On November 7, the U.S. Supreme Court announced it was going to review King v. Burwell. At issue in the case is whether Fourth Circuit correctly determined that the IRS did not exceed its authority when it released a rule in 2012 providing that federal subsidies under the Affordable Care Act are available in both state and federally operated exchanges, but rather was simply clarifying the statute by also providing subsidies in federal exchanges.
New Agency FAQs Drive a Stake Further into the Heart of Premium Reimbursement Arrangements and Eliminate a Common Executive Perk
In clear and unambiguous terms, the U.S. Departments of Labor (“DOL”) and Health and Human Services and the Internal Revenue Service (“IRS”) (the “Agencies”) drove a stake into the heart of two suspect health insurance strategies that have been promoted to business owners across the country. In addition, the guidance may spell trouble for a common reimbursement strategy used by employers for executives and other key employees.
IRS to Amend Cafeteria Plan Regulations to Facilitate Enrollment in Marketplace Coverage
On Thursday, September 18, 2014, the Internal Revenue Service (“IRS”) released Notice 2014-55, which expands the cafeteria plan “change in status” rules to allow plans to offer employees an option to revoke their elections for employer-sponsored health coverage to purchase a qualified health plan through a Health Insurance Marketplace (“Marketplace”). The notice is effective immediately and will appear in IRB 2014-41, to be published Oct. 6, 2014.
The notice addresses two specific situations in which a plan could allow an employee to revoke a cafeteria plan election (other than a health FSA election): due to enrollment in the Marketplace; and due to a reduction in hours of service. This should be a welcome relief to employers that may have been struggling with how to allow employees to change coverage from under the employer’s plan to a Marketplace or other group health plan.
IRS Increases 9.5% Affordability Threshold—Or Did It?
On July 24, 2014, the Internal Revenue Service (IRS) released three Revenue Procedures (2014-46, 2014-37, and 2014-41), which provide guidance to individuals on their obligation to maintain minimum essential coverage (MEC) under the Affordable Care Act’s (ACA) so-called “individual mandate.”
Most notably for employers is that, in Revenue Procedure 2014-37, the IRS increased the threshold
Of Mice and Elephants: Halbig and King and The Struggle of Two Federal Appeals Courts to Find Meaning in Words That May or May Not Be There
At issue in Halbig v. Burwell and King v. Burwell is whether or not subsidies to buy insurance on an exchange are available in both state and federal exchanges. On its face the Affordable Care Act (“ACA”) provides for subsidies only in state exchanges. The Treasury Department wrote regulations in 2012, however, confirming that
Hobby Lobby: The Supreme Court’s View and Its Impact
For the second time in two years the United States Supreme Court (the “Court”) has ruled against the Obama Administration with respect to elements of the Affordable Care Act (the “ACA”). In a 5-4 decision announced today in Burwell v. Hobby Lobby Stores, Inc. (“Hobby Lobby”) (f/k/a Sebelius v. Hobby Lobby Stores, Inc.), the Court ruled that the federal government, acting through Health and Human Services (“HHS”), overstepped its bounds by requiring faith-based private, for-profit employers to pay for certain forms of birth control that those employers argued contradicted their religious beliefs, in violation of the Religious Freedom Restoration Act of 1993 (“RFRA”).
In Hobby Lobby, the Court found that for-profit employers are “persons” for purposes of the RFRA. The Court, assuming that the government could show a compelling interest in its desire to provide women with access to birth control, ultimately held that the government could have met this interest in a less burdensome way.
Final Regulations on Orientation Periods Released
On June 20, the Federal regulatory agencies in charge of health care reform guidance (the Departments of Labor, Treasury, and Health and Human Services) released final regulations (“Final Regulations”) clarifying the relationship between a group health plan’s eligibility criteria and the Affordable Care Act’s (ACA) 90-day limit on waiting periods. Specifically, the Final Regulations (published
Relief for Multiemployer Plans (and the Employers That Love Them)
As previously reported, on Monday, February 10, 2014, the IRS released final regulations on the Affordable Care Act’s (ACA) employer “shared responsibility” provisions, also known as the “pay-or-play” mandate. While the final regulations have (predictably) received mixed reviews, some employers – most notably those with 50 to 99 employees or those that covered almost but not quite 95% of their full-time employees – were likely pleased with at least some of the provisions.
A review of the final regulations shows that there is another group with something to celebrate, at least for now – employers contributing to multiemployer plans. The final regulations contain interim guidance that largely mimics and extends a special transition rule contained in the preamble to the proposed regulations. This rule, which previously only applied in 2014, simplified compliance with the pay-or-play mandate for employers with collectively bargained employees for whom contributions are made to a multiemployer plan. It was unclear whether this interim guidance would be extended.
“Pay-or-Play” & Contingent Workers: Final Regulations Provide Clarity But Not Complete Relief
As previously reported, on February 10, 2014, the IRS issued final regulations on the Affordable Care Act’s (ACA) employer shared responsibility requirements—the so-called “pay-or-play” mandate. In the regulations, the IRS provides new and additional guidance on a wide range of issues relating to the implementation of the pay-or-play rules. Among them, the IRS has restated its position and introduced some new rules relating to the engagement by employers of “contingent workers,” including temporary employees, individuals hired through temporary staffing firms and independent contractors (“1099 employees”). Not surprisingly, in its proposed regulations released about a year ago, the IRS had flagged contingent workers as presenting challenging issues for compliance with the pay-or-play requirements.
Key provisions of the final regulations’ rules for contingent workers are summarized below.
Recent Guidance on Fixed Indemnity Plans—FAQ’s Relax Standards
As previously reported, the federal agencies responsible for drafting the rules implementing the Affordable Care Act (ACA) (the U.S. Labor Department, the U.S. Department of Health and Human Services and the U.S. Treasury Department (together, the “Departments”)) on January 9, 2014 issued FAQ Part XVIII, regarding implementation of the market reform provisions of the