EEOC Proposes ADA Rules on Wellness Program Incentives

Filed under: Health Plans, Wellness Programs

The EEOC has issued proposed regulations providing guidance on the extent to which the ADA permits employers to offer incentives to employees to promote participation in wellness programs that are employee health programs.  The new guidance is similar, but not identical, to the rules governing incentives for health-contingent wellness programs under HIPAA. Employers should review their wellness programs to ensure compliance with both laws.

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IRS Eases Correction Rules for Missed Elective Deferrals

Filed under: 401(k) Plans, 403(b) Plans, Voluntary Correction Programs

The IRS has just given sponsors of 401(k) and 403(b) plans a number of additional options for correcting a failure to honor an employee’s election to defer a portion of his or her pay. These new options, as announced in Revenue Procedure 2015-28, will be particularly helpful to sponsors of plans that provide for automatic enrollment (including those with an automatic escalation feature).

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IRS to Plan Sponsors: You Must Retain Documentation for Loans and Hardship Withdrawals

Filed under: 401(k) Plans, Plan Administration

Most sponsors of defined contribution plans rely on a third-party administrator (a “TPA”) to handle participant loans and hardship withdrawals—typically through the TPA’s website. However, in guidance issued last week, the IRS cautions that the sponsor—not the TPA or the participant—is responsible for maintaining documents proving that those transactions comply with the law.

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Another Court Enforces DOL's Electronic SPD Rules

Filed under: Participant Communications, Reporting and Disclosure, Plan Administration

A recent decision in Thomas v. CIGNA Group Insurance serves as an important reminder that simply posting summary plan descriptions on an employer’s intranet will not satisfy Department of Labor regulations under ERISA.  As a result, this approach may expose an employer to unanticipated liabilities.

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Davidson v. Henkel: A Rather Taxing Decision

Filed under: Nonqualified Plans, Deferred Compensation, Plan Administration

A recent decision by a Michigan federal trial court serves as a warning to employers that their failure to shield participants in nonqualified deferred compensation plans from adverse tax consequences may subject the employers to legal liability.  Although this decision (in Davidson v. Henkel Corporation) involved FICA taxation, the court’s reasoning would seem to apply equally to the 20% penalty tax and interest assessments triggered by a violation of Code Section 409A.

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Anthem Security Breach May Require Plan Sponsor Action

Filed under: Fiduciary Duties, Health Plans, HIPAA Privacy and Security, Group Health Plans

The well-publicized cyber-attack on Anthem, Inc.’s information technology system may require employers to take prompt action to protect the rights of their health plan participants.  This damaging data breach raises both privacy and security issues under HIPAA and fiduciary issues under ERISA.  Employers should be proactive in their response.

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IRS Grants Limited Transition Relief to Small-Employer Premium Reimbursement Arrangements

Filed under: Health Care Reform, Health Plans, Group Health Plans

In a series of notices and FAQs, the IRS has clearly enunciated its view that an employer’s reimbursement of an employee’s premiums for individual health insurance violates certain provisions of the Affordable Care Act (“ACA”). While reiterating this key point, Notice 2015-17 does grant a limited period of relief for smaller employers.  Nonetheless, even those employers should be working toward a June 30 deadline to comply with these ACA constraints.

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IRS Now Accepting "Cycle E" Determination-Letter Applications

Filed under: 401(k) Plans, Determination Letters, Pension Plans, Qualified Retirement Plans

The IRS is now accepting applications for updated determination letters on behalf of individually designed retirement plans falling within “Cycle E” of the determination-letter program. These include plans sponsored by employers having either a “5” or “0” as the last digit of their employer identification number, as well as governmental plans that elected not to file during Cycle C.

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Don’t Forget About HIPAA When Addressing Data Security

Filed under: HIPAA Privacy and Security

Among the many data security and breach laws that exist, covered health care providers and health plans must also contend with the Health Insurance Portability and Accountability Act of 1996 (HIPAA). A recent settlement with the Department of Health and Human Services (HHS), Office for Civil Rights (OCR) emphasizes the importance of not only having a data security policy, but of following and updating such a policy.

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No Good Deed...: Allowing Part-Time Employees to Make Health FSA Contributions May Trigger ACA Penalties

Filed under: Health Care Reform, Health Plans, Cafeteria Plans

When it comes to health coverage, many employers draw a distinction between full-time and part-time employees. To be eligible to enroll in the employer’s health plan, an employee must work a minimum number of hours per pay period. But many of those same employers then allow even part-time employees to contribute to a health flexible spending account (“health FSA”). After all, doing so costs the employer nothing (and even saves a modest amount in employment taxes), and why not at least give those employees an opportunity to pay some of their medical expenses on a pre-tax basis? Unfortunately, this paternalistic approach may now subject an employer to substantial daily penalties under the Affordable Care Act (“ACA”).

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Spencer Fane’s Employee Benefits Group has earned a national reputation developing innovative benefits solutions to meet client needs. From left to right: Larry Jenab, Rob Browning, Chadron Patton, Ken Mason, Melissa Hinkle, Julia Vander Weele and Greg Ash.

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