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 that none of the comments established that the final rule imposed an unnecessary burden or significantly impaired worker access to disability benefits.

With a looming April 1 deadline, employers and their third party administrators and insurers should review all materials for ERISA plans that provide disability benefits, including plan documents and summary plan descriptions.  Particular attention should be given to reviewing and revising processes and communications used for claims and appeals, as the regulations impact the manner of claims processing and expand the disclosures that must be included in benefit denial notices.

The Internal Revenue Service has released its annual cost-of-living adjustments applicable to employee benefit plans. A year-to-year comparison of limitations applicable to plan sponsors can be found here: Mayer Brown – Annual Limitations Chart 2018.

Reflecting a slight uptick in inflation in the past year, several benefit plan limitation amounts will increase for 2018. Noteworthy changes for retirement plan participants include an increase in the elective deferral limitation for defined contribution plans from $18,000 to $18,500, which is the first such increase since 2015. The limit on compensation taken into account under qualified plans will rise from $270,000 to $275,000.

Health and welfare plan participants will also see some increases in the amounts contributable to health care flexible spending accounts and health savings accounts (although the latter increase comes at a price, namely, an increased minimum deductible for HSA-eligible high-deductible health plans). Small employers taking advantage of the fairly recent opportunity to provide Qualified Small Employer Health Reimbursement Arrangements (QSEHRAs) to eligible employees in 2018 can provide increased reimbursements of up to $10,250, up from $10,050, for family coverage. (QSEHRA maximums for self-only coverage will increase from $4,950 to $5,050.)

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.

Continue Reading Disability Claims Procedure Regulations Delayed… For the Last Time?

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 … Continue Reading The Time Is Now: IRS to Issue First PPACA “Employer Mandate” Assessment Notices in Late 2017