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COVID-19 EMPLOYEE BENEFIT AND EXECUTIVE COMPENSATION QUESTIONS AND ANSWERS

In light of the recent economic developments stemming from the COVID-19 pandemic, many employers are evaluating their employee benefit plans and how employee and employer costs will be impacted. The following summary provides a list of questions we have been receiving from clients over the past week, along with action items to help employers address these issues. Health and Welfare Plans and Fringe Benefits Should benefits coverage continue while an employee is on an unpaid furlough? If so, how would the employee pay the employee’s portion of the premium? Could the employee elect to drop coverage due to the reduction in hours of active service? Could the employer pay for coverage for some or all of its furloughed employees? Continued eligibility for benefits will depend on whether the employer treats the furlough as a termination of employment or as an unpaid leave of absence. The terms of the plan, including… Continue Reading

Deadlines Extended for 403(b) Plans and Pre-Approved Defined Benefit Plans

The IRS announced it is extending the deadline for plan sponsors to update their pre-approved and individually designed 403(b) plan documents as well as certain upcoming deadlines applicable to pre-approved defined benefit plans. The IRS’s announcement is available here.

IRS Guidance Regarding High Deductible Health Plans and Expenses Related to COVID-19

In Notice 2020-15 (the “Notice”), the IRS provides relief for certain expenses related to the 2019 novel coronavirus (“COVID-19”). Generally, a high deductible health plan (“HDHP”) must satisfy the minimum deductible and maximum out-of-pocket expense requirements under Section 223(c)(2) of the Internal Revenue Code. However, “[t]o facilitate the nation’s response to [COVID-19],” the Notice provides that a health plan that otherwise satisfies the requirements to be an HDHP will not fail to be an HDHP merely because the plan provides health benefits for testing and treatment of COVID-19 before satisfying the applicable minimum deductible requirements. Notice 2020-15 is available here.

March 31st Deadline to Adopt Compliant 403(b) Plan

Tax-exempt organizations that sponsor individually-designed 403(b) plans that have not received favorable determination letters and which may contain one or more form defects, and plan sponsors that have not timely adopted amendments to reflect changes in the law or regulations, generally have until March 31, 2020 to cure any defects by either (i) amending and restating their plan on an up-to-date pre-approved plan document or (ii) correcting any form defects retroactively to January 1, 2010 (or the plan’s original effective date, if later). After the March 31, 2020 deadline, generally, the only way to cure form defects in a 403(b) plan that arose prior to March 31, 2020 will be through the IRS’s voluntary correction program.

Court Finds Plausible Claim for Violation of Mental Health Parity and Addiction Equity Act

In Peter E. and Eric E. v. United Healthcare Services, Inc., the plaintiffs, a father and son, brought a claim against the defendants for violation of the federal Mental Health Parity and Addiction Equity Act (the “MHPAEA”), alleging that the group health plan’s denial of continued coverage for the dependent son’s mental health and substance abuse treatment violated the MHPAEA. This alleged violation, the plaintiffs argued, resulted in an impermissible disparity under the MHPAEA because equivalent mental health/substance abuse benefits were denied, but analogous levels of medical/surgical benefits would have been covered under the plan. Holding that the plaintiffs had alleged sufficient facts to show they had a plausible claim for a violation of the MHPAEA, the court denied the defendants’ motion to dismiss and allowed the case to proceed to trial. Although this court’s opinion is controlling only in the jurisdiction in which it was issued (Utah), the case… Continue Reading

March 2020
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