IRS Affordable Care Act Penalty Relief for Small Employers Expires Soon

In Employee Benefits by Coolidge Wall

Previously the IRS announced that employer payment plans would violate the Affordable Care Act and subject an employer to penalties. An employer payment plan is a plan under which an employer reimburses an employee for all or part of the premium for an individual health insurance policy. The penalty for this arrangement is $100 per participant/per day. In February the IRS granted small employers (those with fewer than 50 full-time employees) a break from the penalty through June 30, 2015. If a small employer is still reimbursing employees for individual health insurance premiums, the employer must stop the reimbursements no …

IRS Announces 2015 Pension Plan Limitations

In Employee Benefits, General by Coolidge Wall

On October 23, 2014, the IRS announced cost-of-living adjustments for 2015 retirement plan contributions. For 2015, the amounts that individuals will be able to contribute to retirement plans will increase $500 to $18,000. The catch-up contribution limit for employees age 50 and over will also increase $500 to $6,000. This chart summarizes the limitations for 2015: Contribution Limits 2015 2014 Elective Deferral Limit – 401(k), 403(b) and 457(b) Plans $18,000 $17,500 Catch-Up Contribution Limit $6,000 $5,500 Elective Deferral Limit – SIMPLE Retirement Plan $12,500 $12,000 Catch-Up Contribution Limit – SIMPLE Retirement Plan $3,000 $2,500 Contribution Limit – IRA $5,500 $5,500 …

Failure to Provide COBRA Notice Results in Penalties Even When Employer Pays the Bills

In Employee Benefits, Employment Law, Healthcare Reform by Coolidge Wall

Regina Honey was pregnant with her second child and experiencing pre-term labor. Her doctor ordered bed rest for about two weeks. When Ms. Honey was ready to return to work at Dignity Health, she was told her employment was terminated. About two months later she was reinstated. However, the pre-term labor returned and her doctor ordered bed rest for the remainder of the pregnancy. Ms. Honey remained on bed rest until her son was born in July 2010. When the doctor approved her return to work in September 2010, she was never scheduled to return. After several attempts to reach …

IRS Announces Restatement Deadline for Retirement Plans

In Business Law, Employee Benefits, General by Coolidge Wall

An employer that has an IRS preapproved retirement plan, such as a 401(k) plan, profit sharing plan, or money purchase pension plan, is required to restate the plan every six years for changes in the law. The last six year restatement cycle ended April 30, 2010 and the IRS has announced that the second restatement cycle will run through April 30, 2016. Any employer that does not restate a preapproved retirement plan by April 30, 2016 will be subject to a late amender penalty. Generally, an employer is not going to be able to get a determination letter from the …

The Supreme Court Narrows Affordable Care Act Contraception Mandate

In Business Law, Employee Benefits, General, Healthcare Reform by Coolidge Wall

The Affordable Care Act requires health plans to cover “preventive services” at no cost to participants. The federal government has identified 20 forms of contraception that are required to be included as part of preventive services. Various “for-profit” companies have challenged ACA’s birth control coverage requirement in about 50 lawsuits now pending across the country. Many of these employers are family owned, closely held or controlled companies whose owners object to the provision of contraceptive coverage on faith-based grounds. On June 30th, the last day of its 2013-2014 term, the Supreme Court issued a 5-4 decision in Burwell v. Hobby …

Sixth Circuit Expands Damages in ERISA Case

In Employee Benefits, Litigation by Coolidge Wall

In December the Sixth Circuit Court of Appeals issued an opinion in Rochow v. Life Insurance Company of North America. Rochow, the president of a company, began experiencing short- term memory loss and other symptoms of illness in 2001 which led to him being demoted. The symptoms continued to interfere with his performance and he was forced to resign in 2002. Rochow filed a claim for long-term disability benefits and the Life Insurance Company of North America (“LINA”) denied his claim and three appeals. Finally, Rochow filed a complaint in court against LINA and stated two claims under ERISA: one …

IRS Announces 2014 Pension Plan Limitations

In Business Law, Employee Benefits, Employment Law, General by Coolidge Wall

On October 31, 2013, the IRS announced cost-of-living adjustments for 2014 retirement plan contributions. For 2014, the amounts that individuals will be able to contribute to retirement plans will remain the same as 2013. Highlights of the IRS announcement include: Continuing the annual salary deferral limit for 401(k), 403(b), and most 457 plans at $17,500. Leaving unchanged the additional catch-up contribution for employees age 50 and older at $5,500. Increasing the limit on total contributions to defined contribution plans from $51,000 to $52,000. Leaving unchanged the definition of highly compensated employee as an employee making $115,000 per year. Increasing the …

IRS Modifies the Health Flexible Spending Account “Use It or Lose It” Rule to Allow a Limited Carry Over of Unused FSA Funds

In Business Law, Employee Benefits, Employment Law, General by Coolidge Wall

On Halloween, the IRS treated employers and health flexible spending account participants to a change in the longstanding “use it or lose it” rule. Beginning immediately, employers may amend their cafeteria plans to allow participants to carry over up to $500 of unused FSA funds at the end of the plan year so that the carryover can be used to reimburse qualified medical expenses incurred in the following plan year. In addition, the amount carried over will not count against the permitted $2,500 salary reduction limit applicable to the next plan year. According to the guidance, however, a plan cannot …