Benefits in Brief

Department of Labor Finalizes, Delays 401(k) Fee Disclosure Rules

Gregory L. Ash — Thu, 02 Feb 2012 00:00:00 GMT

After months of delay, the Department of Labor (“DOL”) today released final regulations under Section 408(b)(2) of ERISA, requiring retirement plan service providers to disclose information about their services and fees to plan sponsors. In doing so, the DOL delayed the effective date of those rules and made minor modifications to them. The final regulations defer the compliance date from April 1 to July 1, 2012. As a consequence, plan sponsors will also have more time to comply with the related participant-level fee disclosure rules.

More IRS Guidance on W-2 Reporting of Health Coverage

Kenneth A. Mason — Wed, 18 Jan 2012 00:00:00 GMT

Large employers (those issuing more than 250 W-2s for 2011) must report the value of their employees’ health coverage on the W-2s they issue for 2012 (in January of 2013). Given the complexities of this process, the time to start preparing is now. As explained in this article, the IRS has just issued another round of guidance on this reporting requirement. This is likely to be the last guidance available before the requirement takes effect.

Health Care Reform: What's Gone Away? and What's Coming in 2012?

Chadron Patton — Wed, 16 Nov 2011 00:00:00 GMT

The tide of regulations interpreting the 2010 Patient Protection and Affordable Care Act (“PPACA”) began to ebb in 2011, and portions of the law have even been repealed or put on hold. Nonetheless, health plan sponsors will still face new compliance burdens in 2012. This article briefly addresses these aspects of the PPACA.

Deadlines Approaching for Retirement Plan Amendments

Lawrence Jenab — Wed, 16 Nov 2011 00:00:00 GMT

Once again, amendment season is upon us. Sponsors of tax-favored retirement plans should keep in mind the many required amendments for which a year-end deadline is fast approaching. This article highlights some of the more important changes that sponsors must address before the curtain closes on 2011.

Health Plan Assessed Double Damages for MSP Violation

Kenneth A. Mason — Wed, 16 Nov 2011 00:00:00 GMT

A federal appeals court has held that the Medicare Secondary Payer (“MSP”) Act authorizes a medical provider to sue an employer health plan for double damages when the plan fails to comply with the MSP Act, thereby forcing the provider to accept the lower level of reimbursement available under Medicare. This Sixth Circuit decision, in Bio-Medical Applications of Tennessee, Inc. v. Central States Southeast and Southwest Areas Health and Welfare Fund, definitely raises the stakes for health plans that fail to comply with the MSP rules.

Extension of Trade Adjustment Assistance Affects Certain COBRA Coverage

Julia M. Vander Weele — Tue, 15 Nov 2011 00:00:00 GMT

The Trade Act of 2002 created a health care tax credit (“HCTC”) for certain individuals who become eligible for trade adjustment assistance (“TAA eligible individuals”), as well as for certain retired employees who are receiving pension payments from the Pension Benefit Guaranty Corporation (“PBGC recipients”). Under the original HCTC provisions, eligible individuals could either claim a tax credit or receive advance payment of 65% of the premiums they pay for qualified health insurance, including COBRA continuation coverage. Special COBRA rights, including a second opportunity to elect COBRA coverage, also apply to TAA-eligible individuals and PBGC recipients.

Failing to Notify Participants of Plan Changes Can Be Costly

Gregory L. Ash — Tue, 15 Nov 2011 00:00:00 GMT

Among ERISA’s many notice and disclosure obligations, the requirement to timely inform participants of important plan changes is one that is too often overlooked. Although there is no monetary penalty for failing to distribute a summary of material modifications (“SMM”) or an updated summary plan description (“SPD”) within the time periods set by the regulations, such a failure can still have severe consequences. AT&T recently learned that lesson – to the tune of a six-figure judgment awarded to a deferred vested participant in its defined benefit pension plan. (Helton v. AT&T, Inc., Sept. 16, 2011).

Investment Providers and Advisors May Now Provide "Conflicted" Advice to Plan Participants

Robert A. (Rob) Browning — Tue, 15 Nov 2011 00:00:00 GMT

Both the Employee Retirement Income Security Act (“ERISA”) and the Internal Revenue Code (the “Code”) generally prohibit fiduciary investment advisers from receiving compensation from the investment vehicles that they recommend to plan participants and IRA holders. However, the Pension Protection Act of 2006 amended ERISA to create a new statutory exemption from the prohibited transaction rules that is designed to expand the availability of fiduciary investment advice to participants in individual account plans and IRAs, subject to specific safeguards and conditions.

THE FIDUCIARY CORNER: Loss of Privilege: Another Reason Not to Give the Company a Fiduciary Role

Gregory L. Ash — Tue, 15 Nov 2011 00:00:00 GMT

In our efforts to help plan sponsors minimize their fiduciary risk, we consistently advise against giving the sponsoring employer a fiduciary role. Designating the “company” or “employer” as an ERISA fiduciary can unintentionally subject the employer’s executive officers and board of directors to ERISA’s fiduciary standards, and potentially to personal liability. The United States Supreme Court recently reminded us of another reason to avoid this plan governance mistake: the potential loss of the attorney-client privilege.

2012 Inflation Adjustments

Kenneth A. Mason — Fri, 21 Oct 2011 00:00:00 GMT

Following an October 20 announcement by the IRS and an October 19 announcement by the Social Security Administration, we now know most of the dollar amounts that employers will need to administer their benefit plans for 2012. And unlike the past two years, many of these amounts will actually be adjusted upward to account for inflation.

Guidance Issued on ACA’S Summary of Benefits and Coverage

Chadron Patton — Wed, 24 Aug 2011 00:00:00 GMT

The Affordable Care Act (“ACA”) requires each employer group health plan to provide a 4-page summary of its benefits to all individuals who are eligible for coverage. This requirement takes effect on March 23, 2012 (two years after the enactment of the ACA). The three agencies charged with implementing many of the ACA’s requirements have just issued proposed regulations, along with templates of proposed formats, under which a plan may furnish this new “summary of benefits and coverage” (“SBC”).

HHS Proposes Guidance on ACA “Exchanges”

Kenneth A. Mason — Wed, 17 Aug 2011 00:00:00 GMT

A cornerstone of last year’s Affordable Care Act (“ACA”) was the establishment of state-based “American Health Benefit Exchanges.” These Exchanges are to serve as health insurance clearinghouses, allowing health care consumers to connect with insurers. Each Exchange must also maintain a “Small Business Health Options Program” (or “SHOP”), through which small employers may obtain health insurance for their employees. In mid-July, the Department of Health and Human Services (“HHS”) proposed two sets of regulations concerning these new Exchanges.

Employer Stock Funds Continue to Vex 401(k) Fiduciaries

Gregory L. Ash — Wed, 17 Aug 2011 00:00:00 GMT

Offering employees the opportunity to invest in the stock of their employer through a tax-favored vehicle like a Code Section 401(k) plan or employee stock ownership plan (“ESOP”) must have seemed like an innocuous idea at one time. Indeed, Congress expressed its approval of such arrangements by creating special tax benefits for both the sponsors of such plans (in the form additional deductions) and participants in them (in the form of favorable tax treatment on unrealized appreciation in the value of employer stock). Yet these “employer stock funds” are now the quickest path to the courthouse for employers that sponsor them and fiduciaries that administer them.

Agencies Adopt Additional Guidelines for Women's Preventive Services

Chadron Patton — Wed, 17 Aug 2011 00:00:00 GMT

The Affordable Care Act (“ACA”) requires group health plans (other than plans that are “grandfathered”) to cover a list of preventive health services. Earlier this month, the three agencies charged with administering the ACA issued additional rules describing women’s preventive services that must also be covered. Like the services listed in earlier agency guidance, these women’s preventive services must be covered on a first-dollar basis, with no cost-sharing requirement, by “non-grandfathered” group health plans. This article briefly summarizes the new rules.

Revisiting Grandfathered Status for 2012

Julia M. Vander Weele — Tue, 16 Aug 2011 00:00:00 GMT

2011 has been a big year for grandfathered and non-grandfathered group health plans alike. A number of significant changes mandated by the Affordable Care Act (“ACA”) took effect for both types of plans. Now, 2014 looms as the next big milestone in health care reform. But losing track of the grandfathering rules is a trap for the unwary. While there are no major health care reform changes taking effect in 2012, sponsors of grandfathered plans should revisit the rules governing grandfathered status to ensure that they do not inadvertently lose that status in 2012.

THE FIDUCIARY CORNER: Supreme Court Decision Requires New Focus on Participant Communications

Gregory L. Ash — Mon, 15 Aug 2011 00:00:00 GMT

A long-awaited ruling issued by the United States Supreme Court this spring gives employers both reason to celebrate and cause for concern. The Court’s decision in CIGNA Corp. v. Amara (May 16, 2011) reaffirms that courts will not enforce benefit rights that are described in a summary plan description (“SPD”) as if those rights were actually set forth in the plan document. At the same time that it foreclosed this avenue of relief for plan participants, however, the Court apparently opened up another by concluding that participants who are actually harmed by inconsistent or misleading plan summaries may have an equitable right to be compensated for that harm. As a result, participant communications are likely to be a new source of ERISA litigation in the coming years.

Form 8955-SSA Filing Due Date Extended

Kenneth A. Mason — Sun, 14 Aug 2011 00:00:00 GMT

As we reported in our May 2011 article, the Internal Revenue Service (“IRS”) has replaced Schedule SSA to the Form 5500 with a new Form 8955-SSA (“Annual Registration Statement Identifying Separated Participants with Deferred Vested Benefits”), beginning with the 2009 plan year. The IRS has now released the 2009 Form 8955-SSA. It has also extended the August 1, 2011, deadline for the 2009 and 2010 filings.

Revised Again: More Changes to ACA-Required Internal and External Review Procedures

Julia M. Vander Weele — Thu, 07 Jul 2011 00:00:00 GMT

As explained in our August 2010 article, “interim final regulations” issued under the Affordable Care Act (“ACA”) require that group health plans (other than those that are “grandfathered”) comply with a number of internal claims and appeals procedures that go beyond those previously required under ERISA. The ACA also requires group health plans to offer a new state or federal external review process to review denied claims.

June 30 Deadline for FSA Amendments

Kenneth A. Mason — Thu, 26 May 2011 00:00:00 GMT

As explained in our November 2010 article, last year’s Affordable Care Act (“ACA”) restricted the ability of employer health plans, including flexible spending arrangements (“FSAs”) and health reimbursement arrangements (“HRAs”), to reimburse expenses incurred for over-the-counter (“OTC”) medications. With the exception of insulin, expenses for OTC medications may now be reimbursed only if the medications are prescribed by a physician. Sponsors of FSAs face a June 30 deadline for amending their plans to comply with this ACA restriction.

CMS Updates Medicare Part D Creditable Coverage Notices

Chadron Patton — Mon, 16 May 2011 00:00:00 GMT

On April 1, 2011, the Centers for Medicare and Medicaid Services ("CMS") issued revised Medicare Part D creditable and non-creditable coverage notices to reflect an amendment made to the Social Security Act by the Affordable Care Act ("ACA"). The amendment accelerated the Medicare Part D annual enrollment period — from November 15 through December 31, to October 15 through December 7. This change is effective for 2012 Part D enrollments, occurring in the fall of 2011.