Articles Posted in Employee Benefits

Continuing the discussion of my previous blogs on FAQs Part 35, one topic covered in these FAQs is a discussion of the new Qualified Small Employer Health Reimbursement Arrangements.  Here is what the FAQs say on this topic:

Background and Prior Guidance.  On September 13, 2013, the U.S. Department of Labor (the “DOL”) published Technical Release 2013-03 addressing the application of the Affordable Care Act market reforms to health reimbursement arrangements (“HRAs”) and employer payment plans (“EPPs”).  The Treasury Department and the Internal Revenue Service (the “IRS”) contemporaneously published parallel guidance in Notice 2013-54.  The U.S. Department of Health and Human Services (the “HHS”) issued guidance stating that it concurred in the application of the laws under its jurisdiction as set forth in the guidance issued by DOL, Treasury, and IRS (the DOL, Treasury, IRS and HHS being referred to below as the “Departments”).  Subsequent guidance reiterated and clarified the application of the market reforms to HRAs and EPPs.

EPPs and HRAs typically consist of an arrangement under which an employer reimburses medical expenses (whether in the form of direct payments or reimbursements for premiums or other medical costs) up to a certain amount.  As explained in Technical Release 2013-03 and Notice 2013-54, EPPs and HRAs are group health plans that are subject to the group market reform provisions of the Affordable Care Act, including the prohibition on annual dollar limits under PHS Act section 2711 and the requirement to provide certain preventive services without cost sharing under PHS Act section 2713.  The 2013 guidance generally provides that EPPs and HRAs will fail to comply with these group market reform requirements because these arrangements, by their definitions, reimburse or pay medical expenses on the employee’s behalf only up to a certain dollar amount each year.

The U.S. Department of Labor (the “DOL”), in conjunction with the U.S. Department of Health and Human Services (the “HHS”) and the Treasury (collectively, the “Departments”), have jointly issued Frequently Asked Questions (“FAQs”) Part 35, regarding implementation of the Affordable Care Act and other matters.  One topic covered in these FAQs is coverage of preventive services under the Affordable Care Act.  Here is what the FAQs say on this topic:

Background.  PHS Act section 2713 and its implementing regulations require non-grandfathered group health plans to cover, without the imposition of any cost-sharing requirements, the following recommended preventive services:

  • evidence-based items or services that have in effect a rating of “A” or “B” in the current recommendations of the United States Preventive Services Task Force (the “USPSTF”) with respect to the individual involved, except for the recommendations of the USPSTF regarding breast cancer screening, mammography, and prevention issued in or around November 2009, which are not considered in effect for this purpose;

The U.S. Department of Labor (the “DOL”), in conjunction with the U.S. Department of Health and Human Services (the “HHS”) and the Treasury (collectively, the “Departments”), have jointly issued Frequently Asked Questions (“FAQs”) Part 35, regarding implementation of the Affordable Care Act and other matters.  One topic covered in these FAQs is special enrollment for group health plans under HIPAA.  Here is what the FAQs say on this topic:

Background.  Group health plans are required to provide special enrollment periods to current employees and dependents, during which otherwise eligible individuals who previously declined health coverage have the option to enroll under the terms of the plan (regardless of any open enrollment period).  Generally, a special enrollment period must be offered for circumstances in which an employee or dependents lose eligibility for any group health plan coverage, or health insurance coverage, in which the employee or their dependents were previously enrolled, and upon certain life events such as when a person becomes a dependent of an eligible employee by birth, marriage, or adoption.

Under these rules, special enrollment periods are available in several circumstances set forth in the Departments’ regulations, including:

The IRS has revised its Employee Plans Compliance Resolution System (the “EPCRS”), under which errors in the administration of qualified retirement plans may be corrected.  Below, I reproduce a memo I prepared summarizing the EPCRS as revised.  If any errors arise in plan administration, consideration should be given to fixing them using the EPCRS.  Let me know if you have any questions.

IRS REVISES EMPLOYEE PLANS COMPLIANCE RESOLUTION SYSTEM (EPCRS) IN A NEW REVENUE PROCEDURE

INTRODUCTION

In News Release IR-2016-171, Dec. 15, 2016, the Internal Revenue Service (the “IRS”) says that, as the tax filing season approaches, low- and moderate-income workers are reminded that they can take steps now to save for retirement and earn a special tax credit in 2016 and years ahead.  Here is the text of the News Release:

The saver’s credit helps offset part of the first $2,000 workers voluntarily contribute to IRAs and 401(k) plans and similar workplace retirement programs. Also known as the retirement savings contributions credit, the saver’s credit is available in addition to any other tax savings that apply.

Eligible workers still have time to make qualifying retirement contributions and get the saver’s credit on their 2016 tax returns. People have until the due date for filing their 2016 return (April 18, 2017), to set up a new individual retirement arrangement or add money to an existing IRA for 2016. This includes the Treasury Department’s myRA. However, elective deferrals (contributions) must be made by the end of the year to a 401(k) plan or similar workplace program, such as a 403(b) plan for employees of public schools and certain tax-exempt organizations, a governmental 457 plan for state or local government employees, or the Thrift Savings Plan for federal employees.

This helps: IRS says (with a very limited exception) “No Amendments Required”!  The details follow.

The Internal Revenue Service (the “IRS”) has issued Notice 2016-80, which contains the Required Amendments List for 2016 (“2016 RA List”).  The major points:

Final Day of Remedial Amendment Period.  The Notice reminds us that, in the case of an individually designed qualified retirement plan, the remedial amendment period for a disqualifying provision arising as a result of a change in qualification requirements generally is extended to the end of the second calendar year that begins after the issuance of the Required Amendments List (RA List) in which the change in qualification requirements appears.  As such, the Notice provides that December 31, 2018 is the last day of the remedial amendment period-and is the deadline for adopting the amendment- with respect to a disqualifying provision arising as a result of a change in qualification requirements that appears on this 2016 RA List.

In Notice 2016-70, the Internal Revenue Service (“IRS”) extended the due date for providing information returns required under the Affordable Care Act (the “ACA”).  More specifically, the Notice extends the due date, from January 31, 2017, to March 2, 2017, for furnishing to individuals:

–the 2016 Form 1095-B, Health Coverage, required to be furnished by providers of “minimum essential coverage” (such as employers and insurers) under section 6055 of the Internal Revenue Code (the “Code”), and

–the 2016 Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, required to be furnished by “applicable large employers” under section 6056 of the Code.

In Announcement 2016-32, in connection with the changes recently made to its determination letter program for qualified retirement plans, the IRS solicits comments on facilitating compliance with the requirements which apply to such plans. Here is what the IRS said:

This announcement requests comments on ways in which the Treasury Department and IRS can improve compliance with plan qualification requirements by making it easier for plan sponsors to satisfy requirements for qualified plan documents, particularly in light of the changes to the determination letter program described in Rev. Proc. 2016-37. That Rev. Proc. provides, in part, that the five-year staggered remedial amendment cycle system will be eliminated effective January 1, 2017. Rev. Proc. 2016-37 further provides that a sponsor of an individually designed plan will be permitted to submit a determination letter application only for initial qualification, for qualification upon plan termination, and in certain other circumstances to be determined by Treasury and the IRS.

In the Announcement, the IRS asks for comments on the following specific topics:

Following yesterday’s blog, here is what the IRS says on correcting common hardship distribution errors:

Sometimes, plan sponsors don’t follow the terms of their plan document when it comes to hardship distributions. Some of the most common errors are:

  1. making hardship distributions even though they aren’t permitted by the plan document,

Here is what the IRS says in this guidance:

Although not required, a retirement plan may allow participants to receive hardship distributions. A distribution from a participant’s elective deferral account can only be made if the distribution is both:

  • Due to an immediate and heavy financial need.