The DOL issued guidance today stating that the one-year limit on the suspension of COBRA, special enrollment, and claims deadlines during the COVID-19 outbreak period applies on an individual basis. This means those deadlines do not resume running as of March 1, 2021. Instead, each individual has up to a one-year suspension as long as the COVID-19 national emergency continues. As discussed in our prior blog post here, it was unclear whether those deadlines were to resume running as of March 1, 2021. Employers should contact their service providers to ensure they are aware of this new guidance and to issue new participant communications as needed. Notice 2021-01 is available here.
After February 28, 2021, the suspension of COBRA, special enrollment, and claims deadlines may be over. The government’s authority for suspending these deadlines is limited by statute to a period of one year. It is unclear whether the one-year limit applies on the individual level (i.e., each person gets up to a year disregarded if the national emergency is ongoing) or applies as a limit on the outbreak period itself (i.e., deadlines for all persons would resume being counted as of March 1, 2021). The DOL/IRS have not yet issued guidance on this question. Employers may want to contact their service providers to see how they intend to administer, and communicate to participants, the end of the suspension of deadlines.
In 2020, the Taxpayer Certainty and Disaster Tax Relief Act of 2020 (the “Act”) was enacted. The Act is part of the Consolidated Appropriations Act of 2021. The Act provides employer sponsors of cafeteria plans, including health flexible spending accounts (“HFSAs”) and dependent care flexible spending accounts (“DCFSAs”) (collectively, “FSAs”), with helpful new options for easing the normal FSA use-it-or-lose-it and mid-year election change rules. Generally, the Act provides for (i) flexibility with respect to carryovers of unused FSA amounts from the 2020 and 2021 plan years (“Enhanced Carryover”); (ii) extension of the permissible period for incurring FSA claims for plan years ending in 2020 and 2021 (“Enhanced Grace Period”); (iii) a special rule regarding post-termination reimbursements from HFSAs during plan years 2020 and 2021 (“HFSA Post-Termination Option”); (iv) a special claims period and carryover rule for DCFSAs when a dependent “ages out” during the COVID-19 public health emergency; and… Continue Reading
We will begin providing periodic updates on upcoming benefit compliance and/or plan amendment deadlines so that you can add them to your to-do list. Each deadline will have links to our prior blog posts that provide more detailed information about that subject. As of February 10, 2021, an employer-sponsored group health plan that imposes nonquantitative treatment limitations (“NQTLs”) on mental health or substance use disorder benefits must make available to federal agencies, upon request, a comparative analysis of the design and application of NQTLs, including the specific findings and conclusions reached by the plan and any results of the comparative analysis that indicate the plan is or is not in compliance. For more information, please read our blog post here.
The SECURE Act and CARES Act made significant changes to required minimum distributions (“RMDs”). What should you be doing to ensure your retirement plans are administered correctly? The first step is to understand your options. SECURE Act Shifts the Start Before the SECURE Act, RMDs had to begin by April 1st of the calendar year following the later of (i) the calendar year during which the participant retires or (ii) the calendar year in which the participant turns age 70½. Following the passage of the SECURE Act, the age cutoff in that rule changed from age 70½ to age 72, but only for individuals who turned age 70½ on or after January 1, 2020 (i.e., individuals born on or after July 1, 1949). In short, those terminated vested participants born before July 1, 1949 had to start their RMDs by April 1 of the year after turning 70½, while those… Continue Reading
As we’ve previously reported here, there are a number of record retention requirements applicable to employee benefit plans. Plan sponsors should be mindful of the impact and application of these requirements in the context of corporate mergers and acquisitions, especially if assets of the target’s retirement plan are to be merged into the buyer’s plan. When acquiring a company that sponsors (or has sponsored) its own retirement plan, plan sponsors should consider: Protected Benefits. Though the buyer’s plan may be amended to protect certain benefits under the target’s plan, as required by the Internal Revenue Code, in many cases the plan sponsor will need to refer to the target’s actual plan document to fully understand the specifics of the protected benefits. Missing Participants. The DOL recently issued a memorandum outlining best practices for pension plans to avoid and resolve missing participant issues (we previously discussed this issue here). Included in… Continue Reading
Puerto Rico to Allow Rollovers from the Government Plan for Puerto Rico Employees to Qualified Retirement Plans
On January 20, 2021, the Puerto Rico Department of Treasury released Administrative Determination No. 21-01 (“AD 21-01”), allowing for direct and indirect rollovers of lump-sum distributions from the defined contribution government plan for Puerto Rico employees to a plan that is qualified under Section 1081.01(a) of the Puerto Rico Internal Revenue Code of 2011, as amended (the “Code”), maintained by a private-sector employer. Such rollovers would be considered exempt transactions and would not be subject to income tax withholding under Section 1081.01(b) of the Code. The provisions of AD 21-01 are effective immediately. AD 21-01 is available here.
The IRS recently issued updated FAQs related to the expanded paid sick and family leave tax credits authorized under the Consolidated Appropriations Act of 2021 (the “CAA”). Specifically, the CAA extends through March 31, 2021, the availability of paid sick and family leave credits, which were first adopted in the Families First Coronavirus Response Act in March 2020. The extended paid leave tax credits are not new benefits and simply extend the period of time during which eligible employers may claim the credits. Consequently, if an employer has already claimed the maximum amount of these tax credits, they will not be eligible to claim additional paid leave tax credits. For additional information on the paid sick and family leave tax credits, please see our prior blog posts here and here. The IRS has yet to update its FAQs for changes made in the CAA to the terms and conditions of… Continue Reading
The Consolidated Appropriations Act, 2021 (the “CAA”) requires an employer-sponsored group health plan that imposes nonquantitative treatment limitations (“NQTLs”) on mental health or substance use disorder benefits to perform and document a comparative analysis of the design and application of NQTLs. For example, a plan that imposes prior authorization requirements on any mental health or substance use disorder benefits would need to document: (i) all the benefits that require prior authorization; (ii) the factors used to determine which benefits were subject to prior authorization, such as excessive utilization or high variability in cost per episode of care, and whether any factors were given more weight than others and why; (iii) the sources used to define the factors, such as internal claims analysis or national accreditation standards; and (iv) that the process, strategies, and evidentiary standards used in applying prior authorization requirements are comparable and no more stringently applied to mental… Continue Reading
Our world is filled with paper and electronic records, and the HR departments at most companies are no exception. Enrollment forms, notices, plan documents, summary plan descriptions, benefit statements, and service records are just a few of the records that fill the HR department’s file cabinets and computer storage. While it might be tempting to clean out files, plan sponsors should exercise care before disposing of any files relating to benefits under a plan. A clean desk today could create headaches tomorrow. Generally, ERISA requires an employer to retain plan records to support plan filings, including the annual Form 5500, for at least six years from the filing date (ERISA §107) and to maintain records for each employee sufficient to determine the benefits due or that may become due to such employee (ERISA §209), with no time limit on such requirement. In addition, HIPAA requires retention of the policies and… Continue Reading