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ACA repeal, Washington state paid leave and HSA fiduciaries

By Higginbotham on August 02 , 2017

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Senate Rejects Efforts to Repeal the ACA

In the early morning hours of July 28, 2017, members of the U.S. Senate voted 49-51 to reject a “skinny” version of a bill to repeal and replace the Affordable Care Act (ACA) called the Health Care Freedom Act (HCFA).

This was the final vote of the Senate’s 20-hour debate and effectively ends the Republicans’ current efforts to repeal and replace the ACA. However, the skinny repeal bill may be reintroduced at some point in the future.

Impact on Employers

Because the Senate was unable to pass any ACA repeal or replacement bill, the ACA remains current law, and employers must continue to comply with all applicable ACA provisions.



State of Washington Enacts Paid Family and Medical Leave

On July 5, 2017, Governor of Washington State Jay Inslee signed Senate Bill 5975 into law, providing paid family and medical leave benefits to eligible workers beginning January 1, 2020. Key aspects of this leave program, which will be administered by a state agency, are:  

  • Virtually all Washington employers are covered under the program.
  • Employees are eligible for benefits after 820 hours of employment.
  • Benefits are paid out at 90 percent of an employee’s average weekly wage, capped at $1,000 per week.

ACTION STEPS

Employers with employees in Washington should review existing paid time off policies to determine whether they may opt out of the new law. Employers should also review other company policies, such as attendance policies, to determine whether they need updating. Employers will also need to understand how the new law interacts with other laws, including the statewide paid sick leave law that goes into effect January 1, 2018 and the federal Family and Medical Leave Act (FMLA).

The Washington Employment Security Department will process applications for paid family and medical leave benefits as well as administer payments under the program. The department is expected to issue guidance on the state’s new paid family and medical leave program in the future that will likely provide employers with clarification on their responsibilities.



New Fiduciary Rule Takes Effect for HSAs

In April 2016, the Department of Labor (DOL) released a final rule that expands who is considered a “fiduciary” when providing investment advice to retirement plans and their participants. The final rule’s guidance also applies to individual retirement accounts (IRAs) and health savings accounts (HSAs). After being delayed, the final rule became effective on June 9, 2017.

Under the rule, a person is a fiduciary if the person receives compensation for providing investment advice with the understanding that it is based on the particular needs of the person being advised or that it is directed at a specific plan sponsor, plan participant or account owner. Fiduciary status is significant because fiduciaries are required to act in their clients’ best interests and may be held personally liable in the event of a fiduciary breach.

Most employers offering HSA accounts to their employees are merely acting as a payroll conduit and generally will not cross the line from providing general investment education to investment advice (i.e. they are simply recommending employees put funds in an HSA for tax savings, to offset medical expenses, etc. and not expressly recommending it as an investment vehicle nor recommending investments available in their individual HSA plan). Nor are most employers benefiting in some way from the advice being given to their employees, such as reduced fees for employees who actually invest their HSA balances.

Temporary Enforcement Policy:

On May 22, 2017, the DOL announced a temporary enforcement policy with respect to the final rule. Until January 1, 2018, the DOL will not pursue claims against fiduciaries who are working diligently and in good faith to comply with the fiduciary rule and its prohibited transaction exemptions, or treat them as being in violation of the final rule and its exemptions.

The DOL has also stated that its general approach to implementation of the final rule will emphasize assisting (rather than penalizing) plans, plan fiduciaries, financial institutions and others who are working diligently and in good faith to understand and comply with the final rule and its exemptions.

ACTION STEPS

Individuals who provide advice on HSAs may be considered fiduciaries if their communications meet the level of investment recommendations covered by the final rule. Employers should review their arrangements with HSA service providers to determine if the providers will qualify as fiduciaries under the new rule. The DOL’s webpage on the final rule includes links to frequently asked questions and fact sheets that describe the requirements.

Source: Zywave

 

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Tags: Health Care Reform, Employee Benefits

  
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