The Washington Report - 12/4/2017

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December 4, 2017

Legislative

Senate Approves Tax Reform Bill

On December 2, 2017, the Senate passed its tax reform bill (H.R. 1 – Tax Cuts and Jobs Act) with a 51–49 vote. Among other provisions, the bill eliminates the Affordable Care Act’s individual mandate penalty. The next step is for the House and Senate to reconcile differences, with hopes of sending a final tax reform bill to the President before the Christmas holiday. Please see the bulletin Senate Passes Tax Reform Bill Repealing ACA's Individual Insurance Mandate in the Publications section.

The full text of H.R. 1 is available here.

Health

DOL Delays Disability Claims and Appeals Regulations Until April 1, 2018

The Department of Labor (DOL) has issued final regulations delaying the effective date of the disability claims and appeals regulations until April 1, 2018.

The DOL released final regulations on disability claims and appeals on December 19, 2016, giving them an effective date of January 1, 2018. These updated regulations were designed to mirror the claims and appeals regulations for health care claims, as modified by the Affordable Care Act. On November 24, 2017, the DOL issued additional final regulations, this time delaying the effective date until April 1, 2018.

When they eventually become effective, the final disability regulations will modify the requirements relating to:

Disclosure requirements;
Claim file and internal protocols;
Ability to review and respond to new information;
Conflicts of interest;
Deemed exhaustion;
Rescissions; and
Communication requirements in non-English language.

The DOL news release is available here.

The final regulations are available here.

Retirement

DOL Extends Transition Period for Fiduciary Rule Exemptions to July 1, 2019

On November 27, 2017, the Department of Labor (DOL) announced an 18-month extension from January 1, 2018, to July 1, 2019, of the special Transition Period for the Fiduciary Rule’s Best Interest Contract Exemption and the Principal Transactions Exemption, and of the applicability of certain amendments to Prohibited Transaction Exemption 84-24 (PTEs). This follows public comment on a proposed extension that was published in August 2017. According to the DOL, the extension gives the agency the time necessary to consider public comments submitted pursuant to the DOL’s July Request for Information, and the criteria set forth in the Presidential Memorandum of February 3, 2017, including whether possible changes and alternatives to exemptions would be appropriate in light of the current comment record and potential input from, and action by, the Securities and Exchange Commission, state insurance commissioners, and other regulators.

The news release is available here.

The extension of the transition period for PTE amendments is available here.

Other HR/Employment

SSA Updates the 2018 Taxable Maximum Amount

On November 27, 2017, the Social Security Administration (SSA) announced an update to the 2018 taxable amount figure. In the original October 13, 2017, SSA announcement, the maximum amount of earnings subject to the Social Security tax (taxable maximum) was to increase to $128,700 in 2018, from $127,200 in 2017. The new amount for 2018, based on updated wage data reported to Social Security, is $128,400. Please see the updated Aon bulletin Update: Social Security Administration Releases 2018 Indexed Figures; Announces 2.0% Benefit Increase provided in the link below. Note: Other figures (such as the National Average Wage Index and the Formulas for Computing Benefits) were also updated and are reflected in the bulletin.

The November 27, 2017, news release updating the 2018 taxable maximum amount is available here.

The updated Aon bulletin on the 2018 SSA indexed numbers is available here.

Aon Publications

IRS Publishes Draft Form 1094/1095-C Instructions With No Significant Changes

The Internal Revenue Service (IRS) has released final versions of the Forms 1094/1095-C, the health insurance information forms employers and plans use to report insurance coverage under the Affordable Care Act, and updated the instructions for the forms. The IRS has made no significant changes to the forms or the instructions for the 2017 reporting year, which are due in early 2018.

The Aon bulletin is available here.

Now Available: Retirement Legal Consulting and Compliance Quarterly Update

The Retirement Legal Consulting & Compliance practice is pleased to present its Quarterly Update of recent legal developments for the fourth quarter of 2017. In this issue you will find the following articles:

Cybersecurity and the Role of Plan Fiduciaries
Game Changer—Pension Funding and Tax Reform
IRS Provides Model Language for Partial Lump Sums
Increased DOL Audits Target Pension Plan Payment Procedures
Considerations in Using General Fee Benchmarking Data
2018 Limits for Benefit Plans
Plan Sponsors May Use Forfeitures for Plan Corrections
The Calm After the Storms—IRS, DOL, and PBGC Relief
Quarterly Roundup of Other Developments
Recent Publications

The fourth quarter 2017 issue of the Retirement Legal Consulting & Compliance Quarterly Update is available here.

Update: 2018 Limits for Benefit Plans

This bulletin has been updated.
Each year, the U.S. government adjusts the limits for retirement plans, Social Security, Medicare, and other benefit programs to reflect price and wage inflation, and changes in the law. As a result, employee benefit plans must be adapted annually to accommodate the new limits. All of the numbers in this report are official unless otherwise indicated.

The revised 2018 Limits for Benefit Plans is available here.

Senate Passes Tax Reform Bill Repealing ACA's Individual Insurance Mandate

On December 2, 2017, by a vote of 51–49, the U.S. Senate passed its version of tax reform, entitled the “Tax Cuts and Jobs Act.” The Senate’s version now heads either to the House of Representatives for an up-or-down vote or, more likely, to a House–Senate conference committee that will iron out differences with the House’s version of tax reform.

If enacted into law in its current forms, neither the Senate nor House bill would change the basic income tax treatment of most employer-provided health benefits under the Internal Revenue Code and the Affordable Care Act (ACA). However, the Senate version of tax reform would repeal the ACA’s penalty on individual taxpayers who do not maintain health insurance coverage during the year. In contrast, the House’s version of tax reform preserves the individual mandate penalty but changes the income tax treatment of certain medical expenses and some employer-provided welfare benefit programs.