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.
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.
It’s hard to believe August is already here, and with 2021 annual enrollment and year-end rapidly approaching, there are a number of issues health and welfare plan sponsors should be thinking about now.
Here’s a list of some of the most important items:
- SMMs. Have you issued a summary of material modifications (SMM) for any changes you’ve made to your plan for COVID-19 testing/ treatment and for telemedicine?
- Deadline extensions. Have you talked to your vendors about the extensions the agencies created between March 1, 2020, and the end of the pandemic period (as yet unknown) for COBRA, special enrollment and claims periods? Have you added information regarding the deadline extension to any claim and appeal responses issued during the pandemic period?
- Plan amendments. Do you need to amend your plans for any of the following? (Note that many of these plan amendments are not required to be completed until 2021, but you may wish to address them sooner.)
- Increasing the health flexible spending account carryover from $500 to $550
- Allowing retroactive pre-tax deductions for special enrollments on account of birth or adoption during the pandemic period for those enrolling late under the deadline extensions
- Allowing employees to enroll, change or revoke their existing health plan elections for 2020
- Allowing employees to decrease or increase their existing dependent care and/or health flexible spending account elections for 2020
- Reflecting any plan changes as a result of furloughs (such as continuing coverage that would otherwise end)
- For a plan year or grace period ending in 2020, giving participants until 12/31/20 to incur eligible health and/or dependent care expenses
- Allowing your health flexible spending account to cover over-the-counter drugs and menstrual care products (beginning as early as 1/1/20).
- COBRA. Have you reviewed your COBRA notices for accuracy/conformance to the COBRA regulations in light of increased litigation in this area? Have you updated your COBRA notice for the new Department of Labor models published in May 2020 that address coordination of COBRA with Medicare?
- Premium refunds. Have you received any premium refunds/rebates from insurers or third-party administrators due to favorable claims experience during the pandemic? If so, are you aware of and following the fiduciary guidelines regarding such refunds?
- Wellness plans. Will employees be able to complete any biometric screenings required to obtain wellness credits? If not, do you need to make any changes to your wellness program?
- Employer Shared Responsibility. If you use the lookback measurement method, how are you treating coverage for employees who are furloughed during their stability period? How are you counting the furlough period for purposes of the measurement-period hours calculation?
If you need assistance in thinking through these issues, please contact your Faegre Drinker attorney with questions.
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.
On June 23, 2020, the Department of Labor, Department of Health and Human Services (HHS), and Department of the Treasury (the Departments) issued new frequently asked questions (FAQs) regarding coverage for COVID-19 testing under the Families First Coronavirus Response Act (FFCRA) and the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The FFCRA and the CARES Act generally require employer health plans to provide coverage for COVID-19 testing without imposing any cost sharing (including deductibles, copayments and coinsurance), prior authorization or certain other medical management requirements. Prior FAQs were issued on April 11, 2020 (FAQs Part 42).
The June 23, 2020, FAQs provide additional guidance on health coverage issues for sponsors of group health plans during the COVID-19 pandemic, and are particularly relevant for employers considering return-to-work policies.
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.
In light of the COVID-19 pandemic, the federal government recently issued guidance extending various benefits-related deadlines. The guidance includes a Notification of Relief that essentially tolls the timeframes associated with various rights until after the COVID-19 National Emergency. In this alert, we focus on what the tolling means with respect to plan sponsor obligations and participant rights under the Consolidated Omnibus Budget Reconciliation Act (COBRA) and the Health Insurance Portability and Accountability Act (HIPAA) special enrollment provisions.
For the full alert, visit the Faegre Drinker website.
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).
As described in our May 1 blog post, in response to the COVID-19 pandemic, the Employee Benefits Security Administration, the Department of Labor (DOL), and the Internal Revenue Service, the Department of the Treasury (Agencies) recently issued guidance (Extension Guidance) providing emergency relief to employee benefit plans, participants, and beneficiaries for complying with certain deadline and notice requirements under the Employee Retirement Income Security Act of 1974 (ERISA) and the Internal Revenue Code. As part of this guidance, the Agencies released a notification of relief (Joint Notice), which significantly affects administration of all ERISA-governed health, welfare and retirement plans by tolling certain claim-related deadlines throughout the duration of the National Emergency declared by President Trump. This alert, which can be read in its entirety on the Faegre Drinker website, describes the impact of those deadline extensions and provides practical guidance for plan sponsors and fiduciaries to consider in complying with the Joint Notice. For analysis of the Extension Guidance’s implications on retirement plans, see part one of this series of alerts.
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).