Brian Gilmore

I agree if they were overriding the TPA's appeal determination that would challenge the appeals fiduciary status of the TPA and create the possibility of losing the Firestone deferential standard of review. However, if they're preemptively directing the TPA to apply a consistent interpretation for all similar claims, I don't see that as a Firestone risk because it's not challenging the TPA's appeal determination. It's exercising the employer's fiduciary role as plan administer to interpret plan terms, then directing the TPA to apply those interpretations consistently. More details-- https://www.newfront.com/blog/addressing-employee-health-plan-exception-requests-part-ix Issue #3: Preserving the Firestone Deferential Standard of Review Employers that sponsor self-insured health plans have greater flexibility with respect to many aspects of plan administration than a typical fully insured plan. However, a common misconception about moving to a self-insured health plan is that the employer will be able to make plan exceptions to approve employee appeals. In the vast majority of self-insured plan arrangements, the employer does not have the authority under the plan terms to make appeals determinations. ERISA requires that appeals be determined by “an appropriate named fiduciary of the plan” to ensure a full and fair review of the claim and adverse benefit determination. Employers sponsoring a self-insured health plan will almost always delegate the role of the named fiduciary for appeals to the TPA. Such delegation is appropriate because, for example, employers in almost all cases do not want to be responsible for making medical necessity determinations (which would require an experienced medical professional’s judgment), or work within the confines of the strict ERISA appeals procedure timing requirements (which can be as short as 24 hours for urgent care claims). It would generally not be practical or appropriate for employers to assume that role. ERISA’s fiduciary duties include the duty of prudence, requiring all actions be taken with the skill, prudence, and diligence of an expert in the context of plan administration. An employer determining appeals without a comprehensive team of experts and sophisticated committee to make determinations could be exposed to a potential breach of fiduciary duty claim for not acting prudently in determining appeals. Such an approach may also expose the employer to a potential breach of fiduciary claim for imprudently selecting and monitoring a TPA that does not act as appeals fiduciary. Important Note: Employers always have the fiduciary duty to prudently select and monitor plan service providers. If an employer becomes aware of a TPAs consistent practice of incorrectly determining claims and appeals, the employer will need to take action to address the failure by ensuring the TPA corrects its practices or by changing TPA vendors. In the typical situation where the TPA is acting as the named fiduciary for appeals determinations, the employer should not override the final adverse benefit determination of the TPA. An employer’s attempt to override the named appeal fiduciary’s (i.e., TPA’s) appeal determination could violate the requirement that appeals be determined by the named appeals fiduciary. This violation could result in loss of the deferential standard of review in federal court for any claim for benefits brought in federal court. The deferential standard of review, known as the “Firestone standard” in reference to the seminal U.S. Supreme Court case Firestone Tire & Rubber Co. v. Bruch, provides that the participant can prevail on the claim in court only if the plan abused its discretion by acting in an arbitrary and capricious manner in making the adverse benefit determination. This “Firestone standard” (sometimes referred to as “Firestone deference”) provides that the court will generally defer to the plan’s determination—even if the court might independently have come to a different conclusion—unless the determination was beyond the scope of a possible reasonable interpretation. Where the “Firestone standard” does not apply, ERISA claims for benefits brought in federal court would be subject to the “de novo” standard of review with no deferential treatment. Under the “de novo” standard of review, the court will make its own independent decision as to whether it agrees with the decision—without affording any deference to the plan’s determination. In other words, where the “Firestone standard” begins with the presumption that the plan’s determination was correct (and will overturn that determination only if the plan’s determination was clearly wrong), the “de novo” standard of review is a fresh and new decision by the court without any presumption that the plan initially made the correct determination. An employer’s failure to have appeals determined by the named appeals fiduciary could therefore cause the “de novo” standard of review to apply in claims that reach litigation—thereby making it much more likely the plaintiff participant would prevail against the plan. How to address the issue: Employers have two options where they disagree with the TPA’s (named appeals fiduciary’s) determination: The first approach is to amend the plan for all participants to modify the plan terms and specifically cover or exclude the item or service at issue. Alternatively, employers have the discretionary authority to interpret plan terms on a consistent basis for all participants. Employers can direct the TPA in writing to interpret the plan provision in a matter consistent with the employer’s understanding of those plan terms. Under either approach, the employer should first confirm the approach with the TPA (for administrative claim processing purposes) and stop-loss provider (for stop-loss coverage purposes) before proceeding.

The main issues I see here are: The ERISA plan precedent; and Stop-loss coverage. As you noted, the stop-loss piece is as simple as ensuring this approach won't jeopardize the plan's stop-loss coverage for this individual. They should get written approval from the stop-loss provider to confirm. As to the precedent, ERISA requires that employers administer and maintain the plan pursuant to its written terms. Within this framework, employers should not make “exceptions” to act contrary to plan terms because doing so could be a breach of fiduciary duty. Rather, employers can exercise their discretionary authority to interpret plan terms when making a plan benefit determination. Employers that approve coverage in these situations have therefore interpreted the plan’s terms to be flexible enough to accommodate coverage for the benefit at issue. An employer’s broad interpretation of the plan’s terms beyond the standard denotation to permit coverage effectively acts in the same manner as a plan amendment because the employer must then apply that approach consistently for all similarly situated employees. In other words, a health plan benefit “exception” to approve coverage for a benefit creates an ERISA plan precedent requiring the plan to offer coverage for all employees and dependents in similar circumstances. An employee or dependent denied benefits in similar circumstances (e.g., the same type of out-of-network claim) would have a potential claim for ERISA breach of fiduciary duty or claim for benefits. How broadly or narrowly the precedent applies in practice is a matter of interpretation based on the specific facts and circumstances of the exception. Employers should keep in mind that an aggressive argument as to the narrowness of the precedent’s scope could always be challenged by the DOL or a participant lawsuit if it were unreasonable. I think they would be in a good position here to take the position that this interpretation to permit OON Rx coverage at the in-network rate applies only in the context of a drug shortage in-network. In other words, that this precedent wouldn't extend beyond that relatively limited scenario. But they might consider actually amending the plan to specify this type of OON coverage for all participants (i.e., where there's an in-network shortage) for avoidance of doubt. I've written about this issue more here if you're interested: https://www.newfront.com/blog/addressing-employee-health-plan-exception-requests-part-ix

Yeah that will work as long as you take care of it by the tax filing deadline (4/15) to avoid the 6% excise tax on the excess. I posted a walkthrough on the steps to take a corrective distribution of the excess here: https://www.newfront.com/blog/correcting-excess-hsa-contributions

Interesting situation with the CBA mandate through collective bargaining eliminating the choice aspect. If there is a difference in the "employee contribution" for employee-only vs. family coverage, wouldn't there still be a choice between taxable cash and qualified benefits for those employees with a family? In other words, couldn't employees with a family choose the employee-only tier in order to receive more in taxable cash? Or do employees with dependents have to enroll the family? If you there is no difference in cost between EE-only and family--or if there is a cost difference but employees can't choose to drop down to EE-only coverage if they have a family--my take would be that no cafeteria plan is needed or even possible in that situation because of the lack of choice (i.e., no taxable cash option). The "employee contributions" would simply be treated in the same manner as an employer contribution that is excluded from income under §106. Prop. Treas. Reg. §1.125-1(b)(4): (4) Election by participants. (i) In general. A cafeteria plan must offer participants the opportunity to elect between at least one permitted taxable benefit and at least one qualified benefit. For example, if employees are given the opportunity to elect only among two or more nontaxable benefits, the plan is not a cafeteria plan. Similarly, a plan that only offers the election among salary, permitted taxable benefits, paid time off or other taxable benefits is not a cafeteria plan. See section 125(a), (d). See §1.125-2 for rules on elections.

How could there be no employee choice between cash and health coverage? You would have state wage withholding problems if you forced participation in a plan with employee contributions. In other words, there always is going to be the choice between cash and the health plan, which is why you need the Section 125 cafeteria plan safe harbor from constructive receipt to facilitate pre-tax contributions. It's the only game in town. Full details: https://www.newfront.com/blog/the-section-125-safe-harbor-from-constructive-receipt Cite: Prop. Treas. Reg. §1.125-1(b)(1): (1) Cafeteria plans. Section 125 is the exclusive means by which an employer can offer employees an election between taxable and nontaxable benefits without the election itself resulting in inclusion in gross income by the employees. Slide summary: 2023 Newfront Section 125 Cafeteria Plans Guide

These are always unfortunate situations. For a while we could rely on the Outbreak Period extensions, but the last day to enroll using those extensions for a HIPAA special enrollment period (including birth/adoption) was August 9, 2023. More details: https://www.newfront.com/blog/covid-emergency-periods-to-end-may-11 So now we're back to the general rules that applied pre-pandemic. A late enrollment exception typically will not be viable for multiple reasons. The main concerns are: The Section 125 Cafeteria Plan Rules; The Insurance Carrier (or Stop-Loss) Limitations; and The ERISA Duty to Follow Plan Terms and Plan Precedent. Sometimes employers mistakenly think just getting a carrier exception will solve all their concerns, but that would be a major mistake. More details: https://www.newfront.com/blog/health-plan-exceptions-part-1 There is a very rare situation where it might be appropriate to consider the informal IRS "doctrine of mistake" if there was truly a systems limitation that prevented the enrollment. That requires "clear and convincing evidence," which is a very high bar to meet. Typically employees are just grasping for something to facilitate the late enrollment without their actually being clear and convincing evidence of a systems error. Even if there is an argument of meeting that standard, you would still need carrier (or stop-loss approval) to permit the late enrollment. More details: https://www.newfront.com/blog/addressing-employee-health-plan-exception-requests-part-vii

I agree there are no OE rules in ERISA. That's a good point. So in theory the employee could be prevented from moving to a new health plan option annually. But virtually all employers have employees contribute the employee-share of the premium through the Section 125 cafeteria plan on a pre-tax basis. My point was those rules prohibit the employer from requiring the employee to continue to participate in this plan option (via the pre-tax contribution election) year after year. So at a minimum the employee is going to be able to revoke that pre-tax contribution (and thereby health plan participation) election annually. And, assuming this isn't a very strange plan/eligibility arrangement, the employee will have the option to make other alternative plan option elections at that point.

I'm assuming employees pay the employee-share of the premium for this health plan on a pre-tax basis through the Section 125 cafeteria plan. The Section 125 rules require that a cafeteria plan year be 12 months (in some cases shorter for a short plan year, but never longer). Employees need to have the opportunity to change their election prior to the start of each plan year, which is what we would normally call open enrollment. You can use a passive enrollment approach where the elections are essentially evergreen unless the employee elects to change them. But you can't lock an employee into their cafeteria plan election for a period beyond 12 months in any scenario. The fact that the underlying coverage option here is grandfathered for ACA purposes is irrelevant for these purposes. Here are the relevant cites: Prop. Treas. Reg. §1.125-1(d): (d) Plan year requirements. (1) Twelve consecutive months. The plan year must be specified in the cafeteria plan. The plan year of a cafeteria plan must be twelve consecutive months, unless a short plan year is allowed under this paragraph (d). A plan year is permitted to begin on any day of any calendar month and must end on the preceding day in the immediately following year (for example, a plan year that begins on October 15, 2007, must end on October 14, 2008). A calendar year plan year is a period of twelve consecutive months beginning on January 1 and ending on December 31 of the same calendar year. A plan year specified in the cafeteria plan is effective for the first plan year of a cafeteria plan and for all subsequent plan years, unless changed as provided in paragraph (d)(2) of this section. Prop. Treas. Reg. §1.125-2(a): (a) Rules relating to making and revoking elections. (1) Elections in general. A plan is not a cafeteria plan unless the plan provides in writing that employees are permitted to make elections among the permitted taxable benefits and qualified benefits offered through the plan for the plan year (and grace period, if applicable). All elections must be irrevocable by the date described in paragraph (a)(2) of this section except as provided in paragraph (a)(4) of this section. An election is not irrevocable if, after the earlier of the dates specified in paragraph (a)(2) of this section, employees have the right to revoke their elections of qualified benefits and instead receive the taxable benefits for such period, without regard to whether the employees actually revoke their elections. (2) Timing of elections. In order for employees to exclude qualified benefits from employees' gross income, benefit elections in a cafeteria plan must be made before the earlier of— (i) The date when taxable benefits are currently available; or (ii) The first day of the plan year (or other coverage period). Here's some more info on the passive enrollment option: https://www.newfront.com/blog/passive-enrollments-with-rolling-elections Election Options at Open Enrollment for Ongoing Eligible Employees Employers have two options for how to offer election choices at open enrollment for ongoing eligible employees: Affirmative elections; or Passive enrollment (rolling elections). Affirmative elections are the standard approach where the employee must opt-in to coverage by electing to enroll in the health and welfare plan and pay the associated employee-share of the premium on a pre-tax basis through the Section 125 cafeteria plan. Employees who take no action will not be enrolled. Passive enrollments provide that employees’ existing health and welfare plan elections for the current plan year—including to pay the associated employee-share of the premium on a pre-tax basis through the Section 125 cafeteria plan—will automatically roll to the next plan year if the employee takes no action. Employees wishing to change their health and welfare plan elections (e.g., to waive or change plan options) must affirmatively elect such changes at open enrollment. Employers utilizing a passive enrollment structure should clearly communicate the rolling election feature to employees at each open enrollment (typically through a ben admin system), including the following content: A general description of the rolling election process; The employee-share of the premium for each plan option; The procedures for declining coverage; The OE deadline to make an alternative election (i.e., to a different pan option other than the current election, or to waive); A statement that the election (affirmative or rolling) will be irrevocable for the plan year unless the employee experiences a permitted election change event; and A list of the employee’s existing elections.

Unfortunately you're going to need to delay this transition until next year. The health FSA limit is capped at a prorated amount for a short plan year. You'll need to tell employees that prorated amount in advance of the short plan year and have them capped at that prorated limit when electing at OE for the short plan year. At this point presumably you have elections (and reimbursements) in excess of what would have been the prorated limit for a short plan year running from April - December ($2,387. 50). So you'll need to make the transition with a short plan year from April - December 2024 that is communicated in advance and capped at the prorated limit (likely $2,400). Then you can start with for a calendar plan year in 2025. Here's an overview of these considerations: https://www.newfront.com/blog/short-plan-year-considerations

Unfortunately, it is not. Medicare and Medicaid enrollment are specifically referenced in Treas. Reg. §1.125-4, but VA enrollment is not.

Agreed that's not clear, but my reading is the employer (or the TPA if attesting on their behalf) would have to submit a GCPCA on behalf of the plan for the period prior to becoming fully insured. The GCPCA is an annual requirement. Because of the delay in setting it up etc., we are doing the first one by the end of '23 to cover the full period dating back to CAA enactment. So that would cover the end of 2020 plus 2021, 2022 and YTD 2023. Someone still needs to complete the attestation for that period when self-insured, and it wouldn't be the carrier in this case. I don't see how the carrier attestation could satisfy that whole period when not fully insured for the duration--the carrier won't have any insight into the plan's contracts prior to changing funding arrangements. I'm assuming the same will be true going forward where funding arrangements change mid-year, as you noted. One last thought--if the TPA for the new self-insured offering is the same entity as acted as the carrier for fully insured, there might have a decent argument that no separate GCPCA is needed. But even then, you probably would still need to follow the same rules for self-insured where the TPA has agreed in writing to attest. CMS is putting on a webinar next week to "answer some common questions" that may get into these weeds: https://regtap-cms.zoomgov.com/webinar/register/WN_e6ORT5Y7T4mHjhRUHDsJPg#/registration In the meantime, here's why I'm reading it to require the additional attestation in your situation: https://www.dol.gov/sites/dolgov/files/EBSA/about-ebsa/our-activities/resource-center/faqs/aca-part-57.pdf Q6: What is the due date for the Gag Clause Prohibition Compliance Attestation? The first Gag Clause Prohibition Compliance Attestation is due no later than December 31, 2023, covering the period beginning December 27, 2020, or the effective date of the applicable group health plan or health insurance coverage (if later), through the date of attestation. Subsequent attestations, covering the period since the last preceding attestation, are due by December 31 of each year thereafter. ... Q10: Can an issuer that both offers group health insurance and acts as a TPA for self-insured group health plans submit a single Gag Clause Prohibition Compliance Attestation on behalf of itself, its fully-insured group health plan policyholders, and its self-insured group health plan clients? Will the submission requirement be satisfied for the issuer and its group health plan policyholders and clients? Yes. An issuer that both offers group health insurance and acts as a TPA for self-insured group health plans may submit a single Gag Clause Prohibition Compliance Attestation on behalf of itself, its fully-insured group health plan policyholders, and its self-insured group health plan clients. However, to avoid duplication, the Departments recommend that issuers acting as TPAs (or other service providers) and attesting on behalf of self-insured group health plans first coordinate with each plan to ensure that the group health plan does not intend to attest on its own behalf for some or all of its provider agreements. With respect to fully-insured group health plans, the group health plan and the issuer are each required to annually submit a Gag Clause Prohibition Compliance Attestation. However, when the issuer of a fully-insured group health plan submits a Gag Clause Prohibition Compliance Attestation on behalf of the plan, the Departments will consider the plan and issuer to have satisfied the attestation submission requirement.

I would think any change to the terms of the agreement would constitute entering into a new agreement for these purposes. So I would work with the TPA to remove those gag clause provisions asap. They'll probably be more than willing to given the CAA provisions at play here. My guess is they would even be willing to date the change back to 12/27/20 and certify that they have not enforced such terms since that date. It's not perfect, but it still should be good enough at this point--not really sure what else could be done. Here's the actual attestation language: https://www.cms.gov/files/document/hios-gcpca-usermanual-03_00_00_062823.pdf The following will then display: Group health plans, including non-federal governmental plans, and health insurance issuers offering group health insurance coverage. I attest that, in accordance with section 9824(a)(1) of the Internal Revenue Code, section 724(a)(1) of the Employee Retirement Income Security Act, and section 2799A-9(a)(1) of the Public Health Service Act, the group health plan(s) or health insurance issuer(s) offering group health insurance coverage on whose behalf I am signing will not enter into an agreement, and has not, subsequent to December 27, 2020, entered into an agreement with a health care provider, network or association of providers, third-party administrator, or other service provider offering access to a network of providers that would be directly or indirectly restrict the group health plan(s) or health plan(s) or health insurance issuer(s) from—...

Interesting situation and position. My thoughts are: State insurance laws generally don't apply outside of the state where policy is sitused, so the FL age 30 mandate and the state mini-COBRA rules won't apply to B's plan. The COBRA M&A rules still require on of the statutorily prescribed triggering events to cause loss of coverage to form a COBRA qualifying event. Those rules specifically state that an employee retained by the buyer doesn't experience a QE upon the transaction even if the employee/dependent lost coverage (because there's no triggering event where no termination of employment). I think one argument could be that they would've have a 36-month QE for the children upon aging out of B's plan if they had been in it upon reaching age 26, but in this case that option doesn't appear to be available. Your argument appears to be that the children effectively had the triggering event the instant the COBRA rules sprang coverage responsibility to B, because at that point they lost dependent status. But again, since they never were actually in dependent status with B I don't think that works. I think the best analogy would be to assume the transaction never happened and S amended its plan to remove the age 30 dependent provision and bring it to the standard age 26 provision. Good arguments on both sides as to whether that's a COBRA QE. Ultimately, if you could get the carrier (or stop-loss) to agree that it's a QE, I would assume it is a QE and proceed accordingly regardless of these technical considerations. Otherwise, I think you're stuck between a rock and a hard place and will have to direct the dependents to the exchange. Treas. Reg. §54.4980B-9, Q/A-5: Q-. 5. In the case of a stock sale, is the sale a qualifying event with respect to a covered employee who is employed by the acquired organization before the sale and who continues to be employed by the acquired organization after the sale, or with respect to the spouse or dependent children of such a covered employee? A- 5. No. A covered employee who continues to be employed by the acquired organization after the sale does not experience a termination of employment as a result of the sale. Accordingly, the sale is not a qualifying event with respect to the covered employee, or with respect to the covered employee's spouse or dependent children, regardless of whether they are provided with group health coverage after the sale, and neither the covered employee, nor the covered employee's spouse or dependent children, become qualified beneficiaries as a result of the sale.

Yes, that safe harbor is available for any ERISA welfare benefit plan. However, be careful with that "no endorsement" prong because it's rarely satisfied. Here's some details: https://www.newfront.com/blog/the-erisa-voluntary-plan-safe-harbor ERISA §3(1) defines an “employee welfare benefit plan” to include any plan, fund, or program established or maintained by an employer that provides: Medical, surgical, hospital benefits (e.g., medical, dental, vision, health FSA, HRA, EAP); Benefits in the event of sickness, accident, disability, death, or unemployment (e.g., disability, life, AD&D, severance); Vacation benefits; Apprenticeship or other training programs; Day care centers; Scholarship funds; or Prepaid legal services. ... No Employer Endorsement of the Program The third condition of the voluntary plan safe harbor is clearly the most difficult condition to satisfy—both because of its ambiguity in scope and its inconsistency with typical employer practices. Employers commonly refer to offerings that meet the first two conditions above as a “voluntary benefit.” However, for purposes of the voluntary plan safe harbor, employers must have additional degrees of separation from the program to qualify for the ERISA exemption. The regulations specify that the sole functions of the employer with respect to the program can be to a) permit the insurer to publicize the program to employees, and b) collect premiums through payroll deductions to remit them to the insurer. The employer cannot “endorse” the program in those limited permitted functions. In making sure employees are aware of the program, DOL guidance states the employer “may facilitate the publicizing and marketing of the program, but only to an extent short of endorsing the program.” What constitutes “endorsing the program”? The overarching theme from the DOL guidance is that endorsement occurs if the employer “expresses to [employees] any positive, normative judgement regarding the program,” or if it “urges or encourages member participation in the program or engages in activities that would lead a member to reasonably conclude that the program is part of a benefit arrangement established or maintained by the [employer].” The various court cases and DOL guidance interpreting this somewhat ambiguous language generally have found the following employer practices to at least potentially constitute endorsement: Employer selection of a specific insurance carrier to offer the program Employer selection of specific types of coverage to be offered under the program Employer involvement in the plan design of the program Program design structures that are only available to employees Program materials that include the employer’s name, logo, or any other identifying markers Positive statements about the program made by the employer (e.g., a recommendation to enroll) Including the program in ERISA documents (e.g., wrap SPD) or filings (e.g., Form 5500) Stating that the benefit is subject to ERISA in program materials Providing claims and appeals assistance to employees Accordingly, employers relying on the voluntary plan safe harbor exemption from ERISA will want to carefully monitor their benefit administration practices to avoid any of these forms of potential endorsement. Given how common these practices are with all other health and welfare benefits, it will likely take significant education and restraint among the HR, people operations, and benefits professionals responsible for plan administration to avoid inadvertently slipping into one of these traps for the unwary. Slide summary: 2023 Newfront ERISA for Employers Guide

Agreed, quick overview on 41-49 here if helpful: 2023 Newfront Fringe Benefits for Employers Guide

My position would be the current HSA custodian had no obligation to accommodate the request because it related to contributions with a prior custodian. It would have been nice if they could have tried to make something work--but, as you point out, they would still likely have had 5498-SA issues that would be difficult to address. In any case, it's all irrelevant at this point because the 4/15 deadline to allocate the contribution to the prior year has long since passed.

There are two types of domestic partnerships at play: Registered domestic partnerships (RDPs); and Company-defined domestic partnerships. For RDPs, some states will require that fully insured plans sitused in that state treat RDPs and spouses equally as a matter of state insurance law. California is a prime example. The employer is not involved in the RDP status determination, that's simply a function of the employee meeting the state conditions and registering with the state. For company-defined DPs, the employer has broad discretion on how to handle. Cohabitation requirements are common in these definitions. It doesn't matter what state RDP conditions are for purposes of the company definition of a DP. Here's an overview: https://www.newfront.com/blog/registered-domestic-partners-and-company-defined-domestic-partners Company-Defined Domestic Partners: Employer Discretion Many employers prefer to offer domestic partner health plan coverage more broadly than what is required for RDPs. RDP status is the functional equivalent of marriage in California (including community property), and many employees do not want to enter into a serious, state-recognized relationship with significant rights and obligations to enroll their “domestic partner.” As a recruiting and retention matter, it can be difficult to limit domestic partner eligibility exclusively to RDPs because many employees expect the ability to enroll an individual based on a relationship that meets a lower standard than the formal RDP status. Company-Defined Domestic Partners: Domestic Partner Policy Employers that choose to offer domestic partner coverage more broadly can develop their own domestic partner policy that permits employees to enroll their domestic partner simply by meeting the company’s definition of a domestic partner. These domestic partners are typically referred to as company-defined domestic partners or non-RDPs. The insurance carrier (or stop-loss provider for self-insured plans) will almost always defer entirely to the company’s definition of a domestic partnership. Note, however, that some carriers require employers to declare in the application or renewal that they are offering coverage more broadly than the RDP requirements. Company-Defined Domestic Partners: Verification Although some employers choose not to require any form of verification, most employers require employees to complete an affidavit whereby employees attest to their relationship meeting the company-defined domestic partner status in order to enroll the domestic partner in the health plan. This approach generally serves two primary purposes: 1) ensuring that employees are aware of the company’s domestic partner definition, and 2) preventing potential fraudulent enrollment to some degree. Note: The equal verification rules for RDP relationships do not apply to company-defined (non-RDP) domestic partner eligibility. Employers commonly require employees to complete a domestic partnership affidavit to establish eligibility of a company-defined domestic partner regardless of whether they request verification of a marriage or RDP relationship. Company-Defined Domestic Partners: Common Requirements Company-defined domestic partner policies typically require all or some of the following elements to establish an eligible domestic partner: Ongoing and committed relationship Relationship has existed for a set period Both individuals are at least 18 years old and competent to contract Neither individual is currently married or in a RDP relationship with another Intent to remain in the relationship indefinitely Not related by blood in a way that would prevent marriage/RDP relationship Share the same residence for a set period Jointly responsible for each other’s financial obligations Are not in the relationship solely for the purpose of health plan eligibility Slide summary: 2023 Newfront Health Benefits for Domestic Partners Guide

What I'm struggling with is even if this is a MHPAEA "mental health benefit," what prevents the MFT exclusion? I was looking through the MHPAEA compliance checklist, and I'm thinking maybe this note is relevant: https://www.dol.gov/sites/dolgov/files/EBSA/laws-and-regulations/laws/mental-health-parity/self-compliance-tool.pdf Under the MHPAEA regulations, if a plan or issuer provides mental health or substance use disorder benefits in any classification described in the MHPAEA final regulation, mental health or substance use disorder benefits must be provided in every classification in which medical/surgical benefits are provided. See 26 CFR 54.9812-1(c)(2)(ii)(A), 29 CFR 2590.712(c)(2)(ii)(A), 45 CFR 146.136(c)(2)(ii)(A). Under the MHPAEA regulations, the six classifications* of benefits are: 1) inpatient, in-network; 2) inpatient, out-of-network; 3) outpatient, in-network; 4) outpatient, out-of-network; 5) emergency care; and 6) prescription drugs NOTE: If a plan or coverage generally excludes all benefits for a particular mental health condition or substance use disorder, but nevertheless includes prescription drugs for treatment of that condition or disorder on its formulary, the plan or coverage covers MH/SUD benefits in only one classification (prescription drugs). Therefore, the plan or coverage would generally be required to provide mental health or substance use disorder benefits with respect to that condition or disorder for each of the other five classifications for which the plan also provides medical/surgical benefits. That Rx tie-in is the only way I'm seeing a potential parity issue with an exclusion for MFT generally. It will be interesting to learn what the hook is here since this is probably going to be important for a lot of plans to understand.

Yeah you have to use the Q2 Form 720 for all PCORI filings. As Dare noted, that's not out yet. Any day now. You can see the revised date in the top left of the form. It's still showing March 2023, which is how you know it's still the Q1 version.

Unfortunately what I copied above is the lay of the land for ACA purposes if they are W-2 common law employees.

Yes, the preamble to the ACA employer mandate regs addresses this issue: https://www.federalregister.gov/documents/2014/02/12/2014-03082/shared-responsibility-for-employers-regarding-health-coverage C. Application of Hours of Service to Certain Employees Commenters requested guidance on the application of the hours of service definition to certain categories of employees whose hours of service are particularly challenging to identify or track or for whom the final regulations' general rules for determining hours of service may present special difficulties. The Treasury Department and the IRS continue to consider additional rules for the determination of hours of service for purposes of section 4980H with respect to certain categories of employees (including adjunct faculty, commissioned salespeople, and airline employees), and certain categories of hours associated with work by employees (including layover hours (for example, for airline employees) and on-call hours). The regulation authorizes the promulgation of such rules through additional guidance, published in the Internal Revenue Bulletin (see § 601.601(d)(2)(ii)(b)). Until further guidance is issued, employers of adjunct faculty, employers of employees with layover hours, including the airline industry, and employers of employees with on-call hours, as described in sections VI.C.1 through VI.C.3 of this preamble, respectively, are required to use a reasonable method of crediting hours of service that is consistent with section 4980H. Further, employers of other employees whose hours of service are particularly challenging to identify or track or for whom the final regulations' general rules for determining hours of service may present special difficulties, such as commissioned salespeople, are required to use a reasonable method of crediting hours of service that is consistent with section 4980H. A method of crediting hours is not reasonable if it takes into account only a portion of an employee's hours of service with the effect of characterizing, as a non-full-time employee, an employee in a position that traditionally involves at least 30 hours of service per week. For example, it is not a reasonable method of crediting hours to fail to take into account travel time for a travelling salesperson compensated on a commission basis. Paragraphs C.1 through C.3 of this section VI of the preamble describe methods of crediting hours of service that are (or are not) reasonable to use with respect to adjunct faculty, layover hours, including for airline industry employees, and on-call hours. The examples of reasonable methods provided are not intended to constitute the only reasonable methods of crediting hours of service. Whether another method of crediting hours of service in these situations is reasonable is based on the relevant facts and circumstances. ... Commenters noted that the rate of pay safe harbor cannot be used, as a practical matter, for tipped employees or for employees who are compensated solely on the basis of commissions. While this is correct, employers can use the two other affordability safe harbors, Form W-2 wages and federal poverty line, for determining affordability for employees whose compensation is not based on a rate of pay.

First of all, I think they made a mistake using the doctrine of mistake to move the employee's election from the dependent care FSA to the general purpose health FSA. I find it hard to believe there's clear and convincing evidence the employee intended to elect the general purpose health FSA if enrolled in the HDHP, and they've now teed up a nasty HSA correction issue that could have been avoided. It would have made much more sense to either refund the dependent care FSA contributions as taxable income (or move them to a limited purpose FSA). More details here: https://www.newfront.com/blog/addressing-employee-health-plan-exception-requests-part-vii Given that we play the hand we're dealt here--I would still treat this as a situation where the employee was not HSA-eligible for the entire year, and therefore the employer can recoup the ER HSA contributions if the HSA bank permits. The IRS guidance here uses language suggesting that losing HSA-eligibility mid-year is a reference to a situation where the employee is HSA-eligible for some months of the year but not others. In this case, even though it occurs retroactively because of the unusual doctrine of mistake application, the employee ultimately does not have any period of HSA eligibility. I've put that example I'm referring to in bold below: https://www.newfront.com/blog/hsa-mistaken-contributions Mistaken Contribution Exception #1: Employee Was Never HSA-Eligible If an employer contributes to the HSA of an employee who was never HSA-eligible, the IRS takes the position that the HSA never actually existed because it was not properly established. In that case, the employer can correct the error before the end of the calendar year by requesting that the HSA custodian return the contributions (adjusted for earnings and administrative fees) back to the employer. Assuming the custodian agrees to return the funds, the employer should process the correction as follows: Mistaken Employer Contributions: Retained by the employer; Mistaken Employee Contributions: Returned to the employee as taxable income subject to withholding and payroll taxes. Note that this correction method is available only if the employee was never HSA-eligible (or at least was not HSA-eligible during the year at issue—it is not clear if a period of HSA eligibility prior to the calendar year of the mistaken contribution affects the ability to correct under this method). In other words, if the contributions were mistaken because the employee lost HSA eligibility mid-year, the contributions remain nonforfeitable. In that case, any appropriate correction to address excess contributions would be exclusively a matter for the employee dealing directly with the HSA custodian. ... IRS Notice 2008-59, Q/A-23-25: https://www.irs.gov/irb/2008-29_IRB#NOT-2008-59 Q-23. If an employer contributes to the account of an employee who was never an eligible individual, can the employer recoup the amounts? A-23. If the employee was never an eligible individual under § 223(c)(1), then no HSA ever existed and the employer may correct the error. At the employer’s option, the employer may request that the financial institution return the amounts to the employer. However, if the employer does not recover the amounts by the end of the taxable year, then the amounts must be included as gross income and wages on the employee’s Form W-2 for the year during which the employer made the contributions. Example 1. In February 2008, Employer L contributed $500 to an account of Employee M, reasonably believing the account to be an HSA. In July 2008, Employer L first learned that Employee M’s account is not an HSA because Employee M has never been an eligible individual under § 223(c). Employer L may request that the financial institution holding Employee M’s account return the balance of the account ($500 plus earnings less administration fees directly paid from the account) to Employer L. If Employer L does not receive the balance of the account, Employer L must include the amounts in Employee M’s gross income and wages on his Form W-2 for 2008. Example 2. The same facts as Example 1, except Employer L first discovers the mistake in July 2009. Employer L issues a corrected 2008 Form W-2 for Employee M, and Employee M files an amended federal income tax return for 2008. ... Q-25. If an employer contributes to the HSA of an employee who ceases to be an eligible individual during a year, can the employer recoup amounts that the employer contributed after the employee ceased to be an eligible individual? A-25. No. Employers generally cannot recoup amounts from an HSA other than as discussed above in Q&A-23 and Q&A-24. See Notice 2004-50, Q&A-82. Example. Employee N was an eligible individual on January 1, 2008. On April 1, 2008, Employee N is no longer an eligible individual because Employee N’s spouse enrolled in a general purpose health FSA that covers all family members. Employee N first realizes that he is no longer eligible on July 17, 2008, at which time Employee N informs Employer O to cease HSA contributions. Employer O’s contributions into Employee N’s HSA between April 1, 2008 and July 17, 2008 cannot be recouped by Employer O because Employee N has a nonforfeitable interest in his HSA. Employee N is responsible for determining if the contributions exceed the maximum annual contribution limit in § 223(b), and for withdrawing the excess contribution and the income attributable to the excess contribution and including both in gross income. Slide summary: 2023 Newfront Go All the Way with HSA Guide

Yeah I see your point there. Employee elections are governed by the Section 125 cafeteria plan rules, which generally require an irrevocable election for a fixed 12-month period of coverage (plan year) unless the employee experiences a permitted election change event. Not all components of the cafeteria plan need to have the same period of coverage (12-month period). For example, the health FSA could have a different 12-month period of coverage from the dependent care FSA. However, each component does need to have a fixed 12-month period of coverage--and that includes the POP. Employee elections to contribute the employee-share of the premium to the medical, dental, and vision on a pre-tax basis are all run through the POP. Those elections need to have the same 12-month period of coverage where those elections are irrevocable unless the employee experiences a permitted election change event. That 12-month POP period of coverage will track the plan year for the cafeteria plan. So for medical, dental, vision, there will be one OE and one 12-month plan year for all medical elections regardless of the various policy renewal date of the underlying plan options. If the cafeteria plan year is set at 1/1, employees need to make all their medical/dental/vision (even those with a different policy year) elections at an OE that occurs before that date, with those elections irrevocable through 12/31. If the coverage changes mid-year or the employee-share of the premium changes mid-year on 7/1 upon the policy renewal, those could be permitted election change events for the affected employees depending on the type of change that occurs. Here's a couple posts walking through scenarios where that might occur: https://www.newfront.com/blog/when-mid-year-coverage-changes-create-a-mini-oe https://www.newfront.com/blog/mid-year-contribution-changes-employee-share-premium-2

You can have the different cafeteria plan components on different plan years within the same cafeteria plan. I've copied the cite below. Lots more to say on each issue, but short version is to try to avoid whenever possible: The health FSA on a different plan year from the medical plan if they offer an HDHP. This will cause tremendous HSA eligibility headaches. The dependent care FSA on a non-calendar plan year. Coordinating the $5,000 calendar-year limit with a non-calendar plan year is another big headache. Prop. Treas. Reg. §1.125-5(e)(3): (3) Separate period of coverage permitted for each qualified benefit offered through FSA. Dependent care assistance, adoption assistance, and a health FSA are each permitted to have a separate period of coverage, which may be different from the plan year of the cafeteria plan.

This is a good question. I agree that refunding prior YTD contributions attributable to the surcharge is aggressive because it's functionally the equivalent of a retroactive election change (employee paying a reduced EE-share of premium pre-tax through the POP for prior period), which is generally prohibited by the Section 125 cafeteria plan rules. That could in theory potentially disqualify the entire cafeteria plan, resulting in all elections becoming taxable for all employees. Prop. Treas. Reg. §1.125-2(a): (4) Exceptions to rule on making and revoking elections. If a cafeteria plan incorporates the change in status rules in §1.125-4, to the extent provided in those rules, an employee who experiences a change in status (as defined in §1.125-4) is permitted to revoke an existing election and to make a new election with respect to the remaining portion of the period of coverage, but only with respect to cash or other taxable benefits that are not yet currently available. See paragraph (c)(1) of this section for a special rule for changing elections prospectively for HSA contributions and paragraph (r)(4) in §1.125-1 for section 401(k) elections. Also, only an employee of the employer sponsoring a cafeteria plan is allowed to make, revoke or change elections in the employer's cafeteria plan. The employee's spouse, dependent or any other individual other than the employee may not make, revoke or change elections under the plan. So I agree that a prospective removal of the surcharge is the more prudent approach. I will say that I've gone wobbly on this issue sometimes where employees are covering a DP, get married to that DP, then fail to inform the employer of their new married status for some months. In some cases, employers want to retroactively undo the imputed income and permit pre-tax contributions for that period. I think that generally presents the same issue you're raising here, but I haven't strongly advised against it. Just as a reminder, there was a Tri-Agency FAQ clarifying that employers do not have to accommodate a mid-year wellness program incentive/reward/surcharge change in status. They can have a once-per-year requirement to qualify. Here's the guidance: https://www.dol.gov/sites/dolgov/files/EBSA/about-ebsa/our-activities/resource-center/faqs/aca-part-xviii.pdf Q8: A group health plan charges participants a tobacco premium surcharge but also provides an opportunity to avoid the surcharge if, at the time of enrollment or annual reenrollment, the participant agrees to participate in (and subsequently completes within the plan year) a tobacco cessation educational program. A participant who is a tobacco user initially declines the opportunity to participate in the tobacco cessation program, but joins in the middle of the plan year. Is the plan required to provide the opportunity to avoid the surcharge or provide another reward to the individual for that plan year? No. If a participant is provided a reasonable opportunity to enroll in the tobacco cessation program at the beginning of the plan year and qualify for the reward (i.e., avoiding the tobacco premium surcharge) under the program, the plan is not required (but is permitted) to provide another opportunity to avoid the tobacco premium surcharge until renewal or reenrollment for coverage for the next plan year. Nothing, however, prevents a plan or issuer from allowing rewards (including pro-rated rewards) for mid-year enrollment in a wellness program for that plan year. Slide summary: 2023 Newfront Wellness Program Guide