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The Affordable Care Act contains a provision–the so-called “Cadillac tax”–providing for a 40% exciClassic Cadillacse tax on high cost employer-sponsored health coverage.  The bar for “high cost” is fairly low, and the Cadillac tax is ultimately expected to apply to a significant number of employer-sponsored health plans.

Since the passage of the Affordable Care Act, many employers and insurers (who would be responsible for paying the tax) have actively opposed the implementation of the Cadillac tax provisions, with moderate success.  The Cadillac tax was originally slated to take effect in 2018, but its implementation has been delayed twice–most recently until 2022. 


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FICA’s special timing rule for account balance plans is oft-misunderstood – and misapplied – which can lead to unfavorable consequences for employers and employees alike.  Partner Debbie Hoffman and senior associate Stephanie Vasconcellos recently revisited the rule, conducting an in-depth analysis for Bloomberg BNA’s Tax Management Compensation Planning Journal.  Access the full article at www.bna.com

HSA

On March 5, 2018, the IRS announced adjustments – effective immediately – to various annual limitations already in place for 2018.  One such adjustment is to the maximum annual health savings account contribution for a family with high deductible health coverage.  Previously set at $6,900 for 2018, the IRS has lowered the limit to $6,850,

As a follow up to our previous post, the Department of Labor announced earlier this month that its revised disability claims procedure regulations will indeed take effect on April 1, 2018.  The DOL stated that it received few substantive comments with quantitative data on the burdens imposed by the regulations.  Moreover, the DOL found

For an update on the status of the revised claims procedure regulations, see here.

The Department of Labor’s Employee Benefits Security Administration (EBSA) has announced, via final rule, that it is delaying the applicability of revised claims procedures that would have applied to disability benefit plans governed by ERISA.  The revised claims procedures, which are similar to those that apply to group health plans and include expanded disclosure and translation obligations, were originally scheduled to become effective as of January 1, 2018 and are now slated to take effect on April 1, 2018.  In the meantime, EBSA plans to complete its comment solicitation process, examine the information and data submitted, and take any appropriate next steps.


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Under the Patient Protection and Affordable Care Act (“PPACA”), an applicable large employer may be responsible for an “employer shared responsibility payment” (an “ESRP”) if the employer (a) fails to offer minimum essential health coverage to most (generally, at least 95 percent) of its full-time employees and their dependents, or (b) offers coverage to most, but not all, full-time employees and their dependents, or offers coverage that is not affordable or that does not provide minimum value. However, an employer that falls into one of the above categories will be subject to an ESRP only if at least one of the employer’s full-time employees has enrolled in a qualified health plan through a health insurance exchange and received a premium tax credit.

More colloquially called the “employer mandate” or the “pay or play mandate,” this requirement generally took effect in 2015. The ESRP in 2015 for an applicable large employer that failed to offer minimum essential health coverage was generally $2,080 per full-time employee. If the employer offered minimum essential coverage to most employees, but not all, or coverage was not affordable or did not provide minimum value, the ESRP was generally $3,120 per employee who purchased coverage through a health insurance exchange and received a premium tax credit. Until now, though, the IRS had not issued a description of its process for assessing ESRP liability and, to date, no ESRPs have been assessed against applicable large employers.

Some expected that the ESRPs might not be assessed at all, given recent efforts to repeal and/or replace PPACA. Moreover, President Trump released an Executive Order dated January 20, 2017, directing that the Secretary of Health and Human Services and the heads of all other departments and agencies exercise all authority and discretion available to them waive, defer, grant exemptions from, or delay the implementation of any part of PPACA that would impose a financial burden on health insurers, families, individuals, or purchasers of health insurance. Subsequent guidance from the Department of Treasury, though, released on June 30, 2017, suggested that ESRPs might be imminent. In response to an inquiry from an employer, the Department of Treasury stated that employer shared responsibility payments under the Affordable Care Act are not being waived, reminding employers that “[t]he [January 2017] Executive Order does not change the law; the legislative provisions of the ACA are still in force until changed by the Congress, and taxpayers remain required to follow the law and pay what they may owe.”  And now the IRS has weighed in …
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