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DOL’s Proposed Amendments to the Claims Procedure For Plans Providing Disability Benefits

December 8, 2015

Authors

benefitsbclp

DOL’s Proposed Amendments to the Claims Procedure For Plans Providing Disability Benefits

December 8, 2015

by: benefitsbclp

Recently, the DOL released proposed amendments to the current procedural rules for employees claiming disability benefits under an ERISA plan. The proposed rules enhance existing procedures, mirror the procedural protections for claimants contained in the PHS 2719 Final Rule, and update the ERISA claims procedures (set forth in ERISA Section 503) to align with these standards.

Summaries of the major provisions follow:

  • Independence and Impartiality – avoiding conflicts of interest. All claims must be adjudicated in a manner which ensures that the persons making the decision are independent and impartial. The proposed rules specify that this independence and impartiality requirement mandates that decisions involving the hiring, compensation, termination, promotion, or similar matters of individuals making claims-related decisions, such as a claims adjudicator or medical experts, cannot be made based on the likelihood that the individual will support the denial of disability benefits.
  •  Enhanced
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It’s Open Enrollment: Have You Notified Employees on FMLA Leave?

November 10, 2014

Authors

Christy Phanthavong and Chris Rylands

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

November 10, 2014

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.”

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

June 23, 2014

Authors

benefitsbclp

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

June 23, 2014

by: benefitsbclp

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

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You Can Do With a Carryover What You Can’t Do with the Grace Period: Have an HSA

April 8, 2014

Authors

Chris Rylands

You Can Do With a Carryover What You Can’t Do with the Grace Period: Have an HSA

April 8, 2014

by: Chris Rylands

Recently, the IRS released a Chief Counsel Advice Memo describing the interaction of the health FSA carryover feature we previously discussed and HSAs.  This memo addresses some of the important questions left open by prior guidance.  However, readers should know that CCA Memos are not binding guidance, so while this memo is helpful, employers should recognize that subsequent IRS guidance may take a different approach.

The question raised was whether an employee in a general purpose FSA with a carryover feature can contribute to an HSA.  The answer (a good legal answer) is, “it depends.”

The CCA starts out by noting, correctly, that an individual who is covered under a general purpose health FSA (i.e. one that reimburses for more than just dental, vision, preventive care, and post-HDHP deductible expenses) is not eligible to contribute to an HSA.  So a general purpose carryover makes the individual

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Do Your Plan a Favor: Eschew Escheating

January 6, 2014

Authors

Richard Arenburg and Chris Rylands

Do Your Plan a Favor: Eschew Escheating

January 6, 2014

by: Richard Arenburg and Chris Rylands

Given the migratory nature of society these days, it is not uncommon for an employee benefit plan to accumulate significant sums of money attributable to the accounts of lost participants.  For a number of States, the assets attributable to lost participants are an attractive revenue source.  Utilizing their unclaimed property statutes, many States attempt to seize these funds so they can add them to the State’s coffers.

Most employee benefit plans subject to ERISA can sidestep this potential leakage of plan assets through the use of clear plan language that expressly provides for the forfeiture of amounts from the accounts of participants who are determined to be lost after some predetermined period. The language should also provide that those forfeited funds will be utilized either through a reduction of the sponsor’s contribution obligation or their application to reduce plan expenses.  The Department of Labor has unequivocally

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More Post-DOMA Guidance from the IRS – Cafeteria Plans, FSAs and HSAs

December 27, 2013

Authors

benefitsbclp

More Post-DOMA Guidance from the IRS – Cafeteria Plans, FSAs and HSAs

December 27, 2013

by: benefitsbclp

Since the Supreme Court ruled section 3 of DOMA unconstitutional in United States v. Windsor, benefits practitioners have been eagerly awaiting IRS guidance as to how the decision impacts employee benefits. On December 16, 2013, the IRS released Notice 2014-1, to provide some information as to how Federal tax recognition of same-sex spouses affects cafeteria plans, including health and dependent care flexible spending accounts (“FSAs”) and health savings accounts (“HSAs”). Though there were no surprises in the Notice, it may give comfort to employers who allowed employees with same-sex spouses to change elections mid-2013 as a result of Windsor. However, requirements as to the timing of some cafeteria plan amendments is still left unsettled.

Election Changes

Under the Code Section 125 rules, an employee may change cafeteria plan elections mid-year and make new elections only under certain circumstances and as permitted by

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Top 5 Unanswered Questions with the $500 FSA Carryover

November 13, 2013

Authors

Chris Rylands

Top 5 Unanswered Questions with the $500 FSA Carryover

November 13, 2013

by: Chris Rylands

After having some time to consider the recent IRS guidance on the $500 carryover (sometimes called the “rollover”) for FSAs that we previously wrote about, additional issues keep coming to light.  Here’s a quick list of just some of the issues that we have encountered that remain unanswered:

  • As noted in our previous post, additional guidance is needed on the effect of this carryover on the status of a health FSA as an excepted benefit.
  • How does the addition of the carryover impact the limited FSA COBRA obligation?  Ordinarily, if a health FSA meets the conditions of being an excepted benefit as described in our earlier post, it is also eligible for a limited COBRA obligation.  If a participant has an underspent account in such an FSA, then he or she only needs to be offered COBRA through the end of the year of
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  • Trick and Treat: IRS Modifies FSA Use-it-or-Lose-it Rule to Allow $500 Carryover

    November 1, 2013

    Authors

    Chris Rylands

    Trick and Treat: IRS Modifies FSA Use-it-or-Lose-it Rule to Allow $500 Carryover

    November 1, 2013

    by: Chris Rylands

    Just before rushing out the door to hand out candy to trick-or-treaters, the IRS gave the benefits world a treat and released Notice 2013-71 which modified the use-it-or-lose-it rule for health FSAs.  The notice generally provides that a cafeteria plan may be amended to provide a carryover of up to $500 of unused amounts into a subsequent plan year.  The $500 amounts may come from employer or employee contributions.  The carryover may only be applied in the immediately following plan year, so if it is not used then, it will be forfeited.

    Any remaining amounts at the end of the plan year can still be reduced during the plan’s run-out period before the carryover is applied.  For example, if a plan has a run-out period ending March 31 and a participant submits an expense incurred in the prior year before March 31, that would reduce the prior year’s

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    IRS Guidance on HRAs, FSAs and EAPs: Plan Amendments May be Required

    October 15, 2013

    Authors

    Serena Yee

    IRS Guidance on HRAs, FSAs and EAPs: Plan Amendments May be Required

    October 15, 2013

    by: Serena Yee

    Among the many reforms under the Affordable Care Act (“ACA”) is the prohibition on imposing annual dollar limits on essential health benefits (“Annual Dollar Limit Prohibition”).  In addition, non-grandfathered group health plans must provide certain preventive services without any cost-sharing requirements (“Preventive Services Requirement”).  There has been wide-spread speculation as to how these market reforms would affect health reimbursement arrangements (“HRAs”), health flexible spending accounts (“FSAs”) and other employer reimbursement arrangements.

    Health Reimbursement Arrangements

    In the preamble to 2010 interim final regulations, Treasury and the Departments of Labor and Health and Human Services (“Departments”) stated that an HRA that is integrated with a group health plan that complies with the Annual Dollar Limit Prohibition, would be acceptable (despite the HRA having an annual dollar limit) since the combined benefit satisfies the Annual Dollar Limit Prohibition.

    In 2013 FAQs, the Departments explained that an HRA will not be considered

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