COVID-19 Update
Congress Passes Appropriations Bill with COVID-19 Relief
Benefits Compliance COVID-19 FAQ
COVID-19 State Quick Reference ChartEEOC Provides Guidance on Employer-Mandated COVID-19 Vaccinations
Healthcare Reform
DOL Updates FFCRA FAQs
On December 31, 2020, the DOL updated its FAQs for the FFCRA by adding FAQ numbers 104 and 105. These new FAQs concern issues relating to the fact that employers are no longer required to provide EPSL and EFMLA after December 31, 2020.
FAQ 104 asks whether an employee, who was eligible to take leave under the FFCRA but did not take any of that leave in 2020, was entitled to that leave after December 31. The DOL states that employers no longer must provide such leave; however, they can voluntarily provide the leave. Although recent legislation did not extend the time that covered employers must provide the leave, it did allow employers who opt to voluntarily provide that leave to obtain tax credits for granting the leave until March 31, 2021.
FAQ 105 asks whether a covered employer must pay an employee for any outstanding leave granted under EFMLA, to which she was entitled, once the leave provisions under FFCRA expired. The employee in question used six weeks of FFCRA leave before the end of the year, but her employer has not paid her for the last two weeks of that leave. The DOL stated that there is a statute of limitations for violations of the FFCRA that runs from two years from the date of the alleged violation (it is three years for willful violations). The agency will investigate and enforce complaints related to the FFCRA made within this time. So, employers are still obliged to pay outstanding wages owed under that law (and under the example above, the employee would be entitled to the last two weeks of pay).
Employers should be aware of these new FAQs, now that the obligation to provide leave under the FFCRA has expired.
Federal Updates
DOL Releases FMLA Guidance on Electronic Distribution
On December 29, 2020, the DOL’s Wage and Hour Division released Field Assistance Bulletin No. 2020-7, which provides guidance to agency field staff on posting requirements under FMLA, the Fair Labor Standards Act, the Employee Polygraph Protection Act and the Service Contract Act. The bulletin was issued in response to the many questions the division had received about electronic posting requirements, considering that many workers are performing duties remotely during the COVID-19 pandemic.
As background, many notices relevant to these laws must be posted physically at a worksite. If an employer wanted to distribute the notice exclusively by electronic means, all of the following conditions must be met:
- All of the employer’s employees exclusively work remotely.
- All employees customarily receive information from the employer via electronic means.
- All employees have readily available access to the electronic posting at all times.
Some notices may be distributed electronically to each employee if the following conditions are all met:
- The employees have electronic access as part of their essential duties.
- The employees customarily receive information from the employer electronically.
- The employer has taken steps to inform employees of where and how to access the notice electronically.
Under FMLA, the general notice must be posted in a conspicuous place on the worksite where it is visible to both employees and applicants. If all hiring and work is being done remotely due to COVID-19, then the posting requirement would be met by the employer posting the notice on a website. However, remember that the notice must be accessible by applicants as well. Thus, if an employer posts on the intranet and the intranet is not accessible to applicants, the employer should consider posting on an external website or placing an additional posting on the applicant portal.
Employers should be aware of this guidance. For guidance related to the other laws, please see the bulletin.
DOL Releases FMLA Guidance on Telemedicine and Serious Health Conditions
On December 29, 2020, the DOL’s Wage and Hour Division released Field Assistance Bulletin No. 2020-8, which provides guidance to agency field staff on when telemedicine may be considered treatment under the FMLA.
As background, FMLA provides eligible employees of covered employers with unpaid, job-protected leave for specified family and medical reasons. Eligible employees may take up to 12 workweeks of leave in a 12-month period for, among other things, a serious health condition that renders the employee unable to perform the essential functions of their job, or to care for the employee’s spouse, child or parent with a serious health condition.
A serious health condition is defined as an “illness, injury, impairment, or physical or mental condition that involves” either: 1) “inpatient care” such as an overnight stay in a hospital, hospice or residential medical care facility, including any period of incapacity or any subsequent treatment in connection with such inpatient care, or 2) “continuing treatment by a health care provider.” The regulations define treatment as an in-person visit to a healthcare provider. It does not include a letter, phone call, email or text message.
The division recognizes that during the COVID-19 pandemic telemedicine has been increasingly used by healthcare providers to deliver treatment to patients. In July 2020, the division issued FAQ #12 to its Frequently Asked Questions about the FMLA and Pandemic to address this issue. The FAQ provided that until December 31, 2020, telemedicine would meet the FMLA’s treatment standard if certain conditions were met. The current bulletin extends that provision until further notice that telemedicine will meet the FMLA’s treatment standard if the telemedicine visit satisfies all of the following:
- Involves an examination, evaluation or treatment by a healthcare provider
- Is permitted and accepted by state licensing authorities
- Is generally performed by video conference
Employers should be aware of this guidance.
Retirement Update
IRS Extends Temporary Relief from the Requirement to Obtain Physical Spousal Consent
On December 23, 2020, the IRS issued Notice 2021-03 which extends the temporary relief of the physical presence requirement of spousal consent provided by Notice 2020-42 due to the continued COVID-19 public health emergency. Previously, the IRS released Notice 2020-42 (as reported in the June 11, 2020 , edition of Compliance Corner ), providing temporary relief for participant elections required to be witnessed by a plan representative or a notary public, including a required spousal consent. This relief was in response to the social distancing prompted by the COVID-19 public health emergency and applied from January 1, 2020, through December 31, 2020. Now, this relief is extended through June 30, 2021.
As background, when spousal consent is required for distribution payments or a plan loan, it is required that such consent be physically witnessed by a notary public or plan representative. However, IRS guidance provides that if certain rules are satisfied, there is temporary relief from the physical presence requirement for any participant election witnessed by a notary public or plan representative. See our previous article linked above for details on the rules to satisfy the physical presence requirement remotely via live audio-video technology.
Although intended to assist in providing distribution payments and plan loans related to COVID-19 (as expanded by the CARES Act), this temporary relief applies to any participant election requiring an individual’s signature to be witnessed in the physical presence of a plan representative or notary.
Employers should be aware that the temporary relief provided by Notice 2020-42 is now extended through June 30, 2021, and confirm that any procedures are administered in accordance with this new guidance.
IRS Releases Instructions for 2020 Form 5330
On December 23, 2020, the IRS released the 2020 Instructions for Form 5330, Return of Excise Taxes Related to Employee Benefit Plans. The IRS updates the form instructions annually for clarification purposes and to incorporate any regulatory or reporting changes.
As background, the Form 5330 is used to report and pay a wide range of excise taxes related to employee benefit plan failures. These errors include, but are not limited to, prohibited transactions (e.g., the late deposit of employee contributions), excess contributions to 401(k) plans and pension plan minimum funding deficiencies.
The instructions outline the filing due dates and provide specific directions for completing the form and applicable schedules, as well as calculating the excise tax for the various types of failures. The 2020 updates include guidance on reporting the tax on multiemployer plans in endangered or critical status.
Additionally, the instructions for Schedule C clarify that a section 403(b) tax sheltered annuity plan is not subject to the prohibited transactions excise tax.
Employers should be aware of the availability of the updated publication.
FAQ
FAQ: What are some group health plan compliance issues that employers should consider at the beginning of 2021?
There are some compliance items that apply in January and February each year regardless of the group health plan year start date. First, by January 31, employers must report the value of group health plan coverage on employees’ Forms W-2. (There is an exception to this reporting for employers that filed fewer than 250 Forms W-2 in the previous calendar year.) While most employers rely on payroll providers (as they prepare W-2s on behalf of many employers), it’s important to work closely with the provider in ensuring proper reporting.
Second, employers will have to prepare for employer mandate reporting (IRS Forms 1094/95-C and/or 1094/95-B). Due to IRS extensions, there are three different dates to consider for reporting, all in March. By March 1, 2021, employers must file 2020 Forms 1094/95-C with the IRS (if filing by paper). By March 2, 2021, employers must distribute 2020 Form 1095-C (or a similar statement) to employees. By March 31, 2021, employers must file 2020 Forms 1094/95-C with the IRS (if filing electronically, which is required if filing 250 or more forms). In connection with those three dates, during January and early February employers should work closely with payroll providers and filing vendors in gathering information relating to the reporting, including offers of coverage, enrollment, waivers and required employee contribution amounts.
Third, employers will have to consider pandemic-related extensions to FFCRA leave tax credits and to COBRA elections and premium payments. On FFCRA tax credit extensions, end-of-2020 legislation allows (but does not require) employers to provide FFCRA-related leave and receive the associated tax credits through March 31, 2021. Employers will have to decide whether to extend FFCRA leave availability to employees, considering the continued availability of the tax credits. On COBRA election and premium payment extensions, as the end of the so-called “outbreak period” approaches (by statute, it will end on February 28, 2021), employers will need to work closely with COBRA vendors on any additional communications to affected employees (or former employees). The extension rules place the burden of employee notification on both the employer and the vendor (the employer, as plan sponsor, has the fiduciary obligation to ensure notification, though). Thus, employers should review whether the extensions were communicated properly to affected employees or former employees (at the time of the COBRA event), and whether additional communications are necessary.
Lastly, MEWA sponsors must file Form M-1 with the DOL by March 1. MEWA sponsors will need to work with their administrator and potentially with outside counsel in preparing and filing Form M-1.
For employers with calendar year plans (i.e., those with plan years beginning on January 1), there are additional items to consider in January. First, employers should review nondiscrimination tests (for self-insured plans, cafeteria plans, and both health and dependent care FSAs) to assess whether the plan will somehow favor the more highly compensated employees. While adjustments can be made at any point before the end of the plan year to bring the plan into compliance with the tests, knowing early whether adjustments are necessary will help with difficult conversations with those highly compensated employees (whose elections may need to be adjusted).
Second, and similarly, employers should double check their election and enrollment systems to ensure employees’ elections were properly administered. Catching errors earlier in the year helps avoid more difficult administrative problems (and employee conversations) later in the year.
Finally, employers should prepare their Medicare Part D disclosure to CMS form, which is due within 60 days of the plan year start date (March 1, 2021, for calendar year plans). The CMS disclosure is meant to notify CMS whether the employer’s prescription drug coverage is on par with Medicare Part D. Filing is straightforward and can be completed online.
State Updates
California
January 5, 2021
SDI and PFL Rates and Limits Revised for 2021
The Employment Development Department (EDD) recently announced that the 2021 employee contribution rate for State Disability Insurance and Paid Family Leave will increase from 1.0% to 1.2%. The taxable wage base from which the contributions will be taken will increase from $122,909 for calendar year 2020 to $128,298 in 2021. The maximum weekly benefit increases from $1,300 to $1,357.
Employers should be aware of this change in rates and limits, and they should work with their payroll provider to adjust employee contributions.
Massachusetts
January 5, 2021
Continuation of Flexibility in the Issuance and Administration of Insurance
On December 29, 2020, Commissioner Anderson issued Bulletin 2020-30, extending the protections offered in Bulletin 2020-05. Bulletin 2020-30 reiterates that the Division of Insurance expects insurance carriers to continue to take steps to help address concerns about maintaining coverage and preserving the insurance market during the COVID-19 crisis. The division requests that carriers communicate and allow flexibility as it pertains to payment of premiums and continuation of coverage. Specifically, carriers should explain grace periods that are available, work with employers and individuals experiencing financial hardships, and explore ways to relax due dates for premiums.
In addition to the requests made in Bulletin 2020-05, the division now also expects carriers to maintain customer support services to provide consumer information about their insurance options in a way that will allow them to prevent a loss of coverage.
Although this guidance is directed towards insurance carriers, employers based in Massachusetts should familiarize themselves with this guidance as they continue to contend with participants being affected by COVID-19.
Continuation of Flexibility in Efforts to Treat and Restrict the Spread of COVID-19
On December 29, 2020, Commissioner Anderson issued Bulleting 2020-31, extending the protections offered in several bulletins addressing the COVID-19 crisis. Specifically, this bulletin reminds insurance carriers that the state of emergency continues that they should take special care to ensure that they are still operating in a manner that is consistent with these bulletins:
- Bulletin 2020-02 – Addressing COVID-19 (Coronavirus) Testing and Treatment
- Bulletin 2020-04 – Emergency Measures to Address and Stop the Spread of COVID-19 (Coronavirus)
- Bulletin 2020-06 – Administration of Prescription Drug Benefits During COVID-19 (Coronavirus) Public Health Crisis
- Bulletin 2020-07 – Making Consumer Information Available During the COVID-19 Crisis
- Bulletin 2020-10 – Credentialing and Prior Authorization During COVID-19 Health Crisis
- Bulletin 2020-13 – Coverage for COVID-19 Treatment and Out-of-Network Emergency and Inpatient Reimbursement During the COVID-19 Health Crisis
- Bulletin 2020-15 – Relaxing Certain Health Plan Administrative Procedures During the COVID-19 Health Emergency
- Bulletin 2020-16 – COVID-19 (Coronavirus) Testing
- Bulletin 2020-21 – Continued Relaxation of Prior Authorization in Response to the COVID-19 Health Emergency
- Bulletin 2020-23 – Updated Guidance for COVID-19 PCR and Antigen Testing
- Bulletin 2020-25 – Easing Administrative Billing for PCR and Antigen Testing
- Bulletin 2020-28 – Continued Relaxation of Certain Administrative Procedures in Response to the COVID-19 Health Emergency
The division also clarified that they now intend for carriers to ease administrative processes (as outlined in Bulletin 2020-21) through at least March 31, 2021, in order to allow hospitals to devote their resources to treatment of COVID-19 patients.
Although this guidance is directed towards insurance carriers, employers based in Massachusetts should familiarize themselves with this guidance as they continue to contend with participants being affected by COVID-19.
Addressing COVID-19 Vaccines
On December 29, 2020, Commissioner Anderson issued Bulletin 2020-32, reminding carriers that they should facilitate members’ access to COVID-19 vaccines. The division intends for members to have access to the vaccine through insurance, and for the cost of obtaining the vaccine not to be a barrier.
Carriers are expected to communicate all vaccine options to covered persons. Additionally, carriers are expected to:
- Provide descriptive vaccine information on plan websites
- Maintain dedicated help lines to respond to calls about the new coronavirus and provide information on vaccine providers
- Relax prior approval requirements for the vaccine (including for out-of-network providers)
- Reimburse all providers for the cost of administering COVID-19 vaccines and forego any cost sharing for the individual
Although this guidance is directed towards insurance carriers, employers based in Massachusetts should familiarize themselves with this guidance as they continue to contend with participants being affected by COVID-19.
Eligible Workers May Begin Requesting Paid Family and Medical Leave
As of January 1, 2021, workers can request benefits under the Paid Family and Medical Leave Law (PFML, as enacted in 2018). (See the July 12, 2018, and August 20, 2020, editions of Compliance Corner for discussions of the PFML and the finalized rules.)
Beginning in January, workers can begin to apply for leave to welcome a new child into their family, for their own serious health condition and for certain military considerations. In July 2021, workers will be able to apply for leave to care for an ill relative.
Employers should be aware that workers may begin to request this leave. For more information about the law, see our white paper on Massachusetts PFML.
Washington
January 5, 2021
Extension of Emergency Orders on COVID-19 Testing and Surprise Billing
On December 24, 2020, Gov. Kreidler issued orders further extending emergency orders 20-01 and 20-06. Emergency Order 20-01, which has been extended through January 23, 2021, 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 23, 2021, 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 »
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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FAQ
What are some group health plan compliance issues that employers should consider at the beginning of 2021?
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