Recently issued guidance clarifies the application of certain provisions under the Affordable Care Act (ACA) to health reimbursement arrangements, employer payment plans, health flexible spending arrangements and employee assistance programs.
To read the full article, click here.
Employers extending benefit coverage to employees’ same-sex spouses and partners should review their payroll procedures to ensure that such coverages are properly taxed for federal income and FICA tax purposes. Employers also should review the options in Notice 2013-61 and consider filing claims for refunds or adjustments of FICA overpayments.
To read the full article, click here.
Many employers have begun the process of evaluating their options and obligations with respect to extending benefit coverage under employer-sponsored benefit plans to same-sex spouses in light of the U.S. Supreme Court’s recent ruling on Section 3 of the Defense of Marriage Act. Section 3 of DOMA provided that for all purposes of federal law the word “marriage” meant “only a legal union between one man and one woman as husband and wife,” and the word “spouse” referred “only to a person of the opposite-sex who is a husband or wife.” In June 2013, the Supreme Court ruled in United States v. Windsor that Section 3 of DOMA was an unconstitutional “deprivation of the liberty of the person protected by the Fifth Amendment.” The effect of this ruling is that federal law now generally will defer to state law definitions of marriage, including same-sex marriage, which has been legalized in 13 states and the District of Columbia.
As part of evaluating options for extending benefit coverage to same-sex spouses, employers need to consider the financial implications of such benefits. These implications include costs the employer will incur in extending such benefits, as well as the financial impact on employees who opt to utilize such benefits. Many of these costs are dependent upon the spousal benefits the employer currently offers, although the relevant considerations and cost estimates outlined below may be helpful resources.
To read the full article, click here.
Please join McDermott partners, Diane Morgenthaler and Jamie Weyeneth, on October 16-18 at the 2013 ERISA Basics National Institute in Chicago, IL. Designed for in-house and union counsel, benefits specialists, private practitioners, litigators, consultants and accountants, this conference provides an opportunity to hear from the ERISA experts. For more information, click here.
2013 ERISA Basics National Institute
Friday, October 18
10:05-10:55 a.m.
Section 401(k) Plans
Diane Morgenthaler, Partner, McDermott Will & Emery
11:05-11:55 a.m.
Cafeteria Plans
Jamie Weyeneth, Partner, McDermott Will & Emery
Recent guidance issued by the U.S. Department of the Treasury, the Internal Revenue Service (IRS) and the Employee Benefits Security Administration (EBSA) division of the U.S. Department of Labor (DOL) provides some initial clarifications on how U.S. v. Windsor will affect benefits for same-sex spouses. The guidance provides that same-sex couples legally married in a jurisdiction with laws authorizing same-sex marriage will be treated as married for federal tax purposes, regardless of whether the couple resides in a state where same-sex marriage is recognized.
To read the full article, click here.
Recent guidance clarifies the exchange notice requirement and the 90-day waiting period limitation under the Affordable Care Act.
by Amy M. Gordon, Susan M. Nash and Jacob Mattinson
Recently issued guidance clarifies annual information reporting requirements for insurers and employers under the Affordable Care Act (ACA). The required reporting enables the Internal Revenue Service to determine compliance with the employer and individual mandates and individual eligibility for premium tax credits under the ACA.
To read the full article please click here.
In a brief Frequently Asked Question (FAQ) document quietly issued yesterday, the U.S. Department of Labor formally clarified there is no penalty associated with provision of the Exchange Notice. The guidance states that employers “should provide a written notice to its employees about the Health Insurance Marketplace by October 1, 2013, but there is no fine or penalty under the law for failing to provide the notice.” Therefore, employers should send out the Exchange Notice, but there would be no penalty if someone is missed. (This FAQ does not state or imply that employers no longer have to send out the notice.)
In Internal Revenue Service (IRS) Revenue Ruling 2013-17, the U.S. Department of the Treasury and the IRS today ruled that legally married same-sex couples will be treated as married for federal tax purposes. Importantly, the ruling applies regardless of whether the couple lives in a jurisdiction that does not recognize same-sex marriage. In other words, the Treasury Department and IRS have adopted a “state of celebration” rule rather than a “state of residence” rule. Click here for IRS answers to some frequently asked questions.
As a result, it will be possible for same-sex couples to be what we call “federally-recognized same-sex spouses” even if they are not treated as married in the state in which they currently reside. That situation in fact, could become extremely common if same-sex couples travel to a jurisdiction solely to get married and obtain federal tax recognition of their marriage. (See the Obergefell case, discussed in “Two Federal Courts Recognize Same-Sex Spousal Rights for Residents of States Not Permitting Same-Sex Marriage” as one recent example.)
This situation will require employers in all states – not just the 13 states (and the District of Columbia) that currently permit same-sex marriage – to prepare for same-sex couples to request spousal benefits under the employer’s various benefit programs, particularly those programs where preferential spousal treatment is required by federal law (e.g., spousal protection under qualified retirement plans, special enrollment and COBRA rights under health and welfare plans, etc.) The IRS intends to issue further guidance on the retroactive implications of this position.
Additionally, this new guidance will allow same-sex spouses to claim refunds for open tax years for income and employment taxes they paid on imputed income on the value of health coverage. Similarly, there is a procedure for employers to obtain employment tax refunds based on coverage provided to employees’ same-sex spouses.
Finally, note that the IRS guidance does not apply to registered domestic partners, civil unions or other similar relationships recognized under state law but that are not denominated as marriage under that state’s law.
Further McDermott guidance on this important development will be forthcoming shortly. In the meantime, please contact the authors or your regular McDermott attorney if you have questions.
The Internal Revenue Service (IRS) has released final regulations on the requirement that individuals maintain health insurance that meets the minimum essential coverage standard (the “individual mandate”). These regulations give clarity to Professional Employer Organizations (PEOs) offering group health plan coverage to employees on behalf of an employer. An individual can satisfy the minimum essential coverage requirement by maintaining coverage under an eligible employer-sponsored plan. The final regulations provide that an eligible employer-sponsored plan includes coverage offered by a PEO on behalf of an employer. Specifically, the definition of eligible employer-sponsored plan in the final regulations (Section 1.5000A-2(c)) provides that an eligible employer-sponsored plan includes, in addition to coverage offered by an employer, (i) group health insurance coverage offered on behalf of an employer to an employee and (ii) a self-insured group health plan under which coverage is offered by, or on behalf of, an employer to the employee. In addition, the preamble to the final regulations explicitly states that organizations such as PEOs can offer coverage under an eligible employer-sponsored plan on behalf of an employer, yet not be viewed as the employer by reason of offering such coverage (“commentators asked whether a plan offered to an employer’s employees by a third party, such as a professional employer organization or leasing company, is an eligible employer-sponsored plan for the employees eligible to participate in the plan. The final regulations are revised to provide that a plan offered by an employer to an employee includes a plan offered to an employee on behalf of an employer. No inference is intended from this treatment that the third party is the employer for this or any other provision of the Code or related laws.”).
The final regulations are expected to be published in the Federal Register on August 30, 2013.
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