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New Guidance Addresses HIPAA Rules and COVID-19 Vaccination Information in the Workplace

HHS recently issued guidance, in a Q&A format, to clarify when the HIPAA privacy rules apply to disclosures and requests for information about an individual’s COVID-19 vaccination status.  Among other questions, the guidance addresses whether HIPAA prohibits an employer from requiring its employees to disclose to the employer whether they have received a COVID-19 vaccination. In its answer, HHS confirms the important distinction under HIPAA between (i) an individual’s health information an employer receives in its capacity as the plan sponsor of its group health plan (generally, a “covered entity” under HIPAA), and (ii) individualized health information received by the employer in its capacity as an employer (i.e., as related to employment functions referred to by HIPAA as “employment records”). HHS confirmed that HIPAA does not apply to employment records and thus does not regulate the information, such as vaccination status, employers are permitted to request from employees as part of… Continue Reading

New 2022 Health and Welfare Benefits Limits: In Time for Open Enrollment?

The IRS published increased limits for 2022 for various health and welfare benefits, including: Health flexible spending account limit increased to $2,850 (from $2,750); Qualified transportation fringe benefit limit for parking and transit each increased to $280 (from $270); Adoption assistance program limit increased to $14,890 (from $14,400); and Qualified Small Employer Health Reimbursement Arrangement limit increased to $5,450 for individual coverage and $11,050 for family coverage (from $5,300 and $10,700, respectively). An employer that wants to incorporate these increased limits into its plans should determine whether the plans are drafted to automatically reflect the increased limits or whether amendments would be required. If a plan (including a health flexible spending account) is drafted to automatically incorporate any increased limits, the plan sponsor should communicate the increased limits to participants to permit changes during open enrollment for the upcoming plan year. The list of 2022 plan limits can be found in… Continue Reading

Broker / Consultant Compensation Disclosures

The Consolidated Appropriations Act of 2021 requires brokers and consultants to disclose to group health plans the direct and indirect compensation they expect to receive in connection with the services they provide to the plans. This compensation disclosure must be provided before the service contract is entered into or renewed, and the plan must be informed if the information in the disclosure changes. The broker/consultant must also provide the compensation disclosure to a plan upon request in order to permit the plan to comply with any applicable reporting and disclosure requirements. If the compensation disclosure is not provided, a plan fiduciary is required to request the compensation disclosure from the broker/consultant and, if it is still not provided in response to that request, notify the DOL and potentially terminate the contract. Implementing regulations and/or guidance have not yet been issued. This new requirement is scheduled to go into effect on… Continue Reading

Are Your Employee Health and Other Welfare Benefits Fully Wrapped?

Many employers utilize “wrap plan” documents to consolidate their health and other employee welfare benefit programs into a single plan for ERISA purposes. Basically, a wrap plan document incorporates by reference the insurance policies and benefits booklets that comprise the entire plan. By consolidating employee welfare benefit programs into a single plan, a wrap plan document, when properly drafted, will ease the plan sponsor’s compliance obligations under ERISA’s plan document, reporting, and disclosure requirements. If welfare benefits are properly consolidated under a wrap plan, employers may be able to file a single Form 5500 for all their employee welfare benefit programs. Problems may arise if not all of the benefits programs that are considered ERISA “employee welfare benefit plans” are covered by the wrap document. It is thus critical that employers review all their welfare benefit programs to ensure they are properly covered under the wrap plan and included with the… Continue Reading

IRS Announces 2022 Qualified Retirement Plan Limits

The IRS recently announced cost-of-living adjustments for 2022. Below is a list of some of the key annual limits that will apply to qualified retirement plans in 2022: Compensation limit used in calculating a participant’s benefit accruals: increased to $305,000. Elective deferrals to 401(k) and 403(b) plans: increased to $20,500. Annual additions to a defined contribution plan: increased to $61,000. Catch-up contributions for employees aged 50 and over to 401(k) and 403(b) plans: remains unchanged at $6,500. Annual benefit limit for a defined benefit plan: increased to $245,000. Compensation dollar limit for defining a “key employee” in a top heavy plan: increased to $200,000. Compensation dollar limit for defining a “highly compensated employee”: increased to $135,000. The full list of 2022 plan limits included in Notice 2021-61 is available here.

Washington State Partnership Access Line Assessments Due for Self-Insured Employer Plans

The first quarterly assessment is due to the Health Care Authority (the “HCA”) under the Washington Partnership Access Lines (“PAL”) program for certain sponsors of welfare programs, including employers that sponsor self-insured employee welfare benefit plans that cover residents of Washington state. The first regular covered lives report covers the period from July 1 to September 30, 2021, and must be submitted within 45 calendar days after the end of the quarter. The HCA recently approved the monthly assessment at a rate of $0.13 per covered life with the first payment due on November 15, 2021. For purposes of the required report and the assessment, the term “covered life” means any individual residing in Washington with respect to whom the entity administers, provides, pays for, insures, or covers health care services, unless excepted by Washington statute. Plan sponsors of self-insured plans should consult with their third party administrators to confirm they will… Continue Reading

DOL Announces Temporary Enforcement Policy for PTE 2020-02

The DOL recently issued Field Assistance Bulletin No. 2021-02 (the “Bulletin”) announcing a delay in the enforcement of Prohibited Transaction Exemption 2020-02, Improving Investment Advice for Workers & Retirees (“PTE 2020-02”). PTE 2020-02 was adopted by the DOL on December 18, 2020, and sets forth several requirements that investment advice fiduciaries who rely on the exemption must satisfy when providing advice, which we previously discussed on our blog here and here. PTE 2020-02 became effective on February 16, 2021, but the DOL previously provided transitional relief through December 20, 2021. In the Bulletin, the DOL announced a temporary enforcement policy which provides that (i) for the period from December 21, 2021 through January 31, 2022, the DOL will not pursue prohibited transaction claims against investment advice fiduciaries who are working diligently and in good faith to comply with the impartial conduct standards for transactions that are exempted under PTE 2020-02… Continue Reading

IRS Releases FAQs on Rehiring Retirees and Retaining Employees After Retirement Age

As employers around the country struggle with labor shortages, many are turning to former employees who retired to fill in the gaps. The IRS recently released two FAQs on plan distributions related to concerns with the rehiring of retirees and the retention of employees who have reached their retirement age. Generally, for plans that do not permit in-service distributions, benefit distributions to an individual may only commence when the individual has a bona fide retirement. The FAQs state that rehiring an individual who already experienced a bona fide retirement will not cause such retirement to no longer be considered “bona fide” if the rehiring was due to unforeseen circumstances that do not reflect any prearrangement to rehire. Thus, if a plan’s terms permit, benefit distributions can continue after the rehire. The FAQs also state that plans may generally permit in-service distributions for employees who have reached age 59½ or the… Continue Reading

Reminder About Key 2021 Year-End Amendments

As the end of the calendar year approaches, plan sponsors are reminded to adopt certain amendments that may be required for their benefit plans to conform to regulations or reflect certain legal and/or plan design changes. Retirement Plans 2019 Required Amendments List In Notice 2019-64, the IRS published the 2019 Required Amendments List (the “List”), which lists the amendments required to be adopted by December 31, 2021. Pursuant to the List, plans offering hardship distributions must be amended in accordance with the final regulations issued under the Bipartisan Budget Act of 2018. In addition, the List provides that collectively bargained cash balance/hybrid defined benefit plans maintained pursuant to collective bargaining agreements ratified on or before November 13, 2015 must be amended to comply with the final cash balance/hybrid plan regulations. The List also includes certain periodic changes that took effect in 2019, such as adjustments to various dollar limits for… Continue Reading

DOL Issues Proposed Rule (Again) to Address Selecting Plan Investments and Exercising Shareholder Rights

On October 13, 2021, the DOL released a proposed rule which effectively provides that ERISA plan fiduciaries may consider climate change and other environmental, social, and governance (“ESG”) factors when they make investment decisions and when they exercise shareholder rights. Under the Trump administration, in late 2020, the DOL previously issued a final rule on “Financial Factors in Selecting Plan Investments” (generally requiring plan fiduciaries to select investments and investment courses of action based solely on consideration of “pecuniary factors”) and a related final rule on “Fiduciary Duties Regarding Proxy Voting and Shareholder Rights” (addressing obligations of plan fiduciaries under ERISA when voting proxies and exercising other shareholder rights in connection with plan investments in shares of stock) (collectively, the “Prior Rules”). Subsequently, President Biden issued executive orders which directed the DOL to consider a proposed rule to suspend, revise, or rescind the Prior Rules, and in March 2021, the… Continue Reading

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