On March 27, 2020, Congress passed the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). This historic $2 trillion relief package received bipartisan support and is part of the third wave of federal government support as the nation copes with the acute economic fallout from the coronavirus (COVID-19) pandemic. Some of the key provisions of the CARES Act that apply to health and welfare plans, educational assistance programs, retirement plans, executive compensation programs, and employment and payroll taxes are outlined below. Health and Welfare Plans Q1. What COVID-19 testing and treatment is our company’s employer-sponsored group health plan required to cover? The Families First Coronavirus Response Act (“FFCRA”) requires an employer-sponsored group health plan (including a grandfathered plan under the Affordable Care Act (“ACA”)) (a “Plan”) to provide coverage for COVID-19 diagnostic testing and services related to the diagnostic testing without any cost sharing (including deductibles, copayments, and… Continue Reading
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
Federal agencies recently issued updated versions of certain documents that are required to be disclosed to individuals under applicable employer-sponsored group health plans. A set of FAQs regarding the Affordable Care Act (“ACA”) was issued by the federal Departments of Labor (“DOL”), Health and Human Services (“HHS”), and Treasury (collectively, the “Departments”), which describe recent changes made by the Departments to the “summary of benefits and coverage” template under the ACA (“SBC”). Among other minor changes to the SBC, certain verbiage on the SBC and the associated uniform glossary were revised to reflect the prior elimination, as of January 1, 2019, of the tax penalty related to an individual’s failure to comply with the so-called “individual mandate” under the ACA. The FAQs also provide additional guidance regarding the updated SBC coverage examples calculator that was released by HHS late last year. The revised SBC and SBC coverage examples calculator each… Continue Reading
Generally, the Affordable Care Act (“ACA”) requires group health plan coverage sponsored by large employers to be “affordable” in order to avoid certain penalties. “Affordability” is based on whether the premium for employee-only coverage is less than a certain percentage of an employee’s household income or an applicable safe harbor amount. In Notice 2019-29, the IRS announced that the affordability percentage for 2020 would decrease to 9.78% from 9.86% in 2019. Employers should note this change as they set premiums for 2020. Notice 2019-29 is available here.
New proposed rules have been issued by the federal Departments of the Treasury, Labor, and Health and Human Services that permit employers to offer health reimbursement arrangements (“HRAs”) to employees who are enrolled in individual health insurance coverage. An employee could use such an HRA to pay the employee’s premiums for individual health insurance and other medical expenses. The same HRA must be offered to an entire “class” of employees, and a traditional group health plan could not be offered to that class. Classes of employees include full-time, part-time, seasonal, union, employees in a waiting period, employees under age 25, non-resident aliens with no U.S. income, employees in the same insurance rating area, or a combination of those classes. The HRA contribution could increase with age, reflecting the fact that health coverage for older employees is generally more expensive, and the IRS will provide an approach for varying contributions by… Continue Reading
As September 2017 drew to a close, it appeared significant legislative efforts to repeal and replace the Affordable Care Act (ACA) were on hold until at least 2018 and would likely be joined by a bipartisan approach to amend and “save” the ACA. Against that backdrop, October 2017 was a busy month for both executive and regulatory action intended to loosen certain ACA requirements to allow greater flexibility to offer lower cost health insurance coverage options to consumers than is feasible under the existing ACA. Some of these actions are likely to put pressure on the long-term viability of the public insurance marketplace (e.g. Healthcare.gov and state-run insurance exchanges), potentially unraveling a key component of the ACA if not the ACA itself, which may cause Congress to act, perhaps improving the chances of repealing and replacing the law. The October actions included: Interim final regulations expanding the types of entities… Continue Reading
The following is a list of action health and welfare plan action items that should be addressed by plan administrators for the end of 2017 and start of the 2018 plan year. Please note that for non-calendar year plans, the specific timing requirements described below may vary. Employer shared responsibility provisions under the Affordable Care Act (ACA): Determine applicable large employer/applicable large employer member status for 2018. Determine whether any changes will be made to the measurement process for 2018 such as a change in method (e.g., monthly versus look-back), changes to period duration if the look-back measurement method is used, or other variations among permissible employee categories under the employer shared responsibility provisions. Update employer measurement policy as needed. Ensure minimum essential coverage will be offered to at least 95 percent of ACA full-time employees for each month during 2018 to avoid potential Internal Revenue Code (IRC) Section 4980H(a)… Continue Reading
The federal district court for the Northern District of Texas recently granted a stay on proceedings in the case of Franciscan Alliance, Inc. v. Price, pending reconsideration by HHS of the final regulations (the “Nondiscrimination Regulations”) it issued under Section 1557 of the Affordable Care Act (the “ACA”). Section 1557 of the ACA prohibits discrimination in certain healthcare programs and activities on the basis of sex and other protected traits. The Nondiscrimination Regulations specify gender identity discrimination and sexual stereotyping as forms of sex discrimination. In Franciscan Alliance, eight states and three religiously affiliated healthcare providers challenged two aspects of the Nondiscrimination Regulations. In December of 2016, the court issued a preliminary nationwide injunction enjoining HHS from “enforcing its expanded definition of sex discrimination” under the Nondiscrimination Regulations. (Please see our prior blog post discussing the court’s decision to issue the injunction and note that Sylvia Burwell was the Secretary… Continue Reading
The IRS recently released final instructions for the 2016 Forms 1094 and 1095. Highlights of the changes and clarifications included in the final instructions are provided below. While a of the few items are “neutral” and merely reflect pre-programmed changes under the Affordable Care Act that were already known and set to occur, many of the changes and clarifications are welcome news. Form 1094-B Highlights There are no substantive changes for 2016. View the 2016 Form 1094-B here. Form 1095-B Highlights The statement, “Do not attach to your tax return. Keep for your records.” was inserted underneath the main heading, suggesting that the form will continue to not be required for direct substantiation purposes as part of a personal income tax filing in the future. Part I, Lines #2 and #3 and Part IV, columns (b) and (c) have been updated to reflect that TINs may be substituted for SSNs.… Continue Reading
In May, we provided information about the release of final HHS regulations implementing ACA Section 1557 and their potential effects on healthcare providers, insurers, and employer-provided healthcare coverage. Chris Beinecke wrote an article discussing these implications in greater detail. A link to this article, which was recently published in the Dallas Business Journal, is available here.