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[Guidance Overview]

QSEHRAs Provided by '21st Century Cures Act' May Not Be a Total Cure
"Employers desiring to offer a QSEHRA must be aware that these arrangements are different in many significant respects from the health reimbursement arrangements first recognized under IRS Notice 2002-45 (HRA) and QSEHRAs also carry many additional requirements, such as the requirement that the individual must certify that they have MEC before each expense is reimbursed in order for the expense to be eligible and excluded from the individual's income and to not disqualify the QSEHRA. Disqualifying a QSEHRA means loss of the income tax exclusion for the individual, and depending upon the violation it may mean loss of being exempt from the group health plan definition and would trigger application of all provisions applicable to group health plans under the Code, COBRA, the ACA requirements(including the requirement that HRAs be integrated with a group health plan) and under the Medicare secondary payer statute."
Winstead PC


Online Learning Course: Family and Medical Leave Act (FMLA)

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[Guidance Overview]

IRS Issues Comprehensive Guidance on QSEHRAs
"[IRS Notice 2017-67] includes 79 FAQs and addresses a range of issues.... [Highlights include:] [1] Premiums for coverage under the group health plan of a spouse's employer are reimbursable, but reimbursements will be taxable to the extent premiums were paid on a pre-tax basis (FAQ-48). [2] Expenses for over-the-counter drugs purchased without a prescription are also reimbursable but taxable (FAQ-54). [3] QSEHRA balances can be made available ratably over the year and reimbursements limited to the amount available (FAQ-50). [4] QSEHRAs can also have a run-out period (FAQ-53)."
Thomson Reuters / EBIA

[Guidance Overview]

A Step Toward 'Replace' Without the 'Repeal': The Trump Administration Re-Regulates Obamacare
"This year's [Proposed Notice of Benefits and Payment Parameters] is more sweeping in scope than its predecessors, covering not only Exchange-specific policies, such as the Navigator program and Qualified Health Plan (QHP) certification, but also policies that impact the wider commercial small group and individual insurance markets -- like essential health benefits, medical loss ratio and rate review rules. However, a number of hot-topic areas are not addressed, including Section 1332 state innovation waivers (for which CMS shares jurisdiction with the Department of Treasury), segregation of abortion funds, and language access standards for Exchanges, QHP issuers and web-brokers. Comments to the proposed rule are due on November 27."
Faegre Baker Daniels

House Tax Bill Would Scrap Deduction for Medical Expenses
"The tax bill ... would not, as had been rumored, eliminate the tax penalty for failure to have health insurance. But it would eliminate a decades-old deduction for people with very high medical costs.... The medical deduction, originally created in World War II, is available only to taxpayers whose expenses are above 10 percent of their adjusted gross income. Because of that threshold, and because it is available only to people who itemize their deductions, the medical expense deduction is not used by many people[.]"
Kaiser Health News

House of Representatives Releases Tax Reform Proposal: The Tax Cuts and Job Act
"The tax reform proposal does not provide any relief from ... the tax on high cost health plans (the 'Cadillac tax'), the cap on employee contributions to health FSAs, the requirement that drugs be prescribed to be reimbursed from an FSA, HRA or HSA and the increase in the penalty tax for disqualified distributions from an HSA.... Employers will no longer be able to deduct expenses for qualified transportation fringe benefits paid or incurred after December 31, 2017 ... However, the proposal does not change the non-taxable nature of these qualified transportation fringe benefits. This means that employers will not be able to deduct any pre-tax transit and parking amounts, but they will remain tax advantaged for individual employees."
Employers Council on Flexible Compensation [ECFC]


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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

November Compliance Guide: Voluntary Benefits
"[1] Pack the compliance essentials if your voluntary benefits are subject to ERISA.... [2] Take steps to exclude identity theft protection from employee gross income.... [3] Check the fees on student loan reimbursements.... [4] Leave employees' financial stress at the station.... [5] Take off for time off."
Arthur J. Gallagher & Co.

The Deal with Health Savings Accounts
"Is there a business opportunity for advisors to charge into the HSA marketplace when the bulk of assets in HSAs are not being invested, and when what can be contributed annually is still a fairly small amount?"

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

Republican Lawmakers Try New Approach to Paid Leave, Workplace Flexibility
"The Workflex in the 21st Century Act (H.R. 4219), introduced by Reps. Mimi Walters (R-CA), Elise Stefanik (R-NY), and Cathy McMorris Rodgers (R-WA), would create a voluntary program whereby employers that choose to offer their employees a minimum number of compensable leave days per year and institute a flexible work arrangement would be exempt from the current patchwork of local and state paid leave laws. Eight states and more than 30 localities nationwide have enacted varying paid leave requirements, creating a compliance challenge for multi-state employers."

Benefits in General

GOP Tax Bill Outlines Significant Changes for Benefits and Compensation
"There is nothing in the bill that would limit pretax retirement savings or require them to be converted to Roth after-tax savings ... Some of the most significant changes relate to limits on executive compensation ... Beginning in 2018, individuals would no longer be permitted to convert a traditional IRA to a Roth IRA, or vice versa.... There are a few modest changes for tax-qualified retirement plans ... Beginning in 2018, the pretax treatment of expenses under a dependent care flexible spending account would be repealed.... Qualified tuition reimbursement plans through which employers can provide pretax tuition assistance to employees would be repealed effective in 2018.... Several other pretax fringe benefit arrangements would no longer be eligible for tax benefits beginning in 2018, including transportation fringe benefit plans, adoption assistance plans, qualified moving-expense reimbursement arrangements, employee achievement awards, and Archer medical savings accounts."
Ballard Spahr LLP

Executive Compensation
and Nonqualified Plans

Holy Cow! Proposed Tax Bill Would Turn Executive Compensation on Its Head
"The bill would eliminate Code Section 409A effective next year and come up with a new 409B that essentially applies the 457 approach of taxable when vested."
Winston & Strawn LLP

Proposed Tax Bill Has Little Impact on 401(k) Plans But Has Sweeping Changes to Nonqualified Deferred Comp
"[U]nder the new legislation, all nonqualified deferred compensation would become taxable when vested.... Deferred compensation relating to services performed before 2018 would continue to be subject to the current rules until 2025. At that time, even these grandfathered deferrals would become subject to the new tax-on-vesting rule."
Mazursky Constantine LLC

Passage of the Tax Cuts and Jobs Act Would Mean the End of Executive Comp as We Know It
"If enacted, the newly proposed Tax Cuts and Jobs Act would effectively put an end to many of the most widely used forms of executive compensation: Deferred compensation and stock options would disappear. Use of performance-based compensation would be severely limited. Compensation over $1 million to senior executive officers would be nondeductible for public companies and subject to an excise tax for tax-exempt organizations."

Tax Bill Would Change the Face of Executive Compensation
"The draft would amend Code Section 162(m) (the $1 million pay cap) to eliminate the exemption for performance-based compensation. In addition, that section would be amended to cover the Chief Financial Officer in addition to the Chief Executive Officer. Code Section 409A would be repealed (you thought that was good news, didn't you?) and replaced with a new Code Section 409B. Essentially, 409B as drafted would apply the much more stringent taxation upon vesting rules that have previously applied generally only to 457(f) plans."
Benefits and Compensation with John Lowell


How Will Employees React If Peer Group Comparisons Are in Your CEO Pay Ratio Proxy Disclosure?
"[A] recent ISS Position Paper [recommends] companies include in their disclosure a comparison to peer group disclosures.... [T]aking an approach that focuses solely on placing the pay ratio in context for shareholders is likely at odds with the message companies want to communicate to their employees, which they've expressed to be their biggest challenge regarding the pay ratio ... [BLS] data used in the ISS position paper greatly overstate employee pay levels, and should not be used to compare pay ratios published in company proxies."
Willis Towers Watson

on the BenefitsLink Message Boards

Late Form M1 Filings for MEWAs: Penalties Assessed in Practice?
Client has had a MEWA since 2008. No Form M1 ever filed. Client wants to have examples of penalties others have faced in similar situations, when Form M1s are filed late. DOL will only state the worst that could happen.
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BenefitsLink Health & Welfare Plans Newsletter, ISSN no. 1536-9595. Copyright 2017, 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, 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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