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The Wagner Law Group

The Wagner Law Group, A Professional Corporation, is a nationally recognized ERISA & employee benefits, estate planning, employment, labor & human resources practice. 

 

Established in 1996, The Wagner Law Group has 22 attorneys engaged exclusively in employee benefits, estate planning and employment law. Six of our attorneys are AV rated by Martindale-Hubbell as having very high to preeminent legal abilities and ethical standards. The firm is among the largest ERISA boutiques in the country. Our practice is national in scope, with clients in more than 40 states and several foreign countries.

 

 

 

 

Contact Info

The Wagner Law Group

 

  Integrity | Excellence

  

Boston 

Tel: (617) 357-5200 

Fax: (617) 357-5250 

99 Summer Street 

13th Floor

Boston, MA 02110


Palm Beach Gardens 

Tel: (561) 293-3590
Fax: (561) 293-3591
7108 Fairway Drive
Suite 125
Palm Beach Gardens, FL 33418

   

Tampa

Tel: (813) 603-2959

Fax: (813) 603-2961

101 East Kennedy Boulevard

Suite 2140
Tampa, FL  33602 

 

San Francisco

Tel: (415) 625-0002

Fax: (415) 358-8300

315 Montgomery Street

Suite 904

San Francisco, CA 94104

 

St. Louis

Tel: (314) 236-0065

Fax: (314) 236-5743
100 South 4th Street, Suite 550
St. Louis, MO  63102 

 

www.wagnerlawgroup.com

 

 

 

 

January 8, 2016

 

 Health and Welfare Law Alert

 

 

 

IRS Provides Guidance on Various ACA Provisions 

 

 

 

The IRS has issued Notice 2015-87 ("Notice"), which offers guidance on how various provisions of the Affordable Care Act ("ACA") apply to employer-provided group health plans. 

 

Notice 2015-87.  Highlights of the issues covered by Notice 2015-87 are as follows:

 

  • Affordability percentage.  Health coverage offered by an employer is affordable if the cost for self-only coverage is no more than 9.5% of the employee's household income or the cost for such coverage satisfies one of three safe harbors.  While ACA provides that the 9.5% amount will be adjusted for health care premium inflation, it was unclear whether the increase applies to the three safe harbors.  The Notice confirms that the adjustment applies to the safe harbors, and that the adjusted affordability amounts are 9.56% for 2015, and 9.66% for 2016. 
  • Employer flex plan contributions.  Employer contributions to flex plans will only be considered for determining affordability if they can only be used for health spending (including required employee contributions).  Contributions are considered as being used only for health spending if: (i) the employee may not opt to receive the amount as a taxable benefit, (ii) the employee may use the amount to pay for minimum essential coverage, and (iii) the employee may use the amount to pay for medical care.
  • Opt-out payments.  If an employer offers an employee cash payments for waiving health coverage, IRS will consider the payment as an additional charge for the coverage when determining affordability.  In IRS's view, the employee has the option of either receiving additional salary for foregoing coverage or being charged the opt-out payment amount if he or she accepts the employer's offer of health coverage.  However, enforcement of this rule will generally be delayed until final regulations are issued.
  • Hours of service determination.  "Hour of service" means: (i) each hour for which an employee is paid, or entitled to payment, for the performance of duties for the employer, and (ii) each hour for which the employee is paid, or entitled to payment, by the employer during a period when no duties are performed due to vacation, holiday, illness, incapacity, layoff, jury duty, military service, or leave of absence.  Hour of service also includes periods during which an individual is not performing duties but instead receiving payments due to short-term disability or long-term disability as long as the employee retains employee status, unless the payments are made from an arrangement to which the employer did not contribute (such coverage is paid solely with employee after-tax contributions).
  • Service breaks.  Employees of educational institutions who have long breaks in service between school years cannot be treated as having terminated employment and then rehired unless they have a break in service for at least 26 consecutive weeks.
  • COBRA coverage and health FSA carryovers.  In non-ACA related matters, the IRS has said that the maximum amount that may be charged for COBRA coverage in a health FSA does not include unused carryover amounts.  (In other words, the applicable COBRA premium is determined by the sum of the employee's salary reduction election for the plan year and any employer non-elective contributions and does not include the $500 carryover.)  A qualified beneficiary must be allowed to carry over health FSA contributions under the same conditions as an active employee.  However, qualified beneficiaries will not be allowed to elect to make additional salary reduction contributions, and carryover periods are limited to the duration of COBRA coverage.  

 

Notice 2015-87 is available at: https://www.irs.gov/pub/irs-drop/n-15-87.pdf

 

 

 

Cadillac Tax Delayed for Two Years

 

 

 

The Consolidated Appropriations Act, 2016 has delayed the effective date of the Cadillac Tax for two years, until 2020.  The Cadillac Tax is the non-deductible 40% excise tax imposed on "applicable employer-sponsored coverage" in excess of statutory thresholds (in 2018, the amount would have been $10,200 for self-only, $27,500 for family). 

 

 

 

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This Newsletter is provided for information purposes by The Wagner Law Group to clients and others who may be interested in the subject matter, and may not be relied upon as specific legal advice.  This material is not to be construed as legal advice or legal opinions on specific facts. Under the Rules of the Supreme Judicial Court of Massachusetts, this material may be considered advertising.