House and Senate Pass Different Tax Reform Bills
All eyes have been on the U.S. Congress’s massive tax reform bills, and in one month flat, both the House of Representatives and the Senate passed their own versions of the largest rewrite of our tax code in 30 years. While the two bills are largely aligned, they still differ in significant ways, so they’ll go to conference committee to reconcile them and have both chambers vote again. Nothing changes yet, but they do expect to pass a unified bill and have it signed into law by Christmas.
The Senate bill includes a repeal of the individual health insurance mandate in 2019, so that is one major item missing from the House bill. This appears to be the only direct impact to the Affordable Care Act (ACA) in either bill. Neither one repeals any other ACA mandates or taxes, which means:
- The §4980H large employer “play or pay” mandate, non-deductible penalties, and IRS reporting are left intact
- The health insurance providers fee and medical device tax will both resume in 2018
- The 0.9% additional Medicare tax withholding on wages exceeding $200,000 remains
- The 3.8% tax on net investment income remains
- The §4980I “Cadillac” tax is still scheduled for 2020
So far, both bills continue the concept that specified employer benefits (including health insurance) can generally be excluded from employees’ taxable income and deducted as business expenses. Previously, Congress had considered capping the tax exclusion and deductibility of benefits.
Some other potential benefit changes we’re keeping an eye on include:
- House bill removing qualified adoption assistance programs under §137 in 2018
- House bill removing favorable tax treatment of employer tuition reduction/assistance under §§ 117 and 127 in 2018 (but no impact to work-related education under §132(d))
- House bill removing dependent care assistance plans (DCAPs) under §129 in 2023
- Both bills removing the business deduction for qualified transportation benefits under §132(f)
- And other potential benefit changes, such as moving expenses, achievement awards, meals and entertainment, child care facilities, bicycle commuter, on-site gyms, FMLA credits to employers that pay at least 50% of normal wages for employees on protected leave, etc.
Disability Claims Appeal Rules Delayed 90 Days to April 1, 2018
ERISA plans which provide any benefit based on a determination of disability were supposed to be subject to new claim and appeal rules effective January 1, 2018, regardless of plan year. However, on November 24, 2017, the Department of Labor (DOL) delayed the final rule for 90 days until April 1, 2018. According to the DOL, concerns were raised that the final rule will impair workers’ access to disability benefits by driving up costs and increasing litigation. During the delay, the DOL will review the final rule to determine whether it is unnecessary, ineffective or imposes costs that exceed its benefits, consistent with President Donald Trump’s executive order on reducing regulatory burdens.
ERISA claims and appeals rules began in 1977 and were updated in 2000. The ACA updated them for health plans in 2010, and since disability claims remain one of the most litigated areas of employee benefits, the DOL had hoped to expand many of the principles of those ACA updates to disability claims as well. During this 90-day review, the DOL may decide to allow all or part of the final rule to take effect as written, propose a further extension, withdraw the final rule, or propose amendments.
EEOC Launches Online Portal for Employees to File Discrimination Charges
The Equal Employment Opportunity Commission (EEOC) Public Portal became available November 1, 2017. It is intended to provide another way for employees to initiate employment discrimination claims against their employer. The portal is also designed to allow the employee to facilitate EEOC interviews via web cams and teleconferencing, communicate, share documents, direct the EEOC to prepare a formal charge, check on the status, and digitally sign and file the formal charge prepared by the EEOC.
In fiscal year 2017, the EEOC responded to over 550,000 calls to its toll-free number and more than 140,600 inquiries in field offices. The EEOC hopes this portal can greatly enhance the process for those willing and able to utilize it. Any information a user enters in the EEOC Public Portal is password-protected and not available for viewing by employers or the general public. When a charge is filed against an employer, however, the EEOC will send a notice that directs the employer to a separate online system called the EEOC Respondent Portal. This portal, which the EEOC launched in January 2016, allows employers to view a filed charge, file a response, communicate and share documents.
When an individual visits the EEOC Public Portal and selects the first available option (“I want to file a complaint”), the portal displays general information and video tutorials about federal anti-discrimination laws. From there, the user is directed to answer a series of questions designed to screen out claims that do not meet legal requirements. For example, the portal asks about:
- The type and size of the employer, to determine whether federal anti-discrimination laws apply and whether the individual may use the portal to file a charge;
- When and in which state the alleged discrimination occurred, to determine whether the individual meets timeliness requirements for filing a charge; and
- The protected traits upon which the individual alleges the employer discriminated and additional details about the traits and claim, to determine which laws the alleged employment practices may have violated and whether they may actually violate those laws.
Based on the individual’s responses to these questions, the system will indicate either that:
- The EEOC is not the correct agency to assist the individual and that the individual may call or visit an EEOC office for more information; or
- The individual should schedule an interview with the EEOC and that he or she may do so within the portal.
The EEOC enforces the following federal laws (some of which apply only to employers with 15 or 20 employees, some of which apply to all employers):
- Title VII of the Civil Rights Act (which prohibits discrimination on the basis of race, color, religion, sex and national origin…new sexual harassment guidelines are expected to be published soon)
- Americans with Disabilities Act (which prohibits disability-based discrimination)
- Age Discrimination in Employment Act (which prohibits discrimination against employees age 40+)
- Genetic Information and Nondiscrimination Act (which prohibits genetic information discrimination)
- Equal Pay Act (which prohibits sex-based wage discrimination between men and women in the same establishment who perform jobs that require substantially equal skill, effort, and responsibility under similar working conditions)
IMA will continue to monitor regulator guidance and offer meaningful, practical, timely information.
This material should not be considered as a substitute for legal, tax and/or actuarial advice. Contact the appropriate professional counsel for such matters. These materials are not exhaustive and are subject to possible changes in applicable laws, rules, and regulations and their interpretations.