The Internal Revenue Service and U.S. Departments of Health and Human Services and Labor recently issued guidance on the Affordable Care Act employer mandate and market reforms. Notice 2015-87 contains 26 FAQs that clarify the application of market reforms to health reimbursement arrangements and employer payment plans and the affordability of employer-sponsored health coverage, among other topics.
The IRS recently issued guidance providing safe harbor 401(k) plan sponsors with increased flexibility to make mid-year plan changes. Notice 2016-16 sets forth new rules for when and how safe harbor plan sponsors may amend their plans to make mid-year changes, a process which traditionally has been subject to significant restrictions.
The Internal Revenue Service has issued correction procedures for Forms 941 and W-2 in response to the retroactive increase in transit benefit exclusions.
The Patient-Centered Outcomes Research Institute (PCORI) fee was established under the Affordable Care Act (ACA) to advance comparative clinical effectiveness research. The PCORI fee is assessed on issuers of health insurance policies and sponsors of self-insured health plans. The fees are calculated using the average number of lives covered under the policy or plan, and the applicable dollar amount for that policy or plan year.
The Internal Revenue Service (IRS) recently announced the cost-of-living adjustments to the applicable dollar limits for various employer-sponsored retirement and welfare plans for 2016. Although some of the dollar limits currently in effect for 2015 will change, the majority of the limits will remain unchanged for 2016.
On June 25, 2015, the Supreme Court of the United States upheld one of the main pillars of the Affordable Care Act (ACA): the tax credits that allow millions of Americans to afford health care insurance on the public exchanges. In King v. Burwell, Chief Justice Roberts, writing for a 6–3 majority, held that middle- and low-income individuals who purchase health care insurance through a federally facilitated health care exchange are entitled to the same tax credits that are available to purchasers through state-run health care exchanges. The ruling puts to rest one of the remaining challenges to the general framework of the ACA. Accordingly, our On the Subject discusses how employers should continue to plan for compliance with the current and upcoming obligations required under the ACA.
Join McDermott partner, Susan Peters Schaefer, at a Worldwide Employee Benefits Network Chicago Chapter breakfast meeting that will cover operational errors in retirement plans.
Mistakes can and do happen, especially in the complex world of retirement plans. In recognition, the U.S. Internal Revenue Service (IRS) created the Employee Plans Compliance Resolution Program (EPCRS) to help retirement plan sponsors fix operational errors either through self-correction or through an IRS application and approval process. In April, the IRS revised and expanded the correction rules under EPCRS. Here experts will explain the new and old correction rules for retirement plans and provide some real life examples and guidance.
Wednesday, June 24, 2015
7:30 am CDT – Breakfast and Networking
8:00 – 9:00 am CDT – Program
Northern Trust Conference Center
50 South LaSalle Street
Chicago, IL 60603
To register for the event, click here.
Yesterday the U.S. Internal Revenue Service issued new Questions & Answers regarding the Affordable Care Act’s reporting rules under Code Section 6055 and 6056. The categories under the guidance include: Basics of the Reporting, Who is Required to Report, Methods of Reporting (for employers), What Information Must be Reported (for providers), and How and When to Report the Required Information.
The U.S. Internal Revenue Service (IRS) recently issued Revenue Ruling 2014-24, which expressly permits retirement plans that are tax qualified only in Puerto Rico (Puerto Rico-only plans) to continue to pool assets with U.S.-qualified plans in Revenue Ruling 81-100 group trusts (group trusts) now and in the future. The ruling is welcome relief for Puerto Rico plan sponsors, institutional investors, and trustees, who previously were relying on transition relief that permitted Puerto Rico-only plans to participate in U.S. group trusts for only a limited time without facing potential disqualification of the participating U.S. plans and trusts.
Revenue Ruling 2014-24 also extends the deadline for sponsors of certain retirement plans qualified in both the United States and Puerto Rico (dual-qualified plans) that participated in a group trust to make a tax-free transfer of benefits for Puerto Rico employees to a Puerto Rico-only qualified plan prior to January 1, 2016. Eligibility is limited only to dual-qualified plans that participated in a group trust as of January 10, 2011.
The Supreme Court of the United States announced on January 16, 2015, that it would review four cases challenging the constitutionality of state laws banning same-sex marriage in Kentucky, Michigan, Ohio and Tennessee. The U.S. Court of Appeals for the Sixth Circuit ruled in November 2014 that the same-sex marriage bans in these states were constitutional, thereby creating a split of opinion among the federal circuit courts.
As of January 30, 2015, same-sex marriage is legal in 36 states and the District of Columbia. In addition, Michigan is expected to soon begin recognizing 323 marriages that were performed there in March 2014 (during the one-day period after a district court found the state’s ban on same-sex marriage unconstitutional and before an appellate court issued a stay of the district court ruling).
A ruling by the Supreme Court is expected in June 2015. If the Supreme Court rules that state laws banning same-sex marriage are unconstitutional, the ruling will create precedent that will lead to the legalization of same-sex marriage in all 50 states. Same-sex couples would then be able to marry in any state and would be entitled to all of the rights, benefits and obligations that are extended to opposite-sex spouses under both federal and state laws.
Federal Law
In 2013, the Supreme Court ruled in U.S. v. Windsor that Section 3 of the Defense of Marriage Act (DOMA) is unconstitutional (for more information, see McDermott’s On the Subject “Supreme Court Rules on DOMA and California’s Proposition 8”). Section 3 of DOMA had provided that, for purposes of all federal laws, the word “marriage” means “only a legal union between one man and one woman as husband and wife,” and the word “spouse” refers “only to a person of the opposite-sex who is a husband or wife.” Subsequent Internal Revenue Service (IRS) and U.S. Department of Labor guidance clarified that, as a result of Windsor, favorable federal tax treatment of spousal benefit coverage would extend to all same-sex couples legally married in any jurisdiction with laws authorizing same-sex marriage, regardless of whether the couple currently resides in a state where same-sex marriage is recognized (see McDermott’s On the Subject“IRS Guidance Clarifies Retroactive Retirement Plan Impact of Supreme Court’s Windsor Ruling” for more information). The most recent IRS guidance clarifies that, effective as of June 26, 2013, retirement plans must be administered in a manner that reflects the Windsorruling.
Next Steps for Employers
All employers should continue to monitor developments in this case and in state same-sex marriage laws. The Supreme Court’s ruling could have significant consequences for employers in states where same-sex marriage has not been legalized or that have not otherwise extended spousal benefit coverage to same-sex spouses. An employer that currently extends benefit coverage to unmarried same-sex partners would need to consider whether to continue offering such benefits if all employees can marry and thereby receive spousal coverage under the employer’s benefit plans.
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