American Benefits Council
Benefits Byte


September 24, 2015

The Benefits Byte is the American Benefits Council’s regular e-mail and online newsletter for members only, providing timely reports on legislative, regulatory and judicial developments, along with updates on the Council’s activities in support of employer-sponsored benefit plans.

The Benefits Byte is published by the American Benefits Council, based on staff reports and edited by Jason Hammersla, Council director of communications. Contact information for Council staff related to specific topics can be found at the end of each story.

Click here to read past issues on the Benefits Byte Archive page.

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Democrats Introduce New ‘Cadillac Tax’ Repeal Bill in Senate

Another measure to repeal the 40 percent tax on health benefits (enacted as part of the Affordable Care Act (ACA)) was introduced in the Senate by a group of Democratic lawmakers on September 24, led by Senator Sherrod Brown (D-OH).

The American Worker Health Care Tax Relief Act is virtually identical to the bipartisan Middle Class Health Benefits Tax Repeal Act (S. 2045), sponsored by Sen. Dean Heller (R-NV) and cosponsored by Sen. Martin Heinrich (D-NM). The principal difference is that the Brown bill includes a non-binding “sense of the Senate” resolution stating that “the revenue loss resulting from the repeal of the excise tax … should be offset to ensure that the [ACA] continues to reduce the deficit while improving health coverage for millions of Americans.”

As we have previously reported, S. 2045 is the Senate companion to the Middle Class Health Benefits Tax Repeal Act (H.R. 2050), introduced in the House by Representative Joe Courtney (D-CT) and boasting 149 bipartisan cosponsors. Rep. Frank Guinta (R-NH) has introduced a similar measure, the Ax the Tax on Middle Class Americans' Health Plans Act (H.R. 879), which now features 94 Republican cosponsors. Together, a majority of members in the House of Representatives have co-sponsored one or both House bills.

The Council – as part of its own advocacy strategy and as the organizer of the broad-based Alliance to Fight the 40 coalition– supports legislation that specifically repeals the 40 percent tax and has not taken a position on how or whether to offset the associated revenue loss. We will continue to encourage bipartisan support of the House and Senate bills.

For more information, contact Katy Spangler, senior vice president, health policy, or Kathryn Wilber, senior counsel, health policy, at (202) 289-6700.

Council Provides Additional Comments to DOL/EBSA on Fiduciary Rule

The Council provided supplemental comments to the U.S. Department of Labor (DOL) Employee Benefit Security Administration (EBSA) on September 23, describing how the agency’s proposed regulations amending the definition of a “fiduciary” would negatively affect casual conversations among employees, the deployment of call centers and investment education.

The DOL issued proposed regulations on April 14 that broadly update the definition of “investment advice” by extending fiduciary status to a wider array of advice relationships than is done by the existing rules. (See the April 14 Benefits Byte for a brief summary of the proposal.) The Council filed a comment letter on July 21, articulating our concerns with the rule’s possible effects on retirement plan administration, and testified before DOL on August 13. The Council also filed a comment letter on July 10  requesting clarification of the fiduciary definition as it applies to health and welfare plans.

While the Council’s first letter highlighted comprehensive employer concerns  that the new rules will generate uncertainty, cost and potential liability, the September 23 supplemental comments address two specific areas :

  • Casual conversations:  The current language of the proposal brings informal exchanges of information and casual statements by plan sponsor employees or call center personnel within the definition of fiduciary advice, creating fiduciary exposure and, in the case of the call centers, prohibited transactions. To avoid such problems, the Council recommends excluding “casual conversations” from the definition of investment advice and clarifying the application of the “fee or other compensation” rule.
  • Investment advice: The proposal would significantly restrict the type of investment education that can be provided without triggering fiduciary status and the prohibited transaction rules, including education that is currently permitted  under DOL Interpretive Bulletin 96-1. The Council recommends preserving the regime established by Interpretive Bulletin 96-1, but also sets forth a number of issues for consideration in developing a new, viable framework.

September 24 represents the end of the formal comment period for the proposal. Given the substantial feedback the agency has received in response to the proposal, there may be a lengthy period before DOL issues a final rule. The Council will continue to serve as an informational resource for DOL officials as they continue their deliberations. For more information on DOL’s fiduciary definition project, contact Lynn Dudley, senior vice president, global retirement and compensation policy, or Jan Jacobson, senior counsel, retirement policy, at (202) 289-6700.

CMS Provides New Guidance on Federally-Facilitated Marketplace Employer Notice Program

In a set of Frequently Asked Questions (FAQs) released on September 18, the Centers for Medicare and Medicaid Services (CMS) of the U.S. Department of Health and Human Services provided guidance on the program under which employers will be notified of employees obtaining subsidized coverage in Federally-facilitated Marketplaces under the Affordable Care Act (ACA).

As explained in the FAQs, ACA and its implementing regulations require each Health Insurance Marketplace (or “exchange”) to notify any employer whose employee was determined eligible for advance premium tax credits (APTCs) and cost-sharing reductions (CSRs) because the employee attested that he or she was neither enrolled in employer sponsored coverage nor eligible for employer coverage that is affordable and meets the minimum value standard. Federally-facilitated Marketplaces are those that are managed by the federal government in states that elected not to establish their  own exchanges.

According to the FAQs, the Federally-facilitated Marketplaces are “phasing in” the employer notice program.  Starting in the spring of 2016, the federally-facilitated marketplaces will send notices to employers if the employee received APTC for at least one month in 2016 and if the marketplace has a “complete employer address.” For 2016, these exchanges will not notify employers when an employee who was benefiting from APTC or CSRs terminates Marketplace coverage.

The guidance briefly describes the timing and method of employer notices, as well as how an employer can appeal a notice and assert that it provides its employees access to affordable, minimum value employer sponsored coverage or that its employees are  enrolled in employer coverage.

The Council is working to identify employer concerns related to the notice program and appeals. For more information, contact Kathryn Wilber, senior counsel, health policy, at (202) 289-6700.

The American Benefits Council is the national trade association for companies concerned about federal legislation and regulations affecting all aspects of the employee benefits system. The Council's members represent the entire spectrum of the private employee benefits community and either sponsor directly or administer retirement and health plans covering more than 100 million Americans.

Notice: the information contained herein is general in nature. It is not, and should not be construed as, accounting, consulting, legal or tax advice or opinion provided by the American Benefits Council or any of its employees. As required by the IRS, we inform you that any information contained herein was not intended or written to be used or referred to, and cannot be used or referred to (i) for the purpose of avoiding penalties under the Internal Revenue Code, or (ii) in promoting, marketing or recommending to another party any transaction or matter addressed herein (and any attachment).