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Category Archives: Health and Welfare Plans

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Obama administration budget proposals could affect employee benefit programs

Posted in Health and Welfare Plans, Retirement Plans

The Obama administration recently released its budget proposals for Fiscal Year 2015 and as in past years those proposals contained a number of provisions that would affect employee benefit plans. A helpful explanation of the administration’s proposals can be found in the Administration’s Fiscal Year 2016 Revenue Proposals (sometimes referred to as the “Green Book”), which was issued by the Department of the Treasury.

A brief explanation of provisions contained in the proposed budget that affect employer benefit plans (directly or indirectly) are as follows:

1.    Revisions to child care tax incentives. Effective for taxable years beginning after December …

The Supreme Court unanimously says changes to retiree medical coverage a matter of contract analysis—but with a mild twist

Posted in Health and Welfare Plans

In what perhaps can be best described as a win for traditional contract analysis, the United States Supreme Court (the “Court”) issued an opinion on January 25, 2015 in M&G Polymers USA, LLC, et al. v. Tackett et al, that may permit M&G Polymers USA, a chemical company, to force its retirees to help pay for the cost of retiree medical coverage. While technically a unanimous decision, the Court’s opinion , which was authored by Justice Clarence Thomas, seems to prefer a stricter standard for this sort of contract analysis than what is set forth in a concurring opinion …

2015 is lurking: are your health and welfare and cafeteria plans up-to-date?

Posted in Health and Welfare Plans

The snow falling outside my window right now is a stark reminder that the end of 2014 is right around the corner. With 2015 approaching, employers should take a moment to ensure their health and welfare plans and cafeteria plans are up-to-date. While very few changes are mandatory, there have been several legal developments over the past year that present the opportunity to make design changes to these plans. So curl up by the fire with a hot cup of cocoa and those plan documents and review this list of potential year-end health and welfare and cafeteria plan amendments. And, …

Protected health information and health care plan design

Posted in Employment Issues, Health and Welfare Plans

On our sister blog — Employer Law Report — our partner Brian Hall wrote about the likely availability of an Alzheimer’s blood test, and the impact of new genetic testing in the context of employer sponsored group health care plans and wellness programs. Brian spoke of the “imaginary line” that separates protected health information from human resources decision-makers, supervisors and managers, and mentioned a plethora of employee protections, including HIPAA, GINA, ADA, and ERISA Section 510. The Patient Protection and Affordable Care Act also added another set of employee protections. Each of these laws sets forth different standards for burden …

Audits of Benefit Plan Financials – What They Are and Are Not

Posted in Health and Welfare Plans

Department of Labor investigations of employee benefit plans can be challenging experiences for employers. The time demand can be a significant drain on the business, and the employer needs to be concerned about potential issues the investigator may raise. We believe the best defense is a good offense: we like our clients to take their responsibilities seriously well before an investigation. But employers are sometimes surprised that an investigator asks questions that were not asked by the auditors who conducted independent financial statement audits over the years. As a JD/CPA (double geek) I can tell you this audit is only …

United States v. Windsor: Where Is My Money! Obtaining Tax Refunds for Same-Sex Spouse Benefits

Posted in Fringe Benefits, Health and Welfare Plans, Tax Issues

It is hard to believe that nearly five months have passed since the United States Supreme Court issued its landmark decision in United States v. Windsor. As a reminder, the Supreme Court held that the provisions contained in the Defense of Marriage Act (“DOMA”) that exclude same-sex relationships from the definition of marriage and spouse for federal law purposes (i.e., Section 3 of DOMA) are unconstitutional. The broad impact of this holding is clear: for purposes of federal law (e.g., ERISA, the Internal Revenue Code, etc.), same-sex marriages must be treated the same as opposite-sex …

HIPAA Model Notices of Privacy Practices Available: Procrastination Pays Off!

Posted in Health and Welfare Plans

You are probably getting sick of hearing about the September 23, 2013 deadline for compliance with the HIPAA omnibus rule, as we have posted several times about this over the past six months (click here, here, or here for more information). However, given that we have been hounding employers to take action to ensure compliance by this deadline, we thought it only fair that we inform you about a development that makes compliance a bit easier.

Just a few days ago, the U.S. Department of Health & Human Services (the “HHS”) issued model Notices of Privacy Practices that …

HIPAA Omnibus Rule – September 23, 2013 Deadline Reminder

Posted in Health and Welfare Plans

We hope you had a wonderful summer!  Back in May, we alerted our readers to the deadline for complying with the HIPAA Omnibus Rule:  September 23, 2013. That may have seemed like a long way off at the time, but here it is September already.  Health care plan sponsors who have not yet taken action to ensure compliance with the Rule need to make this a priority.  For example, plan sponsors may need to update and distribute new notices of privacy practices, revise and execute new and/or revised business associate agreements, and ensure that their privacy and security policies …

The Supreme Court Rejects Same-Sex Prohibitions in DOMA

Posted in Health and Welfare Plans, Retirement Plans

In a 5-4 opinion written by Justice Kennedy, the United States Supreme today held in United States v. Windsor that the provisions contained in the Defense of Marriage Act (“DOMA”) that exclude same-sex relationships from the definition of marriage and spouse for federal law purposes is unconstitutional as a deprivation of the liberty of persons that is protected by the Fifth Amendment of the Constitution of the United States. In doing so, Justice Kennedy has highlighted once again his role as a critical swing vote on the Court. He also has rendered a decision that seems likely to have far …

Summer is Coming, But Don’t Forget About the HIPAA Omnibus Rule

Posted in Health and Welfare Plans

Summer is right around the corner, so you are probably thinking about cookouts, pool parties, and vacations.  HIPAA is probably the furthest thing from your mind (if not, you probably wish it was).  However, before you book those beach vacations, do not forget to mark September 23, 2013 on your calendars, as this is the general deadline for compliance with the new HIPAA Omnibus Rule.

In a recent blog post, we explained how the HIPAA Omnibus Rule alters business associate agreement requirements.  Unfortunately for plan sponsors, the impact of these new rules extends beyond business associate agreements.  For example, …

HIPAA Omnibus Rule Alters Business Associate Requirements for Covered Entities, Business Associates, and Subcontractors

Posted in Health and Welfare Plans

Most covered entities (e.g., health plans and health care providers) are aware that they are obligated under HIPAA to have business associate agreements (“BAAs”) in place with their business associates who use or disclose protected health information (“PHI”) in carrying out their obligations to the covered entity (e.g., third-party administrators, claim processors, etc.). However, covered entities might not be aware that the Department of Health & Human Services (the “HHS”) recently issued the HIPAA Omnibus Rule, which alters the BAA content requirements (and makes other significant changes to HIPAA, which we will discuss in a …

Employer Excise Taxes Under Health Care Reform – Contraceptive Coverage Mandate, New Proposed Regulations and HHS Due Process and Privacy Report Deadline Was 1/1/13

Posted in Health and Welfare Plans, Health Care Reform

As you may have heard, the U.S Supreme Court denied Hobby Lobby an injunction against the PPACA contraceptive coverage mandate. Employers who maintain health care plans are required to pay excise taxes for failure to comply with a particular aspect of the law, regardless of whether coverage is affordable. As we previously explained, these nondeductible taxes are computed per affected individual, per day, and they may be substantial. Hobby Lobby will purportedly accrue taxes of $1.3 million per day if it continues to maintain its plan, but fails to provide the mandated coverage.

On December 28, the IRS issued

Circuit Decision Reminds Employers: Get Your Ducks in a Row at the EEOC Charge Stage and, for Goodness Sake, Know Your Own Policies

Posted in ERISA Litigation, Health and Welfare Plans

On our sister blog — Employer Law Report Sara Jodka analyzes a recent case — Gaglioti v. Levin Group, Inc. (6th Cir. Dec. 13, 2012), which serves as a good reminder to employers to pin down their reasoning for terminating an employee at the start, and stick to it.

In addition to his other claims, Gaglioti claimed that he was fired in response to the company’s fear of higher health costs for his wife, and that this was discriminatory under ERISA Section 510. Such a claim requires the plaintiff to establish “(1) prohibited employer conduct (2) taken for the …

Health and Welfare Plans Audits on the Rise, Are You Ready?

Posted in Health and Welfare Plans

While audits of qualified retirement plans have become commonplace, audits of health and welfare plans have historically been much less common. Only a select group of “lucky” employers was subjected to health and welfare plan audits, and the scope of those audits was somewhat limited. Unfortunately, it appears that trend is ending. We are seeing a notable increase in the frequency of health and welfare plan audits, and the scope of these audits is becoming much broader. Employers have rights, and the agencies have rules the auditors are required to follow. We encourage employers who receive a phone call or …

U.S. Airways, Inc. v. McCutchen: If you were the victim of a car accident, would you agree to a settlement that required you to pay?

Posted in Health and Welfare Plans

We are anticipating the upcoming oral arguments (November 27) and decision in U.S. Airways, Inc. v. McCutchen, a case at the United States Supreme Court. This case involves a situation where the employer-sponsored plan fronted the payment of health care costs a participant incurred in an automobile accident, on the condition that the participant repay any monies recovered. The case begs the question, “If you were the victim of a car accident, would you agree to a settlement that required you to pay?” The answer appears to be “no,” unless perhaps you were gambling $866 and refusing to repay …

Promising Health Care Plan Benefits in Excess of Plan Terms Can be More Costly Than Anticipated

Posted in Health and Welfare Plans

We occasionally hear that an employer wants to promise greater health care coverage than is provided under the plan terms, either in a sympathetic scenario, or to facilitate a separation. Unfortunately, this “generosity” can leave the employer obligated to provide costly benefits, without insurance coverage. 

Treating a Qualified Beneficiary on Short-term Disability as Continuing to be an Eligible Employee

Take, for example, Clarcor v. Madison National Life Insurance.  The employer maintained a self-funded health plan, and purchased a stop-loss policy.  The policy provided that coverage was limited to benefits paid in accordance with plan terms. Under the plan terms, …

Congress Finally Passes Pension Funding Stabilization Provisions

Posted in ERISA Fiduciary Compliance, Health and Welfare Plans

Now that the excitement (or was that dread?) surrounding the Supreme Court’s ruling upholding the constitutionality of the health care reform legislation has dissipated somewhat, it seems timely to talk a little about pensions. At long last, and after several stalled efforts, meaningful pension funding stabilization legislation was enacted this summer. Congress passed and President Obama signed the Moving Ahead for Progress in the 21st Century Act (one has to wonder who comes up with these names over in Congress). The act, also known as “MAP-21″, makes important changes to how the interest rates used in defined benefit pension plan …

Health Care Reform Survives Supreme Court Scrutiny – But Not Entirely Intact

Posted in Health and Welfare Plans, Health Care Reform

Health care reform just got a clean bill of health from the United States Supreme Court. The Court today ruled on the constitutionality of the Patient Protection and Affordable Care Act (“PPACA”), and generally upheld the legislation in a 5-4 decision written by Chief Justice John G. Roberts. Roberts was joined in his opinion by the four justices who had been appointed to the Court by Democratic presidents. In an expected development, certain individual justices wrote and/or joined concurring and dissenting opinions as well. The Court upheld the individual mandate to purchase health coverage, concluding that the mandate is permissible …

$2,500 FSA Limits: Employers with Non-Calendar Year Plans Can Breathe a Sigh of Relief

Posted in Fringe Benefits, Health and Welfare Plans

In a recent blog, we discussed the need for employers with non-calendar year health FSAs to act now to implement the new $2,500 FSA limits imposed under health care reform.  Thankfully, recent IRS guidance eliminates these concerns. 

The Patient Protection and Affordable Care Act requires plan sponsors to limit pre-tax health FSA contributions to no more than $2,500 for “taxable years” beginning after December 31, 2012.  This author, and many others, mistakenly (but I would argue rationally) believed that “taxable year” referred to the participant’s taxable year, which is generally the calendar year.  If that were the case, the …

Fee Disclosures Are Almost Here — What Should Plan Sponsors Do Now?

Posted in ERISA Fiduciary Compliance, Health and Welfare Plans

The quickly approaching deadline for written fee disclosures by covered service providers creates new homework for plan sponsors–in the form of enhanced fiduciary review obligations and a suggested need to review (and/or create) written service agreements.

By now folks who work in the tax-qualified retirement industry are well (and perhaps painfully) aware that the United States Department of Labor (“DOL”) issued final service provider fee disclosure regulations early this year.  As the deadline for service providers to provide the required disclosures (i.e., July 1, 2012) draws close, it seems like an opportune time to consider what plan sponsors …

Workforce Due Diligence Considerations When Purchasing a Company

Posted in Benefits Issues Related to Mergers and Acquisitions, Health and Welfare Plans

While in the heat of negotiating, dealmakers can overlook potentially costly exposure in a variety of areas, such as employee benefits. As explained by Becca Kopp in our sister blog, Employer Law Report, in Ohio, buyers may incur unanticipated liability for workers’ compensation obligations, regardless of what is set forth in the documentation. This may be the case where the deal is negotiated between two parties, and even where the buyer is acquiring through an intermediary bank or receivership. Accordingly, buyers are cautioned to make sure their due diligence related to employees is thorough.…

United States Supreme Court Declines to Review Sixth Circuit’s Rejection of Class Certification in ERISA Fee Case

Posted in ERISA Litigation, Health and Welfare Plans

The Supreme Court last week denied a writ of certiorari to review the Sixth Circuit’s rejection of class certification for a group of self-insured health plans alleging that their plan administrator charged them improper fees.

In Pipefitters Local 636 Insurance Fund v. Blue Cross Blue Shield of Michigan, No. 09-2607 (Aug. 12, 2011), the Sixth Circuit Court of Appeals reversed the district court’s decision to certify the class, which would have consisted of between 550 to 875 self-insured plans that entered into Administrative Services Contracts (“ASC’s”) with Blue Cross Blue Shield of Michigan (“BCBSM”). These services included payment of …

Implementing $2,500 FSA Limits for Non-Calendar Year Plans – Start Now

Posted in Fringe Benefits, Health and Welfare Plans, Health Care Reform

Beginning January 1, 2013, the Patient Protection and Affordable Care Act (“PPACA”) requires plan sponsors to limit pre-tax health flexible spending account (“FSA”) contributions to no more than $2,500 per calendar year. There are currently no limits on health FSA contributions. Thus, many employers have plan-imposed contribution limits in excess of the new $2,500 limit.  This change is anticipated to be a revenue-raiser.  Because the new limit is lower than most existing plan-imposed pre-tax FSA contribution limits, affected employees will pay taxes on more of their salary.

Given the January 1, 2013 effective date, many employers think they can wait …

The Early Retiree Reinsurance Program — Go Forth and Spend

Posted in Health and Welfare Plans, Health Care Reform, Retirement Plans

The Patient Protection and Affordable Care Act (“PPACA”) contained a provision that established the Early Retiree Reinsurance Program (“ERRP”), the goal of which was to encourage plan sponsors to retain health care coverage for retirees through at least 2013. The ERRP was designed to provide reimbursement to eligible sponsors of employment-based plans for a portion of the costs of providing health coverage to early retirees (and eligible spouses, surviving spouses and dependents of such retirees) during the period beginning on the date on which the program is established and ending on January 1, 2014. Under PPACA, $5 billion was appropriated …