Health & Welfare Plans Newsletter

May 5, 2020

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View Coronavirus (COVID-19) News and Resources

[Guidance Overview]

IRS Clarifies Availability of Employee Retention Tax Credit

"If an employer lays off or furloughs employees and continues their healthcare coverage but does not pay the employees any wages for the time they are not working, the employer cannot treat any of the health plan expenses as qualified wages. This IRS interpretation in particular is contrary to that expressed by the Joint Committee on Taxation and by many tax practitioners."

BakerHostetler

[Guidance Overview]

Claiming Tax Benefits for Health Coverage Costs Under the Employee Retention Credit

"Because the statutory definition of qualified health expenses under the [employee retention credit (ERC)] matches the definition under FFCRA, the new IRS guidance largely mirrors the IRS guidance on 'qualified health plan expenses' under FFCRA ... Similar to the FFCRA credits, employers claim ERC credits on their quarterly payroll tax returns.... Qualifying health expenses include not only major medical coverage, but also dental and vision coverage and any other benefit to which the COBRA continuation rules would apply."

Lockton

[Guidance Overview]

DOL Issues New COBRA Notices But Litigation Trend Will Remain Unphased

"Even though the DOL updated the COBRA notices, the sample notices have been and continue to remain deficient in many areas. Further, the DOL has made it abundantly clear that use of the notices are not mandatory, but would be considered good faith compliance -- except only by the DOL.... Use of the DOL COBRA notices does not insulate a plan sponsor from becoming a target of COBRA notice litigation."

Kilpatrick Townsend

[Guidance Overview]

FSAs, HRAs, and HSAs Can Reimburse Over-the-Counter Medications

"While OTC drugs were previously allowed under the Code, beginning January 1, 2011, the [ACA] limited reimbursable medications to prescriptions and insulin. The CARES Act once again changes that, and while many of the CARES Act provisions include sunset dates, there is no expiration date for OTC reimbursements. With respect to HSAs, this change is effective for amounts paid after December 31, 2019. For health FSAs and HRAs, it is effective for expenses incurred after December 31, 2019."

Fraser Trebilcock

[Guidance Overview]

California Individual Mandate Reporting Requirements

"The California Individual Mandate law went into effect on January 1, 2020. Not only does it require residents to have healthcare, but it also includes a provision requiring employers to file returns electronically for California residents.... The forms [must be] electronically submitted to the State of California by May 31st of each year. Failure to submit forms will be penalized at $50 per enrolled individual."

Tango Health

[Guidance Overview]

Editor's Pick New Coronavirus Relief for Plan Enrollees Means Extra Work for Plan Sponsors, Insurers and Plan Service Providers

"This Outbreak Period-related extension raises various questions for plan sponsors, insurers, TPAs, PBMs and others, including: [1] Can plan sponsors, insurers and TPAs 'pend' claims while they wait to determine if COBRA is actually elected and paid for? ... [2] Must enrollees be told of this new relief?  ... [3] Must our forms be updated? ... [4] Do we have to go back to March 1 and 'correct' situations that did not follow the new regulations? ... [5] The agencies make it clear that the national emergency may vary in different parts of the country.... [6] Will the Outbreak Period relief create cash flow difficulties for plan sponsors and insurers? ... [7] Must our plans and insurance policies be amended to discuss the Outbreak Period relief? ... [8] How will stop-loss insurance be affected?"

Quarles & Brady LLP

Employers Turning to Telehealth for Onsite Clinics (PDF)

"Over 80% of worksite clinics have a telehealth capability, 30% offer only telehealth services and 57% plan to increase telehealth offerings post COVID-19, especially for chronic conditions and primary care.... While 55% of respondents are only offering limited services, 36% still provide all services that were available prior to the COVID-19 crisis ... Telephonic screening of COVID-19 symptoms is being done by 85% of all centers, with 74% offering virtual office visits for other conditions."

National Association of Worksite Health Centers [NAWHC]

Potential Out-of-Pocket Costs for Patients Requiring COVID-19 Hospitalization

"Although it is too early to analyze actual healthcare cost data for those who have been treated for COVID-19 in the United States, historical data from patients who have sought medical attention for influenza or pneumonia may be informative for understanding patient out-of-pocket costs due to treatment for COVID-19. This infographic ... depicts what hospital costs could look like for patients admitted for COVID-19, broken down by insurer type, geography, and age."

Milliman's Healthcare Town Hall

[Opinion]

If COBRA Wasn't Confusing Enough, the DOL and IRS Are Going to Mix It Up for You

"[T]he rule also extends the timeframes for any ERISA required disclosures. So participants have these new lengthy timeframes, but employers don't have to tell them about it. Also, Summary of Benefits and Coverage (SBC), [SPD] and even COBRA notice requirements are extended.... [E]mployers may actually be able to change plans and not inform participants in advance or even soon after making a change.... [P]lan sponsors can use any means of communication as long as they believe participants have reasonable access. So, the use of websites, emails and even texts will probably suffice."

EPIC

Benefits in General

[Guidance Overview]

Editor's Pick DOL and Treasury Extend ERISA Deadlines, Creating Questions and Disruptions in Administrative Procedures

"There is an open question whether employers need to revise COBRA notices to reflect the extended deadlines applicable to participants.... [Another] open question is what, if any, notice obligation an employer has to communicate this right and whether the plan has an affirmative obligation to identify and automatically enroll employees who submitted late special enrollment requests on or after March 1.... As of March 1, 2020 and through the end of the Outbreak Period, there are no deadlines to file claims or appeals.... [T]his includes health FSA and HRA expense reimbursement requests, which are generally a few months after the end of the plan year."

Groom Law Group

[Guidance Overview]

IRS and EBSA Provide Additional Relief for Health and Retirement Plans and Participants Due to COVID-19

"The Joint Notice technically applies only to plans subject to ERISA and the Code. However, HHS ... intends to adopt a policy of measured enforcement to extend similar timeframes to non-federal governmental group health plans and insurers. HHS encourages governmental group health plans to provide relief similar to that granted in the Joint Notice, and encourages states and insurance issuers to enforce and operate, respectively, in a manner consistent with the Joint Notice."

Ice Miller LLP

[Guidance Overview]

DOL and Treasury Release ERISA and COBRA Deadline Extensions Due to COVID-19 (PDF)

"These extensions are unprecedented, and employers and plan administrators will need to take steps to ensure that participants understand the new rules. During the Outbreak Period, employers and plan administrators should consider supplementing and modifying adverse benefit determination notices, special enrollment notices, summary plan descriptions, and COBRA forms to reflect these extensions."

Sherman & Howard

Press Releases

BetterWealth, LLC is Certified for Fiduciary Excellence
Centre for Fiduciary Excellence [CEFEX]

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BenefitsLink Health & Welfare Plans Newsletter, ISSN no. 1536-9595. Copyright 2020 BenefitsLink.com, Inc. All materials contained in this newsletter are protected by United States copyright law and may not be reproduced, distributed, transmitted, displayed, published or broadcast without the prior written permission of BenefitsLink.com, Inc., or in the case of third party materials, the owner of those materials. You may not alter or remove any trademark, copyright or other notices from copies of the content.

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