Only HCEs Participating in the Dependent Care FSA

Question: What happens when the cafeteria plan nondiscrimination pre-test results show that only highly compensated employees (HCEs) have elected the dependent care FSA? Compliance Team Response: Unfortunately, there is no way to pass the nondiscrimination testing requirements for the dependent care FSA if only HCEs participate.  The employees’ remaining contributions in the FSA will simply […]

Bay Area Commuter Benefits Program

Question:  When does the Bay Area Commuter Benefits Program apply to employers?  Which employers are excluded?   Compliance Team Response: Employers Subject to the Program: 50+ Full-Time (30 Hours/Week) Employees in the Bay Area The Bay Area Commuter Benefits Program applies to employers with 50 or more full-time employees working in the Bay Area (which […]

ERISA Preemption of State Court Orders

Question: What is the effect of a state court divorce order purporting to continue active coverage for a former spouse? How are the rules different in Massachusetts? Compliance Team Response: As discussed below, the general rule is that any state court order attempting to require an employee to continue active coverage for a former spouse […]

Cadillac Tax Delayed to 2022 in Budget Deal

The end of the budget deal showdown yesterday brought some welcome relief for employers: The Cadillac Tax has been delayed two more years to 2022. As a reminder, President Obama signed into law at the end of 2015 a bill to delay the Cadillac Tax from its original 2018 effective date to 2020.  That bill also made […]

HIPAA Special Enrollment Events

Question: What are the general HIPAA Special Enrollment Event election, timing and coverage option rules? How are they different from generic Section 125 Permitted Election Change Events? Compliance Team Response: HIPAA Special Enrollment Events: Overview HIPAA Special Enrollment Events are a subset of the Section 125 Permitted Election Change Events that provide special rights. The […]

Distribution Timing Rules for SPDs and SMM

Question: What are the general ERISA distribution timing rules for SPDs and SMMs?  Can they be posted to the company intranet? Compliance Team Response: General Summary Plan Description (SPD) Distribution Timing New Plans: Within 120 after the date the plan is created. Newly Covered Participants: Within 90 days after the participant first becomes covered under […]

HSA Nondiscrimination Rules

Question: What are the nondiscrimination rules that apply for HSA contributions? Compliance Team Response:   Employer HSA contributions are subject to one of two sets of nondiscrimination rules: The comparability rules of IRC §4980G; or The cafeteria plan nondiscrimination rules for IRC §125. The comparability rules are very strict and difficult to pass.  It is […]

Nondiscrimination Rules for Different Health Plan Contribution Structures

Question: What are the main Section 125 nondiscrimination rules that apply for imposing different health plan contribution structures for certain employee groups?   Compliance Team Response:   Background In general, employers will run into Section 125 nondiscrimination issues where they charge the highly compensated participants less for the same plan option than those who are […]

Dependent Care FSA for Part-time Work

Question: Can an employee reimburse day care expenses under the dependent care FSA if the employee (or spouse) is working part-time?    Compliance Team Response:   In general, work can be full-time or part-time to qualify—as long as the daycare expense enables to the individual to work.  A day on which the individual works at […]

2017 ACA Reporting Deadline Extended by 30 Days

Today, the IRS issued IRS Notice 2018-06, extending the deadline for providing the 2017 Forms 1095-B and 1095-C to individuals by 30 days.  This Notice mirrors the same 30-day extension provided last year for the 2016 ACA reporting. As a reminder, applicable large employers (ALEs) provide the Form 1095-C to individuals. If the plan is […]