Benefits
The COBRA subsidy provisions of the ARRA have been extended through March 2010 and expanded to cover additional individuals.
In light of recent developments in numerous states, employers should be aware of the status of nationwide same-sex marriage and domestic partnership laws and employer benefit obligations.
The California Supreme Court finds valid a forfeiture provision in a restricted stock plan, even though the plan is funded from employees' wages.
With the end of the year approaching, employers who are sponsors of qualified benefit plans must comply with a variety of plan amendment and notice requirements as well as put into place new IRS limits on retirement plan contributions.
The Health Information Technology for Economic and Clinical Health Act (HITECH Act), one small legislative portion of the massive economic stimulus bill enacted on February 17, 2009, mandates that employers and health care providers provide notice of any "breach" of "unsecured" protected health information (PHI) to affected individuals; the U.S. Department of Health and Human Services (HHS); and, in certain circumstances, "prominent media outlets." The quoted terms and many others in the HITECH Act are either undefined or raise a multitude of unanswered questions. HHS has recently published interim final regulations and accompanying commentary that clarify many of the Act's ambiguities.
In July 2009, New York Governor David Paterson signed two bills that amend the state's insurance laws and affect group health plans sponsored by both large and small employers. The new laws lengthen the period that employer-sponsored health insurance coverage is available following termination of employment and expand the availability of health insurance coverage for older children.
During the past year, Congress and federal regulatory agencies have been busy enacting legislation and issuing guidance imposing many new requirements on group health and welfare benefit plans. Many of the changes will require thoughtful action on the part of administrators and sponsors of group health and welfare benefit plans. This brief outline of recent health and welfare compliance developments is not intended to be exhaustive, but rather serves to illustrate the depth and breadth of changes facing plan sponsors now and in the coming months.
The IRS has issued new rules implementing a new statutory requirement that employers holding certain life insurance policies on their employees or directors notify the insureds of this coverage. The new rules are effective June 15, 2009.
The IRS has issued proposed regulations that allow for the suspension or reduction of safe harbor nonelective contributions under certain 401(k) safe harbor plans.
Beginning July 1, 2009, many employers and insurance companies will be required to report claims for workers' compensation claimants who are also Medicare beneficiaries to the Centers for Medicare and Medicaid Services (CMS) or become subject to a $1,000 per day per claimant penalty for failure to comply with this mandatory reporting requirement.
The 65% COBRA subsidy passed as part of the American Recovery and Reinvestment Act of 2009 (ARRA) left open many questions as to eligibility for the subsidy. The IRS has now issued guidance on the meaning of "involuntary termination" along with other much-needed guidance on how the subsidy works.
In February 2009, President Obama signed into law the Children's Health Insurance Program Reauthorization Act of 2009, which establishes new rights for participants in employer group health plans to make changes to their enrollment based on eligibility in certain government sponsored health care programs. Employers will want to make sure that they are in compliance with these new group health plan rules.
The IRS recently issued final regulations governing Section 403(b) retirement plans, which frequently are sponsored by charitable organizations, public schools and universities. The final regulations make significant changes to the 403(b) playing field and generally are effective January 1, 2009, with a "written plan documentation requirement" and a "reasonable interpretation of the regulations" standard extending to December 31, 2009.
In Hecker v. Deere Company, the Seventh Circuit Court of Appeals affirms the dismissal of claims by ERISA 401(k) plan participants that the plan's sponsor and service providers violated their fiduciary duties by charging excessive fees and by failing to disclose fee information to plan participants.
The massive $787.2 billion economic recovery package signed into law as the American Recovery and Reinvestment Act of 2009 (ARRA) by President Obama on February 17, 2009, will impact employers in several ways. One of the major components of the ARRA is the COBRA subsidy and tax credit available to employers who pay for part of the COBRA premium for terminated employees. As a result, there are additional burdens, pitfalls and hidden costs on the vast majority of employer-sponsors of group health plans.
The massive $787.2 billion economic recovery package signed into law as the American Recovery and Reinvestment Act of 2009 (ARRA) by President Obama on February 17 will impact employers in several ways. While most of the attention has been focused on the COBRA subsidy provisions, there are several other employment-related provisions in the bill including business tax credits, expanded unemployment benefits, executive compensation limitations, and new restrictions on H-1B visas that employers need to be aware of and plan for.
In a unanimous decision, the U.S. Supreme Court has held that under ERISA, plan administrators must distribute plan assets in accordance with the terms of lawful plan documents without regard to a waiver of benefits contained in a divorce decree. In Kennedy v. Plan Administrator for DuPont Savings & Investment Plan, the plan administrator distributed the proceeds from a savings plan to a deceased employee's ex-wife who was listed as the beneficiary on the plan documents despite the fact that she had earlier waived all rights to the benefits in a divorce decree.
With year-end approaching, employers should make certain they have taken all steps necessary to comply with rules governing deferred pay arrangements.
Effective January 1, 2010, (for calendar year group health benefit plans), Michelle's Law will extend group health benefit plan coverage of a dependent child who loses full-time student status due to serious illness or injury for up to one year from the date the medically necessary leave of absence begins.
Final "minimum creditable coverage" regulations may require immediate action by employers sponsoring health plans covering Massachusetts residents.
The IRS has published 2009 annual dollar limits for retirement plans. Most limits have increased from 2008 levels.
The Emergency Economic Stabilization Act of 2008 legislates new executive pay practices for financial institutions that receive government guarantees.
The newly enacted Heroes Earnings Assistance and Relief Tax Act (HEART Act) of 2008 protects death benefits and provides tax relief to those serving in active military duty.
Where an insurance company both determines an appeal for ERISA benefits and also pays that claim, a conflict of interest is present. The U.S. Supreme Court in Metropolitan Life v. Glenn, holds that where the language of a plan grants the administrator discretionary review of claims, this conflict will be taken into account as a "factor" to be weighed in determining whether judicial deference should be given to the administrator's decision.
The U.S. Supreme Court in Kentucky Retirement Income Systems v. EEOC, found that a pension plan designed to increase disabled public safety workers' pensions to the level they would have attained at normal retirement age, even though it meant that workers who became disabled after reaching retirement age would not receive any pension increase, did not violate the ADEA.
The Internal Revenue Service has released final regulations providing guidance on employer "comparable" contributions to Health Savings Accounts.
The IRS has released Revenue Procedure 2008-29 establishing the 2009 annual Health Savings Account contribution limitations and High Deductible Health Care plan limitations.
Multi-employer pension plans are issuing Pension Protection Act funding notices and improvement schedules. Do you know your compliance bargaining options/strategies?
Revised IRS guidance regarding performance-based compensation could require changes in the financial planning strategies of publicly-traded companies.
The Department of Defense has issued proposed regulations prohibiting an employer from offering financial or benefit incentives to discourage TRICARE beneficiaries from enrolling in group health plans.
The U.S. Supreme Court declined to review the Third Circuit's decision in AARP v. EEOC, in effect upholding the EEOC's final rule exempting from the ADEA the coordination of retiree health benefits with Medicare.
The DOL provides a new checklist to aid employers in determining whether or not they sponsor a wellness program subject to HIPAA regulations and how to comply.
In an important legal development in the area of retirement plan fiduciary liability, the U.S. Supreme Court has held that individual participants may sue ERISA fiduciaries for account losses.
Final EEOC rule permits exemption from the ADEA for employers who coordinate retiree health benefits with Medicare.
The Department of Labor recently has taken regulatory action in two areas with respect to the disclosure of fee information by ERISA plan service providers.
New IRS special rules allow a 2% shareholder-employee in an S corporation to deduct from gross income employer-paid accident and health insurance premiums, if certain requirements are met.
For San Francisco employers, another new ordinance imposes challenging health care requirements. The San Francisco Health Care Security Ordinance (HCSO) mandates spending requirements for employee health care. The ordinance is effective January 1, 2008 for employers with 50 or more employees and April 1, 2008 for employers with 20-49 employees.
Government issues bulletin providing a safe harbor for supplemental heath insurance plans and exempting certain plans from the portability provisions of HIPAA.
Department of Health and Human Services announces the expansion of the agency's privacy enforcement team, which could signal a renewed effort by the agency to follow up on individual complaints and increase HIPAA enforcement.
The Internal Revenue Service (IRS) expands category of diagnostic procedures that would qualify as medical care and therefore deductible.
Two new IRS notices related to Section 409A are significant to employers, as they extend certain compliance deadlines and provide additional guidance on Section 409A requirements.
New DOL regulations effective December 24, 2007 provide a safe harbor for qualified plan fiduciaries offering default investment alternatives.
On September 10, the IRS released Notice 2007-78 extending the deadline for documentary compliance with Section 409A of the Internal Revenue Code from December 31, 2007 to December 31, 2008. Section 409A imposes significant rules related to deferred pay arrangements that became effective January 1, 2005. Final regulations relating to these rules were released earlier this year and provide that pay arrangements are required to be in "good faith compliance" with the rules through the effective date of the regulations, January 1, 2008.
All Massachusetts employers, including employers with ERISA plans, have obligations under the state's new health care reform law. The state continues to issue new regulations and forms, with more deadlines on the horizon.
Final Treasury regulations governing deferred compensation have been released and will affect many forms of compensation beyond traditional deferred compensation. Documents must be fully compliant by December 31, 2007.
Small employers that first sent out a HIPAA Privacy Notice to employees in 2004 are again required by law to provide either the Privacy Notice or a reminder that privacy documents are accessible to employees.
Employers should carefully consider the employment tax ramifications of participating in the IRS's new Initiative allowing employers to pay the taxes and interest due on the exercise of backdated or mispriced stock options.
The IRS has recently issued new guidance that clarifies certain aspects of the new rules contained in the Pension Protection Act.
The IRS issues guidance clarifying certain operational aspects of cash balance and pension equity plans, and will soon begin processing determination letters for cash balance plan conversions, which have been suspended for over six years.
The newly enacted HOPE Act makes significant and attractive changes to Health Savings Account rules for both employers and employees.
Retirement plan sponsors should review their plans for possible required amendments by year end, and employers must ensure that their executive compensation arrangements comply operationally with new legislation.
This ASAP discusses the changes made by the Pension Protection Act with respect to defined benefit plans, which include modified funding requirements for single-employer and multiemployer plans and clarification on the legality of cash balance plans.
This ASAP discusses the wide-ranging changes made by the Pension Protection Act with respect to defined contribution plans. Plans must take steps to comply with these changes to remain compliant with the law. Some of these requirements are effective as soon as January 1, 2007.
The IRS recently published transition rules that relate to changes in the law affecting deferred compensation arrangements. These rules affect not only traditional deferred compensation plans and executive compensation arrangements, but also many other types of compensation that is earned in one year and paid in another.
With the passage of the federal Pension Protection Act and the reversal by the 7th Circuit Court of Appeals in Cooper v. IBM, converting traditional pension plans to alternative plan designs, such as cash balance plans and pension equity plans, becomes a more attractive option for employers.
Faced with skyrocketing annual increases in health care and workers' compensation premiums, employers are looking for ways to manage the health and health care costs of the workforce. Employers have increasingly focused on employee lifestyle choices, such as cigarette smoking, in an attempt to control these costs.
On May 15, 2006, the U.S. Supreme Court revived an important cost containment mechanism for group health plans which that contain recoupment provisions. This decision is especially important with respect to employers which who maintain self-insured plans.
Massachusetts' sweeping health care reform law will affect every employer in the state and may be a national model for expanding health care.
Effective May 12, 2006, employers in New Jersey who provide healthcare coverage to employees through insurance policies issued in the State, must provide coverage for dependents under age 30.
The VFCP permits employers to proactively remedy fiduciary violations under the Employee Retirement Income Security Act (ERISA) by taking prescribed remedial actions. As the VFCP has been recently revised, employers may wish to review their compliance procedures.
In a boon for employees participating in FSAs, employers may adopt a grace period of up to 2½ months after a plan year in which participants may apply unused FSA funds. This article provides an overview of the provision and its benefits and drawbacks for employers.
Pending appeal of the decision, employers are encouraged to be cautious in making any changes to retiree health programs premised on the final rule of AARP v. Equal Employment Opportunity Commission (EEOC) or EEOC's final rule.
This article summarizes the most salient features of the Department of Labor's final "safe harbor" regulations relating to automatic rollover rules, in addition to the Internal Revenue Service's clarifications of such rules.
The new Working Families Tax Relief Act of 2004 (WFTRA) amending the definition of "dependent" not only affects tax preparation, it also impacts employee benefit plans. Learn the current definitions and implications of WFTRA from Littler's Employee Benefits Practice Group.
If signed into law by the President, the 2004 American Jobs Creation Act will affect a huge number of deferral arrangements, sponsored by employers, and require action within a short timeframe. Littler offers insight into the Act's provisions and its impact on current plans.
Employers may not know that widely recognized mutual funds sometimes pay to be recommended for inclusion in 401(k) plans. However lack of disclosure to participants, as well as increased investment costs and diminished returns, may open employers up to breach of fiduciary duty claims.
Upon approval, this final rule would provide employers the opportunity to maintain certain retiree health programs, such as Medicare bridge programs and Medicare carve-out programs, with reduced risk of violating the EEOC's policy on the Age Discrimination in Employment Act ("ADEA").
Major changes to COBRA regulations, as well as a recent IRS ruling on COBRA provisions, may cause immediate compliance problems for many employers. Littler highlights the changes and recommends specific steps employers should take to ensure compliance.