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Treatment of “Collateral” Employees Under Retirement Plans

It is common for employers to contract with one or more third parties (sometimes referred to as “leasing companies”) to provide individuals to perform services for the employer. Various issues may arise regarding the treatment of such individuals under a retirement plan maintained by the employer.

EEOC Releases Sample ADA Notice for Employee Wellness Programs

In our June 2, 2016, article summarizing final wellness program regulations issued by the EEOC under Title I of the Americans with Disabilities Act (“ADA”), we noted the EEOC’s promise to post on its website a sample notice by which employers could satisfy the ADA’s notification requirements. The EEOC has today posted such a sample notice, along with a series of FAQs shedding further light on the notification requirement. Although employers are not required to use this sample notice, they should make sure that their notice covers all the points addressed in the EEOC sample.

New EEOC Guidance on Employee Wellness Programs

Final regulations issued by the Equal Employment Opportunity Commission (“EEOC”) under both the Americans with Disabilities Act (“ADA”) and the Genetic Information Nondiscrimination Act (“GINA”) will require modifications to many employee wellness programs. These modifications may include the deletion of certain questions from health risk assessments, additional employee notification requirements, and a reduction in the incentives used to discourage tobacco usage. Although certain aspects of these regulations will not apply until the first day of the 2017 plan year, others are already in effect.

Another Court Rejects EEOC Position on ADA and Wellness Programs

Following the lead of Seff v. Broward County, another federal court has disagreed with the EEOC on the scope of an ADA exemption for employee benefit plans. In EEOC v. Flambeau, Inc., the court held that this benefit-plan “safe harbor” could be used to justify a wellness program that included both a health risk assessment and a biometric screening.

IRS Grants Temporary Nondiscrimination Relief to Closed DB Plans

In Notice 2014-5, the IRS has granted temporary relief to sponsors of “closed” defined benefit plans.  This will allow such a plan (which has been “soft frozen” to new entrants) to be aggregated with a defined contribution plan sponsored by the same employer when testing the plans for compliance with the Tax Code’s minimum coverage and nondiscrimination requirements.  This relief only modestly expands the circumstances under which such aggregation is already allowed, and it applies only for plan years beginning before January 1, 2016.

Supreme Court’s DOMA Decision Leaves Many Unanswered Questions

The Supreme Court’s decision in U.S. v. Windsor, invalidating Section 3 of the Defense of Marriage Act (“DOMA”), leaves benefit plan sponsors and administrators with a number of unanswered questions.  Pending expected guidance from the IRS and/or Department of Labor, steps should be taken to identify any practices or plan provisions that might need to be modified to comply with this ruling.

Wellness Program Clears ADA Hurdle

In a somewhat surprising decision, a Florida federal court has suggested that even monetary penalties for non-participation in employer-sponsored wellness programs may be permissible under the Americans with Disabilities Act.

Applying Nondiscrimination Requirements to Fully Insured Health Plans: When, and How?

One of the most common questions we receive from employers sponsoring group health plans is, “Can we offer different health benefits to different employees?” Related questions include, “Can we make our hourly employees pay a greater percentage of the cost of the plan than our higher-paid salaried employees?” or “Can we limit health benefits solely to managers and executive level employees?” And for the last 20 years, the answer has been, “Yes, so long as your plan is fully-insured.”

IRS Delays Application of Nondiscrimination Rules for Insured Health

On December 22, 2010, the Internal Revenue Service announced (in Notice 2011-1) that insured group health plans will not be required to comply with the nondiscrimination requirements under health care reform until some time after the IRS issues regulatory guidance on those requirements.
The Affordable Care Act provides that insured group health plans (other than certain “grandfathered” plans) must satisfy the requirements of Code Section 105(h)(2), which prohibits discrimination in favor of “highly compensated” participants in terms of either (i) eligibility to participate, or (ii) the benefits provided under the plan.

Insured Health Plans Now Subject to Nondiscrimination Rules

Prior to enactment of the Affordable Care Act, employee health benefits provided through an insurance contract (i.e., fully insured benefits) were not subject to any income-based nondiscrimination requirements under the Tax Code. Thus, an employer could provide more generous health insurance benefits to executives or other highly compensated individuals through the purchase of individual or group insurance policies.

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