Health & Welfare Plans Newsletter

October 16, 2020

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[Official Guidance]

Text of IRS Rev. Proc. 2020-43: Inflation-Adjusted Maximum Dollar Amount for Excepted Benefit HRAs for Plan Years Beginning After December 31, 2020, and Before January 1, 2022 (PDF)

"For plan years beginning after December 31, 2020, and before January 1, 2022, the maximum amount that may be made newly available for the plan year for an excepted benefit HRA under Section 54.9831-1(c)(3)(viii) is $1,800. The Department of the Treasury and the [IRS] intend to publish, by June 1, 2021, the adjusted amount for plan years beginning after December 31, 2021, and before January 1, 2023." Icon to read more

Internal Revenue Service [IRS]

[Official Guidance]

Text of 2020 Instructions for IRS Forms 1094-C and 1095-C (PDF)

18 pages; Oct. 9, 2020. "What's New ... [1] The due date for furnishing Form 1095-C to employees is extended from January 31, 2021, to March 2, 2021.... [2] The IRS will not impose a penalty for failure to furnish Form 1095-C to any employee enrolled in an ALE member's self-insured health plan who is not a full-time employee for any month of 2020 if certain conditions are met.... [3] The IRS will not impose a penalty for failure to file Form 1095-C with the IRS or failure to furnish Form 1095-C to employees if you make a good faith effort to comply with the information reporting requirements.... [4] Form 1095-C has been modified to add new codes for reporting offers of individual coverage HRAs and new lines for reporting required information.... [5] Plan start month ... is required for the 2020 Form 1095-C. The Applicable Large Employer (ALE) must enter a two-digit number." [Also available: 2020 IRS Form 1094-C and 2020 IRS Form 1095-CIcon to read more

Internal Revenue Service [IRS]

[Official Guidance]

Text of 2020 Instructions for IRS Forms 1094-B and 1095-B (PDF)

7 pages; Oct. 8, 2020. "What's New ... [1] For plan years beginning on or after January 1, 2020, employers may offer HRAs integrated with individual health insurance coverage or Medicare, subject to certain conditions (individual coverage HRAs). Generally, an HRA, including an individual coverage HRA, is a self-insured group health plan and, therefore, is an eligible employer-sponsored plan.... [2] A new code G must be entered on Form 1095-B, line 8 to identify an individual coverage HRA.... [3] The due date for furnishing Form 1095-B to individuals is extended from January 31, 2021, to March 2, 2021.... [4] The IRS will not impose a penalty for failure to furnish Form 1095-B to individuals if certain conditions are met.... [5] The IRS will not impose a penalty for failure to file Form 1095-B with the IRS or failure to furnish Form 1095-B to individuals if you make a good faith effort to comply with the information reporting requirements." [Also available: 2020 IRS Form 1094-B and 2020 IRS Form 1095-BIcon to read more

Internal Revenue Service [IRS]

[Guidance Overview]

Philadelphia Expands Paid Sick Leave Access for Workers Amid COVID-19 Pandemic

"The City of Philadelphia has amended its paid sick leave law to require covered businesses to provide up to two weeks of paid leave for workers to use during a public health emergency, such as the coronavirus (COVID-19) pandemic.... [T]the amendment only applies to workers in Philadelphia who are not covered by the FFCRA.... The new law took effect September 17 and will expire December 31, 2020." Icon to read more

Morgan Lewis

Courts of Appeal Split on Circumstances Where It Is Appropriate to Override the Arbitrary and Capricious Standard of Review

"Noting that the Seventh Circuit Court of Appeals ... has held that a plan administrator' s decision to deny a participant's claim for LTD benefits was subject to the de novo standard of review because the administrator failed to comply with ERISA's deadline for issuing a claims decision, the Eighth Circuit declined to adopt this rationale. Rather, to obtain a less deferential review, the Eighth Circuit explained that a participant had to demonstrate that a palpable conflict of interest or a serious procedural irregularity existed that caused a serious breach of the plan administrator's fiduciary duty." [McIntyre v. Reliance Standard Life Ins. Co., No. 19-2367 (8th Cir. Aug. 25, 2020)] Icon to read more

The Wagner Law Group

Health Plan Deductibles Are Increasing Across the Board (PDF)

"Among enrollees with deductibles, there has been an across-the-board increase in deductibles, regardless of plan type or employee demographic, since 2013.... One reason for the increase in deductibles is the movement of enrollees from PPO and POS plans to HSA-eligible health plans. The percentage of enrollees in HSA-eligible health plans more than doubled between 2013 and 2018, increasing from 4 percent to 10 percent." Icon to read more

Employee Benefit Research Institute [EBRI]

Employers Generally Satisfied with Mental Health Provider Networks

"Sixty-six percent of small companies and 76% of large ones reported ... that they were satisfied with the mental health provider networks available from their health insurer. Still, 9% of all companies surveyed and 23% of very large companies with 5,000 or more employees surveyed [said] that they had asked their health insurer to increase access to in-network mental health and substance abuse providers within the past two years." Icon to read more

PwC

The HSA: The 'S' Is for Savings (Not Spending!), Part 1 (PDF)

"As more and more employers move to high-deductible health plans (HDHPs) to reduce insurance premiums for themselves and their employees, education will be crucial in helping employees understand the HSA's long-term savings benefits versus those of the more transaction-oriented flexible spending account (FSA). There is an opportunity now to engage with employees to spark an increase in HSA use as people become engaged in managing their long-term healthcare savings strategies." Icon to read more

Defined Contribution Institutional Investment Association [DCIIA]

The HSA: The 'S' Is for Savings (Not Spending!), Part 2 (PDF)

"[This paper explores] how HSAs can be more than a checking account to pay for current medical expenses -- they can in fact be part of a comprehensive retirement savings and investment strategy. Through this lens, [the authors] explore some best practices for utilization and long-term investment design, which [they] hope will result in the expanded use of the HSA in just this way." Icon to read more

Defined Contribution Institutional Investment Association [DCIIA]

A Review of CBO's Estimate of Spending from the Department of Defense Medicare-Eligible Retiree Health Care Fund

"In a cost estimate prepared in October 2000, the Congressional Budget Office estimated that spending for new health care benefits for military retirees would total about $57 billion over the 2003-2010 period; actual costs over that period were about $55 billion." Icon to read more

Congressional Budget Office [CBO]

[Opinion]

Rethinking Annual Deductibles: The Case for Monthly Cost-Sharing Limits

"Because annual deductibles do not reflect the economic realities of how people are paid or how they pay for other expenses, ... to improve access to care, policy makers should consider alternatives to annual cost-sharing limits.... [T]his would shift some costs back to insurers, and more affordable care could lead to increases in so-called inefficient health care use, commonly referred to as moral hazard. However, [the authors] believe this risk would actually be lower under a monthly cap compared to an annual cap: There is a practical limit to the amount of care that can be scheduled within one month." Icon to read more

Paul Shafer, Michal Horný, and Stacie Dusetzina, via Health Affairs Blog

Benefits in General

Discrimination, Benefit Issues to Watch When Returning Furloughed Workers

"Applicable large employers should be aware of how breaks-in-service following a rehire of furloughed employees affect eligibility provisions and waiting periods under the employer's group health plan. If benefits continued during the furlough, potential employee 'catch-up' payments are needed if the employer paid employee premiums during this period.... It is also important for employers to review the impact of adjustments to compensation on benefit contributions and eligibility and remind returning employees to review these changes and resume contributions to retirement plans." Icon to read more

Epstein Becker Green, via Bloomberg Law

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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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