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IRS Announces Additional Requirements for Defined Benefit Plan Determination Letter Applications

The IRS recently announced new requirements for determination letter applications for defined benefit plans. Applicants must identify, either in the cover letter to the application or in an attachment, whether the plan contains language which allows participants already receiving annuity payments to accelerate their remaining payments by receiving a lump sum in lieu of a future annuity stream. If the plan does contain such language, also identify whether it satisfies one of the four ?Ç£Pre-Notice Acceleration?Ç¥ conditions in Notice 2015-49. If the applicant states that such risk transfer language is included in the plan and it satisfies one of the conditions in Notice 2015-49, then the IRS will issue a determination letter with a favorable caveat providing reliance on the risk transfer language. Plans with risk transfer language that don?ÇÖt meet one of the conditions in Notice 2015-49 will not receive a determination letter unless the risk transfer language is… Continue Reading

ACA Section 1557 and Nondiscrimination in Health Programs and Activities

In May, we provided information about the release of final HHS regulations implementing ACA Section 1557 and their potential effects on healthcare providers, insurers, and employer-provided healthcare coverage. Chris Beinecke wrote an article discussing these implications in greater detail. A link to this article, which was recently published in the Dallas Business Journal, is available?áhere.

Upcoming Deadline for Annual Reporting and Payment of PCORI Fee under Affordable Care Act

The deadline for plan sponsors of self-insured health plans to report and remit the Patient-Centered Outcomes Research Institute fee (?Ç£PCORI Fee?Ç¥) due under the Affordable Care Act (?Ç£ACA?Ç¥) with respect to the 2015 plan year is July 31, 2016. ?áThe PCORI Fee is assessed to fund the Patient-Centered Outcomes Research Institute. ?áThis fee applies to plan years ending on or after October 1, 2012 and before October 1, 2019. ?áPlans should report and remit the PCORI Fee, which is based on a flat dollar amount multiplied by the average number of lives covered under the plan for the applicable plan year, via a second quarter IRS Form 720. ?áThe applicable dollar amount for plan years ending after September 30, 2015 and before October 1, 2016 is $2.17. Additional information regarding calculating, reporting, and paying the PCORI Fee can be found on the IRS?ÇÖs website, which is available here.?áIRS Form 720… Continue Reading

IRS Releases Draft 2016 Forms 1094 and 1095

On July 13, 2016, the IRS released drafts of the 2016 Forms 1094 and 1095 used to satisfy the Affordable Care Act?ÇÖs employer shared responsibility and individual mandate provisions under Internal Revenue Code Sections 6055 and 6056. The accompanying draft instructions for completing the forms were not released, but we expect them to be published by the end of August. The forms themselves have not substantively changed. The instructions for recipients of Form 1095-C (attached as part of draft Form 1095-C itself) include some subtle changes to offers of coverage reported by employers in Form 1095-C, Part II, Line #14, as the IRS indicated earlier this year. 1I ?Çô In 2015, this code reflected an employer?ÇÖs use of the 2015 Qualifying Offer Transition Relief. This code is ?Ç£reserved?Ç¥ and will be unused in 2016. 1J and 1K ?Çô These new codes reflect conditional offers made to spouses. The draft instructions… Continue Reading

ERISA Does Not Preempt Michigan Paid Claims Tax

In Self-Insurance Institute of America v. Snyder, the U.S. Court of Appeals for the Sixth Circuit ruled that ERISA does not preempt a Michigan state statute requiring insurers and third-party administrators (?Ç£TPAs?Ç¥) of self-funded group health plans to pay a one percent tax on all ?Ç£paid claims?Ç¥ that such entities make to medical service providers. ?áThe statute also requires insurers and TPAs to (i) file quarterly returns with the Michigan Department of the Treasury, (ii) keep accurate and complete records, and (iii) develop and implement a methodology for collecting the tax. ?áBy way of background, earlier this year the U.S. Supreme Court vacated the Sixth Circuit?ÇÖs 2014 decision in this case (which also held that the Michigan statute was not preempted by ERISA) and remanded the case for further consideration in light of the Supreme Court?ÇÖs recent decision in Gobeille v. Liberty Mutual Insurance Co.?á In Gobeille, the Supreme Court… Continue Reading

Lessons Learned on Insuring Cyber Risk from P.F. Chang?ÇÖs and State Bank of Bellingham: What to Look for in Placing Dedicated Network Security/Privacy Liability Insurance

With ever-increasing malware, spear phishing and ransomware attacks on corporate America and ever-contracting terms insuring ?Ç£cyber?Ç¥ liability under traditional insurance, more and more risk managers are venturing into the market for dedicated network security and privacy liability or ?Ç£cyber?Ç¥ insurance.?á Others remain dubious?Çöpreferring ?Ç£traditional?Ç¥ coverage to policies that are little understood and even less tested by claims.?á Over the past several weeks, two judicial decisions have been issued addressing coverage for cyber risk under ?Ç£traditional?Ç¥ and ?Ç£cyber?Ç¥ policies.?á The score for policyholders: cyber insurance: 0; traditional insurance: 1. In P.F. Chang?ÇÖs China Bistro, Inc. v. Federal Insurance Company, a federal district court judge in Arizona denied P.F. Chang?ÇÖs coverage under a specialized ?Ç£CyberSecurity?Ç¥ policy for its liability for more than $1.9 million in credit card ?Ç£assessments,?Ç¥ representing the cost of fraudulent charges paid by Visa and MasterCard after hackers obtained some 60,000 credit card numbers from restaurant customers in 2014.?á… Continue Reading

IRS Releases Additional Guidance on Determination Letter Program Changes

Rev. Proc. 2016-37 provides new guidance on changes to the IRS?ÇÖs determination letter program for individually designed, qualified retirement plans. ?áAs previously announced in Notice 2016-03, the five-year remedial amendment cycle for individually designed plans will be eliminated effective January 1, 2017. ?áAfter that date, individually designed plans may only seek a determination letter for the plan?ÇÖs initial qualification, upon the plan?ÇÖs termination, and in ?Ç£certain other circumstances.?Ç¥ ?áRev. Proc. 2016-37 states that such ?Ç£other circumstances?Ç¥ may include significant law changes, new plan design approaches, and the inability of certain plans to convert to pre-approved plan documents. ?áThe IRS will consider its current case load and available resources when deciding if and when to permit determination letter requests in these other circumstances. ?áTo help plan sponsors remain in operational compliance with the Internal Revenue Code?ÇÖs various qualification requirements, the IRS will begin issuing an annual Operational Compliance List that identifies… Continue Reading

July 2016