SCOTUS: States Can’t Require Reporting of ERISA Health Plan Data

March 2, 2016

Employer and union sponsored group health plans covered by the Employee Retirement Income Security Act of 1974 (ERISA) and their insurers are not required to comply with a Vermont state law that requires health insurers and certain other parties to report payments relating to health care claims and other information relating to health care services to a state agency for compilation in an all-inclusive health care database, according to the United States Supreme Court’s March 1, 2016 ruling in Gobeille v. Liberty Mutual Insurance Company.

In a 6-2 opinion authored by Justice Kennedy, the Supreme Court held in Gobeille that ERISA Section 514 preempts Vermont’s requirement that health insurers and other health benefit payers report health care claims and other information relating to health care services to a state agency for inclusion in an all-inclusive health care data base.

The lawsuit stemmed from a lawsuit challenging Vermont’s attempt to enforce the law against Liberty Mutual In­surance Company’s self-insured health plan (Plan). Liberty Mutual provides benefits under the Plan to its thousands of employees which are located in all 50 States of which only approximately 140 of which are located in Vermont. When Vermont sought to require the Plan’s third-party administrator, Blue Cross Blue Shield of Massachusetts, Inc. (Blue Cross) to transmit its files on the Plan’s eligibility, medical claims, and phar­macy claims for the Plan’s Vermont members to the state data base, Liberty Mutual was concerned that the disclosure of such confidential information might vio­late its fiduciary duties,  It instructed Blue Cross not to comply and sued seeking a declaratory judgement that ERISA pre-empts application of Ver­mont’s statute and regulation to the Plan and an injunction prohibit­ing Vermont from trying to acquire data about the Plan or its mem­bers. After the District Court granted summary judgment to Vermont, the Second Circuit reversed, concluding that Vermont’s reporting scheme is pre-empted by ERISA as applied to the Plan.

When Vermont appealed the Second Circuit’s decision to the Supreme Court, the Supreme Court sided with Liberty Mutual. It upheld the Second Circuit’s ruling, holding that the preemption provisions of ERISA bar Vermont from enforcing the reporting requirement against ERISA-covered health plans or their administrators.

Righting for the Supreme Court Majority, Justice Kennedy explained that ERISA expressly pre-empts “any and all State laws insofar as they may now or hereafter relate to any employee benefit plan.” 29 U.S.C §1144(a). Commenting that this preemption reaches to any state law that has an impermissible “connection with” ERISA plans, Justice Kennedy took judicial notice that ERISA seeks to make the benefits promised by an employer more secure by mandating certain uniform reporting and other oversight systems and other standard procedures, Justice Kennedy said ERISA’s extensive reporting, disclosure, and recordkeeping requirements are central to, and an essential part of, this uniform plan administration system. He also wrote that ERISA’s uniform rule design also makes clear that it is the Secretary of Labor, not the separate States, that is authorized to decide whether to exempt plans from ERISA reporting requirements or to require ERISA plans to report data such as that sought by Vermont. Because Vermont’s law and regulation also govern plan reporting, disclosure, and recordkeeping, Justice Kennedy explained that pre-emption is necessary in order to prevent multiple jurisdictions from imposing differing or even parallel, regulations, creating wasteful administrative costs and threatening to subject plans to wide-ranging liability.

Justice Kennedy also found unpersuasive Vermont’s counterargument that respondent has not shown that the State scheme has caused it to suffer economic costs, stating that Liberty Mutual need not wait to bring its pre-emption claim until confronted with numerous inconsistent obligations and encumbered with any ensuing costs. In addition, Justice Kennedy wrote that the fact that ERISA and the state reporting scheme have different objectives does not transform Vermont’s direct regulation of a fundamental ERISA function into an innocuous and peripheral set of additional rules and that Vermont’s regime also cannot be saved by invoking the State’s traditional power to regulate in the area of public health. Furthermore, Justice Kennedy added that ERISA’s pre-existing reporting, disclosure, and recordkeeping provisions maintain their pre-emptive force regardless of whether the new Patient Protection and Affordable Care Act’s reporting obligations also pre-empt state law.

About The Author

Recognized as a “Top” attorney in employee benefits, labor and employment and health care law extensively involved in health and other employee benefit and human resources policy and program design and administration representation and advocacy throughout her career, Cynthia Marcotte Stamer is a practicing attorney and Managing Shareholder of Cynthia Marcotte Stamer, P.C., a member of Stamer│Chadwick│Soefje PLLC, author, pubic speaker, management policy advocate and industry thought leader with more than 27 years’ experience practicing at the forefront of employee benefits and human resources law.

A Fellow in the American College of Employee Benefit Counsel, past Chair and current Welfare Benefit Committee Co-Chair of the American Bar Association (ABA) RPTE Section Employee Benefits Group, Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee, former Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, an ABA Joint Committee on Employee Benefits Council Representative and Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization, Ms. Stamer is recognized nationally and internationally for her practical and creative insights and leadership on health and other employee benefit, human resources and insurance matters and policy.

Ms. Stamer helps management manage. Ms. Stamer’s legal and management consulting work throughout her 27 plus year career has focused on helping organizations and their management use the law and process to manage people, process, compliance, operations and risk. Highly valued for her rare ability to find pragmatic client-centric solutions by combining her detailed legal and operational knowledge and experience with her talent for creative problem-solving, Ms. Stamer helps public and private, domestic and international businesses, governments, and other organizations and their leaders manage their employees, vendors and suppliers, and other workforce members, customers and other’ performance, compliance, compensation and benefits, operations, risks and liabilities, as well as to prevent, stabilize and cleanup workforce and other legal and operational crises large and small that arise in the course of operations.

Ms. Stamer works with businesses and their management, employee benefit plans, governments and other organizations deal with all aspects of human resources and workforce management operations and compliance. She supports her clients both on a real time, “on demand” basis and with longer term basis to deal with daily performance management and operations, emerging crises, strategic planning, process improvement and change management, investigations, defending litigation, audits, investigations or other enforcement challenges, government affairs and public policy. Well known for her extensive work with health care, insurance and other highly regulated entities on corporate compliance, internal controls and risk management, her clients range from highly regulated entities like employers, contractors and their employee benefit plans, their sponsors, management, administrators, insurers, fiduciaries and advisors, technology and data service providers, health care, managed care and insurance, financial services, government contractors and government entities, as well as retail, manufacturing, construction, consulting and a host of other domestic and international businesses of all types and sizes. Common engagements include internal and external workforce hiring, management, training, performance management, compliance and administration, discipline and termination, and other aspects of workforce management including employment and outsourced services contracting and enforcement, sentencing guidelines and other compliance plan, policy and program development, administration, and defense, performance management, wage and hour and other compensation and benefits, reengineering and other change management, internal controls, compliance and risk management, communications and training, worker classification, tax and payroll, investigations, crisis preparedness and response, government relations, safety, government contracting and audits, litigation and other enforcement, and other concerns.

Ms. Stamer uses her deep and highly specialized health, insurance, labor and employment and other knowledge and experience to help employers and other employee benefit plan sponsors; health, pension and other employee benefit plans, their fiduciaries, administrators and service providers, insurers, and others design legally compliant, effective compensation, health and other welfare benefit and insurance, severance, pension and deferred compensation, private exchanges, cafeteria plan and other employee benefit, fringe benefit, salary and hourly compensation, bonus and other incentive compensation and related programs, products and arrangements. She is particularly recognized for her leading edge work, thought leadership and knowledgeable advice and representation on the design, documentation, administration, regulation and defense of a diverse range of self-insured and insured health and welfare benefit plans including private exchange and other health benefit choices, health care reimbursement and other “defined contribution” limited benefit, 24-hour and other occupational and non-occupational injury and accident, ex-patriate and medical tourism, onsite medical, wellness and other medical plans and insurance benefit programs as well as a diverse range of other qualified and nonqualified retirement and deferred compensation, severance and other employee benefits and compensation, insurance and savings plans, programs, products, services and activities. As a key element of this work, Ms. Stamer works closely with employer and other plan sponsors, insurance and financial services companies, plan fiduciaries, administrators, and vendors and others to design, administer and defend effective legally defensible employee benefits and compensation practices, programs, products and technology. She also continuously helps employers, insurers, administrative and other service providers, their officers, directors and others to manage fiduciary and other risks of sponsorship or involvement with these and other benefit and compensation arrangements and to defend and mitigate liability and other risks from benefit and liability claims including fiduciary, benefit and other claims, audits, and litigation brought by the Labor Department, IRS, HHS, participants and beneficiaries, service providers, and others. She also assists debtors, creditors, bankruptcy trustees and others assess, manage and resolve labor and employment, employee benefits and insurance, payroll and other compensation related concerns arising from reductions in force or other terminations, mergers, acquisitions, bankruptcies and other business transactions including extensive experience with multiple, high-profile large scale bankruptcies resulting in ERISA, tax, corporate and securities and other litigation or enforcement actions.

Ms. Stamer also is deeply involved in helping to influence the Affordable Care Act and other health care, pension, social security, workforce, insurance and other policies critical to the workforce, benefits, and compensation practices and other key aspects of a broad range of businesses and their operations. She both helps her clients respond to and resolve emerging regulations and laws, government investigations and enforcement actions and helps them shape the rules through dealings with Congress and other legislatures, regulators and government officials domestically and internationally. A former lead consultant to the Government of Bolivia on its Social Security reform law and most recognized for her leadership on U.S. health and pension, wage and hour, tax, education and immigration policy reform, Ms. Stamer works with U.S. and foreign businesses, governments, trade associations, and others on workforce, social security and severance, health care, immigration, privacy and data security, tax, ethics and other laws and regulations. Founder and Executive Director of the Coalition for Responsible Healthcare Policy and its PROJECT COPE: the Coalition on Patient Empowerment and a Fellow in the American Bar Foundation and State Bar of Texas, Ms. Stamer annually leads the Joint Committee on Employee Benefits (JCEB) HHS Office of Civil Rights agency meeting and other JCEB agency meetings. She also works as a policy advisor and advocate to many business, professional and civic organizations.

Author of the thousands of publications and workshops these and other employment, employee benefits, health care, insurance, workforce and other management matters, Ms. Stamer also is a highly sought out speaker and industry thought leader known for empowering audiences and readers. Ms. Stamer’s insights on employee benefits, insurance, health care and workforce matters in Atlantic Information Services, The Bureau of National Affairs (BNA), InsuranceThoughtLeaders.com, Benefits Magazine, Employee Benefit News, Texas CEO Magazine, HealthLeaders, Modern Healthcare, Business Insurance, Employee Benefits News, World At Work, Benefits Magazine, the Wall Street Journal, the Dallas Morning News, the Dallas Business Journal, the Houston Business Journal, and many other publications. She also has served as an Editorial Advisory Board Member for human resources, employee benefit and other management focused publications of BNA, HR.com, Employee Benefit News, InsuranceThoughtLeadership.com and many other prominent publications. Ms. Stamer also regularly serves on the faculty and planning committees for symposia of LexisNexis, the American Bar Association, ALIABA, the Society of Employee Benefits Administrators, the American Law Institute, ISSA, HIMMs, and many other prominent educational and training organizations and conducts training and speaks on these and other management, compliance and public policy concerns.

Ms. Stamer also is active in the leadership of a broad range of other professional and civic organizations. For instance, Ms. Stamer presently serves on an American Bar Association (ABA) Joint Committee on Employee Benefits Council representative; Vice President of the North Texas Healthcare Compliance Professionals Association; Immediate Past Chair of the ABA RPTE Employee Benefits & Other Compensation Committee, its current Welfare Benefit Plans Committee Co-Chair, on its Substantive Groups & Committee and its incoming Defined Contribution Plan Committee Chair and Practice Management Vice Chair; Past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group and a current member of its Healthcare Coordinating Council; current Vice Chair of the ABA TIPS Employee Benefit Committee; the former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division; on the Advisory Boards of InsuranceThoughtLeadership.com, HR.com, Employee Benefit News, and many other publications. She also previously served as a founding Board Member and President of the Alliance for Healthcare Excellence, as a Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; the Board President of the early childhood development intervention agency, The Richardson Development Center for Children; Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee; a member of the Board of Directors of the Southwest Benefits Association. For additional information about Ms. Stamer, see CynthiaStamer.com or the Stamer│Chadwick │Soefje PLLC or contact Ms. Stamer via email to here or via telephone to (469) 767-8872.

About Solutions Law Press, Inc.™

Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources at http://www.solutionslawpress.com such as:

If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating or updating your profile here.

©2016 Cynthia Marcotte Stamer. Non-exclusive right to republish granted to Solutions Law Press, Inc.™ All other rights reserved.


Tri-Agencies Update On Planned ACA Transparency Reporting Rules For Non-QHP Issuers & Non-Grandfathered Group Health Plans

August 11, 2015

The Departments of Labor (DOL), Health and Human Services (HHS), and the Treasury (collectively, the Departments) today (August 11, 2015) jointly released updated information about how the Departments plan to develop rules to implement the data reporting rules needed to implement the transparency provisions of section 1311(e)(3) of the Affordable Care Act with respect to non-Exchange coverage, including health insurance issuers offering group and individual health insurance coverage (non-QHP issuers) and non-grandfathered group health plans (including large group and self-insured health plans).

According to FAQS About Affordable Care Act Implementation (Part XXVIII) the transparency reporting rules the Departments plan to issue for non-QHP issuers and non-grandfathered group health plans in the future may differ from those prescribed in the August 11, 2015 HHS proposal under section 1311(e)(3) of the Affordable Care Act, and will take into account differences in markets, reporting requirements already in existence for non-QHPs (including group health plans), and other relevant factors.

FAQS About Affordable Care Act Implementation (Part XXVIII) also states that the Departments also intend to streamline reporting under multiple reporting provisions and reduce unnecessary duplication when they issue the non-QHP issuers and non-grandfathered group health plans.

For Legal or Consulting Advice, Legal Representation, Training Or More Information

If you need help responding to these new or other workforce, benefits and compensation, performance and risk management, compliance, enforcement or management concerns, help updating or defending your workforce or employee benefit policies or practices, or other related assistance, the author of this update, attorney Cynthia Marcotte Stamer may be able to help.

Recognized as a “Top” attorney in employee benefits, labor and employment and health care law extensively involved in health and other employee benefit and human resources policy and program design and administration representation and advocacy throughout her career, Cynthia Marcotte Stamer is a practicing attorney and Managing Shareholder of Cynthia Marcotte Stamer, P.C., a member of Stamer│Chadwick │Soefje PLLC, author, pubic speaker, management policy advocate and industry thought leader with more than 27 years’ experience practicing at the forefront of employee benefits and human resources law.

A Fellow in the American College of Employee Benefit Counsel, past Chair and current Welfare Benefit Committee Co-Chair of the American Bar Association (ABA) RPTE Section Employee Benefits Group, Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee, former Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, an ABA Joint Committee on Employee Benefits Council Representative and Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization, Ms. Stamer is recognized nationally and internationally for her practical and creative insights and leadership on health and other employee benefit, human resources and insurance matters and policy.

Ms. Stamer helps management manage. Ms. Stamer’s legal and management consulting work throughout her 27 plus year career has focused on helping organizations and their management use the law and process to manage people, process, compliance, operations and risk. Highly valued for her rare ability to find pragmatic client-centric solutions by combining her detailed legal and operational knowledge and experience with her talent for creative problem-solving, Ms. Stamer helps public and private, domestic and international businesses, governments, and other organizations and their leaders manage their employees, vendors and suppliers, and other workforce members, customers and other’ performance, compliance, compensation and benefits, operations, risks and liabilities, as well as to prevent, stabilize and cleanup workforce and other legal and operational crises large and small that arise in the course of operations.

Ms. Stamer works with businesses and their management, employee benefit plans, governments and other organizations deal with all aspects of human resources and workforce management operations and compliance. She supports her clients both on a real time, “on demand” basis and with longer term basis to deal with daily performance management and operations, emerging crises, strategic planning, process improvement and change management, investigations, defending litigation, audits, investigations or other enforcement challenges, government affairs and public policy. Well known for her extensive work with health care, insurance and other highly regulated entities on corporate compliance, internal controls and risk management, her clients range from highly regulated entities like employers, contractors and their employee benefit plans, their sponsors, management, administrators, insurers, fiduciaries and advisors, technology and data service providers, health care, managed care and insurance, financial services, government contractors and government entities, as well as retail, manufacturing, construction, consulting and a host of other domestic and international businesses of all types and sizes. Common engagements include internal and external workforce hiring, management, training, performance management, compliance and administration, discipline and termination, and other aspects of workforce management including employment and outsourced services contracting and enforcement, sentencing guidelines and other compliance plan, policy and program development, administration, and defense, performance management, wage and hour and other compensation and benefits, reengineering and other change management, internal controls, compliance and risk management, communications and training, worker classification, tax and payroll, investigations, crisis preparedness and response, government relations, safety, government contracting and audits, litigation and other enforcement, and other concerns.

Ms. Stamer uses her deep and highly specialized health, insurance, labor and employment and other knowledge and experience to help employers and other employee benefit plan sponsors; health, pension and other employee benefit plans, their fiduciaries, administrators and service providers, insurers, and others design legally compliant, effective compensation, health and other welfare benefit and insurance, severance, pension and deferred compensation, private exchanges, cafeteria plan and other employee benefit, fringe benefit, salary and hourly compensation, bonus and other incentive compensation and related programs, products and arrangements. She is particularly recognized for her leading edge work, thought leadership and knowledgeable advice and representation on the design, documentation, administration, regulation and defense of a diverse range of self-insured and insured health and welfare benefit plans including private exchange and other health benefit choices, health care reimbursement and other “defined contribution” limited benefit, 24-hour and other occupational and non-occupational injury and accident, ex-patriate and medical tourism, onsite medical, wellness and other medical plans and insurance benefit programs as well as a diverse range of other qualified and nonqualified retirement and deferred compensation, severance and other employee benefits and compensation, insurance and savings plans, programs, products, services and activities. As a key element of this work, Ms. Stamer works closely with employer and other plan sponsors, insurance and financial services companies, plan fiduciaries, administrators, and vendors and others to design, administer and defend effective legally defensible employee benefits and compensation practices, programs, products and technology. She also continuously helps employers, insurers, administrative and other service providers, their officers, directors and others to manage fiduciary and other risks of sponsorship or involvement with these and other benefit and compensation arrangements and to defend and mitigate liability and other risks from benefit and liability claims including fiduciary, benefit and other claims, audits, and litigation brought by the Labor Department, IRS, HHS, participants and beneficiaries, service providers, and others. She also assists debtors, creditors, bankruptcy trustees and others assess, manage and resolve labor and employment, employee benefits and insurance, payroll and other compensation related concerns arising from reductions in force or other terminations, mergers, acquisitions, bankruptcies and other business transactions including extensive experience with multiple, high-profile large scale bankruptcies resulting in ERISA, tax, corporate and securities and other litigation or enforcement actions.

Ms. Stamer also is deeply involved in helping to influence the Affordable Care Act and other health care, pension, social security, workforce, insurance and other policies critical to the workforce, benefits, and compensation practices and other key aspects of a broad range of businesses and their operations. She both helps her clients respond to and resolve emerging regulations and laws, government investigations and enforcement actions and helps them shape the rules through dealings with Congress and other legislatures, regulators and government officials domestically and internationally. A former lead consultant to the Government of Bolivia on its Social Security reform law and most recognized for her leadership on U.S. health and pension, wage and hour, tax, education and immigration policy reform, Ms. Stamer works with U.S. and foreign businesses, governments, trade associations, and others on workforce, social security and severance, health care, immigration, privacy and data security, tax, ethics and other laws and regulations. Founder and Executive Director of the Coalition for Responsible Healthcare Policy and its PROJECT COPE: the Coalition on Patient Empowerment and a Fellow in the American Bar Foundation and State Bar of Texas, Ms. Stamer annually leads the Joint Committee on Employee Benefits (JCEB) HHS Office of Civil Rights agency meeting and other JCEB agency meetings. She also works as a policy advisor and advocate to many business, professional and civic organizations.

Author of the thousands of publications and workshops these and other employment, employee benefits, health care, insurance, workforce and other management matters, Ms. Stamer also is a highly sought out speaker and industry thought leader known for empowering audiences and readers. Ms. Stamer’s insights on employee benefits, insurance, health care and workforce matters in Atlantic Information Services, The Bureau of National Affairs (BNA), InsuranceThoughtLeaders.com, Benefits Magazine, Employee Benefit News, Texas CEO Magazine, HealthLeaders, Modern Healthcare, Business Insurance, Employee Benefits News, World At Work, Benefits Magazine, the Wall Street Journal, the Dallas Morning News, the Dallas Business Journal, the Houston Business Journal, and many other publications. She also has served as an Editorial Advisory Board Member for human resources, employee benefit and other management focused publications of BNA, HR.com, Employee Benefit News, InsuranceThoughtLeadership.com and many other prominent publications. Ms. Stamer also regularly serves on the faculty and planning committees for symposia of LexisNexis, the American Bar Association, ALIABA, the Society of Employee Benefits Administrators, the American Law Institute, ISSA, HIMMs, and many other prominent educational and training organizations and conducts training and speaks on these and other management, compliance and public policy concerns.

Ms. Stamer also is active in the leadership of a broad range of other professional and civic organizations. For instance, Ms. Stamer presently serves on an American Bar Association (ABA) Joint Committee on Employee Benefits Council representative; Vice President of the North Texas Healthcare Compliance Professionals Association; Immediate Past Chair of the ABA RPTE Employee Benefits & Other Compensation Committee, its current Welfare Benefit Plans Committee Co-Chair, on its Substantive Groups & Committee and its incoming Defined Contribution Plan Committee Chair and Practice Management Vice Chair; Past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group and a current member of its Healthcare Coordinating Council; current Vice Chair of the ABA TIPS Employee Benefit Committee; the former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division; on the Advisory Boards of InsuranceThoughtLeadership.com, HR.com, Employee Benefit News, and many other publications. She also previously served as a founding Board Member and President of the Alliance for Healthcare Excellence, as a Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; the Board President of the early childhood development intervention agency, The Richardson Development Center for Children; Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee; a member of the Board of Directors of the Southwest Benefits Association. For additional information about Ms. Stamer, see http://www.cynthiastamer.com or the Stamer│Chadwick │Soefje PLLC website or contact Ms. Stamer via email to cstamer@solutionslawyer.net or via telephone to (469) 767-8872.

About Solutions Law Press, Inc.™

Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources at http://www.solutionslawpress.com such as:

If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating or updating your profile here.

©2015 Cynthia Marcotte Stamer. Non-exclusive right to republish granted to Solutions Law Press, Inc. All other rights reserved.


Agencies Proposes To Treat Certain EAP, Dental and Vision Only Plans As ACA & HIPAA Excepted Benefits

December 26, 2013

February 24, 2014 is the deadline for interested employers, health insurers and plans, administrators and others to comment on proposed changes to rules defining what arrangements qualify as “excepted benefits” for purposes of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) eligibility, nondiscrimination and other portability mandates and the Patient Protection and Affordable Care Act (ACA) health coverage reform mandates jointly published December 24, 2013 by Internal Revenue Service (IRS) , the Employee Benefits Security Administration (EBSA), and the Health and Human Services Department (HHS)(collectively the “Agencies”).

The Proposed Amendments To Excepted Benefits Regulation (Proposed Rule) published by the Agencies jointly in the December 24, 2013 Federal Register would add certain employee assistance programs (EAPs) and certain vision and dental only plans as  excepted benefits for purposes of HIPAA and ACA and make certain other changes to the excepted benefits definition . The Proposed Regulations would also provide added options for employees and employers in connection with ACA.

The definition of “excepted benefits” is critical for employers and insurers as   HIPAA and ACA exempt from certain of their mandates arrangements that qualify as excepted benefits under the Agencies rules.    Since the passage of the Affordable Care Act, ambiguities and confusion have persisted about when and if certain arrangements qualify as excepted benefits.  Since HIPAA took effect, widespread abuse, debate and confusion about the treatment of certain mini-med and certain other benefit plans as excepted benefits prompted the Agencies to publish additional guidance.  Despite this guidance, many continue to debate the treatment of certain of these and other arrangements.  As the effective date of ACA’s employer and individual mandates and Heath Insurance Exchange premium tax credits, employers, employees and other stakeholders expressed concerns that the past HIPAA definition of excepted health benefits needed updating to prevent undesirable consequences for employees offered these arrangements.

The Proposed Regulations would amend current regulations to treat certain EAPs as excepted benefits, effective immediately. EAPs are typically free programs offered by employers that can provide wide-ranging benefits to address circumstances that might otherwise adversely affect employees’ work and health. Benefits may include short-term substance abuse or mental health counseling or referral services, as well as financial counseling and legal services. Under the Proposed Regulations, EAPs would be considered excepted benefits if the program is free to employees and does not provide significant benefits in the nature of medical care or treatment. As excepted benefits, EAPs would be exempt from private insurance market reforms, and EAP coverage would not make individuals ineligible for a premium tax credit under ACA for enrolling in qualified health plans through the Health Insurance Marketplaces created by ACA.

Similarly, under the Proposed Regulations, vision and dental benefits provided by employers on a self-insured basis would be able to qualify as excepted benefits effective immediately under the conditions specified in the Proposed Regulations, even if they do not require contributions from employees. Insured vision and dental benefits, as well as self-insured vision and dental coverage that requires employee contributions, already qualify as excepted benefits.

The proposal to treat EAPs and stand alone dental and vision benefits require that the arrangements meet the specific requirements set forth in the Proposed Regulations.  For instance, to keep benefits like dental benefits and vision benefits from coming under ACA mandates, an employer must offer the benefits separately from any group health plan and charge a separate premium for the excepted benefits.

Effective for plan years starting in 2015, the Proposed Regulations also would treat as excepted benefits certain limited coverage provided by plan sponsors that “wraps around” an individual market policy. The “wraparound” coverage would be available to employees for whom the plan sponsor’s primary group health coverage is not affordable and who instead get coverage through a nongrandfathered individual market policy. The wraparound coverage would provide extra benefits or broader networks, and may also reduce cost sharing. The proposal in the Proposed Regulations would not allow the wraparound coverage to substitute for employment-based coverage. The value of the wraparound coverage could not exceed 15 percent of the value of the primary coverage offered by the plan sponsor, which the Proposed Regulations would require to be affordable for at least the majority of employees.

The Obama administration may create a new type of benefit program for employers that send some workers to the individual exchanges to get health coverage.

A “limited wraparound plan” would give employers a way to beef up the benefits of some workers who get their coverage from an individual exchange rather than enrolling in the employer’s group health plan.

 

Some employers provide dental and vision plans along with health plans, without charging workers extra. The employers complained that they might have to start collecting small premiums just to keep their dental and vision plans from becoming PPACA plans.

The federal agencies have proposed letting employers keep the self-insured dental and vision benefits out from under PPACA without having to collect separate premiums.

The federal agencies also have made good on previous promises to clarify the rules stating how sponsors of employee assistance plans can keep the EAPs from becoming PPACA plans.

In the section on limited wraparound plans, the agencies talk about strategies for keeping the plans from giving employers a way to drop their group health plans and send all workers to the individual health insurance exchanges.

To offer a wraparound plan, an employer would have to offer a good group health plan. The employer could offer the wraparound plan benefits only to workers who bought “qualified health plan” coverage from an exchange because they found that the group health coverage was unaffordable.

An employer could use a wraparound plan to give workers with QHP coverage benefits similar to what workers in the group health plan have.

The cost of the wraparound coverage would have to be 15 percent or less of the cost of the group health coverage.

Speak Up On The Proposed Changes

Employers, health plan fiduciaries and administrators, health insurers, and others concerned about the scope and effect of the excepted benefit definition should review the proposed changes as soon as possible and provide comments to encourage tailoring the definition optimally.  Input on the proposed changes and other feedback on the definition of excepted benefits and its effect on health care coverage or other health care coverage or reform concerns should be carefully prepared and submitted to the Agencies as well as where appropriate, with Congress.  In addition , we also encourage you and others to help understand the rules and their implications by sharing your thoughts on these and other concerns in the Coalition For Responsible Health Care Policy linkedin group.  The Coalition for Responsible Health Care Policy is a group hosted by Solutions Law Press, Inc. hosts to  provides a resource that concerned Americans can use to share, monitor and discuss the Health Care Reform law and other health care, insurance and related laws, regulations, policies and practices and options for promoting access to quality, affordable healthcare through the design, administration and enforcement of these regulations.

For Assistance or More Information

If you have questions or need help with these or employee benefit, human resources, insurance, health care matters or related documents or practices, please contact the author of this update, Cynthia Marcotte Stamer.

A Fellow in the American College of Employee Benefit Council, immediate past Chair of the American Bar Association (ABA) RPTE Employee Benefits & Other Compensation Group and current Co-Chair of its Welfare Benefit Committee, Vice-Chair of the ABA TIPS Employee Benefits Committee, a council member of the ABA Joint Committee on Employee Benefits, and past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, Ms. Stamer is recognized, internationally, nationally and locally for her more than 25 years of work, advocacy, education and publications on cutting edge health and managed care, employee benefit, human resources and related workforce, insurance and financial services, and health care matters.

A board certified labor and employment attorney widely known for her extensive and creative knowledge and experienced with these and other employment, employee benefit and compensation matters, Ms. Stamer continuously advises and assists employers, employee benefit plans, their sponsoring employers, fiduciaries, insurers, administrators, service providers, insurers and others to monitor and respond to evolving legal and operational requirements and to design, administer, document and defend medical and other welfare benefit, qualified and non-qualified deferred compensation and retirement, severance and other employee benefit, compensation, and human resources, management and other programs and practices tailored to the client’s human resources, employee benefits or other management goals. A primary drafter of the Bolivian Social Security pension privatization law, Ms. Stamer also works extensively with management, service provider and other clients to monitor legislative and regulatory developments and to deal with Congressional and state legislators, regulators, and enforcement officials about regulatory, investigatory or enforcement concerns.

Recognized in Who’s Who In American Professionals and both an American Bar Association (ABA) and a State Bar of Texas Fellow, Ms. Stamer serves on the Editorial Advisory Board of Employee Benefits News, HR.com, Insurance Thought Leadership, Solutions Law Press, Inc. and other publications, and active in a multitude of other employee benefits, human resources and other professional and civic organizations. She also is a widely published author and highly regarded speaker on these matters. Her insights on these and other matters appear in the Bureau of National Affairs, Spencer Publications, the Wall Street Journal, the Dallas Business Journal, the Houston Business Journal, Modern and many other national and local publications. Her widely respected publications and programs include more than 25 years of publications on health plan contracting, design, administration and risk management including a “Managed Care Contracting Guide” published by the American Health Lawyers Association and numerous other works on vendor contracting.  You can learn more about Ms. Stamer and her experience, review some of her other training, speaking, publications and other resources, and register to receive future updates about developments on these and other concerns from Ms. Stamer here.

Other Helpful Resources & Other Information

We hope that this information is useful to you.   If you found these updates of interest, you also be interested in one or more of the following other recent articles published on the Coalition for Responsible Health Care Reform electronic publication available here, our electronic Solutions Law Press Health Care Update publication available here, or our HR & Benefits Update electronic publication available here .  You also can get access to information about how you can arrange for training on “Building Your Family’s Health Care Toolkit,”  using the “PlayForLife” resources to organize low-cost wellness programs in your workplace, school, church or other communities, and other process improvement, compliance and other training and other resources for health care providers, employers, health plans, community leaders and others here. If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information – including your preferred e-mail by creating or updating your profile here. You can reach other recent updates and other informative publications and resources.

Recent examples of these publications include:

For important information about this communication click here.

©2013 Cynthia Marcotte Stamer.  Nonexclusive right to republish granted to Solutions Law Press, Inc. All other rights reserved.


1/1/14 Exchange Enrollment Deadline Extended As Enrollment Still Lags

December 24, 2013

With enrollment in the new Federal and State Health Insurance Exchanges, which the Obama Administration calls “Marketplaces” lagging and Americans attempting to use the Federal and state Exchange enrollment platforms continuing to experience technical “glitches,” the Obama Administration is extending again the deadline for Americans who want to get  health coverage offered through the Exchanges to begin January 1, 2014.

The Administration quietly revised the Exchange enrollment page at Healthcare.gov to instructs visitors that Americans who weren’t able to enroll in an insurance plan by December 23 because of problems you had using HealthCare.gov and want coverage that starts January 1, 2014 to contact the Marketplace Call Center at 1-800-318-2596 (available 24/7; closed December 25. TTY: 1-855-889-4325).

Are you concerned about health care coverage or other health care issues or policy concerns?  Join the discussion and share your input by joining Project COPE: Coalition for Patient Empowerment here.

About Project COPE: The Coalition On Patient Empowerment & Its  Coalition on Responsible Health Policy

Sharing and promoting the use of practical practices, tools, information and ideas that patients and their families, health care providers, employers, health plans, communities and policymakers can share and offer to help patients, their families and others in their care communities to understand and work together to better help the patients, their family and their professional and private care community plan for and manage these  needs is the purpose of Project COPE, The Coalition on Patient Empowerment & It’s Affiliate, the Coalition on Responsible Health Policy.

The best opportunity to improve access to quality, affordable health care for all Americans is for every American, and every employer, insurer, and community organization to seize the opportunity to be good Samaritans.  The government, health care providers, insurers and community organizations can help by providing education and resources to make understanding and dealing with the realities of illness, disability or aging easier for a patient and their family, the affected employers and others. At the end of the day, however, caring for people requires the human touch.  Americans can best improve health care by not waiting for someone else to step up:  Step up and help bridge the gap when you or your organization can. Speak up to help communicate and facilitate when you can.  Building health care neighborhoods filled with good neighbors throughout the community is the key.

The outcome of this latest health care reform push is only a small part of a continuing process.  Whether or not the Affordable Care Act makes financing care better or worse, the same challenges exist.  The real meaning of the enacted reforms will be determined largely by the shaping and implementation of regulations and enforcement actions which generally are conducted outside the public eye.  Americans individually and collectively clearly should monitor and continue to provide input through this critical time to help shape constructive rather than obstructive policy. Regardless of how the policy ultimately evolves, however, Americans, American businesses, and American communities still will need to roll up their sleeves and work to deal with the realities of dealing with ill, aging and disabled people and their families.  While the reimbursement and coverage map will change and new government mandates will confine providers, payers and patients, the practical needs and challenges of patients and families will be the same and confusion about the new configuration will create new challenges as patients, providers and payers work through the changes.

We also encourage you and others to help develop real meaningful improvements by joining Project COPE: Coalition for Patient Empowerment here by sharing ideas, tools and other solutions and other resources. The Coalition For Responsible Health Care Policy provides a resource that concerned Americans can use to share, monitor and discuss the Health Care Reform law and other health care, insurance and related laws, regulations, policies and practices and options for promoting access to quality, affordable healthcare through the design, administration and enforcement of these regulations.

For Assistance or More Information

If you have questions or need help with these or employee benefit, human resources, insurance, health care matters or related documents or practices, please contact the author of this update, Cynthia Marcotte Stamer.

A Fellow in the American College of Employee Benefit Council, immediate past Chair of the American Bar Association (ABA) RPTE Employee Benefits & Other Compensation Group and current Co-Chair of its Welfare Benefit Committee, Vice-Chair of the ABA TIPS Employee Benefits Committee, a council member of the ABA Joint Committee on Employee Benefits, and past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, Ms. Stamer is recognized, internationally, nationally and locally for her more than 25 years of work, advocacy, education and publications on cutting edge health and managed care, employee benefit, human resources and related workforce, insurance and financial services, and health care matters.

A board certified labor and employment attorney widely known for her extensive and creative knowledge and experienced with these and other employment, employee benefit and compensation matters, Ms. Stamer continuously advises and assists employers, employee benefit plans, their sponsoring employers, fiduciaries, insurers, administrators, service providers, insurers and others to monitor and respond to evolving legal and operational requirements and to design, administer, document and defend medical and other welfare benefit, qualified and non-qualified deferred compensation and retirement, severance and other employee benefit, compensation, and human resources, management and other programs and practices tailored to the client’s human resources, employee benefits or other management goals. A primary drafter of the Bolivian Social Security pension privatization law, Ms. Stamer also works extensively with management, service provider and other clients to monitor legislative and regulatory developments and to deal with Congressional and state legislators, regulators, and enforcement officials about regulatory, investigatory or enforcement concerns.

Recognized in Who’s Who In American Professionals and both an American Bar Association (ABA) and a State Bar of Texas Fellow, Ms. Stamer serves on the Editorial Advisory Board of Employee Benefits News, HR.com, Insurance Thought Leadership, Solutions Law Press, Inc. and other publications, and active in a multitude of other employee benefits, human resources and other professional and civic organizations. She also is a widely published author and highly regarded speaker on these matters. Her insights on these and other matters appear in the Bureau of National Affairs, Spencer Publications, the Wall Street Journal, the Dallas Business Journal, the Houston Business Journal, Modern and many other national and local publications. Her widely respected publications and programs include more than 25 years of publications on health plan contracting, design, administration and risk management including a “Managed Care Contracting Guide” published by the American Health Lawyers Association and numerous other works on vendor contracting.  You can learn more about Ms. Stamer and her experience, review some of her other training, speaking, publications and other resources, and register to receive future updates about developments on these and other concerns from Ms. Stamer here.

Other Helpful Resources & Other Information

We hope that this information is useful to you.   If you found these updates of interest, you also be interested in one or more of the following other recent articles published on the Coalition for Responsible Health Care Reform electronic publication available here, our electronic Solutions Law Press Health Care Update publication available here, or our HR & Benefits Update electronic publication available here .  You also can get access to information about how you can arrange for training on “Building Your Family’s Health Care Toolkit,”  using the “PlayForLife” resources to organize low-cost wellness programs in your workplace, school, church or other communities, and other process improvement, compliance and other training and other resources for health care providers, employers, health plans, community leaders and others here. If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information – including your preferred e-mail by creating or updating your profile here. You can reach other recent updates and other informative publications and resources.

Recent examples of these publications include:

For important information about this communication click here.

©2013 Cynthia Marcotte Stamer.  Nonexclusive right to republish granted to Solutions Law Press, Inc. All other rights reserved.


Businesses Performing Income, Payroll Tax Duties For Employers Confirm Compliance With Updated IRS Procedures

December 14, 2013

Payroll, staffing employee leasing and other businesses that provide workers, staffing, payroll or other related services and the businesses that use these services should review their status to determine if the service provider might be considered to act as the “agent” of their client businesses for purposes of the withholding of income taxes from wages and/or the collection, reporting and payment of income and employment taxes on behalf of another employer business and if so, their responsibilities as agents for these purposes under Revenue Procedure 2013-39

The Internal Revenue Service (IRS) recently released Revenue Procedure 2013-39.  It describes and updates the procedure for requesting the IRS authorize a person to act as agent under section 3504 of the Internal Revenue Code (Code) and §31.3504-1 of the Employment Tax Regulations for purposes of Chapters 21, 22, 24, and 25 of the Code. Special instructions are also set forth for agents authorized to perform acts for purposes of Chapter 23 of the Code.

Chapters 21, 22, 23, 24, and 25 of the Code impose obligations on employers with regard to employment taxes. Specifically, Chapter 21 imposes Federal Insurance Contributions Act (FICA) tax, Chapter 22 imposes Railroad Retirement Tax Act (RRTA) tax, Chapter 23 imposes Federal Unemployment Tax Act (FUTA) tax.  Meanwhile, Chapter 24 imposes Collection of Income Tax at Source on Wages (income tax withholding), and Chapter 25 provides general provisions on employment taxes.

While these Code provisions generally impose these obligations on the common law employer of the employee with respect to whose wages the taxes arise, Section 3504 of the Code authorizes the Secretary to issue regulations to authorize a fiduciary, agent, or other person (“agent”) who has the control of, receives, has custody of, disposes of, or pays the wages of an employee or group of employees, employed by one or more employers, to perform certain specified acts required of employers. Under section 3504, all provisions of law (including penalties) applicable with respect to an employer are applicable to the agent and stay applicable to the common law employer. Accordingly, both the agent and employer are liable for the employment taxes and penalties associated with violations of these requirements.

In addition to updating the procedures generally applicable for parties to act as agents of employers for purposes of income and payroll taxes generally, the Revenue Procedure also sets forth special rules for agents dealing with home health workers as well as certain other special circumstances.

Businesses that could be considered to act as agents of another business should carefully review their status to determine whether their organization could be considered an agent for purposes of these rules either because they openly perform these responsibilities as a declared agent in accordance with current IRS procedures, or because the facts and circumstances under which their business acts as an employee leasing, staffing, professional employment organization (PEO) create a risk that workers treated as employed by the service provider could in fact be recharacterized on audit as common law employees of the customer.

Beyond the employer responsibilities under existing income and employment tax rules, proper classification also may have implications on the parties responsibilities under the employer shared responsibility rules of Code Section 4980H.  In Notice 2013-54, the IRS stated that the IRS might be willing to recognize health coverage provided by a staffing, employee leasing or other firm to a worker where the facts and circumstances reflect that the common law employer of the worker in fact is the customer of the staffing company as coverage provided by the common law employer.  In comments made at an American Bar Association Joint Tax and RPTE Meeting this Fall, however, IRS representatives also commented that they contemplated that this ability would be limited to situations where the staffing entity or other service provider registers as the agent of the customer which was the common law employer of the workers.  Businesses must await further clarifying guidance about whether and how the IRS ultimately implements these rules.

For Assistance or More Information

If you have questions or need help with these or employee benefit, human resources, insurance, health care matters or related documents or practices, please contact the author of this update, Cynthia Marcotte Stamer.

A Fellow in the American College of Employee Benefit Council, immediate past Chair of the American Bar Association (ABA) RPTE Employee Benefits & Other Compensation Group and current Co-Chair of its Welfare Benefit Committee, Vice-Chair of the ABA TIPS Employee Benefits Committee, a council member of the ABA Joint Committee on Employee Benefits, and past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, Ms. Stamer is recognized, internationally, nationally and locally for her more than 25 years of work, advocacy, education and publications on cutting edge health and managed care, employee benefit, human resources and related workforce, insurance and financial services, and health care matters.

A board certified labor and employment attorney widely known for her extensive and creative knowledge and experienced with these and other employment, employee benefit and compensation matters, Ms. Stamer continuously advises and assists employers, employee benefit plans, their sponsoring employers, fiduciaries, insurers, administrators, service providers, insurers and others to monitor and respond to evolving legal and operational requirements and to design, administer, document and defend medical and other welfare benefit, qualified and non-qualified deferred compensation and retirement, severance and other employee benefit, compensation, and human resources, management and other programs and practices tailored to the client’s human resources, employee benefits or other management goals. A primary drafter of the Bolivian Social Security pension privatization law, Ms. Stamer also works extensively with management, service provider and other clients to monitor legislative and regulatory developments and to deal with Congressional and state legislators, regulators, and enforcement officials about regulatory, investigatory or enforcement concerns.

Recognized in Who’s Who In American Professionals and both an American Bar Association (ABA) and a State Bar of Texas Fellow, Ms. Stamer serves on the Editorial Advisory Board of Employee Benefits News, HR.com, Insurance Thought Leadership, Solutions Law Press, Inc. and other publications, and active in a multitude of other employee benefits, human resources and other professional and civic organizations. She also is a widely published author and highly regarded speaker on these matters. Her insights on these and other matters appear in the Bureau of National Affairs, Spencer Publications, the Wall Street Journal, the Dallas Business Journal, the Houston Business Journal, Modern and many other national and local publications. Her widely respected publications and programs include more than 25 years of publications on health plan contracting, design, administration and risk management including a “Managed Care Contracting Guide” published by the American Health Lawyers Association and numerous other works on vendor contracting.  You can learn more about Ms. Stamer and her experience, review some of her other training, speaking, publications and other resources, and register to receive future updates about developments on these and other concerns from Ms. Stamer here.

Other Helpful Resources & Other Information

We hope that this information is useful to you.   If you found these updates of interest, you also be interested in one or more of the following other recent articles published on the Coalition for Responsible Health Care Reform electronic publication available here, our electronic Solutions Law Press Health Care Update publication available here, or our HR & Benefits Update electronic publication available here .  You also can get access to information about how you can arrange for training on “Building Your Family’s Health Care Toolkit,”  using the “PlayForLife” resources to organize low-cost wellness programs in your workplace, school, church or other communities, and other process improvement, compliance and other training and other resources for health care providers, employers, health plans, community leaders and others here. If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information – including your preferred e-mail by creating or updating your profile here. You can reach other recent updates and other informative publications and resources.

Recent examples of these publications include:

For important information about this communication click here.

©2013 Cynthia Marcotte Stamer.  Nonexclusive right to republish granted to Solutions Law Press, Inc. All other rights reserved.


Boost Employee Recognition of Value Of Employer & Other Retirement Savings Tools & Plans

October 22, 2012

Studies suggest that employees need to save an estimated 40% of current earnings to have sufficient savings to fund the anticipated cost to keep up their lifestyle post retirement for their expected post retirement life expectancy.  Although times are tough, American workers need to understand the importance of taking advantage of employer sponsored and other retirement saving and funding tools. Here is a free Department of Labor resource that employers might want to include in their retirement education toolkit.

For More Information Or Assistance

If you need help reviewing or responding to the defined benefit plan funding or other employee benefit, compensation or employment regulations or other related matters please contact Cynthia Marcotte Stamer here or (469)767-8872.

About Ms. Stamer

Board Certified in Labor and Employment Law by the Texas Board of Legal Specialization, an American College of Employee Benefits Counsel Fellow, past Chair and current Welfare Benefit Committee Co_Chair of the American Bar Association (ABA) RPTE Employee Benefit & Other Compensation Group, a Council Member of the ABA Joint Committee on Employee Benefits, current TIPS Employee Benefits Committee, Vice Chair, and Past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, management attorney and consultant Cynthia Marcotte Stamer has more than 25 years experience advising and representing employers, health and other employee benefit plans, their sponsors, fiduciaries and plan administrators, consultants, vendors, outsourcers, insurers, governments and others about employment, employee benefit, compensation, and a wide range of other performance, legal and operational risk management practices and concerns.  As a part of this work, Ms. Stamer has worked extensively with clients to manage risks and defend practices under a wide range of laws and circumstances.  Her experience includes extensive work advising and representing employers, plans, plan fiduciaries, trustees, investors, and others about managing and resolving risks relating to distressed pension and other employee benefit plans, downsizing and other workforce re-engineering and other similar matters.  A prolific author and popular speaker, Ms. Stamer also publishes, conducts client and other training, testifies, speaks and consults extensively on other employment and employee benefit risk management practices and concerns for the ABA, World At Work, SHRM, American Health Lawyers Association, Institute of Internal Auditors, Society for Professional Benefits Administrators, HCCA, Southwest Benefits Association and many other organizations.  An Editorial Advisory Board member and contributing author of HR.com, Insurance Thought Leaders, Employee Benefit News and many other publications, her insights on these and related topics have appeared in Atlantic Information Service, Bureau of National Affairs, World At Work, The Wall Street Journal, Business Insurance, Managed Healthcare, Health Leaders, various ABA publications and a many other national and local publications. To learn more about Ms. Stamer, her experience, involvements, programs and publications, see here or contact Ms. Stamer.

Other Resources & Developments

If you found this information of interest, you also may be interested in reviewing other recent Solutions Law Press updates including:

If you or someone else you know would like to receive future updates and notices about upcoming programs and events, please be sure that we have your current contact information – including your preferred e-mail- by creating or updating your profile at here.   For important information concerning this communication click here.

©2012 Cynthia Marcotte Stamer. All rights reserved.


Congress Gives Defined Benefit Plan Sponsors Welcome Funding Relief, Raises PBGC Premiums & Makes Other Reforms

July 31, 2012

The Employee Retirement Income Security Act of 1974, as amended (ERISA) and the Internal Revenue Code generally require employers that sponsor defined benefit pension plans make sufficient contributions to their defined benefit pension plans to ensure that their plans meet minimum funding requirements.  

Failure to meet minimum funding requirements triggers a series of complicated reporting and disclosure, funding and excise tax liabilities, liens and other obligations that are serious and require prompt redress through prompt payment of required contributions and penalties, request for funding waivers or termination under a series of complicated rules or both.  Special controlled group, lien and successor liability rules incorporated into these funding requirements often spread the risk of funding deficiencies under these rules by extending liabilities to commonly controlled or affiliated employers, lenders, potential purchasers and others dealing with these plans or the businesses that sponsor them.  

Because employer funding obligations under these rules depend heavily upon interest and other investment performance used to calculate funding levels, employer funding obligations tend to spike during economic depressions or slowdowns, resulting in sharp increases in funding obligations for employers at a time when the tight economy already makes finances tight.   Congress has faced growing pressure to provide some sort of defined benefit pension plan funding relief as low investment returns and strained corporate budgets during the ongoing economic crisis have fueled an underfunding epidemic among employers sponsoring defined benefit pension plans and threatened the financial viability of many sponsoring employers and the federal insurance program responsible for providing backup insurance for private employer defined benefit commitments administered by the PBGC.

MAP-21 provides immediate defined benefit plan funding relief by changing how the interest rates that employers must use to calculate their current defined benefit plan funding obligations are calculated.  MAP-21 defined benefit plan funding reforms effectively decrease current defined benefit plan funding costs by establishing a minimum and maximum for the interest segment rates defined benefit plans use to calculate currently required funding based on a historic 25-year average of those segment rates. It is important that employers and plan fiduciaries keep in mind that the MAP-21 interest rate change applies to the calculation of current funding obligations that employer.  It does not apply for purposes of calculating lump sum distributions, limits on deductible contributions to single-employer plans, PBGC variable-rate premiums, fi

With many employers continuing to meet defined benefit plan funding requirements driven up by the continued excessively low investment performance of their benefit plan investment in the slow economic environment, defined benefit pension plan funding relief included in the “Moving Ahead for Progress in the 21st Century Act”(MAP–21”) signed into law by President Obama on July 6, 2012 provides welcome and  much-needed pension funding relief. For many financially strapped businesses that sponsor defined benefit plans, the MAP-21 relief may allow the employer to avoid terminating its defined benefit plan, escape costly underfunding consequences that many defined benefit plan sponsors fear will financially cripple or bankrupt their companies, or both.

MAP-21 provides immediate funding relief for financially strapped defined benefit plan sponsors and makes various other reforms impacting defined benefit pension plans and the Pension Benefit Guarantee Corporation (PBGC) insurance program that helps to insure certain benefit commitments made under these defined benefit plans.  The MAP-21 funding relief is intended to help employers struggling to meet heightened pension funding obligations brought about by the decline in investment performance resulting from the economic downturn.

nancial reporting under Section 4010 of ERISA, and qualified transfers of excess pension assets to retiree medical accounts.

In addition to changing the rules for calculating interest rates for purposes of determining defined benefit plan minimum funding obligations, MAP-21 also extends rules allowing transfers of excess pension assets to retiree health accounts to December 31, 2021 and expands those transfer rules also to allow transfers to fund retiree group term life insurance accounts.

Finally, in addition to these changes to defined benefit pension plan funding rules, MAP-21 also reorganizes the PBGC organizational structure and increases PBGC insurance premiums.

While the MAP-21 reforms will provide welcome relief, sponsoring businesses, their commonly controlled and affiliated employers, lenders, investors and successors still must exercise care to carefully monitor the funding status of defined benefit plans and the potential liabilities and responsibilities associated with these plans.  Appropriate steps should be taken to maintain required funding levels or, at the first sign of trouble, to seek experienced legal and actuarial advice and help to identify and take prompt steps to pursue options to head off a potential crisis by freezing or terminating the plan, providing required notifications and disclosures to participants and beneficiaries, the PBGC, lenders, investors, and other concerned parties, and other actions to mitigate exposures. 

For More Information Or Assistance

If you need help reviewing or responding to the defined benefit plan funding or other employee benefit, compensation or employment regulations or other related matters please contact Cynthia Marcotte Stamer here or (469)767-8872. 

A Fellow in the the American College of Employee Benefits Council, Board Certified in Labor and Employment Law by the Texas Board of Legal Specialization, Immediate Past Chair and current Welfare Plan Committee Co-Chair of the American Bar Association (ABA) RPTE Employee Benefit & Other Compensation Group, a Council Member of the ABA Joint Committee on Employee Benefits, Vice-Chair of the ABA TIPS Employee Benefits Commitee, Past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, management attorney and consultant Cynthia Marcotte Stamer nearly 25 years experience advising and representing employers,  employee benefit plans, their sponsors, bankruptcy creditors, debtors and trustees, plan  fiduciaries and plan administrators, consultants, vendors, outsourcers, insurers, governments and others about employment, employee benefit, compensation, and a wide range of other performance, legal and operational risk management practices and concerns.  As a part of this work, Ms. Stamer has worked extensively with clients to manage risks and defend practices under a wide range of laws and circumstances.  Her experience includes extensive work advising and representing employers, plans, plan fiduciaries, trustees, investors, and others about managing and resolving risks relating to distressed pension and other employee benefit plans, downsizing and other workforce reengineering and other similar matters.  A prolific author and popular speaker, Ms. Stamer also publishes, conducts client and other training, speaks and consults extensively on GINA and other employment and employee benefit risk management practices and concerns for the ABA, World At Work, SHRM, American Health Lawyers Association, Institute of Internal Auditors, Society for Professional Benefits Administrators, HCCA, Southwest Benefits Association and many other organizations.  Her insights on these and related topics have appeared in Atlantic Information Service, Bureau of National Affairs, World At Work, The Wall Street Journal, Business Insurance, Managed Healthcare, Health Leaders, various ABA publications and a many other national and local publications. To learn more about Ms. Stamer, her experience, involvements, programs and publications, see here or contact Ms. Stamer.

Other Resources & Developments

If you found this information of interest, you also may be interested in reviewing other recent Solutions Law Press updates including:

If you or someone else you know would like to receive future updates and notices about upcoming programs and events, please be sure that we have your current contact information – including your preferred e-mail- by creating or updating your profile at here.  To unsubscribe, send an e-mail with “Unsubscribe” in the subject here.  For important information concerning this communication click here.

©2010 Cynthia Marcotte Stamer. All rights reserved.