American Benefits Council
Benefits Byte


November 3, 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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Bipartisan Budget Act Signed into Law

President Obama has signed into law the Bipartisan Budget Act of 2015 (H.R. 1314), a two-year deal to increase federal spending caps and raise the debt ceiling through March 2017. Included in the package are numerous revenue-raising provisions, several of which relate directly to employer-sponsored benefits.

The measure:

  • Increases premiums paid by single-employer defined benefit plans to the Pension Benefit Guaranty Corporation (PBGC) (See the October 28 Benefits Byte for details)
  • Expands defined benefit plan funding stabilization by one year. (See the October 28 Benefits Byte for details.)
  • Provides increased flexibility for defined benefit plan sponsors to use mortality tables that are different than those prescribed by the U.S. Treasury Department. (See the October 27 Benefits Byte for details.)
  • Repeals the automatic health plan enrollment requirement under Section 18A of the Fair Labor Standards Act, as added by the Affordable Care Act (ACA) (See the October 27 Benefits Byte for details.)

While the Council has advocated for several of these provisions in the past, we continue to criticize the increases in PBGC premiums and the shortsighted legislative process that led to the inclusion of those increases in this measure.

Now that a debt ceiling crisis has been averted and the spending caps have been lifted, Congress will now move to the appropriations process in which lawmakers will direct each regulatory agency’s funding for the next year. The federal government’s current stopgap funding measure expires on December 11.

For more information on the budget bill and process, contact Diann Howland, vice president, legislative affairs, at (202) 289-6700.

Council Comments on IRS Proposed Regulations for Determining ‘Minimum Value’ of Employer-Sponsored Health Coverage Requiring Inpatient Services

In a comment letter to the Treasury Department and Internal Revenue Service (IRS) on November 2, the Council argued that recently proposed regulations go “well beyond the bounds” of the Affordable Care Act (ACA) and congressional intent by mandating a specific benefit be covered under employer-sponsored group health plans in order to satisfy the definition of “minimum value.”

The letter was a response to the supplemental notice of proposed rulemaking (NPRM) published by the Treasury Department and IRS on September 1, which withdraws in part proposed rules issued in 2013 on minimum value coverage (which were never finalized) and replaces the withdrawn portion of the regulations by stating that when determining premium tax credit eligibility “an eligible employer-sponsored plan provides minimum value only if the plan’s share of the total allowed costs of benefits provided to an employee is at least 60 percent and the plan provides substantial coverage of inpatient hospital and physician services.”

The NPRM follows IRS Notice 2014-69 and guidance from the U.S. Department of Health and Human Services (HHS), both issued in November 2014 (see the November 24, 2014, Benefits Byte), which each stated that plans that fail to provide “substantial coverage” for inpatient hospitalization services or for physician services (or for both) do not provide minimum value. As we reported in the September 1 Benefits Byte, these agency actions were a response to a “glitch” discovered in HHS' minimum value calculator, which can be used by employer-sponsored plans to determine whether such plans meet the “minimum value” requirement under the ACA. The glitch allowed plans to be designed in a manner that technically met the minimum value requirements without providing any coverage for inpatient hospital services and/or physician services.

The Council’s comment letter argues that the existing regulatory definition of minimum value already goes beyond the statute by requiring a plan to measure its minimum value status by reference to a third-party plan. Moreover, the proposed expansion of the minimum value definition propels employer requirements further down a path unsupported by the statute and could establish a precedent to impose essential health benefit mandates on employer-sponsored group health plans in order for such plans to be considered to provide ‘minimum value’ to avoid the employer shared responsibility payments. The letter also notes that the expanded definition would exacerbate current employer concerns regarding the 40 percent excise tax on high-cost plans.In December 2014, the Council submitted similar written comments to HHS.

The comment letter also noted that the Council’s employer members typically sponsor plans that provide substantial coverage for inpatient hospital and physician services and that the NPRM and the HHS 2015 Final Rule are likely targeted at a minority of entities who may seek to provide limited medical benefits with little to no inpatient hospital or physician services. The Council urged IRS and HHS to consider ways to target this small minority without imposing additional benefit mandates upon large group and self-funded employer plans.

For more information, contact Katy Spangler, senior vice president, health policy, or 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).