The Internal Revenue Service has given a last-minute holiday gift to sponsors of insured group health plans.  It announced delayed enforcement for the new nondiscrimination provisions applicable to insured group health plans under the Patient Protection and Affordable Care Act of 2010 (as amended by the Health Care and Education Reconciliation Act of 2010; together the “Health Care Reform Law”).

The Health Care Reform Law requires non-grandfathered insured group health plans to satisfy the requirements of Internal Revenue Code Section 105(h)(2), previously applicable only to self-funded group health plans.  Thus, the new law effectively prohibits non-grandfathered insured group health plans from favoring highly compensated individuals with respect to eligibility or benefits.  It further provides that rules “similar to” Code Section 105(h)(3), (4), and (8) would apply, but left it to the enforcement agencies (including IRS) to come up with  those rules.  Meanwhile, the Health Care Reform Law would require sponsors of noncompliant plans to pay a hefty excise tax ($100 per day per affected individual) beginning, for most, with the 2011 plan year.  This seemingly sounded a death knell for many executive medical arrangements and sent employers in search of alternative ways to meet contractual obligations and otherwise continue to provide desired benefits without running afoul of the new law. 

The IRS issued Notice 2001-11 on December 22, 2010, which provides relief from the excise tax applicable to the nondiscrimination provision.  As an added token of holiday spirit, the IRS suggested that the regulations, once issued, would not apply until the plan year beginning some period of time thereafter.

In the same notice, the IRS requested additional public comments on the application of the nondiscrimination rules to insured group health plans.  Comments must be submitted not later than March 11, 2011.  Regulations, therefore, are not expected until April or later.

Jackson Lewis attorneys are available to answer inquiries regarding this and other workplace developments.

Tags: Employee Health & Welfare Plans, Health Care Reform, Health Care Reform Legislation, Medical Plans
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Photo of Joseph J. Lazzarotti Joseph J. Lazzarotti

Joseph J. Lazzarotti is a principal in the Berkeley Heights, New Jersey, office of Jackson Lewis P.C. He founded and currently co-leads the firm’s Privacy, Data and Cybersecurity practice group, edits the firm’s Privacy Blog, and is a Certified Information Privacy Professional (CIPP)…

Joseph J. Lazzarotti is a principal in the Berkeley Heights, New Jersey, office of Jackson Lewis P.C. He founded and currently co-leads the firm’s Privacy, Data and Cybersecurity practice group, edits the firm’s Privacy Blog, and is a Certified Information Privacy Professional (CIPP) with the International Association of Privacy Professionals. Trained as an employee benefits lawyer, focused on compliance, Joe also is a member of the firm’s Employee Benefits practice group.

In short, his practice focuses on the matrix of laws governing the privacy, security, and management of data, as well as the impact and regulation of social media. He also counsels companies on compliance, fiduciary, taxation, and administrative matters with respect to employee benefit plans.

Privacy and cybersecurity experience – Joe counsels multinational, national and regional companies in all industries on the broad array of laws, regulations, best practices, and preventive safeguards. The following are examples of areas of focus in his practice:

  • Advising health care providers, business associates, and group health plan sponsors concerning HIPAA/HITECH compliance, including risk assessments, policies and procedures, incident response plan development, vendor assessment and management programs, and training.
  • Coached hundreds of companies through the investigation, remediation, notification, and overall response to data breaches of all kinds – PHI, PII, payment card, etc.
  • Helping organizations address questions about the application, implementation, and overall compliance with European Union’s General Data Protection Regulation (GDPR) and, in particular, its implications in the U.S., together with preparing for the California Consumer Privacy Act.
  • Working with organizations to develop and implement video, audio, and data-driven monitoring and surveillance programs. For instance, in the transportation and related industries, Joe has worked with numerous clients on fleet management programs involving the use of telematics, dash-cams, event data recorders (EDR), and related technologies. He also has advised many clients in the use of biometrics including with regard to consent, data security, and retention issues under BIPA and other laws.
  • Assisting clients with growing state data security mandates to safeguard personal information, including steering clients through detailed risk assessments and converting those assessments into practical “best practice” risk management solutions, including written information security programs (WISPs). Related work includes compliance advice concerning FTC Act, Regulation S-P, GLBA, and New York Reg. 500.
  • Advising clients about best practices for electronic communications, including in social media, as well as when communicating under a “bring your own device” (BYOD) or “company owned personally enabled device” (COPE) environment.
  • Conducting various levels of privacy and data security training for executives and employees
  • Supports organizations through mergers, acquisitions, and reorganizations with regard to the handling of employee and customer data, and the safeguarding of that data during the transaction.
  • Representing organizations in matters involving inquiries into privacy and data security compliance before federal and state agencies including the HHS Office of Civil Rights, Federal Trade Commission, and various state Attorneys General.

Benefits counseling experience – Joe’s work in the benefits counseling area covers many areas of employee benefits law. Below are some examples of that work:

  • As part of the Firm’s Health Care Reform Team, he advises employers and plan sponsors regarding the establishment, administration and operation of fully insured and self-funded health and welfare plans to comply with ERISA, IRC, ACA/PPACA, HIPAA, COBRA, ADA, GINA, and other related laws.
  • Guiding clients through the selection of plan service providers, along with negotiating service agreements with vendors to address plan compliance and operations, while leveraging data security experience to ensure plan data is safeguarded.
  • Counsels plan sponsors on day-to-day compliance and administrative issues affecting plans.
  • Assists in the design and drafting of benefit plan documents, including severance and fringe benefit plans.
  • Advises plan sponsors concerning employee benefit plan operation, administration and correcting errors in operation.

Joe speaks and writes regularly on current employee benefits and data privacy and cybersecurity topics and his work has been published in leading business and legal journals and media outlets, such as The Washington Post, Inside Counsel, Bloomberg, The National Law Journal, Financial Times, Business Insurance, HR Magazine and NPR, as well as the ABA Journal, The American Lawyer, Law360, Bender’s Labor and Employment Bulletin, the Australian Privacy Law Bulletin and the Privacy, and Data Security Law Journal.

Joe served as a judicial law clerk for the Honorable Laura Denvir Stith on the Missouri Court of Appeals.

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Photo of Monique Warren Monique Warren

Monique Warren is a principal in the White Plains, New York, office of Jackson Lewis P.C. She counsels employers on employee benefits compliance and administrative matters, represents employers to government agencies, and prepares plan documents and related employee communications.

Monique’s expertise includes health…

Monique Warren is a principal in the White Plains, New York, office of Jackson Lewis P.C. She counsels employers on employee benefits compliance and administrative matters, represents employers to government agencies, and prepares plan documents and related employee communications.

Monique’s expertise includes health and welfare plans as well as retirement plans. She has extensive experience helping plan sponsors navigate COBRA, HIPAA, and other ERISA and Internal Revenue Code provisions and correct compliance issues. A significant part of her practice currently focuses on defending employers in federal investigations of their group health plans as well as assisting government contractors with fulfilling fringe benefit obligations. She also has extensive experience helping retirement plan sponsors comply with ERISA fiduciary requirements and the Code’s qualification requirements and correcting plan errors under the Department of Labor’s and Internal Revenue Service’s voluntary correction programs.

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