Labor and Employment Alert: A Flurry of Employee Benefit Guidance in the Closing Days of the Obama Administration

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2015 Pay or Play Penalties

According to IRS FAQs on IRC §4980H published December 22, 2016, the IRS will begin contacting employers in “early 2017” regarding potential liability for 2015 pay or play penalties under IRC §4980H.  A letter from the IRS will be a notice of potential liability, not an assessment of liability; an employer will have an opportunity to respond prior to an assessment.  The IRS expects to publish guidance on the process before the letters go out to employers.  The IRS also expects to contact employers that the IRS suspects may be applicable large employers (i.e., employers with 50 or more full-time plus full-time equivalent employees in 2014) that failed to file Form 1095-Cs for 2015.  If you get either of these types of letters from the IRS, we can assist with an analysis of your data and the response to the IRS.

2016 Treatment of Opt-Out Payments

An opt-out payment is an amount that an employer pays an employee if and only if the employee waives the employer’s medical plan. For example, assume an employee would need to make a salary reduction contribution of $200 per month to enroll in the employer’s medical plan and the employer would pay the employee $100 per month if the employee waives the medical plan.  What is the employee contribution in this example?  The answer depends on why the question is being asked.

The answer may be different for 2017. The IRS currently expects to issue regulations requiring the inclusion of unconditional opt-out payments in the required contribution for purposes of the IRC §4980H(b) unaffordable/inadequate coverage penalty, to match the treatment of opt-out payments for purposes of premium assistance.  However, the new Administration may choose different treatment – or Congress could repeal the pay or play penalties or change them in a way that makes the question irrelevant.

2017 Indexed Pay or Play Penalties

The IRS indexed the employer pay or play penalties. The 2017 amounts will apply to failures to offer affordable, minimum value health coverage to full time employees in 2017 – unless changed or repealed by Congress.

Other group health plan indexed amounts are on this chart.

2018 Claims and Appeals Process for Disability Benefits

On December 19, 2016, the Department of Labor published final regulations on claims and appeals for disability benefits.  The regulations will be effective for claims filed on or after January 1, 2018 – unless Congress chooses to disapprove the regulations.  The regulations are not related to the Affordable Care Act, so are not necessarily in the crosshairs of the new Administration.  Nonetheless, Congress has the power to block these and other regulations published after May 30, 2016.

If the regulations go into effect as scheduled, they will apply to most but not all claims for disability benefits.

The new regulations would: