Benefits Bryan Cave

Benefits BCLP

Other Posts

Main Content

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

Categories

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

Categories

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.

Additional COVID-19 Extensions = Greater Administrative Headaches for Plan Sponsors

As any employer is keenly aware, the administration of an employee benefit plan (especially a group health plan) involves a number of different deadlines imposed under the Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code (Code).  Amidst concerns that the current COVID-19 pandemic may cause individuals to lose benefits due to the failure to meet certain pre-established deadlines and in recognition of the challenges group health plans may face in complying with certain notice obligations, the Department of Labor and Internal Revenue Service (collectively, the “Agencies”) jointly published notice in the Federal Register of a significant extension in application of the following statutorily prescribed deadlines:

Special Enrollment Periods

  • 30-day deadline to request enrollment in the event of a loss of eligibility for other health coverage or the acquisition of a new dependent due to marriage, birth, adoption or placement for adoption
  • 60-day deadline to request enrollment in the event of either a loss of eligibility for coverage under Medicaid or a state children’s health insurance coverage (CHIP) or gaining eligibility for premium assistance through Medicaid or CHIP.

COBRA Continuation Coverage

  • 30-day period for employer to notify plan administrator of certain COBRA qualifying events
  • 14-day period for plan administrator to issue COBRA Election Notice to qualified beneficiary
  • 60-day period for qualified beneficiary to elect COBRA continuation coverage
  • 45-day period for qualified beneficiary to submit initial COBRA premium payment
  • 30-day period for qualified beneficiary to submit subsequent COBRA premium payments
  • Qualified beneficiary’s

COVID-19: Mid-Year Changes to 401(k) Plans

U.S. employers looking to reduce operating costs in the short term in response to the disruption caused by the COVID-19 pandemic may seek to reduce or suspend their matching or nonelective contributions in their 401(k) plan. The following summarizes the key issues facing employers in making the determination to suspend or reduce safe-harbor contributions.

Suspending or Reducing Employer Contributions in Non-Safe-harbor Plans

Discretionary employer matching and nonelective contributions generally may be immediately suspended or reduced through appropriate corporation action.  Employers should consider the following in connection with a suspension or reduction of employer contributions:

  • Does the Plan have Discretionary Employer Contributions?

If the plan does not include provisions setting out a formula or specific amount of employer contributions, the board simply needs to take action to change the amount of the employer matching contribution, which could include suspending the contribution until the board takes further action.

  • Does The Plan have a Set Formula for Determining Matching or Nonelective Contributions?

If the retirement plan or related documents set out a formula for determining the employer contributions (that is, the amount of the contributions are “hard-wired” into the plan), the plan will need to be amended to change the formula.  Companies may also consider removing specific formulas entirely and replacing them with provisions stating that the amount of the employer nonelective or matching contributions is discretionary and will be determining by the board from time to time.

  • When may the Reduction or

CARES Act Expands U.S. Retirement Plan Access and Provides Additional Relief and Changes to Employer-Provided Benefits

The Coronavirus, Aid, Relief and Economic Security Act (“CARES Act”) provides legislative relief to participants impacted by the Coronavirus pandemic.  A summary of key provisions of the CARES Act, based on the current draft, is included below. These provisions are, of course, still subject to approval by both houses of Congress and the President’s signature.

Provisions Applicable to Retirement Plans

Coronavirus-Related Distributions

Tax-favored coronavirus-related distributions (“CRD’s) which do not exceed $100,000 will not be subject to the 10% early distribution tax.  A CRD means any distribution from a plan made on or after January 1, 2020 and before December 31, 2020 to an individual who is one of the following:

  • An individual who is diagnosed with COVID-19 or SARS-CoV-2;
  • An individual whose spouse or dependent is diagnosed with COVID-19 or SARS-CoV-2; or
  • An individual who experiences adverse financial consequences as a result of being quarantined, furloughed, laid off, experiencing a reduction of work hours, inability to work due to lack of child care caused by COVID-19 or SARS-CoV-2, the closing or reduction of hours by a business owned or operated by such participant due to COVID-19 or SARS-CoV-2, or other factors determined by the Treasury Secretary.

Notably, the plan administrator may rely on the individual’s certification that he/she has experienced a CRD.  Tax on the CRD shall, unless the individual elects to the contrary, be spread pro-rata over a three year period.  The individual may repay the CRD to the plan without regard to contribution

The attorneys of Bryan Cave Leighton Paisner make this site available to you only for the educational purposes of imparting general information and a general understanding of the law. This site does not offer specific legal advice. Your use of this site does not create an attorney-client relationship between you and Bryan Cave LLP or any of its attorneys. Do not use this site as a substitute for specific legal advice from a licensed attorney. Much of the information on this site is based upon preliminary discussions in the absence of definitive advice or policy statements and therefore may change as soon as more definitive advice is available. Please review our full disclaimer.