The Pension Benefit Guaranty Corporation has released a proposed regulation that would set a uniform due date for all PBGC premiums. Under current rules, the premium due date depends on the size of the plan and the type of premium. For example, large calendar-year plans are required to pay fixed-rate premiums on February 28 and variable-rate premiums on October 15 of the premium year. The proposed rule would apply the October 15 date to all premiums for calendar year plans of any size, to match the extended due date for annual reports on Form 5500.
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Labor Department Extends Plan Disclosure Deadline
The Labor Department has extended the deadline for section 401(k) plans and other defined contribution plans to provide a comparative chart with information about investment alternatives. The extension gives plan administrators an opportunity to re-set their disclosure schedules so that they can provide the comparative chart with other recurring disclosures, such as enrollment material or individual benefit statements.
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ACA Employer Mandate Survives Constitutional Challenge
A federal court of appeals has ruled unanimously that the employer mandate under the Affordable Care Act is a valid exercise of Congress’s constitutional power to regulate commerce. The employer mandate requires employers with more than 50 full-time employees to provide affordable health coverage or pay a penalty. The plaintiffs argued that the Commerce Clause of the Constitution does not give Congress the power to force employers to purchase health insurance for their employees.
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Misclassified Workers Create Penalty Risks Under Health Reform
Earlier this year we described the IRS’s Voluntary Classification Settlement Program (VCSP), which substantially reduces an employer’s liability for back taxes when the employer voluntarily reclassifies employees who have been treated as independent contractors. Through June 30, the relief program is available even if the employer did not file Forms 1099 reporting the compensation paid to the workers. Starting in July, however, an employer will be eligible for the program only if the employer filed all required Forms 1099 for the previous three years with respect to the workers it wishes to reclassify.
What does worker classification have to do with health reform? Quite a lot, as it turns out. Starting in 2014, employers with more than 50 full-time employees will owe a “shared responsibility” excise tax if they fail to offer group health coverage on every day of the month to at least 95% of their full-time employees and the employees’ dependent children. A “full-time employee” is a common-law employee who works an average of at least 30 hours per week. (You will find a more detailed description of the shared responsibility rules here and here.)
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EEOC Holds Hearing on Workplace Wellness Programs
The Equal Employment Opportunity Commission held a hearing this week on “Wellness Programs Under Federal Equal Employment Opportunity Laws.” Amy Moore testified at the hearing on behalf of long-time Covington client The ERISA Industry Committee (“ERIC”), a non-profit association committed to the advancement of the employee retirement, health, and other benefit programs of America’s largest employers.
The hearing focused on the treatment of wellness programs under the Americans With Disabilities Act (“ADA”). The ADA permits employers to offer voluntary medical examinations or request voluntary medical histories as long as they keep the information confidential and do not use it for discriminatory purposes. The EEOC issued enforcement guidance in 2000 stating that voluntary wellness programs can qualify for this exception; but the EEOC has never made it clear whether a wellness program is “voluntary” if it offers employees incentives to participate in the program.
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While the Supreme Court considers DOMA’s fate, what’s an in-house benefits lawyer or HR professional to do?
If the Supreme Court holds that the Defense of Marriage Act (“DOMA”) is unconstitutional, those involved with the administration of employee benefits plans will be very busy. Under DOMA, a benefit plan is not required to recognize same-sex marriage and, in many cases, must treat same-sex spouses differently than opposite-sex spouses. If DOMA is struck down, employers might need to amend their benefit plans, and plan administration will necessarily change. Many changes will need to be implemented quickly.
Continue Reading While the Supreme Court considers DOMA’s fate, what’s an in-house benefits lawyer or HR professional to do?
IRS Clarifies Family Health Coverage Mandates
The Affordable Care Act requires an employee to have a minimum amount of health coverage starting in 2014, and requires an employer to offer affordable health coverage to its employees. But how do these health mandates apply to the employee’s spouse and dependents? Recent IRS regulations fill in several pieces of this puzzle.
Several provisions of the Affordable Care Act work together to expand health coverage. An individual mandate requires most individuals to maintain minimum essential health coverage or pay a penalty. In order to encourage employers to offer health coverage to their employees, an employer mandate imposes an excise tax on large employers that fail to offer affordable, minimum value coverage to their full-time employees. If a lower-income individual is not eligible for affordable coverage from another source and purchases individual health insurance, the individual receives a refundable premium tax credit that helps make the coverage affordable. Although these provisions are related, each provision applies in a different way to an employee’s family members. The family coverage rules have important implications for the design and administration of employer group health plans.Continue Reading IRS Clarifies Family Health Coverage Mandates
Labor Department Addresses Key Issues for Cleared Swaps
The Department of Labor resolved key issues related to cleared swaps transactions in a recent advisory opinion. The opinion concludes that margin posted by an employee benefit plan in connection with a cleared swap is not a “plan asset” for purposes of ERISA, and that a Clearing Member does not act as a fiduciary of the plan when the Clearing Member exercises discretionary account liquidation rights upon the plan’s default. The opinion also provides guidance on prohibited transaction issues raised by the clearing process.
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IRS Proposes Shared Responsibility Tax Rules for Employers
Starting in 2014, large employers will have to pay a “shared responsibility” excise tax up to $3,000 per employee if they fail to provide affordable health coverage to full-time employees and their dependents. The Treasury Department and IRS have published a proposed regulation and frequently-asked questions that make important changes in prior guidance.
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Fiscal Cliff Legislation Extends Tax Advantages for Popular Fringe Benefits, Expands In-Plan Roth 401(k) Conversions
The United States government narrowly avoided falling over the so-called “fiscal cliff” by enacting the American Taxpayer Relief Act of 2012 (“ATRA”). ATRA’s impact on tax rates has been covered extensively in the national media. ATRA also included several employee benefit provisions that are of interest to employers and their employees.
Continue Reading Fiscal Cliff Legislation Extends Tax Advantages for Popular Fringe Benefits, Expands In-Plan Roth 401(k) Conversions