Elise Norcini, Author at Spotlight on Benefits

UPDATED: Changes to a Family Member’s Exchange Subsidy Eligibility

Under Internal Revenue Code (Code) Section 36B, individuals are eligible for an exchange subsidy (or premium tax credit) if their employer has not offered them affordable coverage that provides minimum value. The IRS recently released two pieces of guidance with respect to eligibility determinations under Code Section 36B – Final Regulations under Code Section 36B and Notice 2022-41. Under the new guidance, subsidized exchange coverage for family members will be based on the cost of employer-sponsored family coverage. Plans that operate on a plan year other than the calendar year may be amended to permit mid-year election changes corresponding to the new exchange subsidy eligibility rules.

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New COVID-19 Guidance: Government Requires Health Plans to Cover At-Home COVID-19 Tests

On January 10, 2022, the Departments of Health and Human Services, Labor and Treasury issued guidance addressing a group health plan’s obligation to cover the cost of over-the-counter, at-home COVID-19 tests starting January 15, 2022. The new coverage requirement means that enrolled individuals can go online or to a pharmacy and buy an over-the-counter FDA-approved COVID-19 diagnostic test and either have it paid for up front by their health plan or be reimbursed by submitting a claim without any cost-sharing requirements (such as deductibles, co-payments or co-insurance). The guidance provides that beginning January 15, 2022 through the end of the declared public health emergency, plans must cover at least eight (8) over-the-counter at-home tests per enrolled individual per 30-day (or calendar-month) period without an assessment or provider involvement. This does not affect the obligation to provide coverage for COVID-19 tests with a provider’s involvement or prescription.

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ERISA Litigation Roundup: Fifth Circuit Affirms Decision in Favor of American Airlines in Suit Over Plan Investment Alternative Selection

Following the Fifth Circuit’s decision in Ortiz v. American Airlines, plan fiduciaries should be aware that the application of the Thole decision may be deemed inapposite to claims for a defined-contribution plan, where participants’ benefits are tied directly to fiduciary investment decisions.

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PBGC Issues Interim Regulations on Special Financial Assistance for Multiemployer Pension Plans

Multiemployer pension plans are collectively bargained defined-benefit employee benefit plans that are funded by several unrelated employers for the benefit of unionized employees. In recent years, the crisis of significantly underfunded multiemployer plans has continued to grow. In response, Congress enacted the American Rescue Plan Act of 2021 (ARPA), which was signed into law on March 11, 2021. ARPA amended ERISA to establish a new program within the Pension Benefit Guarantee Corporation (PBGC) to offer “special financial assistance” (SFA) to multiemployer plans in danger of becoming insolvent; in contrast to other assistance offered by the PBGC, plans are not required to repay the SFA.

ARPA directed the PBGC to issue regulations or other guidance to prescribe the application requirements for SFA payments and for how funds are to be invested and to impose conditions on plans that receive SFA payments. On July 9, 2021, the PBGC issued this guidance in the form of interim regulations.

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The DOL Provides Practical Guidance on the Application of PTE 2020-02

As described in our recent blog posts, the Department of Labor (“DOL”) recently issued guidance in the form of FAQs to address questions concerning the practical application of PTE 2020-02, Improving Investment Advice for Workers & Retirees. This blog post discusses the guidance the DOL offers with respect to various topics under PTE 2020-02. Guidance with respect to the general requirements of PTE 2020-02 was discussed in our prior blog post and the DOL’s guidance with respect to the application of PTE 2020-02 to rollover recommendations was discussed in our prior blog post.

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The DOL Provides Practical Guidance on the Application of PTE 2020-02 to Rollover Recommendations

As described in our recent blog post, the Department of Labor (“DOL”) recently issued guidance in the form of FAQs to address questions concerning the practical application of PTE 2020-02, Improving Investment Advice for Workers & Retirees. Recommendations regarding the rollover of assets from an employee benefit plan to an IRA are a key focus of the DOL and of these FAQs. This blog post discusses the guidance the DOL offers with respect to rollover recommendations under PTE 2020-02.

In 1975, the DOL issued a regulation that adopted a five-part test for determining when investment advice is “fiduciary investment advice” and would qualify an investment professional as a fiduciary under ERISA (the “1975 Labor Regulation”). The five-part test is met if an investment professional: 1) renders advice to a plan, plan fiduciary or IRA owner as to the value of securities or other property, or makes recommendations as to the advisability of investing in, purchasing, or selling securities or other property; 2) on a regular basis; 3) pursuant to a mutual agreement, arrangement, or understanding with the plan, plan fiduciary or IRA owner; 4) where the advice will serve as a primary basis for investment decisions with respect to plan or IRA assets; and 5) where the advice will be individualized based on the particular needs of the plan or IRA.

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The DOL Issues FAQs on Prohibited Transaction Exemption 2020-02 Related to Fiduciary Investment Advice

On December 18, 2020, the Department of Labor (“DOL”) adopted PTE 2020-02 Improving Investment Advice for Workers & Retirees (“PTE 2020-02”), a new prohibited transaction exemption related to fiduciary investment advice offered to plan sponsors and plan participants of ERISA-governed retirement plans and IRA owners.

Last month, the DOL issued guidance in the form of FAQs to address questions concerning the practical application of PTE 2020-02 (“FAQs”). These FAQs discuss various applications of PTE 2020-02, including guidance with respect to the general requirements of PTE 2020-02, recommendations for the rollover of employee benefit plan assets to an IRA, the use of disclaimers, the requirement to mitigate conflicts of interest, the use of payout grids for compensation, and the application of PTE 2020-02 to insurance industry financial institutions.

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Departments Release FAQs on Implementing the Mental Health and Substance Use Disorder Parity Requirements under the Consolidated Appropriations Act

As described in a recent blog post, the Consolidated Appropriations Act, 2021 amended the Mental Health Parity and Addiction Equity Act (MHPAEA) to require group health plans and health insurance issuers (collectively, “group health plans”) that impose non-quantitative treatment limitations (NQTLs) on mental health or substance use disorder (MH/SUD) benefits to perform and document comparative analyses, in order to demonstrate that such NQTLs comply with the requirements of the MHPAEA¹. This requirement became effective on February 10, 2021, along with the requirement that a group health plan must provide the comparative analyses to the Department of Labor (DOL), Health and Human Services (HHS), or applicable State authority upon request.

The Consolidated Appropriations Act also directed the DOL, HHS, and the Treasury (together, the “Departments”) to issue additional guidance for group health plans, intended to clarify and provide examples of methods group health plans may implement to comply with the comparative analyses and disclosure obligations.

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IRS Clarifies Relief for Health FSA Benefits under the Consolidated Appropriations Act of 2021

As noted in our prior blog posts here and here, Section 214 of the Consolidated Appropriations Act of 2021 (“Act”) permits employers to amend their flexible spending account (FSA) plans to help participants avoid forfeiting unused amounts for the 2020 and 2021 plan years. The Act offers employers a myriad of temporary relief options for health FSAs—including expanded carryover relief, extended grace period relief, mid-year election change relief and post-termination spend down relief. The IRS recently issued Notice 2021-15 (“Notice”) giving employers significant flexibility to tailor these relief options to their particular concerns and objectives. This blog post answers common questions about how the guidance applies to health FSA benefits; the application to dependent care FSA benefits will be discussed in a forthcoming blog post.

Employers should keep in mind that:

All of the relief options are optional. An employer can choose not to adopt any of them or can adopt only some options.
All of the relief options require plan amendments.
The options do not permit participants to receive refunds of their unused contributions.
The options do not permit participants to use health FSA balances for dependent care expenses or vice versa.

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Department of Labor Confirms It Will Not Enforce Controversial “Pecuniary Factors” Rule for ERISA Plan Investments

On March 10, 2021, the Department of Labor’s Employee Benefits Security Administration (EBSA), the agency charged with interpreting and enforcing ERISA, announced that it will not enforce the Trump-era “Financial Factors in Selecting Plan Investments” rule, which has been perceived as potentially discouraging retirement plan fiduciaries from selecting investment alternatives which emphasize environmental, social, and governance factors (commonly referred to as “ESG investments”).

The rule, which was finalized in November 2020 and technically became effective on January 12, 2021, does not prohibit ESG investments. However, it has been widely criticized as fostering a misapprehension that ESG investments may be subjected to a higher degree of fiduciary scrutiny than others. Following the election, EBSA’s announcement of its non-enforcement policy comes as no surprise, as the Biden administration had already identified the rule on its “List of Agency Actions for Review.”

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