For years, employers have used wellness programs with the hope they would help improve employees’ overall health while simultaneously reducing group health plan costs. The pandemic has presented challenges for wellness programs though, as employees have found it more difficult to meet the requirements for discounts because of lockdowns and fears of COVID-19. To address these challenges, some employers are considering modifications to their programs to allow employees to qualify for discounts if they obtain a flu or COVID-19 vaccine. Before adopting any changes, employers should use caution, as wellness programs are subject to numerous legal requirements, including requirements under the ACA, ERISA, HIPAA, and the Americans with Disabilities Act. By carefully evaluating changes and considering the myriad of legal requirements applicable to wellness programs prior to implementing any changes, plan sponsors can avoid jeopardizing the legal health of their wellness programs. Our prior blog posts regarding wellness program compliance… Continue Reading
In Notice 2020-46, the IRS provided guidance regarding cash payments made by employers to certain charitable organizations for the relief of COVID-19 victims under employer-sponsored, leave-based donation programs (see our prior blog post about Notice 2020-46 here). Under such donation programs, an employee could elect to forgo paid vacation, sick, or personal leave in exchange for cash payments made by his or her employer to qualifying charitable organizations for the relief of COVID-19 victims, without having such amounts being included in his or her taxable gross income. Under Notice 2020-46, such cash payments had to be made before January 1, 2021; however, in Notice 2021-42, the IRS extended this relief period to include qualifying cash payments that are made after December 31, 2020 and before January 1, 2022. Notice 2021-42 is available here.
Recent guidance issued by the U.S. Equal Employment Opportunity Commission (the ?Ç£EEOC?Ç¥) addresses many common employment issues regarding COVID-19 vaccinations, including the applicability of certain federal laws such as the Americans with Disabilities Act (the ?Ç£ADA?Ç¥), the Genetic Information Nondiscrimination Act, and Title VII of the of the Civil Rights Act (?Ç£Title VII?Ç¥). In accordance with this EEOC guidance, an employer may require employees who are physically entering the workplace to be vaccinated for COVID-19, subject to certain ?Ç£reasonable accommodations?Ç¥ under the ADA and Title VII for employees who are unable to get vaccinated due to a covered disability, pregnancy, or sincerely held religious belief, practice, or observance. The guidance provides a list of examples of reasonable accommodations, such as requiring the use of face masks, social distancing, working modified shifts, periodic testing for COVID-19, and giving employees the opportunity to telework or accept a reassignment. In addition, an employer… Continue Reading
As we previously reported here, the American Rescue Plan Act of 2021 (?Ç£ARPA?Ç¥) provides a 100% COBRA premium subsidy to any qualified beneficiary who is entitled to COBRA coverage due to an involuntary termination of employment or reduction in hours of employment. Employers will receive a tax credit for the cost of COBRA premiums for April 1 to September 30, 2021. The IRS recently issued FAQs addressing many issues related to the subsidy, including: (i) subsidy eligibility, (ii) what qualifies as a reduction in hours or an involuntary termination of employment, (iii) the type of coverage eligible for the subsidy, (iv) when the subsidy period begins and ends, (v) the extended election period, (vi) coordination with the extended deadlines due to the COVID national emergency (?Ç£Outbreak Period Extensions?Ç¥), (vii) payments to insurers, (viii) application to state continuation coverage, and (ix) calculation and claiming of the subsidy tax credit. One of… Continue Reading
IRS Clarifies Taxability of Dependent Care Benefits Provided Pursuant to a Carryover or Extended Grace Period
The IRS recently issued Notice 2021-26 (the ?Ç£Notice?Ç¥), which addresses certain questions that were not specifically answered in the Taxpayer Certainty and Disaster Tax Relief Act of 2020 (enacted as part of the Consolidated Appropriations Act, 2021), and subsequent IRS guidance (collectively, the ?Ç£CAA Guidance?Ç¥). The CAA Guidance addressed the taxability of dependent care benefits provided under a dependent care assistance program (?Ç£DCAP?Ç¥) when a carryover or extended grace period is applied.?á As discussed in our prior blog post here, the CAA Guidance permits employers to adopt (i) a carryover of unused DCAP funds from taxable years 2020 to 2021 and 2021 to 2022 (?Ç£CAA Carryover?Ç¥) or (ii) an extended grace period for incurring DCAP claims for plan years ending in 2020 and 2021 (?Ç£CAA Extended Grace Period?Ç¥). The CAA Guidance confirms that any unused DCAP amounts carried over from one year (?Ç£Prior Year?Ç¥) to, or available in, the subsequent… Continue Reading
During the pandemic, many employers laid off and terminated employees as businesses shut-down and then rehired employees when businesses reopened. Employers who sponsored retirement plans and incurred these fluctuations in their workforce risked that the layoffs and terminations could trigger partial retirement plan terminations, which would require 100% vesting of affected participants. Whether a partial plan termination has occurred is generally based on the facts and circumstances, but there is a rebuttable presumption that a partial plan termination has occurred if 20% or more of a plan?ÇÖs active participants have had an employer-initiated termination within a given plan year. In September of 2020, the IRS issued FAQs to clarify that when an employee was terminated and rehired within 2020, they would not be counted for purposes of determining whether a partial plan termination occurred (we reported on this guidance here). Section 209 of the Taxpayer Certainty and Disaster Tax Relief… Continue Reading
The DOL?áissued new model notices that may be used in connection with COBRA premium assistance requirements under the American Rescue Plan Act of 2021 (?Ç£ARPA?Ç¥). These model notices include (i) an ARPA General Notice, (ii) a Notice in Connection with Extended Election Periods, (iii) an Alternative Notice, and (iv) a Notice of Expiration of Period of Premium Assistance. The DOL also issued a Summary of ARPA requirements, which the DOL states should be included with the ARPA General Notice, the Alternative Notice, and the Notice in Connection with Extended Election Periods. Use of the model notices is not required. The ARPA General Notice (or its equivalent) should be sent to each COBRA qualified beneficiary (?Ç£QB?Ç¥) who experiences a COBRA qualifying event from April 1, 2021 through September 30, 2021. The FAQs issued in conjunction with the model notices state that the ARPA General Notice must be sent only to those… Continue Reading
In Announcement 2021-7 (the ?Ç£Announcement?Ç¥), the IRS clarified that the costs to purchase personal protective equipment (?Ç£PPE?Ç¥), such as masks, hand sanitizers, and sanitizing wipes, for the primary purpose of preventing the spread of COVID-19, are tax deductible as a medical expense. Specifically, the amounts paid for PPE will be treated as amounts paid for medical care under Section 213(d) of the Internal Revenue Code. The costs of PPE are also eligible to be paid or reimbursed by health flexible spending arrangements, Archer medical savings accounts, health reimbursement arrangements, and health savings accounts. However, if the PPE expense is paid or reimbursed by such an arrangement or account, then the expense will not be tax deductible as a medical expense. The IRS also stated that group health plans may be amended to provide for the reimbursement of PPE expenses incurred for any period beginning on or after January 1, 2020… Continue Reading
Beginning April 1, 2021, the American Rescue Plan Act of 2021 will provide a 100% COBRA premium subsidy (the ?Ç£Subsidy?Ç¥) to any qualified beneficiary who is entitled to COBRA coverage due to an involuntary termination of employment or a reduction in hours of employment. For more information on the Subsidy, please see our prior blog post here.
The American Rescue Plan Act of 2021 (?Ç£ARPA?Ç¥) extended the employee retention credit through the end of 2021 and enhanced the scope of employers eligible to claim the credit by adding two new employer categories: (i) ?Ç£recovery startup businesses?Ç¥ and (ii) ?Ç£severely financially distressed employers?Ç¥.?á A ?Ç£recovery startup business?Ç¥ is a business that was created after February 15, 2020 and has annual gross receipts of no more than $1,000,000. Recovery startup businesses may claim the employee retention credit (capped at $50,000 per quarter) even if they do not otherwise qualify for the credit (i.e., they neither experienced a complete or partial shutdown due to a COVID-19 governmental shutdown order nor had a decrease in gross receipts of at least 20% for the applicable quarter). A ?Ç£severely financially distressed employer?Ç¥ is an employer who had a decrease in gross receipts of at least 90% for the applicable quarter, and such employers… Continue Reading