Executive Compensation and ERISA

Co-authored by Christopher K. Buch.

On January 25, the Department of Health and Human Services (HHS) published its highly anticipated Health Insurance Portability and Accountability Act (HIPAA) Omnibus Final Rule (Final Rule). The Final Rule covers many topics, including the extension of some of HIPAA’s privacy and security compliance obligations to “business associates” or organizations that do business with HIPAA-covered entities.


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Co-authored by Christopher K. Buch.

On January 30, the Internal Revenue Service released proposed and final regulations regarding the health insurance premium tax credit and the requirement that an employer maintain minimum essential coverage under the Affordable Care Act (ACA). The IRS is preparing to release a series of questions and answers to help individuals and entities comply with the new ACA rules.


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Co-authored by Christopher K. Buch.

The Department of Health and Human Services (HHS) issued proposed regulations in the Federal Register on December 7 which provide guidance regarding the Transitional Reinsurance Program (the Program). The Program will be effective for three years: 2014–16. It will impose heavy fees upon employer-sponsored health care plans, whether insured or self-insured.


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Co-authored by Christopher K. Buch.

As the end of the year approaches, important transition relief from penalties and excise taxes imposed by Section 409A of the Internal Revenue Code (the Code) is about to expire. If an employer has an employment agreement or other nonqualified deferred compensation plan that provides for severance payments to an employee only if such employee executes a release, there may be a technical violation of Code Section 409A. The Internal Revenue Service allows for correction of such technical violations without penalty, but the correction must occur before December 31, 2012.


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The US Supreme Court recently declined to review the “stock drop” cases decided late last year by the US Court of Appeals for the Second Circuit involving Citigroup and McGraw-Hill. Patrick L. Gearren, et al. v. The McGraw-Hill Companies, Inc., et al., No. 11-1550 and Stephen Gray, et al. v. Citigroup Inc., et al., No. 11-1531. This allows to stand two decisions which are very favorable to the defense of fiduciaries of certain retirement plans that invest in company stock.


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Under the Michigan Health Insurance Claims Assessment Act (HICA Act) (P.A. 142 of 2011), third-party administrators, carriers and self-insured entities are required to pay assessments on the amount of health care claims paid by them. This assessment will be used by the State in funding its Medicaid program. Presumably, the payers will seek to pass these assessments on to their clients, which include health care benefit plans under the Employee Retirement Income Security Act (ERISA).


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One of the many provisions of the Patient Protection and Affordable Care Act, also referred to as the Healthcare Reform Legislation, provides that health insurers must spend a certain portion of the premiums they receive on clinical services and health care quality-improving activities. If an insurer spends less on such services and activities than the pre-established level, the difference must be refunded to the insurer’s policyholders in the form of rebates. The first such rebates were recently issued to policyholders nationwide.


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The Department of Labor (DOL) continues to revise its stance on the disclosures plan sponsors must make to participants about brokerage windows. DOL regulations require sponsors of participant directed retirement plans to issue statements about the fees paid and the investment returns for investment options under participant-directed plans (such as the typical 401(k) plan). For most plans, the first disclosure is due August 30, 2012.

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