House Tax Reform Bill: A Look at How It Breaks Down

UPDATE: (November 14, 2017) A Look at The Senate Tax Reform Bill

 

On November 2, 2017, House Ways and Means Committee introduced the much anticipated House Tax Reform Bill – The Tax Cuts and Jobs Act. The bill is 429 pages, so it will take some time to completely digest and analyze all of the provisions. The scope of the proposed changes is very broad and the task is more difficult as various provisions are a moving target, since the House Ways and Means Committee’s markup began Monday, November 6th. The Senate Finance Committee, the Senate counterpart to the House Ways and Means Committee, is expected to release its version of the tax bill the week of Nov. 13th. The Administration has expressed its desire to sign tax legislation by Christmas.

If the Bill becomes law, it will mark the most significant change to the Tax Code in over 30 years. The bill generally would apply to taxable years beginning after December 31, 2017. Here is an overview of key provisions:

Business Provisions

  • Corporate tax rate. Lowers the corporate tax rate to 20% – down from 35%
  • Pass-through rate. Sets a top 25% rate for owners who are active participants in pass-through businesses such as sole-proprietorships, S corporations and partnerships. The plan includes complicated guardrails that limit people from turning what would otherwise be wage income taxed at up to 39.6% into business income taxed at a lower rate (presumptively set at 30% — 0% for service-related businesses) of their business income.
  • Immediate expensing of business investment. Allows businesses to immediately write off the full cost of new equipment instead of depreciating it over a number of years.
  • Net Operating Losses. Establishes an indefinite carryforward (and no carryback) for net operating losses (“NOL”) but also caps the NOL deduction at an amount equal to 90% of taxable income (as computed without the NOL deduction).
  • LITC. Retains the low-income housing tax credit.
  • R&D. Preserves the Research & Development Tax Credit.
  • Interest deduction. Limits the business interest expense deduction, capping it at 30% of earnings before interest, taxes, depreciation and amortization, which is a measure of cash flow. Real estate firms and small businesses would be exempt from that limit.
  • Limits executive compensation deduction. Publicly traded businesses would lose the ability to deduct certain executive compensation above $1 million, which they can now do for performance-based pay.
  • Nonqualified Deferred Compensation. Nonqualified deferred compensation, stock options, and stock appreciation rights would be subject to immediate taxation upon “vesting,” which (in many cases) might also be triggered more quickly.
  • Limits like-kind exchanges. Limits §1031 like-kind property exchanges to real propert
  • Repeals the following:
    • Corporate Alternative Minimum Tax
    • Entertainment expense and certain fringe benefits deductions
    • Technical terminations of partnerships
    • New market tax credit
    • Exclusion from income of §118 contributions to capital

International Provisions

  • Repatriation tax rate. Creates a one-time 12% tax on offshore earnings held as cash or cash equivalents and a 5% tax on noncash assets, payable over up to eight years, whether or not the earnings are repatriated.
  • Controlled Foreign Corporations. Creates a new 10% tax on US companies’ high-profit foreign subsidiaries, calculated on a global basis.
  • Territorial Tax System. Establishes territorial taxation with a 100% exemption for domestic corporations on dividends from certain foreign subsidiaries.

Tax-Exempt Entities

  • Sports stadium financing. Eliminates tax-exempt bond treatment for professional stadiums.
  • Executive Compensation. Establishes 20% excise tax on compensation paid in excess of $1 million to an executive of a tax-exempt organization.
  • Excise tax on private college endowments. Imposes a 1.4% excise tax on net investment income of private colleges and universities if the aggregate fair market value of assets is at least $100,000 per student.
  • Permissible political activity. Establishes rule that churches and religious organizations will not lose exempt status or be deemed to have intervened in any political campaign on behalf of a candidate as a result of the content of any sermon, teaching or presentation.

Individual Provisions

  • Reduces the number of individual tax rates as follows:
    • 12%: Applies to incomes from $0 up to $45,000 for individuals and $90,000 for couples.
    • 25%: Applies to incomes up to $200,000 for individuals and $260,000 for couples.
    • 35%: Applies to incomes up to $500,000 for individuals and $1 million for couples.
    • For single parents that are heads of households, the thresholds would be the midpoint between individuals and joint filers, except for the highest bracket which would still kick in at $500,000.
    • 39.6%: Applies to incomes over $500,000 for individuals and couples making more than $1 million a year.
  • A larger standard deduction. The standard deduction for all taxes would increase to $12,000 for individuals (up from $6,350) and $24,000 for couples (up from $12,700). The benefit is offset, however, since the Bill eliminates the personal exemption and various secondary deductions.
  • Expands child tax credit. The Bill proposes to increase the child tax credit to $1,600, up from $1,000, for any child under 17. But the Bill also limits the refundability of this credit. The $600 increase in the credit is, however, not refundable. Further, the Bill will let more people claim the child tax credit. The income level where the credit starts to be phased out is increased to $115,000 for single parents, up from $75,000 today, and to $230,000 for married parents, up from $110,000.
  • Creates two new family credits. The Bill would create two different $300 tax credits.
  • Credit for non-child dependents. Credit for nonchild dependents — for instance, any son or daughter over 17 whom you are supporting, an ailing elderly mother or an adult child with a disability. The credit is equal to $300 per individual.
  • Spousal Credit. A $300 credit for each spouse if they file jointly (or, in the case of single parents, the head of household).

These credits are in effect only for 5 years and would not be refundable.

  • Charitable contributions. The Bill continues the deduction for charitable contributions.
  • Retains the earned income tax credit. Provides tax relief for low-income Americans.
  • No changes to 401(k) plans. Retains retirement savings options such as 401(k)s and IRAs.
  • No repeal of Affordable Care Act’s individual mandate.
  • Limits the home-mortgage interest deduction. Retains the home mortgage interest deduction for existing mortgages but limits the home mortgage interest deduction for newly purchased homes for mortgages up $500,000.
  • SALT Deduction. Limits the state and local tax deduction to local property taxes up to $10,000 but eliminates the deduction for state income and sales taxes.
  • Patents and inventions. Adds patents and inventions to the list of assets that are not treated as capital assets.
  • Eliminates personal exemptions. The Bill eliminates the personal exemption of $4,050 for you, your spouse and each of your dependents.
  • Removes most personal itemized deductions. The only deduction preserved explicitly is for charitable gifts and edited home-mortgage interest and SALT deductions. Eliminated itemized deductions include:
    • Student-loan-interest deduction.
    • Medical expense deduction.
    • Moving expense deduction.
    • Alimony payments.
  • Repeals the adoption tax credit. Repeals the tax credit for adoption.
  • Eliminates the exclusion for dependent care assistance accounts. Some employers provide parents the opportunity to save up to $5,000 of their income in a dependent care flexible spending account. That money is excluded from the parent’s taxable income. The Bill would repeal that exclusion.
  • Removes the deductions for MSA’s. Deductions for contributions to Medical Savings Accounts (“MSAs”) and exclusion from income for contributions of employers to MSAs are eliminated under the Bill.
  • Repeals the estate tax. Under current law, the threshold for the tax, which applies only to estates with greater than $5.6 million in assets during 2018, would double to over $10 million. Then, the tax would be phased out after six years.

Fraser Trebilcock attorney Paul V. McCord has more than 20 years of tax litigation experience, including serving as a clerk on the U.S. Tax Court and as a judge of the Michigan Tax Tribunal. Paul has represented clients before the IRS, Michigan Department of Treasury, other state revenue departments and local units of government. He can be contacted at 517.377.0861 or pmccord@fraserlawfirm.com.

How Trademarks, Copyrights, and Patents Protect your Business

Trademark registration separate your business from your competition and make you unique.Your intellectual assets are some of the most powerful resources your business has. These assets separate your business from your competition and make you unique – as long as they are protected. Trademarks, copyrights, and patents are methods of protecting your intangibles while publicly providing notice to other businesses or individuals to avoid copying or infringing on your intellectual property rights. But when do you need these protections? How do you get them? And what are they for?

Trademarks

What is a trademark?

Trademarks are exclusive legal protections for names, logos, sounds, and even colors as applied to a category of goods or services. Federally registered trademarks may not be used by others without your permission. Trademark owners do have a legal obligation to police their marks and provide notice to anyone that may be inadvertently or willfully using the mark without permission. Trademarks can be renewed indefinitely as long as the owner can show proof that the mark has been continually used in commerce.

What is a trademark for?

Trademarks operate to distinguish your business, build consumer goodwill and solidify your reputation as a source for the goods or services. In most cases, a trademark is a distinctive word, phrase, logo or design that is associated with or applied to a category of goods or services. Trademarks should not be merely descriptive of the goods or services and generic terms are expressly banned from trademark protection (e.g., such as the term “Supermarket” as applied to a grocery store).

Trademarks must not be confusingly similar to another company’s mark otherwise the U.S. Trademark Office will reject the mark or the opposing owner may proactively move to cancel your mark. For example, the Nike name and Swoosh logo are federally registered trademarks. Trademarks may often be referred to as service marks when applied solely to services such as the NBC tri-tone sound or United Airline’s “Fly the Friendly Skies” slogan. If you are in the business of providing goods or services, then it is strongly recommended that you consult with an intellectual property lawyer to get the best protection in a timely manner.

How do I get a trademark?

For the most part, trademark rights vest upon usage of the mark in interstate commerce (e.g., across state lines). When you select a distinctive mark for your business, you are legally considered the owner of an unregistered trademark under common law trademark law (i.e., limited protections vis-à-vis a federally registered trademark). During this initial use and while your trademark application is being examined by the U.S. Trademark Office, you may use the ™ symbol to provide public notice that you are claiming ownership rights in the mark. The ™ symbol does not have any legal significance and is simply used as a public notification tool. Your ability to halt an infringing action, obtain an injunction or obtain money damages is limited when the mark is an unregistered trademark. Therefore, it is strongly recommended that you take the necessary steps to federally register your trademark with the U.S. Patent and Trademark Office. Once registered, you may use the ® symbol and be entitled to a full range of legal protections for your mark.

When should I get a trademark?

If you are consistently using a non-generic name, logo, or other symbol, you already have an unregistered trademark. This shows your customers that it is yours. To prevent another company from using the goodwill associated with your business – or, worse, tainting your business reputation with low-quality products – you should register your mark with the U.S. Patent and Trademark Office as soon as you have finalized the word, phrase, logo and/or design.

Copyright

What is copyright?

Copyright is the exclusive legal protection that covers an original work of authorship. Copyrights vest upon creation of the work, which means placing the work onto a tangible medium (e.g., applying paint to a canvas or words to a screenplay). Stated otherwise, a copyrighted work must be more than an idea – the idea of painting a scenic mountain is not protectable until one applies the paint to the canvas. A copyright owner holds to right to prevent others from copying, reproducing, displaying or making derivative works unless they expressly provide their permission for such use. A derivative work, for example, would be making a movie based on a book. Copyright protections are not indefinite; most protections last the length of the author’s life plus 70 years. For example, the author of the book Dracula died in 1912, so the copyright protection ended in 1982 and the work entered the public domain, which means it can be freely reproduced and distributed by anyone.

What is copyright for?

Original works are copyrightable materials. “Original” simply means that there must be some modicum of creativity that distinguishes the work from others. Books and e-books, magazine or newspaper articles, software, paintings, music, plays, some websites, and movies, among other things fall under purview of copyright protection. Historical and scientific facts, recipes, ideas, domain names, surnames, inventions, methods, and events are examples where copyright protection would not be appropriate; although some of these things may be protected under trademark or patent law.

How do I copyright my work?

As noted above, copyrights vest upon creation of the work, even if it isn’t published. Similar to trademark law, it can be difficult to enforce your copyright if the work is not registered with the U.S. Copyright Office. In most cases, a copyright application entails a downloadable form, a fee, and a copy of the work submitted to the U.S. Copyright Office. The review process takes about four months to possibly one year. Registering your work with the U.S. Copyright Office is definitely a good idea and it is recommended that you have an intellectual property attorney at least do a cursory review of your copyright application prior to submission. If your work is plagiarized, improperly displayed or illicitly distributed then having a registered copyright will strengthen your position in the event you decide to take legal action and file an infringement lawsuit.

Patent

What is a patent?

A patent is a legal monopoly for protecting a utilitarian device, system, machine, composition or process. A patent owner has the right to prevent others from making, using, selling or importing a protected invention for a limited time. Utility patents have a term of 20 years and design patents have a term of 14 years from the date of filing.

What is a patent for?

Design patents protect the aesthetic or ornamental, non-functional aspects of a utilitarian object. Utility patents protect useful devices, systems, machines, processes, and compositions of matter that, upon examination by the U.S. Patent and Trademark Office, are verifiably shown to be new and non-obvious. Almost any product, from Tupperware to iPhones to Vicodin, can be (and often are) patented.

How do I get a patent?

The initial process for obtaining a patent is to prepare and file a patent application with the U.S. Patent and Trademark Office. It is important to realize that a patent is powerful asset that must be written with a variety of audiences in mind (e.g., inventor, investor, licensor, patent examiner, judge, jury, etc.) while meeting a plethora of complex and sometimes arcane rules of the U.S. Patent and Trademark Office. Once a patent application has been filed, a patent examiner will perform a patentability search and determine whether the patent application meets the various standards such as novelty and non-obviousness. The patent owner may publicly assert that the invention is “patent pending” as soon as the U.S. Patent and Trademark Office provides a filing receipt, which typically takes a few minutes if the patent application is filed electronically. The U.S. Patent and Trademark Office has a stated goal of examining a patent application and providing a final disposition within about 36 months, but it is not uncommon for the examination process to take longer. If the patent application successfully makes it through the examination process, the U.S. Patent and Trademark Office will grant an official patent number and the owner will then have a legally enforceable asset.

When should I file a patent?

The U.S. is a “first-to-file” system, so it is imperative that an inventor keep the details of their invention confidential until a patent application has been filed. Also, timing is of the essence to prevent a competitor from winning the race to the Patent Office. The basic requirement to prepare and file a patent application is that the inventor must be able to describe, in sufficient detail, how to make and use the invention to one of “ordinary skill in the art,” which typically means a person versed in the industry to which the invention pertains. For example, technical and industry terms may not need to be defined if such terms are commonly known among those skilled in the art. Further, a prototype of the invention is not necessary nor does the U.S. Patent and Trademark Office required an inventor to perform a patentability search before filing. As soon as you have the aforementioned information, you should contact a registered patent attorney or agent to begin the process. Remember, confidentiality and timely filing are two primary keys to obtaining patent protection for your invention. In view of the complexities of the patent process, retaining an intellectual property lawyer is a vital step to obtaining strong patent protection in an efficient and timely manner.

Whether you are seeking trademark, patent or copyright protection, make sure to document the process carefully, and seek legal advice. The wrong protection or a badly conducted filing can make you vulnerable to legal loopholes or unnecessary rejections from the U.S. Patent and Trademark Office. With the right intellectual property protections in place, your business will be able to thrive and grow while keeping your competition at arms length.

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Are your U.S. Savings Bonds Still Earning Interest?

Bonds increasing in value

Many U.S. Saving Bonds no longer earn interest. It may be time to cash them in and start making money again. It’s important to find out how much your bonds are worth, and when they will stop earning interest. In addition to checking a bond’s maturity date, it is also very important to carefully review the designated owner of your bonds. Has the owner died? Is the owner a trustee of a trust that was terminated? Should you name a beneficiary on your bonds to avoid probate? Information and many of these questions are answered at www.savingsbonds.gov; or, call us for help with the trickier aspects of managing your U.S. Savings Bonds.

 

For further information on this and related matters, contact attorney Marlaine C. Teahan, chair of Fraser Trebilcock’s Trusts and Estates Department. Marlaine can be reached at 517.377.0869 or mteahan@fraserlawfirm.com.

Intellectual Property Due Diligence in Anticipation of a Sale or Purchase of an Organization

Intellectual Property LawIs your business anticipating an upcoming merger or acquisition?  If so, you will be facing a number of upcoming due diligence responsibilities such as, but not limited to, financial stability, asset valuation, contractual obligations, employee benefits arrangements, ownership rights, licenses, and numerous other matters.  However, one incredibly important due diligence item that cannot be forgotten is that involving intellectual property (IP).

IP due diligence generally takes the form of an inventory or audit to assess the quantity and the quality of IP assets owned by, or licensed to, a company, business, or individual. The due diligence process should also include an assessment of how IP is captured, protected, and owned by the business and an analysis of relevant competitors.

Typically, the due diligence process is carried out by a prospective purchaser in relation to the IP assets of a target business.  However, IP due diligence can also be carried out by a company on its own IP assets in preparation for a transaction, such as a business sale or a major licensing deal.

Below is a non-exhaustive list of the primary activities that should carried out during the IP due diligence process. As the process unfolds, it may be necessary to drill down into one or more of the assets, especially if the asset is related to a core technology of the business.

Document retention and proactive steps as viewed from the IP owner’s perspective:

  • Identify the key personnel and consultants who are in any way involved with the IP.
  • Create and maintain a list of all of the patents and patent applications in the U.S. and any foreign country or region.
  • Create and maintain a list of all of the trademarks and trademark applications in the U.S. and any foreign country or region.
  • Create and maintain a list of all domain names and registrations of the business.
  • Create and maintain a list of all copyright registrations and applications, and includes a list of copyrightable material that has not yet been registered by the U.S. Copyright Office.
  • Create and maintain a list of all contracts and agreements relating to patents, trademarks, trade names, brand names, copyrights, inventions, processes, know-how, trade secrets, or other IP, including licenses, royalty agreements, confidentiality agreements, and other agreements or arrangements to which the business is a party relating to any IP of the business or of any other entity.
  • Using proprietary protections, create and maintain a list of all legal opinions and search reports.
  • Create and maintain a list of all software products and licenses produced by or acquired by the business, other than software used for word processing and other general office functions and administration. Obtain all public domain, open source, copyright or community source code materials used, or planned to be used.
  • Summarize all products and services sold or planned to be sold by the business. Such a summary should include the dates of first commercial sale for all products and services currently being sold as well as any future commercial launch dates.
  • Identify and list any security interests taken against any of the IP.
  • Identify any pending, threatened, or past challenges to the IP or right to use its IP and/or products and/or services.
  • Identify and list the main competitors in the US and elsewhere.

Typical review and analysis steps as viewed from the IP lawyer’s perspective:

  • Review any employment or other contracts for the key personnel and consultants to determine ownership, assignment obligations and fiduciary duties. Such a review may include employment and/or consulting agreements, including any agreements with prior employer(s), as applicable. Importantly, this review should also include agreements and communications between founders to ascertain any fiduciary obligations that may impact ownership of the IP.
  • For patents and patent applications, review and analyze the scope and strength thereof to include, but not limited to, ownership, licenses, and the prosecution history of each such patent and patent application.
  • Review the material trade secrets of the business vis-à-vis the patent portfolio.
  • For trademarks and trademark applications, review and analyze the commercial usage, mark strength, coverage and status, licenses, renewal documents, and the prosecution history of each such trademark or trademark application.
  • Compare domain names to trademark list to insure continuity and proper association.
  • Perform at least a cursory review of all copyrights and copyright registrations of the business.
  • Review all contracts and agreements relating to patents, trademarks, trade names, brand names, copyrights, inventions, processes, know-how, trade secrets, or other IP, including licenses, royalty agreements, and other agreements or arrangements to which the business is a party relating to any IP of the business or of any other entity.
  • Review all legal opinions rendered on the IP of the business, such as, but not limited to, all patentability, freedom-to-operate, infringement, validity and registrability matters conducted or commissioned by the business or by another on behalf of the business.
  • Look at any software products produced by or acquired by the business, other than software used for word processing and other general office functions and administration. Obtain all public domain, open source, copyright or community source code materials used, or planned to be used, by the business.
  • Perform at least a cursory review of all software products and licenses.
  • Perform a comparative review of products and services sold or planning to be sold with the IP portfolio and insure that IP protection adequately precedes commercial launch dates, trade shows, and advertisement campaigns.
  • Review any security interests taken against any of the IP.
  • Analyze the scope and relevance of any pending, threatened, or past challenges to the IP of or right to use its IP and/or products and/or services.
  • Perform a cursory review of the IP owned by the main competitors in the US and elsewhere for potential monetization opportunities and to better asses the valuation of the IP assets.

These issues provide a starting point for any business that is considering a merger or acquisition in the near future and beyond. If you have specific legal questions for your business with regard to the quantity and quality of your IP, we can help. Our attorneys are experienced in all aspects of intellectual property law and business law.

This blog serves solely as a general summary of complex intellectual property issues surrounding mergers and acquisitions.  It does not constitute legal guidance. Please contact us with any questions related to your company’s intellectual property or that involving a potential upcoming business sale or purchase.

CLIENT ALERT: New Corporations Online Filing System Launches Monday, October 30, 2017 in Michigan

Business Online FilingOn Monday, October 30th, the Department of Licensing and Regulatory Affairs (LARA) will launch a new Corporations Online Filing System (COFS) for Michigan businesses. This system  will allow businesses to submit documents and annual filings, pay filing fees, and order certificate, and will replace the MICH-ELF system. The service also features an expanded search function.

Michigan Businesses Will Be Assigned New ID Numbers for COFS

Businesses will be assigned new entity identification numbers to use when submitting documents. These numbers have been  mailed to all resident agents of Michigan business entities. It is important that resident agents save this information. It includes log-in instructions, the new entity identification number, as well as a customer identification number and PIN, which will be used as a username and password to log into new system.

It is important to note that business taxpayer identification number(s) used by the Michigan Department of Treasury and federal Internal Revenue Service (IRS) will remain unchanged.

If you have any questions, LARA has provided a detailed guide online at the Corporations Division website. Anyone needing further assistance can reach out to the Corporations Division during extended help hours, from Monday, October 30th to Thursday, November 9th from 8:00 a.m. to 6:00 p.m. EST.

Learn more about the new system from LARA: New Corporations Online Filing System (COFS) Cuts Red Tape for 800,000+ Businesses in Michigan.

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NEW VIDEO: Understanding Eminent Domain Law

Our country has a rich history surrounding eminent domain – from the brick and mortar that built its foundation – to modern-day infrastructure projects like roads, airports, and bridges. Even our Founding Fathers understood the great impact this would have on private landowners as well as the condemning agencies.

“Interestingly, condemnation law was so critical that the Founding Fathers put it right in the Constitution,” said Mark Bush, eminent domain attorney at Fraser Trebilcock. “Without it, roads, bridges, highways, airports, and virtually all other aspects of the critical infrastructure we use daily would not have been possible.”

For more than 30 years, Fraser Trebilcock attorneys have successfully worked with clients to improve, protect, and defend properties of all shapes and sizes, in a broad range of projects that include: petroleum pipelines, highway construction, airport expansion, county roads, drains, water and sewer projects, and more.

“As a result of that work, I’ve actually represented both condemning agencies and landowners in a multitude of public improvement projects,” said attorney Kirby Albright. “The eminent domain area has very unique procedural requirements and any client that’s affected by the eminent domain process it’s imperative that they have knowledgeable and experienced counsel to help them navigate that procedural process.”

This video gives an interesting look back at the history of eminent domain law in the U.S. and some of the cases we have handled.


Mark A. Bush is a veteran litigator and trial specialist with over three decades of hard-earned experience handling cases ranging from condemnation to wrongful death and catastrophic injury. Contact him for more information on this matter at 517.377.0815 or mbush@fraserlawfirm.com.

H. Kirby Albright has amassed a wide range of litigation experience over the last 30 years, including successful representation of clients on both sides of eminent domain law. He has been elected by his fellow shareholders to serve on the Fraser Trebilcock Board of Directors. Contact Kirby for more information on this matter at 517.267.0538 or kalbright@fraserlawfirm.com.

CLIENT ALERT: IRS Announces Increases for Health FSAs and HSAs for 2018

Employee Benefits LawyerThe IRS has just released its 2018 annual inflation adjustments, in which it announced that the dollar limitation under Code section 125 on voluntary employee salary reductions for contribution to health flexible spending arrangements (health FSAs) is increasing to $2,650. Previously the limitation was $2,600. The authority for this increase can be found in Rev. Proc. 2017-58: https://www.irs.gov/pub/irs-drop/rp-17-58.pdf. This link takes you to the IRS annual inflation adjustments for more than 50 tax provisions. Another item to note is that the qualified transportation fringe benefit increases to $260.

Although open enrollment season is about to be in full swing for most, employers should ensure that their salary reduction agreements and related enrollment materials are updated to reflect this increase. Additionally, employers will want to review their Code section 125 cafeteria plan documents to ensure these also allow for such an increase.

Moreover, as previously advised, earlier this year in Rev. Proc. 2017-37, the IRS released the HSA limits for 2018.  Specifically, IRS Revenue Procedure 2017-37 provides the adjusted limits for contributions to a Health Savings Account (“HSA”) as determined under Section 223 of the Internal Revenue Code, as well as the high deductible health plan (“HDHP”) minimums and maximums for calendar year 2018.

The 2018 limits:

    • Annual Contribution Limit
      • Single Coverage: $3,450
      • Family Coverage: $6,900
    • HDHP-Minimum Deductible
      • Single Coverage: $1,350
      • Family Coverage: $2,700
    • HDHP Maximum Annual Out-of-Pocket Expenses (including deductibles, co-payments and other amounts, but not including premiums)
      • Single Coverage: $6,650
      • Family Coverage: $13,300
    • The catch-up contribution for eligible individuals age 55 or older by year end remains at $1,000.

Plans and related documentation, including employee communications, should be updated to reflect these new limits.

As always, please keep in mind that participation in a health FSA will result in HSA ineligibility, unless the health FSA is limited to:

  1. limited-scope dental or vision excepted benefits; and/or
  2. post-deductible expenses.

This blog serves solely as a general summary of the Medicare Part D disclosure requirements, and does not constitute legal advice. If you have questions regarding the application of this fee to your plans, contact an attorney at Fraser Trebilcock.

Elizabeth H. Latchana, Attorney Fraser TrebilcockElizabeth H. Latchana specializes in employee health and welfare benefits. Recognized for her outstanding legal work, in both 2018 and 2015, Beth was selected as “Lawyer of the Year” in Lansing for Employee Benefits (ERISA) Law by Best Lawyers, and in 2017 as one of the Top 30 “Women in the Law” by Michigan Lawyers Weekly. Contact her for more information on this reminder or other matters at 517.377.0826 or elatchana@fraserlawfirm.com.

Could Property Owners or Tenants Who Grow, Process, or Sell Marijuana Make Their Property Tough to Sell?

Michigan Marijuana Law

What Property Owners Need to Know About Title Insurance and Marijuana Facilities

Continue reading Could Property Owners or Tenants Who Grow, Process, or Sell Marijuana Make Their Property Tough to Sell?

President Trump Signs Executive Order on Health Care; HHS Announces CSR Payments to be Discontinued Immediately

President Donald Trump
Photo of President Trump’s news conference, courtesy of the White House.

Yesterday, October 12, 2017, President Trump issued an Executive Order entitled “Promoting Healthcare Choice and Competition Across the United States” (the “Order”). Also on October 12, 2017, the Department of Health and Human Services released a statement that the cost-sharing reduction payments authorized by section 1401 of the Patient Protection and Affordable Care Act (“subsidies”) will be discontinued immediately (the “HHS Statement”).

Executive Order

The Order articles a “policy of the executive branch, to the extent consistent with law, to facilitate the purchase of insurance across State lines and the development and operation of a healthcare system that provides high-quality care at affordable prices for American people.” To meet this policy goal, President Trump announced that his administration will prioritize three areas of law in the new future: (1) Association Health Plans (“AHPs”); (2) Short-term, Limited-Duration Insurance (STLDI); and (3) Health Reimbursement Arrangements (“HRAs”).

To the extent consistent with law, the Order relevantly announces that government rules and guidelines should expand the availability of and access to PPACA insurance alternatives, including AHPs, STLDI, and HRAs. To effectuate this goal, the Order relevantly indicates:

“Sec. 2. Expanded Access to Association Health Plans. Within 60 days of the date of this order, the Secretary of Labor shall consider proposing regulations or revising guidance, consistent with law, to expand access to health coverage by allowing more employers to form AHPs. To the extent permitted by law and supported by sound policy, the Secretary should consider expanding the conditions that satisfy the commonality of-interest requirements under current Department of Labor advisory opinions interpreting the definition of an “employer” under section 3(5) of the Employee Retirement Income Security Act of 1974. The Secretary of Labor should also consider ways to promote AHP formation on the basis of common geography or industry.”

“Sec. 3. Expanded Availability of Short-Term, Limited Duration Insurance. Within 60 days of the date of this order, the Secretaries of the Treasury, Labor, and Health and Human Services shall consider proposing regulations or revising guidance, consistent with law, to expand the availability of STLDI. To the extent permitted by law and supported by sound policy, the Secretaries should consider allowing such insurance to cover longer periods and be renewed by the consumer.”

“Sec. 4. Expanded Availability and Permitted Use of Health Reimbursement Arrangements. Within 120 days of the date of this order, the Secretaries of the Treasury, Labor, and Health and Human Services shall consider proposing regulations or revising guidance, to the extent permitted by law and supported by sound policy, to increase the usability of HRAs, to expand employers’ ability to offer HRAs to their employees, and to allow HRAs to be used in conjunction with nongroup coverage.”

At this point is time, no changes to the law have occurred; this Executive Order merely indicates the President’s intent to make changes to the current regulatory structure in the near future. A copy of the Order is available at: www.whitehouse.gov/the-press-office/2017/10/12/presidential-executive-order-promoting-healthcare-choice-and-competition

HHS Statement

The HHS Statement indicates that its decision to immediately discontinue subsidies is based on a legal opinion issued by the Attorney General. A copy of the HHS Statement and the Attorney General opinion letter are available at: www.hhs.gov/about/news/2017/10/12/trump-administration-takes-action-abide-law-constitution-discontinue-csr-payments.html

We will keep you apprised of future developments in this regard.

Elizabeth H. Latchana, Attorney Fraser TrebilcockElizabeth H. Latchana specializes in employee health and welfare benefits. Recognized for her outstanding legal work, in both 2018 and 2015, Beth was selected as “Lawyer of the Year” in Lansing for Employee Benefits (ERISA) Law by Best Lawyers, and in 2017 as one of the Top 30 “Women in the Law” by Michigan Lawyers Weekly. Contact her for more information on this reminder or other matters at 517.377.0826 or elatchana@fraserlawfirm.com.

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