IRS Announces 2022 Limits For HSAs, HDHPs AND Excepted Benefit HRA’s

May 12 - Posted at 1:00 PM Tagged: , , , , , ,

The Internal Revenue Service (IRS) recently announced (See Revenue Procedure 2021-25) cost-of-living adjustments to the applicable dollar limits for health savings accounts (HSAs), high-deductible health plans (HDHPs) and excepted benefit health reimbursement arrangements (HRAs) for 2022. Many of the dollar limits currently in effect for 2021 will change for 2022. The HSA catch-up contribution for individuals ages 55 and older will not change as it is not subject to cost-of-living adjustments.

The table below compares the applicable dollar limits for HSAs, HDHPs and excepted benefit HRAs for 2021 and 2022.




IRS Fact Sheet: Employer Tax Credits for Employee Paid Leave Due to COVID-19

April 26 - Posted at 10:33 AM Tagged: , , , , , , ,

The American Rescue Plan Act of 2021 (ARP) allows small and midsize employers, and certain governmental employers, to claim refundable tax credits that reimburse them for the cost of providing paid sick and family leave to their employees due to COVID-19, including leave taken by employees to receive or recover from COVID-19 vaccinations. The ARP tax credits are available to eligible employers that pay sick and family leave for leave from April 1, 2021, through September 30, 2021.

Here are some basic facts from the IRS website about the employers eligible for the tax credits and how these employers may claim the credit for leave paid to employees who take leave to receive or recover from COVID-19 vaccinations.

Eligible Employers

An eligible employer is any business, including a tax-exempt organization, with fewer than 500 employees. An eligible employer also includes a governmental employer, other than the federal government and any agency or instrumentality of the federal government that is not an organization described in section 501(c)(1) of the Internal Revenue Code. Self-employed individuals are eligible for similar tax credits.

Paid sick and family leave for which tax credits can be claimed

Eligible employers are entitled to tax credits for wages paid for leave taken by employees who are not able to work or telework due to reasons related to COVID-19, including leave taken to receive COVID–19 vaccinations or to recover from any injury, disability, illness or condition related to the vaccinations. These tax credits are available for wages paid for leave from April 1, 2021, through September 30, 2021.

The amount of the tax credits and how they are calculated

The paid leave credits under the ARP are tax credits against the employer’s share of the Medicare tax. The tax credits are refundable, which means that the employer is entitled to payment of the full amount of the credits if it exceeds the employer’s share of the Medicare tax.

The tax credit for paid sick leave wages is equal to the sick leave wages paid for COVID-19 related reasons for up to two weeks (80 hours), limited to $511 per day and $5,110 in the aggregate, at 100 percent of the employee’s regular rate of pay. The tax credit for paid family leave wages is equal to the family leave wages paid for up to twelve weeks, limited to $200 per day and $12,000 in the aggregate, at 2/3rds of the employee’s regular rate of pay. The amount of these tax credits is increased by allocable health plan expenses and contributions for certain collectively bargained benefits, as well as the employer’s share of social security and Medicare taxes paid on the wages (up to the respective daily and total caps).

Claiming the credit

Eligible employers may claim tax credits for sick and family leave paid to employees, including leave taken to receive or recover from COVID-19 vaccinations, for leave from April 1, 2021, through September 30, 2021.

Eligible employers report their total paid sick and family leave wages (plus the eligible health plan expenses and collectively bargained contributions and the eligible employer’s share of social security and Medicare taxes on the paid leave wages) for each quarter on their federal employment tax return, usually Form 941, Employer’s Quarterly Federal Tax Return PDF. Form 941 is used by most employers to report income tax and social security and Medicare taxes withheld from employee wages, as well as the employer’s own share of social security and Medicare taxes.

In anticipation of claiming the credits on the Form 941 PDF, eligible employers can keep the federal employment taxes that they otherwise would have deposited, including federal income tax withheld from employees, the employees’ share of social security and Medicare taxes and the eligible employer’s share of social security and Medicare taxes with respect to all employees up to the amount of credit for which they are eligible. The Form 941 instructions PDF explain how to reflect the reduced liabilities for the quarter related to the deposit schedule.

If an eligible employer does not have enough federal employment taxes set aside for deposit to cover amounts provided as paid sick and family leave wages (plus the eligible health plan expenses and collectively bargained contributions and the eligible employer’s share of social security and Medicare taxes on the paid leave wages), the eligible employer may request an advance of the credits by filing Form 7200, Advance Payment of Employer Credits Due to COVID-19. The eligible employer will account for the amounts received as an advance when it files its Form 941, Employer’s Quarterly Federal Tax Return, for the relevant quarter.

Self-employed individuals may claim comparable tax credits on their individual Form 1040, U.S. Individual Income Tax Return 

DOL Issues Guidance on Outbreak Period Extensions

March 01 - Posted at 1:41 PM Tagged: , , , , , , , , ,

The COVID-19 extensions that the DOL and IRS had issued last year as part of their “Joint Notice” were set to expire at midnight on February 28th.  For weeks, many have been asking the DOL and IRS for guidance on how to handle the statutorily-mandated expiration, and as a result of the lack of guidance, most plans, TPAs, insurers, and COBRA administrators had to make a judgment call as to how to proceed.

But – with 2 days to spare – DOL finally issued Disaster Relief Notice 2021-01  on February 26th.

Notice 2021-01 sets forth the DOL and IRS’ position that the COVID-19 extensions will continue past February 28th, and that all such extensions must be measured on a person-by-person basis – which was not clear from the prior guidance.  Plans, TPAs, insurers, and COBRA administrators may have to reconsider their administrative practices in light of this new direction.

Short Background

The original Joint Notice (85 Fed. Reg. 26351 (May 4, 2020) required that health and retirement plans toll a number of deadlines for individuals during the COVID-19 National Emergency, plus a 60-day period (the “Outbreak Period”) starting March 1, 2020.

But, as described in Footnote 4 of the Joint Notice, ERISA and the Code limit DOL and Treasury’s ability to toll deadlines to one year (“Tolling Period”).

The deadlines impacted in the Joint Notice are:

  • Deadline to elect COBRA;
  • Deadline to pay COBRA premiums;
  • Deadline to elect HIPAA special enrollment;
  • Deadlines to file claims, appeals, and requests for external review; and
  • Deadline for plan to provide COBRA election notice


When there has been disaster relief guidance in the past, these periods have not bumped up against the statutorily-imposed one-year limit, so this COVID-19 extension is new territory – hence all the requests for the agencies to issue guidance regarding the expiration date.

Disaster Relief Notice 2021-01

In this late-breaking Notice 2021-01, DOL says it coordinated with HHS and IRS, and the agencies are interpreting the Tolling Period to be read on a person-by-person basis.

Specifically, DOL says that the Tolling Period ends the earlier of:

  1. One year from the date the deadline would have begun running for that individual; or
  2. 60 days from the end of the National Emergency (which is still ongoing).

This means that each individual has his or her own Tolling Period!

For example, a COBRA Qualified Beneficiary (QB) has 60 days to elect COBRA, counted from the later of their loss of coverage or the date their COBRA election notice is provided.  Under the Joint Notice, a QB’s 60-day deadline was tolled as of March 1, 2020, until the end of the Outbreak Period (that is, until the end of the National Emergency + 60 days).

At the end of the Outbreak Period, the deadlines would start running again, and the QB would have their normal 60-day COBRA election period (or the balance of their election period if it started before March 1, 2020).

BUT – with the 1-year expiration, DOL’s new Notice 2021-01 says that the one-year period does not end on February 28, 2021 for all individuals, but rather each individual has his/her own one-year Tolling Period.

Examples:

  • If QB A’s election period started 2/1/20, her election deadline was tolled as of 3/1/20. Her one-year Tolling Period would end 2/28/21, so her election period would start 3/1/21, and she would have the balance of her 60-day election period.
  • If QB B’s election period started 3/1/20, her election deadline was tolled as of 3/1/20. Her one-year Tolling Period would end 2/28/21, so her 60-day election period would start 3/1/21.
  • If QB C’s election period started 6/1/20, her election deadline was tolled right away, as of 6/1/20. Her one-year Outbreak Period would end 5/31/21, so her 60-day Tolling period would start 6/1/21.
  • If QB D’s election period starts 4/1/21, her election deadline also will be tolled right away on 4/1/21, as long as we are still in the National Emergency. Her one-year Tolling Period would end 3/31/22, so her 60-day election period would start 4/1/22.

For all of these examples, the tolling would end earlier if the National Emergency ends.  In that case, the election period would end 60 days after the end of the National Emergency.

Reasonable Accommodation Requirement

Notice 2021-01 also says that DOL recognizes that enrollees may continue to encounter COVID issues, even after the one-year Tolling Period expiration.  DOL says that the “guiding principle” is for plans to act reasonably, prudently, and in the interest of the workers and their families.  DOL says that plan fiduciaries should make “reasonable accommodations to prevent the loss of or undue delay in payment of benefits . . . and should take steps to minimize the possibility of individuals losing benefits because of a failure to comply with pre-established time frames.”

Notice 2021-01 does not provide any direction regarding what would constitute a “reasonable accommodation.”  It sounds like plans may need a process to consider whether to continue to waive deadlines on a case-by-case basis, but without any guidance as to what parameters to apply.  And DOL suggests that failure to do so could be a fiduciary issue.


Notices

Regarding communicating these changes to enrollees, DOL says:

  • The plan administrator or fiduciary “should consider” affirmatively sending a notice regarding the end of the one-year relief period (presumably to each person based on her own customized extension period).
  • Plans “may need” to reissue or amend prior disclosures if they failed to provide accurate information regarding these new extension deadlines.
  • Plans “should consider” making enrollees aware of other coverage options, such as the Special Enrollment Period under the Health Insurance Marketplace.

DOL seems to be saying that plans may need to notify each individual when his or her one-year extension is about to be up and should include information about the Health Insurance Marketplace.  In addition, plans may need to update prior communications that did not anticipate this new DOL interpretation.

Enforcement

DOL says it acknowledges that there may be instances when plans or service providers themselves may not be able to fully and timely comply with pre-established timeframes and disclosure requirements.  DOL says that where fiduciaries have acted in “good faith and with reasonable diligence under the circumstances,” DOL’s approach to enforcement will be “marked by an emphasis on compliance assistance,” including grace periods or other relief.

Key 2021 ACA Reporting Deadlines

January 06 - Posted at 1:52 PM Tagged: , , , , , , , , , ,

Every year Applicable Large Employers (ALEs) must file and furnish their ACA information to the IRS and their employees, respectively. Failing to do so can result in significant IRS penalty assessments.

To recap, only groups with 50 or more full time  or equivalent employees or those groups under 50 with self funded medical coverage are required to furnish their employees with copies of either the 1095-B or 1095-C forms (based on group size)

Employers will need to be sure you meet the following IRS deadlines for complying with the ACA’s Employer Mandate for 2020:

  • February 28, 2021: Paper file your 2020 Forms 1094-C and 1095-C with the IRS no later than this date.
  • March 2, 2021: Furnish Forms 1095-C to your full-time employees no later than March 2, 2021. This date was originally January 31, 2021, but the IRS has since issued an extension.
  • March 31, 2021: Employers must electronically file the 2020 Forms 1094-C and 1095-C with the IRS no later than this date. 

Failing to meet these deadlines can result in penalties under IRC 6721/6722, which the IRS is issuing through Letter 972CG. If you receive one of these notices, you only have 45 days from the issue date to respond to the penalty notice. 

For the 2020 tax year, the penalties associated with failing to comply with IRC 6721/6722 for employers with average gross receipts of more than $5 million in the last three years are as follows:

Failure to timely file and furnish correct information returns 

If employers file ACA information returns with the IRS no more than 30 days after the deadline they could be subject to a $50 penalty per return not filed, not to exceed an annual maximum of $556,500. If the ACA information returns are 31 or more days late, up to August 1, 2021, the penalty per return jumps up to $110, not to exceed an annual maximum of $1,669,500. After August 1, the penalty amount steepens to $270 per return, not to exceed an annual maximum of $3,339,000. For intentional disregard, meaning the deadline was missed willfully, the penalty more than doubles to $550 per return with no annual maximum limit.

The penalty amounts for employers with gross receipts of $5 million or less in the last three years will have the same penalty amounts per return with lower annual maximums, except in the case of intentional disregard. For more information on the penalty schedules for failing to meet the IRS deadlines click here

As if the penalties for failing to meet the filing and furnishing deadlines weren’t enough, the IRS is also issuing penalties to employers that fail to comply with the ACA’s Employer Mandate. As a reminder to employers in conjunction with the Employer Shared Responsibility Payment (ESRP), the ACA’s Employer Mandate, Applicable Large Employers (ALEs), organizations with 50 or more full-time employees and full-time equivalent employees, are required to offer Minimum Essential Coverage (MEC) to at least 95% of their full-time workforce (and their dependents) whereby such coverage meets Minimum Value (MV) and is affordable for the employee, or be subject to Internal Revenue Code (IRC) 4980H penalties. These penalties are being issued through IRS Letter 226J.

 

IRS announces relief for certain Form 1094/1095 reporting requirements

October 22 - Posted at 9:08 AM Tagged: , , , , , , ,

The IRS has issued relief from certain Form 1094-C and 1095-C reporting requirements under the Affordable Care Act relating to employee health plans, as well as relief from certain reporting-related penalties.

As a refresher, the ACA generally requires four forms to be produced each year, and the names are anything but intuitive:

  • Form 1094-B: This is essentially a transmittal form used by insurance carriers to report the individual statements (Form 1095-B) to the IRS
  • Form 1095-B: This form is used to report certain statutorily-required information to the employee under a fully-insured policy about his or her coverage.
  • Form 1094-C: This is used by applicable large employers (“ALEs”) to report whether the employer offered minimum essential coverage and to transmit the employee statements (Form 1095-C) to the IRS.
  • Form 1095-C: Finally, this form is used by ALEs to report certain statutory-required information to employees about their employer-sponsored health coverage.

Which form your plan would be required to file or furnish depends on whether you are an ALE, and how you fill out the form and whether you offer fully insured or self-insured coverage. 

Extended deadline for participant statements

The IRS has extended the deadline for furnishing Forms 1095-B and 1095-C to individuals. The typical deadline to report 2020 plan information is January 31, 2021. However, the new relief extends the deadline to March 2, 2021. The extension is automatic, and the IRS has indicated that no further extensions will be granted, and it will not respond to such requests.

No extension for IRS filings

Be aware that this extension does not apply to the 1094-B and 1094-C filings with the IRS. The deadline for submitting these filings to the IRS will remain March 1, 2021 (since the original due date of February 28 falls on a Sunday), for paper filings and March 31, 2021, for those filing electronically. However, while the automatic extension does not apply to these deadlines, filers may still request an extension from the IRS.

Penalty relief

Recognizing that the main purpose of Forms 1095-B and 1095-C was to allow an individual to compute his or her tax liability relating to the individual mandate, and because the individual mandate has been reduced to zero, the IRS has granted relief from furnishing certain documents to individuals.

The IRS indicated that it will not assess penalties for failure to furnish a Form 1095-B if two conditions are met. First, the reporting entity must post a prominent notice on its website stating that individuals may receive a copy of their 2020 Form 1095-B upon request, along with an email address, physical address, and phone number. Second, the reporting entity must furnish the 2020 Form 1095-B to the responsible individual within 30 days of receipt of the request. The statements may be furnished electronically if certain additional requirements are met.

The same reporting relief does not extend to ALEs that are required to furnish Form 1095-C. This form must continue to be furnished to full-time employees, and penalties will continue to be assessed for a failure to furnish Form 1095-C. However, the relief does generally apply to furnishing the Form 1095-C to participants who were not full-time employees for any month of 2019 if the requirements above are met. This would typically include part-time employees, COBRA continuees, or retirees.

Note that while these requirements for furnishing the 1095-B and 1095-C to individuals has been modified, these forms must still be transmitted to the IRS along with their Form 1094 counterparts.

Good-faith relief for errors in reporting

In the final piece of good news from the IRS, it announced relief from penalties for incorrect or incomplete information on any of these forms. This relief applies to both missing and inaccurate taxpayer identification numbers and birthdays, as well as other required information.

The reporting entity must be able to show that it made a good faith effort to comply with the reporting requirements. A successful showing of good faith will show that an employer made reasonable efforts to prepare for the reporting requirements and the furnishing to employees, such as gathering and transmitting the necessary information to the person preparing the forms.

However, the relief does not apply to reporting entities that completely fail to file or furnish the forms at all.

Finally, and importantly, the IRS has indicated that this will be the last year that it will provide this good faith reporting relief.

PCORI Fee Reminders and Clarifications

June 15 - Posted at 11:48 AM Tagged: , , , ,

IRS Notice 2020-44 was issued last week as a reminder that Patient-Centered Outcomes Research Institute (PCORI) fees were extended under the Further Consolidated Appropriations Act of 2020 and are now not scheduled to expire until plan years ending after September 30, 2029.  Annual PCORI fees will still need to be paid by insurers for employers with fully insured group health plans (and will remain to be included in annual premiums). Groups that offer self-insured plans  are responsible for filing and paying the fee on IRS Forms 720, which must be filed by July 31 each year.

The IRS Notice also clarifies there is still a filing obligation owed for all such group health plan filings for plan years ending on or after October 1, 2019, and before October 1, 2020, with the PCORI Fee amount being $2.54 (up from $2.45 for the previous PCORI fee period).  However, the guidance recognizes that insurers and self-funded plan sponsors may not have been accurately tracking the number of covered lives to be reported and paid for the plan year periods from October 1, 2019, through October 1, 2020, because the previous PCORI fee assessments under the Affordable Care Act were scheduled to end after September 30, 2019.  To allow for ease in current reporting of covered lives information, the Notice clarifies that in addition to the other statutory methods of reporting covered lives, for the PCORI reporting periods for plan years ending from October 1, 2019, through October 1, 2020, the IRS will allow insurers and plan sponsors to use a “reasonable” method to calculate the average number of covered lives for this period.

Impact on Employers

Employers with fully insured health plan coverage provided by an insurance carrier may see a slight increase in future insurance premiums to account for this recent update from the IRS.  Self-funded health plan sponsors need to ensure they timely file their annual Form 720 by July 31, 2020, using the appropriate PCORI fee amount (i.e., $2.45 per covered life for plan years ending on or before September 30, 2019, or $2.54 per covered life for plan years ending on or after October 1, 2019), based on the calculated covered lives formula alternatives (e.g., actual count method, snapshot method, Form 5500 method, or for the October 1, 2019, through October 1, 2020, periods, a “reasonable” method for average covered lives).

Reminder: The PCORI Fee is Back and Due By July 31st

June 05 - Posted at 10:00 AM Tagged: , , , , , ,

If you are feeling a sense that the rules around benefits haven’t changed enough in the last three months, this is a reminder of a change made during the long ago time of December 2019.  We all thought the annual PCORI (Patient-Centered Outcomes Research Institute) was set to expire back in 2019 but the SECURE Act extended the PCORI fee for another 10 years, meaning the fee will be in effect until 2029 for most plans (2030 for others, depending on the plan’s year-end).

If your company had a self-insured group health plan in 2019, make sure you’ve set your calendar alerts to pay the PCORI fee for the 2019 plan year. As a reminder, the PCORI fee was put into place by the ACA to help fund the Patient Outcomes Research Institute and is based on the average number of covered lives under the plan.  The fee and the related IRS Form 720 are due no later than July 31st.

For plan years ending before October 1, 2019, the fee is $2.45/person.  The IRS has not announced the specific fee for plan years ending between October 1, 2019 and December 31, 2019; however, it is expected to be slightly higher than $2.45 per covered member. Remember, covered lives include spouses, dependents, retirees, and COBRA beneficiaries. If you have not been through this process before, or if you just need a quick refresher, the IRS has issued detailed guidance on the multiple methods you may use to calculate the PCORI fee, as well as instructions for completing the Form 720 and submitting your payment.

 

IRS Announces 2021 HSA Contribution Limits

May 22 - Posted at 8:23 AM Tagged: , ,
The IRS has announced the 2021 inflation-adjusted contribution limits for Health Savings Accounts (HSA). The 2021 contribution limits for HSAs as compared to 2020 are:

New IRS Guidance Impacting Cafeteria Plan Election Changes and FSA Grace Periods and Rollovers

May 13 - Posted at 3:56 PM Tagged: , , , , , , , , , , , , , , ,

This week the IRS released two new sets of rules impacting Section 125 Cafeteria Plans.  Notice 2020-33 provides permanent rule changes that include an increase in the amount of unused benefits that Health FSA plans may allow plan participants to rollover from one plan year to the next.  Notice 2020-29 provides temporary rules designed to improve employer sponsored group health benefits for eligible employees in response to the coronavirus pandemic.  The relief provided under each notice is optional for employers. Employers who choose to take advantage of any of the offered plan options will be required to notify eligible employees and will eventually be required to execute written plan amendments.

Notice 2020-33 modifies the amount of annual rollover of unused benefits that Health FSA plans may offer to Plan participants.  Up until now, rollovers have been limited to $500 per Plan Year.  The new rule sets the annual rollover limit to 20% of the statutory maximum annual employee Health FSA contribution for the applicable Plan Year.  Because the statutory maximum is indexed for inflation, most years it increases (in mandated increments of $50).  

The notice provides that the increased rollover amount may apply to Plan Years beginning on or after January 1, 2020.  Because the corresponding annual Health FSA employee contribution limit for those Plan Years is $2,750, the annual rollover limit may be increased up to $550.

The relief provided under Notice 2020-29 falls into two major categories, both of which apply only for calendar year 2020.  First, the IRS introduces several significant exceptions to the mid-year change of election rules generally applicable to Section 125 Cafeteria Plans. Second, the notice contains a special grace period which offers Health Flexible Spending Arrangement (FSA) and Dependent Care Assistance Program (DCAP) Participants additional time to incur eligible expenses during 2020.

The temporary exceptions to mid-year participant election change rules for 2020 authorize employers to allow employees who are eligible to participate in a Section 125 Cafeteria Plan to:

  1. make a new election to participate in employer sponsored group health plan coverage if the employee originally declined coverage at open enrollment (depending on if the insurance carrier will allow);
  2. change coverage options previously elected during open enrollment;
  3. drop group coverage for covered family members or themselves if they will be replacing the coverage for the impacted individual immediately with other coverage;
  4. make a prospective election to add, change or drop a Health FSA election; and
  5. make a prospective election to add, change or drop a DCAP election.

None of the above described election changes require compliance with the consistency rules which typically apply for mid-year Section 125 Cafeteria Plan election changes.  They also do not require a specific impact from the coronavirus pandemic for the employee.

Employers have the ability to limit election changes that would otherwise be permissible under the exceptions permitted by Notice 2020-29 so long as the limitations comply with the Section 125 non-discrimination rules.   For allowable Health FSA or DCAP election changes, employers may limit the amount of any election reduction to the amount previously reimbursed by the plan.  Interestingly, even though new elections to make Health FSA and DCAP contributions may not be retroactive, Notice 2020-29 provides that amounts contributed to a Health FSA after a revised mid-year election may be used for any medical expense incurred during the first Plan Year that begins on or after January 1, 2020.

For the election change described in item 3 above, the enrolled employee must make a written attestation that any coverage being dropped is being immediately replaced for the applicable individual.  Employers are allowed to rely on the employee’s written attestation without further documentation unless the employer has actual knowledge that the attestation is false.

The special grace period introduced in Notice 2020-29 allows all Health FSAs and DCAPs with a grace period or Plan Year ending during calendar year 2020 to allow otherwise eligible expenses to be incurred by Plan Participants until as late as December 31, 2020.  This temporary change will provide relief to non-calendar year based plans.  Calendar year Health FSA plans that offer rollovers of unused benefits will not benefit from this change.

The notice does clarify that this special grace period is permitted for non-calendar year Health FSA plans even if the plan provides rollover of unused benefits.  Previous guidance had prohibited Health FSA plans from offering both grace periods and rollovers but Notice 2020-29 provides a limited exception to that rule.

The notice raises one issue for employers to consider before amending their plan to offer the special grace period.  The special grace period will adversely affect the HSA contribution eligibility of individuals with unused Health FSA benefits at the end of the standard grace period or Plan Year for which a special grace period is offered.  This will be of particular importance for employers with employees who may be transitioning into a HDHP group health plan for the first time at open enrollment.

As mentioned above, employers wishing to incorporate any of the allowable changes offered under Notices 2020-29 and 2020-33 will be required to execute written amendments to their Plan Documents and the changes should be reflected in the Plan’s Summary Plan Description and/or a Summary of Material Modification.  Notice 2020-29 requires that any such Plan Amendment must be executed by the Plan Sponsor no later than December 31, 2021.

Last week the Department of Health and Human Services, DOL and the IRS extended deadlines for multiple items related to health plan administration.  We don’t expect a huge influx of issues from the changes.  However, you should be aware so you don’t inadvertently misinform your employees.    

There were changes made regarding COBRA premium payments and election timeframes but since we have addressed those in a previous post, we won’t address it here.  COBRA administration is outsourced and those impacted are no longer employees so you can direct their questions to your COBRA administrator or to our office.  We’ll also skip the changes made to claims and appeals as that won’t apply to everyone.  That leaves the changes to your benefit program. 

As you are aware, most of the carriers have reduced or even eliminated the minimum number of hours a previously full-time employee must work to be covered by your plan.  Meaning, we can offer coverage to furloughed employees or those that have otherwise reduced hours to below the full-time requirements. 

In addition, the agencies, have decided to disregard the Outbreak Period (the time period between March 1st and at least 60 days after the announced end of the COVID 19 National Emergency) when establishing a deadline to request enrollment in coverage for certain qualifying events.  Meaning, the agencies, added a “pause” to the time frame required for employees to notify you about special enrollment periods, such as marriage or birth of a child.  We are not able to determine the exact end date of the Outbreak Period yet as that is based on an end to the National Emergency (and that had yet to be determined). 

For our examples, we’ll assume the COVID 19 National Emergency ends for the country on June 30th.  This would make the Outbreak Period March 1st to August 29th (60 days following June 30). 

Example 1 – Sally has a baby on March 3rd.  Normally, she would have 30 days to notify us that she would like to add the baby.  However, you are being instructed to disregard the Outbreak Period, therefore she has until September 28th (30 days from the end of the Outbreak Period) to let us know her desire to add her child.

Example 2 – Tom gets married June 1st.  He will have until September 28th to let us know if he intends to enroll his spouse. 

Under these examples, the dependents would be enrolled back to their original eligibility date and the employee would owe those back premiums.  I don’t expect this to become a big issue, however, depending on the employees circumstances it could.  The drawback to employers, other than the inconvenience, is this could have an impact on the group claims.  Normally Tom and Sally would only have 30 days to enroll their dependents.  With the extensions, employees have information about any issues or medical expenditures that have already happened along the way.  Carriers will be responsible to back up, enroll the dependent, and pay any claims incurred. 

Please let us know of any questions you have. 

© 2024 Administrators Advisory Group, Inc. All Rights Reserved