Health & Welfare Plans

Our Epstein Becker Green colleague Stuart M. Gerson recently commented in an article titled “4th Circuit Upholds ACA’s Employer Mandate, Says Insurance Regulation Within Commerce,” by Mary Anne Pazanowski, in Bloomberg BNA’s Health Care Daily Report.

Following is an excerpt:

A unanimous U.S. Court of Appeals for the Fourth Circuit July 11 declared the Affordable Care Act’s employer mandate a valid exercise of Congress’s power to regulate commerce under the U.S. Constitution’s Commerce Clause (Liberty University Inc. v. Lew, 4th Cir., No. 10-2347, 7/11/13).

In an opinion co-authored by Judges Diana Gribbon Motz, James A. Wynn Jr., and Andre M. Davis, the court held that the mandate is ‘‘simply an example of Congress’s longstanding authority to regulate employee compensation offered and paid for by employers in interstate commerce.”

The ruling comes in a case filed by Liberty University Inc. and two individual plaintiffs that challenged both the individual and employer mandates. Treasury Secretary Jacob Lew has been substituted as a defendant in place of former Secretary Timothy Geithner.

Stuart Gerson, a former acting U.S. attorney general who is now an attorney with Epstein Becker Green in Washington, told BNA July 11 that ‘‘there is considerable force to the Fourth Circuit’s view that health insurance decisions affect employment, which itself is a matter of interstate commerce.”

He predicted that, if the case returns to the Supreme Court—as seems likely based on a July 11 press release from the university’s attorneys—there would be four solid votes to uphold the Fourth Circuit’s ruling. But, he said, ‘‘it is difficult to predict how the chief justice and the other four conservative justices come out on this point.” He added, though, that ‘‘one must at least recognize that there is a difference between an individual’s decision not to engage in commerce and the clear commercial activity in which Liberty indisputably engages.”

Of course, Gerson said, if the conservatives on the high court vote to uphold Liberty’s challenge to the employer mandate, Chief Justice John G. Roberts Jr. ‘‘could again perform the legerdemain and create a fifth vote for affirmance by holding that the employer man- date is supportable under the tax power as was the individual mandate in NFIB. The Fourth Circuit’s alternative reasoning allows for this result.”

I’ve posted a client advisory on the recent ACA employer mandate delay, with my colleagues Frank C. Morris, Jr.; Elizabeth Bradley; and Adam Solander.  We explore the ramifications and unresolved issues that employers should consider.  Following is an excerpt:

In reaction to employers’ concerns about the many difficulties posed in efforts to comply with the Employer Mandate provisions of the Affordable Care Act (“ACA”), the Obama administration (“Administration”) announced late yesterday that it is delaying the implementation of the penalty provisions and other aspects of the shared responsibility regulations until 2015. While the delay may have been to accommodate stakeholder requests, the delay also may have accommodated the Administration in connection with its readiness to implement the Employer Mandate. This delay could be a precursor to other implementation delays as the Administration seeks to make the ACA’s implementation successful, especially in light of intense scrutiny as to implementation and an inability to amend the law in Congress.

Read the full advisory: Employer Mandate Delayed—Employers Get Welcome Relief from Penalties Until 2015, but Many Questions Remain.

By Gretchen Harders and Michelle Capezza

On May 8, 2013, the Employee Benefits Security Administration of the Department of Labor (the “DOL”) issued Technical Release 2013-02 (the “Release”) providing important guidance under the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (the “Affordable Care Act”) with regard to the requirement that employers provide notices to their employees of the existence of the Health Insurance Marketplace, generally referred to previously as the Exchange.  These employee notices must be provided to existing employees no later than October 1, 2013.  This deadline is intended to correspond to the open enrollment period for the Marketplace commencing October 1, 2013 for coverage through the Marketplace beginning January 1, 2014.  The Release includes temporary guidance and two model employee notices of the Marketplace upon which employers may rely.  The Release further provides an updated model election notice for group health plans for purposes of the continuation coverage provisions under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) to include information of the health coverage options offered to individuals through the Marketplace for comparative purposes.

Employee Notice of the Marketplace.  The Affordable Care Act amended the Fair Labor Standards Act (“FLSA”) to require employers to issue employees a notice of the health coverage options available under the Marketplace.  The FLSA requirement was required to have been satisfied on or before March 1, 2013; however, given the regulatory delays in establishing and approving the Marketplace, the DOL extended the deadline.  The guidance under this Release is temporary through the applicability date of October 1, 2013, but may be relied upon until future guidance and regulations are issued.

Which employers are required to comply with the notice requirements?

Whether or not required to “pay or play” under the Affordable Care Act, all employers subject to the FLSA must provide the employee notice.  The FLSA generally applies to employers that employ one or more employees and are engaged in or produce goods for interstate commerce.  The FLSA also covers, among other things, hospitals, schools, institutions of higher education and federal, state and local government agencies.  To determine whether an employer is subject to the FLSA, the DOL provides an internet assistance tool at http://www.dol.gov/elaws/esa/flsa/scope/screen24.asp.

Which employees must receive the notice?

Employers must provide the employee notice to each employee whether or not the employee has part-time or full-time status.  It does not matter whether the employee is enrolled or eligible to enroll in a group health plan.  A separate notice is not required to dependents or other individuals who may become eligible for coverage under the plan, but are not employees.

What information must the notice provide?

The employee notice must contain the following information:

  • The existence of the Marketplace;
  • The contact information and description of services offered on the Marketplace;
  • A statement that the individual may be eligible for a premium tax credit if the employee purchases a qualified plan on the Marketplace; and
  • A statement that if the employee purchases a qualified plan on the Marketplace, the employee may lose the employer contribution to any health benefit plan offered by the employer and all or a portion of employer contributions may be excluded from federal income.

What are the DOL model notice(s)?

The DOL has provided two model employee notices available on its website, one for employers who do not offer a health plan and one for employers who offer a health plan to some or all employees.  The Release provides that employers may use the model notice(s) provided the notice(s) include the information described above.

The model employee notice for employers who do not offer health coverage includes the information described above, as well as an explanation of the impact of the availability of employer health coverage on the employee’s eligibility for subsidies on the Marketplace.  The model employee notice does not require the employer to provide specific contact information for the Marketplace in the state where the employee resides, but rather refers the employee to the http://www.healthcare.gov website for contact information for the Marketplace in the employee’s area.  This model employee notice requires the employer to provide contact information for the employer, including the employer’s EIN.  This is the information an employee will need to include in an application for a premium subsidy on a Marketplace.

The model employee notice for employers who do offer health coverage generally includes the same information as the model employee notice for employers who do not offer health coverage.  This model employee notice does, however, require the employer to provide contact information to obtain more information about the employer’s health care coverage.  The disclosure requires the employer to state whether the health care coverage is offered to all employees and, if not to all employees, a description of those employees eligible for health care coverage.  It also requires the employer to state whether it offers dependent coverage and which dependents are eligible.  Finally, the employer is required to disclose whether the health care coverage offered meets the minimum value standard and that the cost of coverage is intended to be affordable.  The Department of Treasury and Internal Revenue Service recently issued proposed guidance to assist employees in assessing whether the coverage offered provides minimum value.  See our prior blog post New Proposed guidance for Determining Whether Employer-Sponsored Health Plan Provides Minimum Value.

The model employee notice includes optional information that an employer may provide to the employee based on the Marketplace Employer Coverage Tool to better understand their coverage choices, including whether the employee is eligible in the next three months for employer coverage, whether the employer offers a health plan that meets the minimum value standard, the premium for employee-only coverage under the lowest-cost plan that meets the minimum value standard if the employee received the maximum discount for any tobacco cessation program, and what changes the employer will make for the next plan year.  Although this information is optional, it may be to an employer’s benefit to demonstrate, where appropriate, that its plan is providing minimum value and is affordable.

When must the employee notice be provided and what are the acceptable delivery methods?

Current employees before October 1, 2013 must be provided with the notice no later than October 1, 2013.  Beginning October 1, 2013, the employer must provide each new employee the notice at the time of hire, which will be considered timely provided in 2014 if provided within 14 days of the employee’s start date.

The employee notice must be provided free of charge in writing in a manner calculated to be understood by the average employee.  The employee notice may be provided by first class mail or electronically if in accordance with the DOL’s electronic disclosure safe harbor.

COBRA Model Notice.  Under COBRA, an individual who was covered by a group health plan the day before a qualifying event occurred may be eligible to elect COBRA continuation coverage.  These qualified beneficiaries must be provided with an election notice within 14 day after the plan administrator receives notice of a qualifying event.  The COBRA election notice is required to include specific information.

The DOL updated its model COBRA election notice to provide information about the Marketplace for the purposes of informing qualified beneficiaries that they may also be eligible for a premium tax credit to pay for coverage offered through the Marketplace.  It also includes clarification on the limit on pre-existing conditions exclusions beginning in 2014.  Such information is not specifically required under the Affordable Care Act and should have no impact on whether an employer is subject to the employer responsibility penalties if in fact a former employee obtains coverage on the Marketplace.

The Release provides that the use of the model COBRA election notice completed appropriately will be considered good faith compliance with the COBRA election requirements.  The model COBRA election notice does not provide a specific deadline or compliance date.  Employers may wish to review their existing COBRA election notices for changes relating to the Affordable Care Act.

Employers have long been waiting for specific guidance from the DOL on the employee notice requirements.  Now that it is here, compliance should be addressed well before the October 1, 2013 deadline.

Allen Roberts, a Member of Firm in the Labor and Employment practice and co-chair of the firm’s Whistleblowing and Compliance Subpractice Group, in the New York office, wrote an article titled “Impact: Employers Brace for Change – Top 5 Issues Facing Businesses, as appeared in Insurance Advocate.”

Following is an excerpt:

By popular account, the Affordable Care Act (“ACA”) would preserve the base of insureds and extend health insurance coverage to as many as another 32 million Americans. That estimate could be wrong if ACA disrupts patterns and experience of spouse and dependent coverage on employer-paid policies. Much of the political and media comment has focused on mandates, exchanges, and reasons that employers may maneuver to satisfy requirements concerning employee coverage, or drop it completely. Left out of the discussion has been the cost of covering family members of employees and the opportunity to shift employer dollars away from spouse and dependent premiums and place more dollars in premiums for individual employees. If that happens, spouses and dependent children will receive insurance coverage under employer-provided plans only if their premiums are paid by the employee, a household member, or some third party. Otherwise, those family members must obtain insurance elsewhere or join the ranks of the uninsured, something that might have been unimaginable for many of them—and perhaps for advocates of ACA who have considered it a move towards universal health care coverage.

Click here to read the article in its entirety.

The attached file is used by permission from Insurance Advocate – Vol. 124, No. 6 / March 18, 2013.

On February 20, 2013, the Departments of Labor, Health and Human Services and the Treasury (the “Departments”) jointly issued a set of Frequently Asked Questions (“FAQs”) About Affordable Care Act Implementation (Part XII).  In the latest round of guidance, the Departments addressed the limitations on cost-sharing and the coverage of preventive services under the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (the “Affordable Care Act”).  This guidance applies only to non-grandfathered group health plans.  Large employers should be aware of these significant changes to the provision of health benefits and the limitations to the costs that may be borne by employees.

Limitations on Cost-Sharing for Large Employer Group Health Plans.  Under Section 1302(a) of the Affordable Care Act, group health plans are prohibited from imposing annual limits on essential health benefits.  On February 20, 2013, the Departments issued final regulations on the definition of “essential health benefits” and the standards for offering “qualified health plans” on a State Exchange (PDF).

Under Section 1302(c) of the Affordable Care Act, group health plans are required to limit the annual cost-sharing required of employees.  Cost-sharing includes co-insurance and co-payments.  The rule generally means that:  (1) essential health benefits must be provided without any annual limitations on the cost of those benefits; and (2) employees may not be required to contribute out-of-pocket more than a certain annual dollar limit for the provision of such essential health benefits.

  • Out-of-Pocket Maximums.  The prohibition on cost-sharing limitations under Section 1301(c)(1) applies to all non-grandfathered group health plans, including self-insured group health plans and large group insured health plans.  The FAQs specifically address the annual limitation on the imposition of out-of-pocket maximums, which for 2014 will be limited to $5,000 for self-only coverage and $10,000 for non-self-only coverage.
    • Many group health plans receive benefits through different services providers that impose different limitations.  For example, a group health plan may have a major medical provider, a separate pharmacy benefit manager (PBM) and a separate mental health provider.
    • The Departments have provided a safe harbor for different service providers.  Although the Department stated that the providers must “talk” to each other, for the first plan year beginning on or after January 1, 2014, the annual limitation on out-of-pocket maximums will be considered satisfied if: (1) the major medical coverage satisfies the annual maximums; and (2) if the plan has coverage that applies a separate limit for other coverage (such as prescription drug coverage), a separate out-of-pocket maximum may be imposed as long as it does not exceed the annual dollar limitations.
    • The Departments have noted that this safe harbor generally may not be applied to mental health and substance abuse disorder benefits because the Mental Health Parity and Addiction Equity Act of 2008 prohibits any separate out-of-pocket maximum between medical/surgical benefits and mental health and substance abuse disorder benefits.
  • Deductibles.  The FAQs make clear that the annual deductible limit under Section 1302(c)(2) of the Affordable Care Act, which for 2014 generally will be $2,000 for self-only coverage or $4,000 for non-self-only coverage, will not be enforced against self-insured and large employer group health plans.

Preventive Care Services.  Non-grandfathered group health plans must offer certain preventive care benefits without cost-sharing.  These preventive care benefits or services are based on recommended health guidelines developed by certain government agencies and medical studies, including the United States Preventive Services Task Force (“USPSTF”), the Centers for Disease Control and Prevention, the Health and Human Resources and Services Administration, among others.  The group health plan may use reasonable medical management to determine the frequency, method, treatment or setting for a specific preventive service.

The FAQs address issues raised with respect to specific preventive services and certain identified medical conditions, as follows:

  • In-Network.  If a preventive service is not offered in-network and is obtained out-of-network, the out-of-network service must be provided with no cost-sharing.
  • Aspirin.  Aspirin may only be covered if it is prescribed by a doctor for health conditions.
  • Colonoscopy.  If during a colonoscopy a polyp is removed, it must be covered without cost sharing because it is an integral part of colonoscopy
  • Breast Cancer.  Genetic counseling and evaluation for the routine breast cancer susceptibility gene (“BRCA”) testing for breast cancer includes the BCRA test itself.
  • High-Risk Population.  Some of the USFT recommendations for services apply to certain high-risk populations susceptible to a specific illness for which the service is provided.  The medical provider will make that determination and the service must be provided with no cost-sharing.
  • Immunizations.  The immunizations that must be covered without cost-sharing are those recommended by the Advisory Committee on Immunization Practices (“ACIP”), which may change from time to time.  The FAQs make clear plans and issuers can review the ACIP recommendations and make updates annually prior to the beginning of each plan year.
  • Women’s Preventive Services.  Plans and issuers have raised many questions over what types of women’s preventive services must be offered without cost-sharing.  The recommendations for women preventive services are relatively new and certain provisions, such as the coverage of contraceptives without cost-sharing, have been controversial.
    • Well-Woman Visits.  Well-woman visits are intended to include all women preventive services that are age and developmentally-appropriate.  Though more than one visit may be needed, plans are not required to provide for multiple visits and may provide for one annual well-woman visit.
    • Domestic Violence.  Screening and counseling for interpersonal and domestic violence may include open-ended questions and brochures, forms or other checklists or assessments.
    • HPV DNA Testing.  HPV DNA testing may be done every three years for women with normal cytology results who are 30 years of age or older.
    • HIV Testing.  Annual HIV screening as a preventive service includes HIV testing.
    • Contraceptives.  Preventive services include the full range of FDA-approved contraceptive methods (and are not limited to coverage of oral contraceptives).
      • Over-the-counter contraceptives are not covered unless prescribed by a health care provider.
      • Contraceptives for men are not covered.
      • FDA-approved IUDs and implants must be provided without cost-sharing if prescribed by a health care provider.
      • Side effects of contraceptives, counseling and device removal are covered preventive services.
    • Breastfeeding.  Breastfeeding counseling is a required preventive service and includes prenatal and postnatal lactation support, counseling and equipment rental or purchase for the period of breastfeeding, but the scope of such services is subject to reasonable medical management.  The Departments have declined to address reimbursement policies for such services as outside their scope of these rules.

The detail of the FAQs as to particular conditions and circumstances create challenges for plans and issuers in implementing the Affordable Care Act.  Employers should be aware of these rules to ensure that their group health plans are in compliance and pay attention to the continuing onslaught of guidance from the Departments.

Please join Epstein Becker Green’s Health Care & Life Sciences and Labor & Employment practitioners as we continue to review the Affordable Care Act and its ongoing impact on employers and their group health plans.

In less than a year, employers employing at least 50 full-time employees will be subject to the Employer Shared Responsibility provisions. Under these provisions, if employers do not offer health coverage or do not offer affordable health coverage that provides a minimum level of value to their full-time employees, they may be subject to a tax penalty under the proposed regulations just issued by the Internal Revenue Service.

During this program, Epstein Becker Green practitioners will:

  • Review the basics of the Employer Shared Responsibility provisions and proposed regulations
  • Define employer status under the proposed regulations
  • Clarify the definition of “full-time” employees and dependents who must be offered coverage
  • Discuss the determination of affordable and minimum value coverage
  • Review employer liabilities and penalties

This is the third session in the Employer Affordable Care Act Webinar Series for employers on upcoming rules and regulations implementing the Affordable Care Act.   Please stay tuned for upcoming webinars on:

  • Exchange Implementation
  • Essential Health Benefits
  • Quality Reporting
  • And others…

Epstein Becker Green Presenters:
Mark E. Lutes
Frank C. Morris, Jr.
Adam C. Solander 

Wednesday, January 9, 2013
1:00 – 2:00 pm EST
10:00 – 11:00 am PST

Registration Is Complimentary and Webinar Space Is Limited

Don’t Miss This Opportunity!  To Register, please click here.

Contact Elizabeth Gannon at 202/861-1850 or egannon@ebglaw.com for more information.  If you missed the first two webinars in the New ACA Implementation Regulation series, the audio recording and presentation slides are now available.

On Tuesday, December 18, Epstein Becker Green attorneys Gretchen Harders, Frank C. Morris, Jr., and Adam C. Solander offered a one-hour webinar titled “What Employers Need to Know Now!” as the second webinar in a series on the New ACA Implementation Regulations: Employer Impact.

The webinar included:

  • ACA implementation timeline
  • Structure of the law and basic concepts affecting employers
  • Critical employer decision making and planning for 2014
  • Alternative plan design options available to employers

The webinar recording and presentation slides for “What Employers Need to Know Now!” are now available. Contact Elizabeth Gannon at 202/861-1850 or egannon@ebglaw.com, to obtain a password to download the files.

Frank C. Morris, Jr., Member of the Firm in the Litigation, Labor and Employment, and Employee Benefits practices is speaking at the 36th Annual National Labor & Management Conference on the topic of the Affordable Care Act and associated compliance issues facing employers and health and welfare funds.

The National Labor and Management Conference is recognized as one of the most outstanding labor and management programs in the United States, promoting discussion and collaboration on many levels. The program annually unites a diversity of labor and management leaders from across the country to address key issues affecting both labor and management.

Confirmed speakers for 2013 include: James P. Hoffa, President, United Brotherhood of Teamsters, Sean McGarvey, President,  Building Construction Trades Department, AFL-CIO, Leo W. Gerard, President, United Steelworkers, Craig Alexander, Chief Economist, TD Bank and others.

 

Please join Epstein Becker Green’s Health Care & Life Sciences, Employee Benefits, and Labor & Employment practitioners as we continue to review the Affordable Care Act and its ongoing impact on employers and their group health plans and programs.

Since the Presidential election, The U.S. Department of Health and Human Services is moving quickly to implement the Affordable Care Act. Rules have been released in the past few weeks concerning participation in federal exchanges, discrimination based on pre-existing conditions, essential health benefit requirements, and expanded employment-based wellness.

During this program, Epstein Becker Green practitioners will:

  • Review the ACA implementation timeline
  • Discuss the structure of the law and basic concepts affecting employers
  • Discuss critical employer decision making and planning for 2014
  • Review alternative plan design options available to employers

This is the second in the Employer Affordable Care Act Webinar Series for employers on upcoming rules and regulations implementing the Affordable Care Act. Please stay tuned for upcoming webinars on:

  • Exchange Implementation
  • Shared Responsibility
  • Calculation of Full-time Employees
  • Quality Reporting
  • And others…

Presenters:
Gretchen Harders
Frank C. Morris, Jr.
Adam C. Solander 

Registration Is Complimentary and Seating Is Limited

Don’t Miss This Opportunity!

To Register, please click here.

In addition to this blog, EBG’s PPACA blog will also post ACA regulatory developments.

For additional Information, please contact Elizabeth Gannon at 202/861-1850 or egannon@ebglaw.com.

In the wake of Hurricane Sandy, employers with employees and operations impacted by Hurricane Sandy are asking what types of tax and employee benefits relief may be available to them and their affected employees.  The Internal Revenue Service (“IRS”), the Department of Labor (“DOL”) and the Pension Benefit Guaranty Corporation (“PBGC”) have moved quickly to provide disaster relief guidance for affected employers and their employees.

IRS Relief.  In response to Hurricane Sandy, on November 2, 2012, the IRS in IR-2012-84 declared Hurricane Sandy a “qualified disaster” for federal income tax purposes under Section 139 of the Internal Revenue Code of 1986, as amended (the “Code”).  The IRS then acted to institute the following relief measures:

  • Qualified disaster relief payments.  The designation of Hurricane Sandy as a “qualified disaster” under Code Section 139 allows employers to make “qualified disaster relief payments” for expenses resulting from or attributable to Hurricane Sandy.  Qualified disaster relief payments are excluded from the employees’ federal gross income and are not wages for purposes of employment taxes.  Qualified disaster relief payments are defined as payments that are not covered by insurance made for personal, family, living or funeral expenses resulting from the qualified disaster, including the costs of repairing or rehabilitating personal residences damaged by the qualified disaster and replacing their contents.
  • Sharing and/or donating accrued vacation, sick and PTO leave.  On November 6, 2012, the IRS announced in IR-2012-88 and IRS Notice 2012-69 that employees will be permitted to forego vacation, sick or personal leave and contribute the value of the leave as a cash payment for the relief of victims of Hurricane Sandy.  The cash payments may be contributed to a Code Section 170(c) private foundation, including an employer-sponsored foundation, for the relief of victims of Hurricane Sandy, as long as those amounts are paid to the organization on or before January 1, 2014.  The leave contributed by an employee will not be included in the employee’s gross income or wages and the right to make a contribution will not result in constructive receipt for purposes of income or employment taxes.  Electing employees, however, may not claim a charitable contribution deduction under Section 170 for the value of the cash payment.  On November 6, 2012, the IRS also announced in IR 2012-87 an expedited review and approval process for Code Section 170(c) private foundations that are newly established to help individuals impacted by Hurricane Sandy.
  • Delay of tax filing deadlines to February 1, 2013.  On November 2, 2012, the IRS announced in IR-2012-83 that certain taxpayers affected by Hurricane Sandy will be eligible for filing and payment federal tax relief.  Affected individuals and businesses located in certain counties of the States of Connecticut CT-2012-48 (effective October 27), New Jersey NJ-2012-47 (effective October 26), New York NY-2012-47 (effective October 27) and Rhode Island RI-2012-30 (effective October 26), as well as relief workers working in those areas, will have until February 1, 2013 to file certain tax returns and pay any taxes due.  This includes the filing of the fourth quarter individual estimated tax payment, payroll and excise taxes for the third and fourth quarters, and Form 990 and Form 5500 if the deadlines or extensions occur during the applicable extended filing period.  The extension does not apply to Forms W-2, 1098 and 1099, or Forms 1042-S and 8027.  The IRS is also waiving failure to deposit penalties for federal and excise tax deposits on or after the applicable disaster area effective date through November 26, 2012 if deposits are made by November 26, 2012.
  • Expansion of hardship distributions and participant loans under 401(k) plans, 403(b) plans and 457(b) plans.  On November 16, 2012, the IRS announced in IR-2012-93 and IRS Notice 2012-44that a qualified retirement plan will not be treated as violating any tax qualification requirements if it makes hardship distributions for a need arising from Hurricane Sandy or loans to employees or former employees whose primary residence or place of employment is in a qualified disaster area.
    • Hardship distributions and loans also may be made to employees who have relatives living in the qualified disaster area impacted by Hurricane Sandy.  Relatives for this purpose include an employee’s grandparents, parents, children, grandchildren, dependents, or a spouse.
    • Certain documentation and procedural requirements, and other limitations, are not required if the plan administrator makes a good-faith diligent effort to satisfy those requirements and the plan administrator, as soon as practicable, uses reasonable efforts to assemble any forgone documentation.
    • If the plan does not provide for loans or hardship distributions, the plan may be amended to allow for Hurricane Sandy distributions no later than the end of the first plan year beginning after December 31, 2012.
  • Code Section 409A deferred compensation plans.  Hurricane Sandy may qualify as an “unforeseeable emergency” affecting a service provider that allows for a distribution under a nonqualified deferred compensation plan subject to Code Section 409A.  Though not clear, it may be possible for a plan to be amended to allow for payment upon an unforeseeable emergency after the occurrence of the emergency.

DOL Relief.  The DOL is providing disaster relief by allowing plans to take certain actions that otherwise could be a violation of Title I of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).  The DOL will not consider the following events to be a fiduciary violation under ERISA:

  • The plan provides for loans and hardship distributions in compliance with the IRS Hurricane Sandy disaster relief guidance described above.
  • There is a temporary delay under the plan in forwarding participant contributions and loan repayments from payroll processing services in the Hurricane Sandy qualified disaster area and the affected employers and service providers act reasonably.
  • There is a blackout period under a retirement plan related to Hurricane Sandy and the plan is not able to comply with the requirements to give participants and beneficiaries 30-day advance written notice of the blackout.
  • Group health plans make reasonable accommodations due to Hurricane Sandy for plan participants and beneficiaries for deadlines and documentation in filing claims for benefits, including COBRA elections.
  • Group health plans and issuers are not able to comply with pre-established claims procedures and disclosures due to the physical disruption to the plan or service provider’s principal place of business from Hurricane Sandy.

PBGC Relief.  The PBGC is providing limited disaster relief for a plan or plan sponsor located in the qualified disaster area, specifically Connecticut, New Jersey, New York and Rhode Island, or a plan or plan sponsor that cannot reasonably obtain information from a service provider, bank or other person whose operations were directly affected by Hurricane Sandy.  The PBGC relief includes the following:

  • Any premium payment required to be made on and after October 26, 2012 and on or before February 1, 2013 (the “PBGC disaster relief period”) will not be subject to penalties if made by February 1, 2013.
  • Single-employer standard terminations and distress terminations deadlines required to be made during the PBGC disaster relief period are extended to February 1, 2013.
  • Reportable event post-event notice deadlines for the PBGC disaster relief period are extended to February 1, 2013.  Pre-event reportable event notice deadlines may be extended on a case-by-case basis.
  • Annual financial and actuarial information reporting for certain large underfunded plans, missed contributions or funding waivers may be extended on a case-by-case basis.
  • If information is requested under an allowable extension of a Form 5500 filing date, and the Form 5500 is eligible for a filing extension under the IRS guidance for Hurricane Sandy, the allowable extension will commence on the last day of the qualified disaster extended deadline.
  • Requests for reconsiderations or appeals are extended through the PBGC disaster relief period.
  • Multiemployer plans’ premium deadlines will be extended as described above.  The PBGC will not assess a penalty or take enforcement action for the failure to comply with multiemployer plan deadlines during the PBGC disaster relief period.

All employers with employees and operations impacted by Hurricane Sandy directly or indirectly should take immediate action to review the relief available for their businesses and employees.

For further information on employment considerations for qualified disasters such as Hurricane Sandy, please see our client advisory entitled HR Guide for Employers – Responding to Natural Disasters.