United States: Recent Employee Benefit Developments – July 2014

Amending Retirement Plans to Recognize Same-Sex Marriages

Plan sponsors need to review retirement plan documents and operations to determine whether changes are needed in response to last year's Supreme Court decision in U.S. v. Windsor and subsequent IRS guidance. Under most circumstances, any needed plan amendments should be adopted no later than December 31, 2014.

In Windsor, the Court struck down Section 3 of the Defense of Marriage Act (DOMA), which denied federal recognition to same-sex marriages. As a result, plan sponsors were required to change their plan administrative practices to provide same-sex spouses with the rights required by federal law. For example, same-sex spouses of participants in profit-sharing, 401(k) and other defined contribution plans must be treated as the default beneficiary, unless they consent to the participant's designation of another beneficiary. Refer to our prior client alert for a list of spousal rights under qualified plans that must be provided to same-sex spouses.

Following the Windsor decision, the IRS has released guidance providing additional direction to plan sponsors. First, the IRS issued Revenue Ruling 2013-17, which provides that couples will be treated as married for federal tax purposes if their marriage is legal where it is performed, regardless of where the couple actually resides. Next, the IRS issued Notice 2014-19, which provides guidance on plan document amendments needed to bring plans into compliance with Windsor.

Plan sponsors will need to review plan documents and plan operations to determine what actions to take in response to the IRS guidance.

Any plan document that defines a marital relationship in a manner inconsistent with the Windsor decision (such as a reference to opposite-sex spouses, or by reference to DOMA) must be amended. Even where an amendment isn't required, the IRS points out that a clarifying amendment may be useful for purposes of plan administration.

The IRS recognizes that many plan sponsors did not know which marriages were required to be recognized in the weeks immediately following the Windsor decision. Under the new IRS guidance, a "state of residence" standard may be used between the date of the Windsor decision (June 26, 2013) and the effective date of Revenue Ruling 2013-17 (September 16, 2013). Plan sponsors should review plan operations to confirm operational compliance, and to determine if any special effective date provisions are needed.

Revised Model COBRA Notices Address Optional Coverage Under Health Care Exchanges

The Department of Labor has issued revised model COBRA notices that explain the alternative coverage that may be available to COBRA-eligible individuals under the government-sponsored health insurance exchanges established pursuant to the Affordable Care Act (ACA), otherwise known as health care reform.

The model general COBRA notice (provided when a covered individual first enrolls in the plan) has been revised to include two new paragraphs indicating that a COBRA-eligible individual may be able to elect coverage under a government-sponsored health insurance exchange in lieu of electing COBRA continuation coverage and that the cost of such coverage may be cheaper than COBRA continuation coverage.

The model COBRA election notice (provided when a COBRA qualifying event occurs) has been revised to include the following information:

  • A general summary of the coverage option under the government-sponsored health insurance exchanges;
  • A statement that coverage under the government-sponsored health insurance exchanges may be cheaper than COBRA continuation coverage;
  • The link to the federal website that provides additional information about the government-sponsored health insurance exchanges;
  • Factors to consider when choosing between COBRA continuation coverage and coverage under a government-sponsored health insurance exchange; and
  • Rules for switching between COBRA continuation coverage and coverage under a governmental-sponsored health insurance exchange including the prohibition against a mid-year election of coverage under a health insurance exchange if COBRA continuation coverage terminates early (e.g., for failure to pay premiums).

Employers are not required to use the revised model COBRA notices. However, the model notices are deemed to be good faith compliant with the disclosure requirements under COBRA.

Employers should either begin using the revised model COBRA notices or review and revise their customized COBRA notices to reflect the changes in the revised model documents.

Please feel free to contact us if you have questions about the revised COBRA model notices or need assistance in updating your COBRA notices.

Health Plan Identifier Deadline Approaching

Large health plans ($5 million in claims) are facing a deadline of November 5, 2014 to secure a health plan identifier number from CMS. The requirement arises under HIPAA privacy. While insurers are expected to secure identifiers for fully insured plans, the requirement also applies to self-insured plans. Sponsors of these plans should be certain to obtain the required identifying number from CMS. Please contact a Thompson Coburn employee benefits attorney if you want more information about this requirement.

Reinsurance Fees

Group health plans that provide major medical coverage will be assessed a "transitional reinsurance fee" for 2014, 2015 and 2016. The fee is $63 per participant per year for 2014, $44 per participant per year for 2015 and still to be set for 2016. Participant counts are based on the first nine months of each year must be submitted to HHS by November 15, 2014, 2015, and 2016.

Plans that provide "excepted" benefits (e.g. EAPs, or stand-alone dental or vision plans) are exempt, as are so-called "skinny" plans that do not provide "minimum value." (Generally, "minimum value" means that the plan's share of the total cost of plan benefits is at least 60%.) Additionally for 2015 and 2016 only, self-insured plans that are also self-administered (generally large multiemployer plans) are exempt from the fee.

For insured plans, the insurer is responsible for paying the fee. For a self-insured plan the plan is responsible, but may use a third-party administrator to transfer the fees.

An "ACA Transitional Reinsurance Program Annual Enrollment and Contributions Submission Form" will be available on pay.gov on which the participant count and other information must be submitted and the form will auto-calculate the contribution amount. HHS will offer training on this process. There are four methods for determining the average number of participants – these are the same methods that may be used to calculate the Patient Centered Outcomes Research Institute (PCORI) Fee.

The fee is due in two installments. For 2014, the first installment in the amount of $52.50 per participant is due January 15, 2015. The second installment of $10.50 per participant is due in the fourth quarter of 2015. For 2015, the two installments will be $33 per participant due January 15, 2016 and $11 per participant due in the fourth quarter 2016.

The fee can be passed on to participants or paid from plan assets. It is deductible as a business expense.

The purpose of the fee is to raise a total of $25 billion, $20 billion of which will be paid to insurers who are offering coverage in the individual market for higher risk populations. The remaining $5 billion is to be paid to the U.S. Treasury for the costs of the early retiree reinsurance program (ERRP).

Group Health Plans - HIPAA Business Associate Agreements

Final regulations issued by the Department of Health and Human Services in 2013 included changes to the HIPAA privacy, security and breach notification rules. Among others, the final regulations included the following changes:

  • Expanded the definition of "business associate" to include any entity that creates, receives, maintains or transmits protected health information ("PHI"); and
  • Made business associates directly subject to designated portions of the rules.

Documentary compliance with the final regulations was generally required by September 23, 2013, including new or updated business associate agreements ("BAAs"). A special transition rule applies to BAAs that were in place as of January 25, 2013 and not modified between March 25, 2013 and September 23, 2013. BAAs qualifying for transition rule are deemed compliant with the final regulations until the earlier of (i) the date the BAA is renewed or modified, and (ii) September 22, 2014.

Now is the time for employers to review each of their group health plans to identify business associates, determine whether up-to-date BAAs are in place, and take steps to establish new or modified BAAs as needed by September 22, 2014.

Hobby Lobby Decision

On June 30, 2014, the Supreme Court of the United States in a 5-4 decision ruled in Burwell v. Hobby Lobby Stores, Inc. that, because of the Religious Freedom Restoration Act, the contraceptive mandate under the Affordable Care Act cannot be imposed on a closely held, for-profit company in violation of the religious beliefs of the company's owners. The decision directly impacts only certain closely-held companies. The long-term impact of the decision is uncertain. Justice Kennedy concurring in the opinion of the Court emphasized the narrowness of the decision while Justice Ginsberg writing in dissent asserted that the decision had "startling breadth."

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Emails

From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.