Businessolver’s Dec. 8, 2020 webinar, the 2021 Benefits Compliance Preview, was so well attended, we couldn’t even begin to address all the questions that came in.
This Q&A document collects all the content-related questions we received, accompanied by answers from our panel of experts. They are listed in order of the seven topics addressed in the webinar.
At registration you asked about our biggest compliance challenge in 2020. How did people answer?
We asked, “Which has been your biggest compliance challenge brought about by the pandemic?” Here’s how you and your peers answered:
- 67%: Responding to the various relief measures (CARES Act, FFCRA, COBRA extensions, etc.)
- 13%: Implementation of new programs (i.e. telehealth, etc.)
- 12%: Determining workplace safety requirements
- 6%: Managing privacy in announcing workplace COVID outbreaks
- 2%: Large-scale COBRA events
Is 2022 when we will start to see cost transparency rules? Could the rules have impact in 2021?
There are some requirements that hospitals post negotiated rates online that take effect in 2021, but for the most part, the new rules start in 2022.
Are the cost transparency rules for self-funded plans as well?
Is there a minimum employer size requirement for the cost transparency rules? (i.e., Plans smaller than X are exempt from this rule.)
No. All issuers of non-grandfathered individual- and group-health insurance coverage, and self-insured plans (not account-based plans), are required to comply with the rules.
Who is responsible for providing the cost transparency information, the employers or the carriers
Plans and issuers are required to make the information available on a website. For self-insured plans (and fully insured group health plans), that would be the employer. We anticipate that employers will want to make this information (or links to this information) available during the enrollment decision process.
Would these cost transparency provisions flow to workplace employees, or does only the “main” employer have access?
The Transparency Rule requires that participants in the plans would have access to the information.
Do you think that plans will transition from copay to co-insurance because of the new transparency requirements?
There has been a trend towards co-insurance, but we don't believe this will materially accelerate that trend.
Do you anticipate state individual mandates to continue expanding?
If the federal individual mandate is not reinstated, then we will likely continue to see “blue” states add state individual mandates. Minnesota, Washington State, Connecticut, Hawaii and Oregon all have proposed regulations. Some “red” states may consider this depending on the success of the state mandates in the Democratic leaning states.
Do you foresee a new public option being created? What are the chances based on the two outcomes of the Georgia run-off election for the U.S. Senate seats?
With the margins (for either party) in the U.S. Senate being very narrow, we would not anticipate significant legislative changes in this regard.
What is the point of distributing 1095 forms when the individual mandate was repealed in 2017?
If states continue to have individual mandates, these will continue to be important. Additionally, the employer mandate remains in place, and these forms support the reporting of this data to the participant and the IRS. But, yes, we realize these forms aren’t truly actionable for most participants.
Is Prop 24 solely for California right now?
Does the participant need to pay all the way back to their COBRA effective date to get COBRA relief?
Yes. Unless the employer chooses to offer premium forgiveness. But this is not expected to be a common approach.
Do you expect extensions of 401k loan deferments past 12/31/2020?
There has not been any indication that such an extension is likely.
Where can I find a copy of the COBRA relief?
Is the time period to report a qualifying life event now extended past 30 days? Or, does that apply only to COBRA qualifying life events?
Time periods are extended for COBRA qualifying events that are reported by the employee, as well as special enrollment periods following a loss of other coverage, childbirth/adoption, marriage or divorce.
Will the IRS allow any 2020 funds to roll over into 2021 for dependent care FSA?
The IRS issued guidance that allows employers to increase the carryover limit for health care FSAs from $500 to $550. For dependent care FSA, there are rumors of potential relief, but none have been published thus far.
How likely is it we'll see FSA relief by the end of 2020?
It is not likely we see direct relief. There were specific relief guidelines released in May/June.
What are most employers doing with COBRA non-payment participants? Are they terming for non-payment, or leaving them active?
This varies among employers. Many employers began with leaving COBRA participants active during the relief period. As the state of emergency has lasted longer than initially expected, some employers have shifted their approach to terminating benefits and reinstating if a payment is made. We've heard different ERISA attorneys advocate for each approach. While we did see more employers leaning towards keeping COBRA participants active, there has been an increase in employers opting to terminate for non-payment and reinstate later if participants submit payments.
We receive many questions from our employees who elected dependent care FSA and since then had their dependent’s day care or summer camps closed. What happens to the unused funds in their balances if they have no claims to submit?
At this point, there isn't a means by which those funds can be returned to the employee in such a way that they would be subject to the use-it-or-lose-it rule. IRS Notice 2020-29 did allow employers the ability to permit their employees to make mid-year changes to their dependent care FSA election. If the employer didn’t opt to allow this, or the participant didn’t elect to make a change, the funds are likely to be forfeited, barring any relief from the IRS.
Can benefits for employees out on leave due to COVID be terminated due to non-payment? We are not cancelling COBRA, but are unclear on employees on LOA.
Plans can require employees to pay premiums during leave. Failure to pay premiums in a timely manner can serve as a basis for termination of coverage, subject to any state insurance mandates that may apply.
Do I need to revise line 15 of a 1095c if employees were offered benefit forgiveness while out on furlough?
If the cost of the lowest priced plan changes from month to month, then line 15 should be updated. This applies regardless of whether the change is due to furlough or other reasons.
If employers make the decision to maintain eligibility for furloughed employees who fall below full-time status as defined by the ACA, what should be considered?
Plan rules and documents would need to be updated. IRS Form 1095-C coding would need to reflect they are part-time but benefits eligible/enrolled. Coordinate with your carriers for underlying insured benefits.
When determining eligibility for a health plan on hours worked, if an employer had employees take voluntary LOA and counted those hours toward hours worked, what problems may arise related to their health plan?
A voluntary leave of absence is not considered a special unpaid leave in terms of the Affordable Care Act's break-in-service rules, unless it is FMLA. To that end, while you may consider those hours for determining benefits eligibility, you are not supposed to include them for determining ACA-definition full time status.
What is going on with the Texas sick time ordinances? San Antonio, Austin and Dallas are all suspended. Are there updates on those cities?
Here’s what we know:
Austin: In November 2018, the Third District Court declared the Austin ordinance unconstitutional as it violates the state Minimum Wage Act. The decision has since been appealed to the Texas Supreme Court. As a result, it is unclear if the Austin ordinance will ever go into effect. In June 2020, the Texas Supreme Court denied the City of Austin's petition for review in a non-substantive, one-line decision thereby allowing the Third District’s decision to stand.
See: City of Austin, Texas, et al. v. Texas Association of Business, et al, No. 19-0025.
Dallas: No significant decisions since enjoining ordinance.
San Antonio: The original ordinance was amended in October 2019 and is known as the Sick and Safe Leave Ordinance (SSLO). In November 2019, a Bexar County trial court temporarily enjoined the SSLO finding the ordinance unconstitutional for the same reasons the Third District Court enjoined the Austin PSLO. A trial over permanently enjoining the SSLO was set for 9/21/20, however, the trial courts temporary injunction was appealed in the Fourth Court of Appeals in January 2020. The Fourth Court abated the appeal pending final disposition of the Austin PSL case before the Texas Supreme Court in Mar. 2020, and after the Austin PSL case was denied for review by the Texas Supreme Court, the Fourth Court reinstated the City's appeal of the SSLO's temporary injunction.
See: City of San Antonio v. Associated Builders and Contractors of South Texas, No. 04-20-00004-CV (Fourth Court of Appeals Docket).
Are there employers who can opt out of pandemic benefit compliance requirements?
Pandemic related relief has been a collection of mandatory and optional relief. Employers must comply with any mandatory relief but have the option to comply with some other aspects of the relief.
Can schools require vaccines?
If permitted under state law, yes.
How do new OSHA rules impact COVID testing? Who pays for the testing?
If the person is covered under a health plan, then the health plan is obligated to pay for the testing. Outside of the health plan, the employer will be obligated to pay where mandated by state law.
Do you think the Families First Coronavirus Response Act (FFCRA) will be extended?
Perhaps. New relief discussions continue and are expected to be announced soon.
Where is the post-COVID benefits compliance checklist?
You can find the compliance checklist here.
Are there considerations in place for those who are behind on loan payments or heading into default because of COVID?
The CARES Act permitted employers to defer loan repayments 401(k) plans.
What happens if an employer stops reporting 1095s to the IRS?
If an employer stops reporting 1095 data to the IRS, they will likely be considered as not meeting the employer reporting obligations of the ACA. Employer penalties will apply as well as a likelihood that the employer will receive employer mandate assessments that will need to be appealed.
The IRS shows that the penalty for failure to file a correct information return is $280 for each return for which the failure occurs, with the total penalty for a calendar year not to exceed $3,392,000. The penalty for failure to provide a correct payee statement is $280 for each statement for which the failure occurs, with the total penalty for a calendar year not to exceed $3,392,000.
What is the HRCI continuing education credit code?
The code is 53953.
What is the SHRM continuing education credit code?
The code is 20-XJGAY
Does IRS 2029 or 2033 provide any flexibility for refunding or rolling over 2020 dependent care FSA contributions to employees?
In terms of refunding, they do not. IRS 2020-29 allows for mid-year changes in benefits elections—as a result of the pandemic—allowing individuals to change their benefit elections, specifically including their health care FSA and dependent care FSA. These changes would be prospective, so they don't allow for refunds. Notice 2020-33 does address allowing carryover to 2021 and increases the max carryover from the previously set $500 to an indexed amount, equating to $550 for carryover into 2021.
We hope that these questions and answers help you gain a deeper understanding of current and future benefits compliance issues. Check out the 2021 Benefits Compliance Preview on-demand recording and slide deck if you haven’t already. The webinar offers more insights than can be packed into a Q&A.