As outlined in previous Duane Morris Alerts, the coronavirus, or COVID-19, presents a potentially serious risk to the safety and welfare of employees and the financial health of companies. With employers facing the prospect of government-mandated business closures and employees who need time off to care for children unexpectedly home for multiple weeks due to school closures, COVID-19 presents numerous employee benefit-related questions and challenges. This Alert will provide employers with a roadmap for addressing COVID-19 concerns that affect health insurance plans (including potential HIPAA privacy obligations thereunder), welfare benefit plans and retirement plans.
On December 14, 2018, in Texas v. United States, a federal judge in the Northern District of Texas ruled the entirety of the Patient Protection and Affordable Care Act (ACA) to be unconstitutional due to the elimination of the individual mandate in last year’s Tax Cuts and Jobs Act (Tax Act). The court ruled that the individual mandate was such an essential provision of the ACA that rewriting the ACA without it is beyond the power of a federal court and that the individual mandate is inseverable from the ACA’s remaining provisions.
The court’s decision sent shockwaves through the legal community and news outlets—particularly as the ACA’s annual enrollment period for 2019 was set to end on December 15, 2018. However, while the decision of the court should not be understated, it will be appealed to the U.S. Court of Appeals for the Fifth Circuit (and almost certainly after that to the U.S. Supreme Court) and the ACA remains in place during the appeals process.
The U.S. Department of Labor has issued final regulations for the processing of disability claims under certain benefit plans governed by the Employee Retirement Income Security Act of 1974 (ERISA). The rules are effective for disability determinations filed on or after April 1, 2018.
Affected plans include disability benefit plans subject to ERISA and other ERISA plans that condition the payment of a benefit based upon a disability determination. This latter group of plans may include qualified retirement plans (such as defined benefit plans, 401(k) plans, profit sharing plans and 403(b) plans), as well as severance pay plans, nonqualified deferred compensation plans and supplemental retirement plans. Some programs that provide benefit payments upon a finding of disability may, however, be classified as payroll practices that are not subject to ERISA, and therefore not covered by these new rules.
Blog post by Lawrence I. Davidson
On August 25, 2016, the U.S. Department of Labor (DOL) released its Final Rule that will facilitate state legislatures in establishing employee retirement savings programs that are ERISA compliant. Currently, roughly one-third of all workers do not have an opportunity to save for retirement through retirement savings accounts offered by their employers. To date, eight states, including Illinois and California, have already passed legislation which creates retirement savings account programs for employees. While the specific rules of these employee retirement savings programs vary for each state, all of them have the purpose of encouraging residents of their State to save for retirement. Often this is accomplished through a state “auto-IRA” law which requires employers that do not offer workplace retirement savings programs to automatically enroll their employees in payroll deduction IRAs administered by the state. Continue reading U.S. Department of Labor Finalizes Regulations Authorizing States to Establish Retirement Savings Programs
The Internal Revenue Service (IRS) has released Rev. Proc. 2012-50, which will delay the IRS determination letter filing deadline for governmental plans to January 31, 2016.
As background, governmental plans are required to file for IRS determination letters in “Cycle C” of the IRS’s five-year-cycle determination letter program. The initial Cycle C ended on January 31, 2009, but the IRS effectively extended the filing deadline by allowing governmental plans to submit in “Cycle E,” which ended on January 31, 2011. The extension did not, however, change the requirement that governmental plans file in Cycle C. Therefore, even though many governmental plans filed only last year, absent an accommodation, those plans would be required to file again at the start of the next Cycle C, beginning on February 1, 2013.
As a follow-up to our prior entry regarding Employee-Assistance Programs Available to Employers in the Wake of Hurricane Sandy, there have been two recent developments from the Internal Revenue Service of note:
(1) Notice 2012-69 addressed the treatment of certain amounts paid to Section 170(c) organizations under employer leave-based donation programs to aid victims of Hurricane Sandy. The IRS has stated that it will not assert that cash payments an employer makes to Section 170(c) organizations in exchange for vacation, sick, or personal leave that its employees elect to forgo constitute gross income or wages of the employees if the payments are made to the Section 170(c) organizations for the relief of victims of Hurricane Sandy and are paid before January 1, 2014. Similarly, the Service will not assert that the opportunity to make such an election results in constructive receipt of gross income or wages for employees. Employers who have adopted leave-sharing plans (or are considering their adoption) should take note of this development.
In coping with the aftermath of Hurricane Sandy, which affected millions of individuals across the eastern United States, there are a number of potential programs that employers can implement in order to assist employees. We examine two such programs – the establishment of a major disaster leave sharing plan and tax-free qualified disaster relief payments – in our Client Alert, entitled Employee-Assistance Programs Available to Employers in the Wake of Hurricane Sandy.
“What Are Other Funds Doing?”
I often hear this question at trustee board meetings. More often than not, it arises from a decision on funding or investment policy. When asked, it is expected that “the professionals” (i.e. attorney, actuary or consultant) will pull from a trove of information and divine “the answer.” The fact is, funding policy (dictated by the fund’s sponsor) and investment policy (as determined by the fund’s board) can be as varied as fingerprints.
The public hearing on the IRS’s proposed regulations on the determination of governmental plan status, originally scheduled for June 5, 2012, has been rescheduled to July 9, 2012. Outlines of topics to be discussed must be submitted by June 18, 2012. Details.
A recent article in the Wall Street Journal notes the apparent conflict of public pension fund investments in private equity. The article points to the fact that certain labor unions, including the Service Employees International Union (SEIU), have criticized private equity funds while their members sit on boards which authorize investments in such funds. A specific example citied is the Ohio Public Employees Retirement System, which includes a representative of SEIU among its Board members, having increased its targeted private equity holdings. The article goes on to point out TV spots funded by the American Federation of State, County and Municipal Employees (AFSCME) which criticize Republican presidential candidate Mitt Romney regarding his tenure at Bain Consulting.