Due to the recent surge in ERISA litigation against employers and executives alleging, among other things, that they breached their fiduciary duties to plans and participants by allowing service providers to charge excessive fees, some fiduciary liability insurers have reportedly revamped their processes for evaluating applications for fiduciary liability coverage. These changes may impact an employer’s ability to obtain adequate fiduciary liability coverage, thereby increasing the exposure to plan sponsors and their executives. Periodic fiduciary check-ups are always a good idea, but in light of these developments, it is perhaps more important than ever that plan sponsors conduct periodic internal reviews to ensure they continue to meet their fiduciary duties to their plans and participants. Among other things, responsible plan fiduciaries should: Determine whether the committee (or committees) responsible for administering the plan and overseeing plan investments meets regularly and properly documents its meetings, including information on not just what… Continue Reading
IRS Provides Additional Extension of Temporary Relief from Physical Presence Requirement for Certain Retirement Plan Consents
In June 2020, we reported here regarding the temporary relief from the physical presence requirements for certain participant and beneficiary elections under qualified retirement plans provided in IRS Notice 2020-42 (the “Prior Notice”). As we also discussed in our prior blog posts here and here, the IRS provided two extensions of the temporary relief provided in the Prior Notice during the COVID-19 pandemic. In light of the continuing COVID-19 pandemic, the IRS recently issued Notice 2022-27 (the “2022 Notice”) to provide an additional extension of this temporary relief for six months, through December 31, 2022. The 2022 Notice extends temporary relief, under terms identical to those provided in the Prior Notice, from the “physical presence” requirement for any participant election required to be witnessed either by (i) a notary public of a state that permits remote electronic notarization, or (ii) a plan representative. Importantly, the 2022 Notice states that the extension… Continue Reading
As we have discussed in prior blog posts here and here, noncompliance with the Mental Health Parity and Addition Equity Act (the “MHPAEA”) continues to be a source of significant potential legal liability for employers that sponsor group health plans as well as for their third-party claims fiduciaries or health insurers. As further evidence of that trend, a proposed class action lawsuit has recently been filed against Blue Cross and Blue Shield of Texas (“BCBSTX”), as a designated claims fiduciary or health insurer under the class members’ employer-sponsored group health plans, for alleged violations of the MHPAEA. In particular, the class claims that BCBSTX imposed more restrictive standards on coverage of residential mental health care than the standards applied to coverage of care at skilled nursing facilities. Under the MHPAEA, employer-sponsored group health plans and health insurers that provide mental health or substance use disorder benefits are prohibited from imposing less… Continue Reading
The IRS recently issued Rev. Proc. 2022-24, which sets the 2023 calendar year limits on (i) annual contributions that can be made to a health savings account (“HSA”) and (ii) annual deductibles and out-of-pocket maximums under a high deductible health plan (“HDHP”). The 2023 limits are as follows: Annual HSA contribution limits: $3,850 for self-only coverage ($200 increase from 2022) and $7,750 for family coverage ($450 increase from 2022); Minimum HDHP deductibles: $1,500 for self-only coverage ($100 increase from 2022) and $3,000 for family coverage ($200 increase from 2022); and HDHP out-of-pocket maximum limits: $7,500 for self-only coverage ($450 increase from 2022) and $15,000 for family coverage ($900 increase from 2022). Rev. Proc. 2022-24 is available here.
Service Providers May Allow Investment in Cryptocurrency, but Plan Administrators Should Proceed with Extreme Caution
Recently, one of the country’s largest retirement plan providers announced they were adding a digital assets account to their retirement plan platform that would allow employers to make cryptocurrency, such as Bitcoin, a potential investment option for plan participants. As we previously reported here, prior to that announcement, the DOL had issued guidance cautioning plan fiduciaries to “exercise extreme care” before adding a cryptocurrency option to a retirement plan’s investment lineup or even through a plan’s brokerage window. The DOL guidance went so far as to say that it expected to investigate plans that offer “participant investments in cryptocurrencies and related products, and to take appropriate action to protect the interests of plan participants and beneficiaries with respect to these investments.” The DOL cautioned that plan fiduciaries who allowed cryptocurrency as a plan investment option “should expect to be questioned” about how their decisions to allow investments in cryptocurrency align with their… Continue Reading
Employers that employ between five and 50 California-based employees (“Small Employers”) must either offer a retirement savings program or enroll as a participating employer in the CalSavers Retirement Savings Program by June 30, 2022. Small Employers that sponsor their own retirement savings program are required to register as exempt from the CalSavers program by June 30, 2022. Additional information about the CalSavers program and employer registration can be found on the CalSavers program’s employer website here. Failure to register may result in a penalty of $250 per employee for noncompliance within 90 days and $500 per employee if noncompliance continues for more than 180 days. As a reminder, larger employers with more than 100 California-based employees were required to register as participating or exempt by September 30, 2020, and employers with 50 to 100 California-based employees were required to register as participating or exempt by June 30, 2021.
Recently, the Office for Civil Rights (the “OCR”) of HHS announced the resolution of three investigations and one matter before an Administration Law Judge (collectively, the “HIPAA Matters”) related to non-compliance with the HIPAA privacy rules (the “HIPAA Rules”) by certain covered entities. The OCR’s investigations and enforcement action regarding the HIPAA Matters generally stemmed from infractions of non-administrative provisions of the HIPAA Rules (including impermissible disclosures of PHI) by the HIPAA covered entity in question. Notably, however, the OCR also specifically identified certain violations of administrative provisions by the covered entities that triggered civil monetary penalties and follow up actions by the covered entities under formal corrective action plans with the OCR. The OCR’s published settlement agreements and notice of final determination regarding the HIPAA Matters (each, an “Agreement”) discussed the following administrative violations by one or more covered entities and imposed the associated remedial actions: 1. The failure to… Continue Reading