Current Developments in Employee Benefits and Pensions (Part II)

By Deborah Walker, CPA; Hyuck Oh, J.D., CPA; Stephen LaGarde, J.D.




  • The IRS and Treasury, along with the Departments of Labor and Health and Human Services, issued proposed regulations on a uniform summary of benefits and coverage for health plans required under the Patient Protection and Affordable Care Act of 2010 (PPACA). The IRS also proposed regulations on premium tax credits to purchase coverage through state exchanges beginning in 2014.
  • The status of grandfathered plans under PPACA in a variety of situations was also addressed by the three federal agencies in two sets of frequently asked questions.
  • The Department of Labor issued a final rule delaying applicability of certain new fee disclosures required under the Employee Retirement Income Security Act of 1974.
  • The IRS extended the filing due date for 2009 and 2010 for the new Form 8955-SSA, Annual Registration Statement Identifying Separated Participants with Deferred Vested Benefits.
  • The IRS provided guidance on the implications of a new criterion of “readily tradable” employer securities for purposes of employee stock option plans.

This two-part article covers significant developments in late 2010 and 2011 in employee benefits, including executive compensation, health and welfare benefits, qualified plans, and employment taxes. Part I, in the November 2011 issue, covered updates on employment taxes and executive compensation. Part II focuses on guidance released under the Patient Protection and Affordable Care Act of 2010 (PPACA) 1 and changes to the rules for qualified plans.

PPACA Provisions Repealed

The “free choice” voucher program that was set to become effective in 2014 under PPACA was repealed. 2 Under the program, employers offering coverage would have been required to provide a voucher to certain employees, allowing the amount the employer would have paid toward the employee’s coverage under the employer’s plan to be used to purchase coverage through a state affordable insurance exchange (see below).

In addition, the expanded Form 1099 reporting requirement that had been included as a revenue-raising item in PPACA was repealed. 3 Beginning with payments made after December 31, 2011, reporting on Form 1099-MISC, Miscellaneous Income, would have been expanded to include amounts paid to corporations. 4

Proposed Regs. on Uniform Summary of Benefits and Coverage for Health Plans

Beginning March 23, 2012, group health plans and issuers will be required to provide a standardized summary of benefits and coverage (SBC) that describes the key features of the health coverage in a clear and uniform manner to enable an apples-to-apples comparison by the consumer—that is, in the case of group health plans, by the plan sponsor who selects the policy and the participants and beneficiaries who enroll. 5 A uniform glossary of terms commonly used in health insurance coverage must also be provided. 6

The proposed regulations 7 explain that the duty to provide the SBC and glossary applies across the board—to issuers in the group and individual markets as well as to self-insured group health plans, including those that are grandfathered. Applicants, enrollees, and policy or certificate holders are entitled to the new disclosure. The duty to provide the SBC falls on the issuer, although in the case of self-insured group health plans, the plan sponsor or designated plan administrator is obligated to provide the disclosure.

The SBC and glossary are to be provided free of charge. Generally, they can be provided in paper or electronic format. While the proposed regulations would allow the uniform glossary to be posted on an internet site, group health plans covered by the Employee Retirement Income Security Act of 1974 (ERISA) may provide the SBC electronically only if the Department of Labor’s (DOL) requirements for electronic disclosure are met. In certain counties (where 10% or more of the population is literate only in the same non-English language), the plans and issuers must provide interpretive services and written translations of the SBC in the non-English language on request. The English version of the SBC must also disclose the availability of the language services in the relevant language.

In the case of disclosure from the issuer to the plan, the SBC must be provided on application and in connection with a request for information (although there are provisions that avoid redundant disclosure). The disclosure must also be provided on renewal, and in the case of automatic renewal, it must be provided at least 30 days before the first day of the new policy year. In the case of disclosures from the issuer or plan to participants, the SBC must be provided in connection with the enrollment materials, within seven days after a request for special enrollment, when coverage is renewed (or 30 days before the first day of the new plan year if renewal is automatic), and within seven days of a request for the information. Notice must be given of material modifications that affect the SBC’s content at least 60 days before the change becomes effective. The SBC must be provided as a stand-alone document. However, comments are requested on whether and how the SBC might be coordinated with the summary plan description and other group health plan disclosure materials.

The plan or issuer must make available a uniform glossary within seven days of a request. This requirement can be satisfied by providing an internet address where consumers can obtain the glossary. The address must be either on the plan’s or issuer’s website or on a website of the DOL or Department of Health and Human Services (DHHS), and the plan or issuer must provide a paper copy on request. A draft uniform glossary has been proposed, and additional terms are expected to be added, but generally only on a prospective basis. A fine of up to $1,000 can be imposed on the issuer, plan sponsor, or designated plan administrator for each willful failure to provide the SBC or glossary. For this purpose, a separate fine may be imposed for each individual or entity for whom there is a failure to provide the information.

Premium Tax Credits to Purchase Coverage Through State Exchanges

The IRS proposed regulations on new Sec. 36B, which was added by PPACA to provide refundable “premium tax credits” to qualifying individuals who purchase health coverage through a state affordable insurance exchange beginning in 2014.

The proposed regulations 8 clarify who will be eligible for the tax credit, how the credit is computed, the availability of the credit to employees whose employers offer health coverage, and an individual’s obligation to reconcile the advance credit payments with the actual credit as eventually calculated on the individual’s federal income tax return. (Individuals who receive advance payments must file a federal income tax return even if they are not otherwise required to file.) The regulations are proposed to be effective for tax years ending after December 31, 2013.

Exchanges Will Make Advance Determination of Eligibility for the Credit

An individual’s eligibility for the tax credit is determined by the exchange at the time the individual enrolls for coverage through the exchange. This advance determination of eligibility is based on the individual’s income and other requirements. If the individual qualifies for the credit, an advance payment of the credit is made monthly to the issuer of the qualified health plan in which the individual enrolls. The individual is responsible for paying the difference between the advance payment and the premium amount for the plan actually chosen. An individual is not eligible for the credit for any month in which he or she is eligible for minimum essential coverage other than coverage offered in the individual market. Minimum essential health coverage includes government-sponsored coverage (e.g., Medicare, Medicaid, and TRICARE) and employer-sponsored health plans if that coverage is affordable and provides minimum value. Coverage is affordable if the employee’s required contribution does not exceed 9.5% of household income for the tax year. Minimum value is provided if the plan’s share of the total allowed costs of benefits provided under the plan is at least 60% of those costs.

Sec. 36B(c)(1) provides the credit to an applicable taxpayer, which is one:

  • Whose household income for the year is between 100% and 400% of the federal poverty line (FPL) (lower-income individuals will be eligible for assistance through Medicaid);
  • Who may not be claimed as a dependent of another taxpayer; and
  • Who files a joint return if married.

The refundable tax credit is for the difference between a capped percentage of the individual’s household income and the premium payment for a “benchmark plan” in the exchange. (However, the tax credit never exceeds the premium for the particular qualified health plan in which the taxpayer is actually enrolled.) The benchmark plan is the second-lowest-cost silver plan offered through the exchange. The fixed percentage of household income that sets the maximum amount the taxpayer will be required to pay for benchmark coverage is 2% for taxpayers with household income up to 133% of the FPL; it ranges from 3% to 9.5% for taxpayers with household incomes between 133% and 400% of the FPL. These percentages apply to 2014 and may be adjusted after that.

Employer Perspective

An employer that has on average at least 50 employees and offers health coverage to its full-time employees is subject to penalty under Sec. 4980H if at least one full-time employee is certified to receive a premium tax credit because the employer-sponsored coverage either does not provide minimum value or is unaffordable. The penalty under Sec. 4980H(b)(1) is $250 per month for each employee who declines enrollment in such an employer-sponsored plan, enrolls in a qualified health plan through an exchange, and is eligible for the premium tax credit.

Employees who fail to enroll in employer-sponsored coverage during the enrollment period (assuming that coverage is affordable and provides minimum value) are considered eligible for minimum essential coverage for the remainder of that plan year and would not be eligible for the tax credit. The preamble states that future regulations are expected to provide an affordability safe harbor for employers that seek to satisfy the affordability test. Employers had expressed concern that they would not know their employees’ household income to assure compliance with the 9.5% limit on employee contributions.

Under the expected safe harbor, an employer that offers its full-time employees the opportunity to enroll in eligible employer-sponsored coverage will not be subject to the Sec. 4980H(b)(1) penalty on account of an employee who receives a premium tax credit if the employee portion of the self-only premium for the employer’s lowest-cost plan that provides minimum value does not exceed 9.5% of the employee’s current W-2 wages from the employer. The preamble also explains that DHHS is expected to propose regulations later this year on how to determine the total allowed costs of benefits that are provided under a group health plan so as to determine whether the minimum value requirement is met. Transition relief is also being considered for the minimum value requirement for those employers that currently offer health care coverage.

Employee Perspective

Employees who obtain a premium credit to purchase coverage through the exchange must reconcile the actual credit (that is, the amount computed on the federal income tax return) with the amount of the advance payments that were received during the year. If the tax credit exceeds the advance payments, the excess can be paid as an income tax refund. If the tax credit is less than the advance payment, the excess payments are owed as an income tax liability. (However, repayment limitations apply for taxpayers with a household income under 400% of the FPL. 9 ) The proposed regulation provides guidance on the reconciliation process, including how to address changes in filing status during the year (e.g., marriage, divorce). It requires every taxpayer receiv ing advance credit payments to file a federal income tax return, even if he or she is not otherwise required to file.

More Clarification on Grandfathered Health Plans

The DOL, Treasury, and DHHS together released two sets of frequently asked questions (FAQs) to respond to various practical questions about PPACA’s application. Reaffirming the guidance released earlier in interim federal regulations, 10 the FAQs 11 in large part clarify how a plan retains grandfathered status. Specifically, the FAQs confirm:

Only six changes apply: Only the six changes identified in the regulation will cause a plan to lose its grandfathered status. Therefore, a plan in effect on March 23, 2010, will lose its grandfathered status only if, as measured from March 23, 2010, it:

  1. Eliminates all or substantially all benefits to diagnose or treat a particular condition;
  2. Increases a percentage cost-sharing requirement by any amount (e.g., raises an individual’s coinsurance requirement from 20% to 25%);
  3. Increases a deductible or out-of-pocket maximum by an amount that exceeds medical inflation plus 15 percentage points;
  4. Increases a copayment by an amount that exceeds medical inflation plus 15 percentage points (or, if greater, $5 plus medical inflation);
  5. Decreases an employer’s contribution rate toward the cost of coverage by more than 5 percentage points; or
  6. Imposes annual limits on the dollar value of all benefits below specified amounts.

Benefit-package-by-benefit-package basis: The grandfather analysis applies on the basis of benefit packages. Therefore, a plan that offers three benefit packages (e.g., a PPO, a POS arrangement, and an HMO) can have one package (e.g., the HMO) relinquish grandfathered status without the other benefit packages doing so.

Tier-by-tier basis: The employer contribution requirement applies on the basis of coverage tiers. If, without modifying the tiers in effect on March 23, 2010, a plan adds a new coverage tier to cover classes of individuals not previously covered (e.g., adds family coverage to a plan that previously provided only single coverage), the employer contribution to the new coverage tier would not affect the plan’s grandfathered status. However, if the plan’s grandfathered tiers are modified (e.g., from self-only and family coverage to self-only, self-plus-one, self-plus-two, and self-plus-three-or-more coverage), the employer contribution for the new tiers must be tested in comparison with the corresponding tier in effect on March 23, 2010.

In this example, if the employer contribution rate for family coverage on March 23, 2010, was 50%, the employer contribution rate for self-plus-one, self-plus-two, and self-plus-three-or-more would have to be within 5 percentage points of 50% (i.e., at least 45%). Plan sponsors also need to be aware that wellness plans that impose penalties (i.e., cost-sharing surcharges) may result in new tiers that would be subject to the restrictions on changed premium amounts for grandfathered plans.

Rescissions and the Act’s Effective Date for Individual Policies

The FAQs confirm that PPACA’s prohibition against rescissions (except in the case of employee fraud or misrepresentation) extends beyond circumstances involving medical history. For example, as provided in the regulations, an employer that mistakenly covers a part-time employee for some time (and the employee relies on the coverage) may prospectively cancel the coverage but may not retroactively cancel it unless there was some fraud or intentional misrepresentation by the employee. However, where a plan covers only active employees and those on COBRA 12 and an employee pays no premium for coverage after his or her termination of employment, the retroactive termination of the employee’s coverage back to the date of termination when the administrative records are reconciled would not be considered a rescission subject to PPACA. Similarly, if the plan is not notified of a divorce and the COBRA premium is not paid, the termination of coverage retroactive to the divorce date would not be considered a rescission under PPACA.

Deadline to Fully Comply with PPACA’s New Internal Claims Procedures

PPACA requires non-grandfathered group health plans (and health insurance issuers in the group and individual markets) to provide enhanced claims procedures for plan and policy years that begin on and after September 23, 2010. 13 Basically, the new procedures impose an enhanced version of existing ERISA claim review procedures and add an external, second-level review process. 14 The external review process is governed under state standards or, if no state standards apply, federal standards. 15

The PPACA enforcement agencies decided to extend the nonenforcement period they granted last year for certain of those new requirements. 16 Instead of July 1, 2011, calendar-year plans will now have until the plan year beginning on or after January 1, 2012, to comply with the identified requirements. Non-calendar-year plans may have to comply with certain aspects before then.

DOL Delays ERISA Fee Disclosures to Both Participants and Fiduciaries

The DOL issued a final rule regarding the applicability dates for the new ERISA fee disclosures. The effective date for the new disclosures required from service providers to the fiduciaries of existing ERISA pension plans under ERISA Section 408(b)(2) is now April 1, 2012. 17 In turn, the deadline for the disclosures required from fiduciaries of participant-directed individual account plans to participants under ERISA Section 404(a) is now May 31, 2012, or, if later, 60 days after the first day of the plan year beginning on or after November 1, 2011. 18

Three Months Longer to Provide Disclosures

The DOL previously proposed to extend the date for the fiduciary-level disclosures under ERISA Section 408(b)(2) from the original July 16, 2011, deadline to January 1, 2012, and to extend the deadline for the participant-level disclosures under ERISA Section 404(a) from the original 60 days to 120 days after the first day of the plan year beginning on or after November 1, 2011 (i.e., to allow calendar-year plans until April 30, 2012, to provide the new participant fee disclosures).

In the final rule, the DOL recognized the need for more time to comply and provided an extension for three months longer for the fiduciary-level disclosures than had been proposed. Because the proposed extension for the participant-level disclosures had already been 120 days, the DOL decided that only an additional 60 days beyond the fiduciary-level disclosure deadline was appropriate for providing the participant-level disclosures.

Quarterly Participant-Level Notices Also Postponed

Notably, the participant-level disclosures under ERISA Section 404(a) involve both an initial disclosure and quarterly disclosures. The final rule preserves the ordinary sequencing of those disclosures by preventing the first quarterly disclosure from being due before the initial disclosure. The first quarterly disclosure is now required by the 45th day after the end of the quarter in which the initial disclosure was required. According to an example in the preamble, the first quarterly disclosure would be required by August 14, 2012, which is 45 days after the end of the quarter (i.e., April 1–June 30) in which the initial disclosure was required.

Filing Date Extended for 2009 and 2010 Form 8955-SSA

The IRS announced an extension of the deadline to file Form 8955-SSA, Annual Registration Statement Identifying Separated Participants with Deferred Vested Benefits. 19 Under the announcement, to be confirmed in guidance to be issued in the near future, the filing deadline will be extended to the later of (1) January 17, 2012, or (2) the due date that generally applies for filing the Form 8955-SSA for 2010. This deadline applies to the filings for both the 2009 and 2010 plan years.

Sec. 6057(a) requires that administrators of plans subject to the vesting requirements annually report information regarding each plan participant who has a deferred vested benefit. For years prior to 2009, this reporting requirement was satisfied by attaching Schedule SSA to Form 5500, Annual Return/Report of Employee Benefit Plan. With the changes to Form 5500, especially the mandatory electronic filing requirement and the immediate posting of the form for public review, it was necessary to remove Schedule SSA from the 5500 filing and create a replacement, Form 8955-SSA, which will not be part of the electronic filing of Form 5500 and thus will not be publicized.

Form 8955-SSA is separate and distinct from Form 5500 and is filed with the IRS, not through the EFAST2 filing system. The 2009 form and instructions are now available, and the 2010 form is expected to be released shortly.

Supreme Court Decides CIGNA v. Amara

The Supreme Court vacated a district court decision that had ordered a plan sponsor to “reform” its cash balance plan to provide more generous benefits because of misleading statements in the summary plan description (SPD), and it remanded the case to the district court for it to determine if an appropriate remedy could be imposed under a different ERISA section. 20 The Court unanimously held that misrepresentations in an SPD do not operate to amend the terms of the plan for purposes of ERISA Section 502(a)(1)(B) and mapped out, under ERISA Section 502(a)(3), the basic methodology for obtaining a wide range of potential remedies for misleading language in an SPD.

Implications of CIGNA

Experts are continuing to examine the implications of the CIGNA decision. The Court clearly held that the terms of an SPD are not “terms of the plan,” and therefore ERISA Section 502(a)(1)(B) does not authorize a court to award benefits promised in an SPD as benefits due under the terms of the plan. The impact of the Court’s discussion on ERISA Section 502(a)(3) is fascinating and less straightforward. The analysis may well be “blatant dictum,” as it was characterized in the concurring opinion, but it reveals the sweeping range of remedies the Court views as potentially available under ERISA Section 502(a)(3). It seems to indicate that, where participants have been provided with a false or misleading SPD, a whole host of potential make-whole remedies, including monetary compensation for losses resulting from a breach of fiduciary duty, may be available upon a showing of actual harm—and “actual harm” need not rise to the level of the participant’s actually having relied on the false or misleading statements.

Guidance on Sec. 403(b) Plan Terminations

On February 22, 2011, the IRS issued Rev. Rul. 2011-7, 21 which addresses questions related to terminating Sec. 403(b) arrangements and the steps an employer can take to terminate an arrangement. The ruling describes four situations that can arise with a terminating Sec. 403(b) arrangement and the specific steps that can be taken to properly terminate the arrangement. The ruling also discusses the various tax implications for the participants. The IRS clarified the following points:

  • It is not always necessary to liquidate annuity contracts held under a Sec. 403(b) arrangement and distribute cash to effect a termination of the Sec. 403(b) arrangement. Termination of the arrangement can be accomplished by delivery of the annuity contract itself (in the case of an individual annuity contract) or a participation certificate (in the case of a group contract).
  • Delivery of a fully paid individual annuity contract or of an individual certificate evidencing fully paid benefits under a group annuity contract does not trigger gross income until amounts are actually paid to the participant or beneficiary out of the contract, as long as the contract maintains its status as a Sec. 403(b) contract.
  • The Sec. 403(b) status of any such contract is generally maintained if the contract thereafter adheres to the requirements of Sec. 403(b) that are in effect at the time of the delivery of the contract.
  • Any other distributions to cause plan termination are included in gross income, except to the extent the amount is rolled over to an individual retirement account (IRA) or other eligible retirement plan by a direct rollover or by a transfer made within 60 days after the distribution.

Readily Tradable Employer Securities for ESOPs

In May 2010, the IRS issued final rules 22 defining “readily tradable” employer securities for purposes of the diversification requirements that apply to certain defined contribution plans under Sec. 401(a)(35). In Notice 2011-19, 23 the IRS said the definition will also apply to the rules regarding employee stock ownership plans beginning in 2012. Plans that qualified for the special rule in Sec. 409(l)(2), which allows an employer’s common stock to qualify as employer securities if neither the employer nor any member of its controlled group has common stock that is readily tradable, will have until 2013 to comply if the new definition makes the employer ineligible for the special rule because the definition of “readily tradable” now includes securities that are traded on a foreign national securities exchange.

The new definition of “readily tradable” differs from the definition of “publicly traded” in that it does not include securities quoted on a system sponsored by a national securities association under Section 15A(b) of the Securities Exchange Act (e.g., securities quoted on the OTC Bulletin Board). It does, however, include securities traded on a foreign national securities exchange that is officially recognized, sanctioned, or supervised by a government authority and thus deemed to have a ready market under Securities and Exchange Commission rule 15c3-1.

Notice 2011-19 states that the new definition will apply for purposes of the:

  • Passthrough voting rights requirements of Sec. 401(a)(22), which require defined contribution plans (other than profit-sharing plans) to provide passthrough voting rights on certain matters if more than 10% of the plan assets are employer securities that are not readily tradable on an established market.
  • Independent appraisal requirements of Sec. 401(a)(28)(C), which require that all valuations for activities carried on by an employee stock ownership plan be performed by an independent appraiser if the employer securities are not readily tradable on an established securities market.
  • Put-option requirements of Sec. 409(h), which require that employee stock ownership plan participants (who have the right to receive a distribution in the form of employer securities) also be given the right, if the employer securities are not readily tradable on an established market, to require the employer to repurchase the employer securities under a fair valuation formula.
  • Definition of “employer securities” under Sec. 409(l), for purposes of tax credit employee stock ownership plans under Sec. 409(a).
  • Special tax treatment under Sec. 1042, which allows taxpayers to defer the recognition of income on the sale of qualified employer securities to an employee stock ownership plan.

Unless action is taken, plans with employer securities that are not readily tradable under the new definition (e.g., shares traded over the counter) may be subject to the passthrough voting, independent appraisal, and put-option requirements when the new definition becomes effective with the plan year beginning in 2012. However, an additional year is provided for plans that on March 14, 2011, are sponsored by an employer that (together with its controlled group members) has no common stock that is traded on a national securities exchange registered under Section 6 of the Securities Exchange Act, but the employer (or a member of the controlled group) has common stock traded on a foreign exchange, which now satisfies the definition of “readily tradable.” Those plans will have until the plan year beginning in 2013 to comply.

Expanded Eligibility for Participation in Group Trusts

A new IRS ruling allows the assets of custodial accounts, retirement income accounts, and government retiree benefit plans to be pooled in a group trust under Rev. Rul. 81-100, as modified. 24

Plans Currently Eligible to Participate

Rev. Rul. 81-100, as previously modified by Rev. Rul. 2004-67, 25 permits the assets of qualified plans under Sec. 401(a), IRAs under Sec. 408(e), and eligible government plans under Sec. 457(b) to be pooled in a group trust if certain requirements are satisfied. In that case, the group trust is exempt from taxation under Sec. 501(a) with regard to the funds belonging to participating trusts described in Sec. 401(a), under Sec. 408(e) with regard to the funds belonging to IRAs, and under Sec. 457(g) with regard to funds belonging to eligible government plan trusts or custodial accounts under Sec. 457(b).

The conditions require that the group trust (1) be adopted as part of each adopting employer’s plan or each adopting IRA; (2) expressly limit participation to the identified types of arrangements; (3) prohibit the corpus or income belonging to any participating entity from being used for or diverted to any purpose other than for the exclusive benefit of the employees or beneficiaries entitled to benefits under such entity; (4) prohibit the assignment by any adopting entity of its interest in the group trust; and (5) be created and maintained as a domestic trust in the United States.

Additional Eligible Plans and More Stringent Requirements

Subsequently, the IRS received inquiries regarding whether other types of benefit plans could invest in a group trust. The IRS responded with Rev. Rul. 2011-1, 26 which provided that on or after January 10, 2011, the assets of qualified plans under Sec. 401(a), IRAs, and eligible governmental plans under Sec. 457(b) may be pooled in a group trust under Rev. Rul. 81-100 with the assets of custodial accounts under Sec. 403(b)(7), retirement income accounts under Sec. 403(b)(9), and Sec. 401(a)(24) governmental plans without affecting the tax status of the group trust or each of the separate plans, as long as certain conditions are met. Eligible governmental plans for this purpose include retiree health arrangements as well as pension plans. (The ruling observed, however, that a custodial account under Sec. 403(b)(7) will generally be commingled in a group trust that solely contains the assets of other custodial accounts under Sec. 403(b)(7) because of the restrictions of Regs. Sec. 1.403(b)-8(d)(2)(i).) The ruling also imposes additional conditions on group trusts that, among other things, require the group trust instrument to provide for separate accounts to be maintained to reflect the interest of each participating entity in the group trust.

Model Amendments with Reliance

Two model amendments are provided: one for group trusts that do not currently satisfy the separate account requirement and one for group trusts that intend to permit other eligible entities to participate. The ruling states that, if the group trust instrument provides that amendments to the group trust will automatically pass through to the participating entities and the trustee of the group trust is otherwise entitled to rely on a favorable determination letter issued before January 10, 2011, regarding the eligibility of the group trust under Rev. Rul. 81-100, the trustee will not lose its right to rely on the letter merely because it adopts either of the model amendments on a word-for-word basis (or adopts an amendment that is substantially similar in all material respects).


This publication contains general information only and Deloitte is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional adviser. Deloitte, its affiliates, and related entities shall not be responsible for any loss sustained by any person who relies on this publication.


1 The Patient Protection and Affordable Care Act, P.L. 111-148, and the Health Care and Education Reconciliation Act of 2010, P.L. 111-152, signed into law by President Barack Obama on March 23 and 30, 2010, respectively. In this article, these two statutes are collectively referred to as PPACA.

2 Department of Defense and Full-Year Continuing Appropriations Act, 2011, P.L. 112-10, §1858, repealing PPACA §10108 and Sec. 36B(c)(2)(D).

3 Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011, P.L. 112-9, repealing Secs. 6041(i) and (j).

4 The act also repealed the Sec. 6041(h) requirement enacted by the Small Business Jobs Act of 2010, P.L. 111-240, that would have required individuals who receive rental income to issue Forms 1099 to service providers for payments of $600 or more beginning in 2011.

5 Public Health Service Act §2715, added by PPACA.

6 Id.

7 REG-140038-10.

8 REG-131491-10.

9 Sec. 36B(f)(2)(B).

10 T.D. 9489, effective June 14, 2010.

11 Department of Labor, “FAQs About the Affordable Care Act Implementation Part II.”

12 Consolidated Omnibus Budget Reconciliation Act of 1985, P.L. 99-272.

13 Public Health Service Act §2719.

14 T.D. 9494.

15 Id.

16 DOL Technical Release 2011-01.

17 76 Fed. Reg. 42539 (July 19, 2011).

18 Id.

19 IRS Employee Plans News (June 22, 2011).

20 CIGNA Corp. v. Amara, 131 S. Ct. 1866 (2011).

21 Rev. Rul. 2011-7, 2011-10 I.R.B. 534.

22 T.D. 9484.

23 Notice 2011-19, 2011-11 I.R.B. 550.

24 Rev. Rul. 81-100, 1981 C.B. 326.

25 Rev. Rul. 2004-67, 2004-2 C.B. 28.

26 Rev. Rul. 2011-1, 2011-2 I.R.B. 251.


Deborah Walker is a tax partner, Hyuck Oh is a tax senior, and Stephen LaGarde is a tax senior manager at Deloitte Tax LLP in Washington, DC. For more information about this article, contact Ms. Walker at
Tax Insider Articles


Business meal deductions after the TCJA

This article discusses the history of the deduction of business meal expenses and the new rules under the TCJA and the regulations and provides a framework for documenting and substantiating the deduction.


Quirks spurred by COVID-19 tax relief

This article discusses some procedural and administrative quirks that have emerged with the new tax legislative, regulatory, and procedural guidance related to COVID-19.