Comment Letters

The Church Alliance writes and distributes comment letters, memoranda and other materials regarding laws and regulations that impact church retirement and health benefit plans. Topics include:

Health Care Comment Letters and Additional Materials

Comment Letter—Request for Information (RFI) on Regulations that Can Be Eliminated or Modified (July 31, 2017)
The Church Alliance submitted comment in response to a request for information (RFI) from the Department of the Treasury on ways in which Treasury regulations could be eliminated or modified to reduce burdens. The Church Alliance took the opportunity to suggest, with respect to health plans: (1) eliminating several regulations that are either outdated, unnecessary, or unduly burdensome, (2) continuing relief or flexibility regarding Affordable Care Act and tax code requirements, (3) recognizing church plans as issuers of coverage eligible for the small business health care tax credits for employers in the modified SHOP program, and (4) preserving existing church plan exemptions from state insurance laws.

Comment Letter—Request for Information (RFI) on Regulatory Changes to Improve the ACA (July 12, 2017)
The Church Alliance submitted comment in response to a request for information (RFI) from the Centers for Medicare & Medicaid Services, Department of Health and Human Services (HHS), on ways in which HHS could reduce regulatory burdens, promote consumer choice, stabilize markets, and enhance affordability. The Church Alliance took the opportunity to encourage HHS to consider (1) the creation of a church health plan exchange under its regulatory flexibility, (2) making small business health care tax credits available to employers in the SHOP program equally available to employers in church plans, and (3) preserving existing church plan exemptions from state insurance laws.

Comment Letter—Request for Information (RFI) on Contraceptive Services (September 20, 2016)
The Church Alliance submitted comment in response to a request for information (RFI) from the Department of the Treasury, the Department of Labor and the Department of Health and Human Services (together, the “Departments”) regarding the Affordable Care Act (ACA) rule for coverage of contraceptive services. The Departments issued the RFI in response to the Supreme Court’s order in Zubik v Burwell earlier in 2016, in which the Supreme Court urged the parties (the Departments and the church-affiliated employers challenging the earlier regulatory accommodation) to negotiate a new approach. The letter supplements four previous Church Alliance comment letters on this line of regulations, and maintains the stance that most of the health plans in the Church Alliance cover these services, but that all members agree that the administrator of a church health plan should not have to choose between violating the beliefs of the denomination and paying a penalty.

Comment Letter—Proposed Rule on Nondiscrimination in Health Programs and Activities (November 9, 2015)
The Church Alliance submitted comment in response to a proposed rule issued by the Department of Health and Human Services that addresses Section 1557 of the Affordable Care Act (ACA). Section 1557 prohibits discrimination on the basis of race, color, national origin, sex, age or disability in certain health programs and activities. The Church Alliance letter requests that church self-insured health care plans be exempted from the proposed rule because the plans and plan sponsors generally do not receive Federal financial assistance. The Church Alliance also requests clarification that a retiree-only church health care plan is not a “health program or activity” under the proposed rule. In addition, the Church Alliance requests that the proposed rule include a religious conscience exemption that will protect the rights of religious organizations that object to providing coverage for certain health or medical services otherwise required under Section 1557.

Comment Letter—Notice 2015-52 (October 1, 2015)
From the Church Alliance to the Internal Revenue Service (IRS), in response to Notice 2015-52, which solicited additional comments in preparation for proposed regulations to be issued concerning the “Cadillac Tax” on high cost employer-sponsored health coverage. The letter again requests relief from the tax, and flexibility to the extent relief is not granted. The letter notes the difficulty in calculating the cost of coverage for a church employer, and points out the challenges that would be involved in calculating and allocating any excess benefit in the time period suggested by the IRS.

Comment Letter—Notice 2015-16 (May 15, 2015)
From the Church Alliance to the Internal Revenue Service (IRS), in response to Notice 2015-16, which solicited comments in preparation for proposed regulations to be issued concerning the “Cadillac Tax” on high cost employer-sponsored health coverage. The Affordable Care Act included a provision imposing an excise tax on such coverage. The letter urges the IRS to consider the unique difficulties for denominational health plans in determining the cost of coverage. The letter requests relief from the excise tax, including transition relief and relief with respect to the cost of coverage provided under a self-insured group health plan that is not subject to federal continuation coverage requirements, flexibility in the application of the excise tax, and adjustments to the applicable dollar limits for denominational health plans and church employers.

Comment Letter—Interim Final Rule Regarding Coverage of Certain Preventive Services Under the Affordable Care Act (October 27, 2014)
The Church Alliance submitted comment in response to the interim final rule (IFR) regarding coverage of preventive services under the Affordable Care Act (“ACA”) issued jointly by the Internal Revenue Service, the Department of Labor and the Department of Health and Human Services (HHS) (together, the “Departments”). The Church Alliance commented three times previously on the topic of preventive services (below). In this letter, the Church Alliance acknowledges the Departments’ attempt to amend the “accommodation” for “eligible organizations” (religious employers that are not churches or integrated auxiliaries), but respectfully submits that the “accommodation” nonetheless continues to cause some religious employers to violate their beliefs. The Church Alliance continues to urge the Departments to abandon the employer-by-employer approach and adopt instead a broader plan-based exemption, among other adjustments.

Comment Letter—Notice 2013-54 (April 10, 2014)
From the Church Alliance to the Internal Revenue Service (IRS), Department of Labor, and Department of Health and Human Services commenting on Notice 2013-54 : Application of Market Reform and other Provisions of the Affordable Care Act to HRAs, Health FSAs, and Certain other Employer Healthcare Arrangements (the “Notice”). The Notice, published by the IRS in the fall of 2013, applied the Affordable Care Act’s market reforms, particularly the prohibition on annual limits, to health reimbursement arrangements and “employer payment plans”. Employer payment plans are informal premium reimbursement practices that thousands of local churches have relied upon for over 50 years. Generally, under these practices churches reimburse clergy and lay employees for the cost of premiums for individually purchased health insurance policies on a nontaxable basis. The Notice appears to prohibit these practices almost entirely. The comment letter explains the difficulties with the Notice for churches, asks for transition (non-enforcement) relief for 2014, and asks several clarifying questions.

Note that the transition relief requested was provided by the IRS, at least with respect to employers that are not “applicable large employers” under the Affordable Care Act, through June 30, 2015. See IRS Notice 2015-17 for more information: http://www.irs.gov/pub/irs-drop/n-15-17.pdf

Comment Letter—Information Reporting by Applicable Large Employers; Proposed Rule (November 8, 2013)
From the Church Alliance to the Internal Revenue Service commenting on how the proposed rule for information reporting by applicable large employers on health insurance coverage offered under employer-sponsored plans (Section 6056 Reporting) under the Patient Protection and Affordable Care Act (PPACA) should be applied carefully to church employers. Section 6056 Reporting should be applied to churches at the level of the local church (i.e., a local church, parish, mosque, temple, synagogue or other local place of worship) rather than at the level of the denomination (i.e., the national or highest level of a church in the case of a hierarchical church, or a convention or association of churches in the case of congregational churches) or the intermediate organization level of a denomination (e.g., regional organizations, such as conferences, presbyteries, synods, or dioceses).

Comment Letter—Notice of Proposed Rulemaking Regarding Preventive Services (April 8, 2013)
The Church Alliance submitted comment in response to the notice of proposed rulemaking regarding preventive services (“NPRM”) issued jointly by the Internal Revenue Service, the Department of Labor and the Department of Health and Human Services (HHS) (together, the “Departments”). The Church Alliance commented twice previously on the topic of preventive services (below). In this letter, the Church Alliance expressed appreciation for the Departments’ responsiveness and attentiveness to the Church Alliance’s earlier comments, but continues to urge the Departments to abandon the employer-by-employer approach and adopt instead a broader plan-based exemption.

Comment Letter—Shared Responsibility for Employers Regarding Health Coverage; Proposed Rule (March 18, 2013)
From the Church Alliance to the Internal Revenue Service commenting on how the proposed rule for shared responsibility for employers regarding health care (the “Pay or Play Rule”) under the Patient Protection and Affordable Care Act (PPACA) should be applied carefully to church employers. The Pay or Play Rule should be applied to churches at the level of the local church (i.e., a local church, parish, mosque, temple, synagogue or other local place of worship) rather than at the level of the denomination (i.e., the national or highest level of a church in the case of a hierarchical church, or a convention or association of churches in the case of congregational churches) or the intermediate organization level of a denomination (e.g., regional organizations, such as conferences, presbyteries, synods, or dioceses). Moreover, future rulemaking applying the employer aggregation rules to church employers should be flexible enough to accommodate the unique governance structures of many denominations.

Comment Letter—Advance Notice of Proposed Rulemaking Regarding Preventive Services (ANPRM) (June 21, 2012)
From the Church Alliance to the Department of Health and Human Services commenting on how the Final Regulations regarding preventive services under the Affordable Care Act (ACA) should be revised so that churches and/or church-related employers in self-insured church health plans would be exempt from the requirement to cover certain contraceptive services that are part of the ACA’s preventive services rule.

Comment Letter—W-2 Health Cover Reporting (July 15, 2011)
From the Church Alliance to the IRS explaining the difficulties for church health plans under Notice 2011-28, the proposed rule for reporting the value of employer health coverage on employees’ Forms W-2.
 

Additional comment letters are available on the comment letters archive page.

 


 

Retirement Security Comment Letters and Additional Materials

Comment Letter—Request for Information – Review of Regulations (July 31, 2017)
The Church Alliance submitted comments to the Department of the Treasury (“Treasury”) in response to a request for recommendations on Treasury Regulations that may be eliminated, modified, or streamlined to reduce burdens. The comment letter explains to Treasury that there is an urgent need to modify regulations under Section 403(b) of the Internal Revenue Code (“Code”), which are creating substantial burdens for clergy, church lay workers, and ministries that participate in 403(b)(9) plans. Specifically, under an Internal Revenue Service (“IRS”) interpretation of the regulations, certain church-associated organizations that are not described in Code section 3121(w)(3)(B) – commonly referred to as “non-QCCOs” – cannot participate in 403(b)(9) “retirement income account” plans. This IRS interpretation, which was recently learned by the church benefits community, raises considerable concern and burdens, and is inconsistent not only with Congress’s intent when adding section 403(b)(9) to the Code, but also with decades of previous practices of the IRS and the church benefits community. The comment letter describes the burdens imposed on the church benefits community, provides legal support for the Church Alliance’s position, and proposes modifications to the regulations that would eliminate the burdens.

Comment Letter—Request for Recommendations on Comprehensive Tax Reform (July 17, 2017)
The Church Alliance submitted comments to the Senate Finance Committee (SFC) in response to a request for recommendations on comprehensive tax reform. The comment letter explains to the SFC how several longstanding provisions of the tax code have been carefully tailored to the needs of churches and church ministry organizations, and retaining and strengthening these provisions should be a part of tax reform. Specifically, the comment letter requests (1) clarification that all church-affiliated organizations, including “non-QCCOs,” may participate in a church § 403(b)(9) retirement plan, (2) preservation of the parsonage allowance, (3) retaining retirement plan provisions important to church organizations that could be lost if retirement plan types under the tax code (401(a), 403(b), 401(k), 457(b), etc.) are consolidated or harmonized, (4) parity between church retirement plans and Individual Retirement Accounts (IRAs) with respect to required minimum distributions and qualified charitable distributions (as retirement plans are subject to less favorable rules than IRAs), (5) avoiding legislation that would impose taxes on dividends or other earnings of investment portfolios of tax-exempt organizations, and (6) avoiding legislation that would reduce current limits on pre-tax elective deferral contributions to certain retirement plans and require any contributions in excess of the reduced limits to be treated as post-tax or “Roth” contributions.

Comment Letter—Church Alliance Submits Comment Letter to IRS and Treasury on Agency Guidance on Church Plan Clarification Act Provisions of the PATH Act (August 3, 2016)
On August 3, the Church Alliance submitted a comment letter to the Internal Revenue Service and Treasury Department, addressing the recent enactment of the Church Plan Clarification Act (“CPCA”, which was enacted as part of the “PATH” Act of 2015) and potential guidance that the agencies may issue. In the comment letter, the Church Alliance suggests that the issuance of a notice or other similar sub-regulatory guidance that addresses certain considerations set forth in the letter would be helpful as church benefit programs seek to move forward under the new law. Among other things, the comment letter addresses clarifications that could be made with respect to the new controlled group rules for church organizations, the immediate effective date of the church plan transfers and mergers rules, and clarifications with respect to automatic enrollment guidance and rules on investments by church plans in collective trusts.

Additional comment letters are available on the comment letters archive page.


 

Financial Services Comment Letters and Additional Materials 

Comment Letter—Church Alliance Submits Comment Letter to SEC on Section 956 Proposed Rule (July 22, 2016)
On July 22, the Church Alliance submitted a comment letter to the SEC on a Dodd-Frank-related proposal. By way of background, Section 956 of the Dodd-Frank Act requires that the banking regulators, SEC, and CFTC, prohibit certain incentive-based compensation arrangements that they determine encourage too much risk-taking by a covered financial institution, including investment advisers as defined in Sec. 202(a)(11) of the Investment Advisers Act of 1940 (“Advisers Act”). The Church Alliance is concerned that entities that are typically exempt from most provisions of the Advisers Act – such as church plans – could end up being subject to Section 956 of the Dodd-Frank Act, and thereby subject to new compensation disclosure/reporting requirements.

The proposed rule would apply to advisers who average total consolidated assets of at least $1 billion not including any non-proprietary assets. While there appears to be only a relatively small risk of church plans being subject to the rule, the Church Alliance feels it is prudent to submit the comment letter urging an express exemption for church plans.

Additional comment letters are available on the comment letters archive page.