The Departments of Labor, Treasury, and Health and Human Services have released final rules removing the prohibition on pairing HRAs with individual health policies. The final rules also allow certain HRAs and other account-based group health plans to qualify as limited excepted benefits. These rules are generally effective for plan years beginning on or after January 1, 2020.
A new IRS notice will allow many with chronic health conditions who participate in high-deductible health plans (HDHPs) with health savings accounts (HSAs) to receive necessary care that may otherwise be out of financial reach. The notice expands the list of preventive care benefits that can be covered by an HDHP prior to a participant meeting the minimum deductible without disqualifying them from making or receiving HSA contributions.
The US Supreme Court recently agreed to review the Eighth Circuit’s decision in Thole v. US Bank, in which the Eighth Circuit held that participants in an overfunded defined benefit pension plan lack standing to sue for fiduciary breaches under ERISA. The Supreme Court’s decision in this case—the third ERISA case accepted by the court this term—could have significant implications for plan sponsors and plan fiduciaries. Many believe that if the Supreme Court rules that the plaintiffs have standing to bring suit, it could encourage a proliferation of litigation against plans where there is no actual impact on participants’ benefits.
Executives are no longer reluctant to lawyer up. News reports on executive/employer contretemps at Papa John’s, Barnes & Noble, Uber and other companies have drawn press attention in the past year; countless other executive/employer disputes have flown below radar.
Underlying these controversies is the executive’s employment agreement, typically the most high-stakes and closely negotiated employment agreements to which companies will contract. Yet, these agreements often contain less clarity and less certainty than either executives or their employers need. Indeed, there appear to be three areas where these contracts could and should be upgraded. Let’s look at each.
Originally published by Law360, February 2019.
In 2018, the Treasury Department and the IRS issued new hardship distribution rules applicable to defined contribution plans, and many plans have begun administering these new rules. While plan sponsors may want to wait for further IRS guidance before amending their plans, they should take steps now to inform employees of changes in hardship distribution administration.
The US Supreme Court declined to review a recent Ninth Circuit decision, blocking the interim rules that exempted employers with religious or moral objections from providing birth control coverage required by the Affordable Care Act (ACA). Until such time as this issue is clarified, it is prudent for employers with employees in certain states to comply with the ACA mandate and to cover contraceptives under their health plans.
Teal Trujillo, a summer associate in our Chicago office, also contributed to this article.
IBM estimated last year that data breaches cost companies $148 per stolen record. Given that, not surprisingly, many employers have grown increasingly concerned about the potential impact of such breaches, including breaches that may affect employer-sponsored benefit plans.
Courts have not yet formally addressed whether ERISA requires benefit plan fiduciaries to manage cybersecurity risks. However, a federal district court recently rejected a motion to dismiss filed by defendants seeking to avoid liability for fraudulent distributions from a plan caused by cyber criminals. There, the court held that the defendants were plan fiduciaries and that the plaintiffs had pled facts sufficient to allege that the defendants breached their fiduciary duties. Although this decision only relates to a motion to dismiss, the case underscores the potential for plaintiffs to assert, even in the absence of clear guidance, that plan fiduciaries are not doing enough to protect plan participants from cybersecurity risks.
As a result, with cybersecurity concerns on the rise, plan fiduciaries are continuing to enhance their focus on the best ways to protect employee data. Recently, on Law360, McDermott’s Mark E. Schreiber discussed four helpful tips for handling cybersecurity risks.
Over the past several years, the IRS and DOL have significantly increased the number of benefit plans audits conducted each year.
As a result, it is important for plan sponsors to understand the types of issues that often arise in connection with such audits. At the recent PSCA 2019 National Conference, Brian Tiemann explained what plan sponsors should expect if their benefit plan is selected for audited. More specifically, Brian discussed the ways audits are typically triggered and how to respond when a plan is audited. In addition, Brian outlined some of the most common retirement and health and welfare compliance issues identified in plan audits. He also discussed how plan sponsors can prepare for audits and even address potential compliance issues before they occur.
Connecticut enacted a paid family and medical leave law, which provides paid leave to eligible employees and expand allowable reasons for such leave. This Connecticut statute closely tracks Massachusetts’s parallel statute and appears to be among the most generous paid family leave laws in the country. All private sector employers (and their employees who work in Connecticut) are covered.
The Financial Accounting Standards Board (FASB) adopted changes to the required financial statement disclosures of employee benefit plans with investments in master trusts. The changes will standardize the content and presentation of information reported in plans’ financial statements. Learn about the six significant items the FASB guidance addresses.
Subscribe
