Health & Welfare Plans Newsletter

December 22, 2017

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[Official Guidance]

Text of IRS Notice 2018-06: Extension of Due Date for Furnishing Statements and of Good-Faith Transition Relief Under Sections 6721 and 6722 for Reporting Required by Sections 6055 and 6056 for 2017 (PDF)
10 pages. "This notice extends the due date for certain 2017 information-reporting requirements for insurers, self-insuring employers, and certain other providers of minimum essential coverage under section 6055 ... and for applicable large employers under section 6056 ... [T]his notice extends the due date for furnishing to individuals the 2017 Form 1095-B, Health Coverage, and the 2017 Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, from January 31, 2018, to March 2, 2018. This notice also extends good-faith transition relief from section 6721 and 6722 penalties to the 2017 information-reporting requirements under sections 6055 and 6056." [The accompanying Information Release, IR-17-209 states: "This 30-day extension is automatic. Employers and providers don't have to request it. The due dates for filing 2017 information returns with the IRS are not extended."]
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.


Court Vacates EEOC Rules on Incentives for Disclosure of Medical and Genetic Information
"In September, the EEOC filed a status report stating that it ... [would not issue] a proposed rule addressing the issue until August of 2018 or a final rule until October of 2019 [and] that it did not expect to require employers to comply with a new rule before 2021.... Judge Bates, determined, however, that a year was ample time for the employers to adjust... [and] vacated the EEOC rule effective January 1, 2019. He further ordered the EEOC to promulgate any new proposed rules by August 31, 2018." [AARP v. EEOC, No. 16-2113 (D.D.C. Dec. 20, 2017)]
Timothy Jost in Health Affairs

Paying for Employee Parking? No Longer Deductible under Tax Legislation
"For-profit employers that deduct expenses may not deduct costs for employee parking.... [E]mployers that do not deduct expenses (i.e., tax-exempt and governmental entities) will be subject to unrelated business taxable income on the expenses they incur for employee parking.... [A]ny employer that pays for or offsets the cost of employee parking is faced with the tough decision of incurring taxable expenses or passing the cost on to employees."
Carlton Fields

Tax Reform Law Includes Paid Leave Provisions
"Section 13403 of the Act offers businesses a tax credit if they offer up to 12 weeks of paid family leave to certain eligible workers. Eligible employers must have a written policy that provides not less than two weeks of annual paid family and medical leave for full-time employees, and a pro-rata amount provided at the same ratio for part-time employees. The policy must provide payment at a rate not less than 50 percent of the wages normally paid to employees on leave."
Fisher Phillips

Drug Industry Spent Millions to Squelch Talk About High Drug Prices
"PhRMA spent $7 million last year to prepare its ubiquitous 'Go Boldly' ad campaign and gave millions to politicians who were up for election in both parties in dozens of states. It lavished more than $2 million on scores of groups representing patients with various diseases -- many of them dealing with high drug costs.... The group also aimed dollars at states where policymakers were considering drug-related measures such as price limits or greater price transparency[.]"
Kaiser Health News

[Advert.]

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Subscribe to the new, free Message Boards Digest, sent daily by email. You'll see all of the new topics on the BenefitsLink message boards. (Some topics are included in the BenefitsLink newsletters, but many are not.) View a recent, sample issue -- and sign up here.


FDA Chief Says He's Open to Rethinking Incentives on Orphan Drugs
"The nearly 35-year-old law created incentives for companies to develop 'orphan drugs' considered not financially viable because they treat rare diseases affecting fewer than 200,000 people. Those incentives include a waiver on millions of dollars in fees, seven years of market exclusivity and a tax break for research and development expenses.... Today, orphan drugs often carry six-figure price tags and pharmaceutical companies readily develop them. In 2016, 41 percent of the new drugs approved by the FDA were orphans. And 2017 is on track to be a record year."
Kaiser Health News

Medicare Premium, Deductible and Coinsurance Numbers for 2018
"The standard Part B premium will remain at $134 for 2018.... The annual deductible for all Medicare Part B beneficiaries will be $183.00, the same as for 2017.... The Part A deductible and coinsurance will increase by 1.83 percent."
Segal Consulting

Another U.S. Judge Blocks Trump Administration Birth Control Rules
"U.S. District Judge Haywood Gilliam Jr. in Oakland, California, said the federal government likely did not follow proper administrative procedures in promulgating the new rules, and put them on hold while a lawsuit challenging their legality proceeds. The decision followed a similar ruling from a federal judge in Philadelphia last Friday that blocked the administration from enforcing rules it announced in October allowing businesses or nonprofits to obtain exemptions on moral or religious grounds."
Reuters

[Opinion]

Funding for State Reinsurance Programs Can't Replace Individual Mandate
"[Sen. Susan Collins of Maine] has proposed to provide $5 billion of federal funds in each of 2019 and 2020 for state reinsurance programs and let states secure additional federal funds through waivers -- providing up to roughly $10 billion in total federal funding for each of those years.... [If] states fully tapped [those] federal dollars ... [that] could temporarily reverse the individual market premium increases that repealing the mandate will generate. But the funding would end after 2020[.]"
Center on Budget and Policy Priorities

[Opinion]

What the New Tax Law Likely Will and Won't Do to the Nation's Health Care
"As many of us have speculated about what insurers will do regarding future exchange participation, Jeff Young from the Huffington Post actually called a bunch of them. None have said they were running straight for the exits, but many sound very cautious about the 'big mess' ahead sans mandate."
Association of Health Care Journalists

[Opinion]

The Reality of Obamacare for the Middle Class Small-Business Owner
"Obamacare put self-employed small-business owners and their employees between a rock and a hard place. While the plans on the exchanges are renewable, they're outrageously expensive and consist of very narrow provider networks. The cheaper alternative is purchasing a short-term limited duration plan. The tradeoff is, under Obamacare, there's no guarantee your short-term plan will renew."
The Heritage Foundation

Benefits in General

Senate Confirms EBSA Head, Two SEC Commissioners
"The Senate on Thursday confirmed Hester Peirce and Robert Jackson as new commissioners for the [SEC] and Preston Rutledge as assistant secretary of labor for the Employee Benefits Security Administration. The approvals came in voice votes during an executive session before the chamber left for the year."
Pensions & Investments

2018 Benefit Reporting and Disclosure Requirements, and Statutory Limitations (PDF)
Chart provides a handy listing of disclosure requirements and deadlines, and related 2018 information for retirement and health and welfare plans. A companion chart details the statutory limits applicable to benefit plans.
Willis Towers Watson

When Amending a Plan, Tell the Truth or Pay the Consequences
"The district court found that the communications to employees [about a 1996 modification of its pension plan to become a cash balance plan, causing a suspension of benefit accruals for four to five years for several thousand participants] were intentionally false and misleading ... You have to ask why this case did not settle. Well before trial, Foot Locker surely knew the facts were not favorable, and the plaintiffs also must have been concerned about serious legal issues.... There were legitimate limitations period issues. Compromise on technical actuarial factors (interest rates and mortality tables) might have been reasonable. The plaintiffs might have yielded on the windfall issue.... It might be difficult to find employment records back to 1996 ... But perhaps 'principle' took over.... This loss will cost Foot Locker [$180 million]." [Osberg v. Foot Locker, Inc., No. 15-3602 (2d Cir. July 6, 2017; cert. pet. filed Nov. 8, 2017)]
Bob Blum Mediation

Insurance Agents Held to Be Employees for ERISA Purposes
"Agents who are supposedly independent are not like franchisees who must follow all of the franchisor's rules.... Insurance companies may also want to consider: [1] Carving out agents they deem to be independent contractors from ERISA plans; [2] Not referring to agents as employees in training and personnel manuals; [3] Adding a term to agents' agreements expressly stating when the agreement will be renewable; [4] Allowing the agents to control their book of business, or, at the very least, having discretion in selling their agency and in writing business for other insurance carriers."
Vorys, Sater, Seymour and Pease LLP, via FORC

Executive Compensation
and Nonqualified Plans

[Guidance Overview]

Tax Legislation Includes Significant Executive Comp and Employee Benefits Provisions (PDF)
27 pages. "The Conference Report confirms that compensation paid pursuant to a plan qualifies for the exception under the transition rule, but only if the right to participate in the plan is part of a written binding contract with the covered employee in effect on November 2, 2017.... Additional questions may arise regarding plans or agreements that may be terminated prospectively and what portion of the deferred compensation accrued under the plan or agreement after the effective date is grandfathered.... The new Section 4960 21% excise tax would add a significant financial and administrative burden on tax-exempt organizations with highly compensated employees."
EY

Congress Delivers Bundle of Executive Comp and Employee Benefits Changes for the Holidays
"[P]ublic company employers should note that gain on stock options, previously exempt as performance-based compensation, will now be included in the $1 million deduction limit. There may be opportunities to circumvent these restraints with incentive stock options.... [E]mployers should analyze whether they can rely on the exemption for contracts that were in effect before November 2, 2017, and ensure that they do not take any actions to materially modify arrangements that do qualify for such exemption."
Akerman LLP

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David Rhett Baker, J.D., Editor and Publisher  davebaker@benefitslink.com
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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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