Group health plans with 50 or more participants, including self-insured plans, must be able to conduct electronic transactions in accordance with HHS standards and operating rules. One of the more challenging aspects of the electronic transaction rules has been the transition to the new International Classification of Diseases, 10th Revision (ICD-10) codes for health claims. Continue Reading
The Equal Employment Opportunity Commission has issued new enforcement guidance explaining when an employer’s policies affecting pregnant employees might violate federal law. The new guidance appears in an updated chapter of the EEOC’s enforcement manual, and in a related set of questions and answers. Among other topics, the new guidance addresses the rights of pregnant employees under employer health plans, fringe benefit programs, and other benefit plans. Continue Reading
By December 31, 2015, group health plans must complete a testing process and certify that they are able to conduct electronic transactions in accordance with uniform standards and operating rules. Plans must also ensure that third-party administrators and other outside vendors are in compliance with the electronic transaction rules if the vendors conduct transactions on the plans’ behalf.
December 2015 might seem a long way off to group health plan sponsors and administrators focused on ACA’s shared responsibility rules. Plan sponsors should bear in mind, though, that compliance with the certification requirements for electronic transactions can involve significant lead time. Failure to comply carries substantial penalties. Accordingly, group health plan sponsors that have not already addressed the electronic transaction rules might wish to develop a timetable for compliance. Continue Reading
Recent guidance from the IRS suggests that it will be helpful to segregate funding for retiree health benefits from funding for all other welfare benefits (such as retiree life insurance, disability benefits, and health benefits for active employees) in order to minimize tax liabilities. A proposed regulation issued earlier this year indicates that segregating the retiree health assets in a separate trust might reduce the unrelated business income tax on the trust’s investment income. (As we explain below, this tax issue is limited to benefits that are not collectively-bargained.) Continue Reading
Group health plan sponsors and administrators focused on compliance with ACA’s shared responsibility rules might not be aware that another compliance deadline is looming. By November 5, 2014, most group health plans must apply to the Centers for Medicare & Medicaid Services (CMS) for a unique health plan identifying number. (Please visit the “Deadlines” page of our blog for information about other approaching deadlines.)
The IRS has published a final regulation that allows defined contribution plans to offer longevity annuities commencing as late as age 85. Although the final regulation is similar to the rule proposed in 2012, the IRS has made some welcome improvements in response to public comments.
The final regulation is effective for annuities purchased after July 1, 2014. Employers might wish to consider whether to offer longevity annuities in their defined contribution plans, now that the IRS has explained the rules that govern these annuities.
Yesterday, the Supreme Court issued its much anticipated decision in the stock-drop case, Fifth Third Bancorp v. Dudenhoeffer. The Court vacated the lower court decision that was adverse to the employer, Fifth Third Bancorp, and remanded the case to the lower courts for further proceedings.
Fiduciaries of employee stock ownership plans (ESOPs) had hoped that this decision would clarify their responsibilities for administering an employer stock fund. Although the decision leaves many questions unanswered, it does provide useful guidance for fiduciaries administering an employer stock fund in an ESOP: Continue Reading
A recent Ninth Circuit decision, Gabriel v. Alaska Elec. Pension Fund, offers useful insight for deciding how to fix a pension overpayment.
Virtually every employer that administers a pension plan has experienced (or will experience) discovering a calculation error after incorrect payments have been made for several years–resulting in thousands of dollars of overpayments. Fixing these overpayments is often difficult. On the one hand, plan fiduciaries have an obligation to stop overpayments and restore losses from excess payments. IRS guidance instructs plan administrators to recover overpayments from the affected participants. On the other hand, participants who have received overpayments inevitably claim that they have relied on the incorrect benefit and that correcting the error would result in undue harm to them. The affected participants often recognize that an incorrect benefit cannot be paid by the plan, but they argue that the cost of the correction should be borne by the administrator who made the error, rather than by the affected participant.
Since the Supreme Court’s 2011 decision in Cigna Corp. v. Amara (and even before that decision), many participants who received overpayments have alleged that an equitable remedy like “reformation,” “equitable estoppel,” or “surcharge” entitles them to keep overpayments.
Recently, HHS Office of Civil Rights (OCR) announced that it has entered into settlement agreements with two entities following enforcement actions, both arising from stolen laptops that were not encrypted in accordance with the Security Rule.
According to HHS, an unencrypted laptop was stolen from a physical therapy center in Springfield, Missouri. The center was part of a larger health system, Concentra Health Services. Through conducting required HIPAA risk analyses, Concentra had previously recognized that the lack of encryption on its devices posed a security risk. However, HHS found that Concentra’s efforts to address this risk were “incomplete and inconsistent over time.” Concentra has agreed to pay over $1.7 million to settle potential violations, as well as to submit a corrective action plan. This significant monetary penalty suggests HHS will not look favorably upon violations of the Security Rule that the covered entity has documented but not taken reasonable efforts to correct. Continue Reading
Employers occasionally find themselves in litigation with current or former employees. Sometimes an employer-defendant will uncover communications between the plaintiff-employee and her personal attorney or spouse on an employer-owned email or computer system.
These communications might ordinarily be privileged, but inadvertent disclosure to a third party–in this case, the employer–could waive the privilege if the employee failed to take reasonable precautions to maintain confidentiality. Many employers maintain policies informing employees that communications on work systems are not private and may be monitored. Employers seeking to use otherwise-privileged communications in litigation have argued that any asserted employee privilege is misplaced or waived, because the employee had no reasonable expectation of privacy on company systems.
But courts have not always agreed. The existence of a computer use policy only begins the analysis. Employers might therefore seek a court’s permission before reviewing or using potentially-privileged communications. The chances of a favorable ruling improve if some or all of the following occur: Continue Reading