Benefits In Brief

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.

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.

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).

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.

The Internal Revenue Service has announced that a new Form 8955-SSA (“Annual Registration Statement Identifying Separated Participants with Deferred Vested Benefits”) has replaced Schedule SSA to the Form 5500.

The Affordable Care Act requires that employees’ W-2s provide useful and comparable consumer information on the cost of their employer-sponsored health coverage. On March 29, 2011, the IRS issued Notice 2011-28, providing interim guidance on this new reporting requirement.

On October 12, 2010, the IRS released Notice 2010-69, which provides interim relief from the Affordable Care Act ("ACA") requirement that the cost of coverage under employer-sponsored group health plans be reported on Forms W-2 provided to employees. According to the Notice, such W-2 reporting will now be optional for 2011, but will be required for 2012. This interim relief is designed to give employers additional time to adjust their payroll systems and update procedures to comply with the new reporting requirement.

In addition to transforming the rules governing the benefits that health plans must offer, the Affordable Care Act substantially alters the way that plan sponsors and health insurers must describe and report those benefits. From new claim appeal procedures, to standardized benefit summaries, to additional governmental reporting, the Act will almost certainly increase administrative costs and complexities for employers. And like many other aspects of the Act, determining precisely how — and even when — to comply with some of the new reporting and disclosure obligations will be difficult. Although regulations will likely answer some of these questions, plan sponsors should start revising many of their procedures immediately.

Effective for plan years beginning on and after January 1, 2009, all sponsors of pension and welfare plans and Direct Filing Entities (“DFEs”) that are required to file a Form 5500 under Title I of ERISA must do so electronically through the Employee Benefit Security Administration’s (“EBSA”) computerized ERISA Filing Acceptance System (“EFAST2”). In addition, delinquent and amended filings generally must be submitted electronically through EFAST2.

As we reported in our February 2009 article, the Children’s Health Insurance Program Reauthorization Act of 2009 (“CHIPRA”) directed the Department of Labor (“DOL”) to draft model notices by which sponsors of employer group health plans could notify their employees of the premium assistance made available under both CHIP and Medicaid. The DOL has now issued a model notice that may be used for this purpose.

As we reported in our December 2009 article, Congress and the President have extended the 65% COBRA premium subsidy enacted as part of the American Recovery and Reinvestment Act (“ARRA”). The maximum subsidy period is now 15 months (rather than 9), and the subsidy will now apply to COBRA coverage attributable to involuntary terminations occurring on or before February 28, 2010 (rather than December 31, 2009).

The IRS has finally updated the model “rollover notice” it issued in 2002. In fact, we now have two new models. Plan administrators will want to start using these new notices on or before January 1, 2010.

The 2009 calendar year is a time of great change for employers sponsoring Section 403(b) tax-sheltered annuity plans. The first new IRS regulations in over 40 years, which became effective on January 1, 2009, have redefined a sponsoring employer’s roles and responsibilities with respect to these programs. Under those regulations, 403(b) plans must be maintained pursuant to a “written plan” (although, in separate guidance, the IRS has given plan sponsors until the last day of 2009 to have this “written plan” in place).

The Medicare Part D regulations issued by the Centers for Medicare and Medicaid Services (“CMS”) require group health plans providing prescription drug coverage to Part D-eligible individuals to disclose to participants whether the coverage is “creditable” — that is, at least as good as Medicare Part D coverage. Plans must send these notices to participants each fall, prior to the beginning of the initial enrollment period for Medicare Part D coverage.

More and more employers are choosing to post employee handbooks and related documents on the employer’s intranet site. In many respects, this is an elegant solution to the problem of ensuring that the latest version of each such document is readily and conveniently available to all employees. Updates can be made electronically — and incorporated directly into the text of the document — so that employees can always access a single document containing all of the latest provisions. Unfortunately, employers who rely solely on their intranet sites for distributing a Summary Plan Description (“SPD”), as required for each ERISA plan, may find that this approach carries a costly downside.

The Pension Protection Act (“PPA”) imposed many new disclosure requirements, including expanded benefit statements for defined contribution and defined benefit plans. Many plan sponsors have been expecting model benefit statements by August 18, 2007, the deadline set by the PPA.

In Announcement 2007-63, the Internal Revenue Service (“IRS”) eliminated Schedule P, Annual Return of Fiduciary Benefit Trust, from Form 5500. Instead, the IRS will use a plan’s filing of its annual return to trigger the start of the statute of limitations for tax assessment on an employee benefit trust.

To many group health plan sponsors, the distribution of the “Notice of Privacy Practices” required by HIPAA’s privacy regulations (the “Privacy Rule”) may be no more than a distant memory. Well, dust off those HIPAA privacy notices because, according to the Privacy Rule, “No less frequently than once every three years, the health plan must notify individuals then covered by the plan of the availability of the notice and how to obtain the notice.” Thus, those “small plans” that were originally subject to the Privacy Rule as of April 14, 2004, must comply with this “reminder” requirement by April 14, 2007.

Final rules adopted by the Securities and Exchange Commission on July 26, 2006, will require companies with publicly-traded securities to significantly alter the way that they disclose their executive compensation practices in proxy and registration statements. These rules are generally designed to require the disclosure of all of the compensation that executives receive. They expand the list of executives for whom disclosures must be made, substantially modify the format and content of the required disclosures, and place heightened scrutiny on options-granting practices.

Effective July 1, 2006, sponsors of large defined benefit plans (500 or more participants) must file PBGC premiums electronically for plan years beginning on or after January 1, 2006

As we reported in our July 2005 issue of Benefits in Brief, the Medicare Part D regulations issued by the Centers for Medicare and Medicaid Services (“CMS”) require group health plans providing prescription drug coverage to Part D-eligible individuals to disclose to participants whether that coverage is “creditable” – that is, at least as good as Medicare Part D coverage. Most plans sent these notices to participants last fall, prior to the beginning of the initial enrollment period for Medicare Part D coverage.

As we reported in our July 2005 issue of Benefits in Brief, regulations issued by the Centers for Medicare and Medicaid Services (“CMS”) require group health plans providing prescription drug coverage to Medicare Part D-eligible individuals to disclose to participants whether that coverage is “creditable.” Plan sponsors were required to send these notices by November 15, 2005. CMS has now released guidance regarding the plan sponsor’s obligation to disclose information regarding the plan’s creditable coverage status to CMS.

To many plan sponsors, the distribution of the “Notice of Privacy Practices” required by HIPAA’s privacy regulations (the “Privacy Rule”) may be no more than a distant memory. Well, dust off those HIPAA privacy notices because, according to the Privacy Rule, “No less frequently than once every three years, the health plan must notify individuals then covered by the plan of the availability of the notice and how to obtain the notice.” Thus, those plans that were originally subject to the Privacy Rule as of April 14, 2003, must comply with this “reminder” requirement by April 14, 2006.

On February 1st, the IRS began accepting determination letter applications with respect to individually designed retirement plans under its new system of staggered applications. Because the IRS’ review of determination letter applications filed during this initial period will take into account the requirements of the Economic Growth and Tax Relief Reconciliation Act of 2001 (or “EGTRRA”), the IRS refers to this as the “EGTRRA remedial amendment period.”