United States: Employee Benefits Update - October 2015


1. Summary Annual Report for Calendar Year Group Health Plans. For calendar year plans that obtained an extension to file their annual report (Form 5500), the Summary Annual Report must be distributed to participants and beneficiaries no later than December 15, 2015 (two months after the close of the extension period).

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. Applicable group health plans that have not yet provided the notice should send the notice as soon as possible. The 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 it accurately reflects the plan provisions.

3. Reinsurance Fee for Group Health Plans.

a. Reporting for 2015. 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 health plans' 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 the 2015 calendar year is $44 per reinsurance covered life.

b. Payment for 2014. For contributing entities that chose to pay the 2014 reinsurance fee in two installments, the second payment ($10.50 per reinsurance covered life) is due by November 15, 2015.

4. Health Plan Open Enrollment Requirements.

a. SBCs. 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. HRA Opt-Out. 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.


IRS Publishes Interim Guidance on Processing Determination Letter Applications

On September 1, 2015, the Internal Revenue Service ("IRS") published a memorandum providing interim guidance on the revised determination letter application processing procedures originally outlined in Revenue Procedure 2015-6. The memorandum provides the periods for responding to an IRS request for information to make an application complete or request for information relating to technical compliance. The memorandum also clarifies when extensions will be granted and when a case will be closed for a procedurally or technically incomplete application. Questions remain regarding further changes to the determination letter program for individually designed plans, which the IRS may address in future guidance. The memorandum is effective September 1, 2015, and the guidance will be incorporated into Internal Revenue Manual section 7.11.1, Employee Plans Determination Letter Program, by August 31, 2017.

IRS Issues Final Regulations on Minimum Required Contributions

On September 8, 2015, the IRS issued final regulations under Internal Revenue Code ("Code") section 430 for determining the yearly minimum required contribution for single employer defined benefit pension plans. Single employer defined benefit plans must satisfy the Code's "minimum funding standard" under section 412 by making a yearly minimum required contribution calculated under Code section 430 and its corresponding regulations. The amount of the contribution depends on whether the value of a plan's assets is less than or equal to the plan's funding target for the year. The final regulations, while generally similar to the proposed regulations issued in 2008, include additional rules addressing the amount of the required contribution, liquidity requirements and contributions for short plan years. The final regulations also contain provisions addressing the excise tax imposed on plans failing to satisfy the Code's minimum funding standard. The final regulations will apply to plan years beginning on or after January 1, 2016, but plan sponsors may apply or rely on them for earlier years.

PBGC Issues Updated Regulations on Reportable Events

On September 11, 2015, the Pension Benefit Guaranty Corporation ("PBGC") published final regulations on events required to be reported under section 4043 of the Employee Retirement Income Security Act of 1974 ("ERISA"). Section 4043 requires defined benefit plan sponsors to notify the PBGC of certain events that may signal financial problems and put pensions at risk. To reduce the burden on plan sponsors and reduce the number of reports, the final regulations target the small number of plans and plan sponsors posing the greatest financial risk to the PBGC by increasing waivers and extensions available to financially solvent plans and plans with sufficient funding. Under the relief provided in the final regulations, the PBGC expects that about 94% of plans will be exempt from many of the reporting obligations. The final regulations apply to events occurring after January 1, 2016.

IRS Updates Instructions for Forms 8950 and 8951

On September 23, 2015, the IRS published revised instructions to Form 8950, Application for Voluntary Correction Program (VCP), and Form 8951, Compliance Fee for Application for Voluntary Correction Program (VCP), to reflect recent changes made to the IRS's Employee Plans Compliance Resolution System ("EPCRS"). Changes to EPCRS included new safe harbor corrections for 401(k) and 403(b) plans, expansion of overpayment and underpayment correction methods, and a reduction of VCP compliance fees. The IRS has stated it will continue to accept prior versions of Forms 8950 and 8951 until January 1, 2016.


CMS Releases Proposed 2017 Essential Health Benefits Benchmark Plans

On August 28, 2015, CMS released proposed 2017 essential health benefits benchmark plans for each state. The 2017 benchmark plans are based on plans available in 2014, and many states proposed using the largest small group health plans operating in their state. CMS accepted public comments on the proposed benchmark plans until September 30, 2015, after which CMS expects to publish the final list.

Under the Affordable Care Act ("ACA"), essential health benefits comprise ten broad categories of benefits (e.g., hospitalization, emergency services, maternity care), but no specific services are listed under each category. Instead, HHS regulations define essential health benefits based on state benchmark plans. The ACA does not require employer-sponsored self-insured health plans, insured large group health plans and grandfathered health plans to offer essential health benefits. However, because these plans may not impose annual and lifetime dollar limits on any essential health benefits they do offer, these plans must define their essential health benefits by either selecting a benchmark plan or using a good faith, reasonable definition of essential health benefits. Plan sponsors that decide not to select a benchmark plan may wish to review which services are essential health benefits in benchmark plans in defining their plans' essential health benefits under the good faith standard.

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

On September 15, 2015, the IRS published final forms and instructions for the B-Series (1094-B and 1095-B) and C-Series (1094-C and 1095-C) ACA Information Returns. All applicable large employers and self-funded plan sponsors must file ACA Information Returns with the IRS by February 29, 2016 (March 31, 2016 if filing electronically) to report coverage offered to full-time employees and participants during the 2015 calendar year. A copy of the return is due to employees/participants by February 1, 2016.

The final forms are substantially identical to the draft forms. The final instructions retain most of the information in the draft instructions, but the IRS added some changes, including:

  • Reporting More Than One Type of Coverage. The final instructions for Forms 1094-B and 1095-B state that a plan providing more than one type of minimum essential coverage to an individual need only report one type of coverage. Thus, if an individual is covered by a self-insured medical plan and an HRA provided by the same employer, the employer need only report the medical coverage or the HRA, but not both. The instructions also state that a plan providing minimum essential coverage generally need not report coverage for which an individual is eligible if the individual is covered by other minimum essential coverage for which reporting is required. Thus, if an individual is covered by an insured group health plan and a self-funded HRA offered by the same plan sponsor, the plan sponsor is not required to report the HRA. The insurer will report the individual's coverage under the group health plan.
  • Medicare. The final instructions for Forms 1094-B and 1095-B state that if an individual is covered by Medicare and a Medicare Supplement, the plan sponsor of the Medicare Supplement is not required to report that individual's coverage.
  • Reporting COBRA Offers to Former Employees. The final instructions for Forms 1094-C and 1095-C state that an offer of COBRA continuation coverage made to a former employee upon termination should not be reported as an "Offer of Coverage."


Third Circuit Rules that Plan's Statute of Limitations for Filing Suit Is Unenforceable if Not in Final Denial Letter

In Mirza v. Insurance Administrators of America, Inc., the Third Circuit Court of Appeals refused to apply a plan's contractual limitations period for filing a civil action in court. The Third Circuit held that, because the limitations period was not disclosed in the final adverse determination letter provided to the claimant, the plan violated ERISA's claims procedures regulations. Setting aside the plan's one-year limitations period, the Third Circuit borrowed New Jersey's six-year statute of limitations used for breach of contract claims.

In 2013, the Supreme Court upheld the enforceability of a plan's self-imposed limitations period for filing suit in Heimeshoff v. Hartford Life Insurance Co., provided the limitations period is reasonable and there is no controlling statute to the contrary. Since Heimeshoff, courts have split on whether the claims procedures regulations require plans to notify claimants of any contractual limitations period in the final denial of an appeal. In light of recent court holdings, plan sponsors and administrators should consider adding any applicable contractual limitations period to their denial letters to ensure their plans' internal statutes of limitations remain enforceable.

Ninth Circuit Rules that Successor Liability Doctrine May Apply in Withdrawal Liability Context

Reversing and remanding the lower court's decision, the Ninth Circuit Court of Appeals in Resilient Floor Covering Pension Trust Fund v. Michael's Floor Covering, Inc., ruled that a successor employer, including a building and construction industry employer, could be held liable for its predecessor's withdrawal liability owed to a multiemployer pension plan so long as the successor had notice of the liability. The Ninth Circuit noted that it previously held successor employers liable for their predecessors' delinquent contributions, but now was extending the successor liability doctrine to the withdrawal liability context. In reviewing whether the employer was a successor in the case, the court held that the primary factor was whether substantial continuity in the business operations existed between the predecessor and the successor employer, determined largely by whether the new employer retained the "same body of customers" as the prior employer. The court also provided a list of successorship factors that courts must analyze when imposing withdrawal liability on a successor entity, which include market share, continuity of workforce and similarity of owners and operators.

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.