June 2020 Benefits News Brief

Published by: Rob Peters, RHU

  • Groom Law Firm reports on recent ERISA litigation activity regarding violations of COBRA’s election notice requirements. The lawsuits allege deficiencies, even in notices based on the Department of Labor’s (DOL’s) Model Election Notice, that caused former employees to not elect COBRA when they could have.


  • On June 2nd, the American Benefits Council released a list of its legislative and regulatory priorities related to stabilizing employee benefits for employers to help make re-opening easier during the COVID-19 pandemic. Among other things, the proposal included recommendations for the federal government to subsidize COBRA premiums, increase the affordability of individual market insurance, implement risk adjustment and risk corridors to stabilize premiums and encourage the use of on-site clinics and telehealth programs.


  • On June 8th, the Internal Revenue Service (IRS) released Notice 2020-44, which sets forth the indexed PCORI fee (due July 31, 2020) for plan years ending in October–December 2019. The payment amounts are $2.45 per covered life for plan years ending in January–September 2019, and $2.54 per covered life for plan years ending in October–December 2019. The IRS also made an updated Form 720 available for reporting purposes.


  • On June 10th, the IRS issued proposed rules indicating that most direct primary care (DPC) arrangements and healthcare sharing ministries will be considered “medical coverage” or “medical insurance” and thereby meet the definition of a qualifying medical expense under §213(d). Although these IRS rules clarify some of the tax issues surrounding these arrangements, they do not address other compliance questions, such as ERISA applicability, COBRA, and ACA compliance.


  • On June 11th, the Equal Employment Opportunity Commission (EEOC) held a remote public meeting during which the Commission voted in favor of approving new proposed rules that are likely to be released soon for public comment. The proposed rules will address revised incentive limits for wellness plans and increased confidentiality requirements for information collected and stored as part of a wellness program.


  • On June 10th, the Treasury Inspector General for Tax Administration (TIGTA) released a report finding that the IRS collection of employer shared responsibility payments under Section 4980H fell far short of original projections. Originally, the IRS expected to collect $17 billion in penalties for 2015–2016 and $167 billion between 2016 and 2026. However, only $749 million was collected for 2015–2016, and now the projection through 2026 is just $8 billion.


  • On June 19th, the Department of Health and Human Services (HHS) published final rules that roll back several of the requirements of previous agency guidance that interpreted §1557 requirements. Changes include narrowing the definitions of “covered entity” and “sex”, removing the requirement that a nondiscrimination notice and taglines be provided, and elimination of the grievance procedures and retaliation prohibition that were previously required.


  • Also on June 19th, the DOL’s Employee Benefits Security Administration (EBSA) issued proposed updates for 2020, including additional guidance and examples, to the existing mental health parity self-compliance tool. The tool is designed to help plans and issuers gauge compliance with mental health and substance use disorder coverage requirements. Public comments on the proposed 2020 version are due by July 24, 2020.


  • The 2017 Tax Cut and Jobs Act amended section 274 of the Internal Revenue Code effective for taxable years beginning after December 31, 2017, to eliminate the employer deduction for expenses related to qualified transportation and commuting fringe benefits. On June 20th, the IRS and the Treasury Department released proposed regulations that clarify the requirements and provide simplified methods for calculating the cost of such disallowed benefits.


  • On June 23rd, the IRS, the Treasury Department, and the DOL released a joint FAQ document. It addressed some common questions related to coverage for COVID-19 testing and diagnosis, along with other issues related to the provision of these services and compliance with the ACA.


  • Also on June 23rd, the Commonwealth Fund released survey findings highlighting the effects of the COVID-19 pandemic on health insurance coverage, including implications for employer-sponsored insurance.


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