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DOL investigation results in sentencing of former Connecticut resident for theft of benefit checks

11 hours 23 min ago

After an investigation by the DOL’s EBSA and Office of Inspector General (OIG), Yolanda Silverio, a former eligibility coordinator for a Connecticut company that administers trust funds for public and private sector health benefit plans, has been sentenced by the U.S. District Court for the District of Connecticut to 10 months of imprisonment followed by three years of supervised release. The court has also ordered Silverio to pay $35,461.34 in restitution, perform 150 hours of community service, and notify any future employers in writing of her two prior fraud convictions.

Silverio, a former Meriden resident, received checks from individual participants in health plans as payment toward their union-related health benefits. Such plans are covered under the Employee Retirement Income Security Act.

The Department found that Silverio diverted 49 of these checks totaling $35,461.34 into her own bank accounts between May 2013 and July 2014. In 2004, she was convicted in federal court for embezzling more than $105,000 from two Connecticut businesses.

“Diverting benefit payments for one’s own use violates the law, and undermines the hard-earned benefits of American employees and their families,” said Carol S. Hamilton, EBSA Acting Regional Director in Boston. “The U.S. Department of Labor is committed to fighting fraud and abuse of employee benefit plans and pursues legal action against those who abuse their position of trust.”

“Yolanda Silverio abused her position of trust by diverting the hard-earned health benefits of American workers to her own personal use. We will continue to work with EBSA and law enforcement partners to vigorously pursue those who defraud employee benefit plans,” said Peter Nozka, Acting Special Agent-in-Charge, New York Region, U.S. Department of Labor Office of Inspector General.

SOURCE: www.dol.gov/ebsa
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Survey finds organizations mixed about sharing tax benefits with employees

Tue, 02/27/2018 - 19:00

Organizations are almost evenly split about whether or not they have or may increase pay and benefits for employees in reaction to the new tax reform law, according to a new survey from executive compensation consultancy Pearl Meyer. More companies are still considering changes compared to those that have already taken action.
Less than sixty days after the Tax Cuts and Jobs Act became law, nearly 20 percent of responding organizations have provided some enhanced benefits and approximately 35 percent are considering new or additional changes.
Key findings of the survey include:

  • 12 percent have already made changes;
  • 7 percent have already made changes and are considering additional changes;
  • 29 percent are considering changes; and
  • 52 percent of respondents are not planning to make any changes to their broad-based employee reward system.

“The respondents who don’t plan to take any action cite multiple reasons, including the fact that they don’t anticipate their company will recognize any benefits from the new tax structure or they already offer programs like profit sharing, which are directly correlated to the profitability of the organization,” said Dan Wetzel, managing director at Pearl Meyer. “Because there is such a public focus on the companies who are taking actions such as a one-time bonus, we suggest that those who are not making changes be prepared to answer employee questions by developing a solid communications plan to explain their rationale.”
Of companies that have already made changes, 65 percent awarded a one-time cash bonus, most commonly $1000 (54 percent) or less (27 percent). Close to half (46 percent) increased their minimum (or hourly) wage. Additionally 42 percent of the companies made other structural changes to pay and benefits (e.g., merit pool increases, enhanced benefit programs, increased retirement contributions, etc.) Of the companies considering action, 47 percent are planning or considering a cash bonus, 34 percent are considering an increase to their minimum (or hourly) wage, and 58 percent are considering making other structure changes to pay and benefits.
The top reasons for making changes were sharing the benefits of tax reform (70 percent), rewarding/recognizing employee importance to success of the business (67 percent), and staying competitive (32 percent). Respondent reasons for contemplating future actions generally mirror the rationale for those that have already taken action, although these companies cite considering the competitive environment more often and fewer anticipate improved expectations for their business.
The number of companies considering capital investments (23 percent) outweighs those who already have announced taking that step (5 percent). Just 4 percent have plans to increase hiring and 7 percent are considering a larger workforce.

SOURCE: Pearl Meyer.
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PBGC announces OMB approval of new forms for missing participant programs

Tue, 02/27/2018 - 18:43

The Pension Benefit Guaranty Corporation (PBGC) has announced that the Office of Management and Budget (OMB) has approved a new collection of information consisting of new forms and instructions for its missing participant programs.
In December 2017, the PBGC issued final regulations that expand its existing missing participants program to cover terminated 401(k) and most other defined contribution (DC) plans, multiemployer defined benefit (DB) plans, and certain DB plans that are not currently covered by the program. The regulations were effective January 22, 2018, and generally applicable for plans that terminate on or after January 1, 2018.
The PBGC also created new forms for the various types of plans and submitted the new collection of information to the OMB for review. The OMB approved the new collection of information through January 31, 2021. There are four types of plans that have their own forms and instructions-PBGC-insured DB single-employer plans (Form MP-100, Schedules A and B, and instructions); DC plans (Form MP-200, Schedules A and B, and instructions); small professional DB plans that are not insured by the PBGC (Form MP-300, Schedules A and B, and instructions); and PBGC-insured multiemployer plans (Form MP-400, Schedules A and B, and instructions).

Source: 83 FR 5146, February 5, 2018.
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Proposed rule would allow short-term, limited-duration health insurance for longer periods

Mon, 02/26/2018 - 17:35

The Departments of Health and Human Services (HHS), Labor, and the Treasury (the Departments) have issued a proposed rule that would amend the definition of short-term, limited-duration insurance to lengthen the maximum period of such insurance. Consumers would be allowed to buy plans providing coverage for any period of less than 12 months, rather than the current maximum period of less than three months.

Executive Order.

The proposed rule is in response to President Trump’s Executive Order 13813, issued on October 12, 2017, which directed the Departments to consider proposing regulations or revising guidance to expand the availability of short-term, limited-duration insurance. The order stated the Departments should consider allowing such insurance to cover longer periods and be renewed by the consumer.

Exempt from market requirements.

Short-term, limited-duration insurance is a type of health insurance coverage that was designed to fill temporary gaps in coverage that may occur when an individual is transitioning from one plan or coverage to another plan or coverage. Although short-term, limited-duration insurance is not an excepted benefit, it is exempt from the Public Health Service Act’s (PHSA) individual-market requirements because it is not individual health insurance coverage. PHSA Sec. 2791(b)(5 provides “[t]he term ‘individual health insurance coverage’ means health insurance coverage offered to individuals in the individual market, but does not include short-term limited duration insurance.”

Definition changed.

The PHSA does not define short-term, limited-duration insurance. Under regulations implementing HIPAA, and that continued to apply through 2016, short-term, limited-duration insurance was defined as “health insurance coverage provided pursuant to a contract with an issuer that has an expiration date specified in the contract (taking into account any extensions that may be elected by the policyholder without the issuer’s consent) that is less than 12 months after the original effective date of the contract.”
A final rule issued in October 2016, changed the definition of short-term, limited-duration insurance that had been in place for nearly 20 years by revising the definition to specify that short-term, limited-duration insurance could not provide coverage for 3 months or longer (including any renewal period(s)).

Proposed definition.

In light of Executive Order 13813, as well as continued feedback from stakeholders expressing concerns about the October 2016 final rule, the Departments propose to amend the definition of short-term, limited-duration insurance so that it may offer a maximum coverage period of less than 12 months after the original effective date of the contract, consistent with the original definition in the 1997 HIPAA rule. The proposed rule would expand the potential maximum coverage period by 9 months. In addition, the proposed rule would revise the required notice that must appear in the contract and any application materials for short-term, limited-duration insurance.

Comments requested.

The Departments seek comments on all aspects of this proposed rule, including whether the length of short-term, limited-duration insurance should be some other duration. The Departments seek comments on any regulations or other guidance or policy that limits issuers’ flexibility in designing short-term, limited-duration insurance or poses barriers to entry into the short-term, limited-duration insurance market.
Comments must be submitted by April 23, 2018. Electronic comments may be submitted to https://www.regulations.gov. Via regular mail send comments to: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-9924-P, P.O. Box 8010, Baltimore, MD 21244-8010.

SOURCE: Fact Sheet: Short-Term, Limited-Duration Insurance Proposed Rule, February 20, 2018.
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Retirement plan dollar limitations not changed by Tax Cut and Jobs Act of 2017, IRS says

Mon, 02/26/2018 - 17:16

The IRS has announced that the Tax Cut and Jobs Act of 2017 (P.L. 115-97) does not affect the 2018 cost-of-living adjustments (COLAs) for retirement plan dollar limitations. According to the IRS, the Tax Cut and Jobs Act of 2017 made no changes to the section of the tax law that limits benefits and contributions to retirement plans. Thus, the 2018 amounts released earlier (see IR-2017-1777) did not change after considering the new rules.
The IRS also discussed the effect of the new tax law on the COLAs for IRA contribution limits and the income thresholds related to IRAs and the saver’s credit. The IRS explained that the new tax law did make changes to how these COLAs are made, but after taking the applicable rounding rules into account, the COLA amounts for 2018 released earlier remain the same.

Source: IRS News Release IR-2018-19, February 6, 2018.
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FMLA leave noted as basis for low performance rating, sending retaliation claim to jury

Fri, 02/23/2018 - 18:12

The fact that a branch manager’s “considerable time off” in 2014 to take FMLA leave was noted as a factor justifying her lowered performance rating, and her lowered rating in turn was a cited reason for a bank not to consider her for an assistant manager position when her job was eliminated in a restructuring, was enough for a federal district court in Maryland to deny summary judgment on her FMLA retaliation claim. The branch manager’s age discrimination claim also avoided summary judgment, largely on the strength of evidence suggesting the bank’s performance goals were unrealistic and the bank knew it, as well as emails after she was fired suggesting to the court “a poorly justified decision” and “a post hoc effort to sustain that decision.” But her FMLA interference claim failed.

Position elimination.

After a former bank branch manager’s position was eliminated in a restructuring that consolidated two branches, the 67-year-old former manager was not even considered for the assistant manager position, which was given to a 35-year-old. The bank claimed poor performance; new ownership had made annual goals more ambitious, but she and at least some of her coworkers asserted that an “anemic customer base,” resulting from the growth of online banking and the poor financial position of many in the community, was the reason the bank failed to meet performance goals.
The employee also believed the bank held the FMLA leave she had taken in 2014 against her; the senior VP allegedly spoke of his doubts that her leave was “justified,” and her 2014 performance review—used to support the refusal to consider her for the assistant manager position—noted her “considerable amount of time” off as a factor in her lower performance rating. She sued the bank and the senior VP individually for age discrimination and FMLA interference and retaliation.

Age discrimination.

Denying summary judgment on the age discrimination claim, the court noted that while the branch manager conceded that she had failed to meet the bank’s expectations, she disputed the legitimacy of those expectations and her resulting performance review. She argued that the bank set unrealistic goals for a branch whose clientele was suffering economically, converting to online banking, and eschewing new loans, and that the senior VP and the regional president “recognized as much” (as did her coworkers). Plus she had evidence that in other years, her branch’s failure to meet performance goals had not affected her performance reviews.
To the court, “this inconsistency casts the Bank’s performance benchmarks as little more than aspirational goals, and, if expectations, ones for which the Bank provided allowances based on the difficulties facing [her] branch.” Then there was the fact that her review blamed her poor performance on her FMLA leave, which the court found was directly related to what a reasonable juror might determine were not legitimate expectations, and so the court found she had stated a prima facie case.

Pretext.

Because the bank’s decision not to consider the branch manager for the assistant manager position was based on her poor performance review, she had to provide evidence questioning the validity of this explanation. She submitted evidence of a series of e-mails between the senior VP and HR representatives—after she was fired—suggested to the court “a poorly justified decision” and “a post hoc effort to sustain that decision with legitimate justifications.” This was enough, combined with the selection of substantial younger candidate, to avoid summary judgment.

FMLA retaliation.

The bank argued there was no causal connection between the branch manager’s 2014 FMLA leave and her dismissal without being considered for the assistant branch manager position because the regional president did not know she had taken leave. He testified that he only reviewed her performance review score, not the attached comments, in her 2014 review. That argument did not convince the court, which pointed out that it was undisputed that her negative performance review contributed to the bank’s failure to consider her for the position and that her use of FMLA leave affected her score. The bank’s insistence that the decision to not consider her was motivated by its overall review of her performance necessarily reflected the senior VP’s negative treatment of her use of leave. There was also record evidence suggesting that the senior VP may have told the regional president about her FMLA leave; thus the decision to not consider her for assistant manager may have been either indirectly or directly influenced by her FMLA leave. This was enough, reasoned the court, to suggest both causation and pretext sufficient to avoid summary judgment on her FMLA retaliation claim.

No FMLA interference.

But there was not enough evidence to genuinely dispute the bank’s argument that it did not interfere with the branch manager’s FMLA rights in 2015. She alleged she knew that the senior VP had complained to coworkers about her 2014 leave and noted it in her performance review, so when she needed more time off for knee surgery in 2015, she did not immediately reveal why “for fear of professional consequences,” although she eventually did tell her supervisors. She claimed she would have taken more leave but for the bank’s interference. But, stressed the court, it didn’t matter whether the branch manager requested FMLA leave in March or April of 2015, or how much she would have requested, because the bank had already decided to eliminate her position. Given that timeline, a reasonable juror could not decide that the bank interfered with her FMLA leave by deciding to fire her because, when it decided to fire her, the employer had no idea she was going to seek FMLA leave in 2015.

SOURCE: Ward v. The Columbia Bank, (D. Md.), No. CCB-16-3606, February 2, 2018.
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Spencer’s Benefits NetNews – February 23, 2018

Fri, 02/23/2018 - 18:09
  About this Newsletter

The Spencer’s Benefits Reports is a summary of the week’s news items posted
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Featured This Week

 

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News

February 23, 2018

 

Sixth Circuit can’t create ambiguity in CBA to find vested lifetime healthcare benefits, High Court says

The Supreme Court has reversed and remanded a decision in which the Sixth Circuit held that the same “Yard-Man” inferences it once used to presume lifetime vesting could be used “to render a collective bargaining agreement ambiguous as a matter of law, thus allowing courts to consult extrinsic evidence about lifetime vesting.” That approach was inconsistent with the High Court’s decision in M&G Polymers USA, LLC v. Tackett, which required ordinary principles of contract law to be applied to CBAs. Because Yard-Man inferences are not “ordinary principles of contract law,” stressed the Court in an unsigned opinion, they can’t be used to support more than one “reasonable interpretation” of a contract to create an ambiguity and bring in extrinsic evidence….

        (Read Intelliconnect) »

National health expenditure growth expected to average 5.5 percent annually from 2017-2026

National health expenditure growth is expected to average 5.5 percent annually over 2017-2026, according to a report from the Office of the Actuary at the Centers for Medicare and Medicaid Services (CMS). Growth in national health spending is projected to be faster than projected growth in gross domestic product (GDP) by 1.0 percentage point over 2017-2026. As a result, the report projects the health share of GDP to rise from 17.9 percent in 2016 to 19.7 percent by 2026….

        (Read Intelliconnect) »

February 22, 2018

 

DOL investigation results in sentencing of former Connecticut resident for theft of benefit checks

After an investigation by the DOL’s EBSA and Office of Inspector General (OIG), Yolanda Silverio, a former eligibility coordinator for a Connecticut company that administers trust funds for public and private sector health benefit plans, has been sentenced by the U.S. District Court for the District of Connecticut to 10 months of imprisonment followed by three years of supervised release. The court has also ordered Silverio to pay $35,461.34 in restitution, perform 150 hours of community service, and notify any future employers in writing of her two prior fraud convictions….

        (Read Intelliconnect) »

IRS issues March 2018 AFRs

The March 2018 short-term, mid-term, and long-term applicable federal interest rates (AFRs) have been issued by the IRS. The March mid-term 175 percent AFR (Annual) rate, used to calculate interest charged to the funding standard account for underpayments of quarterly contributions under Code Sec. 412(m), is 4.51 percent….

        (Read Intelliconnect) »

PBGC announces OMB approval of new forms for missing participant programs

The Pension Benefit Guaranty Corporation (PBGC) has announced that the Office of Management and Budget (OMB) has approved a new collection of information consisting of new forms and instructions for the PBGC’s missing participant programs….

        (Read Intelliconnect) »

February 21, 2018

 

Proposed rule would allow short-term, limited-duration health insurance for longer periods

The Departments of Health and Human Services (HHS), Labor, and the Treasury (the Departments) have issued a proposed rule that would amend the definition of short-term, limited-duration insurance to lengthen the maximum period of such insurance. Consumers would be allowed to buy plans providing coverage for any period of less than 12 months, rather than the current maximum period of less than three months….

        (Read Intelliconnect) »

Federal budget agreement includes a number of retirement-related provisions

President Trump on February 9, 2018, signed the Bipartisan Budget Act (P.L. 115-123) into law after a brief government shutdown occurred overnight. The House approved the legislation, which contains a continuing resolution to fund the government and federal agencies through March 23, 2018, in the early morning hours of February 9, by a 240- to-186 vote. The Senate approved the bipartisan measure just before by a 71- to-28 vote. Among the retirement provisions in the new law are items relating to hardship withdrawals, disaster relief, and improper levies on retirement plans. Another provision creates a bipartisan Joint Select Committee to attempt to deal with multiemployer plan solvency issues. Many of the retirement provisions included in the budget deal had previously been included in the Tax Cuts and Jobs Act (P.L. 115-97) enacted late in 2017, but were dropped before final passage of that 2017 legislation….

        (Read Intelliconnect) »

February 20, 2018

 

Democratic staff of Joint Economic Committee warns Americans’ retirement security is headed for disaster

Americans’ retirement future is shaky and Congress must immediately enact policies to secure it, according to a February 2018 report from the Democratic staff of the Joint Economic Committee. Challenges to planning and saving for retirement include inadequate savings, stagnant wages, and limited access to low-cost and high return accounts, according to the recently-released “Retirement Security in Peril….”

        (Read Intelliconnect) »

Employee participation in defined contribution plans increases: PSCA

More defined contribution (DC) and 401k plan participants (84.9 percent) made contributions in 2016 than in previous years, according to a recent survey from the Plan Sponsor Council of America (PSCA). The PSCA’s 60th Annual Survey reflects the 2016 plan-year experience of 590 defined contribution (DC) plan sponsors, and found that Roth availability has doubled in the last decade and the use of automatic enrollment and auto-escalation have shown consistent, significant increases as well….

        (Read Intelliconnect) »

PBGC issues March 2018 interest rates for valuing terminating pension plans

For single-employer pension plans terminating January through March 2018, and for multiemployer plans involved in a mass withdrawal, the interest rate established by the PBGC for calculating immediate annuities is 2.39 percent, up from the 2.34 percent rate that applied in October through December 2017. The interest rate for calculating immediate lump sums in March 2018 is .75 percent, the same rate that applied in February 2018….

        (Read Intelliconnect) »

EBSA highlights results of enforcement and compliance activity in FY 2017

Fri, 02/23/2018 - 17:58

The Employee Benefits Security Administration (EBSA) has issued the results of its enforcement and compliance activity for employee benefit plans and participants in fiscal year (FY) 2017. EBSA’s oversight authority extends to nearly 681,000 retirement plans, approximately 2.3 million health plans, and a similar number of other welfare benefit plans, such as those providing life or disability insurance. As of October 2, 2015, these plans covered about 143 million workers and their dependents and included assets of over $8.7 trillion.
In fiscal year (FY) 2017, EBSA recovered $1.1 billion for direct payment to plans, participants, and beneficiaries. These recoveries resulted from enforcement actions and voluntary fiduciary corrections, as well as amounts recovered through the abandoned plan program and informal complaint resolution. The largest recoveries came from enforcement actions and informal complaint resolutions-$682.3 million and $418.7 million, respectively.

Civil investigations

In FY 2017, EBSA closed 1,707 civil investigations with 1,114 of those cases (65.3%) resulting in monetary returns for plans or other corrective action, which EBSA claims exhibits its ability to effectively target ERISA violators in the employee benefit plan universe. Of the $682.3 million recovered in its investigations, EBSA helped vested participants in defined benefit plans collect benefits of $326.7 million due to them. Also, 134 cases were referred for litigation, and nationwide in FY 2017, the Department of Labor filed suit in 50 civil cases.

Criminal investigations

In addition, EBSA closed 307 criminal investigations in FY 2017. EBSA’s criminal investigations, as well as its participation in criminal investigations with other law enforcement agencies, led to the indictment of 113 individuals – including plan officials, corporate officers, and service providers – for offenses related to employee benefit plans. The number of criminal cases closed with guilty pleas or convictions was 79.

Workers’ informal requests for assistance

Demonstrating how effective EBSA is in resolving workers’ problems with their employee benefit plans, EBSA’s benefits advisors closed more than 174,000 inquiries and recovered $418.7 million in benefits on behalf of workers and their families through informal resolution of individual complaints in FY 2017. These inquiries are also a major source of enforcement leads. In FY 2017, 617 new investigations were opened as a result of referrals from the benefits advisors.

Abandoned plans and compliance programs

During FY 2017, EBSA received 1,004 applications from Qualified Termination Administrators and closed 584 applications with terminations approved, with 586 plans making distributions of $27.9 million directly to participants pursuant to the terminations.

Compliance assistance programs

In FY 2017, EBSA received 1,303 applications for the Voluntary Fiduciary Correction Program and 22,139 annual reports (and $14.4 million) were received through Delinquent Filer Voluntary Compliance Program.

Education and outreach events

EBSA reported that it conducted over 1,800 education and outreach events for workers, employers, plan officials and members of Congress in FY 2017. Of the 1,815 total events, 735 were dislocated worker rapid response sessions, 234 were Congressional briefings, 364 were compliance assistance activities, and 482 were other participant assistance and public awareness activites.

Source: EBSA Fact Sheet for FY 2017 enforcement and compliance activities.
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Provider to pay $3.5M for leaving the door unlocked on ePHI

Thu, 02/22/2018 - 18:13

Fresenius Medical Care North America (FMCNA) agreed to adopt a corrective action plan (CAP) and pay $3.5 million to settle allegations with the HHS Office of Civil Rights (OCR) of potential violations of HIPAA’s Privacy and Security Rules.

Breach.

In 2013, FMCNA filed five breach reports regarding electronic protected health information (ePHI) from five FMCNA covered entities. A resulting OCR investigation revealed that FMCNA failed to conduct an accurate and thorough risk analysis of ePHI vulnerabilities. The impermissible disclosures stemmed from the fact that FMCNA provided unauthorized access to individual’s ePHI for purposes not permitted under HIPAA.
Among the specific breaches were failures to implement policies and procedures:

  • To address security incidents;
  • To govern the receipt and removal of hardware and electronic media that contain ePHI;
  • To safeguard facilities and equipment therein from unauthorized access, tampering, and theft, when it was reasonable and appropriate to do so under the circumstances; and
  • To encrypt and decrypt ePHI, when it was reasonable and appropriate to do so under the circumstances.
CAP.

The CAP requires FMCNA to conduct a risk analysis, develop a risk management plan, revise device management and control policies, develop an encryption report, and educate FMCNA workforce on the new policies and procedures.

SOURCE: www.hhs.gov
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IRS provides guidance on 2018 withholding rules, issues withholding tables for 2018

Thu, 02/22/2018 - 17:50

The IRS has issued guidance on the federal income tax withholding rules in response to recent changes made by the Tax Cuts and Jobs Act (P.L. 115-97). The IRS also has released IRS Publication 15 (Circular E), Employer’s Tax Guide for 2018, which includes the withholding guidance and tables.

Background

The Act made significant changes to federal income tax rates, deductions, and credits that affect income tax withholding. These include changes in available itemized deductions, increases in the child tax credit, a new dependent credit, and the repeal of dependent exemptions. To minimize the burden on employees and employers, the IRS has designed the 2018 withholding tables to work with the Form W-4 (Employee’s Withholding Allowance Certificate) that employees have already furnished their employers.
The IRS is currently revising Form W-4 to reflect the changes made by the Act, but the 2018 Form W-4 might not be available until after February 15, 2018. Until then, employees and employers should continue to use the 2017 Form W-4.

Exemption from withholding

The IRS has extended the effective period of Forms W-4 that employees furnish to their employer to claim exemption from income tax withholding for 2017 to February 28, 2018. The exemption was originally supposed to expire on February 15, 2018. Further, employees claiming exemption from withholding for 2018 can temporarily use the 2017 Form W-4 until 30 days after the 2018 Form W-4 is released, under the revised rules set forth in the guidance. Employees who claimed exemption for 2017 and are renewing exemption claims for 2018 must furnish their Forms W-4 by February 28, 2018, under the revised rules.

Changes in status

If a change in status occurs that reduces the number of withholding allowances to which an employee is entitled, the IRS has determined that the employee does not need to furnish the new withholding allowance certificate to the employer until 30 days after the 2018 Form W-4 is released (normally, the employee must furnish a new Form W-4 to the employer within ten days of the change in status). Further, if the withholding allowances reduction is due solely to the changes made by the Act, the employee does not need to furnish the employer with a new withholding allowance certificate during 2018.

Withholding on supplemental wages

The Act has changed the income tax rate tables for 2018 through 2025 by adding Code Sec. 1(j). This change has lowered the optional flat rate that employers may use to withhold income tax on supplemental wage payments during this period from 25% to 22%. Under the guidance, employers and other entities paying supplemental wages should implement the 22% optional flat rate as soon as possible, but not later than February 15, 2018. Employers using a higher withholding rate can, but are not required to, correct that withholding on supplemental wages paid on or after January 1, 2018, and before February 15, 2018.

Withholding on pension, annuity payments

The payor of certain periodic payments for pensions, annuities, and other deferred income generally must withhold from the payments as if they were wages, unless the individual payee elects not to have withholding apply. Plan administrators figure withholding by using the recipient’s Form W-4P and the federal income tax withholding tables.
If a withholding certificate has not been furnished to the payor, the withholding rate has normally been determined by treating the payee as a married individual claiming three withholding exemptions. The Act amended this rule so that the withholding rate “shall be determined under rules prescribed by the Secretary.” The IRS has determined that, for 2018, withholding on periodic payments when no withholding certificate is in effect continues to be based on treating the payee as a married individual claiming three withholding allowances.

Source: IRS Notice 2018-14.
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IRS updates FAQs reflecting 1095-B, 1095-C transition relief

Wed, 02/21/2018 - 18:34

The IRS has updated its Question and Answers on Information Reporting by Health Coverage Providers website to reflect the transition relief provided by IRS Notice 2018-06. Specifically, the IRS notes that it has extended the 2018 due date for furnishing 2017 Forms 1095-B and 1095-C to individuals, but has not extended the due date for filing the forms with the IRS. Notice 2018-06 extended the due date for furnishing the 2017 forms to individuals from January 31, 2018, until March 2, 2018.

Background.

Health insurers and applicable large employers (ALEs) are required, by Code Secs. 6055 and 6056, respectively, to file and furnish annual information returns and coverage statements. Employers and providers must furnish Forms 1095-B and 1095-C to employees or covered individuals regarding the health care coverage offered to them. The forms may help recipients determine whether they may claim the premium tax credit on their income tax returns. However, taxpayers do not have to file these forms with their returns; thus, they may prepare and file their returns before they receive their Forms 1095-B or 1095-C.

Transition relief.

The extension is automatic, so employers and providers do not have to request it. The due dates for employers and insurers to file 2017 information returns with the IRS are not extended. They are still due on February 28, 2018, for paper filers, and April 2, 2018, for electronic filers.

The IRS also notes in the FAQs that Notice 2018-06 did not affect the rules concerning the reduction of penalty amounts for 207 reporting under Secs. 6055 or 6056.

SOURCE: https://www.irs.gov/affordable-care-act/questions-and-answers-on-information-reporting-by-health-coverage-providers-section-6055#Extended Due Dates and Transition Relief
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Federal budget agreement includes a number of retirement-related provisions

Wed, 02/21/2018 - 18:23

President Trump on February 9, 2018 signed the Bipartisan Budget Act (P.L. 115-123) into law after a brief government shutdown occurred overnight. The House approved the legislation, which contains a continuing resolution to fund the government and federal agencies through March 23, in the early morning hours of February 9, by a 240-to-186 vote. The Senate approved the bipartisan measure just before by a 71-to-28 vote. Among the retirement provisions in the new law are items relating to hardship withdrawals, disaster relief, and improper levies on retirement plans. Another provision creates a bipartisan Joint Select Committee to attempt to deal with multiemployer plan solvency issues. Many of the retirement provisions included in the budget deal had previously been included in the Tax Cuts and Jobs Act (P.L. 115-97) enacted late in 2017, but were dropped before final passage of that 2017 legislation.

Hardship withdrawal provisions modified

The Budget Act includes several provisions relating to hardship withdrawals. Under one such provision, the measure removes the six-month prohibition on retirement plan contributions after a hardship withdrawal. The legislation further directs the IRS, within one year after enactment, to (1) change its administrative guidance in IRS Reg. Sec. 1.401(k)-1(d)(3)(iv)(E) to delete the current six-month prohibition on plan contributions, allowing employees taking hardship distributions from a retirement plan to continue contributing to the plan, and (2) make any other modifications necessary to carry out the purposes of Code Sec. 401(k)(2)(B)(i)(IV). The revised regulations would apply to plan years beginning after December 31, 2018.
Further, under the Act, new Code Sec. 401(k)(14) would permit employers to include qualified nonelective contributions (QNECs), qualified matching contributions (QMACs) and profit-sharing contributions amounts in a hardship withdrawal. It also would remove the requirement to take available loans under the plan before taking a hardship withdrawal. The provision applies to plan years beginning after December 31, 2018.

Special disaster relief for persons impacted by California wildfires

Under the Act, special disaster relief applies for retirement funds used by individuals impacted by the California wildfires. In general, the legislation provides relief from the 10 percent early withdrawal penalty under Code Sec. 72 for qualified wildfire distributions of up to $100,000 (reduced by qualified wildfire distributions received by the individual in prior tax years) made on or after October 8, 2017, and before January 1, 2019. The provision applies to distributions made to an individual whose principal place of residence during any portion of the period was in the California wildfire disaster area and who has sustained an economic loss due to the wildfires.
Unless the taxpayer elects not to do so, qualified wildfire distributions can be included in income ratably over a three-year period beginning with the year of distribution. In the alternative, for qualified wildfire distributions from an eligible retirement plan other than an IRA, amounts that are recontributed within the three-year period would be treated as a rollover distribution and not includible in income.
The legislation also allows individuals to recontribute, during the period beginning on October 8, 2017 through June 30, 2018, withdrawn funds to retirement plans. This special rule applies if the funds were received after March 31, 2017 and before January 15, 2018, and those funds were to be used to purchase or construct a home in a wildfire disaster area but which was not purchased or constructed on account of the wildfires.
Special rules apply for loans made to a qualified individual whose principal place of abode during any portion of the period from October 8, 2017 through December 31, 2017 is located in the California wildfire disaster area and who has sustained an economic loss due to the wildfires. For any loans made to a qualified individual from a qualified retirement plan during the period beginning on the date of enactment (February 9, 2018) and ending on December 31, 2018, the Act (1) increases the loan limit from $50,000 to $100,000 and (2) substitutes “the present value of the nonforfeitable accrued benefit of the employee under the plan” for “one-half of the present value of the nonforfeitable accrued benefit of the employee under the plan.”
The Act also delays the repayment deadline for loans from retirement plans for persons with an outstanding loan on or after October 8, 2017 from a qualified retirement plan by one year if the due date occurs during the October 8, 2017 through December 31, 2018 period. Any subsequent repayments are to be appropriately adjusted to reflect the delay in the due date and any interest accruing during such delay. In determining the five-year repayment period and the term of a loan, the one-year delay period is to be disregarded.

Improper levies on retirement plans

The Budget Act also includes a provision giving the IRS the authority to release a levy on property or money held in retirement plans that was wrongfully levied upon. The measure allows an individual to recontribute, either to an IRA or employer-sponsored plan, an amount withdrawn (and any interest paid on such amount) pursuant to a levy and later returned by the IRS to the individual. Contributions are allowed without regard to the IRA contributions and rollover limits that normally apply. The provision on holding individuals harmless on improper retirement plan levies is effective for amounts paid in tax years beginning after December 31, 2017.

Joint Select Committee on multiemployer plan solvency created

The Budget Act establishes a Joint Select Committee on Solvency of Multiemployer Pension Plans. The bipartisan committee composed of members from both parties and both houses of Congress will be formed in an attempt to address multiemployer pension plan solvency issues. The Joint Select Committee is to vote on a report, no later than November 30, 2018, containing a detailed statement of findings, conclusions, and recommendations of the joint committee and proposed legislative language to carry out these recommendations. The committee will include 12 members, consisting of six members from the House and six from the Senate and an equal number of Democrats and Republicans. If a majority of members from each party agree on a compromise, the committee’s recommendation would be guaranteed an expedited vote in both the House and Senate with no amendments. This expedited vote would occur no later than the last day of the 115th Congress.

Source: P.L. 115-123.
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Pension & Benefits NetNews – February 20, 2018

Tue, 02/20/2018 - 20:26
 

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Employee Benefits Management News

 

  • Creditable coverage disclosure due to CMS by March 1
  • AHIP hears what American workers want from their health plans
  • Provider to pay $3.5M for leaving the door unlocked on ePHI
  • Survey finds organizations mixed about sharing tax benefits with employees

Pension Plan Guide News

 

  • Federal budget agreement includes a number of retirement-related provisions
  • Retirement plan dollar limitations not changed by Tax Cut and Jobs Act of 2017, IRS says
  • PBGC issues disaster relief for California

 

Employee Benefits Management News

 

Creditable coverage disclosure due to CMS by March 1

Group health plan sponsors that provide prescription drug coverage to individuals eligible for Medicare Part D must disclose to the Centers for Medicare and Medicaid Services (CMS) whether the coverage is creditable or non-creditable. The disclosure obligation applies to all plan sponsors that provide prescription drug coverage, even those that do not offer prescription drug coverage to retirees. Calendar year plans must submit this disclosure to the CMS by March 1, 2018. For more information, see ¶2113E.

        (Read Intelliconnect) »

AHIP hears what American workers want from their health plans

American workers want to see businesses and health plans working together to improve health and lower costs, according to results of a survey from America’s Health Insurance Plans (AHIP) of employed U.S. adults with employer-provided health coverage. The top value-added services that survey takers wanted from their employers are wellness discounts and health or flexible savings accounts. For more information, see ¶2113G.

        (Read Intelliconnect) »

Provider to pay $3.5M for leaving the door unlocked on ePHI

Fresenius Medical Care North America (FMCNA) agreed to adopt a corrective action plan (CAP) and pay $3.5 million to settle allegations with the HHS Office of Civil Rights (OCR) of potential violations of HIPAA’s Privacy and Security Rules. For more information, see ¶2113I.

        (Read Intelliconnect) »

Survey finds organizations mixed about sharing tax benefits with employees

Organizations are almost evenly split about whether or not they have or may increase pay and benefits for employees in reaction to the new tax reform law, according to a new survey from executive compensation consultancy Pearl Meyer. More companies are still considering changes compared to those that have already taken action. For more information see ¶2113K.

        (Read Intelliconnect) »

Pension Plan Guide News

 

Federal budget agreement includes a number of retirement-related provisions

President Trump on February 9, 2018 signed the Bipartisan Budget Act (P.L. 115-123) into law after a brief government shutdown occurred overnight. Among the retirement provisions in the new law are items relating to hardship withdrawals, disaster relief, and improper levies on retirement plans. Another provision creates a bipartisan Joint Select Committee to attempt to deal with multiemployer plan solvency issues. Many of the retirement provisions included in the budget deal had previously been included in the Tax Cuts and Jobs Act (P.L. 115-97) enacted late in 2017, but were dropped before final passage of that 2017 legislation. For more information, see ¶155y.

        (Read Intelliconnect) »

Retirement plan dollar limitations not changed by Tax Cut and Jobs Act of 2017, IRS says

The IRS announced that the Tax Cut and Jobs Act of 2017 does not affect the tax year 2018 dollar limitations for retirement plans announced in IR-2017-177. As the recently enacted tax legislation made no changes to the section of the tax law limiting benefits and contributions for retirement plans, the qualified retirement plan limitations for tax year 2018 previously announced in the news release remain unchanged. For more information, see ¶155s.

        (Read Intelliconnect) »

PBGC issues disaster relief for California

The Pension Benefit Guaranty Corporation (PBGC) has announced relief from certain deadlines and penalties in connection with the Form 5500 series for “designated persons” adversely affected by wildfires, flooding, mudflows, and debris flows that began on December 4, 2017 in California. The relief generally extends from December 4, 2017 through April 30, 2018. For more information, see ¶155m.

        (Read Intelliconnect) »

 

For more information, visit http://www.wolterskluwerlb.com/rbcs.

AHIP hears what American workers want from their health plans

Tue, 02/20/2018 - 18:00

American workers want to see businesses and health plans working together to improve health and lower costs, according to results of a survey from America’s Health Insurance Plans (AHIP) of employed U.S. adults with employer-provided health coverage. The top value-added services that survey takers wanted from their employers are wellness discounts and health or flexible savings accounts. The survey also revealed that, while employer-provided coverage is important for recruiting, it is even more important for retention.
Most of the survey respondents (71%) reported that they are satisfied with their plans but concerned about rising costs. However, comprehensive coverage was more important to respondents than affordability of coverage.
Perhaps surprisingly, 60% of employees surveyed thought that the cost of their coverage is reasonable, but only 30% had the same opinion on the current cost of health insurance for other Americans. Seventy-nine percent expected the overall cost of health insurance for most Americans to increase across the board over the next two years.

What matters most.

The benefits that matter most to the consumers surveyed are prescription drugs, preventive care, and emergency care. Reasons that they gave for satisfaction with their current plans were more likely to be connected to comprehensive choice, affordability, and choice of providers, and less likely to involve plan engagement issues such as wellness incentives, customer service, and technological innovation and tools to improve health and understand coverage.
Contributions to health plans by employers tend to be underestimated by employees, but, as knowledge of contributions increases, so do favorable impressions of employers. Seventy-two percent of respondents believe they have a strong understanding of their benefits.

Government involvement.

Respondents said that they prefer greater market competition for health plans, as opposed to government involvement. Most oppose taxing employer provided plans.

Top areas for improvement.

Improvements that respondents would like to see, other than lower costs, were more comprehensive benefits (43%), more transparency (27%), and more flexibility and options (25%). Respondents seemed to show little concern for smaller, specific groups of people. For example, only 15% thought it was most important for their plans to cover therapy, rehabilitation, and assistance services. Only 14% felt the same way about mental health services and pediatric services, 11% about maternity and newborn care, and four percent about drug abuse recovery treatments.

SOURCE: www.ahip.org.
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Spencer’s Benefits NetNews – February 16, 2018

Fri, 02/16/2018 - 18:54
  About this Newsletter

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News

February 16, 2018

 

Survey finds organizations mixed about sharing tax benefits with employees

Organizations are almost evenly split about whether or not they have or may increase pay and benefits for employees in reaction to the new tax reform law, according to a new survey from executive compensation consultancy Pearl Meyer. More companies are still considering changes compared to those that have already taken action….

        (Read Intelliconnect) »

Federal interest rates announced for pensions

The following interest rates have been announced for use in the operation and administration of qualified pension plans….

        (Read Intelliconnect) »

Benefits costs increased 0.5 percent in fourth quarter 2017

Benefits costs for civilian workers increased 0.5 percent for the three-month period ending December 2017, according to the most recent Employment Cost Index from the Department of Labor’s Bureau of Labor Statistics (BLS). In the fourth quarter 2017, benefits costs rose at the same rate as salaries, which also increased 0.5 percent….

        (Read Intelliconnect) »

February 15, 2018

 

IRS updates FAQs reflecting 1095-B, 1095-C transition relief

The IRS has updated its Question and Answers on Information Reporting by Health Coverage Providers website to reflect the transition relief provided by IRS Notice 2018-06. Specifically, the IRS notes that it has extended the 2018 due date for furnishing 2017 Forms 1095-B and 1095-C to individuals, but has not extended the due date for filing the forms with the IRS. Notice 2018-06 extended the due date for furnishing the 2017 forms to individuals from January 31, 2018, until March 2, 2018….

        (Read Intelliconnect) »

Court declines to let ‘pro-life’ organizations intervene in contraceptive mandate rule challenge

A “Christ-centered institution of higher learning” and a “pro-life, nonsectarian advocacy organization” were not permitted to intervene in a lawsuit challenging the validity of two interim final rules expanding the religious exemption to the Patient Protection and Affordable Care Act (ACA) contraceptive mandate. The court held that the organizations—Dordt College and March for Life Education and Defense Fund—failed to establish that their interests would not be adequately represented by the named defendants….

        (Read Intelliconnect) »

February 14, 2018

 

Provider to pay $3.5M for leaving the door unlocked on ePHI

Fresenius Medical Care North America (FMCNA) agreed to adopt a corrective action plan (CAP) and pay $3.5 million to settle allegations with the HHS Office of Civil Rights (OCR) of potential violations of HIPAA’s Privacy and Security Rules….

        (Read Intelliconnect) »

HHS’ risk-adjustment calculation, while harmful to some, didn’t violate law

HHS’ use of a statewide average premium methodology to implement the risk-adjustment program—one of three premium-stabilization programs under the Patient Protection and Affordable Care Act (ACA)—was neither unreasonable nor arbitrary and capricious, a federal district court in Massachusetts ruled. The regulations did not violate the Administrative Procedure Act, nor did they contravene the statute providing for risk adjustment (42 U.S.C. Sec. 18063) despite the fact that they resulted in a provider paying 71 percent of its gross revenues into the program causing the company to go into receivership….

        (Read Intelliconnect) »

February 13, 2018

 

FMLA leave noted as basis for low performance rating, sending retaliation claim to jury

The fact that a branch manager’s “considerable time off” in 2014 to take FMLA leave was noted as a factor justifying her lowered performance rating, and her lowered rating in turn was a cited reason for a bank not to consider her for an assistant manager position when her job was eliminated in a restructuring, was enough for a federal district court in Maryland to deny summary judgment on her FMLA retaliation claim. The branch manager’s age discrimination claim also avoided summary judgment, largely on the strength of evidence suggesting the bank’s performance goals were unrealistic and the bank knew it, as well as emails after she was fired suggesting to the court “a poorly justified decision” and “a post hoc effort to sustain that decision.” But her FMLA interference claim failed….

        (Read Intelliconnect) »

EBSA highlights results of enforcement and compliance activity in FY 2017

The Employee Benefits Security Administration (EBSA) has issued the results of its enforcement and compliance activity for employee benefit plans and participants in fiscal year (FY) 2017. EBSA’s oversight authority extends to nearly 681,000 retirement plans, approximately 2.3 million health plans, and a similar number of other welfare benefit plans, such as those providing life or disability insurance. As of October 2, 2015, these plans covered about 143 million workers and their dependents and included assets of over $8.7 trillion….

        (Read Intelliconnect) »

February 12, 2018

 

AHIP hears what American workers want from their health plans

American workers want to see businesses and health plans working together to improve health and lower costs, according to results of a survey from America’s Health Insurance Plans (AHIP) of employed U.S. adults with employer-provided health coverage. The top value-added services that survey takers wanted from their employers are wellness discounts and health or flexible savings accounts. The survey also revealed that, while employer-provided coverage is important for recruiting, it is even more important for retention….

        (Read Intelliconnect) »

Congress did not include dialysis as ‘essential health benefit’ under ACA in 2013

When Congress prohibited health plans from excluding coverage for certain categories of services under the Patient Protection and Affordable Care Act (ACA), it did not mandate that plans cover any specific benefit within those categories, a federal district court in Wisconsin has ruled. The only way a particular service must be covered under 42 U.S.C. Sec. 18022(b)(1) is if HHS says it must be covered, and because HHS did not say dialysis was within the scope of “chronic disease management” for 2013, no basis existed for the court saying so….

        (Read Intelliconnect) »

Motive for firing employee shortly after she took time off to care for husband was questionable

Fri, 02/16/2018 - 18:14

An employee who was terminated seven days after telling her supervisor she would be submitting FMLA paperwork for leave to care for her husband, who had been diagnosed with brain tumors, raised genuine issues of fact sufficient to survive summary judgment on her FMLA interference and retaliation claims, held a federal court in Maryland. Temporal proximity could support a finding of causation on her retaliation claim. Also, although the employer claimed she was discharged for misconduct, it had not acted on the misconduct at the time it was supposed to have occurred and, in the interim, it had informed the employee that she was not being terminated. Therefore, the employee also established a question of fact as to the employer’s stated motives for terminating her.

Employee leave and termination.

The employee worked for a security consulting company, which had a policy that its offices at apartment complexes were to be staffed from 8:30 am to 5:00 pm Monday through Friday. Any teleworking or flex schedules had to be approved by a manager. In January 2016, the employee contacted her supervisor to inform him that her husband had been diagnosed with brain tumors and she would need to take a week off to take care of him. The employee took a week of paid leave and during the leave her supervisor informed her that her sick time expired at the end of that week and that any additional time off would need to be vacation or unpaid leave.
The following Monday, the employee informed the supervisor that she would need an additional day or two off, as her husband was scheduled to have surgery. The supervisor wrote back, saying that her sick time would “be accounted for either as used vacation time, or, if you need an unpaid leave with your job waiting for you, you’re free to take what time you need.” Until mid-February, the employee continued working from the apartment complex worksite from 7:30 am to 12:00 pm and from home in the afternoons. On March 2, her supervisor told her that she would either need to return to work or state that she was using FMLA leave. When she did not respond within a few hours, the supervisor said “we are left to assume that you’re in need of additional time” and, although “this is not a termination notice,” mandated that she return all company keys and equipment by Friday, March 4.
The employee did not return the equipment by Friday and emailed the supervisor on Monday, March 7, to say that she was not in a position to return to work, but would update him after her husband’s upcoming appointment. The supervisor responded that he needed a timeline on when she would return all company equipment and submit FMLA paperwork. The next day, the employer sent employees and police officers to the employee’s house to retrieve the company equipment. On March 9, the employer terminated her employment, citing poor performance. Also on that day, an assistant manager told the employee that an HR manager had stated that the employee “had stolen time and had been terminated.”

FMLA interference claim.

The employee claimed that the employer interfered with her FMLA rights by demanding she return to work and terminating her because she required leave to care for her husband. The court found that the supervisor’s emails clearly showed that he was not demanding that she return to work, but merely telling her that she needed to cite the FMLA if she needed more time off. However, the court did find a genuine issue of material fact as to whether the employer would have fired the employee regardless of the FMLA leave. The employer alleged that it discovered instances of misconduct by the employee during or prior to her leave, but it had not provided detail for the supposed instances of misconduct; it only made general allegations of misconduct concerning “clients” or “subordinates” without naming individuals. In addition, the employee provided an affidavit from her apartment complex client, testifying that it had not experienced any problems and that the employee was frequently on-site and was always available by phone or email.

FMLA retaliation claim.

Temporal proximity alone could establish the employee’s prima facie case of causation on her retaliation claim. She had notified her supervisor that she would be submitting FMLA paperwork just seven days before she was terminated. The employer presented an explanation of why the employee was fired (the alleged misconduct); however, there was a question of fact as to whether those reasons were legitimate. For example, some of the alleged misconduct took place in December 2015, but the employee was not terminated at that time. She was only discharged months later—after taking intermittent leave and informing the employer that she would be submitting FMLA paperwork. As to alleged misconduct in January and February 2016, the employee was told on March 2 that she was not being terminated, which raised at least a question of fact as to whether the employer’s proffered reason for her discharge was the true reason for the action.

Defamation claim.

The employee claimed that the employer defamed her by reporting to the police that she was in wrongful possession of the employer’s work equipment and by accusing her of “stealing time.” However, the employee did not allege who made the statement to the officers, or what the of ficers were told. Also, the statement about stealing time was conditionally privileged, as it was made in response to an inquiry and was not made with malice. Therefore, summary judgment was entered for the employer on the defamation claim.

SOURCE: Whitt v. R&G Strategic Enterprises, LLC, (D. Md.), No. 1:16-cv-02492-RDB, January 11, 2018.
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Creditable coverage disclosure due to CMS by March 1

Thu, 02/15/2018 - 18:23

Group health plan sponsors that provide prescription drug coverage to individuals eligible for Medicare Part D must disclose to the Centers for Medicare and Medicaid Services (CMS) whether the coverage is creditable or non-creditable. The disclosure obligation applies to all plan sponsors that provide prescription drug coverage, even those that do not offer prescription drug coverage to retirees. Calendar year plans must submit this disclosure to the CMS by March 1, 2017. For non-calendar year plans, the Creditable Coverage Disclosure is due to the CMS no later than 60 days after the beginning of the plan year.

Plan sponsors are required to submit the disclosure online using the Disclosure to CMS Form available on the CMS website. In preparing the disclosure to CMS, plan sponsors need to:

  • Identify the number of prescription drug options they offer to Medicare-eligible individuals. This is the total number of benefit options they offer, excluding any benefit options they are claiming under the retiree drug subsidy (RDS) program (i.e., benefit options for which the plan sponsor is expected to collect the subsidy).
  • Determine the number of benefit options offered that are creditable coverage and the number that are non-creditable. Note that prescription drug coverage is creditable if it is at least actuarially equivalent to Medicare Part D prescription drug coverage.
  • Estimate the total number of Part D-eligible individuals expected to have coverage under the plan at the start of the plan year (or, if both creditable and non-creditable coverage options are offered, estimate the total number of Part D-eligible individuals expected to enroll in each coverage category).

A new disclosure form should be submitted to the CMS within 30 days after any change in the creditable coverage status of the prescription drug plan, or if the plan is terminated for any reason.

SOURCE: www.cms.gov/Medicare/Prescription-Drug-Coverage/CreditableCoverage/CCDisclosureForm.html
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Prior to distribution, ESOP lacked “actual knowledge” of participant’s developmental disability

Thu, 02/15/2018 - 17:56

An ESOP plan administrator did not violate plan terms when it distributed about $80,000 to a developmentally disabled former employee who had been adjudged in state court to be legally incompetent, the U.S. Court of Appeals in Atlanta (CA-11) has ruled. Delivery of conservatorship papers regarding the employee’s incompetency to the grocery store where he worked was insufficient to provide the plan administrator with the “actual knowledge” of the worker’s legal incompetency required by the plan.
The Georgia state court appointed a conservator for the disabled employee, who continued to work at the grocery store for another three years. After his employment ended, the employee requested and received from the employer’s ESOP plan administrator a check for $78,509, the value of his stock benefits. Shortly thereafter the former employee lost the full amount in an internet scam.
The ESOP plan document provided that no distribution could be made if the plan administrator has “actual knowledge” that the participant is legally incompetent.
The conservator sued the ESOP and the employer, arguing that any distributions should have been made to him. He asserted that he had notified the store where the employee worked of the conservatorship. Since the grocery store chain is the plan administrator, this was sufficient notice, he argued.

No actual knowledge

In a per curiam decision the Eleventh Circuit affirmed the trial court’s grant of summary judgment to the plan and the employer. Delivery of conservatorship documents to the local store was insufficient to provide the plan administrator with actual knowledge, the court explained. Imputing to the plan administrator knowledge of everything that occurs in over 1,100 grocery stores “would be a tremendous burden.” Thus the court determined the plan administrator’s decision to deny the request for benefit reinstatement was correct.
Even if the decision had been incorrect, the court explained, it was not arbitrary and capricious. Prior to making the benefits determination, the administrator reviewed records in the Retirement Department and the Payroll Department and found no record of the conservatorship.

Source: Bauman v. Publix Super Markets, Inc. Employee Stock Ownership Plan (CA-11).
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IRS updates IRA FAQs on recharacterization for Tax Cuts and Jobs Act changes

Wed, 02/14/2018 - 18:34

The IRS has updated its website’s IRA FAQs concerning recharacterization of Roth rollovers and conversions for the changes made by the Tax Cuts and Jobs Act (P.L. 115-97). Effective January 1, 2018, under the Act, a conversion from a traditional individual retirement arrangement (IRA), SEP, or SIMPLE IRA to a Roth IRA cannot be recharacterized. In addition, the Act prohibits recharacterizing amounts rolled over to a Roth IRA from other retirement plans, such as 401(k) or 403(b) plans.
According to the IRS, a recharacterization allows an IRA owner to treat an annual contribution made to a Roth IRA or to a traditional IRA as having been made to the other type of IRA. If the recharacterization is done by the due date for filing tax returns (including extensions), the contribution may be treated as made to the second IRA for that year.

Impact of Act

The IRS explains that a Roth IRA conversion made in 2017 may be recharacterized as a contribution to a traditional IRA if the recharacterization is made by October 15, 2018. A Roth IRA conversion made on or after January 1, 2018 cannot be recharacterized. For more details, the IRS recommends reviewing “Recharacterizations” in Pub. 590-A (Contributions to Individual Retirement Arrangements (IRAs)).

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Tasking employee while she was on FMLA leave could constitute interference

Wed, 02/14/2018 - 18:27

Denying a school board’s motion for summary judgment in part, a federal district court in Illinois concluded that a principal who telephoned a teacher who was on medical leave and asked her to come up with lesson plans and to post grades could be considered to have “crossed the line into interference.” However, the employer’s request for a second medical opinion before approving leave did not constitute interference and the employee failed to raise a triable issue on her FMLA retaliation claim because the employer’s unrebutted evidence indicated she would have been suspended and terminated for poor performance in any event.

New principal reassigns employee.

The employee worked as a writing coach for Chicago Public Schools, and as part of her duties, she would create writing curriculum and writing programs. A new principal came on board in March 2007, and she became concerned about the employee’s performance as a writing coach. She reassigned the employee to a classroom teaching position beginning with the 2009-10 school year. According to the employee, the principal switched her grade assignment every year from that point forward, “for four years until she sought my termination.”

Unsatisfactory performance ratings.

Also, after several years of satisfactory reviews, the principal gave the employee an unsatisfactory rating in 2012. This required the employee to go through a remediation plan. According to the employer, she did not cooperate with the process, which involved classroom observations by the principal and a “consulting teacher.” The employee also refused to sign post-observation feedback forms. Ultimately, the principal gave the employee multiple unsatisfactory performance ratings and informed her in May 2013 that she would seek the employee’s termination. The employee was suspended in July 2013 after failing to complete a remediation process, and she was fired in October 2017.

FMLA leave period.

Meanwhile, the employee took her first FMLA leave in January 2010 for three weeks. She took leave again in March 2012; she was also approved for two extensions for a total of three months. She applied for FMLA leave a third time in February 2013 but was informed the employer needed a second medical opinion first. The second opinion was provided in mid-March and her leave was retroactively approved from early February to early April 2013.
According to the employee, the principal contacted her multiple times during her 2013 leave, requesting emergency lesson plans for the entire leave period and directing the employee to post student grades even though it was not yet necessary. The employer countered that the principal only asked a few non-intrusive questions, such as where the emergency lesson plans were stored, and the employee was not asked to perform any work while on leave.
After she returned from leave, the employee was allegedly subjected to unfair deadlines, and was given only a one-day extension for providing a report that was due the day she returned, while other teachers received “a few weeks” to submit the same report.

FMLA interference.

Filing suit, the employee claimed the principal interfered with her FMLA leave by encouraging the employer to contest her medical certification and require a second opinion, by contacting her and requiring her to work while on leave, and by demanding she complete a report within one day of returning from leave. Because the FMLA allows employers to request a second medical opinion before approving leave, the court granted summary judgment against that interference claim. The claim concerning the one-day deadline also failed because that report did not influence the employee’s discipline, suspension, or termination. And while the deadline may have made the employee’s return to work unpleasant, nothing in the record suggested that it rendered her FMLA leave “illusory” or led to negative consequences.
Summary judgment was denied, however, with respect to the contacts during the employee’s third period of leave. Crediting the employee’s version of events, the principal “crossed the line into interference by demanding that Plaintiff—while on leave—perform work such as providing lesson plans and posting grades.”

FMLA retaliation.

The employee also claimed that the employer suspended and ultimately fired her in retaliation for her having taken protected FMLA leave. Granting summary judgment against this claim, the court first explained that the employee did not identify a comparator employee so the McDonnell Douglas framework did not apply and it would have to instead evaluate the evidence as a whole to determine if it would allow a reasonable factfinder to conclude that her FMLA leave was causally connected to her suspension and termination.
Even assuming (without deciding) that the employee showed causation, the court found that her claim could not survive because the unrebutted evidence showed she would have been suspended and later fired even absent a retaliatory motive. She continued receiving “unsatisfactory” performance ratings throughout her remediation process, she refused to participate in some of the process, and the board of education took all necessary steps under applicable state law before suspending and dismissing her. The court also noted that the same principal gave favorable performance reviews to other teachers who took leave, which indicated the employee was rated poorly because she performed poorly, not because she took leave.

SOURCE: Hall v. Board of Education of the City of Chicago, (N.D. Ill.), No. 14-cv-3290, January 29, 2018.
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