In addition to maintaining the funding of the federal government through February 8, 2018, the recently enacted continuing resolution, H.R. 195, entitled the “Federal Register Printing Savings Act of 2017”, deferred by two additional years the date on which the excise tax on high cost employer-sponsored health coverage under the Affordable Care Act, the so-called “Cadillac Tax”, becomes effective. The effective date of the Cadillac Tax had previously been postponed until taxable years beginning after December 31, 2019 (see our prior blog post regarding that postponement). Under H.R. 195, the Cadillac Tax will now go into effect for taxable years beginning after December 31, 2021 (i.e., for calendar year health plans, January 1, 2022). View the text of H.R. 195.
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 “Departments”). 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 “association health plan” (“AHP”). 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 “ACA”), 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 “small group” or “large group” 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’s 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 “ADA”) and the Genetic Information Non-Discrimination Act (“GINA”). The court recently granted a motion filed by the American Association of Retired Persons (“AARP”) 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 “involuntary.” 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.
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 “minimum essential coverage” in 2017 (“Reporting Entities”) to furnish statements to individuals on IRS Forms 1095-B and 1095-C, pursuant to the Affordable Care Act’s information reporting requirements (the “ACA Reporting Requirements”). The notice also extends the IRS’s 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
In Connecticut General Life Insurance Company v. Humble Surgical Hospital, L.L.C., the U.S. Court of Appeals for the Fifth Circuit, whose jurisdiction includes Texas, reversed a district court’s award to Humble Surgical Hospital, LLC, an out-of-network medical provider (“Humble”), of (i) over $11 million based on underpaid medical benefit claims administered by Cigna under ERISA-governed group health plans and private insurance policies, and (ii) over $2 million in penalties based on Cigna’s failure to comply with ERISA’s plan documentation disclosure requirements. (See our prior newsletter article regarding the district court’s decision in this case, including a discussion of background facts.) The Fifth Circuit found that the district court failed to apply ERISA’s required “abuse of discretion” analysis to Cigna’s decisions regarding benefit claims for Humble’s services, which decisions were based on exclusionary language in the plan documents and insurance policies. The Fifth Circuit stated that other courts had upheld Cigna’s… Continue Reading
The following post is a general summary of the changes to the Internal Revenue Code made by the recently enacted Tax Cuts and Jobs Act (the “Act”) that affect employee compensation and benefits: Executive Compensation Updates Loss of Deduction for Compensation in Excess of $1 Million Currently, Section 162(m) of the Internal Revenue Code limits the ability of publicly held corporations to deduct annual compensation paid to a “covered employee” in excess of $1 million, with an exception to this limit for certain performance-based compensation. Beginning on and after January 1, 2018, the Act amends Code Section 162(m) to eliminate the exception for “qualified performance-based compensation” (which includes stock options, stock appreciation rights, and compensation paid upon the attainment of pre-established performance goals) and commissions. There is limited grandfathering relief available under the Act that preserves the deductibility of existing arrangements that pay out after 2017, provided the “written binding… Continue Reading
As September 2017 drew to a close, it appeared significant legislative efforts to repeal and replace the Affordable Care Act (ACA) were on hold until at least 2018 and would likely be joined by a bipartisan approach to amend and “save” the ACA. Against that backdrop, October 2017 was a busy month for both executive and regulatory action intended to loosen certain ACA requirements to allow greater flexibility to offer lower cost health insurance coverage options to consumers than is feasible under the existing ACA. Some of these actions are likely to put pressure on the long-term viability of the public insurance marketplace (e.g. Healthcare.gov and state-run insurance exchanges), potentially unraveling a key component of the ACA if not the ACA itself, which may cause Congress to act, perhaps improving the chances of repealing and replacing the law. The October actions included: Interim final regulations expanding the types of entities… Continue Reading
There are a number of health and welfare plan action items to address at the end of 2017 and early 2018. We have addressed these action items on our HB Health and Welfare blog. These items include: Affordable Care Act (“ACA”) reporting for 2017 (i.e., Forms 1094/1095) and related issues Issues that may impact plan design and/or written materials such as the ACA, plan design limits, wellness regulations, and federal agency enforcement activity Certain other reporting and communication requirements
The following is a list of action health and welfare plan action items that should be addressed by plan administrators for the end of 2017 and start of the 2018 plan year. Please note that for non-calendar year plans, the specific timing requirements described below may vary. Employer shared responsibility provisions under the Affordable Care Act (ACA): Determine applicable large employer/applicable large employer member status for 2018. Determine whether any changes will be made to the measurement process for 2018 such as a change in method (e.g., monthly versus look-back), changes to period duration if the look-back measurement method is used, or other variations among permissible employee categories under the employer shared responsibility provisions. Update employer measurement policy as needed. Ensure minimum essential coverage will be offered to at least 95 percent of ACA full-time employees for each month during 2018 to avoid potential Internal Revenue Code (IRC) Section 4980H(a)… Continue Reading