[firm] blog logo

Regulations Provide for More Cost Transparency in Health Coverage

The federal Departments of Health and Human Services, Labor, and the Treasury (collectively, the ?Ç£Departments?Ç¥) have jointly issued final regulations that are intended to provide for more transparency in health coverage (the ?Ç£Regulations?Ç¥). The Regulations have important implications for employer sponsors of certain group health plans (?Ç£Plans?Ç¥) and health insurers. The Regulations do not apply to health plans that are grandfathered under the Affordable Care Act, health reimbursement arrangements, certain other account-based group health plans, or short-term limited duration insurance. The Regulations require two key forms of disclosures (collectively, the ?Ç£Disclosures?Ç¥) in order to provide for this improved transparency: Self-Service Disclosure. First, the Regulations require Plans and insurers in the individual and group markets to disclose certain cost-sharing information upon request to a participant, beneficiary, or enrollee (or his or her authorized representative), including (a) an estimate of the individual?ÇÖs cost-sharing liability for covered items or services furnished by a… Continue Reading

IRS Issue Snapshot Highlights Plan Sponsor Responsibilities to Missing Participants and Beneficiaries

The IRS recently published an Issue Snapshot (the ?Ç£Snapshot?Ç¥) on IRS.gov that revisits the steps a plan sponsor must complete in order to locate missing plan participants and beneficiaries. While the Snapshot does not contain any new guidance, its publication is an indication that ensuring plan sponsors are undertaking appropriate steps to locate missing participants and beneficiaries remains an area of focus for the IRS, including when they are conducting plan audits. Under current IRS guidance, plan sponsors should complete the following steps to attempt to locate missing plan participants and beneficiaries: Search for alternate contact information (address, telephone number, email, etc.) held by the plan or any related plan, sponsor, or publicly-available records or directories. Use a commercial locator service, credit reporting agency, or proprietary Internet search tool for locating individuals. Mail a letter via certified mail to the last known mailing address and through any appropriate means for… Continue Reading

Want to Elect to Have a Safe Harbor Plan for 2021? ?Çô The Time is Now

As we previously reported here, earlier this year, the IRS provided relief to plan sponsors of safe harbor 401(k) and 403(b) plans, allowing them to amend their plans mid-year to suspend or reduce safe harbor contributions through the end of the 2020 plan year. Many employers elected to make this change in order to reduce overall costs to help them weather the COVID-19 pandemic. Plan sponsors who want to go back to a safe harbor plan design for 2021 must (i) amend their plan documents before the end of the year to include safe harbor contributions; (ii) notify their third party administrators as soon as possible so that the third party administrator is prepared to administer the plan as a safe harbor plan; and (iii) provide the required safe harbor notice to participants at least 30 days (and not more than 90 days) before the beginning of the plan year.… Continue Reading

DOL Brief Supports ERISA Claims for Violation of Mental Health Parity Requirements

The U.S. Secretary of Labor (the ?Ç£Secretary?Ç¥) recently filed an amicus (friend of the court) brief with the U.S. Court of Appeals for the First Circuit arguing that, where a beneficiary alleged that he was denied covered mental health benefits because his employer?ÇÖs group health plan applied an exclusion in violation of ERISA?ÇÖs mental health parity requirements, he is authorized to bring a claim for those benefits under ERISA. ERISA Section 502(a)(1)(B) allows a beneficiary to bring a civil action to ?Ç£recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan.?Ç¥ The amicus brief was filed in the case of N.R. v. Raytheon Co., in which a beneficiary of the company?ÇÖs self-funded health plan was denied coverage for speech therapy treatment under the terms of… Continue Reading

Hurricane Sally Hardship Withdrawal Relief

Last year, the safe harbor rules for hardship withdrawals were amended to include a new subsection which permits hardship withdrawals for expenses and losses incurred by an employee on account of a disaster declared by the Federal Emergency Management Agency (?Ç£FEMA?Ç¥). Recently, FEMA issued a disaster declaration as a result of Hurricane Sally that impacted portions of Alabama and Florida on September 14, 2020. A list of areas covered by the disaster declaration can be found on FEMA?ÇÖs website. This disaster declaration means that affected participants may be eligible for hardship distributions under their 401(k) plans. Plan sponsors should review their 401(k) plan?ÇÖs hardship distribution provisions to ensure they contain either the updated safe harbor provisions specifically allowing hardship distributions for federally declared disasters or catch-all language allowing distributions on any permissible hardship under the Internal Revenue Code.

The DOL Issues Guidance Regarding Lifetime Income Illustrations

The DOL recently issued an interim final rule (?Ç£IFR?Ç¥) pursuant to the Setting Every Community Up for Retirement Enhancement Act of 2019 (the ?Ç£SECURE Act?Ç¥) regarding the information that must be provided on pension benefit statements. ERISA requires plan administrators of defined contribution plans to provide periodic pension benefit statements to participants and certain beneficiaries. The SECURE Act requires plan administrators to provide annual statements illustrating participants?ÇÖ accrued benefits as two lifetime income stream illustrations: (i) a single life annuity, and (ii) a qualified joint and survivor annuity. The IFR describes certain required assumptions plan administrators must use when converting a participant?ÇÖs accrued benefit into lifetime income streams. The lifetime income stream illustrations must be accompanied by clear and understandable explanations of the assumptions underlying the illustrations. To assist plan administrators, the IFR provides model language that may be used to satisfy this explanation requirement. The IFR is effective September… Continue Reading

It?ÇÖs All Part of the Plan ?Çô Consistency is Key to Treating Multiple Documents as One Plan

Plan sponsors of severance plans that set forth the terms of one severance plan in multiple plan documents should consider combining those documents into one document or carefully reviewing each plan document to ensure there are no inconsistencies (including relating to eligibility, effective dates, and benefits) and that each document not only references the other documents but is incorporated into the other documents by reference. Otherwise, the plan sponsor may risk one of the documents being deemed a pay practice exempt from ERISA, subjecting the plan sponsor to state law claims in any state where employees are covered. This risk was recently highlighted in Caggiano v. Teva Pharm. USA, Inc., where former employees (?Ç£Plaintiffs?Ç¥) of Teva Pharmaceuticals, Inc. (?Ç£Defendant?Ç¥) brought two state law causes of action against Defendant based on the denial of separation pay benefits under Defendant?ÇÖs severance plan, which was comprised of a Separation Benefits Plan (?Ç£SBP?Ç¥), a… Continue Reading

Changes to Safe Harbor Notices for Recipients of Eligible Rollover Distributions

The IRS recently issued Notice 2020-62 (the ?Ç£Notice?Ç¥), which modifies the two safe harbor explanations set forth in Notice 2018-74 that plan administrators may use to satisfy the requirements under Code Section 402(f) that plans provide certain information regarding eligible rollover distributions to participants, beneficiaries, and alternate payees who are receiving distributions. The modifications to these explanations reflect recent legislative changes, including those made by the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act), and include a new exception to the 10% additional tax for qualified birth or adoption distributions and the increase in age for required minimum distributions to age 72 for employees born after June 30, 1949. The Notice also includes an updated (i) model safe harbor notice for distributions that are not from a designated Roth account and (ii) model safe harbor notice for distributions that are from a designated Roth account. Plan… Continue Reading

Cross-Plan Offsetting Practice is Challenged in Class Action Lawsuit

This class action lawsuit, styled Scott, et al. v. UnitedHealth Group, Inc., et al., was filed in the U.S. District Court for the District of Minnesota on July 14, 2020. This lawsuit follows the decision of the U.S. Court of Appeals for the Eighth Circuit in Peterson v. UnitedHealth Group Inc. that was issued last year. In Scott, the plaintiffs, who were participants in the plans at issue in Peterson, filed, on behalf of a class of plaintiffs (the ?Ç£Class?Ç¥), a class action against UnitedHealth Group, Inc. and its wholly-owned subsidiaries (collectively, ?Ç£UHC?Ç¥), in their capacities as an insurer and/or third-party claims administrator of employer-sponsored group health plans. The lawsuit alleges the breach of UHC?ÇÖs fiduciary duties under ERISA as related to UHC?ÇÖs practice of ?Ç£cross-plan offsetting.?Ç¥ The Class consists of participants and beneficiaries in all group health plans that are administered by UHC and contain ?Ç£cross-plan offsetting?Ç¥ (collectively, the… Continue Reading

Target?ÇÖs $1.6 Million COBRA Notice Settlement Offer: Employers, It?ÇÖs Time to Review Your COBRA Election Notices

As we discussed in our prior blog post here, there are many reasons why an employer needs to review its template COBRA election notice, such as for the new extended COBRA deadlines as a result of the COVID-19 pandemic, the new DOL model notice, and dramatically increased class action litigation challenging the legal sufficiency of COBRA election notices. These cases have resulted in significant expenditures being incurred by the targeted employers. These cases typically allege that a deficient or misleading COBRA notice caused a former employee (or other COBRA qualified beneficiary) to lose health coverage because the notice lacked required information or was not written in an understandable manner. For example, plaintiffs recently proposed a $1.6 million class action settlement to resolve allegations that Target Corporation failed to provide adequate COBRA election notices. Many employers use third-party vendors to prepare and distribute their plans?ÇÖ COBRA election notices; however, the employer… Continue Reading

September 2021
S M T W T F S
 1234
567891011
12131415161718
19202122232425
2627282930  

Archives