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.
We have previously discussed The Importance of the Official Plan Document including the uncertainty of whether one document could perform double duty as “the Plan document” and the summary plan description (“SPD”). While it is still “not a sure bet” as to how the U.S. Supreme Court would rule, a recent ruling has held that the SPD can, in fact, be the governing plan document.
It is now a part of the strategic business plan for most employers to have implemented some form of wellness program for their employees. These programs are intended to improve the health of employees with the goal of preventing sickness and motivating employees to lead healthier lives. From the employer’s perspective, these programs are aimed toward the critical financial goals of decreasing (i) the rising cost of healthcare, (ii) illness related absenteeism, and (iii) reduced performance while at work. Often, these programs include wellness screening tasks, including the collection of biometric data (height, weight, blood pressure, cholesterol, and blood glucose levels) to identify health risks. It is estimated that 80% or more of employers with a wellness program screen their employees for evaluation and preventive interventions. As part of the wellness landscape, however, the Equal Employment Opportunity Commission (EEOC) has been challenging employer wellness programs for allegedly violating the Americans with Disabilities Act (ADA).