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The Good, the Bad, and the Tax-Exempt Organization: The New Tax Bill’s Effect on Benefits and Compensation Offered by Institutions of Higher Education

January 23, 2018

Authors

Meredith Jacobowitz and Brian Berglund

The Good, the Bad, and the Tax-Exempt Organization: The New Tax Bill’s Effect on Benefits and Compensation Offered by Institutions of Higher Education

January 23, 2018

by: Meredith Jacobowitz and Brian Berglund

On December 22, President Trump signed “An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018” (“Bill”) into law. The Bill was previously named the much-shorter “Tax Cuts and Jobs Act,” but was changed after a senator pointed out that the name violated an obscure Senate rule.

The new employee benefit and executive compensation provisions in the Bill affect both individuals and employers. The good news for colleges and universities is that the harshest employee benefit provisions directed at colleges and universities were not included in the final Bill. The bad news is that the executive compensation and fringe benefit changes directed at tax-exempt organizations are unfavorable to institutions of higher education.

THE GOOD: CHANGES EXCLUDED FROM THE FINAL BILL

The House passed a version of the Bill that would have repealed the exclusion from income for

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Being Proactive v. Reactive – ACA’s Prohibition on Discrimination in Group Health Insurance

December 17, 2014

Authors

benefitsbclp

Being Proactive v. Reactive – ACA’s Prohibition on Discrimination in Group Health Insurance

December 17, 2014

by: benefitsbclp

Back in 2010, the ACA enacted a new rule prohibiting insured group health plans from “discriminating” (on the basis of eligibility or provision of benefits) in favor of highly compensated individuals (called “HCIs”). This rule generally became effective January 1, 2011 for calendar year plans; however, there is and has been an enforcement delay pending issuance of IRS regulations. We’ve heard through the grapevine that this is a “high priority” item for the Service, but to date we’ve seen nothing.

Once guidance is issued, we expect a flurry of changes in group health insurance plans and separation practices. The days of “one-off” arrangements for the benefit of separating executives (i.e., terminated exec can stay on active plan and/or receive contributions like an active employee) are likely going to be a thing of the past.

Unless a plan has and continues to have “grandfathered status” (as defined under the statute and

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