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ACA Employer Mandate / Reporting and Tracking Hours

June 30, 2014

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ACA Employer Mandate / Reporting and Tracking Hours

June 30, 2014

Authored by: benefitsbclp

As if compliance with the ACA’s market reforms and complex plan design rules (including an assessment of affordability and minimum value), hasn’t caused enough headaches – now you have to prepare to track and report detailed information about your compliant offers of coverage?  Unfortunately, the answer is “yes”.  Time spent now tracking information and making decisions about how an employer plans to report in early 2016 (for the 2015 plan year) will make completion of those yet-to-be-released forms more feasible in the future.

Shakespeare TiredTo track or not to track, that is the question….

ACA reporting may not be required until the first quarter of 2016, but employers need to get prepared now to comply with those requirements due to the detailed information required.  While tracking hours may be inevitable for

Do you know the Yard-Man (inference, that is)?

As a child, you may have sung “do you know the Muffin Man?,” but as an employer you should make sure you know the Yard-Man inference.

Read the Small PrintThe “Yard-Man inference” comes from the Sixth Circuit’s decision in Auto Workers v. Yard-Man, Inc.  In that opinion, the Sixth Circuit created a presumption that retiree welfare benefits vest on retirement, unless a collective bargaining agreement clearly states otherwise.

However, the inference that these types of benefits vest has not been well received in all courts. For example, the Third Circuit has held the exact opposite: that retiree welfare benefits granted under a CBA expire with the CBA unless the agreement explicitly states otherwise.  Auto Workers v. Skinner Engine Co..

The split between the Circuits has likely contributed to the

Final Rule Clarifies Application of 30-Day Maximum for Orientation Periods

Late Friday afternoon, the Departments of Treasury, Labor and Health and Human Services (the “Departments”) issued final regulations (the “Final Rule”) clarifying the interaction between a reasonable and bona fide employment-based orientation period and the 90-day waiting period limitation under the Affordable Care Act (“ACA”).

Background

For plan years beginning on or after January 1, 2014, ACACircle a Date prohibits a group health plan from applying a waiting period of more than 90 days. Contemporaneous with the February 24, 2014 issuance of final regulations on the 90-day limitation, the Departments issued proposed regulations addressing employee orientation periods.  Such proposed regulations provide that conditioning plan eligibility on an employee’s completion of a reasonable and bona fide employment-based orientation period would be permissible if the orientation period does not exceed one

Modifying the Affordable Care Act to Make It Better

Modifying the Affordable Care Act to Make It Better

June 25, 2014

Authored by: benefitsbclp

One of my law school professors and now good friends, Professor Burt Brody, has been contemplating beneficial changes to the Affordable Care Act.  I think he is on to something beneficial.

Professor Brody has written an op-ed piece published in the Desert Sun on May 21, 2014.  In the column, he supports the notion of having the health insurance industry participate fully in the correction, and he eschews the notion of “national health care” in its pejorative sense.  Professor Brody, without saying so, realizes that the Act is a health insurance reform act, not truly a health care reform act.

His suggestion is to take the amount that the federal government spends today on health care, and dole it out to everyone with a Social Security card – that’s every legal American – based on age brackets and veteran status that reflects perceived need for  health

U.S. Supreme Court: Inherited IRAs Are Not Exempt from Bankruptcy Estate

June 24, 2014

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Retirement Fund JarThe Bankruptcy Code allows debtors to exempt from their bankruptcy estate certain “retirement funds”, including amounts held in an individual retirement account (IRA) or Roth IRA.  The Code is silent, however, on whether amounts held in an inherited IRA are subject to creditors’ claims in bankruptcy.  The U.S. Supreme Court resolved that issue recently in Clarke v. Rameker, holding that funds held in inherited IRA accounts are not exempt from creditors’ claims.

The debtor in this case inherited her mother’s IRA and was receiving periodic distributions from the account.  At the time of the debtor’s bankruptcy filing, the inherited IRA had just over $300,000 left in it.  The debtor claimed that the exemption under the Bankruptcy Code for “retirement funds” covered her inherited IRA.  Her creditors challenged this

DOL Proposes to Adopt State of Celebration Rule to Determine FMLA Rights of Employees in Same-Sex Marriages

Presently, the federal government uses different rules for different purposes when determining whether a same sex marriage will be recognized. The IRS and the majority of other government agencies use the state of celebration rule for purposes of determining whether a same sex marriages will be recognized.   Under this rule, a same sex marriage is recognized so long as it was recognized in the state in which is was performed.  However, the DOL uses the state of residence rule for Family Medical Leave Act (FMLA) purposes. Under this rule, a same sex marriage is recognized only if it is recognized in the state in which the couple resides.  The resulting inconsistency is confusing and complicates administration of employee benefits.

Secretary of Labor Thomas E. Perez announced on Friday that the Department of Labor (DOL) is proposing a rule to revise the definition of spouse under the

Another Same-Sex Marriage Ban Falls: FMLA Implications

On June 6th, a Wisconsin federal district court held that state laws prohibiting same-sex marriage are unconstitutional in the matter of Wolf v. Walker.  This decision is the latest in a series of rulings in favor of same-sex marriage since the Supreme Court overturned section three of the Defense of Marriage Act in United States v. Windsor, nearly one year ago.  Since Windsor, judges in eight states (AR, ID, MI, OK, TX, UT, VA, and WI) have overturned same-sex marriage bans, and judges in four other states (IN, KY, OH, and TN) have issued more limited rulings in favor of same-sex marriage. On June 13th, the district court judge issued an injunction against enforcement of the ban, but stayed the order pending the outcome of the defendant’s appeal to the Seventh Circuit Court of Appeals.

For the employee benefits community, this decision will have an impact

New IRS Procedures for Waiver of Penalties for Delinquent Form 5500 Filings

June 12, 2014

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ERISA Plans.     Plan administrators who fail to timely file an annual report on Form 5500 are subject to penalties under both ERISA and the Code.  In 1995, the Department of Labor (DOL) adopted the Delinquent Filer Voluntary Compliance program (DFVC), which permits late filers to file  delinquent Forms 5500 (including all required schedules) and pay a reduced penalty.  The IRS announced, in Notice 2002-23, that it will not impose penalties under the Code on plan administrators who are eligible for and follow the DFVC procedures.  Since 2002, the Department of Labor revised its procedures to require electronic filing of all Form 5500s beginning with the 2009 plan year.  Last year the DOL revised the DFVC program to require electronic filing for delinquent filings. In addition, beginning with the 2009 plan year Schedule SSA was replaced by Form 8955-SSA, which is a standalone form that is filed only with the IRS. 

FMLA – Auditing the Administrator

FMLA – Auditing the Administrator

June 11, 2014

Authored by: Christy Phanthavong and Lisa Van Fleet

A few weeks ago, we discussed audits from the perspective of the Employer as the audit target.  Today our discussion is from the perspective of the Employer as auditor rather than audit target.

For many companies, the sheer size and complication of the task of Family and Medical Leave Act (“FMLA”) administration has led to a decision to outsource the work to a third-party administrator.  Whew, you can rest easy now that someone else is in charge of the hassle of FMLA forms, notices, tracking, etc., right?

Wrong.

As the employer, it will be you that is on the hook for FMLA violations, even when such violations occur as a result of a third-party administrator failing to properly perform FMLA administration.  You may have an indemnity clause, but such clauses may

Employee Takes the Cake…and Doesn’t Get COBRA

June 10, 2014

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In a recent decision, the Federal District Court for Idaho found that a grocery store employee who  took a stale cake and shared it with her coworkers was properly denied COBRA for her “gross misconduct.”  (The decision does not say, but we assume “gross” does not refer to the quality of the stale cake.)

The employee alleged that she had been terminated because she was a woman, but the court disagreed finding no substantial evidence that the alleged basis for her termination was a pretext for gender discrimination.

Instead, the court said that she was terminated for “theft and dishonesty” in violation of company policy.  With regard to the claim that her termination was not for gross misconduct, the Court said:

Stealing from and/or lying to one’s employer, regardless of the value of the item, constitutes a willful and intentional disregard for the interests of one’s employer and is

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