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.
Author: Monica Novak
Recent Webinar Regarding Health Plan Provisions in Consolidated Appropriations Act: New Legislation Brings COVID-19 Relief and Shines a Light on Health Plan Price Transparency
As the pandemic continues, employers are increasingly faced with compliance challenges in response to new and pending legislation. Click here to view our webinar recording as members of Faegre Drinker’s benefits and executive compensation group discussed various welfare benefits provisions in the Consolidated Appropriations Act, 2021 and the new provisions employers will need to navigate. Specifically, our team explored:
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COVID-related Benefit Plan Timeframe Extension Relief Continues With One Year Case-by-case Limit
As described in a prior blog post, last spring the Department of Labor and the Department of the Treasury (Agencies) issued COVID-19 pandemic relief that extended numerous deadlines under ERISA and the Internal Revenue Code (Code) applicable to group health plans, retirement plans, and other ERISA benefit plans, as well as participants in those plans (Extension Relief). Specifically, the Extension Relief stated that, subject to a one-year statutory limitation imposed by ERISA Section 518 and Code Section 7508A, all deadlines for benefit plan actions identified in the Extension Relief (Deadlines) would be put on hold for the period beginning March 1, 2020 and ending 60 days after the announced end of the COVID-19 National Emergency (Outbreak Period). President Biden extended the National Emergency on February 24, 2021 and the end date is, at this time, unknown.
Flexible Spending Account Relief in the Consolidated Appropriations Act of 2021
As noted in our prior blog post, the Consolidated Appropriations Act, 2021 (the Act) includes several types of relief for flexible spending accounts (FSAs), impacting both health FSAs and dependent care FSAs. The FSA relief provisions in the Act address a concern raised frequently by employees and employers in 2020 — must employees forfeit their remaining 2020 FSA funds based on the rules that normally apply to FSAs under the Internal Revenue Code (the Code), given that, due to the COVID-19 pandemic, many employees’ actual 2020 health and dependent care expenses were significantly less than employees anticipated when they elected FSA coverage for 2020?
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The GAO Reviews QDROs
In July 2020, the Government Accountability Office (GAO) prepared a report for the Ranking Member of the Senate Committee on Health, Education, Labor and Pensions about Qualified Domestic Relations Orders (QDROs). QDROs are court-issued orders that allow a divorced spouse (or in rare cases a child) to receive a portion of a participant’s qualified retirement plan benefit. A QDRO is one of the few ways in which a participant’s qualified retirement benefit can be assigned or alienated.
Tenth Circuit Interpretation of ERISA Notice Requirement Impacts Plan Administrator’s Right to Deferential Standard of Review
When an ERISA plan delegates authority to the plan administrator to interpret the plan documents for benefit determinations, the plan administrator typically is entitled to a deferential standard of judicial review, and courts will look for abuse of discretion rather than impose a de novo standard of review. In Lyn M. v. Premera Blue Cross, – F.3d –, 2020 WL 4249129 (10th Cir. Jul 24, 2020), the U.S. Court of Appeals for the Tenth Circuit limited the deferential standard of review, holding that a de novo review applied when the plan administrator did not adequately disclose to the plan participants the instrument delegating discretionary authority to the plan administrator.
IRS Guidance on Employer-Based Leave Donation Programs for COVID-19 Relief Organizations
In recent years, it has become the norm for the IRS to respond to a federally declared disaster by issuing guidance enabling employers to establish “Leave Donation Programs,” which allow employees to “convert” accrued vacation, sick, or personal leave benefits into an employer-paid monetary donation to a charitable relief organization, without the employee being taxed on the value of donated leave.1 Therefore, it is not surprising, but certainly welcome, that the IRS recently issued Notice 2020-46 (the Notice) to allow employers to adopt the same type of employer-based Leave Donation Programs in response to the COVID-19 pandemic.
IRS Increases the Health FSA Carryover Limit and Addresses Premium Reimbursement under ICHRAs
On May 12, 2020, the Internal Revenue Service (IRS) issued Notice 2020-33 (the Notice), which increases the maximum health flexible spending account (FSA) carryover limit. The Notice also addresses a gap in existing guidance related to reimbursement of individual insurance premiums by an individual coverage health reimbursement arrangement (ICHRA). Along with the Notice, the IRS also issued Notice 2020-29 to provide temporary relief related to the cafeteria plan mid-year change in status rules (Notice 2020-29 is discussed in our earlier blog post, here).
IRS Issues Welcome Guidance on Mid-Year Cafeteria Plan Election Changes and Other Health & Welfare Matters
On May 12, 2020, the Internal Revenue Service (IRS) issued Notice 2020-29 (the Notice), an important piece of guidance for employers that sponsor health & welfare plans.
The Notice provides much-needed flexibility for employers who are dealing with unexpected requests and circumstances as a result of the 2019-nCoV (COVID-19) pandemic. As discussed below, the Notice permits – but does not require – cafeteria plans to provide additional opportunities for mid-year election changes for health coverage, health flexible spending account (health FSA) coverage and dependent care FSA (dependent care FSA) coverage. It also permits plans to extend the claims periods for health FSA and dependent care FSA expense reimbursement, and it clarifies earlier guidance regarding coverage of telehealth and COVID-19-related items under a high deductible health plan (HDHP).
COVID-19 Joint Agency Relief Part 1: ERISA Enforcement Relief for Retirement Plans
As described in our May 1 blog post, the Department of Labor (DOL) and the Internal Revenue Service (IRS) recently issued guidance (the “Extension Guidance”) providing relief to benefit plan sponsors and participants for complying with certain deadline and notice requirements under ERISA and the Internal Revenue Code (“Code”). One piece of the Extension Guidance, EBSA Disaster Relief Notice 2020-01 (the “Notice”) focuses specifically on ERISA retirement plan obligations, including ERISA-required notices, ERISA rules for retirement plan loans, and ERISA timing requirements for remitting participant contributions to retirement plan trusts. This alert describes in more detail the relief in the Notice and implications for plan sponsors.
For the full alert, visit the Faegre Drinker website.