DOL Issues Compliance Guidance for Plans Contemplating Reducing Contraception Coverage in Wake of Hobby Lobby

August 5, 2014 at 11:18 am | Posted in Affordable Care Act, Department of Labor, ERISA, Health and Human Services | Leave a comment
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On July 17th the DOL, in reaction to the Supreme Court’s recent decision in Hobby Lobby, released FAQ guidance reminding employers and plan sponsors that ERISA requires them to disclose any type of contraception exclusion in their Summary Plan Description and to utilize a Summary of Material Modification if they are contemplating removing the benefit from their current plan. The guidance follows.

Set out below is an additional Frequently Asked Question (FAQ) regarding implementation of the Affordable Care Act. This FAQ has been prepared by the Departments of Labor, Health and Human Services (HHS), and the Treasury (collectively, the Departments). Like previously issued FAQs (available at http://www.dol.gov/ebsa/healthreform/), this FAQ answers a question from stakeholders to help people understand the law and benefit from it, as intended.

Disclosure with respect to Preventive Services

Q: My closely held for-profit corporation’s health plan will cease providing coverage for some or all contraceptive services mid-plan year. Does this reduction in coverage trigger any notice requirements to plan participants and beneficiaries?

Yes. For plans subject to the Employee Retirement Income Security Act (ERISA), ERISA requires disclosure of information relevant to coverage of preventive services, including contraceptive coverage. Specifically, the Department of Labor’s longstanding regulations at 29 CFR 2520.102-3(j) (3) provide that, the summary plan description (SPD) shall include a description of the extent to which preventive services (which includes contraceptive services) are covered under the plan. Accordingly, if an ERISA plan excludes all or a subset of contraceptive services from coverage under its group health plan, the plan’s SPD must describe the extent of the limitation or exclusion of coverage. For plans that reduce or eliminate coverage of contraceptive services after having provided such coverage, expedited disclosure requirements for material reductions in covered services or benefits apply. See ERISA section 104(b)(1) and 29 CFR 2520.104b-3(d)(1), which generally require disclosure not later than 60 days after the date of adoption of a modification or change to the plan that is a material reduction in covered services or benefits. Other disclosure requirements may apply, for example, under State insurance law applicable to health insurance issuers.

DOL Proposes to Expand “Definition of Marriage” in FMLA for Same Sex Married Couples

June 23, 2014 at 9:54 am | Posted in Department of Labor, FMLA, Same Sex Marriage | Leave a comment
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Even though almost a full year will have passed since the Supreme Court’s historic ruling on June 26, 2013 in United States v. Windsor, the Department of Labor’s (DOL) application of the Court’s ruling in an FMLA context continues to evolve. Specifically, under the FMLA’s current regulatory definition of spouse, eligible employees can take FMLA leave to care for a same-sex spouse only if they reside in a State that recognizes same-sex marriages. The DOL acknowledged that the current definition does not allow an eligible employee to take FMLA leave on the basis of the employee’s legal same-sex marriage if the employee lives in a State that does not currently recognize same-sex marriage. The DOL is now proposing to move from a state of residence rule to a rule based on where the marriage was entered into (place of celebration). A place of celebration rule would allow all legally married couples, whether opposite-sex or same-sex, or married under common law, to have consistent federal family leave rights regardless of where they live. The DOL is encouraging interested parties to submit comments on their proposal. The full text of the proposal as well as information on the deadline for submitting comments and the procedures for submitting comments can be found at http://www.dol.gov/whd/fmla/nprm-spouse/.

IRS Says Employer Payment Plan for Marketplace Individual Coverage Triggers $36,500 per Employee per Year Penalty

May 27, 2014 at 3:25 pm | Posted in Affordable Care Act, Health Insurance Marketplace, IRS | Leave a comment
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Last week the IRS released the FAQS below which are intended to disincent employers from directing employees to a Marketplace/Exchange with the promise of reimbursing the employee for any premiums used for Exchange coverage since the “employer payment plan” is considered a “group health plan” that violates the ACA group health plan reforms.   Note that the first FAQ concludes:

“Consequently, such an arrangement fails to satisfy the market reforms and may be subject to a $100/day excise tax per applicable employee (which is $36,500 per year, per employee) under section 4980D of the Internal Revenue Code.”

Employer Health Care Arrangements

Q1. What are the consequences to the employer if the employer does not establish a health insurance plan for its own employees, but reimburses those employees for premiums they pay for health insurance (either through a qualified health plan in the Marketplace or outside the Marketplace)?

Under IRS Notice 2013-54, such arrangements are described as employer payment plans. An employer payment plan, as the term is used in this notice, generally does not include an arrangement under which an employee may have an after-tax amount applied toward health coverage or take that amount in cash compensation. As explained in Notice 2013-54, these employer payment plans are considered to be group health plans subject to the market reforms, including the prohibition on annual limits for essential health benefits and the requirement to provide certain preventive care without cost sharing. Notice 2013-54 clarifies that such arrangements cannot be integrated with individual policies to satisfy the market reforms. Consequently, such an arrangement fails to satisfy the market reforms and may be subject to a $100/day excise tax per applicable employee (which is $36,500 per year, per employee) under section 4980D of the Internal Revenue Code.

Q2. Where can I get more information?

On Sept. 13, 2013, the IRS issued Notice 2013-54, which explains how the Affordable Care Act’s market reforms apply to certain types of group health plans, including health reimbursement arrangements (HRAs), health flexible spending arrangements (health FSAs) and certain other employer healthcare arrangements, including arrangements under which an employer reimburses an employee for some or all of the premium expenses incurred for an individual health insurance policy.

DOL has issued a notice in substantially identical form to Notice 2013-54, DOL Technical Release 2013-03, and HHS will shortly issue guidance to reflect that it concurs with Notice 2013-54. On Jan. 24, 2013, DOL and HHS issued FAQs that addressed the application of the Affordable Care Act to HRAs.

Happy 40th Birthday, ERISA!

March 7, 2014 at 1:00 pm | Posted in Compliance, Department of Labor, ERISA, Federal Laws, Regulations | Leave a comment
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Protections for employee benefits moved forward 40 years ago this week with the March 4, 1974, Senate passage of the Employee Retirement Income Security Act. While it would be nearly six months until President Gerald Ford signed ERISA into law in September of that year, the bill marks congressional recognition of the sanctity of retirement, health care, and other employee benefits. ERISA also calls for the DOL to play the role of chief regulator and enforcer of the new protections. The DOL’s divisions…the Employee Benefits Security Administration…performs that important task.

Affordable Care Act Update: Final Regulations for 90-Day Waiting Period Released

February 21, 2014 at 11:19 am | Posted in Affordable Care Act, Compliance, Creditable Coverage, Department of Labor, Employment Law, Federal Taxes, Health and Human Services, Health Care, PPACA, Regulations | Leave a comment
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On February 20th, The U.S. Departments of Labor, Treasury, and Health and Human Services published final regulations (85 pages) implementing a 90-day limit on waiting periods for health coverage. The final regulations require that no group health plan or group health insurance issuer impose a waiting period that exceeds 90 days after an employee is otherwise eligible for coverage. The rules do not require coverage be offered to any particular individual or class of individuals.

To ensure that eligibility conditions based solely on the passage of time are not used to evade the waiting period limit, the rules state that such conditions cannot exceed 90 days. Other conditions for eligibility are generally permissible, such as meeting certain sales goals, earning a certain level of commission, or successfully completing an orientation period.

Additionally, requiring employees to complete a certain number of hours before becoming eligible for coverage is generally allowed as long as the requirement is capped at 1,200 hours. The rules also address situations in which it cannot be determined that a new employee will be working full-time.

The departments are issuing a companion proposed rule that would limit the maximum duration of an otherwise permissible orientation period to one month. This proposal will be open for public comment.

A link to the final rule is here: http://www.dol.gov/opa/media/press/ebsa/20140220-redfeg1.pdf.

Employer Pays $25,000 to Settle Employee FMLA Claims Arising Out of Care for the Employee’s Niece

February 7, 2014 at 1:54 pm | Posted in Compliance, Department of Labor, Employment Law, FMLA, Human Resources, Regulations | Leave a comment
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Ohio based DNA Diagnostics Center Inc. has agreed to pay $25,000 in lost wages and liquidated damages to an employee  for unlawfully denying her FMLA leave. The company  fired the employee for exercising her rights under the FMLA to care for her seriously ill 12-year-old niece, for whom the employee was standing “in loco parentis,” or in the place of a parent. Under terms of the settlement agreement, the company must expunge the employee’s record of any disciplinary references. In June 2010, the DOL issued an Administrator Interpretation clarifying the definition of son and daughter under the FMLA includes not only a biological or adopted child, but also a foster child, a stepchild, a legal ward, or a child of a person standing in loco parentis. This definition ensures that an employee who assumes the role of caring for a child receives parental rights to family leave, regardless of the legal or biological relationship.

A copy of the DOL press release is here: http://www.dol.gov/whd/media/press/whdpressVB3.asp?pressdoc=Midwest/20140204.xml

DOL Sues Employer/Plan Sponsor for Approximately $500,000 and Removal of Health Plan Fiduciaries for Failure to Fund Health and COBRA Coverage and Pay Incurred Claims

December 26, 2013 at 11:51 am | Posted in COBRA, Compliance, Department of Labor, Employment Law, Flexible Spending Accounts, Health Care, Medical | Leave a comment
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On December 18th, in Perez v. Home Valu, et al., the DOL sued a self insured health benefit plan, self insured dental plan, flexible benefit plan, COBRA plan, and the individuals responsible for its administration seeking recoupment of approximately $500,000.

On December 24, 2009 the self insured plans stopped paying benefit claims. On January 10, 2010 Home Valu stopped doing business because of financial pressures. All Home Valu benefit plans were formally terminated on January 22, 2010 although they were practically terminated on December 24 when the self insured plans stopped paying claims. Nevertheless, HomeValu continued to deduct approximately $12,000 in insurance premiums from employee paychecks in January 2010 and failed to apply those premiums towards health insurance. The Home Valu benefit plans did not pay approximately $490,000 in claims incurred in November and December 2009 and January 2010.

A copy of the DOL complaint can be found here:
http://www.dol.gov/ebsa/pdf/0-13-cv-03572.pdf

DOL Issues FAQ Guidance on Exchange/Marketplace Notices and 90 Day Waiting Period / Eligibility Considerations

September 5, 2013 at 10:16 am | Posted in Affordable Care Act, Department of Labor, Health Insurance Exchanges, Health Insurance Marketplace, PPACA | Leave a comment
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Yesterday the DOL released FAQs about the Affordable Care Act Implementation Part XVI.   Some key answers are below.

  1. A plan sponsor could use another entity to distribute the Marketplace Notices on its behalf. The Plan sponsor would be ultimately responsible, however, to make sure that all employees, and employee groups or subsets (i.e. eligible and ineligible) would receive the Notice.
  2. The DOL also confirmed that other eligibility provisions that a Plan Sponsor may require (i.e. a specific job category is not benefit eligible) is allowable if not designed to avoid compliance with a 90 day waiting period. The DOL stated:

 “The proposed rules also provide that a waiting period is the period that must pass before coverage for an employee or dependent who is otherwise eligible to enroll under the terms of the plan can become effective. For this purpose, being otherwise eligible to enroll in a plan generally means having met the plan’s substantive eligibility conditions (such as being in an eligible job classification or achieving job-related licensure requirements specified in the plan’s terms). However, eligibility conditions based solely on the lapse of time are permissible for no more than 90 days. Other conditions for eligibility under a plan are generally permissible unless the condition is designed to avoid compliance with the 90-day waiting period limitation”

The DOL used a multi-employer’s plan “hours worked” eligibility standard as an example that does not frustrate the 90 day waiting period standard:

[A]n eligibility provision that allows employees to become eligible for coverage by working hours of covered employment across multiple contributing employers (which often aggregates hours by calendar quarter and then permits coverage to extend for the next full calendar quarter, regardless of whether an employee has terminated employment), the Departments would consider that provision designed to accommodate a unique operating structure, (and, therefore, not designed to avoid compliance with the 90-day waiting period limitation).

A link to the DOL Release is here.

 

DOL ANNOUNCES FMLA SAME SEX MARRIED COUPLE GUIDANCE: FMLA Available To Married Same Sex Couple Residing In A State That Recognizes Same Sex Marriage But Not Available If The Same Couple Resides In A State That Does Not Recognize Same Sex Marriage

August 20, 2013 at 9:12 am | Posted in Department of Labor, FMLA, Same Sex Marriage | Leave a comment
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Last week, the Department of Labor released updated guidance outlining the basis for taking FMLA leave and defined “spouse,” for FMLA purposes as:

Spouse: Spouse means a husband or wife as defined or recognized under state law for purposes of marriage in the state where the employee resides, including “common law” marriage and same-sex marriage.

What Is The Practical Impact of the Guidance? 

An employer located in a state that does not recognize same sex marriage does not have to grant FMLA leave to a same sex married employee to care for that employee’s same sex spouse if the same sex married couple do not reside in a state that recognizes same sex marriage.  There is nothing in the DOL guidance, however, that precludes an employer in the situation above from having its own internal corporate leave policy allowing for job and benefits protected leave for a same sex spouse.  Until there is further judicial review, there will be disparate treatment of same sex married couples for FMLA leave purposes that will turn on their place of residence.

A copy of the FMLA Fact Sheet #28F: Qualifying Reasons for Leave under the Family and Medical Leave Act can be found here: DOL Updated Fact Sheet #28F: Qualifying Reasons for Leave under the FMLA (PDF)

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