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DOL Follows IRS – State of Celebration Rule Applies for all ERISA Purposes

In Technical Release 2013-04, the Employee Benefit Security Administration mirrored the guidance provided by the Internal Revenue Service in Revenue Ruling 2013-17, providing clear guidance defining “spouse” and “marriage” for all purposes under ERISA. As now defined, these terms include same-sex spouses, so long as their marriage is recognized by the state in which the marriage occurred (i.e. adopting a “state of celebration” rule). In addition, the DOL confirmed that “spouse” and “marriage” do not include registered domestic partnerships, civil unions, or other similar formal relationships that may be recognized under state law but are not denominated as marriages.

Given the recent IRS guidance, this guidance by the DOL is not surprising and still doesn’t give employers enough information to update plan documents. However, there are steps employers can begin now regarding the administration of same-sex spousal benefits under ERISA plans:

Company Position – Determine company’s position on offering spousal benefits to same-sex spouses.

  • Is recognition of same-sex spouse limited to minimal legal compliance?
  • Does the company want to recognize domestic partnerships and civil unions?
  • Will proof of marriage be required for everyone?

Proof of Marriage

  • Consider a campaign to update records (e.g. beneficiary designations) and gather proof of marriage. Include information on the law change and its effects on benefit plans.

Retirement Plans – Qualified retirement plans are required to provide certain spousal protections (e.g. spousal death benefits).

  • Treat same-sex spouses as spouses. Regardless of plan language, a same-sex spouse must receive

Breaking – DOL Guidance on Same-Sex Marriage – Adopts State of Celebration Approach for ERISA Purposes

Today, the DOL released Technical Release 2013-04, providing that the Secretary of Labor will interpret the terms “spouse” and “marriage”, for purposes of ERISA and related regulations and opinions, to include individuals who are lawfully married under any state law (regardless of state of domicile).  The release states this approach is the most consistent with the Windsor decision and notes that a state of celebration approach provides a uniform rule that can be applied with certainty by employers, plan administrators, participants, and beneficiaries.    In addition, the DOL intends to issue future guidance addressing specific provisions of ERISA.

This approach is the same approach used by the IRS for purposes of federal tax law.  Please see our previous post for further details regarding the IRS approach.

We intend to provide additional analysis in future posts.

Proposed Regulations Issued by IRS Regarding Minimum Essential Coverage and Large Employer Information Reporting Requirements

As part of implementing the Affordable Care Act, IRC 6055 and 6056 were added to the Internal Revenue Code requiring certain information reporting for insurers, sponsors of self-insured plans and other entities that provide “minimum essential coverage” and additional “large employer” information reporting.  In 2012, the IRS requested comments from the public regarding these reporting requirement (Notice 2012-32 and Notice 2012-33).  After considering initial comments from this request, the IRS, on September 5, 2013, released two sets of proposed regulations regarding these reporting requirements.  Copies of these proposed regulations may be found here and here (for IRC 6056).

Although the proposed regulations for the most part do not expand much upon the language of IRC 6055 and 6056, there are a number of points of which practitioners should be aware:

  • In relation to the large employer reporting requirements under IRC 6056, taxpayers are required to apply certain aggregation rules in order to determine whether a taxpayer (or group of taxpayers) is an “applicable large employer” (generally, an employer with more than 50 full-time employees).  However, the IRS confirmed in the proposed regulations that where a group of taxpayers is determined to be an “applicable large employer” under such rules, each of the taxpayers in such group who have full-time employees must meet the information reporting requirements of IRC 6056 (rather than the parent / primary taxpayer).  Each such group member is termed an “applicable large employer member”.  A similar statement was previously made

UPDATE: Health Insurance Marketplace Notice: RELAX!…BUT DON’T PLAY DEAD

Health care reform created a new Section 18B of the Fair Labor Standards Act (“FLSA”) to require employers to furnish notice of the coverage options available through Health Insurance Marketplace to employees. The Secretary of Labor delegated responsibility for regulations under the new law to the Department of Labor’s Employee Benefits Security Administration (“EBSA”).

The new notice requirement was to take effect on March 1, 2013.  However, in a set of FAQs published on January 24, 2013, the EBSA concluded that the notice requirement should be delayed for several reasons.  The EBSA anticipated that distribution of the notices would take place in the late summer or fall of 2013, which would coordinate with the open enrollment period for Exchanges (see our earlier post).

On May 8 2013, the EBSA published Technical Release 2013-02, which offered guidance on various aspects of the marketplace notice, including the required content, timing and delivery of the notice.  Under the guidance, employers are required to provide the marketplace notice to current employees before October 1, 2013, by first-class mail or electronically according to the DOL’s electronic disclosure safe harbor.  The Release also included two model marketplace notices (see our other earlier post).

Earlier this month, the EBSA issued its sixteenth set of FAQs on health care reform and confirmed that an employer will have satisfied its notice obligation  if another party provides a timely and complete notice.  The FAQs also contained a cautionary reminder that all employees must receive the notice

Violations of the HIPAA Privacy and Security Rules Can be Costly

Violations of the HIPAA Privacy and Security Rules Can be Costly

September 16, 2013

Authored by: benefitsbclp

According to a news release issued by the Department of Health and Human Services (HHS), HHS entered into a settlement agreement with Affinity Health Plan, Inc. to settle claims related to violations of the Health Information Portability and Accountability Act of 1996 (HIPAA).  Upon learning that the protected health information of possibly over 300,000 individuals was accessible on leased copiers returned by Affinity to the leasing company, Affinity reported the HIPAA violations to HHS as required by HIPAA’s breach notification rules.  Among other corrective actions, HHS reports that Affinity agreed to pay a fine of $1,215,780.

This settlement is important for two reasons.  First, it underscores that protected health information (PHI) may be found in places that plan administrators and others subject to HIPAA may not immediately consider.  It is important to do a thorough analysis of areas where protected health information, and particularly electronic protected health information, may be held.

It also a reminder of the importance of keeping up to date on HIPAA matters.  The Health Information Technology for Economic and Clinical Health Act (HITECH) added breach notification and additional privacy requirements to the HIPAA Rules.  HHS has issued final regulations which are generally effective September 23, 2013.   The new rules require updates to HIPAA policies and procedures, notice of privacy practices, plan documents and other HIPAA documents.  Updated training for employees with access to PHI may also be required.

Supreme Court Set To Weigh In On When A Cause Of Action Accrues Under ERISA

Next month the Supreme Court is  scheduled to hear oral argument in Heimeshoff v. Hartford Life & Accident Insurance Co., et al., an ERISA case concerning when a statute of limitations should accrue for judicial review of an ERISA disability plan’s adverse benefits determination.  This case is particularly interesting since it considers whether a contractual limitations period can runwhile the claimant is proceeding through a plan’s mandated administrative review process.  Ms. Heimeshoff was a Wal-mart employee who filed a claim for long-term disability (LTD) benefits in 2005  based on her chronic pain and fibromyalgia-related fatigue.  Hartford Life and Accident Insurance Co., the company that insured and administered Wal-mart’s LTD plan, initially denied her claim for benefits in December 2005 based on a failure to receive medical records that supported her claim of disability, as requested by Hartford. After Heimeshoff obtained and provided the requested functionality records, Hartford denied her claim again in November 2006. At that time, Hartford opined the the provided documentation did not support that she was disabled under the terms of the Wal-mart plan. Heimeshoff appealed that determination and allegedly received a final denial letter in November 2007.  Heimeshoff filed her complaint on November 18, 2010, less than three years after receipt of the final denial letter. The plan at issue contained a three-year limitations period on legal actions challenging adverse benefit determinations. Under the terms of the plan, the three-year period began as of the date “written proof of loss [wa]s required

IRS Adopts State of Celebration Rule – If Valid Where Performed, You are Married for Federal Tax Purposes

In Revenue Ruling 2013-17, the Internal Revenue Service provided clear guidance to define “spouse” for all purposes under the Internal Revenue Code. A “spouse” includes a same-sex spouse whose marriage is recognized by the state in which the marriage occurred. Use of this “state of celebration” rule will greatly simplify employee benefit plan administration for employers. However, the IRS indicated in this guidance that it will provide more direction on the impact of this definition on employee benefit plans.

How Did the IRS Define the State of Celebration Rule?

These are the bottom line holdings from the IRS guidance, which apply for all purposes under the Internal Revenue Code:

  • The terms “spouse,” “husband and wife,” “husband,” and “wife” include an individual married to a person of the same sex if the individuals are lawfully married under state law, and the term “marriage” includes a marriage between individuals of the same sex.
  • A marriage of same-sex individuals that was validly entered into in a state whose laws authorize the marriage of two individuals of the same sex will be recognized for Federal tax law purposes even if the married couple is domiciled in a state that does not recognize the validity of same-sex marriages. For example, same-sex marriage is not recognized in Missouri. However, a same-sex couple that marries in Iowa but lives in Missouri will be considered married for Federal tax purposes because the marriage is valid in Iowa where the

Marketplace Notice Deadline Looming – Who Can Send it?

Marketplace Notice Deadline Looming – Who Can Send it?

September 9, 2013

Authored by: benefitsbclp

As most group health plan administrators are well aware, the Marketplace Notice (i.e., notice of coverage options) is required to be distributed to existing employees  by no later than October 1, 2013.

As discussed in our previous Client Alert  and blog entry, the DOL issued model notices and guidance regarding which employers must comply with this requirement, which employees must receive the notice and the notice’s required content.  Links to the models are available on  A more thorough discussion of  employer’s notice obligation is provided in our Client Alert which can be accessed here. Until last week, one open question was whether an employer could satisfy its obligations to provide the Marketplace Notice by engaging another entity (such as an insurer, multiemployer plan, or third-party administrator) to send the Marketplace Notice on its behalf.

In its Sixteenth set of PPACA-related FAQs issued on September 4th, the DOL confirmed that the answer is “yes”.  Specifically, the DOL opined that an employer will have satisfied its obligation to provide the notice  if another party provides a timely and complete notice.  This is welcomed news for employers that contract with another party to generally send participant communications and/or annual open enrollment materials. (Stay tuned for our annual “Check it Out and Check it Off” client alert detailing annual notice requirement that employers should continue during open enrollment).

Note, however, that the FAQ contains a cautionary reminder that all employees must receive the notice, regardless of whether

Individual Mandate – Final Regulations Issued

Individual Mandate – Final Regulations Issued

September 4, 2013

Authored by: benefitsbclp

Putting to rest the speculation that the individual mandate may be delayed, yesterday the Treasury Department and IRS issued final regulations regarding the individual mandate under the Affordable Care Act (“ACA”). The individual mandate requires individuals to maintain health insurance (i.e. “minimum essential coverage”) or pay a penalty (i.e. a “shared responsibility payment”).

The final regulations made a few clarifications but largely left unchanged the proposed regulations (released Jan. 30th). Individuals should go into 2014 with the expectation that they will pay the shared responsibility penalty unless they have minimum essential health care coverage.

Changes include the following:

Definitions: • Specifically identifying the terms used in IRC § 5000A, which requires the shared responsibility payment, are the same terms otherwise used in the ACA (e.g. health insurance coverage, health insurance issuer, individual market, and state).

Minimum Essential Coverage: • Clarifying that eligible employer-sponsored plans include plans issued on behalf of an employer. • Modifying the definition of “self-insured group health plan” to be an eligible employer-sponsored plan, regardless of whether the plan could be offered in the large or small group market in a state. • Clarifying (i) that qualified health plans offered through Exchanges are plans in the individual market and (ii) that a plan offered to one specific individual is a plan in the individual market only if the plan is health insurance coverage under the ACA.

Exempt Individuals: • Clarifying that an individual eligible for continuation or retiree coverage because of a relationship to a former

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