In This Issue
IRS Announces Limits for 2016
Automatic Enrollment Requirement Repealed
Proposed Rule on Wellness Plan Participation
2016 Fee Announced
Delay Likely in Adopting Overtime Rules
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IRS Announces Retirement Plan Contribution and Benefit Limits for 2016
Annual contribution limits and maximums for defined contribution retirement plans including 401(k) plans, and for defined benefit pension plans are mostly unchanged for 2016 the IRS announced in October.
Highlights for defined contribution plans for 2016 include:
- 401(k), 403(b) and profit-sharing plan elective deferrals remain $18,000.
- The catch-up contribution limit for participants age 50 or older stays at $6,000.
- The annual defined contribution limit from employer and employee stays at the lesser of $53,000 plus the $6,000 catch-up if age 50 or older or 100 percent of the employee's compensation.
- The maximum amount of employee compensation includable in calculating contributions to defined contribution plans remains $265,000.
- The limitation used in the definition of highly compensated employee under Section 414(q)(1)(B) remains unchanged at $120,000.
For defined benefit plans, the following limits are in place for 2016:
- The maximum annual benefit that may be funded remains at $210,000.
- For a participant who separates from service before January 1, 2016, the maximum annual benefit limit for defined benefit plans is computed by multiplying the participant's compensation limit, as adjusted through 2015, by 1.0011.
Budget Bill Repeals Automatic Enrollment Requirement Under ACA
The Bipartisan Budget Act of 2015 H.R. 1314, signed into law by President Obama on November 2, repeals the Affordable Care Act (ACA) automatic-enrollment mandate that was added to the Fair Labor Standards Act (FLSA). Under the automatic-enrollment mandate, employers with more than 200 full-time employees are required to automatically enroll new full-time workers into a qualifying health plan, if offered by the employer, and to automatically continue enrollment of current employees. Certain notices were required that gave employees an opportunity to opt out of any coverage in which the employee was automatically enrolled. However, the ACA stipulated that the automatic-enrollment provision could not be implemented without accompanying regulations, which were never promulgated. Thus, the provision was never enacted, and employers were not required to be in compliance. Employers are free to establish automatic-enrollment programs if they choose to do so. The repeal removes the requirement the requirement to do so. A summary of the law, which became effective immediately with the President's signature, is also available.
EEOC Issues Proposed Rule on Spouse Wellness Program Participation
The Equal Employment Opportunity Commission (EEOC) has issued a Notice of Proposed Rulemaking that would amend the Genetic Information Nondiscrimination Act (GINA) regulations concerning employer wellness programs that are part of group health plans. The proposed rule addresses the extent to which an employer may offer incentives for an employee's spouse to provide information about his or her current or past health status as part of an employer-sponsored wellness program, when he or she participates in the employer's health plan. The proposal clarifies that an employer may offer, as a part of its health plan, a limited incentive to an employee whose spouse is covered under the employee's health plan; receives health or genetic services offered by the employer, including as part of a wellness program; and provides information about his or her current or past health status. The limited incentive may take the form of a reward or penalty and may be financial or in-kind, such as time off awards, prizes, or other items of value. The total incentive for an employee and spouse to participate in a wellness program that is part of a group health plan and collects information about current or past health status may not exceed 30 percent of the total cost of the plan in which the employee and any dependents are enrolled. The proposed rule also says that the maximum portion of an incentive that may be offered to an employee alone may not exceed 30 percent of the total cost of self-only coverage. Comments on the proposed rule are due by December 29. EEOC has published a set of questions and answers designed to summarize and clarify the proposed rules.
2016 Patient Centered Outcomes Research Institute Fee Announced
Created under the Affordable Care Act (ACA), the Patient Centered Outcomes Research Institute (PCORI) is responsible to evaluate and compare health outcomes, clinical effectiveness, risks and benefits of medical treatments, services, procedures and drugs. PCORI is funded through an annual fee paid by health insurers and plan sponsors of self-insured group health plans. The fee applies to plan years ending after September 30, 2012, and before October 1, 2019. It is based on the average number of lives covered under the plan. The Internal Revenue Service has announced in IRS Notice 2015-60 that fees paid to fund the PCORI will increase from $2.08 to $2.17 per covered life for policy years and health plan years that end on or after October 1, 2015, and before October 1, 2016. For policy and plan years ending after September 30, 2013, and before October1, 2014, the fee was $2.00. For policy and plan years ending after September 30, 2014, and before October 1, 2015, the fee is $2.08. Plan sponsors are to use Form 720 to report and pay the PCORI fee.
DOL Likely to Delay Adopting Final New FLSA Overtime Rules
It had been widely expected that the US Department of Labor (DOL) would publish final rules implementing new and revised overtime regulations sometime during the first quarter of 2016. However, at a recent American Bar Association Labor and Employment Law conference in Philadelphia, the Solicitor of Labor, M. Patricia Smith, announced during a panel discussion that the revisions to the Fair Labor Standards Act (FLSA) overtime rules likely will not be issued until late 2016. The delay gives employers more time to prepare, although many questions remain regarding the shape the final regulations will take. By the September 4 close of the public comment period on the proposed rules, DOL had received over 250,000 comments. Ms. Smith cited the volume of comments DOL received and the scope and complexity of the proposed regulations as the primary reasons the agency will likely defer adoption of final rules until later in 2016. According to the Fall 2015 Unified Agenda and Regulatory Plan, published in November by the Office of Management and Budget, the earliest the final rule could be released is next July.