Health & Welfare Plans Newsletter

November 8, 2017

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Jobs

Senior Qualified Plan Administrator
Central Ohio Benefits Firm
in OH

Retirement Plan Administrator
TPA Firm in Jacksonville, FL
in FL

401k Service Administrator
Retirement Direct
in NC

Operations Specialist
Goldleaf Partners
in MN

Retirement Distribution Processor III
Alerus Financial
in MN

►See 154 Jobs

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Webcasts, Conferences

Legislative Updates: A Look Back at 2017 and Forward to 2018
November 16, 2017 in GA
Worldwide Employee Benefits Network [WEB] - Atlanta Chapter

First Annual ISCEBS and WEB Joint Networking and Social Event
November 16, 2017 in MD
Worldwide Employee Benefits Network [WEB] - Baltimore Chapter

FMLA Compliance Review: Step-by-Step Guidance to Reduce Employee Abuse & Minimize Potential Employer Liability
December 5, 2017 WEBCAST
HRWebAdvisor

Complying with the FMLA and ADA When Your Employee Suffers from a Mental Health Condition
December 13, 2017 WEBCAST
Franczek Radelet PC

Providing Guidance for Employees in Health Care Benefits Selection
January 9, 2018 WEBCAST
Lorman Education Services

Affordable Care Act Employer Reporting for 2017 Still Required: Update on Forms and Changes
January 16, 2018 WEBCAST
HRWebAdvisor

Nuts and Bolts of Executive Compensation
RECORDED
American Bar Association Joint Committee on Employee Benefits [JCEB]

►See 109 Upcoming Webcasts and Conferences

►See 1327 Recorded Webcasts


Discussions

New Topics on the BenefitsLink Message Boards

New Comments and Topics

All Topics, Grouped by Forum


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[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]

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[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]

IRS Offers Comprehensive Guidance on Small Employer HRAs
"The IRS's new guidance -- 79 questions and answers in Notice 2017-67 -- applies to QSEHRA plan years beginning on or after Nov. 20, 2017. The guidance answers questions such as: [1] when is an employer eligible to sponsor a QSEHRA; [2] how does an employer identify employees who are eligible to receive reimbursement; [3] how must an employer substantiate claims; and [4] how should an employer report QSEHRA coverage on federal W-2 forms?"
Lockton

[Guidance Overview]

Bill Expanding Coverage Under the NYC Earned Sick Time Act Signed Into Law
"The amendments take effect on May 5, 2018 (180 days from the date of signing) ... [The amendments extend] leave protections under the law to include situations where an employee or an employee's covered family member is a victim of domestic violence, sexual offenses, stalking or human trafficking as defined in the bill ('safe time')."
Proskauer

[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

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Text of Amicus Brief to Supreme Court on Vesting of Retiree Health Benefits
28 pages. "Employers and employees cannot meaningfully bargain or reliably plan for the future in the chaotic legal landscape the Sixth Circuit has created. The massive unexpected costs and unpredictable benefits packages that will result (and, indeed, have already resulted) hurt employers and retirees alike.... [T]he Sixth Circuit's effective presumption in favor of vested, frozen-in-time benefits makes it more difficult for parties to achieve the flexibility they intended. Moreover, the Sixth Circuit's outlier rule will undoubtedly result in large-scale forum shopping." [CNH Industrial N.V. v. Reese, No. 17-515, cert. pet. filed Oct. 3, 2017; appeal from Reese v. CNH Industrial N.V., No. 15-2382 (6th Cir. Apr. 20, 2017)]
Chamber of Commerce of the United States of America, National Association of Manufacturers, American Benefits Council, and Business Roundtable

Workflex in the 21st Century Act Could Modernize ERISA with Telecommuting, Job-Sharing, and More
"[T]he Workflex in the 21st Century Act ... would allow employers to create an ERISA plan, known as a qualified flexible workplace arrangement plan, to offer employees a combination of guaranteed paid leave and increased work flexibility options. If an employer elects to offer a plan, the employer would be required to offer full-time and part-time employees at least a guaranteed minimum level of paid leave, basing the amount on both the employer's size and the amount of service the employee had provided to the company."
Ogletree Deakins

Employer Premiums Rise Nearly 7% in 2017 as Employees Absorb More of Health Insurance Cost
"Almost three-quarters (72.6%) of prescription drug plans have four or more tiers, while 27.4% have three or fewer tiers. Even more surprising is that the number of six-tier plans has surged, accounting for 32% of all plans, when only 2% of plans were using this design only a year ago."
Wolters Kluwer Law & Business

Humana Files Suit to Recover Hundreds of Millions in Risk Corridor Payments
"The Humana case follows a string of similar lawsuits over the past year alleging that the government violated Section 1342 of the [ACA] and breached an 'implied-in-fact' contract by failing to make risk corridor payments for 2014, 2015, and 2016. Humana seeks damages and other relief, including an award of interest on unpaid payments, litigation expenses, and attorney's fees."
Carlton Fields

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QSEHRA Revives Opportunity for Small Business HRAs
"The primary appeal of the QSEHRA for most small business owners is that it's a way to provide employee 'health benefits', without taking on the full burden -- and cost uncertainties -- of offering group health insurance. Instead, employers can control their costs by explicitly setting a monthly dollar amount that becomes available to employees for reimbursement, avoiding payroll taxes on any dollars actually spent, and keeping any unused QSEHRA dollars that aren't actually claimed by employees as a reimbursement ... QSEHRA benefits are not available for most small business owners themselves, though with the above-the-line deduction for health insurance premiums for small business owners, the QSEHRA would often be a moot point anyway."
Nerd's Eye View

What Do Young Workers Think About Student Loan Repayment Benefits?
"Of those who received a student loan benefit, a stark majority (93 percent) make additional payments on their student loans.... 23 percent said they would give up basic healthcare benefits for a student loan repayment benefit.... 33 percent said they would give up access to retirement benefits now if it meant receiving a student loan repayment benefit.... 38 percent would give up dental care benefits.... Surprisingly, a large group (46 percent) would give up paid time off."
Millennial Personal Finance

Some States May Want to Change Obamacare Benefits
"Beginning in 2019, states could annually set benchmark essential health benefits that health plans are required to cover under the [ACA] by basing them on coverage available in other states under the [HHS proposed] Notice of Benefit and Payment Parameters for 2019 ... Wisconsin is considering filing a waiver under Section 1332 of the ACA, and it could consider making changes to its essential health benefits package in that context ... Oklahoma may resubmit a 1332 waiver, and state officials are studying the 2019 payment notice proposal ... Prescription drugs may be the most likely category to undergo changes in benefits[.]"
Bloomberg BNA

CBO to Publish Updated Estimate of Effects of Repealing the Individual Mandate
"CBO will publish an updated estimate of the effects of repealing the individual mandate ... In that document, CBO and the staff of the Joint Committee on Taxation estimate that repealing that mandate starting in 2019 would reduce federal budget deficits by $338 billion between 2018 and 2027 relative to CBO's most recent baseline.... The agencies are in the process of revising their methods to estimate the repeal of the individual mandate. However, because that work is not complete and significant changes to the individual mandate are now being considered as part of the budget reconciliation process, the agencies are publishing this update without incorporating major changes to their analytical methods."
Congressional Budget Office [CBO]

[Opinion]

American Academy of Actuaries Comment Letter to DOL, HHS and Treasury on Association Health Plans, Short-Term Limited-Duration Insurance, and Use of HRAs (PDF)
"The extent to which broader access to [association health plans (AHPs)] could result in market segmentation and adverse selection in ACA-compliant markets depends on many factors ... How would the employer mandate rules apply to employers providing coverage through an AHP?.... If access to AHPs is expanded at any time during 2018, premiums for ACA-compliant plans could be understated to the extent that AHPs attract a healthier enrollee population, worsening the risk profile of the ACA-compliant markets.... [A]ll AHPs, both self-funded and fully insured, would need to be subject to state-level consumer protection laws."
American Academy of Actuaries

Benefits in General

Text of Fifth Circuit Opinion Rejecting Insurer's Argument That Discretionary Authority Transfers to SPD (PDF)
"The Summary Plan Description explains that certain benefits offset the long-term disability benefit amount, including '[p]ension benefits from a Verizon pension plan, if [the beneficiary] elect[s] to receive them.'... MetLife argues that selecting a trustee-to-trustee transfer constitutes 'electing to receive' pension benefits, while Thomason argues that such a transfer cannot be an election to receive the funds because he has no control over them ... We do not reach the actual meaning of 'elect to receive' under the Plan. Instead, we determine that the Summary Plan Description is ambiguous and thus we construe it in Thomason's favor." [Thomason v. MetLife, No. 16-10634 (5th Cir. July 18, 2017)]
U.S. Court of Appeals for the Fifth Circuit

New ERISA Disability Claims Procedures: Action Steps for Plan Sponsors (PDF)
"[T]he requirement that a plan administer may not prevent a claimant from seeking court review for failure to exhaust administrative remedies appears to open the door to more proceedings. The regulations suggest that in this instance, a court should apply a de novo standard of review ... This alone may provide incentive for claims administrators to ensure timely and accurate reviews."
Boutwell Fay LLP

Accounting for Pensions and Other Postretirement Benefits, 2017 (PDF)
28 pages. "At fiscal year-end 2016, the average discount rate used to calculate the present value of pension obligations decreased to 4.03%, compared with the 2015 rate of 4.33%.... The average projected benefit obligation (PBO) funded status (plan assets/PBO) was 81% at fiscal year-end 2016, a minor uptick from the 2015 level of 80%.... The fiscal year-end 2016 discount rate for other postretirement benefits ranges from 2.84% to 6.63% in the current survey, with an average of 4.04%. At fiscal year-end 2015, discount rates for companies included in this year's report ranged from 3.25% to 6.47%, with an average value of 4.28%."
Willis Towers Watson

New Tax Reform Bill: Major Changes to Executive Compensation Lead Impact on Benefits and Compensation Practices (PDF)
9 pages. "Employers that have used nonqualified deferred compensation plans to attract and retain highly compensated employees ... would need to consider alternatives to achieve their goals ... With the possible exception of incentive stock options, there would appear to be no reason for employers to grant stock options or stock appreciation rights.... [R]ule changes would ease the ability of employees to take hardship withdrawals and would reduce some of the complexity in administering hardship withdrawals.... As a taxable contribution, [Dependent Care FSAs] would be effectively eliminated as they would have no value to employees.... The Tax Bill does not eliminate Health Care Flexible Spending Accounts."
Mazursky Constantine LLC

Tax Reform Proposal Would Impact Savings Arrangements
"The Ways and Means Committee continues to make changes to the bill before the House of Representatives votes on it. The vote was expected to occur during the week of November 13, 2017, but may occur earlier. Meanwhile, the Senate is working on a tax reform bill of its own. Although the legislative process is still ongoing, [this article provides] a summary of the more significant provisions from the initial proposal that could become law and affect tax-favored savings arrangements."
Ascensus

Executive Compensation
and Nonqualified Plans

House Bill Could Prompt the Most Significant Changes in Pay Plan Design in a Generation
"The proposal would do away with the performance-based compensation exception to the $1 million pay cap under current Code Section 162(m).... Without the need to meet the performance-based pay exception, companies would no longer need to get shareholder approval of their plans for 162(m) purposes, nor would compensation committees need to set performance goals within the first 90 days of the performance period. They also would no longer be limited to using negative discretion only in making their bonus and LTI payout determinations."
Willis Towers Watson

Discussions
on the BenefitsLink Message Boards

Safe Harbor Notice to Each Terminated Participant with a Balance?
Is it OK if non-employee participants are not given an annual Safe Harbor Notice? It seems non-employees don't need to receive it but we've always mailed it to everyone with a balance. If there is a DOL audit we want to be sure to have sent out all of what was required.
BenefitsLink Message Boards

'Top Hat' Plan for Physicians' Corporation in Affiliated Service Group
A corporation wants to have a plan for its employees, all of whom are physicians. We ruled out the use of a qualified plan, because a lot of non-physicians working alongside the physicians but in a separate entity would be considered leased employees and/or part of an affiliated service group -- so any plan for just the physicians would fail nondiscrimination testing. We're stuck as to whether the corporation can have a nonqualified plan. In order to be a top hat plan, a plan must be for a select group of management or highly compensated employees, and it seems unlikely that a group consisting of all of the physician employees could be "select." Although the leased employees and common-law employees of another entity that's part of an affiliated service group with the corporation would be treated as employed by a single employer for Internal Revenue Code purposes, we're not seeing a similar provision under ERISA for top hat purposes. Thoughts?
BenefitsLink Message Boards

Press Releases

DOL Obtains a Temporary Restraining Order to Protect Participants and Beneficiaries of Failing MEWA
Employee Benefits Security Administration [EBSA], U.S. Department of Labor

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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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