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IRS Solicits Comments Regarding Transportation Fringe Benefits

The IRS issued Notice 2012-38 soliciting public comments on what additional guidance may be needed surrounding an employer?ÇÖs provision of transit benefits in light of changes in technology in transit benefit administration. Notice 2012-38 can be found here.

Final Regulations Issued on Premium Tax Credits under Health Reform

The IRS recently issued Final Regulations regarding the Internal Revenue Code Section 36B health insurance premium tax credit which was enacted by the Patient Protection and Affordable Care Act (?Ç£PPACA?Ç¥). The Final Regulations provide guidance to (1)?áindividuals who enroll in qualified health plans through Affordable Insurance Exchanges (?Ç£Exchanges?Ç¥) and claim the premium tax credit, and (2)?áExchanges that make qualified health plans available to individuals and employers. The Final Regulations clarify topics in the proposed regulations including rules on whether coverage is ?Ç£affordable?Ç¥ for an employee for a plan year and the impact of automatic enrollment. The Final Regulations apply to taxable years ending after December 31, 2013, and can be found here.

HHS Issues Final Regulations Expanding Medical Loss Ratio Notice Requirements

The U.S. Department of Health and Human Services issued final regulations requiring health insurers that meet or exceed the medical loss ratio (MLR) standards established under the Affordable Care Act to provide enrollees with a notice describing the MLR standards and explaining that the insurer met or exceeded those standards. Previously, the notice requirements only applied to insurers who owed rebates because they failed to meet the MLR standards. This notice must be provided with the first plan document provided to enrollees on or after July 1, 2012. A copy of the regulations is available here.

Departments Release Additional FAQs on Summary of Benefits Coverage Requirement

On May 11, 2012, the U.S. Departments of Labor, Health and Human Services and the Treasury issued Part IX in the set of FAQs addressing implementation of the Affordable Care Act. The latest FAQs answer additional questions that were raised in connection with the Final Rules regarding the Summary of Benefits and Coverage (?Ç£SBC?Ç¥). For group health plan coverage, the Final Rules provide that, for disclosures concerning participants who enroll or re-enroll through an open enrollment period (including late enrollees and re-enrollees), the SBC must be provided beginning on the first day of the first open enrollment period that begins on or after September 23, 2012. For disclosures with respect to participants who enroll in coverage other than through an open enrollment period (including individuals who are newly eligible for coverage and special enrollees), the SBC must be provided beginning on the first day of the first plan year that… Continue Reading

Eleventh Circuit Holds No Fiduciary Breach in ESOP Stock Drop Case

The U.S. Court of Appeals for the Eleventh Circuit affirmed dismissal of the claim by plan participants that The Home Depot had violated its fiduciary duties with respect to the ESOP by continuing to offer employer stock as an investment option after certain accounting adjustments caused earnings to be restated and the stock price to fall. Although ultimately the Eleventh Circuit upheld the district court’s decision, it overruled the district court on several points. First, the district court had determined that the plaintiffs’ prudence claim was really a diversification claim in disguise (ESOPs are exempt from the diversification requirement). Alternately, the district court had held that even if the claim were properly a prudence claim, the claim would fail because the participants did not allege that The Home Depot was on “the brink of financial collapse.” The Eleventh Circuit determined that this was a prudence claim, not a diversification claim.… Continue Reading

Seventh Circuit Holds 10% Tax Applies to IRA Withdrawal Following Rollover

At age 56, a partner left his law firm and elected to roll his balance in the firm 401(k) over into an IRA. Subsequently, he took a pre-age 59?? distribution from the 401(k) and was assessed with the additional 10% tax. The U.S. Tax Court upheld the additional 10% tax. The U.S. Court of Appeals for the Seventh Circuit upheld the Tax Court. The court held that the taxpayer would not have been subject to the 10% tax if he had taken the distribution directly from the 401(k) plan upon termination because of the exception in section 72(t)(2)(A)(v) of the Internal Revenue Code for post-separation distributions to an employee who has attained age 55, but because he chose to roll over his balance, the exception no longer applied to a distribution from an IRA. Kim v. Comm’r of Internal Revenue, No. 113390 -10 (7th Cir. May 9, 2012).

Department of Labor Issues FAQs on Retirement Plan Fee Disclosure Rules

The U.S. Department of Labor (“DOL”) recently issued Field Assistance Bulletin 2012-02 which includes FAQs to assist plan administrators and service providers in complying with their obligations under the final participant level fee-disclosure regulations which apply to plans permitting participant direction of investments, such as many 401(k) plans do. The 38-question set of FAQs provides additional information on topics such as the scope of covered individual account plans, the required plan-related information to be disclosed and the method of disclosure of plan-related information, disclosures related to managed accounts, brokerage windows and funds accounted for on a unitized basis. Because plan administrators and service providers may have furnished or already prepared to furnish initial disclosures before the date of publication of Field Assistance Bulletin 2012-02, the guidance provides that for enforcement purposes the DOL will take into account whether covered service providers and plan administrators have acted in good faith based… Continue Reading

IRS Updates Informational Webpage on W-2 Reporting of Health Coverage

The IRS updated its informational webpage on the Patient Protection and Affordable Care Act (“PPACA”) W-2 reporting requirement for the value of health coverage. The webpage includes a useful chart presenting various types of coverage and whether or not such coverage is required to be reported on the Form W-2. The chart can be accessed here.

Departments Issue FAQs on the Mental Health Parity and Addiction Equity Act of 2008

The U.S. Departments of Labor, Treasury, and Health and Human Services (collectively the “Departments”) issued a ten question set of FAQs addressing the Mental Health Parity and Addiction Equity Act of 2008 (“MHPAEA”). The MHPAEA generally requires employment-based group health plans and health insurance issuers that provide group health coverage for mental health/substance use disorders to maintain parity between such benefits and and medical/surgical benefits. The FAQs discuss topics such as who has responsibility for overseeing MHPAEA implementation, how plans may define mental health coverage, and how?áthe MHPAEA interacts with mental health mandates that have been imposed by various states. The FAQs can be accessed here.

In re Penthouse Executive Club: Can you Strip Away the Confidentiality of Litigation-Related Communications by Posting Them on Facebook?

If you are a plaintiff in a lawsuit, can you discuss the lawsuit with other plaintiffs on Facebook and keep these communications confidential??á What if the communications are between you and someone you hope will join the lawsuit but is not yet a party??á These questions were front and center before a District Court Judge in New Yorkregarding a class action wage and hour case under the Fair Labor Standards Act (?Ç£FLSA?Ç¥). ?áIn re Penthouse Executive Club Compensation Litigation involves allegations by a group of exotic dancers that the Penthouse Executive Club failed to, among other things, properly pay them overtime and their share of tips.?á As often is the case with FLSA matters, the named plaintiffs converted their lawsuit into a class or collective action.?á To do so, they obtained from the court the right to issue notice to other similarly situated strippers who were then able to opt… Continue Reading

May 2012