Affordable Care Act on Life Support? (and other benefits issues)

Transcription

1 Affordable Care Act on Life Support? (and other benefits issues) CSHRM LEGAL WORKSHOP Presented by: Jim Rourke Nexsen Pruet, LLC (803) April 20, 2017

2 Jim Rourke Jim Rourke, Associate Areas of Focus: Employee Benefits Focuses on employee benefits and state and local tax: handles matters related to 401(k), profit sharing, pension and other qualified retirement plan administration, as well as the administration of insurance and other fringe benefits. LL.M. from NYU. Advises clients with respect to nonqualified plans, including deferred compensation and phantom stock plans. Helped clients navigate the extensive regulatory network created by Health Care Reform under the Patient Protection and Affordable Care Act. Works closely with businesses to find and take advantage of tax credits at both the state and federal level.

3 AGENDA Status of the ACA Overview of Efforts to Repeal New Options for Small Employers Status of DOL Fiduciary Rule Overview of anticipated tax reform (and how it will affect your employees)

4 ACA - Repeal and Replace? Repair? Early January 2017 Repeal and replace will be essentially simultaneously... The same day or the same week... could be the same hour. Late January 2017 Replacement very much formulated down to the final strokes Sunday February 5 It s in the process and maybe it will take till sometime into next year, but we are certainly going to be in the process. It s very complicated I would like to say by the end of the year, at least the rudiments.

5 Future of the ACA Executive Order signed January 20, 2017 I - Executive branch to minimize unwarranted economic and regulatory burdens of the Act, and prepare to afford the States more flexibility and control to create a more free and open healthcare market II HHS, IRS, DOL to exercise all authority and discretion to waive, defer, grant exemptions from, or delay implementation of the Act that would cost any fee, burden, tax, penalty, or regulatory burden on families, individuals, healthcare providers

6 Future of the ACA III Provide greater flexibility to states and cooperate with them in implementing healthcare programs IV Encourage development of interstate market for offering of healthcare and insurance

7 ACA What do we love? No preexisting condition limitations or lifetime/annual maximums Allowing children to stay on plan until age 26 Allowing access to affordable coverage to everyone through Exchanges/mandates Premium equity Free preventative care/coverage of EHBs Premium tax credits for middle class

8 ACA What do we hate? Penalty for failing/refusing to purchase coverage Applicable Large Employers must offer coverage or face penalties Expensive (premiums/new taxes and fee/deductibles) not affordable without subsidy Large insurers are losing $$ No competition among insurers Additional administrative burdens for employers

9 American Health Care Act (R.I.P.) Overview Eliminate individual and employer mandate Revised use of refundable tax credits emphasis on age, not income Eliminate Medicaid expansion Double contribution limits for HSAs Keep ACA s rules on preexisting conditions, annual and lifetime caps, and offer of coverage to children until age 26

10 Now What? Administration s Efforts to Dismantle ACA Employer Mandate Individual Mandate Subsidies for Deductibles and Co-Payments Tax credits for premiums Medicaid expansion Essential Health Benefits Taxes under ACA (e.g., net investment income tax) Rules regarding premium limitations for groups Change in rules for signing up for exchanges

11 Birth of the QSEHRA 21st century Cures Act Qualified Small Employer Health Reimbursement Arrangement For small employers less than 50 FTEs Participants must be enrolled in minimum essential coverage and provide proof Reimbursement limitations - $4950 individual./$10,000 family Employers cannot offer group health plan Federal subsidy reduced by benefit received

12 Fiduciary Rule as designed Department of Labor (DOL) passed Fiduciary Rule to be phased in between April 2017 January 2018 Key items: Stated purpose to limit questionable investments in Plans, imposing a legal and ethical obligation to place participant s interest first (elimination of suitability standard ) Expanded definition as to who is a fiduciary with respect to 401(k) plans Requirements to provide clear reports of all fees and commissions charged by brokers/advisors An advisor can still receive various compensation but must provide Best Interest Contract (BIC) Exemption

13 Fiduciary Rule Uncertain Future December 6, 2016 Chairman of Govtl. Affairs Committee asked Labor Secretary Perez to cease implementation of rule, which will very likely be rescinded BUT - January 13, 2017 FAQs from DOL Investment education vs. investment advice EX - explanation of annuity feature, recommending plan contributions to maximize match EX sending communication to plan participant explaining that their 401(k) account will be automatically rolled over to IRA if they don t make election NOT a recommendation BUT if they recommend a third party and received a referral fee, then a fiduciary recommendation need to compare to keeping $$ in the plan Financial service providers interactive investment tools

14 Fiduciary Rule Takeaways Great starting point See DOL 16-page FAQ Consumer Protections for Retirement Investors January Questions 401(k) and IRA Investors Should Ask Their Financial Advisor

15 Fiduciary Rule Feb. 3 Executive Order Secretary of Labor ordered to "prepare an updated economic and legal analysis" of three areas: whether the rule has "harmed or is likely to harm investors due to a reduction of Americans' access to certain retirement savings offerings, retirement product structures, retirement savings information, or related financial advice whether the rule has disrupted the retirement advice industry "that may adversely affect investors or retirees whether the rule is " likely to cause an increase in litigation, and an increase in the prices that investors and retirees must pay to gain access to retirement services." If yes to above or if rule is found to hurt Americans ability to gain access to retirement info must rescind or revise rule

16 DOL Response As reported in WSJ April 12: The Department has concluded it would be inappropriate to broadly delay application of the fiduciary definition and Impartial Conduct Standards.

17 Trump s Tax Reform Plan Proposals Affecting Employers TAX RATES Tax bracket reduction Currently 7 proposed 3 Reduced corporate income tax Currently 35% top rate - proposal for 15% (Pres. Trump) or 20% (House Republicans) tax Expanding lower corporate income tax rate to LLCs, S-Corps Currently taxed at individual income tax rates (10%- 39.6% - proposal for 15% tax) Elimination of ACA 3.8% Net Investment Income tax

18 Trump s Tax Reform Plan Proposals Affecting Employers Issues related to Employee Benefits Increased employer deductions for childcare Proposed $500,000 cap for onsite child care expenses (currently $150k) Increased use of non-employer dependent care accounts with government match Parental leave offered through Unemployment Insurance During campaign 6 weeks floated for biological mothers Recently thoughts to extend to fathers

19 Employee Benefits U.S. Supreme Court - ERISA exemption for Church-affiliated retirement plans (3/27/17) - 401(k) fee litigation - Same sex marriage redux

20 Questions? Jim Rourke (803)