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Transitional Relief from Employer Mandate for Mid-Size Employers Subject to Conditions

Final regulations issued by the U.S. Department of the Treasury regarding the employer shared responsibility provisions of the Affordable Care Act (the ?Ç£Act?Ç¥), also known as the ?Ç£play-or-pay?Ç¥ rules, delay the imposition of penalties until 2016 for employers that have between 50 and 99 full-time employees, provided that they meet certain eligibility conditions.?á To qualify for the transitional relief, mid-size employers must certify to the following: (1) that they employed on average between 50 and 99 full-time employees on business days during 2014, (2) that they did not reduce the size of their workforce or the overall hours of their employees during 2014 in order to meet the size requirement for this relief, and (3) that they did not eliminate or materially reduce health coverage during 2014 that was already offered to employees as of February 9, 2014.?á The regulations contemplate that these certifications will be made on the transmittal… Continue Reading

Final 90-Day Waiting Period Regulations are Issued, Allowing for Completion of Orientation Period as Eligibility Condition

The U.S. Departments of Health and Human Services, Treasury, and Labor (together, the ?Ç£Departments?Ç¥) issued final regulations, published on February 24, 2014 (the ?Ç£Regulations?Ç¥), regarding the 90-day waiting period limitation under the Act.?á Effective for plan years beginning on or after January 1, 2014, both grandfathered and non-grandfathered group health plans and insurers are prohibited from applying a waiting period for coverage that exceeds 90 days after the individual is otherwise eligible for coverage (the ?Ç£90-day Limit?Ç¥).?á With respect to the 90-day Limit, the Regulations generally adopt the proposed regulations issued in 2013 (which includes applying the 90-day Limit to plans that base eligibility on a minimum-hours-per-week or cumulative hours-of-service requirement). The Regulations also address the application of the 90-day Limit to breaks in service or coverage, and clarify that completion of a ?Ç£reasonable and bona fide?Ç¥ orientation period may be imposed as an eligibility condition under a plan. The… Continue Reading

Proposed Regulations Describe ?Ç£Reasonable and Bona Fide?Ç¥ Orientation Period for Purposes of the 90-Day Waiting Period Limit

Simultaneous to its issuance of the Regulations, the Departments issued proposed regulations providing that one month is the maximum allowed length of any ?Ç£reasonable and bona fide?Ç¥ orientation period. If a group health plan conditions eligibility on an employee?ÇÖs completion of a reasonable and bona fide employment-based orientation period under these proposed regulations, that eligibility condition would not be considered non-compliance with the 90-day Limit. The waiting period would begin on the first day after the orientation period. Compliance with the proposed regulations would constitute compliance with the Act at least through the end of 2014.?á A copy of the proposed regulations is available here.

Treasury Issues Final Regulations Regarding the Affordable Care Act?ÇÖs Employer Shared Responsibility Provisions

The Treasury Department issued final regulations that offer transitional relief for employers that are subject to the employer shared responsibility provisions of the Affordable Care Act, also known as the ?Ç£play-or-pay?Ç¥ rules. ?áIn particular, the play-or-pay penalties will not apply until 2016 for employers that have between 50 and 99 full-time employees.?á Additionally, large employers (i.e., those with 100 or more employees) can avoid penalties in 2015 by offering ?Ç£minimum essential coverage?Ç¥ (includes ?Ç£minimum value?Ç¥ and ?Ç£affordability?Ç¥ components) to at least 70 percent of their ?Ç£full-time employees.?Ç¥?á The previously-issued proposed regulations provided that employers with 50 or more full-time equivalent employees would be assessed penalties under the play-or-pay provisions if they failed to offer minimum essential coverage to at least 95 percent of their full-time employees starting in 2015.?á Under these final regulations, that rule does not go into full effect until 2016.?á The final regulations also offer guidance regarding… Continue Reading

New York Court Of Appeals Rules Contractual Limitations Period Unenforceable, Resolving Conflicting Policy Conditions In Favor Of Coverage

In a decision issued on February 13, the New York Court of Appeals ruled that a policy?ÇÖs contractual limitations provision requiring suit to be filed within two years of a loss is ?Ç£unreasonable and unenforceable?Ç¥ when the insured?ÇÖs property cannot be reasonably replaced (as necessary to fulfill a separate condition of coverage) within the two-year limitations period. Many commercial property policies offer insureds the option to recover the ?Ç£replacement cost?Ç¥ of lost or damaged property, but only if the property is actually repaired or replaced. If the property is not replaced, the insured may only be entitled to recover the ?Ç£actual cash value,?Ç¥ i.e., the replacement cost less depreciation. In Executive Plaza, LLC v. Peerless Insurance Company, a similar policy condition requiring replacement of damaged property conflicted with a separate policy term stating that no action could be maintained against the insurer unless brought within two (2) years after the… Continue Reading

Time is of the Essence to Begin Administering Measurement Periods

Under the employer shared responsibility provisions of the Affordable Care Act (the ?Ç£ACA?Ç¥), beginning as of January 1, 2015, an applicable large employer (?Ç£Employer?Ç¥) that (i) does not offer ?Ç£minimum essential coverage?Ç¥ under its group health plan to at least 95 percent of its full-time employees (?Ç£F-T Employees?Ç¥) and their eligible dependents (not including spouses), or (ii) offers minimum essential coverage to its F-T Employees that is either unaffordable or does not provide ?Ç£minimum value?Ç¥ (as determined under the ACA), will be subject to significant monetary penalties if any of the F-T Employees who qualify for a tax credit or a cost-sharing reduction purchases health insurance through an exchange established under the ACA. ?á To date, the IRS has issued only proposed rules regarding the employer shared responsibility provisions.?á For this purpose, ?Ç£employee?Ç¥ means a common law employee, and ?Ç£full-time?Ç¥ generally means an average of 30 or more hours per… Continue Reading

April Deadline for Employers to Claim FICA Tax Refunds on 2010 Severance Pay

The issue of whether FICA payroll taxes are due on severance payments is currently being reviewed by the U.S. Supreme Court.?á If the Supreme Court finds FICA taxes are not due, employers will have to file refund claims for taxes previously paid on severance payments.?á Unless the Supreme Court issues its opinion before April 15, 2014, an employer must file a refund claim by that date in order to preserve a refund right for any such taxes paid in 2010. (It is already too late to file refund claims for FICA taxes paid in 2009 or earlier.)?á For severance payments made in tax years after 2010, employers should wait for the Supreme Court?ÇÖs decision before taking any action to avoid unnecessary expenses.?á There are specific rules for filing such a refund claim, including the need to obtain employee consent to avoid reimbursement obligations to the employee, and for filing appeals… Continue Reading

February 2014