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New York Employers Must Report Dependent Health Insurance Benefits

Beginning with the third quarter of 2011, New York employers must report whether dependent health insurance benefits are available to new hires. Currently, New York employers must report certain identifying information about new hires, such as the employee?ÇÖs name and social security information within 20 calendar days following an employee?ÇÖs date of hire. Under the new law, employers must now also report whether dependent health insurance benefits are available to the employee and, if so, the date the employee qualifies for the coverage. New York employers should work with their human resources and payroll departments to ensure that they are in compliance with these new reporting requirements. Information about this requirement is available on the New York Department of Taxation and Finance website.

Restricted Annual Limits of Health Reform Do Not Apply to Stand-Alone HRAs

The Department of Health and Human Services recently issued a class exemption exempting health reimbursement arrangements (HRAs) in effect prior to September 23, 2010 from compliance with PPACA?ÇÖs restricted annual limit requirements until January 1, 2014. As a result, HRAs do not have to apply for waivers from the restricted annual limits of $750,000 in 2011, $1.25 million in 2012, and $2 million in 2013. A copy of the class exemption is available here.

Proposed Rules on Summary of Benefits and Coverage Provision UnderHealth Reform

The U.S. Departments of Labor, Health and Human Services, and Treasury recently issued proposed regulations regarding the provisions of the Patient Protection and Affordability Care Act that require: (1) group health plans and health insurance issuers to provide a summary of benefits and coverage ( ?Ç£SBC?Ç¥ ) to participants and beneficiaries, and (2) group health plans and health insurance issuers to make available to participants and beneficiaries a uniform glossary of terms commonly used in health insurance coverage. The proposed rules describe when the SBC and glossary must be provided, as well as the content, form and manner of disclosure of the SBC and glossary. The regulations are available here. A fact sheet on the regulations is available here. The proposed template for the SBC is available here.

HHS Issues Guidance on Affordable Insurance Exchanges

The U.S. Department of Health and Human Services (HHS) recently issued proposed regulations to address the implementation of certain functions of the new Affordable Insurance Exchanges, to be established by 2014. Beginning in 2014, individuals and small business will be able to purchase private health insurance through the State-based exchanges. Specific exchange functions in the proposed regulations include: eligibility determination for exchange participation and insurance affordability programs (including specific rules on the process for determining eligibility, verification, and eligibility redetermination, and the administration of advance payment of the premium tax credit), and standards for employer participation in the Small Business Health Options Program. The proposed regulations apply to taxable years ending after December 31, 2013. HHS is taking comments until October 31, 2011. A copy of the regulations is available here.

Seventh Circuit Requires Arbitration in Withdrawal Fee Assessment Dispute

The U.S. Court of Appeals for the Seventh Circuit reinforced ERISA?ÇÖs requirement that employers must pursue arbitration to completion, if they want to challenge an assessment of withdrawal liability. The court ruled that an employer was required to continue to arbitrate with a multiemployer pension fund its dispute regarding an increase in withdrawal liability, even though a district court previously ruled that the employer was not required to pay the higher amount of liability while awaiting completion of arbitration. The court found that regardless of earlier court rulings, an employer must exhaust the arbitration process before it can ignore a fund?ÇÖs reassessment demands for increased withdrawal liability payments. National Shopmen Pension Fund v. DISA Industries, Inc., No. 10-1827 (7th Cir. Aug. 8, 2011).

Eighth Circuit Holds One-Person Severance Agreement Cannot be ERISA Plan

In a dispute over severance benefits under an employment agreement, the U.S. Court of Appeals for the Eighth Circuit recently held that an ?Ç£individual contract providing severance benefits to a single executive employee?Ç¥?ácould not be a?áwelfare plan subject to ERISA.?á Dakota, Minnesota & Eastern Railroad Corp. v. Schieffer, No. 10-2484 (8th Cir. Aug. 11, 2011).?á The court reasoned that the use of plural?áwords in ERISA?ÇÖs definition of ?Ç£employee welfare benefit plan?Ç¥ indicated that Congress intended ?Ç£that a covered ?Çÿplan?ÇÖ is one that provides welfare benefits to more than one person.?Ç¥?á It is unclear whether the Eighth Circuit would apply the same ?Ç£plural words?Ç¥ reasoning to the definition of ?Ç£employee pension benefit plan?Ç¥ under ERISA.?á The Eighth Circuit?ÇÖs decision is surprising because it appears to conflict with long-standing decisions by the Fourth, Seventh, and Eleventh Circuits.?á See, e.g., Biggers v. Wittek Indus., 4 F.3d 291, 297 (4th Cir. 1993) (holding that… Continue Reading

Purchase Agreement’s Forum Selection Clause Controls Severance Plan Dispute

A recent decision in District of Minnesota serves as a good reminder to buyers and sellers in corporate transactions to understand that the terms of the purchase agreement can have broad reaching implications outside of the transaction.?á The buyer in the case had agreed in the stock purchase agreement (“SPA”) to assume the liabilities under the seller’s severance policy.?á When an employee who was terminated post-closing was denied severance benefits, he sued the buyer in the United States District Court for the District of Minnesota.?á The court applied the forum selection clause from the stock purchase agreement and granted the defendant’s motion to move the forum to the Northern District of Illinois, holding that since the assumption of severance liabilities was in the SPA, the forum selection clause in the SPA should apply.?á See Drapeau v. Airpax Holdings, Inc. Severance Plan, No. 11-64(DWF/JSM) (D.Minn. July 27, 2011).

California Clarifies Organ/Bone Marrow Leave Rules

California?á enacted a new law on August 3, 2011?á to clarify a law enacted in 2010 that allows employees to take leave to donate an organ or bone marrow.?á The new law clarifies the following: (1) the 30-day leave?á period over a one-year period for organ donation, and the five-day leave period over a one-year period for bone marrow donation, are business days not calendar days, and the one-year period is 12 consecutive months rather than a calendar year; (2) employees must provide employers with written verification of the donation and its medical necessity; (3) employers may condition the leave on employees taking up to five days of earned but unused sick leave, vacation or paid time off for a bone marrow donation, and up to two weeks of such leave for organ donation; (4) the leave may not be taken concurrently with FMLA leave; (5) collective bargaining agreements or… Continue Reading

New York Issues More Guidance on Tax Impact of the Marriage Equality Act

The New York State Department of Taxation and Finance recently issued new guidance on how the state’s Marriage Equality Act, which is effective beginning July 24, 2011, impacts employee personal income taxes and employer reporting and withholding requirements.?á With respect to employees, the new guidance provides that same-sex married couples must file New York personal income tax returns as married, even though their marital status is not recognized for federal tax purposes.?á Same-sex married couples should complete the New York personal income tax return by using their federal tax return, recomputed?áusing a married filing status.?á With respect to withholding, employers are advised not to withhold New York tax on the value of?ábenefits that are provided to same-sex married couples (e.g., health benefits), even though such benefits?á?áwhen provided to a same-sex spouse are generally subject to federal withholding.?á As for reporting annual?áincome on Form NYS-45, employers are instructed to report federal… Continue Reading

Connecticut Passes Law Mandating Paid Sick Leave

The Connecticut legislature recently passed Public Act 11-52 which, effective as of January 1, 2012, will require most employers that employ 50 or more individuals in Connecticut to provide certain employees with paid sick leave accruing at a rate of one hour per 40 hours worked, up to a maximum of 40 hours of sick leave in a calendar year.?á The law provides paid sick leave to “service workers” who are paid hourly and work in one of the various occupation categories identified in the law.?á Exceptions are made for certain manufacturing entities and tax-exempt nationally chartered organizations which provide services in recreation, child care, and education, as well as for employers with respect to day or temporary workers and non-hourly salaried professionals.?á Employers are deemed in compliance if they provide other leave (e.g., vacation, personal days or time off) that accrues as quickly as required under the law and… Continue Reading

August 2011