COVID-19 Update
Supreme Court to Hear Oral Arguments Regarding Vaccine Mandates on January 7
On December 22, 2021, the Supreme Court announced that it will hear oral arguments regarding the CMS vaccine mandate for healthcare workers and the Occupational Safety and Health Administration (OSHA) Emergency Temporary Standard (ETS) mandate for employers who employ 100 or more workers.
CMS issued an interim final rule on November 5, 2021, requiring the staff of twenty-one types of Medicare and Medicaid healthcare providers to receive one vaccine by December 6, 2021, and to receive the second vaccine by January 4, 2022. More information on the specifics of this mandate can be found here. The interim final rule was immediately challenged in the courts, and it is currently subject to preliminary injunctions in 25 states. The agency asked the Supreme Court to take up the matter and, in the meantime, will enforce its mandate only in those states where no injunction applies. Note that there are new deadlines for complying with the CMS mandate: the first vaccine dose must be administered by January 27, 2022, and the second dose by February 28, 2022. More information on this decision (including a list of the states where the mandate does not currently apply) can be found here.
The OSHA ETS (imposed on employers with 100 or more employees) is currently in effect, as discussed in the December 23, 2021 article in Compliance Corner. As noted in that article, the agency announced that it would not issue citations for noncompliance with any requirements under the ETS until January 9, 2022. It will not issue citations for noncompliance with the standard’s testing requirements before February 9, 2022. The plaintiffs challenging this mandate appealed the most recent US Court of Appeals for the Sixth Circuit decision to the Supreme Court.
These mandates are expected to remain in force (subject to the parameters established by the respective agencies) until the Supreme Court issues a ruling. We will continue to provide updates as the cases develop.
Healthcare Reform
CMS Issues Proposed Rule on the ACA 2023 Benefit and Payment Parameters
On December 28, 2021, HHS issued the proposed Notice of Benefit and Payment Parameters Rule for 2023. This notice is issued annually preceding the applicable benefit year and, once final, adopts certain changes. While the proposed rule primarily impacts the individual market and the Exchange, it also addresses certain ACA provisions and related topics that impact employer-sponsored group health plans. Highlights include:
- Annual Cost-Sharing Limits: As background, the ACA requires non-grandfathered group health plans to comply with an out-of-pocket maximum on expenses for essential health benefits. This maximum annual limitation on cost-sharing for 2023 is proposed to be $9,100 for self-only coverage and $18,200 for family coverage (an increase from $8,700 and $17,400 for self-only/family coverage respectively in 2022).
- Medical Loss Ratio Rebates: HHS proposes to clarify that Quality Improvement Activity (QIA) expenses that may be included for MLR reporting and rebate calculation are only those expenses that are directly related to activities that improve health care quality. The appropriate QIA expenses include salaries of the staff actually performing QIA functions. On the other hand, indirect expenses, such as a portion of overhead (e.g., holding group overhead), marketing office space, IT infrastructure and vendor profits that have no direct connection to QIA should not be included in QIA expenses.
- Premium Adjustment Percentage and Payment Parameters: HHS announced the premium adjustment percentage for the 2023 benefit year as 1.4408219719, which indicates an increase in employer-sponsored insurance premiums of approximately 44.1% over the period from 2013 to 2022. This premium adjustment percentage will also be used to index the Employer Mandate provision’s penalty amounts for the 2023 benefit year.
- Enhancing Options & Health Equity at Exchanges: HHS plans to conduct network adequacy reviews of plans in all federally facilitated Exchanges prospectively during the Qualified Health Plan (QHP) certification process. Moreover, HHS proposes to require issuers in the Exchanges to offer standardized plan options at every product network type, metal level, and throughout service area when insurers offer non-standardized options in plan year 2023. Additionally, HHS proposes to prohibit Exchanges, issuers, agents and brokers from discriminating against consumers based on sexual orientation and gender identity to increase access to health care, and align with the Executive Order released from the Biden Administration last January.
Once the regulations are finalized, employers should review them and implement any changes needed for the 2023 plan year.
Proposed Rules »
Fact Sheet »
2023 PAPI Parameters Guidance »
Federal Updates
HHS Issues Instructions for Reporting Prescription Drug and Other Information to the Government
On November 23, 2021, HHS issued instructions and supporting documents to report data under a transparency provision of the Consolidated Appropriations Act, 2021 (CAA), which requires group health plans and insurers to annually report certain information regarding spending on prescription drugs and health care treatment to the government. These documents describe the data submission methods for plans and insurers for the 2020 calendar year (“reference year”). Additionally, the instructions and supporting documents explain who must report and when, as well as provide detailed explanations of spending categories, data aggregation rules by state and market segment, and rebate and fee allocation methods.
This material supplements the IRS, HHS and DOL interim final regulations outlining the content and timing requirements for the reports. See our recent article on the interim final regulations in the December 9, 2021 edition of Compliance Corner.
Fully insured plan sponsors will not be required to report but may need to work with the insurer on collecting data. Employer plan sponsors of self-insured plans should review agreements with third party administrators to determine reporting responsibility.
IRS Releases 2022 Mileage Rates and Vehicle Values
The IRS recently announced the optional 2022 standard mileage rates for taxpayers to use in calculating the deductible costs of using an automobile for business, charitable, medical or moving expense (for members of the Armed Forces) purposes. Further, the notice announced the amount that must be included in the employee’s income and wages for the personal use of an employer-provided automobile.
Beginning on January 1, 2022, the standard mileage rate for transportation or travel expenses is 58.5 cents per mile for all miles of business use (an increase from 56 cents per mile in 2021). Taxpayers have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.
These new rates are effective for the expenses incurred on or after January 1, 2022:
| The standard mileage rates used for: | 2022 | 2021 |
|---|---|---|
| Business | 58.5 cents/mile | 56 cents/mile |
| Medical care | 18 cents/mile | 16 cents/mile |
| Certain moving expenses by members of the Armed Forces on active duty | 18 cents/mile | 16 cents/mile |
| Use by charitable organizations (under the Sec. 170) | 14 cents/mile | 14 cents/mile |
For the complete 2022 released rates and additional details, please refer to the IRS Notice 2022-03.
Employers should be aware of these changes.
DOL Announces Temporary Enforcement Policy for Service Provider Disclosures
On December 30, 2021, the DOL issued Field Assistance Bulletin No. 2021-03, which announces a temporary enforcement policy for group health plan service provider disclosures under ERISA Section 408(b)(2). The bulletin also attempts to address certain questions regarding the required disclosures and indicates the DOL does not intend to issue regulatory guidance at this time.
The Consolidated Appropriations Act, 2021 (CAA) amended ERISA Section 408(b)(2) to require group health plan service providers to disclose specified information to the “responsible plan fiduciary” (i.e., typically, the employer as plan sponsor) about compensation that the service provider expects to receive in connection with its plan services. Specifically, the new disclosure requirements apply to those who provide brokerage or consulting services to an ERISA group health plan pursuant to a contract or arrangement, and reasonably expect to receive $1,000 or more in related direct or indirect compensation. Effective December 27, 2021, the disclosure must be provided reasonably in advance of the service provider and plan entering, renewing or extending a contract, so the plan fiduciary can assess the reasonableness of the service provider’s compensation and identify potential conflicts of interest.
The bulletin emphasizes that a significant goal of the new disclosure requirements is to enhance fee transparency, especially for service arrangements that involve the payment of indirect compensation (i.e., compensation received from a party other than the plan or employer). Therefore, when evaluating a service provider’s compliance efforts, the DOL indicates that consideration will be given to whether the provider’s disclosure is reasonably designed to provide the required information and promote transparency. Additionally, if a service provider makes the disclosures in accordance with a good faith, reasonable interpretation of the law, the DOL will not treat the service provider as failing to satisfy the requirements. Conditional relief is also available for plan fiduciaries in connection with disclosure failures by covered service providers.
Therefore, pending future guidance or rulemaking, covered service providers and plan fiduciaries are expected to implement the disclosure requirements using a good faith, reasonable interpretation of the law. To assist with the implementation process, the bulletin provides guidance (in the form of questions and answers), which is summarized as follows:
- According to the DOL, consideration of the 2012 final regulations for pension plan service provider disclosures would be viewed as a good faith and reasonable compliance step for a group health plan service provider. In the DOL’s view, this prior guidance may be helpful in analyzing the new CAA requirements and related terminology, despite differences in the nature of health plan compensation arrangements.
- The disclosure requirements apply to insured and self-funded ERISA group health plans, including grandfathered plans, and regardless of plan size. There is no exception for limited scope dental and vision plans.
- The disclosure requirements are not limited to group health plan service providers who are licensed as, or market themselves as, “brokers” or “consultants”, but any plan service providers who reasonably expect to receive indirect compensation from third parties in connection with advice, recommendations or referrals regarding services defined as brokerage or consulting services under ERISA Section 408(b)(2).
- If service provider compensation is not known at the time the contract is entered, the compensation may be expressed as a monetary amount, formula or a per capita charge for each enrollee. If the compensation cannot be expressed by any other reasonable method, the disclosure may include a description of the circumstances under which the additional compensation may be earned and a reasonable and good faith estimate, which explains the methodology and assumptions used to prepare such estimate. Disclosure of compensation in ranges may be reasonable if contingent on future events.
- Generally, greater specificity in the disclosure of compensation information is preferred, if possible. The objective is to provide the plan fiduciary with sufficient information to fulfill its ERISA obligations and evaluate the reasonableness of the service provider compensation and identify any associated conflicts of interest.
- Only contracts for services that are entered, extended or renewed on or after December 27, 2021, are required to comply with the disclosure requirements. A contract is considered entered on the date of execution. Pending further guidance, a contract through use of a broker of record (BOR) agreement is considered entered on the earlier of the date on which the BOR agreement is submitted to the insurer or the date on which a group application is signed for insurance coverage for the following plan year, provided that the submission or signature is done in the ordinary course and not to avoid disclosure obligations.
- The DOL will monitor comments from stakeholders and enforcement activities to assess whether additional guidance may be necessary to assist covered service providers and plan fiduciaries in complying with the new disclosure requirements. The DOL is interested in input regarding specific aspects of the disclosure requirements that would benefit from regulatory guidance.
Generally, the bulletin does not provide significant new information, but serves to confirm the disclosure requirements as set forth under the CAA. Additionally, the guidance provides insights regarding the DOL’s initial enforcement approach with respect to plan service providers and fiduciaries.
IRS Releases Guidance on Surprise Billing 2022 Qualifying Payment Amount Determination
On December 28, 2021, the IRS issued Rev. Proc. 2022-11, which provides information necessary to implement the surprise billing prohibitions under the No Surprises Act (NSA) of the Consolidated Appropriations Act, 2021. Specifically, the guidance provides the methodology for calculating the qualifying payment amount (QPA) for 2022. (See our recent article on the NSA surprise billing prohibitions in the July 8, 2021 edition of Compliance Corner.)
The NSA provisions, which are applicable to both insured and self-funded group health plans, are effective for plan years beginning on or after January 1, 2022. These provisions protect participants from surprise bills for certain unexpected out-of-network (OON) items and services, including, but not limited to, emergency services.
The QPA is a significant component of the NSA surprise billing prohibitions and the related independent dispute resolution (IDR) process. The QPA is the median contracted rate for an item or service for a geographic region. A participant’s cost-sharing for protected OON services would be based upon the QPA in the absence of an applicable state surprise billing law or All-Payer Model Agreement. Additionally, if the IDR process is invoked to resolve plan and provider payment disputes, the IDR entity must consider the QPA in the determination. (See our recent article on the IDR process in the October 14, 2021 edition of Compliance Corner.)
For an item or service provided during 2022, the plan or insurer must calculate the QPA by increasing the median contracted rate for the same or similar item or service under the plan or coverage on January 31, 2019, by the combined percentage increase in the consumer price index for all urban consumers (U.S. city average) (CPI-U) over 2019, 2020 and 2021. For an item or service provided during 2023 or a subsequent year, the QPA is calculated by increasing the QPA determined for the item or service provided in the immediately preceding year by the applicable percentage increase, as published by the IRS.
The guidance specifies that for items and services provided on or after January 1, 2022, and before January 1, 2023, the combined percentage increase to adjust the median contracted rate is 1.0648523983. Plans and insurers are permitted to round any resulting QPA to the nearest dollar. To illustrate the methodology, an example is provided where the median contracted rate for a covered service (as identified by service code) was $12,480 as of January 31, 2019. For a service with the same code provided during 2022, the 2019 median contracted rate would be increased by the combined percentage increase of 1.0648523983, resulting in $13,289.36 or a 2022 QPA of $13,289 (rounded to the nearest dollar).
Although the actual QPA calculation may be performed by the plan’s insurer or third-party administrator, employers should be aware of this guidance.
Retirement Update
DOL Supplements Letter on Private Equity Investments in Defined Contribution Plans
On December 21, 2021, the DOL provided a supplemental statement on the use of private equity (PE) investments in designated investment alternatives made available to participants and beneficiaries in individual retirement account plans. The statement supplements the June 3, 2020 DOL Information Letter that addressed the role of PE investments in defined contribution plans. (See our June 11, 2020 edition of Compliance Corner for more information about that letter.)
The DOL reiterated that fiduciaries could offer a professionally managed asset allocation fund with a PE component as a designated investment alternative as long as the investment is prudent and made solely in the interest of the plan’s participants and beneficiaries. Although the letter allowed PE investments, the DOL clarified that the Information Letter did not endorse or recommend such investments due to their complexity.
After the DOL came out with the Information Letter in 2020, the Securities and Exchange Commission issued a “risk alert” highlighting compliance issues in examinations of registered investment advisers that manage PE funds. Additionally, the DOL received questions and reactions from a variety of stakeholders regarding the letter. As such, the DOL chose to issue this supplemental statement to clarify a few things.
First, the DOL admitted that the PE investment advantages that were touted by the entity that requested the information letter reflected the perspective of the PE industry and didn’t necessarily include counter-arguments. Second, the DOL chose to emphasize the expertise that plan fiduciaries would need to possess in order to satisfy ERISA duties to be prudent and monitor investments. Finally, the DOL cautioned against application of the Information Letter outside of the context of fiduciaries who offer PE investments in their defined benefit and contribution plans and are suited to analyze these investments for participant-directed accounts with the assistance of qualified fiduciary investment advisers. The DOL took it a step further and mentioned that plan-level fiduciaries of small, individual account plans are likely not suited to evaluate PE investments in designated investment alternatives in individual account plans.
Employers considering offering PE funds as an investment option in their plans should be mindful of their fiduciary duties and consult with their investment advisers for assistance.
IRS Releases 2022 Instructions for Forms 1099-R and 5498
On December 10, 2021, the IRS released the 2022 Instructions for Forms 1099-R and 5498. Form 1099-R reports distributions from retirement plans, pensions, annuities and IRAs. Form 5498 reports contributions to IRAs. The instructions provide specific guidelines for completing the forms. (We previously reported on the draft of these instructions in the November 11, 2021 edition of Compliance Corner.)
The IRS updates the form instructions annually to incorporate any recent administrative, reporting or regulatory changes. The 2022 Form 1099-R instructions include a new reporting requirement for qualified plan payments to state unclaimed property funds under escheat laws. It also announces the new Form W-4R, which will be used to report nonperiodic payments and eligible rollover distributions.
Employers who sponsor retirement plans may want to be aware of the draft release but should understand that changes may be made prior to the issuance of the final instructions.
DOL, IRS and PBGC Release Advance Copies of 2021 Forms 5500
On December 29, 2021, the DOL, IRS and PBGC (the “agencies”) published advance copies of the 2021 Form 5500 Annual Return/Report (including Form 5500-SF for small plans) and related instructions in the Federal Register. The 2021 Form 5500-EZ and instructions were also released and are available on the DOL website.
Certain updates to the form instructions were necessary to implement annual reporting changes related to SECURE Act amendments to ERISA and the code that apply to multiple-employer defined contribution pension plans, including the new pooled employer plans (PEPs). Provided certain conditions are met, PEPs allow multiple unrelated employers to participate in one plan that files one Form 5500.
The notable Form 5500 and Form 5500-SF changes include the following:
- The instructions have been revised to require multiple-employer defined contribution pension plans to report aggregate account balance information by employer on the existing Form 5500/Form 5500-SF attachment for reporting participating employer information. (Prior to SECURE Act changes, employers were only required to report estimates of the percentage of total contributions made by participating employers during the plan year.)
- As a result of the SECURE Act authorization for PEPs to begin operating in 2021, the Form 5500 instructions have been amended to make clear that a PEP is a multiple-employer plan that files a single Form 5500 Annual Return/Report. PEPs are required to check the multiple-employer plan box in Part A of Form 5500 and include the attachment for reporting participating employer information. These plans must also indicate whether the pooled plan provider (PPP) administering the plan has complied with the Form PR (Pooled Plan Provider Registration) filing requirements. If so, the AckID acknowledgement code number for the PPP’s latest Form PR filing must be referenced. Form 5500-SF was also updated to indicate that PEPs must file Form 5500 and cannot file Form 5500-SF.
- A new checkbox is added to Part I of Form 5500 and Form 5500-SF for a plan sponsor who adopted the pension benefit plan in the 2021 plan year and treated the plan as being adopted and effective in the 2020 plan year pursuant to SECURE Act Section 201. For defined benefit plans in this category, the 2021 instructions provide information about how to report data regarding 2020 funding requirements (i.e., Schedule SB data).
- The form instructions were updated to reflect an increase in the maximum civil penalty amount assessable under ERISA section 502(c)(2), which applies to a failure to file a Form 5500.
- A new line 3(d) was added to Schedule MB to require a multiemployer defined benefit plan to report the amount of withdrawal liability payments included in line 3(b) employer contributions. Line 6c, mortality table, was revised to add new mortality tables released by the Society of Actuaries and to simplify reporting of older mortality tables. Line 7, New Amortization Bases Established, has been revised, reflecting changes made by the ARPA for Code 8 to be used for net investment losses and other losses related to COVID-19 incurred in either or both of the first two plan years ending after February 29, 2020.
- Schedule SB, Line 6, target normal cost, was broken down into new lines 6a, 6b and 6c. Line 6a requires the plan to report the present value of current plan year accruals decreased by any mandatory employee contributions. Line 6b requires the plan to report expected plan-related expenses included in the target normal cost, and line 6c requires it to report the total target normal cost (i.e., the sum of lines 6a and 6b). The table in the instructions for line 27 contains an additional code (Code 9) for community newspapers as described in the SECURE Act.
These advance copies are for informational purposes only and cannot be used to file a 2021 Form 5500 or schedule. Employers must wait until the agencies publish the final versions. However, employers may want to familiarize themselves with the updated forms and instructions.
Announcements
Reminder: Form W-2 Cost of Coverage Reporting
Large employers must report the cost of group health coverage provided to employees on Form W-2. The requirement applies to employers that filed 250 or more Form W-2s in 2021. Employer aggregation rules do not apply for this purpose. In other words, the number of Form W-2s is calculated separately without consideration of controlled groups. Indian tribal governments, sponsors of self-funded church plans and employers contributing to a multiemployer plan are exempt from the Form W-2 reporting requirement.
PPI clients who had a PPI-administered and billed, fully-insured medical plan with PPI in 2021 have access to a Cost of Coverage (W2) Report that lists employer medical plan contributions by month for each covered employee in 2021. The report is available to administrators with online billing access at ppibenefits.com.
FAQ
We are a small group with age-banded rates imposed by our insurance carrier. Can we create and utilize a composite rate for our employees?
We do not recommend that employers create composite rates where the carrier is billing on an age-banded basis. This is because it can result in issues under ERISA and the Age in Employment Discrimination Act (ADEA).
Specifically, it is a violation of ERISA if the employer rate for some employees is higher than the insurer rate for those employees. Additionally, if the employer calculates its own composite rates, it becomes unworkable if new employees are hired or if employees present when the rates were set to terminate or retire. Essentially, if the client hires a new employee (or an employee is dropped from coverage), the average rate per employee would be affected (i.e., the employer will have to calculate a new composite rate based on the newly hired or fired employee). In other words, the insurer would be billing for a higher or lower total premium, and the employer’s calculated composite rate may not match the premium charged by the insurer.
This scenario is further augmented by the dependent tiers since even though an insurer could calculate composite rates for dependents, the employer composite rate for dependents may not accurately reflect the actual amount charged by the insurer. With or without the dependent tier structure, this would cause the employer to over or undercharge plan participants and would be viewed as a violation of their ERISA fiduciary duty. Conversely, where the insurer creates a composite rate, they are required to maintain that composite rate throughout the year regardless of the change in the employer’s employee demographic changes.
The other possible issue with an employer setting their own composite rates is the ADEA, which prohibits employers from discriminating against employees aged 40 and older
For a plan that is community rated with individual rates, the employer has two choices if they want to stay in compliance with the ADEA:
- Contribute a percentage of the premium charged by the insurer (i.e., a percentage based on the individual rates received from the insurer); or
- Implement a fixed dollar contribution amount for employees’ payroll deduction (and the employer would absorb the rest).
If the employer structures the employee contribution in any other way, including a set employer contribution, the result will violate the ADEA.
So, setting composite rates when the insurance carrier passes on age-banded rates could cause employers to violate both ERISA and the ADEA. Employers should consult with legal counsel if this is an issue they need to remedy.
State Updates
California
Small Employer Offer of Retirement Plan
Beginning September 30, 2020, California employers with more than 100 employees were required to offer employees a qualified retirement plan (such as a 401(k)) or participate in the state-run retirement savings program known as CalSavers. The requirement applied to employers with 51 to 100 employees on June 30, 2021, and will apply to employers with five or more employees on June 30, 2022. For this purpose, employer size is based on the number of California-based employees reported on the Employment Development Department quarterly report.
Before the June 30, 2022 deadline, small employers must sponsor a qualified retirement plan or register with CalSavers. Under CalSavers, an employer must automatically enroll eligible employees in the retirement program with a contribution of at least 3% of earnings. New employees must be enrolled within 30 days of employment. Employees may opt out of or back into the program at any time.
CalSavers Employer Registration »
SDI and PFL Rates and Limits Revised for 2022
The Employment Development Department (EDD) recently announced that the 2022 employee contribution rate for State Disability Insurance and Paid Family Leave will decrease from 1.2% to 1.1%. The taxable wage base from which the contributions will be taken will increase from $128,298 in 2021 to $145,600 in 2022. The maximum weekly benefit increases from $1,357 to $1,540.
Employers should be aware of this change in rates and limits, and they should work with their payroll provider to adjust employee contributions.
Employer Coverage Reporting
Signed into law in June 2019, the California Individual Health Coverage Mandate established a state individual mandate effective beginning 2020. The law requires California residents to maintain minimum essential coverage (MEC) or pay a penalty. In conjunction with this mandate, there is a reporting requirement for employers that provide self-insured MEC to residents.
Reporting for the 2021 coverage year is due March 31, 2022, to the California Franchise Tax Board. The state will accept copies of federal Forms 1095-B and 1095-C. Self-insured employers must report coverage for any California resident who had coverage for any portion of the calendar year 2021. Note that employers are only subject to these requirements if their carrier does not complete this reporting. Failure to report can result in a $50 per covered person penalty.
Similar to federal filing, electronic returns are required if filing 250 or more forms.
Franchise Tax Board, Reporting Instructions »
Delaware
Coverage for Insulin Pumps
Group health insurance policies issued or renewed after December 31, 2021, must provide coverage for a medically necessary insulin pump at no cost to a covered individual. An insurer may limit the coverage to only those expenses incurred through a network provider.
However, the requirement does not apply to qualified high deductible health plans as such coverage would be considered impermissible and render participants ineligible for HSA contributions. Current IRS guidance provides that insulin, glucometers and hemoglobin A1C testing are considered preventive care and may be covered prior to the statutory HSA deductible, but pumps are not included in that guidance.
Employer plan sponsors should work with their insurers to communicate the coverage change to participants.
Coverage for Children at High-Risk for Lead Poisoning
Group health insurance policies that provide coverage for outpatient services must provide benefits for lead poisoning screening, testing, diagnostic evaluations, screening/testing supplies and home visits for children who are at risk for lead poisoning. The coverage may be subject to the plan’s normal cost-sharing provisions. The requirement applies to policies issued or renewed after December 31, 2021.
Employer plan sponsors should work with their insurers to communicate the coverage change to participants.
HB 222 »District of Columbia
Paid Vaccination Leave
On November 18, 2021, Mayor Bowser signed the COVID Vaccination Leave Emergency Amendment Act of 2021 into law, which contains two primary provisions.
First, it extends the existing requirement for employers to provide unpaid leave under DC FMLA for reasons related to COVID-19. This requirement has been in place since March 2020, was set to expire November 5, 2021, and was previously featured in Compliance Corner. It applies to employers of all sizes.
Employees are eligible for up to 16 weeks of unpaid leave in a 24-month period if they have worked for the employer for at least 30 days and experience one of the following qualifying reasons: the employee or a household member is under a government or health care provider’s order to quarantine, or the employee needs to care for a child whose school or daycare center is closed due to COVID-19. (Note: DC FMLA generally applies only to employers with 20 or more employees working in the district, with employees eligible only after 12 months and 1,000 hours of service.)
Secondly, the Emergency Amendment Act requires employers of all sizes to provide two hours of paid leave for employees receiving (or their child receiving) a COVID-19 vaccination and an additional eight hours of paid leave in the following 24-hour period for vaccination recovery. This requirement was effective November 18, 2021, and is set to expire February 16, 2022, unless extended.
Employers with employees working in the district should be aware of these requirements.
COVID Vaccination Leave Emergency Amendment Act of 2021 »
Florida
Employment Practices Related to a Vaccine Requirement
On November 18, 2021, Gov. DeSantis signed HB 1B into law, restricting employment practices related to a vaccine mandate. If an employer requires employees to be vaccinated, the employer must provide employees with five options for exemption. They are for medical reasons, religious reasons, COVID-19 immunity, periodic testing and the use of employer-provided personal protective equipment (PPE). In other words, a Florida employer is not prohibited from implementing a vaccine mandate on employees, but employees must be permitted to “opt out” of the mandate if they provide certification of one of the exemptions. Model certification forms are available from the Florida Department of Health.
Importantly, if an employer is going to be subject to the federal requirement for private employers with 100 or more employees, that employer would have a conflict with state law for Florida employees who wanted an exemption based solely on the use of PPE or certification of medical/religious reasons. Under the federal requirement, employees are only provided the choice of vaccination or weekly testing. Given the conflict between state and federal law, employers are encouraged to seek outside counsel on this issue.
Florida Department of Health, COVID-19 Vaccine Exemption Forms »
Georgia
Provider Directory Changes
On December 9, 2021, the Insurance and Safety Fire Commissioner issued Bulletin 21-EX-16 to remind all health insurers conducting business in the state that House Bill 454 goes into effect on January 1, 2022.
This legislation requires an insurer to reimburse a provider at in-network rates for 180 days (or through the end of the enrollee’s coverage period, if earlier), if a provider is listed as in-network in the insurer’s directory when the individual selects a health benefit plan, and the provider becomes out of network subsequent to open enrollment in the succeeding plan year. In such case, the provider must accept the insurer’s payment as payment in full. Certain exceptions apply.
This guidance is directed at insurers, but employers may want to be aware of the bulletin.
Paid Parental Leave for State and Public School Employees
Gov. Kemp recently signed HB 146, which provides paid parental leave to state and public-school employees. The law took effect on July 1, 2021.
Specifically, employees of the state government or local board of education are entitled to 120 hours of paid parental leave after the birth of a child, adoption of a child or placement of a child in foster care in their home. Generally, employees of these entities are eligible for the leave after six continuous months of employment. Hourly employees are required to work a minimum of 700 hours over the six-month period immediately preceding the requested paid parental leave date.
An employee can only qualify for the leave once per rolling twelve-month period but can take the time incrementally over such period. Unused leave does not carry over to the next twelve-month period nor does it have any cash value in the event of employment termination. Employers are prohibited from retaliating against employees for using leave to which they are entitled.
State government and local board of education employers should be aware of the new parental paid leave requirements. Under the law, these employers must produce rules for administering the leave that address whether the leave will run concurrently with other federal leave and documentation requirements. Counsel should be consulted for guidance.
Illinois
Chicago Extends OSHA’s Vaccine Mandate to All-Sized Employers
On December 21, 2021, the Commissioner of Health of the City of Chicago signed Order No. 2021-2. The order extends the OSHA ETS vaccine mandate to Chicago employers of all sizes. As background, the federal requirement only applies to private employers with 100 or more employees. This means that employers with Chicago employees reporting to a worksite will be required to implement a vaccine mandate for those employees with the option to opt-out and choose weekly testing instead. Absent further court action, employees will be required to be fully vaccinated or test negative effective February 9, 2022. Additionally, employers will need to adopt and distribute a written policy by January 10, 2022.
Missouri
Crime Victim Leave
Effective August 28, 2021, employers with 20 or more employees within the state must provide unpaid leave to employees who are victims of domestic or sexual violence or have a family/household member who is a victim. The specific reasons for leave include: obtaining victim services from an organization, counseling, seeking legal assistance or remedies and recovering from or seeking medical attention for injuries.
Employers have many responsibilities under the new law. If they have 20 to 49 employees, they must provide eligible employees with one-week unpaid leave per year; those with 50 or more employees must provide two weeks. An employee on such leave is entitled to benefit continuation at the normal cost and restoration to the same or equivalent job. Importantly, an employer must also provide reasonable safety accommodations for the employee. Examples include a change in worksite, reassignment, transfer, modified schedule, lock installation and implementation of a safety procedure.
If an employer has not yet notified existing employees of the new leave entitlement, they should distribute the notice below as soon as possible. Going forward, the notice should be provided to all new employees. The notice may be distributed electronically.
Missouri Victims Economic Safety and Security Act »
New York
Employees Granted Paid COVID-19 Child Vaccination Leave
On December 24, 2021, New York City enacted a law that allows employees to take paid time off in connection with vaccinating their children for COVID-19. The law’s provisions, which amend the Earned Safe and Sick Time Act, apply retroactively to November 2, 2021, and will expire on December 31, 2022.
Specifically, parents are entitled to up to four hours of COVID-19 child vaccination time per injection for each child, for an absence from work to accompany the child to receive the vaccine or to care for a child experiencing temporary side effects from the injection. The child must be under the age of 18 or incapable of self-care due to a mental or physical disability. “Parents” include biological, step or adoptive parents, legal guardians, as well as those who stand in loco parentis.
This leave time is in addition to amounts already required under the Earned Safe and Sick Time Act. For the leave period, employees are generally entitled to compensation at their regular rate of pay at the time the leave is taken.
If the leave is foreseeable, the employer can require an employee to provide advance notice of the need for leave time (not to exceed seven days) and supporting documentation.
Employers that fail to pay employees for the child vaccination leave may be assessed amounts up to three times the wages that they should have paid or $250, whichever is greater. Employers may also be subject to civil penalties of $500 (or more if there are multiple violations). However, these penalties will not be imposed until 60 days after the enactment date.
Employers should be aware of these new requirements and should contact employment law counsel for compliance assistance or further information.
Final Regulations Issued for Paid Sick and Safe Leave Law
On December 22, 2021, the Department of Labor (DOL) released final regulations on the state’s Paid Sick and Safe Leave Law, which has been in effect since September 2020. (See our April 28, 2020 edition of Compliance Corner for more information on the law.) The final regulations do not reflect any changes to the proposed rules issued in December 2020. However, the new guidance attempts to address comments regarding the proposed rules and clarify certain outstanding issues, including carryover requirements, leave accruals, employee counts and supporting documentation and attestations.
With respect to carryovers, the leave law requires that accrued sick leave hours be carried over to the next calendar year. The guidance explains that employers cannot cap the unused carryover amounts, even if the employer frontloads leave time at the beginning of the year. Rather, an employer can either: (1) give employees the option to voluntarily elect to use and receive payment for paid sick leave prior to the end of a calendar year or carry over unused sick leave; or (2) only allow employees to carry over unused sick leave.
The law mandates that employees accrue one hour of leave for every 30 hours worked. When determining accrual for time worked in increments of less than 30 hours, employers may round accrued leave for administrative ease. However, such rounding cannot result in a failure to provide the proper accrual of leave to employees for the time they have actually worked. Additionally, employees must be able to use accrued sick leave upon accrual; employers cannot impose a waiting period for the use of the sick leave.
According to the DOL, the employee count used to determine the law’s application should include all employees of the employer nationwide. However, the sick leave applies only to employees in the state.
Regarding leave documentation and attestation requirements, the DOL indicated it would publish a template for employee attestations. The guidance emphasized that employers may not deny leave while seeking to confirm the leave basis nor require employees to pay costs to obtain verification of their eligibility to use sick leave. Additionally, documentation requirements for leave less than three days is not considered necessary to prevent potential employee abuse. However, if the employer learns a leave request is false or fraudulent, the employer may take disciplinary action against the employee.
Employers should be aware of the final rules. Related questions or concerns should be directed to employment law counsel.
New York State Register (See Pages 16 – 18) »
North Dakota
Employment Practices Related to a Vaccine Requirement
On November 12, 2021, Gov. Burgum signed HB 1511 into law. Under the new law, if a private employer requires employees or independent contractors to be vaccinated against COVID-19 as a condition of employment or contract, the employer must provide an exemption to those submitting proof of COVID-19 antibodies. Such proof shall be valid for six months.
The employer must also provide an exemption for those submitting to periodic testing, providing certification that such immunization would endanger the individual’s health or certification of a religious, philosophical or moral belief opposed to such immunization.
Importantly, the law specifically states that the requirement would not apply to an employer who is required to comply with a related federal law. Thus, large private employers who may be subject to the federal vaccine mandate under the Occupational Safety and Health Administration’s Emergency Temporary Standard would not have to consider conflicting provisions (such as providing an exemption based on proof of antibodies without weekly testing). Those employers would not be subject to the state provisions and would need only comply with the federal mandate.
The law is effective from November 15, 2021, through August 1, 2023. Employers should be aware of this law and consult with employment law counsel about their obligations.
Rhode Island
Mask Requirement for Employees Working Indoors
On December 16, 2021, Gov. McKee signed Executive Order 21-116. Under the order, all office-based businesses plus other private and public employers with indoor operations must require masking of any person on-site, including employees. An exception may be made for any person who provides proof of vaccination. There are additional exceptions for those: under age two, whose health would be damaged by the wearing of a mask, and who are developmentally unable to comply. There are also exceptions for those who are working alone in an office or at a work site or while consuming drink or food.
The requirement became effective immediately upon signing and will expire on January 18, 2022, unless extended by a subsequent order. Employers should be aware of this order.
Vaccine Requirement for Healthcare Workers Extended
As previously reported, state regulations required healthcare workers and providers to be vaccinated against COVID-19 by October 1, 2021, unless a medical exemption applies. The regulation was set to expire December 14, 2021 but has now been extended through February 12, 2022. Healthcare workers with a medical exemption must wear a mask indoors and undergo testing twice weekly. Healthcare providers with a medical exemption must wear a mask when indoors.
Employers in the healthcare industry should be aware of this extension.
South Carolina
CAA Compliance Requirements and Enforcement
On December 31, 2021, the Department of Insurance issued Bulletin No. 2021-09 regarding compliance with the Consolidated Appropriations Act, 2021 (CAA), which includes the No Surprises Act (NSA) and transparency provisions. The stated purpose of the bulletin is to inform insurers, pharmacy benefit managers, independent review organizations and other third-party service providers of the CAA requirements.
The bulletin outlines the NSA surprise billing prohibitions, the independent dispute resolution process and other patient protections. It explains that insurance policy forms must comply with all applicable NSA provisions. Accordingly, forms may require amendments and submission for approval in accordance with the designated process. Further, insurers are required to complete a certification confirming that all policy forms comply with the applicable provisions of the CAA effective January 1, 2022. This certification is provided on the last page of the bulletin. The guidance also references the transparency requirements, including the requirement for insurers to disclose certain compensation arrangements effective December 27, 2021.
The bulletin further explains that enforcement of the CAA provisions generally follows the enforcement provisions of the ACA. In other words, the federal DOL will enforce provisions of the CAA as they relate to self-insured plans, and the states will regulate fully insured plans and other licensees engaged in the issuance or servicing of health insurance coverage.
Although the bulletin is directed at insurers, employers who sponsor fully insured plans should be aware of this guidance.
Texas
Executive Order Restricts Employer Vaccination Mandates
On October 11, 2021, Governor Abbott issued Executive Order GA-40, which prohibits any entity in Texas from compelling receipt of a COVID-19 vaccine by any individual, including an employee or a consumer, who objects to such vaccination for any reason of personal conscience, based on a religious belief, or for medical reasons, including prior recovery from COVID-19. The penalty for violations of this order could be fines of up to $1,000 per violation. The order also provides that it supersedes any other order that may conflict and limits any local officials' ability to issue orders that conflict with this order.
It is unclear whether this order conflicts with the federal vaccination mandates, so employers in the state should consult with counsel regarding their vaccination policies.
Utah
Employer COVID-19 Vaccine Requirements in Workplace Limited
Utah recently released the amended Workplace COVID-19 bill (SB 2004) to require an employer to pay for COVID-19 workplace testing; prohibit adverse action against an employee who claims relief; and prohibit an employer from keeping or maintaining a record or copy of an employee’s proof of vaccination, except under certain conditions. An employer that employs 15 or more employees and requires employees to receive a COVID-19 vaccine must relieve an employee of the requirement if the employee submits a statement that explains receiving a COVID-19 vaccine would be injurious to the health and well-being of the employee; conflict with a sincerely held religious belief; or conflict with a sincerely held personal belief.
Employers subject to this law should be mindful of this development, particularly if they currently are or plan to enforce a vaccine mandate while we wait for the outcome of the Supreme Court’s January 7 hearing on the federal vaccine mandates.
Washington
WA PFML Poster and Resources Updated, and the New 2022 Rates Reminder
To prepare for the 2022 PFML program, the WA Employment Security Department recently updated the following resources for employers:
- Mandatory poster: Employers need to replace the 2021 workplace poster with the new poster in breakrooms or share it with employees electronically.
- Premium calculator: The calculator can be used to verify the amount an employer needs to remit the PFML premiums to the state.
- Employer toolkit: The guide describes how to calculate premiums, how to report for Paid Leave and general information about the program.
- Optional paystub insert: This sample letter can be used to inform employees of the new premiums.
Starting January 1, 2022, the total WA PFML 2022 premium rate increased for the first time to 0.6% of the employees’ gross wages up to the 2022 Social Security cap ($147,000) from 0.4% of the employees’ gross wages in 2021. (We discussed this rate increase in the November 9, 2021 edition of Compliance Corner.) For an employer with 50 or more employees, the total premium is split between an employer and employees. The employer contribution is 26.78% of the total premiums, and the employee contribution is 73.22% of the total premiums. If an employer has fewer than 50 employees, the employer contribution is waived, and the employer will remit the employee premiums only.
The weekly benefit amount is 90% of an employee’s average weekly wage, up to the maximum weekly benefit amount of $1,327 in 2022.
[Update] Governor Delays Collection of Long-Term Care Tax (“WA Cares Fund”)
On December 17, 2021, Gov. Inslee and the legislature issued statements to delay the payroll premium collections that will fund the state’s new long-term care (LTC) program — the Washington Cares Fund. (See the article on this subject in the December 23 edition of Compliance Corner.)
On December 23, 2021, Gov. Inslee issued a statement clarifying that if the legislature fails to change the law, “employers will still be legally obligated to pay the full amount owed to state Employment Security Department (ESD) to begin the long-term care program” since “only the legislature has the authority to eliminate the requirement that employers pay a premium based on withholding from an employee’s wages.” Further, the governor stated that the state of Washington would withhold WA Cares Fund premiums from state employee wages effective January 1, 2022.
Employers with Washington employees should consult with legal counsel and tax advisors to determine their actions given the governor’s most recent comments. Further, if employers choose to delay the premium collections, then they should communicate such change with their payroll division and the vendor as soon as possible.
Statements on Delaying WA Cares Fund Premium Assessment »
Inslee letter to ESD on long-term care premiums collection »
Extension of Emergency Orders on COVID-19 Testing and Surprise Billing
On December 20, 2021, Commissioner Kreidler issued orders further extending emergency orders 20-01 and 20-06. Emergency Order 20-01, which has been extended through January 28, 2022, requires health insurers to waive copays and deductibles for COVID-19 testing. The order also requires insurers to allow a one-time early refill for prescription drugs.
Emergency Order 20-06, which has also been extended through January 28, 2022, protects consumers from receiving surprise bills for lab fees related to COVID-19 diagnostic testing. The order also encourages insurers to report out-of-network labs that are not publishing or honoring the cash price of COVID-19 diagnostic testing.
These orders apply to insurers but provide employers with information about the continued coverage of COVID-19 testing.
Further Extending Emergency Order 20-01 »
Further Extending Emergency Order 20-06 »
West Virginia
Employment Practices Related to a Vaccine Requirement
Effective January 18, 2022, HB 335 restricts employment practices related to a vaccine requirement. If an employer requires employees to be vaccinated as a condition of employment, the employer must provide employees an exemption if: they certify that COVID-19 immunization is medically inadvisable, they have COVID-19 antibodies or they possess religious beliefs that prevent them from receiving COVID-19 immunization.
Importantly, if an employer is going to be subject to the federal requirement for private employers with 100 or more employees, that employer would have a conflict with state law for West Virginia employees who sought an exemption based solely on having COVID-19 antibodies. Under the federal requirement, employees are only provided the choice of vaccination or weekly testing. Given the conflict between state and federal law, employers are encouraged to seek outside counsel on this issue.
This material was created by PPI Benefit Solutions to provide accurate and reliable information on the subjects covered but should not be regarded as a complete analysis of these subjects. It is not intended to provide specific legal, tax or other professional advice. The service of an appropriate professional should be sought regarding your individual situation. PPI does not offer tax or legal advice. "PPI®" is a service mark of Professional Pensions, Inc., a subsidiary of NFP Corp. (NFP). All rights reserved.
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