Employee Benefits & Executive Compensation Monthly Minute
In the Spirit of Giving, IRS Extends and Expands ACA Reporting Relief
Once again, the IRS extended the due date for certain 2019 ACA information reporting requirements in Notice 2019-63. The due date for furnishing Form 1095-C (and 1095-B) to employees is extended from January 31, 2020, to March 2, 2020. (The due date for filing with the IRS remains unchanged at February 28, 2020, or March 31, 2020, if filing electronically). In addition, the IRS will not impose a penalty for failure to furnish Form 1095-C to any employee enrolled in an ALE member's self-insured health plan who is not a full-time employee for any month of 2019 if certain conditions are met. Nor will the IRS impose a penalty for incorrect or incomplete Forms provided that the employer makes a good faith effort to comply with the information reporting requirements. Although the latest round of relief offers no protection against the imposition of employer mandate penalties, and employers must be careful to comply with applicable deadlines and extensions, reporting relief is always welcome news.
Sun Sets on Lower Court Sun Capital Ruling
The First Circuit unanimously found that two Sun Capital private equity funds could not be held jointly and severally liable for multiemployer defined benefit pension plan withdrawal liability incurred by a bankrupt portfolio company. The lower court based its liability ruling on its finding that the funds were partners in an implied partnership-in-fact which was engaged in a “trade or business.” However, on appeal the First Circuit disagreed and found that several factors rebutting the partnership-in-fact formation were too greatly discounted by the lower court. The First Circuit also voiced reluctance to impose withdrawal liability on the private investors absent “a firm indication of congressional intent to do so and any further formal guidance from PBGC.” The Court concluded its decision by acknowledging the tension between ERISA and MPPAA’s principal aims – ensuring pension fund viability and encouraging private sector investment in struggling companies with pension plans. Overall, the case is considered a win for investment funds, but there are still open questions because the holding is not binding outside of the First Circuit and the decision hinged on a facts-and-circumstances analysis. Moreover, the Court did not address the lower court’s “trade or business” determination, so ambiguity remains with respect to private equity fund liability for portfolio pension funding.
Pricing Transparency - But At What Cost?
The Transparency in Coverage Proposed Rule aims to give individuals greater access to health care pricing information. The proposals essentially require most group health plans, including self-insured plans, to disclose price and cost-sharing information to participants and beneficiaries. More specifically, not only do these rules require disclosure of cost-sharing estimates, plans would also be required to disclose negotiated rates for in-network providers and allowed amounts paid for out-of-network (OON) providers. Out-of-pocket cost information would be provided through an internet-based self-service tool and in paper format. In-network negotiated rates and allowed amounts for OON providers would be made available through standardized machine-readable files. Industry groups have already voiced disagreement with pricing transparency rules, citing proprietary concerns and consumer confusion, and further pushback is expected from stakeholders given the proposed rule will entail additional costs and administrative burdens. Comments are still being accepted on the proposed rule, and we do not expect an effective date before January 1, 2022. We will keep you updated on significant changes as the rules are finalized.
KMK Employee Benefits and Executive Compensation email updates are intended to bring attention to benefits and executive compensation issues and developments in the law and are not intended as legal advice for any particular client or any particular situation. Please consult with counsel of your choice regarding any specific questions you may have.