On October 23, 2015, the Departments of Labor, Health and Human Services and Treasury (the “Agencies”) jointly released their twenty-ninth (XXIX) set of Frequently Asked Questions (FAQs) about Affordable Care Act (ACA) implementation. This latest set of FAQs generally (1) clarify that certain services performed ancillary to various preventive services must also be covered without imposition of cost-sharing, (2) explain that in-kind incentives provided through wellness programs are also subject to limitations under HIPAA and (3) state that medical necessity guidelines related to mental health and substance abuse benefits must be provided to participants upon request. Continue Reading
On Monday, November 1, 2015, President Obama signed into law the Bipartisan Budget Act of 2015 (the “BBA”) which brings familiar changes for sponsors of defined benefit pension plans. Similar to the Moving Ahead for Progress in the 21st Century Act in 2012 (“MAP-21”), the BBA provides relief from pension funding obligations while increasing PBGC premiums. The following summarizes the two major changes under the BBA that affect pension plans. Continue Reading
On Monday, November 2nd, the President signed the Bipartisan Budget Act of 2015 (BBA). Some legislators had hoped that a budget deal would at least include a repeal of the controversial 40% excise tax on high-cost health care (the so-called “Cadillac Tax”). However, the BBA left the Affordable Care Act (ACA) largely intact, with the ACA’s automatic enrollment mandate being the only casualty. Continue Reading
On October 21, 2015, the IRS issued proposed regulations to clarify the treatment of same-sex spouses for federal tax purposes. By way of background, in 2013, the United States Supreme Court held in United States v. Windsor that the portion of the Defense of Marriage Act defining marriage as being between opposite-sex partners was unconstitutional. Shortly following the Windsor decision, the IRS issued guidance recognizing, for federal tax purposes, same-sex marriages performed in states permitting such marriages. As previously reported, the Supreme Court recently held in Obergefell v. Hodges, that the Fourteenth Amendment’s Due Process and Equal Protection Clauses required states to allow same-sex marriage and to recognize same-sex marriages performed in other states.
The proposed regulations provide that all marriages, whether opposite-sex or same-sex, will be recognized by the IRS for federal tax purposes if the marriage is recognized by any state, possession or territory of the United States. Additionally, the proposed regulations address the impact that Windsor and Obergefell has on gender-specific terms, such as “husband” and “wife.” To ensure that same-sex marriages are treated equally for federal tax purposes, the proposed regulations clarify that the terms “husband” and “wife” will be interpreted neutrally to include same-sex and opposite-sex spouses.
Similar to the IRS’s previous guidance, the proposed regulations provide that registered domestic partnerships, civil unions and other similar relationships are not considered marriages for federal tax purposes. Also, marriages performed in a foreign jurisdiction will be recognized for federal tax purposes only if the marriage would be recognized by at least one state, possession or territory of the United States.
The proposed regulations explain that previous guidance related to same-sex marriages, such as Rev. Rul. 2013-17 and IRS Notice 2014-19, remain in effect and that additional guidance may be issued in the future.
As we previously reported here, the Equal Employment Opportunity Commission (EEOC) released Proposed Rules on April 16, 2015 to provide guidance under the Americans with Disabilities Act (ADA) on permissible employer incentives for employee participation in wellness programs. Comments on the proposed rules were due on or before June 19, 2015. The EEOC received approximately 340 comments, which can be viewed here.
At an American Bar Association Joint Committee on Employee Benefits conference on October 19, 2015, the EEOC informally stated that the agency is currently reviewing the substantive comments received, including the many comments on the EEOC’s “controversial” position that employers can’t limit coverage under a health plan or deny access to particular benefit packages within a group health plan for employees who don’t participate in the employer’s wellness program. The EEOC has also been discussing potential regulation with the Department of Labor, particularly regarding how to determine which wellness programs are outside of group health plans. Another provision being reviewed for new guidance is the requirement that employers who offer wellness programs give employees a notice that clearly explains what medical information will be obtained, who will receive the medical information, how the medical information will be used, and how the employer will maintain the confidentiality of that information. Many commenters stated that the notice is duplicative of existing notices required under the Health Information Portability and Accountability Act (HIPAA), which applies to group health plans. The EEOC is trying to determine when notice should be required and whether existing notices may be sufficient under the ADA. In addition, the EEOC expects to issue a Notice of Proposed Rulemaking under the Genetic Information Nondiscrimination Act (GINA) addressing spousal participation in wellness programs. Employers should continue to review their current programs in light of current EEOC guidance and remain on alert for new EEOC proposed and final rules.
The Third Circuit held that where an employer has been party to multiple collective bargaining agreements (“CBAs”) with a multiemployer fund, an employer’s withdrawal liability should be based on “the single highest contribution rate” established under the CBAs. In so ruling, the Court observed that ERISA requires annual withdrawal liability payments to be based on “the highest contribution rate at which the employer had an obligation to contribute under the plan,” and rejected the employer’s argument that a “weighted average” of the contribution rates should apply. Continue Reading
The Ninth Circuit concluded in a case of first impression that an employer could be held liable for its predecessor’s withdrawal liability to a multiemployer pension fund pursuant to the “successorship doctrine.” The Court ruled that “the most important factor in assessing whether an employer is a successor for purposes of imposing MPPAA withdrawal liability is whether there is substantial continuity in the business operations between the predecessor and the successor, as determined in large part by whether the new employer has taken over the economically critical bulk of the prior employer’s customer base.” The Ninth Circuit concluded that the district court failed to weigh whether the alleged successor had retained a significant portion of its predecessor’s customer base, or “market share.” In addition, Continue Reading
A federal district court in Tennessee ruled that ERISA did not preempt state law claims for short-term disability benefits because the short-term disability plan fell under the “payroll practice” exception of ERISA. LeBlanc v. SunTrust Bank, No. 3:15-cv-00630 (M.D. Tenn. Aug. 24, 2015). SunTrust provided employees with short-term disability benefits for up to 25 weeks per injury or illness and required employees to be approved for the full 25-week period before they qualified for long-term disability benefits. Continue Reading
After a top-hat plan and pension plan denied a participant’s claims and appeals for additional benefits, the plan administrators preemptively filed a declaratory judgment action, seeking a declaration that: (i) termination of defendant’s employment was not for the purpose of interfering with his ability to attain rights under the plans or ERISA; (ii) the top-hat plan is exempt from certain ERISA requirements; and (iii) the pension plan correctly denied defendant’s claim and appeal. Continue Reading
The Third Circuit recently held that ERISA administrative appeal denial letters must include plan-imposed time limits for commencing a lawsuit challenging the claim denial, and the failure to provide such notice warranted setting aside the plan’s limitation period. Mirza v. Ins. Adm’r. of Am., Inc., 2015 WL 5024159 (3d Cir. Aug. 26, 2015). The ERISA claims regulation provides that adverse determination letters must provide a “description of the plan’s review procedures and the time limits applicable to such procedures, including a statement of the claimant’s right to bring a civil action” for benefits. 29 C.F.R. § 2560.503-1(g)(1)(iv). Consistent with the First and Sixth Circuits’ rulings on this issue, the Third Circuit determined that the regulation’s “time limit” notice requirement applies not only to periods pertaining to when a participant may file an administrative appeal, but also to a plan-imposed limitation period for commencing a lawsuit after an appeal is denied. In so ruling, the Court reasoned that not requiring such notice would permit administrators to “hide the ball” because participants are more likely to read and rely on adverse determination letters than lengthy plan documents. Having found that such notice is required, the Court determined the proper remedy was to set aside the plan’s limitation period and to replace it with the most analogous state law period, which the parties agreed was New Jersey’s six-year limitation period applicable to breach of contract claims.
Proskauer’s Perspective: Given that three circuits already have ruled consistently on these issues, plan fiduciaries should make sure that administrative appeal denial letters specifically set forth plan-imposed time limits. Furthermore, given the courts’ tendency not to penalize participants for failure to consult SPDs and plan documents when pursuing a claim for benefits, plan sponsors and administrators should consider whether there is other information pertinent to the claims process to which they should affirmatively alert participants when determining claims for benefits.