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Aon Hewitt Washington Report

September 26, 2011

Senate Renews TAA Program; Includes Health Care Tax Credit

On September 22, 2011, the Senate passed by a 70-27 vote an amendment that would renew through the end of 2013, the provisions of the Trade Adjustment Assistance (TAA) program, which includes an increase in the Health Care Tax Credit. The Health Care Tax Credit, which lapsed in February, applies to employees who have lost their jobs because work has moved overseas. The credit provides a 72.5% (up from 65%) subsidy to help cover the cost of health insurance premiums for TAA-eligible workers and retirees receiving payments from the Pension Benefit Guaranty Corporation (PBGC). The Health Care Tax Credit will apply to coverage months beginning after February 12, 2011. The amendment was added to the House-passed Generalized System of Preferences (GSP) bill (H.R. 2832). The bill must now go back to the House for another vote.

The full text of H.R. 2832 is available here.

Amendments Limiting NLRB’s Authority and Defunding Health Care Reform Rejected in Senate Committee

On September 21, 2011, the Senate Appropriations Committee rejected an amendment to the 2012 fiscal year Department of Labor, Health and Human Services and Education and Related Agencies appropriations bill (number not available) that would have prevented the National Labor Relations Board (NLRB) from requiring employers to rescind subcontracting, outsourcing, and other transfers of work or to make investments at a particular plant, facility, or location The amendment would have limited the NLRB's authority to remedy unfair labor practices by ordering restoration of transferred, relocated, or outsourced work. The House passed a similar measure (H.R. 2587) on September 15, 2011. Additionally, the Senate Committee also rejected an amendment to defund the Patient Protection and Affordable Care Act (Affordable Care Act).

HHS Awards 28 States Grants to Address Increases in Insurance Premium

The Department of Health and Human Services (HHS) on September 20, 2011, announced Patient Protection and Affordable Care Act (Affordable Care Act) awards of over $100 million dollars to 28 states and the District of Columbia that are designed to help control unreasonable premium increases. Additionally, HHS also released a new report entitled Rate Review Works,detailing how previous rate review grants are fighting premium hikes and helping make the health insurance marketplace more transparent. Effective September 1, 2011, the Affordable Care Act requires health insurers seeking to increase their rates by 10 percent or more in the individual and small group market to submit their request to experts to determine whether the rates are unreasonable. The Affordable Care Act also requires insurance companies to publicly justify "unreasonable" premium rate increases.

The link to the HHS press release is available here.

The fact sheet on the award designations is available here.

The HHS Rate Review Works report is available here.

HHS Releases Proposed Partnership Model to Help States Implement an Exchange

The Department of Health and Human Services (HHS), on September 19, 2011, provided additional information about Exchange Partnership Opportunities. The Partnership model describes Exchanges where both HHS and a state work together to operate different functions of the Exchange in order to take advantage of the state’s expertise and knowledge of their insurance markets to support a seamless consumer experience. States may use Exchange grant funding to support the functions they choose to operate under the Partnership that are related to establishing the Exchange. The proposed Partnership model includes three options: (1) state plan management where states help tailor health plan choices for their Exchange and HHS will coordinate with states regarding plan oversight; (2) state consumer assistance where states oversee in-person consumer assistance, manage the Navigator program, and conduct outreach and education whereas HHS would operate other consumer assistance functions such as call center operations; and (3) both plan management and consumer assistance where states would perform both of these functions. Any comments on this partnership model can be submitted as part of comments on the July 15, 2011 proposed rule on the establishment of Exchanges.

A fact sheet on the Partnership model is available here.

HHS Releases Report Highlighting Benefits of Affordable Care Act

On September 23, 2011, the Department of Health and Human Services (HHS) released a report that highlights some of the provisions of the Affordable Care Act that have been in effect for one year since September 23, 2010. The report summarizes certain provisions of the Affordable Care Act, including the prohibitions on lifetime dollar limits, coverage of preventive services without cost sharing, premium rate review, small business tax credit, coverage of young adults to age 26 on a parent's plan and the prohibition on preexisting condition exclusions for children under age 19. According to HHS Secretary Sebelius, "the law is helping to give hard-working families the security they deserve and stop insurance company abuses, hold down insurance premiums, and strengthen Medicare."

The link to the HHS press release is available here.

DOL Plans to Re-Propose Definition of Fiduciary Rule

The Department of Labor (DOL) announced on September 19, 2011, that it will withdraw and re-propose its rule on the definition of a fiduciary. The DOL's decision to re-propose the rule is in part a response to requests from the public, including members of Congress, that the agency allow an opportunity for more input on the rule. In a press release, the DOL indicated that it plans on "revising provisions of the rule including, but not restricted to, clarifying that fiduciary advice is limited to individualized advice directed to specific parties, responding to concerns about the application of the regulation to routine appraisals and clarifying the limits of the rule's application to arm's length commercial transactions, such as swap transactions." Also anticipated are exemptions addressing concerns about the impact of the new regulation on the current fee practices of brokers and advisers, and clarifying the continued applicability of exemptions that have long been in existence that allow brokers to receive commissions in connection with mutual funds, stocks, and insurance products. The new proposed rule is expected to be issued in early 2012.

The link to the DOL press release is available here.

DOL Offers New Form 5500 Version Selection Tool for Practitioners

On September 19, 2011, the Department of Labor (DOL) posted a Form 5500 series tool on its website. The new tool will assist practitioners in selecting the correct version of the form and related schedules for mandatory annual reporting. The tool is designed to answer questions regarding what to file for plan years prior to the current year and how to amend prior year filings. The DOL states that the new tool does not replace the detailed instructions for Forms 5500 and 5500-SF. Additionally, the DOL warns under no circumstances should practitioners submit the Schedule SSA or any form containing information concerning separated or deferred vested participants electronically to the DOL. All such information must be filed separately to the Internal Revenue Service (IRS).

Instructions for the Form 5500 version selection tool are available here.

The Form 5500 version selection tool is available here.

DOL, IRS, and 11 State Agencies Sign Agreement to Improve Coordination on Employee Misclassification Compliance

On September 19, 2011, the directors of the Department of Labor (DOL) and the Internal Revenue Service (IRS) signed memorandums of understanding with 11 state agencies that aim to improve departmental efforts to "end the business practice of misclassifying employees in order to avoid providing employment protections." The memorandums of understanding will enable the DOL to share information and coordinate law enforcement with the IRS and participating states in order to "level the playing field for law-abiding employers and ensure that employees receive the protections to which they are entitled under federal and state law." During the ceremony, seven of the state agencies (Connecticut, Maryland, Massachusetts, Minnesota, Missouri, Utah, and Washington) signed agreements with the DOL's Wage and Hour Division, and in some cases, the Employee Benefits Security Administration (EBSA), Occupational Safety and Health Administration (OSHA), Office of Federal Contract Compliance Programs (OFCCP), and Office of the Solicitor. The state agencies of Hawaii, Illinois, Montana, and New York's attorney general entered into agreements with the DOL's Wage and Hour Division.

The link to the DOL press release is available here.

IRS Announces Voluntary Worker Classification Settlement Program; Possible Payroll Tax Relief for Employers

On September 21, 2011, the Internal Revenue Service (IRS) launched a new program that will enable many employers to resolve past worker classification issues and achieve certainty under the tax law at a low cost by voluntarily reclassifying their workers. As outlined in IRS Announcement 2011-64, the Voluntary Classification Settlement Program (VCSP) will allow employers the opportunity to get into compliance by making a minimal payment covering past payroll tax obligations rather than waiting for an IRS audit. According to the IRS, this program is part of a larger “Fresh Start” initiative the agency developed to help taxpayers and businesses address their tax responsibilities. Under the program, eligible employers can obtain substantial relief from federal payroll taxes they may have owed in the past, if they prospectively treat workers as employees. The VCSP is available to most businesses, tax-exempt organizations, and government entities that "currently erroneously treat their workers or a class or group of workers as nonemployees or independent contractors, and now want to correctly treat these workers as employees."

To be eligible, an applicant must:

  • Consistently have treated the workers in the past as nonemployees;
  • Have filed all required Forms 1099 for the workers for the previous three years; and
  • Not currently be under audit by the IRS, the Department of Labor (DOL), or a state agency concerning the classification of these workers.

Interested employers can apply for the program by filing IRS Form 8952, (Application for Voluntary Classification Settlement Program), at least 60 days before they wish to begin treating the workers as employees.

IRS Announcement 2011-64 is available here.

IRS Form 8952 (including instructions) is available here.

Frequently Asked Questions (FAQs) are available here.

IRS Releases Revenue Procedure on Determination Letter for Church Plans

On September 21, 2011, the Internal Revenue Service (IRS) released Revenue Procedure 2011-44, which modifies the procedures for church plans that are filing a request for a determination letter. The revenue procedure provides that plan participants and other interested parties be notified of the letter request. Revenue Procedure 2011-44 also modifies previous guidance under tax code Section 414 to require that a copy of the notice be submitted to IRS as part of the ruling request, and provides procedures for IRS to receive and consider comments on the ruling request.

IRS Revenue Procedure 2011-44 is available here.

Required NLRB Poster on Employee Rights Now Available

As of November 14, 2011, most private-sector employers are required to post a notice advising employees of their rights under the National Labor Relations Act (NLRA). The National Labor Relations Board (NLRB) recently released the required poster for employers. The 11x17 notice must be posted in a conspicuous place, where other notifications of workplace rights and employer rules and policies are posted. The posters are available for download and printing. Copies are also are available from any of the NLRB’s regional offices. Additionally, the NLRB is instructing employers to publish the notice on an internal or external website if other personnel policies or workplace notices are posted there.

The NLRB notice for posting is available (via download) here.

A listing of NLRB regional offices is available here.

The final rule, as it appears in the August 30, 2011 Federal Register, is available here.

PBGC Releases 2012 Premium Filing Instructions

On September 19, 2011, the Pension Benefit Guaranty Corporation (PBGC) released premium filing instructions for 2012. The notice is for plan administrators and other practitioners who prepare premium filings and submit them to the PBGC via the "My Plan Administration Account" (My PAA). According to the PBGC, the filing requirements for 2012 are almost identical to the filing requirements for 2011. PBGC expects to post the latest premium filing instructions on its website in December 2012.

Information about the PBGC 2012 premium filings is available here.

A link to the Plan Administration Account (PAA) pamphlet is available here.

Instructions for premium filing (2012 to be available in December) are available here.