Employers – Check Your Severance Arrangements Now!

If employees are required to provide proof of COVID-19 vaccination or a timely negative COVID-19 test, and/or wear a mask as a condition of employment (COVID-19 Policies), and an employee is terminated for violating a COVID-19 Policy, will that employee be entitled to severance benefits?

The answer depends on what the employer intends and the terms of the applicable severance arrangement which, for example, can be in the form of a severance plan, a severance agreement, or an employment agreement.

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Part One of Surprise Medical Billing Regulatory Guidance Outlines Specific Required Changes to Group Health Plan Payment Calculations

The No Surprises Act (the “NSA”), which was signed into law at the end of 2020 as part of the Consolidated Appropriations Act, is designed to protect consumers from unexpected medical bills.  The NSA generally applies to group health plans, healthcare providers, and health insurance issuers.  The NSA is expected to have significant and far-reaching impacts on the health industry, so it is imperative that group health plan sponsors take steps to implement regulatory guidance on the NSA as it is issued.

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IRS Guidance on New COBRA Subsidy Clarifies Many Outstanding Questions

On May 18, 2021, the IRS released Notice 2021-31, a lengthy series of FAQs clarifying many aspects of the new COBRA subsidy made available under the American Rescue Plan Act of 2021 (ARPA). The FAQs address many of the issues raised by plan sponsors since the subsidy was enacted earlier this year. Although this blog post does not address every nuance of the guidance—the IRS issued a whopping 86 FAQs—below we point out some clarifications that might be of interest to group health plan sponsors:

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ERISA Litigation Roundup: Eastern District of Michigan Weighs in on Allegations of COBRA Notice Violations

On May 4, 2021, the United States District Court for the Eastern District of Michigan granted in part and denied in part a motion to dismiss in a class action lawsuit regarding the adequate notice of the right to continued insurance coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA). The decision follows a blitz of class action lawsuits alleging deficient COBRA notices and underscores the importance of careful review by employers.

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DOL Issues Model COBRA Subsidy Notices and Initial Guidance on COBRA Subsidy Relief under the American Rescue Plan Act of 2021

As discussed in our prior blog post, the American Rescue Plan Act of 2021 (ARP) requires employers that sponsor group health plans to provide a 100% COBRA subsidy for “Assistance Eligible Individuals” during the “Subsidy Period” (April 1 through September 30, 2021, or the date the participant is no longer an Assistance Eligible Individual, if earlier) and to offer a COBRA special election opportunity for certain individuals to enroll in COBRA coverage in order to receive the benefit of the COBRA subsidy.

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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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$1.9 Trillion American Rescue Package Includes Major Relief for Single and Multiemployer Pension Plans

The $1.9 trillion COVID stimulus package recently signed into law by President Biden includes significant assistance for pension plans. The financial assistance provisions will have a large bearing on shoring up the ongoing multiemployer pension crisis. The pension assistance has not received as much press as have other provisions of the American Rescue Plan Act of 2021 (ARPA) but it is no less impactful. The stimulus package provides direct financial support for certain underfunded multiemployer pension plans and relief from several minimum funding rules for both multiemployer and single-employer plans.

The pension provisions of ARPA are a modified version of the Butch Lewis Act, a pension rescue bill that has passed in the House but never in the Senate in years past. ARPA should allow over 100 severely underfunded multiemployer pension plans to return to relative financial health; however, ARPA does not provide for any long-term funding reform that would prevent another pension crisis. It also will have little or no effect for contributing employers.
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IRS Clarifies Pandemic-Related Relief for Dependent Care FSAs

As noted in our prior blog posts here and here, the Consolidated Appropriations Act of 2021 (the “Act”) includes several types of relief for flexible spending accounts (“FSAs”), impacting both health and dependent care FSAs.  In February, the IRS issued Notice 2021-15 (the “Notice”), which provides clarifying guidance with respect to the Act’s FSA relief provisions and answers many of the outstanding questions posed by employers following the Act’s passage.  Our prior blog post answers common questions about how the guidance applies to health FSA benefits. Below we describe the key changes in the Act and the Notice (together, the “Relief”) specific to dependent care FSAs.

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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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Employers Must Provide COBRA Subsidies to Assistance Eligible Individuals

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.

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