You probably already know that the Uniformed Services Employment and Reemployment Rights Act (“USERRA”) generally requires an employer to restore an employee to his or her previous position of employment upon returning from military duty. But you may not be familiar with an employer’s obligations to an employee during the time that employee is away on military leave. In particular, what are your obligations as far as health benefits offered to employees?
This time of year, gift-givers may feel rich in spirit but otherwise penniless. They may ask whether they can receive a hardship distribution from their 401(k) account when faced with a not-so-holly or jolly bank statement at the end of December. Those of us who work with 401(k) plans know, however, that it takes more than a large credit card bill to justify a participant’s request for a hardship distribution. Generally, the federal tax code restricts a participant’s access to a 401(k) account balance so that such benefits can provide retirement income, not replenishment of a checking account. More specifically, federal tax rules permit a hardship distribution only if (a) the participant experiences an “immediate and heavy financial need” and (b) the distribution is no greater than the amount “necessary to satisfy the financial need.” In turn, Treasury regulations provide that hardship withdrawals on 401 (k) balances are available for participants who satisfy any of 6 safe harbors or a general, catch-all provision.
Fear of creatures that lurk in deep water is pretty universal – for confirmation, look no further than the numerous summer movies featuring unexpected attacks by fierce underwater predators with sharp teeth. Inevitably, none of the victims seem to have any tools that will actually save them. One after another, their tools break, and their escape attempts fail pitifully. Unfortunately, such movies give the impression that the only protection from these predators is staying out of the water altogether.
Although 401(k) plans are intended to accumulate savings for participants’ retirement, the reality is that when unexpected expenses arise, participants may ask whether they can get a distribution from their 401(k) account. Federal tax rules permit a hardship distribution if (a) the participant experiences an “immediate and heavy financial need,” and (b) the distribution is no greater than the amount “necessary to satisfy the financial need.” If a plan administrator permits a hardship distribution that does not fit within the hardship rules, the result is an operational error that must be corrected in accordance with IRS rules. To avoid the time and expense involved with corrections, plan administrators should stay current with rules in this area. In recent legislation, Congress has loosened restrictions on hardship distributions in some ways and tightened them in others.
“It’s a New Dawn; It’s a New Day; It’s a New Life for Me; and I’m Feeling [not so] Good”
While Nina Simone’s song captures the power of “feeling good,” the effects of an employee’s disability do not feel good for the employee or employer. And if your organization offers employee benefits that require the plan administrator to determine whether a plan participant is disabled, you should confirm that your plans reflect updated claims and appeal procedures. Regulations finalized back in 2016 are now in effect.
Wellness programs in the workplace are generally based on the belief that as employees lose weight, stop smoking, eat more healthfully, and lower their cholesterol, their employer will reap a drop in absenteeism and health care costs. With that hope in mind, employers are often willing to offer a financial reward to encourage employees’ participation. The Equal Employment Opportunity Commission (“EEOC”) has long been concerned about whether the financial reward offered makes such wellness programs “involuntary” such that the wellness programs fail to comply with the Americans with Disabilities Act (“ADA”) and/or the Genetic Information Nondiscrimination Act (“GINA”). Previous S&J blog posts have reported the EEOC’s actions with respect to wellness programs over the years, including the EEOC’s issuance of final ADA and GINA regulations addressing wellness programs. Those regulations have been challenged in court by the AARP, and you can expect changes in the regulations as a result. This post will bring you up to speed on the litigation and what you should watch for going forward.
A pension plan participant’s challenge to his benefit amount was recently struck down by the United States Court of Appeals for the Third Circuit. The court acknowledged that retirement plans are complex documents comprised of hundreds of pages, appendices, and “peculiarities.” The issue on appeal before the court was examining whether the terms of the plan were merely complex or ambiguous.
On June 5, 2017, the U.S. Supreme Court in Advocate Health Care Network, et al. v. Stapleton et al., 581 U.S. ___ (2017), answered whether a church must have originally established an employee benefit plan for it to qualify as an exempted “church plan” under ERISA, to which the Supreme Court answered, no. The Supreme Court held that “a plan maintained by a ‘principal purpose organization’ qualifies as a ‘church plan,’ regardless of who established it.”
With the recent election, the fate of the ACA is uncertain. However, we can be fairly certain that, whatever the changes may be, it is unlikely that we will return to life as it was prior to the enactment of the ACA on March 23, 2010. What the “new” ACA will look like, we can’t know, so it is important to continue to be compliant with the laws and regulations as they are currently, unless and until those laws and regulations change.
On May 17, 2016, the U.S. Equal Opportunity Commission (EEOC) issued an ADA Final Rule amending applicable regulations and interpretive guidance implementing Title I of the Americans with Disabilities Act (ADA), and a GINA Final Rule, under Title II of the Genetic Information Nondiscrimination Act (GINA), clarifying how the ADA and GINA Rules apply to employer wellness programs. In addition, the EEOC issued a Q & A document for each new rule, ADA Rule Q & A and GINA Rule Q & A, addressing key questions about each rule’s applicability and implementation.