Biden Administration Withdraws Support for Court Challenge to ACA

On February 10, 2021, the Department of Justice filed a letter with the US Supreme Court, in which the United States stated that it has reconsidered its position in the pending case challenging the ACA, Texas v. California. Under the Trump Administration, the United States joined several Republican-led states in challenging the ACA’s individual mandate as unconstitutional. In a previous case, the Supreme Court held that the individual mandate was constitutional because Congress exercised its power to tax when it imposed a penalty upon people who did not obtain health coverage and gave people a choice between paying the penalty and buying insurance. In 2017, Congress reduced the penalty to $0, and several Republican-led states argued that by doing so Congress took away the choice and left an unconstitutional requirement to purchase insurance. Although the United States initially joined the case in defense of the law, it switched positions during the case’s appeals.

In this letter, the Biden administration states that the United States no longer supports the argument against the individual mandate. Its new position is that the individual mandate is constitutional because Congress did not remove the choice to purchase insurance or not, but simply removed the negative consequence of choosing not to purchase insurance.

The case remains active. The Supreme Court heard oral arguments in November but it has yet to issue a ruling. Although the United States stated in its letter that it did not believe additional briefing was necessary, it is possible that the Court will ask for more from the United States.

We previously reported on this case in Compliance Corner, such as in the March 3, 2020, edition. We will keep an eye on further developments in the case and report them as they happen.

Department of Justice Letter »

Source: NFP BenefitsPartners

Filed under: Abentras Blog

Biden Administration Issues Executive Order to Strengthen the ACA and Create a Special Enrollment Period

On January 28, 2021, the president signed an executive order instructing federal agencies to examine their regulations in order to find ways to strengthen the ACA. In addition, this order will create a special enrollment period (SEP) in the federal health insurance marketplace, from February 15, 2021, to May 15, 2021.

The order directs agencies to review:

**Policies that undermine protections for people with pre-existing conditions, including complications related to COVID-19.
**Demonstrations and waivers under Medicaid and the ACA that may reduce coverage or undermine the programs, including work requirements.
**Policies that undermine the Health Insurance Marketplace or other markets for health insurance.
**Policies that make it more difficult to enroll in Medicaid and the ACA.
**Policies that reduce affordability of coverage or financial assistance, including for dependents.

The order also revokes Executive Order 13765, which announced the Trump Administration’s intent to repeal the ACA. That order was discussed in the January 24, 2017, edition of Compliance Corner. The order also revoked Executive Order 13813, which encouraged agencies to expand access to AHPs and allow coverage sales across state lines. That order was discussed in the October 17, 2017, edition of Compliance Corner. Finally, the order requires agencies to review any policies and regulations issued as a result of those two orders and consider repealing, revising or rescinding them.

While the creation of the SEP will affect individuals that will enroll on the marketplace, employers should be mindful of this extension in case there are employees who seek to drop coverage under their plans to take advantage of the SEP. Specifically, the permissible qualifying event for a revocation due to enrollment in a qualified plan will allow an employee to drop their employer’s plan mid-year if they intend to enroll in the marketplace.

Since this order includes directives to agencies to act, details regarding implementation have not yet been worked out. We will keep an eye on developments and report them as they occur.

Announcement »
Executive Order »

Source: NFP BenefitsPartners

Filed under: Abentras Blog

IRS Releases 2021 Fringe Benefits Guide

On January 27, 2021, the IRS released the 2021 draft Publication 15-B, the Employer’s Tax Guide to Fringe Benefits. This publication provides an overview of the taxation and exclusion rules applicable to employee benefits such as accident and health benefits, dependent care assistance, health savings accounts, and group term life insurance coverage. The guide also includes the related valuation, withholding and reporting rules.

The IRS updates Publication 15-B each year to incorporate any recent administrative, reporting or regulatory changes. The revisions also include applicable dollar maximums for certain tax-favored benefits for the current year.

The 2020 updates include the introduction of a new Form 1099-NEC for reporting non-employee compensation paid in 2020. Employers reporting non-employee compensation paid in 2020 should use Form 1099-MISC, which is due February 1, 2021.

The business mileage rate for 2021 is 56 cents per mile, which can be used to reimburse an employee for business use of a personal vehicle, and under certain conditions, to value the personal use of a vehicle provided to an employee. The 2021 monthly exclusion for qualified parking is $270 and the monthly exclusion for commuter highway vehicle transportation and transit passes is $270. For plan years beginning in 2021, the maximum salary reduction permitted for a health FSA under a cafeteria plan is $2,750.

Employers should be aware of the availability of the updated publication and most recent modifications.

IRS Publication 15-B »

Source: NFP BenefitsPartners

Filed under: Abentras Blog

IRS Updates FAQ on FFCRA Tax Credits

On January 29, 2021, the IRS released updated FAQs on FFCRA paid sick leave and family leave tax credits. The COVID-related Tax Relief Act of 2020 (included in the Consolidated Appropriations Act of 2021) extends employers’ ability to apply for such credits through March 31, 2021, and the FAQ updates incorporate that change.

The FFCRA included provisions mandating employers with less than 500 employees to provide paid leave to employees who are unable to work or telework due to certain COVID-19-related reasons. To offset the financial burden to covered employers, the FFCRA provides for federal tax credits to fund the leave payments. Originally, the credits applied to qualified leave payments made between April 1, 2020, and December 31, 2020. However, the COVID-related Tax Relief Act of 2020 extends employers’ ability to continue to provide paid leave under the FFCRA through March 31, 2021.

This is optional for employers; however, if they do provide such leave, then they can apply for the tax credits available under the FFCRA for leave granted under the extension. Eligible employers can receive a tax credit for the full amount of the paid sick leave and family leave (which includes related health plan expenses and the employer’s share of Medicare tax) on the leave provided through March 31, 2021.

Eligible employers can claim these tax credits via Form 941, Employer’s Quarterly Federal Tax Return. Alternatively, employers can benefit by reducing their federal employment tax deposits; however, they should consult with their tax advisors before doing so.

Employers should be aware of these developments and review the updated guidance when applying for available tax credits mentioned above.

IRS News Release »
IRS COVID-19 Related Tax Credits for Required Paid Leave Provided by Small and Midsize Businesses FAQs »

Source: NFP BenefitsPartnrs

Filed under: Abentras Blog

DOL Finalizes Rules on Independent Contractors

On January 7, 2021, the DOL’s Wage and Hour Division published final regulations related to independent contractor status under the Fair Labor Standards Act (FLSA). The division largely adopted the rules as proposed on September 25, 2020.

As background, many of the standards for determining whether a worker is an independent contractor or employee were developed through case law over the last 80 years. This led to overlapping rules, inconsistent application and confusion.

The division received over 1,800 comments on the proposed rules, and over 900 of them were from UBER drivers. The remaining comments were from other independent contractors, employers, labor unions, consultants and other stakeholders. Most of the comments were in support of the proposed regulations due to the lack of consistent rules in the past.

The DOL estimates that there are close to 19 million individuals that work as independent contractors for their primary or secondary source of employment. The most prevalent industries are construction and professional/business services. Based on various studies, the DOL reports that 79.4% of self-employed independent contractors have health insurance. Most of these workers either purchase insurance on their own (31.5 %) or have access through their spouse (28.6 %).

In adopting the final regulations, the WHD reviewed and considered all comments, which are detailed in the preamble. They specifically considered the widely publicized “ABC test” used in California for determining worker status. The preamble firmly rejects adopting that test as the federal standard, stating “the ABC test would be infeasible, difficult to administer, and disruptive to the economy if adopted as the FLSA standard.” The final regulations generally apply across all industries. They replace regulations specific to tenants, sharecroppers, forestry and logging workers.

The rules adopt a distinct five factor test. There are two core factors that are considered to have more weight than the other three.

1) Control. The employer should consider the nature and degree of the worker’s control over the work such as setting their own schedule, selecting their projects and the ability to work for others, which might include the potential employer’s competitors.

2) Opportunity for profit or loss. The individual is more likely to be an independent contractor if they have an opportunity to earn profits or incur losses based on their exercise of initiative (such as managerial skill, business acumen or judgment) or management of their investment in, or capital expenditure on, such things as assistants, equipment or material.

The rules acknowledge that there may be additional factors to consider, but the additional three factors in the new test are:

3) The amount of skill required for the work. The employer should consider whether the work requires specialized training or skills that the employer does not provide.

4) The degree of permanence of the work relationship between the individual and the employer. This factor weighs in favor of an independent contractor if the work and the relationship are for a definitive period of time or occurs sporadically. The factor weighs in favor of the worker being an employee to the extent the work relationship is instead by design indefinite in duration or continuous.

5) Work integration with company production. The employer should consider whether the work is an integral unit of production. In other words, is the work a part of the employer’s integrated process with goods or services or is the work outside of that core process?

Although this rule only addresses workers’ independent contractor status under the FLSA primarily for minimum wage and overtime purposes, the DOL assumes that employers are likely to keep the status of most workers the same across all benefits and requirements. When considering the impact these rules have on benefits administration, employers should consider the new test in determining which workers are considered full-time employees for employer mandate and group health plan eligibility purposes. This categorization will also determine if offering benefits to these individuals will create a MEWA. Employers should consult with employment law counsel if they have any questions about this rule.

Final Regulations »

Source: NFP BenefitsPartners

Filed under: Abentras Blog

CMS Issues Toolkit for Insurers re: COVID-19 Vaccines

On January 7, 2021, CMS issued a toolkit designed to assist insurers and Medicare Advantage plans in covering the COVID-19 vaccine. The document focuses on issues that issuers must consider, and includes:

*A list of operational considerations for issuers and Medicare Advantage plans as they design their approach to promoting COVID-19 vaccinations and information.
*A summary of legislative and regulatory provisions applicable to issuers.

The toolkit also contains advice on how to streamline vaccination coverage and how to maximize the number of enrollees who get vaccinated. It also includes an important reminder that, although the cost of the vaccine itself is paid for by the CARES Act, the costs of administering the vaccine by a provider will be paid for by the payer, such as a private insurance company or Medicare in the case of an Medicare Advantage plan.

Employers who have self-insured plans, as well as those who are fully insured, should be aware of this information.

CMS Toolkit »

Source: NFP BenefitsPartners

Filed under: Abentras Blog

DOL Releases FMLA Guidance on Telemedicine and Serious Health Conditions

On December 29, 2020, the DOL’s Wage and Hour Division released Field Assistance Bulletin No. 2020-8, which provides guidance to agency field staff on when telemedicine may be considered treatment under the FMLA.

As background, FMLA provides eligible employees of covered employers with unpaid, job-protected leave for specified family and medical reasons. Eligible employees may take up to 12 workweeks of leave in a 12-month period for, among other things, a serious health condition that renders the employee unable to perform the essential functions of their job, or to care for the employee’s spouse, child or parent with a serious health condition.

A serious health condition is defined as an “illness, injury, impairment, or physical or mental condition that involves” either: 1) “inpatient care” such as an overnight stay in a hospital, hospice or residential medical care facility, including any period of incapacity or any subsequent treatment in connection with such inpatient care, or 2) “continuing treatment by a health care provider.” The regulations define treatment as an in-person visit to a healthcare provider. It does not include a letter, phone call, email or text message.

The division recognizes that during the COVID-19 pandemic telemedicine has been increasingly used by healthcare providers to deliver treatment to patients. In July 2020, the division issued FAQ #12 to its Frequently Asked Questions about the FMLA and Pandemic to address this issue. The FAQ provided that until December 31, 2020, telemedicine would meet the FMLA’s treatment standard if certain conditions were met. The current bulletin extends that provision until further notice that telemedicine will meet the FMLA’s treatment standard if the telemedicine visit satisfies all of the following:

*Involves an examination, evaluation or treatment by a healthcare provider
*Is permitted and accepted by state licensing authorities
*Is generally performed by video conference

Employers should be aware of this guidance.

Field Assistance Bulletin 2020-8 »

Source: NFP BenefitsPartners

Filed under: Abentras Blog

DOL Releases FMLA Guidance on Electronic Distribution

On December 29, 2020, the DOL’s Wage and Hour Division released Field Assistance Bulletin No. 2020-7, which provides guidance to agency field staff on posting requirements under FMLA, the Fair Labor Standards Act, the Employee Polygraph Protection Act and the Service Contract Act. The bulletin was issued in response to the many questions the division had received about electronic posting requirements, considering that many workers are performing duties remotely during the COVID-19 pandemic.

As background, many notices relevant to these laws must be posted physically at a worksite. If an employer wanted to distribute the notice exclusively by electronic means, all of the following conditions must be met:

*All of the employer’s employees exclusively work remotely.
*All employees customarily receive information from the employer via electronic means.
*All employees have readily available access to the electronic posting at all times.

Some notices may be distributed electronically to each employee if the following conditions are all met:

*The employees have electronic access as part of their essential duties.
*The employees customarily receive information from the employer electronically.
*The employer has taken steps to inform employees of where and how to access the notice electronically.

Under FMLA, the general notice must be posted in a conspicuous place on the worksite where it is visible to both employees and applicants. If all hiring and work is being done remotely due to COVID-19, then the posting requirement would be met by the employer posting the notice on a website. However, remember that the notice must be accessible by applicants as well. Thus, if an employer posts on the intranet and the intranet is not accessible to applicants, the employer should consider posting on an external website or placing an additional posting on the applicant portal.

Employers should be aware of this guidance. For guidance related to the other laws, please see the bulletin.

Field Assistance Bulletin 2020-7 »

Source: NFP BenefitsPartners

Filed under: Abentras Blog

Agencies Finalize Rules to Enhance Flexibility for Grandfathered Group Health Plans

On December 11, 2020, the DOL, HHS and IRS issued final rules that amend certain requirements for grandfathered group health plans to maintain their grandfather status. The rules provide such plans with greater flexibility to make changes in response to increases in health coverage costs.

As background, the ACA allows certain group health plans that existed as of the law’s enactment on March 23, 2010, to be treated as grandfathered health plans. This treatment exempts the plans from some ACA mandates. To preserve grandfather status, these plans are restricted in their ability to make plan design changes or increase cost sharing. The 2015 grandfathered plan rules outline these limitations.

The final rules follow July 15, 2020, proposed rules, which have been adopted without substantial change. The 2015 existing regulations are modified in two respects.

First, the rules provide an alternative method of measuring permitted increases in fixed amount cost sharing. Under the existing regulations, increases for fixed amount cost sharing other than copayments (e.g., deductibles and out-of-pocket maximums) cannot exceed thresholds based upon the Consumer Price Index measure of medical inflation. Specifically, the 2015 rules define the maximum increase as medical inflation (from March 23, 2010) plus 15 percentage points. However, this component of the CPI index includes price changes for Medicare and self-pay patients, which are not reflected in grandfathered group health plan costs.

The alternative standard relies upon the premium adjustment percentage, rather than medical inflation. The premium adjustment percentage is published by HHS in the annual notice of benefit and payment parameters and reflects the cumulative historic growth in private health insurance premiums from 2013 through the preceding calendar year. As a result, this measure may better reflect increases in underlying costs for grandfathered group health plans.

This new measurement method does not replace the current standard. Rather, an employer can use the method that yields the greater result. Therefore, grandfathered plans are allowed to increase these out-of-pocket costs at a rate that is the greater of the medical inflation adjustment percentage or premium adjustment percentage, plus 15 percentage points.

Second, the final rules permit a grandfathered group HDHP to increase fixed-amount cost-sharing requirements, such as deductibles, to the extent necessary to maintain HDHP status without losing grandfather status. This change was designed to ensure that participants enrolled in such coverage remain eligible to contribute to an HSA.

Employers who sponsor grandfathered plans should be aware of these final rules, which will be applicable beginning on June 15, 2021.

Grandfathered Group Health Plans »
Grandfathered Group Health Insurance Coverage »

Source: NFP BenefitsPartners

Filed under: Abentras Blog

IRS Issues Guidance Confirming that Premium Tax Credit Unaffected by Repeal of Individual Mandate

On December 1, 2020, the IRS released final regulations clarifying that when Congress zeroed out the personal exemption deduction (provided for meeting the individual mandate) for taxable years beginning after December 31, 2017, and before January 1, 2026, it did not prevent individuals from claiming the premium tax credit when enrolling in a health plan on the Marketplace.

The premium tax credit is a refundable credit that helps eligible individuals and families cover the premiums for their health insurance bought through the Health Insurance Marketplace. Among other requirements, a person can obtain the credit by establishing a household income for the taxable year that is at least 100% but not more than 400% of the federal poverty line for the taxpayer’s family size for the taxable year. The individual’s family size is determined by the number of personal deductions that the person makes on their individual tax returns.

Although the Tax Cuts and Jobs Act of 2017 (TCJA) ended the personal exemption for the years 2018 – 2025 by effectively making it zero, the TCJA also made clear that this should not be considered when determining whether an individual qualified for the deduction in other parts of the IRS Code. The new regulations make clear that an individual’s family, for purposes of obtaining the credit, include the person’s spouse and any other individual from whom the applicant can claim a personal exemption deduction, regardless of whether the applicant could claim that deduction under the TCJA. Similarly, a person who would be the subject of another person’s claim for a personal exemption cannot obtain the premium tax credit.

The new regulations also govern how to distribute advance payments of the premium tax credit in light of this clarification, as well as income tax return filing requirements related to the premium tax credit.

Employers should be aware of this development and how it may affect employees’ ability to obtain and use the premium tax credit.

IRS Guidance and Final Regulations »

Source: NFP BenefitsPartners

Filed under: Abentras Blog