This year has already been a busy one for seismic activity. In the first weeks of 2018 alone, there have been reports of a 7.9 magnitude quake off the shores of Kodiak, Alaska, a 6.2 magnitude temblor in Japan, and a series of tremors in California. And, few will forget the catastrophic earthquakes that struck Mexico City and the Iraq-Iran border last year. With this recent domestic and international seismic activity and predictions of more to come, some corporate policyholders will ask the question: what insurance coverage is available to protect against property damage and business interruption loss from earthquakes? While insurance terms and conditions may vary by region and from one policyholder to another, generally speaking, ?Ç£all-risk?Ç¥ commercial property policies insure all non-excluded direct physical loss or damage to covered property. As a general proposition, many such policies may include exclusions for loss or damage resulting from ?Ç£earth movement.?Ç¥… Continue Reading
A couple entered into a separation agreement, which was later incorporated into a divorce decree, in which they agreed to maintain any employer-related life insurance policies for the benefit of their minor child until she turned 18 or graduated from high school. At the time, the father had an employer-sponsored life insurance policy through Sun Life that listed his uncle as the sole beneficiary. The father died without changing the designated beneficiary to his daughter. After his death, but before payment of the life insurance benefits, the daughter?ÇÖs attorney provided Sun Life with a copy of the divorce decree and separation agreement. Nevertheless, Sun Life paid the benefits to the deceased father?ÇÖs uncle, and the daughter then sued Sun Life for failing to follow the terms of a qualified domestic relations order (?Ç£QDRO?Ç¥). A federal district court originally held that the daughter was entitled to the life insurance benefits, and… Continue Reading
The DOL announced that the new claims procedures for disability benefits will apply as of April 1, 2018. As previously discussed here, the DOL had delayed the effective date of the new disability claims procedures until April 1, 2018, to provide additional time for comments and revisions to the regulations. In its announcement, the DOL stated that the comments it received did not establish the need to make any revisions to the regulations. Employers should now proceed with revising their plan documents, summary plan descriptions, and policies and procedures for employee benefit plans subject to ERISA that provide any disability benefits. View the DOL?ÇÖs announcement.
On January 11, 2018, the IRS released Notice 1036, which contains updated income tax withholding tables for 2018 that reflect changes made to the tax code by the Tax Cuts and Jobs Act. The notice also provides that the new withholding rate for supplemental wages of up to $1 million is now 22 percent, down from 25 percent, and the rate for supplemental wages in excess of $1 million is now 37 percent, down from 39.6 percent. Employers should implement the new withholding rates as soon as administratively possible, but in no event later than February 15, 2018. View Notice 1036.
For submissions made on or after January 2, 2018, the user fee to correct a qualified plan operational failure under the IRS?ÇÖs Voluntary Correction Program (?Ç£VCP?Ç¥) will be based on the total amount of net plan assets rather than the number of participants in the plan. Net plan assets are generally determined using the amount listed on the most recent Form 5500 filed for the plan. Additionally, alternative or reduced fees for certain corrections have been eliminated. Therefore, in some cases fees will be significantly lower than under the prior fee schedule, but in other cases, they will be higher because the prior fee schedule based the fee on the number of affected participants, not the number of total participants. Below is the new, simplified fee schedule for VCP submissions, followed by the prior fee schedule. New Fee Schedule: Net Plan Assets VCP Fee ?á?Çó $0 to $500,000 … Continue Reading
In December 2017, two federal district courts granted nationwide preliminary injunctions from enforcement of the interim final rules providing for religious and moral exemptions from the contraceptive coverage mandate under the ACA issued in October 2017 by the U.S. Departments of Health and Human Services, Labor, and the Treasury (collectively, the ?Ç£Departments?Ç¥). Please see our earlier discussion of these exemptions. Both federal courts held that the Departments impermissibly bypassed the notice and comment rulemaking requirements of the Administrative Procedures Act and that the plaintiffs, consisting of six states, sufficiently demonstrated they would be harmed without an injunction. The timing of these injunctions is a cause for concern for any plan sponsors who have already acted in reliance on the interim final rules. The U.S. Department of Justice has indicated it disagrees with these rulings and may appeal. View Commonwealth of Pennsylvania v. Trump. View State of California v. Health and… Continue Reading
The DOL recently issued proposed regulations which broaden the criteria under ERISA for determining when a group of employers may join together as a single employer to sponsor a single group health plan under ERISA, in the form of an ?Ç£association health plan?Ç¥ (?Ç£AHP?Ç¥). Joining an AHP could be a more viable option for many small employers. Various federal and state laws affecting employer-sponsored health coverage, including the Affordable Care Act (the ?Ç£ACA?Ç¥), impose requirements that differ based on whether employer-sponsored health coverage is insured or self-funded and, if insured, whether it is offered in the ?Ç£small group?Ç¥ or ?Ç£large group?Ç¥ insurance market. The status of coverage as either small or large group coverage generally depends on how many employees the employer has and affects the employer?ÇÖs compliance obligations under the ACA and other laws. Under current DOL guidance, a group of small employers that want to associate in order… Continue Reading
We previously reported that the U.S. District Court for the District of Columbia required the EEOC to reconsider its wellness regulations under the Americans with Disabilities Act (the ?Ç£ADA?Ç¥) and the Genetic Information Non-Discrimination Act (?Ç£GINA?Ç¥). The court recently granted a motion filed by the American Association of Retired Persons (?Ç£AARP?Ç¥) to amend that judgment and vacate the permitted 30 percent incentive level under the applicable ADA and GINA regulations, effective as of January 1, 2019. Generally, the ADA and GINA regulations permitted wellness programs to provide incentives of up to 30 percent of the cost of coverage under an employer group health plan without such programs being considered ?Ç£involuntary.?Ç¥ Employers should be aware that new guidance regarding permitted incentives under the ADA and GINA may be issued later this year to be effective as of January 1, 2019. View AARP v. U.S. Equal Employment Opportunity Commission.
The PBGC issued a final rule on December 22, 2017, that expands the missing participants program from covering only terminated PBGC-insured, single-employer defined benefit plans to also covering defined contribution plans (?Ç£DC Plans?Ç¥), such as 401(k) plans, PBGC-insured multiemployer plans, and non-PBGC-insured defined benefit plans sponsored by professional service organizations that terminate on or after January 1, 2018. Participation will be voluntary for DC Plans and professional service organization plans, and terminating DC Plans will have the option of transferring all missing participants?ÇÖ benefits to the PBGC in lieu of establishing an IRA. There would be a one-time fee upon the transfer of assets to the PBGC, and thereafter participant accounts would not be reduced by ongoing maintenance fees. After a participant is located, the PBGC would pay his or her initial account balance with interest to the participant when located. View the PBGC?ÇÖs Missing Participants Program webpage. View the… Continue Reading
Extension of Due Dates for 2017 Individual Statements under Affordable Care Act Information Reporting
In Notice 2018-06, the IRS extended the due date, from January 31, 2018 to March 2, 2018, for employers (including applicable large employers), insurers, and other providers of ?Ç£minimum essential coverage?Ç¥ in 2017 (?Ç£Reporting Entities?Ç¥) to furnish statements to individuals on IRS Forms 1095-B and 1095-C, pursuant to the Affordable Care Act?ÇÖs information reporting requirements (the ?Ç£ACA Reporting Requirements?Ç¥). The notice also extends the IRS?ÇÖs transition relief from penalties that the Reporting Entities would otherwise incur for incorrect or incomplete information reported on their 2017 information statements to individuals or returns filed with the IRS. To obtain this transition relief, a Reporting Entity must show that it made a good faith effort to comply with the ACA Reporting Requirements in furnishing statements to individuals and filing its IRS returns. Notably, the notice does not extend the due date under the ACA Reporting Requirements for Reporting Entities to file their 2017… Continue Reading