American Benefits Council
Benefits Byte


October 20, 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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Council Urges U.S. Supreme Court to Support ERISA Preemption in Vermont Health Case

In an amicus (“friend of the court”) brief filed on October 20, the American Benefits Council – was joined by five other employer and insurer groups in supporting ERISA preemption of Vermont’s health care database law as it applies to self-funded employers.

In Gobeille v. Liberty Mutual Insurance Company, the employer, Liberty Mutual, sponsored a self-insured employee health plan administered by a third-party administrator. Vermont state law requires that all health plans, including self-insured plans, file informational reports (including claims data) for the state’s database. Liberty Mutual ignored Vermont’s subpoena of claims data and sued the state, arguing that ERISA preempted Vermont’s all-payer claims database law.

The federal district court ruled in in favor of the state, holding that ERISA did not preempt the Vermont statute. The U.S. Court of Appeals for the Second Circuit reversed in a divided decision, holding that ERISA preempted the Vermont law because the state statute’s requirements were connected to the ERISA requirements.

The U.S. Supreme Court granted review of the 2nd Circuit decision despite a U.S. Department of Labor (DOL) amicus brief recommending that the high court deny review because there is currently no conflict with any other courts of appeal or Supreme Court rulings.

The Council’s brief supports ERISA federal preemption, arguing that Vermont’s all-payer claims database and similar state programs undercut ERISA’s objectives by subjecting self-insured plans to a morass of state reporting requirements that Congress neither intended nor allowed in enacting ERISA. The brief described the increasing number of states that have adopted or are considering all payer claims databases, many of which have conflicting and overlapping reporting requirements with respect to the content and format of data reporting.

As discussed in the brief, statutes like Vermont’s all-payer claims database “impose a substantial and unwarranted burden on self-funded employer plans” and the brief further noted that “the exclusive purpose of ERISA benefit plans is to provide benefits, not to be laboratories for state experimentation.”

Oral arguments in Gobeille v. Liberty Mutual have been scheduled for December 2. The Court will issue its ruling in 2016.

State “experimentation” where imposed on self-funded benefit plans has the potential to create compliance challenges for multi-state employers as states grow impatient or dissatisfied with Congressional action. Beginning in 2017, states will be permitted to seek “state innovation waivers” under Section 1332 of the Affordable Care Act (ACA). Under this provision, the Treasury and Health and Human Services departments may waive certain aspects of the law including qualified health plan standards and employer and individual responsibility standards where certain criteria are met

The Council’s public policy strategic plan, A 2020 Vision, called for limiting the applicability and scope of State Innovation Waivers because such initiatives could erode the ability of multi-state employers to uniformly administer their benefit plans consistent with ERISA preemption. It is essential that multi-state employers’ ability to uniformly administer employee benefits plans be preserved and not undermined, whether as a result– of a decision in Gobeille v. Liberty Mutual, or the Section 1332 waiver process

For more information on health care litigation matters or the Council’s amicus brief program, contact Kathryn Wilber, senior counsel, health policy, or Jan Jacobson, senior counsel, retirement policy at (202) 289-6700.

Emerging Issue: State, Local Paid Leave Mandates

On September 7, President Obama issued an Executive Order establishing paid leave requirements for federal contractors. This initiative is representative of the president’s stated policy goal to improve paid leave for all workers as well as efforts in various states and localities to impose similar mandates.

Congressional Democrats and Republicans have introduced legislation (the Healthy Families Act (H.R. 932 and S. 497) and the Working Families Flexibility Act (S. 233)) to require paid leave for private sector workers. During consideration of the federal budget resolution earlier this year, 61 Senators supported a federal paid leave mandate. Additional congressional votes to require paid leave are possible in the near future.

In the meantime, California, New Jersey, Oregon and Rhode Island have already enacted programs mandating paid leave, with similar bills being considered elsewhere (including Washington D.C.) and the U.S. Department of Labor recently issued a number of grants to states to study the matter further.

Common features of these state mandates include administration through state unemployment agencies, payroll taxes to finance the program (i.e. premium payments), qualification and permitted leave standards and benefit amounts. However, many of these mandates have unique features and multi-state employers may find the lack of uniformity to be a significant administrative challenge.

While paid leave issues are somewhat outside the parameters of issues in which the Council has typically engaged, the Council is closely monitoring these matters and the Council’s Board of Directors is considering whether and how the we might play a role in finding a solution to the employer challenges.

To provide input or for more information, contact Diann Howland, vice president, legislative affairs, at (202) 289-6700.

IRS Announces Changes in Retirement Plan Limits for 2016

Each year, various dollar limits applicable to health and retirement plan contributions and benefits are adjusted for inflation. 

In News Release 2015-118, released October 21, the Internal Revenue Service (IRS) announced a series of retirement plan limits for Tax Year 2016. Section 415 of the Internal Revenue Code provides for dollar limitations on benefits and contributions under qualified retirement plans, adjusted annually to keep pace with changes in the cost of living.

Most notably, the 401(k) contribution limit remains unchanged at $18,000 for 2016.

It was also announced that the maximum amount of earnings subject to the Social Security tax (taxable maximum) will remain the same at $118,500.

Revenue Procedure 2015-53 sets forth additional inflation-adjusted items for 2016. For more information, contact Jan Jacobson, senior counsel, retirement 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).