Can Retirees Use HSAs?

Yes – and no.  A Health Savings Account (HSA) is like an IRA but for the payment of medical expenses instead of retirement income. HSA contributions are not taxed, and like IRA accounts, they belong to the employee. No matter how many times an employee changes jobs, the money in the HSA goes with the employee. Ideally, HSA contributions are invested rather than spent for immediate needs.  Over time, these investments can increase and after retirement will be available for the payment of eligible medical expenses.

In order to qualify for an HSA offered by an employer, the employee must also be covered under a High Deductible Health Plan (HDHP). The employee cannot also be covered under another health plan that provides coverage for any benefit that is covered under the HDHP.  For this reason, employees cannot participate in a Health Flexible Spending Accounts (Health FSAs) or Health Reimbursement Arrangements (HRAs) while they are contributing to an HSA, unless the Health FSA or HRA does not provide coverage included in the HDHP. These plans are called limited purpose FSAs/HRAs.

So what are the rules for retirees?  First, anyone entitled to Medicare cannot at the same time make contributions to an HSA.  Entitlement to Medicare is different from eligibility. Persons 65 or older are eligible for Medicare, but unless an individual actually enrolls in Medicare, the prohibition against maintaining a separate HSA does not apply.  Be careful!  Any person 65 or older who enrolls in Social Security is automatically enrolled in Medicare with an effective date that is retroactive for the six months preceding the Social Security enrollment.  As a result, in order to continue contributing to an HSA, an individual must not only decline Medicare but also defer Social Security.
 
Next, even though a Medicare-entitled individual cannot open or contribute to an HSA, funds in an existing HSA can still be used on a tax free basis to pay eligible medical expenses so long as the expense is covered by insurance or another arrangement. Finally, because an HSA can be used to pay the qualified medical expenses of a spouse or tax dependent, an employed spouse can pay the eligible medical expenses of the retired spouse.

In sum, although retirees can’t open or contribute to an HSA, there is enough flexibility in the rules to enable retirees to take advantage of the funds that have been set aside in these non-taxable accounts.

NLRB General Counsel Issues New Guidance on Employee Handbooks

The NLRB’s Office of the General Counsel has issued a report that provides new guidance on employee handbooks.  The report, which is available here, sets out the most recent views of the General Counsel on what he describes as an evolving area of labor law.  According to the General Counsel, Richard Griffin, Jr., the goal of the report is to help employers “to review their handbooks and other rules, and conform them, if necessary, to ensure that they are lawful.”

The report points out that a policy in a handbook can run afoul of federal labor law if it could reasonably be construed by employees as infringing on their protected rights.  This is true even if the policy has never actually been enforced.  As a result, policies that are “overbroad” and that have potential “chilling effects” on the statutory rights of employees present a real risk to employers – even where an employer has not applied a policy in a discriminatory manner or intended a policy to have a chilling effect.

Much like the General Counsel’s previous reports on social media, this report highlights a number of handbook rules that the Board has found to be unlawful.  More importantly from a guidance perspective, the report explains the rationale behind the Board’s findings and provides examples of rules that are compliant with the law.  The first part of the report focuses on handbook rules that are most frequently brought to the Board’s attention, including rules on: (1) confidentiality; (2) employee conduct toward management, co-workers, and third-parties; (3) employee use of company logos, trademarks, and copyrights; and (4) conflict-of-interest rules.  In the second part of the report, the General Counsel presents a more in-depth study of the Board’s recent settlement with Wendy’s International, LLC, which resulted in a number of modifications to Wendy’s handbook rules.

The implicit message to employers from the General Counsel’s report is that the Board’s scrutiny of overbroad workplace rules is not going away anytime soon.  At the same time, the Board appears to be telegraphing a desire to be transparent – a fact from which employers can take at least some comfort.

Governor LePage Pushes Right to Work Legislation

Governor Paul LePage is aggressively pushing LD 489, An Act to Ensure the Right to Work without Payment of Dues or Fees to a Labor Union as a Condition of Employment.  Current law allows public employees to opt out of joining a union, but still requires the employees to pay the pro-rata share of dues.  The law specifically prohibits a public employee from being required to join or pay dues to a union.  A violation of the law would be a Class D crime and allow injunctive relief and recovery of attorneys’ fees and costs.  The Maine AFL-CIO, in its press conference on March 12, 2015, stated its strong opposition to the bill and stated that “Despite its misleading name, the stated law does not give anyone any rights or any work”.  The express concern is that right to work laws “allow workers to contribute nothing and still get all the benefits of union membership.”

This issue is national in scope and was recently enacted in Wisconsin.  At today's press conference, the AFL-CIO suggested protesting Wisconsin Governor Scott Walker’s upcoming visit to Maine. We will track the progress of this legislation as it proceeds through the Legislature.

Revised Definition of "Spouse" Under FMLA Incorporates Same-Sex Marriages

The Department of Labor has issued a final rule that amends its FMLA regulations and provides employees in same-sex marriages the right to take leave to care for a spouse with a serious medical condition.  The new rule, published on February 25, 2015, comes on the heels of the Supreme Court’s decision in United States v. Windsor, which declared as unconstitutional a provision of the Defense of Marriage Act limiting the definition of “spouse” to opposite-sex marriages.

The most significant aspect of the new rule is that spousal status is now determined based on the place where an employee entered into marriage, or the “place of celebration.”  Previously, the DOL had determined spousal status based on a “place of residence” rule, which effectively deprived same-sex employees from qualifying as a spouse if they lived in a jurisdiction where same-sex marriages were not recognized.  Under the new rule, and according to the DOL, the “place of celebration” rule will allow all legally married couples to have uniform rights regardless of where they live.

The DOL’s comments to the new rule suggest that employers should see a decrease in administrative burdens under the new rule.  To the extent this is true, it will probably be most apparent for multi-state employers, who will not have to “consider the employee’s state of residence and the laws of that State in determining the employee’s eligibility for FMLA leave.”

IMMIGRATION UPDATE: A Small Step in the Right Direction

Until recently, the U.S. Citizenship and Immigration Services (USCIS) did not allow the dependent spouses of H-1B (specialty occupation) visa holders to engage in any form of employment while living in the U.S.  H-4 visa holders were unable to obtain a Social Security number and were quite limited in the activities they could engage in over the course of their stay in the U.S.  By contrast, spouses of L-1 (intracompany transferee) visa holders have been allowed to obtain employment authorization from USCIS and work in the U.S. without limitation for many years.

As the result of new regulations proposed last year, effective May 26, 2015, USCIS will begin granting employment authorization to certain H-4 spouses of H-1B visa holders.   According to USCIS, this new employment eligibility is an important element of President Obama’s immigration executive actions and one of several initiatives underway to “modernize, improve and clarify visa programs to grow the U.S. economy and create jobs.”

Not all H-4 visa holders will be eligible to work, however.   Employment authorization will be limited to H-4 spouses – not dependent children -- of H-1B nonimmigrants who are the principal beneficiaries of an approved Immigrant Petition for Alien Worker (Form I-140) or who have been granted H-1B status under the American Competitiveness in the 21st Century Act of 2000 (AC21), which permits H-1B nonimmigrants seeking lawful permanent residence to work and remain in the U.S. beyond the six-year limit on their H-1B visa status.

To commence the process, eligible H-4 visa holders must file USCIS Form I-765, Application for Employment Authorization, with the required supporting evidence and the $380 filing fee. USCIS will begin accepting applications on May 26, 2015.  Upon approval of the Form I-765 and issuance of the EAD, the H-4 spouse may begin working in the U.S. in any capacity, for any employer.  These new H-4 EADs will have a duration of no more than three (3) years.

When they commence employment, these H-4 visa holders must rely on their EADs to satisfy the I-9 employment eligibility verification process.  Although employers need to closely track the expiration dates that appear on the corresponding EADs provided by their new hires to remain in compliance with I-9 obligations, it is the H-4 visa holder’s responsibility to ensure that they maintain their employment authorization without interruption.

Permissible Discrimination in Health Benefits

The intense regulation of health care benefits, especially with respect to the Affordable Care Act, has created much confusion among employers. As a result, many employers do not understand that they may offer different levels of coverage to different categories of employees.  Here are the rules.

First, employers cannot base eligibility for health benefits on the existence of a “health factor” that affects an employee or the employee’s dependents.  A health factor includes:

• Health status
• Medical condition, including both mental and physical illnesses
• Claims experience
• Receipt of health care
• Medical history
• Genetic information
• Evidence of insurability
• Disability, and
• Any other health status – related factor established by regulation

Thus, employers cannot refuse to offer health benefits because an employee or the employee’s dependents are, for example, diabetic, have a heart condition, have a history of mental illness, are genetically predisposed to disease, or are disabled.

This does not mean that an employer cannot make distinctions and offer different types of coverage to different categories of similarly situated employees. These distinctions must, however, be based on employment-based classifications that have been established in connection with the employer’s usual business practices.  If the employer classifies employees for reasons other than eligibility for health coverage ― for example, eligibility for non-health benefits or other terms of employment ― offering different levels of coverage is allowed so long as they are made in good faith and without the underlying intent to avoid offering coverage for health reasons. Permissible classifications include:

• Full-time versus part-time status
• Different geographic location
• Membership in a collective bargaining unit
• Date of hire
• Length of service
• Current employee versus former employee status, and
• Different occupations

Employers may, and often do, provide different benefits to salaried versus hourly employees, to skilled and unskilled workers, to employees at different work locations, and to new hires.  So long as the distinction created is not directed at individuals or is seen as a way to avoid the restrictions on discriminating on the basis of a health factor, employers have considerable leeway in providing different health benefits to differently situated employees.

White House Announces New Disability Resource Guide

A new resource guide for employers to use in working with individuals with disabilities is now available.  The new guide, available here and called Recruiting, Hiring, Retaining and Promoting People with Disabilities, was announced by the White House last week and is the product of a cross-agency initiative to increase equal employment opportunities for individuals with disabilities. Although authored primarily by the Equal Employment Opportunity Commission, the guide includes participation from the Departments of Education, Labor, Health and Human Services, Justice, and others.

As a quick reference tool, employers will likely find this guide helpful.  It provides answers to several frequently asked questions and suggests best practices for employers to use when hiring individuals with disabilities and maintaining those individuals over the course of the employment relationship. Perhaps most useful, however, the guide includes embedded links to other materials with additional information, including agency-specific materials produced by the EEOC and Department of Labor.

In announcing the new guide, the White House noted that 56.7 million Americans, or 19% of the American population, live with a disability.  Given the expanded definition of disability under the Americans with Disabilities Act Amendments Act of 2008, that number is not likely to decrease.  Employers may therefore find this guide a useful additional tool in their efforts to remain educated on disability-related employment issues.