Did Your Company Fail to Adopt a New Preapproved Defined Contribution Plan by the April 30th Deadline? The IRS Has a Solution for You


Sponsors of preapproved defined contribution retirement plans were generally required to sign new plan documents on or before April 30, 2016 that incorporated changes required by the Pension Protection Act of 2006 (PPA). Defined contribution plans include profit sharing plans, 401(k) plans, and money purchase pension plans.  Preapproved plans are plan documents that have been approved by the Internal Revenue Service (IRS) and are sold to plan sponsors through law firms, banks, brokers and other financial institutions. 

A prototype plan is a type of preapproved plan.  It consists of two parts: an adoption agreement and a basic plan document.  The basic plan document contains the non-elective provisions applicable to all adopting employers.  The adoption agreement contains all of the options that can be selected by an adopting employer in a “check the box” format.  A volume submitter plan is another type of document that has been preapproved by the IRS.  Volume submitter documents sometimes consist of an adoption agreement and basic plan document, although many take the form of a self-contained single document that only reflect the provisions that an adopting employer has selected.

Effect of Failure to Timely Adopt New Plan

If you are a plan sponsor of a defined contribution retirement plan that is on a preapproved document, and you did not sign a restated plan document as required on or before the April 30, 2016 deadline, your retirement plan is technically no longer entitled to tax-favored treatment.  Losing tax-favored treatment of your plan could reduce your deduction for contributions paid to the plan, and your employees could be prevented from accumulating retirement savings.  In addition, while not required by the IRS or the Internal Revenue Code, the financial institution holding the plan assets could refuse to make distributions. If they have already made distributions, the distributions could potentially be taxable and not eligible for tax-free rollover.

What Can You Do?

You will have to go to the IRS in order to correct this.  The correction can be done by filing a submission for a Voluntary Correction Program (VCP) compliance statement with the IRS as provided under the IRS Employee Plans Compliance Resolution System (EPCRS).  There is a user fee associated with VCP submissions.  Typically, the applicable user fee is determined using the number of participants in a plan.  The user fee ranges from $500 to $15,000 depending on how many participants are in the plan.  A recently released VCP submission kit indicates that if a plan sponsor sends the VCP submission to the IRS by April 29, 2017, the general user fee is reduced by 50% (so long as the failure to adopt the PPA restated document is the only failure of the submission.  This VCP submission kit is designed to help plan sponsors who missed the April 30th deadline.  The new VCP submission kit can be found at https://www.irs.gov/retirement-plans/vcp-submission-kit-failure-to-adopt-a-new-pre-approved-defined-contribution-plan-by-the-april-30-2016-deadline

If your submission is approved, the tax-favored status of your plan will be restored.  Your Employee Benefits counsel can advise as to the program, and assist with preparation of the required IRS forms.  You should reach out to your Benefits Counsel as soon as possible to discuss this process.


Crash Landing for Central States – What now for Multi-employer Pension Funds?

In the aftermath of the rejection of the Central States Southeast and Southwest Areas Pension Plan (“Central States”) application to reduce core benefits by Treasury Special Master Kenneth Feinberg, it is critical that contributing employers to multi-employer pension funds recognize the harsh reality that help to those funds will not be forthcoming from the government in at least the near term.

Although Feinberg was careful to emphasize that the rejection of the Central States application was limited to Central States and that pending applications by other funds would be considered independently, the text of the May 6, 2016 rejection letter belies that statement.

Of the three criteria which Central States did not meet, only one could possibly be remedied; that Notices must be written so as to be understood by the average plan participant.  Ironically, the majority of plan participants who received drafts of the Notices in a sampling before Central States filed its application stated that it was understood!

Particularly troublesome was the finding that the proposed benefit suspensions were not reasonably estimated to allow Central States to avoid insolvency within the projected 10 years.  It did not take the plan “off the path of insolvency.”

Treasury criticized the assumptions used in the actuarial projections declaring that they contained a bias because they were “significantly optimistic.”  Specifically, the 7.5% annual investment rate of return assumptions failed to adequately take into account relevant current economic data and exceeded longer-term expected rates of return.

Rather, Treasury opined that the estimated 10- year average rate of return should have been 6.43% reflective of the Horizon Survey of investment forecasts.  However, adoption of that rate would have resulted in even deeper reductions in core benefits to participants.

Significantly, a review of several other multi-employer funds reveals that an investment return assumption of 7.50% is not uncommon.  Based on Treasury’s “scrutiny,” it seems probable that the other pending applications will suffer a similar fate to Central States.

Although there have been cries seeking a quick passage of some form of legislation (not fully articulated) to help funds such as Central States and their participants, the current Congress is unlikely to do so in an election year.

A District Court Just Dealt a Blow to the ACA. Employers, Don’t Get Excited!

On May 12, 2016, the United States District Court for the District of Columbia issued an opinion in U.S. House of Representatives v. Burwell et al., No. 14-1967 (D.D.C. May 12, 2016), enjoining the federal government’s use of unappropriated monies to fund reimbursements to health insurers under Section 1402 of the Patient Protection and Affordable Care Act (the “ACA”).  Section 1402 of the ACA provides cost-sharing reductions (e.g., reductions in deductibles, coinsurance and copayments) to certain people who obtain health insurance through the government exchanges.  Section 1402 also provides that the insurer is supposed to be reimbursed by the government for the cost-sharing reductions it gave to those people.

The opinion did not invalidate Section 1402 or rule that insurers cannot be reimbursed at all. However, the Court ruled that Congress had not appropriated federal money for those reimbursements, and it would be unconstitutional for those reimbursements to continue without a Congressional appropriation.  The injunction has been stayed pending appeal, so it remains to be seen what affect this case will have in the end.  If it’s upheld, it could have major ramifications for insurance companies and individuals who rely on cost-sharing reductions.  Insurers may exit the exchange market, refuse to provide cost-sharing reductions, or sue the government to get reimbursed for the cost-sharing reductions.

The decision, however, has little effect on employers that sponsor group health coverage. As you may be aware, the ACA provides that employers with 50 or more full time employees must pay penalties if they (i) fail to provide employees with minimum essential coverage or (ii)  provide coverage that is unaffordable or does not meet a minimum actuarial value.  Those penalties only kick in, however, if a full-time employee goes to the exchange and gets coverage along with a premium tax credit and/or cost-sharing reduction.

This case does not affect an individual’s ability to go to the exchange and get a tax credit or cost-sharing reduction. It only affects an insurer’s ability to get reimbursed for providing a cost-sharing reduction.  So, if one your employees goes to the exchange and gets a tax credit or cost-sharing reduction, your company will still be on the hook for penalties.

For assistance on the ACA and what it means to your company, please contact your Jackson Lewis preferred attorney or one of the members of our Health Care Reform Team.

The New Fiduciary Rule: From the Perspective of the Plan Sponsor

Just one month ago the U.S. Department of Labor released its long awaited final rule re-defining who is considered a “fiduciary” of an employee benefit plan under the Employee Retirement Income Security Act of 1974 (ERISA) and the Internal Revenue Code (the Code). The final rule (which can be found here) targets those that give investment advice to a plan, its participants or its beneficiaries (including IRAs and 401(k)s); and, as a result, effectively expands the group of individuals who may be considered a fiduciary. Because of the definition’s expansion, a plan sponsor who may have freely provided recommendations and information in the past could now be on the hook as a fiduciary for this same behavior. The final rule is an extensive read. However, below are a few key points that may help provide a better understanding of how the April 10, 2017 final rule applicability date may affect plan sponsors in particular.

1. What is considered “investment advice?”

The final rule and the definition of a fiduciary hinges on this very point. Providing investment advice is what differentiates a non-fiduciary from a fiduciary under the new regulation. However, investment advice must be provided in the form of a recommendation. A recommendation is a “communication that, based on its content, context, and presentation, would reasonably be viewed as a suggestion that the advice recipient engage in or refrain from taking a particular course of action.” Definition of the Term “Fiduciary”; Conflict of Interest Rule, 81 Fed. Reg. 20946, 20997 at § 2510.3-21(b)(1) (April 8, 2016)

Specifically, a person provides investment advice if they offer the following types of advice for a fee or other form of compensation (whether direct or indirect): (i) recommendations involving the advisability of acquiring, holding, disposing of, or exchanging, securities or other investment property, or a recommendation as to how securities or other investment property should be invested following their rollover, transfer or distribution from the plan; (ii) recommendations involving the management of securities or other investment property, including investment policies/strategies, portfolio composition, selection of investment account arrangements, selection of other persons to provide investment advice or investment management services, or recommendations with respect to rollovers, distributions or transfers from the plan (including whether, in what amount, in what form, and to what destination such a rollover, transfer or distribution should be made).

However, there are a few exceptions to the broad reach of providing investment advice. In particular, plan fiduciaries that are independent of the adviser and have financial expertise are identified as an exception in the final rule. Additionally, the marketing of retirement plan platforms (without regard to the plan’s individualized needs and with confirmation that the desire is not to provide impartial investment advice or serve in a fiduciary capacity) and providing responses to RFPs are not considered investment advice.

2. Investment Advice vs. Investment Education.

This much has not changed in the final rule: investment education can still be provided by service providers and plan sponsors without triggering fiduciary status, provided certain conditions are met. Investment education is considered non-fiduciary when it consists of providing the following: (i) information and materials that describe investments or plan alternatives without specifically recommending particular investments or strategies; (ii) general information about a plan; (iii) general financial, investment and retirement information; (iv) information and materials that provide a plan fiduciary, participant or beneficiary with models of asset allocation portfolios of hypothetical individuals with different time horizons; and (v) interactive investment materials (such as worksheets, software, questionnaires, etc. that generally provide the means to estimate and evaluate future retirement income needs and assess the impact of different allocations on that income).

However, it is worth noting that asset allocation models and interactive investment materials that identify specific products or investment alternatives must meet additional requirements as well. Primarily, they may only identify designated investment alternatives offered by the plan that are overseen by a fiduciary that is independent from the person who developed or marketed the investment alternative or distribution option. Additionally, other designated investment alternatives, if any, offered under the plan that have similar risk and return characteristics must be identified, the similar characteristics must be described, and participants must be notified where they can obtain additional information regarding the designated investment alternatives.

3. What about a plan sponsor’s employees who provide advice, are they fiduciaries?

Generally speaking, no. A major component of a recommendation being deemed “investment advice” is the receipt of a fee or other form of compensation for that advice. Because employees of plan sponsors are typically paid in the average course of their employment, any advice which they provide generally will not make them an investment advice fiduciary. Therefore, providing information to participants about the plan and distribution options is typically fine, assuming of course that the employee does not receive any payment outside of their normal compensation for work performed.

4. So, what now?

Under the final rule, many common practices are now considered investment advice. Therefore, more and more advice issued to participants will now invoke fiduciary status. Because of the expansion of the fiduciary definition, employers and plan sponsors are encouraged to review their policies and procedures to ensure that any information provided does not cross over into what is deemed “investment advice for a fee,” thus rendering the advisors a fiduciary.

Tenth Circuit Expands Withdrawal Liability of Construction Industry Employer

In a case of first impression, the United States Circuit Court of Appeals for the Tenth Circuit held that work performed by a non-union company acquired after a construction industry employer ceased contributing to a multiemployer pension plan (MEP) triggered withdrawal liability.  The case, Ceco Concrete Construction, LLC v. Centennial State Carpenters Pension Trust, Nos. 15-1021, 15-1190 (10th Cir. May 3, 2016), should be paid close heed by unionized construction companies.

The employer was a signatory to a collective bargaining agreement obligating the company to make contributions to a MEP. This obligation ceased when the CBA expired on April 30, 2010.  The company then acquired a non-union construction company and resumed operations in the CBA’s jurisdiction on a non-contributory basis.

The MEP determined that this resumption triggered withdrawal liability. Under ERISA’s mandatory arbitration regime, the arbitrator (and subsequently the district court) found for the employer.

An employer who withdraws from a MEP is liable for its allocable share of underfunding (“withdrawal liability.”) Withdrawal generally occurs when an employer permanently ceases to have a contribution obligation or permanently ceases covered operations.  Under a special rule applicable to “building and construction industry” employers, however, withdrawal does not occur unless such employer continues to perform on a non-contributory basis (or resumes within 5 years) work in the collective bargaining agreement’s jurisdiction for which contributions were previously required.

Under the applicable definition of “employer”, all trades or businesses which are under common control (a “control group”) are treated as a single employer. The question before the Court was whether the control group must be determined when the employer ceased its obligation to contribute (April 2010) or when the control group triggers withdrawal liability by resuming covered work (October 2010, following the acquisition of the non-union company).

Both the arbitrator and the district court held that the control group was determined on the date the obligation to contribute to the plan ceased, and that the non-contributory work performed by the after-acquired non-union company did not therefore trigger withdrawal liability. The 10th Circuit, however, reversed.

The Court’s holding was rooted in several factors, including: (i) the definition of “employer”, which the Court found included both present and future control group members; (ii) statutory language indicating that the control group must be determined when a withdrawal is triggered, which occurs upon the resumption of CBA-covered work on a non-contributory basis; and (iii) the remedial purposes of the withdrawal liability rules (to protect pension beneficiaries) and the definition of employer (to prevent employers from avoiding their withdrawal liability obligations by fractionalizing operations between entities). The Court also drew upon recent decisions in the First and Seventh Circuits which construed the term “employer” broadly.

Unionized construction employers should now closely scrutinize acquisitions within jurisdictions where the employer had previously contributed to a MEP: non-contributory work performed by an after-acquired entity will (at least within Oklahoma, Kansas, New Mexico, Colorado, Wyoming, and Utah) likely trigger withdrawal liability.

“High Noon” for the Central States Pension Fund?

For the past several months, we have been reporting on the application filed by the Central States Southeast and Southwest Areas Pension Fund  (“Central States”) to the Department of Treasury to reduce “core” benefits to participants.    This extraordinary remedy is permitted by the  Kline-Miller Multiemployer Pension Reform Act of 2014 (“Kline-Miller Act”).

Public hearings conducted by Special Master Feinberg have revealed that the proposed cuts can be between 39.9% and 60.7%.

Special Master Feinberg must decide by May 7th whether to approve the reductions to the Fund which has approximately 400,000 participants.

There has been opposition expressed by retirees as well as retiree groups. A group of fifty United Senators has also written to the Secretary of the Treasury indicating their concern with the proposed reductions.

As the multi-employer pension fund world awaits a decision, a fifth multi-employer pension fund, the Iron Workers Local Union 16 Pension Fund located in Baltimore, Maryland filed its application to the Treasury Department to reduce core benefits.

These actions highlight the risk that employers contributing to multi-employer funds are now facing.  It is not beyond the realm of possibility that the burden of providing the promised benefits will fall even more heavily upon employers.

We suggest that employers become proactive in considering strategies to exit these plans in future negotiations.

Clearly the situation will not get better.

So You’ve Filed Your 1095-C…Now What?

As companies complete their Section 6055 and 6056 reporting under the Affordable Care Act (ACA), now it’s time to be on the lookout for notices regarding ACA penalties.

Watch for Notice Letters:  According to CMS, the Federally-Facilitated Marketplace will begin sending batches of notifications to certain employers whose employees received premium subsidies when purchasing health insurance on the marketplace exchange.  Click here for a link to the publication from CMS regarding  the 2016 Employer notice Program:  https://www.cms.gov/site-search/search-results.html?q=employer%20notice%20program.  Employers should be on the lookout for these notification letters; they might be hard to spot because it’s unclear whom they will come from or to whom they will be addressed.  They could look like junk mail, and employers don’t want them to get thrown away.

Why Would A Company Get A Letter If It Complied With the ACA?:  If an individual calls the Healthcare.gov helpline and attests that his employer failed to provide affordable minimum value coverage, the employee can receive coverage subsidies based on his own statements, whether accurate or not.  Uninsured part-time employees, contractors and temps might have received subsidies, claiming to be full-time employees.  Whether obtained by fraud or mistake, when an eligible employee receives subsidies, it brings risk to the employer.

90 Days to Appeal:  If an employer receives a notice, the company should act quickly because employers only have 90 days to appeal.  Click here for a link to the Employer Appeal Request Form:  https://www.healthcare.gov/marketplace-appeals/employer-appeals/.  Take note that only the Internal Revenue Service can determine whether an employer is subject to a penalty under 4980H(a) or (b).

ACA Retaliation Rules:  Employers should carefully consider how to proceed in light of the ACA retaliation rules, which say that a company cannot “discharge or in any manner discriminate against any employee with respect to his or her compensation, terms, conditions, or other privileges of employment because the employee (or an individual acting at the request of the employee) has received a credit under the ACA or reported any violation of, or any act or omission the employee reasonably believes to be a violation of the ACA.”  See our previous blog about the retaliation rules:  http://www.jacksonlewis.com/resources-publication/health-care-reform-law-protects-employees-employment-retaliation.

Action Steps:  We recommend that employers put a (documented) process in place to put outside counsel or other persons who are not responsible for employee discipline in charge of the notification letters and related appeals in order to help avoid or defeat a later adverse action claim.  If an employer can show that the person who made a termination or disciplinary decision did not have knowledge that the employee had received a credit under the ACA or reported any violation of the ACA, that will help the company prove that it would have taken the same adverse action in the absence of the employee’s protected activity.

Employee Benefit Plans and Data Security Issues

In recent weeks, much of the discussion around a recent Supreme Court case, Gobeille, has focused on ERISA preemption. But for fiduciaries of benefit plans the case can serve as a reminder of important duties that often go unexplored—protecting the private data of participants.

Briefly, the case challenged a Vermont law that required reporting of health care claim payments to a state agency for inclusion in a healthcare database. But in reading the case, I was reminded about how much data—sensitive and personal data—hovers in and around employee health and benefits plans. It seems like news of data breaches can be seen almost daily in the headlines. And anyone familiar with databases maintained for plans can imagine what alluring targets they must be. On top of that, when one considers how often this data is shared with third parties in day-to-day plan administration, (consultants, TPAs, payroll providers, investment advisors, etc.) data breaches will increasingly expose fiduciaries and plans to liability.

When a fiduciary sits down to think about its responsibilities to participants in regards to personal information, a complex and often unclear picture emerges. And a large part of that picture comes outside of the “ERISA-box” plan fiduciaries typically consider. The few court cases exploring this subject are generally not brought as ERISA claims but rather are based on financial regulations and consumer protection laws. As fiduciary standards continue to evolve and differences in privacy protection laws appear from jurisdiction to jurisdiction, there are a host of laws and regulations to keep in mind.

A short list of legislation that touch on the area includes: the Health Insurance Portability and Accountability Act, the Gramm-Leach Bliley Act, the Federal Trade Commission Act, the Fair Credit Reporting Act, the Fair and Accurate Credit Transactions Act, along with numerous state laws relating to “personally identifiable information” and “protected health information.”

At this point, even though the scope of a fiduciary’s duty under ERISA with respect to data protection has yet to be addressed by the courts and the DOL, there are still a number of practical steps that plan sponsors and other fiduciaries can take in the hope of preventing problems. These include:

  • Performing due diligence on all data and security protocols when selecting and monitoring vendors;
  • Developing privacy provisions for contracts with TPAs and other service providers over and above standard confidentiality agreements;
  • Limiting access to sensitive information to necessary personnel;
  • Training personnel on the law and the fiduciary responsibilities;
  • Developing written policies and procedures detailing for personnel the applicable state and federal laws;
  • And continuing to monitor and watch over service providers with access to sensitive data.

Unfortunately, data breaches are here to stay and so are government agencies’ attempts to develop guidance on how they should be handled. Plan sponsors and other fiduciaries need to be aware of these sensitive issues and put into place defensible policies and procedures. Such actions will not only help protect participant information but will also help limit exposure to liability for the plan and the fiduciaries to the myriad of laws aimed at these issues.

Supreme Court Looks for ACA Contraceptive Coverage Compromise for Religious Nonprofits

Less than one week after hearing oral arguments on seven consolidated cases in which non-profit organizations challenged the opt-out process for religious organizations opposing the Affordable Care Act’s contraceptive coverage mandate, the United States Supreme Court took the unusual action of ordering the lawyers on both sides to brief additional issues. The Court’s Order asked the attorneys to address whether contraceptives could be provided to employees of objecting religious nonprofits without requiring them to comply with the current ACA opt-out process. See Order, March 29, 2016. The opt-out process — outlined in final regulations — requires religious nonprofits (and for-profit companies with religious objections) to submit a form with their insurer or the government stating their objection to providing contraceptive coverage. See Treasury, Labor and Health and Human Services, Final Regulation, July 14, 2015.

The Order proposes an example of a compromise solution which would allow the nonprofit to inform their insurance company of their objection to providing contraception coverage as part of the process of contracting for the organization’s health insurance. Under this scenario, not only would the nonprofit have no obligation to provide or pay for contraceptive coverage (as is already permitted under the ACA), but they would not be required to provide any form of opt-out notice to the government or their employees. The Court further suggests that the insurance company then would be responsible for notifying the employees of the nonprofit that cost-free contraceptive coverage would be provided by the insurer and would be completely separate from the objecting nonprofit organization’s health plan.

If the Court is deadlocked in a 4 to 4 vote on the nonprofit contraceptive cases, the lower court rulings would stand and religious nonprofits would be required to comply with the opt-out notice requirements. The issuance of this highly unusual Order suggests that in the face of a potential tie vote on these cases, the Court is seeking an extra-judicial compromise that would permit religious nonprofits to avoid any type of notice requirement.

The Court established tight filing deadlines – with the first briefs due on April 12, and reply briefs due on April 20. No additional hearings on the cases have been scheduled.

Government Contractors: Some DOL/Wage and Hour Guidance on How to Coordinate the Fringe Benefit Requirements with the Affordable Care Act

We each had to hold our collective breath, but the Wage and Hour Division (WHD) of the Department of Labor (DOL) finally issued an All Agency Memorandum 220  (AAM) last week on March 30, 2016 to provide guidance to governmental agencies on how the Affordable Care Act’s (ACA) provisions regarding the employer shared responsibility provisions interact with the fringe benefit requirements of the McNamara-O’Hara Service Contract Act (SCA) and Davis-Bacon Act and the Davis-Bacon Related Acts (DBRA) (together DBA/DBRA).

What is particularly nice about the AAM is that there are no surprises in the WHD’s position.  We feel prescient!

What we have counseled and anticipated for our government contractor clients, as we awaited the WHD’s views on the intersection of these three laws, actually is the position of the WHD. We thus summarize the salient provisions of the AAM.

SCA, DBA/DBRA, and ACA are Separate Laws.

The AAM underscores that the SCA, DBA/DBRA, and ACA are separate federal laws.  It is why we at Jackson Lewis stress that a government contractor applicable large employer (ALE) should be mindful that each law is independent.  Thus, for example, just because an ALE satisfies SCA does not necessarily mean it satisfies ACA.  None of the guidance in the AAM contradicts this principle.

ACA Employer Shared Responsibility.

In general, the ACA’s employer shared responsibility provisions require an employer with an average of at least 50 full-time employees (including full-time equivalents) to provide its full-time employees (and their dependents) affordable health care offering minimum value.  If the ALE to whom this applies chooses not to offer such health care, then it may make a non-deductible payment (by way of an excise tax) to the Internal Revenue Service (IRS).

Employer Contribution to Health — Appropriate Credit to SCA and DBA/DBRA Fringe.

Under SCA and DBA/DBRA, an employer cannot take credit against the required prevailing wage benefits for those benefits required by federal, state, or local law (such as the federal obligation for an employer to contribute to Social Security).  The AAM provides long-awaited guidance that, because an ALE may offer ACA-compliant health care or, alternatively, may simply pay an excise tax to the IRS, the ACA does not require an employer to provide health care.  Consequently, WHD permits ALEs to credit contributions to a health plan towards SCA or DBA/DBRA fringe obligations.

Employer Payment of Excise Tax – Inappropriate Credit to SCA and DBRA Fringe Care.

If an ALE decides alternatively to forego providing health care by instead paying the excise tax to the IRS, the employer cannot credit the payment of such tax towards SCA or DBA/DBRA fringe obligations.  The AAM notes that such a payment does not confer benefits specifically on the workers and therefore is not a bona fide fringe benefit as that term is defined and interpreted under SCA and DBA/DBRA.

The Choice of Providing Cash or Benefits Remains the Employer’s.

Government contractors’ employees often wrongly believe they should have the choice in receiving cash in lieu of SCA or DBA/DBRA mandated benefits.  The AAM reconfirms that whether to provide employees with benefits or cash in lieu is the ALE’s option (so long as not otherwise required under a collective bargaining agreement):

Thus, for example, if an ALE covered by SCA/DBRA chooses to provide all employees with fringe benefits in the form of health coverage, it may do so even if some or all of its employees might prefer to receive. . . cash.  * * *  [A] contractor need not obtain an employee’s concurrence before contributing the [entire fringe to health care].

Bear in mind, however, that an employee’s concurrence (and a writing authorizing deductions) is needed for any benefit the employer intends to provide that requires an employee payment or premium from wages.  For example, if pays 100% of a medical plan benefit for an employee than the employer simply can provide the benefit (and take credit under SCA/DBA/DBRA).  On the other hand, if the employer pays only 80% of the medical plan benefit, then the employee must agree to the benefit and the employee portion deductions.



Those government contractor ALEs needing guidance on the how to comply with each of the SCA, DBA/DBRA, and ACA (and how to coordinate the intersection of those independent federal laws) should contact Jewell Lim Esposito or Leslie Stout-Tabackman at 703.483.8300.