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August 2013

From the editors of CCH's BENE and BAN products, here are hot topics from recent Employee Benefits Management Directions newsletters as well as recent explanatory updates in Employee Benefits Management. Also included are recent explanatory updates to the Benefits Answers Now product.

If you have any comments/suggestions concerning the information provided or the format used, we'd like to hear from you. Please contact Tulay.Turan@wolterskluwer.com.

 

Hot Topics in Employee Benefits Management:
DOMA ruling raises benefits questions for employers seeking to comply with the law, Employee Benefits Management Directions, Issue No. 543, July 16, 2013 — On Wednesday, June 26, 2013, the U.S. Supreme Court issued a ruling striking down Section 3 of the Defense of Marriage Act (DOMA), which had previously provided that the definition of marriage applied only to the legal union of one man and one woman, and that the definition of spouse referred only to a person of the opposite sex who was a husband or wife. To clarify some of the questions at issue, on the day of the ruling, Wolters Kluwer talked to Scott Macey, president of the ERISA Industry Committee (ERIC), who advised that employers need to “make sure they understand the impact of the Supreme Court’s decision.”

Obama Administration postpones implementation of employer mandate to 2015, Employee Benefits Management Directions, Issue No. 543, July 16, 2013 —In an announcement from the White House that probably surprised plan practitioners and employers alike, it was proclaimed on July 2, 2013, that employer shared responsibility payments will not apply until 2015, instead of in 2014, as was originally anticipated.

Fourth Circuit dismisses challenges to ACA's individual, employer mandates, Employee Benefits Management Directions, Issue No. 544, July 30, 2013 — Challenges to the Affordable Care Act's (ACA) individual and employer mandates have been dismissed by the Fourth Circuit Court of Appeals (CA-4), which found that Congress acted within the scope of its authority when it enacted the mandates.

Mercer says delay in health reform penalties for employers leaves many issues to resolve, Employee Benefits Management Directions, Issue No. 544, July 30, 2013 — While the announcement that employer shared responsibility penalties will not apply until 2015 was a welcome relief for employers, addressing the fundamental challenges raised by the reform law remains a priority.

What's New in Employee Benefits Management:
Transition relief for ACA mandate — Notice 2013-42 provides relief from the Sec. 5000A shared responsibility payment for specified individuals who are eligible to enroll in certain employer-sponsored health plans with a plan year other than a calendar year (non-calendar year plans) if the plan year begins in 2013 and ends in 2014. See ¶10,097 for more information.

DOMA ruling — The effects of the DOMA ruling (see story above) on employee benefits is significant. For a special report on the ruling and benefits and tax issues, see the new development at ¶906,581.

SHRM survey results — SHRM's 2013 Employee Benefits Survey found that legislation—including the Patient Protection and Affordable Care Act (ACA)—smaller organizational and HR budgets, an uneven economy, and other factors are influencing employers' decisions on what benefits to offer their employees. The survey results can be found at ¶10,110, ¶20,050, ¶53,070, ¶62,010, ¶68,010, ¶68,170, ¶70,030, and ¶156,125.

Exchange functions — The discussion at ¶12,130 has been updated with recent final regulations on the Affordable Insurance Exchanges' function to determine eligibility for exemption from the individual shared responsibility payment.

What's New in Benefits Answers Now (BAN):
Obama Administration postpones implementation of employer mandate to 2015. In July 2013, the White House announced that the employer shared responsibility payments will not apply until 2015, instead of in 2014, as was originally anticipated. Generally, the Patient Protection and Affordable Care Act (ACA) provides that any applicable large employers that fail to offer to at least 95% of full-time employees and their dependents minimum essential coverage will be assessed a $166.67 per month ($2,000 per year) penalty per full-time employee, assuming that at least one employee obtains premium assistance via a health care exchange. It also provides that applicable large employers that offer minimum essential health coverage that is either unaffordable or does not provide minimum value will be assessed a $250.00 per month ($3,000 per year) penalty for each employee that receives subsidized coverage. More information about the employer shared responsibility provision can be found at ¶20,010, ¶20,020, and ¶20,030.

DOMA ruling raises benefits questions for employers seeking to comply with the law. In June 2013, the U.S. Supreme Court issued a ruling striking down Section 3 of the Defense of Marriage Act (DOMA), which had previously provided that the definition of marriage applied only to the legal union of one man and one woman, and that the definition of spouse referred only to a person of the opposite sex who was a husband or wife (United States v. Windsor, No. 12-307, (US Sup Ct.) June 26, 2013). Employers are now left wondering about the ramifications of the decision on the administration of their employees’ various benefit plans. Questions such as "How will availability or taxation of benefits for health savings accounts (HSAs) and flexible spending accounts (FSAs) be affected?" and "What changes do we have to make to beneficiary information on our retirement plans?" will have to be answered, especially since the High Court specified that, because Section 2 of the law had not been challenged, it was not addressing DOMA’s provision that a state may refuse to recognize same-sex marriages performed under the laws of another state. To find out more about the Supreme Court’s ruling on DOMA, see ¶20,650 and ¶20,680.

Exemption for contraceptive coverage for religious employers is in final IRS, EBSA, HHS regulations. The IRS, the Employee Benefits Security Administration (EBSA), and the HHS (the Departments) have jointly issued regulations that simplify and clarify the exemption for group health plans established or maintained by certain religious employers (and group health insurance provided in connection with such plans) from the requirement under the Public Health Service Act that various preventive services for women, including contraceptive services, be covered without cost-sharing. Find out more about the final rules at ¶20,051.

EBSA proposes to amend PT class exemptions to remove references to “credit ratings.” The Employee Benefits Security Administration has issued proposed amendments to various Prohibited Transaction Class Exemptions that would remove any references to or requirements of reliance on “credit ratings.” The proposed amendment reflects provisions enacted under the Dodd-Frank Wall Street Reform and Consumer Protection Act. An overview of the prohibited transaction exemptions can be found at ¶13,890.

PCORI fee is deductible, IRS says. The Patient-Centered Outcomes Research Institute (PCORI) fee imposed on self-insured health plans and specified health insurance issuers can be considered a “normal, usual, or customary” business expense, and therefore, can be deducted under Code Sec. 162, according to a recent memo issued by the Office of Chief Counsel at the Internal Revenue Service. See the discussion at ¶20,225 for more information about the PCORI fees.

What's New in Spencer’s Benefits Reports:
Domestic Partner Benefits. This report discusses some of the issues relating to offering domestic partner benefits. Also included is a discussion on the recent Supreme Court ruling on the Defense of Marriage Act (Report 327.4.-1).

Bona Fide Wellness Programs. Bona fide wellness programs are subject to rules in HIPAA and the ACA. This report summarizes the rules wellness plans must follow and includes examples of nondiscriminatory wellness programs (Report 326.-3).

Fiduciary Liability. This report discusses the applicable fiduciary standards under ERISA and highlights what the DOL views as subverting the purposes of ERISA by shielding fiduciaries from liability for actions that, absent a presumption of prudence, could constitute breaches of fiduciary duty (Report 605.06.-5).

Prohibited Practices Under ACA. The ACA prohibits annual or lifetime limits, coverage rescissions, and preexisting conditions exclusions. This report reviews these requirements (Report 513.-1).

Group Term Life. Participants in a group term life plan may exclude from gross income the value of the first $50,000 of employer-provided group term life insurance coverage. This report summarizes the major provisions of IRC Sec. 79 (Report 341.3.-1).

New Pension/Benefits Titles Added:
401(k) Advisor (August 2013)
Benefits Law Journal (Autumn 2013)
Employee Benefit Plan Review (August 2013)
ERISA Fiduciary Answer Book, 6th Edition, 2013 Cumulative Supplement
Journal of Pension Planning and Compliance (Fall 2013)
Medical Benefits (August 2013)
Pension Benefits (August 2013)
Quick Reference to HIPAA Compliance, 2013-2014 Edition