The IRS has issued Notice 2021-61 and Revenue Procedure 2021-45 setting forth its annual employee benefit plan limitations for 2022. Key changes, placed in bold in the chart below, include the following:

  • Code Section 402(g) limitation on elective deferrals increased from $19,500 to $20,500.
  • Code Section 408(p) limitation on elective deferrals for SIMPLE retirement account plans increased from $13,500 to $14,000.
  • Code Section 415(c) maximum annual additions increased from $58,000 to $61,000.
  • Compensation limit under Code Section 401(a)(17) increased from $290,00 to $305,000.
  • HDHP Out of Pocket Maximum increased from $7,000 to $7,050 for self-only coverage and from $14,000 to $14,100 for family coverage.
  • HSA Maximum Contribution Limit increased from $6,000 to $3,650 for self-only coverage and from $7,200 to $7,300 for family coverage.
  • All adoption assistance limits and thresholds have increased.
  • All QSEHRA and Archer MSA limits increased.
  • Parking and transit fringe benefit contribution limits increased from $270 to $280 per month.
  2022 2021 2020
401(k) Plan Limits
Elective Deferrals
Maximum Elective Deferrals for 401(k) Plans $20,500 $19,500 $19,500
Maximum Elective Deferrals for SIMPLE 401(k) Plans $14,000 $13,500 $13,500
Maximum Catch-Up Contribution Limits for 401(k) Plans $6,500 $6,500 $6,500
Maximum Catch-Up Contribution Limits for SIMPLE 401(k) Plans $3,000 $3,000 $3,000
Annual Additions
Code Section 415(c) Limit $61,000 $58,000 $57,000
Compensation
Code Section 401(a)(17) Limit $305,000 $290,000 $285,000
Cafeteria Plan Limits
Health Flexible Spending Accounts
Maximum Salary Reduction $2,850 $2,750 $2,750
Maximum Carryover to Next Plan Year $570 $550 $500
Dependent Care Assistance Plan
Maximum Contribution Amount $5,000 ($2,500 if married filing separately) $5,000 ($2,500 if married filing separately) $5,000 ($2,500 if married filing separately)
Deemed Income of Spouse Incapable of Self-Care or Full-Time Student $250 a month with 1 qualifying individual

$500 a month with 2 or more qualifying individuals

$250 a month with 1 qualifying individual

$500 a month with 2 or more qualifying individuals

$250 a month with 1 qualifying individual

$500 a month with 2 or more qualifying individuals

Health Savings Account (HSA)
High Deductible Health Plan (HDHP) Minimum Annual Deductible $1,400 for self-only

$2,800 for family

$1,400 for self-only

$2,800 for family

$1,400 for self-only

$2,800 for family

HDHP Out-of-Pocket Maximum $7,050 for self-only

$14,100 for family

$7,000 for self-only

$14,000 for family

$6,900 for self-only

$13,800 for family

HSA Maximum Contribution Limit $3,650 for self-only

$7,300 for family

$3,600 for self-only

$7,200 for family

$3,550 for self-only

$7,100 for family

HSA Catch-Up Contribution Limit $1,000 $1,000 $1,000

Highly Compensated Employee (HCE) and Key Employee Threshold

*Thresholds are the same across testing and limits for various plans

HCE Threshold $135,000 $130,000 $125,000
Key Employee Threshold $200,000 for officer group

$150,000 for more than 1% owner

$185,000 for officer group

$150,000 for more than 1% owner

$185,000 for officer group

$150,000 for more than 1% owner

Consumer-Driven Health Care Limits
Excepted Benefit Health Reimbursement Accounts
Maximum Newly Available Benefit $1,800 $1,800 $1,800
Qualified Small Employer Health Reimbursement Account (QSEHRA) Limits $5,450 for single

$11,050 for family

$5,300 for single

$10,700 for family

$5,250 for single

$10,600 for family

Archer Medical Savings Accounts (MSAs)
Contributions Limits – Single $1,593 min.

$2,405 max.

$1,566 min.

$2,340 max.

$1,527.50 min.

$2,307.50 max.

Contribution Limits – Family $3,713 min.

$5,550 max.

$3,600 min.

$5,362.50 max.

$3,562.50 min.

$5,325 max.

Health Plan Deductible – Single $2,450 min.

$3,700 max.

$2,400 min.

$3,600 max.

$2,350 min.

$3,550 max.

Health Plan Deductible – Family $4,950 min.

$7,400 max.

$4,800 min.

$7,150 max.

$4,750 min.

$7,100 max.

HDHP Out-of-Pocket Maximum $4,950 for single

$8,750 for family

$4,800 for single

$8,750 for family

$4,750 for single

$8,650 for family

Fringe Benefits Limits
Adoption Assistance
Maximum Exclusion for Employer-Provided Adoption Assistance $14,890 $14,400 $14,300
Maximum Exempt from Phased Reduction of Exclusion $223,410 $216,660 $214,520
Maximum Allowable for Exclusion and Credit $263,410 $256,660 $254,520
Educational Assistance
Maximum Income Exclusion $5,250 $5,250 $5,250
Transportation Fringe Benefits
Parking $280 a month $270 a month $265 a month
Transit Passes & Vanpooling $280 a month $270 a month $265 a month
FICA Taxable Wage Base
Social Security
Maximum Taxable Earnings $147,000 $142,800 $137,700
Employer Tax Rate 6.2% 6.2% 6.2%
Employee Tax Rate 6.2% 6.2% 6.2%
Medicare
Employer Tax Rate 1.45% 1.45% 1.45%
Employee Tax Rate 1.45% 1.45% 1.45%

The U.S. Department of Labor (DOL) published a proposed regulation on October 14, 2021, that would clarify how fiduciaries of private sector employee benefit plans should apply ERISA’s fiduciary duties of prudence and loyalty when making investment decisions and exercising shareholder rights. In part, the DOL’s changes to its “Investment Duties” regulation (29 C.F.R. § 2550.404a-1) would expand whether and how plan fiduciaries may consider environmental, social, and governance (ESG) factors when managing and selecting plan investments. The DOL has solicited public comments in a number of places in the proposed regulation, with comments due by December 13, 2021.

The proposed regulation follows closely on the heels of two sets of final regulations issued by the DOL late last year. The first, “Financial Factors in Selecting Plan Investments” (published November 13, 2020), adopted amendments to the Investment Duties regulation and generally required plan fiduciaries to select investments and investment courses of action based solely on consideration of “pecuniary factors.” On December 16, 2020, the DOL published the second final regulation, “Fiduciary Duties Regarding Proxy Voting and Shareholder Rights,” which also adopted amendments to the Investment Duties regulation by expanding the obligations of plan fiduciaries when exercising shareholder rights, including proxy voting.

Read the full article.

As we previously discussed in our article, the American Rescue Plan Act of 2021 (“ARPA”) provides that eligible multiemployer pension plans (“MEPPs”) can receive special financial assistance (“SFA”) to cover plan benefits through the 2051 plan year.  As directed under ARPA, the Pension Benefit Guaranty Corporation (“PBGC”) issued its interim final rule (the “IFR”) on July 9, 2021 (as is discussed in our previous blog post), providing methodology for calculating the amount of SFA available to eligible MEPPs and detailing how such SFA is treated for purposes of calculating withdrawal liability.  In its introductory comments to the IFR, the PBGC indicated that it would supplement the IFR with informal guidance detailing the SFA application and review process, limitations and reporting requirements for MEPPs applying and receiving SFA, the PBGC’s actuarial assumptions in calculating SFA awards, and how the PBGC would interact with other administrative agencies (specifically, the Departments of Treasury and Labor) in implementing its SFA program.

The PBGC presented this informal guidance via a webinar on July 22, 2021, and, on August 12, 2021, publicly released the two supplements it had previously presented.  The first supplement provides detailed background of the PBGC’s SFA program.  The second supplement recaps the PBGC’s first webinar on the SFA program and includes a detailed walkthrough of the PBGC’s e-filing portal for SFA applications.  Together, the supplements provide detailed information for MEPP trustees and service providers engaging in the SFA application process.

On June 17, 2021, the Supreme Court rejected another attempt to dismantle the Patient Protection and Affordable Care Act (“ACA”) in its highly-anticipated decision in Texas v. California.  However, instead of ruling on the central issue in the case—whether the ACA was rendered unconstitutional when Congress eliminated the individual tax penalty for failing to obtain health insurance—the Court dispatched the case on a procedural technicality.  In a 7:2 decision authored by Justice Breyer, the Court held that neither the states nor the individuals challenging the law had legal standing to challenge the provision of the ACA that requires individuals to have health insurance (known as the individual mandate).

Following this most recent chapter in the “epic Affordable Care Act trilogy,” as Justice Alito put it in his dissent, many hope that there will be greater certainty around the longevity of the ACA.  “Since the ACA was enacted more than a dozen years ago, employers have been asked to comply with and commit to the law despite numerous legal and legislative challenges.  We hope the court’s ruling re-establishes the ACA as settled law that can be relied upon—and improved,” American Benefits Council President James A. Klein said in news release shortly after the Court’s decision.

On June 14, 2021, the Department Labor (“DOL”) issued Information Letter 06-14-2021 to address whether ERISA requires plan fiduciaries to produce audio recordings and transcripts of telephone conversations between plan insurers and claimants.

The issue arose from a plan insurer’s denial of a claimant’s request for an audio recording.  When it denied the request, the plan insurer stated that the “recordings are for ‘quality assurance purposes,’” and “are not created, maintained, or relied upon for claim administration purposes, and therefore are not part of the administrative record.”  DOL disagreed, stating that it interprets 29 C.F.R. § 2560.503-1(m)(8)(ii) as requiring disclosure of the recordings because the materials were “relevant” to a claimant’s claim, irrespective of whether the information was “not created, maintained, or relied upon for claim administration purposes.”

Ultimately, DOL concluded that a recording or transcript of a conversation with a claimant would not be excluded from disclosure merely because the plan or claims administrator:

  • did not include it in the administrative record;
  • does not treat it as part of the claim activity history; or
  • generated it for quality assurance purposes.

The DOL Information Letter is not binding on courts or even DOL, but plan sponsors and third-party plan service providers should be aware that recordings or transcripts of a conversation with a claimant may become subject to disclosure.

The Pension Benefit Guaranty Corporation (“PBGC”) released its highly-anticipated interim final rule (the “IFR”) on July 9, 2021, providing methodology for calculating the amount of special financial assistance (“SFA”) available to certain financially troubled multiemployer pension plans (“MEPPs”) under the American Rescue Plan Act of 2021 (“ARPA”).  The IFR also sets out additional details on the SFA application process and how SFA awards are treated for purposes of withdrawal liability calculation.  The following summarizes certain key aspects (but not all components) of the IFR:

  • Calculating SFA Awards – As we previously discussed in our article, ARPA provides that eligible MEPPs may receive SFA in an amount sufficient to cover plan benefits through the 2051 plan year.  The PBGC’s IFR sets out a more specific calculation providing that the amount of SFA an eligible MEPP may receive is equal to the difference between the MEPP’s current and anticipated benefit obligations and its resources (current assets, expected future contributions, and anticipated withdrawal liability payments) from the last day of the calendar quarter before the MEPP files its application for SFA through the end of the 2051 plan year.
  • SFA Application Timing and Payment – The IFR further set out details on the content, timing, and review process for MEPP SFA applications. ARPA requires that the PBGC review SFA applications within 120 days of receipt, so the IFR breaks application availability into six priority categories based on factors including the MEPP’s funding status and projected insolvency date (with applications opening as early as July 9, 2021 for already insolvent MEPPs).  Once the PBGC approves a MEPP’s SFA application, the PBGC will generally pay the award in a lump sum within 60 to 90 days of approval.
  • Treatment of SFA Awards for Withdrawal Liability Calculation – An early draft of the ARPA legislation contained a provision that disregarded SFA awards for purposes of calculating withdrawal liability. This provision was struck for procedural reasons and instead ARPA deferred to the PBGC to address SFA treatment for withdrawal liability purposes.  The IFR provides that SFA awards are included when calculating a MEPP’s assets for withdrawal liability purposes, but a MEPP that receives an SFA award must use the PBGC’s mass withdrawal interest assumptions for calculating withdrawal liability until the later of 10 years from the end of the plan year in which the SFA award is received or the last day of the plan year in which the MEPP no longer holds assets from the SFA award (or any earnings therefrom).

Separately, the IFR imposes a limitation on settling withdrawal liability disputes whereby trustees of a MEPP receiving an SFA award cannot enter into a withdrawal liability settlement for liability that exceeds $50 million (using mass withdrawal interest rate assumptions) without prior PBGC approval.  The IFR does not set forth the PBGC’s criteria for approving any such settlement, but the IFR’s requirement to use mass withdrawal interest rate assumptions may limit a MEPP’s ability to agree to a higher discount rate in settlement negotiations.

The IFR contains additional important discussion of topics related to SFAs issued under ARPA, including confirming MEPP eligibility for an SFA, restrictions on a MEPP’s use of SFA assets, and other conditions placed on MEPPs receiving an SFA.  These, along with additional guidance from the IRS in Notice 2021-38 on the impact of SFAs on the Internal Revenue Code’s minimum funding rules and reinstatement of suspended benefits, should be considered by trustees of MEPPs that are potentially eligible for an SFA under ARPA and by employers participating in such MEPPs.

On July 1, 2021, the U.S. Department of Health and Human Services (“HHS”), Department of Labor, Internal Revenue Service, and Office of Personnel Management issued their first installment of interim final surprise billing regulations.  As explained in a prior post, the regulations implement new requirements for group health plans, health insurance issuers, and healthcare providers and facilities that were imposed by the bipartisan No Surprises Act, which was enacted as part of a 2020 appropriations act.  The rules, “Requirements Related to Surprise Billing; Part I,” prohibit surprise or balance billing for certain healthcare services.

One important aspect of the new surprise billing regulations for sponsors of group health plans and health insurance companies is its effect on billing for emergency services, out-of-network air ambulance services, and certain out-of-network services provided at an in-network facility.  If a plan or policy provides or covers any emergency services, they must Continue Reading Federal Agencies Release Interim Final Surprise Billing Regulations

The Internal Revenue Service released updates to its Employee Plans Compliance Resolution System (“EPCRS”) in Revenue Procedure 2021-30.  Key changes to the EPCRS include:

  • Extending the self-correction period for significant operational failures from two to three years, effective July 16, 2021;
  • Eliminating the requirement that retroactive plan amendments for self correction benefit all plan participants, effective July 16, 2021;
  • Eliminating the ability to make anonymous submissions but allowing anonymous no-cost pre-submission conferences to discuss potential VCP submissions, effective January 1, 2022;
  • Extending the sunset date for the safe harbor correction method for missed deferral failures in plans with automatic contribution features from December 31, 2020 to December 31, 2023, effective January 1, 2021;
  • Increasing from $100 to $250 the threshold for certain de minimis amounts that plan sponsors are not required to correct;
  • Requiring that Audit CAP sanctions be paid using the Pay.gov website beginning January 1, 2022; and
  • Expanding guidance on recoupment of overpayments.

Revenue Procedure 2021-30 is generally effective as of July 16, 2021, but, as noted above, certain changes are effective on other dates.

On June 8, the U.S. Department of Health and Human Services sent proposed regulations limiting surprise billing to the White House Office of Management and Budget (“OMB”).  The proposed regulations would implement the bipartisan No Surprises Act, which was enacted as part of a 2020 appropriations act.  OMB must review the proposed regulations before they can be issued by HHS.

The No Surprise Act limits unanticipated bills for medical treatment obtained from non-network providers in an emergency situation or in non-emergent situations by ancillary out-of-network providers such as anesthesiologists who treat a patient in a network facility.  The law requires that billing disputes between providers and insurance companies be settled through binding arbitration, which may not take into account rates for care provided under government programs such as Medicare and Medicaid.  Instead, arbiters may use other factors when settling rate disputes, such as the median contracted rate for the service, the provider’s training and expertise, and the severity of the patient’s condition.

HHS plans to issue drafts of the new surprise billing regulations on July 1, 2021.

On Friday, May 28, 2021, the Congressional Research Service (“CRS”) released its analysis of Multiemployer Defined Benefit Pension Plans (“MEPPs”) that are potentially eligible for special financial assistance under the American Rescue Plan Act, 2021 (“ARPA”).  As we previously discussed in our article on ARPA’s special assistance for financially troubled MEPPs, a MEPP is eligible for financial assistance if it meets at least one of the following conditions:

  1. It is in critical and declining status in any plan year from 2020 through 2022;
  2. It had an application to suspend benefits under MPRA-approved prior to the enactment of ARPA (March 11, 2021);
  3. It is in critical status in any plan year from 2020 through 2022, has a modified funded percentage of less than 40% (calculated as the current value of plan assets divided by the present value of plan liabilities, using a specified interest rate), and the ratio of active to inactive participants in the plan is less than 2:3; or
  4. It became insolvent after December 14, 2014, and was not terminated by the date of enactment of ARPA.

At the time of ARPA’s enactment, the Congressional Budge Office estimated that 185 MEPPs could qualify for $86 billion in financial assistance.  CRS’s report provides a comprehensive listing of each MEPP that is potentially eligible for special financial assistance under ARPA based on the eligibility criteria set forth above (and identifies the criteria under which each MEPP is potentially eligible).