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Are Your COBRA Notices Sufficient to Avert a Costly Challenge?

While the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) continuation coverage subsidy requirements imposed by the American Rescue Plan Act of 2021 (previously discussed here and here) are at the forefront of employers’ minds, recent litigation trends should motivate plan sponsors to review their standard COBRA election notices to ensure they comply with the general requirements in the regulations promulgated by the Department of Labor (“DOL”).

The regulations[1] require COBRA notices be written in a manner calculated to be understood by the average plan participant. Required information includes:

  • The name and plan under which continuation coverage is available;
  • The name, address, and phone number of the plan administrator;
  • Identification of the qualifying event;
  • Identification of the qualified beneficiaries (by status or name) who are recognized by the plan as being entitled to elect continuation coverage due to the qualifying event;
  • An explanation of the procedures for electing coverage, and the consequences of failing to elect coverage;
  • A description of the coverage available;
  • The time period for which the coverage is available; and
  • The cost of coverage and due dates for payments.

A spate of recent litigation reminds us that failure to include required information in COBRA election notices may expose the plan sponsor and the plan administrator to claims from participants and beneficiaries. Further, if the information included in COBRA election notices is likely to confuse participants and beneficiaries, there may be potential liability for failure to provide a

ERISA Fiduciary Obligations Expanded to Include Mitigation of Cybersecurity Risks

The clouds have been forming on the horizon for years now:  from the courts we have seen emerging lines of ERISA litigation asserting fiduciary obligations to protect the privacy rights of participants, and from the regulatory agencies we have heard an acknowledgment of the need for guidance regarding fiduciary responsibility with respect to cybersecurity risks.  A call to action for plan fiduciaries came last week from the Department of Labor (“DOL”) in the form of new Cybersecurity Guidance for Plan Sponsors, Plan Fiduciaries, Record-Keepers, Plan Participants.  See News Release at

The DOL guidance provides:

  1. Tips for Hiring a Service Provider With  Strong Cybersecurity Practices
  2. Cybersecurity Program Best Practices for plan fiduciaries, record-keepers and other service providers
  3. Online Security Tips for participants to help them reduce the risk of fraud and loss to their retirement accounts and report identify theft and cybersecurity incidents

Cybersecurity Governance Programs

Plan fiduciaries who have not yet developed a cybersecurity governance program should do so now, and existing programs should be re-evaluated and updated in light of this guidance.  Such cybersecurity governance programs should address all three aspects of the guidance (i.e., development of best practices which include guidelines for hiring service providers and participant education).  See Cybersecurity Program Best Practices at

More specifically, the core elements of a strong cybersecurity governance program should include the following:

  • Develop, document and regularly monitor and update a formal cybersecurity program
  • Conduct annual risk assessments
  • Have a

DOL Flies Alone: Guidance on the 100% COBRA Subsidy under the American Rescue Plan Act of 2021

The American Rescue Plan Act of 2021 (“ARPA”) provides that, for the period from April 1, 2021 until September 30, 2021, if an individual’s Consolidated Omnibus Budget Reconciliation Act (“COBRA”) qualifying event is an involuntary termination of employment or a reduction of hours (each, an “Assistance Eligible Individual”), then 100% of the COBRA premium is paid by the employer, health plan, or insurer and the premium expense is reimbursed by the federal government through a refundable FICA tax credit. We previously summarized the COBRA subsidy provisions under ARPA in a blog post, available by clicking here.

Guidance Provided:  As expected, additional guidance implementing the COBRA subsidy was issued by the Department of Labor (“DOL”) on April 7, 2021 (the “Guidance”). The Guidance includes:

Show Your Work: FAQs on Non-Quantitative Treatment Limitation Comparative Analyses

Among the requirements under the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (the “MHPAEA”) group health plans and health insurance issuers must apply any processes, strategies, evidentiary standards or other factors underlying non-quantitative treatment limitations (“NQTLs”) to mental health or substance use disorder (“MH/SUD”) benefits comparably and no more stringently than to medical/surgical benefits.

The Consolidated Appropriations Act, 2021 (“CAA”) included provisions designed to enhance transparency with respect to compliance with the MHPAEA, including a requirement that group health plans and health insurance issuers perform and document comprehensive NQTL comparability analyses. We previously summarized the CAA’s requirements in our Q1 2021 Newsletter, available by clicking here.

On April 2, 2021, the Department of Labor (“DOL”) issued answers to frequently asked questions (“FAQs”) prepared jointly with Treasury and the Department of Health and Human Services (collectively, the “Departments”) concerning the CAA’s requirements. The key takeaways from the FAQs include:

  • No Delay in Compliance. The Departments are not providing a delay in the compliance requirements under the CAA and stated that group health plans and health insurance issuers should now be prepared to make their NQTL comparative analyses available upon request by the Departments or a state authority.
  • Comparative Analyses Must Include Detailed Supporting Evidence and Discussion. The Departments will not consider a NQTL comparative analysis which includes only general, conclusory statements regarding compliance to meet the requirements of the MHPAEA and CAA. Instead, detailed written

BCLP Benefits Newsletter: Q1 2021

March 31, 2021


BCLP Benefits Newsletter: Q1 2021

March 31, 2021

Authored by: Steve Evans

The 2020-2021 transition was anything but tranquil, even when it comes to something as prosaic as employee benefits. We saw two new pieces of significant benefits legislation: the Consolidated Appropriations Act, 2021 (the “CAA”), and the American Rescue Plan Act of 2021 (“ARPA”). We also saw a frenzy of 4th quarter rule-making from the outgoing Trump administration, much of which was stopped in its tracks with the introduction of the Biden administration. As is common when there is a change in administration, a regulatory freeze was imposed pursuant to which unpublished guidance was withdrawn for review and approval, and the effective dates of other guidance was postponed. All the while, plan sponsors were still responding to 2020 COVID-19 related legislation and looming deadlines under the Setting Every Community Up for Retirement Enhancement Act of 2019 (the “SECURE Act”).

In this newsletter, we provide an overview of the guidance that emerged during this busy period, including ARPA and CAA as they impact pension and welfare plans, fringe benefits and student loan assistance. We briefly address the guidance and implementation freeze, and provide an overview of other important developments — all with the aim of helping plan sponsors digest and comply with new and often imminent compliance obligations.

To read the newsletter, please click here.

If you have any questions about a topic included in this newsletter, please contact a member of our Employee Benefits & Executive Compensation Group.

100% COBRA Subsidy from April 1, 2021 Until September 30, 2021

The American Rescue Plan Act of 2021 (“ARPA”) provides that, for the period from April 1, 2021 until September 30, 2021, if an individual’s Consolidated Omnibus Budget Reconciliation Act (“COBRA”) qualifying event is an involuntary termination of employment or a reduction of hours (each, an “assistance eligible individual”), then 100% of the COBRA premium is paid by the employer, health plan, or insurer and the premium expense is reimbursed by the federal government through a refundable FICA tax credit.  For an insured or self-insured plan, the employer applies for the tax credit; however, a multiemployer plan will apply direct for the tax credit.

The subsidy is available for both assistance eligible individuals as well as their dependents electing COBRA, but is not available for anyone who voluntarily ends their employment.  The subsidy will end on the earliest of (1) the expiration of the assistance eligible individual’s maximum 18-month COBRA period, (2) the individual’s eligibility for another group health plan or Medicare, or (3) September 30, 2021 (when the temporary subsidy under ARPA ends).

The termination of employment or reduction of hours may have occurred prior to the effective date of ARPA.  A new 60-day election period is created for individuals who had an involuntary termination of employment or reduction in hours within the last 18 months and did not timely elect COBRA or dropped COBRA coverage.  The election period begins on the date that the individual receives the new COBRA notice.

An employer may elect to permit assistance eligible persons

U.S. COVID-19: Ring in the New Year with COVID-19 Relief for Health and Dependent Care Flexible Spending Accounts

Thanks to the Consolidated Appropriations Act, 2021 (the “Act”), employers with health flexible spending accounts (“HFSAs”) and dependent care flexible spending accounts (“DFSAs”) may adopt temporary liberalized rules to help reduce employees’ forfeitures during the pandemic.  The Act expands upon some of the prior relief provided under IRS Notice 2020-29 and temporarily relaxes certain standard HFSA and DFSA rules for the 2021 and 2022 Plan Years.

Employers will want to work through the new relief, determine what provisions to adopt, and communicate any changes in short order.

  • Increased Carry-Over Amounts
    • A cafeteria plan may allow for the carry-over of up to 100% of the unused HFSA and DFSA balances at the end of the 2020 and/or 2021 Plan Year(s) to the next Plan Year. Under the standard cafeteria plan rules, carry-overs are limited only to HFSAs.
    • Carried over amounts do not reduce the maximum annual HFSA or DFSA benefit amount a participant may elect for a Plan Year.
  • Extended Grace Period for Incurring Claims
    • Generally, a plan may allow a grace period of up to 2 ½ months following the end of a Plan Year during which participants can incur additional expenses to be paid or reimbursed from HFSA and DFSA amounts remaining at the end of the immediately preceding plan year. IRS Notice 2020-29 allowed employers to extend any HFSA and DFSA grace period ending in 2020 to December 31, 2020.
    • The Act permits employers to adopt a

BCLP Benefits Q3 Review: IRS, DOL, & PBGC Guidance

In this edition of our newsletter, we have summarized key third quarter guidance from the Internal Revenue Service, Department of Labor, and Pension Benefit Guaranty Corporation. As we look back on the third quarter of 2020, there has been a noticeable shift at the federal level from a focus on guidance related to the COVID-19 pandemic and the Congressional response in the first half of the year to a return to executing the regulatory agendas of the federal agencies and the priorities of President Trump’s administration. Despite this shift, federal agencies have continued to issue new, amended, or extended COVID-19 guidance as the circumstances of the COVID-19 pandemic continue to evolve. We have, therefore, included both COVID-19 and non-COVID-19 guidance in this newsletter and group the summaries by these categories.

Read the full newsletter by clicking here.

If you have any questions about a topic included in this newsletter, please contact a member of our Employee Benefits & Executive Compensation Group.

BCLP Benefits Mid-Year 2020 Newsletter: Q2 2020 COVID-19 and Additional Regulatory Guidance

July 21, 2020


In the second quarter of 2020, we have seen employers faced with continued challenges as they manage the impact of the COVID-19 pandemic on their businesses and begin the process of returning to normal operations. The flurry of regulatory guidance from governmental agencies responsible for employee benefit plan oversight that began earlier this year in response to the COVID-19 pandemic and the Families First Coronavirus Response Act (“FFCRA”) and Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) also has continued unabated. In addition, the Department of Labor and the Internal Revenue Service have also been busy releasing guidance unrelated to COVID-19.

In this newsletter, we have provided summaries of five of these items – three related to COVID-19 and the fifth summarizing the Department of Labor’s (“DOL”) final electronic disclosure rule.  In addition to these longer summaries, we have also included short notes describing the additional guidance that has been released.

If you have any questions about a topic included in this newsletter, please contact a member of our Employee Benefits & Executive Compensation Group.

To read a copy of the newsletter, please click here.

U.S. Companies Assess Ripple Impact of COVID-19 on their Business and Incentive Plan Metrics

As we near the end of second quarter 2020, companies are evaluating the ripple effect COVID-19 has had and will likely continue to have on their businesses as a result of worker layoffs, shelter-in-place orders, employee health and safety matters, supply chain and counterparty risk issues and decreased product demand, among other things.

One key area of focus for many companies and compensation committees will be assessing the impact of COVID-19 on incentive plan performance award targets, many of which were set in February before the pandemic hit the United States and may now be unattainable. Most companies will want to keep their executive and management teams striving for potentially new and adjusted goals that the new environment requires. How to go about reflecting and rewarding key employees for performance around these changes becomes challenging when awards for the performance period have already been granted.

Some companies have viewed their performance awards as long-term in nature and have maintained existing performance targets in spite of changed circumstances. Others see a need for changes. The approaches will depend on each company’s particular compensation philosophy and structure, the amounts and types of awards that have been granted, the extent and manner in which the business and existing targets have been affected, and other motivating criteria at issue.

On approach that companies have considered in connection with their annual awards is to adjust the performance targets based on currently available information so as to reflect changing expectations. This approach is relatively straightforward. A

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