Health & Welfare Plans Newsletter

May 13, 2020

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View Coronavirus (COVID-19) News and Resources

[Guidance Overview]

IRS Relaxes Cafeteria Plan Rules for COVID-19 and Increases Health FSA Carryover to $550

[IRS Notice 2020-33 increases] the health FSA carryover cap from $500 to 20% of the salary reduction contribution limit ($550 for 2020 carryovers into 2021).... [Notice 2020-29 provides] five new permitted mid-year election changes ... [1] Mid-year health plan enrollment for waived employees.... [2] Mid-year plan option change or to add dependents.... [3] Mid-year dropping of health plan coverage.... [4] Health FSA election changes.... [5] Dependent care FSA election changes."

ABD Insurance & Financial Services

[Guidance Overview]

IRS Issues Cafeteria Plan Relief to Address COVID-19 Pandemic

"Cafeteria plans may permit mid-year election changes prospectively, including health and dependent care FSA contributions, to address effects of COVID-19 pandemic. Grace period for health and dependent care FSAs may be extended through 2020, even for plans that allow carryovers. Employers must notify eligible employees of temporary plan changes, and adopt plan amendments by the end of 2021."

Hanson Bridgett LLP

[Guidance Overview]

Elections in a Section 125 Plan Just Became Less Irrevocable During 2020

"A plan sponsor can determine the extent to which it will permit election changes and which changes it wishes to permit. The IRS acknowledges that the flexibility it is affording in [Notice 2020-29] can create adverse selection and it acknowledges that an employer may only wish to permit those changes that result in increased or improved coverage. In addition, plan sponsors are permitted to limit mid-year elections in flexible spending account plans to amounts no less than amounts that have already been reimbursed during the plan year."

Graydon

[Guidance Overview]

IRS COVID-19 Guidance: Have You Heard The One About FSAs?

"[Employers may amend] plans to allow participants to apply leftover amounts in a health FSA or a dependent care FSA as of the end of a grace period or plan year ending in 2020 to claims incurred after the end of the plan year or grace period through December 31, 2020. This relief applies to all health FSAs, including limited purpose health FSAs which are compatible with HSAs."

Graydon

[Guidance Overview]

IRS Issues New Rules Impacting FSA and HRA Plans

"Many employers ... will want to enable employees to enroll or revoke an enrollment election in various group health plan options offered by the employer. Similarly, many employers would embrace enabling dependent care FSA participants to increase (or more likely, decrease or revoke) their elections if schools and day care centers are closed, or if the employee is working from home.... [E]mployers may be more reluctant to enable employees to decrease or even revoke their election, in particular if they've already claimed their previous full election amount and payments have been disbursed.... [T]he Notice allows employers to limit, for example, a health care FSA decreased election to no less than amounts already reimbursed in 2020."

Kushner & Company

[Guidance Overview]

COVID-19 Leave and Benefits Requirements as Applied to Three Scenarios

"[This article presents] three scenarios with different types of leave requests ... There are three types of leave available ... [1] FMLA: unpaid leave; [2] FFCRA: emergency paid sick leave; [3] FFCRA: emergency paid family and medical leave."

Corporate Synergies

[Guidance Overview]

Paid Sick Leave / Expanded FMLA: The School Year Comes to an End -- Now What?

"[In] answering one question, the [DOL] opens a new 'loophole.' That is, anticipate that, instead of relying on school, an employee may assert that he/she planned to have his/her child attend summer camp, or some similar activity, which would have provided the necessary child care, but the program has been cancelled due to the virus. That 'excuse' would qualify to trigger leave benefits under the federal programs."

Brouse McDowell

[Guidance Overview]

IRS Issues Updated and Expanded FAQs on CARES Act Employee Retention Credit

"Employers that reduce their employees' hours can claim the Employee Retention Credit for the qualified health plan expenses allocated to the hours not worked. For example, if an employer reduces its employees' hours and pay by 40% but continues to provide full health coverage, 40% of the health plan expenses can be considered for the Employee Retention Credit."

Fox Rothschild LLP

[Guidance Overview]

New York City Department of Health Issues Standing Isolation Order for Purposes of New York State Emergency Sick Leave Law

"The State Emergency Sick Leave Law requires New York employers to provide job-protected sick leave to employees who are subject to an order of quarantine or isolation issued by the State of New York, a state or local health department, or any other governmental entity due to COVID-19.... The new City Order directs certain New York City residents affected by COVID-19 to self-isolate at home or another appropriate location, and deems these residents to have been ordered to self-isolate for purposes of the state Emergency Sick Leave Law."

Proskauer

[Guidance Overview]

Proposed Amendments to the Massachusetts Paid Family and Medical Leave Regs Are Released for Public Comment

"Under the [Massachusetts Paid Family and Medical Leave Law (PFML)], effective January 1, 2021, all private Massachusetts employers must provide covered individuals with paid family and medical leave, funded through a payroll tax. The proposed amendments to the PFML regulations are extensive and include several new definitions of key terms, additional guidance on the requirements for private plan exemptions, and information relating to the application for benefits. The most significant proposed amendments to the regulations are summarized below."

Littler

CMS Announces ACA OOP Limit for 2021

"Out-of-pocket maximums for non-grandfathered plans are indexed each year. The limits for 2021 will be: $8,550 for single coverage and $17,100 for other coverage tiers. The IRS has not yet announced the different (and lower) limits that will apply to high-deductible health plans (HDHPs) paired with Health Savings Accounts (HSAs)."

Segal

Pandemic Could Drive Health Plans to Adopt Reference-Based Pricing

"As companies around the country struggle to address the sudden negative economic impact of the coronavirus, many are looking toward health care costs for potential savings. Reference-based pricing (RBP) is one option that could help to control costs for employees and employers alike. While RBP offers potential savings, its adoption in the U.S. has been slow. According to a 2019 survey ... only 2 percent were using RBP, and 10 percent were considering it."

Society for Human Resource Management [SHRM]; membership may be required to view article

Benefits in General

Embracing Radical Transparency in Benefits Communication

"[1] Invite employee input.... [2] Recognize all employees' needs.... [3] Look for new ways to help your employees.... [4] After launch, diagnose what's missing.... [5] Be honest and thorough when communicating changes."

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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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