Aon Washington Report

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October 9, 2017

Legislative

House Passes Budget Bill

On October 5, 2017, the House passed its fiscal 2018 budget (H. Con. Res. 71) with a 219–206 vote. The Senate now needs to bring its own budget bill to the floor for consideration. After Senate passage, the two bills must be reconciled during negotiation. Currently, the federal government is being funded with temporary stopgap legislation which expires December 8, 2017.

The full text of H. Con Res. 71 is available here.

Health

Departments Issue Interim Final Regulations on ACA Contraceptive Coverage

On October 6, 2017, the Departments of Treasury, Labor, and Health and Human Services (the Departments) issued companion interim final regulations that would allow employers to claim religious or moral objection to the contraceptive coverage mandate included in the Affordable Care Act (ACA). ACA-compliant health insurance plans are required to cover “preventive services,” a term defined through regulation. Under existing regulatory requirements, employers, unless they qualify for an exemption, must offer health insurance that covers all FDA-approved contraception, which includes medications and devices that may act as abortifacients as well as sterilization procedures. Under the first of two companion regulations released, entities that have “sincerely held religious beliefs against providing such services” would no longer be required to do so. The second set of regulations applies the same protections to organizations and small businesses that have objections on the basis of moral conviction which is not based on any particular religious belief.

The interim final regulations became effective on October 6, 2017. Comments are due by December 5, 2017.

For additional information, please see Departments Expand Exemption From ACA Contraceptive Coverage Mandate, found in the Aon Publications section of this report.

The interim final regulations on moral exemptions are temporarily available here.
(The interim final regulations will be published in the October 13, 2017, Federal Register.)

The interim final regulations on religious exemptions are temporarily available here.
(The interim final regulations will be published in the October 13, 2017, Federal Register.)

The news release is available here.

IRS Issues Guidance on Increased Fee for Patient-Centered Outcomes Research Institute

On October 6, 2017, the Internal Revenue Service (IRS) issued Notice 2017-61, which provides the adjusted applicable dollar amount to be multiplied by the average number of covered lives for purposes of the fee imposed by Sections 4375 and 4376 of the Internal Revenue Code for policy years and plan years that end on or after October 1, 2017, and before October 1, 2018. The new fee of $2.39 became effective on October 1, 2017. The fee helps fund the Patient-Centered Outcomes Research Institute, established by the ACA to fund research that can assist patients and caregivers to make better-informed decisions about healthcare choices.

IRS Notice 2017-61 is available here.

Retirement

IRS Publishes Final Mortality Table Regulations, Issues Additional Guidance

On October 3, 2017, the Internal Revenue Service (IRS) published final regulations prescribing mortality tables to be used by most defined benefit pension plans. The tables specify the probability of survival year-by-year for an individual based on age, gender, and other factors. This information is used (together with other actuarial assumptions) to determine the minimum funding requirements and PBGC premiums for a defined benefit plan. The mortality tables are also relevant in determining the minimum required amount of a lump-sum distribution from such a plan. In addition, the regulations update the requirements for a plan sponsor to obtain IRS approval to use plan-specific mortality tables for minimum funding and PBGC premium purposes rather than the generally applicable mortality tables. These regulations are generally effective for plan years beginning in 2018, but provide an option for plan sponsors to defer the application of the new mortality tables until 2019 for minimum funding and PBGC premiums.

On the same day, the IRS also issued two pieces of guidance (IRS Notice 2017-60 and IRS Revenue Procedure 2017-55) related to the final regulations.

IRS Notice 2017-60 sets forth: (1) the mortality table to be used to determine minimum lump sums for distributions during stability periods beginning in the 2018 calendar year; and (2) updated mortality tables for 2018 for minimum funding purposes, determined under prior regulations, which a plan sponsor must use if they elect to defer the application of the new funding mortality tables until 2019.
IRS Revenue Procedure 2017-55 provides the procedure by which a plan sponsor must file for IRS approval in order to use substitute mortality tables under the new final regulations. The provisions of the final regulations regarding substitute mortality tables are generally consistent with the proposed regulations, but allow for some additional flexibility such as the ability to aggregate genders in determining credibility adjustments to the standard tables.

The final regulations are available here.

IRS Notice 2017-60 is available here.

IRS Revenue Procedure 2017-55 is available here.

Disaster Relief

IRS Releases Guidance on Treatment of Leave-Based Donation Programs

On October 6, 2017, the Internal Revenue Service (IRS) released Notice 2017-62, which provides guidance for income and employment tax purposes on the treatment of cash payments made by employers under leave-based donation programs for the relief of victims of Hurricane and Tropical Storm Maria.

IRS Notice 2017-62 is available here.

Aon Publications

Departments Expand Exemption From ACA Contraceptive Coverage Mandate

On October 6, 2017, the Departments of Treasury, Labor, and Health and Human Services (the Departments) issued regulations expanding the exemption from including coverage of contraceptive services in the health insurance plans of employers and insurers with moral or religious objections to such coverage. The regulations were issued as interim final rules and take effect immediately.

The new regulations replace previous Affordable Care Act (ACA) regulations that attempted to accommodate the objections of religious employers to covering contraceptive services. The previous regulations were the subject of several lawsuits that ultimately ended up in the Supreme Court.