In Notice 2019-60, the IRS granted additional nondiscrimination relief for certain “closed” defined benefit plans (i.e., plans frozen as to new participants before December 13, 2013, but that provide ongoing benefit accruals for existing participants). This relief is in addition to the relief originally provided in Notice 2014-5, which permits employers who sponsor both a “closed” defined benefit plan and a defined contribution plan to demonstrate that the aggregated plans comply with the nondiscrimination requirements of Code Section 401(a)(4) on the basis of equivalent benefits, even if the aggregated plans do not satisfy the current conditions for testing on that basis. The new nondiscrimination relief provides that these closed defined benefit plans will also be deemed to satisfy the nondiscrimination requirements that relate to plan benefits, rights, and features (such as optional forms of benefits and certain ancillary benefits) that were provided under the plan at the time it was… Continue Reading
The Federal Circuit recently held in Columbia Sportswear North America, Inc. v Seirus Innovative Accessories, Inc. that logos may be considered in the ordinary observer test. Seirus Innovative Accessories (“Seirus”) makes and sells cold weather gear, and a lower court had ruled on summary judgment that U.S. Patent No. D657,093 to Snyder was infringed by Seirus’s gloves and glove liners: The Federal Circuit reversed the summary judgement in part because the lower court improperly disregarded Seirus’s logo in the ordinary observer test. The ordinary observer test is used to determine whether a claimed design is infringed and provides that an accused product infringes a claimed design if the two designs are substantially the same in the eye of an ordinary observer. In this case, Seirus’s gloves and glove liners included a logo that repeatedly interrupted a wave design, and Seirus argued that?due to the logos?the gloves and glove liners were… Continue Reading
The U.S. Departments of the Treasury, Labor, and Health and Human Services (the “Departments”) recently issued proposed rules requiring fully-insured and self-funded employer-sponsored group health plans and health insurance issuers to provide participants with an Internet-based tool that shows estimated cost-sharing information for specific covered services and providers (based on network rates and allowable amounts for out-of-network providers) prior to receiving services, similar to the information currently provided to participants via an Explanation of Benefits (or EOB) after services are rendered. The participant would also be able to request a hard copy of this information. In addition, the proposed rules would require the group health plan to publish its network negotiated rates and historical allowed amounts for out-of-network providers. Grandfathered plans and excepted benefits would not be subject to the proposed rules. The proposed rules have a 60-day comment period, and the Departments have proposed that the rules would be… Continue Reading
HHS recently issued a final rule (the “HHS Rule”) that sets out the inflation-adjusted civil monetary penalty (“CMP”) amounts that HHS is authorized to assess or enforce, including for violations of the HIPAA privacy and security rules. The adjusted CMP amounts are applicable to HIPAA violations by a HIPAA covered entity or business associate that occur after November 2, 2015, for which a CMP is assessed on or after November 5, 2019 The HHS Rule is available here.
In Revenue Procedure 2013-22, as modified by Revenue Procedure 2017-18, the IRS previously established an initial remedial amendment period for correcting form defects in a 403(b) plan that ends on March 31, 2020. In Revenue Procedure 2019-39, the IRS has now established a system of ongoing remedial amendment periods for correcting form defects in 403(b) plans that occur after March 31, 2020, as well as extending the deadline for certain defects that occur before March 31, 2020. In addition, to assist plan sponsors, the IRS will begin including changes to 403(b) plan requirements on its Required Amendments List and Operational Compliance List. The IRS also introduced a cycle program for pre-approved plans during which Section 403(b) prototype plans and volume submitter plans can request to receive a pre-approved plan letter from the IRS. Under this new guidance, the remedial amendment period for non-governmental Section 403(b) individually-designed plans will end on… Continue Reading
The IRS recently announced the inflation-adjusted limits for 2020 for tax qualified retirement plans. Below is a list of some of the key annual limits that will apply in 2020: • Compensation limit used in calculating a participant’s benefit accruals: increased to $285,000. • Elective deferrals to 401(k) and 403(b) plans: increased to $19,500. • Annual additions to a defined contribution plan: increased to $57,000. • Catch-up contributions for employees aged 50 and over to 401(k) and 403(b) plans: increased to $6,500. • Annual benefit limit for a defined benefit plan: increased to $230,000. • Compensation dollar limit for defining a “key employee” in a top heavy plan: increased to $185,000. • Compensation dollar limit for defining a “highly compensated employee”: increased to $130,000. The complete list of 2020 plan limits is available in Notice 2019-59 here.
The IRS recently announced the following inflation-adjusted limits for 2020 for certain health and welfare plans: • Health flexible spending account limit: increased to $2,750. • Qualified transportation fringe benefit limits for parking and transit: each increased to $270. • Adoption assistance program limit: increased to $14,300. • Qualified Small Employer Health Reimbursement Arrangement limit: increased to $5,250 for individual coverage and $10,600 for family coverage. These, and certain other, 2020 plan limits are available in Notice 2019-44 here.
This is a reminder for sponsors of equity incentive plans and tax-qualified “employee stock purchase plans” (“ESPPs”) of their year-end information reporting requirements under Section 6039 of the Internal Revenue Code with respect to stock issued to employees or former employees upon the exercise of “incentive stock options” (“ISO”) or transferred under an ESPP. The IRS has issued two forms that companies must use to satisfy the return and information statement requirements: (i) Form 3921, which is required when an employee (or former employee) exercises an ISO, and (ii) Form 3922, which is required when a company records the first transfer of legal title of shares acquired under an ESPP when either (a) the purchase price of the shares was less than the stock’s fair market value on the date of grant or (b) the purchase price of the shares was not fixed or determinable on the date of grant.… Continue Reading
Michael Tobin Associate Haynes and Boone, LLP In HZNP Medicines LLC v. Actavis Laboratories UT, Inc. (Fed. Cir. 2019), the Federal Circuit affirmed the district court’s holding that the transitional phrase “consisting essentially of” was indefinite as used in several claims of patents owned by HZNP Medicines LLC and Horizon Pharma USA, Inc. (“Horizon”). Slip Op. at 2, 33. Horizon’s patents cover its PENNSAID® 2% product, which is a Non-Steroidal Anti-Inflammatory Drug (NSAID) and the first FDA-approved twice-daily topical diclofenac sodium formulation for the treatment of pain of osteoarthritis of the knees. Claim 49 of U.S. Patent No. 8,252,838 (the “‘838 patent”) is illustrative of Horizon’s formulation patents and recites: A topical formulation consisting essentially of: 1–2% w/w diclofenac sodium; 40–50% w/w DMSO; 23–29% w/w ethanol; 10–12% w/w propylene glycol; hydroxypropyl cellulose; and water to make 100% w/w, wherein the topical formulation has a viscosity of 500–5000 centipoise. Prior to… Continue Reading
DOL Issues Proposed Regulations for Electronic Delivery of ERISA-Required Retirement Plan Disclosures
The DOL recently issued proposed regulations which provide a “Notice-and-Access” safe harbor for the electronic delivery of ERISA-required disclosures. Under the proposed regulations, plan administrators can fulfill their obligation to provide these disclosures by making the information accessible online and by sending a notice of Internet availability (“Internet Availability Notice”) of the disclosures to participants’ e-mail addresses. The Internet Availability Notice must include a brief description of the document being posted online, a website address where the document is posted, and instructions for requesting a free paper copy of the disclosures or electing paper delivery of such disclosures in the future. Although the Internet Availability Notice must generally be sent each time a disclosure is posted online, the proposed regulations would allow a plan administrator to combine such notices in certain circumstances. The proposed regulations only apply to retirement plans, not health and welfare plans, and a plan administrator must… Continue Reading