Recently in Employee Benefits Category

May 18, 2015

Employee Benefits-DOL Provides Guidance On Coverage Of Preventive Services

In FAQs about Affordable Care Act Implementation (Part XXVI), the U.S. Department of Labor, the Department of Health and Human Services and the Treasury (the "Departments") provide guidance on rules pertaining to coverage of preventive services under the Affordable Care Act.

Background. The FAQs provide the following background. Section 2713 of the Public Health Service Act (PHS Act) and its implementing regulations relating to coverage of preventive services require non-grandfathered group health plans to provide benefits for, and prohibit the imposition of cost-sharing requirements with respect to, the following:

• Evidenced-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 ("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;

• Immunizations for routine use in children, adolescents, and adults that have in effect a recommendation from the Advisory Committee on Immunization Practices ("ACIP") of the Centers for Disease Control and Prevention ("CDC") with respect to the individual involved;

• With respect to infants, children, and adolescents, evidence-informed preventive care and screenings provided for in comprehensive guidelines supported by the Health Resources and Services Administration (HRSA); and

• With respect to women, evidence-informed preventive care and screening provided for in comprehensive guidelines supported by HRSA, to the extent not included in certain recommendations of the USPSTF.

If a recommendation or guideline does not specify the frequency, method, treatment, or setting for the provision of a recommended preventive service, the plan may use reasonable medical management techniques to determine any such coverage limitations.

Topics Covered by the FAQs. In summary, the FAQs say the following:

--Coverage of breast cancer testing: A plan MUST cover, without cost sharing, recommended genetic counseling and BRCA testing (that is, testing for breast cancer susceptibility genes) for a woman who has not been diagnosed with BRCA-related cancer, but who previously had breast cancer, ovarian cancer, or other cancer.

--Coverage of Food and Drug Administration ("FDA")-approved contraceptives: Plans must cover, without cost sharing, at least one form of contraception in each of the methods (currently 18) that the FDA has identified for women in its current Birth Control Guide. This coverage must also include the clinical services, including patient education and counseling, needed for provision of the contraceptive method. The Departments will apply this guidance for plan years beginning on or after the date that is 60 days after publication of these FAQs.

Further, if a plan covers some forms of oral contraceptives, some types of IUDs, and some types of diaphragms without cost sharing, but excludes completely other forms of contraception, the plan does NOT comply with PHS Act section 2713 and its implementing regulations. Also, if a plan covers oral contraceptives (such as the extended/continuous use contraceptive pill), it may NOT impose cost sharing on all items and services within other FDA-identified hormonal contraceptive methods (such as the vaginal contraceptive ring or the contraceptive patch).

--Coverage of sex-specific recommended preventive services: A plan may NOT limit sex-specific recommended preventive services based on an individual's sex assigned at birth, gender identity or recorded gender.

--Coverage of well-woman preventive care for dependents: If a plan covers dependent children, the plan is NOT required to cover (without cost sharing) recommended women's preventive care services for dependent children, including services related to pregnancy, such as preconception and prenatal care.

--Coverage of colonscopies pursuant to USPTF recommendations: The plan may NOT impose cost sharing with respect to anesthesia services performed in connection with the preventive colonoscopy, if the attending provider determines that anesthesia would be medically appropriate for the individual.

April 24, 2015

Employee Benefits-EEOC Issues Proposed Regulations On Wellness Programs

The Equal Employment Opportunity Commission (the "EEOC") has issued a notice of proposed rulemaking (the "NPRM", which includes proposed regulations) on how Title I of the Americans with Disabilities Act (ADA) applies to employer wellness programs that are part of a group health plan. The NPRM proposes changes both to the text of the EEOC's ADA regulations and to interpretive guidance explaining the regulations that will be published along with the final rule. The EEOC has also issued questions and answers ("Q&As") which describe what the NPRM says and what will happen now that the proposed rule has been issued.

One question raised: What should employers do until a final rule is published to make sure their wellness programs comply with the ADA? Here is what the Q&As say:

While employers do not have to comply with the proposed rule, they may certainly do so. It is unlikely that a court or the EEOC would find that an employer violated the ADA if the employer complied with the NPRM until a final rule is issued. Moreover, many of the requirements explicitly set forth in the proposed rule are already requirements under the law. For example, employers should make sure they:
o do not require employees to participate in a wellness program;
o do not deny health insurance to employees who do not participate; and
o do not take any adverse employment action or retaliate against, interfere with, coerce, or intimidate employees who do not participate in wellness programs or who do not achieve certain health outcomes.
Additionally, employers must provide reasonable accommodations that allow employees with disabilities to participate in wellness programs and obtain any incentives offered. For example, if attending a nutrition class is part of a wellness program, an employer must provide a sign language interpreter, absent undue hardship, to enable an employee who is deaf to participate in the class. Employers also must ensure that they maintain any medical information they obtain from employees in a confidential manner.

April 23, 2015

Employee Benefits-DOL Provides Guidance On Wellness Programs

In FAQs About Affordable Care Act Implementation (Part XXV), the U.S. Department of Labor (the "DOL") provides guidance on wellness programs. Here is what the DOL said.

Wellness Programs

Under PHS Act section 2705 , ERISA section 702, and Internal Revenue Code (the "Code") section 9802 and the implementing regulations of the governing departments (the DOL, the Department of Health and Human Services and the Treasury, together the "Departments"), group health plans are generally prohibited from discriminating against participants, beneficiaries, and individuals in eligibility, benefits, or premiums based on a health factor. An exception to this general prohibition allows premium discounts, rebates, or modification of otherwise applicable cost sharing (including copayments, deductibles, or coinsurance) in return for adherence to certain programs of health promotion and disease prevention, commonly referred to as wellness programs. The wellness program exception applies to group health coverage.

On June 3, 2013, the Departments issued final regulations under PHS Act section 2705 and the related provisions of ERISA and the Code that address the requirements for wellness programs provided in connection with group health coverage. Among other things, these regulations set the maximum permissible reward under a health-contingent wellness program that is part of a group health plan at 30 percent of the cost of coverage (or 50 percent for wellness programs designed to prevent or reduce tobacco use). The wellness program regulations also address the reasonable design of health-contingent wellness programs and the reasonable alternatives that must be offered in order to avoid prohibited discrimination. In the preamble to the wellness program regulations, the Departments stated that they anticipated issuing future sub-regulatory guidance as necessary. The following FAQs address several issues that have been raised since the publication of the wellness program regulations.

A Reasonably Designed Program

Under section 2705 of the PHS Act and the wellness program regulations, a health-contingent wellness program must be reasonably designed to promote health or prevent disease. A program complies with this requirement if it: (1) has a reasonable chance of improving the health of, or preventing disease in, participating individuals; (2) is not overly burdensome; (3) is not a subterfuge for discrimination based on a health factor; and (4) is not highly suspect in the method chosen to promote health or prevent disease.

The determination of whether a health-contingent wellness program is reasonably designed is based on all the relevant facts and circumstances. The wellness program regulations are intended to allow experimentation in diverse and innovative ways for promoting wellness. While programs are not required to be accredited or based on particular evidence-based clinical standards, practices such as those found in the Guide to Community Preventive Services or the United States Preventive Services Task Force's Guide to Clinical Preventive Services, may increase the likelihood of wellness program success and are encouraged.

Wellness programs designed to dissuade or discourage enrollment in the plan or program by individuals who are sick or potentially have high claims experience will not be considered reasonably designed under the Departments' wellness program regulations. A program that collects a substantial level of sensitive personal health information without assisting individuals to make behavioral changes such as stopping smoking, managing diabetes, or losing weight, may fail to meet the requirement that the wellness program must have a reasonable chance of improving the health of, or preventing disease in, participating individuals. Programs that require unreasonable time commitments or travel may be considered overly burdensome. Such programs will be scrutinized and may be subject to enforcement action by the Departments.
The wellness program regulations also state that, in order to be reasonably designed, an outcome-based wellness program must provide a reasonable alternative standard to qualify for the reward, for all individuals who do not meet the initial standard that is related to a health factor. This approach is intended to ensure that outcome-based wellness programs are more than mere rewards in return for results in biometric screenings or responses to a health risk assessment, and are instead part of a larger wellness program designed to promote health and prevent disease, ensuring the program is not a subterfuge for discrimination or underwriting based on a health factor.

Compliance With Other Laws

The fact that a wellness program complies with the Departments' wellness program regulations does not necessarily mean it complies with any other provision of the PHS Act, the Code, ERISA, (including the COBRA continuation provisions), or any other State or Federal law, such as the Americans with Disabilities Act or the privacy and security obligations of the Health Insurance Portability and Accountability Act of 1996, where applicable. Satisfying the rules for wellness programs also does not determine the tax treatment of rewards provided by the wellness program. The Federal tax treatment is governed by the Code. For example, reimbursement for fitness center fees is generally considered an expense for general good health. Thus payment of the fee by the employer is not excluded from income as the reimbursement of a medical expense and should generally be added to the employee wages reported on the Form W-2, Wage and Tax Statement. In addition, although the Departments' wellness program regulations generally do not impose new disclosure obligations on plans and issuers, compliance with the wellness program regulations is not determinative of compliance with any other disclosure laws, including those that require accurate disclosures and prohibit intentional misrepresentation.

April 21, 2015

Employee Benefits-IRS Reminds Us To Follow Up On VCP Corrections That We Agreed To

In Employee Plans News Issue No. 2015-4, April 1, 2015, the IRS reminds us to follow up on corrections we agreed to in a Voluntary Correction Program (VCP) compliance statement. The reminder is here.

April 14, 2015

Employee Plans-IRS Discusses Keeping Records For Hardship Withdrawals And Plan Loans

In Retirement News for Employers, April 2, 2015 Edition, the IRS provides guidance on keeping records for hardship withdrawals and plan loans. The guidance is here.

April 10, 2015

Employee Plans-IRS Discusses IRA Contribution Limits

As appropriate for this time of year, in Retirement News for Employers, April 2, 2015 Edition, the IRS discusses IRA contribution limits. This discussion is here.

April 9, 2015

Employee Plans-IRS Discusses How A Self-Employed Individual Should Calculate His Or Her Retirement Plan Contribution And Deduction

In Retirement News for Employers, April 2, 2015 Edition, the IRS discusses how a self-employed individual should calculate his or her retirement plan contribution and deduction. This discussion is here.

April 8, 2015

Employee Plans-IRS Discusses Correction Of A Violation Of The Universal Available Rule For 403(b) Plans

In Retirement News for Employers, April 2, 2015 Edition, the IRS discusses how you may correct the mistake of excluding eligible employees from your 403(b) plan, that is, correction of a violation of the universal available rule that applies to 403(b) plans. This discussion is here.

April 1, 2015

Employee Benefits-EBSA Discusses Intention To Finalize Changes Relating To SBCs

In FAQs about Affordable Care Act Implementation (Part XXIV), the Employee Benefits Security Administration (the "EBSA") discusses the intention of the Departments (namely, the Department of Labor, the Department of Health and Human Services, and the Treasury), who are responsible for the rules governing the summary of benefits and coverage (the "SBC"), to finalize certain changes relating to the SBCs. Here is what the EBSA said:

SBC Guidance In General. Public Health Service ("PHS") Act section 2715, as added by the Affordable Care Act and incorporated by reference into ERISA and the Internal Revenue Code, directs the Departments to develop standards for use by a group health plan in compiling and providing an SBC that "accurately describes the benefits and coverage under the applicable plan or coverage." On February 14, 2012, the Departments published joint final regulations to implement the disclosure requirements under PHS Act section 2715 and an accompanying document announcing the availability of templates, instructions, and related materials. After the 2012 final regulations were published, the Departments released six sets of FAQs regarding implementation of the SBC requirements. After consideration of the comments and feedback from interested stakeholders, on December 30, 2014, the Departments published a notice of proposed rulemaking, as well as a new set of proposed SBC templates, instructions, an updated uniform glossary, and other materials.

Upcoming Changes. The Departments intend to finalize changes to the regulations in the near future, which are intended to apply in connection with coverage that would renew or begin on the first day of the first plan year that begins on or after January 1, 2016 (including open season periods that occur in the Fall of 2015 for coverage beginning on or after January 1, 2016).

The Departments also intend to utilize consumer testing and offer an opportunity for the public, including the National Association of Insurance Commissioners, to provide further input before finalizing revisions to the SBC template and associated documents. The Departments anticipate the new template and associated documents will be finalized by January 2016 and will apply to coverage that would renew or begin on the first day of the first plan year that begins on or after January 1, 2017 (including open season periods that occur in the Fall of 2016 for coverage beginning on or after January 1, 2017).

The Departments are fully committed to updating the template and associated documents (including the uniform glossary) to better meet consumers' needs as quickly as possible.

March 26, 2015

Employee Benefits-IRS Reminds Us That Expanded Actuarial Certifications For Multiemployer Plans Are Due March 31 (For Calendar Year Plans)

In Employee Plans News, Issue 2015-3, March 25, 2015, the Internal Revenue Service ("IRS") reminds us that expanded annual actuarial certifications for multiemployer plans are due March 31 for calendar year plans. Here is what the IRS says:

The Multiemployer Pension Reform Act of 2014 (MPRA), enacted on December 16, 2014, revised the annual funding certification requirements for multiemployer plans by:
• adding a new zone status, and
• providing special rules for entering into and emerging from certain zones.

The revisions generally apply to certifications for 2015 and subsequent plan years. For calendar year plans, the 2015 certification is due by March 31, 2015. MPRA also amended certain provisions of the Pension Protection Act of 2006 (PPA).

Pension Protection Act changes

MPRA made the following changes for zone certifications:
• Made permanent the annual requirement to certify a plan's funding zone. Before MPRA was passed, the annual certification requirement was scheduled to "sunset" on or after December 31, 2014.
• Election of Critical status: Plans projected to be in Critical status in any of the succeeding five plan years may elect to be in Critical status in the current plan year. Plans may bypass Endangered status by making this election.
• Changes made to emergence from Critical status: This was amended to include a condition for projected insolvency and special rules for plans with automatic amortization extensions.

Zone status changes

MPRA added a new zone status available for a plan actuary's annual certification. MPRA also added special rules allowing a plan to be treated as being in a particular zone when, before enactment, the plan would have been in a different zone. The new zone and special rules are indicated in bold below.
• Neither Endangered nor Critical (new special rule): A plan is treated as Neither Endangered nor Critical if it's projected to be in that status as of the end of the 10th plan year following the current plan year. The plan must not have been in either Critical status or Endangered status in the immediately preceding plan year.
• Endangered.
• Seriously Endangered.
• Critical (new special rule): A plan can elect to be treated as Critical if the plan is projected to be in Critical status in any of the succeeding five plan years, but not in Critical status in the current plan year.
Critical and Declining: This is the new zone status that applies if the plan is in Critical status for the current plan year and is projected to become insolvent in the current year or any of the succeeding 14 plan years. The period in which the plan is projected to become insolvent is extended from 14 plan years to 19 plan years if the ratio of inactive participants to active participants exceeds 2:1, or if the funded percentage is less than 80%.

Email and e-fax available for certifications

Actuaries can submit the Annual Actuarial Certification by email, e-fax or regular mail. Certifications must be filed by 90 days after the beginning of the plan year (March 31, 2015, for calendar year plans). The Employee Plans Compliance Unit (EPCU) doesn't provide return-receipt acknowledgements.

File a certification using only one of the following methods:
• Email: EPCU@irs.gov (Note: IRS cannot guarantee internet security for incoming email submissions)
• E-fax: 855-215-7122
• Mail: Internal Revenue Service, Employee Plans Compliance Unit, Group 7602 (TEGE:EP:EPCU), 230 S. Dearborn Street, Room 1700 - 17th Floor Chicago, IL 60604

EPCU offers more information on submission requirements and the actions taken if certifications are not received.

March 23, 2015

Employee Benefits-IRS Reminds Us That Many Retirees Face April 1 Deadline To Take Required Retirement Plan Distributions

An Internal Revenue Service ("IRS") Release, dated March 19, 2015, reminds us that many retirees face an April 1 deadline to take required retirement plan distributions. This reminder applies generally to individuals who turned 70½ during 2014. The Release is here.

January 21, 2015

Employee Benefits-IRS Discusses The Retirement Savings Contributions Credit

In Retirement News for Employers, December 18, 2014 Edition, the Internal Revenue Service (the "IRS") discusses the Retirement Savings Contributions Credit ( sometimes called the Saver's Credit). What the IRS says is here.

January 15, 2015

Employee Benefits-IRS Talks About The Various Types Of Retirement Plan Contributions

In Retirement News for Employers, December 18, 2014 Edition, the Internal Revenue Service (the "IRS") discusses the various types of retirement plan contributions which may be made. Here is what the IRS says:

Types of Retirement Plan Contributions

If you participate in an employer-sponsored retirement plan, you may be able to make different types of plan contributions from your wages:
• Pre-tax elective deferrals aren't included in your gross income in the year that you make them. For example, if you asked your employer to contribute $2,000 from your $30,000 salary to the plan, you'd only include $28,000 in income. You must include these contributions, plus any earnings, in your income when you later withdraw them.
• Designated Roth contributions are elective deferrals that are included in your gross income in the year you make them, but not when you withdraw them from the plan. If you meet certain conditions, you don't have to include any earnings on these contributions in your income when you withdraw them.
• After-tax employee contributions are also included in your gross income in the year you make them. You don't include these contributions in income when you withdraw them, but you must include any earnings. Unlike elective deferrals, there isn't an annual dollar limit on the amount of these contributions you can make, but if you're a highly compensated employee, your after-tax employee contributions may be limited by what other employees contribute.
• Catch-up contributions are additional elective deferrals you may be able to contribute to the plan if you're age 50 or older by the end of the calendar year. You can make these contributions as pre-tax elective deferrals or designated Roth contributions (if your plan allows them) or any combination of the two.

Elective deferral limits:

For 2014:
• $17,500 to 401(k) (other than a SIMPLE 401(k)), 403(b) and 457(b) plans (plus
$5,500 catch-up contributions)
• $12,000 to SIMPLE plans (plus $2,500 catch-up contributions)
For 2015:
• $18,000 to 401(k) (other than a SIMPLE 401(k)), 403(b) and 457(b) plans (plus $6,000 catch-up contributions)
• $12,500 to SIMPLE plans (plus $3,000 catch-up contributions)

Ask your employer or check your summary plan description to find out which types of contributions you can make to your workplace retirement plan.

January 12, 2015

Employee Benefits-IRS Provides Guidance On Correcting A Roth Contribution Failure

In Retirement News for Employers, December 18, 2014 Edition, the Internal Revenue Service (the "IRS") provides guidance on correcting a Roth contribution failure. The IRS says the following:

The issue

Many employers have added a Roth feature to their 401(k), 403(b) or governmental 457(b) plans. This feature allows employees to choose to designate some or all of their elective contributions as Roth contributions. Employees must make this designation before the deferral is withheld from their salary. A Roth contribution differs from a pre-tax elective contribution in that the Roth contribution amount is included in gross income.

The problem

A common mistake we've encountered in the operation of a Roth feature is that the employer doesn't follow the employee's election as to the type of elective deferral. The employee elects a Roth contribution, but the employer treats it as a pre-tax deferral.

Fixing the mistake

To fix the mistake of not following an employee's election to designate the contribution as a Roth contribution you must transfer the deferrals, adjusted for earnings, from the pre-tax account to the Roth account. There are two options on how to report this transfer:
1. The employer issues a corrected Form W-2 and the employee must file an amended Form 1040 for the year of the failure.
2. The employer includes the amount transferred from the pre-tax to the Roth account in the employee's compensation in the year it's transferred. If the employer elects, it may compensate the employee for the additional amount he or she owes in income tax for that year . This must likewise be included in the employee's income for that year.

Next problem

The employee elects pre-tax deferral, but the employer treats it as a Roth contribution.

Fixing the mistake

The employer can transfer the erroneously deposited deferrals, adjusted for earnings, from the Roth account to the pre-tax account. The employer would file a corrected W-2 and the employee would file an amended 1040 for the year of the failure.

Correction programs available

The plan sponsor can use the Voluntary Correction Program (VCP) (if the error issignificant and it meets the other conditions of VC). The error can be self-corrected, without IRS approval, if the mistake is insignificant or, if significant, if the plan sponsor corrects the mistake within two years. A plan sponsor can use self-correction only if the plan has practices and procedures in place designed to promote overall tax law compliance. If the plan is under IRS examination, then mistakes are generally corrected under a closing agreement using the Audit Closing Agreement Program.

Making sure it doesn't happen again

Establish procedures that ensure that the participants' elections are correctly implemented. This could include educating those responsible for processing the deferral elections on how to interpret and implement the information on the election forms. In addition, periodically check the process of withholding, classifying and depositing salary deferrals so that you can timely fix errors and adjust internal controls, as needed.

January 8, 2015

Employee Benefits-IRS Discusses IRA One-Rollover- Per-Year Rule

In Retirement News for Employers, December 18, 2014 Edition, the Internal Revenue Service ("IRS") discuss the one-rollover-per year rule that applies to IRAs. Here is what the IRS says:

Beginning in 2015, you can make only one rollover from an IRA to another (or the same) IRA in any 12-month period, regardless of the number of IRAs you own (IRS Announcements 2014-15 and 2014-32). The limit will apply by aggregating all of an individual's IRAs, including SEP and SIMPLE IRAs as well as traditional and Roth IRAs, effectively treating them as one IRA for purposes of the limit.

• Trustee-to-trustee transfers between IRAs are not limited
• Rollovers from traditional to Roth IRAs ("conversions") are not limited

Transition rule ignores some 2014 distributions
IRA distributions rolled over to another (or the same) IRA in 2014 will not prevent a 2015 distribution from being rolled over provided the 2015 distribution is from a different IRA involved in the 2014 rollover.

Example: If you have three traditional IRAs, IRA-1, IRA-2 and IRA-3, and in 2014 you took a distribution from IRA-1 and rolled it into IRA-2, you could not roll over a distribution from IRA-1 or IRA-2 within a year of the 2014 distribution but you could roll over a distribution from IRA-3. This transition rule applies only to 2014 distributions and only if different IRAs are involved. So if you took a distribution from IRA-1 on January 1, 2015, and rolled it over into IRA-2 the same day, you could not roll over any other 2015 IRA distribution (unless it's a conversion).

Background of the one-per-year rule
Under the basic rollover rule, you don't have to include in your gross income any amount distributed to you from an IRA if you deposit the amount into another eligible plan (including an IRA) within 60 days (Internal Revenue Code Section 408(d)(3)). Internal Revenue Code Section 408(d)(3)(B) limits taxpayers to one IRA-to-IRA rollover in any 12-month period. Proposed Treasury Regulation Section 1.408-4(b)(4)(ii), published in 1981, and IRS Publication, Individual Retirement Arrangements (IRAs) interpreted this limitation as applying on an IRA-by-IRA basis, meaning a rollover from one IRA to another would not affect a rollover involving other IRAs of the same individual. However, the Tax Court held in 2014 that you can't make a non-taxable rollover from one IRA to another if you have already made a rollover from any of your IRAs in the preceding 1-year period (Bobrow v. Commissioner, T.C. Memo. 2014-21).

Tax consequences of the one-rollover-per-year limit
Beginning in 2015, if you receive a distribution from an IRA of previously untaxed amounts:
• you must include the amounts in gross income if you made an IRA-to-IRA rollover in the preceding 12 months (unless the transition rule above applies), and
• you may be subject to the 10% early withdrawal tax on the amounts you include in gross income.

Additionally, if you pay the distributed amounts into another (or the same) IRA, the amounts may be:
• treated as an excess contribution, and
• taxed at 6% per year as long as they remain in the IRA.

Direct transfers of IRA money are not limited
This change won't affect your ability to transfer funds from one IRA trustee directly to another, because this type of transfer isn't a rollover (Revenue Ruling 78-406). The one-rollover-per-year rule of Internal Revenue Code Section 408(d)(3)(B) applies only to rollovers.