labor lawAdivision of labor law center

Two recent changes to the law require employers to change their benefits for employees who serve in the Military Reserve.

The Heroes Earnings Assistance and Relief Tax Act or HEART Act requires employers to permit distributions from healthcare flexible spending accounts. The law prevents a “use-it-or-lose-it” policy for qualified reservists. Under the new law, reservists cannot lose unused funds, as can other employees under cafeteria benefits plans. Reservists must be permitted to withdraw the funds without penalty.

The new regulations went into effect in the middle of 2008, but many employers still struggle with compliance.

Under the HEART Act, benefit plan sponsors must amend cafeteria plans to allow distributions to qualified military reservists and notify all participants – not only qualified reservists – of the changes.

The law also permits active duty reservists to withdraw money (more…)

According to inside sources at the U.S. Department of Treasury, new federal regulations regarding cafeteria benefit plans are likely to be published within the next 30 to 60 days.

These regulations would be in addition to the regulations already published in the Federal Register. These regulations collect many of the principles and rules that the IRS or Internal Revenue Service has issued formally or informally over the past 20 years.

One aspect of the new regulations will not be finalized until President Barack Obama takes office. That is the controversial non-discrimination clause in the regulations. As soon as more information is available on that regulation, it will be published here.

One change in the new cafeteria benefits plan will allow employers to add COBRA benefits to the options available. This benefit is typically used by employees who become old enough for Medicare. The employee often uses cafeteria funds to pay for COBRA premiums, (more…)