DOL Archives - Spotlight on Benefits

New DOL Fiduciary Rule Stayed: What Advisors and Insurance Agents Recommending Rollovers Should Do Now

The stay of the new DOL fiduciary rule will remain in effect until the lawsuits challenging the rule are decided and appeals are resolved. This litigation process is likely to take several years. In the meantime, the fiduciary status of advisors and agents will be measured under the current regulation’s five-part test. However, in some cases the application of that test could result, as this article explains, in apparent one-time recommendations being deemed to satisfy the five-part test. As a result, advisors, agents and their firms should carefully consider where fiduciary status for retirement accounts may apply and, in those cases, should consider complying with the conditions of an applicable prohibited transaction exemption.

To view the full alert, visit the Faegre Drinker website.

DOL Finalizes Changes to the Qualified Professional Asset Manager (QPAM) Exemption: What Investment Managers Need to Know

The changes will primarily impact registered investment advisers, banks, and insurance companies who manage retirement plan or IRA assets directly, or who manage certain types of funds or other vehicles for which the underlying assets are deemed to constitute “plan assets” under the look-through rules in ERISA and DOL regulations.

To view the full alert, visit the Faegre Drinker website.

DOL Issues Long Awaited Mental Health Parity Guidance

Plan sponsors, insurers, and third-party administrators should pay close attention to the new guidance to facilitate health plan compliance with complex nonquantitative treatment limitation comparative analyses requirements.

On July 25, 2023, the Department of Labor (DOL), Department of the Treasury (Treasury), and Health and Human Services (HHS) (the Departments) issued a proposed rule on how to comply with the nonquantitative treatment limitations (NQTL) comparative analyses requirements enacted under the Consolidated Appropriations Act, 2021 (CAA). The requirement for health plans to perform and document their comparative analyses of the design and application of NQTLs became effective February 10, 2021, and the DOL has been aggressively enforcing the requirement through extensive, multi-year health plan investigations over the last few years. In addition to the proposed rule, the new guidance issued also includes:

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Holiday Rush Brings Health Plans Eagerly Awaited RxDC Reporting Guidance and Relief

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[1]:

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.

[1] The Departments will monitor compliance to determine whether to extend these flexibilities for future reporting deadlines. The Departments will communicate any such extensions.

The Annual Form 5500 Audit: DOL Broadens Criteria for Independent Qualified Public Accountants

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.

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ERISA Litigation Roundup: Seventh Circuit Confirms DOL’s Broad Subpoena Power

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.

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Stay Tuned – the DOL Regulatory Agenda

The Department of Labor (“DOL”) recently published its Spring 2022 Regulatory Agenda, and here is a summary of several big ticket items:

ESG & ERISA: Plan sponsors and investment professionals have been waiting for final rules on the permissible use of environmental, social, and governance (“ESG”) considerations under ERISA when selecting plan investments and exercising shareholder rights with respect to plan assets. Based on the updated regulatory agenda, the DOL is planning to issue final ESG rules in December 2022.

Fiduciary Rule: Plan advisors and investment professionals have also been awaiting guidance on the DOL’s fiduciary rule re-write. The Trump era “fiduciary rule” is currently in effect and is a combination of a new and expansive definition of fiduciary advice and an exemption – PTE 2020-02 – from the prohibitions of ERISA and the Internal Revenue Code for certain conflicts of interest arising from nondiscretionary fiduciary recommendations. However, last year, the Biden administration announced that it is revisiting the definition of fiduciary investment advice and the requirements of various prohibited transaction exemptions. Based on the Agenda, we can expect a new proposed fiduciary rule in December 2022.

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ERISA Litigation Roundup: Second Circuit Holds Disability Benefit Claim Must Be Fully Determined on Internal Appeal Review Within 45 Days

On June 7, 2022, the Second Circuit decided McQuillin v. Hartford Life and Accident Insurance Co., No. 21-1514, holding that under ERISA and Department of Labor (DOL) regulations governing administrative benefit claims and appeals (29 C.F.R. § 2560.503-1), when considering an appeal of a denied disability claim, a plan administrator must make full determination of benefits. In doing so, the Second Circuit rejected the claim administrator’s argument that reversing the claim denial and remanding the claim internally for reevaluation satisfied the regulations — instead, a decision on whether or not benefits would be awarded was required.

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Deadline Approaches for Employers to Post Machine-Readable Files on a Public Website

The July 1st deadline is quickly approaching for non-grandfathered group health plans and issuers to publicly disclose, in accordance with the Transparency in Coverage Final Rules, price information in machine-readable files for the plan year beginning on or after January 1, 2022. The two machine-readable files must show (1) in-network negotiated provider rates for covered items and services and (2) out-of-network allowed amounts and billed charges for covered items and services.

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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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