Monthly Benefits Update - January 2014

by Franczek Radelet P.C.

Monthly Benefits Update - January 2014 [pdf]

Health & Welfare Plans

Agencies Issue New Round of Affordable Care Act FAQs

The Departments of Health and Human Services, Labor, and the Treasury (the “Departments”) recently issued their 18th round of Frequently Asked Questions addressing important matters that plan sponsors should consider when implementing the Affordable Care Act (ACA). Certain sections of the FAQ will impact employer-sponsored health plans and thus deserve attention.

A key section of this FAQ addresses the out-of-pocket maximums that a plan may impose for certain benefits. The ACA places limits on out-of-pocket costs on all essential health benefits (EHB) covered under a plan. Under the FAQ, the Departments require that non-grandfathered group health plans comply with the out-of-pocket limits for plan years beginning on or after January 1, 2015. The FAQ further clarifies what services a plan may disregard for purposes of the plan’s out-of-pocket maximum. For example, the ACA will not require a plan to subject out-of-network services and certain non-covered items (like cosmetic services) to the annual out-of-pocket limits.

The FAQ also addresses the employer design of wellness programs under the ACA. The Departments issued final wellness regulations in 2013 that allowed employers to reduce premiums for participants who participate in a wellness or tobacco cessation program. With respect to tobacco cessation programs, the FAQ clarified that an employer may, but is not required to, eliminate the surcharge it imposes on a participant who initially declines to participate in the tobacco cessation program but enrolls in the middle of the plan year. Further wellness-related guidance in the FAQ explains how a plan must provide a participant with a reasonable alternative standard for obtaining a premium reduction where a physician advises that a program is inappropriate for the participant.

The FAQ also answers questions involving the Mental Health Parity and Addiction Equity Act of 2008, the application of the ACA to expatriate health plans, and the prohibition on cost-sharing requirements for certain preventive services related to breast cancer.

Multiemployer Plans

PBGC Proposal Eases Rules Related to Multiemployer Plan Filing and Notice Requirements

On January 28th, 2014, the PBGC issued a proposed rule that would ease certain multiemployer plan filing and notice requirements. One important aspect of the proposed rule would ease the notice requirement for plan sponsors contemplating a plan merger. Plan sponsors currently considering a merger with another multiemployer plan must notify the PBGC 120 days in advance of such merger. The proposed rule would shorten this notice requirement to 45 days for certain types of mergers. The notice, which contains information about the merger, the plans involved, and required actuarial valuations, is designed to allow the PBGC to evaluate whether the merger will satisfy certain statutory requirements. In proposing to shorten the advance notice requirement, the PBGC recognized that many plan sponsors, in an effort to complete plan mergers before the end of a year, often request a waiver of the 120-day advance notice period. The shortened notice period is designed to accommodate the needs of plan sponsors, while maintaining the PBGC’s oversight in this area.

The PBGC also proposed to limit reporting in two other areas. First, multiemployer plans that become insolvent—meaning that they can only pay benefits at minimum levels set by the PBGC—are typically required to provide annual notices to the PBGC, participants, and beneficiaries. Since adopting this rule, the PBGC recognized that insolvent plans rarely return to financial health. Accordingly, the proposed rule would require the plan sponsor to issue these notices only once, rather than on an annual basis. Second, the PBGC proposed to limit the requirement that certain terminated plans perform annual valuations. Under current rules, a terminated but not insolvent plan is required to report an annual valuation to the PBGC so that the PBGC can adequately evaluate its risks should the plan become insolvent. In reviewing this regulation, PBGC recognized that the costs of requiring an annual valuation would accelerate plan insolvency and require PBGC intervention. To alleviate this problem, the proposed rule would require terminated multiemployer plans with less than $25 million in nonforfeitable benefits to provide valuations to the PBC every three years.

Retirement Plans

New “myRA” Workplace Savings Program

In his January 28, 2014 State of the Union address, President Obama outlined a new retirement savings program called “myRA”. Although we do not yet know all the details (the White House has released a fact sheet but more guidance is likely to come), the program aims to provide broad access to a starter retirement savings account for individuals. Set to launch in late 2014, the program will allow individuals to divert a part of their earnings to a retirement savings account. For tax purposes, an individual’s myRA account will likely function as a Roth IRA account. Workers will be permitted to accumulate up to $15,000 in their account, which will be invested in a guaranteed income fund. Importantly, employees who have access to an employer-sponsored retirement plan will also be able to contribute to a separate myRA account.

Early descriptions of the program suggest minimal employer involvement, although it appears that employers will be able to direct employee payroll contributions to employees’ myRA accounts. In particular, small employers who do not currently sponsor a retirement plan may want to communicate this program to employees when more details are known. Details about how an employer may be able to participate in the program should come later this year.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Franczek Radelet P.C. | Attorney Advertising

Written by:

Franczek Radelet P.C.

Franczek Radelet P.C. on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.