Category: Abentras Blog

DOL Clarifies Guidance for FFCRA Leave when Summer Camps Are Closed

On June 26, 2020, the DOL issued Field Assistance Bulletin No. 2020-04 for its investigators. The bulletin provides guidance for those investigators looking into cases in which an employer allegedly improperly denies an employee FFCRA leave when summer camps, summer enrichment programs or other summer programs are closed. It reiterates previous guidance regarding summer camps and FFCRA leave and adds a discussion of what investigators should look at when determining whether an employer appropriately denied FFCRA leave to an employee seeking it because a summer camp was unavailable for the child.

FFCRA provides up to 80 hours of emergency paid sick leave, and up to twelve weeks of expanded family and medical leave (10 of which may be paid), if an employee is unable to work or telework due to a need to care for their child because that child’s “place of care” is closed due to COVID-19 related reasons. In order to obtain this leave, the requesting employee must provide their employer with information to support this need for leave. This information includes an explanation of the reason for the leave, a statement that the employee cannot work due to that reason, the name of the affected child, the name of the place of care, and a statement that no other suitable person is available to care for the child.

The question is whether summer camps, summer enrichment programs and other summer programs count as places of care for this purpose. The bulletin focuses on whether a particular summer camp or program would have served as a place of care had it not closed for COVID-19 related reasons. Evidence of the employee’s intent to use the camp or program for this purpose should be considered. The bulletin suggests that the matter seems clear enough that summer camps or programs are places of care for this purpose when the employee actually enrolled their child in the camp or program before the camp opted to close due to COVID-19.

However, there are cases where the employee had not enrolled their child in the camp or program. The bulletin applies a preponderance of the evidence standard, under which it must appear that the employee would have more likely than not enrolled their child in the camp in question, when evaluating those cases. Steps taken by the employee short of actual enrollment may indicate that intent, such as paying a deposit, prior attendance in the camp or program or submitting an application to enroll. A mere statement of intent is likely not enough. Similarly, a camp or program that is available for 12-year-old children would not be appropriate for the 13-year-old child of an employee, so such a camp or program would not qualify as a place of care for that child.

Although the bulletin is intended for DOL investigators, it could be helpful for employers to keep this in mind when evaluating an employee request for FFCRA leave for this reason.

Field Assistance Bulletin No. 2020-04 »

Source: NFP BenefitsPartners

Filed under: Abentras Blog

DOL Proposes Updates to Mental Health Parity Compliance Tool

On June 19, 2020, the DOL proposed changes to its Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) self-compliance tool. As background, MHPAEA requires that the financial requirements and treatment limitations imposed on mental health and substance use disorder benefits cannot be more restrictive than the predominant financial requirements and treatment limitations that apply to substantially all medical and surgical benefits. The self-compliance tool was created by the DOL to help group health plan sponsors determine whether their group health plan complies with MHPAEA.

The 2020 version of the self-compliance tool mostly adds additional illustrative examples of when a plan is or is not compliant with MHPAEA. It also adds a new section (Section H) and a new appendix (Appendix II). Section H discusses how employers can establish an internal MHPAEA compliance plan and Appendix II provides a tool for comparing plan reimbursement rates to Medicare.

The DOL is requesting public comments on the revisions to the self-compliance tool by July 24, 2020. Ultimately, this tool does not add any new compliance obligations. Instead, it provides assistance in evaluating compliance with MHPAEA’s requirements. Plan sponsors should review the self-compliance tool to ensure their compliance.

Proposed Updates to 2020 MHPAEA Self-Compliance Tool »
Press Release »

Source: NFP BenefitsPartners

Filed under: Abentras Blog

DOL Penalizes Employer for Failure to Forward Health Plan Premiums

The DOL’s Employee Benefits Security Administration (EBSA) investigated a Las Vegas, Nevada, employer who failed to forward employee contributions to the carrier providing the employer sponsored employee health insurance plan. The employer continued to deduct the employee contributions from employee paychecks. The employer did not timely forward those contributions to the insurance carrier; nor did the employer make any payment to the carrier. This resulted in a retroactive termination of the group health insurance plan.

As background, ERISA requires private employer plan sponsors, as an ERISA fiduciary, to operate the group health plan in the best interest of participants and beneficiaries. Plan assets, including employee contributions, must be used exclusively to provide plan benefits. The employer cannot profit from the plan.

The US District Court for the District of Nevada approved a default judgement against the employer requiring them to pay $99,807 to former participants and beneficiaries. This amount included outstanding medical claims and the employee contributions. Further, the employer’s former president is permanently barred from serving as a fiduciary to any ERISA health benefits plan.

DOL Press Release, ERISA Fiduciary Violation »

Source: NFP BenefitsPartners

Filed under: Abentras Blog

IRS Proposes Rule on Direct Primary Care and Healthcare Sharing Ministries

On June 8, 2020, the IRS proposed regulations regarding the tax treatment of amounts paid for certain medical care arrangements, including direct primary care arrangements and healthcare sharing ministries. The proposal would allow individuals who pay for these arrangements to deduct the amounts paid as medical expenses.

As background, on June 24, 2019, President Trump issued Executive Order 13877, “Improving Price and Quality Transparency in American Healthcare to put Patients First.” As part of this transparency effort, the order directed the IRS to propose regulations to treat expenses related to certain medical arrangements as eligible medical expenses under Code Section 213(d). Code Section 213(d) defines medical care broadly to include amounts paid for “the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body,” as well as insurance covering such medical care.

The proposed regulations define a direct primary care arrangement as a contract between an individual and one or more primary care physicians who agree to provide medical care for a fixed annual or periodic fee without billing a third party. Although this definition currently encompasses contracts only with medical doctors specializing in family medicine, internal medicine, geriatric medicine or pediatric medicine, comments are requested as to whether to expand the definition to include other professionals such as nurse practitioners and physician assistants.

A healthcare sharing ministry is defined as a nonprofit organization under Code Section 501(c)(3) that is tax exempt under Section 501(a) in which members share medical expenses in accordance with a common set of ethical or religious beliefs without regard to state residency or employment. Such a ministry must have been in existence since December 31, 1999 (to be grandfathered from health reform requirements), and conduct an annual audit by an independent certified public accounting firm.

Upon analysis, the IRS concludes that payments for direct primary care arrangements could qualify as medical care (for example, for an annual exam or specified treatments) or medical insurance (i.e., similar to a premium to cover such exams or treatments) depending upon the structure of the particular arrangement. Regardless of the classification, the expense would qualify as a deductible medical expense under Code Section 213(d). By contrast, payments for membership in a healthcare sharing ministry would only be considered medical insurance as the ministry is not providing the medical care, but instead receiving and paying claims for such care.

Furthermore, the regulations clarify that amounts paid for coverage under certain government-sponsored healthcare programs are treated as amounts paid for medical insurance. These include Medicare, Medicaid, the Children’s Health Insurance Program (CHIP), TRICARE and certain veterans’ insurance programs. Therefore, amounts paid for enrollment fees or premiums under these programs would be eligible for deduction as a medical expense.

Generally, HRAs can reimburse expenses for medical care as defined under Section 213(d). Accordingly, the proposal indicates that an HRA integrated with a traditional group health plan, an individual health insurance coverage or Medicare (i.e., an ICHRA), an excepted benefit HRA, or a qualified small employer health reimbursement arrangement (QSEHRA) could provide reimbursements for direct primary care arrangement or healthcare sharing ministry fees.

With respect to HSAs, eligibility to contribute is conditioned upon an individual being covered by a high deductible health plan (HDHP) and having no other impermissible coverage that would pay medical expenses prior to satisfaction of the statutory HDHP deductible. Certain types of other coverage can be disregarded for this purpose, such as accident, dental, vision and preventive care. Direct primary care arrangements typically provide a variety of services such as physical exams, vaccination, urgent care and laboratory testing and, therefore, would be providing impermissible coverage before the HDHP statutory deductible is met. As a result, an individual covered by a direct primary care arrangement or healthcare sharing ministry would generally be ineligible to contribute to an HSA. However, there may be exceptions for arrangements that provide limited coverage, such as preventive care only.

Additionally, if an employer pays direct primary care arrangement fees, whether directly or through payroll deductions, the payment arrangement would be a group health plan that would disqualify an individual from contributing to an HSA.

Employers should be aware of the proposed regulations, for which the IRS is currently accepting public comments. Although the guidance clarifies that direct primary care fees can qualify as deductible medical care expenses, questions remain as to how employers can incorporate direct primary care arrangements in a compliant health benefits program. Hopefully, these concerns will be addressed in the final regulations, once issued. Please stay tuned to Compliance Corner for further updates.

Final Rule on Certain Medical Care Arrangements »

Source: NFP BenefitsPartners

Filed under: Abentras Blog

PCOR Fee Increased for 2019-2020 Plan Years

On June 8, 2020, the IRS released Notice 2020-44, which announces that the adjusted applicable dollar amount for PCOR fees for plan and policy years ending on or after October 1, 2019, and before October 1, 2020, is $2.54. This is a $.09 increase from the $2.45 amount in effect for plan and policy years ending on or after October 1, 2018, but before October 1, 2019.

As a reminder, PCOR fees are payable by insurers and sponsors of self-insured plans (including sponsors of HRAs). The fee doesn’t apply to excepted benefits such as stand-alone dental and vision plans or most health FSAs. The fee, however, is required of retiree-only plans. The fee is calculated by multiplying the applicable dollar amount for the year by the average number of lives and is reported and paid on IRS Form 720 (which hasn’t yet been updated to reflect the increased fee). It’s expected that the form and instructions will be updated prior to July 31, 2020, since that’s the first deadline to pay the increased fee amount for plan years ending between October and December 2019. The PCOR fee is generally due by July 31 of the calendar year following the close of the plan year.

The PCOR fee requirement is in place until the plan years ending after September 30, 2029.

IRS Notice 2020-44 »

Source: NFP BenefitsPartners

Filed under: Abentras Blog

CMS Issues 2021 Notice of Benefit and Payment Parameters

On May 14, 2020, CMS released the Final Benefit and Payment Parameters for 2021, along with an accompanying fact sheet. The regulations are primarily directed at health insurers and the marketplace, but include important information that also affects large employers and self-insured group health plans. The effective date is July 13, 2020.

As background, these annual parameters specify the uniform standards for health plans subject to the ACA. Related regulatory and reporting issues are also prescribed. Accordingly, the guidance can serve as a useful planning tool for insurers and employers.

Overall, the 2021 regulations minimize regulatory changes in an effort to promote a more stable and predictable regulatory market. The guidance provides the updated plan cost-sharing limits and addresses the application of prescription drug coupons towards such limits. There are new annual reporting requirements with respect to state mandates for benchmark plans. Other highlights include amendments to the medical loss ratio (MLR) calculation and new notice obligations for non-federal government sponsors of excepted benefit health reimbursement arrangements (EBHRAs).

For 2021, the out-of-pocket maximum applicable to insured and self-funded plans is $8,550 for self-only coverage and $17,100 for family coverage. This limit is distinct from the 2021 IRS out-of-pocket maximum applicable to HSA-compatible high deductible health plans (HDHPs), which is $7,000 for self-only coverage and $14,000 for family coverage.

The guidance also clarifies that, to the extent consistent with state law, plans will be permitted, but not required, to count drug manufacturer coupons or discounts towards enrollees’ annual out-of-pocket limits. (The prior 2020 rule permitted the exclusion of coupons towards the cost-sharing limits only if the drug has a generic equivalent available.) However, the 2021 parameters do not address concerns regarding the applicability of drug coupons to an HSA-compatible HDHP. Accordingly, absent new guidance, these plans should continue to disregard the discounts in determining whether the HDHP statutory deductible has been satisfied.

The ACA requires non-grandfathered health plans in the individual and small group health plans to cover 10 essential health benefits (EHBs). States may require benefits in addition to the EHBs that are incorporated in the state benchmark plans. Beginning in 2021, states will be required to annually notify HHS of any such additional state-required benefits in a form and manner specified by HHS. The change is intended to ensure states are defraying the costs of additional required benefits for those advanced premium tax credits.

In an effort to lower premium amounts, the guidance amends the MLR regulations to require issuers to deduct prescription drug rebates and any other price discounts received by the issuer (or any entity providing pharmacy benefit management services to the issuer) from the incurred claim amount. This change is effective for the 2022 MLR reporting year. Additionally, issuers must report expenses for outsourced services in the same manner as expenses for non-outsourced services, to ensure that the full benefit of prescription drug rebates is reflected in premiums and not offset by outsourcing expenses.

For the benefit of employees, non-federal governmental plan sponsors that offer EBHRAs will now be required to provide a notice that includes the eligibility requirements, annual or lifetime benefit limits, and a summary of benefits generally consistent with ERISA requirements. The notice requirement was designed to ensure that employees received clear information about their excepted benefit offer regardless of whether the arrangement was subject to ERISA.

Employers may find this annual guidance helpful in designing their plan benefit offerings.

HHS Benefit and Payment Parameters Final Rule »
Final Benefit and Payment Parameters Fact Sheet »

Source: NFP BenefitsPartners

Filed under: Abentras Blog

IRS Clarifies When Expenses Can Be Reimbursed Under Dependent Care FSA

On March 31, 2020, the IRS issued information letter Number 2020-0002 that addressed a question concerning whether a dependent care FSA under a Section 125 plan could reimburse an employee for expenses incurred before they became a participant in the plan.

The IRS reminded the employer that expenses incurred before an employee becomes a participant in the plan are not eligible for reimbursement under the plan. The plan can only pay or reimburse for substantiated expenses incurred on or after the date the employee enrolls in the plan.

Information letters are not legal advice and cannot be relied upon for guidance. Taxpayers needing binding legal advice from the IRS must request a private letter ruling. While the letter does not provide any new guidance, this letter does provide general information that may be helpful to employers with questions on this particular topic.

Letter No 2020-0002 »

Source: NFP BenefitsPartners

Filed under: Abentras Blog

DOL Issues New COBRA Model Notices

On May 1, 2020, the DOL issued a series of questions and answers regarding COBRA, as well as a new set of model notices. As background, regulations governing COBRA require plan administrators to provide persons who enroll in the plan with an initial notice of their right to elect COBRA when they initially sign up for plan coverage. Plan administrators must also provide those persons who lost coverage after the occurrence of certain events with an election notice that explains their rights to coverage through COBRA and provides them with an opportunity to make that election. The agency updated these model notices.

The revisions to the model notices and the question and answer document focus on the interaction between COBRA and Medicare. They make clear that there are circumstances under which a person who is eligible for both Medicare and COBRA, and who chooses coverage through COBRA, may face penalties when they later enroll in Medicare. They also make clear that when a person is enrolled in both Medicare and COBRA coverage, Medicare is the primary payer and COBRA is the secondary payer.

Although certain deadlines in COBRA administration have been extended in response to the COVID-19 outbreak, the revisions to the COBRA materials do not mention them.

Plan administrators may use the model notices to comply with COBRA notice requirements, and they should familiarize themselves with the information provided in the revisions regarding the interaction between COBRA and Medicare.

Model Notices and FAQ »

Source: NFP BenefitsPartners

Filed under: Abentras Blog

Extension of Certain Timeframes for Employee Benefit Plans, Participants and Beneficiaries

On May 4, 2020, the DOL and the Department of the Treasury (the Departments) issued guidance providing an extension of various compliance deadlines in its “Extension of Certain Timeframes for Employee Benefit Plans, Participants, and Beneficiaries Affected by the COVID-19 Outbreak” final rule. Recognizing the potential difficulties for group health plans attempting to comply with certain notice obligations due to the COVID-19 public health crisis, and in effort to minimize the possibility of individuals losing benefits due to a failure to timely meet requirements, the Departments have extended certain timeframes for group health plans, disability and other welfare plans, and pension plans.

The relief provides that all group health plans, disability and other employee welfare benefit plans, and employee pension plans subject to ERISA or the Code must disregard the period from March 1, 2020, until 60 days after the end of the National Emergency (known as the “Outbreak Period”) for certain deadlines, including:

    *The 30-day (or 60-day, if applicable) deadline to request a special enrollment under HIPAA
    *The 60-day COBRA election period
    *The 30-day (or 60-day, if applicable) deadline to notify the plan of a COBRA qualifying event (and the 60-day deadline for individuals to notify the plan of a determination of a disability)
    *The 14-day deadline for plan administrators to furnish COBRA election notices
    *The 45-day deadline for participants to make a first COBRA premium payment and 30-day deadline for subsequent COBRA premium payments
    *Deadlines for individuals to file claims for benefits, for initial disposition of claims, and for providing claimants a reasonable opportunity to appeal adverse benefit determinations under ERISA plans and non-grandfathered group health plans
    *Deadlines for providing a state or federal external review process following exhaustion of the plan’s internal appeals procedures for non-grandfathered group health plans

Notably, with this relief applying to deadlines for individuals to file claims for benefits, this may impact health FSA administration. For example: let’s say that under H Company’s health FSA, participants must submit claims incurred in the 2019 plan year by March 31, 2020 (also called the run-out period). Further, for purposes of this example, let’s say that the national emergency is proclaimed to be over on May 31, 2020. The health FSA participants would have until October 28, 2020, to submit claims (90 days following the end of the outbreak period). Note that this relief does not extend a date in which a claim can be incurred for health FSAs. Rather, it extends the time in which a claim can be submitted for reimbursement. This relief will impact health FSAs or even HRAs with a run-out period ending during the outbreak period, as described in the example. Importantly, this extension does not apply to Dependent Care FSAs.

In addition, there is relief for group health plans in furnishing participant notices. More specifically, plans (and responsible plan fiduciaries) will not be treated as having violated ERISA if they act in good faith and furnish any notices, disclosures or documents that would otherwise have to be furnished during the outbreak period (including those requested in writing by a participant or beneficiary) “as soon as administratively practicable under the circumstances.” Here, it’s important to note that acting in good faith includes sending documents electronically as long as the employer believes employees have effective access to electronic means of communications.

Employers should be aware of these developments and confirm with any vendors and administrators, as applicable, that the specified timelines are being administered in accordance with the DOL’s guidance. For more guidance on application, see the examples provided in the DOL’s final rule.

DOL News Release »
Extension of Certain Timeframes for Employee Benefit Plans, Participants, and Beneficiaries Affected by the COVID-19 Outbreak Final Rule »
COVID-19 FAQs for Participants and Beneficiaries »

Source: NFP BenefitsPartners

Filed under: Abentras Blog

DOL Adds Additional Q&As to FFCRA Guidance

The DOL has added nine additional questions and answers (Questions 80-88) to their guidance related to leaves taken under the Families First Coronavirus Response Act (FFCRA). Among other things, the new guidance provides clarification on the following issues:

  • *To calculate the available paid sick leave hours for an employee who works irregular hours, the employer would determine the average number of hours the employee was scheduled to work each calendar day in the prior six-month period. To calculate the available expanded FMLA leave for an employee who works irregular hours, the employer would use the average number of hours the employee was scheduled to work each workday (not calendar day).
    *When determining an employee’s rate of pay for FFCRA leave purposes, the employer would look at the employee’s average rate for the prior six month period. The employer would include only hours worked, not leave hours. Any period of zero hours worked would be disregarded for the purpose of calculating the employee’s regular rate of pay.
    *An employer may not require an employee to use employer provided paid leave (such as vacation, personal time or PTO) concurrently with emergency paid sick leave under the FFCRA. However, an employer may require that an employee use any available accrued paid leave provided by the employer concurrently with expanded FMLA leave. The employee could receive 100% pay under this scenario, but the employer would only receive a tax credit for 2/3 of the employee’s normal wages up to $200 daily maximum.
  • As the DOL and IRS continue to update their FFCRA-related guidance, NFP’s Benefits Compliance Team will provide you with developments in future editions of Compliance Corner, webinars and the Insights from the Experts podcast.

    DOL FFCRA Q&A »

    Source: NFP BenefitsPartners

    Filed under: Abentras Blog