This week, the Department of Labor, Health and Human Services and the Treasury issued a new set of Frequently Asked Questions (FAQs) confirming that group health plans and issuers must provide 100% coverage of over-the-counter (OTC) COVID-19 diagnostic tests beginning January 15, 2022.

The FAQs are further interpretation of the coverage mandate required by the Families First Coronavirus Response Act (FFCRA), as amended by the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). Under this new guidance, 100% of the cost for COVID-19 tests purchased by an individual for diagnostic purposes on or after January 15, 2022, must be covered without cost-sharing or medical management requirements—even if the test was purchased OTC without a provider prescription or clinical assessment. This requirement continues for the duration of the national public health emergency. Read the full article on our sister blog Coronavirus (COVID-19): Guidance for Businesses.

Today, Washington Governor Jay Inslee released a statement clarifying his earlier statement about delaying the assessment of WA Cares Fund premiums.  (Our earlier blog entry is here.)  In today’s clarification, the Governor appears to be saying that employers still have a choice to make about whether to collect and remit WA Cares Fund premiums, noting that the State of Washington will begin collecting premiums from its employees as of January 1, 2022.  This follows his earlier statement that “employers will not be subject to penalties and interest for not withholding fees from employees’ wages during this transition” and statements from Senate Majority Leader Billig and House Speaker Jinkins that “we also support employers pausing premium collections from employees in Washington so lawmakers can take necessary action.”  We are not sure what to make of the Governor’s “clarifying” statement today, although it raises additional questions for employers, regardless of whether they choose to withhold premiums starting January 1, 2022.  Employers should consult with a Perkins Coie employee benefits attorney for additional information about this developing story.

See our December 23, 2021 update to this alert here: Washington Governor Attempts to Clarify WA Cares Fund Premium Collection | Employee Benefits (perkinscoiebenefitsblog.com)

On December 17, Washington Governor Jay Inslee, Senate Majority Leader Andy Billig, and House Speaker Laurie Jinkins issued a joint statement that included the Governor’s intention to direct the State’s Employment Security Department not to collect WA Cares Fund premiums that employers were to start withholding on January 1, 2022 and clear recognition by state lawmakers of a “pause” on premium collections by employers.

WA Cares Fund premiums, in the form of a 0.58% tax on employees’ wages, are intended to fund a trust that will pay long-term care benefits for Washington employees who paid into the program, starting in 2025. Per the joint statement, the Legislature intends to revise the WA Cares Fund during its 2022 session, which will convene on January 10, 2022. Targeted revisions apparently include the program’s long-term funding, what to do for Washington residents who pay into the trust but move out of state, and whether people who have opted out of the WA Cares Fund by buying private long-term care insurance must maintain those policies. At least seven bills addressing the WA Cares Fund have already been pre-filed in the Legislature, including two bills that would create new exemptions to premium assessments, one bill that would create a study of private options to replace the program, and one bill that would repeal the program.

Based on the joint statement, the pause on premium collection should last until the Legislature “sorts through these issues.” Employers that do not withhold and remit premiums to the Employment Security Department will not be subject to penalties or interest for wage withholding failures during this period. For these reasons, companies with affected Washington employees should pause WA Cares Fund premium withholding, pending further action by the Legislature and the Governor.

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.

Continue Reading 2022 IRS Annual Employee Benefit Plan Limit Updates

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