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 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).

The Department of Health and Human Services has stated that it will restore transgender and LGBTQ+ health care protections. Under the Trump Administration, HHS had defined the term “sex” narrowly to mean gender assigned at birth. This had the consequence of excluding transgender and other LGBTQ+ individuals from protection against discrimination in health care. The Biden Administration has now reversed that policy.

This change aligns HHS enforcement with a June 2020 Supreme Court case, Bostock v. Clayton County. In Bostock, the Supreme Court held that federal law’s ban on sex discrimination also prohibits discrimination on the basis of sexual orientation or gender identity. Though Bostock concerned an employment discrimination issue, the ban on sex discrimination extends to many areas of federal law, including health care.

The Patient Protection and Affordable Care Act includes a number of anti-discrimination provisions, including a ban on sex discrimination. As required by Bostock, HHS will now interpret the term “sex” to include sexual orientation and gender identify, in addition to gender assigned at birth. Announcing the change, HHS Secretary Xavier Becerra said, “Fear of discrimination can lead individuals to forgo care, which can have serious negative health consequences. It is the position of the Department of Health and Human Services that everyone—including LGBTQ people—should be able to access health care free from discrimination or interference, period.”

On Tuesday, May 18, 2021 the IRS issued Notice 2021-31 providing 86 FAQs related to premium assistance for COBRA benefits under the American Rescue Plan Act, 2021. The full text version of the FAQs is available below. These provide additional guidance on, among other things:

  • Whether an individual has had an “involuntary” termination, including employee-initiated terminations that could be considered constructive discharges under all of the facts and circumstances;
  • Whether an individual has had a “reduction in hours”, including voluntary or employee-initiated leaves that are not pandemic-related;
  • How the “Outbreak Period” relief applies to individuals who could also elect retroactive COBRA coverage for periods prior to April 1, 2021;
  • The extent to which employers can rely on self-certification or attestation of “assistance eligible individual” status;
  • The impact of retiree coverage on eligibility for COBRA premium assistance;
  • How premium payees can apply and calculate the refundable tax credit, including in the context of retiree coverage, severance benefits, or similar situations.

IRS Notice 2021-31

The IRS released 2022 cost-of-living adjustments for health savings accounts (HSAs) and high-deductible health plans (HDHPs) in Revenue Procedure 2021-25, which will be published in Internal Revenue Bulletin 2021-21 on May 24, 2021.

2022 HSA Contribution Limits. For 2022, individuals enrolled in a high-deductible health plan may make pre-tax contributions of up to $3,650 to an HSA if they have self-only coverage (an increase from $3,600 for 2021), or up to $7,300 if they have family coverage (an increase from $7,200 for 2021).

2022 HDHP Limits. For 2022, the minimum annual deductible for HDHP plans is $1,400 for self-only coverage (unchanged from 2020), and $2,800 for family coverage (unchanged from 2020).  The 2022 annual limit on out-of-pocket expenses (including deductibles, co-payments, and other amounts (but not premiums)) is $7,050 for self-only coverage (an increase from $7,000 for 2021) and $14,100 for family coverage (an increase from $14,000 for 2021).

On April 8, 2021, Washington Governor Jay Inslee issued Proclamation 20-46.3, which modifies proclamations issued in 2020 that provide employment and benefit protections during the COVID-19 pandemic emergency for “high-risk employees.” (For purposes of the Proclamation, a “high-risk employee” is any employee that the Centers for Disease Control defines as being more likely to get severely ill from COVID-19.) This is a new development since our July 2020 Client Update, “State of Washington Extends Existing Protections for “High-Risk Workers” Amid COVID-19.”

Among other modifications (e.g., with respect to medical verification of high-risk status), Proclamation 20-46.3 will no longer prohibit Washington employers from failing to fully maintain health insurance benefits for high-risk employees. Except to the extent benefits are otherwise required to continue (e.g., under FMLA or a collective bargaining agreement), an employer may now terminate health insurance benefits for an employee covered by the proclamation, provided that: (1) the employer gives the affected employee 14 calendar days’ advance written notice of the change; and (2) the coverage termination does not take effect before the first day of the calendar month after the month in which the 14-day notice lapses.

When it released Proclamation 20-46.3, Governor Inslee’s office also issued a set of Frequently Asked Questions discussing this and other modifications. Employers who are considering terminating health insurance coverage for any high-risk employees should consult with their legal counsel to ensure compliance with the Proclamation and other applicable laws, such as the Affordable Care Act, ERISA, and the NLRA.

On April 15, 2021, in response to the ongoing COVID-19 situation, the U.S. Internal Revenue Service (IRS) issued a temporary deviation from the handwritten signature requirement for a limited list of tax forms, including elections under Section 83(b) of the Internal Revenue Code, allowing taxpayers and representatives to use electronic or digital signatures when signing such forms. The temporary deviation expires on December 31, 2021, and applies to forms signed and postmarked on August 28, 2020, or later. Read the full article.

In 2019, Washington passed the first law in the nation requiring employees to fund a state-operated long-term care insurance program. The program, codified at RCW 50B.04 and set to begin on January 1, 2025, will be funded by an uncapped payroll tax starting at 0.58% on all employee compensation beginning January 1, 2022.

Although changes to the law are subject to final approval, Governor Inslee is expected to sign the final bill (HB 1323) shortly. If signed into law, the amendments will require employees who wish to opt out of the tax to purchase long-term care insurance by November 1, 2021. Accordingly, employers should act now if they want to offer employees long-term care options prior to the anticipated deadline. Read the full article.

On April 14, 2021, the U.S. Department of Labor (DOL) released three-part guidance on cybersecurity issues for employee benefit plans, marking its first significant commentary on the issue since its comprehensive but nonbinding report in late 2016.

The DOL’s guidance provides tips and best practices for ERISA plan sponsors, responsible fiduciaries, recordkeepers, service providers, and participants in appropriately safeguarding nonpublic plan and participant information against cybersecurity threats. The DOL also issued a tip sheet for ERISA plan participants to best protect their own information when interacting with plan data online.

Though the DOL’s guidance is described in terms of tips and best practices, this guidance raises a number of practical implications for ERISA plan sponsors and responsible fiduciaries. Plan sponsors and responsible fiduciaries should consider evaluating, implementing, and documenting actional responses for their own information systems and cybersecurity controls against points raised in the DOL’s guidance. Read the full article.