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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Agencies Plug Several Holes in the ACA Dike

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

In recent guidance, the agencies charged with enforcing the Affordable Care Act (“ACA”) have sharply restricted the utility of “minimum-value” plans that exclude coverage for inpatient services, imposed strict constraints on an employer’s ability to subsidize its employees’ purchase of individual health insurance coverage on even an after-tax basis, and given state insurance regulators a green light to impose minimum attachment points in stop-loss policies.

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Employee Benefits Plans – 2015 Inflation

Filed under: Dollar Limits, Plan Administration

Following recent announcements by both the IRS and the Social Security Administration, we now know most of the dollar amounts that employers will need to administer their benefit plans for 2015.

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When Does 9.5% Equal 9.56%?

Filed under: Health Care Reform, Health Plans, Plan Administration

Although 9.5% has been a key threshold in determining the “affordability” of employer health coverage, the IRS has just announced (in Revenue Procedure 2014-37) that this threshold will be adjusted to 9.56% for 2015. This adjustment reflects the fact that health insurance premiums have risen more rapidly than incomes.  Similar adjustments have also been announced for related percentage thresholds.

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National Health Plan Identifiers Required by November

Filed under: HIPAA Privacy and Security, Group Health Plans

The HIPAA Electronic Transactions and Code Sets rule requires most group health plans to obtain new health plan identifier numbers (HPIDs) by November 5, 2014. While insurers will likely obtain the HPID on behalf of fully insured plans, the task of obtaining the HPID for a self-funded plan will fall upon the plan sponsor. While the process is relatively simple, plan sponsors should begin identifying which group health plan arrangements are subject to the HPID requirement and communicating with plan vendors regarding the requirements.

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Upcoming Events

Restating Pre-approved (Prototype/Volume Submitter) Plan Documents

Tuesday, April 14, 2015

An increasing number of qualified plan sponsors use IRS-preapproved (i.e., “prototype” or “volume submitter”) plan documents provided by a third-party service provider (such as the plan’s investment provider or recordkeeper).


Employee Benefits Group

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.

Benefits in Brief Volume 2012 Issue IV

Benefits in Brief Volume 2012 Issue III

Benefits in Brief Volume 2012 Issue II

Benefits in Brief Volume 2012 Issue I