The IRS recently announced the 2024 cost-of-living adjustments to various benefit and contribution limits applicable to retirement plans. The IRS modestly increased the applicable limits for 2024. The following limits apply to retirement plans in 2024:
- The limit on elective deferrals under 401(k), 403(b), and eligible 457(b) plans increased to $23,000.
- The limit on additional catch-up contributions by participants aged 50 or older remains at $7,500. This means that the maximum amount of elective deferral contributions for those participants in 2024 is $30,500.
- The Internal Revenue Code (“Code”) Section 415 annual addition limit is increased to $69,000 for 401(k) and other defined contribution plans, and the annual benefit limit is increased to $275,000 for defined benefit plans.
- The limit on the annual compensation that can be taken into account by qualified plans under Code Section 417 is increased to $345,000.
- The dollar level threshold for becoming a highly compensated employee under Code Section 414(q) increased to $155,000 (which, under the look-back rule, applies to HCE determinations in 2025 based on compensation paid in 2024).
- The dollar level threshold for becoming a “key employee” in a top-heavy plan under Code Section 416(i)(1) is increased to $220,000.
Continue reading “IRS Announces 2024 Retirement Plan Limits”
Plan sponsors, insurers, and third-party administrators should pay close attention to the new guidance to facilitate health plan compliance with complex nonquantitative treatment limitation comparative analyses requirements.
On July 25, 2023, the Department of Labor (DOL), Department of the Treasury (Treasury), and Health and Human Services (HHS) (the Departments) issued a proposed rule on how to comply with the nonquantitative treatment limitations (NQTL) comparative analyses requirements enacted under the Consolidated Appropriations Act, 2021 (CAA). The requirement for health plans to perform and document their comparative analyses of the design and application of NQTLs became effective February 10, 2021, and the DOL has been aggressively enforcing the requirement through extensive, multi-year health plan investigations over the last few years. In addition to the proposed rule, the new guidance issued also includes:
Continue reading “DOL Issues Long Awaited Mental Health Parity Guidance”
The COVID-19 national emergency and public health emergency officially ended on April 10 and May 11, 2023, respectively. (As a practical matter, the Biden administration is effectively treating both emergencies as ending on May 11, 2023, however.) The end of the emergencies offers sponsors of group health plans the opportunity to modify certain COVID-19-related benefits that were offered in the past several years because of national emergency and public health emergency-related legislation and regulations.
In early 2020, following passage of the Families First Coronavirus Response Act (FFCRA) and the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) and the release of guidance from the Internal Revenue Service, Department of Labor, and Department of Health and Human Services (collectively, the Agencies), group health plan sponsors and administrators worked quickly to implement new mandates and incorporate plan operational flexibility relating to the coverage and provision of COVID testing, vaccines, and telehealth. (In addition, the Agencies also adopted various extensions to employee benefit plan deadlines that are coming to an end with the end of the national emergency, as discussed in a previous Spotlight on Benefits post.)
Continue reading “Health Plan Coverage and Documentation Following the End of the COVID-19 Emergencies”
In FAQs Part 56, issued on December 23, 2022, the Treasury Department and the Departments of Labor and Health and Human Services (collectively, Departments) issued important guidance on prescription drug benefit and cost reporting required of health plans and issuers (collectively, health plans). The FAQ guidance includes good faith relief for the 2020 and 2021 submissions. Under the good faith relief, the Departments will not take enforcement action with respect to any health plan that uses a good faith, reasonable interpretation of the applicable regulations and instructions in making its submission. The Departments also provide a submission grace period through January 31, 2023 and will not consider a health plan to be out of compliance provided that the health plan makes a good faith submission of 2020 and 2021 data on or before January 31, 2023.
The required data submission is called prescription drug data collection, or RxDC reporting. Through RxDC reporting, health plans report certain detailed information related to prescription drug and other health care spending. Health plans are required to complete RxDC reporting annually beginning with 2020 information. Reporting for 2020 and 2021, the first years for which reporting is required, was previously delayed until December 27, 2022 and is now subject to the submission grace period through January 31, 2023. Starting with 2022 information, annual reporting is due by June 1 of the following year. While the submission grace period may have come after many health plans have already substantially completed RxDC reporting, the good faith relief is particularly good news for health plan administrators who have struggled to interpret and apply some of the requirements for the first submissions.
In addition to the good faith relief and submission grace period, the FAQs include clarifications and flexibilities to facilitate the submission process for 2020 and 2021 data only:
- Reporting entities reporting on behalf of multiple health plans may create more than one submission for a year without the submissions being considered duplicate submissions.
- Multiple reporting entities may submit the same type of data file on behalf of the same health plan, which relaxes the existing requirement to consolidate a health plan’s data into a single data file for each type of data.
- The requirement for multiple reporting entities submitting the required data on behalf of one or more health plans in a state and market segment to aggregate required data to at least the aggregation level used by the reporting entity that submits the total annual spending data for the health plan(s) is suspended for the filings for 2020 and 2021. For 2020 and 2021 data, a reporting entity submitting the required data may, within each state and market segment, aggregate at a less granular level.
- A health plan or its reporting entity that is submitting only the plan list, premium and life-years data, and narrative response, but not any other data may submit the file by email to RxDCsubmissions@cms.hhs.gov instead of submitting in the Health Insurance Oversight System reporting system. The emailed submission must include the plan list file, premium and life-years data (data file D1), and a narrative response, and may include optional supplemental documents. The name of each file should include the reference year of the submission, the plan list or data file type (g. P2, D1), and the name of the group health plan sponsor.
- Reporting on vaccines through the National Drug Codes for vaccines that were added to the CMS drug and therapeutic class crosswalk on October 3, 2022 is optional.
- Reporting entities are not required to report a value for “Amounts Not Applied to the Deductible or Out-of-Pocket Maximum” in data files D2 and D6 and may leave the data fields blank in the applicable columns.
If you have questions about RxDC reporting, please contact a member of the Faegre Drinker Benefits & Executive Compensation team.
 The Departments will monitor compliance to determine whether to extend these flexibilities for future reporting deadlines. The Departments will communicate any such extensions.
The Department of Labor (DOL) recently removed one regulatory hurdle for public companies that maintain employee benefit plans subject to the Form 5500 requirement. Specifically, the DOL has relaxed the criteria for who qualifies as an “independent qualified public accountant,” or “IQPA.” This matters to employers because it will open the market to new accounting firms that can issue the accountant’s report for the Form 5500 annual filing. IQPAs are the auditors who issue the annual accountant’s report. While not all Form 5500-filers are subject to the accountant’s report requirement, ERISA-covered retirement plans (except for certain small retirement plans) and funded welfare plans must provide the accountant’s report annually.
Revising and restating its 1975 Interpretive Bulletin on the Independence of Employee Benefit Plan Accountants with new Interpretive Bulletin 2022-01, the DOL has changed its guidelines for determining the “independence” of an IQPA. Previously, an auditor could not be an IQPA for a plan if they, the accounting firm, or certain other “members” of the firm owned any direct or indirect financial interest in the plan sponsor during the period covered by the financial statements that are the subject of the audit or during the period of the professional engagement.
Continue reading “The Annual Form 5500 Audit: DOL Broadens Criteria for Independent Qualified Public Accountants”
The American Rescue Plan Act of 2021 (ARPA), which was signed into law by President Biden on March 11, 2021, includes COBRA subsidy provisions that are significant – both for the individuals who will become eligible for COBRA subsidies and for the employers who will be required to subsidize COBRA coverage. The key requirements of the COBRA subsidies, which are effective beginning April 1, 2021, are outlined below.
The Consolidated Appropriations Act of 2021 (Act), enacted on December 27, 2020, contains a number of provisions that may impact the design and administration of employer-sponsored group health plans and flexible spending account (FSA) benefits. Below, we summarize the primary provisions. In the days and weeks ahead, Spotlight on Benefits will provide a series of blog posts that will address the provisions in more detail. We encourage health and FSA plan sponsors to review the blog posts and consider the preparations needed to comply with applicable changes in the law, including coordinating with insurers and third-party administrators, the various effective dates, and whether plan sponsors will have to amend their health plans or FSA plans to implement any applicable changes.
Continue reading “FSA Relief and Significant New Health Plan Requirements Included in Consolidated Appropriations Act of 2021”
On October 29, 2020, the Department of Health and Human Services (HHS), Department of the Treasury (Treasury) and Department of Labor (DOL) issued the final rule on transparency in health plan coverage. The final rule imposes significant new requirements on group health plans, including all issuers of non-grandfathered individual and group health insurance coverage and self-insured plans (that are not account based plans), to disclose information on pricing and cost-sharing under their plans. Grandfathered health plans and excepted benefit health plans are not subject to the transparency rules.
Continue reading “Health Plan Transparency Final Rule Requires New Health Plan Disclosures”
The Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019 changed a number of requirements for retirement plans in 2020 and beyond.
Certain changes under the SECURE Act already are in effect in 2020, including changes to the required minimum distribution rules for participants and beneficiaries, and changes to qualified automatic contribution arrangements under defined contribution plans, as discussed in more detail in our prior alert.
Continue reading “Reminder for 401(k) Plan Sponsors: Long-Term, Part-Time Employee Eligibility Requirements Take Effect in 2021 under the SECURE Act”
On July 24, 2020, President Trump signed four Executive Orders related to drug pricing that direct the Secretary of Health and Human Services (HHS) to take a number of actions aimed at lowering prescription drug prices. These HHS actions generally are not expected to apply directly to employer-sponsored group health plans. However, the Executive Order on “Lowering Prices for Patients by Eliminating Kickbacks to Middlemen” (the Order) could have an indirect impact on such plans, or provide an indication of things to come.
Continue reading “Executive Order Revives HHS Proposed Rule on Prescription Drug Rebates”