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“Preparing for Change: Understanding the Details of the Affordable Care Act”. Adam Solander. Agenda. Agenda/Timeline Market Reforms Employer Mandate Delay ERISA 510 and Whistleblower Complaints Wellness Changes Defense of Marriage Act Decision Exchange Notices. Major Employer Events.
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ACA is more “coverage” than “reform”
Health insurance standards created by ACA include:
Annual and Lifetime Limits: Prohibits a plan or issuer from placing annual or lifetime limits on the dollar value of “essential health benefits.”
Excessive Waiting Periods: Must allow employee to elect coverage that is effective on or before the 91st day after the start of the waiting period.
Employer share of coverage= full-time employees
“Full-Time Employee” means, with respect to any month, an employee who is employed on average at least 30 hours of service per week.
“Hours of Service” includes
Employers may select a period of time between three months and one year to use as a “measurement period.” If the employer determines that an employee was employed on average at least 30 hours of service per week during the “measurement period,” then the employer must treat the employee as a “full-time” employee during a corresponding “stability period,” regardless of the number of hours of service the individual works over that time period.
If new employee is “reasonably expected” to work 30 hours on average, an employer must offer coverage within three months.
If at the time of hire, a determination cannot be made:
“It shall be unlawful for any person to discharge, fine, suspend, expel, discipline, or discriminate against a participant or beneficiary for exercising any right to which he is entitled under the provisions of an employee benefit plan..., or for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan.” 29 USC § 1140
Creating a Sustainable Benefit Package
Recent Events and Trends
On August 29, the Internal Revenue Service and Treasury released Revenue Ruling 2013-17 (the “Ruling”) and accompanying FAQs addressing some of the issues:
State of Celebration: Therefore, if a couple is married in a jurisdiction that recognizes same-sex marriage, then the marriage will be recognized for Federal tax purposes, no matter where the couple lives or works
The Repeal of DOMA is Retroactive
Much of the focus of the Ruling with regard to health and welfare plans involves the retroactive tax effect of recognizing same-sex marriages. More specifically the Ruling states:
If an employer provided health coverage to a same-sex spouse and included the value of that coverage in the employee’s gross income, the employee can file a 1040 and recover federal tax paid on the value of the health coverage of the employee’s spouse.
If an employer sponsored a cafeteria plan that allowed employees to pay premiums for health coverage on a pre-tax basis, a participating employee may file an amended return and recover taxes paid on an after-tax basis for the employee’s same-sex spouse.
In the situations described above, the employer may claim a refund for the Social Security taxes and Medicare taxes paid on such benefits, even if the employer is unable to locate a former employee who received such benefits.
The Ruling identifies several rules that qualified retirement plans must comply with. Much of the guidance relative to qualified retirement plans focuses on the effect of the state of celebration rule. More specifically the Ruling states:
A qualified retirement plan must treat a same-sex spouse as a spouse for purposes of satisfying the federal tax laws. For example, a plan must pay death benefits to the same-sex surviving spouse of any deceased participant.
A qualified retirement plan must recognize a same-sex marriage that was validly entered into in a jurisdiction whose laws authorize the marriage, even if the married couple lives in a jurisdiction that does not recognize the validity of same-sex marriages.
A person who is in a registered domestic partnership or civil union is not considered a spouse for purposes of the federal tax law. For example, a plan is not required to provide a death benefit to a surviving domestic partner of a deceased participant.
Adam C. Solander
Epstein Becker Green
Health Care and Life Sciences Practice