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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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Featured This Week

 

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

The Spencer’s Benefits Reports is a summary of the week’s news items posted
in the WHAT’S NEW pages of Spencer’s Benefits Reports
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(depending on the link*).

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Featured This Week

 

New Reports

 

 

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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Bipartisan multiemployer pension bill takes shape

Tue, 02/13/2018 - 19:20

A bipartisan proposal for changes to multiemployer pensions is taking shape on Capitol Hill. Rep. Donald Norcross (D-NJ) and Rep. Phil Roe (R-TN) said that they plan to roll-out a bill that would allow some multiemployer plans to move to a hybrid structure. Their proposal, called the Give Retirement Options to Workers Act (GROW Act), could be part of an omnibus fiscal year (FY) 2018 federal spending bill.
According to the lawmakers, many multiemployers plans are struggling with funding. Two years ago, the House Education and Workforce Committee cautioned that the Pension Benefit Guaranty Corporation (PBGC) is expected to run out of funds to pay multiemployer benefits around 2024. At that time, a similar composite approach was debated in the Committee.
Hybrid approach
The hybrid approach (also known as a “composite” approach or plan) includes elements of defined contribution (DC) plans and defined (DB) benefit plans. “The GROW plan offers another tool in the toolbox for workers to grow their retirement savings and employers to grow their businesses,” Norcross said. “This bipartisan proposal will provide a new voluntary vehicle for retirement savings that combines the best components of defined benefit and defined contribution plans,” Roe said.
Opposition
The hybrid/composite approach has generated opposition. “The proposal would allow relatively healthy multiemployer plans with secure and adequate benefits to transition to inferior plans,” the Pension Rights Center cautioned. “This proposal would shrink the number of defined benefit plans, and since fewer plans would be paying premiums to the PBGC, it would also hurt solvent plans,” the International Association of Machinists and Aerospace Workers said.
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Employees’ mistaken acknowledgment of independent contractor status precludes ERISA and COBRA claims

Tue, 02/13/2018 - 18:38

ERISA and COBRA claims brought by employees against Superior Healthplan, Inc., and Centene Corporation were dismissed by the U.S. District Court for the Western District of Texas, based on an agreement the employees had signed that acknowledged they were independent contractors, not common law employees. The employees were allowed to proceed with claims under the Fair Labor Standards Act (FLSA), however.

The employees had pointed out that their independent contractor status had later been determined to be improper. Therefore, they argued, they were common law employees entitled to participate in the employer’s ERISA plans.

The court agreed that its decision “may appear unfair,” but it explained that, in order to bring an action for benefits under an ERISA plan, the employees had to not only show that they were common law employees, they had to be eligible to receive benefits in accordance with the language of the plan (citing Bauer v. Summit Bancorp, (CA-3), 325 F.3d, 155, 159, 2003.

The plan had been drafted to exclude anyone who signed an independent contractor agreement even if they were later “adjudicated to be a common law employee.” Therefore, individuals who were really company employees could be barred from the employer’s health plan merely because they had previously agreed that they were independent contractors.

The court explained that ERISA has few limitations on who employers may exclude from their plans, and the limitations are primarily for age and length of service. Excluding individuals who are erroneously categorized as independent contractors is apparently allowed by ERISA, according to the court.

SOURCE: Martinez v. Superior Healthplan, Inc., (DC TX), No. SA-16-CV-870-XR, January 23, 2018.
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Report shows continued shift toward consumer-directed health care

Mon, 02/12/2018 - 18:51

The third annual “State of Employee Benefits” report published by Benefitfocus, Inc., shows a continued shift toward consumer-directed health care, with the rate of employers offering at least one high-deductible health plan (HDHP) increasing more than 20 percent since 2016. This growth primarily stems from employers offering HDHPs alongside traditional health plans, reflecting the increased commitment among employers to offer more choice to employees. With respect to enrollment, the data indicates that employees’ health plan preference and benefits needs differ by demographic criteria, making plan diversity critical. The report is derived from the analysis of anonymous employee benefit election data of more than 1.3 million consumers from 540 large employers
“This is a pivotal time for the benefits market as core and voluntary plan options multiply to meet consumers’ preferences,” said Ray August, President & CEO, Benefitfocus. “As employers seek to offer competitive packages while containing costs, the size and scale of our platform gives us the unique ability to identify trends and use data-driven insights to tailor our solutions to market needs and advise employers and, equally as important, their brokers, on how to be more efficient about their benefits strategy and plan design.”
The report identifies other key trends for the 2018 benefit plan year, including:

  • Employees are embracing health savings accounts. Participation in HSAs among eligible employees – those in HDHPs – grew by more than 60 percent, from roughly 50 percent in 2017 to 81 percent in 2018. Millennials were especially eager to adopt these accounts, nearly doubling their HSA participation from 2017.
  • Higher earners don’t mind higher deductibles. The report points to mounting evidence that HDHPs are more appealing to employees with higher incomes. On average, employees enrolled in HDHPs for 2018 earn seven percent more than employees enrolled in PPOs‐a percentage difference more than twice what it was last year. This trend is consistent across all age groups.
  • Reduced out-of-pocket risk offsets rising premiums. As employers continue to fine-tune plan design, most employees will again see their medical premiums increase, but will also enjoy lower deductibles in 2018. Notably, PPO subscribers will see a nine percent decrease for family-coverage plans and a seven percent decrease for single-coverage plans.
  • Voluntary benefits address a diverse set of employee needs, from critical illness to pets. In addition to options like hospital indemnity, critical illness and accident insurance, employers are increasingly offering products like legal insurance, identity theft protection and pet insurance to round out their voluntary benefit offerings. Over the past two years, the share of large employers offering identity theft protection rose 56 percent, with the share offering pet insurance up 80 percent.

Source: Benefitfocus.
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Court won’t reconsider denial of summary judgment to employer who arguably fired worker based on FMLA-qualifying absences

Fri, 02/09/2018 - 18:34

An employer who fired a worker after he received three disciplinary notices, two of which may have been issued based on FMLA-qualifying absences, failed to persuade a Kentucky federal court to reconsider its prior decision denying summary judgment on the employee’s FMLA interference and retaliation claims. The court rejected the employee’s assertion that the employer had access to medical records of his “chronic” back condition through the third-party benefits administrator, but found that triable issues still existed as to whether the employer had notice of his potential need for FMLA leave based on the fact that he called in sick every day, provided other medical records, and was instructed by a manager to return to the doctor to obtain further documentation.

Called in daily.

The employee, who worked at Pella’s manufacturing plant since 2004, allegedly had a history of attendance issues. In June 2014, he suffered an on-the-job back injury and began calling in sick on June 9. He continued to call in every day until he returned on August 26, each time stating that he could not work due to back pain or spasms. He claimed that in doing so, he was following the same procedure as when he was off from work for several days in 2005 due severe gum disease, at which time Pella had sent him FMLA paperwork.

Met with HR.

When he first visited his physician on June 26, he was diagnosed with lumbar and muscle spasms and prescribed multiple medications. He gave the doctor’s note to the HR manager, who provided him with contact information to apply for short-term disability but not FMLA paperwork (the HR manager disputed this, claiming he gave him the FMLA paperwork). The employee applied for short-term disability but his application was denied.

Disciplinary notices.

While he was still out, the employee’s manager advised him to go back to the doctor. On July 31, he saw his doctor, who performed an x-ray that revealed severe arthritis and degenerative disc disease and prescribed multiple medications. When he returned to work in late August, he received two “corrective action letters,” one for failing to report for mandatory overtime during his absence and the other for “excessive absenteeism” from the first day he called out until HR received his doctor’s note. He was required to sign both or be terminated.

Terminated.

About five months later, he was terminated following disputed absenteeism issues that resulted in a third “corrective action letter.” Pella claimed that he had taken six sick days, that some were vacation days, and that one was for personal business. The employee, on the other hand, said that he had only taken off one or two of the days and that the remaining days he was training another employee and had been sent home because he was no longer needed. The company’s attendance records were also inconsistent.

Medical records not needed for notice.

Pella argued that the court erroneously relied on the employee’s July 31 medical records-which contained new diagnoses and described his injuries as chronic-as evidence that it had notice of his FMLA-qualifying condition, since the employee only provided a boilerplate note after the visit. While the court rejected the employee’s unsupported assertion that Pella had knowledge of the medical records through its third-party benefits administrator, it found that it did not matter whether Pella had access to the records. Rather, triable issues still existed as to whether it was notice of his FMLA qualifying condition based on evidence that he repeatedly called in sick due to back injury, provided his June 26 medical records, and was instructed by Pella to obtain further documentation from his doctor.

Indeed, the fact that his manager undisputedly instructed him in July to return to his doctor to obtain medical documentation for his absences created a jury question as to whether he put Pella on notice of its duty to inquire further about whether FMLA leave was being sought. It did not appear that he was told to obtain a certification from his doctor, that he was provided such a form in anticipation of that visit, or that Pella advised him of the consequences of failing to bring a completed certification or adequate medical documentation following the appointment. There was also no evidence that Pella advised him that the generic note he did provide was inadequate.

Wrong standard applied, but no harm no foul.

In denying summary judgment, the court had held that Pella’s assertion that it terminated the employee based solely on his February 2015 absences was insufficient since he disputed whether he missed each of the days and his termination notice referenced all three of his disciplinary letters (thus including the potentially FMLA-qualifying absences). Pella now argued that this analysis was error since its burden was only to produce the reason, not actually persuade the court that the reason motivated its decision. The court agreed, finding it apparently conflated the third and fourth steps of the McDonnell Douglass analysis. However, because its analysis was valid under the pretext prong, it stood by the initial reasoning.

Triable issues on pretext.

Pella also asserted that it terminated the employee based on his 2014 and 2015 absences together over a twelve-month period, which it claimed was a legitimate ground for terminations. However, as the court explained in its prior order denying summary judgment, that reason was “intimately intertwined” with his potentially FMLA-qualifying leave since triable issues existed as to whether it had adequate notice of his alleged need for FMLA leave for those 2014 absences.

Honest belief doctrine. Lastly, the court rejected Pella’s assertion that summary judgment was warranted based on the honest belief doctrine. Even if the company honestly believed the 2014 corrective action letters were warranted, a jury might find that the employee’s 2014 absences were FMLA-qualifying and terminating him based on the 2014 letters violated the FMLA.

SOURCE: West v. Pella Corp., (W.D. Ky.), No. 5:16-cv-00154-TBR-LLK, January 9, 2018.
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Spencer’s Benefits NetNews – February 9, 2018

Fri, 02/09/2018 - 18:17
  About this Newsletter

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Featured This Week

 

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News

February 9, 2018

 

Americans hold their defined contribution plans in high esteem

Americans remained confident that 401(k)s, and other defined contribution (DC) plan accounts, will help them meet their personal retirement goals, according to a new study released by the Investment Company Institute (ICI). The study, “American Views on Defined Contribution Plan Saving, 2017,” found that, overall, 77 percent of US households were confident that 401(k) and other employer-sponsored retirement plan accounts can help individuals meet their retirement goals….

        (Read Intelliconnect) »

2018 pension plan limits not affected by Tax Cuts and Jobs Act

The IRS has announced that the Tax Cuts and Jobs Act (P.L. 115-97) does not affect the tax year 2018 dollar limitations for retirement plans announced in IR 2017-177 and detailed in Notice 2017-64….

        (Read Intelliconnect) »

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

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….

        (Read Intelliconnect) »

February 8, 2018

 

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, 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….

        (Read Intelliconnect) »

Bipartisan multiemployer pension bill takes shape

A bipartisan proposal for changes to multiemployer pensions is taking shape on Capitol Hill. Reps. Donald Norcross (D-N.J.) and Phil Roe (R-Tenn.) said that they plan to roll-out a bill that would allow some multiemployer plans to move to a hybrid structure. Their proposal, called the Give Retirement Options to Workers Act (GROW Act), could be part of an omnibus fiscal year (FY) 2018 federal spending bill….

        (Read Intelliconnect) »

February 7, 2018

 

Idaho willing to accept non-ACA-compliant plans

The Idaho Department of Insurance, as directed by the governor, is developing guidance for health care insurers that will enable state carriers to offer more health care plans that do not comply with all of the requirements of the Patient Protection and Affordable Care Act (ACA). The move comes following Congress’ elimination of the individual mandate penalty and an executive order issued by President Trump….

        (Read Intelliconnect) »

NY, MN sue Administration for reducing Basic Health Plan funding

The Attorneys General of New York and Minnesota, the only two states to have created Basic Health Plans (BHPs) under the promise of federal funding, filed suit in the Southern District of New York against the Trump Administration for telling the states in December 2017 that it was cutting BHP funding by approximately 25 percent. The states argue in the complaint that the action was “abrupt and unlawful” and “will inflict significant financial injury on the states by forcing them to cover this dramatic loss in federal funding to avoid jeopardizing programs that provide over 800,000 low-income people with access to affordable health care….”

        (Read Intelliconnect) »

February 6, 2018

 

Tasking employee while she was on FMLA leave could constitute interference

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….

        (Read Intelliconnect) »

IRS updates IRA FAQs on recharacterization for Tax Cuts and Jobs Act changes

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….

        (Read Intelliconnect) »

February 5, 2018

 

Employees’ mistaken acknowledgment of independent contractor status precludes ERISA and COBRA claims

ERISA and COBRA claims brought by employees against Superior Healthplan, Inc., and Centene Corporation were dismissed by the U.S. District Court for the Western District of Texas, based on an agreement the employees had signed that acknowledged they were independent contractors, not common law employees. The employees were allowed to proceed with claims under the Fair Labor Standards Act (FLSA), however….

        (Read Intelliconnect) »

Nearly 70 percent of small business owners not confident about retirement

Sixty-nine percent of small business owners have zero to little confidence that they will be able to retire comfortably, according to a recent survey from Paychex. Thirty percent said they were somewhat confident, 21 percent said they were not at all confident, and 18 percent fall between somewhat confident and not at all confident—adding up to a total of 69 percent. Only 20 percent said they were very confident that they will have enough money to retire comfortably….

        (Read Intelliconnect) »

Retiring employees had vested right to benefits, but required scope of benefits is jury question

Thu, 02/08/2018 - 18:16

Retired county workers who alleged their former employer breached its promise of cost-free retiree health coverage for life at the same level the employee enjoyed on his last day of employment will present their contract claims to a jury, a federal district court in Georgia decided. The court found the employees had a vested right to receive the same level of healthcare benefits in retirement as they received on their last day of work. However, it concluded that a jury would have to determine precisely what that level of benefits was supposed to be. Therefore, the parties’ summary judgment motions were denied.
The plaintiffs were retirees of the Unified Government of Athens-Clarke County, Georgia (ACC). Each started work as a city or county employee prior to 1991, and each had at least 15 years of combined, continuous service at retirement. They alleged that the employer breached a promise to employees hired before July 1, 2002, that, in return for a certain minimum number of years of service, it would provide cost-free health coverage for life at the same level that the employee received on his or her last day of employment, including coverage for dependents. The employer maintained that any such deal was unenforceable; alternatively, it argued that if an enforceable deal was struck, it was different than what the retirees alleged.

Separate entities, different plans.

Prior to 1991, the city of Athens and Clarke County operated as separate entities, with separate health insurance plans. In 1975, the city made assurances to employees, by resolution, that it would provide health insurance coverage for retirees who had put in at least 15 years of continuous service. In 1990, the city adopted a motion that employees hired on or after July 1 of that year would receive 100-percent coverage upon retirement but would have the option of obtaining dependent coverage at 100-percent cost to the retiree. The county, on the other hand, approved a motion in 1981 promising that it would pay the cost of the health insurance that the employees had at the time of retirement. Three years later it passed an amendment that required eligible retirees (and/or their spouses) to enroll for Medicare. Vesting would occur after 10 years of service.
Upon consolidation of the city and county, the ACC’s charter included provisions related to non-diminution of compensation, including insurance and retirement benefits, as well as provisions continuing the effect of any ordinances, resolutions, rules or regulations, as well as any contract obligations. Ordinances adopted in 2002 and 2013, however, provided that, for employees hired before 2001, the ACC-provided insurance would only be offered for free as a secondary or supplemental insurance to Medicare Part B. For retirees hired before the end of 1993, dependents would still receive premium free insurance, but only once that dependent also qualified for and enrolled in Medicare Part B. Under the 2013 ordinance, which replaced the 2002 ordinance, retirees (and dependents) were no longer enrolled in the employer’s insurance program and, instead, received monthly contributions to purchase the supplemental insurance, but only so long as they elected Medicare Parts A and B and paid for its costs.

10 years for vesting.

Looking to the plain language of the 1975 resolution and 1990 motion, the court concluded that city employees who had served for 15 or more continuous years were entitled to receive health insurance coverage during retirement, which included dependent coverage. Similarly, after reading the 1981 and 1984 county motions, the court concluded that individuals who served as county employees for at least 10 continuous years were entitled to continue in the county’s health care program without cost. Finally, under the terms of the charter for the newly merged entity, any compensation disparities between city and county employees had to be resolved by applying the more generous policy elements. Thus, the court explained, as of January 1, 1991, the rights of ACC employees to 100-percent health insurance during retirement, including coverage of dependents, would vest after 10 continuous years of service. Employees hired after the end of 1993, however, had to pay for dependent coverage. All the named plaintiffs were hired before the end of 1993.

Ambiguity.

The ambiguity arose, however, in determining what was entailed in 100-percent coverage during retirement. The employees argued that it meant they were entitled to the same level of health insurance during retirement that they had on their last day of work. In other words, they asserted that they were entitled to substantially similar coverage, limits, deductibles, and co-pays and they were not obligated to enroll in Medicare or to pay Medicare premiums. The employer contended that if the plaintiff’s plan on that date excluded services covered by Medicare (which all the insurance plans did), then those services would also not be covered during retirement. Therefore, once the retired employee became eligible for Medicare, the employer was only responsible for paying the premium for secondary coverage. Both interpretations were reasonable, the court concluded, and the ambiguity could not be resolved by the court. A jury would need to determine the intent of the parties.

Vested benefits.

The court did hold, however, that the plaintiffs’ rights to the healthcare benefits had vested. Although the employer argued that the city and county enactments were alterable (“subject to availability” of an insurer and adoption of policies) under sections of the city and county’s merit and personnel systems applicable to employees, that argument was flawed, in the court’s view, and not supported by evidence.

SOURCE: Wood v. Unified Government of Athens-Clarke County, Georgia, (M.D. Ga.), No. 3:14-CV-43 (CDL), January 22, 2018.
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Workers’ confidence about the future of the health care system is low

Wed, 02/07/2018 - 18:37

Workers’ confidence about specific aspects of the health care system overall is mixed, and falls the further out into the future one looks, according to recent research from the Employee Benefit Research Institute (EBRI). The 2017 Health and Workplace Benefits Survey found that while 45 percent of workers are extremely or very confident about their ability to get the treatments the need today, only 34 percent are confident about their ability to get needed treatments during the next 10 years, and just 26 percent are confident about this once they are eligible for Medicare.

Similarly, the survey of 1,518 workers ages 21 to 64 found that 30 percent of workers say they are confident that they are able to afford health care without financial hardship today, but this percentage decreases to 26 percent when they look out over the next 10 years and to 23 percent when they consider the Medicare years.

Confidence in workers’ own health plans remains high, noted EBRI. Workers tend to be more favorable about their own health plans than they are about the health care system overall. One-half of workers with health insurance coverage are extremely or very satisfied with their current health plan. Workers are generally confident that their employers or unions will continue to offer health insurance in the future. Nearly two-thirds (63 percent) of workers report that they are extremely or very confident.

The survey also found the following:

  • Health care most critical issue: Workers rank health care as the most critical issue in the nation. In 2017, 31 percent of workers rank health care as the most critical issue in the United States. And more concretely, 60 percent of workers report that health insurance is extremely important when considering whether to stay in or choose a new job, whereas only 42 percent report that a retirement savings plan is extremely important.
  • Health care system poor or fair: In 2017, a majority of workers (55 percent) describe the health care system as poor (25 percent) or fair (30 percent).
  • Workers concerned about cost: Workers’ dissatisfaction with health insurance is focused primarily on cost: just 22 percent are extremely or very satisfied with the cost of their health insurance plan, and only 18 percent are satisfied with the costs of health care services not covered by insurance. Approximately one-half of workers (48 percent) report having experienced an increase in health care costs in the past year, about the same percentage as in 2016 and 2015, but down from 61 percent in 2013.
  • Workers satisfied with quality: Workers are generally satisfied with the quality of medical care received. One-half of workers (49 percent) say they are extremely or very satisfied with the quality of the medical care they have received in the past two years, 33 percent are somewhat satisfied, and 13 percent are not too (8 percent) or not at all (5 percent) satisfied.
  • Rising health care costs has implications for financial wellbeing: Of the one-half of workers reporting cost increases, 26 percent state they have decreased their contributions to retirement plans, and 43 percent have decreased their contributions to other savings. More than one-quarter also report they have had difficulty paying for basic necessities such as food, heat, and housing, while 36 percent say they have had difficulty paying other bills. Nearly one-third say they have used up all or most of their savings or have increased their credit card debt, 22 percent report that they have borrowed money, 27 percent have delayed retirement, 19 percent have dropped other insurance benefits, 15 percent have taken a loan or withdrawal from a retirement plan, and 13 percent have purchased additional insurance to help with expenses.

SOURCE: www.ebri.org
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Pension & Benefits NetNews – February 6, 2018

Tue, 02/06/2018 - 20:12

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Featured This Week

Employee Benefits Management News

  • Congress moves to delay three ACA taxes
  • Two-thirds of employers expect to offer fertility benefits by 2019
  • Tax law fueling changes to employer benefits and compensation programs, survey finds
  • Employees’ mistaken acknowledgment of independent contractor status precludes ERISA and COBRA claims

Pension Plan Guide News

  • PBGC final regs increase civil penalties for failure to provide certain notices for 2018
  • IRS issues revised covered compensation tables for 2018
  • IRS issues revised procedures for relating to technical advice

Employee Benefits Management News

Congress moves to delay three ACA taxes

The Senate voted on January 22 to delay three Patient Protection and Affordable Care Act (ACA) taxes: the medical device excise tax; the health insurance provider fee; and the excise tax on high-dollar health plans. The House followed suit and approved the measure, sending it to President Trump for his signature. For more information, see ¶2112T.

        (Read Intelliconnect) »

Two-thirds of employers expect to offer fertility benefits by 2019

The percentage of employers offering fertility benefits to employees is expected to grow from 55 percent in 2017 to 66 percent by 2019, according to the 2017 Maternity, Family and Fertility Benefits Survey from Willis Towers Watson. For more information, see ¶2112W.

        (Read Intelliconnect) »

Tax law fueling changes to employer benefits and compensation programs, survey finds

The new tax reform law is fueling changes to corporate America’s employee benefits, compensation, total rewards and executive pay programs, according to a survey by Willis Towers Watson. For more information, see ¶2112X.

        (Read Intelliconnect) »

Employees’ mistaken acknowledgment of independent contractor status precludes ERISA and COBRA claims

ERISA and COBRA claims brought by employees against Superior Healthplan, Inc., and Centene Corporation were dismissed by the U.S. District Court for the Western District of Texas, based on an agreement the employees had signed that acknowledged they were independent contractors, not common law employees. The employees were allowed to proceed with claims under the Fair Labor Standards Act (FLSA), however. For more information see ¶2113B.

        (Read Intelliconnect) »

Pension Plan Guide News

PBGC final regs increase civil penalties for failure to provide certain notices for 2018

The Pension Benefit Guaranty Corporation (PBGC) has issued final regulations that adjust the civil monetary penalties provided in ERISA Secs. 4071 and 4302 for inflation. The maximum daily penalty for failing to provide notices or other material information under ERISA Sec. 4071 has increased from $2,097 to $2,140, and the maximum penalty for failure to provide certain multiemployer plan notices under ERISA Sec. 4302 has risen from $279 to $285. The final regulations are effective January 12, 2018, and the increases apply to penalties assessed after January 12, 2018. The PBGC notes that, although the maximum penalties are increasing, it is uncommon for the PBGC to assess information penalties. The PBGC’s goal is to encourage compliance, not to penalize plans that inadvertently forget to file information. Generally, when the PBGC does assess an information penalty, the amount is significantly less than the maximum allowed. For more information, see ¶155h.

        (Read Intelliconnect) »

IRS issues revised covered compensation tables for 2018

The IRS has released tables for determining employees’ covered compensation for the year 2018 that have been revised to reflect a change made to the 2018 taxable wage base by the Social Security Administration (SSA). In October 2017, the SSA announced that the taxable wage base would be $128,700 for 2018, and based on that amount, the IRS issued the 2018 covered compensation tables in Rev. Rul. 2017-22. In November 2017, the SSA announced that an adjustment had been made to the taxable maximum amount for 2018. The $128,700 amount was reduced to $128,400. The IRS has now issued revised 2018 covered compensation tables that apply in lieu of the tables in Rev. Rul. 2017-22. Rev. Rul. 2017-22 is modified and superseded. For more information, see ¶19948z440.

        (Read Intelliconnect) »

IRS issues revised procedures for relating to technical advice

The IRS has issued its annual update of the general procedures relating to the issuance of technical advice to a director or an appeals area director by the various offices of the Associate Chief Counsel. The procedures also explain the rights a taxpayer has when a field office requests technical advice. A technical advice memorandum (TAM) is normally requested when there is a lack of uniformity regarding the disposition of an issue or when an issue is unusual or complex enough to warrant consideration by an Associate office. No significant changes were made to these procedures for 2018. The updated procedures are effective January 2, 2018. For more information, see ¶17299v62.

        (Read Intelliconnect) »

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

Tax law fueling changes to employer benefits and compensation programs, survey finds

Tue, 02/06/2018 - 19:26

The new tax reform law is fueling changes to corporate America’s employee benefits, compensation, total rewards and executive pay programs, according to a survey by Willis Towers Watson. The survey of 333 large and midsize employers reveals nearly half (49 percent) of the respondents are considering making a change to at least one of these programs this year or next.
“The tax reform law is creating economic opportunity to invest in their people programs,” said John Bremen, managing director, human capital and benefits, Willis Towers Watson. “While a significant number have already announced changes to some of their programs, the majority of employers are proceeding to determine which changes will have the highest impact and generate the greatest value.”
Two-thirds of those (66 percent) surveyed are planning or considering making changes to their benefit programs or have already taken action. The most common changes organizations have made or are planning or considering include expanding personal financial planning (34 percent), increasing 401(k) contributions (26 percent) and increasing or accelerating pension plan contributions (19 percent). Other potential changes include increasing the employer health care subsidy, reducing or holding flat the employee payroll deduction, or adding a new paid family leave program in accordance with the Family Medical and Leave Act’s tax credit available for paid leave for certain employees.
Sixty-four percent of employers are planning or considering taking action on their broad-based compensation programs, or have already taken action. The most common changes organizations have made or are planning or considering include conducting a review of their compensation philosophy (43 percent), addressing pay-gap issues (36 percent) and introducing a profit-sharing or one-time bonus payout to all employees (21 percent).
About four in 10 companies (41 percent) are also planning or considering changes to their executive pay programs, or have already taken action. The most common changes employers have made or are planning or considering including spending more time and analysis on this year’s incentive target (33 percent) and increasing the use of discretion in 2018 incentive plans (19 percent).
“The results of our survey, coupled with the actions taken by some large employers over the past few weeks, suggest that investing in their people remains a top priority. We fully expect most organizations will take the time to thoughtfully evaluate the impact of the tax law on their organization and then make changes that support their specific business strategy,” said Kathy Walgamuth, director, communication and change management, Willis Towers Watson. “The tax law and subsequent company announcements have made headlines, so employees may already have established their own set of expectations. Wherever an organization lands, even if the decision is made to not take any direct action for employees, it’s essential for them to consider the need to communicate and address employee questions.”

SOURCE: www.willistowerswatson.com
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PBGC issues 2018 premium filing instructions

Tue, 02/06/2018 - 18:23

The Pension Benefit Guaranty Corporation (PBGC) has posted the 2018 Comprehensive Premium Filing Instructions (including the illustrative form) on its website. The PBGC states that the filing requirements for 2018 are almost identical to the 2017 filing requirements, according to the PBGC. However, the flat-rate premium, variable rate premium, and cap on variable rate premium amounts have been increased for inflation, and the examples have been expanded in the section of the instructions about how to determine premiums in a year when the plan is involved with a spinoff, merger, or consolidation.
The PBGC has also expanded the section in the instructions about short plan years to provide additional information for plans expecting to distribute assets during the 2018 plan year pursuant to a standard plan termination. Of particular note, the PBGC has added an appendix that provides a list of common filing errors with details concerning those errors. The PBGC reminds filers that premium payment instructions have recently changed and advises filers to review its Premium Payment Instructions and Addresses webpage each year before sending a payment.
The PBGC states that My PAA is ready to accept electronic filings for plan years beginning in 2018. In addition, if a filer has the plan in a My PAA account (which the PBGC highly recommends), the filer can submit an online Request for Reconsideration (of penalty) or a Request for a Premium Refund (by the PA/PA Rep).

Source: PBGC website.
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