Welfare Benefit Plan ERISA News
March 2013

 
Group Discount Constitutes an
Employer Contribution!
In a recent case, an individual disability policy was subject to ERISA-even though the requirements for the Safe Harbor exemption were presumably met. The Safe Harbor removes a group insurance policy from ERISA coverage where (1) no contributions are made by the employer; (2) participation in the program is voluntary; (3) the sole functions of the employer are to permit announcement of the plan and to collect and remit premiums; and (4) the employer receives no consideration in connection with the program.
Even though the employee paid the entire premium for this policy, the court adopted the reasoning that the employer contributed to the policy by obtaining a group discount for its employees. Employers may be surprised to learn that they have created plans that trigger the reporting, disclosure, fiduciary, and enforcement provisions of ERISA. Please contact ERISAPros to discuss whether you should include your noncontributory voluntary disability, life, dental, vision, and other plans in your Plan Document and SPD. (Source)
IRS Warns Employers "Don't Try to Avoid Mandates"
The IRS is aware that employers may try to avoid the employer mandates under ACA. It is now warning employers not to attempt avoiding the employer mandates by cutting hours to less than 30/week, using staffing agencies, terminating and rehiring, or splitting companies into separate legal entities to shrink the size of the company to the requisite penalty-avoiding 49 employees. The IRS has issued a 144-page notice which says it will soon issue anti-abuse rules to address practices that have the effect of circumventing or manipulating the application of ACA.
DOL Dramatically Expands Audit Procedures
Historically, the DOL has requested copies of SPDs, plan documents, 5500 filings, and other documents distributed to employees or filed with the government. The DOL has dramatically expanded its audit letter recently to also ask for proof of distribution of notices - including those required by HIPAA, NMHPA, GINA, WHCRA, MHPAEA, and ACA. Employers should respond fully in an organized manner to end the audit quickly. This self-compliance tool for the health care related provisions of ERISA is useful for group health plans, plan sponsors, TPAs, and brokers. From a compliance perspective, the stakes are even higher now.
New Regulations on Individual Mandate under ACA

A new government fact sheet explains the rules for exemptions to the mandate, such as people with religious objections or hardships, who spend less than 3 consecutive months without coverage, and who don't make enough to pay federal taxes. Also, short gaps in coverage due to temporary unemployment between jobs won't trigger a fine. Those who choose not to purchase medical insurance in 2014 will be subject to a fine of $95, a penalty that grows to $695 by 2016. Fewer than 2 percent of Americans are expected to pay a penalty under the mandate.

 

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© 2017 ERISAPros, LLC, All rights reserved. Information on ERISAPros' website, its newsletter, “News & Views,” and its blog, “ERISA Wonk,” is published as a general informational source. Information and articles are general in nature and are not intended to constitute legal or tax advice in any particular matter. Blog posts and comments reflect the personal views of their respective authors - not those of ERISAPros. Transmission of this information does not create an attorney-client relationship. ERISAPros, LLC is not a law firm and is not giving legal or tax advice. It does not warrant and is not responsible for errors or omissions in the content on its website or in its newsletters. ERISA is a complicated and confusing law. Summary Plan Descriptions (SPDs), Wrap Plan Documents, and Form 5500s require review and updating by qualified ERISA compliance professionals.

 

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