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DISCLAIMER: This blog is published for general information only - it is not intended to constitute legal advice and cannot be relied upon by any person as legal advice.  U.S. Treasury Regulations require us to notify you that any tax-related material in this blog (including links and attachments) is not intended or written to be used, and cannot be used, for the purpose of avoiding tax penalties, and may not be referred to in any marketing or promotional materials.  While we welcome you to contact our authors, the submission of a comment or question does not create an attorney-client relationship between the Firm and you. 

Thursday
May212015

Where There’s Smoke There’s Questions: Designing Compliant Wellness Programs That Target Tobacco Use

The final regulations concerning wellness programs under the Health Insurance Portability and Accountability Act, as amended (HIPAA) continue to generate a number of questions and concerns for employers whose programs seek to promote employee health by curbing tobacco use.  The compliance status of some programs is further complicated by the recent release of Equal Employment Opportunity Commission (EEOC) proposed rules, which depart from the 2013 HIPAA regulations in important ways when it comes to tobacco-related wellness programs.  Here is a sampling of questions we have received from clients, with brief responses that include observations about the proposed rules recently published by the EEOC.

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Monday
Apr272015

EEOC Finally Releases Notice of Proposed Rulemaking for Wellness Programs

For nearly a year the U.S. Equal Employment Opportunity Commission (EEOC) has endured harsh criticism from employers, members of the United States Senate, and the benefits community at large for commencing legal actions challenging employer-sponsored wellness programs before issuing guidance regarding the compliance status of those programs under the Americans with Disabilities Act (ADA).  At long last the EEOC has released a Notice of Proposed Rulemaking (the “Notice”) addressing how Title I of the ADA applies to employer wellness programs.  The good news is that the proposed regulations contained in the Notice hew fairly close to existing regulations published by other federal agencies and are generally limited to programs that involve disability-related inquiries and medical examinations. There are significant differences, however, regarding maximum rewards for programs that target tobacco use, the application of reward limits to certain participatory wellness programs, and the notice requirements that apply to wellness programs.  Perhaps most importantly, the Notice attempts to address what makes participation in a wellness program “voluntary” and, thus, compliant with one of the safe harbor exceptions to the prohibition on employer-sponsored medical examinations under the ADA.  Nevertheless, several questions affecting the legal compliance status of wellness programs remain.  

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Monday
Apr132015

EPCRS Revisions: The Second Act

For the second time in under a week the Internal Revenue Service released a series of updates to its most recent restatement of the Employee Plans Compliance Resolution System (EPCRS).  Revenue Procedure 2015-28 modifies EPCRS by outlining new safe harbor correction methods for plans with automatic contribution features and shorter term elective deferral failures.  The changes provide helpful relief to employers who maintain 401(k) and 403(b) plans by expanding the correction options for errors involving the implementation of elective deferrals or the improper exclusion of eligible employees from the plan.  Employers whose plans provide for automatic enrollment and automatic escalation of elective deferrals will find the new guidance especially advantageous.

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Thursday
Apr022015

IRS Clarifies the Correction of Overpayments under EPCRS

The IRS has clarified the correction of certain retirement plan operational failures under its Employer Plan Compliance Resolution System (EPCRS) and expanded certain elements of the program in ways that are helpful to retirement plan sponsors. The clarifications, contained in Rev. Proc. 2015-27, address what the IRS believes is an overly narrow or strict interpretation by plan sponsors of the requirements for the correction of overpayments and modify the correction program in other ways.

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Monday
Feb232015

Notice 2015-17: Small-Scale Excise Tax Relief for Small Employers

On February 18, 2015 the Internal Revenue Service issued Notice 2015-17, which provides temporary relief from the excise tax under Code section 4980D for employer programs that reimburse employees for the cost of health insurance coverage purchased on the individual market (including coverage obtained through an Exchange).  The Notice also extends limited excise tax relief to health care arrangements covering 2-percent shareholder-employees, employer reimbursements of Medicare Part B or D premiums, and programs that reimburse the medical expenses of employees enrolled in TRICARE. The Notice provides a brief but welcome respite for small employers that wish to reimburse employees for the cost of obtaining individual health insurance policies (on a pre-tax basis) rather than maintaining a group health insurance plan.

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