DOL – Page 3 – Saxon – Employee Benefits, Insurance & Wealth

2019: A Look Forward

A number of significant changes to group health plans have been made since the Affordable Care Act (ACA) was enacted in 2010. Many of these changes became effective in 2014 and 2015 but certain changes to a few ACA requirements take effect in 2019.

Changes for 2019

Cost-sharing Limits – Non-grandfathered plans are subject to limitations on cost sharing for essential health benefits (EHB). The annual limits on cost sharing for EHB are $7,900 for self-only coverage and $15,800 for family coverage, effective January 1, 2019.
- Health plans with more than one service provider can divide maximums between EBH as long as the combined amount does not exceed the out-of-pocket maximum limit for the year.
- Beginning in 2016, each individual – regardless of the coverage the individual is enrolled – is subject to the self-only annual limit on cost sharing.
- The ACA’s annual cost-sharing limits are higher than high deductible health plans (HDHPs) out-of-pocket maximums. For plans to qualify as an HDHP, the plan must comply with HDHP’s lower out-of-pocket maximums. The HDHP out-of-pocket maximum for 2019 is $6,750 for self-only coverage and $13,500 for family coverage.
Coverage Affordability Percentages – If an employee’s required contribution does not exceed 9.5 percent of their household income for the taxable year (adjusted each year), then the coverage is considered affordable. The adjusted percentage for 2019 is 9.86 percent.
Reporting of Coverage – Returns for health plan coverage offered or provided in 2018 are due in early 2019. For 2018, returns must be filed by February 28, 2019, or April 1, 2019 (if electronically filed). Individual statements must be provided by January 31, 2019.
- ALEs are required to report information to the IRS and their eligible employees regarding their employer-sponsored health coverage. This requirement is found in Section 6056. Reporting entities will generally file Forms 1094-B and 1095-B under this section.
- Every health insurance issuer, self-insured health plan sponsor, government agency that provides government-sponsored health insurance, and any other entity that provides MEC is required to finalize an annual return with the IRS, reporting information for each individual who is enrolled. This requirement is found in Section 6055. Reporting entities will generally file Forms 1094-C and 1095-C under this section.
- ALEs that provide self-funded plans must comply with both reporting requirements. Reporting entities will file using a combined reporting method on Forms 1094-C and 1095-C.
- Forms Used for Reporting – Reporting entities must file the following with the IRS:
  1. A separate statement for each individual enrolled
  2. A transmittal form for all returns filed for a given calendar year.
- Electronic Reporting – Any reporting entity that is required to file 250 or more returns in either section must file electronically on the ACA Information Returns (AIR) Program. Reporting entities that file less than 250 returns can file in paper form or electronically on the ACA Information Returns (AIR) Program.
- Penalties – Entities that fail to comply with the reporting requirements are subject to general reporting penalties for failure to file correct information returns and failure to furnish correct payee statements. Penalty amounts for failure to comply with the reporting requirements in 2019 are listed below:

Penalty Type	Per Violation	Annual Maximum	Annual Maximum for Employers with up to $5 million in Gross Receipts
General	$270	$3,275,500	$1,091,500
Corrected within 30 days	$50	$545,500	$191,000
Corrected after 30 days but before August 1	$100	$1,637,500	$545,500
Intentional Disregard	$540*	None	N/A

**Intentional disregard penalties are equal to the greater of either the listed penalty amount or 10 percent of the aggregate amount of the items required to be reported correctly.

Expected Changes

Health FSA Contributions – Effective January 1, 2018, health FSA salary contributions were limited to $2,650. The IRS usually announces limit adjustments at the end of each year. This limit does not apply to employer contributions or limit contributions under other employer-provided coverage.
Employer Shared Responsibility Regulations – The dollar amount for calculating Employer Shared Responsibility 2 penalties is adjusted for each calendar year. Applicable large employers (ALEs) must offer affordable, minimum value (MV) healthcare coverage to full-time employees and dependent children or pay a penalty. If one or more full-time employees of an ALE receive a subsidy for purchasing healthcare coverage through an Exchange, the ALE is subject to penalties.
- Applicable Large Employer Status – ALEs are employers who employ 50 or more full-time employees on business days during the prior calendar year.
- Offering Coverage to Full-time Employees – ALEs must determine which employees are full-time. A full-time employee is defined as an employee who worked, on average, at least 30 hours per week or 130 hours in a calendar month. There are two methods for determining full-time employee status:
  1. Monthly Measurement Method – Full-time employees are identified based on a month-to-month analysis of the hours they worked.
  2. Look-Back Measurement Method – This method is based on whether employees are ongoing or new, and whether they work full time or variable, seasonal or part-time. This method involves three different periods:
    - Measurement period – for county hours of service
    - Administration period – for enrollment and disenrollment of eligible and ineligible employees
    - Stability period – when coverage is provided based on an employee’s average hours worked.
  3. Applicable Penalties – ALEs are liable for penalties if one or more full-time employees receive subsidies for purchasing healthcare coverage through an Exchange. One of two penalties may apply depending on the circumstances:
    - 4980H(a) penalty – Penalty for not offering coverage to all full-time employees and their dependents. This penalty does not apply if the ALE intends to cover all eligible employees. ALEs must offer at least 95 percent of their eligible employees’ health care coverage. Monthly penalties are determined by this equation:
      1. ALE’s number of full-time employees (minus 30) X 1/12 of $2,000 (as adjusted), for any applicable month
      2. The $2,000amount is adjusted for the calendar year after 2014:
      3. $2,080 – 2015; $2,160 – 2016; $2,260 – 2017; $2,320 – 2018
    - 4980H(b) penalty – penalty for offering coverage – ALEs are subject to penalties even if they offer coverage to eligible employees if one or more full-time employees obtain subsidies through an Exchange because:
      1. The ALE didn’t offer all eligible employees coverage
      2. The coverage offered is unaffordable or does not provide minimum value.
      3. Monthly penalties are determined by this equation: 1/12 of $3,000 (as adjusted) for any applicable month
        
        $3,120 – 2015; $3,240 – 2016; $3,390 – 2017; $3,480 – 2018

Contact one of our advisors for assistance or if you have any questions about compliance in the New Year.

Download the Infographic

SOURCES: www.dol.gov, www. HHS.gov, https://www.federalregister.gov/documents/2018/04/17/2018-07355/patient-protectionand-affordable-care-act-hhs-notice-of-benefit-and-payment-parameters-for-2019, https://www.irs.gov/e-fileproviders/air/affordable-care-act-information-return-air-program

by 6drachael

DOL reverses course on ‘80/20’ limitations for tipped employees

On November 8, the Department of Labor (DOL) released four new opinion letters, providing insight into their views on compliance with federal labor laws. Read this blog post to learn more.

Last week, the DOL issued four new opinion letters providing both employers and employees further insight into the agency’s views regarding compliance with federal labor laws.

While the letters touch on a variety of issues, perhaps the most notable change involves the DOL’s about-face regarding the amount of “non-tipped” work an employee can perform while still receiving a lower “tip-credit” wage.

Essentially, this new guidance does away with the previous “80/20” rule regarding tipped employees. Under the 80/20 rule, businesses were barred from paying employees traditionally engaged in tip-based work, like servers and bartenders, a lower minimum wage and taking a tip credit for the other portion of the employee’s wage up to applicable state and federal minimum wage requirements when those employees’ side work, like napkin folding or making coffee, accounted for more than 20% of the employee’s time.

In recent years, there has been an explosion of litigation across the country over the 80/20 rule, questioning whether the tipped employee’s “side work” amounted to more than 20% of the employee’s duties and time. Likewise, in many of those same suits, plaintiffs would challenge individual tasks associated with their side work, attempting to claim that those tasks were not so closely related to their tipped duties, but rather rose to the level of a completely different or “dual job,” meaning that the employer should not be permitted to take the tip credit for hours worked performing those tasks.

What followed was case after case of lawyers, courts and employers quibbling over minutes spent folding napkins, wiping counters, slicing lemons, and painstakingly calculating and arguing as to whether those tasks added up to 20% and whether those tasks were not closely related enough to be included in the 20% calculation.

In these kinds of cases, we’d see arguments over circumstances like the server that moonlights as a “maintenance man” versus the server that changed the lightbulb or helped sweep underneath the tables.

The ultimate result: confusion, chaos and, frankly, a treasure trove for plaintiff’s attorneys who had another arrow in their quiver in which to seek additional purported wages for clients from employers that would find it difficult, if not impossible, to account for all minutes and tasks employees were performing in busy restaurants.

Following the DOL’s opinion letter, the landscape will change. Recognizing that the existing guidance and case law had created “some confusion,” the DOL expressly stated that they “do not intend to place a limitation on the amount of duties related to a tip-producing occupation that may be performed, so long as they are performed contemporaneously with direct customer-service duties...”

However, in attempting to provide additional clarity, the DOL may have instead opened up the proverbial Pandora ’s Box of uncertainty. In identifying the list of duties that the DOL would consider “core or supplemental,” the DOL refers to the Tasks section of the Details report in the Occupational Information Network (O*NET). It goes without saying that no document can provide an exhaustive list of tasks in today’s changing marketplace. While the DOL attempted to recognize the changing nature of today’s environment in a savings-type footnote, one does not have to look too far ahead to foreshadow the response from the plaintiff’s bar arguing over the related duties listed on O*NET.

While the DOL’s new position on the 80/20 rule will certainly come as a relief to many employers with tipped employees, employers should still be mindful in evaluating tipped employees’ job duties on a regular basis. Employees that are engaged in “dual jobs” are entitled to the full minimum wage, without the tip credit.

SOURCE: Kennedy, C. (15 November 2018) "DOL reverses course on ‘80/20’ limitations for tipped employees" (Web Blog Post). Retrieved from https://www.benefitnews.com/opinion/dol-reverses-course-on-80-20-limitations-for-tipped-employees?brief=00000152-14a5-d1cc-a5fa-7cff48fe0001

This article originally appeared on the Foley & Lardner website. The information in this legal alert is for educational purposes only and should not be taken as specific legal advice.

by 6drachael

4 best practices for implementing a gamification-based compliance training system

Many employees may dislike and even disengage when their employer mentions implementing training sessions. Continue reading to learn how implementing a gamification-based training system can help improve employee engagement.

For most employees, compliance training is the Brussels sprouts on the kid’s plate of working life. Everyone knows it’s good for you — one mistake could lead to violations, accidents, reputation issues and maybe a not-so-friendly visit from regulatory body officials — but most workers turn up their noses and disengage when it’s time to dig in.

Considering that merely a third of American workers report feeling engaged at work as it stands, anything that makes matters worse is dangerous. Why risk inflaming indifference — not to mention spending money for on-site instructors — with dull-as-dry-toast workshops?

A far better bet is to embrace technology and go virtual. Of course, online-based compliance training won’t guarantee heightened participation or enthusiasm unless they have one specific aspect: gamification.

Gaming elements can turn any virtual compliance training learning management system (LMS) into an immersive experience. ELearning compliance training participants can enjoy customization and flexibility while getting up to speed on the latest rules, guidelines and protocols. With LMS gamification, HR managers and chief learning officers can cultivate and retain top talent. Best of all, it’s far easier to get buy-in for a robust LMS system with badges, bells and whistles than it is to make a pile of Brussels sprouts disappear from a toddler’s tray.

What exactly is so exciting about game-based learning? In essence, the process prompts active and immediate participation because of extra motivation in the form of rewards. Whether it’s badges or points, these features make eLearning interesting and enjoyable.

In one study, workers who enjoyed themselves retained concepts 40% better than those who weren’t having fun. As you might guess, this is what game-based learning is all about. Engaged employees who rapidly earn rewards are less likely to make errors, so they naturally increase a company’s bottom line and lower the likelihood of compliance fees and penalties. Plus, according to research from TalentLMS, 87% of employees report that gamification makes them more productive.

Merging gamification with training makes plenty of sense. It’s also easy to build a gamification-based compliance training LMS by following a straightforward LMS implementation checklist.

1. Identify your training goals and gaps. Before you can find the best LMS for your needs and move forward with an implementation project plan, you need to spot the inefficiencies of your existing compliance training program. For example, your strategy might not facilitate real-world applications. Knowing this, you would want a compliance training LMS that bridges gaps and imparts practical experience.

2. Discover what motivates and drives employees. Employee gamification only works when employees are properly incentivized, so find out what motivates your team based on their backgrounds and experience levels. Whether a task is challenging or boring, people respond better when they are internally driven to succeed.

Do you need an intuitive LMS with a personalized dashboard? Are the introverts on your team more driven by badges and points than by a sense of competition? Conduct surveys to gauge expectations, and try to follow a 70:20:10 model of training amplified by gaming to foster experimentation and collaboration.

3. Choose the right rewards for desired outcomes. With the plethora of LMS choices on the market, you can select from rewards and mechanics that lead to the exact behaviors and criteria you desire. Want employees to achieve safety online training certifications? Reward “graduates” with points after they have displayed their proficiency. Reinforce favorable behaviors without punishing workers who lag behind. Carrots are far more effective than sticks.

4. Invest in a feature-rich, gamification-supported LMS. Your LMS should not only be user-friendly, but it should also be a portal to game-based learning support and an online asset library. Ideally, your gamified learning platform should include themes and templates that allow you to design visually appealing rewards without reinventing the wheel. Just make sure you have game-based reporting on your side, which makes it simple to track employee performance, completion rates, and other LMS metrics.

Implementing a gamification-based compliance training strategy requires careful budgeting, planning, and analysis. Once you find an LMS platform that delivers the features you need within your price range, you’ll be on your way to mitigating risks and retaining superstar employees. And thanks to gamification, everyone can have a little fun along the way.

SOURCE: Pappas, C. (10 October 2018) "4 best practices for implementing a gamification-based compliance training system" (Web Blog Post). Retrieved from https://www.benefitnews.com/opinion/4-best-practices-for-implementing-a-gamification-based-compliance-training-system?brief=00000152-14a5-d1cc-a5fa-7cff48fe0001

by 6drachael

The DOL Audit: Understanding the spectrum of risk

Will the Department of Labor (DOL) audit my plan? The likelihood that the DOL will audit your plan is low, but it can happen. Continue reading to learn more.

Risk is discussed in many contexts in the retirement plan industry. It comes up as a sales tactic; as good counsel from trusted advisors preaching procedural prudence; or, often, in the form of intimidating industry vernacular like fiduciary liability, fidelity bond or the big, bad Department of Labor (DOL).

This DOL paranoia is an underlying motivation that drives the risk conversation with distributors and retirement plan sponsors. Naturally, the question of probability comes up: What is the likelihood the DOL will audit my plan? The answer is low, but it can happen.

When evaluating retirement plans in terms of risk, it’s best viewed as a spectrum. Generally, risk falls into three principal areas of concern.

Lawsuit risk: The likelihood of a fiduciary-based lawsuit for most plan sponsors is very low. However, if this does arise, it will be unpleasant and expensive, both financially and in terms of reputation.

Administrative breach: Upon inspection, most plans will have some kind of operational defect. Typically, these are either an administrative, fiduciary or a document-level defect. If left uncorrected, they are potentially disqualifying. The good news is the IRS has corrective methods in place for the most common errors. Generally, these are relatively inexpensive to correct but will cost clients a little time and money, and likely some aggravation.

DOL/IRS audit risk: It’s usually the administrative breach discussed above that leads to the DOL/IRS investigation or audit. These agencies are not interested in disqualifying plans; they are more interested in correcting them and protecting the participants from misdeeds (intentional or not).

When a DOL audit does happen, it tends to occur because someone invited investigation. This could be the result of a disgruntled former employee, a standard IRS audit that somehow spiraled into a full DOL investigation or a variety of other reasons. So, what can employers and their service providers do to avoid an audit?

The IRS and DOL don’t publish an official list of items that could lead to an investigation, but it’s a good idea to look at your plan’s most recent IRS Form 5500 filings to decrease the likelihood of an audit. This is publicly available information that can signal to government agencies that something might be wrong and they should take a closer look. Some of the more common red flags include:

Line items that are left blank when the instructions require an answer
Inconsistencies in the data disclosed on the Form 5500 schedules
A large drop in the number of participants from one year to the next
A large dollar amount in the “Other” asset line on the Schedule H
Having an insufficient level for the plan’s required Fidelity Bond
Consistently late deposits or deferrals and hard-to-value or non-marketable investments (including self-directed brokerage accounts or employer stock) could be counted as red flags as well.

Plan sponsors should make sure that 5500s are completed with the same care and attention to detail used when filling out IRS 1040, and ensure the plan is being governed properly and in compliance with ERISA. This can be a challenge even for the most well-intentioned plan sponsors, given the complexity of the task and the fact that most employers don’t have the expertise in-house.

Calling in a specialist

But you don’t need to navigate these waters on your own. Instead, you might consider the “Prudent Man” rule, which implies that when expertise is required yet absent, a prudent person outsources the needed expertise. There is a wealth of talented retirement plan specialists and advisors available to help guide you through the audit process or, better yet, steer clear of it altogether.

When considering whether to employ one of these specialists, you will need to evaluate their experience, expertise and training, as well as if they provide services to help the plan sponsor keep the DOL (and the IRS) out of their offices. Some commonly available services include:

5500 reviews to help plan sponsors avoid potential audit triggers
Coaching services to help plan sponsors identify and eliminate some of those difficult-to-value assets like employer stock or self-directed brokerage accounts
Service provider evaluations to help plan sponsors identify those who will work as a plan fiduciary and put the appropriate guardrails in place on an automated basis

In conclusion, the best way to survive a potential DOL investigation or IRS audit is to avoid one altogether. Committing to best practices for running the plan may mean outsourcing a great deal of the work to specialist retirement plan providers and advisors. Plan sponsors would be wise to consider working with service providers who operate as plan fiduciaries themselves. In this way, you’re more likely to avoid problems and achieve better plan results, leading to better outcomes for everyone.

SOURCE: Grantz, J (7 June 2018) "The DOL Audit: Understanding the spectrum of risk" (Web Blog Post). Retrieved from https://www.benefitnews.com/opinion/dol-audit-understanding-the-spectrum-of-risk?feed=00000152-18a5-d58e-ad5a-99fd31fe0000

by 6drachael

Avoiding red flags: How to lower your plan's audit risk

Any size plan can be selected for an IRS or DOL audit. Businesses should learn how to avoid the red flags to help lower their plan’s audit risk. Read this blog post to learn more.

Are only the largest retirement plans audited? The truth is that plans of any size can be audited by the IRS and the DOL. Your plan could be selected for a random audit, or as a result of IRS datasets that target certain types of plans. However, lots of audits are triggered by specific events. Learning to avoid the red flags can help reduce your risk and increase the odds that you will survive any audit for which you are selected without major problems.

Your Form 5500 can be audit bait

Bad answers to Form 5500 can attract the Labor Department’s attention and serve as audit bait. The best way to make sure that your Form 5500 filing doesn’t lead to an audit is to check it carefully — with outside assistance if necessary — to make sure that the compliance questions are answered correctly.

For example, one compliance question asks whether the plan is protected by an ERISA bond and if so, the amount of coverage. Never answer “no” to this question. If for some reason you didn’t have a bond before, get one now. It is even possible to obtain retroactive coverage.

A coverage amount that is too low is also a red flag. In most cases, the bond must be for at least 10% of plan assets at the beginning of the year, although plans with certain types of investments must have higher coverage. Since assets at prior year end and at the beginning of the year are also shown on the 5500, showing an amount lower than 10% of those assets will invite the DOL to follow up.

The DOL will also look at the investment and financial information shown in the asset report. If your plan has many alternative investments such as hedge funds, has invested in other hard-to-value investments, or if you have large amounts of un-invested cash, you may also be inviting a follow up by the DOL. If your asset values as of the end of the prior year do not match your opening year balance for the succeeding year, you are also inviting unwanted inquiries.

Other answers that may get you targeted for further investigation are: if you indicate that you have late deposits of employee contributions or that you have not made required minimum distributions to former employees who are 70.5 years old. Note that this question does not need to be answered “Yes” if reasonable efforts have been made to find the participants but they still can’t be located.

Don’t ignore employee claims and complaints

Many plan sponsors don’t realize that employee complaints to the IRS and DOL often lead to audits. Make sure that employee questions and complaints receive a response, and if a formal claim for benefits is filed, make sure to follow the ERISA regulations on benefit claims and appeals. It is a good idea to run any denials past your ERISA attorney to make sure they are consistent with the written plan terms and clearly explain the participant’s appeal rights and the reason for the denial.

Be prepared

If your plan is selected for IRS or DOL audit, expect to be asked to provide executed plan documents, participant notices and fiduciary policies, such as your Investment Policy Statement. Keep these in a file to avoid a last-minute scramble to satisfy the auditor’s requests. You should also be prepared to show that you are making diligent efforts to find missing participants, deal with defaulted loans and review plan fees, which are current hot issues for auditors.

To be even better prepared, you can do a self-audit to identify problems that need correction before the IRS or DOL do.

SOURCE: Buckmann, C (29 June 2018) "Avoiding red flags: How to lower your plan's audit risk" (Web Blog Post). Retrieved from: https://www.benefitnews.com/opinion/irs-dol-audit-red-flags-and-avoiding-plan-risks

by 6drachael

What do the DOL’s new AHP rules actually mean?

On June 18, 2018, the Department of Labor released a set of final regulations regarding Association Health Plans. In this article, Beinecke explains what they mean.

President Trump signed an Executive Order on October 12, 2017 directing the U.S. Department of Labor to consider ways to make it easier to form an Association Health Plan by expanding existing membership rules. After issuing proposed regulations in early 2018 and considering public comments, the DOL issued a set of final regulations intended to make it easier to form AHPs on June 18, 2018.

The final regulations do not replace the existing AHP rules. Instead, they create a three-tier AHP system referred to in this article as the:

Narrow Standard AHP: These AHPs are available under the existing rules, but they can be difficult to form.

Relaxed Standard AHP: These AHPs are created by the new regulations. They are easier to form than a Narrow Standard AHP and can allow self-employed individuals to participate, but they do not allow as much flexibility in terms of plan design and underwriting (discussed in the chart below under “Plan Design and Underwriting”).

Non-Conforming AHPs: These are AHPs that do not meet either the Narrow or Relaxed Standards. We’ll touch on these briefly at the end of this article.

What are the Pros and Cons for Narrow and Relaxed Standard AHPs?

Pros:

The combined membership of the member employers may enable the AHP to self-insure
Qualify as single employer group health plans for ERISA and other purposes, enabling many fully-insured AHPs to qualify as a large group insured plan based upon the number of covered lives
Self-insured and large group insured AHPs are able to avoid certain requirements applicable to small group and individual plans under federal and state law, including:

o The requirement to offer all essential health benefits (EHB) mandated by a state’s EHB package (the AHP will still have establish a reasonable definition for EHBs such as selecting a benchmark plan); and

o Community rating requirements. This may enable AHPs to offer less expensive coverage alternatives to member employers as well as greater flexibility when setting premiums (but see “Plan Design and Underwriting” in the chart below)

Greater buying power than individual member employers may have on their own
The AHP’s risk pool may be more favorable for smaller employers than the community rating in their applicable small group market(s)

Cons

Not appropriate for many potential member employers and should be carefully evaluated on a case-by-case basis
Do not avoid state regulation, even if self-insured
Require a strong ongoing commitment to participate from member employers as turnover can cause AHPs to quickly fail
Insurance carriers may be reluctant to insure AHPs that do not meet certain criteria established by the carrier (e.g. The insurance carrier may require a closer relationship between the member employers than the AHP rules require)

AHP odds and ends

AHPs are generally subject to the reporting and disclosure requirements applicable to the underlying benefits, which may include providing summary plan descriptions, summaries of benefits and coverage, and Form 5500 filings. The DOL is still working out how certain other requirements may apply to AHPs. For example, the DOL indicated that existing HIPAA wellness rules apply to AHPs and the Mental Health Parity and Addiction Equity Act will apply if the member employers of the association have at least 50 employees in the aggregate, but the DOL is still considering how COBRA may apply and intends to issue additional guidance addressing this.

Many AHPs will not qualify as Narrow Standard or Relaxed Standard AHPs, typically because the association fails to meet the formation requirements described above. These Non-Conforming AHPs can still provide the advantages of greater purchasing power and the ability to separately experience-rate member employers like Narrow Standard AHPs, but Non-Conforming AHPs do not qualify for single employer plan treatment and are instead viewed as a separate plan maintained by each member employer. As a result, many member employers will still be subject to the small group and individual plan requirements that Narrow Standard and Relaxed Standard AHPs can avoid.

Effective dates

There are three phase-in effective dates under the final regulations:

Sept. 1, 2018: New or existing associations may establish a fully-insured Relaxed Standard AHP
Jan. 1, 2019: AHPs in existence on or before June 18, 2018 may establish a self-insured Relaxed Standard AHP.
April 1, 2019: All other new or existing associations may establish a self-insured Relaxed Standard AHP.

There are no effective dates specific to Narrow Standard or Non-Conforming AHPs as these existed before the final regulations and are not directly affected by them.

Source:

Beinecke, C. (19 July 2018). "What do the DOL’s new AHP rules actually mean?" (Web Blog Post). Retrieved from https://www.employeebenefitadviser.com/opinion/what-dol-ahp-rules-actually-mean

by 6drachael

Consequences and/or Remedies for Late or Missing Form 5500s

The Form 5500 deadline is approaching quickly. Below, Employee Benefits Corporation discusses the three different options employers have if they fail to file their Form 5500 or if they file late.

The Form 5500 is due on the last day following seven months after the end of the plan year. In order to be granted an extension, the employer would have to send the IRS a Form 5558 for each plan subject to Form 5500 obligations. The Form 5558 needs to be postmarked by the original due date or it will be rejected.

Failure to file or failure to file required Form 5500s on time can prove to be costly for an employer as daily penalties are assessed for late or missing filings.

What should an employer do if they find out they never filed a Form 5500 or they failed to file the Form 5500 by the deadline?

The employer should consider their risk tolerance, the number of plans they have not filed and the potential penalties to determine what the best course of action is for them.

They have three options:

Do not file and hope that no one questions them if they are audited. There is a potential consequence of $300/day for each plan (per plan/ per plan year) that did not get filed or get filed on time. Penalties capped at $30,000 per year.
File late and hope that no one notices. There is a potential consequence of $50/day for each plan (per plan/per plan year) that filed late or not on time. No cap on the penalty in this case.
File late under the Delinquent Filers Voluntary Compliance Program (DFVCP). There is late fee of $10/day for each plan (per plan per plan year) that is filing late. Penalties capped at $2,000 per large plan/$750 per small plan if filing multiple plan years for a plan. Penalties for large plans that file more than 1 delinquent plan year per plan number filing at the same time, the maximum penalty is $4,000 per plan and $1,500 for small plans.

The Bottom Line:

Employee Benefits Corporation can assist employers with the preparation of their delinquent Form 5500s as part of our Compliance Services offerings. Employers will pay the DFVCP penalties directly to the DOL online as part of the process. We can help educate the employer on the risk factors associated with each approach and to assist, if contracted to do so, in the preparation of the Form 5500s.

SOURCE:
Employee Benefits Corporation (29 June 2018) "Consequences and/or Remedies for Late or Missing Form 5500s" [Web Blog Post]. Retrieved from https://www.ebcflex.com/Education/ComplianceBuzz/tabid/1140/ArticleID/613/Consequences-and-or-Remedies-for-Late-or-Missing-Form-5500s.aspx?utm_source=7.19.18+Need+to+Know+%7C+Missing+Form+5500s&utm_campaign=7-19-18_Need+to+Know+email-Form+5500+season&utm_medium=email

by 6drachael

DOL cracks down on efforts to find missing retirement plan participants

In this article from Benefits Pro, the DOL auditors are taking action on missing participants in retirement plans.

The Department of Labor’s auditors are pushing harder on plan sponsors to make better efforts to find missing terminated vested participants in retirement plans. In return, there’s a call for more guidance on just how far sponsors have to go to do so.

According to a report in Pensions & Investments, the matter has become more urgent in the wake of MetLife’s experience. After the company had “lost track” of some 13,500 participants, the DOL entered the picture. The company’s earlier efforts to find those lost participants were deemed unacceptable, and then state and federal inquiries began.

But DOL auditors, according to a letter from the American Benefits Council to Deputy Assistant Secretary of Labor Timothy Hauser last fall requesting formal rulemaking on comprehensive guidance for plan fiduciaries, have been “inconsistent and alarming” in routine examinations.

The report says, “Some auditors said that failure to find a missing participant was a breach of fiduciary duty, or forfeiting funds back into a plan until participants are found is a prohibited transaction, and plan sponsors could be penalized. Auditors also have insisted that sponsors try different search methods every year or reach out to friends and former colleagues of the missing participant or through social media. Some plan sponsors have been told they must do ‘whatever it takes’ to find participants who are missing or not responding to communications.”

Large defined benefit plans are creating the loudest outcry, according to members reaching out to the ERISA Industry Committee in Washington on the issue. “It’s frustrating for them because there is just a lack of guidance on what activities they have to engage in, and how long they have to be engaged in it,” Will Hansen, senior vice president of retirement and compensation policy, is quoted saying in the report.

DOL officials are aware of the lack of guidance. A DOL spokesman says in the report that “the agency places a priority on consistent actions across our compliance assistance and enforcement activities, and will continue to work with plans and plan sponsors to connect retirees and beneficiaries with their pensions.”

Still, given the agency’s focus on employers’ responsibilities, experts say that employers should try to get ahead of the issue, guidance or not. The report cites David Rogers, partner at Winston & Strawn LLP in Washington, saying, “Given the potential penalties involved and the need for a coordinated response, it is a good practice to have a missing participants policy and designated persons within the organization who make regular efforts to keep participant information current.”

In addition, it quotes Norma Sharara, a principal with Mercer’s Washington resource group, saying, “The rational plan sponsor would be well advised to up their game. At least revisit the issue so when someone comes knocking your door, you are prepared. All along you need to be in constant contact with anybody you are holding money for. Somebody has to be responsible and the Labor Department is placing the burden on the shoulders of the employer.”

On March 1, Senators. Elizabeth Warren, D-MA, and Steve Daines, R-MT, reintroduced the Retirement Savings Lost and Found Act, bipartisan legislation that would create a national online lost-and-found for retirement accounts. The bill is supposed to make it easier for participants to find accounts, as well as for employers to connect with former employees. Employers could also invest abandoned accounts in target-date funds more easily, the report said.

Read the article.

Source:
Satter M. (5 March 2018). "DOL cracks down on efforts to find missing retirement plan participants" [Web Blog Post]. Retrieved from address https://www.benefitspro.com/2018/03/05/dol-cracks-down-on-efforts-to-find-missing-retirem/

by 6djina

DOL Proposes Rule to Expand Association Health Plans for Small Employers

What are the pros and cons of the proposed rule by the DOL allowing small business to purchase health insurance without some of the restraints imposed on smaller employers by the ACA and individual states? Let's take a look.

A proposed rule by the U.S. Department of Labor (DOL) would allow small businesses to band together and purchase health insurance without some of the regulatory requirements that the individual states and the Affordable Care Act (ACA) impose on smaller employers.

Advocates of the proposal say that it will make it easier for small businesses to afford better coverage for their employees. Critics contend that it's a way to get around the ACA requirement that plans cover essential health benefits.

The proposal, published in the Federal Register on Jan. 5, expands access to what the rule calls "small business health plans," which are more commonly known as association health plans.

The proposed rule attempts to achieve many of the objectives of the Small Business Health Fairness Act introduced in Congress last year, which also sought to allow small businesses to offer employees health coverage through association health plans.

The rule modifies the definition of "employer" under the Employee Retirement Income Security Act (ERISA) regarding entities—such as associations—that could sponsor group health coverage. An association can be formed for the sole purpose of offering the health plan.

A broader interpretation of ERISA could potentially allow employers anywhere in the country that can pass a "commonality of interest" test to join together to offer health care coverage to their employees. For instance, an association could show a commonality of interest among its members on the basis of geography or industry, if the members are either:

In the same trade, industry or profession throughout the United States.

In the same principal place of business within the same state or a common metropolitan area, even if the metro area extends across state lines.

Sole proprietors also could join small business health plans to provide coverage for themselves as well as their spouses and children.

"Many small employers struggle to offer insurance because it is currently too expensive and cumbersome," the DOL said in a press release. "Up to 11 million Americans working for small businesses/sole proprietors and their families lack employer-sponsored insurance. … These employees—and their families—would have an additional alternative through Small Business Health Plans (Association Health Plans)."

"With the passage of the tax bill, which includes a reduction of the individual mandate penalty, it's very likely that many people will drop their health care coverage in the individual marketplace," said Chatrane Birbal, the Society for Human Resource Management's senior advisor for government relations. Association health plans "could provide an option for small employers to offer competitive and affordable health benefits to their employees, thereby increasing the number of Americans who receive coverage through their employer," she noted.

For most midsize-to-large employers and their employees, however, the proposed rule will likely result in no change in health coverage, Birbal said.

Large Group Treatment for Small Employers

The ACA requires that nongrandfathered insured health plans offered in the individual and small group markets provide a core package of health care services, known as essential health benefits. Large employer group plans and self-funded plans are not required to comply with the essential benefit requirements.

Last October, President Donald Trump signed an executive order directing the DOL and other agencies to issue regulations that would allow more employers to band together and purchase health care plans, including across state lines. The DOL's proposed rule would do this by allowing employers that currently can only purchase group coverage in their state's small group market to join together to purchase insurance in the less-regulated large group market. The 50 states most often limit the large group market to employers with 50 or more employees, while a handful of states limit this market to employers with 100 or more employees.

By joining together, employers could not only avoid those regulatory restrictions that pertain only to the small group market, but also could reduce administrative costs through economies of scale, strengthen their bargaining position to obtain more favorable deals, enhance their ability to self-insure, and offer a wider array of insurance options, the DOL said.

The rule would maintain current employee protections by:

Preserving nondiscrimination provisions under the Health Insurance Portability and Accountability Act (HIPAA) and the ACA. with regard to association health plans.

Clarify that an association health plan cannot restrict coverage of an individual based on any health factor.

"Small Business Health Plans (Association Health Plans) cannot charge individuals higher premiums based on health factors or refuse to admit employees to a plan because of health factors," the DOL said. The Employee Benefits Security Administration "will closely monitor these plans to protect consumers."

The DOL will accept comments on the proposed rule during a 60-day period ending on March 6. "There are likely to be a number of changes to the proposed regs before they become final, and there really are a number of issues related to the proposal which need to be answered," said Robert Toth, principal at Toth Law and Toth Consulting in Fort Wayne, Ind.

Differing Reactions

Insurance sold nationwide through associations of small employers "would have to comply with far fewer standards" than current small group market plans, according to a statement by the Commonwealth Fund, a nonprofit foundation that supports expanding health care coverage to low-income and uninsured Americans. "Federal administrative changes that allow some health plans to bypass state and federal rules but not others create an uneven playing field, destabilize insurance markets, and put consumers at risk."

"Allowing the expansion of association health plans could mean the proliferation of coverage that does not provide the essential benefits people with diabetes need to effectively manage their disease and to prevent devastating and costly complications," said a statement from the American Diabetes Association.

The proposal, however, is supported by the National Retail Federation. "Main Street retailers need more affordable health care options and a level playing field with larger companies that are better positioned to negotiate for lower insurance costs," said David French, senior vice president for government relations at the federation, in a statement.

"These changes could be attractive to small employers with relatively healthy employees and who would not need the full range of benefits offered by the ACA's exchange plans" for the small group market, said Beth Halpern, health law partner at Hogan Lovells in Washington, D.C.

Like Trump's executive order, the proposed regulation seeks "to liberalize the rules to build large insurance pools of small employers," said Perry Braun, executive director at Benefit Advisors Network (BAN), a Cleveland-based consortium of health and welfare benefit brokers. "Spreading the risk across large numbers of participants in an insurance pool is thought to bring insurance premium stability," he said, adding, "It will be interesting to see [which brokers] enter the market to aggregate small businesses" into the new plans.

Source:

Miller S. (8 January 2018). "DOL Proposes Rule to Expand Association Health Plans for Small Employers" [ web blog post]. Retrieved from address https://www.shrm.org/ResourcesAndTools/hr-topics/benefits/Pages/DOL-association-health-plans-rule.aspx

by 6djina

How to avoid a DOL 401(k) audit

Are you worried that your company's 401(k) plan might face a Department of Labor audit? Check out this great tips from Employee Benefits Network on how to avoid a 401 (k) aduit by Robert C. Lawton

There are many reasons for plan sponsors to do everything possible to avoid a Department of Labor 401(k) audit. They can be costly, time consuming and generally unpleasant.

The DOL, in its fact sheet for fiscal year 2016, indicates that the Employee Benefits Security Administration closed 2,002 civil investigations with 1,356 of those cases (67.7%) resulting in monetary penalties/additional contributions. The total amount EBSA recovered for Employee Retirement Income Security Act plan participants last year was $777.5 million.

In my experience, if a plan sponsor receives notification from the DOL that it has an interest in looking over their 401(k) plan, they need to be concerned. Not only do the statistics support the fact that DOL auditors do a good job of uncovering problems, but in my opinion, they are not an easy group to negotiate with to fix deficiencies.

As a result, the best policy plan sponsors should follow to ensure they don’t receive a visit from a DOL representative is to do everything possible to avoid encouraging such a visit. Here are some suggestions that may help plan sponsors avoid a DOL 401(k) audit:

1. Always respond to employee inquiries in a timely way. The most frequent trigger for a DOL 401(k) audit is a complaint received from a current or former employee. These complaints can originate from employees you have terminated who feel poorly treated or existing employees who feel ignored. Make sure you are sensitive to employee concerns and respond in a timely way to all questions. Keep copies of any correspondence. Be very professional in how you treat those individuals who are terminated — even though in certain instances that may be difficult. Terminated employees who feel they have been mistreated often call the DOL to “get back” at an employer.

2. Improve employee communication. Often employee frustrations come from not understanding a benefit program — or worse, misunderstanding it. If you are aware that employees are frustrated with your plan or there is a lot of behind the scenes discussion about it, schedule an education meeting as soon as possible to explain plan provisions.

3. Fix your plan — now. If the DOL decides to audit your 401(k) plan, as shown above, it frequently finds something wrong. Many times plan sponsors are aware that a certain provision in the plan is a friction point for employees. Or worse, they know the plan is brokenand no one has taken the time to fix it. Contact your benefits consultant, recordkeeper or benefits attorney to address these trouble spots before they cause an employee to call the DOL.

4. Conduct a “mock” DOL 401(k) audit. Many 401(k) plan sponsors have found it helpful to conduct a mock audit of their plan or hire a consulting firm to do one for them. If management hasn’t been responsive to your concerns about addressing a plan issue, having evidence to share with them that shows an audit failure can be very convincing.

5. Make sure your 5500 is filed correctly. The second most frequent cause of a DoL 401(k) audit relates to the annual Form 5500 filing. The most common 5500 errors include failing to file on time, not including all required schedules and failing to answer multiple-part questions. Ensure that your 5500 is filed by a competent provider and that it is filed on time. Most plan sponsors either use their recordkeeper or accountant to file their plan’s 5500. Don’t do it yourself. The fees a provider will charge to do the work for you are very reasonable.

6. Don’t be late with contribution submissions. Surprisingly, many employers still don’t view participant 401(k) contributions as participant money. They are, and the DOL is very interested in ensuring that participant 401(k) contributions are submitted promptly to the trustee. Be very consistent and timely with your deposits to the trust. Participants will track how long it takes for their payroll deductions to hit the trust. If they aren’t happy with how quickly that happens, they may call the DOL. If you have forgotten to submit a payroll to the trustee, or think you may have been late, call your benefits attorney. There are procedures to follow for late contribution submissions.

DOL audits are generally not pleasant. It wouldn’t be too strong to say that they are often adversarial. Because these visits are typically generated by employee complaints or Form 5500 errors, auditors have a pretty good idea that something is wrong. Consequently, I recommend that plan sponsors do everything they can to avoid a DOL 401(k) audit.

See the original article Here.

Source:

Lawton R. (2017 February 13). How to avoid a DOL 401(k) audit [Web blog post]. Retrieved from address https://www.benefitnews.com/opinion/how-to-avoid-a-dol-401-k-audit?brief=00000152-14a5-d1cc-a5fa-7cff48fe0001