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January 2014

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.

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Hot Topics in Employee Benefits Management:
CMS issues proposed regulations on premium stabilization programs and adjustments for transitional relief, Employee Benefits Management Directions, Issue No. 553, December 10, 2013 — The Centers for Medicare & Medicaid Services (CMS) has issued proposed regulations that include a number of approaches to mitigate the effects of the transitional policy for certain individual and small group health plans that may have been canceled because they did not comply with requirements of the Patient Protection and Affordable Care Act (ACA). The proposed regulations contain an assortment of other provisions, including proposals on FF-SHOPs and dental plans.

Supreme Court to hear controversial contraception cases, declines to review of challenges to ACA's employer mandate, Employee Benefits Management Directions, Issue No. 553, December 10, 2013 — The U.S. Supreme Court has announced that it will hear two major cases involving disputes over insurance coverage for contraceptives mandated by the Patient Protection and Affordable Care Act (ACA). But the Court has declined to hear constitutional challenges to the ACA's employer mandate.

Supreme Court: ERISA plan’s three-year limit on filing suit is enforceable despite its start before exhaustion of internal review process, Employee Benefits Management Directions, Issue No. 554, December 27, 2013 — An ERISA plan’s three-year limitations period for judicial review of an adverse benefit determination is enforceable, a unanimous Supreme Court has ruled. The long-term disability plan’s limitations provision, which required that any lawsuit to recover benefits pursuant to the judicial review provision in ERISA §502(a)(1)(B) be filed within three years after “proof of loss” was due, was reasonable. In addition, there is no controlling statute that prevents the provision from taking effect.

Indiana and schools sue to block imposition of employer mandate penalty by IRS, Employee Benefits Management Directions, Issue No. 554, December 27, 2013 — Twenty-four school corporations have joined 15 others, along with the State of Indiana, in a lawsuit against the IRS, contending that final regulations issued by the IRS in May 2012 impermissibly expanded the definition of the word "Exchange," for purposes of the health insurance premium tax credit, to include not just health care exchanges run by individual states, but also those run by the federal government. The employer mandate penalty is triggered when an employee purchases insurance through a federally-run or state-run exchange and receives a health insurance premium subsidy.

What's New in Employee Benefits Management:
Mental health parity — Final regulations have been issued on mental health parity. See the discussion at ¶10,065.

2014 PBGC maximum benefit — The PBGC has issued the maximum guaranteed monthly benefit for 2014. For the amount, see ¶82,020 and ¶82,030.

2014 standard mileage rates — The IRS has released the 2014 optional standard mileage rates that employees, self-employed individuals, and other taxpayers can use to compute deductible costs of operating automobiles (including vans, pickups and panel trucks) for business, medical, moving and charitable purposes. For the rates, see ¶150,535, ¶150,565, ¶150,595 and ¶154,352.

2014 COLAs — More COLAs have been updated at, among other paragraphs, ¶150,030, ¶151,075, ¶151,180 and ¶151,190.

What's New in Benefits Answers Now (BAN):

Final rules allow for reduction or suspension of safe harbor 401(k) nonelective and matching contributions. The IRS has issued final regulations that allow employers sponsoring a safe harbor 401(k) plan, including a qualified automatic contribution arrangement (QACA), to reduce or suspend required nonelective and matching contributions in the event they are operating at an "economic loss" during the plan year. The rules alternatively allow an employer to suspend contributions if notice is provided to participants before the beginning of the year disclosing the possibility that contributions might be reduced or suspended during the year. To find out more about the final rule, see ¶10,875, ¶10,720, and ¶11,110.

Online enrollment for FF-SHOP unavailable for 2014 plan year. Small businesses in states with a federally-facilitated Small Business Health Options Program (FF-SHOP) will only be able to enroll in coverage through an agent, broker, or insurer that offers a certified SHOP plan, according to recently released frequently-asked-questions from the Centers for Medicare and Medicaid Services (CMS). The CMS is calling this process “direct enrollment,” and notes that it is similar to how most small employers currently purchase and provide health insurance coverage to employees. An overview of the rules governing SHOP exchanges can be found at ¶20,065.

Reporting for hard-to-value IRA investments is optional for 2014. New information reporting requirements are proposed to apply to certain IRA investments with no readily available fair market value, according to the IRS. Investments that would need to be reported include nonpublicly traded stock, partnership or limited liability company interests, real estate, options, and other hard-to-value investments. See the discussion at ¶14,920 for more information about reporting IRA investments.

PBGC amends regulation on allocation of assets in single-employer plans for 2014. The PBGC regulation that governs the allocation of assets in single-employer plans and sets forth the methods for valuing benefits of terminating single-employer plans covered by ERISA has been amended. The regulation provides a new table that applies to any plan being terminated, either in a distress termination or an involuntary termination by the PBGC, with a valuation date falling in 2014, and is used to determine expected retirement ages for plan participants. Find out more about single-employer plan terminations at ¶14,340.

What's New in Spencer’s Benefits Reports:
General rules for Sec. 125 plans. Prop. Reg. Sec. 1.125-1 provides general rules on qualified and nonqualified benefits in cafeteria plans, including benefits that may or may not be offered in a Sec. 125 plan. This report examines the Prop. Reg. Sec. 1.125-1 rules (Report 351.-1).

Correcting plan failures. Under the IRS’s Employee Plans Compliance Resolution System (EPCRS), sponsors of specific retirement plans can voluntarily correct failures to avoid disqualification. This report describes the correction programs available under EPCRS (Report 179.-1).

Fringe benefits. IRC Sec. 132 provides an exclusion from an employee’s gross income for the value of fringe benefits provided by the employer. This report analyzes the provisions of Sec. 132 (Report 355.-1).

Defined benefit limits. This report analyzes the IRC Sec. 415(b) limitations for defined benefit plans (Report 109.1.-1).

Medicare Part D. This report summarizes the major provisions of Medicare Part D, as it applies to employers (Report 324.4.-9).