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It’s Open Enrollment: Have You Notified Employees on FMLA Leave?

It’s Open Enrollment: Have You Notified Employees on FMLA Leave?

November 10, 2014

Authored by: Christy Phanthavong and Chris Rylands

Enroll NowOpen enrollment has likely begun at your company, often bringing it with changes to employee health plans. When communicating benefits-related information, it is important to ensure that all employees – including those currently away from the workplace on FMLA leave – receive the same communications and opportunity to select the new or changed coverage.

The FMLA regulations provide that:

If an employer provides a new health plan or benefits or changes health benefits or plans while an employee is on FMLA leave, the employee is entitled to the new or changed plan/benefits to the same extent as if the employee were not on leave. . . . Notice of any opportunity to change plans or benefits must also be given to an employee on FMLA leave.”

Reiterating this requirement, the IRS regulations provide the following guidance concerning the effects of the FMLA on the operation of cafeteria plans:

FMLA requires that an employee on FMLA leave have the right to revoke or change elections (because of events described in § 1.125-4) under the same terms and conditions that apply to employees participating in the cafeteria plan who are not on FMLA leave. Thus, for example, if a group health plan offers an annual open enrollment period to active employees, then, under FMLA, an employee on FMLA leave when the open enrollment is offered must be offered

Relationship Talk: Same-Sex Couples May Marry in Missouri

November 6, 2014

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I have a friend who has lived in St. Louis with his same-sex partner for years. About a year ago, we were discussing same-sex marriage rights and my friend expressed his hope that Missouri would NOT join the other states that permit same sex couples to marry because he was not sure he wanted to commit to his partner. Well, my friend, you now face the same dilemma as commitment-phobic partners in opposite-sex couples, and can no longer blame the law for your failure to commit.

Yesterday, a St. Louis Circuit Court judge ruled that Missouri’s ban on same-sex marriage is unconstitutional and “in violation of the Equal Protection Clause and Due Process Clause of the Fourteenth Amendment to the United States Constitution.” It was just a month ago that a Missouri court held that same sex marriages performed in other states would be recognized in Missouri. That ruling required that Missouri recognize same-sex marriages legally performed in other states, but it did not address laws that bar same-sex couples from getting married in Missouri. This subsequent decision removes that bar.

In light of yesterday’s ruling, the St. Louis Recorder of Deeds may issues marriage licenses to same-sex couples immediately – and my friend may find himself having the dreaded “relationship talk.”

IRS and DOL Encourage DC Plan Participants to Hedge Bets Against Outliving Retirement Savings

On October 24th, the Internal Revenue Service (“IRS”) and the Department of Labor (“DOL”) offered guidance on the use of a series of target date funds (“TDFs”) in defined contribution plans that would include investment in deferred annuities in the TDFs for older participants. As baby boomers get older and life expectancies continue to increase, this arrangement has been touted as a way for defined contribution plan participants to invest a portion of their accounts in lifetime income in order to protect themselves from outliving their retirement savings. Many plan sponsors and advisors have hesitated to jump on this band wagon preferring to await guidance on a number of issues that arise from the arrangement.

CalculatorIn Notice 2014-66, the IRS offers some clarity regarding nondiscrimination issues. Guidance had been requested because, for actuarial reasons, the TDFs for the older age groups would only be open to participants within the target age range. Because older participants tend to be more highly compensated, there was a concern that this arrangement would violate section 401(a)(4) of the Internal Revenue Code (the “Code”) which prohibits discrimination in favor of highly compensated employees. Under Code section 401(a)(4) and applicable regulations, each investment option is a right or feature that must be made available in a nondiscriminatory manner that does not violate the applicable current availability or effective availability requirements.

In response to

Election Day Surprise: Skinny Plans Will Need to Fatten Up

Early this morning, the IRS, in a coordinated effort with the DOL and HHS, issued guidance that basically said that so-called “skinny” plans won’t get employers out of the “play or pay” penalties. Limited grandfathering is available for so called “Pre-November 4, 2014” plans. All of this will be finalized in future regulations, but the guidance sets out what the agencies expect the regulations to say.

Skinny plans, for those unaware, were an attempt to circumvent the ACA rules requiring plans to provide minimum value. They cover preventive services, as required by the ACA, but exclude other substantial hospitalization and/or physician services. Some consultants had discovered that these plans technically satisfied the ACA’s minimum value standard even though they did not really comport with the spirit of the law. Skinny plans were not designed to provide health coverage; but rather; were intended as a way for employers to avoid completely the application of the play or pay taxes. By providing a plan that technically met minimum value, and making it affordable, an employer could make its employees ineligible for premium tax credits. By doing so, the employer would avoid the application of the play or pay penalties because one of the conditions to being hit with a penalty is that an employee obtain a premium tax credit.

The government intends to slam that door shut. The notice states that the agencies will amend the regulations to explicitly provide that plans that fail

Trick or Treat? HPID Requirement Delayed Until Further Notice

Back in the Spring, the lack of clarity on application of the HPID requirement to self-funded group health plans and issues with the CMS portal led us to the conclusion that plan sponsors were better off waiting until the Fall before filing for an HPID. Yet, as the November 5, 2014 deadline approached with no further guidance in sight, it seemed as if plan sponsors needed to get moving on their HPID application given the time consuming nature of the process and potential for technical failures if the CMS portal became overwhelmed in the final weeks prior to the deadline. Then, last Friday, Halloween, and mere days before the deadline, CMS quietly and without fanfare announced on its website, a delay, until further notice, in its enforcement of the regulations on obtaining and using the HPIDs in HIPAA transactions. As usual, those who procrastinated get the benefit of the delay.

Plan sponsors who have secured an HPID should sit tight. Although there is no need to employ the use of the HPID at this time, CMS technically has not rescinded the requirement; but rather, has simply announced an enforcement delay. Of course, the duration of the delay remains to be seen. And for those entities who just hadn’t gotten around to securing an HPID – or who had technical difficulties in securing one (we heard this was tough) – you too can sit tight. Not a trick – this is a bit of a treat for the time

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