Tax Reform and Other Actions Affect Benefits

During a webcast sponsored by Mercer, implications of the AARP v. EEOC lawsuit ruling were discussed.

In a recent Washington Update webcast, Mercer professionals focused on the influence of recent tax laws concerning health care, retirement plans, investments and executive rewards; new benefits reaping in the 2018 year; and what employers should know.


Given the updated corporate tax rate cut from 35% to the new 21%, employers should expect pension funds to be costlier, says Mercer’s Cheryl Hughes, principal in Mercer’s Washington Resource Group. Due to the decrease, an increase after-tax cost of contributions should be expected, yet a grace period through September 15 is anticipated for most, according to Mercer.


Relating to employer-shared responsibility under the Affordable Care Act (ACA), employers’ priorities include completing 2017 reporting by the extended March. 2 deadline, along with filing 1094/1095 reports with the Internal Revenue Service (IRS) by February 28 through paper form, or April 2 electronically.


In light of the 2017 AARP v. EEOC ruling in which the 30% wellness inventive for physical exams or health screenings will be ejected as of January 1, 2019, Mercer suggests employers prepare accordingly for the upcoming year. Certain considerations Mercer says includes eliminating biometric screenings and health risk assessments; finding other solutions to incite engagement with biometric screenings and health reimbursement arrangements (HRAs); and utilizing additional programs with incentives. Additionally, Mercer alerts employers that the Equal Employment Opportunity Commission (EEOC) could issue new rules, or even appeal the court ruling.


All Employee Retirement Income Security Act (ERISA)-covered plans offering disability benefits and distributions, along with all claims filed after April. 1 will be subject to the Department of Labor’s (DOL) final disability rules. Those plans who rely on a third-party administrator (TPA), according to Hughes, will not be subject to these rules. To prepare, Hughes says employers should establish which plans are subject to the new rule; review compliance policies with careers and/or TPAs; review and update summary plan descriptions (SPDs) or summaries of material modifications (SMMs); and go over claims, appeal procedures and notices.