Benefits Update- September 2014

From the editors of Wolters Kluwer’s benefits 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 and Spencer’s Research Reports.

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Hot Topics in Employee Benefits Management:

Sen. Warner asks administration to again delay ACA employer mandate, Employee Benefits Management Directions, Issue No. 569, August 12, 2014 — Sen. Mark R. Warner, D-Va., has asked the Obama administration to either delay or minimize the Code Secs. 4980H, 6055 and 6056 reporting requirements for employers under the Patient Protection and Affordable Care Act (ACA).

Halbig, King decisions on subsidies may hinder ACA implementation, Employee Benefits Management Directions, Issue No. 569, August 12, 2014 — The ultimate outcomes of Halbig v. Burwell and King v. Burwell remain to be seen. However, the overturn of Code Sec. 36B that may result is predicted to “broadly undermine the implementation” of the Patient Protection and Affordable Care Act (ACA), according to a report by the Urban Institute and the Robert Wood Johnson Foundation.

Government seeks rehearing in Halbig to avoid ‘perverse consequences’, Employee Benefits Management Directions, Issue No. 570, August 26, 2014 — As expected, the Obama Administration has filed a motion for rehearing before the entire U.S. Court of Appeals for the District of Columbia Circuit, challenging an unfavorable decision issued by a three-member panel (the Panel) on July 22, 2014 that could severely hamper the mission of the Patient Protection and Affordable Care Act (ACA) to provide “near-universal coverage.”

Use open enrollment to ensure ACA compliance,Employee Benefits Management Directions, Issue No. 570, August 26, 2014 — Open enrollment presents the perfect opportunity for employers to update their processes and to take action to ensure they are compliant with an assortment of legal requirements, including those of the Patient Protection and Affordable Care Act (ACA). So said speakers during Mercer’s recent webinar entitled Preparing for 2015 Open Enrollment.


What’s New in Employee Benefits Management:

Rulings on premium assistance credit — The two appellate court rulings on the Code Sec. 36B premium assistance credit (see story above) are discussed at ¶10,500.

Small employer tax credit — The IRS has issued final regulations dealing with the Code Sec. 45R tax credit for certain small employers that provide health coverage to their employees. For more information, see ¶10,505.

Rollovers —  The discussion at ¶79,510 has been updated.

SIFL rates — SIFL rates have been issued for the second half of 2014. For the rates, see ¶150,086.

IRAs — The discussion on individual retirement accounts has been updated at ¶152,453.


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

Health plans that cease providing contraceptive services must disclose changes. In response to the Supreme Court’s decision in Hobby Lobby v. Burwell, the Departments of Labor (DOL), Health and Human Services, and the Treasury have issued a Frequently Asked Question (FAQ) that addresses disclosure requirements for plans that will cease providing coverage for some or all contraceptive services mid-plan year. More information about these disclosure notices can be found at ¶20,051.

Highway bill with pension provisions becomes law. On August 8, 2014, the President signed the Highway and Transportation Funding Bill of 2014, which contains “pension smoothing” provisions. In 2012, Congress incorporated pension funding relief provisions in the Moving Ahead for Progress in the 21st Century Act (MAP-21). Under MAP-21, pension plan liabilities would continue to be determined based on corporate bond segment rates, which are based on the average interest rates over the preceding two years. However, beginning in 2012 for purposes of the minimum funding rules, any segment rate must be within 10% (increasing to 30% in 2016 and thereafter) of the average of such segment rates for the 25-year period preceding the current year. This provision was designed to stabilize the fluctuation of interest rates from year to year, resulting in fewer sharp declines and fewer sharp increases in interest rates. Find out more about the new law at ¶12,410.

Draft forms for reporting employee health coverage are released by IRS. Draft forms that employers will soon have to use to report on health coverage they offer to their employees have been released by the IRS. The draft forms are not to be used for reporting, and they do not, as of yet, include draft instructions, which the IRS expects to issue in August. The forms and instructions, suitable for filing, will be finalized by the IRS later this year. The IRS provided the draft forms to help employers prepare for new reporting provisions. To find out more about the draft forms, see ¶20,069.

HSA contributions can create surprisingly large nest eggs for retiree health expenses. According to research by the Employee Benefit Research Institute (EBRI), a person contributing the maximum allowable amounts for 40 years to a health savings account (HSA) without making withdrawals could accumulate up to $360,000 for health care expenses if the rate of return was 2.5 percent, $600,000 if the rate of return was 5 percent, and nearly $1.1 million if the rate of return was 7.5 percent. With an ever-increasing number of Americans gaining access to HSAs via their employment-based health plan, how much could they accumulate for health care expenses in these accounts depends on how much is contributed to the HSA as well as how much is withdrawn, and what the investment return and fees on the HSA are. See the discussion at ¶23,770 for more information about HSAs and retirement.

Employers adjust employee benefits to emphasize health care and wellness even with rising costs. Despite rising health care costs, employers are redirecting more of their financial resources toward health and wellness benefits, according to the 2014 SHRM Employee Benefits Report, released by the Society for Human Resource Management (SHRM). The survey covers health benefits, retirement benefits time off benefits, among others. An overview of some of the SHRM findings can be found at ¶20,690, ¶31,260, ¶31,530, ¶32,000, ¶70,740, ¶81,150, ¶81,440, ¶81,550, and ¶81,600.


What’s New in Spencer’s Benefits Reports:

Employer Mandate. The ACA assesses payments on large employers with 50 or more employees, including employers that do and do not offer health coverage. This report discusses the requirements of the ACA’s employer mandate (Report 550.-1).

Excise Tax. In 2018, the ACA will impose a 40 percent excise tax on high-cost employer-sponsored health plans. Tracy Watts, senior partner at Mercer, spoke about how the excise tax will impact employers and what strategies employers can use over the next few years to avoid being subject to the ACA’s excise tax (Report 563.-5).

Expatriate Employees. There is not much guidance regarding expatriate employees under the ACA. This report looks at what guidance is available to address any required obligations for expatriate employees under the ACA (Report 524.-1).

401k Coverage Defects. A plan that fails to comply with coverage requirements may lose its qualified and tax-exempt status. However, a plan may retroactively correct coverage defects. This report explains this process (Report 224.-25).

Preventive Care. The ACA requires that group health plans provide preventive care at no cost, including contraceptive coverage. The Supreme Court recently ruled that the contraceptive coverage requirements violate the religious beliefs of closely held corporations. This report reviews the preventive coverage requirements and includes a summary of the Supreme Court case (Report 514.1.-1).