Related to the Navigator Program and Enrollment Education for the Upcoming Enrollment Period (PDF)
"For the upcoming Open Enrollment Period, CMS plans to spend $10 million on educational activities in order to meet the needs of new and returning enrollees.... Navigator grantees will receive funding based on their ability to meet their enrollment goals during the previous year.... In this final year of a three-year grant cycle, Navigators will be asked to assist consumers with plan selections, particularly focusing on consumers who are currently enrolled in coverage in areas where issuers have reduced or eliminated plan offerings."
Centers for Medicare & Medicaid Services [CMS], U.S. Department of Health and Human Services [HHS]

Trump Administration Slashes Funding for ACA Outreach, Assistance During Open Enrollment
"[CMS said] it will spend $10 million on promotional activities during the upcoming open enrollment period. Comparatively, CMS spent $100 million in 2016 for the 2017 open enrollment period, and a little more than $50 million the year prior. The agency will also change how the ACA's Navigator program is funded. Navigators received $62.5 million in federal grants in 2016, but will receive $36.8 million this year -- a 39% funding cut. They'll also receive funding based on their ability to meet their enrollment goals during the previous year."
FierceHealthcare

Administration Acts to Move Beyond Troubled Navigator Program
"The administration today announced planned action to reduce funding to a program within the so-called 'Affordable Care Act' that has repeatedly fallen short of its purpose. Obamacare's data shows that many of their navigators have been paid handsomely, yet have not delivered in enrolling the number of patients they promised."
Energy and Commerce Committee, U.S. House of Representatives

Insurance Commissioners and the Feds: Time for Some Relationship Counseling?
"The [ACA] effectively created a shotgun marriage between state insurance regulators and [HHS] who then had to provide oversight of their baby -- the individual insurance market. The relationship has been complicated since the start: the insurance market has proved to be a problem child and the federal government has not been the most reliable spouse and parent recently. Next Wednesday's Senate Health Education, Labor, and Pension (HELP) Committee hearing, Stabilizing Premiums and Helping Individuals in the Individual Insurance Market for 2018: Insurance Commissioners, with testimony from five state insurance commissioners, will provide a chance for some of the states -- the parents with de facto custody -- to make their grievances known. What can we expect to hear?"
Health Affairs

Benefits in General

[Guidance Overview]

Agencies Provide Guidance for Plans and Participants Affected by Hurricane Harvey
"A hardship distribution is still limited to the maximum amount permitted by IRS rules but can be provided for any hardship, not just those listed in the IRS regulations, and no post-distribution contribution restrictions are required.... Plan loans can be made without following the procedural requirements imposed by the plan at the time of the loan.... The filing date for Form 5500 filings due on or after August 23, 2017 and before January 31, 2018 is automatically extended to January 31, 2018.... The DOL requests welfare plans make reasonable accommodations for participants and beneficiaries who are unable to timely file benefit claims or make COBRA elections ... Under an emergency PTO sharing plan, employees can donate some of their PTO to a PTO bank that is administered by the employer."
Haynes and Boone, LLP

[Guidance Overview]

First Round of Hurricane Harvey Relief Guidance
"A retirement plan will not be disqualified if it ... disregards procedural requirements of plan loans in its document ... However the plan is required to attempt to gather the required documentation for loans as soon as possible; such documentation would include spousal consents to the distribution or loan. There is a discussion of the alternatives in the event a spouse is represented to be deceased without providing a death certificate.... The DOL also recognized that they will emphasize compliance assistance, grace periods and relief where appropriate when physical disruption to a plan or its service provider makes timely compliance with requirements, including disclosures impossible."
Winstead PC

Cyber Security and Online Privacy Issues for Employee Benefit Plans
"Increasingly, data is accessed on mobile devices and data is stored using cloud-based services making it susceptible to cyber security threats. The fact that there are many different users and service providers involved in benefits administration further complicates the issue."
Butterfield Schechter LLP

Discussions
on the BenefitsLink Message Boards

IRS Enforcement of ACA Individual Penalty
"IRS permitted individuals to file 2016 tax returns without answering the ACA penalty question (so if you owed the penalty you didn't have to fess up and pay with your tax return). Have they done any follow-up with those taxpayers or does it appear nobody had to pay for 2016? I know they keep saying the penalty is still in effect but I'm wondering if enforcement has slacked off."
BenefitsLink Message Boards

DOL Audits of Health Plans for ACA Compliance
"ACA provided substantial funding to DOL to audit (or, as they say, to 'investigate') group health plans for ACA compliance. There is anecdotal evidence that a few audits have occurred. If you have experienced a recent audit, would you mind posting a copy of the initial DOL letter and attached list of required documents (with employer information redacted, of course)?"
BenefitsLink Message Boards

Correction of Release Timing Language After Termination
"I have a situation involving a 2005 employment agreement that makes severance payments (to be paid in installments over 18 months) contingent upon a release of claims being signed no later than 45 days following delivery of the required release by the Company but without any other of the necessary release timing provisions in IRS Notice 2010-6 and IRS Notice 2010-80. The individual has been terminated, so we do not appear to have the ability to correct the provisions without penalty per 2010-6. A large portion of the severance -- but not all -- is exempt from Section 409A. If we cannot find a basis for claiming the release timing provisions satisfactory and must pay an excise tax, can we exclude the severance amount exempt from 409A from the excise tax calculations? There is a concern that the entire severance benefit may be subject to the excise tax because the entire employment agreement/severance payment are not exempt."
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Lois Baker, J.D., President  loisbaker@benefitslink.com
David Rhett Baker, J.D., Editor and Publisher  davebaker@benefitslink.com
Holly Horton, Business Manager  hollyhorton@benefitslink.com

BenefitsLink Health & Welfare Plans Newsletter, ISSN no. 1536-9595. Copyright 2017 BenefitsLink.com, Inc. All materials contained in this newsletter are protected by United States copyright law and may not be reproduced, distributed, transmitted, displayed, published or broadcast without the prior written permission of BenefitsLink.com, Inc., or in the case of third party materials, the owner of those materials. You may not alter or remove any trademark, copyright or other notices from copies of the content.

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