Temporary Reinstatement of Relief for Telemedicine Coverage in HDHPs

The Consolidated Appropriations Act 2022 (“CAA 2022”), signed by President Biden on March 15, 2022, reinstated temporary relief for high deductible health plans (“HDHPs”) to provide pre-deductible coverage of telehealth services from April 1 through December 31, 2022, without impacting HDHP participants’ eligibility to contribute to their health savings accounts (“HSAs”).

In general, HDHP coverage of telehealth services at no or low cost before the participant satisfies the minimum HDHP deductible (in 2022, $1,400 for single-only coverage and $2,800 for family coverage) would cause HDHP participants to become ineligible to make HSA contributions.

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IRS Proposes Updates to the RMD Rules

On February 24, 2022, the IRS issued proposed regulations incorporating the Setting Every Community Up for Retirement Enhancement Act (“SECURE Act”) into the required minimum distributions (“RMDs”) regulations. The IRS is accepting comments until May 25, 2022, and then holding a public hearing on June 15, 2022. The proposed regulations, if finalized as currently drafted, generally would be effective for required minimum distributions that occur on and after January 1, 2022.

SECURE Act RMD Reminder

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Federal District Court Invalidates Some Surprise Billing Rules: What It Means for the No Surprises Act

On February 23, 2022, the United States District Court for the Eastern District of Texas invalidated portions of Part II of the interim final rule (“IFR”) issued by the U.S. Departments of Health and Human Services, Labor, and Treasury (“Tri-Agencies”), implementing the dispute resolution provisions of the No Surprises Act (“NSA”).  While the ruling in the case, Texas Medical Association v. U.S. Department of Health & Human Services, may impact medical plan costs, it does not substantively affect the consumer protections against surprise medical billing added by the NSA, which took effect in 2022.

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ERISA Litigation Roundup: Mortality Table Pension Plan Litigation – Reasonableness Not Required

When determining alternative pension benefits (such as joint and survivor annuities and early retirement benefits), a recent court decision held that underlying actuarial assumptions selected decades ago do not violate federal law simply because they are outdated and may result in a pension benefit that is less than using more current actuarial assumption.

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Selling an LLC? Don’t Forget About 280G!

Internal Revenue Code Section 280G (280G) (commonly referred to as the golden parachute provision) is intended to discourage the payment of excessive compensation to certain shareholders, officers and highly compensated service providers of companies undergoing a change in control. In general, when transaction-related payments or benefits to a covered individual equal or exceed three times the individual’s average compensation for the previous five years, the individual may be subject to a 20% excise tax, and the company’s deduction for such payments or benefits may be disallowed (in each case, with respect to amounts in excess of the average compensation).

280G commonly applies when a C-corporation undergoes a corporate transaction. However, in certain circumstances, 280G can also apply when the only entity being sold is an LLC. Note: Although this post focuses on the applicability of 280G to LLCs, 280G can also apply to the sale of a partnership in the circumstance described in #2 below.

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Preview of 2022 Required Changes for Retirement Plans

As 2022 begins, retirement plan sponsors and service providers should keep in mind deadlines for required plan changes in 2022.  In particular, retirement plan changes under the Setting Every Community Up for Retirement Enhancement Act (SECURE Act) and Coronavirus Aid Relief and Economic Security Act (CARES Act) must be adopted by amendment by December 31, 2022, for calendar year plans.  In addition, retirement plans must comply with new SECURE Act disclosure requirements beginning later this year.

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ERISA Litigation Roundup: SCOTUS Vacates and Remands Seventh Circuit’s 403(b) Decision in Northwestern

Last week, the Supreme Court issued its anticipated ruling in the ERISA fiduciary-breach class action Hughes v. Northwestern. In its unanimous decision, the Court vacated the Seventh Circuit’s dismissal of the case and sent the case back to the lower court for further review. The narrow decision may boost plaintiffs in similar ERISA cases involving challenges to retirement plan fees and investment options, but it also offers hope to defendants.

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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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Department of Labor Issues New Guidance on Private Equity Investments in Individual Account Plans

On December 21, 2021, the Department of Labor (DOL) issued additional guidance on the use of private equity investments in certain retirement plans, warning that most plan fiduciaries will not have enough experience to adequately evaluate such investments.

The DOL’s guidance relates to a June 3, 2020 “information letter” (which is a non-binding statement) issued by the Employee Benefits Security Administration of the DOL . In that information letter, the DOL addressed private equity investments in “designated investment alternatives” (or DIAs) offered to participants in individual account plans, like 401(k) plans, considered whether ERISA prohibits offering certain private equity investments to participants in individual account plans.

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ERISA Litigation Roundup: Florida Federal District Court Compels Individual Arbitration of ERISA Class Action

On January 20, 2022, the United States District Court for the Southern District of Florida enforced a mandatory arbitration and class action-waiver provision (Arbitration Provision) in an ERISA-governed defined contribution plan, precluding a putative class of former and current plan participants from pursuing breach-of-fiduciary duty claims against plan fiduciaries in federal court. The plaintiffs in Holmes v. Baptist Health South Florida, Inc., 2022 WL 180638, argued that the plan’s Arbitration Provision was unenforceable as it both violated the “effective vindication” doctrine and was unenforceable because the participants did not knowingly agree to it. The court rejected both arguments.

Holmes adds to the flurry of recent decisions on the enforceability of mandatory arbitration and class action-waiver provisions in defined-contribution plans, which have yielded inconsistent results and are still working their way through courts of appeals. However, plan sponsors following this line of cases can glean several takeaways from the Holmes decision:

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