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.
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.
Continue reading “UPDATED: Changes to a Family Member’s Exchange Subsidy Eligibility”
We understand a former general counsel of the Equal Employment Opportunity Commission (EEOC or Commission), Sharon Fast Gustafson, recently sent a form letter to various employers alleging that providing abortion-related travel benefits to their employees could result in unlawful discrimination. Specifically, Gustafson’s letter avers that offering abortion travel benefits without also offering travel benefits for other health conditions may constitute several types of discrimination, including pregnancy and childbirth discrimination under Title VII of the Civil Rights Act of 1964, disability discrimination under the Americans with Disabilities Act and religious discrimination.
The letter does not actually threaten any litigation and appears designed to advance Gustafson’s personal agenda. However, recipients may be concerned that Gustafson’s views could be conflated with those of the EEOC, since the letter’s opening paragraph describes Gustafson as a “recent General Counsel of the Equal Employment Opportunity Commission (EEOC) with 31 years of experience practicing primarily employment law.”
Continue reading “EEOC Disavows Former General Counsel’s Letter on Abortion Travel Benefits”
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 IRS recently announced the 2023 cost-of-living adjustments to various benefit and contribution limits applicable to retirement plans. The IRS significantly increased the applicable limits for 2023 due to the high rate of inflation in 2022. The following limits apply to retirement plans in 2023:
- The limit on elective deferrals under 401(k), 403(b), and eligible 457(b) plans increased to $22,500.
- The limit on additional catch-up contributions by participants age 50 or older increased to $7,500. This means that the maximum amount of elective deferral contributions for those participants in 2023 is $30,000.
- The Internal Revenue Code (“Code”) Section 415 annual addition limit is increased to $66,000 for 401(k) and other defined contribution plans, and the annual benefit limit is increased to $265,000 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 $330,000.
- The dollar- level threshold for becoming a highly compensated employee under Code Section 414(q) increased to $150,000 (which, based on the look-back rule, is applicable for HCE determinations in 2024 based on compensation in 2023).
- The dollar- level threshold for becoming a “key employee” in a top-heavy plan under Code Section 416(i)(1) is increased to $215,000.
Continue reading “IRS Announces 2023 Retirement Plan Limits”
On September 26, 2022, the IRS published Notice 2022-45, extending the deadline for required retirement plan amendments associated with qualifying coronavirus-related and disaster-relief distributions under Section 2202 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) and Section 302 of Title III of the Taxpayer Certainty and Disaster Tax Relief Act of 2020 (Relief Act).
Notice 2022-45 follows Notice 2022-33, released in August, which extended the deadline for plan amendments under Section 2203 the CARES Act, the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act), and Section 104 of the Bipartisan American Miners Act of 2019 (Miners Act). Information on Notice 2022-33 can be found here.
Continue reading “Relief All Around: IRS Expands Required Plan Amendment Deadline Extensions”
Fall open enrollment is upon us, and plan sponsors and administrators are preparing to provide their employees with the required notices related to their health and welfare plans. Notice and disclosure obligations for health and welfare plans have become increasingly complex, with some information being required at initial enrollment and others required annually. Although insurers and third-party administrators may prepare or distribute these notices, ultimately the responsibility for compliance often rests with the plan sponsor or plan administrator.
Some of the notices routinely included in open enrollment materials are listed below.
Continue reading “Navigating Open Enrollment Notice Requirements”
Earlier this year we reported on the “Employee and Retiree Access to Justice Act,” which sought to render arbitration and class action waiver provisions, and discretionary authority for plan administrators, in ERISA plans unenforceable. On September 29, 2022, the U.S. House of Representatives passed the Mental Health Matters Act (the Act) — which encompasses the Employee and Retiree Access to Justice Act.
Continue reading “ERISA Litigation Roundup: Legislation Update — House Passes ERISA Bill to End Arbitration and Firestone“
As recently announced, President Biden has authorized forgiveness of up to $10,000 for federal student loan borrowers and $20,000 to individuals who received Pell Grants.
Employers are also able to provide student loan repayment benefits to their employees on a tax-free basis by expanding the type of permitted expenses under a Code § 127 “educational assistance program” to include student loan repayments made by the employer on behalf of an employee. If an employer has or adopts an educational assistance program, the employer may make student loan payments on behalf of an employee in an amount up to $5,250 annually, and such payments would be excluded from the employee’s taxable income.
Continue reading “Student Loan Assistance From Employers”
In Walsh v. Alight Solutions, LLC, — F.4th —, 2022 WL 3334450 (7th Cir. Aug. 12, 2022), the Seventh Circuit affirmed a district court order requiring Alight Solutions to produce documents in response to a Department of Labor (“DOL”) subpoena, confirming that the DOL has broad authority to issue subpoenas to investigate possible ERISA violations, even against non-fiduciaries.
Alight provides recordkeeping services for employers who sponsor ERISA-governed health and welfare and retirement plans. In 2019, the DOL began investigating Alight on the basis of alleged cybersecurity breaches that resulted in unauthorized distributions of plan benefits from plans for which Alight provides recordkeeping services. The DOL served Alight with an administrative subpoena duces tecum requesting 32 categories of documents dating back to 2015.
Continue reading “ERISA Litigation Roundup: Seventh Circuit Confirms DOL’s Broad Subpoena Power”