Health and Welfare Plans Archives - Page 67 of 128

Full D.C. Circuit to Rehear ACA Premium Tax Credit Case

by McDermott Will & Emery | Sep 11, 2014 | Health and Welfare Plans

The full U.S. Court of Appeals for the D.C. Circuit has vacated the 2-1 panel decision issued July 22, 2014, in Halbig v. Burwell, which struck down the Internal Revenue Service (IRS) Rule providing for Affordable Care Act (ACA) premium tax credits to be available to lower income exchange customers, regardless of their state of residence. The plaintiffs’ brief is due October 3, 2014, and the government’s opposing brief is due a month later on November 3, 2014, to precede oral arguments on December 17, 2014. It is likely that the full D.C. Circuit would not render its opinion before mid- to late Spring 2015. This has the effect of preserving the status quo with respect to the availability of premium tax credits, at least until the full D.C. Circuit renders its decision.

Meanwhile, the plaintiffs have sought review by the Supreme Court of the United States in King v. Burwell, Halbig’s sister case in which the U.S. Court of Appeals for the Fourth Circuit upheld that same IRS Rule. The Clerk of the Supreme Court has granted the government an extension until October 3, 2014, to respond to the petition for certiorari. The plaintiffs have urged the highest court render its decision as quickly as possible to resolve the circuit split. If the Supreme Court accepts King for review before mid-January, it could issue a ruling in the current term, which is scheduled to end in late June 2015.

Among the highest profile legal challenges to the ACA, Halbig and King seek to invalidate a May 2012 IRS Rule providing that health insurance premium tax credits will be available to all taxpayers nationwide, regardless of whether they obtain coverage through a state-based exchange or a federally facilitated exchanges (FFE). The plaintiffs (represented by the same lawyers in both cases) argued that the plain language of the ACA limits the availability of premium tax credits to only those taxpayers who reside in the 14 states (plus the District of Columbia) that set up their own exchanges, and thus nullifies the IRS Rule’s application to the 36 states operating exchanges through the FFE. Plaintiffs’ argument is based on language providing that premium tax credits are only available for plans “enrolled in through an Exchange established by the State under section 1311 of the [ACA].” ACA § 1401(a), enacting 26 U.S.C. § 36B(c)(2)(A)(i) (emphasis added). The government counters that other provisions of the ACA make clear that the subsidies are to be made available in the FFE states as well.

There are also two similar cases awaiting decisions by federal trial courts on motions for summary judgment. First, in Pruitt v. Burwell, pending in federal district court in Muskogee, Oklahoma, the state complains that the availability of the premium tax credit in FFE states forces the state to choose between the costs of providing coverage to its employees or paying the IRS a significant financial penalty. Second, in Indiana v. IRS, pending in federal district court in Indianapolis, the state and 39 of its public school districts argue that the IRS Rule directly injures the [...]

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Developments Impacting Benefits for Same-Sex Spouses

by Brian Tiemann and Todd Solomon | Sep 2, 2014 | Employment, Health and Welfare Plans

As federal and state agencies and courts further examine the implications of the Supreme Court of the United States’ ruling on same-sex marriage in U.S. v. Windsor, the laws and regulations governing employee benefits for employees’ same-sex spouses continue to be clarified. As a result, employers should monitor additional guidance as it is issued and continue to reevaluate the same-sex spousal benefits offered under their employee benefit plans.

Read the full article.

OCR to Begin Phase 2 of HIPAA Audit Program

by Edward G. Zacharias and Daniel F. Gottlieb | Aug 26, 2014 | Health and Welfare Plans, Privacy and Data Security

The U.S. Department of Health and Human Services’ Office for Civil Rights (OCR) will soon begin a second phase of audits (Phase 2 Audits) of compliance with Health Insurance Portability and Accountability Act of 1996 (HIPAA) privacy, security and breach notification standards (HIPAA Standards) as required by the Health Information Technology for Economic and Clinical Health (HITECH) Act. Unlike the pilot audits during 2011 and 2012 (Phase 1 Audits), which focused on covered entities, OCR will conduct Phase 2 Audits of both covered entities and business associates. The Phase 2 Audit Program will focus on areas of greater risk to the security of protected health information (PHI) and pervasive noncompliance based on OCR’s Phase I Audit findings and observations, rather than a comprehensive review of all of the HIPAA Standards. The Phase 2 Audits are also intended to identify best practices and uncover risks and vulnerabilities that OCR has not identified through other enforcement activities. OCR will use the Phase 2 Audit findings to identify technical assistance that it should develop for covered entities and business associates. In circumstances where an audit reveals a serious compliance concern, OCR may initiate a compliance review of the audited organization that could lead to civil money penalties.

The following sections summarize OCR’s Phase 1 Audit findings, describe the Phase 2 Audit program and identify steps that covered entities and business associates should take to prepare for the Phase 2 Audits.

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Upcoming Health and Welfare Plan Requirements Checklist for Employers

by McDermott Will & Emery | Aug 21, 2014 | Health and Welfare Plans

As the mid-way point of 2014 approaches, employers should actively turn their attention to several upcoming compliance obligations for the health and welfare benefit plans they sponsor. Following is a checklist of upcoming health and welfare compliance initiatives that require action by employers, including preparation for upcoming fees and penalties under the Affordable Care Act, the filing of required forms and distribution of relevant notices.

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Individual Responsibility under the ACA

by McDermott Will & Emery | Aug 11, 2014 | Health and Welfare Plans

Effective 2014, if a taxpayer is not covered under minimum essential coverage for one or more months, then, unless an exemption applies, the taxpayer is liable for the individual shared responsibility payment on his return. The individual shared responsibility payment is the lesser of: (1) the sum of the monthly penalty amounts; or (2) the sum of the “monthly national average bronze plan premiums” for the “shared responsibility family.”

In recently published Revenue Procedure 2014-46, Sec. 3, the IRS provides that the monthly national average premium, for qualified health plans that have a bronze level of coverage and are offered through exchanges in 2014, is $204 per individual and $1,020 for a shared responsibility family with five or more members. For example, if the sum of the monthly penalty amount is $95 (or 1 percent of income) and the bronze level of coverage costs $204, the individual’s shared responsibility payment would be $95, unless the 1 percent is greater than $95.

U.S. Appeals Courts Issue Conflicting Decisions on Whether ACA Permits Tax Subsidies of Health Care Coverage Purchased Through Federal Exchanges

by Anthony A. Bongiorno, Ankur J. Goel, Eric Zimmerman and H. Guy Collier | Jul 29, 2014 | Health and Welfare Plans

The U.S. Court of Appeals for the District of Columbia struck down the Internal Revenue Service (IRS) rule providing for federal tax credits for health insurance purchased through federal exchanges, while the U.S. Court of Appeals for the Fourth Circuit upheld the same IRS rule. If en banc review in the appeals courts does not resolve the circuit split, the matter likely will go to the Supreme Court of the United States for review. Tax subsidies under the IRS rule should remain available until such review, which is not expected before June 2015.

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Final Regulations Allow Retirement Plan Payments for Accident, Health and Disability Insurance

by McDermott Will & Emery | Jun 10, 2014 | Health and Welfare Plans, Retirement Plans

On May 9, 2014, the Internal Revenue Service finalized regulations that govern the tax treatment of payments made by retirement plans to pay accident or health insurance premiums. Under the final regulations, accident or health insurance premium payments by qualified defined contribution plans are taxable distributions to the participant unless those payments are used to pay premiums for disability insurance that replace retirement plan contributions for disabled employees. The regulations apply for tax years beginning January 1, 2015, although taxpayers may elect to apply them to earlier years.

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IRS Rules Captive Reinsurance Arrangement Involving Retiree Medical Benefits Qualifies as Insurance for Federal Tax Purposes

by Brian Tiemann, Elizabeth Erickson, Kristen E. Hazel and Thomas M. Jones, PC | Jun 3, 2014 | Health and Welfare Plans

On May 18, 2014, the Internal Revenue Service (IRS) ruled that an employer’s wholly owned captive insurance subsidiary could reinsure the employer’s retiree medical benefit risks and still qualify as insurance for federal tax purposes, even though the retiree medical reinsurance policy was the only business of the captive. The IRS held that the insured risks were those of the retirees and their dependents, not of the employer or the employer’s voluntary employee benefit association that purchased the insurance policy reinsured through the captive. The ruling will serve as guidance for employers seeking to structure and implement similar captive reinsurance arrangements that are eligible for favorable federal tax treatment.

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U.S. Department of Labor Issues Proposed Regulations Amending the COBRA Notice Requirements

by McDermott Will & Emery | May 8, 2014 | Health and Welfare Plans

On May 2, 2014, the U.S. Department of Labor (DOL) Employee Benefits Security Administration (EBSA) issued proposed regulations which seek to amend the notice requirements under the Consolidated Omnibus Budget Reconciliation Act (COBRA). The changes are intended “to better align the provision of guidance under the COBRA notice requirements with the Patient Protection and Affordable Care Act (ACA) provisions already in effect, as well as any provisions of federal law that will become applicable in the future.”

Under COBRA, a group health plan must provide participants with a general COBRA notice and COBRA qualified beneficiaries with an election notice. These notices describe a qualified beneficiary’s right to continue coverage under a group health plan. On May 8, 2013, DOL issued Technical Release 2013-02, which included a series of model COBRA notices (see “Notice of Coverage Options Available Through the Exchanges” for more information). These model notices include references to the ACA, noting that some qualified beneficiaries (1) may want to consider and compare health coverage alternatives to COBRA continuation coverage that are available through the ACA exchanges and (2) may also be eligible for a premium tax credit to help pay for the cost of coverage.

The proposed regulations eliminate the current versions of the model notices. However, until the regulations are finalized and effective, the DOL will consider appropriately completed use of the model notices that are currently available on its website to constitute good faith compliance with the notice content requirements of COBRA. Once the current notices are available, they will be posted at the following links:

Note: Use of the model notices is not required.

Supreme Court Grants Certiorari to Review Sixth Circuit’s Pro-Union Inference in Retiree Health Insurance Benefits Cases

by Wilber H. Boies, PC | May 7, 2014 | Benefit Controversies, Health and Welfare Plans

The Supreme Court of the United States has agreed to resolve a circuit split about how courts should interpret collective bargaining agreements that provide for health insurance benefits for retired employees in M&G Polymers USA, LLC v. Tackett. The U.S. Court of Appeals for the Sixth Circuit says that such retiree health insurance benefits carry with them an inference that they are vested, or guaranteed to continue for life, while the majority of the other federal appellate courts require specific durational language to find that benefits are vested. Given the high cost of retiree health insurance on many employers’ balance sheets, M&G Polymers USA could represent a game changer for employers’ ability to modify retiree benefits going forward.

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