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IRS Announces Final Regulations Implementing New Hardship Distribution Requirements

The IRS recently published final regulations addressing changes enacted by the Tax Cuts and Jobs Act of 2017, the Bipartisan Budget Act of 2018, and other prior changes to the tax code. The final regulations do not contain any substantive differences to the proposed regulations issued by the IRS in November 2018. The new final regulations: • Permit, but do not require, hardship distributions from a participant’s elective contributions, QNECs, QMACs (including safe harbor matching contributions), and any earnings on those amounts, regardless of when they were contributed or earned. • Prohibit plans from containing a requirement that a participant may not contribute to the plan for any period of time following a hardship distribution (in other words, eliminate the six-month suspension rule). • Eliminate the requirement that a participant take out all available plan loans before receiving a hardship distribution (although plans may continue to contain such a requirement).… Continue Reading

OCR Issues Fact Sheet on Direct Liability for Business Associates under HIPAA

HHS’s Office for Civil Rights(“OCR”), which is the government agency responsible for enforcement of the HIPAA privacy, security, breach notification, and enforcement rules (the “HIPAA Rules”), recently issued a new fact sheet (“Fact Sheet”). The Fact Sheet recaps the provisions in the HIPAA Rules for which a HIPAA business associate may be held directly liable for compliance. HIPAA business associates of an employer-sponsored group health plan, which is a “covered entity” under HIPAA, would include, for example, the health plan’s third-party claims administrator, a health plan consulting firm, a benefits broker, and the health plan’s outside legal counsel, if such persons or entities create, receive, maintain, or transmit HIPAA protected health information (“PHI”) on behalf of the health plan. The Fact Sheet clarified that OCR has authority to take enforcement action against business associates only for certain requirements and prohibitions of the HIPAA Rules as listed in the Fact Sheet,… Continue Reading

No Nonce-nse: MTD Products Inc. v. Iancu Untangles Means-Plus-Function Interpretation

    In MTD Products Inc. v. Iancu[1], the U.S. Court of Appeals for the Federal Circuit described how to identify a means-plus-function limitation under 35 U.S.C. § 112, ¶ 6[2].  In particular, the court clarified that the question of whether § 112, ¶ 6 applies is distinct from the determination of what structure corresponds to the means-plus-function limitation[3], and held that the description in the specification of corresponding structure does not determine if § 112, ¶ 6 applies.[4] MTD is a decision on appeal from an inter partes review (“IPR”) of U.S. Patent No. 8,011,458 (“the ’458 patent”)[5], owned by MTD Products.[6]  The ’458 patent describes zero turn radius (“ZTR”) vehicles such as riding lawnmowers[7], and explains how for prior art ZTR steering systems, when a vehicle was moving forward, it turned in the direction the steering wheel was rotated, but when the vehicle was moving in reverse, it turned… Continue Reading

Federal Departments Announce No Enforcement Action Regarding Drug Manufacturer Coupons Counting Toward Out-of-Pocket Maximums

HHS’s 2020 Notice of Benefit and Payment Parameters (“NBPP”) provides that a group health plan does not have to count drug manufacturer coupons for brand-name drugs towards an annual out-of-pocket maximum if there is a medically appropriate generic equivalent. Many questions were raised by this rule, including (i) how it interacted with health savings account guidance and (ii) what types of arrangements and/or plans to which it applied. The DOL, HHS, and the Treasury Department (collectively, the “Departments”) announced in an FAQ (available here) that the Departments will not initiate any enforcement action if a group health plan does not count the value of drug manufacturer coupons toward an out-of-pocket maximum. This no enforcement policy lasts until HHS’s 2021 NBPP becomes effective, and the 2021 NBPP should clarify how this rule affects employer-sponsored group health plans.

IRS Addresses Medical Expense Reimbursements Related to Ancestry Genetic Testing Services

In Private Letter Ruling 201933005 (the “PLR”), the IRS recently addressed whether certain genetic testing services and reports provided to an individual by a commercial retailer of bundled ancestry and health evaluation services (“Ancestry Provider”) constituted “medical care” expenses under Section 213(d) of the Internal Revenue Code, which would be reimbursable to the individual from his or her employer-sponsored health flexible spending arrangement (“HFSA”). Under the facts of the PLR, the Ancestry Provider (i) collected a DNA sample from an individual through a DNA testing kit, (ii) sent the sample to a third-party laboratory for genetic testing, and (iii) issued reports to the individual with results from such laboratory testing, including, among other things, information regarding the individual’s potential health risks. The IRS concluded that because the Ancestry Provider’s bundled services included both non-medical (i.e., ancestry) as well as health services, the costs of its services must be valued and… Continue Reading

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