Don’t Forget to Post OSHA Injury and Illness Data at Your Worksite

Employers must post a summary of 2018 work-related injury and illnesses in a noticeable place from Feb. 1 to April 30 if they are covered by the Occupational Safety and Health Administration's (OSHA's) record-keeping rule. Read on to learn more.


Employers that are covered by the Occupational Safety and Health Administration's (OSHA's) record-keeping rule must post a summary of 2018 work-related injury and illnesses in a noticeable place from Feb. 1 to April 30. Here are some compliance tips for employers to review.

Required Posting

Many employers with more than 10 employees—except for those in certain low-risk industries—must keep a record of serious work-related injuries and illnesses. But minor injuries that are treated only by first aid do not need to be recorded.

Employers must complete an incident report (Form 301) for each injury or illness and log work-related incidents on OSHA Form 300. Form 300A is a summary of the information in the log that must be posted in the worksite from Feb. 1 to April 30 each year.

"This information helps employers, workers and OSHA evaluate the safety of a workplace, understand industry hazards, and implement worker protections to reduce and eliminate hazards," according to OSHA's website.

Employers should note that they are required to keep a separate 300 log for each "establishment," which is defined as "a single physical location where business is conducted or where services or industrial operations are performed."

If employees don't work at a single physical location, then the establishment is the location from which the employees are supervised or that serves as their base.

Employers frequently ask if they need to complete and post Form 300A if there were no injuries at the relevant establishment. "The short answer is yes, " said Tressi Cordaro, an attorney with Jackson Lewis in Washington, D.C. "If an employer recorded no injuries or illnesses in 2018 for that establishment, then the employer must enter 'zero' on the total line."

Correct Signature

Before the OSHA Form 300A is posted in the worksite, a company executive must review it and certify that "he or she has examined the OSHA 300 Log and that he or she reasonably believes, based on his or her knowledge of the process by which the information was recorded, that the annual summary is correct and complete," according to OSHA.

A common mistake seen on 300A forms is that companies forget to have them signed, noted John Martin, an attorney with Ogletree Deakins in Washington, D.C.

There are only four company representatives who may certify the summary:

  • An owner of the company.
  • An officer of the corporation.
  • The highest-ranking company official working at the site.
  • The immediate supervisor of the highest-ranking company official working at the site.

Businesses commonly make the mistake of having an HR or safety supervisor sign the form, said Edwin Foulke Jr., an attorney with Fisher Phillips in Atlanta and Washington, D.C., and the former head of OSHA under President George W. Bush.

They need to get at least the plant manager to sign it, he said, noting that the representative who signs Form 300A must know how numbers in the summary were obtained.

Once the 300A form is completed, it should be posted in a conspicuous place where other employment notices are usually posted.

Electronic Filing

The Improve Tracking of Workplace Injuries and Illnesses rule requires covered establishments with at least 20 employees to also electronically submit Form 300A to OSHA.

Large establishments with 250 or more employees were also supposed to begin electronically submitting data from the 300 and 301 forms in 2018, but the federal government recently eliminated that requirement. However, those establishments still must electronically submit their 300A summaries.

The deadline to electronically submit 2018 information is March 2.

SOURCE: Nagele-Piazza, L. (1 February 2019) "Don’t Forget to Post OSHA Injury and Illness Data at Your Worksite" (Web Blog Post). Retrieved from https://www.shrm.org/resourcesandtools/legal-and-compliance/employment-law/pages/don%E2%80%99t-forget-to-post-osha-injury-and-illness-data-at-your-worksite.aspx/


Compliance Recap - 2018 Year in Review

Compliance Recap – 2018 Year in Review

During 2018, federal agencies and courts provided employers with a significant amount of new guidance, regulation, and FAQs relating to employer benefit plans. This month-by-month guide provides a timeline of these documents, highlighting the major changes and updates in 2018.

To access the complete monthly Compliance Recaps, please click below:

January 2018 Compliance Recap

February 2018 Compliance Recap

March 2018 Compliance Recap

April 2018 Compliance Recap

May 2018 Compliance Recap

June 2018 Compliance Recap

July 2018 Compliance Recap

August 2018 Compliance Recap

September 2018 Compliance Recap

October 2018 Compliance Recap

November 2018 Compliance Recap

December 2018 Compliance Recap

January 2018

January was a busy month in the employee benefits world. On January 24, 2018, the U.S. Senate confirmed Alex Azar as the new Secretary of the U.S. Department of Health and Human Services (HHS).

HHS released the 2018 federal poverty guidelines. The DOL issued updated civil monetary penalties for 2018 and announced the applicability date for final regulations regarding disability claims procedures.

Congress and the President delayed the Cadillac tax’s effective date, delayed the health insurance tax (HIT), and reauthorized the Children’s Health Insurance Program.

HHS Releases 2018 Federal Poverty Guidelines

The U.S. Department of Health and Human Services (HHS) released the 2018 federal poverty guidelines (FPL). For a family/household of one in the contiguous United States, the FPL is $12,140. In Alaska, the FPL is $15,180, and in Hawaii, the FPL is $13,960.

For 2018, applicable large employers that wish to use the FPL affordability safe harbor under the employer shared responsibility / play-or-pay rules should ensure that their lowest employee-only premium is equal to or less than $96.72 a month, which is 9.56% of the 2018 FPL.

Civil Monetary Penalties Inflation Adjustment for 2018

The U.S. Department of Labor (DOL) published its civil monetary penalties for 2018. Under federal law, the DOL is required to annually adjust its regulations’ civil monetary penalties for inflation no later than January 15 of each year. The adjusted penalty amounts are effective for violations occurring after November 2, 2015, that have penalties assessed after January 2, 2018.

Below are some examples of the increases.

Description 2017 Penalty Amount 2018 Penalty Amount
Failure to file Form 5500 $2,097 per day $2,140 per day
Failure to provide the Summary of Benefits and Coverage (SBC) $1,105 $1,128
Failure to provide documents requested by the DOL $149 per day, not to exceed $1,496 per request $152 per day, not to exceed $1,527 per request
Failure to inform employees of children’s health insurance program (CHIP) coverage opportunities; each employee is a separate violation $112 per day $114 per day

DOL Issues Final Disability Claims Procedures Regulations’ Applicability Date

The U.S. Department of Labor (DOL) announced that April 1, 2018, will be the applicability date for its rule that amends the claims procedure requirements of ERISA-covered employee benefit plans that provide disability benefits. The DOL’s Fact Sheet contains a summary of the regulation’s requirements.

Congress Delays Cadillac Tax Effective Date, Delays HIT Tax, and Reauthorizes CHIP

Congress and the President passed H.R. 195, a short-term spending bill. The bill delays the effective date of the excise tax on high cost employer-sponsored health coverage (“Cadillac tax”) to 2022. The bill delays the health insurance tax (HIT) that applies to insurers. The HIT was in effect in 2014, 2015, and 2016, and will be in effect for 2018. Now the HIT will be delayed from 2019 to 2020; essentially, the bill implemented a one-year moratorium for the HIT for 2019. The bill also reauthorizes the Children’s Health Insurance Program (CHIP) for six years.

February 2018

Coming off a busy January, the Internal Revenue Service (IRS) updated its Questions and Answers about Information Reporting by Employers on Form 1094-C and Form 1095-C, its Questions and Answers on Information Reporting by Health Coverage Providers, and its Questions and Answers on Employer Shared Responsibility Provisions Under the Affordable Care Act.

The IRS released its adjusted penalty amounts under the employer shared responsibility provisions for the 2018 calendar year.

IRS Updates Its Employer Information Reporting Q&As

The Internal Revenue Service (IRS) updated its “Questions and Answers about Information Reporting by Employers on Form 1094-C and Form 1095-C.” The IRS made one substantive change to the Q&As. At Q&A #5, the IRS provided the 2018 due dates for furnishing forms to employees and filing forms with the IRS.

For reporting in 2018 (for offers of coverage and coverage in 2017), an applicable large employer must furnish Form 1095-C to each full-time employee on or before March 2, 2018. This due date reflects a 30-day extension from the general due date (that is, January 31 of the year immediately following the calendar year to which the information relates); the extension was provided by the IRS in Notice 2018-06 on December 22, 2017. The extension applies automatically and does not require the submission of any request or other documentation to the IRS.

Although the IRS extended the due date for furnishing Form 1095-C for 2017, the due date for filing Forms 1094-C and 1095-C with the IRS was not extended.

IRS Updates Its Q&As on Information Reporting by Health Coverage Providers

The Internal Revenue Service (IRS) updated its Questions and Answers on Information Reporting by Health Coverage Providers (Section 6055) by adding questions 30 through 35. Among other items, the IRS discussed short-term relief available from penalties for incomplete or incorrect returns filed with the IRS or furnished to individuals. For reporting in 2016, 2017, and 2018, the IRS will not impose penalties on employers that can show that they have made good faith efforts to comply with the information reporting requirements.

IRS Announces the Play-or-Pay Adjusted Penalty Amounts

The Internal Revenue Service (IRS) updated its Questions and Answers on Employer Shared Responsibility Provisions Under the Affordable Care Act to reflect adjusted penalty amounts for failures to offer coverage in the 2018 calendar year. For Penalty A (or the “no offer” penalty), the adjusted penalty amount per full-time employee is $2,320. For Penalty B (or the “inadequate coverage” penalty), the adjusted penalty amount per full-time employee is $3,480.

March 2018

March was a quiet month in the employee benefits world. The U.S. Department of Labor (DOL) updated its model Premium Assistance Under Medicaid and the Children’s Health Insurance Program notice (CHIP notice).

The IRS issued its updated Employer’s Tax Guide to Fringe Benefits, issued transition relief regarding HSA eligibility of individuals with health insurance that provides benefits for male sterilization or male contraceptives without a deductible, and issued its updated Guide on Health Savings Accounts and Other Tax-Favored Health Plans.

DOL Updates Employer CHIP Notice

The U.S. Department of Labor (DOL) updated its model Premium Assistance Under Medicaid and the Children’s Health Insurance Program notice (CHIP notice).

Employers that provide health insurance coverage in states with premium assistance through Medicaid or the Children’s Health Insurance Program (CHIP) must provide their employees with the CHIP notice before the start of each plan year. The CHIP notice provides information to employees on how to apply for premium assistance, including how to contact their state Medicaid or CHIP office. The DOL usually updates its model CHIP notice biannually.

IRS Issues Updated Employer’s Tax Guide to Fringe Benefits

The Internal Revenue Service (IRS) issued its 2018 Publication 15-B which contains information for employers on the employment tax treatment of fringe benefits. The guide is updated to reflect, among other items:

  • The suspension of qualified bicycle commuting reimbursements from an employee’s income for any tax year beginning after December 31, 2017, and before January 1, 2026.
  • The suspension of the exclusion for qualified moving expense reimbursements from an employee’s income for tax years beginning after December 1, 2017, and before January 1, 2026. However, the exclusion remains available for a U.S. Armed Forces member on active duty who moves because of a permanent change of station.
  • Limits on the deduction by employers for certain fringe benefits, such as meals and transportation commuting benefits.
  • The definition of items that aren’t tangible personal property for purposes of employee achievement awards.

The guide lists fringe benefits’ tax treatment in its Table 2-1 “Special Rules for Various Types of Fringe Benefits.”

IRS Issues Transition Relief Notice for Plans with Male Sterilization or Contraceptive Benefit

Recently, some states adopted laws that require certain health insurance policies to provide benefits for male sterilization and male contraceptives without cost-sharing.

However, under health saving account (HSA) eligibility requirements, a high deductible health plan (HDHP) generally may not provide benefits for any year until the minimum deductible for that year is satisfied. Although an HDHP may provide preventive care without a deductible or with a deductible that is below the minimum annual amount required by HSA eligibility requirements, male sterilization and male contraceptives are not considered preventive care under the Social Security Act or any Treasury Department guidance.

The Internal Revenue Service (IRS) released its Notice 2018-12 (Notice) to clarify that if a health plan provides benefits for male sterilization or male contraceptives before satisfying the minimum deductible for an HDHP, then the plan is not an HDHP, regardless of whether state law requires coverage of such benefits. Further, an individual who is not covered by an HDHP with respect to a month is not an HSA-eligible individual and may not deduct contributions to an HSA for that month. Similarly, HSA contributions made by an employer on behalf of the individual are not excludible from income and wages.

To allow states time to change their laws so their residents will be able to purchase health insurance coverage that qualifies as an HDHP, the Notice provides transition relief for periods before 2020 to individuals who are, have been, or become participants in or beneficiaries of a health insurance policy that provides benefits for male sterilization or male contraceptives without a deductible or with a deductible below the minimum deductible for an HDHP.

During the transition relief period, an individual with this type of health insurance policy will not be treated as HSA-ineligible, merely because the policy fails to qualify as an HDHP.

IRS Issues Updated Guide on Health Savings Accounts and Other Tax-Favored Health Plans

The Internal Revenue Service (IRS) updated its Publication 969 for taxpayers to use in preparing their 2017 returns. The publication explains health savings accounts (HSAs), medical savings accounts (Archer MSAs and Medicare Advantage MSAs), health flexible spending arrangements (FSAs), and health reimbursement arrangements (HRAs).

April 2018

April was a busy month in the employee benefits world. The Internal Revenue Service (IRS) modified the 2018 health savings account (HSA) family contribution limit back to $6,900. The U.S. Department of Labor (DOL), U.S. Department of Health and Human Services (HHS), and the Treasury released proposed frequently asked questions regarding mental health parity.

The Centers for Medicare and Medicaid Services (CMS) released the 2019 parameters for the Medicare Part D prescription drug benefit, a 2019 Benefit and Payment Parameters final rule, and a transitional policy extension for non-grandfathered coverage in the small group and individual health insurance markets.

The IRS released frequently asked questions on the employer credit for paid family medical leave.

IRS Changes 2018 HSA Family Contribution Limit

The Internal Revenue Service (IRS) recently released Revenue Procedure 2018-27 to modify the 2018 health savings account (HSA) family contribution limit back to $6,900. This is the second, and likely final, change in limit during 2018.

As background, in May 2017, the IRS released Revenue Procedure 2017-37 that set the 2018 HSA family contribution limit at $6,900.

However, in March 2018, the IRS released Revenue Procedure 2018-10 that adjusted the annual inflation factor for some tax-related formulas from the Consumer Price Index (CPI) to a new factor called a “chained CPI.” As a result, the 2018 HSA family contribution limit was lowered to $6,850 from $6,900, retroactively effective to January 1, 2018.

Stakeholders informed the IRS that the lower HSA contribution limit would impose many unanticipated administrative and financial burdens. In response and in the best interest of sound and efficient tax administration, the IRS will allow taxpayers to treat the originally published $6,900 limit as the 2018 HSA family contribution limit.

Excess Contribution Tax Treatment if Employee Received Distribution Based on Earlier Limit
Employee received distribution of excess contribution with earnings? Employee repays distribution by the individual’s tax return filing date? Excess contribution is includible in the employee’s gross income and subject to the 20% excess contributions excise tax?
Yes Yes No
Yes No Generally, no.

Yes, if the HSA distribution is attributable to employer contributions and not included in the employee’s wages because the employer treats $6,900 as the limit, unless the employee uses the distribution for qualified medical expenses.

DOL, HHS, and Treasury Release Proposed FAQs on Mental Health Parity

The U.S. Departments of Labor (DOL), Health and Human Services (HHS), and the Treasury (collectively, the “Departments”) released proposed FAQs About Mental Health and Substance Use Disorder Parity Implementation and the 21st Century Cures Act Part XX.

The Departments respond to FAQs as part of implementing the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA).

Generally, the MHPAEA requires that the financial requirements (for example, coinsurance and copays) and treatment limitations (for example, visit limits) imposed on mental health or substance abuse disorder (MH/SUD) benefits cannot be more restrictive than the predominant financial requirements and treatment limitations that apply to substantially all medical/surgical benefits in a class.

Similarly, a group health plan or issuer cannot impose a nonquantitative treatment limitation (NQTL) on MH/SUD benefits that is more stringent than a comparable limitation that is applied to medical/surgical benefits.

The MHPAEA regulations include express disclosure requirements. For example, if a participant requests the criteria for medical necessity determinations regarding MH/SUD benefits, then the plan administrator must make the information available to the participant.

To assist plan sponsors with disclosure requests, DOL released a revised draft Mental Health and Substance Use Disorder Parity Disclosure Request that plan sponsors may provide to individuals who request information from an employer-sponsored health plan regarding treatment limitations.

To assist plan sponsors in determining whether a group health plan complies with MHPAEA, the DOL released its Self-Compliance Tool for the Mental Health Parity and Addiction Equity Act. 

CMS Releases 2019 Parameters for Medicare Part D Prescription Drug Benefit

The Centers for Medicare and Medicaid Services (CMS) released the following parameters for the defined standard Medicare Part D prescription drug benefit for 2019:

Deductible $ 415
Initial coverage limit $ 3,820
Out-of-pocket threshold $ 5,100
Total covered Part D spending at the out-of-pocket threshold (for beneficiaries who are ineligible for the coverage gap discount program) $ 8,139.54
Minimum cost-sharing in catastrophic coverage portion of the benefit $ 3.40 for generic/preferred multi-source drugs

$ 8.50 for all other drugs

Generally, group health plan sponsors must disclose to Part D eligibility individuals whether the prescription drug coverage offered by the employer is creditable. Coverage is creditable if it, on average, pays out at least as much as coverage available through the defined standard Medicare Part D prescription drug plan.

CMS Issues 2019 Benefit and Payment Parameters Final Rule

The Centers for Medicare and Medicaid Services (CMS) published its 2019 Benefit and Payment Parameters final rule. The rule primarily affects the individual health insurance market inside and outside of the Exchange, the small group health insurance market, issuers, and the states.

Within the rule, three items most directly affect employers and their group health plans:

  • Maximum annual out-of-pocket limit on cost sharing for 2019
  • New methods for changing state EHB-benchmark plans
  • New requirements for employers and issuers participating in the Small Business Health Options Program (SHOP) Marketplace

Read more about the final rule.

CMS Issues Transitional Policy Extension

The Centers for Medicare and Medicaid Services (CMS) issued a bulletin extending its transitional policy.

As background, in November 2013, CMS announced a transitional policy for non-grandfathered coverage in the small group and individual health insurance markets. Under its policy, health insurance issuers may choose to continue certain coverage that would otherwise be cancelled because of noncompliance with Patient Protection and Affordable Care Act (ACA) and Public Health Service Act (PHS Act). Further, affected small businesses and individuals may choose to re-enroll in such coverage.

Under its policy, non-grandfathered health insurance coverage in the small group and individual health insurance markets will not be considered to be out of compliance with the following ACA and PHS Act market reforms if certain criteria are met:

  • Fair health insurance premiums
  • Guaranteed availability of coverage
  • Guaranteed renewability of coverage
  • Prohibition of pre-existing condition exclusions or other discrimination based on health status, with respect to adults, except with respect to group coverage
  • Prohibition of discrimination against individual participants and beneficiaries based on health status, except with respect to group coverage
  • Non-discrimination in health care
  • Coverage for individuals participating in approved clinical trials
  • Single risk pool requirement

Under CMS’ transitional policy, states may permit issuers that have renewed policies under the transitional policy continually since 2014 to renew such coverage for a policy year starting on or before October 1, 2019. However, any policies renewed under this transitional policy must not extend past December 31, 2019.

IRS Releases FAQ on Employer Credit for Paid Family Medical Leave

The IRS released an FAQ that primarily reiterates the Tax Cuts an Jobs Act’s provisions that provide a new federal credit for employers that provide paid family and medical leave to their employees.

The IRS explains that an employer must reduce its deduction for wages or salaries paid or incurred by the amount determined as a credit. Also, any wages taken into account in determining any other general business credit may not be used in determining this credit.

The IRS adds this definition of “paid family and medical leave” that, for purposes of the credit, includes time off for:

  • Birth of an employee’s child and to care for the child.
  • Placement of a child with the employee for adoption or foster care
  • To care for the employee’s spouse, child, or parent who has a serious health condition
  • A serious health condition that makes the employee unable to perform the functions of his or her position
  • Any qualifying exigency due to an employee’s spouse, child, or parent being on covered active duty (or having been notified of an impending call or order to covered active duty) in the Armed Forces.
  • To care for a service member who is the employee’s spouse, child, parent, or next of kin

The FAQ also explains that, in the future, the IRS intends to address:

  • When the written policy must be in place
  • How paid “family and medical leave” relates to an employer’s other paid leave
  • How to determine whether an employee has been employed for “one year or more”
  • The impact of state and local leave requirements
  • Whether members of a controlled group of corporations and businesses under common control are treated as a single taxpayer in determining the credit

Read more about the federal tax credit for employer-provided paid family and medical leave.

May 2018

May was a relatively busy month in the employee benefits world. The Internal Revenue Service (IRS) released the indexed threshold that employers will use in 2019 to determine coverage affordability. The IRS also issued inflation-adjusted amounts that will apply to health savings accounts for 2019.

The IRS released guidance on its play-or-pay penalty response acknowledgment letters. The IRS also released a tax reform tip, frequently asked questions about the family and medical leave credit, and a fact sheet on determining whether an employer is a large employer.

IRS Releases ACA Indexed Affordability Threshold for 2019

The Internal Revenue Service (IRS) released its Revenue Procedure 2018-34 that makes an indexing adjustment to the required contribution percentage that is used to determine whether employer-sponsored health coverage is affordable. For 2019, the percentage will be 9.86 percent.

This means that if an employer is using the federal poverty level (FPL) affordability safe harbor, then the maximum monthly self-only contribution will be $99.75. [9.86% of $12,140 (the 2018 contiguous U.S. FPL for one person), divided by 12, equals $99.75.]

IRS Releases 2019 Limits on Health Savings Accounts

The Internal Revenue Service (IRS) released its Revenue Procedure 2018-30 that provides the 2019 inflation-adjusted amounts for health savings accounts (HSAs).

For 2019, the annual limitation on deductions for an individual with self-only coverage under a high deductible health plan is $3,500. For 2019, the annual limitation on deductions for an individual with family coverage under a high deductible health plan is $7,000.

For 2019, a “high deductible health plan” is defined as a health plan with an annual deductible that is not less than $1,350 for self-only coverage or $2,700 for family coverage, and the annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) do not exceed $6,750 for self-only coverage or $13,500 for family coverage.

IRS Releases Guidance on its Play-or-Pay Penalty Response Acknowledgment Letters

In late 2017, the Internal Revenue Service (IRS) started mailing Letter 226J to inform large employers of their potential liability for an employer shared responsibility payment (ESRP) for the 2015 calendar year. The IRS’ determination of an employer’s liability and potential payment is based on information reported to the IRS on Forms 1094-C and 1095-C and information about the employer’s full-time employees that were allowed the premium tax credit.

The letter contains Form 14764 (ESRP Response) which is the form that the employer must use to file its response by the deadline listed in the letter. The employer uses Form 14764 to indicate that it agrees or disagrees with the IRS’ letter. If an employer disagrees with the proposed liability, then it must provide a full explanation of its disagreement using Form 14765.

The IRS will acknowledge the employer’s response with a Letter 227 that describes the further actions that an employer can take. The IRS’ recently released Understanding Your Letter 227 describes the versions of Letter 227 that an employer may receive:

  • Letter 227-J acknowledges receipt of the signed agreement Form 14764, ESRP Response, and that the penalty will be assessed. After the IRS issues this letter, the case will be closed. No response is required.
  • Letter 227-K acknowledges receipt of the information provided and shows the penalty has been reduced to zero. After the IRS issues this letter, the case will be closed. No response is required.
  • Letter 227-L acknowledges receipt of the information provided and shows the penalty has been revised. The letter includes an updated Form 14765 and revised calculation table. The employer can agree or request a meeting with the manager and/or appeals.
  • Letter 227-M acknowledges receipt of information provided and shows that the penalty did not change. The letter provides an updated Form 14765 and revised calculation table. The employer can agree or request a meeting with the manager and/or appeals.
  • Letter 227-N acknowledges the decision reached in appeals and shows the penalty based on the appeals review. After the IRS issues this letter, the case will be closed. No response is required.

If, after receiving Letter 227, the employer agrees with the proposed penalty, then the employer would follow the instructions to sign the response form and return it with full payment in the envelope provided.

If, after receiving Letter 227, the employer disagrees with the proposed or revised shared employer responsibility payment, the employer must provide an explanation of why it disagrees or indicate changes needed, or both, on Form 14765. Then the employer must return all documents as instructed in the letter by the response date. The employer may also request a pre-assessment conference with the IRS Office of Appeals within the response date listed within Letter 227, which will be generally 30 days from the date of the letter.

If the employer does not respond to either Letter 226J or Letter 227, the IRS will assess the amount of the proposed employer shared responsibility payment and issue a notice and demand for payment.

Read more about the play-or-pay penalty assessment letters.

IRS Releases Tax Reform Tax Tip and FAQs Regarding Family and Medical Leave Credit

The Internal Revenue Service (IRS) released its Tax Reform Tax Tip 2018-69: How the Employer Credit for Family and Medical Leave Benefits Employers and its updated Section 45S Employer Credit for Paid Family and Medical Leave FAQs that primarily reiterates the Tax Cuts and Jobs Act’s provisions that provide a new federal credit for employers that provide paid family and medical leave to their employees.

In its Tax Tip, the IRS explains that an employer must reduce its deduction for wages or salaries paid or incurred by the amount determined as a credit. Also, any wages taken into account in determining any other general business credit may not be used in determining this credit.

In its FAQs, the IRS indicates that, in the future, it will address when the written policy must be in place, how paid family and medical leave relates to an employer’s other paid leave, how to determine whether an employee has been employed for one year or more, the impact of state and local leave requirements, and whether members of a controlled group of corporations and businesses under common control are treated as a single taxpayer in determining the credit.

Read more about the federal tax credit for employer-provided paid family and medical leave.

IRS Releases Fact Sheet on Determining Whether an Employer is a Large Employer

The Internal Revenue Service (IRS) released Publication 5208 – Affordable Care Act: Determining if you are an applicable large employer that provides a three-step process for employers to determine whether they are an applicable large employer for purposes of the employer shared responsibility provisions.

Although this one-page fact sheet doesn’t provide new information about counting employees, it may be a helpful guide for those employers who have fewer than 50 full-time or full-time equivalent employees and who are growing their staff numbers.

June 2018

June was a relatively quiet month in the employee benefits world. The U.S. Department of Labor issued final regulations regarding association health plans. The Centers for Medicare and Medicaid Services released a form that certain plan sponsors will use for reporting limited wraparound coverage.

DOL Issues Final Regulations Regarding Association Health Plans

On June 19, 2018, the U.S. Department of Labor (DOL) published Frequently Asked Questions About Association Health Plans (AHPs) and issued a final rule that broadens the definition of “employer” and the provisions under which an employer group or association may be treated as an “employer” sponsor of a single multiple-employer employee welfare benefit plan and group health plan under Title I of the Employee Retirement Income Security Act (ERISA).

The final rule is intended to facilitate adoption and administration of AHPs and expand health coverage access to employees of small employers and certain self-employed individuals.

The final rule will be effective on August 20, 2018. The final rule will apply to fully-insured AHPs on September 1, 2018, to existing self-insured AHPs on January 1, 2019, and to new self-insured AHPs formed under this final rule on April 1, 2019.

Read more about the final rule.

CMS Releases Form for Reporting Wraparound Excepted Benefits

Under a 2015 final rule by the Internal Revenue Service, U.S. Department of Labor, and U.S. Department of Health and Human Services, certain employers may offer limited wraparound coverage under one of two narrow pilot programs.

These wraparound benefits are considered an excepted benefit and are generally exempt from certain requirements of federal laws, including ERISA, the Internal Revenue Code, and parts of the Patient Protection and Affordable Care Act.

Under the final rule, plan sponsors who offer limited wraparound coverage have reporting requirements. In December 2017, the Centers for Medicare and Medicaid Services (CMS) issued a notice for comments on a proposed reporting form.

On June 25, 2018, the CMS published its Reporting Form for Plan Sponsors Offering Limited Wraparound Coverage. A plan sponsor of limited wraparound coverage must file the form once, within 60 days of the form’s publication (by August 24, 2018), or 60 days after the first day of the first plan year that limited wraparound coverage is first offered.

Read more about limited wraparound coverage.

July 2018

July was a quiet month in the employee benefits world. The IRS released an information letter on the employer shared responsibility provisions.

IRS Releases Information Letter on Employer Shared Responsibility

The Internal Revenue Service (IRS) released its Information Letter 2018-0013 to reiterate how the employer shared responsibility provisions would apply to an applicable large employer. Specifically, the IRS explained how the Service Contract Act (SCA) interacts with the Patient Protection and Affordable Care Act (ACA).

As background, the SCA requires workers who are employed on certain federal contracts to be paid prevailing wages and fringe benefits. An employer generally can satisfy its fringe benefit obligation by providing the cash equivalent of benefits or a combination of cash and benefits. Alternatively, an employer may permit employees to choose among various benefits, or various benefits and cash. An employer may choose to provide fringe benefits under the SCA by offering an employee the option to enroll in health coverage provided by the employer (including an option to decline that coverage). If the employee declines the coverage, that employer would then generally be required by the SCA to provide the employee with cash or other benefits of an equivalent value.

This Information Letter refers to IRS Notice 2015-87 which describes how the ACA and the SCA may be coordinated for plan years beginning before January 1, 2017, and until further guidance is issued and applicable. Notice 2015-87 clarifies that, for employees under the SCA, the choice of a cash-out payment will generally not require an employer to pay a greater share of the cost of the health coverage for the coverage to be considered affordable.

August 2018

August was a relatively quiet month in the employee benefits world. The Internal Revenue Service (IRS), the Department of Health and Human Services (HHS), and the Department of Labor (DOL) published a final rule that amends the definition of short-term, limited-duration insurance. HHS also released a fact sheet on the final rule. To provide guidance on association health plans, the DOL posted a fact sheet and the IRS posted a new Q&A for employers.

IRS, HHS, and DOL Issue Final Rule on Short-Term, Limited-Duration Insurance

On August 3, 2018, the Internal Revenue Service, the Department of Health and Human Services (HHS), and the Department of Labor (collectively, the Departments) published a final rule that amends the definition of short-term, limited-duration insurance. HHS also released a fact sheet on the final rule.

According to the Departments, the final rule will provide consumers with more affordable options for health coverage because they may buy short-term, limited-duration insurance policies that are less than 12 months in length and may be renewed for up to 36 months.

The final rule will apply to insurance policies sold on or after October 2, 2018.

Read more about the final rule.

DOL and IRS Release Additional Information on Association Health Plans

On August 20, 2018, the Department of Labor (DOL) posted the Association Health Plans ERISA Compliance Assistance fact sheet.

On August 20, 2018, the IRS added a new Q&A 18 to its Questions and Answers on Employer Shared Responsibility Provisions Under the Affordable Care Act. Q&A 18 confirms that:

  • An employer that is not an applicable large employer (ALE) under the employer shared responsibility provisions does not become an ALE due to participation in an AHP.
  • An employer that is an ALE under the employer shared responsibility provisions continues to be an ALE subject to the employer shared responsibility provisions regardless of its participation in an AHP.
  • The only circumstance when multiple employers are treated as a single employer for determining whether the employer is an ALE is if the employers have a certain level of common or related ownership.

Read more about the association health plan final rule.

September 2018

September was another relatively quiet month in the employee benefits world. The IRS issued guidance on the employer credit for paid family and medical leave.

IRS Issues Guidance on Employer Credit for Paid Family and Medical Leave

The Internal Revenue Service (IRS) released Notice 2018-71 (Notice) that provides Q&A guidance on the Internal Revenue Code Section 45S employer credit for paid family and medical leave (FML). The IRS clarified several items in its guidance, including:

  • An employer does not need to be subject to Title I of the Family and Medical Leave Act of 1993 (FMLA) to be eligible for the employer credit for FML
  • A description of what the employer’s written policy must contain, including sample “non-interference” language
  • Under Section 45S, paid leave is considered FML only if the leave is specifically designated for one or more FMLA purposes, may not be used for any other reason, and is not paid by a state or local government or required by state or local law
  • An employee does not need to work a minimum number of hours per year to be a qualifying employee
  • Each member of a controlled group generally makes a separate election of whether to claim the credit
  • An employer must file IRS Form 8994, Employer Credit for Paid Family and Medical Leave, and IRS Form 3800, General Business Credit, with its tax return to claim the credit

Read more about the IRS’ Q&A guidance.

October 2018

October was a busy month in the employee benefits world. The Internal Revenue Service (IRS) released final forms and instructions for 2018 ACA reporting. The Department of Health and Human Services (HHS) released inflation-adjusted civil monetary penalty amounts.

Congress and the President enacted a law to prohibit pharmacy gag clauses. The IRS provided tax relief to victims of Hurricane Michael in Florida. The DOL released FAQs for plan participants affected by Hurricanes Florence and Michael.

IRS Releases Final Forms and Instructions for 2018 ACA Reporting

The Internal Revenue Service (IRS) released instructions for both the Forms 1094-B and 1095-B and the Forms 1094-C and 1095-C and Forms 1094-B, 1095-B, 1094-C, and 1095-C. There are no substantive changes in the forms or instructions between 2017 and 2018, beyond the further removal of now-expired forms of transition relief. There is a minor formatting change to Forms 1095-B and 1095-C for 2018. There are dividers for the entry of an individual’s first name, middle name, and last name.

Reporting will be due early in 2019, based on coverage in 2018. For calendar year 2018, Forms 1094-C, 1095-C, 1094-B, and 1095-B must be filed by February 28, 2019, or April 1, 2019, if filing electronically. Statements to employees must be furnished by January 31, 2019.

All reporting will be for the 2018 calendar year, even for non-calendar year plans.

Read more about the final forms and instructions.

HHS Releases Inflation-Adjusted Federal Civil Penalty Amounts

The Department of Health and Human Services (HHS) issued its Annual Civil Monetary Penalties Inflation Adjustment. Here are some of the adjustments:

  • Medicare Secondary Payer:
    • For failure to provide information identifying situations where the group health plan is primary, the maximum penalty increases from $1,157 to $1,181 per failure.
    • For an employer who offers incentives to a Medicare-eligible individual to not enroll in employer-sponsored group health that would otherwise be primary, the maximum penalty increases from $9,054 to $9,239.
    • For willful or repeated failure to provide requested information regarding group health plan coverage, the maximum penalty increases from $1,474 to $1,504.
  • Summary of Benefits and Coverage: For failure to provide, the maximum penalty increases from $1,105 to $1,128 per failure.
  • Health Insurance Portability and Accountability Act (HIPAA):
Tier Penalty
1. Did Not Know:

Covered entity or business associate did not know (and by exercising reasonable diligence would not have known) that it violated the provision of the Administrative Simplification regulations.

$114 to $57,051 for each violation, up to a maximum of $1,711,533 for identical provisions during a calendar year.
2. Reasonable Cause:

The violation was due to reasonable cause and not to willful neglect.

$1,141 to $57,051 for each violation, up to a maximum of $1,711,533 for identical provisions during a calendar year.
3. Willful Neglect – Corrected:

The violation was due to willful neglect, but the violation is corrected during the 30-day period beginning on the first date the liable person knew (or by exercising reasonable diligence would have known) of the failure to comply.

$11,410 to $57,051 for each violation, up to a maximum of $1,711,533 for identical provisions during a calendar year.
4. Willful Neglect – Not Corrected:

The violation was due to willful neglect and the violation is not corrected as described in Tier 3.

$57,051 minimum for each violation, up to a maximum of $1,711,533 for identical provisions during a calendar year.

 

The adjustments are effective for penalties assessed on or after October 11, 2018, for violations occurring after November 2, 2015.

Congress and the President Enact Law Prohibiting Pharmacy Gag Clauses

Congress and the President enacted the Patient Right to Know Drug Prices Act (Act) that prohibits any restriction on a pharmacy’s ability to inform customers about certain prescription drug costs.

The Act prohibits a group health plan (or a health insurance issuer offering group or individual health insurance coverage, or a pharmacy benefits management service working with a health plan or health insurance issuer) from taking the following actions against a pharmacy that dispenses a prescription drug to an enrollee in the plan or coverage:

  • restricting, directly or indirectly, the pharmacy from informing an enrollee of any difference between the enrollee’s out-of-pocket prescription drug cost under the plan or coverage and the amount that the enrollee would pay for the prescription drug without using any health plan or insurance coverage, or
  • penalizing the pharmacy for informing an enrollee of any difference between the enrollee’s out-of-pocket prescription drug cost under the plan or coverage and the amount that the enrollee would pay for the prescription drug without using any health plan or insurance coverage.

Tax Relief for Victims of Hurricane Michael in Florida

Victims of Hurricane Michael that took place beginning on October 7, 2018, in Florida may qualify for tax relief from the Internal Revenue Service (IRS). The President declared that a major disaster exists in Florida. The Federal Emergency Management Agency’s major declaration permits the IRS to postpone deadlines for taxpayers who have a business in certain counties within the disaster area.

The IRS automatically identifies taxpayers located in the covered disaster area and applies automatic filing and payment relief. But affected taxpayers who reside or have a business located outside the covered disaster area must call the IRS disaster hotline at 866-562-5227 to request this tax relief.

In the prior month, the IRS extended deadlines for victims of Hurricane Florence in certain counties of North Carolina, South Carolina, and Virginia.

DOL Releases FAQs for Plan Participants Affected by Hurricanes Florence and Michael

The Department of Labor (DOL) released its FAQs for Participants and Beneficiaries Following Hurricanes Florence and Michael to answer health benefit and retirement benefit questions. The FAQs cover topics including:

  • Whether an employee will still be covered by an employer-sponsored group health plan if the worksite closed
  • Potential options such as special enrollment rights, COBRA continuation coverage, individual health coverage, and health coverage through a government program in the event that an employee loses health coverage

November 2018

November was a busy month in the employee benefits world. The Internal Revenue Service (IRS) extended the due date for employers to furnish Forms 1095-C or 1095-B to individuals, extended “good faith compliance efforts” relief for 2018, and issued specifications for employer-provided substitute ACA forms. The Department of the Treasury (Treasury), Department of Labor (DOL), and Department of Health and Human Services (HHS) released two final rules on contraceptive coverage exemptions.

The IRS released indexed Patient-Centered Outcomes Research Institute (PCORI) fees and inflation-adjusted limits for various benefits. The DOL, IRS, and the Pension Benefit Guaranty Corporation (PBGC) released advance informational copies of the 2018 Form 5500 annual return/report and instructions.

For survivors of the 2018 California wildfires, the IRS provided tax relief and the DOL released employee benefit guidance. The IRS provided guidance to employers who adopt leave-based donation programs to provide charitable relief for victims of Hurricane Michael. The Treasury released its Priority Guidance Plan that lists projects that will be the focus of the Treasury and IRS for the period from July 1, 2018, through June 30, 2019.

IRS Extends Due Date to Furnish ACA Forms to Participants and Provides Good Faith Penalty Relief

The Internal Revenue Service (IRS) issued Notice 2018-94 to extend the due date to furnish 2018 Forms 1095-B and 1095-C to individuals. The due date moves from January 31, 2019, to March 4, 2019.

The IRS also extends “good faith compliance efforts” relief for 2018. As in prior years, this relief is applied only to incorrect or incomplete information reported in good faith on a statement or return. The relief does not apply to a failure to timely furnish a statement or file a return.

Read more about the notice.

IRS Issues Specifications for Employer-Provided Substitute ACA Forms

The Internal Revenue Service (IRS) issued Publication 5223 General Rules and Specifications for Affordable Care Act Substitute Forms 1095-A, 1094-B, 1095-B, 1094-C, and 1095-C that describes how employers may prepare substitute forms to furnish ACA reporting information to individuals and the IRS.

Treasury, DOL, and HHS Release Two Final Rules on Contraceptive Coverage Exemptions

The Department of the Treasury (Treasury), Department of Labor (DOL), and Department of Health and Human Services (HHS) (collectively, Departments) released two final rules on contraceptive coverage exemptions. These rules finalize the Departments’ interim final rules that were published on October 13, 2017. HHS also issued a press release and fact sheet on these final rules.

The first final rule provides an exemption from the contraceptive coverage mandate to entities (including certain employers) and individuals that object to services covered by the mandate on the basis of sincerely held religious beliefs.

The second final rule provides an exemption from the contraceptive coverage mandate to nonprofit organizations, small businesses, and individuals that object to services covered by the mandate on the basis of sincerely held moral convictions.

The final rules will be effective on January 14, 2019.

Read more about the final rules.

IRS Releases Indexed PCORI Fee

The Patient Protection and Affordable Care Act (ACA) imposes a fee on insurers of certain fully insured plans and plan sponsors of certain self-funded plans to help fund the Patient-Centered Outcomes Research Institute (PCORI). The PCORI fee is due by July 31 of the year following the calendar year in which the plan or policy year ends.

The Internal Revenue Service issued Notice 2018-85 to announce the PCORI fee of $2.45 for policy years and plan years that end on or after October 1, 2018, and before October 1, 2019.

Plan/Policy Year Last Year Fee Is Due ($2.45, indexed/person)   Plan/Policy Year Last Year Fee Is Due ($2.45, indexed/person)
Nov. 1, 2017 – Oct. 31, 2018 July 31, 2019 May 1, 2018 – April 30, 2019 July 31, 2020
Dec. 1, 2017 – Nov. 30, 2018 July 31, 2019 June 1, 2018 – May 31, 2019 July 31, 2020
Jan. 1, 2018 – Dec. 31, 2018 July 31, 2019 July 1, 2018 – June 30, 2019 July 31, 2020
Feb. 1, 2018 – Jan. 31, 2019 July 31, 2020 Aug. 1, 2018 – July 31, 2019 July 31, 2020
March 1, 2018 – Feb. 28, 2019 July 31, 2020 Sept. 1, 2018 – Aug. 31, 2019 July 31, 2020
April 1, 2018 – March 31, 2019 July 31, 2020 Oct. 1, 2018 – Sept. 30, 2019 July 31, 2020

Read more about the PCORI fee.

IRS Releases 2019 Inflation-Adjusted Limits

The Internal Revenue Service (IRS) released its inflation-adjusted limits for various benefits. For example, the maximum contribution limit to health flexible spending arrangements (FSAs) will be $2,700 in 2019. Also, the maximum reimbursement limit in 2019 for Qualified Small Employer Health Reimbursement Arrangements will be $5,150 for single coverage and $10,450 for family coverage.

Read more about the 2019 limits.

Advance Informational Copies of 2018 Form 5500 Annual Return/Report

The U.S. Department of Labor’s Employee Benefits Security Administration (EBSA), the Internal Revenue Service (IRS), and the Pension Benefit Guaranty Corporation (PBGC) released advance informational copies of the 2018 Form 5500 annual return/report and related instructions.

Here are some of the changes that the instructions highlight:

  • Principal Business Activity Codes.Principal Business Activity Codes have been updated to reflect updates to the North American Industry Classification System (NAICS). For Line 2d, a plan administrator would enter the six-digit Principal Business Activity Code that best describes the nature of the plan sponsor’s business from the list of codes on pages 78-80 of the Form 5500 Instructions.
  • Administrative Penalties. The instructions have been updated to reflect that the new maximum penalty for a plan administrator who fails or refuses to file a complete or accurate Form 5500 report has been increased to up to $2,140 a day for penalties assessed after January 2, 2018, whose associated violations occurred after November 2, 2015.

Because the Federal Civil Penalties Inflation Adjustment Improvements Act of 2015 requires the penalty amount to be adjusted annually after the Form 5500 and its schedules, attachments, and instructions are published for filing, be sure to check for any possible required inflation adjustments of the maximum penalty amount that are published in the Federal Register after the instructions have been posted.

  • Form 5500-Participant Count.The instructions for Lines 5 and 6 have been enhanced to make clearer that welfare plans complete only Line 5 and elements 6a(1), 6a(2), 6b, 6c, and 6d in Line 6.

Be aware that the advance copies of the 2018 Form 5500 are for informational purposes only and cannot be used to file a 2018 Form 5500 annual return/report.

ERISA imposes the Form 5500 reporting obligation on the plan administrator. Form 5500 is normally due on the last day of the seventh month after the close of the plan year. For example, a plan administrator would file Form 5500 by July 31, 2019, for a 2018 calendar year plan.

Tax Relief for Victims of November Wildfire in California

Victims of the wildfires that took place beginning on November 8, 2018, in California may qualify for tax relief from the Internal Revenue Service (IRS). The President declared that a major disaster exists in California. The Federal Emergency Management Agency’s major declaration permits the IRS to postpone deadlines for taxpayers who have a business in certain counties within the disaster area.

The IRS automatically identifies taxpayers located in the covered disaster area and applies automatic filing and payment relief. But affected taxpayers who reside or have a business located outside the covered disaster area must call the IRS disaster hotline at 866-562-5227 to request this tax relief.

DOL Releases Employee Benefit Guidance and Relief for 2018 California Wildfire Survivors

The Department of Labor (DOL) released its FAQs for Participants and Beneficiaries Following the 2018 California Wildfires to answer health benefit and retirement benefit questions.

The FAQs cover topics including:

  • Whether an employee will still be covered by an employer-sponsored group health plan if the worksite closed
  • Potential options such as special enrollment rights, COBRA continuation coverage, individual health coverage, and health coverage through a government program in the event that an employee loses health coverage

The DOL also released its Fact Sheet: Guidance and Relief for Employee Benefit Plans Impacted by the 2018 California Wildfires to recognize that employers may encounter problems due to the wildfires. The DOL advises plan fiduciaries to make reasonable accommodations to prevent workers’ loss of benefits and to take steps to minimize the possibility of individuals losing benefits because of a failure to comply with pre-established time frames.

The DOL also acknowledged that there may be instances when full and timely compliance by group health plans may not be possible due to physical disruption to a plan’s principal place of business. The DOL’s enforcement approach will emphasize compliance assistance, including grace periods and other relief where appropriate.

IRS Provides Guidance on Leave-Based Donation Programs’ Tax Treatment

The IRS issued Notice 2018-89 to guide employers who adopt leave-based donation programs to provide charitable relief for victims of Hurricane Michael. These leave-based donation programs allow employees to forgo vacation, sick, or personal leave in exchange for cash payments that the employer will make to charitable organizations described under Internal Revenue Code Section 170(c).

The employer’s cash payments will not constitute gross income or wages of the employees if paid before January 1, 2020, to the Section 170(c) charitable organizations for the relief of victims of Hurricane Michael. Employers do not need to include these payments in Box 1, 3, or 5 of an employee’s Form W-2.

Treasury Releases 2018-19 Priority Guidance Plan

The Department of the Treasury (Treasury) released its 2018-2019 Priority Guidance Plan (Plan) that describes the priorities for the Treasury and the Internal Revenue Service (IRS) for the period from July 1, 2018, through June 30, 2019. The Plan contains a list of projects that will be the focus of the Treasury and IRS, including:

  • Guidance on employer shared responsibility provisions
  • Regulations regarding the excise tax on high cost employer-provided coverage (also known as the “Cadillac tax”).

December 2018

December was a relatively quiet month in the employee benefits world. A U.S. District Court issued an order declaring that the Patient Protection and Affordable Care Act (ACA) is unconstitutional. The Equal Employment Opportunity Commission (EEOC) issued two final rules to remove certain wellness program incentives. The Department of Labor (DOL) updated its Form M-1 filing guidance for association health plans.

U.S. District Court Declares ACA Unconstitutional

On December 14, 2018, the U.S. District Court for the Northern District of Texas (Court) issued a declaratory order in ongoing litigation regarding the individual mandate and the Patient Protection and Affordable Care Act (ACA). The Court declared that the individual mandate is unconstitutional and declared that the rest of the ACA – including its guaranteed issue and community rating provisions – is unconstitutional.

The Court did not grant the plaintiffs’ request for a nationwide injunction to prohibit the ACA’s continued implementation and enforcement. The Court’s declaratory judgment simply defines the parties’ legal relationship and rights under the case at this relatively early stage in the case.

On December 16, 2018, the Court issued an order that requires the parties to meet and discuss the case by December 21, 2018, and to jointly submit a proposed schedule for resolving the plaintiffs’ remaining claims.

On December 30, 2018, the Court issued two orders. The first order grants a stay of its December 14 order. This means that the court’s order regarding the ACA’s unconstitutionality will not take effect while it is being appealed. The second order enters the December 14 order as a final judgment so the parties may immediately appeal the order.

On December 31, 2018, the Court issued an order that stays the remainder of the case. This means that the Court will not be proceeding with the remaining claims in the case while its December 14 order is being appealed. After the appeal process is complete, the parties are to alert the Court and submit additional court documents if they want to continue with any remaining claims in the case.

At this time, the case’s status does not impact employers’ group health plans. However, employers should stay informed for the final decision in this case.

Read more about the court case.

EEOC Issue Final Rules to Remove Wellness Program Incentive Limits Vacated by Court

On December 20, 2018, the Equal Employment Opportunity Commission (EEOC) issued two final rules to remove wellness program incentives.

As background, in August 2017, the U.S. District Court for the District of Columbia held that the U.S. Equal Employment Opportunity Commission (EEOC) failed to provide a reasoned explanation for its decision to allow an incentive for spousal medical history under the Genetic Information Nondiscrimination Act (GINA) rules and adopt 30 percent incentive levels for employer-sponsored wellness programs under both the Americans with Disabilities Act (ADA) rules and GINA rules.

In December 2017, the court vacated the EEOC rules under the ADA and GINA effective January 1, 2019. The EEOC issued the following two final rules in response to the court’s order.

The first rule removes the section of the wellness regulations that provided incentive limits for wellness programs regulated by the ADA. Specifically, the rule removes guidance on the extent to which employers may use incentives to encourage employees to participate in wellness programs that ask them to respond to disability-related inquiries or undergo medical examinations.

The second rule removes the section of the wellness regulations that provided incentive limits for wellness programs regulated by GINA. Specifically, the rule removes guidance that addressed the extent to which an employer may offer an inducement to an employee for the employee’s spouse to provide current health status information as part of a health risk assessment (HRA) administered in connection with an employer-sponsored wellness program.

Both rules will be effective on January 1, 2019.

Read more about the EEOC’s final rules.

DOL Updates Form M-1 Filing Guidance for Association Health Plans

On December 3, 2018, the Department of Labor (DOL) published its “10 Tips for Filing Form M-1 For Association Health Plans And Other MEWAs That Provide Medical Benefits” that provides plan administrators with information on when to file and how to complete portions of Form M-1.

The DOL emphasizes that all multiple employer welfare arrangements (MEWAs) that provide medical benefits, including association health plans (AHPs) that intend to begin operating under the DOL’s new AHP rule, are required to file an initial registration Form M-1 at least 30 days before any activity including, but not limited to, marketing, soliciting, providing, or offering to provide medical care benefits to employers or employees who may participate in an AHP.

Read more about the DOL guidance.

1/3/2019

*This information is general and is provided for educational purposes only. It is not intended to provide legal advice. You should not act on this information without consulting legal counsel or other knowledgeable advisors


Advance Informational Copies of 2018 Form 5500 Annual Return/Report

Recently, the IRS, EBSA and PBGC released informational copies of the 2018 Form 5500 annual return/report. Continue reading this blog post for more information and some highlighted changes.


The U.S. Department of Labor’s Employee Benefits Security Administration (EBSA), the Internal Revenue Service (IRS), and the Pension Benefit Guaranty Corporation (PBGC) released advance informational copies of the 2018 Form 5500 annual return/report and related instructions.

Here are some of the changes that the instructions highlight:

  • Principal Business Activity Codes. Principal Business Activity Codes have been updated to reflect updates to the North American Industry Classification System (NAICS). For Line 2d, a plan administrator would enter the six-digit Principal Business Activity Code that best describes the nature of the plan sponsor’s business from the list of codes on pages 78-80 of the Form 5500 Instructions.
  • Administrative Penalties. The instructions have been updated to reflect that the new maximum penalty for a plan administrator who fails or refuses to file a complete or accurate Form 5500 report has been increased to up to $2,140 a day for penalties assessed after January 2, 2018, whose associated violations occurred after November 2, 2015.

Because the Federal Civil Penalties Inflation Adjustment Improvements Act of 2015 requires the penalty amount to be adjusted annually after the Form 5500 and its schedules, attachments, and instructions are published for filing, be sure to check for any possible required inflation adjustments of the maximum penalty amount that are published in the Federal Register after the instructions have been posted.

  • Form 5500-Participant Count. The instructions for Lines 5 and 6 have been enhanced to make clearer that welfare plans complete only Line 5 and elements 6a(1), 6a(2), 6b, 6c, and 6d in Line 6.

Be aware that the advance copies of the 2018 Form 5500 are for informational purposes only and cannot be used to file a 2018 Form 5500 annual return/report.

ERISA imposes the Form 5500 reporting obligation on the plan administrator. Form 5500 is normally due on the last day of the seventh month after the close of the plan year. For example, a plan administrator would file Form 5500 by July 31, 2019, for a 2018 calendar year plan.

SOURCE: Hsu, K. (25 January 2019) "Advance Informational Copies of 2018 Form 5500 Annual Return/Report" (Web Blog Post). Retrieved from http://blog.ubabenefits.com/advance-informational-copies-of-2018-form-5500-annual-return/report


IRS Releases 2019 Inflation-Adjusted Limits

IRS Releases 2019 Inflation-Adjusted Limits

The Internal Revenue Service (IRS) recently released their inflation-adjusted limited for various benefits. Continue reading this blog post from United Benefit Advisors (UBA) to learn more about the 2019 limits.


The Internal Revenue Service (IRS) released its inflation-adjusted limits for various benefits. For example, the maximum contribution limit to health flexible spending arrangements (FSAs) will be $2,700 in 2019. Also, the maximum reimbursement limit in 2019 for Qualified Small Employer Health Reimbursement Arrangements will be $5,150 for single coverage and $10,450 for family coverage.

Read more about the 2019 limits.

SOURCE: Hsu, K. (17 January 2019) "IRS Releases 2019 Inflation-Adjusted Limits" (Web Blog Post). Retrieved from http://blog.ubabenefits.com/irs-releases-2019-inflation-adjusted-limits


The do’s and don’ts of ADA accommodations: 3 new rulings

Are you compliant with ADA accommodation laws? More than 25,000 ADA charges were filed by the EEOC in the past year, despite employers best compliance efforts. Continue reading to learn more.


Employers are facing more disability discrimination lawsuits than ever – despite their best compliance efforts. 
In the past year alone, over 25,000 ADA charges were filed by the EEOC.

The right way to accommodate

One area that’s often a point of contention? The accommodation process. Workers and employers can have a very different idea of how a disability should be accommodated.

And while each disability needs to be evaluated on a case by case basis, several recent court rulings shed further light on employers’ ADA accommodation responsibilities.

1. In Brumley v. United Parcel Service, a court ruled that ADA accommodations don’t necessarily have to be given to employees immediately.

Melissa Brumley delivered packages for UPS when she hurt her back lifting a heavy box from her truck.

She took leave to heal, and her doctor said when she returned to work she could no longer lift packages or drive. Since these were two essential functions of her job, Brumley’s manager put her on leave while waiting on more information from her doctor.

After beginning the interactive process and considering a reassignment, Brumley’s doctor cleared her to go back to her old job, and UPS ended the process.

But Brumley sued the company for failing to accommodate her during those weeks she was on leave, which resulted in loss of pay.

A district court ruled in favor of UPS, and on appeal, the 6th Circuit agreed. It said just because the company didn’t accommodate the employee immediately didn’t mean it violated the ADA.

UPS began the interactive process and only stopped once Brumley was cleared to go back to her old job without an accommodation.

The key things the company did? Beginning the process and requesting additional info from Brumley’s doctor – this showed the court a good faith effort to comply with the ADA.

2. In Sharbono v. Northern States Power, a court ruled a company that failed to find an accommodation didn’t fail to fulfill its ADA duties.

After a foot injury, James Sharbono wasn’t able to wear the steel-toed boots required by his company’s safety procedures.

HR worked with Sharbono and suggested several accommodations, such as altering his boots and getting a custom pair made, but none worked out. Sharbono was forced to retire, and he sued for ADA violation.

But the 8th Circuit ruled the company acted in good faith. It worked with Sharbono and suggested several accommodations. It was only after exhausting all options that Sharbono was forced to retire. The court said the company fulfilled its ADA responsibilities, despite finding no accommodation for Sharbono.

3. In Stokes v. Nielsen, a court decided companies can be required to make accommodations that cover more than just essential job functions.

Jacqueline Stokes had impaired vision and received multiple accommodations that allowed her to do her job. Stokes then requested special meeting handouts, printed in large letters, that she could read beforehand.

Despite many promises from HR, Stokes never received her requested handouts. She sued, claiming to be denied a reasonable accommodation under the ADA.

While the company argued it gave Stokes everything she needed to do her job, therefore fulfilling its ADA responsibilities, the Fifth Circuit disagreed.

“Our circuit has explicitly rejected the requirement that requested modifications must be necessary to perform essential job functions to constitute a reasonable accommodation,” it said. And Stokes’ request was deemed reasonable.

This case shows if an employee makes a reasonable request for their job, it’s easier to just grant it.

SOURCE: Mucha, R. (4 January 2019) "The do’s and don’ts of ADA accommodations: 3 new rulings" (Web Blog Post). Retrieved from http://www.hrmorning.com/the-dos-and-donts-of-ada-accommodations-3-new-rulings/


4 mistakes to avoid at the intersection of FMLA and PTO

Are your leave policies explicitly outlined for your employees? A costly mistake employers often make is not outlining the concurrent rule to employees. Read on for more mistakes employers make when it comes to FMLA and PTO.


By now, many employers can recite the basic requirements of the federal Family and Medical Leave Act (FMLA) in their sleep. The law provides eligible employees (those who have at least one year of service and 1,250 hours under their belt) with up to 12 weeks of unpaid, job-protected leave over a 12-month period for qualifying family-related or medical reasons. FMLA covers companies with 50 or more employees located within 75 miles of each other.

While the law itself is conceptually straightforward, administration can become incredibly complex — especially when you throw other types of leave entitlements into the mix such as workers' comp, disability leave, and paid time off (PTO).

HR Dive recently spoke with three employment law attorneys about the most common — and costly — leave administration errors employers make when it comes to the intersection of FMLA and paid leave.

Mistake #1: Not running leaves concurrently

"I would say that the biggest issue that we see is a lot of employers do not have policies that provide for the use of paid time off concurrently with the FMLA," said attorney Molly Batsch, an officer at the St. Louis office of Greensfelder, Hemker & Gale, P.C. "[Because] the FMLA regulations allow employers to require employees to use any paid time off concurrently with unpaid FMLA leave, we really encourage employers to put that specifically in their policies."

Attorney Jeff Nowak, a partner at the Chicago office of Franczek Radelet P.C., concurred via email: "A decent number of employers don't realize that they can run FMLA leave concurrently with paid leave benefits such as worker's compensation benefits — or they forget to run both at the same time."

Failing to run leaves concurrently, when permitted, can be costly for employers. A series of consecutive leaves strung together can mean longer absences and increased workplace disruption.

Mistake #2: Policy confusion

A similar mistake employers make is that they don't explicitly outline the concurrent rule to employees. Your FMLA policy should make clear that any paid time off will run concurrently with unpaid FMLA time, advised Batsch: "I think that employers have a few misconceptions about that.

"The first misconception would be that the employee gets to pick," she said. "If the employee doesn't want to run the two concurrently, then they can go ahead and take 12 weeks of unpaid FMLA and then they can take their five weeks of vacation after that, and that is not the case. It is permissible for an employer to require that time to run concurrently. So that's the first mistake I see."

Make sure your policy is abundantly obvious about that so employees don't get upset about that requirement when it's being administered.

Mistake #3: Missing an important caveat about FMLA and paid leave

There is an important exception to the general rule that employers may require an employee to use paid leave during unpaid FMLA leave, one that many employers miss, according to all three attorneys HR Dive spoke with.

"If an employee is on FMLA leave and simultaneously in receipt of a paid benefit, in any amount, FMLA leave is considered paid. When it's paid FMLA, an employer may not require that the employee substitute PTO — but it can permit that," said attorney David Mohl, a principal at the Atlanta office of Jackson Lewis PC.

For example, he said, if short-term disability provides 70% income replacement, an employer cannot require that the employee use PTO (or other paid leave) to make up the difference. If, however, there is a waiting period before that paid benefit kicks in — say, seven days — an employer may require the use of paid leave during that seven days.

Batsch noted that even if the employee is receiving paid time off via a third-party disability plan rather than an employer disability plan, "that's still a situation where you can't require an employee to run their paid time off concurrently with their FMLA time." This was clarified by the Seventh Circuit in a 2007 case (Repa v. Roadway Express, Inc., 477 F.3d 938).

Mistake #4: Forgetting to consider the patchwork of local laws

"The growing number of state and local laws heap a load of additional compliance concerns onto employers," said Nowak. "Not only are there additional considerations for accrual, carryover, and reasons for leave, but these new leave laws tend to provide job-protected leave in situations where the medical condition is not covered by the FMLA. As a result, employers cannot discipline an employee for an absence when he or she is utilizing leave covered by one of these leave laws."

Of course, those laws only make the interactions with FMLA management more complex.

"Paid parental leave policies interact with FMLA and gender discrimination laws," said Mohl. "PPL policies are, of course, a type of paid leave; some operate as a disability benefit."

Paid leave will likely continue to expand in scope in the coming months as more states and cities consider mandating it. Currently, 10 states and about 30 localities guarantee some type of paid sick leave. A number of federal policies have also been proposed, but no movement has been seen at that level yet.

SOURCE: Carsen, J. (27 November 2018) "4 mistakes to avoid at the intersection of FMLA and PTO" (Web Blog Post). Retrieved from https://www.hrdive.com/news/4-mistakes-to-avoid-at-the-intersection-of-fmla-and-pto/542962/


Compliance Recap - December 2018

December was a relatively quiet month in the employee benefits world.

A U.S. District Court issued an order declaring that the Patient Protection and Affordable Care Act (ACA) is unconstitutional. The Equal Employment Opportunity Commission (EEOC) issued two final rules to remove certain wellness program incentives. The Department of Labor (DOL) updated its Form M-1 filing guidance for association health plans.

UBA Updates

UBA updated or revised existing guidance:

U.S. District Court Declares ACA Unconstitutional

On December 14, 2018, the U.S. District Court for the Northern District of Texas (Court) issued a declaratory order in ongoing litigation regarding the individual mandate and the Patient Protection and Affordable Care Act (ACA). The Court declared that the individual mandate is unconstitutional and declared that the rest of the ACA – including its guaranteed issue and community rating provisions – is unconstitutional.

The Court did not grant the plaintiffs’ request for a nationwide injunction to prohibit the ACA’s continued implementation and enforcement. The Court’s declaratory judgment simply defined the parties’ legal relationship and rights under the case at this relatively early stage in the case.

On December 16, 2018, the Court issued an order that requires the parties to meet and discuss the case by December 21, 2018, and to jointly submit a proposed schedule for resolving the plaintiffs’ remaining claims.

On December 30, 2018, the Court issued two orders. The first order grants a stay of its December 14 order. This means that the court’s order regarding the ACA’s unconstitutionality will not take effect while it is being appealed. The second order enters the December 14 order as a final judgment so the parties may immediately appeal the order.

On December 31, 2018, the Court issued an order that stays the remainder of the case. This means that the Court will not be proceeding with the remaining claims in the case while its December 14 order is being appealed. After the appeal process is complete, the parties are to alert the Court and submit additional court documents if they want to continue with any remaining claims in the case.

At this time, the case’s status does not impact employers’ group health plans. However, employers should stay informed for the final decision in this case.

Read more about the court case.

EEOC Issue Final Rules to Remove Wellness Program Incentive Limits Vacated by Court

On December 20, 2018, the Equal Employment Opportunity Commission (EEOC) issued two final rules to remove wellness program incentives.

As background, in August 2017, the United States District Court for the District of Columbia held that the U.S. Equal Employment Opportunity Commission (EEOC) failed to provide a reasoned explanation for its decision to allow an incentive for spousal medical history under the Genetic Information Nondiscrimination Act (GINA) rules and adopt 30 percent incentive levels for employer-sponsored wellness programs under both the Americans with Disabilities Act (ADA) rules and GINA rules.

In December 2017, the court vacated the EEOC rules under the ADA and GINA effective January 1, 2019. The EEOC issued the following two final rules in response to the court’s order.

The first rule removes the section of the wellness regulations that provided incentive limits for wellness programs regulated by the ADA. Specifically, the rule removes guidance on the extent to which employers may use incentives to encourage employees to participate in wellness programs that ask them to respond to disability-related inquiries or undergo medical examinations.

The second rule removes the section of the wellness regulations that provided incentive limits for wellness programs regulated by GINA. Specifically, the rule removes guidance that addressed the extent to which an employer may offer an inducement to an employee for the employee’s spouse to provide current health status information as part of a health risk assessment (HRA) administered in connection with an employee-sponsored wellness program.

Both rules will be effective on January 1, 2019.

Read more about the EEOC’s final rules.

DOL Updates Form M-1 Filing Guidance for Association Health Plans

On December 3, 2018, the Department of Labor (DOL) published its “10 Tips for Filing Form M-1 For Association Health Plans And Other MEWAs That Provide Medical Benefits” that provides plan administrators with information on when to file and how to complete portions of Form M-1.

The DOL emphasizes that all multiple employer welfare arrangements (MEWAs) that provide medical benefits, including association health plans (AHPs) that intend to begin operating under the DOL’s new AHP rule, are required to file an initial registration Form M-1 at least 30 days before any activity including, but not limited to, marketing, soliciting, providing, or offering to provide medical care benefits to employers or employees who may participate in an AHP.

Read more about the DOL guidance.

Question of the Month

Q: If an employee must increase the hours of childcare needed because the employee changes work schedules, may the employee increase the DCAP amount that the employee elects?

A: Yes, increasing the hours of childcare is a permitted election change event that would allow an employee to increase the employee’s DCAP election amount consistent with the change in childcare cost.

**This information is general and is provided for educational purposes only. It is not intended to provide legal advice. You should not act on this information without consulting legal counsel or other knowledgeable advisors.


From HSA to 401(k) contribution limits, 11 numbers to know for 2019

Are health savings accounts (HSA), 401(k)s and flexible spending accounts (FSA) a part of your employer-sponsored benefits? Read this blog post for the 11 numbers you should know for 2019.


There are a slew of important figures companies and employees need to know regarding health savings accounts, 401(k)s and flexible spending accounts. While the IRS announced HSA changes in May, the agency only recently announced annual changes to FSAs and 401(k)s. From contribution limits to out-of-pocket amounts, here are the figures employers need to know — all of which take effect in January.

$19,000: 401(k) pre-tax contribution limits

The IRS in November said it is increasing the pre-tax contribution limits for employees who participate in a 401(k), 403(b) and most 457 plans to $19,000 from $18,500. That limit also applies to the federal government’s Thrift Savings Plan.

$6,000: 401(k) catch-up contribution limit

For participants ages 50 and over, the additional 401(k) catch-up contribution limit, which is set by law, will stay at $6,000 for 2019.

$6,000: IRA contribution limits

IRA contribution limits are being raised to $6,000 from $5,500 — the first time the IRS has increased the limits since 2013. The catch-up contribution limit for people 50 and over will still be $1,000.

$3,500: Annual HSA contribution limit for individuals

The 2019 annual health savings account contribution limit for individuals with single medical coverage is $3,500, an increase of $50 from 2018.

$7,000: HSA contribution limit for family coverage

For HSAs linked to family coverage, the 2019 contribution limit will rise by $100, to $7,000, above the family cap set for 2018.

$1,350: HDHP minimum deductible for individual

The minimum deductible for a qualifying high-deductible health plan remains unchanged for 2019: $1,350 for individual coverage.

$2,700: HDHP minimum deductible for family

The minimum deductible for a qualifying high-deductible health plan remains at $2,700 for family coverage.

$6,750: HDHP maximum out-of-pocket amounts (individual)

Deductibles, copayments and other amounts that do not include premiums will have a maximum limit of $6,750 for individual coverage next year, up $100 from 2018.

$13,500: HDHP maximum out-of-pocket amounts (family)

Deductibles, copayments and other amounts that do not include premiums will have a maximum limit of $13,500 for family coverage, up $200 from 2018.

$1,000: HSA catch-up contributions

Individuals 55 years or older can contribute an extra $1,000 to their health savings account in 2019. The amount remains unchanged from 2018.

$2,700: FSA contribution limit

The health flexible spending account contribution limit for 2019 is $2,700 — an increase of $50 over the 2018 limit. The increase also applies to limited-purpose FSAs that are restricted to dental and vision care services, which can be used in tandem with health savings accounts.

SOURCE: Mayer, K. (6 December 2018) "From HSA to 401(k) contribution limits, 11 numbers to know for 2019" (Web Blog Post). Retrieved from https://www.benefitnews.com/list/from-hsa-to-401-k-contribution-limits-11-numbers-to-know-for-2019


The ACA Remains In Place After Being Struck Down By Federal Court

Overview

On Dec. 14, 2018, a federal judge ruled in Texas v. United States that the entire Affordable Care Act (ACA) is invalid due to the elimination of the individual mandate penalty in 2019. The decision was not stayed, but the White House announced that the ACA will remain in place pending appeal.

This lawsuit was filed by 20 states as a result of the 2017 tax reform law that eliminates the individual mandate penalty. In 2012, the U.S. Supreme Court upheld the ACA on the basis that the individual mandate is a valid tax. With the penalty’s elimination, the court, in this case, ruled that the ACA is no longer valid under the U.S. Constitution.

Action Steps

This ruling is expected to be appealed and will likely be taken up by the Supreme Court. As a result, a final decision is not expected to be made until that time. The federal judge’s ruling left many questions as to the current state of the ACA; however, the White House announced that the ACA will remain in place pending appeal.

Background

The ACA imposes an “individual mandate” beginning in 2014, which requires most individuals to obtain acceptable health insurance coverage for themselves and their family members or pay a penalty. In 2011, a number of lawsuits were filed challenging the constitutionality of this individual mandate provision.

In 2012, the U.S. Supreme Court upheld the constitutionality of the ACA in its entirety, ruling that Congress acted within its constitutional authority when enacting the individual mandate. The Court agreed that, while Congress could not use its power to regulate commerce between states to require individuals to buy health insurance, it could impose a tax penalty using its tax power for individuals who refuse to buy health insurance.

Highlights

  • A federal judge ruled that the entire ACA is invalid due to the elimination of the individual mandate penalty.
  • This ruling is expected to be appealed and will likely be taken up by the Supreme Court.
  • The ACA will remain in place pending appeal.

Important Dates

December 14, 2018

A federal judge ruled that the entire ACA is invalid due to the elimination of the individual mandate penalty

January 1, 2019

Individuals will no longer be penalized under the ACA for failing to obtain acceptable health insurance coverage

However, a 2017 tax reform bill, called the Tax Cuts and Jobs Act, reduced the ACA’s individual mandate penalty to zero, effective beginning in 2019. As a result, beginning in 2019, individuals will no longer be penalized for failing to obtain acceptable health insurance coverage.

Texas v. United States

Following the tax reform law’s enactment, 20 Republican-controlled states filed a lawsuit again challenging the ACA’s constitutionality. The plaintiffs, first, argued that the individual mandate can no longer be considered a valid tax, since there will no longer be any revenue generated by the provision.

In addition, in its 2012 ruling, the Supreme Court indicated (and both parties agreed) that the individual mandate is an essential element of the ACA, and that the remainder of the law could not stand without it. As a result, the plaintiffs argued that the elimination of the individual mandate penalty rendered the remainder of the ACA unconstitutional.

The U.S. Justice Department chose not to fully defend the ACA in court and, instead, 16 Democratic-controlled states intervened to defend the law.

Because the court determined that the individual mandate is no longer a valid tax, but is an essential element of the ACA, it ultimately ruled that the ACA is invalid in its entirety.

Federal Court Ruling

In his ruling, Judge Reed O’Connor ultimately agreed with the plaintiffs, determining that the individual mandate can no longer be considered a valid exercise of Congressional tax power. According to the court, “[u]nder the law as it now stands, the individual mandate no longer ‘triggers a tax’ beginning in 2019.” As a result, the court ruled that “the individual mandate, unmoored from a tax, is unconstitutional.”

Because the court determined that the individual mandate is no longer valid, it now had to determine whether the provision is “severable” from the remainder of the law (meaning whether other portions of the ACA can remain in place or whether the entire law is invalid without the individual mandate).

In determining whether the remainder of the law could stand without the individual mandate, the court pointed out that “Congress stated three separate times that the individual mandate is essential to the ACA … [and that] the absence of the individual mandate would ‘undercut’ its ‘regulation of the health insurance market.’ Thirteen different times, Congress explained how the individual mandate stood as the keystone of the ACA … [and,] ‘together with the other provisions’ [the individual mandate] allowed the ACA to function as Congress intended.” As a result, the court determined that the individual mandate could not be severed, making the ACA invalid in its entirety.

Impact of the Federal Court Ruling

Judge O’Conner’s ruling left many questions as to the current state of the ACA, because it did not order for anything to be done or stay the ruling pending appeal. However, this ruling is expected to be appealed, and the White House announced that the ACA will remain in place until a final decision is made. Many industry experts anticipate that the Supreme Court will likely take up the case, which means that a final decision will not be made until that time.

While these appeals are pending, all existing ACA provisions will continue to be applicable and enforced. Although the individual mandate penalty will be reduced to zero beginning in 2019, employers and individuals must continue to comply with all other applicable ACA requirements. This ruling does not impact the 2019 Exchange enrollment, the ACA’s employer shared responsibility (pay or play) penalties and related reporting requirements, or any other applicable ACA requirement.

Download the PDF


Compliance Recap - November 2018

Compliance Recap

November 2018

November was a busy month in the employee benefits world.

The Internal Revenue Service (IRS) extended the due date for employers to furnish Forms 1095-C or 1095-B to individuals, extended “good faith compliance efforts” relief for 2018, and issued specifications for employer-provided substitute ACA forms. The Department of the Treasury (Treasury), Department of Labor (DOL), and Department of Health and Human Services (HHS) released two final rules on contraceptive coverage exemptions.

The IRS released indexed Patient-Centered Outcomes Research Institute (PCORI) fees and inflation-adjusted limits for various benefits. The DOL, IRS, and the Pension Benefit Guaranty Corporation (PBGC) released advance informational copies of the 2018 Form 5500 annual return/report and instructions.

For survivors of the 2018 California wildfires, the IRS provided tax relief and the DOL released employee benefit guidance. The IRS provided guidance to employers who adopt leave-based donation programs to provide charitable relief for victims of Hurricane Michael. The Treasury released its Priority Guidance Plan that lists projects that will be the focus of the Treasury and IRS for the period from July 1, 2018, through June 30, 2019.

UBA Updates

UBA released one new advisor: 2019 Annual Benefit Plan Amounts card

UBA updated or revised existing guidance:

IRS Extends Due Date to Furnish ACA Forms to Participants and Provides Good Faith Penalty Relief

The Internal Revenue Service (IRS) issued Notice 2018-94 to extend the due date to furnish 2018 Forms 1095-B and 1095-C to individuals. The due date moves from January 31, 2019, to March 4, 2019.

The IRS also extends “good faith compliance efforts” relief for 2018. As in prior years, this relief is applied only to incorrect or incomplete information reported in good faith on a statement or return. The relief does not apply to a failure to timely furnish a statement or file a return.

Read more about the notice.

IRS Issues Specifications for Employer-Provided Substitute ACA Forms

The Internal Revenue Service (IRS) issued Publication 5223 General Rules and Specifications for Affordable Care Act Substitute Forms 1095-A, 1094-B, 1095-B, 1094-C, and 1095-C that describes how employers may prepare substitute forms to furnish ACA reporting information to individuals and the IRS.

Treasury, DOL, and HHS Release Two Final Rules on Contraceptive Coverage Exemptions

The Department of the Treasury (Treasury), Department of Labor (DOL), and Department of Health and Human Services (HHS) (collectively, Departments) released two final rules on contraceptive coverage exemptions. These rules finalize the Departments’ interim final rules that were published on October 13, 2017. HHS also issued a press release and fact sheet on these final rules.

The first final rule provides an exemption from the contraceptive coverage mandate to entities (including certain employers) and individuals that object to services covered by the mandate on the basis of sincerely held religious beliefs.

The second final rule provides an exemption from the contraceptive coverage mandate to nonprofit organizations, small businesses, and individuals that object to services covered by the mandate on the basis of sincerely held moral convictions.

The final rules will be effective on January 14, 2019.

Read more about the final rules.

IRS Releases Indexed PCORI Fee

The Patient Protection and Affordable Care Act (ACA) imposes a fee on insurers of certain fully insured plans and plan sponsors of certain self-funded plans to help fund the Patient-Centered Outcomes Research Institute (PCORI). The PCORI fee is due by July 31 of the year following the calendar year in which the plan or policy year ends.

The Internal Revenue Service issued Notice 2018-85 to announce the PCORI fee of $2.45 for policy years and plan years that end on or after October 1, 2018, and before October 1, 2019.

Plan/Policy Year

Last Year Fee Is
Due (2.45,
indexed/person)

Nov. 1, 2017 – Oct. 31, 2018

July 31, 2019

Dec. 1, 2017 – Nov. 30, 2018

July 31, 2019

Jan. 1, 2018 – Dec. 31, 2018

July 31, 2019

Feb. 1, 2018 – Jan. 31, 2019

July 31, 2020

March 1, 2018 – Feb. 28, 2019

July 31, 2020

April 1, 2018 – March 31, 2019

July 31, 2020

May 1, 2018 – April 30, 2019

July 31, 2020

June 1, 2018 – May 31, 2019

July 31, 2020

July 1, 2018 – June 30, 2019

July 31, 2020

Aug. 1, 2018 – July 31, 2019

July 31, 2020

Sept. 1, 2018 – Aug 31, 2019

July 31, 2020

Oct 1, 2018 – Sept. 30, 2019

July 31, 2020

Read more about the PCORI fee.

IRS Releases 2019 Inflation-Adjusted Limits

The Internal Revenue Service (IRS) released its inflation-adjusted limits for various benefits. For example, the maximum contribution limit to health flexible spending arrangements (FSAs) will be $2,700 in 2019. Also, the maximum reimbursement limit in 2019 for Qualified Small Employer Health Reimbursement Arrangements will be $5,150 for single coverage and $10,450 for family coverage.

Read more about the 2019 limits.

Advance Informational Copies of 2018 Form 5500 Annual Return/Report

The U.S. Department of Labor’s Employee Benefits Security Administration (EBSA), the Internal Revenue Service (IRS), and the Pension Benefit Guaranty Corporation (PBGC) released advance informational copies of the 2018 Form 5500 annual return/report and related instructions.

Here are some of the changes that the instructions highlight:

  • Principal Business Activity Codes. Principal Business Activity Codes have been updated to reflect updates to the North American Industry Classification System (NAICS). For Line 2d, a plan administrator would enter the six-digit Principal Business Activity Code that best describes the nature of the plan sponsor’s business from the list of codes on pages 78-80 of the Form 5500 Instructions.
  • Administrative Penalties. The instructions have been updated to reflect that the new maximum penalty for a plan administrator who fails or refuses to file a complete or accurate Form 5500 report has been increased to up to $2,140 a day for penalties assessed after January 2, 2018, whose associated violations occurred after November 2, 2015.Because the Federal Civil Penalties Inflation Adjustment Improvements Act of 2015 requires the penalty amount to be adjusted annually after the Form 5500 and its schedules, attachments, and instructions are published for filing, be sure to check for any possible required inflation adjustments of the maximum penalty amount that are published in the Federal Register after the instructions have been posted.
  • Form 5500-Participant Count. The instructions for Lines 5 and 6 have been enhanced to make clearer that welfare plans complete only Line 5 and elements 6a(1), 6a(2), 6b, 6c, and 6d in Line 6.

Be aware that the advance copies of the 2018 Form 5500 are for informational purposes only and cannot be used to file a 2018 Form 5500 annual return/report.

ERISA imposes the Form 5500 reporting obligation on the plan administrator. Form 5500 is normally due on the last day of the seventh month after the close of the plan year. For example, a plan administrator would file Form 5500 by July 31, 2019, for a 2018 calendar year plan.

Tax Relief for Victims of November Wildfire in California

Victims of the wildfires that took place beginning on November 8, 2018, in California may qualify for tax relief from the Internal Revenue Service (IRS). The President declared that a major disaster exists in California. The Federal Emergency Management Agency’s major declaration permits the IRS to postpone deadlines for taxpayers who have a business in certain counties within the disaster area.

The IRS automatically identifies taxpayers located in the covered disaster area and applies automatic filing and payment relief. But affected taxpayers who reside or have a business located outside the covered disaster area must call the IRS disaster hotline at 866-562-5227 to request this tax relief.

DOL Releases Employee Benefit Guidance and Relief for 2018 California Wildfire Survivors

The Department of Labor (DOL) released its FAQs for Participants and Beneficiaries Following the 2018 California Wildfires to answer health benefit and retirement benefit questions.

The FAQs cover topics including:

  • Whether an employee will still be covered by an employer-sponsored group health plan if the worksite closed
  • Potential options such as special enrollment rights, COBRA continuation coverage, individual health coverage, and health coverage through a government program in the event that an employee loses health coverage

The DOL also released its Fact Sheet: Guidance and Relief for Employee Benefit Plans Impacted by the 2018 California Wildfires to recognize that employers may encounter problems due to the wildfires. The DOL advises plan fiduciaries to make reasonable accommodations to prevent workers’ loss of benefits and to take steps to minimize the possibility of individuals losing benefits because of a failure to comply with pre-established time frames.

The DOL also acknowledged that there may be instances when full and timely compliance by group health plans may not be possible due to physical disruption to a plan’s principal place of business. The DOL’s enforcement approach will emphasize compliance assistance, including grace periods and other relief where appropriate.

IRS Provides Guidance on Leave-Based Donation Programs’ Tax Treatment

The IRS issued Notice 2018-89 to guide employers who adopt leave-based donation programs to provide charitable relief for victims of Hurricane Michael. These leave-based donation programs allow employees to forgo vacation, sick, or personal leave in exchange for cash payments that the employer will make to charitable organizations described under Internal Revenue Code Section 170(c).

The employer’s cash payments will not constitute gross income or wages of the employees if paid before January 1, 2020, to the Section 170(c) charitable organizations for the relief of victims of Hurricane Michael. Employers do not need to include these payments in Box 1, 3, or 5 of an employee’s Form W-2.

Treasury Releases 2018-19 Priority Guidance Plan

The Department of the Treasury (Treasury) released its 2018-2019 Priority Guidance Plan (Plan) that describes the priorities for the Treasury and the Internal Revenue Service (IRS) for the period from July 1, 2018, through June 30, 2019. The Plan contains a list of projects that will be the focus of the Treasury and IRS, including:

  • Guidance on employer shared responsibility provisions
  • Regulations regarding the excise tax on high cost employer-provided coverage (also known as the “Cadillac tax”).

Question of the Month

Q. Under the ACA, which employers must report information on Form W-2 and what information must be reported?

A. The ACA requires employers to report the cost of coverage under an employer-sponsored group health plan. Reporting the cost of health care coverage on Form W-2 does not mean that the coverage is taxable.

Employers that provide “applicable employer-sponsored coverage” under a group health plan are subject to the reporting requirement. This includes businesses, tax-exempt organizations, and federal, state and local government entities (except with respect to plans maintained primarily for members of the military and their families). Federally recognized Indian tribal governments are not subject to this requirement.

Employers that are subject to this requirement should report the value of the health care coverage in Box 12 of Form W-2, with Code DD to identify the amount. There is no reporting on Form W-3 of the total of these amounts for all the employer’s employees.

In general, the amount reported should include both the portion paid by the employer and the portion paid by the employee. Please see the chart below from the IRS’ webpage and its questions and answers for more information.

The chart below illustrates the types of coverage that employers must report on Form W-2. Certain items are listed as “optional” based on transition relief provided by Notice 2012-9 (restating and clarifying Notice 2011-28). Future guidance may revise reporting requirements but will not be applicable until the tax year beginning at least six months after the date that the IRS issues its guidance.

Form W-2 Reporting of Employer-Sponsored Health Coverage

Form W-2, Box 12, Code DD
Coverage Type

Report

Do Not 
Report

Optional

Major medical

X

Dental or vision plan not integrated into another medical or health plan

X

Dental or vision plan which gives the choice of declining or electing and paying an additional premium

X

Health flexible spending arrangement (FSA) funded solely by salary-reduction amounts

X

Health FSA value for the plan year in excess of employee’s cafeteria plan salary reductions for all qualified benefits

X

Health reimbursement arrangement (HRA) contributions

X

Health savings account (HSA) contributions (employer or employee)

X

Archer Medical SAvings Account (Archer MSA) contributions (employer or employee)

X

Hospital indemnity or specified illness (insured or self-funded), paid on after-tax basis

X

Hospital indemnity or specified illness (insured or self-funded), paid through salary reduction (pre-tax) or by employer

X

Employee assistance plan (EAP) providing applicable employer-sponsored healthcare coverage Required if employer charges a COBRA premium Optional if employer does not charge a COBRA premium
On-site medical clinics providing applicable employer-sponsored healthcare coverage Required if employer charges a COBRA premium Optional if employer does not charge a COBRA premium
Wellness programs providing applicable employer-sponsored healthcare coverage Required if employer charges a COBRA premium Optional if employer does not charge a COBRA premium
Multi-employer plans

X

Domestic partner coverage included in gross income

X

Governmental plans providing coverage primarily for members of the military and their families

X

Federally recognized Indian tribal government plans and plans of tribally charted corporations wholly owned by a federally recognized Indian tribal government

X

Self-funded plans not subject to federal COBRA

X

Accident or disability income

X

Long-term care

X

Liability insurance

X

Supplemental liability insurance

X

Workers’ compensation

X

Automobile medical payment insurance

X

Credit-only insurance

X

Excess reimbursement to highly compensated individual, included in gross income

X

Payment/reimbursement of health insurance premiums for 2% shareholder-employee, included in gross income

X

Other situations
Employers required to file fewer than 250 Forms W-2 for the preceding calendar year (determined without application of any entity aggregation rules for related employers)

X

Forms W-2 furnished to employees who terminate before the end of a calendar year and rquest, in writing, a Form W-2 before the end of that year

X

Forms W-2 provided by third-party sick-pay provider to employees of other employers

X

11/30/2018