The IRS has provided much-anticipated (and welcome) guidance on mid-year amendments to safe-harbor 401(k) plans. This is favorable guidance that provides greater flexibility to employers that sponsor safe-harbor plans.

Brief Background

Safe-harbor 401(k) plans are excused from performing some nondiscrimination tests in exchange for meeting specified criteria, including providing a minimum employer contribution (either a matching contribution or nonelective contribution) and providing eligible employees with a notice each year. Prior guidance from the IRS (mostly informal) has indicated that employers generally could not make mid-year amendments to safe-harbor plans (unless expressly authorized by the IRS) or would risk losing safe-harbor status for that year. This presumption against mid-year amendments appeared to include amendments to plan provisions that did not relate specifically to safe-harbor status.

A Change in the Presumption

New guidance from the IRS reverses the prior presumption that any mid-year amendment to a safe-harbor plan was prohibited unless expressly permitted. Instead the guidance says that most mid-year amendments are permissible, so long as notice and election requirements are met in cases where the change affects the required content of the safe-harbor notice. Specifically, the guidance provides:

“A change made to a safe harbor plan or to a plan’s required safe harbor notice content does not violate the requirements of [the safe-harbor rules] merely because the change is a mid-year change, provided that (i) if it is a mid-year change to a plan’s required safe harbor notice content, the notice and election opportunity conditions [described in the guidance] are satisfied, and (ii) the mid-year change      Continue Reading...

In its much-anticipated decision in King v. Burwell, the Supreme Court has upheld the availability of the ACA's premium assistance tax credits for individuals purchasing insurance through a federally facilitated exchange, including the exchanges maintained for residents of Kansas and Missouri.

Background. This case addressed a seemingly simple proposition: Whether the phrase "an Exchange established by the State" meant only exchanges actually established and operated by one of the 50 states or the District of Columbia or whether it also included exchanges operated by the federal government in states that declined to establish their own exchanges. If the language meant only exchanges actually established and operated by one of the 50 states or the District of Columbia, the ACA's premium assistance tax credits would not be available to the residents of the 34 states that did not establish their own exchanges. This would have a ripple effect under the ACA by potentially limiting the impact of the individual mandate and the employer mandate and impairing the operation of the individual insurance market.

The Court's Analysis. The Supreme Court concluded that the statutory language (“an Exchange established by the State”) was ambiguous and that its meaning should be interpreted in the context of the broader structure of the ACA. It then held that the overall statutory scheme of the ACA compelled the conclusion that the tax credits should be available to individuals purchasing coverage through federally facilitated exchanges. Otherwise the individual insurance market would be destabilized in states with federally facilitated exchanges, likely leading to      Continue Reading...

The IRS has updated two sets of Q&As on its website to clarify a variety of issues related to ACA reporting on Forms 1094-C and 1095-C. Here are some highlights:

• ALE With No Full-Time Employees. An employer that qualifies as an "ALE member" does not have to report under Code Section 6056 if the employer does not have any full-time employees for any month of the year. This might happen, for example, if an entity is part of a larger group of entities that collectively employ 50 or more FTEs, but the particular entity in question has no full-time employees. This clarification would allow the employer to avoid filing Forms 1094-C and 1095-C, unless the employer actually provides coverage to one or more part-time employees under a self-insured plan sponsored by the employer.
   
• Hand Delivery of Form 1095-C. An employer that is required to distribute Form 1095-C to an employee may hand deliver the Form 1095-C. It was unclear under prior guidance whether the only permitted distribution methods were first class mail and electronic delivery (with consent). 
   
• Employee's SSN Required for Form 1095-C. When reporting individuals to whom coverage is provided (either on Form 1095-B or Part III of Form 1095-C), there is an option to use an individual's date of birth if the individual has not provided an SSN. However, when providing Form 1095-C to an employee, the employer must      Continue Reading...

The IRS has released the 2016 inflation-adjusted amounts for health savings accounts (HSAs) and high-deductible health plans (HDHPs).

HDHP Minimums and Maximums. The minimum annual deductible for an HDHP will be $1,300 for self-only coverage and $2,600 for family coverage. These amounts have not changed from the 2015 amounts. The maximum annual out-of-pocket for an HDHP will increase to $6,550 for self-only coverage and $13,100 for family coverage.

"Embedded" ACA Out-of-Pocket Maximum. The Affordable Care Act also sets out-of-pocket maximums for non-grandfathered plans. For 2016, the ACA maximum will be $6,850 for self-only coverage and $13,700 for family coverage (compared to $6,550 and $13,100 for HDHPs). In addition, recent HHS guidance provides that, beginning in 2016, the self-only ACA out-of-pocket maximum must be "embedded" within the family ACA out-of-pocket maximum, meaning that no individual may be subject to out-of-pocket expenses in excess of the self-only maximum. In the case of a plan intended to be an HDHP, this means that (1) the out-of-pocket maximum cannot exceed the lower maximum applicable to HDHPs, and (2) the out-of-pocket maximum for an individual covered under a family plan cannot exceed the ACA maximum for self-only coverage. 

Example. An HDHP for 2016 has a family deductible of $13,100, with no other cost sharing. This is permissible because it does not exceed either the ACA out-of-pocket maximum limit ($13,700) or the lower HDHP out-of-pocket maximum limit ($13,100). However, the plan must further provide that no member of the family will be required to contribute more than $6,850 toward      Continue Reading...

The Supreme Court heard oral arguments this week in King v. Burwell, the latest challenge to the Affordable Care Act.

At issue in the case is whether the tax credits that are available to subsidize the cost of health insurance coverage are available in all of the public exchanges or just exchanges that are operated by states. If the credits are only available in state-based exchanges, that would severely limit access to the credits, because most states (37 of them) have some form of an exchange operated by the federal government.

This could have an impact beyond individual access to the tax credits. For example, whether and to what extent large employers may be subject to penalty under the "play-or-pay" rules depends on whether and to what extent employees of those employers are able to qualify for tax credits. If tax credits aren't available to employees because the exchange in their state is a federally operated exchange (as in Kansas), the employer might avoid penalties, even if it is not offering the type of coverage required by the play-or-pay rules. 

It's hard to predict how the case will come out. The court is expected to break along the typical ideological lines, with the result depending on how the "swing" votes go. We should have an answer sometime this summer.

A transcript of the oral arguments is here.

The IRS recently issued Notice 2015-16, which represents the first step in yet another significant ACA guidance project that will unfold over the next two years. This project will flesh out the scope and mechanics of so-called “Cadillac” tax enacted as part of the ACA. Here is an overview of the initial guidance.

Background

Beginning in 2018, a 40% excise tax will be imposed on the value of “applicable employer-sponsored coverage” provided to an employee each year, to the extent that value exceeds a threshold amount. The statutory thresholds are $10,200 for self-only coverage and $27,500 for other-than-self-only coverage. There are some potential upward adjustments to the threshold amounts, including for cost of living, although the thresholds are not anticipated to adjust as quickly as the growth in healthcare costs.

Items Included in Applicable Coverage

Notice 2015-16 begins to clarify the coverage that will (and will not) be included in “applicable employer-sponsored coverage” for purposes of the Cadillac tax, in addition to major medical coverage.

• Executive Physicals and HRAs. Executive physical programs and HRAs will be included.
   
• HSAs. Employer contributions to HSAs and employee salary-reduction contributions to HSAs will be included. Employee after-tax contributions (i.e., employee contributions made outside a cafeteria plan) will not be included.
   
• On-Site Clinics. Coverage through on-site clinics generally will be included, but the IRS is considering an exception for on-site clinics that offer only “de      Continue Reading...

With the addition of Wisconsin last week, the Department of Labor (DOL) now has 19 states participating in the collaborative effort to reduce the misclassification of employees as contractors.  The DOL's initiative is a concerted effort to investigate and pursue companies that misclassify employees as contractors to avoid various tax and/or benefit burdens.  Over the last three to four years, the initiative has resulted in a significant number of companies being investigated by the DOL (or a state partner) and the payment of significant back pay amounts to employees.  If your company makes use of independent contractors (contract labor), you should carefully review these arrangements to ensure they are truly contractors and not employees.  Correcting these issues before a government investigation is almost certain to be better for your company.  

The IRS has released the annual cost of living adjustments for various benefit-plan limits. The adjusted amounts will apply for 2015. Here are the highlights:

• Retirement plan elective deferrals (402(g) limit) - $18,000 ($500 increase)
• Retirement plan catch-up contributions - $6,000 ($500)
• Annual additions to a defined contribution plan (415 limit) - $53,000 ($1,000 increase)
• Definition of highly compensated employee - $120,000 ($5,000 increase)
• Annual compensation limit (401(a)(17) limit) - $265,000 ($5,000 increase)

For individuals age 50 and older, these increased limits represent the ability to electively contribute up to $24,000 to a 401(k) plan, 403(b) plan, or governmental 457(b) plan during 2015. 

Inflation-adjusted amounts for high deductible health plans (HDHPs) and health savings accounts (HSAs) were released earlier this year (see prior post here).

New guidance from the IRS and HHS aims to quickly scuttle the use of health plans designed to push the limits of minimum value. These plans (sometimes referred to in the market simply as “minimum value plans,” “MVPs,” or “MV lite”) aimed to reduce cost by excluding coverage for key benefits, such as physician services or inpatient hospitalization, but were nonetheless said to provide minimum value because they qualified under the MV calculator.

The Concept. The idea behind MVPs was to create a plan that would allow a large employer to avoid all penalties under the ACA’s employer shared responsibility mandate at relatively low cost. As minimum essential coverage that provided minimum value, an MVP would allow a large employer to avoid all penalties, so long as the plan was affordable. And due to the relatively low cost, employers could make MVPs affordable with little or no premium subsidy.

But the effect of MVPs was not limited to penalty avoidance by employers. Employees who are offered coverage under an affordable, minimum value plan are ineligible for premium tax credits (PTCs) through state and federal exchanges, even if they turn down the employer-sponsored coverage. And with MVPs, this meant employees could be knocked out of PTC eligibility with an offer of coverage under a plan that intentionally excluded a significant category of benefits (e.g., inpatient hospitalization). This may well have been their undoing.

MV Calculator. Why did this seem to work? It all came down to the MV calculator. Final HHS regulations and      Continue Reading...

Employers considering the look-back measurement method to identify full-time employees for purposes of the ACA’s employer shared responsibility mandate have expressed concern about the impact on employees who are treated as full-time for a stability period but experience a reduction in actual hours of service.

Locked-In Status. Employers recognize that these employees may prefer to drop employer-sponsored coverage upon the reduction in hours. But employers that want to avoid penalty exposure under the ACA must continue to make these employees eligible for coverage, because they are recognized as full-time. And because there is no loss of eligibility, the employees cannot make a voluntary decision to drop coverage in the middle of the year. There is no change in status that will support an election change under the existing 125 plan regulations. The employees are locked-in.

New Election Change. A recent notice from the IRS provides important relief from this problem by adding a new election-change event to the cafeteria-plan rules. An employee can now make a mid-year election to revoke health plan coverage (not including health FSA coverage) upon a reduction in hours of service, if the following conditions are satisfied:

1. The employee has been in a full-time position and changes to a position that is reasonably expected to average less than 30 hours of service per week, even if that change does not result in a loss of health plan eligibility.
    
2. The employee represents to the employer that the employee      Continue Reading...

The IRS has announced that, for plan years ending on or after October 1, 2014 and before October 1, 2015, the Patient Centered Outcomes Research Institute Trust Fund tax (or "PCORI fee") will be $2.08 per covered life, up slightly from the rate of $2.00 per covered life that applied for plan years ending on or after October 1, 2013 and before October 1, 2014.

For insured plans, the PCORI fee is paid by the insurance carrier, but for self-insured plans, the plan sponsor (typically the employer) is responsible for calculating and paying the fee. Payment of the fee is due by July 31 of the year following the calendar year in which the plan year ends. Thus, for example, for plan years ending in 2014, the PCORI fee is due by July 31, 2015. IRS Form 720 must be filed along with payment of the fee.

The announcement (Notice 2014-56) is available here.

The IRS released two new regulation packages today dealing with "cash balance" and other "hybrid" pension plans.They provide some important clarifications on implementation of the "market rate" requirement enacted in 2006 as part of the Pension Protection Act. The market-rate requirement ensures that cash-balance plans do not discriminate against older workers by crediting interest at an unreasonably high rate.

Final Regulations. One package of rules finalizes (at long last) market-rate-of-return regulations under Code Section 411(b)(5) that were proposed in 2010. Among other things, the regulations identify the types of interest-crediting rates that will be considered market rates of return, including:

• the 430(h)(2)(C) segment rates (adjusted or unadjusted),
• the actual rate of return on plan assets (if conditions are satisfied),
• the rate of return on certain regulated investment companies (RICs), and
• a fixed rate of up to 6% (increased from 5% in the proposed regulations).

Interest Rate Floors. The final regulations address the use of an annual or cumulative floor on a variable interest-crediting rate and allow for a floor of up to 5% annually (increased from 4% in the proposed regulations) in connection with any Notice 96-8 rate (e.g., the yield on 30-year Treasury Constant Maturities) and a floor of up to 4% annually in connection with any of the 430(h)(2)(C) segment rates. An investment-based interest-crediting rate (including the rate of return on plan assets) cannot be subject to an annual floor, but may be subject to a cumulative floor      Continue Reading...

The recent decision by the Court of Appeals for the D.C. Circuit in Halbig v. Burwell (here) is certainly a major development in the ongoing saga of health care reform implementation. If it holds up, it would have a significant impact on the ACA as a whole, since both the employer and individual mandates are affected by the presence (or absence) of premium-assistance tax credits.

The IRS has released the 2015 inflation-adjusted amounts for health savings accounts (HSAs) and high-deductible health plans (HDHPs). 

HDHP Minimums and Maximums. The minimum annual deductible for an HDHP will increase to $1,300 for self-only coverage and $2,600 for family coverage. The maximum annual out-of-pocket for an HDHP will increase to $6,450 for self-only coverage and $12,900 for family coverage.

Relationship to ACA Maximum Out-of-Pocket. The Affordable Care Act also sets out-of-pocket maximums for non-grandfathered plans. For 2014, the ACA maximum and the HDHP maximum are the same. But the amounts are indexed at different rates, and for 2015 they will be different. The ACA maximum will be $6,600 for self-only coverage and $13,200 for family coverage (compared to $6,450 and $12,900 for HDHPs). What does this mean? A plan designed to satisfy the ACA maximums will not necessarily qualify as an HDHP. It will need to satisfy the lower maximum applicable to HDHPs. 

Maximum HSA Contribution. The maximum annual contribution to an HSA for 2015 will increase slightly to $3,350 for an individual with self-only HDHP coverage and $6,650 for an individual with family HDHP coverage. Catch-up contributions for individuals age 55 and older are not inflation-adjusted and remain at $1,000 per year.

Recall that these annual maximums are prorated on a monthly basis for an individual who is covered under an HDHP for less than the full year. Also, special rules apply when one or both spouses have HDHP coverage, with the general effect of limiting the household to a single family-level      Continue Reading...

An internal IRS memorandum has provided much-needed clarification on the interaction between the new $500 carryover rule for health FSA plans and eligibility to make contributions to a health savings account (HSA). The conclusions in the memo are generally favorable, but employers wanting to both offer the carryover rule in a health FSA and allow employees to be HSA-eligible will need to carefully design their health FSA plans to take advantage.

Background. In guidance issued last year, the IRS provided limited relief from the use-it-or-lose-it rule that applies to health FSA plans by allowing for a carryover of up to $500 of unused amounts each year. (See my post here.) Among the open questions was how this carryover would affect an individual's eligibility to make HSA contributions and what steps, if any, could be taken to ensure an individual would be HSA-eligible if the individual had a carryover amount. In general, to be HSA-eligible, an individual cannot have any low-deductible health coverage, including coverage under a general-purpose health FSA.

Carryover Affects HSA Eligibility for Entire Year. In this recent memorandum, the IRS confirmed that an individual who has a carryover amount in a general-purpose health FSA is ineligible to contribute to an HSA for the entire carryover year, even after the individual exhausts the balance in the health FSA. For example, if at the end of 2014 an individual has $400 remaining in a general-purpose health FSA and that amount carries over to a general purpose health FSA for 2015, the individual will      Continue Reading...

The IRS released its long-anticipated guidance today on the impact of the Windsor case to qualified retirement plans. The guidance resolves a potentially thorny issue on retroactive recognition of same-sex marriages and clarifies when plans must adopt any amendments required to comply with Windsor. Here are the highlights:

Retroactivity Permitted But Not Required. Plans are not required to recognize same-sex marriages for any period before June 26, 2013 (the date of the Windsor decision). They are permitted to designate an earlier date as of which same-sex marriages will be recognized for plan purposes, although the guidance observes that recognizing same-sex marriages for all purposes as of a date earlier than June 26, 2013 may trigger requirements that are difficult to implement retroactively and may create unintended consequences, so caution must be exercised. 

Amendments May Not Be Necessary. A plan must be amended to reflect the outcome in Windsor only if the plan terms are inconsistent with Windsor. For example, a plan that defines a spouse as only a person of the opposite sex would be inconsistent with the outcome in Windsor. But a plan that merely uses the term "spouse" or "lawful spouse" without limiting it to persons of the opposite sex may be ok.

Amendment Timing. To the extent an amendment is required, it generally must be adopted by December 31, 2014. (Special rules may apply for non-calendar-year plans and governmental plans.)

Health and Welfare Plans Unaffected. This guidance addresses only retirement plans and does not impact health and welfare plans. 

The IRS's notice (Notice      Continue Reading...

On February 12, 2014, the IRS published its long-awaited final regulations on the employer play-or-pay mandate under health care reform (here). Although the final regulations do not make significant wholesale changes to the proposed regulations, they do provide some important clarifying rules and transitional guidance that will help smooth the path to full implementation of the employer shared responsibility mandate.

Background. By way of brief background, the employer shared responsibility (pay-or-play) mandate under health care reform requires an "applicable large employer" (generally an employer with 50 or more full-time-equivalent employees) to offer affordable, minimum value health insurance coverage to its full-time employees (defined as employees working an average of 30 or more hours per week). Applicable large employers that fail to offer minimum essential coverage to at least 95% of their full-time employees generally face an annual penalty of $2,000 per full-time employee, if at least one of the employer's full-time employees obtains subsidized coverage through the public insurance exchange. Applicable large employers that offer minimum essential coverage to at least 95% of their full-time employees but do not ensure that the coverage is both affordable and provides minimum value generally face a penalty of $3,000 per full-time employee that obtains subsidized coverage through the public exchange. Key issues under these rules include determining who is an applicable large employer, who is a full-time employee, and whether coverage offered to an employee is affordable.

Details, Details. The specific provisions of the final regulations touch on many different areas to a degree      Continue Reading...

In new final amendments to the 401(k) safe harbor regulations (here), the IRS has provided some additional flexibility on mid-year reductions or suspensions of safe harbor contributions but also has added some new requirements. The regulations apply to amendments adopted after May 18, 2009, except that the additional requirements for mid-year reductions or suspensions of safe harbor matching contributions apply for plan years beginning on or after January 1, 2015.

Background. Safe harbor 401(k) plans are exempt from certain nondiscrimination testing requirements but must meet specific requirements related to employer contributions and vesting and must provide an annual notice. The employer contribution requirement is satisfied through either a matching contribution or a "nonelective" contribution. Safe harbor plan provisions generally must be adopted at or before the beginning of a plan year and must remain in effect for the entire plan year.

Because safe harbor plan provisions must remain in effect for the entire plan year, employers generally have been prohibited from reducing or suspending safe harbor contributions in the middle of a plan year. A limited exception has been available for safe harbor matching contributions, which could be reduced or suspended with at least 30 days advance notice, so long as participants were given an opportunity to change their deferral elections. Before 2009, however, safe harbor nonelective contributions could not be reduced or suspended during the plan year. Proposed regulations issued in 2009 permitted a narrow exception allowing for reduction or suspension of safe harbor nonelective contributions in cases of substantial      Continue Reading...

In new guidance issued late last week (here), the IRS tackled a long-standing issue with cafeteria plans: the requirement that all dollars be used by the end of the plan year or be forfeited. Employees can now be allowed to carryover up to $500 remaining in a health FSA account at the end of the year and use it at any time during the following year. But there are some conditions and limitations, and it's not clear that this approach will be ideal for all plans. Here's what you need to know.

Optional. Employers are not required to add the carryover option to their health FSA plans. But if they do want to add the option, they must timely amend their plans and make sure they meet the other conditions for offering the carryover. Also, employers are not required to allow carryover of the full $500. They could specify a lower carryover amount.

Relationship to $2,500 Cap. Amounts carried over from one plan year to the next under this guidance do not count against the $2,500 cap on salary reduction contributions for the carryover year. So, for example, an employee could carryover $500 from the 2014 plan year into the 2015 plan year and make a $2,500 salary reduction election for the 2015 plan year, giving the employee a total of $3,000 available during the 2015 plan year.

Grace Period. A plan cannot offer both the carryover option and a grace period option. It must be one or the other. This leads      Continue Reading...

The IRS has released the annual cost of living adjustments for various tax-related items, including benefit plan limits (see here, here, and here). The adjusted amounts will apply for 2014. For the most part they reflect no increase or only a modest increase over 2013 levels. Here are the highlights:

• Retirement plan elective deferrals (402(g) limit) - $17,500 (unchanged)
• Retirement plan catch-up contributions - $5,500 (unchanged)
• Annual additions to a defined contribution plan (415 limit) - $52,000 ($1,000 increase)
• Definition of highly compensated employee - $115,000 (unchanged)
• Annual compensation limit (401(a)(17) limit) - $260,000 ($5,000 increase)
• Social security taxable wage base - $117,000 ($3,300 increase)

Inflation-adjusted amounts for high deductible health plans (HDHPs) and health savings accounts (HSAs) were released earlier this year (see prior post here).

In another round of post-Windsor guidance (here), the IRS has provided some alternative processes for obtaining refunds of employment taxes (FICA tax and withheld income tax) paid with respect to same-sex spouses prior to the Supreme Court's decision in Windsor (e.g., for coverage under a cafeteria or health plan).

Overpayments for 2013. With respect to taxes paid in 2013, there are two alternative procedures for claiming a refund: (1) the employer may true-up the entire year's withholding on its fourth quarter 2013 employment tax return (Form 941); or (2) the employer may file a single amended employment tax return (Form 941-X) for the fourth quarter of 2013 to reflect the correct withholding amounts for the entire year. Both of these approaches allow employers to avoid filing amended returns for each quarter of the year to correct the withholding for that quarter.

For the third quarter of 2013 (July-September), employers should report on the employment tax return for that quarter the amount of taxes actually withheld and not refunded by the end of the quarter. For example, if an employer adjusted its withholding system effective August 1, 2013 and also refunded any taxes withheld in July 2013, then it would not report any of those withheld amounts on its Form 941 for the third quarter. But if it did not refund the July taxes by the end of the third quarter, then those taxes should be reported on the third quarter return and a refund claimed by way of one of the methods      Continue Reading...

A continuing area of uncertainty under health care reform has been the treatment of health reimbursement arrangements (HRAs) and other arrangements that might be used to allow employees to purchase health insurance through individual policies with the employer subsidizing some or all of the cost. A new notice from the IRS, HHS, and DOL (here) provides some clarity on these - and some related - issues.

Employer Payment Plans. As a preliminary matter, this guidance gives us a new term: "employer payment plan." This refers to an arrangement by which an employer provides payment or reimbursement of individual market insurance premiums in the manner described in an old Revenue Ruling (Rev. Rul. 61-146). Historically, these employer payment plans have been permissible and have allowed employers to provide pre-tax subsidies of individual market coverage.

Integration of Plans with Individual Market Coverage. A concern with HRAs and employer payment plans is that they may be treated as violating two key health care reform mandates: the prohibition on annual limits and the requirement to provide no-cost preventive care services. Previous FAQ guidance (see coverage here) said that HRAs would be treated as satisfying the annual limit rule if they were "integrated" with other coverage that satisfies the annual limit rule.

This guidance effectively confirms that treatment and provides a similar rule for preventive care. But the guidance goes on to say that HRAs and employer payment plans may not be treated as integrated with individual market coverage. Thus, an HRA or employer payment plan      Continue Reading...

The IRS has provided an expected, but welcome, clarification (see Notice here) regarding the impact of providing no-cost preventive care services under a high-deductible health plan. 

Background. To be eligible to contribute to a health savings account (HSA), an individual must be covered under a qualifying high-deductible health plan (HDHP) and must not be covered under any low-deductible coverage, other than permitted coverage. Permitted coverage incudes coverage for preventive care services within the meaning of Internal Revenue Code Section 223(c)(2)(C). 

Health Care Reform. Under health care reform, non-grandfathered health plans are required to offer specified preventive care services without cost sharing. This rule applies to non-grandfathered plans that otherwise meet the requirements to be an HDHP. But the preventive care services required under health care reform are not quite the same as preventive care services described in guidance under Code Section 223(c)(2)(C). And, of course, there cannot be a deductible. So we have wondered: Will compliance with the preventive care mandate under health care reform risk causing a plan to no longer qualify as an HDHP?

Guidance. The assumption has been that the IRS would not view preventive care services provided in accordance with health care reform as impermissible low-deductible coverage. Otherwise HDHPs could effectively no longer exist, unless they remained grandfathered.

That assumption has now been confirmed: "[A] health plan will not fail to qualify as an HDHP under section 223(c)(2) of the Code merely because it provides without a deductible the preventive care health services required under section 2713 of the PHS Act to      Continue Reading...

We have been anticipating guidance from the IRS on the treatment of same-sex spouses for tax and benefit purposes in light of the Supreme Court's overturning of DOMA, and here it is.

Married Anywhere. Rev. Rul. 2013-17 (here) says that a same-sex couple validly married anywhere (including in a foreign country) will be recognized as married for federal tax purposes, even if their marriage is not recognized under the law of their home state. In other words, it’s a state-of-celebration rule, not a state-of-residence rule.

All Tax Purposes. The rule applies for all tax purposes, including employee benefits. So in addition to filing joint tax returns, same-sex spouses may obtain tax-free coverage for each other under health or cafeteria plans and are entitled to spousal rights under 401(k) and other qualified retirement plans. Also, medical expenses incurred by one spouse in a same-sex marriage will qualify for reimbursement from a flexible spending account or health savings account maintained by the other spouse. Recognition of the same-sex marriage may present an issue for participants in dependent care assistance plans, because the spouse's income and employment must now be taken into account.

Retroactivity. Individuals in existing same-sex marriages may go back and claim a refund for taxes on any imputed income that resulted from coverage of a same-sex spouse or children of a same-sex spouse under a health or cafeteria plan. Employers may also be able to obtain refunds of employment taxes imposed on imputed income. The refunds are limited to years for which the statute      Continue Reading...

Final tri-agency regulations were released recently on the religious employer exemption from health care reform's contraception mandate, and there is little change from the approach outlined in the proposed regulations (see discussion here). In short, the regulations finalize a moderate expansion of the definition of "religious employer," but continue to require religiously affiliated nonprofit organizations to seek an "accommodation" that allows individuals covered under their plans to obtain contraception coverage at no cost through an insurance carrier.

Applicability Date. A key piece of the final regulations is the effective-date provision, which provides nonprofit organizations some additional time to comply with the accommodation requirement. The regulations generally apply for plan years beginning on or after January 1, 2014, rather than applying for plan years beginning on or after August 1, 2013, as previously expected. Nonprofit organizations that had been relying on a one-year safe harbor from application of the mandate (see description here and here) may continue relying on the safe harbor until the first plan year beginning on or after January 1, 2014. CMS has updated its guidance on the nonenforcement safe harbor (here). 

Definition of Religious Employer. The definition of religious employer is unchanged from the proposed regulations. Although not intended to expand the number of organizations that qualify as religious employers, the change is intended to clarify that religious employers providing educational, charitable, and social services may qualify for the exemption even though some of their constituents or employees may not be of the same      Continue Reading...

It’s been a big week for employee benefits law, starting with the Supreme Court’s Windsor decision on DOMA last Wednesday, the administration’s release of a final rule on the religious employer exemption to the contraception mandate, and now a surprise temporary reprieve for employers from the play-or-pay penalties that were scheduled to take effect in 2014.

Transition Relief. In a blog post published quietly on Tuesday afternoon, a senior Treasury Department official said that the administration had been listening to concerns raised by employers about the time needed to implement various aspects of the health care reform law and would be publishing formal guidance within the next week delaying enforcement of the employer shared responsibility (or “play-or-pay”) mandates until 2015. However, the post affirmed that qualifying individuals purchasing health insurance coverage through exchanges in 2014 would continue to have access to premium assistance tax credits. And a related post on the White House Blog asserted that exchange implementation is proceeding "full steam ahead" and is "on target."

What Does the Delay Mean? We won’t know all the specifics until the formal guidance is released (and even then there are likely to be questions). But in broad terms, it appears that large employers will not need to be ready to comply with the play-or-pay requirements until at least January 1, 2015. So, for example -

• It may not be necessary to implement the look-back measurement period regime until later this year, or perhaps even 2014.
     Continue Reading...

An internal IRS memorandum released this week provides informal guidance clarifying that the PCORI trust fund tax is generally deductible for income-tax purposes when paid by an insurer or the sponsor of a self-insured plan.

By way of brief background, the PCORI trust fund tax is a $1 (increasing to $2) tax on the average number of covered lives under a health insurance policy or self-insured health plan. It funds the Patient Centered Outcomes Research Institute, which studies the comparative effectiveness of medical treatment options.

Given the relatively small dollar amount of the tax when calculated for a single employer, the ability to deduct the tax will not make a huge difference. But it is a welcome clarification just the same.

Reminder. For plans with plan years ending after October 1, 2012 and on or before December 31, 2012, the tax must be paid and a return filed by July 31, 2013. The IRS recently published drafts of the Form 720 and related instructions that must be used to pay the tax.

The IRS has released the 2014 inflation-adjusted amounts for health savings accounts (HSAs) and high-deductible health plans (HDHPs). The changes are not large, but most of the key metrics will see some increase.

HDHP Minimums and Maximums. The minimum annual deductible for an HDHP will remain unchanged at $1,250 for self-only coverage and $2,500 for family coverage. The maximum annual out-of-pocket for an HDHP will increase to $6,350 for self-only coverage and $12,700 for family coverage.

>>Why do we care? Whether health coverage qualifies as HDHP coverage is important because an individual must have HDHP coverage to be eligible to contribute to an HSA.

>>Interaction with health care reform. These amounts relate only to compliance with the HSA requirements. Health care reform will impose further limits on deductibles and out-of-pocket maximums beginning in 2014 (see prior coverage here), and plans will need to satisfy those requirements in addition to the conditions necessary to be an HDHP.

Maximum HSA Contribution. The maximum annual contribution to an HSA for 2014 will be $3,300 for an individual with self-only HDHP coverage and $6,550 for an individual with family HDHP coverage. Catch-up contributions for individuals age 55 and older are not inflation-adjusted and remain at $1,000 per year.

Recall that these annual maximums are prorated on a monthly basis for an individual who is covered under an HDHP for less than the full year. Also, special rules apply when one or both spouses have HDHP coverage, with the general effect of limiting the household to a single family-level HSA      Continue Reading...

Buried deep within new regulations on the arcane "minimum value" requirement is important new guidance on how employer wellness incentives will impact both the minimum value and affordability analysis with respect to employer-provided health coverage.

Most Wellness Impact is Disregarded. The rule described in the regulation is fairly simple, although not favorable to employers. For purposes of determining whether health coverage is affordable to employees, any reward associated with participation in a wellness program (other than related to tobacco use) is ignored. This generally has the effect of increasing the amount the employee is treated as contributing toward the cost of coverage, thereby making the coverage less affordable.

Example. Assume, employees generally are required to pay $200 per month for employee-only coverage. But if the employees participate in a health risk assessment and basic biometric screening, they receive a discount of $50 per month (making the monthly cost $150). For purposes of determining whether the coverage is affordable, the employees are treated as having to pay $200 per month for coverage, even though they may actually qualify to pay only $150 per month.

There is a similar rule for minimum value, to the extent the wellness incentive impacts the cost-sharing structure of the plan (deductible, coinsurance, or copayments). Non-tobacco wellness programs are ignored in determining the plan's cost sharing, which impacts the determination whether the plan provides minimum value. For example, if a plan has a $2,000 deductible but provides a $500 reduction for participating in a non-tobacco-related wellness plan, the plan      Continue Reading...

We are now up to Part XV of the tri-agency FAQs providing guidance on various ACA-related issues.

The most important guidance in these FAQs relates to the treatment of mini-med plans that obtained a waiver from the prohibition on annual limits. But the FAQs also acknowledge, in so many words, that there are some issues on which further guidance simply will not be provided before 2014, so we're going to have to use our best judgment.

Changing the Plan Year on Mini-Med Plans. Employers and insurance carriers offering mini-med plans were required to obtain a waiver from the prohibition on annual limits. Under the waiver program, plans were allowed to continue until the end of the plan year ending in 2014. Creative employers and carriers began exploring whether they could change their plan years now and effectively extend waiver through most of 2014. For example, a plan with a plan year ending June 30 might change to a plan year ending November 30 and rely on the waiver until November 30. 

These FAQs provide, unequivocally, that a change in the plan year will not be effective to extend a plan's waiver. The waiver only applies until the end of the plan year ending in 2014, based on the plan year the plan was using when it applied for the waiver.

In other words, nice try.

Why would this matter? Well, it now appears that mini-med coverage extending into 2014 will be sufficient to allow employers with fiscal year plans to avoid some of the      Continue Reading...

The latest set of Affordable Care Act FAQs (Part XIV) announces the release of updated templates for the SBC and uniform glossary. The updated templates are designed to provide employers and insurers with tools to comply with the SBC requirement for the second year of applicability.

Note that many fiscal-year plans may not yet have begun their first year of applicability for the SBC requirement, which essentially begins with the first open-enrollment period beginning on or after September 23, 2012.

Limited Template Changes. The updated templates reflect only two significant changes. They add language for describing whether the coverage does (or does not) provide minimum essential coverage (MEC), and they add language for describing whether the coverage does (or does not) provide minimum value (MV). There is no change in the language describing whether benefits are (or are not) subject to annual limits, and the template keeps the same two coverage examples (childbirth and diabetes).

Extended Enforcement Relief. Perhaps the most significant guidance in the FAQs is an extension of much of the helpful enforcement relief that was provided through previous FAQs. For example:

• Compliance emphasis. IRS, DOL, and HHS will continue to emphasize "assisting (rather than imposing penalties on) plans, issuers and others that are working diligently and in good faith to understand and come into compliance with the new law" (Part VIII, Q2) and "will not impose penalties on plans and issuers that are working diligently and in good faith to comply" (Part IX, Q8).
     Continue Reading...

HHS, DOL, and IRS recently proposed regulations interpreting the health care reform mandate limiting health plan waiting periods to no more than 90 days. The guidance is fairly straightforward, but does not include one clarification we were anticipating: 3 months cannot be used as a substitute for 90 days. 90 days means 90 days. Period.

What is a waiting period? Under the rules, a waiting period is any period of time that must pass before coverage may become effective for anyone who has otherwise satisfied the plan's eligibility criteria. Eligibility criteria that are based solely on the lapse of a time period count as part of the waiting period. So, for example, if a plan requires employees to work in a particular job classification to be eligible for coverage, time spent working in an ineligible job classification does not count as a waiting period, and the 90-day period may be imposed once an employee moves to an eligible job classification. But if a plan merely requires 60 days of full-time employment to become eligible, those 60 days of employment count toward the waiting period, so another 90 days may not be imposed.

Variable-hour employees. We know from the regulations on the look-back measurement method (see coverage here) that we may need some time (up to 12 months or so) to determine whether a variable-hour employee meets an eligibility requirement relating to average hours worked. These proposed regulations clarify that the period during which a variable-hour employee's hours of service are being measured      Continue Reading...

We have been thinking and talking about Section 409A for more than 8 years now, but most of that discussion has been hypothetical. We have pursued compliance with Section 409A, but have been left to wonder: What would actually happen if an arrangement violated Section 409A? Is the IRS monitoring compliance or enforcing these requirements?

Well now we have some answers.

A federal court recently issued a ruling (here) dealing with the consequences under Section 409A of a discounted stock option arrangement. In addition to providing some specific legal analysis on Section 409A issues, the court’s decision provides some insights into how a case like this might arise.

Background. The case involves a founder and senior executive of a technology company (Marvell Semiconductor) who was granted stock options in 2003. In the wake of the various stock option backdating scandals, the company reviewed its option program and repriced the 2003 option grant. As a result, the executive paid over $5,000,000 in additional exercise price, presumably reflecting that the options had been substantially discounted when awarded.

The IRS Takes Notice. Disclosures regarding this repricing must have caught the IRS’s attention. In 2010, it issued the executive a notice of deficiency to the executive assessing additional taxes and penalties under Section 409A in excess of $3,000,000. The executive paid the assessed amounts and then sued to obtain a refund, arguing that the option arrangement was not governed by Section 409A.

The Court’s Analysis. The court made several important rulings regarding the impact of Section 409A for      Continue Reading...

Two more sets of tri-agency FAQs have been released, providing additional interpretive guidance on the Affordable Care Act. They are Part XII and Part XIII in the series.

Cost-Sharing Limitations. Part XII includes two important clarifications on the cost-sharing limitations that will apply to group health plans beginning in 2014.

(1) Deductible. The rule that limits the annual deductible under a plan to $2,000 for self-only coverage and $4,000 for family coverage will apply only to non-grandfathered plans in the individual and small-group markets. Grandfathered plans and large-group plans will be permitted to impose higher deductibles. This may be important for large-group plans that want to offer an option with a high deductible that meets the minimum requirements for a 60% actuarial value plan.

(2) Out-of-pocket maximum. The rule that limits overall cost-sharing under a plan to $5,000 for self-only coverage and $10,000 for family coverage will apply to all non-grandfathered plans. So even large-group plans will be limited.

Preventive Care. Part XII also provides detailed guidance on miscellaneous issues related to the requirement for non-grandfathered plans to offer preventive-care services without cost-sharing. Some highlights:

(1) Out-of-network services. Plans generally are permitted to impose cost-sharing with respect to preventive-care services obtained out of network. However, if a service that is required to be covered by the plan is not available through any in-network provider, the plan must cover the out-of-network service without cost-sharing.

(2) Over-the-counter items. Some of the covered preventive-care items include over-the-counter drugs and devices, such as aspirin. A plan is only      Continue Reading...

Note: This is one in a series of posts addressing new rules from the IRS that may be used to determine which employees are full-time employees for purposes of applying the play-or-pay penalties under health care reform. Although the penalties do not become effective until 2014, it may be necessary to begin collecting data on employees soon, so it's a good time to begin thinking about these rules.

Let's review what we know from the previous posts in this series.

(1) It's important to identify full-time employees, because if we want to avoid the play-or-pay penalties, we have to make sure all full-time employees are offered appropriate coverage. 

(2) In many cases, we can determine whether an employee is full-time or not by looking at hours worked over a prior period, known as the measurement period.

(3) An employee's status for a measurement period remains the same during a stability period associated with that measurement period.

(4) We can utilize a brief administrative period between a measurement period and a stability period to allow time for such things as making enrollment elections and allowing coverage to become effective at the beginning of a month or year.

(5) When applying the look-back measurement method, it's useful to distinguish between new hires and ongoing employees. New hires that are reasonably expected to be full time upon hire must be offered coverage within 3 months. New hires that are variable hour or seasonal employees do not have to be offered coverage until the end of an initial measurement period,      Continue Reading...

If you sponsor a 403(b) retirement plan - which might be the case if you are a 501(c)(3) organization or a governmental educational agency - you are required to maintain a written plan document for the plan. This hasn't always been the law, however. The plan-document requirement began in 2009 when the current 403(b) regulations went into effect.

Some plans have yet to come into compliance with this rule. In most cases this is not due to willful disregard of the law. Rather, plan sponsors may not understand the requirement or - more likely - they may think they have a plan document, because they have entered into an annuity contract or custodial agreement with the investment provider for the plan. But that contract typically will not satisfy all the requirements of a plan document. 

Well, if you happen to sponsor a 403(b) plan that hasn't yet fully complied with the plan-document requirement, the IRS has a deal for you. Under a recently released update to its Employee Plans Compliance Resolution System or "EPCRS" (see here), the IRS has outlined a specific procedure for correcting this problem. It requires filing an application with the IRS and paying a fee. But the relief and peace of mind it provides is nearly priceless.

And there's even better news: If you file your application to correct this problem by December 31, 2013, the required fee is half of what it would be normally. For example, a plan with 51 to 100 participants would typically pay      Continue Reading...

The IRS, DOL, and HHS have proposed two key changes in the rules that exempt certain religious employers from complying with the mandate to cover all FDA-approved contraception and sterilization procedures for women (see proposed rules here). 

1. Definition of Religious Employer

Employers that are "religious employers" are wholly exempt from compliance with the mandate. The new rules would modify the definition of religious employer slightly. The definition would still be limited to houses of worship (churches, synagogues, mosques, and the like) and religious orders. But the change would clarify that those organizations will not fail to be religious employers even if they also provide educational, charitable, or social services, without regard to whether the persons served share the same religious values.

Example. A church with a parochial school that employs teachers or serves students who are not necessarily of the same religious faith may still qualify as a religious employer.

2. Broader Accommodation for Non-Profit Religious Organizations

A non-profit organization that is not a church or religious order but that meets specified criteria would be provided an "accommodation" exempting the organization from directly providing contraceptive coverage. The criteria are:

• The organization opposes some or all of the required contraceptive coverage on religious grounds
• The organization is a non-profit entity
• The organization holds itself out as a religious organization
• The organization self-certifies that it meets the first three criteria

This change is intended to exempt organizations such as religious-affiliated non-profit institutional health care      Continue Reading...

The IRS, DOL, and HHS have released their 11th series of FAQs (here) addressing various issues related to health care reform implementation.

Exchange Notice Requirement. In a helpful clarification, the agencies confirmed that employers will not have to provide a notice to employees regarding insurance exchanges until “regulations are issued and become applicable.” By statute, the notice is required to be distributed by March 1, 2013. This guidance effectively allows employers to delay compliance until further notice.

Stand-Alone HRAs. Three of the FAQs address issues related to health reimbursement arrangements (HRAs). The technical clarifications are as follows:

(1) An HRA cannot be treated as “integrated” with individual insurance coverage.

(2) An HRA can only be treated as “integrated” with major-medical coverage if participation in the HRA is conditioned on being enrolled in that major-medical coverage.

(3) Most amounts credited to an HRA before January 1, 2014, will continue to be available for reimbursements on and after January 1, 2014 without causing the HRA to violate the annual-limit rules under Section 2711 of the Public Health Service Act.

While all of this seems straightforward enough, the proverbial elephant in the room is the fundamental question whether stand-alone HRAs will be deemed to violate the prohibition against annual and lifetime limits under Section 2711 of the Public Health Service Act. These FAQs are the strongest indication yet that future guidance will say they do violate the prohibition, effectively eliminating stand-alone HRAs. 

Plan sponsors that maintain stand-alone HRAs - or are considering implementing one for 2014 - will want      Continue Reading...

Note: This is one in a series of posts addressing new rules from the IRS that may be used to determine which employees are full-time employees for purposes of applying the play-or-pay penalties under health care reform. Although the penalties do not become effective until 2014, it may be necessary to begin collecting data on employees soon, so it's a good time to begin thinking about these rules.

Now that we’ve got a handle on the general rules - measurement periods, stability periods, new hires, and ongoing employees - let’s look at a couple of nuanced points: rehired employees and employees who change job classifications.

Rehires - General Rule. Here’s the basic question with a rehired employee: Should the employee be treated as a new hire (meaning she starts over on plan eligibility) or should the employee retain the classification she had when she terminated?

For better or worse, the rule on this is pretty clear. If the period of time between termination and rehire is at least 26 weeks, then the employee is treated as a new hire. If not, then the employee generally retains the same classification she had when she terminated, at least for the remainder of that stability period.

Example 1. A long-term employee terminates employment on February 10, 2014. At the time of termination, the employee was being treated as a full-time employee for a 12-month standard stability period that began January 1, 2014. The employee is then rehired on June 30, 2014. Because the rehire date is less      Continue Reading...

Note: This is one in a series of posts addressing new rules from the IRS that may be used to determine which employees are full-time employees for purposes of applying the play-or-pay penalties under health care reform. Although the penalties do not become effective until 2014, it may be necessary to begin collecting data on employees soon, so it's a good time to begin thinking about these rules.

As we’ve noted, these rules on full-time employees apply differently depending on whether the employee in question is a new hire or an “ongoing employee,” and we've looked previously at the impact on new hires. So let’s look at them in the context of ongoing employees. Here's the good news: It’s pretty straightforward.

Ongoing Employee Defined. We first need to start with a definition of “ongoing employee,” so we know how to distinguish them from new hires. An ongoing employee is an employee who has been employed for one full standard measurement period. That’s it. So once you know what your standard measurement period is, you know how to identify your ongoing employees.

Test Everyone, Every Period. All ongoing employees will be tested for full-time status during each standard measurement period. It doesn’t matter whether they were previously full-time or not. At the end of each standard measurement period we’ll look back at the hours worked by each ongoing employee during that period and determine whether they averaged 30 or more hours per week. If so, they must be treated as full-time for the associated      Continue Reading...

The IRS has released important new guidance on the play-or-pay penalties under Internal Revenue Code Section 4980H in the form of proposed regulations (here) and a set of FAQs (here). The guidance comprehensively addresses a number of key issues regarding the penalties and steps that may be taken to avoid them. For the sake of brevity, only a few highlights will be noted here.

Covered Employers. All common-law employers that are “applicable large employers” (generally 50 or more FTEs) are subject to the penalty rules, including tax-exempt and governmental entities.

Entity Aggregation. The Code's entity-aggregation rules (relating to controlled groups and affiliated service groups) apply for purposes of determining whether an entity is an “applicable large employer.” However, in an important clarification, the regulations confirm that each member of a controlled or affiliated group is allowed to determine separately whether it will comply with the requirements of Section 4980H or pay the penalty, and non-compliance by one group member will not be imputed to other group members.

"All" Full-Time Employees Means 95%. The requirement to offer minimum essential coverage to all full-time employees will be satisfied if the employer offers coverage to at least 95% of its full-time employees (or, if less, all full-time employees but five). This is a welcome interpretation of the statutory language that, at a minimum, will provide some protection against inadvertent failures to comply.

Dependents. The regulations confirm that Section 4980H requires offering coverage to both full-time employees and their dependents. However, the rules define “dependent” to      Continue Reading...

Note: This is one in a series of posts addressing new rules from the IRS that may be used to determine which employees are full-time employees for purposes of applying the play-or-pay penalties under health care reform. Although the penalties do not become effective until 2014, it may be necessary to begin collecting data on employees soon, so it's a good time to begin thinking about these rules.

Prior posts in this series have addressed the structural rules that will apply to the process of determining which employees are full-time employees - things like measurement, stability, and administrative periods. Now it’s time to start looking at how these rules will apply to some specific classifications of employees.

Employees may be initially sorted into one of two groups: new hires and ongoing employees. This post will discuss the treatment of new hires. I’ll discuss ongoing employees in the next post in this series.

New hires will be treated one of two ways.

1. New Full-Time Employees. If, based on the facts at the time of hire, the new employee is reasonably expected to work full time right away (average of 30 or more hours per week) and is not a seasonal employee, the employee must be treated as a full-time employee immediately. Employees hired as full-time employees must be offered coverage within 3 months to avoid penalty exposure.

2. New Variable-Hour Employees. If, based on the facts at the time of hire, it cannot be determined whether the employee will be full time because the employee’s      Continue Reading...

The IRS has released several guidance items on the new Medicare taxes that take effect beginning January 1, 2013:

• Proposed regulations on 0.9% additional Medicare tax on earned income (here).
• Updated Questions and Answers for the Additional Medicare Tax (here).
• Proposed regulations on the new 3.8% Medicare tax on net investment income (here). 
• Net Investment Income Tax FAQs (here).

There is considerable detail in all of this, but here are a few highlights:

Additional Medicare Tax on Wages

• The employer must begin withholding the 0.9% after $200,000 in taxable wages paid. The employee may not opt out of withholding, even if the employee will not owe the tax.
• Withholding by an employer may not be sufficient to cover all tax actually due by an employee, so the employee may be required to make estimated-tax payments. This can occur when, for example, two married individuals have combined wages that exceed the threshold amount, but neither individual's wages exceed $200,000.
• If an employer employs two married individuals, the employer is not required to withhold the additional tax from either employee unless and until that employee's wages exceed $200,000. This is the case even if the combined wages paid to the two employees exceed $250,000 (meaning the employees will be subject to the tax).
• If wages are paid to a single employee by two or more related      Continue Reading...

The IRS has released its final rule on the Patient-Centered Outcomes Research Institute (PCORI) trust-fund tax.

Background on the tax and the proposed regulation released earlier this year is here.

The final regulation does not make significant changes to the proposed rule. It is mostly significant for it is confirmation of certain positions that health insurers and health-plan sponsors had sought relief on, including:

• Retiree-Only Plans. The tax applies to retiree-only plans, even though those plans are generally exempt from the group-market reforms enacted as part of the Affordable Care Act.
• COBRA Coverage. Individuals receiving COBRA coverage under a plan are counted as covered lives for purposes of the tax.
• Integrated Insured and Self-Funded Coverage. The tax applies to both the insured and self-funded portions of a plan or arrangement, when the same individual is covered under both portions. For example, if a plan provides fully insured high-deductible coverage integrated with a self-funded HRA, the tax applies to both the insured portion and the self-funded HRA. However, if a plan includes an insured option and a self-funded option as alternatives (i.e., an individual may be covered under one or the other but not both), the tax may be calculated separated for each option under the plan, meaning individuals receiving only insured coverage do not have to be counted for purposes of calculating the tax on the self-funded coverage.
• HRAs and Health FSAs. There is no blanket exclusion for      Continue Reading...

The IRS, DOL, and HHS have issued a joint proposed regulation addressing wellness plans and the wellness exception to the HIPAA nondiscrimination rules. 

Background. Section 2705 of the Public Health Service Act, as added by the Affordable Care Act, provides statutory affirmation of the wellness-plan rules that have existed by regulation for several years as part of the HIPAA nondiscrimination rules (rules that prohibit, among other things, discrimination on the basis of health factors). It also gives the relevant governmental agencies (IRS, DOL, and HHS) express authority to issue further rules on wellness plans that increase the permissible reward or penalty to as much as 50% of the cost of associated heath-plan coverage.

Proposed Regulations. The proposed regulations largely follow the structure of the existing wellness-plan regulations, requiring, among other things, that wellness programs requiring a particular health outcome (e.g., smoking cessation, biometric screening results, minimum BMI, etc.) provide reasonable alternatives and limit the reward or penalty offered or imposed in connection with the plan. However, there are a couple of points worth highlighting:

• Participation v. Health-Contingent. The proposed regulations label wellness programs as either "participatory" or "health-contingent." It is only the health-contingent programs that are subject to more rigorous regulation under the proposed rules. Participatory programs include fitness-club memberships, general health education, and other similar programs that do not provide for a reward or include any conditions based on satisfying a standard related to a health factor.
• Size of Reward. The requirements that must      Continue Reading...

Note: This is one in a series of posts addressing new rules from the IRS that may be used to determine which employees are full-time employees for purposes of applying the play-or-pay penalties under health care reform. Although the penalties do not become effective until 2014, it may be necessary to begin collecting data on employees soon, so it's a good time to begin thinking about these rules.

As we have already seen, an employer may use a measurement period to determine whether an employee is a full-time employee, and any such full-time employee must be offered health-plan coverage during the following stability period, if the employer wants to avoid an automatic penalty for that employee. But, of course, enrollment can take some time. The employee may have multiple coverage options to consider and enrollment forms to fill out. And the employer will almost certainly need time to calculate the employee's hours of service during the measurement period. So it wouldn't work very well if the stability period had to begin immediately after the measurement period.

A Time For Transition. Recognizing this, the IRS’s guidance allows employers to use an "administrative period" in connection with their measurement and stability periods. This allows for a reasonable transition period between the measurement and stability periods. It also allows the initial measurement period to begin at a convenient time, such as at the beginning of a month or payroll cycle.

Ground Rules. Like the measurement and stability periods, employers have flexibility in defining the administrative period, but      Continue Reading...

The IRS has issued guidance temporarily relaxing certain requirements related to loans and hardship distributions from 401(k), 403(b), and governmental 457(b) plans, in an effort to make those funds more readily available to individuals affected by Hurricane Sandy. The new rules apply to loans and hardship distributions made between October 26, 2012 and February 1, 2013, if they are made for the purpose of assisting plan participants or their family members who live or work in a Sandy-related federally declared disaster area.

As described in an IRS news release:

“This broad-based relief means that a retirement plan can allow a Sandy victim to take a hardship distribution or borrow up to the specified statutory limits from the victim’s retirement plan. It also means that a person who lives outside the disaster area can take out a retirement plan loan or hardship distribution and use it to assist a son, daughter, parent, grandparent or other dependent who lived or worked in the disaster area.”

Highlights of the specific relief provided:

Plan Amendment. Plans can make qualifying loans or hardship distributions before the plan document has been formally amended to allow for loans or hardship distributions, so long as an amendment is made by the end of the first plan year beginning after December 31, 2012.
Broader Hardship Standards. Hardship distributions can be made for any Sandy-related hardship, not just the “safe harbor” hardship standards typically relied upon.
Relaxed Documentation Requirements. Documentation and procedural requirements related to hardship distributions      Continue Reading...

Note: This is one in a series of posts addressing new rules from the IRS that may be used to determine which employees are full-time employees for purposes of applying the play-or-pay penalties under health care reform. Although the penalties do not become effective until 2014, it may be necessary to begin collecting data on employees soon, so it's a good time to begin thinking about these rules.

So we know it’s important to identify which employees are full-time (and which are not), and we know we can use a measurement period of up to 12 months to collect the data we need to make the determination about full-time status. The next question then is what that means going forward. How long do the determinations we make during the measurement period last? That’s where the stability period comes in.

Stability Period Related to Measurement Period. Each measurement period (whether an initial measurement period or a standard measurement period) will have an associated stability period. If an employer determines that an employee did not work full-time during a measurement period, the employer is permitted to treat the employee as a part-time employee during the following stability period. Similarly, employees determined to be full-time during the measurement period are treated as full-time during the following stability period.

Actual Facts Don't Change the Current Period. The key is that an employee’s status during the stability period remains the same, regardless of how many hours the employee actually works during the stability period. For example, if an employee      Continue Reading...

In new guidance, the IRS has provided tax relief for leave-based donation programs established to aid victims of Hurricane Sandy. Similar guidance was provided after the September 11, 2001 terrorist attacks and after Hurricane Katrina in 2005.

Under a leave-based donation program, an employer allows employees to elect to forego paid leave time (e.g., vacation, sick, or personal leave), and the employer then donates the value of the foregone leave to a charitable organization.

The guidance clarifies that employees will not have taxable wage income solely because they make, or have the right to make, an election to donate leave under a qualifying leave-based donation program. Employers are allowed a full deduction for the donations, without regard to the percentage limitations on charitable contributions.

To qualify for this treatment, payments of foregone leave time must be made:

• To a qualifying charitable organization.
• For the relief of victims of Hurricane Sandy.
• Before January 1, 2014.

Employees who elect to participate in a leave-based donation program may not claim a charitable contribution deduction for the value of the foregone leave.

Note: This is one in a series of posts addressing new rules from the IRS that may be used to determine which employees are full-time employees for purposes of applying the play-or-pay penalties under health care reform. Although the penalties do not become effective until 2014, it may be necessary to begin collecting data on employees soon, so it's a good time to begin thinking about these rules.

We know a critical issue in looking at the play-or-pay penalties is determining which employees are full-time and which are not. An initial step in that process is identifying the period to be used for making that determination.

Looking Back vs. Looking Forward. For employees who work varying schedules and hours, it can be difficult to predict whether or when those employees will average 30 or more hours per week. So Notice 2012-58 allows an employer to look back over a defined period to make that determination. This look-back period is referred to as a “measurement period.” As the name suggests, it is the period over which the employer will measure an employee’s hours worked and determine whether the employee was above or below the 30-hour threshold.

Two Types. There are two types of measurement periods: an “initial measurement period” and a “standard measurement period.” They are conceptually similar, but operate differently and serve slightly different functions.

Initial Measurement Period. The initial measurement period applies to newly hired variable-hour and seasonal employees. Although the length of the initial measurement period must be the same for all      Continue Reading...

The IRS has released its annual cost-of-living adjustments for retirement plans for 2013. Among the highlights:

• The annual limit on elective contributions (other than catch-up contributions) to a 401(k), 403(b), or 457(b) plan has increased to $17,500.
• The annual limit on catch-up contributions (for plan participants age 50 or older) remains the same at $5,500.
• The maximum amount of annual additions that may be made to a defined contribution plan (the "415 limit") has increased to $51,000.
• The maximum amount of compensation that may be taken into account for the year (the "401(a)(17) limit") has increased to $255,000.
• The compensation threshold for identifying certain highly compensated employees remains the same at $115,000.

Separately, the Social Security Administration announced that the Social Security taxable wage base will increase to $113,700 for 2013 - up from $110,100 in 2012. In addition to affecting certain retirement-plan contributions, this impacts the amount of wages and earned income that are subject to the Social Security portion of the FICA and SECA taxes.

The IRS has posted a new 403(b) Plan Checklist to its website. It is a list of 10 common operational problems, intended as a "quick tool" to help employers spot check for key compliance issues. 

Among the issues identified:

• Is the employer eligible to sponsor a 403(b) plan?
• Is the plan complying with the "universal availability" requirement?
• Are employee contributions being monitored and appropriately limited?
• Are the dollar limits on plan loans being monitored and repayments enforced?
• Is the plan obtaining proper substantiation of hardship withdrawals?

A key issue that is NOT addressed on the checklist is the written-plan requirement. Since 2009, IRS regulations have required that 403(b) plans be maintained under a written plan document. Although it's a fairly simple requirement to comply with, it has been often overlooked. But you can be sure the IRS will check for a written document in every 403(b) examination it conducts.

Employers that sponsor 403(b) plans would be well-advised to use this checklist to conduct a mini self-audit at least once a year. Any issues that may be identified are much easier to resolve through voluntary correction than if the IRS discovers them on audit.

Note: This is one in a series of posts addressing new rules from the IRS that may be used to determine which employees are full-time employees for purposes of applying the play-or-pay penalties under health care reform. Although the penalties do not become effective until 2014, it may be necessary to begin collecting data on employees soon, so it's a good time to begin thinking about these rules.

Background. The play-or-pay penalties essentially penalize applicable large employers that do not provide adequate, affordable group health coverage to full-time employees. So for employers that want to either ensure they avoid penalty exposure or assess their potential exposure to penalties, a critical issue is determining which employees are full-time employees.

The law generally defines "full time" for this purpose as working an average of 30 or more hours per week. Guidance from the IRS indicates that this may be determined on a monthly basis, in which case employees working an average of 130 or more hours per month are treated as full time.

Month-by-Month Determination. The structure of the penalty rules contemplates a month-by-month determination and calculation. An employer that decides to "pay" rather than "play" must calculate for each month in the year the number of full-time employees it had for that month and the corresponding penalty amount that is due.

But for employers that intend to offer group health coverage to employees so they can avoid most or all of the penalties, making a month-by-month determination is largely impractical. This could literally result in      Continue Reading...

As we have reported previously on this blog (see here), the IRS is considering modifying or eliminating the so-called use-it-or-lose-it rule for health FSAs, which is the rule that requires participants to spend down their entire account balances during the plan year (and any related grace period) or else forfeit the money. Legislative repeal of the rule has also been proposed.

Tax Analysts, which publishes tax-industry news, is reporting today that leading Treasury and IRS officials have said nothing will happen on this issue for 2012, at least as an administrative matter. (Congress theoretically could still act during the post-election lame-duck session, but that seems unlikely too.) However, the government did receive "a tsunami" of letters and comments in support of eliminating the rule, so we may see further movement on the issue in the near future.

With the cap on health FSA contributions reduced to $2,500 for plan years beginning on or after January 1, 2013, there is very limited opportunity for tax avoidance or deferral through health FSAs. So there is a sense that the use-it-or-lose-it rule may no longer serve a meaningful regulatory function. 

As the crisp fall air settles in, our thoughts turn to pumpkins, hayrack rides, apple cider - and, of course, retirement plan restatements. This year, it's Cycle B plans that must be restated and filed with the IRS for a fresh determination letter. If your EIN ends in a 2 or a 7 and you sponsor an individually designed retirement plan, you're up. The deadline to file with the IRS is still a few months away (January 31, 2013), but it's a good time to start getting everything in order, so you can beat the last-minute rush.

Not sure if you have an individually designed plan? All ESOPs and cash-balance pension plans are individually designed, and many traditional defined-benefit pension plans are too. But most plans maintained on a pre-approved "prototype" or "volume submitter" plan document are not considered individually designed and do not need to be submitted to the IRS at this time. This covers many (but not all) 401(k) and profit-sharing plans. Your retirement plan service provider or legal counsel can help you understand what type of plan you have, if you're not sure.

A recent IRS ruling addresses compensation arrangements that purport to provide employees with tax-free expense reimbursements but, in fact, merely recharacterize taxable wages as tax-free income. The IRS treats these arrangements as failing to satisfy the requirements of an "accountable plan," making the expense reimbursements taxable to the employees. 

The ruling describes three examples of invalid accountable plans:

1. Tool Expense. A cable installation company requires its installers to purchase their own tools. Each year the installers tell the employer how much they expect to spend on tools for the year. The employer divides this amount over the total number of hours the installers are expected to work and then treats a portion of the wages paid for each hour worked as a tax-free reimbursement of this tool expense. For example, if the installers would otherwise make $10 per hour and are treated as incurring $1 of tool expense for every hour worked, the installers are paid $9 in taxable wages and $1 in tax-free tool reimbursement for every hour worked.
2. Meals and Lodging. A staffing service that places temporary nurses in hospitals pays those nurses a set hourly wage, regardless of where the nurses are working. But for nurses who must travel away from home for an assignment, the contractor treats a portion of the hourly wages they would otherwise receive as a tax-free per diem allowance for food and lodging.
3. Mileage Allowance. A construction contractor that builds commercial buildings in various locations      Continue Reading...

The New York Times has an article reporting that the IRS will not use its agents or other resources to enforce the individual mandate under health care reform once it goes into effect in 2014.

Individuals who fail to maintain appropriate health coverage will be subject to a penalty beginning in 2014. The penalty is to be paid in the same manner as a tax. This presumably will require an addition to the individual income tax return (Form 1040) where taxpayers will certify whether they have the required coverage. If they do not have the coverage, the penalty will be added to the tax due, meaning it will either be offset against any refund or will need to be paid along with any other tax due with the return.

But the law specifically exempts the penalty from the provisions of the tax code relating to enforcement and collection - things such as the IRS's ability to impose a lien or levy to assist with collection. So the IRS has apparently decided that it will not even look for non-compliant taxpayers, since it would not have the tools to compel payment of the penalty anyway.

The Times article refers to some projections that only 1% of Americans will even be subject to the penalty for failing to maintain insurance. So on a large-scale basis, the IRS simply may not view the risks of noncompliance as serious enough to warrant devoting resources to enforcement.

Notice 2012-59 provides guidance on the requirement under Section 2708 of the Public Health Service Act (added by PPACA) that a group health plan not apply any waiting period that exceeds 90 days. The rule applies for plan years beginning on or after January 1, 2014.

Among the clarifications offered by the guidance:

• Definition of Waiting Period. A "waiting period" is defined as a period of time that must pass before coverage can become effective for an individual who is otherwise eligible to enroll under a plan. Eligibility conditions based solely on the lapse of time cannot exceed 90 days, but other eligibility conditions (e.g., working full time or working in a covered job classification) are permissible, even if they have the effect of excluding an individual from coverage under the plan for more than 90 days.
• Determining Full-Time Status for Variable-Hour Employees. If a plan limits coverage to full-time employees, it may take a reasonable period of time to determine whether a newly hired employee meets the full-time standard, if it is not clear on the date of hire that the employee will work the required number of hours (e.g., 30 hours per week). In general, this determination must be made within a year after the employee is hired, and if the employee satisfies the eligibility requirements, coverage must be offered beginning within 13 months after the date of hire. Otherwise, the plan may be treated as indirectly avoiding the 90-day-waiting-period requirement.

This notice      Continue Reading...

Beginning in 2014, employers may be subject to the play-or-pay penalties under health care reform if they fail to offer health coverage to full-time employees, so it will be important to understand which employees are considered "full time" under those rules. In general, "full time" means working an average of 30 or more hours per week. 

In some cases it will be clear that an employee is (or is not) a full-time employee. But in other cases, an employee's work hours may be expected to vary over time, making it difficult to know whether the employee will be working an average of 30 or more hours per week.

It would be an administrative nightmare to determine a variable-hour employee's eligibility for health plan coverage on a weekly or even monthly basis, depending on the hours worked by the employee during that period. This would also be largely impractical, since it often would not be known until the end of a period whether the employee worked enough hours during that period to have been eligible for coverage.

Recognizing this, IRS Notice 2012-58 provides a framework for employers to make eligibility determinations for variable-hour employees over longer periods (up to 12 months) and rely on those determinations for a specified future period without regard to actual hours worked. These determinations will be respected both for purposes of plan eligibility and for purposes of applying the play-or-pay penalties. In other words, by following the framework established in Notice 2012-58, employers can better quantify which employees      Continue Reading...

In updated guidance on its letter-forwarding program, the IRS has announced it will no longer offer the program to benefit-plan administrators for the purpose of locating missing individuals who may be entitled to plan benefits.

"Under this revenue procedure, the Service will no longer provide letter-forwarding services to locate a taxpayer that may be owed assets from an individual, company, or organization. The letter-forwarding program is now limited to situations in which a person is trying to locate a taxpayer to convey a message for a humane purpose . . . or in an emergency situation."

The IRS's rationale appears to be that, with the proliferation of locator services available over the internet, use of the letter-forwarding program is no longer necessary for efficient and cost-effective administration of private benefit plans.

As a result of this guidance, many retirement-plan sponsors will need to re-visit plan provisions that direct the plan administrator to use, or consider using, the IRS's letter-forwarding program when searching for missing participants or beneficiaries. This became a particularly popular approach after the DOL issued a Field Assistance Bulletin in 2004 regarding the fiduciary obligation to attempt to locate certain missing participants. That bulletin advocated using the IRS's letter-forwarding program as one of several tools available to search for missing individuals.

The House Oversight and Government Reform Committee has sent a letter to IRS commissioner Douglas Shulman asking the IRS to produce background information and analysis supporting the final premium-tax-credit regulations released in May. The tax credit is the federal subsidy provided by PPACA for insurance coverage purchased by qualifying individuals through an exchange.

The issue underlying this brouhaha is the IRS's position that the tax credit is available to qualifying individuals for coverage purchased through any exchange, including an exchange established and operated by the federal government in a state that has declined to establish its own exchange. (For a summary of the different ways in which exchanges may be established, click here.) Some have argued that this position is not supported by the statutory language in PPACA and the Internal Revenue Code, which says the tax credit is available for coverage purchased through an exchange established by a state.

It is unlikely the House Committee's inquiry will amount to much more than political theater. But it will highlight what has become a popular line of attack on the health-care-reform law since it was upheld by the Supreme Court in June.

The IRS has posted a set of FAQs to its website that provide guidance on withholding the new 0.9% Medicare tax that will apply beginning in 2013.

The new tax was enacted as part of health care reform and goes into effect with respect to wages paid on or after January 1, 2013. The tax is an additional 0.9% on all wages received in excess of a threshold amount. The threshold amount is $200,000 in the case of a single individual and $250,000 in the case of a married individual who files a joint tax return. But regardless of an employee's marital status or household income, employers are required to begin withholding the tax once they have paid an employee $200,000 in wages during a year.

Example. An employee has received $180,000 in wages during 2013 and then receives a bonus of $50,000 in December 2013. In addition to all other required tax  withholding, the employer must withhold the new 0.9% Medicare tax on $30,000 of the bonus.

Some of the clarifications provided in the FAQs:

• The obligation to withhold the new tax only applies once an employee has received $200,000 in wages and only to the extent wages for the year exceed $200,000. 
• Non-cash taxable fringe benefits provided to an employee who has received at least $200,000 in other taxable wages are subject to the new tax, even though not paid in cash.
• The withholding requirement does apply to tipped employees who      Continue Reading...

A new ruling from the IRS (Rev. Rul. 2012-19) addresses when dividends and dividend-equivalents paid to an employee in connection with restricted stock or restricted-stock units (RSUs) will qualify as performance-based compensation for purposes of the deduction limitation under Code Section 162(m).

Note. This ruling is of particular relevance to publicly traded companies. They are limited by Code Section 162(m) in their ability to deduct compensation paid to a "covered employee," unless the compensation is qualifying performance-based compensation.

The ruling concludes that rights to dividends and dividend-equivalents must be analyzed separately from the underlying restricted stock or RSUs to determine whether they qualify as performance-based compensation.

For example, if an employee is granted restricted stock that qualifies as performance-based compensation but is also given the right to receive dividends with respect to the restricted stock without regard to whether the performance conditions are satisfied with respect to the restricted stock, the dividends will not qualify as performance-based compensation and will be subject to the deduction limitation under Section 162(m). But if the arrangement provides that the dividends will be accumulated and paid to the employee only if and when the performance-based conditions on the restricted stock are satisfied, the dividends also will qualify as performance-based compensation.

The IRS has provided two important pieces of new guidance regarding Code Section 83, which governs the taxation of property (e.g., stock and stock options) transferred in exchange for the performance of services.

First, new regulations have been proposed that would revise or clarify the standards on when property is subject to a "substantial risk of forfeiture" for purposes of Section 83. (This is a key consideration, because property transferred in connection with the performance of services generally is not taxable so long as it is subject to a substantial risk of forfeiture.)

• Conditions Other Than Service or Performance. The proposed regulations would clarify that a substantial risk of forfeiture may be established only through a service condition (e.g., a vesting schedule) or a condition related to the purpose of the transfer (e.g., a performance-based condition). For example, an obligation to sell property back to the employer in lieu of transferring it to a third party would not qualify as a substantial risk of forfeiture.
• Likelihood That Condition Will Occur. The proposed regulations would clarify that, in determining whether a performance-based condition is a substantial risk of forfeiture, the likelihood that the condition will occur must be considered, in addition to considering the likelihood that the condition will be enforced. For example, if stock transferred to an employee will be forfeited if the employer's gross receipts fall by 90% over the three-year period after the transfer, the likelihood that gross receipts actually will fall by      Continue Reading...

The IRS recently released Revenue Ruling 2012-18, which provides updated guidance for employers on the treatment of employee tips for FICA-tax purposes.

Tips are subject to both the employer's and the employee's share of the FICA tax, even though they are not paid directly from the employer to the employee. Special procedures govern how employees report tips to employers and when employers must withhold and pay the required FICA taxes on those tips.

Among other things, the new guidance clarifies the distinction between tips and service charges. Service charges, such as automatic gratuities added to a bill for large parties, are not tips for FICA purposes and may not be reported using the special procedures that apply to tips. They must be treated like other wages paid by the employer. This means, for example, that they are subject to FICA-tax withholding at the time they are paid to the employee.

In a related announcement, the IRS has released a memorandum to field agents providing instruction on audits of businesses where tipping of employees is customary. The memorandum says that, in general, the principles in Revenue Ruling 2012-18 are retroactively effective. But in certain cases it may be appropriate for auditors to apply the new guidance on service charges prospectively from January 1, 2013, "in order to allow businesses not currently in compliance additional time to amend their business practices and make needed system changes."

Although this announcement indicates the possibility of some relief for employers that have not handled service charges in the      Continue Reading...

The IRS issued Notice 2012-40 yesterday (click here for the notice), providing a number of important clarifications regarding the $2,500 cap on health FSA contributions that applies beginning in 2013.  The most surprising development is the IRS's interpretation that the cap applies on a plan-year basis, rather than a calendar-year basis.  This is important for employers with fiscal-year plans.  They will be able to wait until the first plan year beginning after December 31, 2012, to implement the cap, rather than using the transition rule or early implementation of the cap to ensure contributions during the 2013 calendar year do not exceed the cap, as was previously thought necessary.

Other key guidance points include:

• Clarification that unspent amounts carried over during a grace period will not count against the cap for the plan year in which the grace period occurs.
• Confirmation that the cap only applies to employee salary-reduction contributions to a health FSA.  Employer contributions (e.g., flex credits) and salary-reduction contributions to dependent-care FSAs do not count, nor do amounts credited to HSAs or HRAs.

In addition to interpretive guidance, the Notice provides a limited correction rule that will allow fixing some good-faith mistakes.  If a mistaken election to contribute more than $2,500 to a health FSA in a year is properly corrected, the error will not jeopardize the plan's status as a qualifying cafeteria plan. 

Of academic interest, the Notice also requests comments on the use-it-or-lose-it rule.  The implication is that the $2,500 cap may be low enough      Continue Reading...

Recent IRS regulations provide guidance to employers and insurers on the calculation and payment of a new fee on health plans.  The fee is part of health care reform and will be used to fund the Patient Centered Outcomes Research Institute.  The first fee payments will be due by July 31, 2013, and relate to plan years ending on or after October 1, 2012. 

Employers are responsible for calculating and paying this fee with respect to any self-insured health plans they sponsor.  Insured plans are subject to the fee also, although the insurance carrier is responsible for calculating and paying the fee.  The fee is $1 (increasing to $2 in the second year), multiplied by the average number of lives covered under the plan during the year. 

A key issue in calculating the fee is determining the average number of lives covered by a plan during a year.  (Covered lives include not only covered employees, but also spouses, dependent children, COBRA beneficiaries, retirees, and any other persons with coverage under the plan.)  The regulations give employers four options for calculating this number.  Two of the options involve counting the actual number of covered lives under the plan as of certain dates during the plan year.  A third option uses a formula based on "snapshots" of the number of employees in the plan at various points during the plan year, and the fourth option uses a formula based on the number of participants shown on the Form 5500 for the plan.

The fee applies to all self-insured      Continue Reading...