The Pension Benefit Guaranty Corporation (PBGC) recently issued a press release announcing that the Multiemployer Insurance Program remains in a dire financial condition, nearing insolvency. The agency’s insurance program for multiemployer pensions, covering more than 10 million people, will likely run out of money by the end of fiscal year 2025, according to the FY 2018 Projections Report. On the other hand, the PBGC’s projection for the Single-Employer Program shows continued improvement. However, these positive projections are subject to a range of potential outcomes due to the Program’s sensitivity to economic conditions.
An employer learned the full cost of ambiguity when a Connecticut federal district court agreed with an employee’s widow that the word “maximum” was ambiguous in the company’s life insurance plan, thus making the widow entitled to an additional $4 million in benefits. This decision serves as a warning for employers sponsoring insured benefits.
A Texas federal court certified a class in case brought by participants in one plan, and allowed those participants to represent participants in unaffiliated plans. The claims alleged that the defendants, who marketed and provided services to all of the plans, breached fiduciary duties by imposing excessive fees. See Chavez, et al. v. Plan Benefits Services, Inc., et al., No. AU-17-CA-00659-SS, United States District Court for Western District of Texas (Aug. 30, 2019).
In two opinions—one published and one unpublished—the Ninth Circuit overturned prior precedent and held that a Plan amendment requiring arbitration meant that an individual had to arbitrate, on an individual basis, purported class claims alleging imprudent and disloyal management of 401(k) investments. This decision, although unpublished, provides support for plans wishing to add binding arbitration provisions that apply to ERISA 502(a)(2) claims.
A growing number of medical organizations, courts and administrative bodies have stated that transition-related medical care is medically necessary and should be covered by employer-sponsored medical plans. Access to employer-sponsored healthcare coverage for transgender workers has become an issue of focus for civil rights advocacy groups such as Lambda Legal and the American Civil Liberties Union, and there has been an uptick in discrimination lawsuits filed against health plans and insurers denying such care.
These trends highlight the importance of weighing the legal and business considerations that come with providing (or not providing) comprehensive health benefits for transgender workers. Health plan sponsors and insurers should consider how the decision to provide or exclude transition-related medical coverage will affect their legal compliance, overall costs and workplace culture—all of which are discussed in this article.
Originally published in Benefits Magazine, August 2019.
A Third Circuit appeals panel upheld the lower court ruling in Commonwealth of Pennsylvania v. President United States of America et al. No. 17-3752. This ruling grants a nationwide preliminary injunction against the religious and moral exemptions for employers to the ACA’s birth control mandate, so employers may want to take a cautious approach toward limiting contraceptive coverage.
Teal Trujillo, a summer associate in our Chicago office, also contributed to this article.
The IRS issued a private letter ruling (PLR) this week indicating that an FSA (and presumably an HSA and HRA) may reimburse a portion of the purchase of genetic testing and reports regarding ancestry and health. The IRS noted that the health services portion of such a cost is a reimbursable medical expense under Code Section 213(d) because the tests fall under “diagnosis of a disease.” With respect to the genetic services incurred by the individual seeking the PLR, the IRS noted that the reports contained genotyping (a qualified medical expense), as well as general information and ancestry information (not a qualified medical expense). It is incumbent upon the taxpayer to allocate the cost for the reimbursement to the portion which was attributable to a qualified medical expense. IRS private letter rulings are only applicable for the taxpayer that requests it; however, this is helpful insight to IRS approach to genetic testing kits as Code Section 213 medical expenses.
Beginning September 1, 2019, the IRS is expanding its retirement plan determination letter program to apply to certain individually designed statutory hybrid and merged plans. Employers sponsoring hybrid plans not previously reviewed by the IRS for required (or other) plan changes, and employers that have or will merge two or more of their plans together in connection with a corporate transaction, should consider taking advantage of this expanded determination letter program.
In-house counsel and human resources professionals at tax-exempt colleges and universities often face a variety of challenges when structuring, and determining obligations due under, severance arrangements. There are some key considerations to bear in mind, which are outlined in this article.
In the past few years, several states and localities have passed paid sick leave laws. These laws generally require employers to offer workers paid sick leave due to illness or injury, domestic or sexual assault, or care of a family member. Proponents of paid sick leave laws say that they help the local economy by improving workers’ health, safety and welfare and by reducing employee turnover. The ordinance San Antonio passed last year required businesses with more than 15 employees to provide 64 hours of paid sick leave per year. Businesses with 15 or fewer employees were required to provide 48 hours of paid sick leave. Continue Reading San Antonio Temporarily Suspends Paid Sick Leave Law Amidst Legal Challenge from Business Groups