One of the more obscure provisions of the Affordable Care Act says that a group health plan may not discriminate against “any health care provider who is acting within the scope of that provider’s license or certification under applicable State law.” What on earth does this provision mean? Apparently not even the federal government is sure. Continue Reading
Withholding and paying FICA tax on nonqualified deferred compensation can be a tricky business. Because special timing rules apply to FICA tax, employers can’t simply withhold and pay FICA tax when they pay deferred compensation to the employee. Instead, FICA tax is due when the deferred compensation vests (or, in some cases, when the amount of the deferred compensation can be determined).
It is not always easy to tell when these triggering events occur. In fact, it is sometimes hard to tell whether compensation is “deferred compensation” that is subject to the special timing rules. Employers faced with these complications often discover long after the fact that they have failed to withhold and pay FICA tax on deferred compensation when the tax was due. The additional 0.9% Medicare tax introduced in 2013 makes these errors much more difficult to correct. Continue Reading
Starting in 2015, the Affordable Care Act imposes burdensome new reporting requirements on employers and insurers that provide group health coverage. We described the reporting requirements in earlier posts, here and here.
Employers and other reporting entities have anxiously awaited the IRS forms on which these reports will be made, so that they can program and test their computer systems, develop administrative procedures, coordinate reporting responsibility with their affiliates, and make arrangements with their business partners to collect and report the necessary information. The IRS posted drafts of the reporting forms on its website yesterday. Unfortunately, however, the instructions to the forms—which are expected to provide much of the detail programmers will need—will not be available until August. Continue Reading
Yesterday two federal courts of appeal reached opposite conclusions on the question whether individuals in 34 states are eligible for federal subsidies when they purchase health insurance coverage. Depending on how this issue is resolved, it could have a significant impact on the future of the Affordable Care Act, including the employer mandate scheduled to take effect in 2015. Continue Reading
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.