United States: Employee Benefits Update - September 2015


1. Summary Annual Report for Calendar Year Group Health Plans. The Summary Annual Report must be distributed to participants and beneficiaries no later than September 30, 2015 for calendar year plans (nine months after the end of the plan year) unless an extension is available.

2. Medicare Part D Notice of Creditable Coverage. All group health plans that offer prescription drug coverage to Medicare-eligible employees (under either an active plan or retiree plan) must provide an annual creditable coverage disclosure notice to Medicare-eligible participants and dependents no later than October 15, 2015. Centers for Medicare and Medicaid Services ("CMS") provides a model notice that can be accessed through the CMS website. Plan sponsors should review the model notice to ensure that it accurately reflects the plan provisions.

3. Reinsurance Fee for Group Health Plans. Contributing entities (the third-party administrator for self-funded plans or the insurer for fully insured plans) must report to the Department of Health and Human Services ("HHS") their annual enrollment counts by November 16, 2015 using the electronic "2015 ACA Transitional Reinsurance Program Annual Enrollment and Contributions Submission Form." The Form will then calculate the contribution amount owed. The contribution rate for 2015 is $44 per reinsurance covered life.

4. Health Plan Open Enrollment Requirements.

a. Plan sponsors of group health plans must issue a new summary of benefits and coverage ("SBC") to participants and beneficiaries covered under the plan with each open enrollment. Group health plans without open enrollment must issue the SBC 30 days in advance of the plan year (December 2, 2015 for calendar year plans).

b. Plan sponsors of health reimbursement arrangements ("HRA") must offer participants an annual opportunity to opt-out of and waive all future reimbursements from their HRA. This notice of opt-out can be provided with the open enrollment materials.

5. Retirement Plan QDIA Notice. Plan sponsors of defined contribution plans that invest participant contributions in a qualified default investment alternative ("QDIA") because the participant failed to make an investment election must provide an annual notice to all participants at least 30 days but not more than 90 days, before the beginning of the plan year. Plan sponsors of calendar year plans must send the notice between October 3 and December 2, 2015.

6. Retirement Plan Automatic Enrollment Notice. Plan sponsors of defined contribution plans with an eligible automatic contribution arrangement or a qualified automatic contribution arrangement must provide an annual notice to all participants on whose behalf contributions may be automatically contributed to the plan at least 30 days, but not more than 90 days, before the beginning of the plan year. Plan sponsors of calendar year plans must send the notice between October 3 and December 2, 2015. Plan sponsors can combine the automatic enrollment notice with the QDIA notice.

7. Safe Harbor 401(k) Plan Notice. Plan sponsors of safe harbor 401(k) plans must provide participants an annual safe harbor notice that describes the safe harbor contribution and other material plan features at least 30 days, but not more than 90 days, before the beginning of the plan year. Plan sponsors of calendar year plans must send the notice between October 3 and December 2, 2015. Plan sponsors can combine the safe harbor notice with other required notices such as the QDIA notice.


Internal Revenue Service Issues Corrections under the Multiemployer Pension Reform Act

The Internal Revenue Service ("IRS") issued corrections to temporary regulations published in June 2014 under the Multiemployer Pension Reform Act of 2014 ("MPRA"). The corrections address generally grammatical errors and typos, but the IRS is concerned that, as published, the notices contain errors that may be misleading.

IRS Issues Temporary Regulations Related to Participant Vote to Approve a Suspension of Benefits under MPRA

Under MPRA, multiemployer plans that are projected to have insufficient funds in the future to pay full promised benefits may reduce the benefits payable if certain conditions are satisfied. One of the conditions is that a suspension of benefits cannot occur until the participants of the plan have affirmatively voted for such a suspension. Recently, the IRS issued temporary regulations providing guidance on how to administer such a participant vote.

These temporary regulations apply as of June 17, 2015, and will expire on June 15, 2018.


IRS Issues Second Notice on Cadillac Tax Proposals

The Patient Protection and Affordable Care Act ("ACA") added a new section 4980I to the Internal Revenue Code ("Code") imposing an excise tax on high cost employer-sponsored coverage ("Cadillac Tax"). The Cadillac Tax, beginning in 2018, generally provides that each provider will pay a nondeductible 40% excise tax on its share of each employee's excess benefit each year.

No regulations have been issued to implement the Cadillac Tax, but the IRS issued two notices in 2015 seeking comments on certain aspects of, and approaches for implementing, the Cadillac Tax. The first notice (Notice 2015-16) was issued on February 23, 2015. The second notice (Notice 2015-52) was issued on July 30, 2015. Employers and plan sponsors are not permitted to rely on the notices. However, the notices provide employers with some idea of what the IRS may incorporate into its future regulations.

Notice 2015-52 provides clues as to (1) who will be responsible for paying the tax, (2) what benefits and costs will be counted for purposes of the tax, and (3) how to allocate contributions made to account-based programs, such as FSAs, HSAs and HRAs.

IRS Releases Draft 2015 Instructions for Forms 1094-B, 1095-B, 1094-C and 1095-C

The ACA added sections 6055 and 6056 to the Code, generally requiring employers and plan sponsors to file annual information returns with the IRS. More specifically, Code section 6055 requires all self-funded plan sponsors (and insurance carriers, for insured plans) to file a return with the IRS to report participants and dependents who were enrolled in "minimum essential coverage." Forms 1094-B and 1095-B will be used to report this information to the IRS and participants.

Code section 6056 requires all applicable large employers to file a return with the IRS to report the type of coverage offered to full-time employees. Applicable large employers will use IRS Forms 1094-C and 1095-C for this purpose. Applicable large employers who are plan sponsors of a self-funded plan will also use Forms 1094-C and 1095-C to satisfy both the Code sections 6055 and 6056 reporting requirements for employees covered by that plan.

The IRS recently released draft instructions for the B-Series (1094-B and 1095-B) and the C-Series (1094-C and 1095-C) forms ("Instructions"). This reporting obligation is effective beginning with coverage offered during the 2015 calendar year and the filing is due to the IRS no later than February 29, 2016 (March 31, 2016 if filing electronically). A copy of the return is due to employees/participants no later than February 1, 2016.

The Instructions for both forms incorporate the recent failure to file penalty increase to $250 per return (previously $100) up to a $3 million cap (previously a $1.5 million cap), and provide a new, automatic 30-day extension to the deadline to file the returns with the IRS. To receive the 30-day extension, plan sponsors or applicable large employers must file a Form 8809, Application for Extension of Time to File Information Returns, by the due date of the returns, absent certain hardship conditions. The Instructions also allow plan sponsors or applicable large employers to request an extension of time to furnish the statements to recipients by sending a letter to the IRS.

Additionally, the Instructions for Forms 1094-C and 1095-C incorporate the COBRA guidance previously issued by the IRS in the form of questions and answers. The IRS has also provided simplified reporting options for applicable large employers who participate in multiemployer plans and qualify for, and rely upon, the multiemployer interim transition relief.

Departments Issue FAQ on Transparency Reporting Rulemaking for Non-QHP Coverage

HHS previously issued a proposed information collection for public comment related to the collection of certain information from Qualified Health Plan ("QHP") issuers in the Exchanges. The Department of Labor, HHS and the Treasury (the "Departments") recently issued a FAQ stating that the Departments intend to propose transparency reporting for non-QHP issuers and non-grandfathered group health plans in the future. The FAQ notes that the requirements may differ from those described in the HHS proposal.

CMS Issues Operational Guidance on Reinsurance Contributions Updated for the 2015 Benefit Year

On August 18, 2015, CMS issued updated guidance providing operational guidance to assist contributing entities (the third-party administrator for self-funded plans or the insurer for fully insured plans) to determine their annual enrollment counts for purposes of the transitional reinsurance program. This guidance updates earlier guidance for the 2015 benefit year.

A contributing entity's annual enrollment count is important because CMS uses this count to calculate the reinsurance contribution amount due for that benefit year. This new guidance describes each of the counting methods allowable under the law and provides additional examples related to each of the methods.

IRS Issues Proposed Regulations Related to Minimum Value of Eligible Employer-Sponsored Health Plans

The IRS issued guidance at the end of August that withdraws prior portions of a proposed rulemaking published on May 3, 2013, relating to the definition of minimum value.

Under the ACA, applicable large employers must offer minimum essential coverage that is affordable and that provides minimum value to full-time employees or be exposed to a penalty. Previously, a plan provided "minimum value" if the plan's share of the total allowed costs of benefits provided under the plan was at least 60%.

Earlier this year, HHS issued guidance stating that a plan provides minimum value only if it covers at least 60% of the total allowed costs of benefits provided under the plan and the plan benefits include substantial coverage of inpatient hospitalization and physician services. The IRS's proposed regulations mirror HHS's final regulations and require that a plan provide substantial coverage of inpatient hospital and physician services in order to provide minimum value coverage. The IRS has also asked for comments on how to define "substantial coverage" of inpatient hospital and physician services.

PLR Clarifies that Adding Active Employee Benefits to Retiree VEBA Does Not Result in Disqualified Benefit

In a recent Private Letter Ruling (PLR 201530022), the IRS determined that a voluntary employees' beneficiary association ("VEBA") trust providing benefits for retirees could be amended to provide benefits for active employees and that such an amendment would not create a disqualified benefit.

Under the facts of PLR 201530022, the taxpayer's VEBA trust held assets to provide health benefits for retirees. The taxpayer deducted contributions to the trust in accordance with Code section 419A(c)(2). The taxpayer questioned whether it could amend the trust to also provide health benefits for active employees.

The IRS concluded that no part of the VEBA trust would revert to the taxpayer and the use of trust assets for active employees' health benefits would not result in a disqualified benefit. However, the IRS further concluded that the amendment would result in amounts that were originally reserved for retiree benefits to be used for active employees, which results in taxable income (under the tax benefit rule) because the contributions to the trust were previously deducted by the taxpayer as reserves for retiree benefits in a prior year. The use of the funds for active employees is inconsistent with the intention of the original deduction. Accordingly, the IRS agreed with the taxpayer that the taxpayer should include the amounts available for the payment of active employees' health benefits as income.

IRS Issues Guidance Related to Electronic Filing for ACA Reporting Requirements

The IRS released various publications aimed at providing guidance on how to electronically file ACA information returns. These publications provide information on the technical aspects of the electronic filing process, including general and program specific testing information for use with ACA Assurance Testing System. These publications are available through the IRS website.

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.

In association with
Related Video
Up-coming Events Search
Font Size:
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
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
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.


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.


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.


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.


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.


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.


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.